UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Amendment No. 1
Under the Securities Exchange Act of 1934
MAGNA INTERNATIONAL INC.
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(Name of Issuer)
CLASS A SUBORDINATE VOTING SHARES
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(Title of Class of Securities)
559222401
-----------------------------------
(CUSIP Number)
Jeffrey O. Palmer
Executive Vice-President
Magna International Inc.
337 Magna Drive
Aurora, Ontario L4G 7K1
(905) 726-2462
Scott M. Freeman
Sidley Austin LLP
787 Seventh Avenue
New York City, NY 10019
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
September 20, 2007
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. |_|
(1) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 (the "Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
SCHEDULE 13D
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13D
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CUSIP No. 559222401 Page 2 of 14 Pages
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1 NAME OF REPORTING PERSONS: Donald Walker
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(D) OR 2(E) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canada
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 558,938
OWNED BY --------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 0
WITH --------------------------------------------------------
9 SOLE DISPOSITIVE POWER
558,938
--------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
558,938
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.4%
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14 TYPE OF REPORTING PERSON
IN
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2
SCHEDULE 13D
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13D
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CUSIP No. 559222401 Page 3 of 14 Pages
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1 NAME OF REPORTING PERSONS: Siegfried Wolf
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(D) OR 2(E) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Austria
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 360,500
OWNED BY --------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 0
WITH --------------------------------------------------------
9 SOLE DISPOSITIVE POWER
360,500
--------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
360,500
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.3%
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14 TYPE OF REPORTING PERSON
IN
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3
SCHEDULE 13D
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13D
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CUSIP No. 559222401 Page 4 of 14 Pages
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1 NAME OF REPORTING PERSONS: Vincent J. Galifi
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(D) OR 2(E) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canada
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 328,707
OWNED BY --------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 0
WITH --------------------------------------------------------
9 SOLE DISPOSITIVE POWER
328,707
--------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
328,707
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.3%
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14 TYPE OF REPORTING PERSON
IN
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4
SCHEDULE 13D
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13D
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CUSIP No. 559222401 Page 5 of 14 Pages
---------------------- ---------------------------
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1 NAME OF REPORTING PERSONS: Jeffrey O. Palmer
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(D) OR 2(E) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canada
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 154,063
OWNED BY --------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 0
WITH --------------------------------------------------------
9 SOLE DISPOSITIVE POWER
154,063
--------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
154,063
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
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14 TYPE OF REPORTING PERSON
IN
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5
SCHEDULE 13D
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13D
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CUSIP No. 559222401 Page 6 of 14 Pages
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1 NAME OF REPORTING PERSONS: Peter Koob
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(D) OR 2(E) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Federal Republic of Germany
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 171,720
OWNED BY --------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 0
WITH --------------------------------------------------------
9 SOLE DISPOSITIVE POWER
171,720
--------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
171,720
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
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14 TYPE OF REPORTING PERSON
IN
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6
Introduction
This Amendment No. 1 to Schedule 13D ("Statement") is being filed to report the
closing of the transactions contemplated by the Transaction Agreement (the
"Transaction Agreement") entered into by Magna International Inc. (the
"Company"), Open Joint Stock Company Russian Machines ("RM"), Veleron Holding
B.V. ("RM Sub"), the Stronach Trust, 445327 Ontario Limited ("445327", and
together with RM, RM Sub, the Stronach Trust, and Mr. Frank Stronach, the "Major
Investors") and the Reporting Persons.
Item 1. Security and Issuer.
This Statement relates to the Company's Class A Subordinate Voting Shares
(the "Class A Shares"). The principal executive offices of the Company are
located at 337 Magna Drive, Aurora, Ontario, Canada, L4G 7K1.
Item 2. Identity and Background.
This Statement is being filed by Siegfried Wolf ("Mr. Wolf"), Donald J.
Walker ("Mr. Walker"), Vincent J. Galifi ("Mr. Galifi"), Peter Koob ("Mr. Koob")
and Jeffrey O. Palmer ("Mr. Palmer", and together with Mr. Wolf, Mr. Walker, Mr.
Galifi and Mr. Koob, the "Reporting Persons").
Item 3. Source and Amount of Funds or Other Consideration.
On September 20, 2007, pursuant to the Plan of Arrangement, M Unicar Inc.
("Newco") acquired indirect ownership and control of:
o 726,829 Class B Shares of the Company held by 447 Holdings Inc.
("447"), a direct wholly owned subsidiary of Newco (the "Class B
Holdings")
o 605,000 Class A Shares held among five wholly owned subsidiaries of
2143453 Ontario Inc. ("Newco I.5"), a company controlled by Newco
(the "Newco I.5 Class A Holdings")
o 20 million Class A Shares held by 2143455 Ontario Inc. ("Newco II"),
a company indirectly controlled by Newco (the "Newco II Class A
Holdings" and, together with the Newco I.5 Class A Holdings, the
"Class A Holdings").
No funds or other consideration were provided by any Reporting Person
contemporaneously with the execution of the Transaction Agreement. In connection
with the closing of the transactions contemplated by the Transaction Agreement,
Mr. Walker, Mr. Wolf, Mr. Galifi, Mr. Koob and Mr. Palmer indirectly contributed
250,000, 250,000, 35,000, 35,000 and 35,000 Class A Shares, respectively, to
Newco I.5 in exchange for shares of capital stock of Newco and Newco I.5.
Item 4. Purpose of Transaction.
7
The purpose of the arrangements described in Item 6 below is to accelerate
the Company's strategic efforts to capitalize on the growth opportunities within
the Russian and other automotive markets, and to align the interests of the
Reporting Persons, RM and the Stronach Trust with respect to the Company.
Mr. Frank Stronach ("Mr. Stronach") (in his capacity as Chairman of the
Board of the Company or otherwise), the Stronach Trust and 445327 have indicated
that they may, from time to time, communicate with the Company's management,
directors, shareholders and other interested parties regarding matters of mutual
interest, including strategies designed to increase the value of the Class A
Shares. The Major Investors and Newco may from time to time acquire or dispose
of beneficial ownership of additional Class A Shares (including by acquiring or
disposing of beneficial ownership of additional Class B Shares of the Company)
in the open market, in privately negotiated transactions or otherwise.
The Reporting Persons may from time to time acquire or dispose of
beneficial ownership of additional Class A Shares (including by acquiring or
disposing of beneficial ownership of employee stock options to acquire Class A
Shares) in the open market, in privately negotiated transactions or otherwise.
Except as indicated in this Schedule 13D, none of the Reporting Persons
currently has any plans or proposals that relate to or would result in any of
the matters described in subparagraphs (a) through (j) of Item 4 of Schedule
13D. However, such plans and proposals may have been considered, and may from
time to time hereafter be considered, by Mr. Stronach in his capacity as a
director and/or officer of the Company, as trustee of the Stronach Trust, or
otherwise, and by the Reporting Persons.
Item 5. Interest in Securities of Issuer.
The information on the cover pages is incorporated herein by reference.
Mr. Walker is the beneficial owner of 558,938 Class A Shares, comprised of
15,437 Class A Shares, 548 Class A Shares issuable upon conversion of CDN$50,000
of the Company's 6.5% Convertible Subordinated Debentures (the "Debentures") and
542,953 options to acquire Class A Shares, all of which are currently
exercisable.
Mr. Wolf is the beneficial owner of 360,500 Class A Shares, comprised of
54,199 Class A Shares, 79,248 restricted Class A Shares and 227,053 options to
acquire Class A Shares, all of which are currently exercisable.
Mr. Galifi is the beneficial owner of 328,707 Class A Shares, comprised of
5,273 Class A Shares, 2,193 Class A Shares issuable upon conversion of
CDN$200,000 of the Debentures, 263,900 options to acquire Class A Shares, all of
which are currently exercisable, an aggregate of 481 Class A Shares held in the
name of family members sharing the same residence, and 31,971 restricted Class A
Shares and 24,889 Class A Shares, both of which are held by an investment
holding company which is controlled by Mr. Galifi.
8
Mr. Koob is the beneficial owner of 171,720 Class A Shares, comprised of
11,020 Class A Shares and 160,700 options to acquire Class A Shares, all of
which are currently exercisable.
Mr. Palmer is the beneficial owner of 154,063 Class A Shares, comprised of
18,625 Class A Shares, 438 Class A Shares issuable upon conversion of CDN$40,000
of the Debentures and 135,000 options to acquire Class A Shares, all of which
are currently exercisable.
The ownership of Class A Shares reported above by the Reporting Persons
reflects their beneficial ownership following the share transfers described
below.
In connection with the Arrangement, Mr. Walker, Mr. Wolf, Mr. Galifi, Mr.
Koob and Mr. Palmer (through a series of transactions among their personal
holding companies, a newly formed holding company owned indirectly by the
Principals ("Principals Holdco"), Newco and Newco I.5) transferred 250,000,
250,000, 35,000, 35,000 and 35,000 Class A Shares, respectively to Newco 1.5, in
exchange for 6,500 Class A-1 Common Shares, Series 1 of Principals Holdco, 6,500
Class A-1 Common Shares, Series 2 of Principals Holdco, 1,000 Class A-1 Common
Shares, Series 3, of Principals Holdco, 1,000 Class A-1 Common Shares, Series 4,
of Principals Holdco, and 1,000 Class A-1 Common Shares, Series 5, of Principals
Holdco, respectively, representing equity interests of approximately 40.6%,
40.6%, 6.25%, 6.25%, and 6.25%, respectively, of Principals Holdco.
Through their ownership interests in Principals Holdco, each of the
Reporting Persons will, indirectly, be entitled to receive dividends paid by the
Company to Newco in an amount that exceeds the dividends that each of the
Reporting Persons was entitled to receive from his prior direct or indirect
shareholdings in the Company. The equity securities in the capital of Newco and
its subsidiaries held by Principals Holdco representing an approximate 11%
voting interest, and a 16% dividend entitlement, in Newco and its subsidiaries.
The foregoing transfers of Class A Shares, together with the related indirect
transfer of Class B Shares by the Stronach Trust, to Newco and its subsidiaries,
will result in such shares being effectively combined with the 20 million Class
A Shares subscribed for by Newco II using the funding indirectly provided by
Russian Machines (through its subsidiary RM Sub). Accordingly, so long as RM Sub
remains an investor in Newco, the Reporting Persons will receive, indirectly,
16% of the aggregate dividends paid by the Company on the 20,605,000 Class A
Shares and the 726,829 Class B Shares held indirectly by Newco. Therefore, the
Reporting Persons, collectively, will indirectly receive dividends from the
Company as if they held 3,413,093 shares of the Company although the Reporting
Persons, collectively, contributed 605,000 Class A Shares to Newco I.5.
On September 11, 2007 Mr. Walker exercised options to acquire 4,400 Class
A Shares at an exercise price of $59.10 per share and options to acquire 25,000
Class A Shares at an exercise price of $42.35 per share. On August 30, 2007, PK
Holdco Inc., a corporation owned by Mr. Koop, acquired from 1741773 Ontario
Inc., a corporation owned by the Company, 13,472 restricted Class A Shares at a
purchase price of $50.18, 10,764 Class A Shares at a purchase price of $48.32,
and 5,630 Class A Shares at a purchase price of $47.39. Except as set forth
above, none of the Reporting Persons have effected any transactions in the Class
A Shares
9
during the past sixty days. Each Reporting Person disclaims beneficial ownership
of all the Class A Shares owned by each other Reporting Person.
The Reporting Persons may be deemed to be part of a group together with
RM, RM Sub, the Stronach Trust, and 445327 and therefore deemed to beneficially
own the Class A Shares beneficially owned by the Major Investors, but no
Reporting Person affirms the existence of any such group and each Reporting
Person disclaims beneficial ownership of any such shares.
Based on information provided in the Company's latest publicly available
reports and information provided by the Major Investors, the beneficial
ownership of Class A Shares by the Major Investors other than through Newco is
as set forth below:
Mr. Stronach holds directly 53,338 Class A Shares. Mr. Stronach is a
partner of Stronach & Co. ("S&Co."), an entity that provides consulting services
to certain subsidiaries of the Company. S&Co. holds 248,026 Class A Shares
issued upon exercise of options previously held by S&Co., which options are no
longer outstanding.
See Item 3 for a description of the shares owned by Newco. The Reporting
Persons disclaim beneficial ownership of the Class A Shares owned by Newco.
Item 6. Contracts, Arrangements, Understanding or Relationships with Respect to
Securities of the Issuer.
In connection with the closing of the transactions contemplated by the
Transaction Agreement, the Reporting Persons and/or Principals Holdco, have
entered into the following agreements.
Newco II Shareholders Agreement
The Newco II Shareholders Agreement was entered into among 446, RM Sub,
Principals Holdco, Newco, Newco I.5 and Newco II and provides for, among other
things, the business and management of Newco I.5 and Newco II, the composition
of their respective boards of directors and the voting of the Class A Holdings
held, directly and indirectly, by Newco I.5 and Newco II.
The boards of directors of Newco I.5 and Newco II are the same as the
board of directors for Newco.
The Newco II Shareholders Agreement prohibits the transfer of any shares
of Newco I.5 or Newco II, except in limited circumstances.
10
The Newco II Shareholders Agreement provides that Newco I.5 and Newco II
will vote the Class A Shares held, directly and indirectly, by them in the same
manner as provided for under the Investors Agreement entered into by 446 and RM
Sub on September 20, 2007 (i.e. to ensure that the Company's board of directors
consists of: (a) six nominees of 446, one of whom will be appointed chairman of
the Company's board of directors, provided that at least four such nominees are
"independent", (b) six nominees of RM Sub, provided that at least four such
nominees are "independent", and (c) subject to certain exceptions, Mr. Walker
and Mr. Wolf).
Principals Agreement
The Principals Agreement was entered into on September 20, 2007 among each
of the Reporting Persons, their individual and common holding companies,
Principals Holdco, Newco I.5 and Newco and provides for, among other things,
restrictions on transfer, acquisition of additional Class A Subordinate Voting
Shares of the Company, the exit of a Reporting Person from his indirect
relationship with Newco, 446 and RM Sub under certain circumstances and a
reduction in dividend entitlement in certain circumstances.
In the event that a Reporting Person is no longer employed by the Company
or an affiliate of the Company (including as a result of death or permanent
disability), the Reporting Person or his estate or legal representative will
have the right to cause the disposition of that portion of the Newco I.5 Class A
Shares contributed by the Reporting Person indirectly to Newco. The Principals
Agreement provides certain mechanisms for facilitating the exit of a Reporting
Person. Under certain circumstances, the parties to the Principals Agreement
will complete the transactions contemplated by the Principals Exchange
Agreement.
If, prior to September 20, 2013, a Reporting Person resigns from his
employment with the Company or an affiliate of the Company, but has not exited
as described above, the portion of the dividends to which he would have
otherwise been entitled in each of the six years following September 20, 2007
which exceeds the dividends received directly or indirectly by Newco and Newco
I.5 from that portion of the Newco I.5 Class A Shares contributed by the
Reporting Person indirectly to Newco will be reduced in accordance with a
formula set out in the Principals Agreement.
The Principals Agreement restricts each Reporting Person from transferring
directly or indirectly his shares in Newco. Each Reporting Person is also
prohibited from acquiring additional Class A Shares except in certain
circumstances, including pursuant to a Magna employee, officer or director
equity compensation arrangement.
Principals Exchange Agreement
The Principals Exchange Agreement was entered into on September 20, 2007
to facilitate an efficient exit by the Reporting Persons from their investment
in Newco and Newco I.5 under certain circumstances. In the event RM Sub sells
all its interests in Newco and Newco II or there is a demand by the lender to
Newco II to repay certain loans, Newco, the Reporting Persons and their
individual and common holding companies will have the right to cause the sale to
the Company of (i) all of Newco I.5 Class A Shares held indirectly by Newco in
exchange for
11
(ii) that number of Class A Shares of the Company issued from treasury equal to
the number of Newco I.5 Class A Shares acquired by the Company in clause (i).
Principals Option Agreements
Principals Holdco has entered into five Class A Share Option Agreements
with respect to the Class A Shares indirectly contributed to Newco by the
Reporting Persons. The agreements are between Principals Holdco, Newco, Newco
I.5 and in each case a subsidiary of Newco I.5 which holds the Class A Shares
contributed by one of the Reporting Persons. These agreements provide Principals
Holdco the right under certain circumstances to acquire the Class A Shares
transferred to Newco in connection with the closing of the transactions under
the Transaction Agreement, in exchange for the shares of Newco I.5 received at
such closing.
Each of these Agreements has been filed as an exhibit to this Schedule
13D, and is incorporated herein by reference.
Item 7. Material to be Filed as Exhibits.
The following documents are being filed as exhibits to this statement and
are incorporated herein by reference:
12
Exhibit A Joint Filing Agreement
Exhibit B Principals Agreement, dated September 20, 2007
Exhibit C Principals Exchange Agreement, dated September 20,
2007
Exhibit D Newco II Unanimous Shareholders Agreement, dated
September 20, 2007
Exhibit E Share Option Agreement between SW Holdco Inc. as
Wolf Holdco., MPMAG Holdings Inc. as Princpals
Holdco, 2143453 Ontario Inc. as Newco 1.5 and
Unicar Inc. as Newco, dated September 20, 2007
Exhibit F Share Option Agreement between DW Holdco Inc. as
Walker Holdco, MPMAG Holdings Inc. as Principals
Holdco, 2143453 Ontario Inc. as Newco 1.5 and
Unicar as Newco Wolf Holding, dated September 20,
2007
Exhibit G Share Option Agreement between JOP Holdco Inc. as
Palmer Holdco, MPMAG Holdings Inc. as Principals
Holdco, 2143453 Ontario Inc. as Newco 1.5 and M
Unicar Inc. as Newco, dated September 20, 2007
Exhibit H Share Option Agreement between PK Holdco Inc. as
Koob Holdco, MPMAG Holdings Inc, as Principal,
Holdco, 2143453 Ontario Inc. as Newco 1.5 and M
Unicar Inc. as Newco, dated September 20, 2007
Exhibit I Share Option Agreement between VG Holdco Inc. as
Galifi Holdco, MPMAG Holdings Inc. as Principals
Holdco, 2143453 Ontario Inc. as Newco 1.5 and M
Unicar Inc. as Newco, dated September 20, 2007
13
Signature
After reasonable inquiry and to the best of the undersigneds' knowledge
and belief, each of the undersigned certifies that the information set forth in
this statement is true, complete and correct.
Dated: September 26, 2007
SIEGFRIED WOLF
/s/ SIEGFRIED WOLF
-------------------------
DONALD J. WALKER
/s/ DONALD J. WALKER
-------------------------
VINCENT J. GALIFI
/s/ VINCENT J. GALIFI
-------------------------
PETER KOOB
/s/ PETER KOOB
-------------------------
JEFFREY O. PALMER
/s/ JEFFREY O. PALMER
-------------------------
The original statement shall be signed by each person on whose behalf the
statement is filed or his authorized representative. If the statement is signed
on behalf of a person by his authorized representative (other than an executive
officer or general partner of this filing person), evidence of the
representative's authority to sign on behalf of such person shall be filed with
the statement, provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by reference.
The name and any title of each person who signs the statement shall be
typed or printed beneath his signature.
Attention: Intentional misstatements or omissions of fact constitute
Federal criminal violations (See 18 U.S.C. 1001).
14
Exhibit A
JOINT FILING AGREEMENT
The undersigned hereby agree jointly to prepare and file with regulatory
authorities a Statement on Schedule 13D reporting each of the undersigned's
beneficial ownership of the Class A Subordinate Voting Shares of Magna
International Inc. and hereby affirm that such Statement on Schedule 13D is
being filed on behalf of each of the undersigned in accordance with Rule
13d-1(k)(1) under the Securities Exchange Act of 1934. This agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
Dated: September 26, 2007
SIEGFRIED WOLF
/s/ SIEGFRIED WOLF
-------------------------
DONALD J. WALKER
/s/ DONALD J. WALKER
-------------------------
VINCENT J. GALIFI
/s/ VINCENT J. GALIFI
-------------------------
PETER KOOB
/s/ PETER KOOB
-------------------------
JEFFREY O. PALMER
/s/ JEFFREY O. PALMER
-------------------------
15
Exhibit B
EXECUTION COPY
DONALD J. WALKER, SIEGFRIED WOLF, VINCENT J. GALIFI, PETER KOOB
and JEFFREY O. PALMER
as Principals
and
GKP HOLDINGS INC.
as GKP Holdco
and
MPMAG HOLDINGS INC.
as Principals Holdco
and
2143453 ONTARIO INC.
as Newco I.5
and
M. UNICAR INC.
as Newco
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PRINCIPALS AGREEMENT
September 20, 2007
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STIKEMAN ELLIOTT LLP
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
Section 1.1 Defined Terms..............................................2
Section 1.2 Gender and Number.........................................12
Section 1.3 Headings and Divisions....................................13
Section 1.4 Currency..................................................13
Section 1.5 Certain Phrases, etc......................................13
Section 1.6 Statutory References......................................13
ARTICLE 2
IMPLEMENTATION OF AGREEMENT AND TERM
Section 2.1 Term of Agreement.........................................13
Section 2.2 Agreement to be Bound.....................................13
Section 2.3 Deemed Consent under Articles.............................14
ARTICLE 3
RESTRICTIONS ON TRANSFER, ACQUISITION OF ADDITIONAL MAGNA SHARES AND
CERTAIN ACTIVITIES
Section 3.1 Restrictions on Transfer by Principals....................14
Section 3.2 Permitted Transfers by Principals.........................14
Section 3.3 Encumbering of Shares.....................................15
Section 3.4 Indirect Transfers........................................15
Section 3.5 Restrictions on Acquiring Additional Magna Shares.........15
Section 3.6 Restrictions on Business..................................16
ARTICLE 4
PURCHASE AND SALE TRANSACTIONS
Section 4.1 Exit at Option of Principal...............................16
Section 4.2 Exit at Option of Newco...................................17
Section 4.3 Exit Procedures...........................................17
ARTICLE 5
CONVERSION OF NEWCO AND NEWCO I.5 SHARES
Section 5.1 Effect of Resignation from Employment.....................19
ARTICLE 6
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 6.1 Tuck Transactions.........................................20
Section 6.2 Treatment of Restricted Shares............................20
Section 6.3 Non-Compete...............................................21
i
Section 6.4 Representations and Warranties of the Principals..........21
Section 6.5 Representations and Warranties of GKP Holdco..............22
Section 6.6 Representations and Warranties of Principals Holdco.......23
Section 6.7 Representations and Warranties of Newco I.5...............24
Section 6.8 Survival..................................................25
ARTICLE 7
ARBITRATION
Section 7.1 Settling Disputes.........................................25
Section 7.2 Right to Oral Discovery...................................25
Section 7.3 Injunctive Relief.........................................25
ARTICLE 8
MISCELLANEOUS
Section 8.1 Notices...................................................25
Section 8.2 Time of the Essence.......................................28
Section 8.3 Announcements.............................................28
Section 8.4 Third Party Beneficiaries.................................28
Section 8.5 No Agency or Partnership..................................28
Section 8.6 Expenses..................................................28
Section 8.7 Amendments................................................28
Section 8.8 Waiver....................................................29
Section 8.9 Entire Agreement..........................................29
Section 8.10 Successors and Assigns....................................29
Section 8.11 Severability..............................................29
Section 8.12 Governing Law.............................................29
Section 8.13 Counterparts..............................................30
ii
PRINCIPALS AGREEMENT
Principals Agreement dated September 20, 2007 among Donald J. Walker
("Walker"), Siegfried Wolf ("Wolf"), Vincent J. Galifi ("Galifi"), Peter Koob
("Koob"), Jeffrey O. Palmer ("Palmer"), GKP Holdings Inc. ("GKP Holdco"),
MPMAG Holdings Inc. ("Principals Holdco"), 2143453 Ontario Inc. ("Newco I.5")
and M Unicar Inc. ("Newco").
RECITALS:
(a) DWMAG Inc., being a Permitted Transferee of Walker, is the
registered and beneficial owner of 6,500 Class A-1 Common Shares,
Series 1 in the capital of Principals Holdco;
(b) SW CDN Holdings Inc., being a Permitted Transferee of Wolf, is
the registered and beneficial owner of 6,500 Class A-1 Common
Shares, Series 2 in the capital of Principals Holdco;
(c) VGMAG Inc., being a Permitted Transferee of Galifi, is the
registered and beneficial owner of 1,000 Class A-1 Common Shares,
Series 3 in the capital of GKP Holdco;
(d) Makrist Beteiligungen GmbH, being a Permitted Transferee of Koob,
is the registered and beneficial owner of 1,000 Class A-1 Common
Shares, Series 4 in the capital of GKP Holdco;
(e) JPMAG Inc., being a Permitted Transferee of Palmer, is the
registered and beneficial owner of 1,000 Class A-1 Common Shares,
Series 5 in the capital of GKP Holdco;
(f) GKP Holdco is the registered and beneficial owner of 1,000
Class A-1 Common Shares, Series 3, 1,000 Class A-1 Common Shares,
Series 4 and 1,000 Class A-1 Common Shares, Series 5 in the
capital of Principals Holdco;
(g) Principals Holdco is the registered and beneficial owner of 6,175
Class A-1 Common Shares, Series 1, 6,175 Class A-1 Common Shares,
Series 2, 950 Class A-1 Common Shares, Series 3, 950 Class A-1
Common Shares, Series 4, 950 Class A-1 Common Shares, Series 5,
6,175 Class A Preferred Shares, Series 1, 6,175 Class A Preferred
Shares, Series 2, 950 Class A Preferred Shares, Series 3, 950
Class A Preferred Shares, Series 4 and 950 Class A Preferred
Shares, Series 5 in the capital of Newco I.5 and 400 Class A
Shares in the capital of Newco;
(h) Newco is the registered and beneficial owner of 84,800 Voting
Preferred Shares and 84,800 Class B Common Shares in the capital
of Newco I.5 and 100 Common Shares in the capital of 447;
(i) Newco I.5 is the registered and beneficial owner of all of the
issued and outstanding shares in the capital of each of the
Corresponding Holdcos and
1,000,000 Non-Voting Preferred shares and 100 Class B Common
Shares in the capital of Newco II; and
(j) the Parties have entered into this Agreement to establish, among
other things, rights and obligations arising out of, or in
connection with, the ownership of shares of Newco, Newco I.5 and
the Corresponding Holdcos.
In consideration of the above recitals, and the agreements of the
Parties contained in this Agreement and other good and valuable consideration
(the receipt and adequacy of which are acknowledged), the Parties agree as
follows:
ARTICLE 1
INTERPRETATION
Section 1.1 Defined Terms.
As used in this Agreement, the following terms have the following
meanings:
"446" has the meaning ascribed to such term in the Investors Agreement.
"446 Call Option" means the call option granted to 446 pursuant to the
call option agreement dated the date hereof among 446, 447 and Newco.
"447" means 447 Holdings Inc., a corporation existing under the Act,
and its successors.
"447 Magna Shares" means the number of Magna Class B Shares held by
Newco and/or its Subsidiaries.
"Act" means the Business Corporations Act (Ontario).
"affiliate" has the meaning ascribed to such term from time to time in
the Securities Act (Ontario).
"Agreement" means this agreement and all schedules attached to it as
amended, modified, restated, replaced or supplemented from time to time.
"Applicable Laws" means all applicable federal, provincial, state,
municipal and local statutes, laws, by-laws, regulations, ordinances,
orders, enactment, directives and rules and all injunctions, decisions,
directives, judgments and orders of any Governmental Entity having
jurisdiction in respect of a particular matter and all amendments
thereto and which have the force of law.
"Authorization" means, with respect to a Person, any order, permit,
approval, consent, waiver, licence or similar authorization of any
Governmental Entity having jurisdiction over the Person.
2
"Business Day" means any day of the year, other than a Saturday, Sunday
or day observed as a statutory holiday in Toronto, Ontario, New York,
New York or Moscow, Russia.
"Closing Date" has the meaning specified in Section 4.3(4).
"Contract" means any agreement, contract, lease, licence, permit,
franchise, purchase order, commitment, engagement, option, indenture,
mortgage, deed, instrument or other legally binding obligation, whether
written, oral or implied.
"Corresponding Holdco", when such term is used in relation to:
(i) Walker, means Walker Holdco, (ii) Wolf, means Wolf Holdco,
(iii) Galifi, means Galifi Holdco, (iv) Koob, means Koob Holdco, and
(v) Palmer, means Palmer Holdco.
"Dispute" has the meaning specified in Section 7.1.
"Exchange Agreement" means the exchange agreement dated the date hereof
among Magna, RM, RM Sub, 445327 Ontario Limited, 446, Newco I.5 and
Newco II.
"Exit Agreement" means the exit agreement dated the date hereof among
445327 Ontario Limited, 446, RM, RM Sub, Newco, Newco I.5 and Newco II.
"Exit Taxes" means: (A) the Taxes, as calculated by Newco's auditors
and specified by Newco in a written notice to the Exiting Principal,
payable by Newco, Newco I.5, and/or Newco II on the assumption that
(i) all of the assets of such corporations (other than shares in any of
the other such corporations, shares of a Corresponding Holdco and
shares of 447) were disposed of on the Closing Date for the Market
Value on such date of any such assets which are Magna Class A Shares
and for the fair market value as at the Closing Date (as determined by
Newco's auditors) of any other assets, (ii) each of those corporations
will pay taxable dividends in their respective taxation years in which
the Closing Date occurs in the minimum amount required for such
corporation to be entitled to receive a refund (the "Dividend Refund")
of all of its refundable dividend tax on hand, if any, resulting from
the dispositions described in (i) above; (iii) each of Newco, Newco I.5
and Newco II claimed no losses, deductions or credits in calculating
its income, taxable income or tax other than the Dividend Refund, if
any, and any losses, deductions and credits arising as a result of the
transactions, arrangements, events, activities and undertakings of the
corporation pursuant to and in accordance with the Transaction
Agreements; minus (B) the Expected Taxes;
"Exiting Principal", as the context requires, means a Principal who has
delivered an Exit Notice pursuant to Section 4.1, or a Principal in
respect of whom Newco has delivered an Exit Notice pursuant to
Section 4.2.
"Exiting Principal's Referable Newco Shares", when such term is used in
relation to: (i) Walker, means all of the issued and outstanding Newco
Class A Shares, Series 1 and all of the issued and outstanding Newco
Class D Shares, Series 1, (ii) Wolf, means all of the issued and
outstanding Newco Class A Shares, Series 2 and all of the issued and
outstanding Newco Class D Shares, Series 2, (iii) Galifi, means all of
the issued and
3
outstanding Newco Class A Shares, Series 3 and all of the issued and
outstanding Newco Class D Shares, Series 3, (iv) Koob, means all of the
issued and outstanding Newco Class A Shares, Series 4 and all of the
issued and outstanding Newco Class D Shares, Series 4, and (v) Palmer,
means all of the issued and outstanding Newco Class A Shares, Series 5
and all of the issued and outstanding Newco Class D Shares, Series 5.
"Exiting Principal's Referable Newco I.5 Preferred and Class B Common
Shares", when such term is used in relation to: (i) Walker, means 325
Voting Preferred Shares and 325 Class B Common Shares in the capital of
Newco I.5, (ii) Wolf, means 325 Voting Preferred Shares and 325 Class B
Common Shares in the capital of Newco I.5, (iii) Galifi, means 50
Voting Preferred Shares and 50 Class B Common Shares in the capital of
Newco I.5, (iv) Koob, means 50 Voting Preferred Shares and 50 Class B
Common Shares in the capital of Newco I.5, and (v) Palmer, means 50
Voting Preferred Shares and 50 Class B Common Shares in the capital of
Newco I.5.
"Exiting Principal's Referable Newco I.5 Common and Class A Preferred
Shares", when such term is used in relation to: (i) Walker, means all
of the issued and outstanding Newco I.5 Class A-1 Common Shares,
Series 1, all of the issued and outstanding Newco I.5 Class A-2 Common
Shares, Series 1 and all of the issued and outstanding Newco I.5
Class A Preferred Shares, Series 1, (ii) Wolf, means all of the issued
and outstanding Newco I.5 Class A-1 Common Shares, Series 2, all of the
issued and outstanding Newco I.5 Class A-2 Common Shares, Series 2 and
all of the issued and outstanding Newco I.5 Class A Preferred Shares,
Series 2, (iii) Galifi, means all of the issued and outstanding Newco
I.5 Class A-1 Common Shares, Series 3, all of the issued and
outstanding Newco I.5 Class A-2 Common Shares, Series 3 and all of the
issued and outstanding Newco I.5 Class A Preferred Shares, Series 3,
(iv) Koob, means all of the issued and outstanding Newco I.5 Class A-1
Common Shares, Series 4, all of the issued and outstanding Newco I.5
Class A-2 Common Shares, Series 4 and all of the issued and outstanding
Newco I.5 Class A Preferred Shares, Series 4, and (v) Palmer, means all
of the issued and outstanding Newco I.5 Class A-1 Common Shares,
Series 5, all of the issued and outstanding Newco I.5 Class A-2 Common
Shares, Series 5 and all of the issued and outstanding Newco I.5
Class A Preferred Shares, Series 5.
"Expected Taxes" means the Taxes, as calculated by Newco's auditors and
specified by Newco in a written notice to the Exiting Principal,
payable by such Exiting Principal's Corresponding Holdco as a
consequence of the disposition by such Corresponding Holdco to such
Exiting Principal of the Exiting Principal's Referable Interest
pursuant to Section 4.3(4)(b) hereof on the assumption that (i) the
Corresponding Holdco will pay a taxable dividend in its taxation year
in which the Closing Date occurs in the minimum amount required for the
Corresponding Holdco to be entitled to receive a refund (the "Dividend
Refund") of all of its refundable dividend tax on hand, if any,
generated as a consequence of the Corresponding Holdco's capital gain,
if any, as a result of disposing of the Exiting Principal's Referable
Interest pursuant to Section 4.3(4)(b), and (ii) the Corresponding
Holdco will claim no losses, deductions or credits in computing its
income, taxable income or tax other than the Dividend Refund, if any,
and losses, deductions or credits which have arisen on or before the
Closing Date or which Newco's auditors reasonably expect will arise as
a result of the aforesaid disposition of the Exiting
4
Principal's Referable Interest or otherwise during the taxation year of
the Corresponding Holdco in which the aforesaid disposition of the
Exiting Principal's Referable Interest occurs.
"Fifth Anniversary" means September 20, 2012.
"First Anniversary" means September 20, 2008.
"Fourth Anniversary" means September 20, 2011.
"Galifi Holdco" means VG Holdco Inc., a corporation existing under the
Act, and its successors.
"GKP Holdco" means GKP Holdings Inc., a corporation existing under the
Act, and its successors.
"GKP Holdco Shares" means the issued and outstanding shares in the
capital of GKP Holdco, appropriately adjusted for stock splits, stock
dividends, reverse stock splits, share consolidations and similar
events, and, where the context requires, includes: (i) any securities
into which such shares may be converted, reclassified, redesignated,
subdivided, consolidated or otherwise changed, (ii) any securities
received by the holders of such shares as a result of any merger,
amalgamation, reorganization, arrangement or other similar transaction
involving GKP Holdco, (iii) any securities of GKP Holdco which are
received by any one or more Persons as a stock dividend or distribution
on or in respect of such shares, and (iv) any security, other
instrument or right that is exercisable, exchangeable or convertible
into, or evidences the right to acquire, any shares in the capital of
GKP Holdco.
"Governmental Entity" means any (i) multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitrator or
arbitral body, commission, board, bureau or agency, domestic or
foreign, including the Ontario Securities Commission, the Autorite des
marches financiers du Quebec and the United States Securities and
Exchange Commission, (ii) self-regulatory organization or stock
exchange, including the TSX and the NYSE, (iii) subdivision, agent,
commission, board, or authority of any of the foregoing, or
(iv) quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any of
the foregoing.
"Investor" means each of 446, RM Sub and any Permitted Transferee under
the Investors Agreement.
"Investors Agreement" means the Investors Agreement dated the date
hereof between 446 and RM Sub.
"Koob Holdco" means PK Holdco Inc., a corporation existing under the
Act, and its successors.
5
"Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, deemed trust,
security interest, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or
nature whatsoever (including any lease or title retention agreement,
any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the PPSA or
comparable notice filing under the law of any other jurisdiction or any
option, warrant, right or privilege capable of becoming a Transfer);
other than the 446 Call Option and the Principals Holdco Call Option,
including the related security for the performance of such call options.
"Magna" means Magna International Inc., a corporation existing under
the Act, and its successors.
"Magna Class A Shares" means the class A subordinate voting shares in
the capital of Magna, appropriately adjusted for stock splits, stock
dividends, reverse stock splits, share consolidations and similar
events, and, where the context requires, includes: (i) any securities
into which such shares may be converted, reclassified, redesignated,
subdivided, consolidated or otherwise changed, (ii) any securities
received by the holders of such shares as a result of any merger,
amalgamation, reorganization, arrangement or other similar transaction
involving Magna, (iii) any securities of Magna which are received by
any one or more Persons as a stock dividend or distribution on or in
respect of such shares, and (iv) any security, other instrument or
right that is exercisable, exchangeable or convertible into, or
evidences the right to acquire, any class A subordinate voting shares
in the capital of Magna or any of the other above securities.
"Magna Class B Shares" means the class B shares in the capital of
Magna, appropriately adjusted for stock splits, stock dividends,
reverse stock splits, share consolidations and similar events, and,
where the context requires, includes: (i) any securities into which
such shares may be converted, reclassified, redesignated, subdivided,
consolidated or otherwise changed, (ii) any securities received by the
holders of such shares as a result of any merger, amalgamation,
reorganization, arrangement or other similar transaction involving
Magna, (iii) any securities of Magna which are received by any one or
more Persons as a stock dividend or distribution on or in respect of
such shares, and (iv) any security, other instrument or right that is
exercisable, exchangeable or convertible into, or evidences the right
to acquire, any class B shares in the capital of Magna.
"Magna Shares" means, collectively, the Magna Class A Shares and the
Magna Class B Shares.
"Market Value" on any particular date means the volume weighted average
trading price per Magna Class A Share on the NYSE for the ten NYSE
trading days ending on the NYSE trading day immediately prior to such
date; provided, however, that if the Magna Class A Shares are no longer
traded on the NYSE on such date, Market Value means the volume weighted
average trading price per Magna Class A Share on the TSX for the ten
TSX trading days ending on the TSX trading day immediately prior to
such date, converted from Canadian dollars into U.S. dollars as at such
date.
6
"Material Adverse Effect" means any matter, event or occurrence that
prevents or would reasonably be expected to prevent or significantly
delay the ability of a Party to perform its obligations under this
Agreement.
"Net Upside Value" of an Exiting Principal:
i) at any time when RM Sub is no longer a shareholder of Newco and
when RM Sub and 446 have settled and paid all amounts required to
be paid pursuant to the Exit Agreement, means the product
obtained when the Exiting Principal's Proportionate Interest is
multiplied by 16% multiplied by the amount, if any, by which the
Market Value of all Magna Class A Shares or Substituted Property
then held by Newco I.5 and Newco II (other than any Magna Class A
Shares or Substituted Property held by any Corresponding Holdco)
exceeds the Exit Taxes; and
ii) at any time when RM Sub is no longer a shareholder of Newco and
when RM Sub and 446 have not yet settled and paid all amounts
required to be paid pursuant to the Exit Agreement, means an
amount which will be determined immediately following the date
when RM Sub and 446 have settled and paid all amounts required to
be paid pursuant to the Exit Agreement (such date, the
"Settlement Date"), which amount shall be the product obtained
when the Exiting Principal's Proportionate Interest is multiplied
by 16% multiplied by the amount, if any, by which the Market
Value of all Magna Class A Shares or Substituted Property held by
Newco I.5 and Newco II on the Settlement Date (other than any
Magna Class A Shares or Substituted Property held by any
Corresponding Holdco) exceeds the Exit Taxes.
"Newco" means M Unicar Inc., a corporation existing under the Act, and
its successors.
"Newco Class A Shares" means the Class A Shares in the capital of
Newco, appropriately adjusted for stock splits, stock dividends,
reverse stock splits, share consolidations and similar events, and,
where the context requires, includes: (i) any securities into which
such shares may be converted, reclassified, redesignated, subdivided,
consolidated or otherwise changed, (ii) any securities received by the
holders of such shares as a result of any merger, amalgamation,
reorganization, arrangement or other similar transaction involving
Newco, (iii) any securities of Newco which are received by any one or
more Persons as a stock dividend or distribution on or in respect of
such shares, and (iv) any security, other instrument or right that is
exercisable, exchangeable or convertible into, or evidences the right
to acquire, any Class A Shares in the capital of Newco or any of the
other above securities.
"Newco Class D Shares" means the Class D Shares in the capital of
Newco, appropriately adjusted for stock splits, stock dividends,
reverse stock splits, share consolidations and similar events, and,
where the context requires, includes: (i) any securities into which
such shares may be converted, reclassified, redesignated, subdivided,
consolidated or otherwise changed, (ii) any securities received by the
holders of such shares as a result of any merger, amalgamation,
reorganization, arrangement or
7
other similar transaction involving Newco, (iii) any securities of Newco
which are received by any one or more Persons as a stock dividend or
distribution on or in respect of such shares, and (iv) any security,
other instrument or right that is exercisable, exchangeable or
convertible into, or evidences the right to acquire, any Class D Shares
in the capital of Newco or any of the other above securities.
"Newco I.5" means 2143453 Ontario Inc., a corporation existing under
the Act, and its successors.
"Newco I.5 Class A-1 Shares" means the Class A-1 Common Shares in the
capital of Newco I.5, appropriately adjusted for stock splits, stock
dividends, reverse stock splits, share consolidations and similar
events and, where the context permits, includes: (i) any securities
into which such shares may be converted, reclassified, redesignated,
subdivided, consolidated or otherwise changed, (ii) any securities
received by the holders of such shares as a result of any merger,
amalgamation, reorganization, arrangement or other similar transaction
involving Newco I.5, (iii) any securities of Newco I.5 which are
received by any one or more Persons as a stock dividend or distribution
on or in respect of such shares, and (iv) any security, other
instrument or right that is exercisable, exchangeable or convertible
into, or evidences the right to acquire, any Class A-1 Common Shares in
the capital of Newco I.5 or any of the other above securities.
"Newco I.5 Class A-2 Shares" means the Class A-2 Common Shares in the
capital of Newco I.5, appropriately adjusted for stock splits, stock
dividends, reverse stock splits, share consolidations and similar
events and, where the context permits, includes: (i) any securities
into which such shares may be converted, reclassified, redesignated,
subdivided, consolidated or otherwise changed, (ii) any securities
received by the holders of such shares as a result of any merger,
amalgamation, reorganization, arrangement or other similar transaction
involving Newco I.5, (iii) any securities of Newco I.5 which are
received by any one or more Persons as a stock dividend or distribution
on or in respect of such shares, and (iv) any security, other
instrument or right that is exercisable, exchangeable or convertible
into, or evidences the right to acquire, any Class A-2 Common Shares in
the capital of Newco I.5 or any of the other above securities.
"Newco I.5 Magna Class A Shares" means, at any time, the total number
of Magna Class A Shares then held by Newco I.5 and/ or its Subsidiaries.
"Newco I.5 Shares" means, collectively, the Newco I.5 Class A-1 Shares,
the Class B Common Shares and the Voting Preferred Shares in the
capital of Newco I.5, appropriately adjusted for stock splits, stock
dividends, reverse stock splits, share consolidations and similar
events and, where the context permits, includes: (i) any securities
into which such shares may be converted, reclassified, redesignated,
subdivided, consolidated or otherwise changed, (ii) any securities
received by the holders of such shares as a result of any merger,
amalgamation, reorganization, arrangement or other similar transaction
involving Newco I.5, (iii) any securities of Newco I.5 which are
received by any one or more Persons as a stock dividend or distribution
on or in respect of such shares, and (iv) any security, other
instrument or right that is exercisable, exchangeable or convertible
into, or evidences the right to acquire, any Class A-1 Shares,
8
Class B Common Shares or Voting Preferred Shares in the capital of Newco
I.5 or any of the other above securities.
"Newco II" means 2143455 Ontario Inc., a corporation existing under the
Act, and its successors.
"Newco II Unanimous Shareholders Agreement" means the Newco II
Unanimous Shareholders Agreement dated the date hereof among 446, RM
Sub, Principals Holdco, Newco, Newco I.5 and Newco II.
"NYSE" means the New York Stock Exchange, and its successors.
"Option Pledge Agreements" means each of the five pledge agreements
dated the date hereof between Principals Holdco and each of the
respective Corresponding Holdcos.
"Palmer Holdco" means JOP Holdco Inc., a corporation existing under the
Act, and its successors.
"Parties" means the Principals, GKP Holdco, Principal Holdco, Newco I.5
and Newco.
"Permitted Transferee" means:
(a) in the case of a Principal, any member of his immediate family or
any of his lineal descendents;
(b) one or more trusts for the benefit of one or more individuals
described in paragraph (a);
(c) an entity, directly or indirectly, wholly owned by any of the
foregoing.
"Person" includes any individual, firm, partnership, limited
partnership, joint venture, venture capital fund, limited liability
company, unlimited liability company, association, trust, trustee,
heir, executor, administrator, legal personal representative, estate,
group, body corporate, corporation, unincorporated association or
organization, Governmental Entity, syndicate or other entity, whether
or not having legal status.
"PPSA" means the Personal Property Security Act (Ontario).
"Principals" means each of Walker, Wolf, Galifi, Koob and Palmer.
"Principals Exchange Agreement" means the principals exchange agreement
dated the date hereof among Magna, Newco, Newco I.5, Principals Holdco,
GKP Holdco, VGMAG Inc., Makrist Beteiligungen GmbH, JPMAG Inc., WSA
Beteiligungs GmbH, DWMAG Inc., SW CDN Holdings Inc., each of the
Corresponding Holdcos and each of the Principals.
"Principals Holdco" means MPMAG Inc., a corporation existing under the
Act, and its successors.
9
"Principals Holdco Call Option" means the right of Principals Holdco to
purchase from each of the Corresponding Holdcos in certain
circumstances all, but not less than all, the Magna Class A Shares
owned by each Corresponding Holdco on the terms and conditions set out
in the Principals Holdco Call Option Agreements.
"Principals Holdco Call Option Agreements" means each of the five call
option agreements dated the date hereof among Principals Holdco, Newco
I.5 and each of the Corresponding Holdcos providing for the Principals
Holdco Call Option.
"Principals Holdco Shares" means the Class A-1 Common Shares in the
capital of Principals Holdco, appropriately adjusted for stock splits,
stock dividends, reverse stock splits, share consolidations and similar
events, and, where the context requires, includes: (i) any securities
into which such shares may be converted, reclassified, redesignated,
subdivided, consolidated or otherwise changed, (ii) any securities
received by the holders of such shares as a result of any merger,
amalgamation, reorganization, arrangement or other similar transaction
involving Principals Holdco, (iii) any securities of Principals Holdco
which are received by any one or more Persons as a stock dividend or
distribution on or in respect of such shares, and (iv) any security,
other instrument or right that is exercisable, exchangeable or
convertible into, or evidences the right to acquire, any Class A-1
Common Shares in the capital of Principals Holdco or any of the other
above securities.
"Proportionate Interest" of a Principal means the percentage that the
amount set out opposite that Principal's name below is of the total of
all of the following amounts for those Principals in respect of whom
the purchase and sale transactions provided for in Article 4 have not
been completed:
Walker 6.5
Wolf 6.5
Galifi 1.0
Koob 1.0
Palmer 1.0
"Purchase Price Adjustment" means (A) the Expected Taxes plus (B) the
Exiting Principal's Proportionate Interest multiplied by (i) 16% of the
liabilities of the Corresponding Holdcos (as recorded on their
financial statements) less (ii) 16% of the aggregate amount of cash and
similar assets and the fair market value of all marketable securities
(other than any Magna Shares) of the Corresponding Holdcos.
"Referable Interest", when such term is used in relation to:
(i) Walker, means 250,000 Magna Class A Shares, (ii) Wolf, means
250,000 Magna Class A Shares, (iii) Galifi, means 35,000 Magna Class A
Shares, (iv) Koob, means 35,000 Magna Class A Shares, and (v) Palmer,
means 35,000 Magna Class A Shares.
"Referable Series" in respect of a Principal means:
(a) Series 1 for Walker,
10
(b) Series 2 for Wolf,
(c) Series 3 for Galifi,
(d) Series 4 for Koob, and
(e) Series 5 for Palmer.
"Resigning Principal's Exit Percentage" means the fraction set out
below based on the time that the applicable Resigning Principal resigns
from his employment with Magna or an affiliate of Magna:
Time of Resignation Resigning Principal
Exit Percentage
Prior to and including the First 0/6
Anniversary
Following the First Anniversary and 1/6
prior to and including the Second
Anniversary
Following the Second Anniversary and 2/6
prior to and including the Third
Anniversary
Following the Third Anniversary and 3/6
prior to and including the Fourth
Anniversary
Following the Fourth Anniversary and 4/6
prior to and including the Fifth
Anniversary
Following the Fifth Anniversary and 5/6
prior to and including the Sixth
Anniversary
"Restricted Share Terms" means the restrictive terms of certain of the
Magna Class A Shares forming part of a Principal's Referable Interest
requiring forfeiture of such Magna Class A Shares in certain
circumstances.
"RM Sub" means Veleron Holding B.V., a company existing under the laws
of The Netherlands, and its successors.
"Second Anniversary" means September 20, 2009. "Sixth Anniversary"
means September 20, 2013.
"Subsidiary" of any Person means a subsidiary (as that term is defined
in the Act as now in effect) of that Person or any other Person in
which such Person has a direct or indirect controlling interest or a
joint-controlling interest, and shall be deemed to include any
partnership or joint venture in which such Person has a direct or
indirect ownership interest of more than 50 percent.
"Substituted Property" means the property acquired by Newco I.5 or
Newco II (the "Holder") in any transaction where the Holder has
disposed of or exchanged any Magna Class A Shares and acquired other
property in substitution therefor or subsequently, by
11
one or more further transactions, has effected one or more further
substitutions; and, identifiable or traceable property in any form
derived directly or indirectly from any dealing by the Holder with the
Magna Class A Shares or proceeds therefrom.
"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, harmonized sales, use, value-added, excise,
special assessment, stamp, withholding, business, franchising, real or
personal property, 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 (i) or this (ii); (iii) any liability for the payment of any amounts
of the type described in (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 (i) or (ii) as a result of any express or implied
obligation to indemnify any other Person or as a result of being a
transferee or successor in interest to any party.
"Third Anniversary" means September 20, 2010.
"Transfer" means any (i) transfer, sale, assignment, exchange, gift,
donation, mortgage, pledge, charge, encumbrance, grant of security
interest or other disposition of securities where possession, legal
title, beneficial ownership or the economic risk or return associated
with such securities passes directly or indirectly from one Person to
another or to the same Person in a different legal capacity, whether or
not for value, whether or not voluntary and however occurring, or
(ii) agreement, undertaking or commitment to effect any of the
foregoing, and "Transferred" shall be construed accordingly.
"TSX" means the Toronto Stock Exchange, and its successors.
"Walker Holdco" means DW Holdco Inc., a corporation existing under the
Business Corporations Act (Alberta), and its successors.
"Wolf Holdco" means SW Holdco Inc., a corporation existing under the
Act, and its successors.
Section 1.2 Gender and Number.
Any reference in this Agreement to gender includes all genders. Words
importing the singular number also include the plural and vice versa.
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Section 1.3 Headings and Divisions.
The division of this Agreement into Articles and Sections, the
insertion of headings and the inclusion of a table of contents are for
reference purposes only and shall not affect the interpretation of this
Agreement. Unless otherwise indicated, any reference in this Agreement to an
Article or a Section refers to the specified Article or Section of this
Agreement.
Section 1.4 Currency.
All references in this Agreement to dollars or to "$" are expressed in
United States 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
words "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". The expressions "Article", "Section" and other subdivision followed by
a number mean the specified Article, Section or other subdivision of this
Agreement.
Section 1.6 Statutory References.
A reference to a statute includes all rules and regulations made
pursuant to such statute and, unless otherwise specified, the provisions of
any statute or regulation or rule which amends, supplements or supersedes any
such statute or any such regulation or rule.
ARTICLE 2
IMPLEMENTATION OF AGREEMENT AND TERM
Section 2.1 Term of Agreement.
(1) This Agreement terminates on the earliest to occur of the date on which:
(a) the transactions contemplated by the Principals Exchange Agreement
dated the date hereof among Magna, Newco, Newco I.5 and Principals
Holdco are consummated;
(b) this Agreement is terminated by written agreement among all of the
Parties; or
(c) with respect to a Principal, the date on which such Principal's
Corresponding Holdco is no longer the owner of any Magna Class A
Shares pursuant to the terms of Article 4.
Section 2.2 Agreement to be Bound.
In order for a Transfer, directly or indirectly, (i) by a Principal of
GKP Holdco Shares, (ii) by GKP Holdco of Principals Holdco Shares, or
(iii) by either Walker or Wolf of Principals Holdco Shares, to a Permitted
Transferee to be effective, the Permitted Transferee who acquires
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such GKP Holdco Shares or Principals Holdco Shares from a Principal must
concurrently with becoming a shareholder of GKP Holdco or Principals Holdco,
as the case may be, execute and deliver to the Parties a counterpart copy of
this Agreement or a written agreement in form and substance satisfactory to
the Parties, acting reasonably, agreeing to be bound by this Agreement.
Section 2.3 Deemed Consent under Articles.
Each of the Parties (i) consents to a Transfer of GKP Holdco Shares
made, directly or indirectly, by a Principal or a Transfer of Principals
Holdco Shares by GKP Holdco, Walker or Wolf to a Permitted Transferee in
accordance with this Agreement, and (ii) agrees that this consent satisfies
any restriction on the transfer of the GKP Holdco Shares or Principals Holdco
Shares contained in the articles of incorporation or by-laws of the GKP
Holdco or Principals Holdco, as the case may be, and that no further consent
is required for any such Transfer.
ARTICLE 3
RESTRICTIONS ON TRANSFER, ACQUISITION OF ADDITIONAL MAGNA
SHARES AND CERTAIN ACTIVITIES
Section 3.1 Restrictions on Transfer by Principals.
(1) Except as expressly permitted by this Agreement:
(a) no Principal may Transfer, directly or indirectly, any interest in
his GKP Holdco Shares,
(b) neither Walker, Wolf nor GKP Holdco may Transfer, directly or
indirectly, his or its Principals Holdco Shares, and
(c) Principals Holdco may not Transfer its Newco I.5 Shares or Newco
Class A Shares.
(2) Any purported Transfer, directly or indirectly, of Principals Holdco
Shares, GKP Holdco Shares, Newco I.5 Shares or Newco Class A Shares in
violation of this Agreement is void. Each of Newco, Newco I.5, GKP
Holdco and Principals Holdco shall take such action as is required to
prevent the recording of such a purported Transfer on its share
registers.
(3) From the date of any purported Transfer, directly or indirectly, by a
Principal in violation of this Agreement, all rights of such Principal
set out in this Agreement are suspended and inoperative until the
purported Transfer is rescinded. This remedy is in addition to and not
in lieu of any other remedies that may be available to a Party.
Section 3.2 Permitted Transfers by Principals.
(1) Subject to this Section 3.2, upon twenty Business Days prior written
notice to each of the other Parties of the particulars of the proposed
Transfer, a Principal is entitled to Transfer his GKP Holdco Shares and
each of Walker and Wolf is entitled to transfer his Principals Holdco
Shares to a Permitted Transferee.
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(2) No proposed Transfer of any Principals Holdco Shares or GKP Holdco
Shares is effective until the Permitted Transferee complies with
Section 2.2. At all times after the Transfer of Principals Holdco
Shares or GKP Holdco Shares to a Permitted Transferee, the transferring
Principal shall cause the Permitted Transferee to remain a Permitted
Transferee of the transferring Principal for as long as the Permitted
Transferee has any interest in the Principals Holdco Shares or GKP
Holdco Shares.
Section 3.3 Encumbering of Shares.
No Principal may grant a Lien on or otherwise encumber his GKP Holdco
Shares nor may GKP Holdco, Walker or Wolf grant a Lien on or otherwise
encumber its Principals Holdco Shares, in any way whatsoever.
Section 3.4 Indirect Transfers.
For the purposes of Article 2 and this Article 3:
(a) an indirect Transfer by Galifi, Koob or Palmer of an interest in
his GKP Holdco Shares includes: (i) a Transfer by such Principal's
Permitted Transferee that holds GKP Holdco Shares of any of such
shares, and (ii) any Transfer of an interest in such Permitted
Transferee,
(b) an indirect Transfer by Walker or Wolf of art interest in the
Principals Holdco Shares includes: (i) a Transfer by such
Principal's Permitted Transferee that holds Principals Holdco
Shares of any of such shares, and (ii) any Transfer of an interest
in such Permitted Transferee, and
(c) a reference to a Principal's Principals Holdco Shares or GKP
Holdco Shares shall include any Principals Holdco Shares or GKP
Holdco Shares, as the case may be, held by a Permitted Transferee
of such Principal.
Section 3.5 Restrictions on Acquiring Additional Magna Shares.
(1) Subject to Section 3.5(2), each Principal (and any of his respective
affiliates, associates, and Persons acting jointly or in concert with
such Principal) and each of GKP Holdco and Principals Holdco is
prohibited from acquiring any Magna Shares.
(2) Notwithstanding Section 3.5(1), a Principal or his affiliates,
associates, and Persons acting jointly or in concert with such
Principal may:
(a) exercise any options to purchase Magna Shares granted to such
Person by Magna;
(b) acquire Magna Shares pursuant to Magna's employee, officer or
director equity compensation arrangements;
(c) purchase Magna Class A Shares, provided that such Magna Class A
Shares when added to the Magna Class A Shares then held by Newco,
the Investors, Principals Holdco and each of their affiliates and
shareholders of their affiliates (after giving
15
effect to the exercise of any options or rights to acquire Magna
Class A Shares held by them) would not exceed 20 percent in
aggregate of the issued and outstanding Magna Class A Shares; and
(d) Principals Holdco or its affiliates, associates and Persons acting
jointly or in concert with Principals Holdco may acquire Magna
Class A Shares pursuant to a Principals Holdco Call Option
Agreement or an Option Pledge Agreement.
(3) Each Principal shall (i) notify the other Parties in writing of the
particulars of any proposed trade of securities of Magna to be effected
by him, his affiliates, his associates or any Person acting jointly or
in concert with him, including the number of Magna Shares that would be
held by such parties after such trade, at least one Business Day prior
to any such trade; and (ii) provide the other Parties and the Investors
by the fifteenth day of the end of each calendar quarter in which any
such Person has acquired or disposed of any Magna Shares with a report
of the number of Magna Shares held by such Person, its affiliates, its
associates or any Person acting jointly or in concert with it or any of
its affiliates or associates.
Section 3.6 Restrictions on Business.
The sole business of Principals Holdco is to acquire and hold
securities of Newco and Newco I.5 and, directly or indirectly, Magna, to
distribute funds to its shareholders from time to time at the discretion of
the directors of Principals Holdco (and to invest on a short term basis any
funds not so distributed) and to enter into and perform its obligations under
this Agreement, the Newco II Unanimous Shareholders Agreement, any agreement
entered into by Principals Holdco with the prior written consent of Newco and
any other agreements with its shareholders with respect to the distribution
of its assets.
The sole business of GKP Holdco is to acquire and hold securities of
Principals Holdco and, directly or indirectly, Magna, and to acquire and
dispose of passive investments other than Magna Shares, and to distribute
funds to its shareholders from time to time at the discretion of the
directors of GKP Holdco (and to invest on a short term basis any funds not so
distributed) and to enter into and perform its obligations under this
Agreement, any agreement entered into by GKP Holdco with the prior written
consent of Newco and any other agreements with its shareholders with respect
to the distribution of its assets.
ARTICLE 4
PURCHASE AND SALE TRANSACTIONS
Section 4.1 Exit at Option of Principal.
In the event that a Principal is no longer employed by Magna or an
affiliate of Magna (including as a result of the death or permanent
disability of the Principal), then such Principal or such Principal's estate
or legal personal representative, as the case may be, shall have the right to
require such Principal's Corresponding Holdco to dispose of all but not less
than all of such Principal's Referable Interest in accordance with
Section 4.3.
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Section 4.2 Exit at Option of Newco.
In the event that:
(a) a Principal is no longer employed by Magna or an affiliate of
Magna and such employment relationship was terminated by Magna or
such affiliate of Magna for cause;
(b) a Principal is no longer employed by Magna or an affiliate of
Magna and such Principal is carrying on any activity which, if
carried on immediately following termination of his employment,
would have been in violation of the non-compete provisions
contained in such Principal's employment agreement with Magna or
an affiliate of Magna that was in force on the date that such
Principal ceased to be an employee of Magna or an affiliate of
Magna; or
(c) a Principal's Corresponding Holdco forfeits any of its Magna Class
A Shares in accordance with any Restricted Share Terms applicable
thereto, and such Principal does not comply within 20 Business
Days with the requirements of Section 6.2,
then Newco shall have the right to cause such Principal's Corresponding
Holdco to dispose of all but not less than all of the Principal's Referable
Interest in accordance with Section 4.3.
Section 4.3 Exit Procedures.
(1) In order to exercise the exit rights under Section 4.1 or Section 4.2,
the Party exercising its rights to cause the exit of an Exiting
Principal (or such Party's estate or legal personal representative)
shall deliver to each of the other Parties to this Agreement in writing
an irrevocable and unconditional notice (the "Exit Notice") indicating
that such Party wishes to exercise the rights granted to it pursuant to
Section 4.1 or Section 4.2, as applicable.
(2) Following receipt of an Exit Notice, each Party shall use its
commercially reasonable efforts to make or give, or cause to be made or
given, all filings with and notifications to any Governmental Entity
and obtain or cause to be obtained all Authorizations, necessary in
order to complete any transaction specified in this Section 4.3.
(3) The completion of a transaction specified in this Section 4.3 is
subject to the following conditions to be fulfilled or performed, on or
before the date of completion of such transaction:
(a) all filings, notices and the receipt of all Authorizations
necessary under Applicable Laws to permit the completion of such
transaction must be made, given or obtained; and
(b) the completion of such transaction will not result in the
violation of any Applicable Law.
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(4) On a date agreed by Newco and such Exiting Principal, or failing any
such agreement, on the fifth Business Day following the satisfaction of
all of the conditions specified in Section 4.3(3) (such date, the
"Closing Date"), the following transactions will take place in the
following order at the offices of Stikeman Elliott LLP in Toronto,
Ontario, or at such other place as Newco and such Exiting Principal may
agree to in writing:
(a) in the event that the Purchase Price Adjustment calculated as of
the Closing Date is a negative amount, Newco and Newco I.5 shall
make distributions to their shareholders in such amount as
required to cause the Purchase Price Adjustment to equal zero;
(b) the Exiting Principal's Corresponding Holdco shall sell such
Exiting Principal's Referable Interest to such Exiting Principal,
and such Exiting Principal shall acquire his Referable Interest
from his Corresponding Holdco, in consideration for:
(i) the Purchase Price Adjustment, if the Purchase Price
Adjustment calculated as of the Closing Date is a positive
amount; and
(ii) two promissory notes issued by the Exiting Principal, one
(the "Base 95% Promissory Note") in a principal amount
equal to 95% of (A) the Market Value on the Closing Date of
such Exiting Principal's Referable Interest less (B) the
Purchase Price Adjustment, and one (the "Base 5% Promissory
Note") in a principal amount equal to 5% of (A) the Market
Value on the Closing Date of such Exiting Principal's
Referable Interest less (B) the Purchase Price Adjustment;
(c) the Exiting Principal's Corresponding Holdco shall distribute both
the Base 95% Promissory Note and the Base 5% Promissory Note by
way of a dividend-in-kind to Newco I.5;
(d) in the event that the transactions described in this Section 4.3
occur at a time when RM Sub is no longer a shareholder of Newco,
then Newco II and/or Newco I.5 shall sell to the Exiting
Principal, and the Exiting Principal shall acquire from Newco II
and/or Newco I.5, such number of Magna Class A Shares having a
Market Value equal to the Exiting Principal's Net Upside Value
calculated as of the Closing Date in consideration for two
promissory notes issued by the Exiting Principal, one (the "Upside
95% Promissory Note") in a principal amount equal to 95% of such
Exiting Principal's Net Upside Value, and one (the "Upside 5%
Promissory Note") in a principal amount equal to 5% of such
Exiting Principal's Net Upside Value;
(e) Newco I.5 shall purchase for cancellation the Exiting Principal's
Referable Newco I.5 Common and Class A Preferred Shares for
purchase consideration consisting of the Base 95% Promissory Note
and, if applicable, the Upside 95% Promissory Note;
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(f) Newco I.5 shall purchase for cancellation the Exiting Principal's
Referable Newco I.5 Preferred and Class B Common Shares for
purchase consideration consisting of the Base 5% Promissory Note
and, if applicable, the Upside 5% Promissory Note; and
(g) Newco shall purchase for cancellation the Exiting Principal's
Referable Newco Shares for purchase consideration consisting of
the Base 5% Promissory Note, and if applicable, the Upside 5%
Promissory Note; and in the event that such Exiting Principal's
Referable Newco Shares consists of both Newco Class A Shares and
Newco Class D Shares, the purchase consideration shall be
allocated proportionately between such Newco Class A Shares and
Newco Class D Shares based on the numbers of such shares
outstanding.
ARTICLE 5
CONVERSION OF NEWCO AND NEWCO I.5 SHARES
Section 5.1 Effect of Resignation from Employment.
(1) If, at any time up to and including the Sixth Anniversary, a Principal
(the "Resigning Principal") resigns from his employment with Magna or
an affiliate of Magna prior to such Principal becoming an Exiting
Principal, then Principals Holdco shall, effective as of the first
Business Day after the day on which the Principal so resigns:
(a) convert that number of its Newco I.5 Class A-1 Common Shares of
the Referable Series relating to such Resigning Principal into
Newco I.5 Class A-2 Common Shares of such Referable Series on a
one-for-one basis, and
(b) convert that number of its Newco Class A Shares of the Referable
Series relating to such Resigning Principal into Newco Class D
Shares of such Referable Series on a one-for-one basis,
such that immediately after both such conversions the aggregate of the
dividends that would be paid to Principals Holdco by Newco I.5 on the
Newco I.5 Class A-1 Shares of such Referable Series and by Newco on the
Newco Class A Shares of such Referable Series if (i) Newco I.5 were to
pay dividends equal to dividends paid on the Magna Class A Shares owned
by Newco I.5 and/or its Subsidiaries, and (ii) Newco were to pay
dividends equal to the dividends paid on the 447 Magna Shares and on
the Newco I.5 Shares owned by Newco, were equal to the dividends that
would then be paid on that number of Magna Class A Shares determined in
accordance with the following:
(A*B)+C
where:
A is the Resigning Principal's Exit Percentage
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B is (x) the sum of the 447 Magna Shares and the Newco I.5 Magna
Class A Shares, multiplied by (y) either 6.5% in the case of Walker or
Wolf, or 1.0% in the case of Galifi, Koob or Palmer (z) less C
C is the Resigning Principal's Referable Interest.
(2) If: (i) Principals Holdco has converted any Newco I.5 Class A-1 Common
Shares of a particular Referable Series into Newco I.5 Class A-2 Common
Shares and has converted any Newco Class A Shares of a particular
Referable Series into Newco Class D Shares pursuant to Section 5.1(1),
(ii) thereafter any Newco Class A-1 shares or Newco Class A Shares of
another series are purchased for cancellation or converted, and
(iii) as a consequence of such purchases for cancellation or
conversions, the aggregate of the dividends that would be paid to
Principals Holdco by Newco I.5 and Newco on the assumptions described
in Section 5.1(1) are no longer valid, then Principals Holdco shall
convert or exchange such number of Newco Class A-2 Shares and/or Newco
Class D shares of the Referable Shares into Newco I.5 Class A-1 Common
Shares and/or Newco Class A Shares of the Referable Series such that
after such conversion or exchange the equations in Section 5.1(1) are
valid in relation to the relevant Resigning Principal, and Newco and
Newco I.5 shall take all necessary action to facilitate such
conversions or exchanges.
ARTICLE 6
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 6.1 Tuck Transactions.
In the event that an "Exchange" occurs (as that term is defined in the
Exchange Agreement), the Parties agree to immediately consummate the
transactions contemplated by the Principals Exchange Agreement subject to the
terms of such agreement.
Section 6.2 Treatment of Restricted Shares.
In the event that any of the Magna Class A Shares which make up a
Principal's Referable Interest are required to be forfeited in accordance
with any Restricted Share Terms, then:
(a) in the case of Walker or Wolf, such Principal shall, or shall
cause one of his Permitted Transferees to, contribute to
Principals Holdco the number of Magna Class A Shares that are
forfeited by his Corresponding Holdco;
(b) in the case of Galifi, Koob or Palmer, such Principal shall, or
shall cause one of his Permitted Transferees to, contribute to GKP
Holdco the number of Magna Class A Shares that are forfeited by
his Corresponding Holdco, which Magna Class A Shares shall be
contributed by GKP Holdco to Principals Holdco;
(c) 5% of such Magna Class A Shares shall be contributed by Principals
Holdco to Newco and 95% of such Magna Class A Shares shall be
contributed by Principals Holdco to Newco I.5;
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(d) Newco shall contribute such 5% of the Magna Class A Shares to
Newco I.5; and
(e) Newco I.5 shall contribute such Magna Class A Shares to such
Principal's Corresponding Holdco.
Section 6.3 Non-Compete.
Each Principal who is no longer employed by Magna or an affiliate of
Magna must notify in writing the other Parties immediately upon him carrying
on any activity which, if carried on immediately following the termination of
his employment, would have been in the violation of the non-compete
provisions of such Principal's employment agreement that was in force on the
date that such Principal ceased to be an employee of Magna or an affiliate of
Magna.
Section 6.4 Representations and Warranties of the Principals.
Each Principal represents and warrants to and in favour of the other
Parties as follows and acknowledge and confirm that the other Parties are
relying on such representations and warranties in entering into this
Agreement:
(a) Authority and Enforceability. This Agreement has been duly
executed and delivered and is a legal and binding obligation,
enforceable against him by the other Parties in accordance with
its terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may be granted only
in the discretion of a court of competent jurisdiction.
(b) No Violation. The execution, delivery and performance of this
Agreement does not, and will not, result in a breach or violation
of any of the provisions of or constitute a default under, or
conflict with or cause the acceleration of any obligation under
(i) a material Contract to which he is a party, (ii) any judgment,
decree, order or award of any Governmental Entity having
jurisdiction over him or (iv) any Applicable Law. No consent,
approval, order or authorization of, or declaration or filing
with, any Governmental Entity or other Person is required by him
to be obtained or made, as the case may be, in connection with the
execution and delivery of this Agreement.
(c) Title to Shares. The GKP Holdco Shares and Principals Holdco
Shares, as the case may be, described in the recitals to this
Agreement as being owned by him are owned by the Principal or his
Permitted Transferee, as the case may be, as the beneficial owner
with good title, free and clear of Liens, other than those
restrictions on Transfer, if any, contained in the articles of
incorporation of GKP Holdco or Principals Holdco, as the case may
be.
(d) Corresponding Holdcos. Such Principal's Corresponding Holdco (i)
neither owns nor holds any property or assets or any interests
therein of any nature or kind whatsoever other than its Referable
Interest, (ii) has never carried on nor currently carries on nor
intends to carry on any active business and (iii) has no
obligations or liabilities of any nature or kind whatsoever
(whether actual or contingent),
21
including indebtedness to any person, any liabilities in respect
of Taxes of any nature or kind whatsoever, or in respect of any
judgements, orders, fines, penalties, awards or decrees of any
court, tribunal or governmental, administrative or regulatory
department, commissions, board, bureau, agency or instrumentality,
domestic or foreign.
Section 6.5 Representations and Warranties of GKP Holdco.
GKP Holdco represents and warrants to and in favour of the other
Parties as follows and acknowledges that the other Parties are relying on
such representations and warranties in entering into this Agreement:
(a) Existence. It is a corporation validly incorporated and existing
under the Act and has all necessary corporate power and authority
to carry on its business as now conducted, to own or lease and
operate its assets and to execute, deliver and perform its
obligations under this Agreement.
(b) Corporate Authority and Enforceability. It has taken all necessary
corporate action to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly
executed and delivered by it and is a legal, valid and binding
obligation of it, enforceable against it in accordance with its
terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may be granted only
in the discretion of a court of competent jurisdiction.
(c) No Violation. The execution, delivery and performance of this
Agreement does not, and will not, result in a breach or violation
of any of the provisions of or constitute a default under, or
conflict with or cause the acceleration of any of its obligation
under (i) any Contract to which it is a party, (ii) any provision
of its articles of incorporation, by-laws or resolutions of its
board of directors (or any committee thereof) or shareholders or
similar organizational document, (iii) any judgment, decree, order
or award of any Governmental Entity having jurisdiction over it,
(iv) any Applicable Law or (v) any authorization held by it that
is necessary to its ownership of shares of Principals Holdco,
except with respect to clauses (i), (iii) and (iv) above, for any
such breaches, violations, defaults, conflicts or other
occurrences that have not had and are not reasonably expected to
have a Material Adverse Effect.
(d) Authorizations and Consents. There is no requirement on its part
to make any filing with or give any notice to any Governmental
Entity, or obtain any authorization, in connection with the
completion of the transactions contemplated by this Agreement,
except for any filings and notifications required by Applicable
Laws in Canada. There is no requirement on its part to obtain any
consent, approval or waiver of any Person under any contracts or
instruments to which it is or they are a party or pursuant to
which any of its or their assets may be affected in connection
with the completion of the transactions contemplated by this
Agreement.
22
(e) Title to Shares. The shares in the capital of Principals Holdco
described in this Agreement as being owned by it are owned by it
as the registered and beneficial owner with good title, free and
clear of Liens, other than those restrictions on Transfer, if any,
contained in the articles of incorporation of Principals Holdco.
Section 6.6 Representations and Warranties of Principals Holdco.
Principals Holdco represents and warrants to and in favour of the other
Parties as follows and acknowledges that the other Parties are relying on
such representations and warranties in entering into this Agreement:
(a) Existence. It is a corporation validly incorporated and existing
under the Act and has all necessary corporate power and authority
to carry on its business as now conducted, to own or lease and
operate its assets and to execute, deliver and perform its
obligations under this Agreement.
(b) Corporate Authority and Enforceability. It has taken all necessary
corporate action to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly
executed and delivered by it and is a legal, valid and binding
obligation of it, enforceable against it in accordance with its
terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may be granted only
in the discretion of a court of competent jurisdiction.
(c) No Violation. The execution, delivery and performance of this
Agreement does not, and will not, result in a breach or violation
of any of the provisions of or constitute a default under, or
conflict with or cause the acceleration of any of its obligation
under (i) any Contract to which it is a party, (ii) any provision
of its articles, by-laws or resolutions of its board of directors
(or any committee thereof) or shareholders or similar
organizational document, (iii) any judgment, decree, order or
award of any Governmental Entity having jurisdiction over it, (iv)
any Applicable Law or (v) any authorization held by it that is
necessary to its ownership of Newco I.5 Class A-1 Shares and Newco
Class A Shares, except with respect to clauses (i), (iii) and (iv)
above, for any such breaches, violations, defaults, conflicts or
other occurrences that have not had and are not reasonably
expected to have a Material Adverse Effect.
(d) Authorizations and Consents. There is no requirement on its part
(or on the part of any of its direct or indirect shareholders) to
make any filing with or give any notice to any Governmental
Entity, or obtain any authorization, in connection with the
completion of the transactions contemplated by this Agreement,
except for any filings and notifications required by Applicable
Laws in Canada. There is no requirement on its part (or on the
part of any of its direct or indirect shareholders) to obtain any
consent, approval or waiver of any Person under any contracts or
instruments to which it is or they are a party or pursuant to
which any of its or their assets may be affected in connection
with the completion of the transactions contemplated by this
Agreement.
23
(e) Title to Shares. The Newco I.5 Class A-1 Shares and Newco Class A
Shares described in this Agreement as being owned by it are owned
by Principals Holdco as the registered and beneficial owner with
good title, free and clear of Liens, other than those restrictions
on Transfer, if any, contained in the articles of incorporation of
Newco I.5 and Newco, as the case may be.
Section 6.7 Representations and Warranties of Newco I.5.
Newco I.5 represents and warrants to and in favour of the other Parties
as follows and acknowledges that the other Parties are relying on such
representations and warranties in entering into this Agreement:
(a) Existence. It is a corporation validly incorporated and existing
under the laws of Ontario and has all necessary corporate power
and authority to carry on its business as now conducted, to own or
lease and operate its assets and to execute, deliver and perform
its obligations under this Agreement.
(b) Corporate Authority and Enforceability. It has taken all necessary
corporate action to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly
executed and delivered by it and is a legal, valid and binding
obligation of it, enforceable against it in accordance with its
terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may be granted only
in the discretion of a court of competent jurisdiction.
(c) No Violation. The execution, delivery and performance of this
Agreement does not, and will not, result in a breach or violation
of any of the provisions of or constitute a default under, or
conflict with or cause the acceleration of any of its obligation
under (i) any Contract to which it is a party, (ii) any provision
of its articles of incorporation, by-laws or resolutions of its
board of directors (or any committee thereof) or shareholders or
similar organizational document, (iii) any judgment, decree, order
or award of any Governmental Entity having jurisdiction over it,
(iv) any Applicable Law or (v) any authorization held by it that
is necessary to its ownership of shares of a Corresponding Holdco,
except with respect to clauses (i), (iii) and (iv) above, for any
such breaches, violations, defaults, conflicts or other
occurrences that have not had and are not reasonably expected to
have a Material Adverse Effect.
(d) Authorizations and Consents. There is no requirement on its part
to make any filing with or give any notice to any Governmental
Entity, or obtain any authorization, in connection with the
completion of the transactions contemplated by this Agreement,
except for any filings and notifications required by Applicable
Laws in Canada. There is no requirement on its part to obtain any
consent, approval or waiver of any Person under any contracts or
instruments to which it is or they are a party or pursuant to
which any of its or their assets may be affected in connection
with the completion of the transactions contemplated by this
Agreement.
24
(e) Title to Shares. All of the issued and outstanding shares of each
of the Corresponding Holdcos are owned by Newco I.5 as the
registered and beneficial owner with good title, free and clear of
Liens, other than those restrictions on Transfer, if any,
contained in the articles of incorporation of the Corresponding
Holdcos.
Section 6.8 Survival.
The representations, warranties and covenants of the Parties contained
in this Article survive the execution and delivery of this Agreement and
continue in full force and effect with respect to each Party until it ceases
to be bound by the provisions of this Agreement.
ARTICLE 7
ARBITRATION
Section 7.1 Settling Disputes.
Any controversy or dispute arising out of or relating to this
Agreement, including its negotiation, validity, existence, breach,
termination, construction or application, or the rights, duties or
obligations of any Party to this Agreement, shall be referred to and finally
resolved by arbitration in accordance with the Arbitration Act, 1991
(Ontario) in effect on the date of this Agreement. The seat of the
arbitration shall be Toronto, Ontario and the proceedings shall be conducted
in the English language before a panel composed of three (3) arbitrators.
Each of Principals Holdco and Newco shall appoint one arbitrator and the two
(2) appointed arbitrators shall appoint a chair. Should the two
(2) arbitrators fail to agree upon a chair within 15 days of their
appointment, either of Principals Holdco and Newco may apply to the Ontario
Superior Court of Justice for the appointment of the third arbitrator.
Section 7.2 Right to Oral Discovery.
Notwithstanding anything to the contrary in the Arbitration Act, 1991
(Ontario), each Party shall have the right to conduct an oral discovery of a
representative of the other Parties.
Section 7.3 Injunctive Relief.
Nothing in this Article 8 shall preclude one of the Parties to this
Agreement from seeking injunctive relief from a court of competent
jurisdiction when deemed necessary by such court to preserve the status quo
or prevent irreparable injury pending resolution by arbitration of the actual
dispute.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Notices.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be delivered in person or transmitted
by telecopier or similar means of recorded electronic communication (with
receipt confirmed) as follows:
25
(a) to Walker at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario, L4G 7K1
Attention: Donald J. Walker
Facsimile: (905) 726-2593
(b) to Wolf at:
c/o Magna International Europe AG
Magna Strasse 1
2522 Oberwaltersdorf
Austria
Attention: Siegfried Wolf
Facsimile: +43 2253 600-1020
(c) to Galifi at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario, L4G 7K1
Attention: Vincent Galifi
Facsimile: (905) 726-2595
(d) to Koob at:
c/o Magna International Europe AG
Magna Strasse 1
2522 Oberwaltersdorf
Austria
Attention: Peter Koob
Facsimile: +43 2253 600 1020
(e) to Palmer at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario, L4G 7K1
Attention: Jeffrey O. Palmer
Facsimile: (905) 726-7455
26
(f) to Principals Holdco at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario, L4G 7K1
Attention: Jeffrey O. Palmer
Facsimile: (905) 726-7455
with a copy to each of Galifi, Koob, Walker and Wolf.
(g) to Newco at:
M Unicar Inc.
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario, L4G 7K1
Attention: Belinda Stronach
Facsimile: (905) 726-7494
with a copy to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
and to:
Miller Thomson LLP
40 King Street West
Suite 5800
Toronto, Ontario
M5H 3S1
Attention: John Campbell
Facsimile: (416) 595-8695
(h) to any other Person, at the address for such Person set out in the
counterpart copy of this Agreement or other written agreement
pursuant to which such Person agrees to be bound by this
Agreement.
27
Any such notice or other communication shall be deemed to have been given and
received on the day on which it was delivered or transmitted (or, if such day
is not a Business Day, on the next following Business Day). A Party may
change its address for service and may add "copy to" parties 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.
Section 8.2 Time of the Essence.
Time is of the essence in this Agreement.
Section 8.3 Announcements.
No public release or announcement concerning the transactions
contemplated by this Agreement shall be issued by a Party without the
approval of the other Parties (which consent shall not be unreasonably
withheld), except as such release or announcement may be required by
Applicable Laws, in which case the Party required to make the release or
announcement shall allow the other Parties reasonable time to comment on such
announcement in advance of such issuance.
Section 8.4 Third Party Beneficiaries.
The Parties intend that this Agreement will not benefit or create any
right or cause of action in favour of any Person, other than the Parties. No
Person, other than the Parties, is entitled to rely on the provisions of this
Agreement in any action, suit, proceeding, hearing or other forum. 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.
Section 8.5 No Agency or Partnership.
Nothing contained in this Agreement makes or constitutes any Party, or
any of its directors, officers or employees, the representative, agent,
principal, partner, joint venturer, employer or employee of any other Party.
Section 8.6 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 and the transactions contemplated by it. The fees and expenses
referred to in this 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 and accountants.
Section 8.7 Amendments.
This Agreement may only be amended, supplemented or otherwise modified
by written agreement signed by all of the Parties to be bound thereby.
28
Section 8.8 Waiver.
No waiver of any of the provisions of this Agreement will constitute a
waiver of any other provision (whether or not similar) nor shall any waiver
constitute a continuing waiver unless otherwise expressly provided. 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 8.9 Entire Agreement.
This Agreement 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. There are no
representations, warranties, covenants, conditions or other agreements,
express or implied, collateral, statutory or otherwise, between the Parties
in connection with the subject matter of this Agreement, except as
specifically set forth in this Agreement. The 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.
Section 8.10 Successors and Assigns.
This Agreement shall enure to the benefit of and shall be binding on,
and enforceable by, the Parties and, where the context so permits, their
respective heirs, executors, administrators, legal representatives,
successors and permitted assigns. Except as otherwise provided in this
Agreement, a Party may not assign any of its rights or obligations hereunder
without the prior written consent of the other Parties.
Section 8.11 Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any Party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in an acceptable manner
to the end that the transactions contemplated hereby are fulfilled to the
fullest extent possible.
Section 8.12 Governing Law.
This Agreement shall be construed, interpreted and enforced in
accordance with, and the respective rights and obligations of the Parties
shall be governed by, the laws of the Province of Ontario and the federal
laws of Canada applicable in that province. Subject to Article 7, each Party
unconditionally submits to the non-exclusive jurisdiction of the courts of
the Province of Ontario.
29
Section 8.13 Counterparts.
This Agreement may be executed in any number of counterparts (including
counterparts by facsimile) and all such counterparts taken together will be
deemed to constitute one and the same instrument. The Parties may rely on
copies of this Agreement which are delivered by facsimile as if such copies
were originals.
30
IN WITNESS WHEREOF the Parties have executed this Principals Agreement.
_____________________________ _____________________________________
Witness Donald J. Walker
_____________________________ _____________________________________
Witness Siegfried Wolf
_____________________________ _____________________________________
Witness Vincent J. Galifi
_____________________________ _____________________________________
Witness Peter Koob
_____________________________ _____________________________________
Witness Jeffrey O. Palmer
GKP HOLDINGS INC.
By:
------------------------------
Authorized Signing Officer
MPMAG HOLDINGS INC.
By:
------------------------------
Authorized Signing Officer
IN WITNESS WHEREOF the Parties have executed this Principals Agreement.
_____________________________ _____________________________________
Witness Donald J. Walker
_____________________________ _____________________________________
Witness Siegfried Wolf
_____________________________ _____________________________________
Witness Vincent J. Galifi
_____________________________ _____________________________________
Witness Peter Koob
_____________________________ _____________________________________
Witness Jeffrey O. Palmer
GKP HOLDINGS INC.
By:
------------------------------
Authorized Signing Officer
MPMAG HOLDINGS INC.
By:
------------------------------
Authorized Signing Officer
IN WITNESS WHEREOF the Parties have executed this Principals Agreement.
_____________________________ _____________________________________
Witness Donald J. Walker
_____________________________ _____________________________________
Witness Siegfried Wolf
_____________________________ _____________________________________
Witness Vincent J. Galifi
_____________________________ _____________________________________
Witness Peter Koob
_____________________________ _____________________________________
Witness Jeffrey O. Palmer
GKP HOLDINGS INC.
By:
------------------------------
Authorized Signing Officer
MPMAG HOLDINGS INC.
By:
------------------------------
Authorized Signing Officer
IN WITNESS WHEREOF the Parties have executed this Principals Agreement.
_____________________________ _____________________________________
Witness Donald J. Walker
_____________________________ _____________________________________
Witness Siegfried Wolf
_____________________________ _____________________________________
Witness Vincent J. Galifi
_____________________________ _____________________________________
Witness Peter Koob
_____________________________ _____________________________________
Witness Jeffrey O. Palmer
GKP HOLDINGS INC.
By:
------------------------------
Authorized Signing Officer
MPMAG HOLDINGS INC.
By:
------------------------------
Authorized Signing Officer
IN WITNESS WHEREOF the Parties have executed this Principals Agreement.
_____________________________ _____________________________________
Witness Donald J. Walker
_____________________________ _____________________________________
Witness Siegfried Wolf
_____________________________ _____________________________________
Witness Vincent J. Galifi
_____________________________ _____________________________________
Witness Peter Koob
_____________________________ _____________________________________
Witness Jeffrey O. Palmer
GKP HOLDINGS INC.
By:
------------------------------
Authorized Signing Officer
MPMAG HOLDINGS INC.
By:
------------------------------
Authorized Signing Officer
2143453 ONTARIO INC.
By:
------------------------------
Authorized Signing Officer
M UNICAR INC.
By:
------------------------------
Authorized Signing Officer
Exhibit C
EXECUTION VERSION
PRINCIPALS EXCHANGE AGREEMENT
Principals Exchange Agreement dated September 20, 2007 among Magna
International Inc. ("Magna"), M Unicar Inc. ("Newco"), 2143453 Ontario Inc.
("Newco I.5"), MPMAG Holdings Inc. ("Principals Holdco"), VGMAG Inc. ("VGMAG"),
Makrist Beteiligungen GmbH ("PKMAG"), JPMAG Inc. ("JPMAG"), DWMAG Inc.
("DWMAG"), WSA Beteiligungs GmbH ("SWMAG"), GKP Holdings Inc. ("GKP Holdco") SW
CDN Holdings Inc. ("SW CDN Holdco"), DW Holdco Inc. ("Walker Holdco"), SW Holdco
Inc. ("Wolf Holdco"), VG Holdco Inc. ("Galifi Holdco"), PK Holdco Inc. ("Koob
Holdco"), JOP Holdco Inc. ("Palmer Holdco"), Donald J. Walker, Siegfried Wolf,
Vincent J. Galifi, Peter Koob and Jeffrey O. Palmer.
RECITALS:
(a) Each of the Principals, Principals Holdco, GKP Holdco, Newco and
Newco I.5 are parties to a principals agreement (the "Principals
Agreement") establishing, among other things, rights and obligations
arising out of, and in connection with, the direct and indirect
ownership of shares of, Newco I.5, the Personal Holdcos and Magna;
(b) The Principals Agreement provides for the consummation of the
Principals Exchange in certain circumstances; and
(c) The Parties have entered into this Agreement to establish, among
other things, the rights and obligations arising out or, or in
connection with, the Principals Exchange.
In consideration of the above recitals, and the agreements of the Parties
contained in this Agreement and other good and valuable consideration (the
receipt and adequacy of which are acknowledged), the Parties agree as follows:
ARTICLE 1
INTERPRETATION
Section 1.1 Defined Terms.
As used in this Agreement, the following terms have the following
meanings:
"445" means 445327 Ontario Limited, a corporation existing under the Act,
and its successors.
"Act" means the Business Corporations Act (Ontario).
"Acquired Corporations" means each of Newco I.5, the Personal Holdcos,
Principals Holdco, GKP Holdco and SW CDN Holdco.
"Aggregate Voting Preferred Share Redemption Price" means the Canadian
dollar equivalent on the Exchange Date of the aggregate redemption price
of all Newco I.5 Voting Preferred Shares then held by Newco.
"Agreement" means this agreement and all schedules attached to it as
amended, modified, restated, replaced or supplemented from time to time.
"Applicable Laws" means all applicable federal, provincial, state,
municipal and local statutes, laws, by-laws, regulations, ordinances,
orders, enactment, directives and rules and all injunctions, decisions,
directives, judgments and orders of any Governmental Entity having
jurisdiction in respect of a particular matter and all amendments thereto
and which have the force of law.
"Business Day" means any day of the year, other than a Saturday, Sunday or
day observed as a statutory holiday in Toronto, Ontario.
"Contract" means any agreement, contract, lease, licence, permit,
franchise, purchase order, commitment, engagement, option, indenture,
mortgage, deed, instrument or other legally binding obligation, whether
written, oral or implied.
"DWMAG" means DWMAG Inc., a corporation existing under the Business
Corporations Act (Alberta), and its successors.
"DWMAG's Proportionate Share" means the number of shares of Principals
Holdco owned on the Exchange Date by DWMAG divided by the total number of
shares of Principals Holdco issued and outstanding on the Exchange Date.
"Exchange" has the meaning set out in the Exchange Agreement.
"Exchange Agreement" means the exchange agreement dated the date hereof
among Magna, RM Sub, 445, Newco I.5 and Newco II.
"Exchange Date" means the date on which the Exchange Time occurs.
"Exchange Time" means the time at which the Principals Exchange is
effected.
"Galifi Holdco" means VG Holdco Inc., a corporation existing under the
Act, and its successors.
"GKP Holdco Class A-1 Shares" means the Class A-1 Shares in the capital of
GKP Holdco, appropriately adjusted for stock splits, stock dividends,
reverse
stock splits, share consolidations and similar events and, where the
context permits, includes: (i) any securities into which such shares may
be converted, reclassified, redesignated, subdivided, consolidated or
otherwise changed, (ii) any securities received by the holders of such
shares as a result of any merger, amalgamation, reorganization,
arrangement or other similar transaction involving GKP Holdco, (iii) any
securities of GKP Holdco which are received by any one or more Persons as
a stock dividend or distribution on or in respect of such shares, and (iv)
any security, other instrument or right that is exercisable, exchangeable
or convertible into, or evidences the right to acquire, any Class A-1
Shares in the capital of GKP Holdco or any of the other above securities.
"GKP Holdco Class A-2 Shares" means the Class A-2 Shares in the capital of
GKP Holdco, appropriately adjusted for stock splits, stock dividends,
reverse stock splits, share consolidations and similar events and, where
the context permits, includes: (i) any securities into which such shares
may be converted, reclassified, redesignated, subdivided, consolidated or
otherwise changed, (ii) any securities received by the holders of such
shares as a result of any merger, amalgamation, reorganization,
arrangement or other similar transaction involving GKP Holdco, (iii) any
securities of GKP Holdco which are received by any one or more Persons as
a stock dividend or distribution on or in respect of such shares, and (iv)
any security, other instrument or right (other than GKP Holdco Class A-1
Shares) that is exercisable, exchangeable or convertible into, or
evidences the right to acquire, any Class A-2 Shares in the capital of GKP
Holdco or any of the other above securities.
"GKP Holdco" means GKP Holdings Inc., a corporation existing under the
Act, and its successors.
"GKP Holdco Value" means the aggregate Market Value on the Exchange Date
of all Magna Class A Shares owned on the Exchange Date by GKP Holdco plus
GKP Holdco's Proportionate Share multiplied by the Principals Holdco
Value.
"GKP Holdco's Proportionate Share" means the number of shares of
Principals Holdco owned by GKP Holdco on the Exchange Date divided by the
total number of shares of Principals Holdco issued and outstanding on the
Exchange Date.
"Governmental Entity" means any (i) multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitrator or arbitral
body, commission, board, bureau or agency, domestic or foreign, including
the Ontario Securities Commission, the Autorite des marches financiers du
Quebec and the United States Securities and Exchange Commission, (ii)
self-regulatory organization or stock exchange, including the TSX and the
NYSE, (iii) subdivision, agent, commission, board, or authority of any of
the foregoing, or (iv) quasi-governmental or private body exercising any
regulatory, expropriation or taxing authority under or for the account of
any of the foregoing.
"JPMAG" means JPMAG Inc., a corporation existing under the Act, and its
successors.
"JPMAG's Proportionate Share" means the number of shares of GKP Holdco
owned on the Exchange Date by JPMAG divided by the total number of shares
of GKP Holdco issued and outstanding on the Exchange Date.
"Koob Holdco" means PK Holdco Inc., a corporation existing under the Act,
and its successors.
"Magna Class A Shares" means the class A subordinate voting shares in the
capital of Magna, appropriately adjusted for stock splits, stock
dividends, reverse stock splits, share consolidations and similar events,
and, where the context requires, includes: (i) any securities into which
such shares may be converted, reclassified, redesignated, subdivided,
consolidated or otherwise changed, (ii) any securities received by the
holders of such shares as a result of any merger, amalgamation,
reorganization, arrangement or other similar transaction involving Magna,
(iii) any securities of Magna which are received by any one or more
Persons as a stock dividend or distribution on or in respect of such
shares, and (iv) any security, other instrument or right that is
exercisable, exchangeable or convertible into, or evidences the right to
acquire, any class A subordinate voting shares in the capital of Magna or
any of the other above securities.
"Magna Group" means Magna and its Subsidiaries, taken as a whole.
"Market Value" on any particular date means the volume weighted average
trading price per Magna Class A Share on the NYSE for the ten NYSE trading
days ending on the NYSE trading day immediately prior to such date;
provided, however, that if the Magna Class A Shares are no longer traded
on the NYSE on such date, Market Value means the volume weighted average
trading price per Magna Class A Share on the TSX for the ten TSX trading
days ending on the TSX trading day immediately prior to such date,
converted from Canadian dollars into U.S. dollars as at such date.
"Material Adverse Effect" means any matter, event or occurrence that
prevents or would reasonably be expected to prevent or significantly delay
the ability of a Party to perform its obligations under this Agreement.
"Newco" means M Unicar Inc., a corporation existing under the Act, and its
successors.
"Newco Class A Shares" means the Class A Shares in the capital of Newco,
appropriately adjusted for stock splits, stock dividends, reverse stock
splits, share consolidations and similar events and, where the context
permits, includes: (i) any securities into which such shares may be
converted, reclassified, redesignated, subdivided, consolidated or
otherwise changed, (ii) any securities received by the holders of such
shares as a result of any merger, amalgamation, reorganization,
arrangement or other similar transaction involving Newco, (iii) any
securities of Newco which are received by any one or more Persons as a
stock dividend or distribution on or in respect of such shares, and (iv)
any security, other instrument or right that is exercisable, exchangeable
or convertible into, or evidences the right to acquire, any Class A Shares
in the capital of Newco or any of the other above securities.
"Newco Class D Shares" means the Class D Shares in the capital of Newco,
appropriately adjusted for stock splits, stock dividends, reverse stock
splits, share consolidations and similar events and, where the context
permits, includes: (i) any securities into which such shares may be
converted, reclassified, redesignated, subdivided, consolidated or
otherwise changed, (ii) any securities received by the holders of such
shares as a result of any merger, amalgamation, reorganization,
arrangement or other similar transaction involving Newco, (iii) any
securities of Newco which are received by any one or more Persons as a
stock dividend or distribution on or in respect of such shares, and (iv)
any security, other instrument or right that is exercisable, exchangeable
or convertible into, or evidences the right to acquire, any Class D Shares
in the capital of Newco or any of the other above securities.
"Newco I.5" means 2143453 Ontario Inc., a corporation existing under the
Act, and its successors.
"Newco I.5 Class A-1 Shares" means the Class A-1 Common Shares in the
capital of Newco I.5, appropriately adjusted for stock splits, stock
dividends, reverse stock splits, share consolidations and similar events
and, where the context permits, includes: (i) any securities into which
such shares may be converted, reclassified, redesignated, subdivided,
consolidated or otherwise changed, (ii) any securities received by the
holders of such shares as a result of any merger, amalgamation,
reorganization, arrangement or other similar transaction involving Newco
I.5, (iii) any securities of Newco I.5 which are
received by any one or more Persons as a stock dividend or distribution on
or in respect of such shares, and (iv) any security, other instrument or
right that is exercisable, exchangeable or convertible into, or evidences
the right to acquire, any Class A-1 Common Shares in the capital of Newco
I.5 or any of the other above securities.
"Newco I.5 Class A-2 Shares" means the Class A-1 Common Shares in the
capital of Newco I.5, appropriately adjusted for stock splits, stock
dividends, reverse stock splits, share consolidations and similar events
and, where the context permits, includes: (i) any securities into which
such shares may be converted, reclassified, redesignated, subdivided,
consolidated or otherwise changed, (ii) any securities received by the
holders of such shares as a result of any merger, amalgamation,
reorganization, arrangement or other similar transaction involving Newco
I.5, (iii) any securities of Newco I.5 which are received by any one or
more Persons as a stock dividend or distribution on or in respect of such
shares, and (iv) any security, other instrument or right (other than Newco
I.5 Class A-1 Shares) that is exercisable, exchangeable or convertible
into, or evidences the right to acquire, any Class A-2 Common Shares in
the capital of Newco I.5 or any of the other above securities.
"Newco I.5 Class A Preferred Shares" means the Class A Preferred Shares in
the capital of Newco I.5, appropriately adjusted for stock splits, stock
dividends, reverse stock splits, share consolidations and similar events
and, where the context permits, includes: (i) any securities into which
such shares may be converted, reclassified, redesignated, subdivided,
consolidated or otherwise changed, (ii) any securities received by the
holders of such shares as a result of any merger, amalgamation,
reorganization, arrangement or other similar transaction involving Newco
I.5, (iii) any securities of Newco I.5 which are received by any one or
more Persons as a stock dividend or distribution on or in respect of such
shares, and (iv) any security, other instrument or right that is
exercisable, exchangeable or convertible into, or evidences the right to
acquire, any Class A Preferred Shares in the capital of Newco I.5 or any
of the other above securities.
"Newco I.5 Class B Shares" means the Class B Common Shares in the capital
of Newco I.5, appropriately adjusted for stock splits, stock dividends,
reverse stock splits, share consolidations and similar events and, where
the context permits, includes: (i) any securities into which such shares
may be converted, reclassified, redesignated, subdivided, consolidated or
otherwise changed, (ii) any securities received by the holders of such
shares as a result of any merger, amalgamation, reorganization,
arrangement or other similar transaction involving Newco I.5, (iii) any
securities of Newco I.5 which are received by any one or more Persons as a
stock dividend or distribution on or in respect of such shares, and (iv)
any security, other instrument or right that is
exercisable, exchangeable or convertible into, or evidences the right to
acquire, any Class B Common Shares in the capital of Newco I.5 or any of
the other above securities.
"Newco I.5 Value" means the aggregate Market Value on the Exchange Date of
all Magna Class A Shares owned on the Exchange Date by Newco I.5 or any
Personal Holdco.
"Newco I.5 Voting Preferred Shares" means the Voting Preferred Shares in
the capital of Newco I.5, appropriately adjusted for stock splits, stock
dividends, reverse stock splits, share consolidations and similar events
and, where the context permits, includes: (i) any securities into which
such shares may be converted, reclassified, redesignated, subdivided,
consolidated or otherwise changed, (ii) any securities received by the
holders of such shares as a result of any merger, amalgamation,
reorganization, arrangement or other similar transaction involving Newco
I.5, (iii) any securities of Newco I.5 which are received by any one or
more Persons as a stock dividend or distribution on or in respect of such
shares, and (iv) any security, other instrument or right that is
exercisable, exchangeable or convertible into, or evidences the right to
acquire, any Voting Preferred Shares in the capital of Newco I.5 or any of
the other above securities.
"Newco's Proportionate Share" means the Aggregate Voting Preferred Share
Redemption Price plus the amount determined by the following formula:
(A/B) x (Newco I.5 Value - Aggregate Voting Preferred Share Redemption
Price)
Where:
A = the number of Newco I.5 Class B Shares held by Newco on the
Exchange Date; and
B = the aggregate number of Newco I.5 Class B Shares, Newco I.5
Class A-1 Shares and Newco I.5 Class A-2 Shares issued and
outstanding on the Exchange Date.
"Newco II" means 2143455 Ontario Inc., a corporation existing under the
Act, and its successors.
"NYSE" means the New York Stock Exchange, and its successors.
"Palmer Holdco" means JOP Holdco Inc., a corporation existing under the
Act, and its successors.
"Party" means a signatory to this Agreement.
"Person" includes any individual, firm, partnership, limited partnership,
joint venture, venture capital fund, limited liability company, unlimited
liability company, association, trust, trustee, heir, executor,
administrator, legal personal representative, estate, group, body
corporate, corporation, unincorporated association or organization,
Governmental Entity, syndicate or other entity, whether or not having
legal status.
"Personal Holdcos" means, collectively, Walker Holdco, Wolf Holdco, Galifi
Holdco, Koob Holdco and Palmer Holdco, each a corporation existing under
the Act, all of the issued and outstanding shares of which are owned by
Newco I.5.
"PKMAG" means Makrist Beteiligungen GmbH, a corporation existing under the
laws of Austria, and its successors.
"PKMAG's Proportionate Share" means the number of shares of GKP Holdco
owned on the Exchange Date by PKMAG divided by the total number of shares
of GKP Holdco issued and outstanding on the Exchange Date.
"Principals" means, collectively, Donald J. Walker, Siegfried Wolf,
Vincent J. Galifi, Peter Koob and Jeffrey O. Palmer.
"Principals Agreement" has the meaning specified in the recitals.
"Principals Exchange" has the meaning set out in Section 2.2.
"Principals Holdco" means MPMAG Holdings Inc., a corporation existing
under the Act, and its successors.
"Principals Holdco Class A-1 Shares" means the Class A-1 Common Shares in
the capital of Principals Holdco, appropriately adjusted for stock splits,
stock dividends, reverse stock splits, share consolidations and similar
events and, where the context permits, includes: (i) any securities into
which such shares may be converted, reclassified, redesignated,
subdivided, consolidated or otherwise changed, (ii) any securities
received by the holders of such shares as a result of any merger,
amalgamation, reorganization, arrangement or other similar transaction
involving Principals Holdco, (iii) any securities of Principals Holdco
which are received by any one or more Persons as a stock dividend or
distribution on or in respect of such shares, and (iv) any security, other
instrument or right that is exercisable, exchangeable or convertible into,
or evidences the right to acquire, any Class A-1 Common Shares in the
capital of Principals Holdco or any of the other above securities.
"Principals Holdco Class A-2 Shares" means the Class A-2 Common Shares in
the capital of Principals Holdco, appropriately adjusted for stock splits,
stock dividends, reverse stock splits, share consolidations and similar
events and, where the context permits, includes: (i) any securities into
which such shares may be converted, reclassified, redesignated,
subdivided, consolidated or otherwise changed, (ii) any securities
received by the holders of such shares as a result of any merger,
amalgamation, reorganization, arrangement or other similar transaction
involving Principals Holdco, (iii) any securities of Principals Holdco
which are received by any one or more Persons as a stock dividend or
distribution on or in respect of such shares, and (iv) any security, other
instrument or right (other than Principals Holdco Class A-1 Shares) that
is exercisable, exchangeable or convertible into, or evidences the right
to acquire, any Class A-2 Common Shares in the capital of Principals
Holdco or any of the other above securities.
"Principals Holdco Value" means the aggregate Market Value on the Exchange
Date of all Magna Class A Shares owned on the Exchange Date by Principals
Holdco plus Principals Holdco's Proportionate Share multiplied by the
Newco I.5 Value.
"Principals Holdco's Proportionate Share" means the amount determined by
the following formula:
(A/B) x (Newco I.5 Value - Aggregate Voting Preferred Share Redemption
Price)
Where:
A = the number of Newco I.5 Class A-1 Shares and Newco I.5 Class A-2
Shares held by Principals Holdco on the Exchange Date; and
B = the aggregate number of Newco I.5 Class B Shares, Newco I.5
Class A-1 Shares and Newco I.5 Class A-2 Shares issued and
outstanding on the Exchange Date.
"Principals Parentcos" means each of PKMAG, JPMAG, VGMAG, DWMAG and SWMAG.
"Referable Interest", when such term is used in relation to: (i) Donald J.
Walker and DWMAG, means 250,000 Magna Class A Shares held by Walker
Holdco, (ii) Siegfried Wolf and SWMAG, means 250,000 Magna Class A Shares
held by Wolf Holdco , (iii) Vincent J. Galifi and VGMAG, means 35,000
Magna Class A Shares held by Galifi Holdco, (iv) Peter Koob and PKMAG,
means 35,000 Magna Class A Shares held by Koob Holdco, and (v) Jeffrey O.
Palmer and JPMAG, means 35,000 Magna Class A Shares held by Palmer Holdco.
"Regulatory Approvals" means those rulings, consents, orders, exemptions,
permits, waivers, authorizations, agreements, certificates, clearances and
other approvals (including the lapse, without objection, of a prescribed
time under a statute or regulation that provides that a transaction may
only be implemented if a prescribed time lapses following the giving of
notice without an objection being made) of any Governmental Entity that
are necessary in connection with the Principals Exchange.
"Restricted Share Terms" means the restrictive terms applicable to the
Magna Class A Shares forming all or part of a Principal's Referable
Interest which terms require the forfeiture of such Magna Class A Shares
in certain circumstances.
"RM" means Open Joint Stock Company Russian Machines, a company existing
under the laws of Russia, and its successors.
"RM Sub" means Veleron Holding B.V., a company existing under the laws of
The Netherlands, and its successors.
"Special Committee" means the special committee of Magna's board of
directors constituted to consider and make recommendations in respect of
the transactions contemplated by the Transaction Agreement.
"Stronach Trust" means certain trusts existing under the laws of the
Province of Ontario, and their successors, of which Mr. Frank Stronach and
certain members of his immediate family are trustees.
"Subsidiary" means, in respect of a Party, a subsidiary (as that term is
defined in the Act as now in effect) of that Party and any other person in
which such Party has a direct or indirect controlling interest or a
joint-controlling interest, and shall be deemed to include any partnership
or joint venture in which such Party has a direct or indirect interest of
more than 50%.
"SWMAG" means WSA Beteiligungs GmbH, a corporation existing under the laws
of Austria, and its successors.
"SW CDN Holdco" means SW CDN Holdings Inc., a corporation existing under
the Act, and its successors.
"SW CDN Value" means the aggregate Market Value on the Exchange Date of
all Magna Class A Shares owned by SW CDN Holdco on the Exchange Date plus
SW CDN Holdco's Proportionate Share multiplied by the Principals Holdco
Value.
"SW CDN Holdco's Proportionate Share" means the number of shares of
Principals Holdco owned by SW CDN Holdco on the Exchange Date divided by
the total number of shares of Principals Holdco issued and outstanding on
the Exchange Date.
"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,
harmonized sales, use, value-added, excise, special assessment, stamp,
withholding, business, franchising, real or personal property, 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 (i) or this (ii); (iii) any liability for the payment of any amounts of
the type described in (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
(i) or (ii) as a result of any express or implied obligation to indemnify
any other Person or as a result of being a transferee or successor in
interest to any party.
"Tax Act" means the Income Tax Act (Canada) and the regulations made
thereunder, as now in effect and as they may be promulgated or amended
from time to time.
"Tax Returns" means all returns, declarations, remittances, information
returns, reports and other documents of every nature required to be filed
by or on behalf of an Acquired Corporation in respect any Taxes or in
respect of any other provision in any domestic or foreign federal,
provincial, municipal, state, territorial or other taxing statute.
"Transaction Agreement" means the transaction agreement dated May 10, 2007
among Magna, RM, RM Sub, 445, the Stronach Trust and each of Donald J.
Walker, Siegfried Wolf, Vince Galifi, Peter Koob and Jeffrey O. Palmer.
"TSX" means the Toronto Stock Exchange, and its successors.
"Tuck Transactions" means the transactions contemplated by this Agreement
and the winding-up of each of the Acquired Corporations into Magna.
"VGMAG" means VGMAG Inc., a corporation existing under the Act, and its
successors.
"VGMAG's Proportionate Share" means the number of shares of GKP Holdco
owned on the Exchange Date by VGMAG divided by the total number of shares
of GKP Holdco issued and outstanding on the Exchange Date.
"Walker Holdco" means DW Holdco Inc., a corporation existing under the
Act, and its successors.
"Wolf Holdco" means SW Holdco Inc., a corporation existing under the Act,
and its successors.
Section 1.2 Gender and Number.
Any reference in this Agreement to gender includes all genders. Words
importing the singular number also include the plural and vice versa.
Section 1.3 Headings and Divisions.
The division of this Agreement into Articles and Sections, the insertion
of headings and the inclusion of a table of contents are for reference purposes
only and shall not affect the interpretation of this Agreement. Unless otherwise
indicated, any reference in this Agreement to an Article or a Section refers to
the specified Article or Section of this Agreement.
Section 1.4 Statutory References.
A reference to a statute includes all rules and regulations made pursuant
to such statute and, unless otherwise specified, the provisions of any statute
or regulation or rule which amends, supplements or supersedes any such statute
or any such regulation or rule.
Section 1.5 Actions or Determinations by Magna.
Any action or determination to be taken or made by Magna hereunder shall
be made or taken by, or at the direction of, a committee of independent
directors of Magna's board of directors.
ARTICLE 2
THE PRINCIPALS EXCHANGE
Section 2.1 Condition Precedent.
If at any time after the date of this Agreement, an Exchange occurs, the
Parties shall cause the Principals Exchange to occur contemporaneous with or
immediately following an Exchange on and subject to the conditions of this
Agreement.
Section 2.2 Transactions to be Effected at the Exchange Time.
At the Exchange Time, the following transactions shall occur, and shall be
deemed to occur in the following order (the "Principals Exchange") and, for
greater certainty, none of the transactions shall occur unless the conditions
set out herein for all of the transactions are satisfied:
(a) Newco shall sell to Magna, and Magna shall acquire from Newco, all
and not less than all of the shares in the capital of Newo I.5 then
held by Newco, being Newco I.5 Class B Shares and Newco I.5 Voting
Preferred Shares (the "Newco I.5 Exchanged Shares");
(b) PKMAG, JPMAG and VGMAG shall each sell to Magna, and Magna shall
acquire from each of PKMAG, JPMAG and VGMAG, all and not less than
all of the shares of GKP Holdco then held by PKMAG, JPMAG and VGMAG,
as the case may be;
(c) DWMAG shall sell to Magna, and Magna shall acquire from DWMAG, all
and not less than all of the shares of Principals Holdco then held
by DWMAG;
(d) SWMAG shall sell to Magna, and Magna shall acquire from SWMAG, all
and not less than all of the shares of SW CDN Holdco then held by
SWMAG; and
(e) in consideration for the acquisition of the shares of Newco I.5, GKP
Holdco, Principals Holdco and SW CDN Holdco pursuant to Sections
2.2(a), (b), (c) and (d), Magna shall issue an aggregate number of
Magna Class A Shares equal to the aggregate number of Magna Class A
Shares held on the Exchange Date by the Acquired Corporations, and
the aggregate number of which Magna Class A Shares so determined
shall be allocated among Newco and the Principals Parentcos as
provided in Section 2.3.
Section 2.3 Allocation of Magna Class A Shares.
(a) Newco shall receive that number of Magna Class A Shares pursuant to
Section 2.2 with a Market Value on the Exchange Date equal to
Newco's Proportionate Share of the Newco I.5 Value.
(b) PKMAG, JPMAG and VGMAG shall receive that number of Magna Class A
Shares pursuant to Section 2.2 with a Market Value on the Exchange
Date equal to each of PKMAG's Proportionate Share, JPMAG's
Proportionate Share and VGMAG's Proportionate Share, respectively,
of the GKP Holdco Value.
(c) DWMAG shall receive that number of Magna Class A Shares pursuant to
Section 2.2 with a Market Value on the Exchange Date equal to
DWMAG's Proportionate Share of the Principals Holdco Value.
(d) SWMAG shall receive that number of Magna Class A Shares pursuant to
Section 2.2 with a Market Value on the Exchange Date equal to the SW
CDN Value.
(e) Notwithstanding Sections 2.3(a), (b), (c), and (d), the aggregate
number of Magna Class A Shares that Magna shall be obliged to issue
pursuant to Section 2.2(e) shall not exceed the aggregate number of
Magna Class A Shares held by the Acquired Corporations on the
Exchange Date.
(f) The Principals Parentcos and the Principals acknowledge and agree
with Magna that the Magna Class A Shares issued to each Principals
Parentco pursuant to Section 2.2(e) shall be subject to Restricted
Share Terms in the same proportion as the Restricted Shares Terms
(if any) applicable to the Magna Class A Shares constituting the
Principal's Referable Interest immediately prior to the Exchange
Time.
(g) On the Business Day immediately prior to the Exchange Date, Newco
and the Principals Parentcos shall jointly provide to Magna (i)
their calculation of the Newco I.5 Value, the GKP Holdco Value, the
Principals Holdco Value, the SW CDN Value, Newco's Proportionate
Share, PKMAG's Proportionate Share, VGMAG's Proportionate Share,
DWMAG's Proportionate Share, Principals Holdco's Proportionate Share
and SW CDN Holdco's Proportionate Share, together with such
supporting documents as Magna may reasonably request (the "Market
Value Calculation"), and (ii) the number of Magna Class A Shares to
be allocated among Newco and the Principals Parentcos pursuant to
Sections 2.3(a), (b), (c) and (d) (the "Allocation Calculation").
Magna may question the accuracy of the Market Value Calculation, and
Magna, Newco and the Principals Parentcos shall consult with each
other to resolve such question.
(h) Magna shall in no circumstances be liable in respect of the accuracy
or validity of the Market Value Calculation or the Allocation
Calculation given jointly by Newco and the Principals Parentcos.
(i) If the parties cannot agree on the number of Magna Class A Shares to
be issued to Newco or any Principals Parentco pursuant hereto, then
the number of Magna Class A Shares to be so issued shall be
determined by Magna's auditors at that time based on the terms of
this Agreement, which determination shall be final and binding on
the parties hereto. Each Party shall provide Magna's auditors with
whatever information they may reasonably require in this regard.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of Magna.
Magna represents and warrants to and in favour of the other Parties and
acknowledge that the other Parties are relying on such representations and
warranties in entering into this Agreement:
(a) Existence. Magna is a corporation validly existing under the Act,
and has all necessary corporate power and authority to carry on its
business as now conducted, to own or lease and operate its assets
and to execute, deliver and perform its obligations under this
Agreement.
(b) Corporate Authority and Enforceability. Magna has taken all
necessary corporate action to authorize the execution, delivery and
performance of this Agreement. Magna's board of directors has duly
authorized the execution, delivery and performance of this
Agreement, following the favourable recommendation by the Special
Committee. This Agreement has been duly executed and delivered by
Magna and is a legal, valid and binding obligation of Magna,
enforceable against Magna by each of the other Parties in accordance
with its terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may be granted only in
the discretion of a court of competent jurisdiction.
(c) No Violation. Except for Regulatory Approvals, the execution,
delivery and performance of this Agreement does not, and will not,
result in a breach or violation of any of the provisions of or
constitute a default under, or conflict with or cause the
acceleration of any obligation of any member of the Magna Group
under (i) any Magna Contract, (ii) any provision of the articles,
by-laws or resolutions of the board of directors (or any committee
thereof) or shareholders or similar organizational document of any
member of the Magna Group, (iii) any judgment, decree, order or
award of any Governmental Entity having jurisdiction over any member
of the Magna Group or (iv) any Applicable Law, except with respect
to clauses (i), (iii) and (iv) above, for any such breaches,
violations, defaults, conflicts or other occurrences that have not
had and are not reasonably expected to have a Material Adverse
Effect. Except for Regulatory Approvals, no consent, approval, order
or authorization of, or declaration or filing with, any Governmental
Entity or other person is required to be obtained or made, as the
case may be, by any member of the Magna Group in connection with the
execution and delivery of this Agreement or the consummation by
Magna of the Principals Exchange.
(d) Public Disclosure. Magna is a reporting issuer under the Securities
Act (Ontario) and has complied in all material respects with its
requirements under National Instrument 51-102 - Continuous
Disclosure and all other continuous disclosure requirements under
all Applicable Laws.
(e) Taxable Canadian Corporation. Magna is a "taxable Canadian
corporation" within the meaning of the Tax Act. As of the date of
this Agreement, the value o f the Magna Class A Shares is not
derived principally from immoveable property situated in Canada.
Section 3.2 Representations and Warranties of the Principals Parentcos and
Newco.
Each of the Principals Parentcos and Newco each represent and warrant to
and in favour of the other Parties and acknowledge that the other Parties are
relying on such representations and warranties in entering into this Agreement:
(a) Existence. It is a corporation validly existing under the Act, or
under the laws of Austria in the case of PKMAG and SWMAG, or under
the Business Corporations Act (Alberta) in the case of DWMAG, and
has all necessary corporate power and authority to carry on its
business as now conducted, to own or lease and operate its assets
and to execute, deliver and perform its obligations under this
Agreement.
(b) Corporate Authority and Enforceability. It has taken all necessary
corporate action to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly executed
and delivered by it and is a legal, valid and binding obligation
enforceable against it by each of the other Parties in accordance
with its terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may be granted only in
the discretion of a court of competent jurisdiction.
(c) No Violation. Except for Regulatory Approvals, the execution,
delivery and performance of this Agreement does not, and will not,
result in a breach or violation of any of the provisions of or
constitute a default under, or conflict with or cause the
acceleration of any obligation under (i) any Contract, (ii) any
provision of its articles, by-laws or resolution of its board of
directors (or any committee thereof) or shareholders, (iii) any
judgment, decree, order or award of any Governmental Entity having
jurisdiction over it or (iv) any Applicable Law. Except for
Regulatory Approvals, no consent, approval, order or authorization
of, or declaration or filing with, any Governmental Entity or other
person is required to be obtained or made, as the case may be, by it
in connection with the execution and delivery of this Agreement or
the consummation by it of the Principals Exchange.
(d) Residence. Each of Newco, JPMAG, VGMAG and DWMAG is not a
non-resident for purposes of the Tax Act.
Section 3.3 Representations and Warranties of the Principals Parentcos and
Newco in respect of the Acquired Corporations.
The Principal Parentcos and Newco jointly and severally represent and
warrant to and in favour of Magna in respect of each of the Acquired
Corporations in which any of the Principals Parentcos and Newco directly or
indirectly holds shares and acknowledge that Magna is relying on such
representations and warranties in entering into this Agreement:
(a) Existence. The Acquired Corporations are corporations validly
existing under the Act and have all necessary corporate power and
authority to carry on their business as now conducted, to own or
lease and operate their assets and to execute, deliver and perform
their obligations under this Agreement.
(b) Authority and Enforceability. The Acquired Corporations have taken
all necessary corporate action to authorize the execution, delivery
and performance of this Agreement. This Agreement has been duly
executed and delivered by the Acquired Corporations and is a legal,
valid and binding obligation of the Acquired Corporations,
enforceable against each of them by Magna in accordance with its
terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may be granted only in
the discretion of a court of competent jurisdiction.
(c) No Violation. Except for Regulatory Approvals, the execution,
delivery and performance of this Agreement does not, and will not,
result in a breach or violation of any of the provisions of or
constitute a default under, or conflict with or cause the
acceleration of any obligation of the Acquired Corporations under
(i) any material Contract to which they are a party, (ii) any
provision of the articles, by-laws or resolutions of their boards of
directors (or any committee thereof) or shareholders, (iii) any
judgment, decree, order or award of any Governmental Entity having
jurisdiction over them or (iv) any Applicable Law. Except for
Regulatory Approvals, no consent, approval, order or authorization
of, or declaration or filing with, any Governmental Entity or other
person is required to be obtained or made, as the case may be, by
the Acquired Corporations in connection with the execution and
delivery of this Agreement.
(d) Assets and Property. The Acquired Corporations neither own nor hold
any property or assets or any interests therein of any nature or
kind whatsoever other than (i) in the case of GKP Holdco, 3,000
Principals Holdco Class A-1 Shares, or 3,000 Principals Holdco Class
A-2 Shares into which such Principals Holdco Class A-1 Shares have
been converted, (ii) in the case of SW CDN Holdco, 6,500 Principals
Holdco Class A-1 Shares, or 6,500 Principals Holdco Class A-2 Shares
into which such Principals Holdco Class A-1 Shares have been
converted (iii) in the case of Principals Holdco, 15,200 Newco I.5
Class A-1 Shares, or 15,200 Newco I.5 Class A-2 Shares into which
such Newco I.5 Class A-1 Shares have been converted, 15,200 Newco
I.5 Class A Preferred Shares and 400 Newco Class A Shares or 400
Newco Class D Shares into which such Newco Class A Shares have been
converted, (iv) in the case of Newco I.5, all of the issued and
outstanding shares of each of the Personal Holdcos, (v) in the case
of Walker Holdco, 250,000 Magna Class A Shares, (vi) in the case of
Wolf Holdco, 250,000 Magna Class A Shares, (vii) in the case of
Galifi Holdco, 35,000 Magna Class A Shares, (viii) in the case of
Koob Holdco, 35,000 Magna Class A Shares and (ix) in the case of
Palmer Holdco, 35,000 Magna Class A Shares, and none of the Acquired
Corporations has ever carried on or currently carries on or intends
to carry on any active business.
(e) Obligations and Liabilities. Other than under this Agreement and
other agreements entered into pursuant to the Transaction Agreement
or transactions contemplated thereby, the Acquired Corporations have
no obligations or liabilities of any nature or kind whatsoever
(whether actual or contingent) including indebtedness to any person,
any liabilities in respect of Taxes of any nature or kind whatsoever
(except as permitted by Section 3.3(o)(ii)), or in respect of any
judgments, orders, fines, penalties, awards or decrees of any court,
tribunal or governmental, administrative or regulatory department,
commission, board, bureau, agency or instrumentality, domestic or
foreign.
(f) Paid-up Capital. The paid-up capital for purposes of the Tax Act in
respect of the share capital of each of the Acquired Corporations
immediately after the Exchange Time will be provided in writing to
Magna before the Exchange Time and once so provided will constitute
a representation under this Agreement.
(g) Subsidiaries. At the Exchange Time, (i) GKP Holdco and SW CDN Holdco
will have no direct subsidiaries other than Principals Holdco, (ii)
Principals Holdco will have no direct subsidiaries other than Newco
I.5 and Newco, and (iii) Newco I.5 will have no direct subsidiaries
other than the Personal Holdcos.
(h) Employees and Directors. The Acquired Corporations have no employees
and their directors and officers receive no remuneration or
compensation from the Acquired Corporations.
(i) Joint Ventures. The Acquired Corporations are not partners,
co-tenants, joint venturers or otherwise participants in any
partnership, joint venture, co-tenancy or other jointly owned
business.
(j) Claims. There are no claims, investigations, actions, suits or
proceedings commenced, pending or threatened by, against or
affecting the Acquired Corporations, whether at law or in equity in
any court or before or by any federal, provincial, municipal or
other governmental or administrative or regulatory department,
commission, board, tribunal, bureau, agency or instrumentality,
domestic or foreign.
(k) Compliance with Laws. Except for Regulatory Approvals, the Acquired
Corporations are in full compliance with all laws, rules or
regulations to which they are subject.
(l) Approvals and Authorizations. Other than Regulatory Approvals, no
consent, waiver, approval, authorization, exemption, registration,
license or declaration of or by, or filing with, or notification to
any governmental, administrative or regulatory authority or other
person is required to be made or obtained by the Acquired
Corporations in connection with (i) the execution, delivery,
performance or enforcement of this Agreement or (ii) the
consummation of any transactions provided for herein.
(m) Books and Records. The books and records of the Acquired
Corporations fairly and correctly set out and disclose in all
respects, in accordance with generally accepted accounting
principles in Canada consistently applied, the financial position of
the Acquired Corporations as of the date thereof and all financial
transactions of the Acquired Corporations have been accurately
recorded in such books and records.
(n) Minute Books and Corporate Records. The corporate records and minute
books of the Acquired Corporations contain complete and accurate
minutes of all meetings and resolutions of the directors (including
any committee thereof) and shareholders of the Acquired Corporations
held since their incorporation and all such meetings were duly
called and held and the share certificate books, register of
shareholders, register of transfers and register of directors and
officers of the Acquired Corporations are complete and accurate.
(o) Tax Matters. With respect to tax matters:
(i) each Acquired Corporations has duly and in a timely manner
filed all Tax Returns required to be filed by it on or before
the Exchange Date with the appropriate taxing or other
Governmental Entity or agency or if not timely filed has paid
any penalties imposed as a result thereof and has duly,
completely and correctly reported all income and all other
amounts and information required to be reported thereon;
(ii) each Acquired Corporation has duly and in a timely manner paid
all Taxes, including all instalments on account of Taxes for
the current year, that are due and payable by it and has
either paid, or made provision for payment in a manner
reasonably
acceptable to Magna, for Taxes that are not yet due and
payable and that relate to periods ending on or prior to the
Exchange Date or any period that includes the Exchange Date;
(iii) there are no actions, suits, proceedings, investigations,
audits, assessments or reassessments or claims now pending or
threatened against any Acquired Corporation in respect of any
Taxes and there are no matters under discussion, audit or
appeal with any taxing or other governmental authority or
agency relating to Taxes;
(iv) none of the Acquired Corporations has requested or entered
into any agreement or other arrangement or executed any waiver
providing for, an extension of time within which: (A) to file
any Tax Return covering any Taxes for which the Acquired
Corporation is or may be liable, (B) to file any elections or
designations relating to Taxes for which the Acquired
Corporation is or may be liable, (C) the Acquired Corporation
is required to pay or remit any Taxes or amounts on account of
Taxes, or (D) any taxing or other governmental authority or
agency may assess or collect Taxes for which the Acquired
Corporation is or may be liable;
(v) to the extent any Acquired Corporation has paid or credited
any amount to or for the account or benefit of any person,
including, without limitation, any of its directors or any
non-resident person, that Acquired Corporation has deducted
and remitted to the applicable governmental authority or
agency any Taxes or other deductions required to be withheld
therefrom under any applicable law, rule or regulation;
(vi) each Acquired Corporation is a resident of Canada and a
taxable Canadian corporation for the purposes of the Tax Act
and is not a non-resident owned investment corporation for the
purposes of the Tax Act;
(vii) no amount has been deducted under paragraph 53(2)(g.1) of the
Tax Act in computing the adjusted cost base to the
shareholders of any Acquired Corporation of the shares of that
Acquired Corporation, at any time; and
(viii) no Acquired Corporation has been party to any transactions
with any person (other than Magna) with whom it does not deal
at arm's length within the meaning of the Tax Act which would
result in any liability of the Acquired Corporation for Taxes
under the provisions of section 160 of the Tax Act or an
analogous provision of any applicable provincial legislation.
(p) Share Capital. The authorized share capital of:
(i) GKP Holdco consists of an unlimited number of GKP Holdco Class
A-1 Shares and an unlimited number of GKP Holdco Class A-2
Shares, of which (x) 1,000 GKP Holdco Class A-1 Shares, Series
3, (y) 1,000 GKP Holdco Class A-1 Shares, Series 4, and (z)
1,000 GKP Holdco Class A-1 Shares, Series 5 and no GKP Holdco
Class A-2 Shares are issued and outstanding as of the date of
this Agreement and at the Exchange Time such GKP Holdco Class
A-1 Shares and GKP Holdco Class A-2 Shares into which such GKP
Holdco Class A-1 Shares have been converted will constitute
all of the issued and outstanding share capital of GKP Holdco;
(ii) SW CDN Holdco consists of an unlimited number of common shares
of which 100 common shares are issued and outstanding as of
the date of this Agreement and at the Exchange Time such
shares will constitute all of the issued and outstanding share
capital of SW CDN Holdco;
(iii) Principals Holdco consists of an unlimited number of
Principals Holdco Class A-1 Shares and an unlimited number of
Principals Holdco Class A-2 Shares, of which (v) 6,500
Principals Holdco Class A-1 Shares, Series 1, (w) 6,500
Principals Holdco Class A-1 Shares, Series 2, (x) 1,000
Principals Holdco Class A-1 Shares, Series 3, (y) 1,000
Principals Holdco Class A-1 Shares, Series 4, and (z) 1,000
Principals Holdco Class A-1 Shares, Series 5 and no Principals
Holdco Class A-2 Shares are issued and outstanding as of the
date of this Agreement and at the Exchange Time such
Principals Holdco Class A-1 Shares and any Principals Holdco
Class A-2 Shares into which such Principals Holdco Class A-1
Shares have been converted will constitute all of the issued
and outstanding share capital of Principals Holdco and all
such shares will be owned by GKP Holdco, SW CDN Holdco and
DWMAG;
(iv) Newco I.5 consists of 15,200 Newco I.5 Class A-1 Shares,
15,200 Newco I.5 Class A-2 Shares, 84,800 Newco I.5 Class B
Shares, 15,200 Newco I.5 Class A Preferred Shares and 84,800
Newco I.5 Voting Preferred Shares, of which (i) 6,175 Newco
I.5 Class A-1 Shares, Series 1, (i) 6,175 Newco I.5 Class A-1,
Series 2, (iii) 950 Class A-1 Shares, Series 3, (iv) 950 Newco
I.5 Class A-1, Series 4, (v) 950 Newco I.5 Class A-1, Series
5, (vi) no Newco I.5 Class A-2 Shares, (vi) 6,175 Newco I.5
Class A Preferred Shares, Series 1, (vii) 6,175 Newco I.5
Class A Preferred Shares, Series 2, (viii) 950 Newco I.5 Class
A Preferred Shares, Series 3, (ix) 950 Newco I.5 Class A
Preferred Shares, Series 4, (x) 950 Newco I.5 Class A
Preferred Shares, Series 5, (xi) 84,800 Newco I.5 Class B
Shares and (xii) 84,800 Newco I.5 Voting Preferred Shares are
issued and outstanding as of the date of this Agreement and at
the Exchange Time such shares in addition to any shares issued
or less any shares redeemed or cancelled pursuant to the
Principals Agreement will constitute all of the issued and
outstanding share capital of Newco I.5 and all such shares
will be owned by Newco or Principals Holdco;
(v) Walker Holdco consists of an unlimited number of common
shares, of which 100 common shares are issued and outstanding
as of the date of this Agreement and at the Exchange Time such
shares will constitute all of the issued and outstanding share
capital of Walker Holdco and all such shares will be owned by
Newco I.5;
(vi) Wolf Holdco consists of an unlimited number of common shares,
of which 100 common shares are issued and outstanding as of
the date of this Agreement and at the Exchange Time such
shares will constitute all of the issued and outstanding share
capital of Wolf Holdco and all such shares will be owned by
Newco I.5;
(vii) Galifi Holdco consists of an unlimited number of common
shares, of which 100 common shares are issued and outstanding
as of the date of this Agreement and at the Exchange Time such
shares will constitute all of the issued and outstanding share
capital of Galifi Holdco and all such shares will be owned by
Newco I.5;
(viii) Koob Holdco consists of an unlimited number of common shares,
of which 100 common shares are issued and outstanding as of
the date of this Agreement and at the Exchange Time such
shares will constitute all of the issued and outstanding share
capital of Koob Holdco and all such shares will be owned by
Newco I.5; and
(ix) Palmer Holdco consists of an unlimited number of common
shares, of which 100 common shares are issued and outstanding
as of the date of this Agreement and at the Exchange Time such
shares will constitute all of the issued and outstanding share
capital of Koob Holdco and all such shares will be owned by
Newco I.5.
Except for such shares, there are no shares of capital stock or
other equity securities of the Acquired Corporations issued,
reserved for issuance or outstanding. Other than shares issuable by
Newco I.5 pursuant to the Principals Agreement, there are no
options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments (pre-emptive, contractual or
otherwise) obligating the Acquired Corporations to issue or sell any
shares of the Acquired Corporations or securities or obligations of
any kind convertible into or exchangeable for any shares or other
securities of the Acquired Corporations.
Section 3.4 Representation of Principals.
Each Principal represents to the other Parties that he is entering into
this Agreement for business purposes.
Section 3.5 Survival of Representations and Warranties.
Notwithstanding the Limitations Act, 2000 (Ontario), all representations
and warranties contained in this Agreement and in all certificates delivered
pursuant to this Agreement shall survive until the date that is 15 months after
the Exchange Date, except that the representations and warranties contained in
Sections 3.3(f) and 3.3(o) shall survive until the date that is 60 days after
the expiration of the period during which an assessment or reassessment for
Taxes may be issued in respect of the taxation year or reporting period to which
the relevant representation or warranty relates.
ARTICLE 4
COVENANTS
Section 4.1 Covenants of the Parties.
Without in any way limiting the obligations of the Parties under this
Agreement, except as contemplated hereby:
(a) Availability of Documents. Commencing on the date of this Agreement,
the Parties other than Magna (the "Non-Magna Parties") shall, upon
prior written notice by Magna, make available to Magna and its
representatives all minute books, share certificate books, share
registers, books of account, accounting records, corporate documents
and all other books or records, documents, information or data
relating to the Acquired Corporations (collectively the "Acquired
Corporation Documents"). Until the Exchange Time, Magna agrees that,
except as authorized by the Non-Magna Parties or as required by
Applicable Law, Magna and any of its representatives will not
disclose to any third party any confidential information or data
relating to the Acquired Corporations discovered by Magna or its
respective representatives as a result of their review of the
Acquired Corporations Documents.
(b) Compliance with Laws. The Non-Magna Parties shall comply with all
applicable securities and other laws of Canada and the provinces in
connection with the transfer of the shares of the Acquired
Corporations to Magna pursuant hereto.
(c) Directors and Officers. The Non-Magna Parties shall cause all
officers and directors of the Acquired Corporations to resign, and
all such officers and directors shall deliver a release in form and
substance reasonably satisfactory to Magna in respect of any
liability or obligation of the relevant Acquired Corporation, in
each case effective as at the Exchange Date, and Magna shall cause
the requisite filings in respect thereof to be made with Industry
Canada on a timely basis.
(d) Tax Returns. The Non-Magna Parties agree that they will cause the
Acquired Corporations, at their own cost and expense, to duly and
timely file all Tax Returns not yet filed for all periods ending on
or prior to the Exchange Date, that such returns as filed will be
complete and correct, that, prior to filing, such returns will be
provided to Magna for its approval as to form and substance, such
approval not to be unreasonably withheld, that all Taxes payable by
any Acquired Corporation in respect of such periods shall be paid by
it on a timely basis, that copies of all returns filed will be
provided to Magna forthwith after they have been filed and that in
any event all such Tax Returns will be filed no later than the date
on which they are required to be filed in accordance with the
provisions of the Tax Act or other applicable law and all Taxes
payable pursuant thereto will be paid, or provision for payment in a
manner reasonably acceptable to Magna will be made.
(e) Notice of Certain Events. Each of the Parties hereto shall promptly
advise the other Parties in writing if it becomes aware of:
(i) any event occurring after the date of this Agreement that
would reasonably be expected to render any of the
representations and warranties given by it in this Agreement
untrue or inaccurate if made on or as of the date of the
Exchange Time; or
(ii) any matter, event or occurrence (including a change in the tax
treatment of the Principals Exchange) that would reasonably be
expected to impede, interfere with, prevent or materially
delay the consummation of a Principals Exchange.
(f) Satisfaction of Conditions. Each of the Parties hereto shall use its
commercially reasonable efforts to satisfy the conditions contained
in Article 5 and shall take such commercially reasonable measures as
are lawful and within its power or control to effect the Exchange in
accordance with the terms of this Agreement.
(g) Tax Elections.
(i) At the request of Newco or any of the Principals Parentcos
(collectively, the "Vendors" and each, a "Vendor"), Magna
shall jointly make with such Vendor one or more elections in
prescribed or approved form under subsection 85(1) of the Tax
Act and the applicable provisions of the legislation of any
other relevant jurisdiction, in respect of the Exchange of
shares pursuant hereto. For the purposes of such election or
elections, the elected amounts shall be such amounts as shall
be determined by such Vendor, in its sole and absolute
discretion, subject to compliance with Applicable Law.
(ii) The requesting Vendor shall prepare such election forms and
Magna shall execute such forms and return them to the
requesting Vendor in a timely manner.
(h) Section 116 Certificate.
(i) Each of SWMAG and PKMAG shall use reasonable commercial
efforts to deliver or cause to be delivered to Magna prior to
the Exchange Date a certificate (the "Section 116(2)
Certificate") issued by the Canadian Minister of National
Revenue (the "Minister") pursuant to subsection 116(2) of the
Tax Act with a "certificate limit" (as defined in subsection
116(2) of the Tax Act) that is not less than the Market Value
on the Exchange Date of the Magna Class A Shares to be issued
to such Vendor (the "Purchase Price").
(ii) If either SWMAG or PKMAG does not deliver or cause to be
delivered to Magna the Section 116(2) Certificate prior to the
Exchange Date or the certificate limit in any Section 116(2)
Certificate delivered to Magna is less than the Purchase Price
for such Vendor and the Exchange is effected, subject to
clause (iii) below, such Vendor acknowledges that Magna shall
be entitled to deduct and withhold from the Purchase Price an
amount equal to 25% of such Purchase Price (determined in
Canadian dollars as of the Exchange Date) (the "Withheld
Amount") on the following terms and conditions:
(A) Such Vendor shall provide Magna on or before the
Exchange Date with immediately available funds equal to
the Withheld Amount or with an irrevocable letter of
credit issued by a financial institution satisfactory to
Magna naming Magna as the beneficiary in an amount not
less than the Withheld Amount and that may be drawn down
in any circumstance in which Magna is required to remit
the Withheld Amount in accordance with subclause (C) or
(D) below (a "Replacement LC"). The cash or Replacement
LC so provided to Magna shall from that point in time
constitute the Withheld Amount. If such Vendor does not
fund the Withheld Amount as provided for above, then (i)
upon Magna receiving written direction signed by all of
the Non-Magna Parties, the Exchange Date shall be
deferred to a date not more than 365 days after the
original Exchange Date, or (ii) the other Non-Magna
Parties shall be entitled to fund the Withheld Amount,
in which case, such Vendor shall be obliged to repay the
amount so funded to the other Non-Magna Parties with
interest per annum at the prime rate quoted by the Bank
of Nova Scotia plus 2% calculated monthly not in advance
and the Magna Class A Shares to be issued to such Vendor
pursuant hereto shall be delivered to the other
Non-Magna Parties to be held as security for such
repayment obligation.
(B) Promptly upon such Vendor delivering to Magna either:
(I) The Section 116(2) Certificate with a certificate
limit not less than the Purchase Price, or
(II) a certificate issued by the Minister pursuant to
subsection 116(4) of the Tax Act in respect of the
Exchange described in Section 2.2 above (the
"Section 116(4) Certificate"),
the Withheld Amount shall be delivered to such Vendor;
(C) If neither the Section 116(2) Certificate nor the
Section 116(4) Certificate has been provided to Magna on
or before the date (the "Remittance Date") that is the
25th day after the end of the month in which the
Exchange Date occurs, Magna shall remit by the 30th day
after the end of the month in which the Exchange Date
occurs the Withheld Amount to the Receiver General for
Canada in satisfaction of Magna's obligation to withhold
and remit 25% of the Purchase Price pursuant to
subsection 116(5) of the Tax Act, unless prior to the
Remittance Date such Vendor provides written evidence to
Magna that the Minister or the Canada Revenue Agency has
acknowledged in writing that the Withheld Amount need
not be remitted at such time, (a "Comfort Letter") in
which case subclause (D) shall apply to defer the time
at which the Withheld Amount is required to be remitted;
and
(D) Where this subclause (D) applies to defer the time at
which the Withheld Amount is required to be remitted to
the Receiver General for Canada under subsection 116(5)
of the Tax Act, the provisions of this Section
4.1(h)(ii) shall continue to apply to the Withheld
Amount as if the reference in subclause (c) to the
Remittance Date and in subsection 116(5) of the Tax Act
to the date that such amount is required to be remitted
to the Receiver General for Canada were instead a
reference to the date set by the Minister or the Canada
Revenue Agency, as the case may be, pursuant to the
Comfort Letter, as the date for the remittance.
(iii) If the certificate limit of the Section 116(2) Certificate
provided to Magna is less than the Purchase Price, Magna shall
remit 25% of the difference between the certificate limit and
the Purchase Price to the Receiver General for Canada and the
balance of the Withheld Amount shall be paid forthwith to such
Vendor.
(i) Regulatory Approvals. Each of the Parties hereto shall apply for and
use all commercially reasonable efforts to obtain promptly any
Regulatory Approvals that are required for the Exchange, including
making all filings or submissions as are required to obtain all such
Regulatory Approvals and promptly filing any additional information
requested by any Governmental Entity. Each of the Parties hereto
shall promptly furnish to the other such necessary information and
reasonable assistance as the other may request in connection with
its preparation of any filing, notification or submission which is
necessary or desirable in connection with obtaining any Regulatory
Approval.
(j) Liabilities. Prior to the Exchange Time the Acquired Corporations
shall not incur any liabilities or obligations of any nature or kind
whatsoever (whether accrued, absolute, contingent, unasserted or
otherwise) other than (i) Tax liabilities incurred by the Personal
Holdcos as a result of holding Magna Class A Shares, (ii)
liabilities to pay dividends and (iii) liabilities and obligations
contemplated by the Transaction Agreement or transactions
contemplated thereby or this Agreement.
ARTICLE 5
CONDITIONS TO PRINCIPALS EXCHANGE
Section 5.1 Mutual Conditions.
The respective obligations of the Parties hereunder to consummate the
Principals Exchange are subject to the satisfaction or waiver, at or before the
Exchange Time, of the following conditions precedent, each of which may only be
waived by unanimous consent of the Parties:
(a) Exchange. An Exchange shall have occurred.
(b) No Termination. This Agreement shall not have been terminated in
accordance with its terms.
(c) Regulatory Approvals. All Regulatory Approvals shall have been
obtained or satisfied and shall not have been revoked and reasonably
satisfactory evidence of the receipt of such Regulatory Approvals
shall have been delivered to each Party.
(d) No Law. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any law, including any cease
trading or stop order with respect to the Magna Class A Shares,
which is then in effect and has the effect of making the execution,
delivery or performance of this Agreement illegal or otherwise
preventing or prohibiting the consummation of the Principals
Exchange or which
results in the Principals Exchange causing a material adverse effect
on Magna.
(e) No Legal Restraint. No material legal or regulatory action or
proceeding shall be pending or threatened by any person to enjoin,
restrict or prohibit this Agreement or the Principals Exchange.
(f) No Objection. Neither the Market Value Calculation nor the
Allocation Calculation shall be in dispute.
Section 5.2 Conditions in favour of Magna.
The obligations of Magna hereunder to consummate the Principals Exchange
are subject to the satisfaction at or before the Exchange Time of the following
conditions for the exclusive benefit of Magna, any of which may be waived in
writing by Magna:
(a) Representations and Warranties of the Principals Parentcos and
Newco. The representations and warranties of each of the Principals
Parentcos and Newco contained in this Agreement in favour of Magna
shall be true and correct at the Exchange Time with the same force
and effect as if the representations and warranties were made at and
as of such time, and certificates dated the date of the Exchange
Time to that effect shall have been signed on behalf of each of the
Principals Parentcos and Newco by an officer of them and delivered
to Magna, each such certificate to be in form and substance
satisfactory to Magna, acting reasonably.
(b) Covenants. Each of the Principals Parentcos and Newco shall have
complied in all material respects with and performed in all material
respects its covenants and obligations hereunder that are to be
complied with or performed at or before the Exchange Time, and
certificates dated the date of the Exchange Time to that effect
shall have been signed on behalf of each of the Principals Parentcos
and Newco by an officer of them and delivered to Magna, each such
certificate to be in form and substance satisfactory to Magna,
acting reasonably.
(c) No Tax Liability. Magna shall be satisfied and shall be permitted to
take all reasonable action to be satisfied that the Tuck
Transactions will not give rise to liability for Taxes for Magna or
any of the Acquired Corporations or expose Magna to liability for
Taxes of the Acquired Corporations or other adverse tax consequence
for Magna.
(d) No Liens. Magna shall be satisfied that all shares in the capital of
the Acquired Corporations are free and clear of all liens as at the
Exchange.
(e) No Contracts. Magna shall be satisfied that the Acquired
Corporations are not party to or bound or affected by any Contract,
other than contracts which are necessary for or incidental to the
Transaction Agreement.
(f) Corporate Records. The minute books and corporate records, including
copies of all filings with any Governmental Entity, of each of the
Acquired Corporations shall have been made available to Magna and
Magna shall be satisfied with their contents, acting reasonably.
(g) Opinion of Counsel. Magna shall have received opinions of counsel to
the Principals Parentcos, Newco and the Acquired Corporations dated
as of the Exchange Date acceptable to Magna as to such matters as
may be requested by Magna, acting reasonably, including an opinion
acceptable to Magna, acting reasonably, as to any liability for
Taxes of the Acquired Corporations.
(h) Ownership of Acquired Corporations. Magna shall be satisfied that no
Person other than Magna and any Acquired Corporation will be a
shareholder of any Acquired Corporation upon the completion of the
Principals Exchange.
(i) Assets of the Acquired Corporations. None of the Acquired
Corporations shall hold any assets other than Magna Class A Shares,
shares of other Acquired Corporations, cash, rights to receive Tax
refunds or other assets satisfactory to Magna.
(j) Section 116(2) Certificate. Each of SWMAG and PKMAG shall have
provided Magna with a Section 116(2) Certificate referred to in
Section 4.1(h)(i) or Magna shall have been provided with cash equal
to the Withheld Amount or a Replacement LC in accordance with
Section 4.1(h)(ii)(A).
Section 5.3 Conditions in favour of the Principals Parentcos.
The obligations of each of the Principals Parentcos hereunder to
consummate the Principals Exchange are subject to the satisfaction at or before
the Exchange Time of the following conditions for the exclusive benefit of each
of the Principals Parentcos, any of which may be waived in writing by a
Principals Parentco:
(a) Representations and Warranties. The representations and warranties
of each of the other Parties contained in this Agreement in favour
of a Principals Parentco shall be true and correct at the Exchange
Time with the same force and effect as if the representations and
warranties were made at and as of such time, and certificates dated
the date of the Exchange Time to that effect shall have been signed
on behalf of each of the other Parties giving such representations
and warranties by an officer of it and delivered to the Principals
Parentcos, each such certificate to be in form and substance
satisfactory to the Principals Parentcos, acting reasonably.
(b) No Tax Liability. Each Principals Parentco shall be satisfied and
shall be permitted to take all reasonable action to be satisfied
that the Principals Exchange will not give rise to liability for
Taxes or other adverse tax consequence for each such Principals
Parentco.
ARTICLE 6
TERMINATION
Section 6.1 Termination.
This Agreement shall be terminated and the transactions contemplated
hereby abandoned by the mutual agreement of Magna, Newco and the Principals
Parentcos at any time.
Section 6.2 Remedies.
In the event of the valid termination of this Agreement as provided in
Section 6.1, this Agreement shall forthwith become void and have no further
effect, and there shall be no liability or further obligation on the part of any
Party or their respective officers or directors hereunder, except that the
provisions of Section 6.3 and this Section 6.2 shall remain in full force and
effect and shall survive any such termination.
Section 6.3 Expenses.
Except as otherwise provided in this Agreement, Newco and the Principals
Parentcos shall each bear and pay all costs, expenses and fees incurred by it in
connection with the transactions contemplated by this Agreement and for all
costs and expenses (including counsel's fees and expenses and fees and expenses
of auditors) incurred by Magna after entering into this Agreement in connection
with effecting the transactions contemplated hereby.
ARTICLE 7
CLOSING
Section 7.1 Closing of the Principals Exchange.
Closing of the Principals Exchange shall take place at the offices of
Osler, Hoskin & Harcourt LLP, in Toronto, Ontario at 10:00 a.m. (Toronto time)
on the Business Day following the later of (i) the consummation of the Exchange
and (ii) the day that the conditions to this Agreement are satisfied or waived.
Each Party shall deliver, at the closing of the Principals Exchange, such
certificates, resolutions, opinions and other customary closing documents as may
be required by the other Parties, acting reasonably.
Section 7.2 Further Assurances.
Each Party covenants and agrees that, from time to time, subsequent to the
Exchange Time, such party will, at the request of the requesting party, execute
and deliver all such documents, including, without limitation, all such
additional conveyances, transfers, consents, tax elections (or any amendment
thereto) and other assurances and do all such other acts and things as any other
party hereto, acting reasonably, may from time to time request to be executed or
done in order to better evidence, perfect or effectuate any provision of this
Agreement or any of the respective obligations intended to be created hereby.
ARTICLE 8
INDEMNIFICATION
Section 8.1 Indemification.
(a) After the Exchange Time, each of the Principals, Principals
Parentcos and Newco shall indemnify and save harmless Magna and the
Acquired Corporations (and their directors and officers, employees,
advisors and agents) from all actions, claims, demands, processes,
proceedings, losses, damages, liabilities, deficiencies, Taxes
(whether or not such Taxes have been assessed or reassessed as at
the date hereof), and any instalments with respect thereto, costs
and expenses (including, without limitation, all legal and other
professional fees and disbursements, interest, penalties and amounts
paid in settlement) (collectively "Liabilities") whether in contract
or tort or otherwise suffered or incurred by Magna and/or the
Acquired Corporations (and their directors, officers, employees and
agents), the whole to be computed on an after-tax basis, as a result
of or arising directly or indirectly out of or in connection with
any breach by the Principals Parentcos or Newco of any
representation, warranty, obligation or
covenant of the Principals Parentcos or Newco contained in this
Agreement or any certificate or document delivered pursuant hereto.
(b) After the Exchange Time, each of the Principals, Principals
Parentcos and Newco shall indemnify and save harmless Magna and the
Acquired Corporations (and their directors and officers, employees,
advisors and agents) from all Liabilities whether in contract or
tort or otherwise suffered or incurred by Magna or the Acquired
Corporations (and their directors, officers, employees and agents),
the whole to be computed on an after-tax basis, as a result of or
arising directly or indirectly out of or in connection with:
(i) any breach by any of the Principals Parentcos or Newco of any
obligation or covenant of the Principals Parentcos or Newco
contained in the Agreement or any certificate or document
delivered pursuant hereto;
(ii) any Liability sustained, suffered, incurred, assumed or
acquired by the Principals Parentcos or Newco on or before, or
related to any matter occurring on or before, the consummation
of the Tuck Transactions; and
(iii) any Liability which would not have been sustained, suffered,
incurred, assumed or acquired by (or which would not have been
asserted, threatened or be pending against) Magna, the
Principals Parentcos, Newco or the Acquisition Corporations
but for the Tuck Transactions pursuant to this Agreement,
including all Liabilities which, as a result of the Tuck
Transactions, are assumed or incurred by Magna, the Principals
Parentcos, Newco or the Acquisition Corporations, and other
than any Liability relating to covenants, representations or
warranties given by Magna pursuant to this Agreement.
Section 8.2 Limitation.
Each of the Principals, Principals Parentcos and Newco will be responsible
for any Liability incurred by Magna or an Acquired Corporation pursuant to
Section 8.1 to the extent that such Liability is referable to such Principal,
Principals Parentco or Newco or any Acquired Corporation in which such
Principal, Principals Parentco or Newco held a direct or indirect interest at
the Exchange Time, with the Liability to be borne in proportion to the portion
of the aggregate number of equity securities of such Acquired Corporation owned
directly or indirectly by such Principal, Principals Parentco or Newco and his
or its permitted transferees at the Exchange Time.
Section 8.3 Notice of Claim.
In the event that a Party (the "Indemnified Party") shall become aware of
any claim, proceeding or other matter (a "Claim") in respect of which another
Party (the "Indemnifying Party") agreed to indemnify the Indemnified Party
pursuant to this Agreement, the Indemnified Party shall promptly give written
notice thereof to the Indemnifying Party. Such notice shall specify whether the
Claim arises as a result of a claim by a person against the Indemnified Party (a
"Third Party Claim") or whether the Claim does not so arise (a "Direct Claim"),
and shall also specify with reasonable particularity (to the extent that the
information is available) the factual basis for the Claim and the amount of the
Claim, if known. If, through the gross negligence or wilful misconduct of the
Indemnified Party, the Indemnifying Party does not receive notice of any Claim
in time to contest effectively the determination of any liability susceptible of
being contested, the Indemnifying Party shall be entitled to set off against the
amount claimed by the Indemnified Party the amount of any Liabilities incurred
by the Indemnifying Party resulting from the Indemnified Party's failure to give
such notice on a timely basis.
Section 8.4 Direct Claims.
With respect to any Direct Claim, following receipt of notice from the
Indemnified Party of the Claim, the Indemnifying Party shall have 30 days to
make such investigation of the Claim as is considered necessary or desirable.
For the purpose of such investigation, the Indemnified Party shall make
available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both parties
agree at or prior to the expiration of such 30-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such Claim, the
Indemnifying Party shall immediately pay to the Indemnified Party the full
agreed upon amount of the Claim.
Section 8.5 Third Party Claims.
With respect to any Third Party Claim, the Indemnified Party shall have
the exclusive right, at the expense of the Indemnifying Party, to contest,
settle or pay the amount claimed and to retain counsel and other experts or
advisors selected by the Indemnified Party in its sole discretion in connection
therewith; provided, however, that the Indemnified Party shall not settle any
Third Party Claim without the written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld or delayed. If the Indemnified Party
elects to assume such control, the Indemnifying Party shall have the right, at
its sole expense, to participate in the negotiation, settlement or defence of
such Third Party Claim. If any Third Party Claim is of a nature such that the
Indemnified Party is required by applicable law to make a payment to any person
(a "Third Party") with respect to the Third Party Claim before the completion of
settlement negotiations or related legal proceedings, the Indemnified Party may
make such payment and the Indemnifying Party shall,
forthwith after demand by the Indemnified Party, reimburse the Indemnified Party
for such payment. If the amount of any liability of the indemnified Party under
the Third Party Claim in respect of which such payment was made, as finally
determined, is less than the amount that was paid by the Indemnifying Party to
the Indemnified Party, the Indemnified Party shall, forthwith after receipt of
the difference from the Third Party, pay the amount of such difference to the
Indemnifying Party.
Section 8.6 Reduction, Set-off, Payment and Co-operation.
The Indemnifying Party shall pay to the Indemnified Party all amounts for
which the Indemnifying Party is liable pursuant to this Article 9 promptly after
the Indemnified Party incurs the Liability in respect of which such liability
arises. If such amount is not so paid, the Indemnified Party may deduct or
set-off such amount from any obligation it may have to the Indemnifying Party.
The Indemnified Party and the Indemnifying Party shall co-operate fully with
each other with respect to Third Party Claims, and shall keep each other fully
advised with respect thereto (including supplying copies of all relevant
documentation promptly as it becomes available).
ARTICLE 9
ARBITRATION
Section 9.1 Settling Disputes.
Any controversy or dispute arising out of or relating to this Agreement,
including its negotiation, validity, existence, breach, termination,
construction or application, or the rights, duties or obligations of any Party,
shall be referred to and finally resolved by arbitration in accordance with the
provisions of the Arbitration Act, 1991 (Ontario) in effect on the date of this
Agreement. The seat of the arbitration shall be Toronto, Ontario and the
proceedings shall be conducted in the English language before a panel composed
of three (3) arbitrators. Each of (i) Magna and (ii) Newco and the Principals
Parentcos shall appoint one arbitrator and the two (2) appointed arbitrators
shall appoint a chair. Should the two (2) arbitrators fail to agree upon a chair
within 15 days of their appointment, either of (i) Magna and (ii) Newco and the
Principals Parentcos may apply to the Ontario Superior Court of Justice for the
appointment of the third arbitrator.
Section 9.2 Right to Oral Discovery.
Notwithstanding anything to the contrary in the provisions of the
Arbitration Act, 1991 (Ontario), each Party shall have the right to conduct an
oral discovery of a representative of the other Parties.
Section 9.3 Injunctive Relief.
Nothing in this Article 9 shall preclude one of the Parties from seeking
injunctive relief from a court of competent jurisdiction when deemed necessary
by such court to preserve the status quo or prevent irreparable injury pending
resolution by arbitration of the actual dispute.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Notices.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be delivered in person or transmitted by
telecopier or similar means of recorded electronic communication (with receipt
confirmed) as follows:
(a) to Magna at:
Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Executive Vice President, Special Projects
Facsimile: (905) 726-7164
with a copy to:
Osler, Hoskin & Harcourt LLP
1 First Canadian Place
66th Floor, 100 King Street West
Toronto, Ontario
M5X 1B8
Attention: Jean M. Fraser
Facsimile: (416) 862-6666
(b) to Siegfried Wolf, SW CDN Holdco or SWMAG at:
c/o Magna International Europe AG
Magna Strasse 1
2522 Oberwaltersdorf
Austria
Attention: Siegfried Wolf
Facsimile: +43 2253 600-1020
(c) to Donald J. Walker, Walker Holdco or DWMAG at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario, L4G 7K1
Attention: Donald J. Walker
Facsimile: (905) 726-2593
(d) to Vincent J. Galifi, Galifi Holdco or VGMAG at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario, L4G 7K1
Attention: Vincent Galifi
Facsimile: (905) 726-2595
(e) to Peter Koob, Koob Holdco or PKMAG at:
c/o Magna International Europe AG
Magna Strasse 1
2522 Oberwaltersdorf
Austria
Attention: Peter Koob
Facsimile: +43 2253 600 1020
(f) to Jeffrey O. Palmer, Palmer Holdco or JPMAG at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario, L4G 7K1
Attention: Jeffrey O. Palmer
Facsimile: (905) 726-7455
(g) to Principals Holdco at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario, L4G 7K1
Attention: Jeffrey O. Palmer
Facsimile: (905) 726-7455
with a copy to each of Galifi, Koob, Walker and Wolf
(h) to Newco or Newco I.5 at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario, L4G 7K1
Attention: Belinda Stronach
Facsimile: (905) 726-7494
with a copy to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
and to:
Miller Thomson LLP
40 King Street West
Suite 5800
Toronto, Ontario
M5H 3S1
Attention: John Campbell
Facsimile: (416) 595-8695
(i) to any other Person, at the address for such Person set out in the
counterpart copy of this Agreement or other written agreement
pursuant to which such Person agrees to be bound by this Agreement.
Any such notice or other communication shall be deemed to have been given and
received on the day on which it was delivered or transmitted (or, if such day is
not a Business Day, on the next following Business Day). A Party may change its
address for service and may add "copy to" parties 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.
Section 10.2 Time of the Essence.
Time is of the essence in this Agreement.
Section 10.3 Announcements.
No public release or announcement concerning the transactions contemplated
by this Agreement shall be issued by a Party without the approval of the other
Parties (which consent shall not be unreasonably withheld), except as such
release or announcement may be required by Applicable Laws, in which case the
Party required to make the release or announcement shall allow the other Parties
reasonable time to comment on such announcement in advance of such issuance.
Section 10.4 Third Party Beneficiaries.
The Parties intend that this Agreement will not benefit or create any
right or cause of action in favour of any Person, other than the Parties. No
Person, other than the Parties, is entitled to rely on the provisions of this
Agreement in any action, suit, proceeding, hearing or other forum. 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.
Section 10.5 No Agency or Partnership.
Nothing contained in this Agreement makes or constitutes any Party, or any
of its directors, officers or employees, the representative, agent, principal,
partner, joint venturer, employer or employee of any other Party.
Section 10.6 Amendments.
This Agreement may only be amended, supplemented or otherwise modified by
written agreement signed by all of the Parties to be bound thereby.
Section 10.7 Waiver.
No waiver of any of the provisions of this Agreement will constitute a
waiver of any other provision (whether or not similar) nor shall any waiver
constitute a continuing waiver unless otherwise expressly provided. 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 10.8 Entire Agreement.
This Agreement 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. There are no representations, warranties, covenants,
conditions or other agreements, express or implied, collateral, statutory or
otherwise, between the Parties in connection with the subject matter of this
Agreement, except as specifically set forth in this Agreement. The 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.
Section 10.9 Successors and Assigns.
This Agreement shall enure to the benefit of and shall be binding on, and
enforceable by, the Parties and, where the context so permits, their respective
heirs, executors, administrators, legal representatives, successors and
permitted assigns. Except as otherwise provided in this Agreement, a Party may
not assign any of its rights or obligations hereunder without the prior written
consent of the other Parties
Section 10.10 Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
Party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
Section 10.11 Governing Law.
This Agreement shall be construed, interpreted and enforced in accordance
with, and the respective rights and obligations of the Parties shall be governed
by, the laws of the Province of Ontario and the federal laws of Canada
applicable in that
province. Subject to Article 9, each Party unconditionally submits to the
non-exclusive jurisdiction of the courts of the Province of Ontario.
Section 10.12 Counterparts.
This Agreement may be executed in any number of counterparts (including
counterparts by facsimile) and all such counterparts taken together will be
deemed to constitute one and the same instrument. The Parties may rely on copies
of this Agreement which are delivered by facsimile as if such copies were
originals.
IN WITNESS WHEREOF the Parties have executed this Principals Exchange
Agreement.
MAGNA INTERNATIONAL INC.
By:
------------------------------------
Authorized Signing Officer
M UNICAR INC.
By:
------------------------------------
Authorized Signing Officer
2143453 ONTARIO INC.
By:
------------------------------------
Authorized Signing Officer
MPMAG HOLDINGS INC.
By:
------------------------------------
Authorized Signing Officer
VGMAG HOLDINGS INC.
By:
------------------------------------
Authorized Signing Officer
MAKRIST BETEILIGUNGEN GMBH
By:
------------------------------------
Authorized Signing Officer
JPMAG INC.
By:
------------------------------------
Authorized Signing Officer
WSA BETEILIGUNGS GMBH
By:
------------------------------------
Authorized Signing Officer
DWMAG INC.
By:
------------------------------------
Authorized Signing Officer
GKP HOLDINGS INC.
By:
------------------------------------
Authorized Signing Officer
SW CDN HOLDINGS INC.
By:
------------------------------------
Authorized Signing Officer
DW HOLDCO INC.
By:
------------------------------------
Authorized Signing Officer
SW HOLDCO INC.
By:
------------------------------------
Authorized Signing Officer
VG HOLDCO INC.
By:
------------------------------------
Authorized Signing Officer
PK HOLDCO INC.
By:
------------------------------------
Authorized Signing Officer
JOP HOLDCO INC.
By:
------------------------------------
Authorized Signing Officer
-------------------------------- -----------------------------------
Witness Donald J. Walker
-------------------------------- -----------------------------------
Witness Siegfried Wolf
-------------------------------- -----------------------------------
Witness Vincent J. Galifi
-------------------------------- -----------------------------------
Witness Peter Koob
-------------------------------- -----------------------------------
Witness Jeffrey O. Palmer
Exhibit D
EXECUTION COPY
446 HOLDINGS INC.
and
VELERON HOLDING B.V.
as Investors
and
MPMAG HOLDINGS INC.
as Principals Holdco
and
M UNICAR INC.
as Newco
and
2143453 ONTARIO INC.
as Newco I.5
and
2143455 ONTARIO INC.
as Newco II
------------------------------------------------------------------------------
NEWCO II UNANIMOUS SHAREHOLDERS AGREEMENT
September 20, 2007
------------------------------------------------------------------------------
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
Section 1.1 Defined Terms..................................................1
Section 1.2 Gender and Number..............................................8
Section 1.3 Sections and Headings..........................................8
Section 1.4 Currency.......................................................8
Section 1.5 Certain Phrases................................................8
Section 1.6 Statutory References...........................................9
ARTICLE 2
IMPLEMENTATION OF AGREEMENT AND TERM
Section 2.1 Actions in Accordance with Agreement...........................9
Section 2.2 Conflicts......................................................9
Section 2.3 Newco I.5 and Newco II Consent................................10
Section 2.4 Share Certificates............................................10
Section 2.5 Term of Agreement.............................................10
Section 2.6 Agreement to be Bound.........................................10
Section 2.7 Deemed Consent under Articles.................................11
ARTICLE 3
BUSINESS AND MANAGEMENT OF NEWCO I.5 AND NEWCO II
Section 3.1 Business of Newco I.5 and Newco II............................11
Section 3.2 Distributions.................................................11
Section 3.3 Approval of the Investors.....................................11
Section 3.4 Maintenance...................................................12
ARTICLE 4
DIRECTORS AND SHAREHOLDERS
Section 4.1 Directors of Newco I.5 and Newco II...........................12
Section 4.2 Appointment of Directors of Magna and Voting of Magna Shares..13
Section 4.3 Indemnification...............................................14
ARTICLE 5
RESTRICTIONS ON TRANSFER
Section 5.1 Restrictions on Transfer by Investors.........................15
Section 5.2 Permitted Transfers by Investors..............................15
Section 5.3 Encumbering of Newco II Shares or Newco II Loan...............15
(i)
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
Section 6.1 Representations and Warranties of the Investors...............16
Section 6.2 Survival......................................................17
ARTICLE 7
ARBITRATION
Section 7.1 Settling Disputes.............................................17
Section 7.2 Right to Oral Discovery.......................................18
Section 7.3 Injunctive Relief.............................................18
ARTICLE 8
MISCELLANEOUS
Section 8.1 Principals Agreement..........................................18
Section 8.2 Notices.......................................................18
Section 8.3 Time of the Essence...........................................23
Section 8.4 Announcements.................................................23
Section 8.5 Third Party Beneficiaries.....................................23
Section 8.6 No Agency or Partnership......................................24
Section 8.7 Expenses......................................................24
Section 8.8 Amendments and Waivers........................................24
Section 8.9 Entire Agreement..............................................24
Section 8.10 Successors and Assigns........................................24
Section 8.11 Severability..................................................25
Section 8.12 Governing Law.................................................25
Section 8.13 Counterparts..................................................25
ARTICLE 9
RELEASE BY PRINCIPALS HOLDCO OF NEWCO II
Section 9.1 Release by Principals Holdco of Newco II.....................25
(ii)
NEWCO II UNANIMOUS SHAREHOLDERS AGREEMENT
Newco II Unanimous Shareholders Agreement dated September 20, 2007
among 446 Holdings Inc. ("446"), Veleron Holding B.V. ("RM Sub"), MPMAG
Holdings Inc. ("Principals Holdco"), M Unicar Inc. ("Newco"), 2143453 Ontario
Inc. ("Newco I.5") and 2143455 Ontario Inc. ("Newco II").
RECITALS:
(a) Newco is the registered and beneficial owner of 84,800 Voting
Preferred Shares and 84,800 Class B Common Shares of Newco I.5;
(b) Newco I.5 is the registered and beneficial owner of 100 Class B
Common Shares and 1,000,000 Non-Voting Preferred Shares of Newco II;
(c) 446 is the registered and beneficial owner of 42,000 Class B Shares
of Newco;
(d) RM Sub is the registered and beneficial owner of 42,000 Class C
Common Shares of Newco and 100 Class A Common Shares of Newco II,
and has made the Newco II Loan to Newco II;
(e) Principals Holdco is the registered and beneficial owner of 15,200
Class A-1 Common Shares and 15,200 Class A Preferred Shares of Newco
I.5; and
(f) the Parties have entered into this Agreement to establish, among
other things, rights and obligations arising out of, or in
connection with, the ownership of shares of Newco I.5 and Newco II.
In consideration of the above recitals, the agreements of the Parties
contained in this Agreement and other good and valuable consideration (the
receipt and adequacy of which are acknowledged), the Parties agree as follows:
ARTICLE 1
INTERPRETATION
Section 1.1 Defined Terms.
As used in this Agreement, the following terms have the following
meanings:
"446" means 446 Holdings Inc., a corporation existing under Act, and its
successors.
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"446 Magna Nominees" has the meaning specified in Section 4.2(1)(a).
"Act" means the Business Corporations Act (Ontario).
"Agreement" means this agreement and all schedules attached to it as
amended, modified, restated, replaced or supplemented from time to time.
"affiliate" has the meaning ascribed to such term from time to time in the
Securities Act (Ontario).
"Applicable Laws" means all applicable federal, provincial, state,
municipal and local statutes, laws, by-laws, regulations, ordinances,
orders, enactment, directives and rules and all injunctions, decisions,
directives, judgments and orders of any Governmental Entity having
jurisdiction in respect of a particular matter and all amendments thereto
which have the force of law.
"Business Day" means any day of the year, other than a Saturday, Sunday or
day observed as a statutory holiday in Toronto, Ontario, New York, New
York, or Moscow, Russia.
"Collateral" has the meaning assigned to it in the Exit Agreement.
"Contract" means any agreement, contract, lease, licence, permit,
franchise, purchase order, commitment, engagement, option, indenture,
mortgage, deed, instrument or other legally binding obligation, whether
written, oral or implied.
"Directors" means the Persons who are elected or appointed as directors
of, as the context requires, Newco I.5 or Newco II, in accordance with
this Agreement.
"Exchange Agreement" means the exchange agreement dated the date hereof
among Magna, 446, RM, RM Sub, 445327 Ontario Limited, Newco I.5 and Newco
II.
"Exchange Time" has the meaning specified in the Exchange Agreement.
"Exit Agreement" means the exit agreement dated the date hereof among
Newco, Newco I.5, Newco II, 445327 Ontario Limited, 446, RM and RM Sub.
"Governmental Entity" means any (i) multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitrator or arbitral
body, commission, board, bureau or agency, domestic or foreign, including
the Ontario Securities Commission, the Autorite des marches financiers du
-3-
Quebec and the United States Securities and Exchange Commission, (ii)
self-regulatory organization or stock exchange, including the Toronto
Stock Exchange and the New York Stock Exchange, (iii) subdivision, agent,
commission, board, or authority of any of the foregoing, or (iv)
quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any of the
foregoing.
"GKP Holdco" means GKP Holdings Inc., a corporation existing under the
Act, and its successors.
"Independent" means directors of Magna who are "independent" within the
meaning of Multilateral Instrument 52-110 - Audit Committees (or any
successor instrument) and under any applicable rules of any stock exchange
upon which the Magna Shares are listed.
"Investor" means each of 446 and RM Sub and any Permitted Transferee to
whom RM Sub has Transferred Newco II non-voting common shares in
accordance with the terms of this Agreement.
"Investors Agreement" means the Investors Agreement dated the date hereof
between 446 and RM Sub.
"Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, deemed trust,
security interest, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any
financing lease having substantially the same economic effect as any of
the foregoing, and the filing of, or agreement to give, any financing
statement perfecting a security interest under the PPSA or comparable
notice filing under the law of any other jurisdiction or any option,
warrant, right or privilege capable of becoming a Transfer).
"Magna" means Magna International Inc., a corporation existing under the
Act, and its successors.
"Magna Class A Shares" means the class A subordinate voting shares in the
capital of Magna, appropriately adjusted for stock splits, stock
dividends, reverse stock splits, share consolidations and similar events,
and, where the context requires, includes: (i) any securities into which
such shares may be converted, reclassified, redesignated, subdivided,
consolidated or otherwise changed, (ii) any securities received by the
holders of such shares as a result of any merger, amalgamation,
reorganization, arrangement or other similar transaction involving Magna,
(iii) any securities of Magna which are received
-4-
by any one or more Persons as a stock dividend or distribution on or in
respect of such shares, and (iv) any security, other instrument or right
that is exercisable, exchangeable or convertible into, or evidences the
right to acquire, any class A subordinate voting shares in the capital of
Magna or any of the other above securities.
"Magna Class B Shares" means the class B shares in the capital of Magna,
appropriately adjusted for stock splits, stock dividends, reverse stock
splits, share consolidations and similar events, and, where the context
requires, includes: (i) any securities into which such shares may be
converted, reclassified, redesignated, subdivided, consolidated or
otherwise changed, (ii) any securities received by the holders of such
shares as a result of any merger, amalgamation, reorganization,
arrangement or other similar transaction involving Magna, (iii) any
securities of Magna which are received by any one or more Persons as a
stock dividend or distribution on or in respect of such shares, and (iv)
any security, other instrument or right that is exercisable, exchangeable
or convertible into, or evidences the right to acquire, any class B shares
in the capital of Magna.
"Magna Corporate Constitution" means the Corporate Constitution which
forms part of the articles of arrangement of Magna.
"Magna Directors" has the meaning specified in Section 4.2(1).
"Magna Group" means Magna and its Subsidiaries, taken as a whole.
"Magna Shares" means, collectively, the Magna Class A Shares and the Magna
Class B Shares.
"Newco" means M Unicar Inc., a corporation existing under the Act, and its
successors.
"Newco I.5" means 2143453 Ontario Inc., a corporation existing under the
Act, and its successors.
"Newco I.5 Shares" means the Voting Preferred Shares and Class A-1 Common
Shares of Newco I.5, appropriately adjusted for stock splits, stock
dividends, reverse stock splits, share consolidations and similar events
and, where the context permits, includes: (i) any securities into which
such shares may be converted, reclassified, redesignated, subdivided,
consolidated or otherwise changed, (ii) any securities received by the
holders of such shares as a result of any merger, amalgamation,
reorganization, arrangement or other similar transaction involving Newco
I.5, (iii) any securities of Newco I.5 which are received by any one or
more Persons as a stock dividend or
-5-
distribution on or in respect of such shares and (iv) any security, other
instrument or right that is exercisable, exchangeable or convertible into,
or evidences the right to acquire, any Voting Preferred Shares or Class
A-1 Common Shares in the capital of Newco I.5 or any of the other above
securities.
"Newco II" means 2143455 Ontario Inc., a corporation existing under the
Act, and its successors.
"Newco II Loan" means the loan provided by RM Sub to Newco II on the date
hereof and evidenced by the Newco II Loan Note.
"Newco II Loan Note" means the promissory note dated the date hereof
issued to RM Sub by Newco II to evidence the Newco II Loan, including the
ancillary agreements relating to the security therefor.
"Newco II Shares" means the Non-Voting Preferred Shares, Non-Voting Common
Shares, Voting Common Shares and Special Shares of Newco II, appropriately
adjusted for stock splits, stock dividends, reverse stock splits, share
consolidations and similar events and, where the context permits,
includes: (i) any securities into which such shares may be converted,
reclassified, redesignated, subdivided, consolidated or otherwise changed,
(ii) any securities received by the holders of such shares as a result of
any merger, amalgamation, reorganization, arrangement or other similar
transaction involving Newco II, (iii) any securities of Newco II which are
received by any one or more Persons as a stock dividend or distribution on
or in respect of such shares, and (iv) any security, other instrument or
right that is exercisable, exchangeable or convertible into, or evidences
the right to acquire, any Non-Voting Preferred Shares, Non-Voting Common
Shares, Voting Common Shares or Special Shares in the capital of Newco II
or any of the other above securities.
"Newco Shares" means the Class A Shares, Class B Shares and Class C Common
Shares of Newco, appropriately adjusted for stock splits, stock dividends,
reverse stock splits, share consolidations and similar events and, where
the context permits, includes: (i) any securities into which such shares
may be converted, reclassified, redesignated, subdivided, consolidated or
otherwise changed, (ii) any securities received by the holders of such
shares as a result of any merger, amalgamation, reorganization,
arrangement or other similar transaction involving Newco, (iii) any
securities of Newco which are received by any one or more Persons as a
stock dividend or distribution on or in respect of such shares and (iv)
any security, other instrument or right that is exercisable, exchangeable
or convertible into, or
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evidences the right to acquire, any Class A Shares, Class B Shares or
Class C Common Shares in the capital of Newco or any of the other above
securities .
"Out of the Ordinary Course Transaction" means, in respect of the Magna
Group, a commitment or agreement to: (i) incur or assume any indebtedness
for borrowed money in excess of $500 million in the aggregate or guarantee
any indebtedness in excess of $500 million in the aggregate (other than
the debt of any Person acquired, directly or indirectly, by Magna if such
debt is not guaranteed by Magna); (ii) acquire (by merging or
consolidating with, or by purchasing a substantial portion of the assets
of, or by any other manner) any business or any corporation, partnership,
association or other business organization or division thereof, or
otherwise acquire any assets, having a purchase price in excess of $250
million, in a single transaction or series of related transactions; (iii)
divest any business or any corporation, partnership, association or other
business organization or division of the Magna Group, or otherwise sell
any assets of the Magna Group, for a purchase price in excess of $250
million, in a single transaction or series of related transactions; (iv)
invest in or acquire any non-automotive businesses in excess of $20
million per year in the aggregate; (v) except for transactions referred to
in paragraph (vi), enter into or amend any oral or written contract or
related party transaction with any of Frank Stronach, 445327 Ontario
Limited or the Stronach Trust or any of their respective affiliates,
unless any such transaction or proposed transaction has been publicly
disclosed by Magna or otherwise disclosed to RM Sub by Magna prior to May
10, 2007; (vi) enter into any transactions in respect of real property or
any amendments thereto with MI Developments Inc. or its Subsidiaries
unless any such transaction or amendment has been approved by a majority
of the Independent directors or by a committee of Independent directors of
Magna; or (vii) issue treasury shares in the capital of Magna having an
issue price in excess of $100 million, in the aggregate, other than shares
issued by Magna pursuant to the terms of outstanding options, convertible
debt or other securities of Magna that are convertible into, or
exchangeable or exercisable for shares of Magna.
"Parties" means Newco II, Newco I.5, Newco, Principals Holdco, 446 and RM
Sub.
"Permitted Transferee" means:
(a) in the case of 446, Mr. Frank Stronach or any member of his
immediate family or any of their lineal descendents; and in the case
of RM Sub, Mr. Oleg Deripaska or any member of his immediate family
or any of their lineal descendents;
-7-
(b) one or more trusts for the benefit of one or more of the individuals
described in paragraph (a); or
(c) an entity, directly or indirectly, majority controlled by any of the
foregoing.
"Person" includes any individual, firm, partnership, limited partnership,
joint venture, venture capital fund, limited liability company, unlimited
liability company, association, trust, trustee, heir, executor,
administrator, legal personal representative, estate, group, body
corporate, corporation, unincorporated association or organization,
Governmental Entity, syndicate or other entity, whether or not having
legal status.
"Pledge" means the pledge agreement dated the date hereof between Newco II
and RM Sub.
"PPSA" means the Personal Property Security Act (Ontario).
"Principals Agreement" means the principals agreement dated the date
hereof among Donald J. Walker, Siegfried Wolf, Vincent J. Galifi, Peter
Koob, Jeffrey O. Palmer, GKP Holdco, Principals Holdco, Newco and Newco
I.5.
"Principals Holdco" means MPMAG Holdings Inc., a corporation existing
under the Act, and its successors.
"Realization Event" has the meaning specified in the Exit Agreement.
"Registration Rights Agreement" means the registration rights agreement
dated the date hereof among Magna, RM Sub, Newco I.5, Newco II and RM's
Lender.
"RM's Lender" means the lender or syndicate of lenders, from time to time,
providing any portion of the RM Loan that is secured by the Collateral.
"RM Loan" has the meaning specified in the Exit Agreement.
"RM Sub" means Veleron Holding B.V., a company existing under the laws of
The Netherlands, and its successors.
"RM Sub Magna Nominees" has the meaning specified in Section 4.2(1)(b).
"Section 116 Event" means the resignations of directors contemplated by
Sections 3.1(8) and 3.1(9) of the Exit Agreement following either such
section becoming applicable.
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"Subsidiary" means, in respect of an Investor, a subsidiary (as that term
is defined in the Act as now in effect) of that Investor or any Person in
which such Investor has a direct or indirect controlling interest or a
joint-controlling interest, and shall be deemed to include any partnership
or joint venture in which such Investor has a direct or indirect interest
of more than 50 percent.
"Transaction Agreement" means the transaction agreement dated May 10, 2007
among Magna, RM, RM Sub, 445327 Ontario Limited, the Stronach Trust and
the individuals named therein.
"Transaction Agreements" means this Agreement, the Exit Agreement, the
Exchange Agreement, the Investors Agreement, the Newco II Loan, the
Pledge, the Principals Agreement and the Registration Rights Agreement.
"Transfer" means any (i) transfer, sale, assignment, exchange, gift,
donation, mortgage, pledge, charge, encumbrance, grant of security
interest or other disposition of securities where possession, legal title,
beneficial ownership or the economic risk or return associated with such
securities passes directly or indirectly from one Person to another or to
the same Person in a different legal capacity, whether or not for value,
whether or not voluntary and however occurring, or (ii) agreement,
undertaking or commitment to effect any of the foregoing and "Transferred"
shall be construed accordingly.
Section 1.2 Gender and Number.
Any reference in this Agreement to gender includes all genders. Words
importing the singular number also include the plural and vice versa.
Section 1.3 Sections and Headings.
The division of this Agreement into Articles and Sections, the insertion
of headings and the inclusion of a table of contents are for reference purposes
only and shall not affect the interpretation of this Agreement. Unless otherwise
indicated, any reference in this Agreement to an Article, a Section, a Schedule
or an Exhibit refers to the specified Article or Section of, or Schedule or
Exhibit to, this Agreement.
Section 1.4 Currency.
Unless otherwise indicated, all dollar amounts in this Agreement are
expressed in United States funds.
Section 1.5 Certain Phrases.
In this Agreement, (i) the words "including", "includes" and "include"
mean "including (or includes or include) without limitation", and (ii) the words
"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".
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Section 1.6 Statutory References.
A reference to a statute includes all rules and regulations made pursuant
to such statute and, unless otherwise specified, the provisions of any statute
or regulation or rule which amends, supplements or supersedes any such statute
or any such regulation or rule.
ARTICLE 2
IMPLEMENTATION OF AGREEMENT AND TERM
Section 2.1 Actions in Accordance with Agreement.
(a) Each Investor shall vote its Newco Shares to cause Newco to fulfill
its obligations under this Agreement, whether at a meeting of the
shareholders of Newco or by written resolution of the shareholders
of Newco, and shall take all other actions and proceedings as may be
required to give effect to this Agreement.
(b) Each of Newco and Principals Holdco shall vote its Newco I.5 Shares
to give effect to this Agreement, whether at a meeting of the
shareholders of Newco I.5 or by written resolution of the
shareholders of Newco I.5, and shall take all other actions and
proceedings as may be required to give effect to this Agreement.
(c) Each of Newco I.5 and RM Sub shall vote its Newco II Shares to give
effect to this Agreement, whether at a meeting of shareholders of
Newco II or by written resolution of shareholders of Newco II, and
shall take all other actions and proceedings as may be required to
give effect to this Agreement.
(d) Each of Newco I.5 and Newco II shall vote its Magna Shares held
directly or indirectly to give effect to this Agreement and shall
take all other actions and proceedings as may be required to give
effect to this Agreement.
Section 2.2 Conflicts.
In the event of any conflict between the provisions of this Agreement and
the provisions of Newco I.5's or Newco II's articles or by-laws, this Agreement
will prevail. Each of the Investors, Principals Holdco, Newco I.5 and Newco
shall take such actions and proceedings as may be required to amend Newco I.5's
or Newco II's articles and by-laws to resolve any conflicts in favour of this
Agreement.
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Section 2.3 Newco I.5 and Newco II Consent.
Each of Newco I.5 and Newco II consents to this Agreement and is governed
by its terms.
Section 2.4 Share Certificates.
In addition to any legends required by Applicable Laws, all certificates
representing shares in the capital of Newco I.5 or Newco II must bear the
following legend:
"The shares represented by this certificate are subject to the Newco
II Unanimous Shareholders Agreement dated September 20, 2007 among
the Corporation and its shareholders, as may be amended from time to
time, and such shares may not be pledged, sold or otherwise
transferred except in accordance with the terms of that agreement.
Any transfer made in contravention of such restrictions is null and
void. A copy of the agreement is on file at the registered office of
the Corporation and available for inspection on request and without
charge."
Section 2.5 Term of Agreement.
(1) This Agreement terminates on the earlier to occur of the date on which:
(a) the Investors Agreement is terminated in accordance with its terms;
or
(b) this Agreement is terminated by written agreement among all of the
Parties.
(2) Effective at the Exchange Time, Newco II shall cease to have any rights or
obligations under this Agreement, including any obligations with respect
to any breach of this Agreement by Newco II prior to the Exchange Time.
Section 2.6 Agreement to be Bound.
In order for a Transfer by RM Sub to a Permitted Transferee to be
effective, the Permitted Transferee who acquires Newco II Shares from RM Sub
must concurrently with becoming a shareholder of Newco II execute and deliver to
the Parties a counterpart copy of this Agreement or a written agreement in form
and substance satisfactory to the Parties, acting reasonably, agreeing to be
bound by the Transaction Agreements to which RM Sub is a party.
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Section 2.7 Deemed Consent under Articles.
Each of the Parties hereby (i) consents to a Transfer of Newco II Shares
made in accordance with this Agreement and (ii) agrees that such consent
satisfies the requirement for any consent to any such Transfer of Newco II
Shares required under Newco II's articles of incorporation or by-laws and that
no further consent is required for any such Transfer.
ARTICLE 3
BUSINESS AND MANAGEMENT OF NEWCO I.5 AND NEWCO II
Section 3.1 Business of Newco I.5 and Newco II.
The sole business of Newco I.5 and Newco II is to, directly or indirectly,
acquire and hold Magna Shares, to distribute funds pursuant to Newco I.5's and
Newco II's distribution policy, whether such funds are received by Newco I.5 or
Newco II as a result of holding Magna Shares or otherwise, and to enter and
perform its obligations under those of the Transaction Agreements to which it is
a party.
Section 3.2 Distributions.
Each of the Newco I.5 board of directors and the Newco II board of
directors shall establish a distribution policy for Newco I.5 and Newco II,
respectively, which shall include the prompt distribution by Newco I.5 and Newco
II (by way of dividend or return of capital) to their shareholders in accordance
with their articles of incorporation and by-laws of all distributions and other
income received by Newco I.5 and Newco II from Magna or otherwise, less amounts
required to satisfy Newco I.5's and Newco II's expenses and other liabilities,
including by way of reserves provided by the Directors for that purpose.
Section 3.3 Approval of the Investors.
(1) Without receiving the prior written approval of each of the Investors,
until a Section 116 Event, neither Newco I.5 nor Newco II shall make any
decision about, take action on or implement any matter, other than
performing its obligations under the terms of the Transaction Agreements
to which it is a party and any other agreement entered into by it in
compliance with the terms hereof, and paying dividends to its shareholders
in accordance with the articles and by-laws. Without limiting the
generality of the foregoing, neither Newco I.5 nor Newco II shall amend
its articles of incorporation or its by-laws, issue any shares, redeem or
retract any of their shares or any shares of the other, or buy or sell any
Magna Shares, other than in connection with performing its obligations
under the terms of the Transaction Agreements to which it is a party and
any other agreement entered into by it in compliance
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with the terms hereof, without receiving the prior written approval of
each of the Investors.
(2) Unless the prior written approval of each of the Investors is received,
until a Section 116 Event, each of Newco I.5 and Newco II shall vote its
Magna Shares held directly or indirectly for the election or removal of
Magna Directors pursuant to the terms of this Agreement.
Section 3.4 Maintenance
Each of Newco I.5 and Newco II shall maintain its existence during the
entire term of this Agreement.
ARTICLE 4
DIRECTORS AND SHAREHOLDERS
Section 4.1 Directors of Newco I.5 and Newco II.
(1) Subject to this Section 4.1, until a Section 116 Event, each of Newco I.5
and Newco II shall have six Directors, which number shall be adjusted if
the number of Directors of Newco changes so that the number of Directors
of Newco I.5 and Newco II shall always be the same as the number of
directors of Newco.
(2) Until a Section 116 Event, the Directors shall be the same as the
directors of Newco.
(3) 446 shall advise each of Newco I.5 and Newco II in writing as to which
Directors of Newco I.5 and Newco II, respectively, are the Class B
Shareholder Nominees (who shall be the directors of Newco who are the
Class B Shareholder Nominees (as defined in the by-laws of Newco)). RM Sub
shall advise each of Newco I.5 and Newco II in writing as to which
Directors of Newco I.5 and Newco II, respectively, are the Class C
Shareholder Nominees (who shall be the directors of Newco who are the
Class C Shareholder Nominees (as defined in the by-laws of Newco)).
(4) If a nominee Director of an Investor resigns or is removed as a director
of Newco, the Investor shall cause such individual to resign as a Director
of Newco I.5 and Newco II.
(5) If an Investor wishes to remove either of its nominee Directors as a
director of Newco, such Investor shall also remove such individual as a
Director of Newco I.5 and Newco II.
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(6) If a replacement director of Newco I.5 and Newco II is not elected or
appointed within 10 days of the nominee director of Newco I.5 and Newco II
resigning or being removed because such Investor has failed to nominate a
replacement, the Directors then in office are entitled to transact
business and exercise all of the powers and functions of the Directors.
Section 4.2 Appointment of Directors of Magna and Voting of Magna Shares.
(1) Until a Section 116 Event, each of Newco I.5 and Newco II shall vote its
Magna Shares held directly or indirectly to cause the board of directors
of Magna to consist of:
(a) six nominees of 446 (the "446 Magna Nominees"), one of whom shall be
appointed the chairman of the board of directors of Magna, provided
that at least four of such nominees must be Independent;
(b) six nominees of RM Sub (the "RM Sub Magna Nominees"), provided that
at least four of such nominees must be Independent; and
(c) Donald J. Walker and Siegfried Wolf
(collectively, the "Magna Directors"). Notwithstanding the foregoing, in
the event that the employment of either Donald J. Walker or Siegfried Wolf
as an executive officer of Magna is terminated by Magna, or he is
requested by Magna to resign as an executive officer of Magna, unless each
of the Investors agrees in writing, Newco II shall vote its Magna Shares
to remove him as a Magna Director.
(2) If:
(a) a nominee Magna Director resigns or is removed as a Magna Director;
or
(b) 446 or RM Sub wishes to remove one of its nominee Magna Directors,
for any reason prior to a Section 116 Event, each of Newco I.5 and Newco
II shall vote its Magna Shares held directly or indirectly to cause the
board of directors of Magna to, in the case of (b), remove such nominee
Magna Director, and to fill any vacancy by the election or appointment of
an individual nominated by the Investor whose nominee resigned or was
removed.
(3) Until a Section 116 Event, each of the Investors shall consult with the
other to ensure that the requisite number of Magna Directors nominated by
the Investors pursuant to Section 4.2(1) will be "resident Canadians"
within the
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meaning of the Act; provided that in the event that the Investors are
unable to agree upon which of the Magna Directors nominated by them will
be "resident Canadians" within the meaning of the Act then (i) 446 shall
ensure that at least three of the 446 Magna Nominees who are Independent
are "resident Canadians" and (ii) RM Sub shall ensure that at least two of
the RM Sub Magna Nominees who are Independent are "resident Canadians".
(4) Until a Section 116 Event, each of Newco I.5 and Newco II shall vote its
Magna Shares, held directly or indirectly, to cause Magna to, as soon as
practicable, adopt and maintain governance guidelines, which shall form
part of the procedure of the board of directors of Magna, to the effect
that:
(a) each Magna Director must declare his or her interest and abstain
from voting on all matters where there is an actual or perceived
conflict of interest involving him or her, including in the case of
Magna Directors who are direct or indirect shareholders of
Principals Holdco:
(i) the appointment of Magna Directors to committees of the Magna
board of directors; and
(ii) with respect to any matter where any 446 Magna Nominee or RM
Sub Magna Nominee who is not Independent has declared an
interest and is abstaining from voting; and
(b) the approval of any Out of the Ordinary Course Transaction will
require the approval of at least two-thirds of the Magna Directors
voting in respect of such transaction.
(5) Until a Section 116 Event, each of Newco I.5 and Newco II shall vote its
Magna Shares held directly or indirectly:
(a) against any resolution that would have the effect of detracting from
the culture, business philosophies and operating principles that
have been the cornerstone of Magna's success, including in
particular the Magna Corporate Constitution and the employee profit
sharing and employee charter principles contained therein; and
(b) in favour of any resolution that may be required to reaffirm or
otherwise maintain in force such culture, philosophies and
principles in all fundamental respects.
Section 4.3 Indemnification.
Each of Newco I.5 and Newco II shall indemnify its Directors to the
fullest extent permitted by the Act. Nothing in this Agreement limits the right
of any
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Director to claim indemnity apart from the provisions of this Agreement, if the
Director is entitled to such indemnity.
ARTICLE 5
RESTRICTIONS ON TRANSFER
Section 5.1 Restrictions on Transfer by Investors.
(1) No shareholder of Newco I.5 or Newco II may Transfer any Newco I.5 Shares
or Newco II Shares, including by way of retraction of retractable shares,
except as expressly permitted by this Agreement, the Principals Agreement
or the Exit Agreement.
(2) Any purported Transfer of Newco I.5 Shares or Newco II Shares in violation
of this Agreement is void. Each of the Parties shall take such action as
is required to prevent Newco I.5 or Newco II from recording such a
purported transfer on the share register of Newco I.5 or Newco II
maintained for the Newco I.5 Shares or Newco II Shares.
(3) From the date of any purported Transfer by a shareholder of Newco II
Shares in violation of this Agreement, all rights of such shareholder set
out in this Agreement are suspended and inoperative until the purported
Transfer is rescinded. This remedy is in addition to and not in lieu of
any other remedies that may be available to a Party.
Section 5.2 Permitted Transfers by Investors.
(1) Subject to this Section 5.2, upon twenty Business Days prior written
notice to each of the other Parties of the particulars of the proposed
Transfer, RM Sub is entitled to Transfer its Newco II Shares and its
interest in the Newco II Loan to any of its Permitted Transferees.
(2) No proposed Transfer of any Newco II Shares or an interest in the Newco II
Loan is effective until the Permitted Transferee complies with Section
2.6.
(3) Notwithstanding any other provision of this Agreement, RM Sub is
prohibited from Transferring Newco II Shares in a transaction that results
in Newco II becoming liable as a "resident contributor" to a non-resident
trust for the purposes of the Income Tax Act (Canada).
Section 5.3 Encumbering of Newco II Shares or Newco II Loan.
(1) Newco is prohibited from granting a Lien on or otherwise encumbering any
of its Newco I.5 Shares in any way whatsoever without the prior written
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consent of each of the Investors, which consent may be withheld in the
unfettered discretion of each such Investor.
(2) Newco I.5 is prohibited from granting a Lien on or otherwise encumbering
any of its Newco II Shares in any way whatsoever without the prior written
consent of each of the Investors, which consent may be withheld in the
unfettered discretion of each such Investor.
(3) Subject to Section 5.3(4), RM Sub is prohibited from granting a Lien on or
otherwise encumbering any of its Newco II Shares or interest in the Newco
II Loan in any way whatsoever without the prior written consent of 446,
which consent may be withheld in the unfettered discretion of 446.
(4) RM Sub may pledge its Newco II Shares and interest in the Newco II Loan to
secure the RM Loan, which pledge may permit transfers to RM's Lender of
Magna Class A Shares held by Newco II on the occurrence of a Realization
Event, provided that the agreements evidencing the RM Loan and related
security arrangements comply with the restrictions governing the RM Loan
contained in the Exit Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
Section 6.1 Representations and Warranties of the Investors.
Each Investor represents and warrants as follows and acknowledges and
confirms that each other Investor is relying on such representations and
warranties in entering into this Agreement:
(a) Existence. It is a corporation validly existing under the Applicable
Laws of its jurisdiction of incorporation and has all necessary
corporate power and authority to carry on its business as now
conducted, to own or lease and operate its assets and to execute,
deliver and perform its obligations under this Agreement.
(b) Authority and Enforceability. It has taken all necessary corporate
action to authorise the execution, delivery and performance of this
Agreement. This Agreement has been duly executed and delivered and
is a legal, binding obligation, enforceable against it by the other
Investor in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency and other laws affecting the
rights of creditors generally and except that equitable remedies may
be granted only in the discretion of a court of competent
jurisdiction.
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(c) No Violation. The execution, delivery and performance of this
Agreement does not, and will not, result in a breach or violation of
any of the provisions of or constitute a default under, or conflict
with or cause the acceleration of any obligation or that of a
Subsidiary under (i) a material Contract to which it is a party,
(ii) any provision of its articles, by-laws or resolutions of its
board of directors (or any committee thereof) or shareholders, (iii)
any judgment, decree, order or award of any Governmental Entity
having jurisdiction over it or (iv) any Applicable Law. No consent,
approval, order or authorization of, or declaration or filing with,
any Governmental Entity or other Person is required to be obtained
or made, as the case may be, in connection with the execution and
delivery of this Agreement.
(d) Title to Shares. The Newco Shares, Newco II Shares and interest in
the Newco II Loan described in the recitals as being owned or held
by it are owned or held by the Investor as the registered and
beneficial owner with good title, free and clear of all Liens, other
than those restrictions on transfer, if any, contained in the
articles of incorporation of Newco II, in the case of RM Sub, other
than Liens created by the RM Loan in accordance with Section 5.3.
Section 6.2 Survival.
The representations, warranties and covenants of the Parties contained in
this Article survive the execution and delivery of this Agreement and continue
in full force and effect with respect to each Party until it ceases to be bound
by the provisions of this Agreement.
ARTICLE 7
ARBITRATION
Section 7.1 Settling Disputes.
Any controversy or dispute arising out of or relating to this Agreement,
including its negotiation, validity, existence, breach, termination,
construction or application, or the rights, duties or obligations of any Party
to this Agreement, shall be referred to and finally resolved by arbitration to
be administered by the London Court of International Arbitration (LCIA) in
accordance with the UNCITRAL Arbitration Rules in effect on the date of this
Agreement. The seat of the arbitration shall be London, England and the
proceedings shall be conducted in the English language before a panel composed
of three (3) arbitrators. Each of the Investors shall appoint one arbitrator and
the two (2) appointed arbitrators shall appoint a chair. Should the two (2)
arbitrators fail to agree upon a chair within 15 days of their
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appointment, either of the Investors may apply to the LCIA for the appointment
of the third arbitrator.
Section 7.2 Right to Oral Discovery.
Notwithstanding anything to the contrary in the UNCITRAL Arbitration
Rules, each Party shall have the right to conduct an oral discovery of a
representative of the other Parties to the arbitration.
Section 7.3 Injunctive Relief.
Nothing in this Article 7 shall preclude one of the Parties to this
Agreement from seeking injunctive relief from a court of competent jurisdiction
when deemed necessary by such court to preserve the status quo or to prevent
irreparable injury pending resolution by arbitration of the actual dispute.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Principals Agreement.
Without the approval of each of the Investors, Newco shall promptly
enforce its rights under the Principals Agreement and shall not amend the
Principals Agreement nor waive any obligations of any other parties to the
Principals Agreement.
Section 8.2 Notices.
(i) Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be delivered in person or
transmitted by facsimile or similar means of recorded electronic
communication (with receipt confirmed) as follows:
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(a) to 446 at:
446 Holdings Inc.
c/o Miller Thomson LLP
40 King Street West
Suite 5800
Toronto, Ontario
Canada M5H 3S1
Attention: John Campbell
Facsimile: (416) 595-8695
with a copy to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
Canada M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
(b) to RM Sub at:
Veleron Holding B.V.
Haaksbergweg 31
Suite 4
1101 BP Amsterdam
The Netherlands
Facsimile: 31 20 650 9061
with a copy to:
Open Joint Stock Company Russian Machines
Registration #1047701003778
3 Kapranov Lane
123242 Moscow
Russia
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Attention: General Director
Facsimile: 7 495 705 5792
and to:
Bennett Jones LLP
3400 One First Canadian Place
P.O. Box 130
Toronto, Ontario
Canada M5X 1A4
Attention: Alan Bell
Facsimile: (416) 863-1716
and to:
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019-7475
Attention: Mark Greene and Richard Hall
Facsimile: (212) 474-3700
(c) if to Newco at:
M Unicar Inc.
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
Canada L4G 7K1
Attention: Belinda Stronach
Facsimile: (905) 726-7494
with a copy to:
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Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
Canada M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
and to:
Miller Thomson LLP
40 King Street West
Suite 5800
Toronto, Ontario
Canada M5H 3S1
Attention: John Campbell
Facsimile: (416) 595-8695
(d) to Newco I.5 at:
2143453 Ontario Inc.
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
Canada L4G 7K1
Attention: Belinda Stronach
Facsimile: (905) 726-7494
with a copy to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
Canada M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
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and to:
Miller Thomson LLP
40 King Street West
Suite 5800
Toronto, Ontario
Canada M5H 3S1
Attention: John Campbell
Facsimile: (416) 595-8695
(e) to Newco II at:
2143455 Ontario Inc.
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
Canada L4G 7K1
Attention: Belinda Stronach
Facsimile: (905) 726-7494
with a copy to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
Canada M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
-23-
and to:
Miller Thomson LLP
40 King Street West
Suite 5800
Toronto, Ontario
Canada M5H 3S1
Attention: John Campbell
Facsimile: (416) 595-8695
(ii) Any such notice or other communication shall be deemed to have been given
and received on the day on which it was delivered or transmitted (or, if
such day is not a Business Day, on the next following Business Day).
A Party may change its address for service and may add "copy to" parties from
time to time by providing a notice in accordance with the foregoing. Any
subsequent notice must be sent to such 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.
Section 8.3 Time of the Essence.
Time is of the essence in this Agreement.
Section 8.4 Announcements.
No public release or announcement concerning the transactions contemplated
by this Agreement shall be issued by a Party without the approval of the other
Parties (which consent shall not be unreasonably withheld), except as such
release or announcement may be required by Applicable Laws, in which case the
Party required to make the release or announcement shall allow the other Parties
reasonable time to comment on such announcement in advance of such issuance.
Section 8.5 Third Party Beneficiaries.
The Parties intend that this Agreement will not benefit or create any
right or cause of action in favour of any Person, other than the Parties. No
Person, other than the Parties, is entitled to rely on the provisions of this
Agreement in any action, suit, proceeding, hearing or other forum. 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.
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Section 8.6 No Agency or Partnership.
Nothing contained in this Agreement makes or constitutes any Party, or any
of its directors, officers or employees, the representative, agent, principal,
partner, joint venturer, employer or employee of any other Party.
Section 8.7 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
and the transactions contemplated by it. The fees and expenses referred to in
this 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 and accountants.
Section 8.8 Amendments and Waivers.
No amendment or waiver of any provision of this Agreement shall be binding
on any Party unless consented to in writing by that Party. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision,
nor shall any waiver constitute a continuing waiver unless otherwise expressly
provided.
Section 8.9 Entire Agreement.
This Agreement, together with the Transaction Agreement and the agreements
contemplated therein to which the Parties are party, constitute the entire
agreement between the Parties with respect to the transactions contemplated
hereby and thereby and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the Parties. There are
no representations, warranties, covenants, conditions or other agreements,
express or implied, collateral, statutory or otherwise, between the Parties or
certain of them in connection with the subject matter of this Agreement, the
Transaction Agreement or any of the agreements contemplated therein, except as
specifically set forth in this Agreement, the Transaction Agreement or in the
agreements contemplated therein. The 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, the Transaction
Agreement or the agreements contemplated therein.
Section 8.10 Successors and Assigns.
This Agreement shall enure to the benefit of and shall be binding on, and
enforceable by, the Parties and, where the context so permits, their respective
successors and permitted assigns. No Party may assign any of its rights or
obligations hereunder without the prior written consent of the other Parties,
except
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that RM Sub shall assign its rights and obligations hereunder to any Permitted
Transferee to whom it Transfers the RM Sub Securities (as defined in the Exit
Agreement) in accordance with Section 2.6.
Section 8.11 Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
Party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
Section 8.12 Governing Law.
This Agreement shall be construed, interpreted and enforced in accordance
with, and the respective rights and obligations of the Parties shall be governed
by, the laws of the Province of Ontario and the federal laws of Canada
applicable in that province. Subject to Article 7, each Party unconditionally
submits to the non-exclusive jurisdiction of the courts of the Province of
Ontario.
Section 8.13 Counterparts.
This Agreement may be executed in any number of counterparts (including
counterparts by facsimile) and all such counterparts taken together will be
deemed to constitute one and the same instrument. The Parties may rely on copies
of this Agreement which are delivered by facsimile as if such copies were
originals.
ARTICLE 9
RELEASE BY PRINCIPALS HOLDCO OF NEWCO II
Section 9.1 Release by Principals Holdco of Newco II
Effective at the Exchange Time, Principals Holdco hereby grants to Newco
II a full and final release from any and all liabilities and obligations of any
nature or kind whatsoever (whether accrued, absolute, contingent, unasserted or
otherwise) owed by Newco II to Principals Holdco and arising on or before, or
related to any matter occurring on or before, the Exchange Time. Effective at
the Exchange Time, Principals Holdco agrees that Newco II shall cease to have
any rights (other than pursuant to this Article 9) or any obligation with
respect to any breach of this Agreement by Newco II prior to the Exchange Time.
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IN WITNESS WHEREOF the Parties have executed this Agreement.
446 HOLDINGS INC.
By:
---------------------------------
Authorized Signing Officer
By:
---------------------------------
Authorized Signing Officer
VELERON HOLDING B.V.
By:
---------------------------------
Authorized Signing Officer
By:
---------------------------------
Authorized Signing Officer
M UNICAR INC.
By:
---------------------------------
Authorized Signing Officer
By:
---------------------------------
Authorized Signing Officer
2143453 ONTARIO INC.
By:
---------------------------------
Authorized Signing Officer
By:
---------------------------------
Authorized Signing Officer
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MPMAG HOLDINGS INC.
By:
---------------------------------
Authorized Signing Officer
By:
---------------------------------
Authorized Signing Officer
2143455 ONTARIO INC.
By:
---------------------------------
Authorized Signing Officer
By:
---------------------------------
Authorized Signing Officer
Exhibit E
SW HOLDCO INC.
AS WOLF HOLDCO
and
MPMAG HOLDINGS INC.
AS PRINCIPALS HOLDCO
and
2143453 ONTARIO INC.
AS NEWCO I.5
and
M UNICAR INC.
AS NEWCO
WOLF HOLDCO MAGNA CLASS A SHARE OPTION AGREEMENT
September 20, 2007
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION...............................................................1
1.1 Defined Terms.....................................................1
1.2 Gender and Number.................................................5
1.3 Sections and Headings.............................................5
1.4 Currency..........................................................6
1.5 Certain Phrases...................................................6
1.6 Statutory References..............................................6
ARTICLE 2
RIGHT TO PURCHASE CLASS A SHARES OF MAGNA....................................6
2.1 Call Option.......................................................6
2.2 Exercise of Call Option...........................................6
2.3 Call Option Consideration.........................................6
2.4 Closing...........................................................6
2.5 Acknowledgement...................................................7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES...............................................7
3.1 Representations and Warranties of Wolf Holdco.....................7
3.2 Representations and Warranties of Principals Holdco...............8
3.3 Representations and Warranties of Newco I.5.......................8
3.4 Survival..........................................................8
ARTICLE 4
COVENANTS OF WOLF HOLDCO, PRINCIPALS HOLDCO AND NEWCO I.5...................9
4.1 Covenants of Wolf Holdco..........................................9
4.2 Covenants of Principals Holdco....................................9
4.3 Covenants of Newco I.5............................................9
4.4 Covenants of Newco...............................................10
ARTICLE 5
PROCEDURE FOR SALE OF SHARES................................................10
5.1 Additional Covenants of the Parties..............................10
5.2 Conditions for the Benefit of Principals Holdco..................10
5.3 Closing Procedures...............................................11
5.4 Non-Compliance with Conditions...................................11
5.5 Non-Completion by Wolf Holdco....................................11
ARTICLE 6
MISCELLANEOUS...............................................................12
6.1 Notices..........................................................12
6.2 Time of the Essence..............................................15
6.3 Announcements....................................................15
6.4 No Agency or Partnership.........................................15
6.5 Expenses.........................................................15
6.6 Amendments and Waivers...........................................15
6.7 Entire Agreement.................................................15
(i)
6.8 Successors and Assigns...........................................16
6.9 Severability.....................................................16
6.10 Governing Law....................................................16
6.11 Counterparts.....................................................16
(ii)
WOLF HOLDCO MAGNA CLASS A SHARE OPTION AGREEMENT
Wolf Holdco Magna Class A Share Option Agreement dated September 20,
2007 between SW Holdco Inc. ("Wolf Holdco"), MPMAG Holdings Inc. ("Principals
Holdco"), 2143453 Ontario Inc. ("Newco I.5") and M Unicar Inc. ("Newco")
RECITALS:
A. Wolf Holdco is the registered and beneficial owner of 250,000 Magna Class
A Shares;
B. Principals Holdco is the registered and beneficial owner of 6,175 Newco
I.5 Class A-1, Series 2 Common Shares, which are convertible in certain
circumstances into 6,175 Newco I.5 Class A-2, Series 2 Common Shares;
162.5 Newco Class A Series 2 Shares, which are convertible in certain
circumstances into 162.5 Newco Class D Series 2 Shares; and 6,175 Class A
Preferred shares; and
C. Wolf Holdco desires to issue to Principals Holdco an option to purchase
the Wolf Holdco Magna Securities on the terms and conditions set out in
this Agreement.
In consideration of the above recitals, and the agreements of the parties
hereto contained in this Agreement and other good and valuable consideration
(the receipt and adequacy of which are hereby acknowledged), the parties hereto
agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Defined Terms.
As used in this Agreement, the following terms have the following meanings:
"446" means 446 Holdings Inc., a corporation existing under the Act and a
wholly owned subsidiary of 445, and its successors.
"446 Anniversary Date Triggering Event" means the delivery of an Exit
Notice by 446 in accordance with Section 2.2(3) of the Exit Agreement in
connection with the exercise by 446 of its right to cause RM Sub to sell
its RM Sub Securities to Newco Purchaser pursuant to Section 2.2(2)(a) of
the Exit Agreement.
"Act" means the Business Corporations Act (Ontario).
"Agreement" means this agreement and all schedules attached to it as
amended, modified, restated, replaced or supplemented from time to time.
"Applicable Laws" means all applicable federal, provincial, state,
municipal and local statutes, laws, by-laws, regulations, ordinances,
orders, enactment, directives and rules and all injunctions, decisions,
directives, judgments and orders of any Governmental Entity having
jurisdiction in respect of a particular matter and all amendments thereto
which have the force of law.
"Authorization" means, with respect to a Person, any order, relief,
permit, approval, consent, waiver, licence or similar authorization of any
Governmental Entity, including any securities regulatory authority, having
jurisdiction over the Person.
"Business Day" means any day of the year, other than a Saturday, Sunday or
day observed as a statutory holiday in Toronto, Ontario.
"Call Sale Transaction" has the meaning specified in Section 2.4.
"Class A Shares" means the class A shares in the capital of Newco,
issuable in series.
"Class A-1 Common Shares" means the class A-1 common shares in the capital
of Newco I.5, issuable in series.
"Class A-2 Common Shares" means the class A-2 common shares in the capital
of Newco I.5, issuable in series.
"Class A Preferred Shares" means the class A preferred shares in the
capital of Newco I.5, issuable in series.
"Class D Shares" means the class D shares in the capital of Newco,
issuable in series.
"Closing Date" has the meaning specified in Section 2.4.
"Contract" means any agreement, contract, lease, licence, permit,
franchise, purchase order, commitment, engagement, option, indenture,
mortgage, deed, instrument or other legally binding obligation, whether
written, oral or implied.
"Effective Date" means the date shown on the Certificate of Arrangement.
"Effective Time" means 12:01 a.m. (Eastern Time) on the Effective Date.
"Exit Agreement" means the exit agreement to be entered into on the
Effective Date among 445, 446, RM, RM Sub, Newco, Newco I.5, Newco II and
RM's lender.
"Exit Notice" means the formal notice to be provided by RM Sub or 446, as
the case may be, to each of the parties to the Exit Agreement in
connection with an exercise of its respective exit rights pursuant to the
Exit Agreement.
"Governmental Entity" means any (a) multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitrator or arbitral
body, commission, board, bureau or agency, domestic or foreign, including
the Ontario Securities Commission, the Autorite des marches financiers du
Quebec and the United States Securities and Exchange Commission, (b)
self-regulatory organization or stock exchange, including the Toronto
Stock Exchange and the New York Stock Exchange, (c) subdivision, agent,
commission, board, or authority of any of the foregoing, or (d)
quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any of the
foregoing.
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"Insolvency/Material Breach Triggering Event" means the delivery of an
Exit Notice by either RM Sub or 446 in accordance with Section 2.2(3) of
the Exit Agreement in connection with the exercise by RM Sub or 446 of RM
Sub's right to sell, or 446's right to cause RM Sub to sell, as the case
may be, the RM Sub Securities to Newco Purchaser pursuant to Sections
2.2(1)(b), 2.2(1)(c), 2.2(2)(b) or 2.2(2)(c) of the Exit Agreement.
"Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, deemed trust,
security interest, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any
financing lease having substantially the same economic effect as any of
the foregoing, and the filing of, or agreement to give, any financing
statement perfecting a security interest under the PPSA or comparable
notice filing under the law of any other jurisdiction or any option,
warrant, right or privilege capable of becoming a Transfer) (other than
Liens created pursuant to any long-term retention (restricted share)
agreement between Magna and a Principal).
"Magna" means Magna International Inc., a corporation existing under
the Act and its successors.
"Magna Class A Shares" means the Class A Subordinate Voting Shares in the
capital of Magna.
"Newco" means M Unicar Inc., a corporation existing under the Act and,
immediately prior to the Effective Time, a wholly owned subsidiary of 446,
and its successors.
"Newco Class C Common Shares" means 42,000 Class C Common Shares in the
capital of Newco beneficially owned by RM Sub.
"Newco I.5" means 2143453 Ontario Inc., a corporation existing under the
Act and, immediately prior to the Effective Time, a wholly-owned
subsidiary of Newco, and its successors;
"Newco II" means 2143455 Ontario Inc., a corporation existing under the
Act and, immediately prior to the Effective Time, a wholly owned
subsidiary of Newco I.5, and its successors.
"Newco II Class A Common Shares" means 100 Class A Common Shares in the
capital of Newco II beneficially owned by RM Sub.
"Newco II Loan" means the loan provided by RM Sub to Newco II on the date
hereof and evidenced by the Newco II Loan Note.
"Newco II Loan Note" means the promissory note dated the date hereof
issued to RM Sub by Newco II to evidence the Newco II Loan, including the
ancillary agreements and documents relating to the security therefor.
"Newco Purchaser" means 446 or such other Person as 446 may designate
from time to time by giving notice to others in accordance with the Exit
Agreement.
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"Parties" mean Principals Holdco, Wolf Holdco and Newco I.5.
"Person" includes any individual, firm, partnership, limited partnership,
joint venture, venture capital fund, limited liability company, unlimited
liability company, association, trust, trustee, heir, executor,
administrator, legal personal representative, estate, group, body
corporate, corporation, unincorporated association or organization,
Governmental Entity, syndicate or other entity, whether or not having
legal status.
"Pledge Agreement" means the pledge agreement to be entered into on the
Effective Date between Wolf Holdco and Principals Holdco.
"PPSA" means the Personal Property Security Act (Ontario).
"Principals Holdco Newco I.5 Securities" means all of the Newco I.5 Class
A-1 Series 2 Common Shares, all of the Newco I.5 Class A-2 Series 2 Common
Shares, all of the Newco I.5 Class A Series 2 Preferred Shares, all of the
Newco Class A Series 2 Shares and all of the Newco Class D Series 2 Shares
legally and beneficially owned by Principals Holdco, appropriately
adjusted for stock splits, stock dividends, reverse stock splits, share
consolidations and similar events and, where the context permits,
includes: (i) any securities into which such shares may be converted,
reclassified, redesignated, subdivided, consolidated or otherwise changed,
(ii) any securities received by the holder of such shares as a result of
any merger, amalgamation, reorganization, arrangement or other similar
transaction involving Newco I.5, and (iii) any securities of Newco I.5
which are received by the holder of such shares as a stock dividend or
distribution on or in respect of such shares.
"Realization Triggering Event" means any demand for repayment of the Newco
II Loan.
"RM" means Open Joint Stock Company Russian Machines, a company existing
under the laws of Russia, and its successors.
"RM Sub" means Veleron Holding B.V., a company existing under the laws of
The Netherlands and a wholly owned indirect subsidiary of RM, and its
successors.
"RM Sub Anniversary Date Triggering Event" means the time of the closing
of the sale by RM Sub of some or all of its RM Sub Securities to Newco
Purchaser pursuant to the Exit Agreement following the occurrence of the
date referred to in Section 2.2(1)(a) of the Exit Agreement and delivery
of an Exit Notice in accordance with Section 2.2(3) of the Exit Agreement.
"RM Sub Securities" means the Newco Class C Common Shares, Newco II Class
A Common Shares and interest in the Newco II Loan and the Newco II Loan
Note (or any Newco II special shares issued on conversion of the Newco II
Loan Note) owned by RM Sub.
"Subsidiary" means, in respect of a Party, a subsidiary (as that term is
defined in the Act as now in effect) of that Party or any Person in which
such Party has a direct or indirect controlling interest or a
joint-controlling interest, and shall be deemed to include any
-4-
partnership or joint venture in which such Party has a direct or indirect
interest of more than 50 percent.
"Time of Closing" means 10:00 a.m. (Toronto Time) on the Closing Date or
such later or earlier time on the Closing Date as those parties to a Call
Sale Transaction may agree in writing.
"Transfer" means any (i) transfer, sale, assignment, exchange, gift,
donation, mortgage, pledge, charge, encumbrance, grant of security
interest or other disposition of securities where possession, legal title,
beneficial ownership or the economic risk or return associated with such
securities passes directly or indirectly from one Person to another or to
the same Person in a different legal capacity, whether or not for value,
whether or not voluntary and however occurring, or (ii) agreement,
undertaking or commitment to effect any of the foregoing, and
"Transferred" and "Transferring" shall be construed accordingly.
"Triggering Event" means a 446 Anniversary Date Triggering Event, an RM
Sub Anniversary Date Triggering Event, an Insolvency/Material Breach
Triggering Event or a Realization Triggering Event.
"Wolf Holdco" means SW Holdco Inc., a corporation existing under the OBCA
and, immediately prior to the Effective Time, a wholly owned subsidiary of
Principals Holdco that holds 250,000 Class A Subordinate Voting Shares,
and its successors;
"Wolf Holdco Magna Securities" means the 250,000 Magna Class A Shares
beneficially owned by Wolf Holdco, appropriately adjusted for stock
splits, stock dividends, reverse stock splits, share consolidations and
similar events and, where the context permits, includes: (i) any
securities into which such shares may be converted, reclassified,
redesignated, subdivided, consolidated or otherwise changed, (ii) any
securities received by the holder of such shares as a result of any
merger, amalgamation, reorganization, arrangement or other similar
transaction involving Magna, and (iii) any securities of Magna which are
received by the holder of such shares as a stock dividend or distribution
on or in respect of such shares.
1.2 Gender and Number.
Any reference in this Agreement to gender includes all genders. Words importing
the singular number also include the plural and vice versa.
1.3 Sections and Headings.
The division of this Agreement into Articles and Sections, the insertion of
headings and the inclusion of a table of contents are for reference purposes
only and shall not affect the interpretation of this Agreement. Unless otherwise
indicated, any reference in this Agreement to an Article, a Section, a Schedule
or an Exhibit refers to the specified Article or Section of, or Schedule or
Exhibit to, this Agreement.
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1.4 Currency.
Unless otherwise indicated, all dollar amounts in this Agreement are expressed
in United States funds.
1.5 Certain Phrases.
In this Agreement, (i) the words "including", "includes" and "include" mean
"including (or includes or include) without limitation", and (ii) the words "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".
1.6 Statutory References.
A reference to a statute includes all rules and regulations made pursuant to
such statute and, unless otherwise specified, the provisions of any statute or
regulation or rule which amends, supplements or supersedes any such statute or
any such regulation or rule.
ARTICLE 2
RIGHT TO PURCHASE CLASS A SHARES OF MAGNA
2.1 Call Option
Principals Holdco shall have the right to purchase from Wolf Holdco all, but not
less than all, of the Wolf Holdco Magna Securities in accordance with this
Article 2 upon the occurrence of any Triggering Event.
2.2 Exercise of Call Option
In order to exercise its right under Section 2.1, Principals Holdco shall,
within 30 Business Days after any Triggering Event, deliver to each of Wolf
Holdco and Newco I.5, in writing, a notice ("Call Notice") that Principals
Holdco is exercising its rights under Section 2.1 specifying the type of
Triggering Event related to such exercise.
2.3 Call Option Consideration
If the Call Notice is delivered in accordance with Section 2.2 and is not
revoked by Principals Holdco prior to the Closing Date, then on the Closing Date
Wolf Holdco shall sell and Principals Holdco shall purchase the Wolf Holdco
Magna Securities free and clear of all Liens in exchange for the Principals
Holdco Newco I.5 Securities held by Principals Holdco free and clear of all
Liens.
2.4 Closing
The completion of the transaction of purchase and sale under this Agreement
contemplated by Section 2.1 (a "Call Sale Transaction") will take place on the
Closing Date in accordance with and subject to Article 5. "Closing Date" means
(a) the second Business Day following the satisfaction (or, to the extent
permitted, the waiver) of the conditions set forth in Section 5.2 or such other
date as Principals Holdco and Wolf Holdco shall agree to in writing.
-6-
2.5 Acknowledgement
Notwithstanding any other provision of this Agreement, Principals Holdco
acknowledges that some or all of the Wolf Holdco Magna Securities may be subject
to the terms, conditions and restrictions contained in one or more long-term
retention (restricted share) agreement(s) and that Magna shall maintain
possession of such Wolf Holdco Magna Securities and shall only release them as
and when the applicable restrictions are fully satisfied.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Wolf Holdco.
Wolf Holdco represents and warrants as follows and acknowledges and confirms
that each other Party is relying on such representations and warranties in
entering into this Agreement:
(a) Existence. It is a corporation validly existing under the Act and
has all necessary corporate power and authority to carry on its
business as now conducted, to own or lease and operate its assets
and to execute, deliver and perform its obligations under this
Agreement.
(b) Authority and Enforceability. It has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement. This Agreement has been duly executed and delivered and
is a legal and binding obligation, enforceable against it by the
other Parties in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency and other laws affecting
the rights of creditors generally and except that equitable remedies
may be granted only in the discretion of a court of competent
jurisdiction.
(c) No Violation. The execution, delivery and performance of this
Agreement does not, and will not, result in a breach or violation of
any of the provisions of or constitute a default under, or conflict
with or cause the acceleration of any obligation or that of a
Subsidiary under (i) a material Contract to which it is a party,
(ii) any provision of its articles, by-laws or resolutions of its
board of directors (or any committee thereof) or shareholders, (iii)
any judgment, decree, order or award of any Governmental Entity
having jurisdiction over it or (iv) any Applicable Law. No consent,
approval, order or authorization of, or declaration or filing with,
any Governmental Entity or other Person is required to be obtained
or made, as the case may be, in connection with the execution and
delivery of this Agreement.
(d) Title to Magna Class A Shares. The Wolf Holdco Magna Securities
described in the recitals as being owned by Wolf Holdco are owned by
it as the registered and beneficial owner with good title, free and
clear of all Liens (other than the Lien created by the Pledge
Agreement).
-7-
3.2 Representations and Warranties of Principals Holdco
Principals Holdco represents and warrants as follows and acknowledges and
confirms that each other Party is relying on such representations and warranties
in entering into this Agreement:
(a) Existence. It is a corporation validly existing under the Act and
has all necessary corporate power and authority to carry on its
business as now conducted, to own or lease and operate its assets
and to execute, deliver and perform its obligations under this
Agreement.
(b) Authority and Enforceability. It has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement. This Agreement has been duly executed and delivered and
is a legal and binding obligation, enforceable against it by the
other Parties in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency and other laws affecting
the rights of creditors generally and except that equitable remedies
may be granted only in the discretion of a court of competent
jurisdiction.
(c) No Violation. The execution, delivery and performance of this
Agreement does not, and will not, result in a breach or violation of
any of the provisions of or constitute a default under, or conflict
with or cause the acceleration of any obligation or that of a
Subsidiary under (i) a material Contract to which it is a party,
(ii) any provision of its articles, by-laws or resolutions of its
board of directors (or any committee thereof) or shareholders, (iii)
any judgment, decree, order or award of any Governmental Entity
having jurisdiction over it or (iv) any Applicable Law. No consent,
approval, order or authorization of, or declaration or filing with,
any Governmental Entity or other Person is required to be obtained
or made, as the case may be, in connection with the execution and
delivery of this Agreement.
(d) Title to Class A Common Shares of Newco I.5. The Principals Holdco
Newco I.5 Securities described in the recitals as being owned by
Principals Holdco are owned by it as the registered and beneficial
owner with good title, free and clear of all Liens.
3.3 Representations and Warranties of Newco I.5
Newco I.5 represents and warrants as follows and acknowledges and confirms that
each other Party is relying on such representations and warranties in entering
into this Agreement:
(a) That it has taken all actions necessary to carry out the pledge
contemplated by the Pledge Agreement and the Call Sale Transaction.
3.4 Survival.
Notwithstanding the Limitations Act, 2002 (Ontario), The representations and
warranties of Wolf Holdco and Principals Holdco contained in Article 3and the
covenants of Wolf Holdco, Principals Holdco and Newco I.5 contained in Article
4and Article 5survive the execution and delivery of this Agreement and continue
in full force and effect with respect to each of Wolf
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Holdco, Principals Holdco and Newco I.5 until it ceases to be bound by the
provisions of this Agreement.
ARTICLE 4
COVENANTS OF WOLF HOLDCO, PRINCIPALS HOLDCO AND NEWCO I.5
4.1 Covenants of Wolf Holdco.
(a) Wolf Holdco shall not Transfer the Wolf Holdco Magna Securities
except as expressly permitted by this Agreement or except with the
prior written consent of Principals Holdco, which consent may be
withheld in the unfettered discretion of Principals Holdco.
(b) Wolf Holdco shall not grant a Lien on or otherwise encumber any of
the Wolf Holdco Magna Securities in any way whatsoever without the
prior written consent of Principals Holdco, which consent may be
withheld in the unfettered discretion of Principals Holdco.
(c) Wolf Holdco shall execute the Pledge Agreement concurrently with the
execution and delivery of this Agreement and pledges the Wolf Holdco
Magna Securities to Principals Holdco pursuant to the terms of the
Pledge Agreement.
4.2 Covenants of Principals Holdco.
(a) Principals Holdco shall not Transfer the Principals Holdco Newco I.5
Securities except as expressly permitted by this Agreement or except
with the prior written consent of Wolf Holdco, which consent may be
withheld in the unfettered discretion of Wolf Holdco;
(b) Principals Holdco shall not grant a Lien on or otherwise encumber
any of the Principals Holdco Newco I.5 Securities in any way
whatsoever without the prior written consent of Wolf Holdco, which
consent may be withheld in the unfettered discretion of Wolf Holdco.
4.3 Covenants of Newco I.5
(a) Newco I.5 hereby irrevocably consents to the Transfer of the
Principals Holdco Newco I.5 Securities to Wolf Holdco pursuant to
this Agreement and shall take all actions necessary to effect the
transfer of the Principals Holdco Newco I.5 Securities to Wolf
Holdco, all in accordance with the terms and conditions of this
Agreement.
(b) Newco I.5, as the sole shareholder of Wolf Holdco, hereby
irrevocably consents to, authorizes and approves the pledge of the
Wolf Holdco Magna Securities to Principals Holdco pursuant to the
Pledge Agreement and the sale by Wolf Holdco of the Wolf Holdco
Magna Securities pursuant to this Agreement.
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4.4 Covenants of Newco
(a) Newco hereby irrevocably consents to the Transfer of the Principals
Holdco Newco I.5 Securities to Wolf Holdco pursuant to this
Agreement and shall take all actions necessary to effect the
transfer of the Principals Holdco Newco I.5 Securities to Wolf
Holdco, all in accordance with the terms and conditions of this
Agreement.
ARTICLE 5
PROCEDURE FOR SALE OF SHARES
5.1 Additional Covenants of the Parties.
(a) Each Party shall take all actions that are within its power to
control, and use its commercially reasonable efforts to cause other
actions to be taken which are not within its power to control, to
ensure satisfaction of the conditions in Section 5.2.
(b) Wolf Holdco shall take all necessary steps and corporate proceedings
to permit good title to the Wolf Holdco Magna Securities to be duly
and validly transferred and assigned in accordance with the
provisions of this Agreement at the Time of Closing, free and clear
of Liens.
(c) Principals Holdco shall take all necessary steps and corporate
proceedings to permit good title to any Principals Holdco Newco I.5
Securities that are to be delivered by Principals Holdco to Wolf
Holdco in accordance with the provisions of this Agreement to be
duly and validly transferred and assigned in accordance with the
provisions of this Agreement at the Time of Closing, free and clear
of Liens.
(d) Each Party shall use its commercially reasonable efforts to make or
give, or cause to be made or given, all filings with and
notifications to any Governmental Entity and obtain or cause to be
obtained all Authorizations, necessary in order to complete the Call
Sale Transaction and to facilitate any purchase and sale of
securities in accordance with Article 2.
5.2 Conditions for the Benefit of Principals Holdco.
The completion of any Call Sale Transaction is subject to the following
conditions to be fulfilled or performed on or before the Closing Date, which
conditions are for the exclusive benefit of Principals Holdco and may be waived,
in whole or in part, by Principals Holdco in its sole discretion:
(a) the delivery to Principals Holdco of a certificate of Wolf Holdco,
signed by an authorized officer of Wolf Holdco on its behalf and not
in his personal capacity, certifying that (i) on the Closing Date,
the Wolf Holdco Magna Securities are owned by Wolf Holdco as the
registered and beneficial owner with good title, free and clear of
Liens other than those being released on such date, and (ii) upon
completion of the Call Sale Transaction, Principals Holdco will have
good and
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valid title to the Wolf Holdco Magna Securities transferred by Wolf
Holdco, free and clear of Liens;
(b) all filings, notices and the receipt of all Authorizations necessary
under Applicable Laws to permit the trade or distribution by Wolf
Holdco of the Wolf Holdco Magna Securities necessary to effect the
Call Sale Transaction shall have been made, given or obtained; and
(c) the completion of the Call Sale Transaction will not result in the
violation of any Applicable Law.
5.3 Closing Procedures.
(a) The completion of the Call Sale Transaction will take place at the
offices of Miller Thomson LLP in Toronto, Ontario, at the Time of
Closing or at such other place, or on such other date as the parties
to the Call Sale Transaction may agree to in writing.
(b) Subject to satisfaction or waiver by Principals Holdco of the
conditions of closing in its favour, at the closing of the Call Sale
Transaction:
(i) Wolf Holdco shall assign and transfer title and deliver actual
possession of the Wolf Holdco Magna Securities to Principals
Holdco and endorse the share certificates representing the
Wolf Holdco Magna Securities for transfer to Principals
Holdco; and
(ii) Principals Holdco shall assign and transfer title and deliver
actual possession of the Principals Holdco Newco I.5
Securities to Wolf Holdco and endorse the share certificates
representing the Principals Holdco Newco I.5 Securities for
transfer to Wolf Holdco.
5.4 Non-Compliance with Conditions.
If at the Time of Closing, the Wolf Holdco Magna Securities are not free and
clear of all Liens (other than the Lien created by the Pledge Agreement),
Principals Holdco may, without prejudice to any other rights it may have, choose
to purchase the Wolf Holdco Magna Securities subject to such Liens to the extent
that Principals Holdco recognizes the validity of such Liens provided that
Principals Holdco shall be entitled to such monetary rights of set off and/or to
take such other steps as it deems appropriate to recognize any diminution in
value in the Wolf Holdco Magna Securities due to such Liens. Wolf Holdco agrees
to indemnify Principals Holdco for the amount of any obligations and liabilities
in respect of such Liens to the extent that such obligations and liabilities
exceed the value of the Principals Holdco Newco Securities.
5.5 Non-Completion by Wolf Holdco.
(a) In addition to and without limiting any remedy that may be available
under Applicable Law to Principals Holdco, if at the Time of Closing
Wolf Holdco fails to complete the Call Sale Transaction in violation
of this Agreement, Principals Holdco has the right, if Principals
Holdco is not in default under this Agreement,
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to make payment of the purchase price for the Wolf Holdco Magna
Securities to Wolf Holdco by delivering share certificates
representing the Principals Holdco Newco I.5 Securities to a
recognized financial institution in Canada to hold on behalf of Wolf
Holdco. Such delivery constitutes valid and effective payment of the
purchase price to Wolf Holdco irrespective of any action Wolf Holdco
may have taken to transfer or grant a Lien on the Wolf Holdco Magna
Securities. If the purchase price has been so paid, then from the
date of such delivery the Call Sale Transaction is deemed to have
been completed and all right, title, benefit and interest, both at
law and in equity, in and to the Wolf Holdco Magna Securities shall
be deemed to have been transferred to and become vested in
Principals Holdco and all right, title, benefit and interest of Wolf
Holdco, or of any transferee or assignee of, or other Person
claiming an interest through, Wolf Holdco, in and to the Wolf Holdco
Magna Securities, shall cease.
(b) Wolf Holdco is entitled to receive the share certificates delivered
to a recognized financial institution in Canada under Section 5.1(a)
on delivery to Principals Holdco of the documents referred to in
Section 5.2 and Section 5.3(b)(i) and in compliance with all other
provisions of this Agreement.
ARTICLE 6
MISCELLANEOUS
6.1 Notices.
Any notice or other communication required or permitted to be given hereunder
shall be in writing and shall be delivered in person or transmitted by
telecopier or similar means of recorded electronic communication (with receipt
confirmed) as follows:
(a) to Principals Holdco at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Jeffrey O. Palmer
Facsimile: (905) 726-7164
with a copy to: Vincent J. Galifi, Peter Koob, Donald J. Walker
and Siegfried Wolf
and to:
Miller Thomson LLP
Scotia Plaza
40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
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Attention: John Campbell
Facsimile: (416) 595.8695
(b) to Wolf Holdco at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Siegfried Wolf
Facsimile: (905) 726-2595
with a copy to:
Miller Thomson LLP
Scotia Plaza
40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
Attention: John Campbell
Facsimile: (416) 595.8695
and to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
(c) to Newco I.5 at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Belinda Stronach
Facsimile: (905) 726-7494
with a copy to:
Miller Thomson LLP
Scotia Plaza
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40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
Attention: John Campbell
Facsimile: (416) 595.8695
and to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
(d) to Newco at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Belinda Stronach
Facsimile: (905) 726-7494
with a copy to:
Miller Thomson LLP
Scotia Plaza
40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
Attention: John Campbell
Facsimile: (416) 595.8695
and to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
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Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
Any such notice or other communication shall be deemed to have been given and
received on the day on which it was delivered or transmitted (or, if such day is
not a Business Day, on the next following Business Day).
A Party may change its address for service and may add "copy to" parties 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.
6.2 Time of the Essence.
Time is of the essence in this Agreement.
6.3 Announcements.
No public release or announcement concerning the transactions contemplated by
this Agreement shall be issued by a Party without the approval of Principals
Holdco and Wolf Holdco (which consent shall not be unreasonably withheld),
except as such release or announcement may be required by Applicable Laws, in
which case the Party required to make the release or announcement shall allow
the other Parties reasonable time to comment on such announcement in advance of
such issuance.
6.4 No Agency or Partnership.
Nothing contained in this Agreement makes or constitutes a Party, or any of its
directors, officers or employees, the representative, agent, principal, partner,
joint venturer, employer or employee of the other Party.
6.5 Expenses.
Each Party will pay for its own costs and expenses incurred in connection with
this Agreement and the transactions contemplated by it.
6.6 Amendments and Waivers.
No amendment or waiver of any provision of this Agreement shall be binding on
any Party unless consented to in writing by that Party. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision,
nor shall any waiver constitute a continuing waiver unless otherwise expressly
provided.
6.7 Entire Agreement.
This Agreement constitutes the entire agreement between the Parties with respect
to the transactions contemplated hereby and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties. There are no representations, warranties, covenants, conditions or
other agreements, express or implied, collateral, statutory or otherwise,
between the Parties or certain of them in connection with the
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subject matter of this Agreement, except as specifically set forth in this
Agreement. The 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.
6.8 Successors and Assigns.
This Agreement shall enure to the benefit of and shall be binding on, and
enforceable by, the Parties and, where the context so permits, their respective
successors and permitted assigns. No Party may assign any of its rights or
obligations hereunder without the prior written consent of the other Parties.
6.9 Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
Party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
6.10 Governing Law.
This Agreement shall be construed, interpreted and enforced in accordance with,
and the respective rights and obligations of the Parties shall be governed by,
the laws of the Province of Ontario and the federal laws of Canada applicable in
that province. Each Party unconditionally submits to the non-exclusive
jurisdiction of the courts of the Province of Ontario.
6.11 Counterparts.
This Agreement may be executed in any number of counterparts (including
counterparts by facsimile) and all such counterparts taken together will be
deemed to constitute one and the same instrument. The Parties may rely on copies
of this Agreement which are delivered by facsimile as if such copies were
originals.
(Signatures appear on the following page)
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IN WITNESS WHEREOF the Parties have executed this Share Option Agreement.
MPMAG HOLDINGS INC.
Per:
------------------------------
Authorized Signing Officer
Per:
------------------------------
Authorized Signing Officer
SW HOLDCO INC.
Per:
------------------------------
Authorized Signing Officer
Per:
------------------------------
Authorized Signing Officer
2143453 ONTARIO INC.,
Per:
------------------------------
Authorized Signing Officer
Per:
------------------------------
Authorized Signing Officer
M UNICAR INC.,
Per:
------------------------------
Authorized Signing Officer
Per:
------------------------------
Authorized Signing Officer
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Exhibit F
DW HOLDCO INC.
AS WALKER HOLDCO
and
MPMAG HOLDINGS INC.
AS PRINCIPALS HOLDCO
and
2143453 ONTARIO INC.
AS NEWCO I.5
and
M UNICAR INC.
AS NEWCO
WALKER HOLDCO MAGNA CLASS A SHARE OPTION AGREEMENT
September 20, 2007
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION................................................................1
1.1 Defined Terms.................................................1
1.2 Gender and Number.............................................5
1.3 Sections and Headings.........................................5
1.4 Currency......................................................6
1.5 Certain Phrases...............................................6
1.6 Statutory References..........................................6
ARTICLE 2
RIGHT TO PURCHASE CLASS A SHARES OF MAGNA.....................................6
2.1 Call Option...................................................6
2.2 Exercise of Call Option.......................................6
2.3 Call Option Consideration.....................................6
2.4 Closing.......................................................6
2.5 Acknowledgement...............................................7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES................................................7
3.1 Representations and Warranties of Walker Holdco...............7
3.2 Representations and Warranties of Principals Holdco...........8
3.3 Representations and Warranties of Newco I.5...................8
3.4 Survival......................................................8
ARTICLE 4
COVENANTS OF WALKER HOLDCO, PRINCIPALS HOLDCO AND NEWCO I.5..................9
4.1 Covenants of Walker Holdco....................................9
4.2 Covenants of Principals Holdco................................9
4.3 Covenants of Newco I.5........................................9
4.4 Covenants of Newco...........................................10
ARTICLE 5
PROCEDURE FOR SALE OF SHARES.................................................10
5.1 Additional Covenants of the Parties..........................10
5.2 Conditions for the Benefit of Principals Holdco..............10
5.3 Closing Procedures...........................................11
5.4 Non-Compliance with Conditions...............................11
5.5 Non-Completion by Walker Holdco..............................11
ARTICLE 6
MISCELLANEOUS................................................................12
6.1 Notices......................................................12
6.2 Time of the Essence..........................................15
6.3 Announcements................................................15
6.4 No Agency or Partnership.....................................15
(i)
6.5 Expenses.....................................................15
6.6 Amendments and Waivers.......................................15
6.7 Entire Agreement.............................................15
6.8 Successors and Assigns.......................................16
6.9 Severability.................................................16
6.10 Governing Law................................................16
6.11 Counterparts.................................................16
(ii)
WALKER HOLDCO MAGNA CLASS A SHARE OPTION AGREEMENT
Walker Holdco Magna Class A Share Option Agreement dated September 20,
2007 between DW Holdco Inc. ("Walker Holdco"), MPMAG Holdings Inc. ("Principals
Holdco"), 2143453 Ontario Inc. ("Newco I.5") and M Unicar Inc. ("Newco")
RECITALS:
A. Walker Holdco is the registered and beneficial owner of 250,000 Magna
Class A Shares;
B. Principals Holdco is the registered and beneficial owner of 6,175 Newco
I.5 Class A-1, Series 1 Common Shares, which are convertible in certain
circumstances into 6,175 Newco I.5 Class A-2, Series 1 Common
Shares;162.5 Newco Class A Series 1 Shares, which are convertible in
certain circumstances into 162.5 Class D Series 1 Shares and 6,175
Class A Preferred shares; and
C. Walker Holdco desires to issue to Principals Holdco an option to
purchase the Walker Holdco Magna Securities on the terms and conditions
set out in this Agreement.
In consideration of the above recitals, and the agreements of the
parties hereto contained in this Agreement and other good and valuable
consideration (the receipt and adequacy of which are hereby acknowledged), the
parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Defined Terms.
As used in this Agreement, the following terms have the following meanings:
"446" means 446 Holdings Inc., a corporation existing under the Act and
a wholly owned subsidiary of 445, and its successors.
"446 Anniversary Date Triggering Event" means the delivery of an Exit
Notice by 446 in accordance with Section 2.2(3) of the Exit Agreement
in connection with the exercise by 446 of its right to cause RM Sub to
sell its RM Sub Securities to Newco Purchaser pursuant to Section
2.2(2)(a) of the Exit Agreement.
"Act" means the Business Corporations Act (Ontario).
"Agreement" means this agreement and all schedules attached to it as
amended, modified, restated, replaced or supplemented from time to
time.
"Applicable Laws" means all applicable federal, provincial, state,
municipal and local statutes, laws, by-laws, regulations, ordinances,
orders, enactment, directives and rules and all injunctions, decisions,
directives, judgments and orders of any Governmental Entity having
jurisdiction in respect of a particular matter and all amendments
thereto which have the force of law.
"Authorization" means, with respect to a Person, any order, relief,
permit, approval, consent, waiver, licence or similar authorization of
any Governmental Entity, including any securities regulatory authority,
having jurisdiction over the Person.
"Business Day" means any day of the year, other than a Saturday, Sunday
or day observed as a statutory holiday in Toronto, Ontario.
"Call Sale Transaction" has the meaning specified in Section 2.4.
"Class A Shares" means the class A shares in the capital of Newco,
issuable in series.
"Class A-1 Common Shares" means the class A-1 common shares in the
capital of Newco I.5, issuable in series.
"Class A-2 Common Shares" means the class A-2 common shares in the
capital of Newco I.5, issuable in series.
"Class A Preferred Shares" means the class A preferred shares in the
capital of Newco I.5, issuable in series.
"Class D Shares" means the class D shares in the capital of Newco,
issuable in series.
"Closing Date" has the meaning specified in Section 2.4.
"Contract" means any agreement, contract, lease, licence, permit,
franchise, purchase order, commitment, engagement, option, indenture,
mortgage, deed, instrument or other legally binding obligation, whether
written, oral or implied.
"Effective Date" means the date shown on the Certificate of
Arrangement.
"Effective Time" means 12:01 a.m. (Eastern Time) on the Effective Date.
"Exit Agreement" means the exit agreement to be entered into on the
Effective Date among 445, 446, RM, RM Sub, Newco, Newco I.5, Newco II
and RM's lender.
"Exit Notice" means the formal notice to be provided by RM Sub or 446,
as the case may be, to each of the parties to the Exit Agreement in
connection with an exercise of its respective exit rights pursuant to
the Exit Agreement.
"Governmental Entity" means any (a) multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitrator or
arbitral body, commission, board, bureau or agency, domestic or
foreign, including the Ontario Securities Commission, the Autorite des
marches financiers du Quebec and the United States Securities and
Exchange Commission, (b) self-regulatory organization or stock
exchange, including the Toronto Stock Exchange and the New York Stock
Exchange, (c) subdivision, agent, commission, board, or authority of
any of the foregoing, or (d) quasi-governmental or private body
exercising any regulatory, expropriation or taxing authority under or
for the account of any of the foregoing.
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"Insolvency/Material Breach Triggering Event" means the delivery of an
Exit Notice by either RM Sub or 446 in accordance with Section 2.2(3)
of the Exit Agreement in connection with the exercise by RM Sub or 446
of RM Sub's right to sell, or 446's right to cause RM Sub to sell, as
the case may be, the RM Sub Securities to Newco Purchaser pursuant to
Sections 2.2(1)(b), 2.2(1)(c), 2.2(2)(b) or 2.2(2)(c) of the Exit
Agreement.
"Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, deemed trust,
security interest, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or
nature whatsoever (including any lease or title retention agreement,
any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the PPSA or
comparable notice filing under the law of any other jurisdiction or any
option, warrant, right or privilege capable of becoming a Transfer)
(other than Liens created pursuant to any long-term retention
(restricted share) agreement between Magna and a Principal).
"Magna" means Magna International Inc., a corporation existing under
the Act and its successors.
"Magna Class A Shares" means the Class A Subordinate Voting Shares in
the capital of Magna.
"Newco" means M Unicar Inc., a corporation existing under the Act and,
immediately prior to the Effective Time, a wholly owned subsidiary of
446, and its successors.
"Newco Class C Common Shares" means 42,000 Class C Common Shares in the
capital of Newco beneficially owned by RM Sub.
"Newco I.5" means 2143453 Ontario Inc., a corporation existing under
the Act and, immediately prior to the Effective Time, a wholly-owned
subsidiary of Newco, and its successors;
"Newco II" means 2143455 Ontario Inc., a corporation existing under the
Act and, immediately prior to the Effective Time, a wholly owned
subsidiary of Newco I.5, and its successors.
"Newco II Class A Common Shares" means 100 Class A Common Shares in the
capital of Newco II beneficially owned by RM Sub.
"Newco II Loan" means the loan provided by RM Sub to Newco II on the
date hereof and evidenced by the Newco II Loan Note.
"Newco II Loan Note" means the promissory note dated the date hereof
issued to RM Sub by Newco II to evidence the Newco II Loan, including
the ancillary agreements and documents relating to the security
therefor.
"Newco Purchaser" means 446 or such other Person as 446 may designate
from time to time by giving notice to others in accordance with the
Exit Agreement.
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"Parties" mean Principals Holdco, Walker Holdco and Newco I.5.
"Person" includes any individual, firm, partnership, limited
partnership, joint venture, venture capital fund, limited liability
company, unlimited liability company, association, trust, trustee,
heir, executor, administrator, legal personal representative, estate,
group, body corporate, corporation, unincorporated association or
organization, Governmental Entity, syndicate or other entity, whether
or not having legal status.
"Pledge Agreement" means the pledge agreement to be entered into on the
Effective Date between Walker Holdco and Principals Holdco.
"PPSA" means the Personal Property Security Act (Ontario).
"Principals Holdco Newco I.5 Securities" means all of the Newco I.5
Class A-1 Series 1 Common Shares, all of the Newco I.5 Class A-2 Series
1 Common Shares, all of the Newco I.5 Class A Series 1 Preferred
Shares, all of the Newco Class A Series 1 Shares and all of the Newco
Class D Series 1 Shares legally and beneficially owned by Principals
Holdco, appropriately adjusted for stock splits, stock dividends,
reverse stock splits, share consolidations and similar events and,
where the context permits, includes: (i) any securities into which such
shares may be converted, reclassified, redesignated, subdivided,
consolidated or otherwise changed, (ii) any securities received by the
holder of such shares as a result of any merger, amalgamation,
reorganization, arrangement or other similar transaction involving
Newco I.5, and (iii) any securities of Newco I.5 which are received by
the holder of such shares as a stock dividend or distribution on or in
respect of such shares.
"Realization Triggering Event" means any demand for repayment of the
Newco II Loan.
"RM" means Open Joint Stock Company Russian Machines, a company
existing under the laws of Russia, and its successors.
"RM Sub" means Veleron Holding B.V., a company existing under the laws
of The Netherlands and a wholly owned indirect subsidiary of RM, and
its successors.
"RM Sub Anniversary Date Triggering Event" means the time of the
closing of the sale by RM Sub of some or all of its RM Sub Securities
to Newco Purchaser pursuant to the Exit Agreement following the
occurrence of the date referred to in Section 2.2(1)(a) of the Exit
Agreement and delivery of an Exit Notice in accordance with Section
2.2(3) of the Exit Agreement.
"RM Sub Securities" means the Newco Class C Common Shares, Newco II
Class A Common Shares and interest in the Newco II Loan and the Newco
II Loan Note (or any Newco II special shares issued on conversion of
the Newco II Loan Note) owned by RM Sub.
"Subsidiary" means, in respect of a Party, a subsidiary (as that term
is defined in the Act as now in effect) of that Party or any Person in
which such Party has a direct or indirect controlling interest or a
joint-controlling interest, and shall be deemed to include any
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partnership or joint venture in which such Party has a direct or
indirect interest of more than 50 percent.
"Time of Closing" means 10:00 a.m. (Toronto Time) on the Closing Date
or such later or earlier time on the Closing Date as those parties to a
Call Sale Transaction may agree in writing.
"Transfer" means any (i) transfer, sale, assignment, exchange, gift,
donation, mortgage, pledge, charge, encumbrance, grant of security
interest or other disposition of securities where possession, legal
title, beneficial ownership or the economic risk or return associated
with such securities passes directly or indirectly from one Person to
another or to the same Person in a different legal capacity, whether or
not for value, whether or not voluntary and however occurring, or (ii)
agreement, undertaking or commitment to effect any of the foregoing,
and "Transferred" and "Transferring" shall be construed accordingly.
"Triggering Event" means a 446 Anniversary Date Triggering Event, an RM
Sub Anniversary Date Triggering Event, an Insolvency/Material Breach
Triggering Event or a Realization Triggering Event.
"Walker Holdco" means DW Holdco Inc., a corporation existing under the
OBCA and, immediately prior to the Effective Time, a wholly owned
subsidiary of Principals Holdco that holds 250,000 Class A Subordinate
Voting Shares, and its successors;
"Walker Holdco Magna Securities" means the 250,000 Magna Class A Shares
beneficially owned by Walker Holdco, appropriately adjusted for stock
splits, stock dividends, reverse stock splits, share consolidations and
similar events and, where the context permits, includes: (i) any
securities into which such shares may be converted, reclassified,
redesignated, subdivided, consolidated or otherwise changed, (ii) any
securities received by the holder of such shares as a result of any
merger, amalgamation, reorganization, arrangement or other similar
transaction involving Magna, and (iii) any securities of Magna which
are received by the holder of such shares as a stock dividend or
distribution on or in respect of such shares.
1.2 Gender and Number.
Any reference in this Agreement to gender includes all genders. Words importing
the singular number also include the plural and vice versa.
1.3 Sections and Headings.
The division of this Agreement into Articles and Sections, the insertion of
headings and the inclusion of a table of contents are for reference purposes
only and shall not affect the interpretation of this Agreement. Unless otherwise
indicated, any reference in this Agreement to an Article, a Section, a Schedule
or an Exhibit refers to the specified Article or Section of, or Schedule or
Exhibit to, this Agreement.
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1.4 Currency.
Unless otherwise indicated, all dollar amounts in this Agreement are expressed
in United States funds.
1.5 Certain Phrases.
In this Agreement, (i) the words "including", "includes" and "include" mean
"including (or includes or include) without limitation", and (ii) the words "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".
1.6 Statutory References.
A reference to a statute includes all rules and regulations made pursuant to
such statute and, unless otherwise specified, the provisions of any statute or
regulation or rule which amends, supplements or supersedes any such statute or
any such regulation or rule.
ARTICLE 2
RIGHT TO PURCHASE CLASS A SHARES OF MAGNA
2.1 Call Option
Principals Holdco shall have the right to purchase from Walker Holdco all, but
not less than all, of the Walker Holdco Magna Securities in accordance with this
Article 2 upon the occurrence of any Triggering Event.
2.2 Exercise of Call Option
In order to exercise its right under Section 2.1, Principals Holdco shall,
within 30 Business Days after any Triggering Event, deliver to each of Walker
Holdco and Newco I.5, in writing, a notice ("Call Notice") that Principals
Holdco is exercising its rights under Section 2.1 specifying the type of
Triggering Event related to such exercise.
2.3 Call Option Consideration
If the Call Notice is delivered in accordance with Section 2.2 and is not
revoked by Principals Holdco prior to the Closing Date, then on the Closing Date
Walker Holdco shall sell and Principals Holdco shall purchase the Walker Holdco
Magna Securities free and clear of all Liens in exchange for the Principals
Holdco Newco I.5 Securities held by Principals Holdco free and clear of all
Liens.
2.4 Closing
The completion of the transaction of purchase and sale under this Agreement
contemplated by Section 2.1 (a "Call Sale Transaction") will take place on the
Closing Date in accordance with and subject to Article 5. "Closing Date" means
(a) the second Business Day following the satisfaction (or, to the extent
permitted, the waiver) of the conditions set forth in Section 5.2 or such other
date as Principals Holdco and Walker Holdco shall agree to in writing.
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2.5 Acknowledgement
Notwithstanding any other provision of this Agreement, Principals Holdco
acknowledges that some or all of the Walker Holdco Magna Securities may be
subject to the terms, conditions and restrictions contained in one or more
long-term retention (restricted share) agreement(s) and that Magna shall
maintain possession of such Walker Holdco Magna Securities and shall only
release them as and when the applicable restrictions are fully satisfied.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Walker Holdco.
Walker Holdco represents and warrants as follows and acknowledges and confirms
that each other Party is relying on such representations and warranties in
entering into this Agreement:
(a) Existence. It is a corporation validly existing under the Act
and has all necessary corporate power and authority to carry
on its business as now conducted, to own or lease and operate
its assets and to execute, deliver and perform its obligations
under this Agreement.
(b) Authority and Enforceability. It has taken all necessary
corporate action to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly
executed and delivered and is a legal and binding obligation,
enforceable against it by the other Parties in accordance with
its terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may be granted
only in the discretion of a court of competent jurisdiction.
(c) No Violation. The execution, delivery and performance of this
Agreement does not, and will not, result in a breach or
violation of any of the provisions of or constitute a default
under, or conflict with or cause the acceleration of any
obligation or that of a Subsidiary under (i) a material
Contract to which it is a party, (ii) any provision of its
articles, by-laws or resolutions of its board of directors (or
any committee thereof) or shareholders, (iii) any judgment,
decree, order or award of any Governmental Entity having
jurisdiction over it or (iv) any Applicable Law. No consent,
approval, order or authorization of, or declaration or filing
with, any Governmental Entity or other Person is required to
be obtained or made, as the case may be, in connection with
the execution and delivery of this Agreement.
(d) Title to Magna Class A Shares. The Walker Holdco Magna
Securities described in the recitals as being owned by Walker
Holdco are owned by it as the registered and beneficial owner
with good title, free and clear of all Liens (other than the
Lien created by the Pledge Agreement).
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3.2 Representations and Warranties of Principals Holdco
Principals Holdco represents and warrants as follows and acknowledges and
confirms that each other Party is relying on such representations and warranties
in entering into this Agreement:
(a) Existence. It is a corporation validly existing under the Act
and has all necessary corporate power and authority to carry
on its business as now conducted, to own or lease and operate
its assets and to execute, deliver and perform its obligations
under this Agreement.
(b) Authority and Enforceability. It has taken all necessary
corporate action to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly
executed and delivered and is a legal and binding obligation,
enforceable against it by the other Parties in accordance with
its terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may be granted
only in the discretion of a court of competent jurisdiction.
(c) No Violation. The execution, delivery and performance of this
Agreement does not, and will not, result in a breach or
violation of any of the provisions of or constitute a default
under, or conflict with or cause the acceleration of any
obligation or that of a Subsidiary under (i) a material
Contract to which it is a party, (ii) any provision of its
articles, by-laws or resolutions of its board of directors (or
any committee thereof) or shareholders, (iii) any judgment,
decree, order or award of any Governmental Entity having
jurisdiction over it or (iv) any Applicable Law. No consent,
approval, order or authorization of, or declaration or filing
with, any Governmental Entity or other Person is required to
be obtained or made, as the case may be, in connection with
the execution and delivery of this Agreement.
(d) Title to Class A Common Shares of Newco I.5. The Principals
Holdco Newco I.5 Securities described in the recitals as being
owned by Principals Holdco are owned by it as the registered
and beneficial owner with good title, free and clear of all
Liens.
3.3 Representations and Warranties of Newco I.5
Newco I.5 represents and warrants as follows and acknowledges and confirms that
each other Party is relying on such representations and warranties in entering
into this Agreement:
(a) That it has taken all actions necessary to carry out the
pledge contemplated by the Pledge Agreement and the Call Sale
Transaction.
3.4 Survival.
Notwithstanding the Limitations Act, 2002 (Ontario), The representations and
warranties of Walker Holdco and Principals Holdco contained in Article 3 and the
covenants of Walker Holdco, Principals Holdco and Newco I.5 contained in Article
4 and Article 5 survive the execution and delivery of this Agreement and
continue in full force and effect with respect to
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each of Walker Holdco, Principals Holdco and Newco I.5 until it ceases to be
bound by the provisions of this Agreement.
ARTICLE 4
COVENANTS OF WALKER HOLDCO, PRINCIPALS HOLDCO AND NEWCO I.5
4.1 Covenants of Walker Holdco.
(a) Walker Holdco shall not Transfer the Walker Holdco Magna
Securities except as expressly permitted by this Agreement or
except with the prior written consent of Principals Holdco,
which consent may be withheld in the unfettered discretion of
Principals Holdco.
(b) Walker Holdco shall not grant a Lien on or otherwise encumber
any of the Walker Holdco Magna Securities in any way
whatsoever without the prior written consent of Principals
Holdco, which consent may be withheld in the unfettered
discretion of Principals Holdco.
(c) Walker Holdco shall execute the Pledge Agreement concurrently
with the execution and delivery of this Agreement and pledges
the Walker Holdco Magna Securities to Principals Holdco
pursuant to the terms of the Pledge Agreement.
4.2 Covenants of Principals Holdco.
(a) Principals Holdco shall not Transfer the Principals Holdco
Newco I.5 Securities except as expressly permitted by this
Agreement or except with the prior written consent of Walker
Holdco, which consent may be withheld in the unfettered
discretion of Walker Holdco;
(b) Principals Holdco shall not grant a Lien on or otherwise
encumber any of the Principals Holdco Newco I.5 Securities in
any way whatsoever without the prior written consent of Walker
Holdco, which consent may be withheld in the unfettered
discretion of Walker Holdco.
4.3 Covenants of Newco I.5
(a) Newco I.5 hereby irrevocably consents to the Transfer of the
Principals Holdco Newco I.5 Securities to Walker Holdco
pursuant to this Agreement and shall take all actions
necessary to effect the transfer of the Principals Holdco
Newco I.5 Securities to Walker Holdco, all in accordance with
the terms and conditions of this Agreement.
(b) Newco I.5, as the sole shareholder of Walker Holdco, hereby
irrevocably consents to, authorizes and approves the pledge of
the Walker Holdco Magna Securities to Principals Holdco
pursuant to the Pledge Agreement and the sale by Walker Holdco
of the Walker Holdco Magna Securities pursuant to this
Agreement.
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4.4 Covenants of Newco
(a) Newco hereby irrevocably consents to the Transfer of the
Principals Holdco Newco I.5 Securities to Walker Holdco
pursuant to this Agreement and shall take all actions
necessary to effect the transfer of the Principals Holdco
Newco I.5 Securities to Walker Holdco, all in accordance with
the terms and conditions of this Agreement.
ARTICLE 5
PROCEDURE FOR SALE OF SHARES
5.1 Additional Covenants of the Parties.
(a) Each Party shall take all actions that are within its power to
control, and use its commercially reasonable efforts to cause
other actions to be taken which are not within its power to
control, to ensure satisfaction of the conditions in Section
5.2.
(b) Walker Holdco shall take all necessary steps and corporate
proceedings to permit good title to the Walker Holdco Magna
Securities to be duly and validly transferred and assigned in
accordance with the provisions of this Agreement at the Time
of Closing, free and clear of Liens.
(c) Principals Holdco shall take all necessary steps and corporate
proceedings to permit good title to any Principals Holdco
Newco I.5 Securities that are to be delivered by Principals
Holdco to Walker Holdco in accordance with the provisions of
this Agreement to be duly and validly transferred and assigned
in accordance with the provisions of this Agreement at the
Time of Closing, free and clear of Liens.
(d) Each Party shall use its commercially reasonable efforts to
make or give, or cause to be made or given, all filings with
and notifications to any Governmental Entity and obtain or
cause to be obtained all Authorizations, necessary in order to
complete the Call Sale Transaction and to facilitate any
purchase and sale of securities in accordance with Article 2.
5.2 Conditions for the Benefit of Principals Holdco.
The completion of any Call Sale Transaction is subject to the following
conditions to be fulfilled or performed on or before the Closing Date, which
conditions are for the exclusive benefit of Principals Holdco and may be waived,
in whole or in part, by Principals Holdco in its sole discretion:
(a) the delivery to Principals Holdco of a certificate of Walker
Holdco, signed by an authorized officer of Walker Holdco on
its behalf and not in his personal capacity, certifying that
(i) on the Closing Date, the Walker Holdco Magna Securities
are owned by Walker Holdco as the registered and beneficial
owner with good title, free and clear of Liens other than
those being released on such date, and (ii) upon completion of
the Call Sale Transaction, Principals Holdco will have good
and
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valid title to the Walker Holdco Magna Securities
transferred by Walker Holdco, free and clear of Liens;
(b) all filings, notices and the receipt of all Authorizations
necessary under Applicable Laws to permit the trade or
distribution by Walker Holdco of the Walker Holdco Magna
Securities necessary to effect the Call Sale Transaction shall
have been made, given or obtained; and
(c) the completion of the Call Sale Transaction will not result in
the violation of any Applicable Law.
5.3 Closing Procedures.
(a) The completion of the Call Sale Transaction will take place at
the offices of Miller Thomson LLP in Toronto, Ontario, at the
Time of Closing or at such other place, or on such other date
as the parties to the Call Sale Transaction may agree to in
writing.
(b) Subject to satisfaction or waiver by Principals Holdco of the
conditions of closing in its favour, at the closing of the
Call Sale Transaction:
(i) Walker Holdco shall assign and transfer title and
deliver actual possession of the Walker Holdco Magna
Securities to Principals Holdco and endorse the share
certificates representing the Walker Holdco Magna
Securities for transfer to Principals Holdco; and
(ii) Principals Holdco shall assign and transfer title and
deliver actual possession of the Principals Holdco
Newco I.5 Securities to Walker Holdco and endorse the
share certificates representing the Principals Holdco
Newco I.5 Securities for transfer to Walker Holdco.
5.4 Non-Compliance with Conditions.
If at the Time of Closing, the Walker Holdco Magna Securities are not free and
clear of all Liens (other than the Lien created by the Pledge Agreement),
Principals Holdco may, without prejudice to any other rights it may have, choose
to purchase the Walker Holdco Magna Securities subject to such Liens to the
extent that Principals Holdco recognizes the validity of such Liens provided
that Principals Holdco shall be entitled to such monetary rights of set off
and/or to take such other steps as it deems appropriate to recognize any
diminution in value in the Walker Holdco Magna Securities due to such Liens.
Walker Holdco agrees to indemnify Principals Holdco for the amount of any
obligations and liabilities in respect of such Liens to the extent that such
obligations and liabilities exceed the value of the Principals Holdco Newco
Securities.
5.5 Non-Completion by Walker Holdco.
(a) In addition to and without limiting any remedy that may be
available under Applicable Law to Principals Holdco, if at the
Time of Closing Walker Holdco fails to complete the Call Sale
Transaction in violation of this Agreement, Principals Holdco
has the right, if Principals Holdco is not in default under
this
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Agreement, to make payment of the purchase price for the
Walker Holdco Magna Securities to Walker Holdco by delivering
share certificates representing the Principals Holdco Newco
I.5 Securities to a recognized financial institution in Canada
to hold on behalf of Walker Holdco. Such delivery constitutes
valid and effective payment of the purchase price to Walker
Holdco irrespective of any action Walker Holdco may have taken
to transfer or grant a Lien on the Walker Holdco Magna
Securities. If the purchase price has been so paid, then from
the date of such delivery the Call Sale Transaction is deemed
to have been completed and all right, title, benefit and
interest, both at law and in equity, in and to the Walker
Holdco Magna Securities shall be deemed to have been
transferred to and become vested in Principals Holdco and all
right, title, benefit and interest of Walker Holdco, or of any
transferee or assignee of, or other Person claiming an
interest through, Walker Holdco, in and to the Walker Holdco
Magna Securities, shall cease.
(b) Walker Holdco is entitled to receive the share certificates
delivered to a recognized financial institution in Canada
under Section 5.1(a) on delivery to Principals Holdco of the
documents referred to in Section 5.2 and Section 5.3(b)(i) and
in compliance with all other provisions of this Agreement.
ARTICLE 6
MISCELLANEOUS
6.1 Notices.
Any notice or other communication required or permitted to be given hereunder
shall be in writing and shall be delivered in person or transmitted by
telecopier or similar means of recorded electronic communication (with receipt
confirmed) as follows:
(a) to Principals Holdco at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Jeffrey O. Palmer
Facsimile: (905) 726-7164
with a copy to: Vincent J. Galifi, Peter Koob, Donald J.
Walker and Siegfried Wolf
and to:
Miller Thomson LLP
Scotia Plaza
40 King Street West, Suite 5800
P.O. Box 1011
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Toronto, Ontario
M5H 3S1
Attention: John Campbell
Facsimile: (416) 595.8695
(b) to Walker Holdco at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Donald J. Walker
Facsimile: (905) 726-2595
with a copy to:
Miller Thomson LLP
Scotia Plaza
40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
Attention: John Campbell
Facsimile: (416) 595.8695
and to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
(c) to Newco I.5 at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Belinda Stronach
Facsimile: (905) 726-7494
with a copy to:
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Miller Thomson LLP
Scotia Plaza
40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
Attention: John Campbell
Facsimile: (416) 595.8695
and to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
(d) to Newco at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Belinda Stronach
Facsimile: (905) 726-7494
with a copy to:
Miller Thomson LLP
Scotia Plaza
40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
Attention: John Campbell
Facsimile: (416) 595.8695
and to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
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Toronto, Ontario
M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
Any such notice or other communication shall be deemed to have been given and
received on the day on which it was delivered or transmitted (or, if such day is
not a Business Day, on the next following Business Day).
A Party may change its address for service and may add "copy to" parties 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.
6.2 Time of the Essence.
Time is of the essence in this Agreement.
6.3 Announcements.
No public release or announcement concerning the transactions contemplated by
this Agreement shall be issued by a Party without the approval of Principals
Holdco and Walker Holdco (which consent shall not be unreasonably withheld),
except as such release or announcement may be required by Applicable Laws, in
which case the Party required to make the release or announcement shall allow
the other Parties reasonable time to comment on such announcement in advance of
such issuance.
6.4 No Agency or Partnership.
Nothing contained in this Agreement makes or constitutes a Party, or any of its
directors, officers or employees, the representative, agent, principal, partner,
joint venturer, employer or employee of the other Party.
6.5 Expenses.
Each Party will pay for its own costs and expenses incurred in connection with
this Agreement and the transactions contemplated by it.
6.6 Amendments and Waivers.
No amendment or waiver of any provision of this Agreement shall be binding on
any Party unless consented to in writing by that Party. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision,
nor shall any waiver constitute a continuing waiver unless otherwise expressly
provided.
6.7 Entire Agreement.
This Agreement constitutes the entire agreement between the Parties with respect
to the transactions contemplated hereby and supersedes all prior agreements,
understandings,
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negotiations and discussions, whether oral or written, of the Parties. There
are no representations, warranties, covenants, conditions or other agreements,
express or implied, collateral, statutory or otherwise, between the Parties or
certain of them in connection with the subject matter of this Agreement, except
as specifically set forth in this Agreement. The 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.
6.8 Successors and Assigns.
This Agreement shall enure to the benefit of and shall be binding on, and
enforceable by, the Parties and, where the context so permits, their respective
successors and permitted assigns. No Party may assign any of its rights or
obligations hereunder without the prior written consent of the other Parties.
6.9 Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
Party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
6.10 Governing Law.
This Agreement shall be construed, interpreted and enforced in accordance with,
and the respective rights and obligations of the Parties shall be governed by,
the laws of the Province of Ontario and the federal laws of Canada applicable in
that province. Each Party unconditionally submits to the non-exclusive
jurisdiction of the courts of the Province of Ontario.
6.11 Counterparts.
This Agreement may be executed in any number of counterparts (including
counterparts by facsimile) and all such counterparts taken together will be
deemed to constitute one and the same instrument. The Parties may rely on copies
of this Agreement which are delivered by facsimile as if such copies were
originals.
(SIGNATURES APPEAR ON THE FOLLOWING PAGE)
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IN WITNESS WHEREOF the Parties have executed this Share Option Agreement.
MPMAG HOLDINGS INC.
Per:______________________________
Authorized Signing Officer
Per:_______________________________
Authorized Signing Officer
DW HOLDCO INC.
Per:_______________________________
Authorized Signing Officer
Per:_______________________________
Authorized Signing Officer
2143453 ONTARIO INC.
Per:_______________________________
Authorized Signing Officer
Per:_______________________________
Authorized Signing Officer
M UNICAR INC.
Per:_______________________________
Authorized Signing Officer
Per:_______________________________
Authorized Signing Officer
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Exhibit G
JOP HOLDCO INC.
AS PALMER HOLDCO
and
MPMAG HOLDINGS INC.
AS PRINCIPALS HOLDCO
and
2143453 ONTARIO INC.
AS NEWCO I.5
and
M UNICAR INC.
AS NEWCO
PALMER HOLDCO MAGNA CLASS A SHARE OPTION AGREEMENT
September 20, 2007
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION...............................................................1
1.1 Defined Terms.....................................................1
1.2 Gender and Number.................................................5
1.3 Sections and Headings.............................................5
1.4 Currency..........................................................6
1.5 Certain Phrases...................................................6
1.6 Statutory References..............................................6
ARTICLE 2
RIGHT TO PURCHASE CLASS A SHARES OF MAGNA....................................6
2.1 Call Option.......................................................6
2.2 Exercise of Call Option...........................................6
2.3 Call Option Consideration.........................................6
2.4 Closing...........................................................6
2.5 Acknowledgement...................................................7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES...............................................7
3.1 Representations and Warranties of Palmer Holdco...................7
3.2 Representations and Warranties of Principals Holdco...............8
3.3 Representations and Warranties of Newco I.5.......................8
3.4 Survival..........................................................8
ARTICLE 4
COVENANTS OF PALMER HOLDCO, PRINCIPALS HOLDCO AND NEWCO I.5.................9
4.1 Covenants of Palmer Holdco........................................9
4.2 Covenants of Principals Holdco....................................9
4.3 Covenants of Newco I.5............................................9
4.4 Covenants of Newco...............................................10
ARTICLE 5
PROCEDURE FOR SALE OF SHARES................................................10
5.1 Additional Covenants of the Parties..............................10
5.2 Conditions for the Benefit of Principals Holdco..................10
5.3 Closing Procedures...............................................11
5.4 Non-Compliance with Conditions...................................11
5.5 Non-Completion by Palmer Holdco..................................11
ARTICLE 6
MISCELLANEOUS...............................................................12
6.1 Notices..........................................................12
6.2 Time of the Essence..............................................15
6.3 Announcements....................................................15
6.4 No Agency or Partnership.........................................15
6.5 Expenses.........................................................15
6.6 Amendments and Waivers...........................................16
6.7 Entire Agreement.................................................16
(i)
6.8 Successors and Assigns...........................................16
6.9 Severability.....................................................16
6.10 Governing Law....................................................16
6.11 Counterparts.....................................................16
(ii)
PALMER HOLDCO MAGNA CLASS A SHARE OPTION AGREEMENT
Palmer Holdco Magna Class A Share Option Agreement dated September 20,
2007 between JOP Holdco Inc. ("Palmer Holdco"), MPMAG Holdings Inc.
("Principals Holdco"), 2143453 Ontario Inc. ("Newco I.5") and M Unicar Inc.
("Newco")
RECITALS:
A. Palmer Holdco is the registered and beneficial owner of 35,000 Magna Class
A Shares;
B. Principals Holdco is the registered and beneficial owner of 950 Newco I.5
Class A-1, Series 5 Common Shares, which are convertible in certain
circumstances into 950 Newco I.5 Class A-2, Series 5 Common Shares; 25
Newco Class A Series 5 Shares, which are convertible in certain
circumstances into 25 Newco Class D Series 5 Shares and 950 Class A
Preferred Shares; and
C. Palmer Holdco desires to issue to Principals Holdco an option to purchase
the Palmer Holdco Magna Securities on the terms and conditions set out in
this Agreement.
In consideration of the above recitals, and the agreements of the parties
hereto contained in this Agreement and other good and valuable consideration
(the receipt and adequacy of which are hereby acknowledged), the parties hereto
agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Defined Terms.
As used in this Agreement, the following terms have the following meanings:
"446" means 446 Holdings Inc., a corporation existing under the Act and a
wholly owned subsidiary of 445, and its successors.
"446 Anniversary Date Triggering Event" means the delivery of an Exit
Notice by 446 in accordance with Section 2.2(3) of the Exit Agreement in
connection with the exercise by 446 of its right to cause RM Sub to sell
its RM Sub Securities to Newco Purchaser pursuant to Section 2.2(2)(a) of
the Exit Agreement.
"Act" means the Business Corporations Act (Ontario).
"Agreement" means this agreement and all schedules attached to it as
amended, modified, restated, replaced or supplemented from time to time.
"Applicable Laws" means all applicable federal, provincial, state,
municipal and local statutes, laws, by-laws, regulations, ordinances,
orders, enactment, directives and rules and all injunctions, decisions,
directives, judgments and orders of any Governmental Entity having
jurisdiction in respect of a particular matter and all amendments thereto
which have the force of law.
"Authorization" means, with respect to a Person, any order, relief,
permit, approval, consent, waiver, licence or similar authorization of any
Governmental Entity, including any securities regulatory authority, having
jurisdiction over the Person.
"Business Day" means any day of the year, other than a Saturday, Sunday or
day observed as a statutory holiday in Toronto, Ontario.
"Call Sale Transaction" has the meaning specified in Section 2.4.
"Class A Shares" means the class A shares in the capital of Newco,
issuable in series.
"Class A-1 Common Shares" means the class A-1 common shares in the capital
of Newco I.5, issuable in series.
"Class A-2 Common Shares" means the class A-2 common shares in the capital
of Newco I.5, issuable in series.
"Class A Preferred Shares" means the class A preferred shares in the
capital of Newco I.5, issuable in series.
"Class D Shares" means the class D shares in the capital of Newco,
issuable in series.
"Closing Date" has the meaning specified in Section 2.4.
"Contract" means any agreement, contract, lease, licence, permit,
franchise, purchase order, commitment, engagement, option, indenture,
mortgage, deed, instrument or other legally binding obligation, whether
written, oral or implied.
"Effective Date" means the date shown on the Certificate of Arrangement.
"Effective Time" means 12:01 a.m. (Eastern Time) on the Effective Date.
"Exit Agreement" means the exit agreement to be entered into on the
Effective Date among 445, 446, RM, RM Sub, Newco, Newco I.5, Newco II and
RM's lender.
"Exit Notice" means the formal notice to be provided by RM Sub or 446, as
the case may be, to each of the parties to the Exit Agreement in
connection with an exercise of its respective exit rights pursuant to the
Exit Agreement.
"Governmental Entity" means any (a) multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitrator or arbitral
body, commission, board, bureau or agency, domestic or foreign, including
the Ontario Securities Commission, the Autorite des marches financiers du
Quebec and the United States Securities and Exchange Commission, (b)
self-regulatory organization or stock exchange, including the Toronto
Stock Exchange and the New York Stock Exchange, (c) subdivision, agent,
commission, board, or authority of any of the foregoing, or (d)
quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any of the
foregoing.
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"Insolvency/Material Breach Triggering Event" means the delivery of an
Exit Notice by either RM Sub or 446 in accordance with Section 2.2(3) of
the Exit Agreement in connection with the exercise by RM Sub or 446 of RM
Sub's right to sell, or 446's right to cause RM Sub to sell, as the case
may be, the RM Sub Securities to Newco Purchaser pursuant to Sections
2.2(1)(b), 2.2(1)(c), 2.2(2)(b) or 2.2(2)(c) of the Exit Agreement.
"Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, deemed trust,
security interest, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any
financing lease having substantially the same economic effect as any of
the foregoing, and the filing of, or agreement to give, any financing
statement perfecting a security interest under the PPSA or comparable
notice filing under the law of any other jurisdiction or any option,
warrant, right or privilege capable of becoming a Transfer) (other than
Liens created pursuant to any long-term retention (restricted share)
agreement between Magna and a Principal).
"Magna" means Magna International Inc., a corporation existing under
the Act and its successors.
"Magna Class A Shares" means the Class A Subordinate Voting Shares in the
capital of Magna.
"Newco" means M Unicar Inc., a corporation existing under the Act and,
immediately prior to the Effective Time, a wholly owned subsidiary of 446,
and its successors.
"Newco Class C Common Shares" means 42,000 Class C Common Shares in the
capital of Newco beneficially owned by RM Sub.
"Newco I.5" means 2143453 Ontario Inc., a corporation existing under the
Act and, immediately prior to the Effective Time, a wholly-owned
subsidiary of Newco, and its successors;
"Newco II" means 2143455 Ontario Inc., a corporation existing under the
Act and, immediately prior to the Effective Time, a wholly owned
subsidiary of Newco I.5, and its successors.
"Newco II Class A Common Shares" means 100 Class A Common Shares in the
capital of Newco II beneficially owned by RM Sub.
"Newco II Loan" means the loan provided by RM Sub to Newco II on the date
hereof and evidenced by the Newco II Loan Note.
"Newco II Loan Note" means the promissory note dated the date hereof
issued to RM Sub by Newco II to evidence the Newco II Loan, including the
ancillary agreements and documents relating to the security therefor.
"Newco Purchaser" means 446 or such other Person as 446 may designate from
time to time by giving notice to others in accordance with the Exit
Agreement.
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"Palmer Holdco" means JOP Holdco Inc., a corporation existing under the
OBCA and, immediately prior to the Effective Time, a wholly owned
subsidiary of Principals Holdco that holds 35,000 Class A Subordinate
Voting Shares, and its successors;
"Palmer Holdco Magna Securities" means the 35,000 Magna Class A Shares
beneficially owned by Palmer Holdco, appropriately adjusted for stock
splits, stock dividends, reverse stock splits, share consolidations and
similar events and, where the context permits, includes: (i) any
securities into which such shares may be converted, reclassified,
redesignated, subdivided, consolidated or otherwise changed, (ii) any
securities received by the holder of such shares as a result of any
merger, amalgamation, reorganization, arrangement or other similar
transaction involving Magna, and (iii) any securities of Magna which are
received by the holder of such shares as a stock dividend or distribution
on or in respect of such shares.
"Parties" mean Principals Holdco, Palmer Holdco and Newco I.5.
"Person" includes any individual, firm, partnership, limited partnership,
joint venture, venture capital fund, limited liability company, unlimited
liability company, association, trust, trustee, heir, executor,
administrator, legal personal representative, estate, group, body
corporate, corporation, unincorporated association or organization,
Governmental Entity, syndicate or other entity, whether or not having
legal status.
"Pledge Agreement" means the pledge agreement to be entered into on the
Effective Date between Palmer Holdco and Principals Holdco.
"PPSA" means the Personal Property Security Act (Ontario).
"Principals Holdco Newco I.5 Securities" means all of the Newco I.5 Class
A-1 Series 5 Common Shares, all of the Newco I.5 Class A-2 Series 5 Common
Shares, all of the Newco I.5 Class A Series 5 Preferred Shares, all of the
Newco Class A Series 5 Shares and all of the Newco Class D Series 5 Shares
legally and beneficially owned by Principals Holdco, appropriately
adjusted for stock splits, stock dividends, reverse stock splits, share
consolidations and similar events and, where the context permits,
includes: (i) any securities into which such shares may be converted,
reclassified, redesignated, subdivided, consolidated or otherwise changed,
(ii) any securities received by the holder of such shares as a result of
any merger, amalgamation, reorganization, arrangement or other similar
transaction involving Newco I.5, and (iii) any securities of Newco I.5
which are received by the holder of such shares as a stock dividend or
distribution on or in respect of such shares.
"Realization Triggering Event" means any demand for repayment of the Newco
II Loan.
"RM" means Open Joint Stock Company Russian Machines, a company existing
under the laws of Russia, and its successors.
"RM Sub" means Veleron Holding B.V., a company existing under the laws of
The Netherlands and a wholly owned indirect subsidiary of RM, and its
successors.
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"RM Sub Anniversary Date Triggering Event" means the time of the closing
of the sale by RM Sub of some or all of its RM Sub Securities to Newco
Purchaser pursuant to the Exit Agreement following the occurrence of the
date referred to in Section 2.2(1)(a) of the Exit Agreement and delivery
of an Exit Notice in accordance with Section 2.2(3) of the Exit Agreement.
"RM Sub Securities" means the Newco Class C Common Shares, Newco II Class
A Common Shares and interest in the Newco II Loan and the Newco II Loan
Note (or any Newco II special shares issued on conversion of the Newco II
Loan Note) owned by RM Sub.
"Subsidiary" means, in respect of a Party, a subsidiary (as that term is
defined in the Act as now in effect) of that Party or any Person in which
such Party has a direct or indirect controlling interest or a
joint-controlling interest, and shall be deemed to include any partnership
or joint venture in which such Party has a direct or indirect interest of
more than 50 percent.
"Time of Closing" means 10:00 a.m. (Toronto Time) on the Closing Date or
such later or earlier time on the Closing Date as those parties to a Call
Sale Transaction may agree in writing.
"Transfer" means any (i) transfer, sale, assignment, exchange, gift,
donation, mortgage, pledge, charge, encumbrance, grant of security
interest or other disposition of securities where possession, legal title,
beneficial ownership or the economic risk or return associated with such
securities passes directly or indirectly from one Person to another or to
the same Person in a different legal capacity, whether or not for value,
whether or not voluntary and however occurring, or (ii) agreement,
undertaking or commitment to effect any of the foregoing, and
"Transferred" and "Transferring" shall be construed accordingly.
"Triggering Event" means a 446 Anniversary Date Triggering Event, an RM
Sub Anniversary Date Triggering Event, an Insolvency/Material Breach
Triggering Event or a Realization Triggering Event.
1.2 Gender and Number.
Any reference in this Agreement to gender includes all genders. Words importing
the singular number also include the plural and vice versa.
1.3 Sections and Headings.
The division of this Agreement into Articles and Sections, the insertion of
headings and the inclusion of a table of contents are for reference purposes
only and shall not affect the interpretation of this Agreement. Unless otherwise
indicated, any reference in this Agreement to an Article, a Section, a Schedule
or an Exhibit refers to the specified Article or Section of, or Schedule or
Exhibit to, this Agreement.
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1.4 Currency.
Unless otherwise indicated, all dollar amounts in this Agreement are expressed
in United States funds.
1.5 Certain Phrases.
In this Agreement, (i) the words "including", "includes" and "include" mean
"including (or includes or include) without limitation", and (ii) the words "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".
1.6 Statutory References.
A reference to a statute includes all rules and regulations made pursuant to
such statute and, unless otherwise specified, the provisions of any statute or
regulation or rule which amends, supplements or supersedes any such statute or
any such regulation or rule.
ARTICLE 2
RIGHT TO PURCHASE CLASS A SHARES OF MAGNA
2.1 Call Option
Principals Holdco shall have the right to purchase from Palmer Holdco all, but
not less than all, of the Palmer Holdco Magna Securities in accordance with this
Article 2 upon the occurrence of any Triggering Event.
2.2 Exercise of Call Option
In order to exercise its right under Section 2.1, Principals Holdco shall,
within 30 Business Days after any Triggering Event, deliver to each of Palmer
Holdco and Newco I.5, in writing, a notice ("Call Notice") that Principals
Holdco is exercising its rights under Section 2.1 specifying the type of
Triggering Event related to such exercise.
2.3 Call Option Consideration
If the Call Notice is delivered in accordance with Section 2.2 and is not
revoked by Principals Holdco prior to the Closing Date, then on the Closing Date
Palmer Holdco shall sell and Principals Holdco shall purchase the Palmer Holdco
Magna Securities free and clear of all Liens in exchange for the Principals
Holdco Newco I.5 Securities held by Principals Holdco free and clear of all
Liens.
2.4 Closing
The completion of the transaction of purchase and sale under this Agreement
contemplated by Section 2.1 (a "Call Sale Transaction") will take place on the
Closing Date in accordance with and subject to Article 5. "Closing Date" means
(a) the second Business Day following the satisfaction (or, to the extent
permitted, the waiver) of the conditions set forth in Section 5.2 or such other
date as Principals Holdco and Palmer Holdco shall agree to in writing.
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2.5 Acknowledgement
Notwithstanding any other provision of this Agreement, Principals Holdco
acknowledges that some or all of the Palmer Holdco Magna Securities may be
subject to the terms, conditions and restrictions contained in one or more
long-term retention (restricted share) agreement(s) and that Magna shall
maintain possession of such Palmer Holdco Magna Securities and shall only
release them as and when the applicable restrictions are fully satisfied.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Palmer Holdco.
Palmer Holdco represents and warrants as follows and acknowledges and confirms
that each other Party is relying on such representations and warranties in
entering into this Agreement:
(a) Existence. It is a corporation validly existing under the Act and
has all necessary corporate power and authority to carry on its
business as now conducted, to own or lease and operate its assets
and to execute, deliver and perform its obligations under this
Agreement.
(b) Authority and Enforceability. It has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement. This Agreement has been duly executed and delivered and
is a legal and binding obligation, enforceable against it by the
other Parties in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency and other laws affecting
the rights of creditors generally and except that equitable remedies
may be granted only in the discretion of a court of competent
jurisdiction.
(c) No Violation. The execution, delivery and performance of this
Agreement does not, and will not, result in a breach or violation of
any of the provisions of or constitute a default under, or conflict
with or cause the acceleration of any obligation or that of a
Subsidiary under (i) a material Contract to which it is a party,
(ii) any provision of its articles, by-laws or resolutions of its
board of directors (or any committee thereof) or shareholders, (iii)
any judgment, decree, order or award of any Governmental Entity
having jurisdiction over it or (iv) any Applicable Law. No consent,
approval, order or authorization of, or declaration or filing with,
any Governmental Entity or other Person is required to be obtained
or made, as the case may be, in connection with the execution and
delivery of this Agreement.
(d) Title to Magna Class A Shares. The Palmer Holdco Magna Securities
described in the recitals as being owned by Palmer Holdco are owned
by it as the registered and beneficial owner with good title, free
and clear of all Liens (other than the Lien created by the Pledge
Agreement).
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3.2 Representations and Warranties of Principals Holdco
Principals Holdco represents and warrants as follows and acknowledges and
confirms that each other Party is relying on such representations and warranties
in entering into this Agreement:
(a) Existence. It is a corporation validly existing under the Act and
has all necessary corporate power and authority to carry on its
business as now conducted, to own or lease and operate its assets
and to execute, deliver and perform its obligations under this
Agreement.
(b) Authority and Enforceability. It has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement. This Agreement has been duly executed and delivered and
is a legal and binding obligation, enforceable against it by the
other Parties in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency and other laws affecting
the rights of creditors generally and except that equitable remedies
may be granted only in the discretion of a court of competent
jurisdiction.
(c) No Violation. The execution, delivery and performance of this
Agreement does not, and will not, result in a breach or violation of
any of the provisions of or constitute a default under, or conflict
with or cause the acceleration of any obligation or that of a
Subsidiary under (i) a material Contract to which it is a party,
(ii) any provision of its articles, by-laws or resolutions of its
board of directors (or any committee thereof) or shareholders, (iii)
any judgment, decree, order or award of any Governmental Entity
having jurisdiction over it or (iv) any Applicable Law. No consent,
approval, order or authorization of, or declaration or filing with,
any Governmental Entity or other Person is required to be obtained
or made, as the case may be, in connection with the execution and
delivery of this Agreement.
(d) Title to Class A Common Shares of Newco I.5. The Principals Holdco
Newco I.5 Securities described in the recitals as being owned by
Principals Holdco are owned by it as the registered and beneficial
owner with good title, free and clear of all Liens.
3.3 Representations and Warranties of Newco I.5
Newco I.5 represents and warrants as follows and acknowledges and confirms that
each other Party is relying on such representations and warranties in entering
into this Agreement:
(a) That it has taken all actions necessary to carry out the pledge
contemplated by the Pledge Agreement and the Call Sale Transaction.
3.4 Survival.
Notwithstanding the Limitations Act, 2002 (Ontario), The representations and
warranties of Palmer Holdco and Principals Holdco contained in Article 3 and the
covenants of Palmer Holdco, Principals Holdco and Newco I.5 contained in Article
4 and Article 5 survive the execution and delivery of this Agreement and
continue in full force and effect with respect to
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each of Palmer Holdco, Principals Holdco and Newco I.5 until it ceases to be
bound by the provisions of this Agreement.
ARTICLE 4
COVENANTS OF PALMER HOLDCO, PRINCIPALS HOLDCO AND NEWCO I.5
4.1 Covenants of Palmer Holdco.
(a) Palmer Holdco shall not Transfer the Palmer Holdco Magna Securities
except as expressly permitted by this Agreement or except with the
prior written consent of Principals Holdco, which consent may be
withheld in the unfettered discretion of Principals Holdco.
(b) Palmer Holdco shall not grant a Lien on or otherwise encumber any of
the Palmer Holdco Magna Securities in any way whatsoever without the
prior written consent of Principals Holdco, which consent may be
withheld in the unfettered discretion of Principals Holdco.
(c) Palmer Holdco shall execute the Pledge Agreement concurrently with
the execution and delivery of this Agreement and pledges the Palmer
Holdco Magna Securities to Principals Holdco pursuant to the terms
of the Pledge Agreement.
4.2 Covenants of Principals Holdco.
(a) Principals Holdco shall not Transfer the Principals Holdco Newco I.5
Securities except as expressly permitted by this Agreement or except
with the prior written consent of Palmer Holdco, which consent may
be withheld in the unfettered discretion of Palmer Holdco;
(b) Principals Holdco shall not grant a Lien on or otherwise encumber
any of the Principals Holdco Newco I.5 Securities in any way
whatsoever without the prior written consent of Palmer Holdco, which
consent may be withheld in the unfettered discretion of Palmer
Holdco.
4.3 Covenants of Newco I.5
(a) Newco I.5 hereby irrevocably consents to the Transfer of the
Principals Holdco Newco I.5 Securities to Palmer Holdco pursuant to
this Agreement and shall take all actions necessary to effect the
transfer of the Principals Holdco Newco I.5 Securities to Palmer
Holdco, all in accordance with the terms and conditions of this
Agreement.
(b) Newco I.5, as the sole shareholder of Palmer Holdco, hereby
irrevocably consents to, authorizes and approves the pledge of the
Palmer Holdco Magna Securities to Principals Holdco pursuant to the
Pledge Agreement and the sale by Palmer Holdco of the Palmer Holdco
Magna Securities pursuant to this Agreement.
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4.4 Covenants of Newco
(a) Newco hereby irrevocably consents to the Transfer of the Principals
Holdco Newco I.5 Securities to Palmer Holdco pursuant to this
Agreement and shall take all actions necessary to effect the
transfer of the Principals Holdco Newco I.5 Securities to Palmer
Holdco, all in accordance with the terms and conditions of this
Agreement.
ARTICLE 5
PROCEDURE FOR SALE OF SHARES
5.1 Additional Covenants of the Parties.
(a) Each Party shall take all actions that are within its power to
control, and use its commercially reasonable efforts to cause other
actions to be taken which are not within its power to control, to
ensure satisfaction of the conditions in Section 5.2.
(b) Palmer Holdco shall take all necessary steps and corporate
proceedings to permit good title to the Palmer Holdco Magna
Securities to be duly and validly transferred and assigned in
accordance with the provisions of this Agreement at the Time of
Closing, free and clear of Liens.
(c) Principals Holdco shall take all necessary steps and corporate
proceedings to permit good title to any Principals Holdco Newco I.5
Securities that are to be delivered by Principals Holdco to Palmer
Holdco in accordance with the provisions of this Agreement to be
duly and validly transferred and assigned in accordance with the
provisions of this Agreement at the Time of Closing, free and clear
of Liens.
(d) Each Party shall use its commercially reasonable efforts to make or
give, or cause to be made or given, all filings with and
notifications to any Governmental Entity and obtain or cause to be
obtained all Authorizations, necessary in order to complete the Call
Sale Transaction and to facilitate any purchase and sale of
securities in accordance with Article 2.
5.2 Conditions for the Benefit of Principals Holdco.
The completion of any Call Sale Transaction is subject to the following
conditions to be fulfilled or performed on or before the Closing Date, which
conditions are for the exclusive benefit of Principals Holdco and may be waived,
in whole or in part, by Principals Holdco in its sole discretion:
(a) the delivery to Principals Holdco of a certificate of Palmer
Holdco, signed by an authorized officer of Palmer Holdco on its
behalf and not in his personal capacity, certifying that (i) on
the Closing Date, the Palmer Holdco Magna Securities are owned by
Palmer Holdco as the registered and beneficial owner with good
title, free and clear of Liens other than those being released on
such date, and (ii) upon completion of the Call Sale Transaction,
Principals Holdco will have good and
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valid title to the Palmer Holdco Magna Securities transferred by
Palmer Holdco, free and clear of Liens;
(b) all filings, notices and the receipt of all Authorizations necessary
under Applicable Laws to permit the trade or distribution by Palmer
Holdco of the Palmer Holdco Magna Securities necessary to effect the
Call Sale Transaction shall have been made, given or obtained; and
(c) the completion of the Call Sale Transaction will not result in the
violation of any Applicable Law.
5.3 Closing Procedures.
(a) The completion of the Call Sale Transaction will take place at the
offices of Miller Thomson LLP in Toronto, Ontario, at the Time of
Closing or at such other place, or on such other date as the parties
to the Call Sale Transaction may agree to in writing.
(b) Subject to satisfaction or waiver by Principals Holdco of the
conditions of closing in its favour, at the closing of the Call Sale
Transaction:
(i) Palmer Holdco shall assign and transfer title and deliver
actual possession of the Palmer Holdco Magna Securities to
Principals Holdco and endorse the share certificates
representing the Palmer Holdco Magna Securities for transfer
to Principals Holdco; and
(ii) Principals Holdco shall assign and transfer title and deliver
actual possession of the Principals Holdco Newco I.5
Securities to Palmer Holdco and endorse the share certificates
representing the Principals Holdco Newco I.5 Securities for
transfer to Palmer Holdco.
5.4 Non-Compliance with Conditions.
If at the Time of Closing, the Palmer Holdco Magna Securities are not free and
clear of all Liens (other than the Lien created by the Pledge Agreement),
Principals Holdco may, without prejudice to any other rights it may have, choose
to purchase the Palmer Holdco Magna Securities subject to such Liens to the
extent that Principals Holdco recognizes the validity of such Liens provided
that Principals Holdco shall be entitled to such monetary rights of set off
and/or to take such other steps as it deems appropriate to recognize any
diminution in value in the Palmer Holdco Magna Securities due to such Liens.
Palmer Holdco agrees to indemnify Principals Holdco for the amount of any
obligations and liabilities in respect of such Liens to the extent that such
obligations and liabilities exceed the value of the Principals Holdco Newco
Securities.
5.5 Non-Completion by Palmer Holdco.
(a) In addition to and without limiting any remedy that may be available
under Applicable Law to Principals Holdco, if at the Time of Closing
Palmer Holdco fails to complete the Call Sale Transaction in
violation of this Agreement, Principals Holdco has the right, if
Principals Holdco is not in default under this
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Agreement, to make payment of the purchase price for the Palmer
Holdco Magna Securities to Palmer Holdco by delivering share
certificates representing the Principals Holdco Newco I.5 Securities
to a recognized financial institution in Canada to hold on behalf of
Palmer Holdco. Such delivery constitutes valid and effective payment
of the purchase price to Palmer Holdco irrespective of any action
Palmer Holdco may have taken to transfer or grant a Lien on the
Palmer Holdco Magna Securities. If the purchase price has been so
paid, then from the date of such delivery the Call Sale Transaction
is deemed to have been completed and all right, title, benefit and
interest, both at law and in equity, in and to the Palmer Holdco
Magna Securities shall be deemed to have been transferred to and
become vested in Principals Holdco and all right, title, benefit and
interest of Palmer Holdco, or of any transferee or assignee of, or
other Person claiming an interest through, Palmer Holdco, in and to
the Palmer Holdco Magna Securities, shall cease.
(b) Palmer Holdco is entitled to receive the share certificates
delivered to a recognized financial institution in Canada under
Section 5.1(a) on delivery to Principals Holdco of the documents
referred to in Section 5.2 and Section 5.3(b)(i) and in compliance
with all other provisions of this Agreement.
ARTICLE 6
MISCELLANEOUS
6.1 Notices.
Any notice or other communication required or permitted to be given hereunder
shall be in writing and shall be delivered in person or transmitted by
telecopier or similar means of recorded electronic communication (with receipt
confirmed) as follows:
(a) to Principals Holdco at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Jeffrey O. Palmer
Facsimile: (905) 726-7164
with a copy to: Vincent J. Galifi, Peter Koob, Donald J. Walker
and Siegfried Wolf
Miller Thomson LLP
Scotia Plaza
40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
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Attention: John Campbell
Facsimile: (416) 595.8695
and to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
(b) to Palmer Holdco at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Jeffrey O. Palmer
Facsimile: (905) 726-2595
with a copy to:
Miller Thomson LLP
Scotia Plaza
40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
Attention: John Campbell
Facsimile: (416) 595.8695
and to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
(c) to Newco I.5 at:
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c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Belinda Stronach
Facsimile: (905) 726-7494
with a copy to:
Miller Thomson LLP
Scotia Plaza
40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
Attention: John Campbell
Facsimile: (416) 595.8695
and to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
(d) to Newco at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Belinda Stronach
Facsimile: (905) 726-7494
with a copy to:
Miller Thomson LLP
Scotia Plaza
40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
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Attention: John Campbell
Facsimile: (416) 595.8695
and to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
Any such notice or other communication shall be deemed to have been given and
received on the day on which it was delivered or transmitted (or, if such day is
not a Business Day, on the next following Business Day).
A Party may change its address for service and may add "copy to" parties 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.
6.2 Time of the Essence.
Time is of the essence in this Agreement.
6.3 Announcements.
No public release or announcement concerning the transactions contemplated by
this Agreement shall be issued by a Party without the approval of Principals
Holdco and Palmer Holdco (which consent shall not be unreasonably withheld),
except as such release or announcement may be required by Applicable Laws, in
which case the Party required to make the release or announcement shall allow
the other Parties reasonable time to comment on such announcement in advance of
such issuance.
6.4 No Agency or Partnership.
Nothing contained in this Agreement makes or constitutes a Party, or any of its
directors, officers or employees, the representative, agent, principal, partner,
joint venturer, employer or employee of the other Party.
6.5 Expenses.
Each Party will pay for its own costs and expenses incurred in connection with
this Agreement and the transactions contemplated by it.
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6.6 Amendments and Waivers.
No amendment or waiver of any provision of this Agreement shall be binding on
any Party unless consented to in writing by that Party. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision,
nor shall any waiver constitute a continuing waiver unless otherwise expressly
provided.
6.7 Entire Agreement.
This Agreement constitutes the entire agreement between the Parties with respect
to the transactions contemplated hereby and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties. There are no representations, warranties, covenants, conditions or
other agreements, express or implied, collateral, statutory or otherwise,
between the Parties or certain of them in connection with the subject matter of
this Agreement, except as specifically set forth in this Agreement. The 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.
6.8 Successors and Assigns.
This Agreement shall enure to the benefit of and shall be binding on, and
enforceable by, the Parties and, where the context so permits, their respective
successors and permitted assigns. No Party may assign any of its rights or
obligations hereunder without the prior written consent of the other Parties.
6.9 Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
Party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
6.10 Governing Law.
This Agreement shall be construed, interpreted and enforced in accordance with,
and the respective rights and obligations of the Parties shall be governed by,
the laws of the Province of Ontario and the federal laws of Canada applicable in
that province. Each Party unconditionally submits to the non-exclusive
jurisdiction of the courts of the Province of Ontario.
6.11 Counterparts.
This Agreement may be executed in any number of counterparts (including
counterparts by facsimile) and all such counterparts taken together will be
deemed to constitute one and the same instrument. The Parties may rely on copies
of this Agreement which are delivered by facsimile as if such copies were
originals.
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(SIGNATURES APPEAR ON THE FOLLOWING PAGE)
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IN WITNESS WHEREOF the Parties have executed this Share Option Agreement.
MPMAG HOLDINGS INC.
Per:
------------------------------
Authorized Signing Officer
Per:
------------------------------
Authorized Signing Officer
JOP HOLDCO INC.
Per:
------------------------------
Authorized Signing Officer
Per:
------------------------------
Authorized Signing Officer
2143453 ONTARIO INC.
Per:
------------------------------
Authorized Signing Officer
Per:
------------------------------
Authorized Signing Officer
M UNICAR INC.
Per:
------------------------------
Authorized Signing Officer
Per:
------------------------------
Authorized Signing Officer
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Exhibit H
PK HOLDCO INC.
AS KOOB HOLDCO
and
MPMAG HOLDINGS INC.
AS PRINCIPALS HOLDCO
and
2143453 ONTARIO INC.
AS NEWCO I.5
and
M UNICAR INC.
AS NEWCO
KOOB HOLDCO MAGNA CLASS A SHARE OPTION AGREEMENT
September 20, 2007
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION...............................................................1
1.1 Defined Terms................................................1
1.2 Gender and Number............................................5
1.3 Sections and Headings........................................5
1.4 Currency.....................................................5
1.5 Certain Phrases..............................................6
1.6 Statutory References.........................................6
ARTICLE 2
RIGHT TO PURCHASE CLASS A SHARES OF MAGNA....................................6
2.1 Call Option..................................................6
2.2 Exercise of Call Option......................................6
2.3 Call Option Consideration....................................6
2.4 Closing......................................................6
2.5 Acknowledgement..............................................6
ARTICLE 3
REPRESENTATIONS AND WARRANTIES...............................................7
3.1 Representations and Warranties of Koob Holdco................7
3.2 Representations and Warranties of Principals Holdco..........7
3.3 Representations and Warranties of Newco I.5..................8
3.4 Survival.....................................................8
ARTICLE 4
COVENANTS OF KOOB HOLDCO, PRINCIPALS HOLDCO AND NEWCO I.5...................8
4.1 Covenants of Koob Holdco.....................................9
4.2 Covenants of Principals Holdco...............................9
4.3 Covenants of Newco I.5.......................................9
4.4 Covenants of Newco...........................................9
ARTICLE 5
PROCEDURE FOR SALE OF SHARES................................................10
5.1 Additional Covenants of the Parties.........................10
5.2 Conditions for the Benefit of Principals Holdco.............10
5.3 Closing Procedures..........................................11
5.4 Non-Compliance with Conditions..............................11
5.5 Non-Completion by Koob Holdco...............................11
ARTICLE 6
MISCELLANEOUS...............................................................12
6.1 Notices.....................................................12
6.2 Time of the Essence.........................................15
6.3 Announcements...............................................15
6.4 No Agency or Partnership....................................15
6.5 Expenses....................................................15
6.6 Amendments and Waivers......................................15
6.7 Entire Agreement............................................15
(i)
6.8 Successors and Assigns......................................15
6.9 Severability................................................16
6.10 Governing Law...............................................16
6.11 Counterparts................................................16
(ii)
KOOB HOLDCO MAGNA CLASS A SHARE OPTION AGREEMENT
Koob Holdco Magna Class A Share Option Agreement dated September 20,
2007 between PK Holdco Inc. ("Koob Holdco"), MPMAG Holdings Inc. ("Principals
Holdco"), 2143453 Ontario Inc. ("Newco I.5") and M Unicar Inc. ("Newco")
RECITALS:
A. Koob Holdco is the registered and beneficial owner of 35,000 Magna
Class A Shares;
B. Principals Holdco is the registered and beneficial owner of 950 Newco
I.5 Class A-1, Series 4 Common Shares, which are convertible in certain
circumstances into 950 Newco I.5 Class A-2, Series 4 Common Shares; 25
Newco Class A Series 4 Shares, which are convertible in certain
circumstances into 25 Newco Class D Series 4 Shares; and 950 Class A
Preferred shares; and
C. Koob Holdco desires to issue to Principals Holdco an option to purchase
the Koob Holdco Magna Securities on the terms and conditions set out in
this Agreement.
In consideration of the above recitals, and the agreements of the
parties hereto contained in this Agreement and other good and valuable
consideration (the receipt and adequacy of which are hereby acknowledged), the
parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Defined Terms.
As used in this Agreement, the following terms have the following meanings:
"446" means 446 Holdings Inc., a corporation existing under the Act and
a wholly owned subsidiary of 445, and its successors.
"446 Anniversary Date Triggering Event" means the delivery of an Exit
Notice by 446 in accordance with Section 2.2(3) of the Exit Agreement
in connection with the exercise by 446 of its right to cause RM Sub to
sell its RM Sub Securities to Newco Purchaser pursuant to Section
2.2(2)(a) of the Exit Agreement.
"Act" means the Business Corporations Act (Ontario).
"Agreement" means this agreement and all schedules attached to it as
amended, modified, restated, replaced or supplemented from time to
time.
"Applicable Laws" means all applicable federal, provincial, state,
municipal and local statutes, laws, by-laws, regulations, ordinances,
orders, enactment, directives and rules and all injunctions, decisions,
directives, judgments and orders of any Governmental Entity having
jurisdiction in respect of a particular matter and all amendments
thereto which have the force of law.
"Authorization" means, with respect to a Person, any order, relief,
permit, approval, consent, waiver, licence or similar authorization of
any Governmental Entity, including any securities regulatory authority,
having jurisdiction over the Person.
"Business Day" means any day of the year, other than a Saturday, Sunday
or day observed as a statutory holiday in Toronto, Ontario.
"Call Sale Transaction" has the meaning specified in Section 2.4.
"Class A Shares" means the class A shares in the capital of Newco,
issuable in series.
"Class A-1 Common Shares" means the class A-1 common shares in the
capital of Newco I.5, issuable in series.
"Class A-2 Common Shares" means the class A-2 common shares in the
capital of Newco I.5, issuable in series.
"Class A Preferred Shares" means the class A preferred shares in the
capital of Newco I.5, issuable in series.
"Class D Shares" means the class D shares in the capital of Newco,
issuable in series.
"Closing Date" has the meaning specified in Section 2.4.
"Contract" means any agreement, contract, lease, licence, permit,
franchise, purchase order, commitment, engagement, option, indenture,
mortgage, deed, instrument or other legally binding obligation, whether
written, oral or implied.
"Effective Date" means the date shown on the Certificate of
Arrangement.
"Effective Time" means 12:01 a.m. (Eastern Time) on the Effective Date.
"Exit Agreement" means the exit agreement to be entered into on the
Effective Date among 445, 446, RM, RM Sub, Newco, Newco I.5, Newco II
and RM's lender.
"Exit Notice" means the formal notice to be provided by RM Sub or 446,
as the case may be, to each of the parties to the Exit Agreement in
connection with an exercise of its respective exit rights pursuant to
the Exit Agreement.
"Governmental Entity" means any (a) multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitrator or
arbitral body, commission, board, bureau or agency, domestic or
foreign, including the Ontario Securities Commission, the Autorite des
marches financiers du Quebec and the United States Securities and
Exchange Commission, (b) self-regulatory organization or stock
exchange, including the Toronto Stock Exchange and the New York Stock
Exchange, (c) subdivision, agent, commission, board, or authority of
any of the foregoing, or (d) quasi-governmental or private body
exercising any regulatory, expropriation or taxing authority under or
for the account of any of the foregoing.
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"Insolvency/Material Breach Triggering Event" means the delivery of an
Exit Notice by either RM Sub or 446 in accordance with Section 2.2(3)
of the Exit Agreement in connection with the exercise by RM Sub or 446
of RM Sub's right to sell, or 446's right to cause RM Sub to sell, as
the case may be, the RM Sub Securities to Newco Purchaser pursuant to
Sections 2.2(1)(b), 2.2(1)(c), 2.2(2)(b) or 2.2(2)(c) of the Exit
Agreement.
"Koob Holdco" means PK Holdco Inc., a corporation existing under the
OBCA and, immediately prior to the Effective Time, a wholly owned
subsidiary of Principals Holdco that holds 35,000 Class A Subordinate
Voting Shares, and its successors;
"Koob Holdco Magna Securities" means the 35,000 Magna Class A Shares
beneficially owned by Koob Holdco, appropriately adjusted for stock
splits, stock dividends, reverse stock splits, share consolidations and
similar events and, where the context permits, includes: (i) any
securities into which such shares may be converted, reclassified,
redesignated, subdivided, consolidated or otherwise changed, (ii) any
securities received by the holder of such shares as a result of any
merger, amalgamation, reorganization, arrangement or other similar
transaction involving Magna, and (iii) any securities of Magna which
are received by the holder of such shares as a stock dividend or
distribution on or in respect of such shares.
"Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, deemed trust,
security interest, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or
nature whatsoever (including any lease or title retention agreement,
any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the PPSA or
comparable notice filing under the law of any other jurisdiction or any
option, warrant, right or privilege capable of becoming a Transfer)
(other than Liens created pursuant to any long-term retention
(restricted share) agreement between Magna and a Principal).
"Magna" means Magna International Inc., a corporation existing under
the Act and its successors.
"Magna Class A Shares" means the Class A Subordinate Voting Shares in
the capital of Magna.
"Newco" means M Unicar Inc., a corporation existing under the Act and,
immediately prior to the Effective Time, a wholly owned subsidiary of
446, and its successors.
"Newco Class C Common Shares" means 42,000 Class C Common Shares in the
capital of Newco beneficially owned by RM Sub.
"Newco I.5" means 2143453 Ontario Inc., a corporation existing under
the Act and, immediately prior to the Effective Time, a wholly-owned
subsidiary of Newco, and its successors;
-3-
"Newco II" means 2143455 Ontario Inc., a corporation existing under the
Act and, immediately prior to the Effective Time, a wholly owned
subsidiary of Newco I.5, and its successors.
"Newco II Class A Common Shares" means 100 Class A Common Shares in the
capital of Newco II beneficially owned by RM Sub.
"Newco II Loan" means the loan provided by RM Sub to Newco II on the
date hereof and evidenced by the Newco II Loan Note.
"Newco II Loan Note" means the promissory note dated the date hereof
issued to RM Sub by Newco II to evidence the Newco II Loan, including
the ancillary agreements and documents relating to the security
therefor.
"Newco Purchaser" means 446 or such other Person as 446 may designate
from time to time by giving notice to others in accordance with the
Exit Agreement.
"Parties" mean Principals Holdco, Koob Holdco and Newco I.5.
"Person" includes any individual, firm, partnership, limited
partnership, joint venture, venture capital fund, limited liability
company, unlimited liability company, association, trust, trustee,
heir, executor, administrator, legal personal representative, estate,
group, body corporate, corporation, unincorporated association or
organization, Governmental Entity, syndicate or other entity, whether
or not having legal status.
"Pledge Agreement" means the pledge agreement to be entered into on the
Effective Date between Koob Holdco and Principals Holdco.
"PPSA" means the Personal Property Security Act (Ontario).
"Principals Holdco Newco I.5 Securities" means all of the Newco I.5
Class A-1 Series 4 Common Shares, all of the Newco I.5 Class A-2 Series
4 Common Shares, all of the Newco I.5 Class A Series 4, all of the
Newco Class A Series 4 Shares and all of the Newco Class D Series 4
Shares legally and beneficially owned by Principals Holdco,
appropriately adjusted for stock splits, stock dividends, reverse stock
splits, share consolidations and similar events and, where the context
permits, includes: (i) any securities into which such shares may be
converted, reclassified, redesignated, subdivided, consolidated or
otherwise changed, (ii) any securities received by the holder of such
shares as a result of any merger, amalgamation, reorganization,
arrangement or other similar transaction involving Newco I.5, and (iii)
any securities of Newco I.5 which are received by the holder of such
shares as a stock dividend or distribution on or in respect of such
shares.
"Realization Triggering Event" means any demand for repayment of the
Newco II Loan.
"RM" means Open Joint Stock Company Russian Machines, a company
existing under the laws of Russia, and its successors.
-4-
"RM Sub" means Veleron Holding B.V., a company existing under the laws
of The Netherlands and a wholly owned indirect subsidiary of RM, and
its successors.
"RM Sub Anniversary Date Triggering Event" means the time of the
closing of the sale by RM Sub of some or all of its RM Sub Securities
to Newco Purchaser pursuant to the Exit Agreement following the
occurrence of the date referred to in Section 2.2(1)(a) of the Exit
Agreement and delivery of an Exit Notice in accordance with Section
2.2(3) of the Exit Agreement.
"RM Sub Securities" means the Newco Class C Common Shares, Newco II
Class A Common Shares and interest in the Newco II Loan and the Newco
II Loan Note (or any Newco II special shares issued on conversion of
the Newco II Loan Note) owned by RM Sub.
"Subsidiary" means, in respect of a Party, a subsidiary (as that term
is defined in the Act as now in effect) of that Party or any Person in
which such Party has a direct or indirect controlling interest or a
joint-controlling interest, and shall be deemed to include any
partnership or joint venture in which such Party has a direct or
indirect interest of more than 50 percent.
"Time of Closing" means 10:00 a.m. (Toronto Time) on the Closing Date
or such later or earlier time on the Closing Date as those parties to a
Call Sale Transaction may agree in writing.
"Transfer" means any (i) transfer, sale, assignment, exchange, gift,
donation, mortgage, pledge, charge, encumbrance, grant of security
interest or other disposition of securities where possession, legal
title, beneficial ownership or the economic risk or return associated
with such securities passes directly or indirectly from one Person to
another or to the same Person in a different legal capacity, whether or
not for value, whether or not voluntary and however occurring, or (ii)
agreement, undertaking or commitment to effect any of the foregoing,
and "Transferred" and "Transferring" shall be construed accordingly.
"Triggering Event" means a 446 Anniversary Date Triggering Event, an RM
Sub Anniversary Date Triggering Event, an Insolvency/Material Breach
Triggering Event or a Realization Triggering Event.
1.2 Gender and Number.
Any reference in this Agreement to gender includes all genders. Words importing
the singular number also include the plural and vice versa.
1.3 Sections and Headings.
The division of this Agreement into Articles and Sections, the insertion of
headings and the inclusion of a table of contents are for reference purposes
only and shall not affect the interpretation of this Agreement. Unless otherwise
indicated, any reference in this Agreement to an Article, a Section, a Schedule
or an Exhibit refers to the specified Article or Section of, or Schedule or
Exhibit to, this Agreement.
-5-
1.4 Currency.
Unless otherwise indicated, all dollar amounts in this Agreement are expressed
in United States funds.
1.5 Certain Phrases.
In this Agreement, (i) the words "including", "includes" and "include" mean
"including (or includes or include) without limitation", and (ii) the words "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".
1.6 Statutory References.
A reference to a statute includes all rules and regulations made pursuant to
such statute and, unless otherwise specified, the provisions of any statute or
regulation or rule which amends, supplements or supersedes any such statute or
any such regulation or rule.
ARTICLE 2
RIGHT TO PURCHASE CLASS A SHARES OF MAGNA
2.1 Call Option
Principals Holdco shall have the right to purchase from Koob Holdco all, but not
less than all, of the Koob Holdco Magna Securities in accordance with this
Article 2 upon the occurrence of any Triggering Event.
2.2 Exercise of Call Option
In order to exercise its right under Section 2.1, Principals Holdco shall,
within 30 Business Days after any Triggering Event, deliver to each of Koob
Holdco and Newco I.5, in writing, a notice ("Call Notice") that Principals
Holdco is exercising its rights under Section 2.1 specifying the type of
Triggering Event related to such exercise.
2.3 Call Option Consideration
If the Call Notice is delivered in accordance with Section 2.2 and is not
revoked by Principals Holdco prior to the Closing Date, then on the Closing Date
Koob Holdco shall sell and Principals Holdco shall purchase the Koob Holdco
Magna Securities free and clear of all Liens in exchange for the Principals
Holdco Newco I.5 Securities held by Principals Holdco free and clear of all
Liens.
2.4 Closing
The completion of the transaction of purchase and sale under this Agreement
contemplated by Section 2.1 (a "Call Sale Transaction") will take place on the
Closing Date in accordance with and subject to Article 5. "Closing Date" means
(a) the second Business Day following the satisfaction (or, to the extent
permitted, the waiver) of the conditions set forth in Section 5.2 or such other
date as Principals Holdco and Koob Holdco shall agree to in writing.
-6-
2.5 Acknowledgement
Notwithstanding any other provision of this Agreement, Principals Holdco
acknowledges that some or all of the Koob Holdco Magna Securities may be subject
to the terms, conditions and restrictions contained in one or more long-term
retention (restricted share) agreement(s) and that Magna shall maintain
possession of such Koob Holdco Magna Securities and shall only release them as
and when the applicable restrictions are fully satisfied.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Koob Holdco.
Koob Holdco represents and warrants as follows and acknowledges and confirms
that each other Party is relying on such representations and warranties in
entering into this Agreement:
(a) Existence. It is a corporation validly existing under the Act
and has all necessary corporate power and authority to carry
on its business as now conducted, to own or lease and operate
its assets and to execute, deliver and perform its obligations
under this Agreement.
(b) Authority and Enforceability. It has taken all necessary
corporate action to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly
executed and delivered and is a legal and binding obligation,
enforceable against it by the other Parties in accordance with
its terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may be granted
only in the discretion of a court of competent jurisdiction.
(c) No Violation. The execution, delivery and performance of this
Agreement does not, and will not, result in a breach or
violation of any of the provisions of or constitute a default
under, or conflict with or cause the acceleration of any
obligation or that of a Subsidiary under (i) a material
Contract to which it is a party, (ii) any provision of its
articles, by-laws or resolutions of its board of directors (or
any committee thereof) or shareholders, (iii) any judgment,
decree, order or award of any Governmental Entity having
jurisdiction over it or (iv) any Applicable Law. No consent,
approval, order or authorization of, or declaration or filing
with, any Governmental Entity or other Person is required to
be obtained or made, as the case may be, in connection with
the execution and delivery of this Agreement.
(d) Title to Magna Class A Shares. The Koob Holdco Magna
Securities described in the recitals as being owned by Koob
Holdco are owned by it as the registered and beneficial owner
with good title, free and clear of all Liens (other than the
Lien created by the Pledge Agreement).
-7-
3.2 Representations and Warranties of Principals Holdco
Principals Holdco represents and warrants as follows and acknowledges and
confirms that each other Party is relying on such representations and warranties
in entering into this Agreement:
(a) Existence. It is a corporation validly existing under the Act
and has all necessary corporate power and authority to carry
on its business as now conducted, to own or lease and operate
its assets and to execute, deliver and perform its obligations
under this Agreement.
(b) Authority and Enforceability. It has taken all necessary
corporate action to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly
executed and delivered and is a legal and binding obligation,
enforceable against it by the other Parties in accordance with
its terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may be granted
only in the discretion of a court of competent jurisdiction.
(c) No Violation. The execution, delivery and performance of this
Agreement does not, and will not, result in a breach or
violation of any of the provisions of or constitute a default
under, or conflict with or cause the acceleration of any
obligation or that of a Subsidiary under (i) a material
Contract to which it is a party, (ii) any provision of its
articles, by-laws or resolutions of its board of directors (or
any committee thereof) or shareholders, (iii) any judgment,
decree, order or award of any Governmental Entity having
jurisdiction over it or (iv) any Applicable Law. No consent,
approval, order or authorization of, or declaration or filing
with, any Governmental Entity or other Person is required to
be obtained or made, as the case may be, in connection with
the execution and delivery of this Agreement.
(d) Title to Class A Common Shares of Newco I.5. The Principals
Holdco Newco I.5 Securities described in the recitals as being
owned by Principals Holdco are owned by it as the registered
and beneficial owner with good title, free and clear of all
Liens.
3.3 Representations and Warranties of Newco I.5
Newco I.5 represents and warrants as follows and acknowledges and confirms that
each other Party is relying on such representations and warranties in entering
into this Agreement:
(a) That it has taken all actions necessary to carry out the
pledge contemplated by the Pledge Agreement and the Call Sale
Transaction.
3.4 Survival.
Notwithstanding the Limitations Act, 2002 (Ontario), The representations and
warranties of Koob Holdco and Principals Holdco contained in Article 3 and the
covenants of Koob Holdco, Principals Holdco and Newco I.5 contained in Article 4
and Article 5 survive the execution and delivery of this Agreement and continue
in full force and effect with respect to each of Koob
-8-
Holdco, Principals Holdco and Newco I.5 until it ceases to be bound by the
provisions of this Agreement.
ARTICLE 4
COVENANTS OF KOOB HOLDCO, PRINCIPALS HOLDCO AND NEWCO I.5
4.1 Covenants of Koob Holdco.
(a) Koob Holdco shall not Transfer the Koob Holdco Magna
Securities except as expressly permitted by this Agreement or
except with the prior written consent of Principals Holdco,
which consent may be withheld in the unfettered discretion of
Principals Holdco.
(b) Koob Holdco shall not grant a Lien on or otherwise encumber
any of the Koob Holdco Magna Securities in any way whatsoever
without the prior written consent of Principals Holdco, which
consent may be withheld in the unfettered discretion of
Principals Holdco.
(c) Koob Holdco shall execute the Pledge Agreement concurrently
with the execution and delivery of this Agreement and pledges
the Koob Holdco Magna Securities to Principals Holdco pursuant
to the terms of the Pledge Agreement.
4.2 Covenants of Principals Holdco.
(a) Principals Holdco shall not Transfer the Principals Holdco
Newco I.5 Securities except as expressly permitted by this
Agreement or except with the prior written consent of Koob
Holdco, which consent may be withheld in the unfettered
discretion of Koob Holdco;
(b) Principals Holdco shall not grant a Lien on or otherwise
encumber any of the Principals Holdco Newco I.5 Securities in
any way whatsoever without the prior written consent of Koob
Holdco, which consent may be withheld in the unfettered
discretion of Koob Holdco.
4.3 Covenants of Newco I.5
(a) Newco I.5 hereby irrevocably consents to the Transfer of the
Principals Holdco Newco I.5 Securities to Koob Holdco pursuant
to this Agreement and shall take all actions necessary to
effect the transfer of the Principals Holdco Newco I.5
Securities to Koob Holdco, all in accordance with the terms
and conditions of this Agreement.
(b) Newco I.5, as the sole shareholder of Koob Holdco, hereby
irrevocably consents to, authorizes and approves the pledge of
the Koob Holdco Magna Securities to Principals Holdco pursuant
to the Pledge Agreement and the sale by Koob Holdco of the
Koob Holdco Magna Securities pursuant to this Agreement.
-9-
4.4 Covenants of Newco
(a) Newco hereby irrevocably consents to the Transfer of the
Principals Holdco Newco I.5 Securities to Koob Holdco pursuant
to this Agreement and shall take all actions necessary to
effect the transfer of the Principals Holdco Newco I.5
Securities to Koob Holdco, all in accordance with the terms
and conditions of this Agreement.
ARTICLE 5
PROCEDURE FOR SALE OF SHARES
5.1 Additional Covenants of the Parties.
(a) Each Party shall take all actions that are within its power to
control, and use its commercially reasonable efforts to cause
other actions to be taken which are not within its power to
control, to ensure satisfaction of the conditions in Section
5.2.
(b) Koob Holdco shall take all necessary steps and corporate
proceedings to permit good title to the Koob Holdco Magna
Securities to be duly and validly transferred and assigned in
accordance with the provisions of this Agreement at the Time
of Closing, free and clear of Liens.
(c) Principals Holdco shall take all necessary steps and corporate
proceedings to permit good title to any Principals Holdco
Newco I.5 Securities that are to be delivered by Principals
Holdco to Koob Holdco in accordance with the provisions of
this Agreement to be duly and validly transferred and assigned
in accordance with the provisions of this Agreement at the
Time of Closing, free and clear of Liens.
(d) Each Party shall use its commercially reasonable efforts to
make or give, or cause to be made or given, all filings with
and notifications to any Governmental Entity and obtain or
cause to be obtained all Authorizations, necessary in order to
complete the Call Sale Transaction and to facilitate any
purchase and sale of securities in accordance with Article 2.
5.2 Conditions for the Benefit of Principals Holdco.
The completion of any Call Sale Transaction is subject to the following
conditions to be fulfilled or performed on or before the Closing Date, which
conditions are for the exclusive benefit of Principals Holdco and may be waived,
in whole or in part, by Principals Holdco in its sole discretion:
(a) the delivery to Principals Holdco of a certificate of Koob
Holdco, signed by an authorized officer of Koob Holdco on its
behalf and not in his personal capacity, certifying that (i)
on the Closing Date, the Koob Holdco Magna Securities are
owned by Koob Holdco as the registered and beneficial owner
with good title, free and clear of Liens other than those
being released on such date, and (ii) upon completion of the
Call Sale Transaction, Principals Holdco will have good and
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valid title to the Koob Holdco Magna Securities transferred by
Koob Holdco, free and clear of Liens;
(b) all filings, notices and the receipt of all Authorizations
necessary under Applicable Laws to permit the trade or
distribution by Koob Holdco of the Koob Holdco Magna
Securities necessary to effect the Call Sale Transaction shall
have been made, given or obtained; and
(c) the completion of the Call Sale Transaction will not result in
the violation of any Applicable Law.
5.3 Closing Procedures.
(a) The completion of the Call Sale Transaction will take place at
the offices of Miller Thomson LLP in Toronto, Ontario, at the
Time of Closing or at such other place, or on such other date
as the parties to the Call Sale Transaction may agree to in
writing.
(b) Subject to satisfaction or waiver by Principals Holdco of the
conditions of closing in its favour, at the closing of the
Call Sale Transaction:
(i) Koob Holdco shall assign and transfer title and
deliver actual possession of the Koob Holdco Magna
Securities to Principals Holdco and endorse the share
certificates representing the Koob Holdco Magna
Securities for transfer to Principals Holdco; and
(ii) Principals Holdco shall assign and transfer title and
deliver actual possession of the Principals Holdco
Newco I.5 Securities to Koob Holdco and endorse the
share certificates representing the Principals Holdco
Newco I.5 Securities for transfer to Koob Holdco.
5.4 Non-Compliance with Conditions.
If at the Time of Closing, the Koob Holdco Magna Securities are not free and
clear of all Liens (other than the Lien created by the Pledge Agreement),
Principals Holdco may, without prejudice to any other rights it may have, choose
to purchase the Koob Holdco Magna Securities subject to such Liens to the extent
that Principals Holdco recognizes the validity of such Liens provided that
Principals Holdco shall be entitled to such monetary rights of set off and/or to
take such other steps as it deems appropriate to recognize any diminution in
value in the Koob Holdco Magna Securities due to such Liens. Koob Holdco agrees
to indemnify Principals Holdco for the amount of any obligations and liabilities
in respect of such Liens to the extent that such obligations and liabilities
exceed the value of the Principals Holdco Newco Securities.
5.5 Non-Completion by Koob Holdco.
(a) In addition to and without limiting any remedy that may be
available under Applicable Law to Principals Holdco, if at the
Time of Closing Koob Holdco fails to complete the Call Sale
Transaction in violation of this Agreement, Principals Holdco
has the right, if Principals Holdco is not in default under
this Agreement,
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to make payment of the purchase price for the Koob Holdco
Magna Securities to Koob Holdco by delivering share
certificates representing the Principals Holdco Newco I.5
Securities to a recognized financial institution in Canada to
hold on behalf of Koob Holdco. Such delivery constitutes valid
and effective payment of the purchase price to Koob Holdco
irrespective of any action Koob Holdco may have taken to
transfer or grant a Lien on the Koob Holdco Magna Securities.
If the purchase price has been so paid, then from the date of
such delivery the Call Sale Transaction is deemed to have been
completed and all right, title, benefit and interest, both at
law and in equity, in and to the Koob Holdco Magna Securities
shall be deemed to have been transferred to and become vested
in Principals Holdco and all right, title, benefit and
interest of Koob Holdco, or of any transferee or assignee of,
or other Person claiming an interest through, Koob Holdco, in
and to the Koob Holdco Magna Securities, shall cease.
(b) Koob Holdco is entitled to receive the share certificates
delivered to a recognized financial institution in Canada
under Section 5.1(a) on delivery to Principals Holdco of the
documents referred to in Section 5.2 and Section 5.3(b)(i) and
in compliance with all other provisions of this Agreement.
ARTICLE 6
MISCELLANEOUS
6.1 Notices.
Any notice or other communication required or permitted to be given hereunder
shall be in writing and shall be delivered in person or transmitted by
telecopier or similar means of recorded electronic communication (with receipt
confirmed) as follows:
(a) to Principals Holdco at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Jeffrey O. Palmer
Facsimile: (905) 726-7164
with a copy to: Vincent J. Galifi, Peter Koob, Donald J.
Walker and Siegfried Wolf
Miller Thomson LLP
Scotia Plaza
40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
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Attention: John Campbell
Facsimile: (416) 595.8695
(b) to Koob Holdco at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Peter Koob
Facsimile: (905) 726-2595
with a copy to:
Miller Thomson LLP
Scotia Plaza
40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
Attention: John Campbell
Facsimile: (416) 595.8695
and to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
(c) to Newco I.5 at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Belinda Stronach
Facsimile: (905) 726-7494
with a copy to:
Miller Thomson LLP
Scotia Plaza
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40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
Attention: John Campbell
Facsimile: (416) 595.8695
and to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
(d) to Newco at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Belinda Stronach
Facsimile: (905) 726-7494
with a copy to:
Miller Thomson LLP
Scotia Plaza
40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
Attention: John Campbell
Facsimile: (416) 595.8695
and to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
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Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
Any such notice or other communication shall be deemed to have been given and
received on the day on which it was delivered or transmitted (or, if such day is
not a Business Day, on the next following Business Day).
A Party may change its address for service and may add "copy to" parties 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.
6.2 Time of the Essence.
Time is of the essence in this Agreement.
6.3 Announcements.
No public release or announcement concerning the transactions contemplated by
this Agreement shall be issued by a Party without the approval of Principals
Holdco and Koob Holdco (which consent shall not be unreasonably withheld),
except as such release or announcement may be required by Applicable Laws, in
which case the Party required to make the release or announcement shall allow
the other Parties reasonable time to comment on such announcement in advance of
such issuance.
6.4 No Agency or Partnership.
Nothing contained in this Agreement makes or constitutes a Party, or any of its
directors, officers or employees, the representative, agent, principal, partner,
joint venturer, employer or employee of the other Party.
6.5 Expenses.
Each Party will pay for its own costs and expenses incurred in connection with
this Agreement and the transactions contemplated by it.
6.6 Amendments and Waivers.
No amendment or waiver of any provision of this Agreement shall be binding on
any Party unless consented to in writing by that Party. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision,
nor shall any waiver constitute a continuing waiver unless otherwise expressly
provided.
6.7 Entire Agreement.
This Agreement constitutes the entire agreement between the Parties with respect
to the transactions contemplated hereby and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties. There are no representations, warranties, covenants, conditions or
other agreements, express or implied, collateral, statutory or otherwise,
between the Parties or certain of them in connection with the
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subject matter of this Agreement, except as specifically set forth in this
Agreement. The 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.
6.8 Successors and Assigns.
This Agreement shall enure to the benefit of and shall be binding on, and
enforceable by, the Parties and, where the context so permits, their respective
successors and permitted assigns. No Party may assign any of its rights or
obligations hereunder without the prior written consent of the other Parties.
6.9 Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
Party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
6.10 Governing Law.
This Agreement shall be construed, interpreted and enforced in accordance with,
and the respective rights and obligations of the Parties shall be governed by,
the laws of the Province of Ontario and the federal laws of Canada applicable in
that province. Each Party unconditionally submits to the non-exclusive
jurisdiction of the courts of the Province of Ontario.
6.11 Counterparts.
This Agreement may be executed in any number of counterparts (including
counterparts by facsimile) and all such counterparts taken together will be
deemed to constitute one and the same instrument. The Parties may rely on copies
of this Agreement which are delivered by facsimile as if such copies were
originals.
(Signatures appear on the following page)
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IN WITNESS WHEREOF the Parties have executed this Share Option
Agreement.
MPMAG HOLDINGS INC.
Per:
---------------------------------
Authorized Signing Officer
Per:
---------------------------------
Authorized Signing Officer
PK HOLDCO INC.
Per:
----------------------------------
Authorized Signing Officer
Per:
----------------------------------
Authorized Signing Officer
2143453 ONTARIO INC.
Per:
----------------------------------
Authorized Signing Officer
Per:
----------------------------------
Authorized Signing Officer
M UNICAR INC.
Per:
----------------------------------
Authorized Signing Officer
Per:
----------------------------------
Authorized Signing Officer
Exhibit I
VG HOLDCO INC.
AS GALIFI HOLDCO
and
MPMAG HOLDINGS INC.
AS PRINCIPALS HOLDCO
and
2143453 ONTARIO INC.
AS NEWCO I.5
and
M UNICAR INC.
AS NEWCO
GALIFI HOLDCO MAGNA CLASS A SHARE OPTION AGREEMENT
SEPTEMBER 20, 2007
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION...............................................................1
1.1 Defined Terms................................................1
1.2 Gender and Number............................................5
1.3 Sections and Headings........................................5
1.4 Currency.....................................................6
1.5 Certain Phrases..............................................6
1.6 Statutory References.........................................6
ARTICLE 2
RIGHT TO PURCHASE CLASS A SHARES OF MAGNA....................................6
2.1 Call Option..................................................6
2.2 Exercise of Call Option......................................6
2.3 Call Option Consideration....................................6
2.4 Closing......................................................6
2.5 Acknowledgement..............................................7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES...............................................7
3.1 Representations and Warranties of Galifi Holdco..............7
3.2 Representations and Warranties of Principals Holdco..........8
3.3 Representations and Warranties of Newco I.5..................8
3.4 Survival.....................................................8
ARTICLE 4
COVENANTS OF GALIFI HOLDCO, PRINCIPALS HOLDCO AND NEWCO I.5.................9
4.1 Covenants of Galifi Holdco...................................9
4.2 Covenants of Principals Holdco...............................9
4.3 Covenants of Newco I.5.......................................9
4.4 Covenants of Newco..........................................10
ARTICLE 5
PROCEDURE FOR SALE OF SHARES................................................10
5.1 Additional Covenants of the Parties.........................10
5.2 Conditions for the Benefit of Principals Holdco.............10
5.3 Closing Procedures..........................................11
5.4 Non-Compliance with Conditions..............................11
5.5 Non-Completion by Galifi Holdco.............................11
ARTICLE 6
MISCELLANEOUS...............................................................12
6.1 Notices.....................................................12
6.2 Time of the Essence.........................................15
6.3 Announcements...............................................15
6.4 No Agency or Partnership....................................15
6.5 Expenses....................................................15
6.6 Amendments and Waivers......................................15
6.7 Entire Agreement............................................15
(i)
6.8 Successors and Assigns......................................16
6.9 Severability................................................16
6.10 Governing Law...............................................16
6.11 Counterparts................................................16
(ii)
GALIFI HOLDCO MAGNA CLASS A SHARE OPTION AGREEMENT
Galifi Holdco Magna Class A Share Option Agreement dated September 20,
2007 between VG Holdco Inc. ("Galifi Holdco"), MPMAG Holdings Inc. ("Principals
Holdco"), 2143453 Ontario Inc. ("Newco I.5") and M Unicar Inc. ("Newco")
RECITALS:
A. Galifi Holdco is the registered and beneficial owner of 35,000 Magna
Class A Shares;
B. Principals Holdco is the registered and beneficial owner of 950 Newco
I.5 Class A-1, Series 3 Common Shares, which are convertible in certain
circumstances into 950 Newco I.5 Class A-2, Series 3 Common Shares; 25
Newco Class A Series 3 Shares, which are convertible in certain
circumstances into 25 Newco Class D Series 3 Shares; and 950 Class A
Preferred shares; and
C. Galifi Holdco desires to issue to Principals Holdco an option to
purchase the Galifi Holdco Magna Securities on the terms and conditions
set out in this Agreement.
In consideration of the above recitals, and the agreements of the
parties hereto contained in this Agreement and other good and valuable
consideration (the receipt and adequacy of which are hereby acknowledged), the
parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Defined Terms.
As used in this Agreement, the following terms have the following meanings:
"446" means 446 Holdings Inc., a corporation existing under the Act and
a wholly owned subsidiary of 445, and its successors.
"446 Anniversary Date Triggering Event" means the delivery of an Exit
Notice by 446 in accordance with Section 2.2(3) of the Exit Agreement
in connection with the exercise by 446 of its right to cause RM Sub to
sell its RM Sub Securities to Newco Purchaser pursuant to Section
2.2(2)(a) of the Exit Agreement.
"Act" means the Business Corporations Act (Ontario).
"Agreement" means this agreement and all schedules attached to it as
amended, modified, restated, replaced or supplemented from time to
time.
"Applicable Laws" means all applicable federal, provincial, state,
municipal and local statutes, laws, by-laws, regulations, ordinances,
orders, enactment, directives and rules and all injunctions, decisions,
directives, judgments and orders of any Governmental Entity having
jurisdiction in respect of a particular matter and all amendments
thereto which have the force of law.
"Authorization" means, with respect to a Person, any order, relief,
permit, approval, consent, waiver, licence or similar authorization of
any Governmental Entity, including any securities regulatory authority,
having jurisdiction over the Person.
"Business Day" means any day of the year, other than a Saturday, Sunday
or day observed as a statutory holiday in Toronto, Ontario.
"Call Sale Transaction" has the meaning specified in Section 2.4.
"Class A Shares" means the class A shares in the capital of Newco,
issuable in series.
"Class A-1 Common Shares" means the class A-1 common shares in the
capital of Newco I.5, issuable in series.
"Class A-2 Common Shares" means the class A-2 common shares in the
capital of Newco I.5, issuable in series.
"Class A Preferred Shares" means the class A preferred shares in the
capital of Newco I.5, issuable in series.
"Class D Shares" means the class D shares in the capital of Newco,
issuable in series.
"Closing Date" has the meaning specified in Section 2.4.
"Contract" means any agreement, contract, lease, licence, permit,
franchise, purchase order, commitment, engagement, option, indenture,
mortgage, deed, instrument or other legally binding obligation, whether
written, oral or implied.
"Effective Date" means the date shown on the Certificate of
Arrangement.
"Effective Time" means 12:01 a.m. (Eastern Time) on the Effective Date.
"Exit Agreement" means the exit agreement to be entered into on the
Effective Date among 445, 446, RM, RM Sub, Newco, Newco I.5, Newco II
and RM's lender.
"Exit Notice" means the formal notice to be provided by RM Sub or 446,
as the case may be, to each of the parties to the Exit Agreement in
connection with an exercise of its respective exit rights pursuant to
the Exit Agreement.
"Galifi Holdco" means VG Holdco Inc., a corporation existing under the
OBCA and, immediately prior to the Effective Time, a wholly owned
subsidiary of Principals Holdco that holds 35,000 Class A Subordinate
Voting Shares, and its successors;
"Galifi Holdco Magna Securities" means the 35,000 Magna Class A Shares
beneficially owned by Galifi Holdco, appropriately adjusted for stock
splits, stock dividends, reverse stock splits, share consolidations and
similar events and, where the context permits, includes: (i) any
securities into which such shares may be converted, reclassified,
redesignated, subdivided, consolidated or otherwise changed, (ii) any
securities received by the holder of such shares as a result of any
merger, amalgamation, reorganization, arrangement or other similar
transaction involving Magna, and (iii) any securities of
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Magna which are received by the holder of such shares as a stock
dividend or distribution on or in respect of such shares.
"Governmental Entity" means any (a) multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, central bank, court, tribunal, arbitrator or
arbitral body, commission, board, bureau or agency, domestic or
foreign, including the Ontario Securities Commission, the Autorite des
marches financiers du Quebec and the United States Securities and
Exchange Commission, (b) self-regulatory organization or stock
exchange, including the Toronto Stock Exchange and the New York Stock
Exchange, (c) subdivision, agent, commission, board, or authority of
any of the foregoing, or (d) quasi-governmental or private body
exercising any regulatory, expropriation or taxing authority under or
for the account of any of the foregoing.
"Insolvency/Material Breach Triggering Event" means the delivery of an
Exit Notice by either RM Sub or 446 in accordance with Section 2.2(3)
of the Exit Agreement in connection with the exercise by RM Sub or 446
of RM Sub's right to sell, or 446's right to cause RM Sub to sell, as
the case may be, the RM Sub Securities to Newco Purchaser pursuant to
Sections 2.2(1)(b), 2.2(1)(c), 2.2(2)(b) or 2.2(2)(c) of the Exit
Agreement.
"Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, deemed trust,
security interest, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or
nature whatsoever (including any lease or title retention agreement,
any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the PPSA or
comparable notice filing under the law of any other jurisdiction or any
option, warrant, right or privilege capable of becoming a Transfer)
(other than Liens created pursuant to any long-term retention
(restricted share) agreement between Magna and a Principal).
"Magna" means Magna International Inc., a corporation existing under
the Act and its successors.
"Magna Class A Shares" means the Class A Subordinate Voting Shares in
the capital of Magna.
"Newco" means M Unicar Inc., a corporation existing under the Act and,
immediately prior to the Effective Time, a wholly owned subsidiary of
446, and its successors.
"Newco Class C Common Shares" means 42,000 Class C Common Shares in the
capital of Newco beneficially owned by RM Sub.
"Newco I.5" means 2143453 Ontario Inc., a corporation existing under
the Act and, immediately prior to the Effective Time, a wholly-owned
subsidiary of Newco, and its successors;
-3-
"Newco II" means 2143455 Ontario Inc., a corporation existing under the
Act and, immediately prior to the Effective Time, a wholly owned
subsidiary of Newco I.5, and its successors.
"Newco II Class A Common Shares" means 100 Class A Common Shares in the
capital of Newco II beneficially owned by RM Sub.
"Newco II Loan" means the loan provided by RM Sub to Newco II on the
date hereof and evidenced by the Newco II Loan Note.
"Newco II Loan Note" means the promissory note dated the date hereof
issued to RM Sub by Newco II to evidence the Newco II Loan, including
the ancillary agreements and documents relating to the security
therefor.
"Newco Purchaser" means 446 or such other Person as 446 may designate
from time to time by giving notice to others in accordance with the
Exit Agreement.
"Parties" mean Principals Holdco, Galifi Holdco and Newco I.5.
"Person" includes any individual, firm, partnership, limited
partnership, joint venture, venture capital fund, limited liability
company, unlimited liability company, association, trust, trustee,
heir, executor, administrator, legal personal representative, estate,
group, body corporate, corporation, unincorporated association or
organization, Governmental Entity, syndicate or other entity, whether
or not having legal status.
"Pledge Agreement" means the pledge agreement to be entered into on the
Effective Date between Galifi Holdco and Principals Holdco.
"PPSA" means the Personal Property Security Act (Ontario).
"Principals Holdco Newco I.5 Securities" means all of the Newco I.5
Class A-1 Series 3 Common Shares, all of the Newco I.5 Class A-2 Series
3 Common Shares, all of the Newco I.5 Class A Series 3 Preferred
Shares, all of the Newco Class A Series 3 Shares and all of the Newco
Class D Series 3 Shares legally and beneficially owned by Principals
Holdco, appropriately adjusted for stock splits, stock dividends,
reverse stock splits, share consolidations and similar events and,
where the context permits, includes: (i) any securities into which such
shares may be converted, reclassified, redesignated, subdivided,
consolidated or otherwise changed, (ii) any securities received by the
holder of such shares as a result of any merger, amalgamation,
reorganization, arrangement or other similar transaction involving
Newco I.5, and (iii) any securities of Newco I.5 which are received by
the holder of such shares as a stock dividend or distribution on or in
respect of such shares.
"Realization Triggering Event" means any demand for repayment of the
Newco II Loan.
"RM" means Open Joint Stock Company Russian Machines, a company
existing under the laws of Russia, and its successors.
-4-
"RM Sub" means Veleron Holding B.V., a company existing under the laws
of The Netherlands and a wholly owned indirect subsidiary of RM, and
its successors.
"RM Sub Anniversary Date Triggering Event" means the time of the
closing of the sale by RM Sub of some or all of its RM Sub Securities
to Newco Purchaser pursuant to the Exit Agreement following the
occurrence of the date referred to in Section 2.2(1)(a) of the Exit
Agreement and delivery of an Exit Notice in accordance with Section
2.2(3) of the Exit Agreement.
"RM Sub Securities" means the Newco Class C Common Shares, Newco II
Class A Common Shares and interest in the Newco II Loan and the Newco
II Loan Note (or any Newco II special shares issued on conversion of
the Newco II Loan Note) owned by RM Sub.
"Subsidiary" means, in respect of a Party, a subsidiary (as that term
is defined in the Act as now in effect) of that Party or any Person in
which such Party has a direct or indirect controlling interest or a
joint-controlling interest, and shall be deemed to include any
partnership or joint venture in which such Party has a direct or
indirect interest of more than 50 percent.
"Time of Closing" means 10:00 a.m. (Toronto Time) on the Closing Date
or such later or earlier time on the Closing Date as those parties to a
Call Sale Transaction may agree in writing.
"Transfer" means any (i) transfer, sale, assignment, exchange, gift,
donation, mortgage, pledge, charge, encumbrance, grant of security
interest or other disposition of securities where possession, legal
title, beneficial ownership or the economic risk or return associated
with such securities passes directly or indirectly from one Person to
another or to the same Person in a different legal capacity, whether or
not for value, whether or not voluntary and however occurring, or (ii)
agreement, undertaking or commitment to effect any of the foregoing,
and "Transferred" and "Transferring" shall be construed accordingly.
"Triggering Event" means a 446 Anniversary Date Triggering Event, an RM
Sub Anniversary Date Triggering Event, an Insolvency/Material Breach
Triggering Event or a Realization Triggering Event.
1.2 Gender and Number.
Any reference in this Agreement to gender includes all genders. Words importing
the singular number also include the plural and vice versa.
1.3 Sections and Headings.
The division of this Agreement into Articles and Sections, the insertion of
headings and the inclusion of a table of contents are for reference purposes
only and shall not affect the interpretation of this Agreement. Unless otherwise
indicated, any reference in this Agreement to an Article, a Section, a Schedule
or an Exhibit refers to the specified Article or Section of, or Schedule or
Exhibit to, this Agreement.
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1.4 Currency.
Unless otherwise indicated, all dollar amounts in this Agreement are expressed
in United States funds.
1.5 Certain Phrases.
In this Agreement, (i) the words "including", "includes" and "include" mean
"including (or includes or include) without limitation", and (ii) the words "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".
1.6 Statutory References.
A reference to a statute includes all rules and regulations made pursuant to
such statute and, unless otherwise specified, the provisions of any statute or
regulation or rule which amends, supplements or supersedes any such statute or
any such regulation or rule.
ARTICLE 2
RIGHT TO PURCHASE CLASS A SHARES OF MAGNA
2.1 Call Option
Principals Holdco shall have the right to purchase from Galifi Holdco all, but
not less than all, of the Galifi Holdco Magna Securities in accordance with this
Article 2 upon the occurrence of any Triggering Event.
2.2 Exercise of Call Option
In order to exercise its right under Section 2.1, Principals Holdco shall,
within 30 Business Days after any Triggering Event, deliver to each of Galifi
Holdco and Newco I.5, in writing, a notice ("Call Notice") that Principals
Holdco is exercising its rights under Section 2.1 specifying the type of
Triggering Event related to such exercise.
2.3 Call Option Consideration
If the Call Notice is delivered in accordance with Section 2.2 and is not
revoked by Principals Holdco prior to the Closing Date, then on the Closing Date
Galifi Holdco shall sell and Principals Holdco shall purchase the Galifi Holdco
Magna Securities free and clear of all Liens in exchange for the Principals
Holdco Newco I.5 Securities held by Principals Holdco free and clear of all
Liens.
2.4 Closing
The completion of the transaction of purchase and sale under this Agreement
contemplated by Section 2.1 (a "Call Sale Transaction") will take place on the
Closing Date in accordance with and subject to Article 5. "Closing Date" means
(a) the second Business Day following the satisfaction (or, to the extent
permitted, the waiver) of the conditions set forth in Section 5.2 or such other
date as Principals Holdco and Galifi Holdco shall agree to in writing.
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2.5 Acknowledgement
Notwithstanding any other provision of this Agreement, Principals Holdco
acknowledges that some or all of the Galifi Holdco Magna Securities may be
subject to the terms, conditions and restrictions contained in one or more
long-term retention (restricted share) agreement(s) and that Magna shall
maintain possession of such Galifi Holdco Magna Securities and shall only
release them as and when the applicable restrictions are fully satisfied.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Galifi Holdco.
Galifi Holdco represents and warrants as follows and acknowledges and confirms
that each other Party is relying on such representations and warranties in
entering into this Agreement:
(a) Existence. It is a corporation validly existing under the Act
and has all necessary corporate power and authority to carry
on its business as now conducted, to own or lease and operate
its assets and to execute, deliver and perform its obligations
under this Agreement.
(b) Authority and Enforceability. It has taken all necessary
corporate action to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly
executed and delivered and is a legal and binding obligation,
enforceable against it by the other Parties in accordance with
its terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may be granted
only in the discretion of a court of competent jurisdiction.
(c) No Violation. The execution, delivery and performance of this
Agreement does not, and will not, result in a breach or
violation of any of the provisions of or constitute a default
under, or conflict with or cause the acceleration of any
obligation or that of a Subsidiary under (i) a material
Contract to which it is a party, (ii) any provision of its
articles, by-laws or resolutions of its board of directors (or
any committee thereof) or shareholders, (iii) any judgment,
decree, order or award of any Governmental Entity having
jurisdiction over it or (iv) any Applicable Law. No consent,
approval, order or authorization of, or declaration or filing
with, any Governmental Entity or other Person is required to
be obtained or made, as the case may be, in connection with
the execution and delivery of this Agreement.
(d) Title to Magna Class A Shares. The Galifi Holdco Magna
Securities described in the recitals as being owned by Galifi
Holdco are owned by it as the registered and beneficial owner
with good title, free and clear of all Liens (other than the
Lien created by the Pledge Agreement).
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3.2 Representations and Warranties of Principals Holdco
Principals Holdco represents and warrants as follows and acknowledges and
confirms that each other Party is relying on such representations and warranties
in entering into this Agreement:
(a) Existence. It is a corporation validly existing under the Act
and has all necessary corporate power and authority to carry
on its business as now conducted, to own or lease and operate
its assets and to execute, deliver and perform its obligations
under this Agreement.
(b) Authority and Enforceability. It has taken all necessary
corporate action to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly
executed and delivered and is a legal and binding obligation,
enforceable against it by the other Parties in accordance with
its terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may be granted
only in the discretion of a court of competent jurisdiction.
(c) No Violation. The execution, delivery and performance of this
Agreement does not, and will not, result in a breach or
violation of any of the provisions of or constitute a default
under, or conflict with or cause the acceleration of any
obligation or that of a Subsidiary under (i) a material
Contract to which it is a party, (ii) any provision of its
articles, by-laws or resolutions of its board of directors (or
any committee thereof) or shareholders, (iii) any judgment,
decree, order or award of any Governmental Entity having
jurisdiction over it or (iv) any Applicable Law. No consent,
approval, order or authorization of, or declaration or filing
with, any Governmental Entity or other Person is required to
be obtained or made, as the case may be, in connection with
the execution and delivery of this Agreement.
(d) Title to Class A Common Shares of Newco I.5. The Principals
Holdco Newco I.5 Securities described in the recitals as being
owned by Principals Holdco are owned by it as the registered
and beneficial owner with good title, free and clear of all
Liens.
3.3 Representations and Warranties of Newco I.5
Newco I.5 represents and warrants as follows and acknowledges and confirms that
each other Party is relying on such representations and warranties in entering
into this Agreement:
(a) That it has taken all actions necessary to carry out the pledge
contemplated by the Pledge Agreement and the Call Sale Transaction.
3.4 Survival.
Notwithstanding the Limitations Act, 2002 (Ontario), The representations and
warranties of Galifi Holdco and Principals Holdco contained in Article 3and the
covenants of Galifi Holdco, Principals Holdco and Newco I.5 contained in Article
4and Article 5survive the execution and delivery of this Agreement and continue
in full force and effect with respect to each of Galifi
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Holdco, Principals Holdco and Newco I.5 until it ceases to be bound by the
provisions of this Agreement.
ARTICLE 4
COVENANTS OF GALIFI HOLDCO, PRINCIPALS HOLDCO AND NEWCO I.5
4.1 Covenants of Galifi Holdco.
(a) Galifi Holdco shall not Transfer the Galifi Holdco Magna
Securities except as expressly permitted by this Agreement or
except with the prior written consent of Principals Holdco,
which consent may be withheld in the unfettered discretion of
Principals Holdco.
(b) Galifi Holdco shall not grant a Lien on or otherwise encumber
any of the Galifi Holdco Magna Securities in any way
whatsoever without the prior written consent of Principals
Holdco, which consent may be withheld in the unfettered
discretion of Principals Holdco.
(c) Galifi Holdco shall execute the Pledge Agreement concurrently
with the execution and delivery of this Agreement and pledges
the Galifi Holdco Magna Securities to Principals Holdco
pursuant to the terms of the Pledge Agreement.
4.2 Covenants of Principals Holdco.
(a) Principals Holdco shall not Transfer the Principals Holdco
Newco I.5 Securities except as expressly permitted by this
Agreement or except with the prior written consent of Galifi
Holdco, which consent may be withheld in the unfettered
discretion of Galifi Holdco;
(b) Principals Holdco shall not grant a Lien on or otherwise
encumber any of the Principals Holdco Newco I.5 Securities in
any way whatsoever without the prior written consent of Galifi
Holdco, which consent may be withheld in the unfettered
discretion of Galifi Holdco.
4.3 Covenants of Newco I.5
(a) Newco I.5 hereby irrevocably consents to the Transfer of the
Principals Holdco Newco I.5 Securities to Galifi Holdco
pursuant to this Agreement and shall take all actions
necessary to effect the transfer of the Principals Holdco
Newco I.5 Securities to Galifi Holdco, all in accordance with
the terms and conditions of this Agreement.
(b) Newco I.5, as the sole shareholder of Galifi Holdco, hereby
irrevocably consents to, authorizes and approves the pledge of
the Galifi Holdco Magna Securities to Principals Holdco
pursuant to the Pledge Agreement and the sale by Galifi Holdco
of the Galifi Holdco Magna Securities pursuant to this
Agreement.
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4.4 Covenants of Newco
(a) Newco hereby irrevocably consents to the Transfer of the
Principals Holdco Newco I.5 Securities to Galifi Holdco
pursuant to this Agreement and shall take all actions
necessary to effect the transfer of the Principals Holdco
Newco I.5 Securities to Galifi Holdco, all in accordance with
the terms and conditions of this Agreement.
ARTICLE 5
PROCEDURE FOR SALE OF SHARES
5.1 Additional Covenants of the Parties.
(a) Each Party shall take all actions that are within its power to
control, and use its commercially reasonable efforts to cause
other actions to be taken which are not within its power to
control, to ensure satisfaction of the conditions in Section
5.2.
(b) Galifi Holdco shall take all necessary steps and corporate
proceedings to permit good title to the Galifi Holdco Magna
Securities to be duly and validly transferred and assigned in
accordance with the provisions of this Agreement at the Time
of Closing, free and clear of Liens.
(c) Principals Holdco shall take all necessary steps and corporate
proceedings to permit good title to any Principals Holdco
Newco I.5 Securities that are to be delivered by Principals
Holdco to Galifi Holdco in accordance with the provisions of
this Agreement to be duly and validly transferred and assigned
in accordance with the provisions of this Agreement at the
Time of Closing, free and clear of Liens.
(d) Each Party shall use its commercially reasonable efforts to
make or give, or cause to be made or given, all filings with
and notifications to any Governmental Entity and obtain or
cause to be obtained all Authorizations, necessary in order to
complete the Call Sale Transaction and to facilitate any
purchase and sale of securities in accordance with Article 2.
5.2 Conditions for the Benefit of Principals Holdco.
The completion of any Call Sale Transaction is subject to the following
conditions to be fulfilled or performed on or before the Closing Date, which
conditions are for the exclusive benefit of Principals Holdco and may be waived,
in whole or in part, by Principals Holdco in its sole discretion:
(a) the delivery to Principals Holdco of a certificate of Galifi
Holdco, signed by an authorized officer of Galifi Holdco on
its behalf and not in his personal capacity, certifying that
(i) on the Closing Date, the Galifi Holdco Magna Securities
are owned by Galifi Holdco as the registered and beneficial
owner with good title, free and clear of Liens other than
those being released on such date, and (ii) upon completion of
the Call Sale Transaction, Principals Holdco will have good
and
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valid title to the Galifi Holdco Magna Securities
transferred by Galifi Holdco, free and clear of Liens;
(b) all filings, notices and the receipt of all Authorizations
necessary under Applicable Laws to permit the trade or
distribution by Galifi Holdco of the Galifi Holdco Magna
Securities necessary to effect the Call Sale Transaction shall
have been made, given or obtained; and
(c) the completion of the Call Sale Transaction will not result in
the violation of any Applicable Law.
5.3 Closing Procedures.
(a) The completion of the Call Sale Transaction will take place at
the offices of Miller Thomson LLP in Toronto, Ontario, at the
Time of Closing or at such other place, or on such other date
as the parties to the Call Sale Transaction may agree to in
writing.
(b) Subject to satisfaction or waiver by Principals Holdco of the
conditions of closing in its favour, at the closing of the
Call Sale Transaction:
(i) Galifi Holdco shall assign and transfer title and
deliver actual possession of the Galifi Holdco Magna
Securities to Principals Holdco and endorse the share
certificates representing the Galifi Holdco Magna
Securities for transfer to Principals Holdco; and
(ii) Principals Holdco shall assign and transfer title and
deliver actual possession of the Principals Holdco
Newco I.5 Securities to Galifi Holdco and endorse the
share certificates representing the Principals Holdco
Newco I.5 Securities for transfer to Galifi Holdco.
5.4 Non-Compliance with Conditions.
If at the Time of Closing, the Galifi Holdco Magna Securities are not free and
clear of all Liens (other than the Lien created by the Pledge Agreement),
Principals Holdco may, without prejudice to any other rights it may have, choose
to purchase the Galifi Holdco Magna Securities subject to such Liens to the
extent that Principals Holdco recognizes the validity of such Liens provided
that Principals Holdco shall be entitled to such monetary rights of set off
and/or to take such other steps as it deems appropriate to recognize any
diminution in value in the Galifi Holdco Magna Securities due to such Liens.
Galifi Holdco agrees to indemnify Principals Holdco for the amount of any
obligations and liabilities in respect of such Liens to the extent that such
obligations and liabilities exceed the value of the Principals Holdco Newco
Securities.
5.5 Non-Completion by Galifi Holdco.
(a) In addition to and without limiting any remedy that may be
available under Applicable Law to Principals Holdco, if at the
Time of Closing Galifi Holdco fails to complete the Call Sale
Transaction in violation of this Agreement, Principals Holdco
has the right, if Principals Holdco is not in default under
this Agreement,
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to make payment of the purchase price for the Galifi Holdco
Magna Securities to Galifi Holdco by delivering share
certificates representing the Principals Holdco Newco I.5
Securities to a recognized financial institution in Canada to
hold on behalf of Galifi Holdco. Such delivery constitutes
valid and effective payment of the purchase price to Galifi
Holdco irrespective of any action Galifi Holdco may have taken
to transfer or grant a Lien on the Galifi Holdco Magna
Securities. If the purchase price has been so paid, then from
the date of such delivery the Call Sale Transaction is deemed
to have been completed and all right, title, benefit and
interest, both at law and in equity, in and to the Galifi
Holdco Magna Securities shall be deemed to have been
transferred to and become vested in Principals Holdco and all
right, title, benefit and interest of Galifi Holdco, or of any
transferee or assignee of, or other Person claiming an
interest through, Galifi Holdco, in and to the Galifi Holdco
Magna Securities, shall cease.
(b) Galifi Holdco is entitled to receive the share certificates
delivered to a recognized financial institution in Canada
under Section 5.1(a) on delivery to Principals Holdco of the
documents referred to in Section 5.2 and Section 5.3(b)(i) and
in compliance with all other provisions of this Agreement.
ARTICLE 6
MISCELLANEOUS
6.1 Notices.
Any notice or other communication required or permitted to be given hereunder
shall be in writing and shall be delivered in person or transmitted by
telecopier or similar means of recorded electronic communication (with receipt
confirmed) as follows:
(a) to Principals Holdco at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Jeffrey O. Palmer
Facsimile: (905) 726-7164
with a copy to: Vincent J. Galifi, Peter Koob, Donald J.
Walker and Siegfried Wolf
and to:
Miller Thomson LLP
Scotia Plaza
40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
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Attention: John Campbell
Facsimile: (416) 595.8695
(b) to Galifi Holdco at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Vincent J. Galifi
Facsimile: (905) 726-2595
with a copy to:
Miller Thomson LLP
Scotia Plaza
40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
Attention: John Campbell
Facsimile: (416) 595.8695
and to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
(c) to Newco I.5 at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Belinda Stronach
Facsimile: (905) 726-7494
with a copy to:
Miller Thomson LLP
Scotia Plaza
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40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
Attention: John Campbell
Facsimile: (416) 595.8695
and to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
(d) to Newco at:
c/o Magna International Inc.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Attention: Belinda Stronach
Facsimile: (905) 726-7494
with a copy to:
Miller Thomson LLP
Scotia Plaza
40 King Street West, Suite 5800
P.O. Box 1011
Toronto, Ontario
M5H 3S1
Attention: John Campbell
Facsimile: (416) 595.8695
and to:
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
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Attention: Edward J. Waitzer
Facsimile: (416) 947-0866
Any such notice or other communication shall be deemed to have been given and
received on the day on which it was delivered or transmitted (or, if such day is
not a Business Day, on the next following Business Day).
A Party may change its address for service and may add "copy to" parties 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.
6.2 Time of the Essence.
Time is of the essence in this Agreement.
6.3 Announcements.
No public release or announcement concerning the transactions contemplated by
this Agreement shall be issued by a Party without the approval of Principals
Holdco and Galifi Holdco (which consent shall not be unreasonably withheld),
except as such release or announcement may be required by Applicable Laws, in
which case the Party required to make the release or announcement shall allow
the other Parties reasonable time to comment on such announcement in advance of
such issuance.
6.4 No Agency or Partnership.
Nothing contained in this Agreement makes or constitutes a Party, or any of its
directors, officers or employees, the representative, agent, principal, partner,
joint venturer, employer or employee of the other Party.
6.5 Expenses.
Each Party will pay for its own costs and expenses incurred in connection with
this Agreement and the transactions contemplated by it.
6.6 Amendments and Waivers.
No amendment or waiver of any provision of this Agreement shall be binding on
any Party unless consented to in writing by that Party. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision,
nor shall any waiver constitute a continuing waiver unless otherwise expressly
provided.
6.7 Entire Agreement.
This Agreement constitutes the entire agreement between the Parties with respect
to the transactions contemplated hereby and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties. There are no representations, warranties, covenants, conditions or
other agreements, express or implied, collateral, statutory or otherwise,
between the Parties or certain of them in connection with the
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subject matter of this Agreement, except as specifically set forth in this
Agreement. The 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.
6.8 Successors and Assigns.
This Agreement shall enure to the benefit of and shall be binding on, and
enforceable by, the Parties and, where the context so permits, their respective
successors and permitted assigns. No Party may assign any of its rights or
obligations hereunder without the prior written consent of the other Parties.
6.9 Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
Party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
6.10 Governing Law.
This Agreement shall be construed, interpreted and enforced in accordance with,
and the respective rights and obligations of the Parties shall be governed by,
the laws of the Province of Ontario and the federal laws of Canada applicable in
that province. Each Party unconditionally submits to the non-exclusive
jurisdiction of the courts of the Province of Ontario.
6.11 Counterparts.
This Agreement may be executed in any number of counterparts (including
counterparts by facsimile) and all such counterparts taken together will be
deemed to constitute one and the same instrument. The Parties may rely on copies
of this Agreement which are delivered by facsimile as if such copies were
originals.
(Signatures appear on the following page)
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IN WITNESS WHEREOF the Parties have executed this Share Option
Agreement.
MPMAG HOLDINGS INC.
Per:
---------------------------------
Authorized Signing Officer
Per:
---------------------------------
Authorized Signing Officer
VG HOLDCO INC.
Per:
---------------------------------
Authorized Signing Officer
Per:
---------------------------------
Authorized Signing Officer
2143453 ONTARIO INC.
Per:
---------------------------------
Authorized Signing Officer
Per:
---------------------------------
Authorized Signing Officer
M UNICAR INC.
Per:
---------------------------------
Authorized Signing Officer
Per:
---------------------------------
Authorized Signing Officer
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