-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EylJjiOQF2aKW0XwLwIl5Cwn4Asjm5NZo0gxysF9qL/S8cTN+D0QMRfYPtnY7nYK 1mSnS+dplPyIs/3RTbTLpw== 0000950123-04-011009.txt : 20040915 0000950123-04-011009.hdr.sgml : 20040915 20040915123504 ACCESSION NUMBER: 0000950123-04-011009 CONFORMED SUBMISSION TYPE: F-4 PUBLIC DOCUMENT COUNT: 69 FILED AS OF DATE: 20040915 FILER: COMPANY DATA: COMPANY CONFORMED NAME: 9022-3751 Quebec Inc. CENTRAL INDEX KEY: 0001301125 IRS NUMBER: 000000000 STATE OF INCORPORATION: A8 FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118990-13 FILM NUMBER: 041031101 BUSINESS ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 BUSINESS PHONE: (514) 844-4155 MAIL ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Aker Plastics CO Inc. CENTRAL INDEX KEY: 0001301126 IRS NUMBER: 351179106 STATE OF INCORPORATION: IN FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118990-12 FILM NUMBER: 041031100 BUSINESS ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 BUSINESS PHONE: (514) 844-4155 MAIL ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Cuisine Expert - C.E. Cabinets Inc. CENTRAL INDEX KEY: 0001301127 IRS NUMBER: 980353819 STATE OF INCORPORATION: A8 FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118990-10 FILM NUMBER: 041031098 BUSINESS ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 BUSINESS PHONE: (514) 844-4155 MAIL ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAAX-Hydro Swirl Manufacturing Corp. CENTRAL INDEX KEY: 0001301144 IRS NUMBER: 911699988 STATE OF INCORPORATION: WA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118990-07 FILM NUMBER: 041031095 BUSINESS ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 BUSINESS PHONE: (514) 844-4155 MAIL ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAAX-KSD CORP CENTRAL INDEX KEY: 0001301146 IRS NUMBER: 232952989 STATE OF INCORPORATION: PA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118990-06 FILM NUMBER: 041031094 BUSINESS ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 BUSINESS PHONE: (514) 844-4155 MAIL ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAAX LLC CENTRAL INDEX KEY: 0001301147 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118990-05 FILM NUMBER: 041031093 BUSINESS ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 BUSINESS PHONE: (514) 844-4155 MAIL ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAAX Midwest, Inc. CENTRAL INDEX KEY: 0001301149 IRS NUMBER: 351482750 STATE OF INCORPORATION: IN FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118990-15 FILM NUMBER: 041031104 BUSINESS ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 BUSINESS PHONE: (514) 844-4155 MAIL ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAAX Spas (Arizona), Inc. CENTRAL INDEX KEY: 0001301150 IRS NUMBER: 953076078 STATE OF INCORPORATION: CA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118990-04 FILM NUMBER: 041031091 BUSINESS ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 BUSINESS PHONE: (514) 844-4155 MAIL ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAAX Spas (B.C.) Inc. CENTRAL INDEX KEY: 0001301152 IRS NUMBER: 980374148 STATE OF INCORPORATION: A8 FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118990-03 FILM NUMBER: 041031090 BUSINESS ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 BUSINESS PHONE: (514) 844-4155 MAIL ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAAX Spas (Ontario) Inc. CENTRAL INDEX KEY: 0001301153 IRS NUMBER: 000000000 STATE OF INCORPORATION: A8 FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118990-02 FILM NUMBER: 041031089 BUSINESS ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 BUSINESS PHONE: (514) 844-4155 MAIL ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Pearl Baths, Inc. CENTRAL INDEX KEY: 0001301154 IRS NUMBER: 411337304 STATE OF INCORPORATION: MN FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118990-01 FILM NUMBER: 041031088 BUSINESS ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 BUSINESS PHONE: (514) 844-4155 MAIL ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Beauceland CORP CENTRAL INDEX KEY: 0001301155 IRS NUMBER: 000000000 STATE OF INCORPORATION: A5 FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118990-11 FILM NUMBER: 041031099 BUSINESS ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 BUSINESS PHONE: (514) 844-4155 MAIL ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 FILER: COMPANY DATA: COMPANY CONFORMED NAME: 4200217 Canada Inc. CENTRAL INDEX KEY: 0001301156 IRS NUMBER: 000000000 STATE OF INCORPORATION: A8 FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118990-14 FILM NUMBER: 041031103 BUSINESS ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 BUSINESS PHONE: (514) 844-4155 MAIL ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAAX Canada Inc. CENTRAL INDEX KEY: 0001301157 IRS NUMBER: 980353816 STATE OF INCORPORATION: A8 FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118990-09 FILM NUMBER: 041031097 BUSINESS ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 BUSINESS PHONE: (514) 844-4155 MAIL ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAAX CORP CENTRAL INDEX KEY: 0001301158 IRS NUMBER: 000000000 STATE OF INCORPORATION: A5 FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118990 FILM NUMBER: 041031092 BUSINESS ADDRESS: STREET 1: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 BUSINESS PHONE: (514) 844-4155 MAIL ADDRESS: STREET 1: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAAX Holding Co. CENTRAL INDEX KEY: 0001301143 IRS NUMBER: 411775598 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: F-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-118990-08 FILM NUMBER: 041031096 BUSINESS ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 BUSINESS PHONE: (514) 844-4155 MAIL ADDRESS: STREET 1: C/O MAAX CORPORATION STREET 2: 1010 SHERBROOKE WEST, SUITE 1610 CITY: MONTREAL STATE: A8 ZIP: H3A 2R7 F-4 1 y99327fv4.txt FORM F-4 REGISTRATION NO. 333-[ ] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM F-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- MAAX CORPORATION (Exact name of registrant as specified in its charter) NOVA SCOTIA 6719 NONE (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation Classification Code Number) Identification No.) or organization)
--------------------- FOR INFORMATION REGARDING ADDITIONAL REGISTRANTS, SEE FOOTNOTE (2) BELOW AND THE "TABLE OF ADDITIONAL REGISTRANTS" --------------------- 1010 SHERBROOKE STREET WEST, SUITE 1610 MONTREAL, QUEBEC CANADA H3A 2R7 (514) 844-4155 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) --------------------- ANDRE HEROUX PRESIDENT AND CHIEF EXECUTIVE OFFICER MAAX CORPORATION 1010 SHERBROOKE STREET WEST, SUITE 1610 MONTREAL, QUEBEC CANADA H3A 2R7 (514) 844-4155 (Name, address, including zip code, and telephone number, including area code, of agent for service) --------------------- Copy to: STEPHEN C. KOVAL, ESQ. KAYE SCHOLER LLP 425 PARK AVENUE NEW YORK, NEW YORK 10022 (212) 836-8019 --------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as practicable after this Registration Statement becomes effective. If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------------ TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE PER UNIT AGGREGATE OFFERING PRICE REGISTRATION FEE - ------------------------------------------------------------------------------------------------------------------------------------ 9.75% Senior Subordinated Notes due 2012............ US$150,000,000 100% US$150,000,000(1) US$19,005 - ------------------------------------------------------------------------------------------------------------------------------------ Guarantees of 9.75% Senior Subordinated Notes due 2012(2)................... US$150,000,000 100% US$150,000,000 (3) - ------------------------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act of 1933, as amended. (2) The following co-registrants will guarantee the notes to be issued by MAAX Corporation and that will be registered under this registration statement: 4200217 Canada Inc., 9022-3751 Quebec Inc., Aker Plastics Company, Inc., Beauceland Corporation, Cuisine Expert -- C.E. Cabinets Inc., MAAX Canada Inc., MAAX Holding Co., MAAX-Hydro Swirl Manufacturing Corp., MAAX-KSD Corporation, MAAX LLC, MAAX Midwest, Inc., MAAX Spas (Arizona) Inc., MAAX Spas (B.C.) Inc., MAAX Spas (Ontario) Inc., Pearl Baths, Inc. (3) Pursuant to Rule 457(n), no separate fee is payable with respect to the guarantees of the notes being registered. --------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF ADDITIONAL REGISTRANTS Set forth below is certain information regarding each of the additional registrants. For each such registrant, its principal executive office is 1010 Sherbrooke Street West, Suite 1610, Montreal, Quebec, Canada H3A 2R7 and its telephone number is (514) 844-4155.
STATE OR OTHER PRIMARY STANDARD JURISDICTION OF INDUSTRIAL EXACT NAME OF REGISTRANT INCORPORATION CLASSIFICATION I.R.S. EMPLOYER AS SPECIFIED IN ITS CHARTER OR ORGANIZATION CODE NUMBER IDENTIFICATION NO. - --------------------------- --------------- ---------------- ------------------ 4200217 Canada Inc. ......................... Canada 6719 None 9022-3751 Quebec Inc. ....................... Quebec 3088 None Aker Plastics Company, Inc. ................. Indiana 3088 35-1179106 Beauceland Corporation....................... Nova Scotia 6719 None Cuisine Expert -- C.E. Cabinets Inc. ........ Canada 3088 98-0353819 MAAX Canada Inc. ............................ Canada 3088 98-0353816 MAAX Holding Co. ............................ Delaware 6719 41-1775598 MAAX-Hydro Swirl Manufacturing Corp. ........ Washington 3088 91-1699988 MAAX-KSD Corporation......................... Pennsylvania 3088 23-2952989 MAAX LLC..................................... Delaware 6719 None MAAX Midwest, Inc. .......................... Indiana 3088 35-1482750 MAAX Spas (Arizona), Inc. ................... California 3088 95-3076078 MAAX Spas (B.C.) Inc. ....................... Canada 6719 98-0374148 MAAX Spas (Ontario) Inc. .................... Canada 3088 None Pearl Baths, Inc. ........................... Minnesota 3088 41-1337304
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED SEPTEMBER 15, 2004 PROSPECTUS [MAAX CORPORATION LOGO] MAAX CORPORATION --------------------- OFFER TO EXCHANGE 9.75% SENIOR SUBORDINATED NOTES DUE 2012 FOR 9.75% SENIOR SUBORDINATED EXCHANGE NOTES DUE 2012, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 --------------------- We are offering to exchange all of our $150,000,000 in outstanding 9.75% senior subordinated notes due 2012, which we refer to as the original notes, for $150,000,000 in registered 9.75% senior subordinated notes due 2012, which we refer to as the exchange notes. The original notes and the exchange notes are collectively referred to as the notes. The original notes were issued on June 4, 2004. The terms of the exchange notes are identical to the terms of the original notes except that the exchange notes are registered under the Securities Act of 1933, and therefore are freely transferable, subject to certain conditions. The exchange notes evidence the same indebtedness as the original notes. You should consider the following: - INVESTING IN THE NOTES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 16 OF THIS PROSPECTUS. - Our offer to exchange original notes for exchange notes will be open until 11:59 p.m., New York City time, on [ ], 2004, unless we extend the offer. - No public market currently exists for the exchange notes. We do not intend to apply for listing of the exchange notes on any securities exchange or for inclusion of the exchange notes in any automated quotation system. The notes bear interest at the rate of 9.75% per year. We will pay interest on the notes on June 15 and December 15 of each year. The first such payment will be made on December 15, 2004. The notes will mature on June 15, 2012. We have the option to redeem all or a portion of the notes at any time before June 15, 2008 at a "make-whole" premium and thereafter at the redemption prices set forth in this prospectus. In addition, on or before June 15, 2007, we may, at our option, use the net proceeds from one or more qualified equity offerings to redeem up to 35% of the aggregate principal amount of the notes issued under the indenture at 109.750% of their principal amount, plus accrued and unpaid interest to the redemption date. We also have the right to redeem all of the notes at 100% of their principal amount, plus accrued and unpaid interest to the redemption date, if at any time Canadian or U.S. law changes to require us to withhold taxes from payments on the notes. Notes will be issued only in registered book-entry form, in denominations of $1,000 and integral multiples of $1,000. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER SECURITIES COMMISSION OR SIMILAR AUTHORITY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is , 2004 TABLE OF CONTENTS
PAGE ---- Prospectus Summary.......................................... 1 Risk Factors................................................ 16 Notice to Investors......................................... 29 Market and Industry Data.................................... 29 Trademarks and Trade Names.................................. 29 Special Note Regarding Forward-Looking Statements........... 29 Presentation of Financial and Other Information............. 30 Exchange Rate Data.......................................... 30 The Exchange Offer.......................................... 32 Use of Proceeds............................................. 43 Unaudited Pro Forma Financial Data.......................... 44 Selected Historical Financial Data.......................... 53 Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 55 Business.................................................... 67 Management.................................................. 82 Security Ownership of Certain Beneficial Owners and Management................................................ 87 Certain Relationships and Related Party Transactions........ 90 Description of New Senior Secured Credit Facility........... 92 Description of Notes........................................ 95 Income Tax Considerations................................... 144 Plan of Distribution........................................ 149 Legal Matters............................................... 151 Experts..................................................... 151 Where You Can Find Information.............................. 152 Index to Financial Statements............................... F-1
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION ABOUT US THAT IS NOT INCLUDED OR DELIVERED WITH THIS PROSPECTUS. WE WILL PROVIDE THIS INFORMATION TO YOU AT NO CHARGE UPON WRITTEN OR ORAL REQUEST DIRECTED TO DENIS AUBIN, MAAX CORPORATION, 1010 SHERBROOKE STREET WEST, SUITE 1610, MONTREAL, QUEBEC, CANADA H3A 2R7, TELEPHONE NUMBER (514) 844-4155. IN ORDER TO ENSURE TIMELY DELIVERY OF THIS INFORMATION, ANY REQUEST SHOULD BE MADE BY [ ], 2004, FIVE BUSINESS DAYS PRIOR TO THE EXPIRATION DATE OF THE EXCHANGE OFFER. No dealer, salesperson or other individual has been authorized to give any information or to make any representations not contained in this prospectus in connection with the exchange offer. If given or made, such information or representations must not be relied upon as having been authorized by us. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create any implications that there has not been any change in the facts set forth in this prospectus or in our affairs since the date hereof. Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. The letter of transmittal accompanying this prospectus states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act of 1933, as amended, or the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of the exchange notes received in exchange for original notes where such original notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days after the expiration of the exchange offer, we will make this prospectus available to any broker-dealer for use in connection with any such resales. See "Plan of Distribution." i PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary is not complete and may not contain all of the information that you should consider before investing in our notes. You should read the entire prospectus carefully, including the financial data and related notes included herein, before making an investment decision. This prospectus contains forward- looking statements, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth in "Risk Factors" and elsewhere in this prospectus. In this prospectus, the terms "we," "us," "our," "our company" and MAAX refer to MAAX Corporation and its consolidated subsidiaries after giving effect to the transactions described in this prospectus or the businesses of MAAX Inc. and its consolidated subsidiaries, prior to the consummation of the transactions, as applicable, in each case, unless otherwise expressly stated or the context otherwise requires. References to "fiscal year" refer to the results of operations for the 12-month period ended February 28 or 29 of the applicable year. In this prospectus, except where we indicate otherwise, all dollar amounts are expressed in U.S. dollars, references to "$" or "dollars" are to U.S. dollars and references to "C$" and "Canadian dollars" are to Canadian dollars. "EBITDA" and other financial terms have the meanings set forth under "-- Summary Historical and Pro Forma Consolidated Financial Data." The term "offering" refers to the offering of the original notes and the issuance of such notes on June 4, 2004. OUR COMPANY We are a leading North American manufacturer and distributor of bathroom fixtures, with the number one market share in Canada and the number three market share in the U.S. within the bathtub and shower fixtures market. We sell a broad range of bathroom fixture products, including acrylic, gelcoat and thermoplastic bathtubs, showers, whirlpools and bathtub/shower surrounds, as well as shower doors and medicine cabinets. By leveraging our relationships with our bathroom customers, we have also emerged as a leading manufacturer of spas in North America and have a growing presence in the semi-custom kitchen cabinetry market. Founded in 1970, we focus on marketing stylish, innovative products at mid- to high-end retail price points primarily under the MAAX(R) brand name. Through our extensive manufacturing footprint and unique multi-channel distribution strategy, we estimate that we currently serve over 3,500 customers. We compete in the largest and fastest growing major segment of the bathroom fixtures industry. We focus almost exclusively on the residential housing market, in which approximately 65% of total U.S. bathroom fixture sales in 2003 were generated in the more stable and more profitable remodeling segment as opposed to new home construction. Bathroom remodeling, our particular focus, is one of the most common residential remodeling projects. We target our bathroom products primarily at the bathtub and shower fixtures market, which is expected to grow in the U.S. at a compound annual growth rate, or CAGR, of 4.0% from 2001 to 2006, as compared to 2.8% for all other bathroom fixture products. Our bathtubs and showers are manufactured primarily from acrylic and gelcoat, which are the most common and fastest growing bathroom fixture materials due to their durability, appearance, value and relative ease of installation. U.S. sales of acrylic and gelcoat bathtubs grew at a CAGR of 6.3% and 4.5%, respectively, from 1996 to 2001, as compared to a CAGR of 0.6% for bathtubs manufactured from all other materials over the same period. We also focus on the fast growing kitchen remodeling segment. Sales in the U.S. of semi-custom kitchen cabinets, the niche in which we compete, grew at a CAGR of 6.5% from 1996 to 2001. We sell our products through a diverse set of distribution channels across the U.S. and Canada, including wholesalers, showrooms, specialty retailers and home centers. In fiscal year 2004, approximately 50% of our net sales were to wholesalers and showrooms, approximately 15% were to specialty retailers and approximately 35% were to home centers. In each of our distribution channels we sell a distinct set of sub-brands differentiated by styles, features and price points. Our multi-channel distribution network, complemented by our disciplined channel-specific product offering, allows us to operate under a unique go-to-market strategy. We believe this strategy has enabled us to maximize our profits as well as those of our customers, which in turn has further strengthened our customer relationships. We currently operate 24 strategically located manufacturing facilities, including 13 in the U.S., ten in Canada and one in the Netherlands. This makes us one of only two manufacturers of acrylic and gelcoat bathroom products with a footprint that extends across North America. We believe that our extensive North American footprint gives us a significant advantage vis-a-vis our other competitors by enabling us to service both national and regional customers while reducing delivery times, lowering inventory investment, decreasing shipping costs and enhancing customer service. Over the past six years, we have experienced significant growth, both internally and through acquisitions. Since 1993, we have completed 15 acquisitions. Our largest acquisition was Aker Plastics Company, Inc., or Aker, which we acquired in October 2002 for $80.4 million. At the time of the acquisition, Aker was reportedly the third largest manufacturer of gelcoat bathroom products in the U.S., focused exclusively on the wholesaler and showroom channels. This acquisition enhanced our growing market position in the U.S. by allowing us to solidify our relationships in the higher margin wholesaler and showroom channels and expand our U.S. manufacturing and distribution capabilities. The following table provides a brief overview of our primary products, distribution channels and brands.
PRODUCT FISCAL 2004 NET CATEGORY SALES (% OF TOTAL) DISTRIBUTION CHANNELS KEY BRANDS BY CHANNEL -------- ------------------ --------------------- --------------------------------------- Bathroom $401 million Wholesalers MAAX Aker, MAAX Villa (81%) Showrooms MAAX Collection, MAAX Genna, MAAX Pearl, MAAX Tub & Shower Doors, MAAX Medicine Cabinets Home Centers Advanta by MAAX, Keystone by MAAX, Premium by MAAX Europe Saninova by MAAX - --------------------------------------------------------------------------------------------------------- Kitchen $41 million Kitchen Dealers MAAX Collection Cabinetry (8%) Home Centers Cuisine Expert by MAAX, Express Kitchen - --------------------------------------------------------------------------------------------------------- Spas $54 million Specialty Retailers Coleman Spas by MAAX, (11%) Elite Spas by MAAX Home Centers Savannah Spas - ---------------------------------------------------------------------------------------------------------
THE TRANSACTIONS On March 10, 2004, certain entities formed by J.W. Childs Equity Partners Ill, L.P. and certain of its affiliates, or JWC Fund III, Borealis Private Equity Limited Partnership and Borealis (QLP) Private Equity Limited Partnership, or Borealis, and Ontario Municipal Employees Retirement Board, or OMERS, collectively, our Sponsors, entered into a merger agreement to acquire MAAX Inc. and its subsidiaries. On June 4, 2004, concurrently with the consummation of the transactions contemplated by the merger agreement, our Sponsors, certain consultants and members of our management made an investment in our indirect parent, MAAX Holdings, Inc., or MAAX Holdings, of approximately C$181 million in cash, which investment was contributed as common equity to MAAX Corporation. In addition, certain members of our management exchanged a portion of their MAAX Inc. stock options into stock options of MAAX Holdings with a fair value of approximately C$3.8 million, including a one-time option grant to Mr. Heroux described under "Management -- 2 Gestion Camada Agreement." We also entered into a new senior secured credit facility, consummated the offering of the original notes and refinanced substantially all indebtedness of MAAX Inc. and its subsidiaries. The consummation of the transactions contemplated by the merger agreement, the cash investment by our Sponsors, certain consultants and members of our management, the rollover by certain members of our management of a portion of their MAAX Inc. stock options into stock options of MAAX Holdings, the one-time option grant to Mr. Heroux, the financing under our new senior secured credit facility, the refinancing of existing indebtedness, the offering of the original notes and the payment of all related fees and expenses are collectively referred to in this prospectus as the "transactions." For a more complete description of the transactions, see the sections entitled "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations -- History -- Impact of the Transactions" and "Description of New Senior Secured Credit Facility." 3 CORPORATE STRUCTURE The following chart illustrates the relationship among us, our parent companies and certain of our principal subsidiaries, which are 100% owned. Corporate Structure Chart 4 SPONSORS J.W. Childs Associates, L.P., or JWC, is a leading private equity firm based in Boston, Massachusetts specializing in leveraged buyouts and recapitalizations of middle-market growth companies in partnership with company management through JWC Fund III and other funds it sponsors. Since 1995, the firm has invested in 31 transactions with a total value of over $7.3 billion. JWC presently manages $3.4 billion of equity capital from leading financial institutions, pension funds, insurance companies and university endowments. Its principal executive offices are located at 111 Huntington Avenue, Suite 2900, Boston, Massachusetts 02199. Each of JWC and JWC Fund III is a Delaware limited partnership. Borealis was established in 2001 as an investment vehicle to generate long-term returns primarily through private equity investment in Canadian companies in partnership with management. Borealis has committed capital of C$375 million and currently holds interests in a number of mid-sized Canadian enterprises in the following sectors: specialty retail (optical), educational publishing, investment counseling services, consulting engineering, specialty hockey skate manufacturing and distributing and management of long-term care facilities. Its principal executive offices are located at 1 Adelaide Street East, Suite 2800, Box 198, Toronto, Ontario M5C 2V9. Each of Borealis Private Equity Limited Partnership and Borealis (QLP) Private Equity Limited Partnership is a limited partnership formed under the laws of the Province of Ontario. Recently, Borealis Capital Corporation, or BCC, the manager of Borealis, became a subsidiary of OMERS. OMERS is a significant investor in Borealis Private Equity Limited Partnership. Established in 1962, Ontario Municipal Employees Retirement System is a multi-employer pension plan established under the Ontario Municipal Employees Retirement System Act and Regulations made thereunder, or the OMERS Act, which is managed and administered by OMERS, a crown corporation established under the OMERS Act. OMERS Capital Partners is the private equity subsidiary of the C$33 billion Ontario Municipal Employees Retirement System. With a portfolio of over C$1.2 billion, OMERS Capital Partners is one of Canada's largest private equity investors. OMERS provides pensions for various groups including, but not limited to, employees of Ontario municipalities, local boards, public utilities and school boards (non-teaching staff). OMERS is a contributory defined benefit pension plan financed by equal contributions from participating employers and employees and by its investment earnings. Its principal executive offices are located at One University Avenue, Suite 700, Toronto, Ontario M5J 2P1. --------------------- MAAX Corporation is an unlimited company incorporated under the laws of Nova Scotia, Canada in 2004 and operates under the Companies Act (Nova Scotia). Our executive offices are located at 1010 Sherbrooke Street West, Suite 1610, Montreal, Quebec, Canada H3A 2R7, telephone number (514) 844-4155. MAAX Inc., the predecessor entity, commenced operations in 1970. 5 SUMMARY OF THE EXCHANGE OFFER On June 4, 2004, we completed the private offering of $150,000,000 of 9.75% senior subordinated notes due 2012. We and the guarantors entered into a registration rights agreement pursuant to which we and the guarantors agreed, among other things: (1) to file with the SEC, within 150 days following the closing date of the offering, a registration statement of which this prospectus forms a part under the Securities Act relating to an exchange offer pursuant to which exchange notes substantially identical to the original notes (except that such exchange notes will not contain terms with respect to the special interest payments described below or transfer restrictions) would be offered in exchange for the then outstanding original notes; and (2) to use commercially reasonable efforts to cause the registration statement of which this prospectus forms a part to become effective within 300 days following the closing date of the offering. We agreed further to commence the exchange offer within 30 days after the registration statement of which this prospectus forms a part has become effective, hold the offer open for at least 30 days, and exchange notes for all original notes validly tendered and not withdrawn before the expiration of the offer. Under existing SEC interpretations, the exchange notes would in general be freely transferable after the exchange offer without further registration under the Securities Act, except that broker-dealers receiving exchange notes in the exchange offer will be subject to a prospectus delivery requirement with respect to resales of those exchange notes. The SEC has taken the position that broker-dealers may fulfill their prospectus delivery requirements with respect to the exchange notes (other than a resale of an unsold allotment from the original sale of the original notes) by delivery of this prospectus. Under the registration rights agreement, we will be required to allow broker-dealers and other persons, if any, subject to similar prospectus delivery requirements to use this prospectus in connection with the resale of such exchange notes. The registration statement of which this prospectus forms a part will be kept effective until the earlier of 180 days after the exchange offer has been consummated or until such time as such broker-dealers are no longer required to comply with such prospectus delivery requirements in order to permit resales of exchange notes acquired by broker-dealers in after-market transactions. Each Holder of original notes (other than certain specified holders) who wishes to exchange such original notes for exchange notes in the exchange offer will be required to represent that any exchange notes to be received by it will be acquired in the ordinary course of its business, that at the time of the commencement of the exchange offer it has no arrangement with any person to participate in the distribution (within the meaning of the Securities Act) of the exchange notes and that it is not an affiliate of ours. In addition, each such holder will be required to make any additional representations that in the written opinion of our counsel are necessary under existing rules or regulations (or interpretations thereof) of the SEC in order for the registration statement of which this prospectus forms a part to be declared effective. However, if: (1) on or before the date of consummation of the exchange offer, the existing SEC interpretations are changed such that the exchange notes would not in general be freely transferable in such manner on such date; or (2) the exchange offer is not available to any holder of the original notes, we will, in lieu of (or, in the case of clause (2), in addition to) effecting registration of exchange notes, file within 150 days and use our commercially reasonable efforts to cause a registration statement under the Securities Act relating to a shelf registration of the original notes for resale by holders or, in the case of clause (2), of the original notes held by the initial purchasers for resale by the initial purchasers (the "RESALE REGISTRATION") to become effective within 300 days and to 6 remain effective until two years following the effective date of such registration statement or such shorter period that will terminate when all the securities covered by the shelf registration statement have been sold pursuant to the shelf registration statement. We will, in the event of the Resale Registration, provide to the holder or holders of the applicable original notes copies of the prospectus that is a part of the shelf registration statement, notify such holder or holders when the Resale Registration for the applicable original notes has become effective and take certain other actions as are required to permit unrestricted resales of the applicable original notes. A holder of original notes that sells such original notes pursuant to the Resale Registration generally would be required to be named as a selling securityholder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the registration rights agreement that are applicable to such a holder (including certain indemnification obligations). In the event that: (1) we have not filed the registration statement relating to the exchange offer (or, if applicable, the Resale Registration) within 150 days following the closing date of the offering; or (2) such registration statement has not become effective within 300 days following the closing date of the offering; or (3) the exchange offer has not been consummated within 30 days following the date the registration statement becomes effective; or (4) any registration statement required by the registration rights agreement is filed and declared effective but shall thereafter cease to be effective (except as specifically permitted therein) without being succeeded immediately by an additional registration statement filed and declared effective (any such event referred to in clauses (1) through (4), the "REGISTRATION DEFAULT"), then we will pay to the holders, as liquidated damages, for the period from the occurrence of the Registration Default (but only with respect to one Registration Default at any particular time) until such time as no Registration Default is in effect an amount per annum equal to 0.25% of the aggregate principal amount of original notes during the first 90-day period following the occurrence of such Registration Default which rate shall increase by an additional 0.25% during each subsequent 90-day period, up to a maximum of 2.0%. Liquidated damages shall be paid on interest payment dates to the holders of record for the payment of interest. References to interest on the original notes shall mean such interest plus liquidated damages, if any. Under certain circumstances, we and the guarantors may allow any shelf registration statement to cease to become effective and usable for a period of no more than 90 days during any 12-month period. The summary herein of certain provisions of the registration rights agreement does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the registration rights agreement, a copy of which is incorporated by reference as an exhibit to the registration statement of which this prospectus forms a part. 7 The following summarizes the terms of this exchange offer. You should read the discussion under the heading "The Exchange Offer" for further information regarding this exchange offer and resale of the exchange notes. Securities to be Exchanged.... On June 4, 2004, we issued $150.0 million in aggregate principal amount of original notes to the initial purchasers in a transaction exempt from the registration requirements of the Securities Act. The terms of the exchange notes and the original notes are substantially identical in all material respects, except that the exchange notes will be freely transferable by the holders except as otherwise provided in this prospectus. See "Description of the Notes." The Exchange Offer............ For each original note surrendered to us pursuant to the exchange offer, the holder of such original note will receive an exchange note having a principal amount equal to that of the surrendered original note. Exchange notes will only be issued in denominations of $1,000 and integral multiples of $1,000. The form and terms of the exchange notes will be substantially the same as the form and terms of the surrendered original notes. The exchange notes will evidence the same indebtedness as, and will replace the original notes tendered in exchange therefor and will be issued pursuant to, and entitled to the benefits of, the indenture governing the original notes. As of the date of this prospectus, original notes representing $150.0 million aggregate principal amount are outstanding. Under existing SEC interpretations, the exchange notes would in general be freely transferable after the exchange offer without further registration under the Securities Act; provided that, in the case of broker-dealers that will receive exchange notes for their own accounts in exchange for original notes that were acquired as a result of market-making activities or other trading activities, and our affiliates, a prospectus meeting the requirements of the Securities Act is delivered as required. We have agreed to use all commercially reasonable efforts to keep the registration statement of which this prospectus forms a part effective for a period beginning when exchange notes are first issued in the exchange offer and ending upon the earlier of the expiration of the 180th day after the exchange offer has been completed and such time as broker-dealers are no longer required to comply with the prospectus delivery requirements in connection with offers and sales of exchange notes. Each holder of original notes that wishes to exchange such original notes for exchange notes in the exchange offer will be required to make certain representations, including representations that: - any exchange notes to be received by it will be acquired in the ordinary course of its business; - it has no arrangement or understanding with any person to participate in the distribution of the exchange notes; and 8 - it is not an "affiliate," as defined in Rule 405 of the Securities Act, of ours or of any of the guarantors of the notes. In addition, each such holder will be required to make any additional representations that in the written opinion of our counsel are necessary under existing rules or regulations (or interpretations thereof) of the SEC in order for the registration statement of which this prospectus forms a part to be declared effective. Registration Rights Agreement..................... We sold the original notes on June 4, 2004, in a private offering in reliance on Section 4(2) of the Securities Act. The original notes were immediately resold by the initial purchasers in reliance on Rule 144A under the Securities Act. In connection with the sale, we and the guarantors entered into the registration rights agreement with the initial purchasers requiring us to make this exchange offer. See "The Exchange Offer." Expiration Date............... This exchange offer will expire at 11:59 p.m., New York City time, on , 2004, or a later date and time if we extend it. Withdrawal.................... The tender of the original notes pursuant to this exchange offer may be withdrawn at any time prior to 11:59 p.m., New York City time, on the expiration date. Any original notes not accepted for exchange for any reason will be returned without expense promptly after the expiration or termination of this exchange offer. Interest on the Exchange Notes and the Original Notes........ We will pay interest on the exchange notes twice a year, on each June 15 and December 15, beginning December 15, 2004. No additional interest will be paid on original notes tendered and accepted for exchange. Conditions of this Exchange Offer......................... This exchange offer is subject to certain customary conditions, certain of which may be waived by us. See "The Exchange Offer -- Conditions of the Exchange Offer." Procedures for Tendering Original Notes................ Each holder of the original notes wishing to accept this exchange offer must complete, sign and date the letter of transmittal, or a copy thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver the letter of transmittal, or the copy, together with the original notes and any other required documentation, to the exchange agent at the address set forth herein. Persons holding the original notes through the Depository Trust Company, or the DTC, and wishing to accept this exchange offer must do so pursuant to DTC's Automated Tender Offer Program, by which each tendering participant will agree to be bound by the letter of transmittal. By executing or agreeing to be bound by the letter of 9 transmittal, each holder will represent to us that, among other things: - any exchange notes to be received by it will be acquired in the ordinary course of its business; - it has no arrangement or understanding with any person to participate in the distribution of the exchange notes; and - it is not an "affiliate," as defined in Rule 405 of the Securities Act, of ours or of any of the guarantors of the notes. In addition, each such holder will be required to make any additional representations that in the written opinion of our counsel are necessary under existing rules or regulations (or interpretations thereof) of the SEC in order for the registration statement of which this prospectus forms a part to be declared effective. We will accept for exchange any and all original notes which are properly tendered and not withdrawn in this exchange offer prior to the expiration date. The exchange notes will be delivered promptly following the expiration date. See "The Exchange Offer -- Terms of the Exchange Offer." Exchange Agent................ U.S. Bank Trust National Association is serving as exchange agent in connection with this exchange offer. Income Tax Consequences....... The exchange of original notes for exchange notes will not be a taxable exchange for U.S. federal income tax purposes or for Canadian federal income tax purposes, and holders will not recognize any taxable gain or loss or any interest income as a result of the exchange of original notes for exchange notes pursuant to the exchange offer. See "Income Tax Considerations." Effect of Not Tendering....... Original notes that are not tendered or that are tendered but not accepted will, following the completion of this exchange offer, continue to be subject to the existing restrictions upon transfer. We will have no further obligation to provide for the registration under the Securities Act of the original notes. 10 SUMMARY OF THE TERMS OF THE EXCHANGE NOTES Issuer........................ MAAX Corporation. Notes Offered................. $150 million aggregate principal amount of 9.75% Senior Subordinated Notes due 2012. Maturity...................... June 15, 2012. Interest Payment Dates........ June 15 and December 15 of each year, commencing on December 15, 2004. Interest will accrue from the issue date of the original notes. Optional Redemption........... We may redeem the exchange notes, in whole or in part, at our option at any time before June 15, 2008 at a "make-whole" premium and thereafter at the redemption prices listed in the "Description of Notes -- Optional Redemption." In addition, on or before June 15, 2007, we may use the net proceeds from one or more qualified equity offerings to redeem up to 35% of the aggregate principal amount of the exchange notes issued under the indenture at 109.750% of their face amount, plus accrued and unpaid interest. See "Description of Notes -- Optional Redemption." Tax Redemption................ If we become obligated to pay withholding taxes related to payments on the exchange notes as a result of changes affecting Canadian or U.S. withholding taxes, we may redeem all, but not less than all, of the exchange notes at 100% of their principal amount plus accrued interest to the date of redemption. See "Description of Notes -- Redemption for Changes in Canadian Withholding Taxes." Additional Amounts............ All payments with respect to the exchange notes will be made without withholding or deduction for Canadian taxes unless required by law or the interpretation or administration thereof, in which case we will pay such withholding or deduction as may be necessary so that the net amount received by the holders after such withholding or deduction will not be less than the amount that would have been received in the absence of such withholding or deduction. See "Description of Notes -- Additional Amounts." Sinking Fund.................. None. Subordination and Guarantees.................... The exchange notes and the guarantees will rank junior to all of our existing and future senior debt, will rank pari passu with any future senior subordinated debt, and will rank senior to any future debt that is expressly subordinated to the exchange notes. See "Description of Notes -- Subordination." Our parent company, Beauceland Corporation, and all of our existing and future restricted subsidiaries that guarantee any credit facility will guarantee our obligation to pay principal, premium, if any, and interest on the exchange notes. The guarantees, if any, will rank junior to all existing and future senior debt of these subsidiaries, will rank pari passu with 11 any future senior subordinated debt of these subsidiaries, and will rank senior to any future debt of these subsidiaries that is expressly subordinated to the guarantees. See "Description of Notes -- Guarantees." As of May 31, 2004, assuming that this offering and other transactions occurred on that date, the exchange notes and the guarantees would have been subordinated in right of payment to approximately $225 million of senior debt. Change of Control............. If we experience a change of control, we will be required to make an offer to purchase the exchange notes at 101% of their face amount, plus accrued and unpaid interest. See "Description of Notes -- Change of Control." Basic Covenants of the Indenture..................... The indenture governing the exchange notes contains certain covenants that, among other things, limit our ability and ability of our restricted subsidiaries to: - incur additional debt, - declare or pay dividends, redeem stock or make other distributions to shareholders, - make investments, - enter into transactions with affiliates, - sell assets, - create liens, and - consolidate or merge. These covenants are subject to a number of important qualifications and limitations. See "Description of Notes." Absence of a Public Market.... There is no public market for the exchange notes. We do not intend to apply for the exchange notes to be listed on any securities exchange or to arrange for any quotation system to quote them. The initial purchasers have advised us that they intend to make a market for the exchange notes, but they are not obligated to do so. The initial purchasers may discontinue any market-making in the exchange notes at any time in their sole discretion. Accordingly, if an active public market does not develop, the market price and liquidity of the exchange notes may be adversely affected. Risk Factors.................. Investing in the exchange notes involves substantial risks. See "Risk Factors" for a description of certain of the risks you should consider before investing in the exchange notes. For more information about the exchange notes, see "Description of Notes." 12 SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA Set forth below is a summary of certain of our historical consolidated financial data for the periods and at the dates indicated. Our summary historical consolidated financial data as at February 28, 2003 and February 29, 2004 and for the fiscal years ended February 28 or 29, 2002, 2003 and 2004 have been derived from our audited consolidated financial statements included elsewhere in the prospectus, and as at May 31, 2004 and for the three month periods ended May 31, 2003 and 2004 have been derived from our unaudited consolidated financial statements included elsewhere in the prospectus. The consolidated financial data as of February 28, 2002 has been derived from our audited consolidated financial statements not included herein. The summary historical financial data for the three month periods ended May 31, 2003 and 2004 are derived from our unaudited interim financial statements which, in the opinion of management, include all normal, recurring adjustments necessary to state fairly the data included therein in accordance with U.S. GAAP for interim financial information. Interim results are not necessarily indicative of the results to be expected for the entire fiscal year. Also set forth below is certain unaudited pro forma consolidated financial information for the twelve months ended May 31, 2004 for Beauceland Corporation, our parent, which gives pro forma effect to the transactions. The pro forma consolidated financial information does not purport to represent what the results of operations or financial position would have been had the transactions occurred on the dates indicated above or to project results of operations or financial position for any future period or at any future date. You should read the summary consolidated financial data set forth below in conjunction with "Unaudited Pro Forma Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and the related notes included elsewhere in this prospectus.
FISCAL YEAR ENDED THREE MONTHS ENDED ------------------------------------------ ------------------- FEBRUARY 28, FEBRUARY 28, FEBRUARY 29, MAY 31, MAY 31, 2002 2003 2004 2003 2004 ------------ ------------ ------------ -------- -------- (DOLLARS IN THOUSANDS) STATEMENT OF INCOME DATA: Net Sales: Bathroom and kitchen...................... $304,126 $359,901 $441,518 $110,551 $121,499 Spas...................................... 50,811 62,291 54,219 15,997 14,637 -------- -------- -------- -------- -------- Net sales............................... 354,937 422,192 495,737 126,548 136,136 Cost of goods sold.......................... 246,207 287,762 344,431 86,919 93,144 Selling, general and administrative expenses.................................. 68,125 76,746 80,061 12,454 27,773 Depreciation and amortization............... 13,690 12,595 15,638 3,699 3,833 Interest expense............................ 4,291 3,965 4,898 1,149 1,263 Impairment of goodwill...................... -- -- 4,511 -- -- -------- -------- -------- -------- -------- Income before income taxes.................. 22,624 41,124 46,198 22,327 10,123 Income taxes................................ 8,034 15,699 14,247 7,161 1,770 -------- -------- -------- -------- -------- Income before cumulative effect of a change in accounting principles.................. 14,590 25,425 31,951 15,166 8,353 Cumulative effect of a change in accounting principles related to impairment of goodwill.................................. -- (11,312) -- -- -- -------- -------- -------- -------- -------- Net income.................................. $ 14,590 $ 14,113 $ 31,951 $ 15,166 $ 8,353 ======== ======== ======== ======== ========
13
FISCAL YEAR ENDED THREE MONTHS ENDED ------------------------------------------ ------------------- FEBRUARY 28, FEBRUARY 28, FEBRUARY 29, MAY 31, MAY 31, 2002 2003 2004 2003 2004 ------------ ------------ ------------ -------- -------- (DOLLARS IN THOUSANDS) OTHER FINANCIAL DATA: EBITDA(1)(2)................................ $ 40,605 $ 57,684 $ 71,245 $ 27,175 $ 15,219 Net cash provided by operating activities... 29,974 38,379 62,787 7,573 (6,031) Net cash provided by (used in) investing activities................................ (12,771) (69,090) (17,136) (2,458) (2,332) Net cash provided by (used in) financing activities................................ (16,411) 33,177 (43,797) (917) 6,720 Capital expenditures(3)..................... 13,595 11,132 18,765 2,460 2,429 Ratio of earnings to fixed charges(4)....... 4.9 8.4 7.5 14.3 6.6
AS OF MAY 31, 2004 ----------------------- ACTUAL PRO FORMA(5) -------- ------------ (DOLLARS IN THOUSANDS) BALANCE SHEET DATA: Cash........................................................ $ 2,793 $ -- Working capital(6).......................................... 72,480 74,452 Total assets................................................ 371,964 578,378 Total debt.................................................. 65,395 378,005 Total shareholders' equity.................................. 234,972 128,776
- --------------- (1) Management believes that the presentation of EBITDA included in this prospectus provides useful information to investors regarding our results of operations because such presentation assists in analyzing the operating performance of our business and our ability to service debt. Although we use EBITDA as a financial measure to assess the performance of our business, the use of EBITDA is limited because it does not include certain material costs, such as interest and taxes, necessary to operate our business. The presentation of EBITDA included in this prospectus should be considered in addition to, and not as a substitute for, net income in accordance with U.S. GAAP as a measure of performance or net cash provided by operating activities as determined in accordance with U.S. GAAP as a measure of liquidity. (2) "EBITDA" is defined as income before cumulative effect of a change in accounting principles plus interest expense, depreciation, amortization, income taxes and impairment of goodwill. Other companies may define EBITDA differently and, as a result, our measure of EBITDA may not be directly comparable to EBITDA of other companies. The following table sets forth a reconciliation of EBITDA to net income:
PRO ACTUAL PRO FORMA ACTUAL FORMA ------------------------------------------ ------------ ----------------- ------- FISCAL YEAR ENDED THREE MONTHS ENDED --------------------------------------------------------- --------------------------- FEBRUARY 28, FEBRUARY 28, FEBRUARY 29, FEBRUARY 29, MAY 31, MAY 31, MAY 31, 2002 2003 2004 2004 2003 2004 2004 ------------ ------------ ------------ ------------ ------- ------- ------- (DOLLARS IN THOUSANDS) Income before cumulative effect of a change in accounting principles............ $14,590 $25,425 $31,951 $20,757 $15,166 $ 8,353 $ 5,707 Interest expense........ 4,291 3,965 4,898 25,753 1,149 1,263 6,793 Depreciation and amortization.......... 13,690 12,595 15,638 15,638 3,699 3,833 3,833 Income taxes............ 8,034 15,699 14,247 8,807 7,161 1,770 485 Impairment of goodwill.............. -- -- 4,511 4,511 -- -- -- ------- ------- ------- ------- ------- ------- ------- EBITDA.................. $40,605 $57,684 $71,245 $75,466 $27,175 $15,219 $16,818 ======= ======= ======= ======= ======= ======= =======
(3) Capital expenditures are defined as additions to property, plant and equipment and other assets. (4) For the purpose of calculating the ratio of fixed charges, earnings consist of earnings before income taxes and before cumulative effect of a change in accounting principles plus fixed charges. Fixed charges consist 14 of interest expensed or capitalized and the portion of rental expense we believe is representative of the interest component of rental expenses. As of May 31, 2004, on a pro forma basis after giving effect to the transactions, the ratio of earnings to fixed charges would have been 1.8x. (5) The pro forma total debt is calculated giving effect to the transactions as if they had occurred on May 31, 2004. (6) Working capital is defined as current assets less current liabilities. 15 RISK FACTORS You should carefully consider the following risks and the other information in this prospectus in evaluating the exchange offer. Any of the following risks could cause the value of the notes to decline and, accordingly, you could lose all or a portion of your investment. RISKS RELATED TO OUR BUSINESS WE OPERATE IN A VERY COMPETITIVE BUSINESS ENVIRONMENT. The home improvement products business is highly competitive. We compete against large international and national players, as well as many regional competitors. Some of our principal competitors may be less highly leveraged than we are and have greater financial, marketing and distribution resources than we do. Accordingly, these competitors may be better able to withstand changes in conditions within the industries in which we operate, including increased competition from imported products, and may have significantly greater operating and financial flexibility than we do. These competitors could increase their market share and cause us to lose business from our customers. As a result of this competitive environment, we face and will continue to face pressure on sales prices of our products from competitors, as well as from large customers. As a result of these pricing pressures, we may in the future experience reductions in our profit margins, revenues or sales, and may be unable to pass on future raw material price or labor cost increases to our customers which would also reduce profit margins. In addition, we will need to invest continuously in manufacturing, customer service and support, marketing and our sales force. We cannot assure you that we will be able to maintain or increase either current market share of our products or our price and operating margins successfully in the future. DOWNWARD TRENDS IN THE HOUSING SECTOR AND IN GENERAL ECONOMIC CONDITIONS COULD NEGATIVELY IMPACT OUR FINANCIAL PERFORMANCE. Trends in the housing sector directly impact our financial performance because demand for bathroom products, kitchen cabinetry products and, to a lesser extent, spas is influenced by the level of repair and remodeling activity in existing homes and new home construction activity. Accordingly, the strength of the U.S. and Canadian economies, the age of existing home stock, housing sales, job growth, interest rates, consumer confidence, gross domestic product levels, employment rates and the availability of consumer credit, as well as demographic factors such as immigration into North America and migration of the population within North America have a direct impact on our business. Cyclical declines in new housing starts, housing sales or demand for replacement home improvement products may result in certain products falling out of favor, in homeowners delaying home improvements and in potential new home buyers delaying the purchase or construction of a new home, all of which could result in decreased demand for our products and reductions in our profitability, product margins and revenues. There can be no assurance that any such reductions would not be material and would not continue for an indeterminate period of time. INCREASES IN INTEREST RATES AND THE REDUCED AVAILABILITY OF FINANCING FOR HOME IMPROVEMENTS COULD HAVE A MATERIAL ADVERSE IMPACT ON US. In general, demand for home improvement products may be adversely affected by increases in interest rates and the reduced availability of financing. If interest rates increase and, consequently, the ability of prospective buyers to finance purchases of home improvement products is adversely affected, our business, financial condition and results of operations may also be adversely impacted and the impact may be material. 16 BECAUSE WE DEPEND ON A CORE GROUP OF SIGNIFICANT CUSTOMERS, OUR SALES, CASH FLOWS FROM OPERATIONS AND RESULTS OF OPERATIONS MAY BE NEGATIVELY AFFECTED IF OUR KEY CUSTOMERS REDUCE THE AMOUNT OF PRODUCTS THEY PURCHASE FROM US. Our customers consist mainly of wholesalers, showrooms, specialty retailers and home centers. Based upon Canadian GAAP, our top 12 major customers together accounted for approximately 44% of our consolidated net sales in fiscal year 2004, while our largest customer, The Home Depot, accounted for approximately 24% of our consolidated net sales in fiscal year 2004. We expect this percentage to decrease in fiscal year 2005 as we continue to grow our wholesale and specialty retail distribution channels. The decision to stop supplying gelcoat bathtubs and certain other products to U.S. Home Depot stores, which took effect in June 2004, is expected to also decrease this percentage. We expect that a small number of customers will continue to account for a substantial portion of our net sales for the foreseeable future. We do not have long-term contracts with any of our customers and they may not continue to purchase our products. The loss of, or a diminution in, our relationship with The Home Depot or any other major customer could have a material adverse effect on us. In fiscal year 2004, we discontinued our spa business with U.S. Home Depot stores, primarily as a result of The Home Depot's decision to switch from stocking spas in stores to making them available by special order only, which we believed would not be a profitable proposition for us. Our competitors may adopt more aggressive sales policies and devote greater resources to the development, promotion and sale of their products than we do, which could result in a loss of customers. The loss of, or a reduction in orders from, any significant customers, losses arising from customer disputes regarding shipments, fees, merchandise condition or related matters, or our inability to collect accounts receivable from any major customer, could have a material adverse effect on us. In addition, revenue from customers that have accounted for significant revenue in past periods, individually or as a group, may not continue, or if continued, may not reach or exceed historical levels in any period. WE ARE EXPOSED TO POLITICAL, ECONOMIC AND OTHER RISKS THAT ARISE FROM OPERATING A MULTINATIONAL BUSINESS. We have operations in the U.S., Canada and, to a lesser extent, Europe. Further, certain of our businesses obtain raw materials and finished goods from foreign suppliers. Accordingly, our business is subject to political, economic and other risks that are inherent in operating in numerous countries. These risks include: - the difficulty of enforcing agreements and collecting receivables through foreign legal systems; - trade protection measures and import or export licensing requirements; - tax rates in foreign countries and the imposition of withholding requirements on foreign earnings; - the imposition of tariffs or other restrictions; - difficulty in staffing and managing widespread operations and the application of foreign labor regulations; - required compliance with a variety of foreign laws and regulations; and - changes in general economic and political conditions in countries where we operate. Our business success depends in part on our ability to anticipate and effectively manage these and other risks. We cannot assure you that these and other factors will not have a material adverse effect on our international operations or on our business as a whole. 17 ENVIRONMENTAL REQUIREMENTS MAY IMPOSE SIGNIFICANT ENVIRONMENTAL COMPLIANCE COSTS AND LIABILITIES ON US. Our operations are subject to numerous Canadian (federal, provincial and local), U.S. (federal, state and local) and foreign laws and regulations relating to pollution and the protection of the environment, including those governing emissions to air, discharges to water, storage, treatment and disposal of waste, releases of contaminants or hazardous or toxic substances, remediation of contaminated sites and protection of worker health and safety. From time to time, our facilities are subject to investigation by governmental regulators. Our efforts to comply with environmental requirements do not remove the risk that we may be subject to civil, administrative or criminal enforcement actions and as a result be held liable, be subject to an order or incur costs, fines or penalties, and that the amount of liabilities, costs, fines or penalties may be material, for, among other things, releases of contaminants or hazardous or toxic substances occurring on or emanating from current or formerly owned or operated properties or any associated offsite disposal location, or for contamination discovered at any of our properties from activities conducted by us or by previous occupants. We do not believe we will be required under existing environmental laws and enforcement policies to expend amounts that will have a material adverse effect on our results of operations or financial condition. The requirements of such laws and enforcement policies, however, have generally become more stringent over time. Changes in environmental laws and regulations, including any new legislation that might arise as a result of the government of Canada's ratification of the Kyoto Protocol, or their enforcement or the discovery of previously unknown contamination or other non-compliance with environmental laws and regulations relating to our properties and operations could result in significant environmental liabilities or costs which could adversely affect our business. In addition, we might incur increased operating and maintenance costs and capital expenditures and other costs to comply with increasingly stringent air emission control laws or other future requirements, for example, as applicable to our styrene emissions, which would decrease the cash flow available to service our indebtedness. Also, discovery of currently unknown conditions could require responses that would result in significant liabilities and costs. Accordingly, we are unable to predict the ultimate costs of compliance with or liability under environmental laws. FLUCTUATING EXCHANGE RATES COULD ADVERSELY AFFECT OUR PROFITABILITY AND REVENUES. Our profitability and revenues may be adversely affected by fluctuating exchange rates. We are subject to currency exchange rate risk to the extent that some of our costs are denominated in currencies other than those in which we earn revenues. In addition, since our financial statements are denominated in U.S. dollars, changes in currency exchange rates between the U.S. dollar and other currencies have had, and will continue to have, an impact on our financial results. An appreciation in the Canadian dollar could result in lower earnings or higher selling prices for our products that are manufactured in Canada and sold on the U.S. market and possibly a decrease in sales. We cannot assure you that currency exchange rate fluctuations will not adversely affect our results of operations and financial condition. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Quantitative and Qualitative Disclosures About Market Risk -- Currency Exchange Risk." CHANGES IN CONSUMER PREFERENCES COULD ADVERSELY AFFECT OUR BUSINESS. Our business in general is subject to changing consumer and industry trends, demands and preferences. Our continued success depends largely on the introduction and acceptance by our customers of new product lines and improvements to existing product lines that respond to such trends, demands and preferences. Trends within the industry change often and our failure to anticipate, identify or react to changes in these trends could lead to, among other things, rejection of a new product line and reduced demand and price reductions for our products, and could materially adversely affect us. In addition, we may not have sufficient resources to make necessary 18 investments or we may be unable to make the investments necessary to develop new products or improve our existing products to maintain our market position. CONSOLIDATION OF OUR CUSTOMERS COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS. We believe that there is a trend among our customers to increase in size and market power. If this trend continues, they may be able to exert pressure on us to reduce prices and create price competition. If our customer base were to consolidate, competition for the business of fewer customers would intensify. If we do not provide product offerings and price points that meet the needs of our customers, or if we lose a substantial amount of our customer base, our profitability, margins and revenues could decrease. WE RELY ON INDEPENDENT SALES REPRESENTATIVES. In the U.S., we depend on the services of independent sales representatives to sell the majority of our products and to provide services and aftermarket support to our customers. The sales representative agreements are typically cancelable by the sales representative or us at any time or after a short notice period. The loss of a substantial number of these relationships, or our failure to maintain good relationships with these sales representatives, could materially reduce our sales and profits. WE ARE EXPOSED TO PRODUCT LIABILITY CLAIMS. We face an inherent business risk of exposure to product liability claims in the event that the use of any of our products results in personal injury or property damage. In the event that any of our products proves to be defective, we may be required to recall, redesign or retrofit such products. No assurance can be given that coverage under our insurance policies will be adequate to cover existing or future product liability claims against us. Liability insurance in our industry is expensive, difficult to maintain and may be unobtainable in the future on acceptable terms or at all. Furthermore, any significant claims made against us could result in negative publicity against us, which could adversely affect our sales and increase our costs. INTERRUPTIONS IN DELIVERIES OF RAW MATERIALS OR FINISHED GOODS AND/OR INCREASED PRICES FOR RAW MATERIALS OR FINISHED GOODS USED IN OUR PRODUCTS COULD ADVERSELY AFFECT OUR PROFITABILITY, MARGINS AND REVENUES. We require a regular supply of resin, polyester, fiberglass, acrylic, thermoplastic, aluminum, steel, tempered glass, wood and particleboard, oil, pumps, accessories and packaging materials. Our dependency upon regular deliveries from particular suppliers means that interruptions or stoppages in such deliveries could adversely affect our operations until arrangements with alternate suppliers could be made. If any of our suppliers were unable to deliver materials to us for an extended period of time, or if we were unable to negotiate acceptable terms for the supply of materials with these or alternative suppliers, our business could suffer. We may not be able to find acceptable alternatives, and any such alternatives could result in increased costs for us. Even if acceptable alternatives are found, the process of locating and securing such alternatives might be disruptive to our business. In addition, our profitability is affected by the prices of the raw materials and finished goods used in the manufacture of our products. These prices may fluctuate based on a number of factors beyond our control, including, among others, world oil prices, changes in supply and demand, general economic conditions, labor costs, competition, import duties, tariffs, currency exchange rates and, in some cases, government regulation. We have a few long-term supply contracts for certain of the raw materials and finished goods used in the manufacture of our products. These contracts provide for periodic review of prices and some provide a pricing calculation method dependent upon variables in the market. This means that we are subject to changes in the prices charged by our 19 suppliers. The commodities we use may undergo major price fluctuations and there is no certainty that we will be able to pass these costs through to our customers. Significant increases in the prices of raw materials or finished goods are more difficult to pass through to customers in a short period of time and may negatively impact our short term profitability, margins and revenues. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Quantitative and Qualitative Disclosures About Market Risk -- Commodity Price Risk." WE MAY NOT BE ABLE TO IDENTIFY ATTRACTIVE ACQUISITION CANDIDATES, SUCCESSFULLY INTEGRATE ANY ACQUIRED OPERATIONS OR REALIZE THE INTENDED BENEFITS OF ANY ACQUISITIONS. Part of our strategy is to capitalize on the fragmented market for bathroom products by making selective strategic acquisitions. We continuously evaluate potential acquisitions and are engaged in discussions with sizable and smaller acquisition candidates. There can be no assurance that suitable acquisition candidates will be identified and acquired in the future, that the financing or necessary consents for any such acquisitions will be available on satisfactory terms or at all or that we will be able to accomplish our strategic objectives in making any such acquisition. Nor can we assure you that our acquisition strategy will be successfully received by customers or achieve its intended benefits. Our future performance will depend heavily on our ability to integrate the businesses that we may acquire in the future. To integrate any newly acquired businesses into our business, we will need to integrate manufacturing facilities and extend our financial and management controls and operating, administrative and information systems in a timely manner and on satisfactory terms and conditions. We may not be able to successfully integrate the businesses or realize projected cost savings and synergies in connection with any such acquisitions on the timetable contemplated or at all. Furthermore, the costs of businesses that we may acquire could significantly impact our short-term operating results. Those costs could include expenses associated with a change of control, as well as acquisition costs including accounting and legal fees, investment banking fees, recognition of transaction-related obligations and various other acquisition-related costs. The integration of any acquired companies may also lead to a diversion of management's attention from other ongoing business concerns. In addition, we may need to recruit additional managers to supplement the incumbent management of acquired companies, but we may not be successful in recruiting additional managers with the skills necessary to enhance the management of the acquired companies. We may also be subject to unexpected claims and liabilities arising from acquisitions we have made or may make in the future. These claims and liabilities could be costly to defend, could be material in amount and may exceed the limitations of any applicable indemnification provisions, the financial resources of the indemnifying parties or coverage under our insurance policies. INCREASES IN LABOR COSTS, POTENTIAL LABOR DISPUTES AND WORK STOPPAGES AT OUR FACILITIES OR THE FACILITIES OF OUR SUPPLIERS COULD MATERIALLY ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE. Our financial performance is affected by the availability of qualified personnel and the cost of labor. We employ approximately 3,850 full-time employees. Approximately 1,200 of our production line employees, located primarily in Canada, are unionized through affiliations with Confederation des syndicats nationaux, Centrale des syndicats democratiques or the Teamsters Union. Employees represented by these unions are subject to collective bargaining agreements and work at ten of our manufacturing facilities with a separate union at each location, three of which are local unions in the U.S. and the remaining seven are in Canada. Five of the collective bargaining agreements have expired or are expected to expire July through December 2004 (covering approximately 575 employees). We are in the process of negotiating two of the five collective bargaining agreements that have already expired. If we are unable to enter into new, satisfactory labor agreements with our 20 unionized employees upon expiration of their collective bargaining agreements, or if our workers were to engage in a strike, work stoppage or other slowdown, we could experience a significant disruption of our operations, which could cause us to be unable to deliver products to customers on a timely basis. This could result in a loss of business and an increase in our operating expenses, which could reduce our profit margins. In addition, our non-unionized labor force may become subject to labor union organizing efforts, which could cause us to incur additional labor costs and increase the related risks that we now face. Many of our direct and indirect suppliers and customers have unionized workforces. Strikes, work stoppages or slowdowns experienced by these suppliers and customers could result in slowdowns or closures of facilities where components of our products are manufactured or delivered. Any interruption in the production or delivery of our products could reduce sales, increase costs and have a material adverse affect on us. IF WE ARE UNABLE TO MEET FUTURE CAPITAL REQUIREMENTS, OUR BUSINESS MAY BE ADVERSELY AFFECTED. We make capital investments to, among other things, maintain and upgrade our facilities and enhance our production processes and information systems. In particular, we have implemented in Canada and are in the process of implementing in the U.S. a management network utilizing the SAP(R) management information system for our bathroom fixture products. As we grow our businesses, we may have to incur significant capital expenditures. Our new senior secured credit facility contains limitations that could affect our ability to make capital expenditures. We cannot assure you that we will have, or be able to obtain, adequate funds to make all necessary capital expenditures when required, or that the amount of future capital expenditures will not be materially in excess of our current or anticipated expenditures. If we are unable to make necessary capital expenditures, our product offering may become dated, our productivity may be decreased and the quality of our products may be adversely affected, which, in turn, could reduce our profitability and revenues. WE MAY BE REQUIRED TO ENFORCE OUR INTELLECTUAL PROPERTY OR DEFEND OUR INTELLECTUAL PROPERTY FROM INFRINGEMENT CLAIMS AND WE MAY INCUR SUBSTANTIAL COSTS AS A RESULT OF LITIGATION OR OTHER PROCEEDINGS RELATING TO PATENT OR TRADEMARK RIGHTS. We rely on a combination of U.S., Canadian and, to a lesser extent, European and Asian patent, trademark, copyright, trade secret laws and licenses to protect certain aspects of our business. We have registered trademarks, copyrights and patents, and trademark and patent registrations pending in the U.S., Canada and abroad. However, we have selectively pursued patent and trademark protection, and in some instances we may not have perfected important patent and trademark rights in these and other countries. The failure to obtain worldwide patent protection may result in other companies copying and marketing products based upon our protected technologies outside our protected markets. This could impede our growth in existing markets and into new markets, and result in a greater supply of similar products that could erode our pricing power. Our success depends in part on our ability to protect our patents, trademarks, copyrights, trade secrets and licensed intellectual property from unauthorized use by others. We cannot be sure that the patents we have obtained, or other protections such as confidentiality, trade secrets and copyrights, will be adequate to prevent imitation of our products by others. If we are unable to protect our products through the enforcement of intellectual property rights, our ability to compete based on our current market advantages may be harmed. If we fail to prevent substantial unauthorized use of our trade secrets, we risk the loss of intellectual property rights and our competitive advantage. Although we are not aware that any of our intellectual property rights infringe upon the proprietary rights of third parties, third parties may accuse us of infringement of their patents, trademarks, copyrights, trade secrets and licenses. Third parties may also challenge our trademark 21 rights and branding practices in the future. We may be required to institute or defend litigation to defend ourselves from such accusations and enforce our patent, trademark and copyright rights, which, regardless of the outcome, could result in substantial costs and diversion of resources and could negatively affect our competitive position, sales, profitability and reputation. If we lose a patent infringement suit, we may be liable for money damages and be enjoined from selling the infringing product, which could negatively affect our profitability. If we lose the use of a product name, our efforts spent building that brand may be lost and we will have to rebuild a brand for that product, which we may or may not be able to do. We have a license that expires in October 2008 from The Coleman Company Inc. for use of the name Coleman(R) and certain other trademarks for marketing our spa products. We believe that use of this license is of great value and the loss of this license or failure to renew upon expiration would have a material adverse effect on our spa business. MANUFACTURING OR ASSEMBLY REALIGNMENTS MAY RESULT IN A DECREASE IN OUR NEAR-TERM EARNINGS AND CASH FLOWS. We continuously review our manufacturing and assembly operations and sourcing capabilities. Effects of periodic manufacturing realignments and cost savings programs could result in a decrease in our near-term earnings and cash flows until the expected cost reductions are achieved. Such programs may include the consolidation and integration of facilities, functions, systems and procedures. Certain products may also be shifted from one manufacturing or assembly facility to another. Such actions may not be accomplished as quickly as anticipated and the expected cost reductions may not be achieved. OUR BUSINESS WILL SUFFER IF CERTAIN KEY OFFICERS OR EMPLOYEES DISCONTINUE EMPLOYMENT WITH US OR IF WE ARE UNABLE TO RECRUIT AND RETAIN HIGHLY SKILLED STAFF. The success of our business is materially dependent upon the skills, experience and efforts of our President and Chief Executive Officer, Andre Heroux, and certain of our other key officers and employees. The loss of Mr. Heroux or other key personnel could have a material adverse effect on our business, operating results or financial condition. Our business also depends on our ability to continue to recruit, train and retain skilled employees, particularly skilled sales personnel. The market for these resources is highly competitive. We may be unsuccessful in attracting and retaining the resources we need to generate sales and to expand our operations successfully, and, in such event, our business could be materially and adversely affected. The loss of the services of any key personnel, or our inability to hire new personnel with the requisite skills, could impair our ability to develop new products or enhance existing products, sell products to our customers or manage our business effectively. In addition, certain key officers of MAAX Inc. resigned upon consummation of the transactions, which could have a material adverse effect on our business, operating results or financial condition. Even though we entered into non-competition agreements with certain former key officers of MAAX Inc., we cannot assure you that a court will find such agreements enforceable under applicable law. OUR BUSINESS IS SUBJECT TO SOME SEASONALITY AND WEATHER MAY IMPACT OUR SALES, CASH FLOWS FROM OPERATIONS AND RESULTS OF OPERATIONS. Our spas business, and to a lesser extent, our other businesses experience seasonal business swings, which correspond to the North American seasons. Unusually prolonged periods of cold, rain, blizzards, hurricanes or other severe weather patterns could delay or halt renovation and construction activity. For example, an unusually severe winter can lead to reduced construction activity and magnify the seasonal decline in our sales, cash flows from operations and results of operations during the winter months. Generally, sales in each of the first three quarters of our fiscal year generate a significantly greater percentage of our total annual sales as compared to the fourth quarter of our fiscal year. This seasonality requires that we manage our cash flows over the course 22 of the year. If sales were to fall substantially below what we would normally expect during certain periods, our annual financial results would be adversely impacted and our ability to service our debt may also be adversely affected. IF OUR LEASES TERMINATE OR ARE NOT RENEWED UPON EXPIRATION, WE COULD BE REQUIRED TO MAKE SIGNIFICANT CAPITAL EXPENDITURES TO RELOCATE OUR FACILITIES. Certain of our manufacturing facilities and warehouses are leased. There can be no assurance that upon termination or expiration of these leases we will be able to renew them on acceptable terms or at all. If we are unable to renew such leases, we could be required to make significant capital expenditures to relocate our facilities. WE EXTEND TRADE CREDIT AND FLOOR PLAN FINANCING TO CERTAIN OF OUR CUSTOMERS AND THEY MAY NOT PAY US PROMPTLY OR IN FULL. We extend trade credit to certain of our customers and floor plan financing to a few of our spa customers to facilitate the purchase of our products. We rely on the creditworthiness of such customers. The failure of such customers to pay us promptly or in full under the terms of the trade credit or floor plan financing we extend to them could have a material adverse effect on our financial condition. WE HAVE AGREED TO CERTAIN UNDERTAKINGS WITH THE MINISTER RESPONSIBLE FOR THE INVESTMENT CANADA ACT WHICH IMPOSE RESTRICTIONS ON OUR BUSINESS FOR THREE YEARS. In connection with the transactions, we agreed to certain undertakings with the Minister responsible for the Investment Canada Act which require us to, among other things, maintain certain levels of management control, investment and employment in Quebec and Canada for three years after consummation of the transactions. These undertakings may affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities during this period. In addition, our ability to comply with these undertakings may be affected by events beyond our control, including prevailing economic, financial and industry conditions. Although the Minister responsible may waive non-compliance with an undertaking, no assurance can be given that the Minister will do so in the event that we fail to comply with any of our undertakings. TERRORIST ATTACKS AND OTHER ACTS OF VIOLENCE OR WAR MAY AFFECT THE MARKETS IN WHICH WE OPERATE AND OUR PROFITABILITY AND CASH FLOW. Terrorist attacks or other acts of violence or war may negatively affect our operations and your investment. These attacks may directly impact our suppliers' or customers' physical facilities. Furthermore, these attacks may make travel and the transportation of our supplies and products more difficult and more expensive and ultimately affect our operating results. The U.S. has entered into, and may enter into additional, armed conflicts which could have a further impact on our sales and our ability to deliver product to our customers in the U.S. and elsewhere. Political and economic instability in some regions of the world may also result and could negatively impact our business. The consequences of any of these armed conflicts are unpredictable, and we may not be able to foresee events that could have an adverse effect on our business or your investment. More generally, any of these events could cause consumer confidence and spending to decrease or result in increased volatility in the U.S. and worldwide financial markets and economy. They could also result in economic recession in the U.S. or abroad. Any of these occurrences could have a significant impact on our operating results. 23 THE INTERESTS OF MAAX HOLDINGS' MAJOR STOCKHOLDERS MAY CONFLICT WITH THE INTERESTS OF THE HOLDERS OF THE NOTES. JWC Fund III, Borealis and OMERS beneficially own shares representing approximately 99.5% of MAAX Holdings' equity prior to dilution for options. Accordingly, these stockholders have the power to elect our board of directors, appoint new management and approve any action requiring a stockholder vote, including amendments to our certificate of incorporation and mergers or sales of substantially all of our assets. The directors so elected have the authority to make decisions affecting our capital structure, including the issuance of additional indebtedness and the declaration of dividends. Circumstances may occur in which the interests of equity holders could be in conflict with the interests of holders of the notes. In addition, these equity holders may have an interest in pursuing acquisitions, divestitures or other transactions that, in their judgment, could enhance their equity investment, even though such transactions might involve risks to the holders of notes. See "Security Ownership of Certain Beneficial Owners and Management" and "Certain Relationships and Related Party Transactions." RISKS RELATED TO OUR INDEBTEDNESS WE HAVE SUBSTANTIAL DEBT AND HAVE THE ABILITY TO INCUR ADDITIONAL DEBT. THE PRINCIPAL AND INTEREST PAYMENT OBLIGATIONS OF SUCH DEBT MAY RESTRICT OUR FUTURE OPERATIONS AND IMPAIR OUR ABILITY TO MEET OUR OBLIGATIONS UNDER THE NOTES. As of May 31, 2004, assuming that the transactions occurred on that date, we and our subsidiaries would have had approximately $375 million of outstanding debt. In addition, the indenture governing the notes permits us to incur additional debt. Our substantial levels of debt may have important consequences to you. For instance, it could: - make it more difficult for us to satisfy our financial obligations, including those relating to the notes; - require us to dedicate a substantial portion of any cash flow from operations to the payment of interest and principal due under our debt, including the notes, which will reduce funds available for other business purposes; - increase our vulnerability to general adverse economic and industry conditions; - limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate; - place us at a competitive disadvantage compared with some of our competitors that have less debt; and - limit our ability to obtain additional financing required to fund working capital and capital expenditures and for other general corporate purposes. Our ability to satisfy our obligations and to reduce our total debt depends on our future operating performance and on economic, financial, competitive and other factors, many of which are beyond our control. Our business may not generate sufficient cash flow, and future financings may not be available to provide sufficient net proceeds, to meet these obligations or to successfully execute our business strategy. THE AGREEMENTS GOVERNING THE NOTES AND OUR OTHER DEBT IMPOSE RESTRICTIONS ON OUR BUSINESS. The indenture governing the notes and our new senior secured credit facility contain, and other agreements we may enter into in the future may contain, covenants imposing significant restrictions on our business. These restrictions may affect our ability to operate our business and may limit our 24 ability to take advantage of potential business opportunities as they arise. These covenants place restrictions on our ability to, among other things: - incur additional debt, - declare or pay dividends, redeem stock or make other distributions to shareholders, - create liens, - make investments, - enter into transactions with affiliates, - sell assets, and - consolidate or merge. Our new senior secured credit facility also requires us to meet a number of financial ratios and tests. Our ability to comply with these covenants may be affected by events beyond our control, including prevailing economic, financial and industry conditions. The breach of any of these covenants or restrictions could result in a default under the indenture or the new senior secured credit facility. An event of default under our debt agreements would permit some of our lenders to declare all amounts borrowed from them to be due and payable, together with accrued and unpaid interest and the commitments of the senior lenders to make further extensions of credit under the new senior secured credit facility could be terminated. If we were unable to repay debt to our senior lenders, these lenders could proceed against the collateral securing that debt. In addition, acceleration of our other debt may cause us to be unable to make interest payments on the notes and repay the principal amount of the notes or may cause the subsidiary guarantors to be unable to make payments under the guarantees. OUR ABILITY TO MAKE PAYMENTS UNDER THE NOTES AND SERVICE OUR OTHER DEBT SUBSTANTIALLY DEPENDS ON CASH FLOW FROM OUR SUBSIDIARIES. In addition to any cash flow that we may generate, we will substantially depend on distributions or other intercompany transfers from our subsidiaries to make payments under the notes and service our other debt. Distributions and intercompany transfers to us from our subsidiaries will depend on: - our subsidiaries' earnings; - covenants contained in our and their debt agreements, including our new senior secured credit facility and the notes; - covenants contained in other agreements to which we or our subsidiaries are or may become subject; - business and tax considerations; and - applicable law, including laws regarding the payment of dividends and distributions. The operating results of our subsidiaries at any given time may not be sufficient to make distributions or other payments to us and any distributions and/or payments may not be adequate to pay any amounts due under the notes or our other indebtedness. RISKS RELATED TO THE NOTES THE NOTES ARE UNSECURED AND SUBORDINATED TO OUR SENIOR DEBT. The notes rank junior to all of our existing and future senior debt. Our senior debt includes all debt that is not expressly subordinated to or that ranks pari passu in right of payment with the notes, 25 subject to certain exceptions. The notes are guaranteed on an unsecured senior subordinated basis by our direct parent company and our direct and indirect restricted subsidiaries that guarantee any of our credit facilities, and are subordinated to all existing and future obligations and liabilities of the guarantors that rank senior to the guarantees. In addition, the notes are not secured by any of our assets or the guarantors' assets. As a result, the notes are effectively subordinated to all of our and the guarantors' secured debt to the extent of the value of the assets securing such debt. As of May 31, 2004, assuming the transactions had been completed on that date, the notes and the guarantees would have been subordinated in right of payment to approximately $225 million of senior debt and up to an additional approximately $19.6 million of senior debt would have been available, subject to meeting certain borrowing conditions, to be borrowed under our new senior secured credit facility. You may not be fully repaid on your notes if we or a guarantor is declared bankrupt, becomes insolvent, is liquidated or reorganized, defaults on payment under senior debt or commits a default causing the acceleration of the maturity of our debt. In such a case, holders of any debt that ranks senior to the notes will be entitled to be paid in full from our assets and the assets of our subsidiaries before any payment may be made with respect to the notes or the guarantees. As a result, we may not have sufficient assets to fully repay the notes. An event of default under our senior debt also may prohibit us and the guarantors of the notes from paying the obligations under the notes or the guarantees. WE MAY BE UNABLE TO PURCHASE THE NOTES UPON A CHANGE OF CONTROL. Upon the occurrence of a change of control, as defined in the indenture, we will be required to make an offer to purchase the notes in cash at a price equal to 101% of the principal amount of the notes, plus accrued interest. A change of control may constitute an event of default and may trigger similar rights under our other debt then outstanding. In the event of a change of control, we may not have sufficient funds to purchase all of the notes and to repay the amounts outstanding under our new senior secured credit facility or other debt. Further, payment of the purchase price of the notes is subordinated to the prior payment of our senior debt. A COURT COULD VOID THE SUBSIDIARY GUARANTEES UNDER FRAUDULENT TRANSFER LAWS. Although the subsidiary guarantees provide you with a direct claim against the subsidiary guarantors, under the U.S. federal or state law, applicable Canadian federal or provincial law or applicable laws of other relevant jurisdictions and countries, a subsidiary guarantee could be voided, or claims with respect to a subsidiary guarantee could be subordinated to all other debts of that subsidiary guarantor. In addition, a court could void (i.e., cancel) any payments by that subsidiary guarantor pursuant to its subsidiary guarantee and require those payments to be returned to the subsidiary guarantor or to a fund for the benefit of the other creditors of the subsidiary guarantor. The court might take these actions if it found, among other things, that when a subsidiary guarantor executed its subsidiary guarantee (or, in some jurisdictions, when it became obligated to make payments under its subsidiary guarantee): - such subsidiary guarantor issued its subsidiary guarantee to delay, hinder or defraud present or future creditors; or - such subsidiary guarantor received less than reasonably equivalent value or fair consideration for the incurrence of its subsidiary guarantee and such subsidiary guarantor: - was (or was rendered) insolvent by the incurrence of the debt; - was engaged or about to engage in a business or transaction for which its assets constituted unreasonably small capital; 26 - intended to incur, or believed that it would incur, obligations beyond its ability to pay as those obligations matured; or - was a defendant in an action for money damages, or had a judgment for money damages docketed against it and, in either case, after final judgment, the judgment was unsatisfied. A court would likely find that a subsidiary guarantor received less than fair consideration or reasonably equivalent value for its subsidiary guarantee to the extent that it did not receive direct or indirect benefit from the issuance of the notes. A court could also void a subsidiary guarantee if it found that the subsidiary issued its subsidiary guarantee with actual intent to hinder, delay, or defraud creditors. Although courts in different jurisdictions measure solvency differently, in general, an entity would be deemed insolvent if the sum of its debts, including contingent and unliquidated debts, exceeds the fair value of its assets, or if the present fair salable value of its assets is less than the amount that would be required to pay the expected liability on its debts, including contingent and unliquidated debts, as they become due. If a court voided a subsidiary guarantee, it could require that noteholders return any amounts previously paid under such subsidiary guarantee. If any subsidiary guarantee were voided, noteholders would retain their rights against us and any other subsidiary guarantors, although there is no assurance that those entities' assets would be sufficient to pay the notes in full. THERE IS NO PUBLIC MARKET FOR THE NOTES, AND WE CANNOT BE SURE THAT A MARKET FOR THE NOTES WILL DEVELOP. The notes are a new issue of securities for which there is no active trading market. The original notes are, and the exchange notes, when issued will be, eligible for trading in The PORTAL Market of the National Association of Securities Dealers, Inc. If any of the notes are traded after their initial issuance, they may trade at a discount from their initial offering price, depending upon prevailing interest rates, the market for similar securities and other factors, including general economic conditions, our financial condition, performance and prospects and prospects for companies in our industry generally. In addition, the liquidity of the trading market in the notes and the market prices quoted for the notes may be adversely affected by changes in the overall market for high-yield securities. The initial purchasers have advised us that they presently intend to make a market in the exchange notes as permitted by applicable law. The initial purchasers are not obligated, however, to make a market in the notes and any such market-making may be discontinued at any time at the sole discretion of the initial purchasers. As a result, you cannot be sure that an active trading market will develop for the notes. VOLATILE TRADING PRICES MAY REQUIRE YOU TO HOLD THE NOTES FOR AN INDEFINITE PERIOD OF TIME. If a market develops for the notes, the notes might trade at prices higher or lower than their initial offering price. The trading price would depend on many factors, such as prevailing interest rates, the market for similar securities, general economic conditions and our financial condition, performance and prospects. Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial fluctuation in the prices of these securities. The market for the notes may be subject to such disruptions, which could have an adverse effect on the price of the notes. You should be aware that you may be required to bear the financial risk of an investment in the notes for an indefinite period of time. 27 BECAUSE SEVERAL OF OUR DIRECTORS AND OFFICERS RESIDE IN CANADA, YOU MAY NOT BE ABLE TO EFFECT SERVICE OF PROCESS UPON THEM OR US, OR ENFORCE CIVIL LIABILITIES AGAINST THEM OR US, UNDER THE U.S. FEDERAL SECURITIES LAWS. We are an unlimited company incorporated under the laws of Nova Scotia. Some of our directors and officers and some of the experts named in this prospectus are residents of Canada or other jurisdictions outside of the U.S. and all or a substantial portion of their assets and a substantial portion of our assets are located outside of the U.S. As a result, it may be difficult for holders of notes to effect service of process upon us or such persons within the U.S. or to enforce against us or them in the U.S. judgments of courts of the U.S. predicated upon the civil liability provisions of the U.S. federal securities laws or other laws of the U.S. In addition, we have been advised by our Nova Scotia counsel that there is doubt as to the enforceability in Canada of liabilities predicated solely upon U.S. federal securities law against us, our directors, controlling persons and officers and the experts named in this prospectus who are not residents of the U.S., in original actions or in actions for enforcements of judgments of U.S. courts. YOU MAY HAVE DIFFICULTY ENFORCING U.S. BANKRUPTCY LAWS, AND YOUR RIGHTS AS A CREDITOR MAY BE LIMITED UNDER THE BANKRUPTCY LAWS OF CANADA OR OTHER JURISDICTIONS. Under bankruptcy laws in the U.S., courts have jurisdiction over a debtor's property wherever it is located, including property situated in other countries. However, courts outside of the U.S. may not recognize the U.S. bankruptcy court's jurisdiction. Accordingly, you may have difficulty administering a U.S. bankruptcy case involving us, because we have property located outside of the U.S. Any orders or judgments of a bankruptcy court in the U.S. may not be enforceable against us with respect to our property located outside the U.S. Similar difficulties may arise in administering bankruptcy cases in foreign jurisdictions. Under the indenture governing the notes, the rights of the trustee to enforce remedies may be significantly impaired if we seek the benefit of the restructuring provisions of applicable Canadian federal bankruptcy, insolvency and other restructuring legislation. For example, both the Bankruptcy and Insolvency Act (Canada) and the Companies' Creditors Arrangement Act (Canada) contain provisions enabling an "insolvent person" to obtain a stay of proceedings against its creditors and others and to prepare and file a proposal or plan of compromise or arrangement for consideration by all or some of its creditors to be voted on by the various classes of its creditors. The restructuring plan or proposal, if accepted by the requisite majorities of creditors and if approved by the court, may permit the insolvent debtor to retain possession and administration of its property, even though it may be in default under the applicable debt instrument. The powers of the courts under the Bankruptcy and Insolvency Act (Canada) and particularly under the Companies' Creditors Arrangement Act (Canada) have been exercised broadly to protect a restructuring entity from actions taken by creditors and other parties. Accordingly, we cannot predict whether payments under the notes would be made following commencement of or during such a proceeding, whether or when the trustees could exercise its rights under the indenture governing the notes, whether your claims could be compromised or extinguished under such a proceeding or whether and to what extent holders of the notes would be compensated for delays in payment, if any, of principal and interest. 28 NOTICE TO INVESTORS This prospectus contains summaries of the terms of certain agreements that we believe to be accurate in all material respects. However, we refer you to the actual agreements for complete information relating to those agreements. All summaries of such agreements contained in this prospectus are qualified in their entirety by this reference. We will make copies of such agreements available without charge to you upon request. MARKET AND INDUSTRY DATA Market and industry data used throughout this prospectus, including information relating to our relative position in the industries in which we operate, are based on the good faith estimates of management, which estimates are based upon their review of internal surveys, discussions with customers and independent industry publications, reports or other available information. Although we believe that these sources are reliable, we do not guarantee the accuracy or completeness of this information, and we have not independently verified this information. TRADEMARKS AND TRADE NAMES We own or have rights to trademarks, service marks, copyrights and trade names that we use in conjunction with the operation of our business including, without limitation, MAAX. This prospectus also includes trademarks, service marks and trade names of other companies. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus includes "forward-looking statements," as defined by federal securities laws, with respect to our financial condition, results of operations and business and our expectations or beliefs concerning future events. Words such as, but not limited to, "believe," "expect," "anticipate," "estimate," "intend," "plan," "targets," "likely," "will," "would," "could" and similar expressions or phrases identify forward-looking statements. All forward-looking statements involve risks and uncertainties. The occurrence of the events described, and the achievement of the expected results, depend on many events, some or all of which are not predictable or within our control. Actual results may differ materially from expected results. Factors that may cause actual results to differ from expected results include, among others: - our highly competitive business environment; - the availability and price of raw materials; - the level of residential construction and remodeling activity in our markets; - changes in consumer confidence and preferences; - our failure to protect our trademarks, patents and other intellectual property rights; - our ability to retain and attract employees; - our ability to introduce new products and improve existing products; - changes in foreign currency valuations, exchange rates and economic and political conditions in the countries where we do business; - current and future litigation, including product liability claims; - costs of environmental compliance; and - the effects of past and potential future acts of terrorism, bioterrorism, violence or war. All future written and verbal forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or 29 referred to in this section. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this prospectus might not occur. See the Section entitled "Risk Factors" for a more complete discussion of these risks and uncertainties and for other risks and uncertainties. These factors and the other risk factors described in this prospectus are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. PRESENTATION OF FINANCIAL AND OTHER INFORMATION Our functional currency is the Canadian dollar, but we present our financial statements in U.S. dollars. In this prospectus, except where we indicate otherwise, all dollar amounts are expressed in U.S. dollars, references to "$" or "dollars" are to U.S. dollars and references to "C$" and "Canadian dollars" are to Canadian dollars. See "Exchange Rate Data" below for information about the rates of exchange between Canadian dollars and U.S. dollars for the past five fiscal years and for the three-month period ended May 31, 2004. Our financial statements are prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. We also refer in this prospectus to accounting principles generally accepted in Canada, or Canadian GAAP. EXCHANGE RATE DATA The following table sets forth, for each period indicated, the low and high exchange rates for Canadian dollars expressed in U.S. dollars, the exchange rate at the end of such period and the average of such exchange rates on the last day of each month during such period, based on the inverse of the noon buying rate in the City of New York for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York. The exchange rates set forth below demonstrate trends in exchange rates, but the actual exchange rates used throughout this prospectus may vary.
THREE FISCAL YEAR ENDED MONTHS ---------------------------------------------------- ENDED FEBRUARY FEBRUARY FEBRUARY FEBRUARY FEBRUARY ------- 29, 28, 28, 28, 29, MAY 31, 2000 2001 2002 2003 2004 2004 -------- -------- -------- -------- -------- ------- High.......................... 0.6542 0.6410 0.6200 0.6252 0.6709 0.7155 Low........................... 0.6969 0.6911 0.6622 0.6720 0.7880 0.7652 Period End.................... 0.6894 0.6527 0.6231 0.6720 0.7460 0.7344 Average Rate.................. 0.6932 0.6687 0.6425 0.6414 0.7346 0.7415
The following table sets forth, for each of the last six months, the low and high exchange rates for Canadian dollars expressed in U.S. dollars and the exchange rate at the end of the month based on the inverse of the noon buying rate as described above:
LAST SIX MONTHS --------------------------------------------------- MARCH APRIL MAY JUNE JULY AUGUST ------ ------ ------ ------ ------ ------ High.......................... 0.7418 0.7293 0.7155 0.7260 0.7485 0.7507 Low........................... 0.7645 0.7637 0.7370 0.7450 0.7642 0.7713 End of Month.................. 0.7634 0.7293 0.7334 0.7450 0.7523 0.7579
30 On September 10, 2004, the inverse of the noon buying rate was C$1.2877 = $1.00. Canada has no system of exchange controls. There are no Canadian exchange restrictions affecting the remittance of dividends, interest, royalties or similar payments to non-resident holders of our securities, except as described under "Income Tax Considerations -- Canadian Federal Income Tax Considerations." 31 THE EXCHANGE OFFER PURPOSE OF THE EXCHANGE OFFER EXCHANGE OFFER We hereby offer, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal, to exchange up to $150,000,000 aggregate principal amount of original notes properly tendered on or prior to the expiration date and not withdrawn as permitted pursuant to the procedures described below. The exchange offer is being made with respect to any and all of the original notes. As of the date of this prospectus, $150,000,000 aggregate principal amount of the original notes is outstanding. This prospectus, together with the accompanying letter of transmittal, is first being sent on or about , 2004 to all holders of original notes registered on our note register. Our obligation to accept original notes for exchange pursuant to the exchange offer is subject to certain conditions set forth under "-- Conditions of the Exchange Offer" below. We currently expect that each of the conditions will be satisfied and that no waivers will be necessary. PURPOSE AND EFFECT We sold the original notes on June 4, 2004 to Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and RBC Capital Markets Corporation, as the initial purchasers pursuant to a purchase agreement in a transaction exempt from the registration requirements of the Securities Act. Accordingly, the original notes may not be reoffered, resold or otherwise transferred unless so registered or unless an applicable exemption from the registration and prospectus delivery requirements of the Securities Act is available. The initial purchasers subsequently resold the original notes under Rule 144A and Regulation S under the Securities Act. As part of the offering of the original notes, we and the guarantors entered into a registration rights agreement with the initial purchasers. The registration rights agreement requires, unless the exchange offer is not permitted by applicable law or SEC policy, that we and the guarantors: - within 150 days after the closing of the offering, file the registration statement of which this prospectus forms a part with the SEC with respect to the exchange offer; - within 300 days after the closing of the offering, use our commercially reasonable best efforts to cause the exchange offer registration statement to be declared effective under the Securities Act; and - keep the exchange offer open for at least 30 days and exchange the exchange notes for all original notes validly tendered and not withdrawn before the expiration of the offer. Except as provided below, upon the completion of the exchange offer, our obligations with respect to the registration of the original notes and the exchange notes will terminate. A copy of the registration rights agreement has been filed as an exhibit to the registration statement of which this prospectus forms a part. Following the completion of the exchange offer (except as set forth in the paragraph immediately below), holders of original notes not tendered will not have any further registration rights and those original notes will continue to be subject to the restrictions on transfer described above. Accordingly, the liquidity of the market for the original notes could be adversely affected upon consummation of the exchange offer. However, if: (1) on or before the date of consummation of the exchange offer, the existing SEC interpretations are changed such that the exchange notes would not in general be freely transferable in such manner on such date; or (2) the exchange offer is not available to any holder of the original notes, 32 we will, in lieu of (or, in the case of clause (2), in addition to) effecting registration of exchange notes, file within 150 days and use our commercially reasonable efforts to cause a registration statement under the Securities Act relating to a shelf registration of the original notes for resale by holders or, in the case of clause (2), of the original notes held by the initial purchasers for resale by the initial purchasers (the "RESALE REGISTRATION") to become effective within 300 days and to remain effective until two years following the effective date of such registration statement or such shorter period that will terminate when all the securities covered by the shelf registration statement have been sold pursuant to the shelf registration statement. We will, in the event of the Resale Registration, provide to the holder or holders of the applicable original notes copies of the prospectus that is a part of the shelf registration statement, notify such holder or holders when the Resale Registration for the applicable original notes has become effective and take certain other actions as are required to permit unrestricted resales of the applicable original notes. A holder of original notes that sells such original notes pursuant to the Resale Registration generally would be required to be named as a selling securityholder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the registration rights agreement that are applicable to such a holder (including certain indemnification obligations). In the event that: (1) we have not filed the registration statement relating to the exchange offer (or, if applicable, the Resale Registration) within 150 days following the closing date of the offering; or (2) such registration statement has not become effective within 300 days following the closing date of the offering; or (3) the exchange offer has not been consummated within 30 days following the date the registration statement becomes effective; or (4) any registration statement required by the registration rights agreement is filed and declared effective but shall thereafter cease to be effective (except as specifically permitted therein) without being succeeded immediately by an additional registration statement filed and declared effective (any such event referred to in clauses (1) through (4), the "REGISTRATION DEFAULT"), then we will pay to the holders, as liquidated damages, for the period from the occurrence of the Registration Default (but only with respect to one Registration Default at any particular time) until such time as no Registration Default is in effect an amount per annum equal to 0.25% of the aggregate principal amount of original notes during the first 90-day period following the occurrence of such Registration Default which rate shall increase by an additional 0.25% during each subsequent 90-day period, up to a maximum of 2.0%. Liquidated damages shall be paid on interest payment dates to the holders of record for the payment of interest. References to interest on the original notes shall mean such interest plus liquidated damages, if any. Under certain circumstances, we and the guarantors may allow any shelf registration statement to cease to become effective and usable for a period of no more than 90 days during any 12-month period. In order to participate in the exchange offer, a holder must represent to us, among other things, that: - any exchange notes to be received by it will be acquired in the ordinary course of its business; - it has no arrangement or understanding with any person to participate in the distribution of the exchange notes; and 33 - it is not an "affiliate," as defined in Rule 405 of the Securities Act, of ours or of any of the guarantors of the notes. In addition, each such holder will be required to make any additional representations that in the written opinion of our counsel are necessary under existing rules or regulations (or interpretations thereof) of the SEC in order for the registration statement of which this prospectus forms a part to be declared effective. Based on an interpretation by the SEC's staff set forth in no-action letters issued to third parties unrelated to us, we believe that, with the exceptions set forth below, exchange notes issued pursuant to the exchange offer in exchange for original notes may be offered for resale, resold and otherwise transferred by holders thereof, other than any holder which is our affiliate within the meaning of Rule 405 promulgated under the Securities Act, or a broker-dealer who purchased original notes directly from us to resell pursuant to Rule 144A or any other available exemption promulgated under the Securities Act, without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the exchange notes are acquired in the ordinary course of business of the holder and the holder is not participating, does not intend to participate and does not have an arrangement or understanding with any person to participate in the distribution of such exchange notes. Any holder who tenders in the exchange offer for the purpose, or with the intention, of participating in a distribution of the exchange notes, or who is our affiliate, cannot rely on this interpretation by the SEC's staff and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and such secondary resale transaction must be covered by an effective registration statement under the Securities Act containing the selling securityholder's information required by Regulation S-K under the Securities Act, unless an exemption from registration is otherwise available. The foregoing is based on existing interpretations of the Securities Act by the SEC. We do not intend to seek our own no-action letter, and there is no assurance that the SEC staff would make a similar determination with respect to the exchange notes. If this interpretation is inapplicable, and you transfer any exchange note without delivering a prospectus meeting the requirements of the Securities Act or without an exemption from such requirements, you may incur liability under the Securities Act. We do not assume, or indemnify holders of notes against, any such liability. Each broker-dealer that receives exchange notes for its own account in exchange for original notes, where such original notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, may be a statutory underwriter and must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such exchange notes. See "Plan of Distribution." Broker-dealers who acquired original notes directly from us and not as a result of market-making activities or other trading activities may not rely on the staff's interpretations discussed above or participate in the exchange offer and must comply with the registration and prospectus delivery requirements of the Securities Act in order to sell the original notes. CONSEQUENCES OF FAILURE TO EXCHANGE ORIGINAL NOTES Following the completion of the exchange offer, holders of original notes who did not tender their original notes, or who did not properly tender their original notes, will not have any further registration rights and such original notes will continue to be subject to restrictions on transfer. Accordingly, the liquidity of the market for a holder's original notes could be adversely affected upon expiration of the exchange offer if such holder elects to not participate in the exchange offer. TERMS OF THE EXCHANGE OFFER Upon the terms and subject to the conditions set forth in this prospectus and in the accompanying letter of transmittal, we will accept for exchange any and all original notes that are validly tendered on or prior to 11:59 p.m. New York City time, on the expiration date. For each 34 original note surrendered to us pursuant to the exchange offer, the holder of such original note will receive an exchange note having a principal amount equal to that of the surrendered note. We will issue $1,000 principal amount of exchange notes for each $1,000 principal amount of outstanding original notes accepted in the exchange offer. Holders who have tendered their original notes may withdraw their tender of original notes at any time prior to 11:59 p.m., New York City time, on the expiration date. The exchange offer is not conditioned upon any minimum principal amount of original notes being tendered for exchange. However, the exchange offer is subject to the terms and provisions of the registration rights agreement. See "-- Conditions of the Exchange Offer." The form and terms of the exchange notes are substantially the same as the form and terms of the original notes, except that the exchange notes have been registered under the Securities Act and will not bear legends restricting their transfer. The exchange notes will evidence the same debt as the original notes and will be issued pursuant to, and entitled to the benefits of, the indenture pursuant to which the original notes were issued. As of the date of this prospectus, $150.0 million in aggregate principal amount of the original notes is outstanding. Only a holder of the original notes, or such holder's legal representative or attorney-in-fact, may participate in the exchange offer. We will not fix a record date for determining holders of the original notes entitled to participate in the exchange offer. We will be deemed to have accepted validly tendered original notes when, as and if we have given oral or written notice thereof to the exchange agent. The exchange agent will act as agent for the tendering holders of original notes and for the purpose of receiving the exchange notes from us. If any tendered original notes are not accepted for exchange because of an invalid tender, the occurrence of other events set forth in this prospectus or otherwise, the certificates for any such unaccepted original notes will be returned, without expense, to the tendering holder promptly after the expiration date. Holders who tender original notes in the exchange offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of original notes pursuant to the exchange offer. We will pay all charges and expenses, other than certain applicable taxes, in connection with the exchange offer. See "-- Fees and Expenses." EXPIRATION DATE; EXTENSIONS; AMENDMENTS The expiration date shall be , 2004, at 11:59 p.m., New York City time, unless we, in our sole discretion, extend the exchange offer, in which case the expiration date shall be the latest date and time to which the exchange offer is extended. In order to extend the exchange offer, we will notify the exchange agent of any extension by written notice and will make a public announcement thereof, each prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. This public announcement will also disclose the approximate aggregate principal amount of original notes tendered to date. We reserve the right, in our sole discretion, if any of the conditions set forth below under "-- Conditions of the Exchange Offer" shall not have been satisfied: - to delay accepting any original notes; - to extend the exchange offer; - to terminate the exchange offer; in each case by giving written notice of such delay, extension or termination to the exchange agent; and - to amend the terms of the exchange offer in any manner. 35 If we amend the exchange offer in a manner we determine to constitute a material change, we will promptly disclose such amendments by means of a prospectus supplement that we will distribute to the registered holders of the original notes. Modification of the exchange offer, including, but not limited to: - extension of the period during which the exchange offer is open; and - waiver of satisfaction of the conditions set forth below under "-- Conditions of the Exchange Offer" may require that at least five business days remain in the exchange offer. CONDITIONS OF THE EXCHANGE OFFER Notwithstanding any other term of the exchange offer, we are not required to accept for exchange, or to exchange the exchange notes for, any original notes not previously accepted for exchange, and we may terminate or amend the exchange offer as provided herein before the expiration of the exchange offer, if any of the following events shall occur: - any action or proceeding is instituted or threatened in any court or by or before any governmental agency which would be reasonably likely to materially impair our ability to proceed with the exchange offer, or there shall have occurred any material adverse development in any existing action or proceeding with respect to us or any of our subsidiaries; or - the exchange offer shall violate any applicable law, rule, regulation or interpretation of the staff of the SEC; or - any governmental approval which we shall deem necessary for the consummation of the exchange offer as contemplated by this prospectus shall not have been obtained. If we determine in our reasonable discretion that any of these conditions are not satisfied (or any of such events shall have occurred), we may (1) refuse to accept any original notes and return all tendered original notes to the tendering holders and/or terminate the exchange offer, (2) extend the exchange offer and retain all original notes tendered prior to the expiration of the exchange offer, subject, however, to the rights of holders to withdraw such original notes as described in "-- Withdrawal Rights" or (3) waive such unsatisfied conditions with respect to the exchange offer and accept all properly tendered original notes which have not been withdrawn. If such waiver constitutes a material change to the exchange offer, we will promptly disclose such waiver by means of a prospectus supplement that will be distributed to the registered holders of the original notes, and we will extend the exchange offer for a period of five to ten business days, depending upon the significance of the waiver and the manner of disclosure to the registered holders, if the exchange offer would otherwise expire during such five to ten business day period. Holders may have certain rights and remedies against us under the registration rights agreement should we fail to consummate the exchange offer, notwithstanding a failure of the conditions stated above. Such conditions are not intended to modify those rights or remedies in any respect. The foregoing conditions are for our sole benefit and we may assert them regardless of the circumstances giving rise to such conditions or we may waive them in whole or in part at any time and from time to time in our reasonable discretion; provided, that, all conditions to the exchange offer other than those dependent upon receipt of necessary government approvals must be satisfied or waived by us before the exchange offer expires. If we decide to waive any of the foregoing conditions, we will expressly announce the decision in a manner reasonably calculated to inform holders of the waiver. Any failure by us at any time to exercise the foregoing rights shall not be 36 deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. INTEREST The exchange notes will bear interest at a rate equal to 9.75% per annum. We will pay interest on the notes twice a year, on each June 15 and December 15, beginning December 15, 2004. See "Description of the Notes." PROCEDURES FOR TENDERING ORIGINAL NOTES Only a holder of original notes may tender the original notes in the exchange offer. Except as set forth under "-- Book Entry Transfer," to tender in the exchange offer, a holder must complete, sign and date the letter of transmittal, or a copy thereof, have the signatures thereon guaranteed if required by the letter of transmittal, and mail or otherwise deliver the letter of transmittal or copy to the exchange agent prior to the expiration date. In addition, (1) certificates for the original notes must be received by the exchange agent along with the letter of transmittal prior to the expiration date, (2) a timely confirmation of a book-entry transfer of such original notes, if that procedure is available, into the exchange agent's account at DTC pursuant to the procedure for book-entry transfer described below, must be received by the exchange agent prior to the expiration date or (3) the holder must comply with the guaranteed delivery procedures described below. To be tendered effectively, the letter of transmittal and other required documents must be received by the exchange agent at the address set forth under "-- The Exchange Agent; Assistance" prior to the expiration date. The tender by a holder that is not withdrawn before the expiration date will constitute an agreement between that holder and us in accordance with the terms and subject to the conditions set forth herein and in the letter of transmittal. THE METHOD OF DELIVERY OF ORIGINAL NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR ORIGINAL NOTES SHOULD BE SENT TO US. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUSTS COMPANIES OR NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS. Any beneficial owner whose original notes are registered in the name of a broker-dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct the registered holder to tender on the beneficial owner's behalf. If the beneficial owner wishes to tender on the owner's own behalf, the owner must, prior to completing and executing the letter of transmittal and delivering the owner's original notes, either make appropriate arrangements to register ownership of the original notes in the beneficial owner's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. Signatures on a letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an eligible guarantor institution that is a member of or participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, unless original notes tendered pursuant thereto are tendered (1) by a registered holder who has not completed the box entitled "Special Registration Instructions" or "Special Delivery Instructions" in the letter of transmittal or (2) for the account of such an eligible guarantor institution. 37 If signatures on a letter of transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, the guarantee must be by an eligible guarantor institution. If the letter of transmittal is signed by a person other than the registered holder of any original notes listed therein, the original notes must be endorsed or accompanied by a properly completed bond power, signed by the registered holder as that registered holder's name appears on the original notes. If the letter of transmittal or any original notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and evidence satisfactory to us of their authority to so act must be submitted with the letter of transmittal unless waived by us. We will determine all questions as to the validity, form, eligibility, including time of receipt, acceptance and withdrawal of tendered original notes in our sole discretion, which determination will be final and binding. We reserve the absolute right to reject any and all original notes not properly tendered or any original notes our acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defects, irregularities or conditions of tender as to particular original notes, but if we waive any condition of the exchange offer, we will waive that condition for all holders. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of original notes must be cured within such time as we shall determine. Although we intend to notify holders of defects or irregularities with respect to tenders of original notes, neither we nor the exchange agent nor any other person shall incur any liability for failure to give such notification. Tenders of original notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any original notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the exchange agent to the tendering holders, unless otherwise provided in the letter of transmittal, promptly following the expiration date. In addition, we reserve the right in our sole discretion to purchase or make offers for any original notes that remain outstanding after the expiration date or to terminate the exchange offer and, to the extent permitted by applicable law, to purchase original notes in the open market, in privately negotiated transactions, or otherwise. The terms of any such purchases or offers could differ from the terms of the exchange offer. By tendering, each holder will represent to us that, among other things: - any exchange notes to be received by it will be acquired in the ordinary course of its business; - it has no arrangement or understanding with any person to participate in the distribution of the exchange notes; and - it is not an "affiliate," as defined in Rule 405 of the Securities Act, of ours or of any of the guarantors of the notes. In addition, each such holder will be required to make any additional representations that in the written opinion of our counsel are necessary under existing rules or regulations (or interpretations thereof) of the SEC in order for the registration statement of which this prospectus forms a part to be declared effective. In all cases, issuance of exchange notes for original notes that are accepted for exchange pursuant to the exchange offer will be made only after timely receipt by the exchange agent of certificates for such original notes or a timely confirmation of a book-entry transfer of such original 38 notes into the exchange agent's account at DTC, a properly completed and duly executed letter of transmittal (or, with respect to DTC and its participants, electronic instructions in which the tendering holder acknowledges its receipt of an agreement to be bound by the letter of transmittal), and all other required documents. If any tendered original notes are not accepted for any reason set forth in the terms and conditions of the exchange offer or if original notes are submitted for a greater principal amount than the holder desires to exchange, such unaccepted or non-exchanged original notes will be returned without expense to the tendering holder thereof, or, in the case of original notes tendered by book-entry transfer into the exchange agent's account at DTC pursuant to the book-entry transfer procedures described below, such nonexchanged original notes will be credited to an account maintained with DTC, promptly after the expiration or termination of the exchange offer. Each broker-dealer that receives exchange notes for its own account in exchange for original notes, where such original notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See "Plan of Distribution." BOOK-ENTRY TRANSFER The exchange agent will make a request to establish an account with respect to the original notes at DTC for purposes of the exchange offer within two business days after the date of this prospectus, and any financial institution that is a participant in DTC's systems may make book-entry delivery of original notes being tendered by causing DTC to transfer such original notes into the exchange agent's account at DTC in accordance with DTC's procedures for transfer. However, although delivery of original notes may be effected through book-entry transfer at DTC, the letter of transmittal or copy thereof, with any required signature guarantees and any other required documents, must, in any case other than as set forth in the following paragraph, be transmitted to and received by the exchange agent at the address set forth under "-- The Exchange Agent; Assistance" on or prior to the expiration date or the guaranteed delivery procedures described below must be complied with. Alternatively, participants may use DTC's Automated Tender Offer Program, or ATOP, to process exchange offers through DTC. To accept the exchange offer through ATOP, participants in DTC must send electronic instructions to DTC through DTC's communication system in lieu of sending a signed, hard copy letter of transmittal. DTC is obligated to communicate those electronic instructions to the exchange agent. To tender original notes through ATOP, the electronic instructions sent to DTC and transmitted by DTC to the exchange agent must reflect that the participant acknowledges its receipt of and agrees to be bound by the letter of transmittal. GUARANTEED DELIVERY PROCEDURES Other than holders whose original notes are held through DTC, holders who wish to tender their original notes and whose original notes are not immediately available, or who cannot deliver their original notes or any other documents required by the letter of transmittal to the exchange agent prior to the expiration date, may tender their original notes according to the guaranteed delivery procedures set forth in the letter of transmittal. Pursuant to such procedures: - the holder tenders through an eligible guarantor institution and signs a notice of guaranteed delivery; - on or prior to the expiration date, the exchange agent receives from the holder and the eligible guarantor institution a written or facsimile copy of a properly completed and duly executed notice of guaranteed delivery, substantially in the form provided by us, setting forth the name and address of the holder, the certificate number or numbers of the tendered original notes, and the principal amount of tendered original notes, stating that the tender is being made thereby and guaranteeing that, within five business days after the date of 39 delivery of the notice of guaranteed delivery, the tendered original notes, a duly executed letter of transmittal and any other required documents will be deposited by the eligible guarantor institution with the exchange agent; and - such properly completed and executed documents required by the letter of transmittal and the tendered original notes in proper form for transfer are received by the exchange agent within five business days after the expiration date. Any holder who wishes to tender original notes pursuant to the guaranteed delivery procedures described above must ensure that the exchange agent receives the notice of guaranteed delivery and letter of transmittal relating to such original notes prior to 11:59 p.m., New York City time, on the expiration date. ACCEPTANCE OF ORIGINAL NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES Upon satisfaction or waiver of all the conditions to the exchange offer, we will accept any and all original notes that are properly tendered in the exchange offer prior to 11:59 p.m., New York City time, on the expiration date. The exchange notes issued pursuant to the exchange offer will be delivered promptly after expiration of the exchange offer. For purposes of the exchange offer, we shall be deemed to have accepted validly tendered original notes, when, as, and if we have given oral or written notice thereof to the exchange agent. In all cases, issuances of exchange notes for original notes that are accepted for exchange pursuant to the exchange offer will be made only after the exchange agent timely receives such original notes, a properly completed and duly executed letter of transmittal and all other required documents; provided, however, we reserve the absolute right to waive any defects or irregularities in the tender or conditions of the exchange offer. If we do not accept any tendered original notes for any reason, we will return such unaccepted original notes without expense to the tendering holder thereof promptly after the expiration or termination of the exchange offer. WITHDRAWAL RIGHTS Holders may withdraw tenders of original notes at any time prior to 11:59 p.m., New York City time, on the expiration date. For the withdrawal to be effective, the exchange agent must receive a written notice of withdrawal at its address set forth under "-- The Exchange Agent; Assistance." The notice of withdrawal must: - specify the name of the person who tendered the original notes to be withdrawn; - identify the original notes to be withdrawn, including the certificate number or numbers and principal amount of withdrawn original notes; - be signed by the holder in the same manner as the original signature on the letter of transmittal by which such original notes were tendered, including any required signature guarantees, or be accompanied by a bond power in the name of the person withdrawing the tender, in satisfactory form as determined by us in our sole discretion, duly executed by the registered holder, with the signature thereon guaranteed by an eligible guarantor institution together with the other documents required upon transfer by the indenture; and - specify the name in which such original notes are to be registered, if different from the person who deposited the original notes, pursuant to such documents of transfer. We will determine all questions as to the validity, form and eligibility, including time of receipt, of such withdrawal notices in our sole discretion. The original notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the exchange offer. Any original notes which have been tendered for exchange but which are withdrawn will be returned to their holder without cost to such holder promptly after withdrawal. Properly withdrawn original notes may be 40 retendered by following one of the procedures described under "-- Procedures for Tendering Original Notes" at any time on or prior to the expiration date. THE EXCHANGE AGENT; ASSISTANCE U.S. Bank Trust National Association is the exchange agent. All tendered original notes, executed letters of transmittal and other related documents should be directed to the exchange agent. Questions and requests for assistance and requests for additional copies of this prospectus, the letter of transmittal and other related documents should be addressed to the exchange agent as follows: BY REGISTERED OR CERTIFIED MAIL: U.S. BANK TRUST NATIONAL ASSOCIATION CORPORATE TRUST SERVICES EP-MN-WS-2N 60 LIVINGSTON AVENUE ST. PAUL, MINNESOTA 55107 ATTENTION: SPECIALIZED FINANCE BY HAND OR OVERNIGHT COURIER: U.S. BANK TRUST NATIONAL ASSOCIATION CORPORATE TRUST SERVICES EP-MN-WS-2N 100 WALL STREET 60 LIVINGSTON AVENUE ST. PAUL, MINNESOTA 55107 ATTENTION: SPECIALIZED FINANCE BY FACSIMILE: (ELIGIBLE INSTITUTIONS ONLY) U.S. BANK TRUST NATIONAL ASSOCIATION ATTENTION: SPECIALIZED FINANCE (651) 495-8158 CONFIRM FACSIMILE BY TELEPHONE OR FOR INFORMATION CALL: (800) 934-6802 FEES AND EXPENSES We will bear all expenses incident to the consummation of the exchange offer and compliance with the registration rights agreement, including, without limitation: - all registration and filing fees, including fees and expenses of compliance with state securities or blue sky laws; - printing expenses, including expenses of printing certificates for the exchange notes in a form eligible for deposit with DTC and of printing prospectuses; - messenger, telephone and delivery expenses; - fees and disbursements of our counsel; - fees and disbursements of independent public accountants; - rating agency fees; 41 - our internal expenses, including all salaries and expenses of our officers and employees performing legal or accounting duties; and - fees and expenses, if any, incurred in connection with the listing of the exchange notes on a securities exchange. We have not retained any dealer-manager in connection with the exchange offer and will not make any payments to brokers, dealers or others soliciting acceptance of the exchange offer. We, however, will pay the exchange agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses in connection therewith. We will pay all transfer taxes, if any, applicable to the exchange of original notes pursuant to the exchange offer. If, however, a transfer tax is imposed for any reason other than the exchange of original notes pursuant to the exchange offer, then the amount of any such transfer taxes, whether imposed on the registered holder or any other person, will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. ACCOUNTING TREATMENT We will record the exchange notes at the same carrying value as the original notes, as reflected in our accounting records on the date of the exchange. Accordingly, we will not recognize any gain or loss for accounting purposes. We will amortize expenses of the exchange offer over the term of the exchange notes. 42 USE OF PROCEEDS The exchange offer is intended to satisfy our obligations under the registration rights agreement. We will not receive any cash proceeds or incur any additional indebtedness as a result of the issuance of the exchange notes pursuant to the exchange offer. We used the proceeds from the sale of the original notes, together with the initial borrowings under our new senior secured credit facility and the cash investment by our Sponsors, certain consultants and members of our management, to consummate the transactions. 43 UNAUDITED PRO FORMA FINANCIAL DATA The following pro forma consolidated financial statements present the consolidated financial position and consolidated results of operations resulting from the acquisition and financing transactions whereby Beauceland Corporation has acquired MAAX Inc. as at and for the three months ended May 31, 2004 and for the year ended February 29, 2004. Beauceland Corporation, our parent company, is the guarantor of the notes and, consequently, the pro forma consolidated financial statements that are presented are those of Beauceland Corporation. The pro forma consolidated financial statements are based on (a) for the balance sheet as of May 31, 2004 and the statement of income for the quarter then ended, the unaudited historical consolidated financial statements of MAAX Inc. and (b) for the statement of income for the year ended February 29, 2004, the audited historical consolidated financial statements of MAAX Inc., both of which are included elsewhere in this prospectus, and on the audited historical financial statements of Beauceland Corporation, adjusted to give pro forma effect to the following transactions, all of which are deemed to have occurred concurrently: - The issuance of common shares by Beauceland Corporation in the amount of $125.9 million; - The creation of new indebtedness by MAAX, a wholly-owned subsidiary of Beauceland Corporation consisting of: - a term loan A facility of $95.4 (C$130.0 million); - a term loan B facility of $115.0 million; and - an authorized revolving credit of $36.7 million (C$50.0 million), of which $17.1 million (C$23.3 million) was borrowed at the acquisition date. - The issuance of $150.0 million of notes by MAAX; - The acquisition of all outstanding shares for cash and the acquisition of the outstanding share purchase options of MAAX Inc., either for cash or stock options of the acquirer; - The repayment of the outstanding long-term debt of MAAX Inc.; and - The payment of transaction costs amounting to $31.3 million. The pro forma consolidated statement of income for both periods ending May 31, 2004 and February 29, 2004 give effect to the transactions set forth above as if they had occurred on March 1, 2003, and the pro forma consolidated balance sheet gives effect to the transactions set forth above as if they had occurred on May 31, 2004. The transactions set forth above and the related adjustments are more fully described in the accompanying notes. The pro forma adjustments are based upon available information and assumptions that management believes are reasonable. All tax amounts are based on the statutory tax rate prevailing during each of the periods presented which was 32.7%. Interest rates applied are historical rates for current debt and assumed rates for the new debt. The pro forma consolidated statements of income and balance sheet do not purport to represent what the results of operations or financial position would have been had the items set forth above in fact occurred on the dates indicated above or to project results of operations or financial position for any future period or at any future date. Management has used certain estimates in preparing the pro forma financial data. These estimates do not include the final allocation of fair value of identifiable tangible and intangible assets and accordingly, the excess of the purchase price over the carrying value of the net assets acquired is recorded as goodwill, and no amortization is recorded in the pro forma consolidated statements of income. When the allocation of purchase price is finalized, the appropriate amortization related to the allocated assets will be included in the results of operations. 44 In preparing the pro forma consolidated statements of income and the pro forma consolidated balance sheet, no adjustments have been made to reflect the additional costs or savings that could result from the acquisition of MAAX Inc. The pro forma consolidated financial statements are prepared on the basis of U.S. GAAP. All references in this pro forma to "dollars" or "$" are to United States dollars, and all references in this pro forma to "C dollars" and "C$" are to Canadian dollars. The pro forma consolidated financial statements are based on a May 31, 2004 exchange rate of C$1.3634 per $1.00. 45 BEAUCELAND CORPORATION PRO FORMA CONSOLIDATED BALANCE SHEET AS OF MAY 31, 2004
BEAUCELAND ADJUSTMENTS PRO FORMA PRO FORMA, CORPORATION(1) MAAX INC. FOR FINANCING ADJUSTMENTS AS ADJUSTED -------------- --------- ------------- ----------- ----------- (UNAUDITED) (DOLLARS IN THOUSANDS) ASSETS Current assets: Cash........................ $1 $ 2,793 $ (2,793)(g) $ -- $ 1 Accounts receivable......... -- 77,862 -- -- 77,862 Inventories................. -- 45,948 -- -- 45,948 Prepaid expenses............ -- 3,074 -- -- 3,074 Deferred income taxes....... -- 3,342 -- -- 3,342 -- -------- -------- --------- -------- Total current assets........ 1 133,019 (2,793) -- 130,227 Investment in MAAX Inc. ...... -- -- 422,251(h) (422,251)(h) -- Property, plant, and -- 98,378 -- -- 98,378 equipment................... Intangible assets............. -- 15,709 -- -- 15,709 Goodwill...................... -- 111,687 -- 197,844(h) 309,531 Derivative financial -- 9,130 -- -- 9,130 instruments................. Other assets.................. -- 1,459 12,364(i) (1,001)(i) 12,822 Deferred income taxes......... -- 2,582 -- -- 2,582 -- -------- -------- --------- -------- Total assets.................. $1 $371,964 $431,822 $(225,408) $578,379 == ======== ======== ========= ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued $-- $ 52,481 $ -- $ -- $ 52,481 liabilities.............. Income taxes payable........ -- 343 -- -- 343 Deferred income taxes....... -- 2,950 -- -- 2,950 Current portion of long-term -- 4,765 (4,765)(j) 3,246(j) 3,246 debt..................... -- -------- -------- --------- -------- Total current liabilities... -- 60,539 (4,765) 3,246 59,020 Long-term debt................ -- 60,630 317,375(j) (3,246)(j) 374,759 Deferred income taxes......... -- 15,823 -- -- 15,823 -- -------- -------- --------- -------- Total liabilities............. -- 136,992 312,610 -- 449,602 Shareholders' equity: Common shares............... 1 105,076 125,940(g) (105,076)(k) 125,941 Additional paid-in -- -- 2,836(k) -- 2,836 capital.................. Other elements of -- 129,896 (9,564)(l) (120,332)(k) -- shareholders' equity..... -- -------- -------- --------- -------- Total shareholders' 1 234,972 119,212 (225,408) 128,777 equity................... -- -------- -------- --------- -------- Total liabilities and $1 $371,964 $431,822 $(225,408) $578,379 shareholders' equity........ == ======== ======== ========= ========
- --------------- (1) Beauceland Corporation was incorporated for purposes of consummation of the acquisition and, consequently, had only a nominal amount of asset (cash) and equity at May 31, 2004. 46 BEAUCELAND CORPORATION PRO FORMA CONSOLIDATED STATEMENTS OF INCOME QUARTER ENDED MAY 31, 2004
BEAUCELAND PRO FORMA PRO FORMA, CORPORATION(1) MAAX INC. ADJUSTMENTS AS ADJUSTED -------------- --------- ----------- ----------- (UNAUDITED) (DOLLARS IN THOUSANDS) Net sales................................. $-- $136,136 $ -- $136,136 Expenses: Cost of goods sold...................... -- 93,144 -- 93,144 Selling, general, and administrative.... -- 27,773 (1,599)(m) 26,174 Depreciation and amortization........... -- 3,833 -- 3,833 Financial expenses...................... -- 1,263 5,530(m) 6,793 -- -------- ---------- -------- -- 126,013 3,931 129,944 -- -------- ---------- -------- Income before income taxes................ -- 10,123 (3,931) 6,192 Income taxes.............................. -- 1,770 (1,285) 485 -- -------- ---------- -------- Net income................................ $-- $ 8,353 $ (2,646) $ 5,707 == ======== ========== ========
- --------------- (1) Beauceland Corporation was incorporated for purposes of the acquisition and, consequently, had no prior operations. YEAR ENDED FEBRUARY 29, 2004
BEAUCELAND PRO FORMA PRO FORMA, CORPORATION(1) MAAX INC. ADJUSTMENTS AS ADJUSTED -------------- --------- ----------- ----------- (DOLLARS IN THOUSANDS) Net sales................................. $-- $495,737 $ -- $495,737 Expenses: Cost of goods sold...................... -- 344,431 -- 344,431 Selling, general, and administrative.... -- 80,061 (4,221)(m) 75,840 Depreciation and amortization........... -- 15,638 -- 15,638 Financial expenses...................... -- 4,898 20,855(m) 25,753 Goodwill impairment loss................ -- 4,511 -- 4,511 -- -------- ---------- -------- -- 449,539 16,634 466,173 -- -------- ---------- -------- Income before income taxes................ -- 46,198 (16,634) 29,564 Income taxes.............................. -- 14,247 (5,440) 8,807 -- -------- ---------- -------- Net income................................ $-- $ 31,951 $ (11,194) $ 20,757 == ======== ========== ========
- --------------- (1) Beauceland Corporation was incorporated for purposes of the acquisition and, consequently, had no prior operations. 47 ASSUMPTIONS UNDERLYING THE PRO FORMA CONSOLIDATED BALANCE SHEET AND STATEMENTS OF INCOME: (A) SUBSCRIPTION FOR CAPITAL STOCK OF THE PARENT OF BEAUCELAND CORPORATION BY THE SPONSORS, CERTAIN CONSULTANTS AND MEMBERS OF OUR MANAGEMENT Concurrently with the acquisition, the Sponsors, certain consultants and members of our management made an investment in the parent of Beauceland Corporation in the amount of $125.9 million. (B) ADDITIONAL INDEBTEDNESS PURSUANT TO TERM LOAN A FACILITY, TERM LOAN B FACILITY AND REVOLVING LOAN FACILITY Concurrently with the acquisition, we entered into a term loan A facility of $95.4 million (C$130.0 million), a term loan B facility of $115.0 million and a revolving loan facility of an authorized amount of $36.7 million (C$50.0 million). The term loan A facility bears interest at a Canadian bankers' acceptance rate plus 2.5% and is payable in increasing quarterly installments beginning on December 31, 2004 and will mature in 2009. The term loan B facility bears interest at LIBOR plus 2.75% and is payable in increasing quarterly installments beginning on September 30, 2004 and will mature in 2011. The revolving loan facility bears interest at a Canadian bankers' acceptance rate plus 2.5% and will mature in 2009. At the acquisition date, an amount of $17.1 million was drawn from the revolving credit facility. Unused line fees calculated at a rate of 0.5% apply on the unused amount of the revolving loan facility. See "Description of New Senior Secured Credit Facility." (C) ISSUANCE OF SENIOR SUBORDINATED NOTES Concurrently with the acquisition, we issued Senior Subordinated Notes in the amount of $150.0 million. These notes bear interest at a rate of 9.75% payable semiannually and will mature in 2012. (D) REPAYMENT OF THE OUTSTANDING LONG-TERM DEBT OF MAAX INC. Concurrently with the acquisition, we refinanced substantially all of the outstanding long-term debt of MAAX Inc., comprised of a revolving credit of $10.0 million and senior unsecured notes in the amount of $45.5 million. The note payable resulting from a previous business acquisition amounting to $9.3 million was also repaid. The remaining long-term debt of MAAX Inc. was assumed by our company. As a result of the debt repayment described above, deferred financing costs of MAAX Inc., as at May 31, 2004 in an amount equal to $1.0 million, were written off. (E) REPURCHASE OF THE REDEEMABLE SHARES ISSUED BY MAAX INC. The acquisition was accomplished through an amalgamation of MAAX Inc. with two wholly-owned indirect subsidiaries of Beauceland Corporation. As a result of the amalgamation, the shareholders of MAAX Inc. received, for a moment in time, redeemable shares in exchange for their common shares. Immediately after issuance of the redeemable shares, we redeemed for cash the redeemable shares issued to the shareholders of MAAX Inc. in an amount equal to $402.6 million. The holders of the share purchase options received in cash the difference between the transaction price of $16.50 per share (C$22.50) and the exercise price of the outstanding share purchase options in an amount equal to $7.4 million. The purchase price required for the redemption of common stock and the cash payment on the options is $410.0 million. 48 ASSUMPTIONS UNDERLYING THE PRO FORMA CONSOLIDATED BALANCE SHEET AND STATEMENTS OF INCOME (CONTINUED): (F) PAYMENT OF TRANSACTION COSTS Transaction costs are estimated to be $31.3 million and are mainly comprised of financing fees, premium for the early redemption of the senior unsecured notes, rating agencies fees and legal, investment banking and accounting fees. (G) CASH (DOLLARS IN THOUSANDS): Sources of funds: Beauceland capital stock.................................. $125,940 Term loan A facility(b)................................... 95,350 Term loan B facility(b)................................... 115,000 Revolving loan facility(b)................................ 17,093 Senior Subordinated Notes(c).............................. 150,000 -------- 503,383 Uses of funds: Reimbursement of revolving credit(d)...................... 10,000 Reimbursement of senior subordinated notes(d)............. 45,500 Reimbursement of a balance payable on business acquisition(d)......................................... 9,333 Repurchase of the redeemable shares(e).................... 402,595 Repurchase of the outstanding share purchase options(e)... 7,396 Transaction costs(l)................................... 31,352 -------- ------- 506,176 (2,793) Cash in MAAX Inc. and in Beauceland Corporation ............ 2,794 ------- Cash on pro forma basis..................................... $ 1 =======
(H) PURCHASE PRICE ALLOCATION (DOLLARS IN THOUSANDS): Assets: Current................................................... $133,019 Property, plant and equipment, and intangible assets...... 114,087 Other..................................................... 12,170 -------- 259,276 Liabilities: Current................................................... 60,539 Long-term debt............................................ 60,630 Other..................................................... 15,823 Assumed transaction costs of MAAX Inc.(l)................. 9,564 -------- Net assets acquired......................................... 112,720 Purchase price paid in cash and in options, including acquirer's transactions costs(g), (l)..................... 422,251 -------- Excess of purchase price paid over the carrying value of assets and liabilities of MAAX Inc. -- presented as goodwill.................................................. 309,531 Goodwill already recorded in MAAX Inc. ..................... 111,687 -------- Goodwill adjustment......................................... $197,844 ========
49 ASSUMPTIONS UNDERLYING THE PRO FORMA CONSOLIDATED BALANCE SHEET AND STATEMENTS OF INCOME (CONTINUED): The entire amount of the excess purchase price over the carrying value of net assets acquired is recorded in our unaudited pro forma financial data as goodwill. We are currently assisted by external advisors to allocate the purchase price to the various assets acquired and liabilities assumed. We intend to finalize the allocation of the purchase price before the end of February 2005, our fiscal year-end, and expect to have a preliminary allocation recorded in our unaudited interim consolidated financial statements as at and for the quarter ending August 31, 2004. Once the fair value of tangible and intangible assets becomes known, a portion of the value attributed to goodwill will be reallocated to tangible and intangible assets. These intangible assets may include, among others, customers lists, customers relationships, trademarks, distribution networks and intellectual property. As a result, we expect to incur an incremental depreciation expense for our property, plant and equipment, as well as an additional amortization expense for the intangible assets acquired that have finite useful lives. Accordingly, any additional depreciation and amortization expense will have a negative impact on our results of operations; we are unable at this moment to provide any estimate of this impact, but the amount could be significant. (I) OTHER ASSETS (DOLLARS IN THOUSANDS): Increase in other assets: New financing fees from the issuance of the debt(l)....... $12,364 Reversal of unamortized financing fees of MAAX Inc. on repaid debt(d)......................................... (1,001) ------- Other assets adjustments.................................. 11,363 Other assets of MAAX Inc. .................................. 1,459 ------- Other assets on pro forma basis............................. $12,822 =======
(J) CURRENT AND LONG-TERM PORTIONS OF LONG-TERM DEBT (DOLLARS IN THOUSANDS): Increase in long-term debt: Term loan A facility(b)................................... $ 95,350 Term loan B facility(b)................................... 115,000 Revolving loan facility(b)................................ 17,093 Senior Subordinated Notes(c).............................. 150,000 -------- 377,443 Repayment of MAAX Inc. existing current and long-term debt: Revolving loan facility(d)................................ (10,000) Senior Subordinated Notes(d).............................. (45,500) Balance payable on business acquisition(d)................ (9,333) -------- (64,833) -------- Adjustment of long-term debt, including current portion of $4,765.................................................... 312,610 Long-term debt of MAAX Inc., including current portion of $4,765.................................................... 65,395 -------- Long-term debt on pro forma basis........................... $378,005 ======== Current portion............................................. $ 3,246 Long-term portion........................................... 374,759 -------- Long-term debt on pro forma basis........................... $378,005 ========
50 ASSUMPTIONS UNDERLYING THE PRO FORMA CONSOLIDATED BALANCE SHEET AND STATEMENTS OF INCOME (CONTINUED): (K) SHAREHOLDERS' EQUITY (DOLLARS IN THOUSANDS): Adjustment in shareholders' equity: Issuance of common shares in Beauceland Corporation(a).... $125,940 Rollover of stock options(1).............................. 2,836 Shareholders' equity accounts of MAAX Inc. and Beauceland Corporation at acquisition: Common shares of Beauceland Corporation at incorporation.......................................... 1 Common shares of MAAX Inc. ............................... 105,076 Other elements of the shareholders' equity, including transaction costs incurred by MAAX Inc. ............... 120,332 -------- 354,185 Elimination upon consolidation.............................. (225,408) -------- Shareholders' equity on pro forma basis..................... $128,777 ========
- --------------- (1) This amount represents the fair value of stock options issued to acquire outstanding stock options of MAAX Inc. (L) TRANSACTION COSTS (DOLLARS IN THOUSANDS): Transaction costs are comprised of: Deferred financing fees(f)................................ $12,364 Acquisition costs(f)...................................... 9,424 Costs incurred by MAAX Inc.(f)(1)......................... 9,564 ------- Total transaction costs..................................... $31,352 =======
- --------------- (1) MAAX Inc. incurred various costs in connection with this acquisition. These costs are estimated at $9.6 million and were expensed as incurred in MAAX Inc.'s financial statements. (M) EXPENSES (DOLLARS IN THOUSANDS): THREE MONTHS ENDED MAY 31, 2004 Adjustments to the expenses: Interest expenses, unused line fees on the new financing(b), (c) and amortization of new deferred financing fees(b), (c), (l)............................ $6,643 Reversal of the interest expenses on the old financing(d)........................................... (998) Reversal of amortization of the old deferred financing fees(d)................................................ (115) $ 5,530 ------ Reversal of one-time transaction costs.................... (1,761) Management fees to Sponsors............................... 162 (1,599) ------ -------- 3,931 Total expenses of MAAX Inc. ................................ 126,013 -------- Total expenses on pro forma basis........................... $129,944 ========
51 ASSUMPTIONS UNDERLYING THE PRO FORMA CONSOLIDATED BALANCE SHEET AND STATEMENTS OF INCOME (CONTINUED): YEAR ENDED FEBRUARY 29, 2004 Adjustments to the expenses: Interest expenses, unused line fees on the new financing(b), (c) and amortization of new deferred financing fees(b), (c), (l)............................ $25,753 Reversal of the interest expenses on the old financing(d)........................................... (4,380) Reversal of amortization of the old deferred financing fees(d)................................................ (518) $ 20,855 ------- Reversal of one-time transaction costs.................... (3,756) Reversal of Gestion Camada management fee contract........ (2,784) Estimated costs to replace Gestion Camada................. 1,685 Management fees to Sponsors............................... 634 (4,221) ------- -------- 16,634 Total expenses of MAAX Inc. ................................ 449,539 -------- Total expenses on pro forma basis........................... $466,173 ========
(N) OTHER INCOME STATEMENT ADJUSTMENTS TO BE RECORDED: The entire amount of the excess purchase price over the carrying value of net assets acquired is recorded in our unaudited pro forma financial data as goodwill. We are currently assisted by external advisors to allocate the purchase price to the various assets acquired and liabilities assumed. We intend to finalize the allocation of the purchase price before the end of February 2005, our fiscal year-end, and expect to have a preliminary allocation recorded in our unaudited interim consolidated financial statements as at and for the quarter ending August 31, 2004. Once the fair value of tangible and intangible assets becomes known, a portion of the value attributed to goodwill will be reallocated to tangible and intangible assets. These intangible assets may include, among others, customers lists, customers relationships, trademarks, distribution networks and intellectual property. As a result, we expect to incur an incremental depreciation expense for our property, plant and equipment, as well as an additional amortization expense for the intangible assets acquired that have finite useful lives. Accordingly, any additional depreciation and amortization expense will have a negative impact on our results of operations; we are unable at this moment to provide any estimate of this impact, but the amount could be significant. 52 SELECTED HISTORICAL FINANCIAL DATA The selected financial data presented below for and as of the end of each of the years in the three-year period ended February 29, 2004 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected financial data presented below for and as of the end of February 2000, 2001 and 2002 and for each of the years in the two-year period ended February 28, 2001 are based on our audited consolidated financial statements prepared under Canadian GAAP which have been reconciled to U.S. GAAP. The selected financial data presented below for and as of the end of the three month periods ended May 31, 2003 and 2004 are derived from our unaudited interim financial statements which, in the opinion of management, include all normal, recurring adjustments necessary to state fairly the data included therein in accordance with U.S. GAAP for interim financial information which are included elsewhere in this prospectus. Interim results are not necessarily indicative of the results to be expected for the entire fiscal year. The selected financial data presented below are qualified in their entirety by, and should be read in conjunction with, the financial statements and notes thereto and other financial and statistical information included in this prospectus, including the information contained under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations."
FISCAL YEAR ENDED THREE MONTHS ENDED ------------------------------------------------------------------------ ------------------- FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 29, MAY 31, MAY 31, 2000 2001 2002 2003 2004 2003 2004 ------------ ------------ ------------ ------------ ------------ -------- -------- (DOLLARS IN THOUSANDS) STATEMENT OF INCOME DATA: Net sales: Bathroom and kitchen.......... $270,573 $292,859 $304,126 $359,901 $441,518 $110,551 $121,499 Spas.......................... 43,297 50,215 50,811 62,291 54,219 15,997 14,637 -------- -------- -------- -------- -------- -------- -------- Net sales................... 313,870 343,074 354,937 422,192 495,737 126,548 136,136 Cost of goods sold.............. 221,729 239,820 246,207 287,762 344,431 86,919 93,144 Selling, general and administrative expenses....... 55,044 66,116 68,125 76,746 80,061 12,454 27,773 Depreciation and amortization... 10,730 13,652 13,690 12,595 15,638 3,699 3,833 Interest expense................ 2,937 5,996 4,291 3,965 4,898 1,149 1,263 Impairment of goodwill.......... -- -- -- -- 4,511 -- -- -------- -------- -------- -------- -------- -------- -------- Income before income taxes...... 23,430 17,490 22,624 41,124 46,198 22,327 10,123 Income taxes.................... 7,402 5,672 8,034 15,699 14,247 7,161 1,770 -------- -------- -------- -------- -------- -------- -------- Income before cumulative effect of a change in accounting principles.................... 16,028 11,818 14,590 25,425 31,951 15,166 8,353 Cumulative effect of a change in accounting principles related to impairment of goodwill..... -- -- -- (11,312) -- -- -- -------- -------- -------- -------- -------- -------- -------- Net income...................... $ 16,028 $ 11,818 $ 14,590 $ 14,113 $ 31,951 $ 15,166 $ 8,353 ======== ======== ======== ======== ======== ======== ======== OTHER FINANCIAL DATA: EBITDA(1)(2).................... $ 37,097 $ 37,139 $ 40,605 $ 57,684 $ 71,245 $ 27,175 $ 15,219 Net cash provided by operating activities.................... 11,658 35,929 29,974 38,379 62,787 7,573 (6,031) Net cash provided by (used in) investing activities.......... (61,531) (21,484) (12,771) (69,090) (17,136) (2,458) (2,332) Net cash provided by (used in) financing activities.......... 44,712 (11,849) (16,411) 33,177 (43,797) (917) 6,720 Capital expenditures(3)......... 24,335 20,926 13,595 11,132 18,765 2,460 2,429 Ratio of earnings to fixed charges(4).................... 6.8 3.4 4.9 8.4 7.5 15.5 6.6 BALANCE SHEET DATA: Cash and cash equivalents....... $ (3,095) $ (419) $ 810 $ 2,668 $ 4,467 $ 5,751 $ 2,793 Working capital(5).............. 57,895 55,109 57,966 68,159 55,173 74,228 72,480 Total assets.................... 275,573 265,472 263,024 344,189 365,587 385,239 371,964 Total debt...................... 77,517 64,839 51,843 100,662 57,444 98,068 65,395 Total shareholders' equity...... 149,741 155,726 164,031 187,747 231,399 212,884 234,972
- --------------- (1) Management believes that the presentation of EBITDA included in this prospectus provides useful information to investors regarding our results of operations because such presentation 53 assists in analyzing the operating performance of our business and our ability to service debt. Although we use EBITDA as a financial measure to assess the performance of our business, the use of EBITDA is limited because it does not include certain material costs, such as interest and taxes, necessary to operate our business. The presentation of EBITDA included in this prospectus should be considered in addition to, and not as a substitute for, net income in accordance with U.S. GAAP as a measure of performance or net cash provided by operating activities as determined in accordance with U.S. GAAP as a measure of liquidity. (2) "EBITDA" is defined as income before cumulative effect of a change in accounting principles plus interest expense, depreciation, amortization, income taxes and impairment of goodwill. Other companies may define EBITDA differently and, as a result, our measure of EBITDA may not be directly comparable to EBITDA of other companies. The following table sets forth a reconciliation of EBITDA to net income:
FISCAL YEAR ENDED THREE MONTHS ENDED ------------------------------------------------------------------------ ------------------- FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 29, MAY 31, MAY 31, 2000 2001 2002 2003 2004 2003 2004 ------------ ------------ ------------ ------------ ------------ -------- -------- (DOLLARS IN THOUSANDS) Income before cumulative effect of a change in accounting principles........... $16,028 $11,818 $14,590 $25,425 $31,951 $15,166 $ 8,353 Interest expense....... 2,937 5,996 4,291 3,965 4,898 1,149 1,263 Depreciation and amortization......... 10,730 13,652 13,690 12,595 15,638 3,699 3,833 Income taxes........... 7,402 5,673 8,034 15,699 14,247 7,161 1,770 Impairment of goodwill............. -- -- -- -- 4,511 -- -- ------- ------- ------- ------- ------- ------- ------- EBITDA................. $37,097 $37,139 $40,605 $57,684 $71,245 $27,175 $15,219 ======= ======= ======= ======= ======= ======= =======
(3) Capital expenditures are defined as additions to property, plant and equipment and other assets. (4) For the purpose of calculating the ratio of fixed charges, earnings consist of earnings before income taxes and before cumulative effect of a change in accounting principles plus fixed charges. Fixed charges consist of interest expensed or capitalized and the portion of rental expense we believe is representative of the interest component of rental expenses. As of May 31, 2004, on a pro forma basis after giving effect to the transactions, the ratio of earnings to fixed charges would have been 1.8x. (5) Working capital is defined as current assets less current liabilities. 54 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the notes thereto appearing elsewhere in this prospectus. OVERVIEW We are a leading North American manufacturer and distributor of bathroom fixtures. Our revenues are derived primarily from the manufacture and sale of bathroom fixtures, kitchen cabinetry and spas for the residential housing market in North America. We currently operate 24 strategically located manufacturing facilities, including 13 in the U.S., ten in Canada and one in the Netherlands. We sell our products through a diverse set of distribution channels across the U.S. and Canada, including wholesalers, showrooms, specialty retailers and home centers. We manufacture and sell, primarily in the U.S. and Canada, with a small presence in Europe, Asia and the Middle East, a broad range of products, including a wide selection of bathtubs, whirlpools, showers, kitchen cabinetry and spas. HISTORY IMPACT OF THE TRANSACTIONS On March 10, 2004, certain entities formed by our Sponsors entered into a merger agreement to acquire MAAX Inc., pursuant to which two of our wholly-owned subsidiaries amalgamated with MAAX Inc. on June 4, 2004. In connection with the amalgamation, the shareholders and optionholders of MAAX Inc. received an aggregate of approximately C$563 million. In addition, certain assets and liabilities of MAAX Inc. were reorganized and consolidated into several direct and indirect subsidiaries. Upon consummation of the amalgamation, MAAX Corporation acquired MAAX Inc. and its direct and indirect subsidiaries. Concurrently with the consummation of the transactions, our Sponsors, certain consultants and members of our management made a cash investment in MAAX Holdings of approximately C$181 million. In addition, certain members of our management exchanged a portion of their MAAX Inc. stock options for stock options of MAAX Holdings, with a fair value of approximately C$3.8 million. We also entered into a new senior secured credit facility, consummated the offering of the original notes and refinanced substantially all existing indebtedness of MAAX Inc. and its subsidiaries. As a result of the consummation of the transactions, our aggregate level of debt increased significantly and therefore our interest expense and the amortization of deferred financing costs will have a negative impact on our future results of operations. The impact of such increased interest expense and amortization of deferred financing costs on a pro forma basis for certain historical periods is reflected in our unaudited pro forma financial data. The entire amount of the excess purchase price over the carrying value of net assets acquired is recorded in our unaudited pro forma financial data as goodwill. We are currently assisted by external advisors to allocate the purchase price to the various assets acquired and liabilities assumed. We intend to finalize the allocation of the purchase price before the end of February 2005, our fiscal year-end, and expect to have a preliminary allocation and the effect thereof on our results of operations recorded in our unaudited interim consolidated financial statements as at and for the quarter ending August 31, 2004. Once the fair value of tangible and intangible assets becomes known, a portion of the value attributed to goodwill will be reallocated to tangible and intangible assets. These intangible assets may include, among others, customers lists, customers relationships, trademarks, distribution networks and intellectual property. As a result, we expect to incur an incremental depreciation expense for our property, plant and equipment, as well as an additional amortization expense for the intangible assets acquired that have finite useful lives. Accordingly, any additional depreciation and 55 amortization expense will have a negative impact on our results of operations; we are unable at this moment to provide any estimate of this impact, but the amount could be significant. AKER ACQUISITION In October 2002, we acquired all of the outstanding capital stock of Aker for an aggregate purchase price of $80.4 million, including $66.4 million paid in cash and $14 million paid in notes bearing interest at a rate of 3%, payable over a three-year period. The notes were prepaid on June 3, 2004. We have remaining payments for deferred compensation of approximately $0.5 million. At the time Aker was acquired, it was reportedly the third largest manufacturer of gelcoat bathroom products in the U.S. with sales of approximately $77 million for the twelve months ended September 2002, generated from three manufacturing facilities and a distribution network consisting exclusively of wholesaler and showroom channels. CRITICAL ACCOUNTING POLICIES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Consequently, actual results could differ from these estimates. We believe that the following are some of the more critical areas requiring the use of management estimates. GOODWILL We evaluate goodwill for impairment on at least an annual basis and whenever events or circumstances indicate that the carrying amount may be less than the fair value. Impairment testing of goodwill is performed at our bathroom and kitchen and spas business unit levels. The test involves two steps, the first of which is comparing the reporting unit's carrying amount, including goodwill, to the fair value of the reporting unit, which we establish based on projected discounted future cash flows of the unit using a discount rate reflecting our average cost of funds. If the carrying amount of the reporting unit exceeds its fair value, a second test is performed to measure the amount of the impairment. The second test to measure the impairment of goodwill allocates the fair value determined in the first step to all assets and liabilities of the reporting unit and establishes the residual value of goodwill which is then compared to the carrying value. Any excess of carrying value of the goodwill over the "fair value" is considered impaired and written-off. In our determination of the impairment of goodwill, we base our estimates used in preparing the discounted cash flows on historical operations and a projection of future operations that includes various assumptions that we believe to be reasonable under the circumstances. The assumptions made by management require a high degree of judgment and are inherently imprecise as such assumptions relate to future facts. Actual results may differ from these estimates. Furthermore, under different economic conditions, management would likely make different assumptions which could result in a different fair value estimate. WARRANTIES Products sold are generally covered by a warranty for periods ranging from one to ten years. At the time of sale, we accrue a warranty reserve for estimated costs to provide parts or services to satisfy warranty obligations. Our estimate of costs to service warranty obligations is based on our own historical experience and our expectation of future conditions. To the extent we experience changes in warranty claim activity or costs associated with servicing these claims, our warranty accrual will be adjusted accordingly. 56 INCOME TAXES We record a valuation allowance to reduce our deferred tax assets to the amount that we believe is more likely than not to be realized. We consider future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance. Upon determination that we will not be able to realize all or part of our net deferred tax assets in the future, a corresponding charge to income is accounted for in the period such determination is made. Likewise, should we determine that we will be able to realize our deferred tax assets for an amount in the future in excess of our net recorded amount, an adjustment to decrease the valuation allowance is recorded which would increase net income in the period such determination is made. The evaluation of the need for a valuation allowance against the deferred tax asset requires significant judgment on the part of management, particularly as it relates to future sources of taxable income. ALLOWANCE FOR DOUBTFUL ACCOUNTS We estimate the net collectability of accounts receivable, considering both historical and anticipated trends of trade deductions and returns taken by our customers and the possibility of non-collection due to the financial position of our customers. The company regularly monitors credit risk exposure of its customers and takes steps to mitigate the risk of loss. PROVISION FOR OBSOLETE INVENTORY We try to manage our inventory level taking into account anticipated sales and current market trends. We set up adequate provisions when we believe that we will not be able to realize the value of our inventory. CHANGE IN ACCOUNTING POLICIES During the year ended February 29, 2004, we adopted the following new accounting policy: FIN 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others In November 2002, the Financial Accounting Standard Board issued the above-named interpretation that requires the initial recognition and initial measurement of a liability at the inception of certain guarantees and additional disclosures for most guarantees. The interpretation requires that a guarantor disclose significant information about most types of guarantees that require payments contingent on specified future events, without regard to the probability that it will have to make any payments under the guarantees. Disclosures include the nature of the guarantee, how it arose, the events or circumstances that would trigger performance under the guarantee, the maximum potential future payments under the guarantee, the carrying amount of the related liability and information about recourse or collateral. The provisions related to recognizing a liability at inception of the guarantees for the fair value of the guarantor's obligations would not apply to product warranties or guarantees accounted for as derivatives. We adopted this standard on March 1, 2003 with no material impact on our consolidated financial statements. 57 RESULTS OF OPERATIONS The following table sets forth our results of operations for the periods indicated and the percentage of net sales represented by the respective financial line items.
FISCAL YEAR ENDED THREE MONTHS ENDED --------------------------------------------------------- ------------------------------------- FEBRUARY 28, FEBRUARY 28, FEBRUARY 29, MAY 31, MAY 31, 2002 2003 2004 2003 2004 ----------------- ----------------- ----------------- ----------------- ----------------- (DOLLARS IN MILLIONS) Net sales..................... $354.9 100.0% $422.2 100.0% $495.7 100.0% $126.5 100.0% $136.1 100.0% Cost of goods sold............ 246.2 69.3% 287.8 68.2% 344.4 69.5% 86.9 68.8% 93.1 68.4% Selling, general and administrative expenses..... 68.1 19.2% 76.7 18.2% 80.1 16.2% 12.5 9.9% 27.8 20.4% Depreciation and amortization................ 13.7 3.9% 12.6 3.0% 15.6 3.1% 3.7 2.9% 3.8 2.8% Interest expense.............. 4.3 1.2% 4.0 0.9% 4.9 1.0% 1.1 0.9% 1.2 0.9% Impairment of goodwill........ -- -- -- -- 4.5 0.9% -- --% -- --% ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- Income before income taxes.... 22.6 6.4% 41.1 9.7% 46.2 9.3% 22.3 17.6% 10.2 7.5% Income taxes.................. 8.0 2.3% 15.7 3.7% 14.2 2.9% 7.1 5.6% 1.8 1.3% ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- Income before cumulative effect of a change in accounting principles....... 14.6 4.1% 25.4 6.0% 32.0 6.4% 15.2 12.0% 8.4 6.2% Cumulative effect of a change in accounting principles related to impairment of goodwill.................... -- -- (11.3) (2.7)% -- -- -- -- -- -- ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- Net income.................... $ 14.6 4.1% $ 14.1 3.3% $ 32.0 6.4% $ 15.2 12.0% $ 8.4 6.2% ====== ===== ====== ===== ====== ===== ====== ===== ====== =====
THREE MONTHS ENDED MAY 31, 2004 COMPARED TO THREE MONTHS ENDED MAY 31, 2003 Net Sales. Net sales increased from $126.5 million for the three months ended May 31, 2003 to $136.1 million for the three months ended May 31, 2004, an increase of $9.6 million, or 7.6%. This increase was due to an 11.2% increase in net sales of bathroom products, partially offset by an 8.5% decrease in net sales of spas primarily as a result of The Home Depot's decision to switch from stocking spas in stores to making them available by special order only, which we believed would not be a profitable proposition for us. Excluding the impact of fluctuations in the U.S. dollar in relation to the Canadian dollar and the withdrawal during the 2004 fiscal year of the spas products from home improvement centers, consolidated net sales would have been up 8.6% over the three months ended May 31, 2003. On a geographical basis, U.S. net sales rose 3.7% to $91.4 million and accounted for 67.2% of net sales for the three months ended May 31, 2004. Canadian net sales rose 13.7% to $39.4 million and accounted for 28.9% of net sales for the three months ended May 31, 2004. Bathroom and Kitchen. Net sales for the bathroom and kitchen sector increased from $110.6 million for the three months ended May 31, 2003 to $121.5 million for the three months ended May 31, 2004, an increase of $10.9 million, or 9.9%. This increase was due to higher organic sales and the positive impact of currency fluctuations. Excluding currency fluctuations, net sales for the bathroom and kitchen sector was $119.5 million for the three months ended May 31, 2004. The bathroom and kitchen sector posted a profit margin of 9.4%, down from 19.6% for the three months ended May 31, 2003 due to the change in fair value of derivative financial instruments which represented a loss of $2.3 million for the period ended May 31, 2004 and a gain of $10.5 million for the corresponding period in 2003. Spas. Net sales for the spas sector decreased from $16.0 million for the three months ended May 31, 2003 to $14.6 million for the three months ended May 31, 2004, a decrease of $1.4 million, or 8.8%. This decrease was due to the withdrawal of our spa products from U.S. Home Depot stores. The spas sector posted a loss margin of (0.5)%, down from a profit margin of 14.3% for the three months ended May 31, 2003. 58 Cost of Goods Sold. Cost of goods sold increased from $86.9 million, or 68.8% of net sales for the three months ended May 31, 2003 to $93.1 million, or 68.4% of net sales, for the three months ended May 31, 2004, an overall increase of $6.2 million or 7.1%. This increase was due to volume growth. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased from $12.5 million for the three months ended May 31, 2003 to $27.8 million for the same period in 2004, an increase of $15.3 million, or 122.4%. Selling, general and administrative expenses as a percentage of net sales increased from 9.9% for the three months ended May 31, 2003 to 20.4% for the same period in 2004. $12.8 million is related to a non-cash change in the fair value of derivative financial instruments and non-recurring transaction expenses of $1.8 million related to the consummation of the transactions on June 4, 2004. Depreciation and Amortization. Depreciation and amortization increased from $3.7 million for the three months ended May 31, 2003 to $3.8 million for the three months ended May 31, 2004, an increase of $0.1 million, or 2.7%. Depreciation and amortization as a percentage of net sales decreased from 2.9% for the three months ended May 31, 2003 to 2.8% for the same period in 2004. Interest Expense. Interest expense increased from $1.1 million for the three months ended May 31, 2003 to $1.2 million for the three months ended May 31, 2004, an increase of $0.1 million, or 9.1%. This increase was due to a loss on the mark to market of our interest swap for the three months ended May 31, 2004 compared to a mark to market gain for the same period in 2003, offset by the positive impact in the reduction in debt as of May 31, 2004 compared to the debt outstanding for the same period in 2003. Income Before Income Taxes. Income before income taxes decreased from $22.3 million for the three months ended May 31, 2003 to $10.2 million for the three months ended May 31, 2004, a decrease of $12.1 million, or 54.3%. Income before income taxes as a percentage of net sales decreased from 17.6% for the year ended February 28, 2003 to 7.5% for the same period in 2004, principally due to the factors described above. Income Taxes. Income taxes decreased from $7.1 million for the three months ended May 31, 2003, to $1.8 million for the same period in 2004 as a result of the company's implementation of tax planning strategies which resulted in an overall lower tax rate for the company. Net Income. Net income decreased from $15.2 million for the three months ended May 31, 2003 to $8.4 million for the same period in 2004, a decrease of $6.8 million. This decrease was a result of the items described above. FISCAL YEAR ENDED FEBRUARY 29, 2004 COMPARED TO FISCAL YEAR ENDED FEBRUARY 28, 2003 Net Sales. Net sales increased from $422.2 million for the year ended February 28, 2003 to $495.7 million for the year ended February 29, 2004, an increase of $73.5 million, or 17.4%. This increase was due to inclusion of a full year of contribution by Aker and organic growth, positive impact of $15.5 million from currency fluctuation, offset in part by reduced sales from the withdrawal of our spa products from U.S. Home Depot stores and our exit from the less profitable mobile home business. On a geographical basis, U.S. net sales rose 17.7% to $347.0 million and accounted for 70.0% of consolidated sales for fiscal year 2004. Canadian sales increased by 13.1% to $131.5 million and accounted for 26.5% of total sales, supported by the 14.0% decline in the U.S. dollar, despite the negative impact of SARS, the war in Iraq and adverse weather conditions. Bathroom and Kitchen. Net sales for the bathroom and kitchen sector increased from $359.9 million for the year ended February 28, 2003 to $441.5 million for the year ended February 29, 2004, an increase of $81.6 million, or 22.7%. This increase was due to the inclusion of a full year of contribution by Aker and higher organic sales and the positive impact of currency 59 fluctuations. The bathroom and kitchen sector posted a profit margin of 12.3%, up from 11.2% in fiscal year 2003. Spas. Net sales for the spas sector decreased from $62.3 million for the year ended February 28, 2003 to $54.2 million for the year ended February 29, 2004, a decrease of $8.1 million, or 13.0%. This decrease was due to the withdrawal of our spa products from U.S. Home Depot stores offset by the positive impact of currency fluctuations. The spas sector posted a loss margin of (15.3)%, down from a profit margin of 1.2% in fiscal year 2003. Cost of Goods Sold. Cost of goods sold increased from $287.8 million, or 68.2% of net sales for the year ended February 28, 2003 to $344.4 million, or 69.5% of net sales, for the year ended February 29, 2004, an increase of $56.6 million or 19.7%. This increase was due principally to costs associated with the December 2003 shutdown of our Langley, British Columbia facility, the withdrawal of our spa products from U.S. Home Depot stores, the retrofitting of our Marion and Valdosta plants to produce Aker products, as well as volume growth and the negative impact of currency fluctuations. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased from $76.7 million for the year ended February 28, 2003 to $80.1 million for the same period in 2004, an increase of $3.4 million, or 4.4%. Selling, general and administrative expenses as a percentage of net sales decreased from 18.2% for the year ended February 28, 2003 to 16.2% for the same period in 2004. We recorded expenses related to the December 2003 shutdown of our Langley, British Columbia facility and the withdrawal of our spa products from U.S. Home Depot stores. Selling, general and administrative expenses were impacted negatively by currency fluctuations and positively by the gain recorded on the mark to market of our foreign exchange forward contracts. Depreciation and Amortization. Depreciation and amortization increased from $12.6 million for the year ended February 28, 2003 to $15.6 million for the year ended February 29, 2004, an increase of $3.0 million, or 23.8%. This increase was primarily a result of Aker being included in our financial statements for a full year. Depreciation and amortization as a percentage of net sales increased from 3.0% for the year ended February 28, 2003 to 3.1% for the same period in 2004. Interest Expense. Interest expense increased from $4.0 million for the year ended February 28, 2003 to $4.9 million for the year ended February 29, 2004, an increase of $0.9 million, or 22.5%. These increases were the result of increased debt incurred to finance the Aker acquisition. Impairment of Goodwill. We incurred an impairment of goodwill charge related to our spa sector of $4.5 million for the year ended February 29, 2004 as determined in our annual test of goodwill impairment. Income Before Income Taxes. Income before income taxes increased from $41.1 million for the year ended February 28, 2003 to $46.2 million for the year ended February 29, 2004, an increase of $5.1 million, or 12.4%. Income before income taxes as a percentage of net sales decreased from 9.7% for the year ended February 28, 2003 to 9.3% for the same period in 2004, principally due to the factors described above. Income Taxes. Income taxes decreased from $15.7 million for the year ended February 28, 2003, to $14.2 million for the same period in 2004. This decrease was primarily due to the write-off of the deferred tax asset of our European subsidiary in fiscal year 2003 for which management had previously estimated that it was more likely than not that such amount would be realized. Income Before Cumulative Effect of a Change in Accounting Principles. Income before cumulative effect of a change in accounting principles increased from $25.4 million for the year ended February 28, 2003, to $32.0 million for the same period in 2004. This increase was primarily due to the factors described above. 60 Cumulative Effect of a Change in Accounting Principles Related to Impairment of Goodwill. We recorded a cumulative effect of a change in accounting principles related to the initial adoption of the accounting standard on the impairment of goodwill of $11.3 million for the year ended February 28, 2003. The change in accounting policy related to the write-off of the goodwill of our European subsidiary. Net Income. Net income increased from $14.1 million for the year ended February 28, 2003 to $32.0 million for the same period in 2004, an increase of $17.9 million. This increase was a result of the items described above. FISCAL YEAR ENDED FEBRUARY 28, 2003 COMPARED TO FISCAL YEAR ENDED FEBRUARY 28, 2002 Net Sales. Net sales increased from $354.9 million for the year ended February 28, 2002 to $422.2 million for the year ended February 28, 2003, an increase of $67.3 million, or 19.0%. This increase was principally due to internal growth of approximately 12.0% and a $23.2 million contribution by Aker, the third largest U.S. manufacturer of gelcoat bathroom products, which we acquired in October 2002. In fiscal year 2003, Canadian currency remained at substantially the same level as fiscal year 2002. On a geographical basis, U.S. sales were driven by the contribution of Aker, as well as internal growth. U.S. sales rose 21.6% to $294.8 million and accounted for 69.8% of consolidated sales for fiscal year 2003, while Canadian sales grew by 14.6% to reach $116.3 million and accounted for 27.5% of total sales. We also benefited from a favorable trend in interest rates and the continuing growth in the home improvement and new construction industries. Bathroom and Kitchen. Net sales for the bathroom and kitchen sector increased from $304.1 million for the year ended February 28, 2002 to $359.9 million for the year ended February 28, 2003, an increase of $55.8 million, or 18.3%. The increase in the bathroom and kitchen sector was due principally to internal growth of approximately 11% and to the contribution by Aker. Additionally, we benefited from a favorable trend in interest rates and the continuing growth in the home improvement and new construction industries. The bathroom and kitchen sector posted a profit margin of 11.2%, up from 9.1% in fiscal year 2002. Spas. Net sales for the spas sector increased from $50.8 million for the year ended February 28, 2002 to $62.3 million for the year ended February 28, 2003, an increase of $11.5 million, or 22.6%. This increase was principally due to sales growth in the retail market. The spas sector posted a profit margin of 1.2%, up from a loss margin of (5.3)% in fiscal year 2002. Cost of Goods Sold. Cost of goods sold increased from $246.2 million for the year ended February 28, 2002 to $287.8 million for the year ended February 28, 2003, an increase of $41.6 million or 16.9%. This increase was due principally to volume growth. Cost of goods sold as a percentage of net sales decreased from 69.3% for the year ended February 28, 2002 to 68.2% for the year ended February 28, 2003. This decrease was due principally to leveraging our fixed costs basis. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased from $68.1 million for the year ended February 28, 2002 to $76.7 million for the same period in 2003, an increase of $8.6 million, or 12.6%. Selling, general and administrative expenses as a percentage of net sales decreased from 19.2% for the year ended February 28, 2002 to 18.2% for the same period in 2003. This decrease was primarily the result of leveraging our fixed costs basis. Depreciation and Amortization. Depreciation and amortization decreased from $13.7 million for the year ended February 28, 2002 to $12.6 million for the year ended February 28, 2003, a decrease of $1.1 million, or 8.0%. This decrease was primarily a result of goodwill not being depreciated in 2003. Depreciation and amortization as a percentage of net sales decreased from 3.9% for the year ended February 28, 2002 to 3.0% for the same period in 2003. 61 Interest Expense. Interest expense decreased from $4.3 million for the year ended February 28, 2002 to $4.0 million for the year ended February 28, 2003, a decrease of $0.3 million, or 7.0%. This decrease was the result of more favorable interest rates. Income Before Income Taxes. Income before income taxes increased from $22.6 million for the year ended February 28, 2002 to $41.1 million for the year ended February 28, 2003, an increase of $18.5 million, or 81.9%. Income before income taxes as a percentage of net sales increased from 6.4% for the year ended February 28, 2002 to 9.7% for the same period in 2003, principally due to the factors described above. Income Taxes. Income taxes increased from $8.0 million for the year ended February 28, 2002, to $15.7 million for the same period in 2003. This increase was primarily due to the $1.9 million write-off of the future tax assets of our European subsidiary. Income Before Cumulative Effect of a Change in Accounting Principles. Income before cumulative effect of a change in accounting principles increased from $14.6 million for the year ended February 28, 2002, to $25.4 million for the same period in 2003. This increase was primarily due to an impairment recorded for our bathroom operations in Europe in 2003. Cumulative Effect of a Change in Accounting Principles Related to Impairment of Goodwill. Cumulative effect of a change in accounting principles related to impairment of goodwill increased from $0 for the year ended February 28, 2002, to $11.3 million for the same period in 2003. This increase was primarily due to an impairment recorded for our bathroom operations in Europe in 2003 as a result of the initial application of Statement of Financial Accounting Standards No. 142 on the impairment of goodwill which the company determined as of March 1, 2002. Net Income. Net income decreased from $14.6 million for the year ended February 28, 2002 to net income of $14.1 million for the same period in 2003, a decrease of $0.5 million. This decrease was primarily due to the items described above. LIQUIDITY AND CAPITAL RESOURCES GENERAL We require capital primarily to fund capital expenditures related to purchases of plant and equipment, provide working capital, meet debt service requirements and finance our strategic plans. Based on our current level of operations, we believe our cash flow from operations, available cash and available borrowings under our new senior secured credit facility will be adequate to meet our future operating liquidity needs for at least the next few years. However, our business may not generate sufficient cash flow from operations, currently anticipated cost savings and operating improvements may not be realized on schedule, and future borrowings may not be available to us in an amount sufficient to enable us to pay our indebtedness, including the notes, or to fund our other liquidity needs. See "Risk Factors -- Risks Related to Our Indebtedness -- We have substantial debt and have the ability to incur additional debt. The principal and interest payment obligations of such debt may restrict our future operations and impair our ability to meet our obligations under the notes." Our growth and acquisition strategy may require substantial capital, sufficient funding for such acquisitions may not be available under our existing revolving credit facility, and we may not be able to raise any necessary additional funds through bank financing or the issuance of debt securities on terms acceptable to us, if at all. See "Risk Factors -- Risks Related to Our Business -- We may not be able to identify attractive acquisition candidates, successfully integrate our acquired operations or realize the intended benefits of our acquisitions." 62 CASH FLOWS Operating Activities. Cash flows from operating activities during the three months ended May 31, 2004 were $(6.0) million compared with $7.6 million for the three months ended May 31, 2003. This decrease of $13.6 million was due to a seasonal build up of working capital to accommodate the higher sales volume achieved and the outlay of non-recurring transaction expenses in an amount of $3.6 million. Cash flows from operating activities during the year ended February 29, 2004 were $62.8 million compared with $38.4 million for the same period of 2003. This increase of $24.4 million was due to our increased profitability and a reduction in working capital through an increase of our inventory turnover. Cash flows from operating activities during the year ended February 28, 2003 were $38.4 million compared with $30.0 million for the same period of 2002. This increase of $8.4 million was due to our increased profitability. Investing Activities. Cash flows used in investing activities were $(2.3) million for the three months ended May 31, 2004 compared with $(2.5) million for the three months ended May 31, 2003. Cash flows used in investing activities were $17.1 million in fiscal year 2004 compared with $69.1 million in fiscal year 2003. The decrease of $52.0 million was due to the fact that we completed our acquisition of Aker in fiscal year 2003. Excluding Aker, our capital expenditures increased from $11.1 million to $18.8 million from activities related to building improvements and the retrofitting of two of our manufacturing facilities to manufacture Aker products. Cash flows used in investing activities were $69.1 million in fiscal year 2003 compared with $12.8 million in fiscal year 2002. The increase of $56.3 million was due to the fact that we acquired Aker in fiscal year 2003. Financing Activities. Cash flows from financing activities for the three months ended May 31, 2004 were $6.7 million compared with a $0.9 million outflow for the three months ended May 31, 2003. The increase of $7.6 million was primarily due to an increase in our long term debt required to fund the $6.0 million cash out flow from operating activities. Cash flows used for financing activities for the year ended February 29, 2004 were $43.8 million compared with a $33.2 million inflow for the same period of 2003. The decrease of $77.0 million was primarily due to repayment of long-term debt assumed in fiscal year 2003 in connection with the Aker acquisition. Cash flows from financing activities for the year ended February 28, 2003 were $33.2 million compared with a $16.4 million outflow for the same period of 2002. The increase of $49.6 million was primarily due to an increase of long term debt related to completion of the Aker acquisition in fiscal year 2003. CAPITAL EXPENDITURES Capital expenditures decreased $0.1 million from $2.5 million for the three months ended May 31, 2003 to $2.4 million for the three months ended May 31, 2004. Capital expenditures increased $7.7 million from $11.1 million for the year ended February 28, 2003 to $18.8 million for the same period of 2004. The increase was primarily attributable to building improvements in fiscal year 2004 and the retrofitting of two of our manufacturing facilities to manufacture Aker products. Capital expenditures decreased $2.5 million from $13.6 million for the year ended February 28, 2002 to $11.1 million for the same period of 2003. Expenditures in 2003 were primarily attributable to the expansion of one of our facilities, purchase of new production equipment for such facility, rollout of our new management information system and our ongoing plant automation program. 63 We expect to spend approximately $16 million in capital expenditures in fiscal year 2005 primarily in connection with the maintenance of our fixed assets, the implementation of SAP(R) management information system in the U.S. and continued investment in plant automation and consolidation. NEW SENIOR SECURED CREDIT FACILITY Concurrently with the closing of the offering, on June 4, 2004, and as a condition thereof, we entered into our new senior secured credit facility. Our new senior secured credit facility provides us with up to C$50 million in available revolving borrowings. We borrowed $12 million of such amount at the closing of the offering and utilized approximately $1.6 million of availability for the issuance of letters of credit to replace or "backstop" letters of credit and letters of guarantee which were outstanding prior to the consummation of the transactions. Our new senior secured credit facility contains financial covenants and maintenance tests, including a total leverage ratio test, an interest coverage ratio test, a fixed charge coverage ratio test and restrictive covenants, including restrictions on our ability to make capital expenditures. For a more complete description of our new senior secured credit facility, see "Description of New Senior Secured Credit Facility." FACTORING AGREEMENT We are party to a Factoring Agreement with two divisions of the National Bank of Canada that allows them, in their sole discretion, to discount accounts receivable of certain of our customers with credit ranging from C$1,000,000 to $8,000,000, depending upon the customer. The discount for each account receivable is equal to the sum of (1) the financing rate set forth in a financing letter executed in connection with each discount, multiplied by the amount of the account receivable, multiplied by the number of days that the account receivable remains outstanding, divided by 360 days (for $) or 365 days (for C$) and (2) all fees set forth in the applicable financing letter. These discounts generally range from 2.1% to 3.3%. These sales of accounts receivable amounted to $42,035,721 in 2002, $42,701,233 in 2003 and $47,941,637 in 2004. CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS The following table summarizes our contractual obligations as of February 29, 2004, without giving effect to the transactions, that require us to make future cash payments. Actual amounts may vary, depending on exchange rate fluctuations and other factors.
CONTRACTUAL OBLIGATIONS 2005 2006 2007 2008 2009 THEREAFTER TOTAL - ----------------------- ------ ------ ------- ------- ------- ---------- -------- (DOLLARS IN THOUSANDS) Long-Term Debt Obligations...... $4,782 $4,832 $ 132 $ 132 $45,566 $ 2,000 $ 57,444 Capital Lease Obligations....... 31 17 -- -- -- -- 48 Operating Lease Obligations..... 5,919 5,090 4,184 2,656 1,561 1,459 20,869
The following table summarizes our contractual obligations as of February 29, 2004, after giving effect to the transactions, that require us to make future cash payments. Actual amounts may vary, depending on exchange rate fluctuations and other factors.
CONTRACTUAL OBLIGATIONS 2005 2006 2007 2008 2009 THEREAFTER TOTAL - ----------------------- ------ ------ ------- ------- ------- ---------- -------- (DOLLARS IN THOUSANDS) Long-Term Debt Obligations...... $1,894 $7,300 $12,155 $17,017 $27,963 $308,594 $374,923 Capital Lease Obligations....... 31 17 -- -- -- -- 48 Operating Lease Obligations..... 5,919 5,090 4,184 2,656 1,561 1,459 20,869
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board, or FASB, recently issued FASB Statement No. 132, Employers' Disclosure about Pensions and Other Postretirement Benefits. Statement 132 64 (revised) which revises employers' disclosures about pension plans and other post-retirement benefit plans. It does not change the measurement or recognition of those plans. It requires additional disclosures about the assets, obligations, cash flows and net periodic benefit cost of defined benefit pension plans and other post-retirement benefit plans. The new annual disclosure requirements for all retirement plans of nonpublic entities and for foreign retirement plans of publicly traded entities apply to fiscal years ending after June 15, 2004. Other statements and interpretations recently issued by the FASB that are applicable to us have little or no immediate effect. These statements included No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity and FASB Interpretation No. 46 Consolidation of Variable Interest Entities. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK CURRENCY EXCHANGE RISK We are subject to inherent risks attributable to operating in a global economy. Our practice is to utilize financial instruments to manage foreign currency exchange rate risks. We purchase financial instruments, primarily forward contracts, to reduce foreign exchange volatility. We purchased C$42.0 million of forward contracts at a rate of approximately $1.54 per U.S. dollar in each of fiscal year 2004, 2005 and 2006, divided equally by month, and our objective is to be approximately 60% to 80% protected against volatility in our projected net cash flows at the beginning of fiscal year 2005. We may increase or decrease our hedging activities in the future. We view derivative financial instruments as a risk management tool and do not use them for speculative trading purposes. We are exposed to credit loss in the event of non-performance by the other party to the derivative financial instruments. We limit this exposure by entering into agreements directly with a number of major financial institutions that meet our credit standards and that are expected to satisfy fully their obligations under the contracts. We estimate that with our currency risk management program, at May 31, 2004, every $0.01 depreciation (appreciation) in the U.S. dollar to Canadian dollar exchange rate results in approximately $0.7 million annual increase (decrease) in net earnings. For fiscal year 2004, we hedged substantially all of our U.S. dollar denominated net cash flows at $1.54 per U.S. dollar. For fiscal year 2005, we have currently hedged approximately 80% to 90% of the projected U.S. dollar denominated net cash flows at $1.55 per U.S. dollar. We also intend to pursue operating strategies to create natural hedges to this foreign exchange exposure. INTEREST RATE RISK We are subject to interest rate risk in connection with our long-term debt. Our principal interest rate exposure relates to our new senior secured credit facility. We have outstanding a C$130 million term loan A facility and a $115 million term loan B facility, bearing interest at variable rates. Each quarter point change in interest rates would result in a C$0.5 million change in interest expense on our new term loans. We also have a new revolving loan facility which provides for borrowings of up to C$50 million which bear interest at variable rates. Assuming an outstanding balance of $11 million is drawn on our revolver, each quarter point change in interest rates would result in a $28,000 change in interest expense on our new revolving loan facility. Our new senior secured credit facility requires that at least 50% of our total debt outstanding on the closing date be either fixed rate debt or subject to interest rate protection agreements, in each case for a period of not less than three years. We have capped our exposure to variable interest rates with an interest rate agreement that provides a maximum floating LIBOR rate of 6% on a notional amount of $40 million through June 2007. These amounts are in addition to the notes with a fixed interest rate. In addition, in the future, we may enter into interest rate swaps or other derivative financial instruments to reduce interest rate volatility. 65 COMMODITY PRICE RISK We require a regular supply of resin, polyester, fiberglass, acrylic, thermoplastic, aluminum, steel, tempered glass, wood and particleboard, oil, pumps, accessories and packaging materials. We purchase resin and polyester from various suppliers in both Canada and the U.S. Some resins are used to manufacture thermoplastic sheets. Fiberglass is purchased from a single supplier, but other suppliers are available. Two U.S. manufacturers supply us with acrylic sheets. There are multiple suppliers of pumps, which are manufactured in the U.S. and distributed by Canadian suppliers. Aluminum, steel and tempered glass are purchased from Canadian, U.S. and Asian suppliers. Wood is purchased primarily from local suppliers. Packaging materials are supplied locally. We have never encountered difficulties obtaining raw materials in the past and do not expect to experience difficulties in the foreseeable future. Our current suppliers have the capacity to serve all of our divisions and subsidiaries in the U.S. and Canada. Negotiations with suppliers for all of our divisions and subsidiaries are effected through our principal executive office to ensure economies of scale. Suppliers are selected according to our strict qualification standards. The prices of raw materials are subject to fluctuations in the prices of the underlying commodities. Those commodities may undergo major price fluctuations and there is no certainty that we will be able to increase our selling prices proportionately, if necessary. In recent years, we have reacted to increases in raw material prices by seeking to identify supply alternatives in other geographical regions or substitute raw materials and impose a corresponding increase of our prices. 66 BUSINESS The following should be read in conjunction with our consolidated financial statements and the related notes contained elsewhere in this prospectus. This prospectus contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results discussed in the forward-looking statements. GENERAL We are a leading North American manufacturer and distributor of bathroom fixtures, with the number one market share in Canada and the number three market share in the U.S. within the bathtub and shower fixtures market. We sell a broad range of bathroom fixture products, including acrylic, gelcoat and thermoplastic bathtubs, showers, whirlpools and bathtub/shower surrounds, as well as shower doors and medicine cabinets. By leveraging our relationships with our bathroom customers, we have also emerged as a leading manufacturer of spas in North America and have a growing presence in the semi-custom kitchen cabinetry market. Founded in 1970, we focus on marketing stylish, innovative products at mid- to high-end retail price points primarily under the MAAX(R) brand name. Through our extensive manufacturing footprint and unique multi-channel distribution strategy, we estimate that we currently serve over 3,500 customers. We compete in the largest and fastest growing major segment of the bathroom fixtures industry. We focus almost exclusively on the residential housing market, in which approximately 65% of total U.S. bathroom fixture sales in 2003 were generated in the more stable and more profitable remodeling segment as opposed to new home construction. Bathroom remodeling, our particular focus, is one of the most common residential remodeling projects. We target our bathroom products primarily at the bathtub and shower fixtures market, which is expected to grow in the U.S. at a CAGR of 4.0% from 2001 to 2006, as compared to 2.8% for all other bathroom fixture products. Our bathtubs and showers are manufactured primarily from acrylic and gelcoat, which are the most common and fastest growing bathroom fixture materials due to their durability, appearance, value and relative ease of installation. U.S. sales of acrylic and gelcoat bathtubs grew at a CAGR of 6.3% and 4.5%, respectively, from 1996 to 2001, as compared to a CAGR of 0.6% for bathtubs manufactured from all other materials over the same period. We also focus on the fast growing kitchen remodeling segment. Sales in the U.S. of semi-custom kitchen cabinets, the niche in which we compete, grew at a CAGR of 6.5% from 1996 to 2001. We sell our products through a diverse set of distribution channels across the U.S. and Canada, including wholesalers, showrooms, specialty retailers and home centers. In fiscal year 2004, approximately 50% of our net sales were to wholesalers and showrooms, approximately 15% were to specialty retailers and approximately 35% were to home centers. In each of our distribution channels we sell a distinct set of sub-brands differentiated by styles, features and price points. Our multi-channel distribution network, complemented by our disciplined channel-specific product offering, allows us to operate under a unique go-to-market strategy. We believe this strategy has enabled us to maximize our profits as well as those of our customers, which in turn has further strengthened our customer relationships. We currently operate 24 strategically located manufacturing facilities, including 13 in the U.S., ten in Canada and one in the Netherlands. This makes us one of only two manufacturers of acrylic and gelcoat bathroom products with a footprint that extends across North America. We believe that our extensive North American footprint gives us a significant advantage vis-a-vis our other competitors by enabling us to service both national and regional customers while reducing delivery times, lowering inventory investment, decreasing shipping costs and enhancing customer service. Over the past six years, we have experienced significant growth, both internally and through acquisitions. From 1998 to 2004, our net revenue increased at a CAGR of 24%, supported by organic revenue growth averaging 11% over the same period. Since 1993, we have completed 15 acquisitions. Our largest acquisition was Aker which we acquired in October 2002 for $80.4 million. 67 At the time of the acquisition, Aker was reportedly the third largest manufacturer of gelcoat bathroom products in the U.S., focused exclusively on the wholesaler and showroom channels. This acquisition enhanced our growing market position in the U.S. by allowing us to solidify our relationships in the higher margin wholesaler and showroom channels and expand our U.S. manufacturing and distribution capabilities. The following table provides a brief overview of our primary products, distribution channels and brands.
FISCAL 2004 PRODUCT NET SALES CATEGORY (% OF TOTAL) DISTRIBUTION CHANNELS KEY BRANDS BY CHANNEL - -------- ------------ --------------------- ----------------------------------------------- Bathroom $401 million Wholesalers MAAX Aker, MAAX Villa (81%) Showrooms MAAX Collection, MAAX Genna, MAAX Pearl, MAAX Tub & Shower Doors, MAAX Medicine Cabinets Home Centers Advanta by MAAX, Keystone by MAAX, Premium by MAAX Europe Saninova by MAAX - ------------------------------------------------------------------------------------------------- Kitchen $41 million Kitchen Dealers MAAX Collection Cabinetry (8%) Home Centers Cuisine Expert by MAAX, Express Kitchen - ------------------------------------------------------------------------------------------------- Spas $54 million Specialty Retailers Coleman Spas by MAAX, Elite Spas by MAAX (11%) Home Centers Savannah Spas - -------------------------------------------------------------------------------------------------
INDUSTRY OVERVIEW BATHROOM FIXTURES INDUSTRY The U.S. bathroom fixtures industry, which is comprised of bathtubs, showers, whirlpools, sinks, toilets and other fixtures, grew at a CAGR of 4.9% from $3.2 billion of sales in 1996 to $4.0 billion in 2001. The bathtub and shower segment (bathtubs, showers, whirlpools and bathtub/shower surrounds) of the bathroom fixtures market, the segment in which we primarily compete, is the largest and fastest growing major segment of the market. In 2001, this segment generated approximately $1.6 billion of sales, or 40% of total bathroom fixture sales, in the U.S. The U.S. bathtub and shower fixtures market grew at a 5.0% CAGR from 1996 to 2001 and is expected to grow at a 4.0% CAGR from 2001 to 2006, as compared to 2.8% for all other bathroom fixture products for the 2001 through 2006 period. Within the U.S. bathtub market, the fastest growing segments by material have been acrylic and gelcoat, the product categories in which we compete. Acrylic and gelcoat bathtubs grew at a 6.3% and 4.5% CAGR, respectively, from 1996 to 2001, and are expected to grow at a CAGR of 4.2% and 4.1%, respectively, from 2001 to 2006, as compared to a CAGR of 0.6% for all other bathtub materials over the same period. We estimate that the Canadian bathroom fixtures industry is approximately 10% of the size of the U.S. industry and has experienced similar trends. KITCHEN CABINETRY INDUSTRY The U.S. kitchen cabinetry industry grew at a CAGR of 6.1% from $6.5 billion of sales in 1996 to $8.7 billion in 2001. The U.S. kitchen cabinetry industry is expected to experience similar attractive growth in the future fueled by an increasing demand for larger remodeled kitchens, with an estimated CAGR of 6.5% from $8.7 billion of sales in 2001 to $11.9 billion in 2006. U.S. sales of semi-custom kitchen cabinetry, the market in which we primarily compete, grew at a CAGR of 6.5% 68 from $1.4 billion of sales in 1996 to $1.9 billion in 2001. The semi-custom cabinet market is expected to grow at a CAGR of 6.7% from 2001 to 2006. SPA INDUSTRY According to our estimates, the combined U.S. and Canadian spa industry had approximately C$1.15 billion of sales in 2002, up from C$1.0 billion in 1998, representing a CAGR of approximately 1.1%. In 2003, the industry experienced a 14.3% decline in sales due in part to the U.S. involvement in the war with Iraq, a decrease in consumer discretionary spending and poor weather conditions. We expect consumer trends and demographics to drive future growth in the spa industry of 3-5% annually. GENERAL INDUSTRY DRIVERS The broad drivers of demand for the bathroom fixture and kitchen cabinetry industries in the U.S. and Canada include consumer confidence, availability of credit, housing sales, new housing starts and general economic cycles. Historically, demand for remodeling products has typically been less sensitive to these factors than new home construction. Demand for bathroom and kitchen remodeling and new construction projects is driven by a number of favorable trends, including (1) the increasing size of new U.S. homes from 1,785 square feet in 1985 to 2,320 square feet in 2001, and the trend towards a greater number of bathrooms per home and increased kitchen size; (2) the aging of the domestic housing stock, with the median home age in the U.S. increasing from 23 years in 1985 to 32 years in 2002; and (3) the overall growth in disposable income among the aging baby boomer population that favors "cocooning" at home, which is a trend that also drives spending on home renovations and demand for new spa purchases. OUR COMPETITIVE STRENGTHS We believe that our competitive strengths include the following: LEADING MARKET POSITIONS We estimate that we are the number one manufacturer and distributor of bathtubs and showers in Canada and the third largest in the U.S. In the combined U.S. and Canadian bathtub and shower fixtures market, we estimate that our market share for our core product categories (bathtubs, whirlpools, showers and bathtub/shower surrounds) was approximately 15% in fiscal year 2004. Based on our estimates, this would make us the second largest player in our product categories in a generally fragmented industry. In Canada, we estimate having a current market share of approximately 40% in our core product categories. We are also a leading North American spa producer. We believe that we face limited exposure to imports due to the high shipping costs associated with the bulky dimensions of our products, the short lead times demanded by our customers, the semi-custom nature of our products and the relatively low domestic labor content associated with their production. Furthermore, as a result of environmental legislation, new permits to produce gelcoat and acrylic products have become increasingly difficult to obtain, thus benefiting established gelcoat and acrylic bathtub manufacturers such as our company. POSITIONED IN THE MOST ATTRACTIVE MARKET SEGMENTS We focus almost exclusively on the residential housing market, in which approximately 66% of total U.S. bathroom fixture sales in 2003 were generated. Historically, approximately 65% of industry-wide sales have been generated from the remodeling market, which has generally been the most stable segment of the residential housing market. In this respect, we believe that our net sales are generally consistent with those of the industry and, as a result, we believe our sales are more resistant to economic swings and cycles than sales associated with new home construction. Our 69 products are primarily in the bathtub and shower fixtures category, which is expected to grow in the U.S. at a CAGR of 4.0% from 2001 to 2006, as compared to 2.8% for all other bathroom fixture products. Specifically, our products compete in the acrylic and gelcoat bathtub and shower fixtures segments. Acrylic and gelcoat bathtub sales are expected to grow at a CAGR of 4.2% and 4.1%, respectively, from 2001 to 2006, as compared to a CAGR of 0.6% for all other bathtub materials over the same period. NORTH AMERICAN MANUFACTURING FOOTPRINT AND STRONG FOCUS ON LOGISTICS With 23 manufacturing facilities strategically located in the U.S. and Canada, we are one of only two manufacturers capable of producing both acrylic and gelcoat bathroom fixture products across North America. Given the fragmented nature of the bathroom fixtures industry, our broad footprint allows us the opportunity to compete and gain share from regional players by leveraging our scale and established relationships with our larger customer accounts in the U.S. and Canada. With such a broad footprint, we are also able to optimize our logistics. Because of the bulky nature of our products, transportation costs (approximately 7% of our gross sales in fiscal year 2004) and delivery times are important factors that affect profitability, pricing and customer service. As a result, we operate under a "circle of profitability" philosophy, whereby the parameters for distribution are determined by the distance and resulting freight costs involved, as well as the dimensions of the particular product being shipped. We believe our emphasis on logistics, our just-in-time manufacturing strategy and our footprint across North America enable us to lower shipping costs, reduce required inventory investment and increase the quality and consistency of our service. Our recent success in reducing our overall delivery time to an estimated average of five business days for bathroom fixture sales exemplifies our commitment to efficiency and customer service. BROAD, INNOVATIVE PRODUCT OFFERING We manufacture and distribute a broad range of bathroom fixtures, kitchen cabinetry and spas, including the widest offering of bathtubs, whirlpools and showers in the industry. We believe we have differentiated ourselves from our competitors by introducing products with attractive and distinctive features, including a strong focus on quality, comfort and ergonomic design. This emphasis is reflected in such products as the Moonlight(R) bathtub, the Stamina(R) shower, Signature Kitchen Cabinets by Jean-Claude Poitras(TM), Opulance(TM) shower doors and medicine cabinets, and MAAXIM Series(TM) spas with powerful jets. In addition, our ability to consistently develop new, innovative products has enabled us to both strengthen our product line in existing categories and enter new business segments. Examples of unique product innovations include the only True Whirlpool(R) bathtub, the Galvalume(R) Steel sub structure, and an integrated energizing system for our high-end shower line. To ensure that these new products meet customer needs and internal profitability thresholds under our new product development initiative, teams of product managers, designers, engineers, sales managers and communication specialists track a project from idea to market. In addition, our research and development department runs one of the few laboratories in North America that is UL(R) compliant, which allows for in-house testing under UL(R) and thus enables product introductions within a shorter timeframe than many of our competitors can achieve. MULTI-CHANNEL DISTRIBUTION NETWORK COMPLEMENTED BY A CHANNEL-SPECIFIC PRODUCT OFFERING Our broad distribution network of over 3,500 customers encompasses wholesalers, showrooms and specialty retailers (approximately 65% of net sales in fiscal year 2004) and home centers (approximately 35% of net sales in fiscal year 2004). Sales to our extensive wholesaler, showroom and specialty retailer distribution network, including companies such as Ferguson (Wolseley) and EMCO, are driven by our diverse, high quality product offerings and our commitment to customer service. Our home center channel, which includes such customers as Home Depot and Menards, thrives on a broad product offering that features style, affordability and ease of installation. Each of our distribution channels is targeted with distinct sub-brands and high quality, value-added products 70 at appropriate price points. By offering a differentiated set of products in each distribution channel, we enable our customers to enjoy higher margins since their customers cannot readily compare products across channels. This has helped us build strong customer loyalty. As testament to this strategy, our relationships with each of our top 10 customers average a decade or more, with some, including our relationship with Home Depot, extending more than 15 years. DEMONSTRATED GROWTH AND CASH FLOW GENERATION We have demonstrated consistently strong growth in revenue, cash flow and earnings. Historically, net sales have grown at a CAGR of 24% over the past six fiscal years. With generally low working capital requirements, we expect to continue generating considerable cash flow that can be used to service debt. In addition, we invested over C$162 million in our three business lines in the form of capital expenditures from 1998 to 2004. As a result, we have increasingly benefited from operating leverage and expect to continue to do so as we grow organically in the future. EXPERIENCED AND COMMITTED MANAGEMENT TEAM We have built a strong, results-oriented and talented senior management team. Our management is led by Andre Heroux, President and Chief Executive Officer of MAAX. Mr. Heroux joined MAAX Inc. in 1999 as Vice President, Operations and was promoted to Chief Operating Officer later that year. He became our President and Chief Executive Officer in 2001. Our management team is comprised of senior managers with many years of experience building the business, augmented by highly qualified personnel who have been recruited selectively in recent years to strengthen the team. Management has a strong track record of execution, including transforming MAAX into a market-driven organization that is focused on developing new opportunities for increased cash flow generation and growth. Furthermore, our management team owns approximately 2% of MAAX Holdings' equity value, with an opportunity to significantly increase this ownership stake through MAAX Holdings' new stock option program. OUR STRATEGY INCREASE MARKET SHARE AND IMPROVE PRODUCT MIX We seek to increase our market share across all of our geographic markets. With an estimated current market share of approximately 40% in our core product categories in Canada, we intend to continue as the market leader by leveraging our brand and scale. In the U.S., we intend to grow share by (1) leveraging our experience and deep relationships in the Canadian market, (2) utilizing our recently expanded wholesale and showroom distribution platform, our extensive manufacturing footprint and our national sales capabilities in the U.S. and Canada to increase sales of our higher end products, and (3) continuing to enhance our customer service capabilities by using our large fleet of trucks and our just-in-time manufacturing strategy to improve delivery times and overall customer satisfaction. In addition, we seek to improve our product mix by continuing to develop innovative, value-added and high margin products for our customers. Finally, we plan to complete in the next 12 months our "One-Stop-Shop" approach, which will enable customers to order a full bathroom product line from one distribution center location with a single purchase order, delivery and invoice. This unique One-Stop-Shop approach is expected to provide our customers with cost savings and improved efficiency, and increase our market share. CONTINUE TO PURSUE OPERATIONAL EFFICIENCIES AND MAINTAIN LOW COST BASE We intend to continue to pursue operational efficiencies by leveraging the enhanced scale provided by our past acquisitions, which has already led to improved purchasing terms, greater sourcing of less expensive foreign raw materials and increased use of automation and robotics for certain manufacturing facilities. Under our Quality Control Program, we have implemented a structure to standardize the procedures for each of our product lines in accordance with the standards 71 established for each of our distribution networks. By increasing uniformity and adherence to best practices at each production facility, we have already achieved an improvement in our gross margins and intend to realize further improvement. Helping to guide these efforts in the future will be Arthur Byrne, our non-executive Chairman of the Board and an Operating Partner of J.W. Childs Associates, L.P., who is a world-renowned expert in lean manufacturing. LEVERAGE MAAX BRAND We have adopted a master branding strategy based on the MAAX(R) name and its reputation for high quality, innovation and style. We have focused on creating a recognizable "brand name" that serves as an umbrella for a variety of sub-brands within each of our product lines and each distribution network that caters to specific consumer preferences. As part of this initiative, certain brands have been eliminated and our overall product offering has been streamlined to better target and penetrate our core market segments. We aim to further leverage the strength of the MAAX(R) brand to sell our products in new markets and facilitate new product introductions. GROW PROFITABLY THROUGH SELECTIVE ACQUISITIONS Given the fragmented nature of the markets in which we operate, as well as our proven track record of integrating businesses, we may continue to supplement our internal growth with selective strategic acquisitions. An area of focus may be expansion of our bathroom product line into certain geographic regions in the U.S., enabling us to pursue further opportunities to build scale. OUR PRODUCTS We offer a broad range of bathroom, kitchen cabinetry and spa products primarily for the residential housing market in a wide range of price points, styles and materials. BATHROOM Our bathroom products include bathtubs, showers, whirlpools and bathtub/shower surrounds as well as bathtub and shower doors and bathroom furniture, including medicine cabinets and mirrors. These bathroom fixture products are positioned primarily towards the mid- to high-end of the market. Our bathtubs and showers are available with air jets, whirlpool massage systems and/or steam systems. Other available features include the patented Thermo-Acoustic system, which reduces noise, vibration and water consumption normally associated with bathing massage systems, and the Audiomax(R) music system. We are also one of the few manufacturers to offer an optional "pre-plumb" shower system, marketed under the name MAAX IES(R). Our bathtub, shower and whirlpool product lines are manufactured using acrylic, gelcoat or thermoplastic products. Our whirlpool massage systems are factory assembled with most parts supplied by third parties. Our bathtub and shower doors are manufactured using tempered glass and aluminum, which are increasingly being imported from sources in China. Our medicine cabinets are made from steel, aluminum, mirrors and glass and our bathroom furniture is manufactured using the same raw materials as our kitchen cabinetry products, as described below. As part of our recent streamlining initiative towards a single MAAX-focused branding strategy, all of our bathroom fixture products are sold under the MAAX(R) brand name, with sub-brands supporting the particular products sold to customers within each distribution network. See "-- Sales, Marketing and Distribution" for a full list of bathroom fixture brand names. KITCHEN CABINETRY Our cabinetry products are primarily "semi-custom" and produced on a "made-to-order," "just-in-time" basis using wood and particleboard. Significant price differentiation is evidenced by the price of "stock" cabinets, which can cost as little as one-third of the cost of "semi-custom" products. "Semi-custom" products have a broader selection of door and drawer styles, sizes, finishes and 72 accessories than "stock" cabinets, while fully "customized" cabinetry is made to customer specifications. Cabinets are also divided into face frame and frameless categories across all levels of customization. Face frame cabinets, which are more common in the U.S. market, have door hinges attached to a rectangular frame in front of the cabinet box. On frameless cabinets, the focus of our business, the door hinges are mounted inside the cabinet box. Frameless cabinets, which are generally considered to be more European in style, are popular in Canada and primarily serve a niche, high-end market in the U.S. Frameless cabinets have shorter lead times for production than face frame cabinets. Our cabinet products are marketed under three brand names: MAAX Collection(TM), Cuisine Expert(R) by MAAX and Express Kitchen(R). The MAAX Collection(TM) products are mid- to high-end "semi-custom" kitchen cabinets and bathroom vanities. The Cuisine Expert(R) by MAAX line consists of mid- to high-end "semi-custom" kitchen cabinets and Express Kitchen(R) provides our "stock" cabinet offering. SPAS Our spa products category encompasses all operations related to the manufacture of spas and uses the same basic raw materials as our bathroom fixture products. Our spa products are marketed under the names Coleman Spas(R) by MAAX, Elite Spas(R) by MAAX and Savannah Spas(R). The Coleman Spas(R) by MAAX line consists of mid- to high-end products produced by us under a license from The Coleman Company Inc. for the use of the trademark Coleman(R) and certain other trademarks. The Savannah Spas(R) sub-brand produces a mid-priced product line and the Elite Spas(R) by MAAX sub-brand produces low- to mid-priced spas. NET SALES PRODUCT CATEGORY(1)
2002 2003 2004 PRODUCT -------------------------- -------------------------- -------------------------- CATEGORY U.S. CANADA OVERSEAS U.S. CANADA OVERSEAS U.S. CANADA OVERSEAS - -------- ------ ------ -------- ------ ------ -------- ------ ------ -------- (DOLLARS IN MILLIONS) Bathroom Products........... $185.0 $75.7 $10.6 $221.9 $92.5 $10.7 $277.6 $105.6 $16.3 Kitchen Cabinetry........... 21.1 10.2 0.1 24.3 10.5 -- 29.2 12.5 -- Spas........................ 36.3 15.5 0.3 48.6 13.4 0.4 40.2 13.4 1.0 ------ ------ ----- ------ ------ ----- ------ ------ ----- Total..................... $242.5 $101.5 $11.0 $294.8 $116.3 $11.0 $347.0 $131.5 $17.3 ====== ====== ===== ====== ====== ===== ====== ====== =====
- --------------- (1) Net sales by product category and geographic regions set forth above are based on management's calculations derived from our audited financial statements. MANUFACTURING Our manufacturing strategy is based on parameters for distribution, which are determined by the shipping distance, freight costs and the product being shipped. We operate 13 plants in the U.S., ten plants in Canada and one plant in the Netherlands. The Aker acquisition provided us with additional flexibility to reallocate production according to demand, thereby enabling us to improve reaction and delivery times, while reducing freight costs. Further, to satisfy demand for value-added products from Aker's wholesale distribution network, we converted two of our existing manufacturing facilities to produce Aker products under the MAAX Aker(R) name. We have also adopted other manufacturing strategies, including increased plant automation and robotics, cost-effective foreign sourcing of certain raw materials and a quality control program designed to ensure product and process standardization for each of our product lines and all distribution networks. In addition, we have implemented in Canada and are in the process of implementing in the U.S. a management network utilizing the SAP(R) management information system for our bathroom fixture products. By increasing uniformity and adherence to our set standards at 73 each production facility, we believe we will increasingly be able to produce uniform products from the various plants and continue to realize improved gross margins per plant. Critical to the manufacture of high quality products is the collaboration of our research and development team with external suppliers to develop raw materials with characteristics yielding products meeting the highest standards of resistance, durability and finish. Raw materials required to manufacture our products include resin, polyester, fiberglass, acrylic, thermoplastic, aluminum, steel, tempered glass, wood and particleboard, oil, pumps, accessories and packaging materials. We purchase resin and polyester from various suppliers in both Canada and the U.S. Some resins are used to manufacture thermoplastic sheets. Fiberglass is purchased from a single supplier, but other suppliers are available. Two U.S. manufacturers supply us with acrylic sheets. There are multiple suppliers of pumps, which are manufactured in the U.S. and distributed by Canadian suppliers. Aluminum, steel and tempered glass are purchased from Canadian, U.S. and Asian suppliers. Wood is purchased primarily from local suppliers. Packaging materials are supplied locally. SALES, MARKETING AND DISTRIBUTION The marketing and sales teams within each of our three business categories focus on specified distribution networks and MAAX sub-brands. Our bathroom fixture products are distributed to customers through three distribution networks -- wholesalers, showrooms and home centers. The customers in these three distribution networks tend to demand a different yet overlapping selection of our products, which are marketed under eleven different MAAX(R) sub-brands to target the particular customer segment. PRODUCT AND CUSTOMER SUMMARY
DISTRIBUTION CHANNELS/ MAAX SUB-BRAND PRODUCTS CUSTOMERS POSITIONING - -------------- --------------------- ---------------------- --------------------- MAAX COLLECTION(TM) Bathtubs, showers, Wholesalers with High-end bathroom whirlpool, shower showrooms and solutions for systems, faucets and independent showrooms professional bathroom furniture remodeling MAAX PEARL(R) Whirlpool bathtubs Wholesalers with Wellness bathware for and shower systems showrooms and active people independent showrooms MAAX GENNA(R) Whirlpool bathtubs Wholesalers with Mid-range affordable and shower systems showrooms and acrylic products for independent showrooms younger home owners (in Eastern Canada only) MAAX AKER(R) Bathtubs, showers, Wholesalers, Premium builder line tub showers, contractors, building for new home whirlpool tubs, air contractors construction pools (acrylic and gelcoat) MAAX VILLA(R) Bathtubs, showers, Wholesalers, Competitive builder tub showers, contractors, building line for new home whirlpool tubs contractors construction (acrylic and gelcoat) MAAX(R) TUB & SHOWER Tub doors, shower Wholesalers with DOORS doors, shower shields showrooms and independent showrooms, glass shops
74
DISTRIBUTION CHANNELS/ MAAX SUB-BRAND PRODUCTS CUSTOMERS POSITIONING - -------------- --------------------- ---------------------- --------------------- MAAX(R) MEDICINE Medicine cabinets, Wholesalers with Mid- to high-end CABINETS mirrors, lights showrooms and independent showrooms PREMIUM BY MAAX(R) Bathtubs, showers, Home Depot Do It Yourself whirlpools, tub Renovation surrounds, shower kits, laundry tubs ADVANTA BY MAAX(R) Bathtubs, showers, Home centers other Do It Yourself whirlpools, tub than Home Depot Renovation surrounds, shower kits, laundry tubs KEYSTONE BY MAAX(R) Shower doors and Home Depot and Do It Yourself medicine cabinets builders Renovation (approximately 10% of Keystone sales) SANINOVA(R) BY MAAX Whirlpools, steam Home centers, OEMs (in Do It Yourself cabins, shower bases Europe only) Renovation
We are currently focused on the implementation of a "One-Stop-Shop" supply chain approach for bathroom fixture customers in each of our distribution channels. This entails implementing a logistics and inventory management system that will provide customers with the ability to order multiple products from one distribution center location with a single purchase order. Our sales force is being realigned with a national orientation in the U.S. and Canada and is being trained to offer our complete product offering. An ongoing initiative is to augment Aker's gelcoat products with our acrylic lines to create a MAAX Aker(R) wholesale brand in the U.S. for distribution through Aker's wholesale and showroom network. Aker's top tier wholesale network is being utilized to sell our higher margin product categories, such as Collection(TM) bathtub units, Pearl(R) whirlpools, MAAX(R) shower doors and MAAX(R) medicine cabinets and provides us with a cross-selling opportunity. To enhance our market coverage and leverage our brand equity, we market our cabinet products under three brand names: MAAX Collection(TM), Cuisine Expert(R) by MAAX and Express Kitchen(R). The MAAX Collection(TM) products are sold to kitchen dealers. The Cuisine Expert(R) by MAAX line is sold to Home Depot in Canada and Express Kitchen(R) is sold to other home centers in Canada. We estimate that 70% of our sales are to specialty kitchen cabinet distributors and kitchen dealers and the balance of our kitchen cabinetry products are sold to home centers, including Home Depot in Canada and Reno Depot, and to building contractors for large commercial projects. Our spa products are marketed under our Coleman Spas(R) by MAAX, Elite Spas(R) by MAAX and Savannah Spas(R) brand names and primarily distributed through a network of spa and pool retailers and home improvement centers. Coleman Spas(R) by MAAX are sold through backyard, pool and spa specialty retailers in the U.S., Canada and Europe. The Elite Spas(R) by MAAX sub-brand is distributed to backyard, pool and spa specialty stores and showrooms throughout North America. Primary customers of this brand are Spa Depot in the U.S. and Club Piscine and Pioneer Pools in Canada. Savannah Spas(R) are sold through the home center channel in both the U.S. and Canada and are targeted toward first-time and price conscious spa purchasers. Our spas business, and to a lesser extent, our other businesses experience seasonal business swings, which correspond to the North American seasons. Unusually prolonged periods of cold, rain, blizzards, hurricanes or other severe weather patterns could delay or halt renovation and construction activity. Generally, sales in each of the first three quarters of our fiscal year generate a 75 significantly greater percentage of our total annual sales as compared to the fourth quarter of our fiscal year. This seasonality requires that we manage our cash flows over the course of the year. Our marketing unit is comprised of approximately 30 employees. Individual marketing teams within the marketing unit prepare and review annual marketing plans by channel of distribution with objectives and an action plan for each brand. Each team operates autonomously with support from corporate marketing, which assists in defining our global marketing strategies and direction. Each marketing team oversees market analysis, sector strategies and new product planning, and develops sales programs and monitors profitability with our sales force. In conjunction with our brand consolidation initiative, we have completed a consolidation of our sales force to provide national sales coverage in the U.S. and Canada through our own sales force and a combination of external agency sales representatives. Our sales representatives have been placed in most key regions in the U.S. and Canada, based on customer demand, and have been trained to market to their customers our full product offering. Business plans are prepared by region, distribution network and major customer. Our products are sold by our sales force or by external agency sales representatives, depending upon the region of distribution. We distribute our products through our own sales force in most provinces of Canada, including Quebec, Ontario, the Atlantic Provinces, Alberta and British Columbia. In the U.S., sales agencies are used within each of the business sectors. Generally, these sales agencies employ 5-10 representatives, each of whom is responsible for covering two or three states. These sales agencies are not permitted to sell products that compete directly with our products.
SALES FORCE BREAKDOWN BY PRODUCT CATEGORY AS OF MAY 31, 2004 --------------------------------------------------------------------- BATHROOM CABINETRY SPAS --------------------- --------------------- --------------------- U.S. CANADA TOTAL U.S. CANADA TOTAL U.S. CANADA TOTAL ---- ------ ----- ---- ------ ----- ---- ------ ----- MAAX Sales Managers.................... 18 6 25(2) 2 3 5 2 2 4 MAAX Sales Representatives............. -- 23 23 1 8 9 4 1 5 Sales Agencies......................... 48 7 55 6 -- 6 3 4 7 Agency Representatives................. 490 16(1) 507(2) 10 -- 10 6 23 29
- --------------- (1) Agency representatives for provinces of Newfoundland, Manitoba and Saskatchewan. (2) One sales manager and one agency representative are in Europe. Our sales representatives are compensated through a base salary and potential bonus, based upon achievement of certain sales growth, product mix and margin targets. Sales agency representatives receive commission-based compensation. RAW MATERIALS AND SUPPLIERS We purchase a broad range of raw materials and components throughout the world in connection with our manufacturing activities. Major raw materials and components include resin, polyester, fiberglass, acrylic, thermoplastic, aluminum, steel, tempered glass, wood and particleboard, oil, pumps, accessories and packaging materials. Our policy is to maintain, wherever possible, alternate sources of supply for our important raw materials and components and, consequently, we are not dependent on a single supply source for any raw material or component. The raw materials and components required for our manufacturing operations have been generally readily available. COMPETITION BATHROOM We are a leading player in the North American bathtub and shower segment, with a leadership position in the Canadian market and a number three position in the U.S. In the combined U.S. and 76 Canadian bathtub and shower fixtures market, we estimate that our market share for our core product categories (bathtubs, whirlpools, showers and bathtub/shower surrounds) was approximately 15% in fiscal year 2004. This made us the second largest player in these product categories in a generally fragmented industry. Our share of fiscal year 2004 Canadian sales in our core product categories is estimated to be approximately 40%. Our market shares are higher in the geographic regions where we have had a longer historical presence. We compete against a large number of companies in the bathroom industry including several multinationals, such as Kohler, American Standard, Jacuzzi Brands, Lasco (a division of Tomkins Plc) and the Aquaglass, Mirolin and ASB divisions of Masco. We believe that our innovative product design, the efficiency of our distribution network and our high level of customer service set us apart from our competitors. In addition, through our broad North American footprint, we offer a full range of bathroom fixture products, kitchen cabinetry and spas to our customers. Our customers are able to enjoy the convenience of coordinating with a single supplier. We believe that the quality, price and value of our products, their design, our development of new technologies through research and development, and our strategic expansion across the U.S. and Canada provide us with a competitive edge in the bathroom fixtures market. Market trends indicate sustained growth in demand for our core products, and we believe our broad, innovative product offering will enable us to take advantage of this projected increase in demand. CABINETRY In the highly fragmented U.S. cabinet industry, there are several large and hundreds of smaller competitors, with the top four participants, Masco, Fortune Brands (MasterBrand Cabinets, Omega, Schrock), American Woodmark and Elkay, accounting for approximately 40% of industry sales. Other competitors include Kohler, American Standard, Jacuzzi Brands and Lasco (a division of Tomkins Plc). Kitchen and Bath Business estimates that we are the 25th largest cabinet manufacturer in North America with a 0.3% share of overall industry sales in 2003. The cabinet industry's largest players made numerous acquisitions in recent years in order to serve larger accounts, broaden product lines and price points and expand and diversify distribution networks. Consolidation is expected to continue given the largely fragmented nature of the industry. Competition in the cabinet sector focuses on service, product styling and performance, quality and delivery times. Customers tend to be less sensitive to price, resulting in strong margins in the sector. Brand awareness and loyalty play a key role given the high degree of product differentiation among manufacturers. We believe our focus on delivering high quality, innovative products, manufactured at our automated Laval, Quebec facility and marketed through our broad, well-located dealer network will allow for continued growth by capturing increased regional demand. SPAS We are a leading North American spa manufacturer with an estimated 5% share of industry sales in the combined U.S. and Canadian spa market. The industry remains highly fragmented with over 100 spa manufacturers in North America. The majority of our competitors are small regional suppliers who individually hold less than 2% of the spa market. Our leading competitors are Jacuzzi Brands, Watkins Manufacturing (a division of Masco) and Cal Spas. We produce and market Coleman Spas(R) by MAAX, under a license from The Coleman Company Inc., and Elite Spas(R) by MAAX to specialty retailers, as well as Nahanni (tm) spas to Home Depot. We manufacture spas out of two strategically located facilities in Beamsville, Ontario and Chandler, Arizona. RESEARCH AND DEVELOPMENT Our research and development team focuses on the manufacturing process and product design in order to develop innovative products using the latest technology. We also work with our suppliers 77 to develop raw materials with characteristics meeting the highest standards of resistance, durability and finish. In addition, we have implemented an automation program for certain manufacturing plants. We operate five research and development centers, the largest located in Sainte-Marie, Quebec. We have a product development team dedicated exclusively to designing and developing our product lines. These employees work in collaboration with the sales and marketing departments to develop new products and products that are complementary to existing product lines. In recent years, we have developed several new products, including whirlpools, showers, spas and kitchen cabinetry models. We spend approximately 0.5% of our consolidated net sales on research and development annually. In April 2004, we launched the Urban(R) minimalist bathroom series, a full product line including bathtubs, showers, massage systems, medicine cabinets and lighting with uptown style and ultra-modern design. All of our bathtubs, showers, whirlpools and spas are certified by at least one of the following certification organizations: CSA(R), UL(R), IAPMO(R), ANSI(R), ASME(R). We are one of the few laboratories in North America that is Underwriters Laboratories Inc. compliant, which allows for in-house testing under UL(R) and thus enables product introductions within a shorter time-frame than many of our competitors. INTELLECTUAL PROPERTY We use a broad range of trademarks, of which approximately 130 are registered or pending registration in the U.S., Canada, Europe, Taiwan and Thailand. We believe that certain trademarks including MAAX(R) are of material importance to our product lines. We also own approximately 50 patents and industrial designs, registered or pending registration in the U.S., Canada and Europe. Although protection of our patents and related technologies is an important component of our business strategy, none of the individual patents is material to our business. In addition, we have a license from The Coleman Company Inc. for use of the mark Coleman(R) and certain other trademarks in association with our spa and related products that expires in October 2008. We believe that use of this license is of great value and the loss of this license or failure to renew upon expiration would have a material adverse effect on our spa business. We also have a license from Altura Leiden Holding B.V. for use of a shower enclosure patent, which expires in September 2006. 78 PROPERTIES We lease approximately 8,000 square feet of office space for our headquarters in Montreal, Quebec. The location, primary use, approximate square footage and ownership status of our principal properties as of May 31, 2004 are set forth below:
APPROXIMATE PRODUCT LOCATION PRINCIPAL USE SQUARE FOOTAGE OWNED/LEASED CATEGORY - -------- ------------- -------------- ------------ -------- CANADA Montreal, Quebec.................... Principal Office 8,000 Leased Corporate Anjou, Quebec....................... Warehouse/Factory/Offices 110,000 Leased Bathroom Sainte-Marie, Quebec (2 plants)..... Warehouse/Factory/Offices 301,900* Owned** Bathroom Tring-Jonction, Quebec.............. Warehouse/Factory/Offices 142,350 Owned**/Leased Bathroom Lachine, Quebec..................... Warehouse/Factory/Offices 170,000 Leased Bathroom Airdrie, Alberta.................... Factory/Offices 40,220 Owned** Bathroom Armstrong, British Columbia......... Warehouse/Factory/Offices 65,131 Owned** Bathroom Beamsville, Ontario................. Factory/Offices 78,800 Leased Spas Surrey, British Columbia............ Offices 794 Leased Bathroom Laval, Quebec....................... Warehouse/Factory/Offices 236,950 Owned** Kitchen Cabinetry Cookshire, Quebec................... Warehouse/Factory/Offices 35,700 Owned Kitchen Cabinetry EUROPE Heinenoord, Netherlands............. Warehouse/Factory/Offices 183,920 Owned Bathroom UNITED STATES Valdosta, Georgia................... Warehouse/Factory/Offices 142,700* Owned**/Leased Bathroom Bremen, Indiana..................... Warehouse/Factory/Offices 132,870* Owned** Bathroom Marion, Iowa........................ Warehouse/Factory/Offices 42,850 Owned/Leased Bathroom Minneapolis, Minnesota.............. Warehouse/Factory/Offices 146,100* Owned**/Leased Bathroom Bellingham, Washington.............. Warehouse/Factory/Offices 65,000 Owned** Bathroom Plymouth, Indiana (2 plants)........ Warehouse/Factory/Offices 238,000 Owned**/Leased Bathroom Martinsburg, West Virginia.......... Warehouse/Factory 180,000* Owned** Bathroom Riviera Beach, Florida.............. Warehouse/Factory/Offices 41,000 Leased Bathroom Ontario, California................. Warehouse/Factory/Offices 124,800* Leased Bathroom Warminster, Pennsylvania............ Warehouse/Factory/Offices 58,000 Leased Bathroom Southampton, Pennsylvania........... Factory/Offices 61,800 Leased Bathroom Bensalem, Pennsylvania***......... Warehouse 12,000 Leased Bathroom East Hanover, New Jersey***....... Warehouse 3,200 Leased Bathroom Lakewood, New Jersey***........... Warehouse 5,400 Leased Bathroom Claymont, Delaware***............. Warehouse 3,200 Leased Bathroom Chandler, Arizona................... Factory/Offices 83,100 Owned** Spas DISTRIBUTION CENTERS Airdrie, Alberta.................... Warehouse/Offices 39,800 Leased West Berlin, New Jersey............. Warehouse/Offices 21,000 Leased Elk Grove, California............... Warehouse/Offices 20,600 Leased
- --------------- * Includes a distribution center. ** Property mortgaged under our new senior secured credit facility. *** Part of the Southampton, Pennsylvania facility. 79 ENVIRONMENTAL MATTERS Our operations are subject to extensive Canadian (federal, provincial and local), U.S. (federal, state and local) and foreign environmental laws and regulations relating to, among other things, the generation, storage, handling, emission, transportation and discharge of contaminants or regulated materials or substances into the environment. Permits are required for certain of our operations, and these permits are subject to revocation, modification and renewal by issuing authorities. Non-compliance with applicable requirements may result in civil, administrative or criminal enforcement action that may entail damages, fines, costs or the entry of injunctions, or all of the preceding. For example, we have received a summons from the Ontario Court of Justice alleging violation of permitting and air emission requirements, relating to styrene and odors, under the Environmental Protection Act (Ontario) and regulations adopted thereunder at our facility in Beamsville, Ontario. We have resolved this matter and agreed to pay a fine equal to C$37,500. Aside from this matter, which is settled and closed, we believe we are in substantial compliance with applicable environmental requirements. We may also incur liability and costs for investigation and clean-up of soil or groundwater contamination on or emanating from currently or formerly owned and operated properties, or at offsite locations at which we have disposed or arranged for disposal of contaminants or regulated materials where we are identified as a responsible party. For example, an investigation conducted at our facility in Tring-Jonction, Quebec, revealed soil and groundwater impacts relating to former gasoline and heating oil tanks onsite. Although no assurance may be made, and the investigation is not complete, we do not expect the soil and groundwater impacts at Tring-Jonction, which we are in the process of addressing, to require expenditures that will have a material adverse effect on our results of operation or financial condition. We also do not expect the costs to comply with existing environmental laws and enforcement policies to be material. However, the requirements of such laws and enforcement policies have generally become more stringent over time. We might incur significant capital and other costs to comply with increasingly stringent air emission control laws, such as the federal regulation that will become applicable to styrene air emissions at U.S. facilities, which may decrease our cash flow. Also discovery of currently unknown conditions could require responses that would result in significant liabilities and costs. Accordingly, we are unable to predict the ultimate costs of compliance with or liability under environmental laws. EMPLOYEES We had approximately 3,850 employees as of August 31, 2004, including 2,180 in Canada, 1,620 in the U.S. and 50 in Europe. Currently, approximately 1,200 of our production line employees, located primarily in Canada, are unionized through affiliations with Confederation des syndicats nationaux, Centrale des syndicats democratiques or the Teamsters Union. Ten of our manufacturing facilities are subject to collective bargaining agreements with a separate union at each location, three of which are local unions in the U.S. and the remaining seven are in Canada. Five of the collective bargaining agreements have expired or are expected to expire July through December 2004 (covering approximately 575 employees). We are in the process of negotiating two of the five collective bargaining agreements that have already expired. We have not experienced any significant work stoppages in the last ten years, and we believe that our relations with our employees and our unions are good. LEGAL MATTERS During the ordinary course of business, we have been and may in the future become subject to pending and threatened legal actions and proceedings. All of the current legal actions and proceedings that we are party to are of an ordinary or routine nature incidental to our past or current operations, including product liability claims, the resolution of which should not have a material adverse effect on our financial condition and results of operations. The product liability claims are 80 generally covered by insurance, but there can be no assurance that our insurance coverage will be adequate to cover any such liability. On October 27, 2000, one of our suppliers, American Faucet, Inc., or American Faucet, made a claim against our predecessor, MAAX Inc., in an amount of approximately $582,000 for unpaid supplies. We denied this claim and counterclaimed for a total amount of $2,510,000 for breach of a contract. American Faucet added a demand to its claim of approximately $10,412,000 for breach of that same contract. In accordance with the terms of that contract, this matter was submitted to arbitration, though a hearing has not yet been scheduled. We believe that the claims are without merit and are vigorously defending the claims. 81 MANAGEMENT EXECUTIVE OFFICERS AND DIRECTORS The following table sets forth information about our executive officers and directors following the consummation of the transactions:
NAME AGE POSITION - ---- --- -------- Arthur Byrne......................... 59 Non-Executive Chairman of the Board of Directors Andre Heroux......................... 46 President, Chief Executive Officer and Director Denis Aubin.......................... 45 Executive Vice President and Chief Financial Officer Benoit Boutet........................ 41 Vice President and Corporate Controller Patrice Henaire...................... 44 Corporate Vice President, Marketing, Sales and Research and Development Jean Rochette........................ 43 Vice President and General Manager, Bathroom Sector, Wholesale Showroom Guy Berard........................... 48 Vice President and General Manager, Cabinetry Terry Rake........................... 53 Vice President and General Manager, Spas Daniel Stewart....................... 42 Vice President and General Manager, Bathroom Sector, Retail Michael Graham....................... 38 Director Andre LaForge........................ 44 Director James Rhee........................... 33 Director Steven Segal......................... 44 Director
Arthur Byrne is the non-executive Chairman of our Board. He is an Operating Partner of J.W. Childs Associates, L.P., and has been at JWC since 2002. Previously, he was Chairman, President and Chief Executive Officer of The Wiremold Company from 1991 to 2002. Prior to that time, he was a Group Executive with the Danaher Corporation responsible for half its business from 1985 through 1991. At both Danaher and Wiremold, he was responsible for introducing and implementing "Lean Management" practices that resulted in strong gains at both companies. He is also non-executive Chairman of the Advisory Board at Esselte Group Holdings AB. Andre Heroux is our President and Chief Executive Officer and a director. Mr. Heroux joined MAAX Inc. in April 1999 as Vice President, Operations. In September 1999, he was named Chief Operating Officer of MAAX Inc. and, in July 2001, he became the President and Chief Executive Officer of MAAX Inc. Prior to April 1999, Mr. Heroux was President and Chief Executive Officer of CDM Lamines Inc. Mr. Heroux was President and Chief Executive Officer of CDM Papier Decor from 1996 to 1999. Between 1994 and 1996, Mr. Heroux was Vice President and General Manager of Domtar's decorative panel division. Denis Aubin is our Executive Vice President and Chief Financial Officer. Mr. Aubin joined MAAX Inc. in 2004 as Executive Vice President and Chief Financial Officer. Prior to joining MAAX Inc., Mr. Aubin was Senior Vice President Finance of Quebecor World Inc. from 2000 to 2004. From 1997 to 2000 Mr. Aubin was Vice President and Treasurer of Cambior Inc. Benoit Boutet is our Vice President and Corporate Controller. Benoit Boutet joined MAAX Inc. in 2000 as Director of Finance and was promoted to his current position in March 2003. Prior to joining MAAX Inc., he was Director of Finance at Groupe Brochu Lafleur from 1997 to 2000, and from 1994 to 1997, he was Vice President Finance at Culinar. Patrice Henaire is our Corporate Vice President, Marketing, Sales and Research and Development. Mr. Henaire joined MAAX Inc. in 2000 as Corporate Vice President Marketing and assumed responsibilities for R&D in 2001. Prior to joining MAAX Inc., he was Senior Vice President 82 Marketing and Sales at Broan Nutone, from 1995 to 2000, and previously with Venmar as Marketing Manager for seven years. Jean Rochette is our Vice President and General Manager, Bathroom Sector, Wholesale Showroom. Mr. Rochette joined MAAX Inc. in 2000 as General Manager of MAAX Anjou. He was promoted to Vice President, General Manager-Bathroom Products Sector Canada in 2001 and Vice President, General Manager for all MAAX Bathroom Sectors in 2003. Prior to joining MAAX Inc., he was President and General Manager with Ralston Purina in France from 1996 to 2000. Guy Berard is our Vice President and General Manager, Cabinetry Sector. Mr. Berard joined MAAX Inc. in 2002 as Vice President, General Manager MAAX Cabinetry Sector. Prior to joining MAAX Inc., he was President and General Manager of Arborite, a division of Illinois Tool Works, for eight years. Terry Rake is our Vice President and General Manager, Spas Sector. Mr. Rake joined MAAX Inc. in 2000 as General Manager of MAAX Coleman Spas in Chandler, Arizona. He was promoted to Vice President, General Manager-MAAX Spas Sector in 2001. Prior to joining MAAX Inc., he was President and Chief Executive Officer for LA Spas from 1996 to 1999. Daniel Stewart is our Vice President and General Manager, Bathroom Sector, Retail. Mr. Stewart joined MAAX Inc. in 1998 as General Manager of MAAX Keystone. In 2001, he was promoted to his current position. Prior to joining MAAX Inc., he was Plant Manager of a shower door manufacturing plant in Florida for five years. He was also a General Contractor for ten years. Michael Graham is a director. He is a Portfolio Manager of OMERS Capital Partners and has been at OMERS since 2003. Previously, he was a Vice President, Investments with Working Ventures Canadian Fund Inc. from 1996 to 2003. From 1993 to 1996 Mr. Graham was employed by the National Bank of Canada and from 1989 to 1993 by HSBC Bank Canada. He is also a director of Papier Masson Ltd. Andre LaForge is a director. He is a Senior Vice President of Borealis Capital Corporation and has been at Borealis Capital Corporation since September 2001. Previously, Mr. LaForge was a Senior Partner with KPMG Corporate Finance for ten years. From 1988 to 1990, Mr. LaForge was a Vice President and Principal with Canadian Corporate Funding Limited, a privately held Canadian merchant bank. Prior to 1988, Mr. LaForge was employed by the Royal Bank of Canada for five years. He is also a director of Cheneliere Education, Generale de Services Sante, Greiche & Scaff and Coastal Value Fund. James Rhee is a director. He is a Vice President of J.W. Childs Associates, L.P. and has been at JWC since 2000. Previously, he was an Associate in the Mergers and Acquisitions Department of Merrill Lynch from 1998 to 2000. He is also a director of Murray's Discount Auto Stores, Inc. Steven Segal is a director. He is a founding Partner of J.W. Childs Associates, L.P. and has been at JWC since 1995. Prior to that time, he was an executive at Thomas H. Lee Company from 1987, most recently holding the position of Managing Director. He is also a director of Jillian's Entertainment Corp., Insight Health Services Corp., Universal Hospital Services, Inc. and The NutraSweet Company. COMPENSATION The aggregate compensation for our directors and members of our administrative, supervisory or management bodies for the fiscal year ended February 29, 2004, including retention bonuses paid in connection with the transactions and severance compensation was $4.6 million. 83 EMPLOYMENT AGREEMENTS We entered into an employment agreement with Andre Heroux, which will continue indefinitely unless terminated by either party. Under the employment agreement, Mr. Heroux will be our President and Chief Executive Officer and will be entitled to an annual base salary of C$500,000, subject to annual review by the board of directors, and certain fringe benefits. In addition to his annual base salary, Mr. Heroux will be entitled to a bonus of up to 100% of his annual base salary, based on the achievement of certain targets as jointly determined by the board of directors and Mr. Heroux, and Mr. Heroux participates in the MAAX Holdings 2004 stock option plan. Mr. Heroux also rolled over a portion of his MAAX Inc. stock options into stock options of MAAX Holdings with a value of approximately C$1.5 million. In addition, in lieu of payment to Mr. Heroux of his portion of the Gestion Camada non-renewal fee described below, Mr. Heroux received a one-time grant of stock options to purchase shares of MAAX Holdings Series A Preferred Stock. Under certain circumstances, Mr. Heroux will be entitled to receive severance upon termination for up to 18 months. In addition, his employment agreement contains confidentiality restrictions during and after the term of the agreement and noncompetition, nonsolicitation and nondisparagement provisions during the term of the agreement and for 18 months thereafter. We entered into an employment agreement with Daniel Stewart, which expires on February 28, 2007, subject to renewal or termination 90 days prior to the scheduled expiration date. Under the employment agreement, Mr. Stewart is entitled to an annual base salary of $195,000 and certain fringe benefits. In addition to the annual base salary, Mr. Stewart is entitled to a bonus, payable on a quarterly basis, equal to 1.25% of MAAX-KSD Corporation's EBITDA based on the achievement by MAAX-KSD Corporation of certain EBITDA targets. For the year ended February 29, 2004, Mr. Stewart was paid an annual bonus of $160,035. Under certain circumstances, Mr. Stewart will be entitled to receive severance upon termination for a period ranging from 90 days to 12 months. In addition, his employment agreement contains confidentiality restrictions during and after the term of the agreement and nonsolicitation and noninterference provisions during the term of the agreement and for 2 years thereafter. Each of Denis Aubin, Benoit Boutet, Patrice Henaire, Jean Rochette, Guy Berard and Terry Rake has an employment agreement with us, which will continue indefinitely unless terminated by either party. Under the employment agreements, Messrs. Aubin, Boutet, Henaire, Rochette, Berard and Rake, respectively, are each entitled to an annual base salary of C$300,000, C$175,000, C$182,250, C$300,000, C$185,000 and $160,000 and certain fringe benefits. In addition to the annual base salary paid to each executive, each executive is entitled to a bonus up to 50% of his annual base salary based on the achievement of certain performance targets and entitled to participate in the MAAX Holdings 2004 stock option plan. Messrs. Boutet, Henaire, Rochette, Berard and Rake also rolled over their MAAX Inc. stock options into stock options of MAAX Holdings with a value of approximately C$1.0 million. If any of Messrs. Aubin, Boutet, Henaire, Rochette, Berard and Rake are terminated without cause, such executive will be entitled to continued payments of salary and bonus for one year. For the year ended February 29, 2004, Messrs. Boutet, Henaire, Rochette, Berard and Rake were paid annual bonuses of C$105,062, C$51,765, C$93,750, C$13,875 and $17,600, respectively. GESTION CAMADA AGREEMENT Under a management agreement, entered into on January 10, 2001, amended on November 1, 2001 and October 20, 2003 and terminated on February 29, 2004, between Gestion Camada Inc., or Gestion Camada, a holding company controlled by Placide Poulin and his family, and MAAX Inc., Gestion Camada was responsible for the general management of MAAX Inc. Pursuant to the agreement, Gestion Camada agreed to provide MAAX Inc. with the services of five qualified managers: Placide Poulin, Chairman of the Board; Andre Heroux, President and Chief Executive Officer; Richard Garneau, Executive Vice President and Chief Financial Officer; Marie-France Poulin, Executive Vice President, Sales; and David Poulin, Vice President, Operations, Bathroom Products 84 Sector (Eastern Canada). In exchange for the services of these five individuals, MAAX Inc. paid to Gestion Camada an annual fee of C$1,096,704, adjusted annually in relation to the Canadian Consumer Price Index published by Statistics Canada for the region of Montreal, payable in weekly installments, a performance bonus equal to 4.3% of MAAX Inc.'s earnings before taxes and performance bonuses and theoretical amortization of C$3,484,100 of the goodwill of MAAX Inc., payable in quarterly installments, and certain fringe benefits. For the year ended February 29, 2004, MAAX Inc. paid to Gestion Camada an aggregate of C$3,832,725, comprised of the annual fee and performance bonus. MAAX Inc. also paid to Gestion Camada a fee of C$3,744,637 for the non-renewal of this agreement, of which C$3,311,077 was paid on March 2, 2004 and the remaining balance of C$433,560 was paid on April 28, 2004. In addition, in lieu of payment to Mr. Heroux of his portion of the non-renewal fee, Mr. Heroux received a one-time grant of stock options to purchase shares of MAAX Holdings Series A Preferred Stock. CONSULTING AGREEMENTS As of March 1, 2004, MAAX Inc. entered into consulting agreements with each of Messrs. Richard Garneau and David Poulin and Ms. Marie-France Poulin for a three month period from March 1, 2004 through June 1, 2004, subject to extension. The consulting agreements were terminated upon the consummation of the offering of the original notes. Under the consulting agreements, each of Messrs. Richard Garneau and David Poulin and Ms. Marie-France Poulin provided certain consulting services to MAAX Inc. as independent contractors, working up to a maximum of 20 working days during such three month period and were each entitled to compensation of C$20,000 and certain fringe benefits. MAAX Inc. also provided an indemnity payment to each of these consultants for prior service to MAAX Inc. equal to C$630,000 for each individual. Placide Poulin received certain fringe benefits through June 30, 2004. Each of Messrs. Placide Poulin, Richard Garneau and David Poulin and Ms. Marie-France Poulin entered into an agreement with MAAX Inc. that contains confidentiality restrictions and noncompetition, nonsolicitation and nondisparagement provisions covering North America for a period of five years from the closing. BENEFIT PLANS MAAX HOLDINGS 2004 STOCK OPTION PLAN All of the outstanding options previously issued under the MAAX Inc. Senior Executives and Management stock option plan were either exercised, or, with respect to certain members of management, converted into options exercisable for shares under the MAAX Holdings 2004 stock option plan. Under the MAAX Holdings 2004 stock option plan, MAAX Holdings has available for grant options to purchase approximately 9% of its common stock on a fully-diluted basis in addition to approximately C$3.8 million of rollover option fair value to certain members of management, including a one-time option grant to Mr. Heroux to purchase shares of its Series A Preferred Stock described under "Management -- Gestion Camada Agreement." The plan provides for the grant of nonqualified stock options to any of our full or part-time employees, including officers and directors, consultants and independent contractors. The exercise price of options granted under the plan is generally equal to the fair market value of MAAX Holdings' common stock on the date such options are granted, as determined by its board of directors, however, the board has discretion to issue options at exercise prices lower or higher than fair market value. The plan is administered by MAAX Holdings' board of directors or by a committee appointed by the board of directors. While the terms of the options granted under this plan are determined at the time of grant, the stock options will expire ten years after grant. New stock options are comprised of two general types: (1) options with fixed vesting schedules and (2) options that vest upon the achievement of established performance targets. Upon a holders' termination from employment, all options terminate immediately, except in the case of termination by us without cause (as defined in the option 85 agreement) or upon the holders' death or disability or by the holder for good reason (as defined in the option agreement), in which case vested options remain exercisable for a period of time after termination. STOCK OPTIONS The following table summarizes option grants as of August 31, 2004 to the Chief Executive Officer and the members of our administrative, supervisory or management bodies. Other than as noted below, all options are exercisable for shares of MAAX Holdings common stock. The stock options expire on June 4, 2014. OPTION GRANTS AS OF AUGUST 31, 2004
NAME OPTION GRANT EXERCISE PRICE ---- ------------ -------------- Arthur Byrne................................................ 90,370 $16.56 Andre Heroux................................................ 68,475 C$0.01 289,183 $16.56 42,995 C$0.01 42,995(1) $16.56 Denis Aubin................................................. 72,296 $16.56 Benoit Boutet............................................... 5,892 C$0.01 28,918 $16.56 Patrice Henaire............................................. 5,892 C$0.01 36,148 $16.56 Jean Rochette............................................... 19,020 C$0.01 72,296 $16.56 Guy Berard.................................................. 1,779 C$0.01 14,459 $16.56 Terry Rake.................................................. 14,508 $ 6.75 14,459 $16.56 Daniel Stewart.............................................. 6,127 $ 6.75 50,607 $16.56
- --------------- (1) This option grant is exercisable by Mr. Heroux for shares of MAAX Holdings Series A Preferred Stock. 86 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT We are an indirect wholly-owned subsidiary of MAAX Holdings. The capital stock of MAAX Holdings consists of common stock, par value $0.01 per share and Series A Preferred Stock, par value $0.01 per share. The common stock of MAAX Holdings consists of common stock and class A common stock which are identical in all respects, except that the class A common stock is not entitled to vote in the election of directors. The only stockholder of MAAX Holdings that holds class A common stock is OMERS. The Series A Preferred Stock is redeemable under certain circumstances, does not have voting rights, no shares of Series A Preferred Stock have been issued by MAAX Holdings and Mr. Heroux is the only stockholder of MAAX Holdings who has options to purchase the Series A Preferred Stock. JWC Fund Ill, Borealis and OMERS hold approximately 99.5% of the outstanding common stock of MAAX Holdings prior to dilution for options. MAAX Holdings has made approximately 9% of its equity available to certain consultants, members of our management team and one of our directors on a fully-diluted basis through its 2004 stock option plan, in addition to approximately C$3.8 million of rollover option fair value to certain members of management, including a one-time option grant to Mr. Heroux to purchase shares of its Series A Preferred Stock described under "Management -- Gestion Camada Agreement." The following table sets forth certain information regarding the beneficial ownership of MAAX Holdings' capital stock by (a) JWC Fund Ill, Borealis and OMERS, (b) our directors and named executive officers, and (c) all directors and executive officers described above as a group. Except as otherwise noted under "Certain Relationships and Related Party Transactions," we know of no agreements among our or MAAX Holdings' stockholders which relate to voting or investment power over capital stock of us or MAAX Holdings or any arrangement the operation of which may at a subsequent date result in a change of control of us or MAAX Holdings. For purposes of the table, all shares of common stock refer to MAAX Holdings' common stock. Beneficial ownership is determined in accordance with the rules of the SEC, and includes direct and indirect voting power and/or investment power with respect to securities. Shares of capital stock subject to options which are exercisable within 60 days of August 31, 2004, are deemed outstanding for purposes of computing the beneficial ownership of the person holding such options, but are not deemed outstanding for purposes of computing the beneficial ownership of any other person. Except as otherwise noted, the persons or entities named have sole voting and investment power with respect to the shares shown as beneficially owned by them. Unless otherwise indicated, the principal address of each of the stockholders below is c/o MAAX Corporation, 1010 Sherbrooke Street West, Suite 1610, Montreal (Quebec), Canada H3A 2R7.
PERCENTAGE OF NUMBER OF SHARES SHARES BENEFICIALLY BENEFICIAL OWNER BENEFICIALLY OWNED OWNED - ---------------- ------------------ ------------------- Andre Heroux(1).................................. 154,465 1.9% Denis Aubin...................................... 6,667 * Benoit Boutet(2)................................. 7,225 * Patrice Henaire(3)............................... 8,892 * Jean Rochette(4)................................. 24,576 * Guy Berard(5).................................... 8,890 * Terry Rake(6).................................... 14,508 * Daniel Stewart(7)................................ 15,183 * Arthur Byrne(8)(9)............................... 4,553,191 56.6% Michael Graham(10)(11)........................... 3,459,610 43.0% Andre LaForge(12)(13)............................ 1,729,805 21.5% James Rhee(9)(14)................................ 4,553,191 56.6%
87
PERCENTAGE OF NUMBER OF SHARES SHARES BENEFICIALLY BENEFICIAL OWNER BENEFICIALLY OWNED OWNED - ---------------- ------------------ ------------------- Steven Segal(9)(15).............................. 4,553,191 56.6% Borealis Private Equity Limited Partnership(13)................................ 1,383,844 17.2% Borealis (QLP) Private Equity Limited Partnership(13)................................ 345,961 4.3% J.W. Childs Equity Partners III, L.P.(9)......... 4,458,168 55.4% JWC Fund III Co-Invest LLC(9).................... 95,023 1.2% Ontario Municipal Employees Retirement Board(11)...................................... 3,459,610 43.0% All executive officers and directors as a group (13 persons)................................... 8,253,207 99.9%
- --------------- * Amount represents less than 1% of our capital stock. (1) Includes (i) 111,470 shares of common stock issuable upon exercise of options and (ii) 42,995 shares of preferred stock issuable upon exercise of options. (2) Includes (i) 1,333 shares of common stock and (ii) 5,892 shares of common stock issuable upon exercise of options. (3) Includes (i) 3,000 shares of common stock and (ii) 5,892 shares of common stock issuable upon exercise of options. (4) Includes (i) 5,556 shares of common stock and (ii) 19,020 shares of common stock issuable upon exercise of options. (5) Includes (i) 7,111 shares of common stock and (ii) 1,779 shares of common stock issuable upon exercise of options. (6) Includes 14,508 shares of common stock issuable upon exercise of options. (7) Includes (i) 9,056 shares of common stock and (ii) 6,127 shares of common stock issuable upon exercise of options. (8) Includes 4,458,168 shares of common stock held by J.W. Childs Equity Partners III, L.P. and its affiliates and 95,023 shares of common stock held by JWC Fund III Co-Invest LLC which Mr. Byrne may be deemed to beneficially own by virtue of his position as an Operating Partner of J.W. Childs Associates, L.P., which manages J.W. Childs Equity Partners III, L.P. and its affiliates. Mr. Byrne disclaims beneficial ownership of the shares held by J.W. Childs Equity Partners Ill, L.P. and JWC Fund III Co-Invest LLC. (9) The address for these stockholders is c/o J.W. Childs Associates, L.P., 111 Huntington Avenue, Suite 2900, Boston, Massachusetts 02199-7610. (10) Includes (i) 1,429,805 shares of common stock and (ii) 300,000 shares of class A common stock held by Ontario Municipal Employees Retirement Board, 1,383,844 shares of common stock held by Borealis Private Equity Limited Partnership and 345,961 shares of common stock held by Borealis (QLP) Private Equity Limited Partnership which Mr. Graham may be deemed to beneficially own by virtue of his position as a Portfolio Manager of OMERS Capital Partners. Mr. Graham disclaims beneficial ownership of the shares held by Ontario Municipal Employees Retirement Board, Borealis Private Equity Limited Partnership and Borealis (QLP) Private Equity Limited Partnership. (11) Includes (i) 1,429,805 shares of common stock and (ii) 300,000 shares of class A common stock held by Ontario Municipal Employees Retirement Board, 1,383,844 shares of common stock held by Borealis Private Equity Limited Partnership and 345,961 shares of common stock held by Borealis (QLP) Private Equity Limited Partnership. The address for these stockholders is c/o OMERS, One University Avenue, Suite 700, Toronto, Ontario M5J 2P1. OMERS does not exercise investment control over the funds managed by Borealis Capital Corporation and disclaims beneficial ownership of the shares held by such funds. 88 (12) Includes 1,729,805 shares of common stock held by Borealis Private Equity Limited Partnership and Borealis (QLP) Private Equity Limited Partnership which Mr. LaForge may be deemed to beneficially own by virtue of his position as a Senior Vice President of Borealis Capital Corporation. Mr. LaForge disclaims beneficial ownership of the shares held by Borealis Private Equity Limited Partnership and Borealis (QLP) Private Equity Limited Partnership. (13) The address for these stockholders is c/o Borealis Capital Corporation, 1 Adelaide Street East, Suite 2800, Box 198, Toronto, Ontario M5C 2V9. Borealis Capital Corporation, the manager of Borealis Private Equity Limited Partnership and Borealis (QLP) Private Equity Limited Partnership, is a subsidiary of OMERS. OMERS does not exercise investment control over the funds managed by Borealis Capital Corporation and disclaims beneficial ownership of the shares held by such funds. (14) Includes 4,458,168 shares of common stock held by J.W. Childs Equity Partners III, L.P. and its affiliates and 95,023 shares of common stock held by JWC Fund Ill Co-Invest LLC which Mr. Rhee may be deemed to beneficially own by virtue of his position as a Vice President of J.W. Childs Associates, L.P., which manages J.W. Childs Equity Partners III, L.P. and its affiliates. Mr. Rhee disclaims beneficial ownership of the shares held by J.W. Childs Equity Partners III, L.P. and JWC Fund III Co-Invest LLC. (15) Includes 4,458,168 shares of common stock held by J.W. Childs Equity Partners Ill, L.P. and its affiliates and 95,023 shares of common stock held by JWC Fund Ill Co-Invest LLC which Mr. Segal may be deemed to beneficially own by virtue of his position as a Partner of J.W. Childs Associates, L.P., which manages J.W. Childs Equity Partners III, L.P. and its affiliates. Mr. Segal disclaims beneficial ownership of the shares held by J.W. Childs Equity Partners Ill, L.P. and JWC Fund III Co-Invest LLC. 89 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS STOCKHOLDERS AGREEMENT Upon consummation of the transactions, our Sponsors, MAAX Holdings and all of MAAX Holdings' stockholders, including each of our executive officers and directors who own capital stock or stock options of MAAX Holdings and the stockholders affiliated with the Sponsors, entered into a stockholders agreement governing certain aspects of the relationship among the parties and their ownership of MAAX Holdings' capital stock. The stockholders agreement includes provisions relating to restrictions on issue or transfer of shares, call rights, put rights, tag-along rights, drag-along rights, pre-emptive rights, rights of first offer, rights of first refusal, registration rights, other special corporate governance provisions (including the right of our Sponsors to veto various corporate actions) and the election of directors (including our company). In the event of the termination of employment of a stockholder who is a member of management, MAAX Holdings, or another person designated by MAAX Holdings, may purchase the shares of stock held by the terminated employee. If neither MAAX Holdings nor MAAX Holdings' designee purchases the shares of stock held by the terminated employee, the Sponsors will be entitled to do so on a pro rata basis. If none of MAAX Holdings, MAAX Holdings' designee or the Sponsors elects to purchase the shares held by the terminated employee, the employee may force MAAX Holdings or MAAX Holdings' designee to purchase the shares of stock held by the employee. MANAGEMENT AGREEMENT Upon consummation of the transactions, we and MAAX Holdings entered into a Management Agreement with the Sponsors under which we paid a one-time closing fee equal to approximately C$6.2 million to be shared pro rata among the Sponsors. In exchange for providing financial and strategic corporate planning consulting services, the Sponsors will receive consulting fees of an aggregate of approximately $54,000 per month, plus out-of-pocket expenses. MERGER AGREEMENT Certain of our subsidiaries entered into a merger agreement with MAAX Inc. and such merger agreement is described in this prospectus under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations -- History -- Impact of the Transactions." EMPLOYMENT AGREEMENTS Upon consummation of the transactions, we entered into an employment agreement with Mr. Heroux. This employment agreement is described in this prospectus under the caption "Management -- Employment Agreements." We also have employment agreements with Messrs. Aubin, Boutet, Henaire, Rochette, Berard, Rake and Stewart, all of which are described in "Management -- Employment Agreements," that became effective upon consummation of the transactions. DIRECTOR COMPENSATION Other than Mr. Byrne, who received options to purchase 90,370 shares of common stock of MAAX Holdings, no member of the board of directors receives compensation for service on the board, other than expense reimbursement. LOANS TO EXECUTIVE OFFICERS On January 26, 2001, MAAX Inc. made a loan to Mr. Heroux, in an aggregate principal amount of C$917,274 in connection with his purchase of 100,000 common shares of MAAX Inc. One half of the principal amount of the loan was payable in three equal installments in the amount of C$152,879 90 on February 28 in each of 2002, 2003 and 2004 and bore interest at the legal interest rate. Upon payment of all such amounts, the remaining balance was canceled. SEVERANCE AND RETENTION ARRANGEMENTS In September 2003, MAAX Inc. entered into severance and retention agreements with each of Messrs. Patrice Henaire, Jean Rochette, Guy Berard, Terry Rake, Daniel Stewart and Benoit Boutet. Each of Messrs. Henaire, Rochette, Berard, Rake, Stewart and Boutet received a retention bonus upon consummation of the transactions payable in a lump sum of C$30,000, C$88,000, C$37,000, C$42,000, C$47,000 and C$13,000, respectively. These agreements provide that each executive is also entitled to receive an amount equal to one year of his annual base salary plus annual bonus if the executive is terminated as a result of consummation of the transactions. 91 DESCRIPTION OF NEW SENIOR SECURED CREDIT FACILITY We and all of our Canadian and U.S. subsidiaries entered into a facility on June 4, 2004 consisting of a term loan B facility, a term loan A facility and a revolving credit facility. Goldman Sachs Credit Partners L.P. acted as a joint lead arranger for the entire facility, a joint bookrunner of the term loan B facility and as the syndication agent. Royal Bank of Canada, acting through its business group, RBC Capital Markets Corporation, acted as a joint lead arranger for the entire facility, sole bookrunner for the term loan A facility and the revolving credit facility and Royal Bank of Canada acted as the administrative and collateral agent. Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated acted as a joint lead arranger for the entire facility, a joint bookrunner of the term loan B facility and as the documentation agent. The following is a description of the principal terms of the facility. Structure. Our facility provides for a $115.0 million term loan B facility with a maturity of seven years, and a C$130.0 million term loan A facility and a C$50.0 million revolving credit facility, which may be borrowed in either Canadian or U.S. dollars, each with a maturity of five years and three months. The revolving credit facility includes a sublimit for the issuance of letters of credit and a sublimit for swing line loans. Proceeds of the term loans were used, and $12.0 million of the revolving facility were used, on the closing date in connection with the transactions. In addition, $1.6 million of the revolving credit facility was drawn on the closing date to replace or backstop former letters of credit and letters of guarantee. Proceeds of the revolving facility will be used to provide financing for working capital and general corporate purposes. The new senior secured credit facility permits us to incur, from time to time, up to $50.0 million in one or more additional series of term loans which will have the benefit of the security and the guarantees described below. Such an increase in the term loans will occur at our option if certain conditions are satisfied, including being in compliance with our financial covenants on a pro forma basis and receipt of commitments from lenders for such additional amount. Security/Guarantees. Beauceland Corporation and all existing and future, direct and indirect Canadian and U.S. subsidiaries of Beauceland Corporation, subject to certain exceptions agreed to in the loan documents, unconditionally guarantee our obligations under the facility. In addition, our obligations under the facility and the obligations of the guarantors under the guarantees are secured by substantially all of our assets, and each guarantor's assets, including: - a first priority perfected security interest in all of the capital stock of each of Beauceland Corporation's direct and indirect Canadian and U.S. subsidiaries and 65% of the capital stock of each other subsidiary directly or indirectly owned by Beauceland Corporation or any of its Canadian or U.S. subsidiaries; and - a first priority perfected security interest in substantially all of our and the guarantors' other present and future assets and properties, including, without limitation, accounts receivable, inventory, real property, machinery, equipment, contracts, intellectual property, license rights and general intangibles. Amortization. We are required to repay the amounts borrowed under each of the term loan facilities in installments on March 31, June 30, September 30 and December 31 of each loan year and on the maturity date of the applicable facility. Installment payments under the term loan B facility begin on September 30, 2004 and equal 0.25% of the initial principal amount of such facility for each of the first 24 installment payments and 23.50% for each of the final four installment payments. Installment payments under the term loan A facility begin on December 31, 2004 and equal 1.25% of the initial principal amount of such facility for each of the first four installment payments, 2.50% of such amount for each of installment payments 5 through 8, 3.75% of such amount for each of installment payments 9 through 12, 5.00% of such amount for each of installment payments 13 through 16, and 12.50% of such amount for each of installment payments 16 through 20. 92 Interest. The Canadian dollar amounts outstanding under the facility bear interest at a rate per annum equal to the Prime Rate (which is the greater of (x) the administrative agent's reference rate of interest for commercial customers and (y) the yield rate for one month bankers' acceptances displayed on the Reuters CDOR Page, plus 1%) plus an applicable margin or, at our option, the BA Discount Rate (which (a) in the case of Schedule I lenders is determined by reference to the British Bankers Association Interest Settlement Rate and (b) in the case of all other lenders is determined largely by reference to the Reuters CDOR page yield rate for a bankers' acceptance of the applicable maturity) plus an applicable margin. The U.S. dollar amounts outstanding under the facility bear interest at a rate per annum equal to the Base Rate (which is equal to the greater of (i) (x) in the case of loans made by lenders out of Canada only, the administrative agent's reference rate of interest for loans in U.S. dollars to its Canadian borrowers and (y) in all other cases, the administrative agent's reference rate of interest for commercial loans quoted by its New York branch and (ii) the federal funds effective rate as published by the Federal Reserve Bank of New York plus 0.50%) plus an applicable margin or, at our option, the Adjusted Eurodollar Rate (which is determined by reference to the British Bankers Association Interest Settlement Rate) plus an applicable margin. Each outstanding swing line loan bears interest at (i) if denominated in U.S. dollars, the Base Rate plus the applicable margin and (ii) if denominated in Canadian dollars, the Prime Rate plus the applicable margin. Commencing with the delivery of our financial statements for the second fiscal quarter commencing after the closing date, the applicable margins for the loans will be determined pursuant to a grid based on our total leverage ratio. Interest on amounts not paid when due will accrue at a rate equal to the rate on loans bearing interest at the rate determined by reference to the Base Rate or Prime Rate, as applicable, plus an applicable margin. Optional Prepayments. We may prepay loans (other than bankers' acceptances) and reduce the amounts available to us at any time by giving prior notice thereof, in each case, without premium or penalty (except LIBOR breakage costs). Bankers' acceptances may only be prepaid at the end of the applicable interest period. Mandatory Prepayments or Offers to Prepay. Subject to exceptions, our facility must be prepaid, or we must make an offer to prepay, in an amount equal to: - 100% of the net cash proceeds of all asset sales by Beauceland Corporation or any of its subsidiaries (including sales or issuances of stock of subsidiaries); - 100% of all casualty and condemnation net cash proceeds received by Beauceland Corporation or any of its subsidiaries; - 50% of the net cash proceeds from the issuance of equity by, or equity contributions to, any parent company of us; - 100% of the net cash proceeds from the issuance of any debt (other than permitted debt) by Beauceland Corporation or any of its subsidiaries; and - 75% of our excess cash flow (subject to reduction to a lower percentage based upon our total leverage ratio). Prior to 5 years from the closing date, we are not required to make amortization payments of the term loan B or mandatory prepayments under the term loan B facilities in respect of equity issuances or excess cash flow in an aggregate amount of more than 25% of the original principal amount of the term loan B. We will be required to make any amortization payments or mandatory prepayments not made due to the foregoing sentence five years and one day after the closing date. Fees. We are required to pay the following fees under our facility: - a commitment fee of 0.50% per annum, payable quarterly in arrears, calculated on the unused portion of the revolving credit facility; provided that, commencing with the delivery of our quarterly financial statements for the second fiscal quarter ending after the closing date the commitment fee percentage is subject to reduction to 0.40% per annum if our total 93 leverage ratio is less than or equal to 3.5x but greater than 2.5x and to 0.35% per annum if our total leverage ratio is less than or equal to 2.5x; - a letter of credit fee equal to the applicable margin for Eurodollar Rate revolving loans, with respect to U.S. dollar denominated letters of credit and bankers' acceptances, with respect to Canadian dollar denominated letters of credit multiplied by the average daily aggregate amount available to be drawn under all letters of credit, payable quarterly in arrears; - customary fronting fees in connection with the issuances of letters of credit; - an annual fee to the administrative agent; and - certain expenses of the lenders and agents. Financial Covenants. Our facility contains financial covenants that require Beauceland Corporation and its subsidiaries to comply with certain financial ratios and tests, including a minimum fixed charge coverage ratio, a minimum interest coverage ratio, a maximum capital expenditure amount and a maximum total leverage ratio. Our facility also contains operational covenants and other restrictions that, among other things, subject to certain exceptions and baskets, restrict Beauceland Corporation's ability and the ability of its subsidiaries to: - incur additional indebtedness and guarantee obligations; - create liens on assets; - make investments; - pay dividends, redeem stock and prepay and/or redeem other indebtedness; - engage in mergers, consolidations and sales of assets; and - engage in transactions with affiliates. Events of Default. Our facility contains the following events of default: - payment defaults; - defaults under other debt; - breach or non-performance of covenants; - breach of representations and warranties; - certain events of bankruptcy and insolvency; - the entering of judgments in excess of specified amounts against us; - ERISA defaults; - the actual or asserted invalidity of any security interest in collateral or any guarantees; and - change of control. 94 DESCRIPTION OF NOTES You can find the definitions of certain terms used in this description under the subheading "-- Certain Definitions." In this description, the word "Issuer" refers only to MAAX Corporation and not to any of its subsidiaries, and the word "Holdings" refers to Beauceland Corporation and not to any of its subsidiaries. The Issuer issued the original notes and will issue the exchange notes under an indenture among itself, the Guarantors and U.S. Bank Trust National Association, as trustee, a copy of which is incorporated by reference as an exhibit to the registration statement of which this prospectus forms a part. The terms of the notes include those stated in the indenture and those made part of the indenture by reference to the U.S. Trust Indenture Act of 1939, as amended. The following description is a summary of the material provisions of the indenture and the registration rights agreement. It does not restate those agreements in their entirety. We urge you to read the indenture and the registration rights agreement because they, and not this description, define your rights as holders of these notes in addition to those rights you have under the federal securities laws. Copies of the indenture and registration rights agreement are incorporated by reference and filed as exhibits to the registration statement of which this prospectus forms a part and are available as set forth below under " -- Additional Information." The registered holder of a note will be treated as the owner of it for all purposes. Only registered holders will have rights under the indenture. BRIEF DESCRIPTION OF THE NOTES AND THE GUARANTEES The notes are: - general unsecured obligation of the Issuer; - subordinated in right of payment to all existing and future Senior Debt of the Issuer; - equal in right of payment to any future unsecured Indebtedness of the Issuer that is subordinated in right of payment to any other Indebtedness of the Issuer; - senior in right of payment to any future Indebtedness of the Issuer that expressly provides that it is junior in right of payment to the notes; and - unconditionally guaranteed by the Guarantors. The notes are guaranteed by Holdings and each of its existing and future Restricted Subsidiaries that guarantee any Credit Facility. The Guarantee by each Guarantor is: - a general unsecured obligations of such Guarantor; - subordinated in right of payment to all existing and future Senior Debt of such Guarantor; - equal in right of payment with any future unsecured Indebtedness of such Guarantor that is subordinated in right of payment to any other Indebtedness of such Guarantor; and - senior in right of payment to any future Indebtedness of such Guarantor that expressly provides that it is junior in right of payment to the Guarantee of such Guarantor. As of May 31, 2004, assuming the offering and the related transactions as described under the caption "Use of Proceeds" had occurred on that date, the Issuer and the Guarantors would have had total Senior Debt of approximately $225 million and up to an additional approximately $19.6 million of Senior Debt would have been available, subject to meeting certain borrowing conditions, to be borrowed under the Credit Agreement. As indicated above and as discussed in detail below under the subheading " -- Subordination," payments on the notes and under the 95 Guarantees are subordinated to the payment of Senior Debt. The indenture permits us and the Guarantors to incur additional Senior Debt. As of the date of the indenture, all of Holdings' subsidiaries were "Restricted Subsidiaries." However, under the circumstances described below under "-- Certain Covenants -- Designation of Restricted and Unrestricted Subsidiaries," Holdings is permitted to designate certain of its subsidiaries as "Unrestricted Subsidiaries." Unrestricted Subsidiaries will not be subject to the restrictive covenants in the indenture, but transactions between Holdings and/or any of the Restricted Subsidiaries on the one hand and any of the Unrestricted Subsidiaries on the other hand will be subject to certain restrictive covenants. The European Subsidiaries are not Guarantors and any Unrestricted Subsidiaries will not be Guarantors. The notes are structurally subordinated to the Indebtedness and other obligations (including trade payables) of the European Subsidiaries. The notes will be structurally subordinated to the Indebtedness and other obligations (including trade payables) of the Unrestricted Subsidiaries. PRINCIPAL, MATURITY AND INTEREST In the offering, the Issuer issued $150.0 million in aggregate principal amount of notes. The indenture provides that the Issuer may issue additional notes from time to time. Any issuance of additional notes is subject to all of the covenants in the indenture, including the covenant described below under the caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock." The notes and any additional notes subsequently issued under the indenture will be treated as a single class for all purposes under the indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. The Issuer issued the original notes and will issue the exchange notes in denominations of $1,000 and integral multiples of $1,000. The notes will mature on June 15, 2012. Interest on the notes will accrue at the rate of 9.75% per annum and will be payable semi-annually in arrears on June 15 and December 15, commencing on December 15, 2004. Interest on overdue principal and interest and Special Interest will accrue at the then applicable interest rate on the notes. The Issuer will make each interest payment to the holders of record on the immediately preceding June 1 and December 1. Interest on the notes will accrue from the date of original issuance of the original notes or, if interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. METHODS OF RECEIVING PAYMENTS ON THE NOTES If a holder of notes owning at least $5.0 million in principal amount of notes has given wire transfer instructions to the Issuer, the Issuer will pay all principal, interest and premium and Special Interest, if any, on that holder's notes in accordance with those instructions. All other payments on the notes will be made at the office or agency of the paying agent and registrar within the City and State of New York unless the Issuer elects to make interest payments by check mailed to the holders of notes at their address set forth in the register of holders. PAYING AGENT AND REGISTRAR FOR THE NOTES The trustee will initially act as paying agent and registrar. The Issuer may change the paying agent or registrar without prior notice to the holders of the notes, and Holdings or any of its Subsidiaries may act as paying agent or registrar other than in connection with the discharge or defeasance provisions of the indenture. 96 TRANSFER AND EXCHANGE A holder may transfer or exchange notes in accordance with the provisions of the indenture. The registrar and the trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents in connection with a transfer of notes. Holders will be required to pay all taxes due on transfer. The Issuer is not required to transfer or exchange any note selected for redemption. Also, the Issuer is not required to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed. GUARANTEES The Guarantors jointly and severally, fully and unconditionally, guarantee the Issuer's obligations under the notes. The Guarantee of each Guarantor is subordinated to the prior payment in full in cash or cash equivalents of all Senior Debt of that Guarantor to the same extent that the notes are subordinated to Senior Debt of the Issuer. The obligations of each Subsidiary Guarantor under its Guarantee are limited as necessary to prevent that Guarantee from constituting a fraudulent conveyance under applicable law. SUBORDINATION The payment of all Obligations on or relating to the notes is subordinated in right of payment to the prior payment in full in cash or cash equivalents of all Obligations on Senior Debt of the Issuer (including all Obligations with respect to any Credit Facility, whether outstanding on the Issue Date or thereafter incurred). Notwithstanding the foregoing, payments and distributions made from a trust established pursuant to the provisions described under "-- Satisfaction and Discharge" or "-- Legal Defeasance and Covenant Defeasance" shall not be so subordinated in right of payment so long as the payments into the trust were made in accordance with the requirements described under "-- Satisfaction and Discharge" or "-- Legal Defeasance and Covenant Defeasance," as the case may be, and did not violate the subordination provisions when they were made. The holders of Senior Debt will be entitled to receive payment in full in cash or cash equivalents of all Obligations due in respect of Senior Debt before the holders of notes will be entitled to receive any payment or distribution of any kind or character with respect to any Obligations on, or relating to, the notes (other than payments or distributions of Permitted Junior Securities or payments and distributions from a trust established pursuant to the provisions described under "-- Satisfaction and Discharge" or "-- Legal Defeasance and Covenant Defeasance" so long as the payments into the trust were made in accordance with the requirements described under "-- Satisfaction and Discharge" or "-- Legal Defeasance and Covenant Defeasance," as the case may be, and did not violate the subordination provisions when they were made) in the event of any distribution to creditors of the Issuer: (1) in a total or partial liquidation, dissolution or winding-up of the Issuer; (2) in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Issuer or its assets; (3) in an assignment for the benefit of creditors; or (4) in any marshalling of the Issuer's assets and liabilities. The Issuer also may not make any payment or distribution of any kind or character with respect to any Obligations on, or relating to, the notes or acquire any notes for cash or assets or otherwise, other than payments or distributions of Permitted Junior Securities and payments and distributions made from a trust established pursuant to the provisions described under "-- Satisfaction and Discharge" or "-- Legal Defeasance and Covenant Defeasance" so long as the payments into the trust were made in accordance with the requirements described under "-- Satisfaction and 97 Discharge" or "-- Legal Defeasance and Covenant Defeasance," as the case may be, and did not violate the subordination provisions when they were made, if: (1) a payment default on any Senior Debt occurs and is continuing beyond the applicable grace period, if any; or (2) any other default occurs and is continuing on Designated Senior Debt that permits holders of the Designated Senior Debt to accelerate its maturity and the trustee receives a notice of such default (a "PAYMENT BLOCKAGE NOTICE") from the Representative of any Designated Senior Debt. Payments on and distributions with respect to any Obligations on, or with respect to, the notes may and shall be resumed: (1) in the case of a payment default, upon the date on which all payment defaults are cured or waived; and (2) in case of a nonpayment default, the earliest of (x) the date on which all such nonpayment defaults are cured or waived, (y) 179 days after the date on which the applicable Payment Blockage Notice is received or (z) the date on which the trustee receives notice from the Representative for such Designated Senior Debt rescinding the Payment Blockage Notice, unless the maturity of any Designated Senior Debt has been accelerated. No new Payment Blockage Notice may be delivered unless and until 360 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 90 consecutive days (it being acknowledged that any subsequent action, or any breach of any financial covenants for a period ending after the date of delivery of such initial Payment Blockage Notice that in either case would give rise to a default pursuant to any provisions under which a default previously existed or was continuing shall constitute a new default for this purpose). The Issuer must promptly notify holders of Senior Debt if payment of the notes is accelerated because of an Event of Default. As a result of the subordination provisions described above, in the event of a bankruptcy, liquidation or reorganization of the Issuer, holders of the notes may recover less ratably than creditors of the Issuer who are holders of Senior Debt. See "Risk Factors -- Risks Related to the Notes -- The notes will be unsecured and subordinated to our senior debt." ADDITIONAL AMOUNTS All amounts paid or credited by the Issuer under or with respect to the notes, or by any Guarantor pursuant to the Guarantees, will be made free and clear of and without withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and other liabilities or expenses related thereto) (hereinafter, "TAXES") imposed or levied by or on behalf of the Government of Canada or the United States or of any province, territory, state or other political subdivision thereof or by any authority or agency therein or thereof having power to tax (each, a "RELEVANT TAXING JURISDICTION"), unless the Issuer or such Guarantor, as the case may be, is required to withhold or deduct any amount for or on account of Taxes by law or by the interpretation or administration thereof. If the Issuer or any Guarantor is required to withhold or deduct any amount for or on account of any such Taxes from any amount paid or credited under or with respect to the notes or the Guarantees, the Issuer or such Guarantor will pay such additional amounts (the "ADDITIONAL AMOUNTS") as may be necessary so that the net amount received by each owner of a beneficial interest in the notes (an "owner" for the purposes of this "Additional Amounts" section) (including Additional Amounts) after such 98 withholding or deduction (including any withholding or deduction in respect of Additional Amounts) will not be less than the amount such owner would have received if such Taxes had not been withheld or deducted; provided, however, that Additional Amounts will not be payable to an owner or holder of notes with respect to any Taxes to the extent such Taxes ("EXCLUDED TAXES") would not have been imposed but for such owner or holder being an owner or holder: (1) in the case of Canadian Taxes, with which the Issuer or such Guarantor does not deal at arm's length (within the meaning of the Income Tax Act (Canada)) at the time of making a payment; (2) which is subject to such Taxes by reason of such owner or holder being connected with the Relevant Taxing Jurisdiction other than solely by reason of the mere acquisition or holding of notes, the receipt of payments thereunder or the enforcement of the holder's or owner's rights thereunder; (3) which failed to duly and timely comply with a timely request of the Issuer to provide information, documents, certification or other evidence concerning such owner's or holder's nationality, residence, entitlement to treaty benefits, identity or connection with a Relevant Taxing Authority, but only if such owner or holder is legally entitled to comply with such request and only to the extent that due and timely compliance with such request would have resulted in the reduction or elimination of the Taxes in question; (4) in the case of United States Taxes, which do not qualify for the "portfolio interest exception" contained in Sections 871(h) and 881(c) of the U.S. Internal Revenue Code of 1986, as amended; or (5) which is a fiduciary, a partnership or not the beneficial owner of a note, if and to the extent that any beneficiary or settlor of such fiduciary, any partner in such partnership or the beneficial owner of such note (as the case may be) would not have been entitled to receive Additional Amounts with respect to the payment in question if such beneficiary, settlor, partner or beneficial owner had been the holder of such note (but only if there is no material cost or expense associated with transferring such note to such beneficiary, settlor, partner or beneficial owner and no restriction on such transfer that is outside the control of such beneficiary, settlor, partner or beneficial owner). The Issuer or such Guarantor will also (a) make such withholding or deduction and (b) remit the full amount deducted or withheld to the relevant authority in accordance with and in the time required under applicable law. The Issuer or the Guarantor will furnish the holders of the notes, within 30 days after the date the payment of any Taxes is due pursuant to applicable law, evidence of such payment by the Issuer or such Guarantor. The Issuer and the Guarantors will indemnify and hold harmless each holder and owner from and against (x) any Taxes (other than Excluded Taxes) levied or imposed on such holder or owner as a result of payments or credits made under or with respect to the notes or the Guarantees, and (y) any Taxes (other than Excluded Taxes) so levied or imposed with respect to any indemnification payments under the foregoing clause (x) or this clause (y) such that the net amount received by such holder or owner after such indemnification payments will not be less than the net amount the holder or owner would have received if the Taxes described in clauses (x) and (y) above had not been imposed. At least 30 days prior to each date on which any payment under or with respect to the notes is due and payable, if the Issuer or any Guarantor will be obligated to pay Additional Amounts with respect to such payment, the Issuer or such Guarantor will deliver to the trustee an officers' certificate stating the fact that such Additional Amounts will be payable and the amounts so payable and will set forth such other information necessary to enable the trustee to pay such Additional Amounts to holders or owners on the payment date. Whenever in the indenture or in this "Description of Notes" there is mentioned, in any context, the payment of principal, premium, if any, 99 redemption price, Change of Control Payment, Asset Sale Offer purchase price, interest or any other amount payable under or with respect to any note, such mention shall be deemed to include mention of the payment of Additional Amounts or indemnification payments to the extent that, in such context, Additional Amounts or indemnification payments are, were or would be payable in respect thereof. The Issuer and the Guarantors will pay any present or future stamp, court, documentary or other excise or property Taxes, charges or similar levies that arise in any Relevant Taxing Jurisdiction from the execution, delivery or registration of, or enforcement of rights under, the notes, the indenture, any Guarantee or any related document ("DOCUMENTARY TAXES"). The obligation to pay any Additional Amounts (and any associated indemnification payments) and Documentary Taxes under the terms and conditions described above will survive any termination, defeasance or discharge of the indenture. OPTIONAL REDEMPTION On or after June 15, 2008 (the "FOURTH ANNIVERSARY"), the Issuer may on any one or more occasions redeem all or a part of the notes at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Special Interest, if any, on the notes redeemed to the redemption date, if redeemed during the twelve-month period beginning on June 15 of the years indicated below, subject to the rights of holders of notes on the relevant record date to receive interest on the relevant interest payment date:
YEAR PERCENTAGE - ---- ---------- 2008........................................................ 104.875% 2009........................................................ 102.438% 2010 and thereafter......................................... 100.000%
REDEMPTION AT MAKE-WHOLE PREMIUM At any time prior to the Fourth Anniversary, the Issuer may on any one or more occasions redeem all or a part of the notes, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium, plus accrued and unpaid interest and Special Interest, if any, on the notes to be redeemed to the date of redemption, subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date; provided that in the case of any redemption in part, at least 50% of the aggregate principal amount of notes issued under the indenture (including any additional notes) remains outstanding after giving effect to such redemption. "APPLICABLE PREMIUM" means, with respect to a note at any redemption date, the greater of: (1) 1.0% of the principal amount of such Note; and (2) the excess of: (a) the present value at such redemption date of (1) the redemption price of such note on the Fourth Anniversary set forth in the first paragraph of this "-- Optional Redemption" section plus (2) all required remaining scheduled interest payments due on such note through the Fourth Anniversary, other than accrued interest to such redemption date, computed using a discount rate equal to the Treasury Rate plus 50 basis points, discounted on a semi-annual bond equivalent basis, over (b) the principal amount of such Note on such redemption date. Calculation of the Applicable Premium will be made by the Issuer or on behalf of the Issuer by such Person as the Issuer shall designate; provided, however, that such calculation shall not be a duty or obligation of the trustee. 100 "TREASURY RATE" means, with respect to a redemption date, the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) that has become publicly available at least two Business Days prior to such redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from such redemption date to the Fourth Anniversary; provided, however, that if the period from such redemption date to the Fourth Anniversary is not equal to the constant maturity of the United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from such redemption date to the Fourth Anniversary is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. REDEMPTION WITH PROCEEDS OF EQUITY OFFERINGS At any time prior to June 15, 2007, the Issuer may on any one or more occasions redeem up to 35% of the aggregate principal amount of notes issued under the indenture (including any additional notes) at a redemption price of 109.750% of the principal amount, plus accrued and unpaid interest and Special Interest, if any, on the notes to be redeemed to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that: (1) at least 65% of the aggregate principal amount of notes issued under the indenture (including any additional notes, but excluding notes held by the Issuer or any of its Affiliates) remains outstanding immediately after the occurrence of such redemption; and (2) the redemption occurs within 90 days of the date of the closing of such Equity Offering. REDEMPTION FOR CHANGES IN WITHHOLDING TAXES The Issuer may redeem all, but not less than all, of the notes at any time, upon not less than 30 nor more than 60 days' notice, at 100% of the aggregate principal amount of the notes, together with accrued and unpaid interest and Special Interest, if any, to the redemption date, if the Issuer has become or would become obligated to pay, on the next date on which any amount would be payable with respect to the notes, any Additional Amounts as a result of a change in the laws (including any regulations promulgated thereunder) of a Relevant Taxing Jurisdiction, or any change in any official position of any governmental agency, taxing authority or regulatory authority regarding the application or interpretation of such laws or regulations, which change is announced on or after the date of the offering (a "CHANGE IN LAW"), and the Issuer cannot avoid such obligation by taking reasonable measures available to it. Before the Issuer publishes or mails notice of redemption of the notes as described above, the Issuer will deliver to the trustee an officers' certificate to the effect that it cannot avoid its obligation to pay Additional Amounts by taking reasonable measures available to it and an opinion of independent legal counsel of recognized standing stating that the Issuer would be obligated to pay Additional Amounts as a result of a Change in Law. No such notice of redemption may be given more than 60 days before or more than 90 days after the Issuer first becomes aware of its liability to pay any Additional Amounts as a result of a Change in Law. 101 SELECTION AND NOTICE If less than all of the notes are to be redeemed at any time, the trustee will select notes for redemption as follows: (1) if the notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the notes are listed; or (2) if the notes are not listed on any national securities exchange, on a pro rata basis, by lot or by such method as the trustee deems fair and appropriate; provided that if a partial redemption is made pursuant to the provisions described under "-- Redemption with Proceeds from Equity Offerings," selection of the notes or portions thereof for redemption shall be made by the trustee only on a pro rata basis or on as nearly a pro rata basis as is practicable (subject to the procedures of The Depository Trust Company), unless that method is otherwise prohibited. No notes of $1,000 or less can be redeemed in part. Notices of redemption will be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each holder of notes to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the notes or a satisfaction and discharge of the indenture. Notices of redemption may not be conditional. If any note is to be redeemed in part only, the notice of redemption that relates to that note will state the portion of the principal amount of that note that is to be redeemed. A new note in principal amount equal to the unredeemed portion of the original note will be issued in the name of the holder of notes upon cancellation of the original note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on notes or portions of them called for redemption, unless the Issuer defaults in the payment of the redemption price. The Issuer may acquire notes by means other than a redemption, whether pursuant to a tender offer, open market purchase, negotiated transaction or otherwise, so long as such acquisition does not otherwise violate the terms of the indenture. MANDATORY REDEMPTION Except as described below under "-- Offer to Purchase," the Issuer is not required to make mandatory redemption or sinking fund payments with respect to the notes. OFFER TO PURCHASE CHANGE OF CONTROL If a Change of Control occurs, the Issuer will be required to make an offer to purchase all notes as described below (the "CHANGE OF CONTROL OFFER") on the terms set forth in the indenture. In the Change of Control Offer, the Issuer will offer a payment in cash ("CHANGE OF CONTROL PAYMENT") equal to 101% of the aggregate principal amount of notes repurchased plus accrued and unpaid interest and Special Interest, if any, on the notes purchased, to the date of purchase, subject to the rights of holders of notes on the relevant record date to receive interest due on the relevant interest payment date. Within thirty days following any Change of Control, the Issuer will mail a notice to each holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase notes on the Change of Control Payment Date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures required by the indenture and described in such notice. 102 The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the indenture, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of the indenture by virtue of such compliance. On the Change of Control Payment Date, the Issuer will, to the extent lawful: (1) accept for payment all notes or portions of notes in minimum amounts equal to $1,000 or an integral multiple of $1,000 in excess thereof, properly tendered pursuant to the Change of Control Offer; (2) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all notes or portions of notes properly tendered; and (3) deliver or cause to be delivered to the trustee the notes properly accepted together with an officers' certificate stating the aggregate principal amount of notes or portions of notes being purchased by the Issuer. The paying agent will promptly mail to each holder of notes properly tendered the Change of Control Payment for such notes, and the trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each holder a new note equal in principal amount to any unpurchased portion of the notes surrendered, if any; provided that each new note will be in a principal amount of $1,000 or an integral multiple of $1,000. The Issuer will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The provisions described above that require the Issuer to make a Change of Control Offer following a Change of Control will be applicable whether or not any other provisions of the indenture are applicable. Except as described above with respect to a Change of Control, the indenture does not contain provisions that require the Issuer to redeem or offer to purchase the notes in the event of a takeover, recapitalization or similar transaction. The Issuer will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the indenture applicable to a Change of Control Offer made by the Issuer and purchases all notes properly tendered and not withdrawn under the Change of Control Offer or (2) notice of redemption has been given pursuant to the indenture as described above under the caption "-- Optional Redemption," unless and until there is a default in payment of the applicable redemption price. Notwithstanding the foregoing, the Issuer will not be required to make a Change of Control Offer, as provided above, if, in connection with or in contemplation of any Change of Control, it or a third party has made an offer to purchase (an "ALTERNATE OFFER") any and all notes validly tendered at a cash price equal to or higher than the Change of Control Payment and has purchased all notes properly tendered in accordance with the terms of such Alternate Offer. The definition of "Change of Control" includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of "all or substantially all" of the properties or assets of Holdings and the Restricted Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase "substantially all," there is no precise established definition of the phrase under applicable law. Accordingly the requirement that the Issuer make a Change of Control Offer as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of Holdings and the Restricted Subsidiaries taken as a whole to another Person or group may be uncertain. 103 ASSET SALES Holdings will not, and will not permit any Restricted Subsidiary to, consummate an Asset Sale unless: (1) Holdings (or a Restricted Subsidiary) receives consideration at the time of the Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of; and (2) at least 75% of the consideration received in the Asset Sale by Holdings or such Restricted Subsidiary is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following will be deemed to be cash: (a) any liabilities, as shown on Holdings' most recent consolidated balance sheet, of Holdings or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the notes or any Guarantee) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases Holdings or such Restricted Subsidiary from such liabilities; (b) any securities, notes or other obligations received by Holdings or any such Restricted Subsidiary from such transferee that are, within 180 days of the Asset Sale, converted by Holdings or such Restricted Subsidiary into cash or Cash Equivalents, to the extent of the cash or Cash Equivalents received in that conversion; and (c) any stock or assets of the kind referred to in clause (2) or (4) of the next paragraph of this covenant. Within 365 days after the receipt of any Net Proceeds from an Asset Sale, Holdings (or a Restricted Subsidiary) may apply those Net Proceeds at its option: (1) to repay any Senior Debt and, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; (2) to acquire all or substantially all of the assets of, or any Capital Stock of, a Person engaged in a Permitted Business; provided that in the case of acquisition of Capital Stock of any Person, such acquisition is permitted by the covenant described below under the caption "-- Certain Covenants -- Restricted Payments" (without giving effect to clause (4) of the definition of "Permitted Investments"); (3) to make a capital expenditure; or (4) to acquire other assets that are not classified as current assets under GAAP and that are used or useful in a Permitted Business. Pending the final application of any Net Proceeds, Holdings (or a Restricted Subsidiary) may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by the indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the second paragraph of this covenant will constitute "EXCESS PROCEEDS." When the aggregate amount of Excess Proceeds exceeds $15.0 million, the Issuer will make an offer to purchase (an "ASSET SALE OFFER"), to all holders of notes and all holders of other Indebtedness that is pari passu with the notes containing provisions similar to those set forth in the indenture with respect to offers to purchase or redeem with the proceeds of sales of assets, the maximum principal amount of notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price for the notes in any Asset Sale Offer will be equal to 100% of principal amount of the notes plus accrued and unpaid interest and Special Interest thereon, if any, to the date of purchase, and will be payable in cash, and the offer or redemption price for such pari passu Indebtedness shall be as set forth in the related documentation governing such Indebtedness. If any Excess Proceeds 104 remain after consummation of an Asset Sale Offer, the Issuer may use those Excess Proceeds for any purpose not otherwise prohibited by the indenture. If the aggregate principal amount of notes and other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the trustee will select the notes and such other pari passu Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero. The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sale provisions of the indenture, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Asset Sale provisions of the indenture by virtue of such compliance. The Credit Agreement will contain prohibitions on the ability of the Issuer to voluntarily repurchase, redeem or prepay certain of its indebtedness, including the notes, and limitations on the Issuer's ability to engage in Asset Sales, and provides that any Change of Control under the indenture governing the notes constitutes an event of default under the Credit Agreement. Additionally, future agreements may contain prohibitions of certain events, including events that would constitute a Change of Control or an Asset Sale and including repurchases of or other prepayments in respect of the notes. The acceptance by the holders of the notes of an offer to repurchase made by the Issuer upon a Change of Control or an Asset Sale could cause a default under these other agreements, even if the Change of Control or Asset Sale itself does not, due to the financial effect of such repurchases on the Issuer. In the event a Change of Control or Asset Sale occurs at a time when the Issuer is prohibited from purchasing notes, the Issuer could seek the consent of its other lenders to the purchase of notes or could attempt to refinance the borrowings that contain such prohibition. If the Issuer does not obtain a consent or repay those borrowings, the Issuer will remain prohibited from purchasing notes. In that case, the Issuer's failure to purchase tendered notes would constitute an Event of Default under the indenture which, in turn, may constitute a default under the other indebtedness. In such circumstances the subordination provisions in the indenture would likely restrict payments to the holders of the notes. Finally, the Issuer's ability to pay cash to the holders of notes upon a repurchase may be limited by the Issuer's then existing financial resources. See "Risk Factors -- Risks Relating to the Notes -- We may be unable to purchase the notes upon a change of control." CERTAIN COVENANTS RESTRICTED PAYMENTS Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of the Equity Interests of Holdings or any Restricted Subsidiary (including, without limitation, any payment in connection with any merger, amalgamation or consolidation involving Holdings or any Restricted Subsidiary) or to the direct or indirect holders of the Equity Interests of Holdings or any Restricted Subsidiary in their capacity as such (other than (A) dividends or distributions payable in Qualified Equity Interests, (B) dividends or distributions payable to Holdings or any Restricted Subsidiary and (C) any dividend, payment or distribution made on the Issue Date in connection with the amalgamation as described in this prospectus under the caption "Use of Proceeds"); (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger, amalgamation or consolidation involving Holdings) any Equity Interests of Holdings or any Parent Company; 105 (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Indebtedness of the Issuer or any Guarantor that is contractually subordinated to the notes or any Guarantee (excluding any Indebtedness owed to and held by Holdings or any Restricted Subsidiary), other than (x) payments of interest or principal at the Stated Maturity thereof and (y) payments, purchases, redemptions, defeasances or other acquisitions or retirements for value in anticipation of satisfying a scheduled maturity, sinking fund or amortization or other installment obligation or mandatory redemption, in each case, due within one year of the Stated Maturity thereof; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "RESTRICTED PAYMENTS"), unless, at the time of and after giving effect to such Restricted Payment: (1) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; (2) Holdings would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock"; and (3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by Holdings and the Restricted Subsidiaries since the date of the indenture (excluding Restricted Payments permitted by clauses (2), (3), (4), (5), (6), (7), (8), (9) and (10) of the next succeeding paragraph), is not greater than the sum, without duplication, of: (a) 50% of the Consolidated Net Income of Holdings for the period (taken as one accounting period) from the beginning of the fiscal quarter in which the Issue Date occurs to the end of Holdings' most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus (b) 100% of the aggregate net cash proceeds received by Holdings, and 100% of the Fair Market Value at the time of receipt of assets other than cash, if any, received by Holdings, after the date of the indenture as a contribution to its common equity capital or from the issue or sale of Qualified Equity Interests or from the issue or sale (other than to a Subsidiary of Holdings) of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of Holdings that have been converted into or exchanged for Qualified Equity Interests; plus (c) to the extent that any Restricted Investment that was made after the date of the indenture is sold for cash or Holdings or a Restricted Subsidiary otherwise receives Cash Equivalents therefor, the return of capital in cash or Cash Equivalents with respect to such Restricted Investment (less the cost of disposition, if any); plus (d) to the extent that any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary after the date of the indenture, the Fair Market Value of the Investment of Holdings and the Restricted Subsidiaries in such Subsidiary as of the date of such redesignation. 106 The preceding provisions will not prohibit: (1) the payment of any dividend within 60 days after the date of declaration of the dividend, if at the date of declaration the dividend payment would have complied with the provisions of the indenture; (2) the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of Holdings) of, Qualified Equity Interests or from the substantially concurrent contribution of common equity capital to Holdings; provided that the amount of any such net cash proceeds that is utilized for any such Restricted Payment will be excluded from clause (3)(b) of the preceding paragraph; (3) the payment, defeasance, redemption, repurchase or other acquisition or retirement for value of Indebtedness of the Issuer or any Guarantor that is contractually subordinated to the notes or to any Guarantee with the net cash proceeds from a substantially concurrent incurrence of Permitted Refinancing Indebtedness; (4) the payment of any dividend (or, in the case of any partnership, limited liability company or unlimited company, any similar distribution) by a Restricted Subsidiary of Holdings to the holders of its Equity Interests on a pro rata basis taking into account the relative preferences, if any, of the various classes of equity interests in such Restricted Subsidiary; (5) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of Holdings or any Restricted Subsidiary, or payments by Holdings to any Parent Company to permit, and which are used by, any Parent Company to repurchase, redeem or otherwise acquire or retire for value any Equity Interests of any Parent Company, in each case, held by any current or former officer, director, consultant or employee of Holdings or any Restricted Subsidiary (or permitted transferees, assigns, estates or heirs of any of the foregoing); provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed $5.0 million in any calendar year (excluding for purposes of calculating such amount the purchase price of Equity Interests repurchased, redeemed, acquired or retired with the proceeds from the repayment of loans by Holdings or a Restricted Subsidiary made for the purpose of purchasing such Equity Interests), with unused amounts being available to be used in the following calendar year, but not in any succeeding calendar year; (6) the repurchase of Equity Interests deemed to occur upon the exercise of stock options to the extent such Equity Interests represent a portion of the exercise price of those stock options; (7) the declaration and payment of dividends on Designated Preferred Stock in accordance with the certificate of designations therefor; provided that at the time of issuance of such Designated Preferred Stock, Holdings would, after giving pro forma effect thereto as if such issuance had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock"; (8) payments made to purchase, redeem, defease or otherwise acquire or retire for value any Equity Interests of Holdings or any Restricted Subsidiary or any Indebtedness of the Issuer or any Guarantor that is contractually subordinated to the notes or to any Guarantee, in each case, pursuant to provisions requiring such Person to offer to purchase, redeem, defease or otherwise acquire or retire for value such Equity Interests or subordinated Indebtedness upon the occurrence of a "change of control" or with the proceeds of "asset sales" as defined in the charter provisions, agreements or instruments governing such Equity Interests or subordinated Indebtedness; provided, however, that a Change of Control Offer or Asset Sale Offer, as 107 applicable, has been made and the Issuer has purchased all notes validly tendered in connection with that Change of Control Offer or Asset Sale Offer; (9) payments pursuant to clause (4), (8) or (10) of the covenant described under "-- Transactions with Affiliates"; and (10) other Restricted Payments in an aggregate amount not to exceed $20.0 million since the date of the indenture; provided that in the case of clause (5), (7), (8) or (10), no Default shall have occurred and be continuing. The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by Holdings or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. For purposes of determining compliance with this covenant, if a Restricted Payment meets the criteria of more than one of the exceptions described in clauses (1) through (10) above or is entitled to be made according to the first paragraph of this covenant, Holdings may, in its sole discretion, classify the Restricted Payment in any manner that complies with this covenant. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "INCUR") any Indebtedness (including Acquired Debt), and Holdings will not issue any Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of preferred stock; provided, however, that Holdings may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and any Subsidiary Guarantor may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Fixed Charge Coverage Ratio of Holdings for its most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued, as the case may be, would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period. The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, "PERMITTED DEBT"): (1) the incurrence by the Issuer and any Guarantor of Indebtedness and letters of credit under Credit Facilities in an aggregate amount at any time outstanding under this clause (1) (with letters of credit being deemed to have an amount equal to the maximum potential liability of Holdings and the Restricted Subsidiaries thereunder) not to exceed the greater of (a) the sum of (x) $165.0 million and (y) C$180.0 million (including the Canadian Dollar Equivalent of any amount under this clause (y) denominated in U.S. dollars) less the aggregate amount of all Net Proceeds of Asset Sales applied by Holdings or any Restricted Subsidiary since the date of the indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to the covenant described above under the caption "-- Offer to Purchase -- Asset Sales" and (b) the amount that is 2.5 times Consolidated Cash Flow of Holdings for its most recently ended four full fiscal quarters for which internal financial statements are available; (2) the incurrence by Holdings and the Restricted Subsidiaries of the Existing Indebtedness; 108 (3) the incurrence of the notes on the Issue Date, the Guarantees and the exchange notes to be issued pursuant to the registration rights agreement; (4) the incurrence by Holdings or any Restricted Subsidiary of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used or useful in the business of Holdings or any Restricted Subsidiary, and refinancings thereof, in an aggregate amount not to exceed $10.0 million at any time outstanding; (5) the incurrence by Holdings or any Restricted Subsidiary of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance, replace, defease or discharge, Indebtedness (other than intercompany Indebtedness) that was permitted by the indenture to be incurred under the first paragraph of this covenant or clause (2), (3) or (5) of this paragraph; (6) the incurrence by Holdings or any Restricted Subsidiary of intercompany Indebtedness between or among Holdings and/or any Restricted Subsidiary; provided, however, that: (a) if the Issuer or any Guarantor is the obligor on such Indebtedness and the payee is not the Issuer or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the notes, in the case of the Issuer, or the Guarantee, in the case of a Guarantor; and (b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than Holdings or a Restricted Subsidiary and (ii) any sale or other transfer of any such Indebtedness to a Person that is neither Holdings nor a Restricted Subsidiary will be deemed, in each case, to constitute an incurrence of such Indebtedness by Holdings or such Restricted Subsidiary, as the case may be, that is not permitted by this clause (6); (7) the issuance by any of the Restricted Subsidiaries to Holdings or to any Restricted Subsidiary of preferred stock; provided, however, that (a) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than Holdings or a Restricted Subsidiary and (b) any sale or other transfer of any such preferred stock to a Person that is neither Holdings nor a Restricted Subsidiary will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that is not permitted by this clause 7); (8) the incurrence by Holdings or any Restricted Subsidiary of Hedging Obligations in the ordinary course of business; (9) the guarantee by the Issuer or any Guarantor of Indebtedness of Holdings or a Restricted Subsidiary that was permitted to be incurred by another provision of this covenant; provided that if the Indebtedness being guaranteed is subordinated to the notes or the Guarantees, then the guarantee shall be subordinated to the same extent as the Indebtedness guaranteed; (10) the incurrence by Holdings or any Restricted Subsidiary of Indebtedness in respect of workers' compensation claims, self-insurance obligations, indemnities, bankers' acceptances, performance, completion and surety bonds or guarantees, and similar types of obligations in the ordinary course of business; (11) the incurrence by Holdings or any Restricted Subsidiary of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five business days; 109 (12) the incurrence by Holdings or any Restricted Subsidiary of Indebtedness consisting of guarantees, earn-outs, indemnities or obligations in respect of purchase price adjustments in connection with the acquisition or disposition of assets, including, without limitation, shares of Capital Stock; provided that the maximum aggregate liability in respect of all such obligations outstanding under this clause (12) shall at no time exceed (a) in the case of an acquisition, $10.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the consolidated balance sheet of Holdings (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by Holdings and the Restricted Subsidiaries in connection with such disposition; (13) Daylight Loans incurred by Holdings from time to time; (14) Indebtedness in respect of Permitted Factoring Arrangements; and (15) the incurrence by Holdings or any Restricted Subsidiary of additional Indebtedness in an aggregate amount at any time outstanding, including all Indebtedness incurred to refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (15), not to exceed $25.0 million. For purposes of determining compliance with this "Incurrence of Indebtedness and Issuance of Preferred Stock" covenant, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (15) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, the Issuer will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this covenant. Indebtedness under Credit Facilities outstanding on the Issue Date will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) above. The accrual of interest, the accrual of dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this covenant; provided, in each such case, that the amount thereof is included in Fixed Charges of Holdings as accrued. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that Holdings or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The amount of any Indebtedness outstanding as of any date will be: (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; (2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and (3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of: (A) the Fair Market Value of such assets at the date of determination; and (B) the amount of the Indebtedness of the other Person that is secured by such assets. NO LAYERING OF DEBT The Issuer will not, directly or indirectly, incur any Indebtedness that is, or purports to be by its terms (or by the terms of any agreement governing such Indebtedness), subordinate or junior in right of payment to any Senior Debt of the Issuer and senior in any respect in right of payment to the 110 notes. No Guarantor will, directly or indirectly, incur any Indebtedness that is, or purports to be by its terms (or by the terms of any agreement governing such Indebtedness), subordinate or junior in right of payment to any Senior Debt of such Guarantor and senior in any respect in right of payment to such Guarantor's Guarantee. For purposes hereof, unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness solely because it is unsecured, and Indebtedness that is not guaranteed by a particular Person shall not be deemed to be subordinate or junior to Indebtedness solely because it is not so guaranteed. LIENS Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist any Lien of any kind on any asset now owned or hereafter acquired, except Permitted Liens, which Lien secures Indebtedness or trade payables, unless contemporaneously therewith: (1) in the case of any Lien securing an obligation that ranks pari passu with the notes or a Guarantee, effective provision is made to secure the notes or such Guarantee, as the case may be, at least equally and ratably with or prior to such obligation with a Lien on the same collateral; and (2) in the case of any Lien securing an obligation that is subordinated in right of payment to the notes or a Guarantee, effective provision is made to secure the notes or such Guarantee, as the case may be, with a Lien on the same collateral that is prior to the Lien securing such subordinated obligation, in each case, for so long as such obligation is secured by such Lien. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (1) pay dividends or make any other distributions on its Capital Stock to Holdings or any Restricted Subsidiary, or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to Holdings or any Restricted Subsidiary; (2) make loans or advances to Holdings or any Restricted Subsidiary; or (3) transfer any of its properties or assets to Holdings or any Restricted Subsidiary. However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of: (1) agreements governing Existing Indebtedness and Credit Facilities as in effect on the date of the indenture and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of those agreements; provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the date of the indenture; (2) the indenture, the notes and the Guarantees; (3) applicable law, rule, regulation or order; (4) any instrument governing Indebtedness or Capital Stock of a Person acquired by Holdings or any Restricted Subsidiary as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation 111 of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the indenture to be incurred; (5) customary non-assignment provisions in contracts and licenses entered into in the ordinary course of business; (6) purchase money obligations for property acquired in the ordinary course of business and Capital Lease Obligations that impose restrictions on the property purchased or leased of the nature described in clause (3) of the preceding paragraph; (7) any agreement for the sale or other disposition of a Restricted Subsidiary or an asset that restricts distributions by that Restricted Subsidiary or transfers of such asset pending the sale or other disposition; (8) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; (9) Liens permitted to be incurred under the provisions of the covenant described above under the caption "-- Liens" that limit the right of the debtor to dispose of the assets subject to such Liens; (10) provisions limiting the disposition or distribution of assets or property in joint venture agreements, partnership agreements, limited liability company operating agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements entered into with the approval of the Board of Directors of Holdings, which limitation is applicable only to the assets that are the subject of such agreements; (11) restrictions on cash or other deposits or net worth imposed under contracts entered into in the ordinary course of business; (12) restrictions under Permitted Factoring Arrangements on the disposition of accounts receivable subject to Permitted Factoring Arrangements; and (13) agreements governing Indebtedness permitted to be incurred pursuant to the covenant described under "-- Incurrence of Indebtedness and Issuance of Preferred Stock"; provided that the provisions relating to such encumbrance or restriction contained in such Indebtedness, taken as a whole, are not materially more restrictive to the Issuer or Holdings, as applicable, as determined by the Board of Directors of the Issuer or Holdings, as applicable, in its reasonable and good faith judgment, than the provisions contained in the Credit Agreement or the indenture as in effect on the date of the indenture. TRANSACTIONS WITH AFFILIATES Holdings will not, and will not permit any Restricted Subsidiary to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of Holdings (each, an "AFFILIATE TRANSACTION"), unless: (1) the Affiliate Transaction is on terms that are not materially less favorable to Holdings or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by Holdings or such Restricted Subsidiary with an unrelated Person; and 112 (2) Holdings delivers to the trustee: (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, a resolution of the Board of Directors of Holdings set forth in an officers' certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of such Board of Directors; and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $20.0 million, an opinion as to the fairness to Holdings or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing in the United States or Canada. The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph: (1) reasonable director, officer, consultant and employee compensation, benefit and indemnification agreements, plans and arrangements entered into by Holdings or any Restricted Subsidiary in the ordinary course of business and payments pursuant thereto; (2) transactions between or among Holdings and/or the Restricted Subsidiaries; (3) transactions with a Person (other than an Unrestricted Subsidiary of Holdings) that is an Affiliate of Holdings solely because Holdings owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person; (4) to the extent that Holdings or one or more of the Restricted Subsidiaries are members of a consolidated, combined or similar income tax group of which a direct or indirect parent of Holdings is the common parent, payment of dividends or other distributions by Holdings or one or more of the Restricted Subsidiaries pursuant to a tax sharing agreement or otherwise to the extent necessary to pay, and which are used to pay, any income taxes of such tax group that are attributable to Holdings and/or the Restricted Subsidiaries (or would be attributable to Holdings if Holdings were a U.S. corporation) and are not payable directly by Holdings and/or the Restricted Subsidiaries; provided that the amount of any such dividends or distributions (plus any such taxes payable directly by Holdings and/or the Restricted Subsidiaries) shall not exceed the amount of such taxes that would have been payable directly by Holdings and/or the Restricted Subsidiaries had Holdings been the U.S. common parent of a separate tax group that included only Holdings and the Restricted Subsidiaries; (5) any issuance of Qualified Equity Interests (and the exercise of any warrants, options or other rights to acquire Qualified Equity Interests); (6) Restricted Payments that do not violate the provisions of the indenture described above under the caption "-- Restricted Payments"; (7) loans or advances to employees of Holdings or any Restricted Subsidiary (x) in the ordinary course of business in an aggregate amount not to exceed $5.0 million at any time outstanding or (y) in connection with the purchase by such Persons of Equity Interests of Holdings or any Parent Company so long as the cash proceeds of such purchase received by any Parent Company are contemporaneously contributed to the common equity capital of Holdings; (8) payments by Holdings to or on behalf of any Parent Company in an amount sufficient to pay out-of-pocket legal, accounting and filing and other general corporate overhead costs of such Parent Company and franchise taxes and other fees required to maintain its existence actually incurred by such Parent Company, in any case in an aggregate amount not to exceed $1.0 million in any calendar year; 113 (9) the agreements described in this prospectus under the caption "Certain Relationships and Related Party Transactions," as in effect on the date of the indenture or as amended thereafter (so long as the amended agreement is not more disadvantageous to the holders of the notes, taken as a whole, in any material respect than such agreement immediately prior to such amendment) or any transaction contemplated thereby (other than payment of management fees referred to in clause (10) below); and (10) so long as no Event of Default exists, the existence or performance by Holdings or any Restricted Subsidiary of the provisions of the Management Agreement described in this prospectus under "Certain Relationships and Related Party Transactions" or any amendment thereto or replacement agreement therefor or any transaction contemplated thereby so long as such amendment or replacement is not more disadvantageous to the holders of the notes, taken as a whole, in any material respect than the original agreements as in effect on the date of the indenture. MERGER, CONSOLIDATION OR SALE OF ASSETS (a) The Issuer may not, directly or indirectly: (1) consolidate, amalgamate or merge with or into another Person (whether or not the Issuer is the surviving Person); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Issuer and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless: (1) either: (a) the Issuer is the surviving Person; or (b) the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Issuer) or to which such sale, assignment, transfer, conveyance or other disposition has been made (x) is a Nova Scotia unlimited company or a corporation, limited liability company or limited partnership organized or existing under the laws of Canada, any province or territory thereof, the United States, any state of the United States or the District of Columbia and (y) assumes all the obligations of the Issuer under the notes, the indenture and the registration rights agreement pursuant to agreements reasonably satisfactory to the trustee; (2) immediately after such transaction, no Default or Event of Default exists; and (3) either (a) the Issuer or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Issuer), or to which such sale, assignment, transfer, conveyance or other disposition has been made, will, on the date of such transaction after giving pro forma effect thereto and to any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock" or (b) the Fixed Charge Coverage Ratio of Holdings or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Issuer), or to which such sale, assignment, transfer, conveyance or other disposition has been made, after giving effect to the transaction and any related financings, would not be less than the Fixed Charge Coverage Ratio of Holdings immediately prior to such transaction. In addition, the Issuer may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries, the Equity Interests of which constitute all or substantially all of the properties and assets of the Issuer, will be deemed to be the transfer of all or substantially all of the properties and assets of the Issuer. 114 (b) Holdings may not, directly or indirectly: (1) consolidate, amalgamate or merge with or into another Person (whether or not Holdings is the surviving Person); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of Holdings and the Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless: (1) either: (a) Holdings is the surviving Person; or (b) the Person formed by or surviving any such consolidation, amalgamation or merger (if other than Holdings) or to which such sale, assignment, transfer, conveyance or other disposition has been made (x) is a Nova Scotia unlimited company or a corporation, limited liability company or limited partnership organized or existing under the laws of Canada, any province or territory thereof, the United States, any state of the United States or the District of Columbia and (y) assumes all the obligations of Holdings under the Guarantee, the indenture and the registration rights agreement pursuant to agreements reasonably satisfactory to the trustee; (2) immediately after such transaction, no Default or Event of Default exists; and (3) either (a) Holdings or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than Holdings), or to which such sale, assignment, transfer, conveyance or other disposition has been made will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock" or (b) the Fixed Charge Coverage Ratio of Holdings or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than Holdings), or to which such sale, assignment, transfer, conveyance or other disposition has been made, after giving effect to the transaction and any related financings, would not be less than the Fixed Charge Coverage Ratio of Holdings immediately prior to such transaction. In addition, Holdings may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries, the Equity Interests of which constitute all or substantially all of the properties and assets of Holdings, will be deemed to be the transfer of all or substantially all of the properties and assets of Holdings. (c) This "Merger, Consolidation or Sale of Assets" covenant will not apply to a merger of the Issuer or a Guarantor with an Affiliate solely for the purpose, and with the effect, of reincorporating the Issuer or such Guarantor, as the case may be, in another jurisdiction of the United States or Canada. In addition, nothing in this "Merger, Consolidation or Sale of Assets" will prohibit any Restricted Subsidiary from consolidating or amalgamating with, merging with or into or conveying, transferring or leasing, in one transaction or a series of transactions, all or substantially all of its assets to Holdings or another Restricted Subsidiary. BUSINESS ACTIVITIES Holdings will not, and will not permit any Restricted Subsidiary to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Issuer and its Restricted Subsidiaries taken as a whole. 115 DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES The Board of Directors of Holdings may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by Holdings and the Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under the covenant described above under the caption "-- Restricted Payments" or under one or more clauses of the definition of "Permitted Investments," as determined by Holdings. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors of Holdings may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if that redesignation would not cause a Default. SUBSIDIARY GUARANTEES If any Restricted Subsidiary (including any newly formed or newly acquired Restricted Subsidiary) guarantees any Indebtedness under any Credit Facility, then within 30 days of the date on which it guaranteed such Indebtedness, the Issuer shall: (1) execute and deliver to the trustee a supplemental indenture in form reasonably satisfactory to the trustee pursuant to which such Restricted Subsidiary shall unconditionally guarantee all of the Issuer's obligations under the notes and the indenture on the terms set forth in the indenture and (2) deliver to the trustee an opinion of counsel that such supplemental indenture has been duly authorized, executed and delivered by such Restricted Subsidiary and constitutes a valid and legally binding and enforceable obligation of such Restricted Subsidiary, subject to customary exceptions. Thereafter, such Restricted Subsidiary shall be a Subsidiary Guarantor for all purposes of the indenture. The Issuer will not permit any Subsidiary Guarantor to, directly or indirectly, consolidate, amalgamate or merge with or into another Person (whether or not such Guarantor is the surviving Person) unless: (1) such Guarantor is the surviving Person or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than a Guarantor or the Issuer) expressly assumes all the obligations of such Guarantor under the Guarantee of such Guarantor, the indenture and the registration rights agreement pursuant to agreements reasonably satisfactory to the trustee; and (2) immediately after such transaction, no Default or Event of Default exists. Notwithstanding the foregoing, the Guarantee of a Subsidiary Guarantor will automatically and unconditionally be released: (1) in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) Holdings or any Restricted Subsidiary, if the sale or other disposition does not violate the "Asset Sale" provisions of the indenture; (2) in connection with any sale or other disposition of all of the Capital Stock of that Guarantor to a Person that is not (either before or after giving effect to such transaction) Holdings or any Restricted Subsidiary, if the sale or other disposition does not violate the "Asset Sale" provisions of the indenture; 116 (3) if Holdings designates such Subsidiary Guarantor to be an Unrestricted Subsidiary in accordance with the applicable provisions of the indenture; (4) upon legal defeasance or satisfaction and discharge of the notes as provided below under the caption "-- Legal Defeasance and Covenant Defeasance" or "-- Satisfaction and Discharge"; or (5) if such Subsidiary Guarantor shall not guarantee any Indebtedness under any Credit Facility (other than if such Subsidiary Guarantor no longer guarantees any Indebtedness under any Credit Facility as a result of payment under any guarantee of any such Indebtedness by any Subsidiary Guarantor); provided that a Subsidiary Guarantor shall not be permitted to be released from its Guarantee if it is an obligor with respect to Indebtedness that would not, under "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock," be permitted to be incurred by a Restricted Subsidiary that is not a Guarantor. See "-- Offer to Purchase -- Asset Sales." The form of the Guarantee is attached as an exhibit to the indenture. PAYMENTS FOR CONSENT Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any holder of notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the indenture or the notes unless such consideration is offered to be paid or is paid to all holders of the notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. REPORTS So long as any notes are outstanding, the Issuer will furnish to the holders of notes or cause the trustee to furnish to the holders of notes, within the time periods that such information would have otherwise been required to have been provided to the Commission if the rules and regulations applicable to the filing of such information were applicable to the Issuer: (1) all quarterly and annual information that would be required to be filed with the Commission on (a) if the Issuer is a domestic issuer, Forms 10-Q and 10-K if the Issuer were required to file such reports or (b) if the Issuer is a foreign private issuer, on Form 6-K and Form 20-F or Form 40-F (if eligible) if the Issuer were required to file such forms; and (2) all current reports that would be required to be (a) filed if the Issuer is a domestic issuer with the Commission on Form 8-K if the Issuer were required to file such reports or (b) furnished if the Issuer is a foreign private issuer, to the Commission on Form 6-K if the Issuer were required to furnish such reports. The availability of the foregoing materials on either the Commission's EDGAR service or on the Issuer's website shall be deemed to satisfy the Issuer's delivery obligation. All such reports will be prepared in all material respects in accordance with all of the rules and regulations applicable to such reports. Each annual report will include a report on the Issuer's consolidated financial statements by the Issuer's certified independent accountants. In addition, the Issuer will cause a copy of all of the information and reports referred to in clauses (1) and (2) above to be posted no later than the date such information is required to be furnished to registered holders of Notes, on the website of the Issuer (and remain there for a period of one year from the date of such posting). The Issuer will also agree that, for so long as any Notes remain outstanding, if at any time the Issuer and the Guarantors are not required to file reports under the Exchange Act with the Commission, the Issuer will furnish to the holders of Notes and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to 117 Rule 144A(d)(4) under the Securities Act. If any Parent Company has complied with the reporting requirements of Section 13 or 15(d) of the Exchange Act, if applicable, or has furnished the holders of notes or posted on its or the Issuer's website the reports described herein with respect to such Parent Company (including any consolidating financial information required by Regulation S-X relating to the Issuer and the Guarantors), the Issuer shall be deemed to be in compliance with the provisions of this covenant. EVENTS OF DEFAULT AND REMEDIES Each of the following is an "Event of Default": (1) default for 30 days in the payment when due of interest on, or Special Interest with respect to, the notes (whether or not such payment is prohibited by the subordination provision of the indenture); (2) default in payment when due of the principal of, or premium, if any, on the notes (whether or not such payment is prohibited by the subordination provision of the indenture); (3) failure by Holdings or any Restricted Subsidiary to comply (a) for 30 days after written notice with the provisions described under the captions "-- Offer to Purchase -- Change of Control" and "-- Offer to Purchase -- Asset Sales" or (b) with the provisions under "-- Certain Covenants -- Merger, Consolidation or Sale of Assets"; (4) failure by Holdings or any Restricted Subsidiary for 60 days after written notice has been given to the Issuer by the trustee or to the Issuer and the trustee by the holders of at least 25% in aggregate principal amount of the notes then outstanding to comply with any of the other agreements in the indenture; (5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by Holdings or any Restricted Subsidiary (or the payment of which is guaranteed by Holdings or any Restricted Subsidiary), whether such Indebtedness or guarantee now exists or is created after the date of the indenture, if that default: (a) is caused by a failure to pay any such Indebtedness at its stated final maturity after giving effect to any applicable grace periods (a "PAYMENT DEFAULT"); or (b) results in the acceleration of such Indebtedness prior to its stated final maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $20.0 million or more; (6) failure by Holdings or any Restricted Subsidiary to pay final judgments aggregating in excess of $20.0 million in excess of amounts that are covered by insurance, which judgments are not paid, discharged or stayed for a period of 60 days; (7) except as permitted by the indenture, the Guarantee of Holdings or any Restricted Subsidiary that is a Significant Subsidiary shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Guarantee; (8) certain events of bankruptcy or insolvency described in the indenture with respect to Holdings, the Issuer or any of Holdings' Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary; and 118 (9) the amalgamation contemplated by the merger agreement described under "Summary -- The Transactions" is not consummated on or before June 7, 2004. In the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to Holdings, the Issuer, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, or an Event of Default described in clause (9) of the immediately preceding paragraph, all outstanding notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the trustee or the holders of at least 25% in principal amount of the then outstanding notes may declare (an "ACCELERATION DECLARATION") all the notes to be due and payable. Upon an acceleration declaration, the aggregate principal of and accrued and unpaid interest on the outstanding notes shall become due and payable immediately without further action or notice (a) if there is no Indebtedness outstanding under any Credit Facility at such time, immediately and (b) if otherwise, upon the earlier of (x) the final maturity (after giving effect to any applicable grace period or extensions thereof) or an acceleration of any Indebtedness under any Credit Facility prior to the express final stated maturity thereof and (y) five business days after the Representative under each Credit Facility receives the acceleration declaration, but, in the case of this clause (b) only, if such Event of Default is then continuing; provided, however, that after such acceleration, but before a judgment or decree based on acceleration, the holders of a majority in aggregate principal amount of such outstanding notes may, under certain circumstances, rescind and annul such acceleration if all Events of Default, other than the nonpayment of accelerated principal and interest, have been cured or waived as provided in the indenture. In addition, in the event of an acceleration declaration because an Event of Default has occurred and is continuing as a result of the acceleration of any Indebtedness described in clause (5) of the second preceding paragraph, the acceleration declaration shall be automatically annulled if the holders of any Indebtedness described in clause (5) have rescinded the declaration of acceleration in respect of such Indebtedness and if (a) the annulment of the acceleration of the notes would not conflict with any judgment or decree of a court of competent jurisdiction and (b) all existing Events of Default, except nonpayment of principal or interest on the notes that became due solely because of the acceleration of the notes, have been cured or waived. Subject to certain limitations, holders of a majority in principal amount of the then outstanding notes may direct the trustee in its exercise of any trust or power. The trustee may withhold from holders of the notes notice of any continuing Default or Event of Default if it determines that withholding notice is in their interest, except a Default or Event of Default relating to the payment of principal or interest or Special Interest. Except to enforce the right to receive payment of principal, premium, if any, or interest when due, no holder of a note may pursue any remedy with respect to the indenture or the notes unless: (1) such holder has previously given the trustee written notice that an Event of Default is continuing; (2) holders of at least 25% in aggregate principal amount of the outstanding notes have requested in writing the trustee to pursue the remedy; (3) such holders have offered the trustee reasonable security or indemnity against any loss, liability or expense; (4) the trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and (5) holders of a majority in aggregate principal amount of the outstanding notes have not given the trustee a written direction inconsistent with such request within such 60-day period. The holders of a majority in aggregate principal amount of the notes then outstanding by written notice to the trustee may, on behalf of the holders of all of the notes, rescind an acceleration 119 or waive any existing Default or Event of Default and its consequences under the indenture except a continuing Default or Event of Default in the payment of interest or premium or Special Interest on, or the principal of, the notes. The Issuer will be required to deliver to the trustee annually a statement regarding compliance with the indenture. Upon becoming aware of any Default or Event of Default, the Issuer will be required to deliver to the trustee a statement specifying such Default or Event of Default. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS No director, officer, employee, incorporator, member or shareholder of the Issuer or any Guarantor, as such, will have any liability for any obligations of the Issuer or the Guarantors under the notes, the indenture, the Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. The waiver may not be effective to waive liabilities under the federal securities laws. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The Issuer may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding notes and all obligations of the Guarantors discharged with respect to their Guarantees ("LEGAL DEFEASANCE") except for: (1) the rights of holders of outstanding notes to receive payments in respect of the principal of, or interest or premium and Special Interest, if any, on such notes when such payments are due from the trust referred to below; (2) the Issuer's obligations with respect to the notes concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and money for security payments held in trust; (3) the rights, powers, trusts, duties and immunities of the trustee, and the Issuer's and the Guarantor's obligations in connection therewith; and (4) the Legal Defeasance provisions of the indenture. In addition, the Issuer may, at its option and at any time, elect to have the obligations of the Issuer and the Guarantors released with respect to certain covenants (including its obligation to make Change of Control Offers and Asset Sale Offers) in the indenture ("COVENANT DEFEASANCE") and thereafter any omission to comply with those covenants will not constitute a Default or Event of Default with respect to the notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under "-- Events of Default and Remedies" will no longer constitute an Event of Default with respect to the notes. In order to exercise either Legal Defeasance or Covenant Defeasance: (1) the Issuer must irrevocably deposit with the trustee, in trust, for the benefit of the holders of the notes, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, without consideration of any reinvestment of interest, in the opinion of an investment bank, appraisal firm or firm of independent public accountants nationally recognized in the United States to pay the principal of, or interest and premium and Special Interest, if any, on the outstanding notes on the Stated Maturity or on the applicable redemption date, as the case may be, and the Issuer must specify whether the notes are being defeased to maturity or to a particular redemption date; 120 (2) in the case of Legal Defeasance, the Issuer must deliver to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that (a) the Issuer has received from, or there has been published by, the U.S. Internal Revenue Service a ruling or (b) since the date of the indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion of counsel will confirm that, the holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (3) in the case of Covenant Defeasance, the Issuer must deliver to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that the holders of the outstanding notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (4) in the case of Legal Defeasance or Covenant Defeasance, the Issuer must deliver to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that the holders and beneficial owners of the outstanding notes will not recognize income, gain or loss for Canadian federal, provincial, territorial income tax or other tax purposes as a result of such Legal Defeasance or Covenant Defeasance, as applicable, and will be subject to Canadian federal, provincial or territorial income tax and other tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance or Covenant Defeasance, as the case may be, had not occurred (which condition may not be waived by any holder of outstanding notes or the trustee); (5) no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit); (6) such Legal, Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the indenture) to which Holdings, the Issuer or any of Holdings' Restricted Subsidiaries that are Significant Subsidiaries is a party or by which Holdings, the Issuer or any of Holdings' Restricted Subsidiaries that are Significant Subsidiaries is bound; (7) the Issuer must deliver to the trustee an officers' certificate stating that the deposit was not made by the Issuer with the intent of preferring the holders of notes over the other creditors of the Issuer with the intent of defeating, hindering, delaying or defrauding creditors of the Issuer or others; and (8) the Issuer must deliver to the trustee an officers' certificate and an opinion of counsel, each to the effect that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with. SATISFACTION AND DISCHARGE The indenture will be discharged and will cease to be of further effect as to all notes issued thereunder, when: (1) either: (a) all notes that have been authenticated, except lost, stolen or destroyed notes that have been replaced or paid and notes for whose payment money has been deposited in trust and thereafter repaid to the Issuer or discharged from the trust, have been delivered to the trustee for cancellation; or 121 (b) all notes that have not been delivered to the trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise, will become due and payable within one year or have been called for redemption pursuant to the provisions described under "-- Optional Redemption" and the Issuer or any Guarantor has irrevocably deposited or caused to be deposited with the trustee as trust funds in trust solely for the benefit of the holders, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the notes not delivered to the trustee for cancellation for principal, premium and Special Interest, if any, and accrued interest to the date of maturity or redemption; (2) the Issuer or any Guarantor has paid or caused to be paid all sums payable by it under the indenture; and (3) the Issuer has delivered irrevocable instructions to the trustee under the indenture to apply the deposited money toward the payment of the notes at maturity or the redemption date, as the case may be. In addition, the Issuer must deliver an officers' certificate and an opinion of counsel to the trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next two succeeding paragraphs, the indenture, the notes or the Guarantees may be amended or supplemented with the consent of the holders of at least a majority in principal amount of the notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes), and any existing Default or Event of Default or compliance with any provision of the indenture or the notes or the Guarantees may be waived with the consent of the holders of a majority in principal amount of the then outstanding notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes). Without the consent of each holder of notes affected, an amendment, supplement or waiver may not (with respect to any notes held by a non-consenting holder): (1) reduce the principal amount of notes whose holders must consent to an amendment, supplement or waiver; (2) reduce the principal of or change the fixed maturity of any note or alter the provisions with respect to the redemption of the notes (it being understood that this clause (2) does not apply to provisions relating to the covenants described above under the caption "-- Offer to Purchase"); (3) reduce the rate of or change the time for payment of interest on any note; (4) waive a Default or Event of Default in the payment of principal of, or interest or premium, or Special Interest, if any, on the notes (except a rescission of acceleration of the notes by the holders of at least a majority in aggregate principal amount of the then outstanding notes in accordance with the provisions of the indenture and a waiver of the payment default that resulted from such acceleration); (5) make any note payable in money other than that stated in the notes; (6) make any change in the provisions of the indenture relating to waivers of past Defaults or the rights of holders of notes to receive payments of principal of, or interest or premium or Special Interest, if any, on the notes; 122 (7) waive a redemption payment with respect to any note (it being understood that this clause (7) does not apply to a payment required by one of the covenants described above under the caption "-- Offer to Purchase"); (8) release Holdings or any other Guarantor that is a Significant Subsidiary from any of its obligations under its Guarantee or the indenture, except in accordance with the terms of the indenture; (9) in the event that the obligation to make a Change of Control Offer or an Asset Sale Offer has arisen, amend, change or modify in any material respect the obligation of the Issuer to make and consummate such Change of Control Offer or such Asset Sale Offer, as the case may be; (10) modify or change any provision of the indenture or the related definitions affecting the subordination of the notes or any Guarantee in a manner that adversely affects the holders of notes; or (11) make any change in the preceding amendment and waiver provisions. Notwithstanding the preceding, without the consent of any holder of notes, the Issuer, the Guarantors and the trustee may amend or supplement the indenture, the notes or the Guarantees: (1) to cure any ambiguity, defect or inconsistency; (2) to provide for uncertificated notes in addition to or in place of certificated notes; (3) to provide for the assumption of the Issuer's or a Guarantor's obligations to holders of notes and Guarantees in the case of a merger or consolidation or sale of all or substantially all of the Issuer's or such Guarantor's assets, as applicable; (4) to make any change that would provide any additional rights or benefits to the holders of notes or that does not materially adversely affect the legal rights under the indenture of any such holder; (5) to comply with requirements of the Commission in order to effect or maintain the qualification of the indenture under the Trust Indenture Act; (6) to allow any Guarantor to execute a supplemental indenture and a Guarantee with respect to the notes; or (7) to evidence and provide for the acceptance of appointment under the indenture by a successor trustee. No amendment of, or supplement or waiver to, the indenture shall adversely affect the rights of any holder of Senior Debt under the subordination provisions of the indenture, without the consent of such holder or, in accordance with the terms of such Senior Debt, the consent of the agent or representative of such holder or the requisite holders of such Senior Debt. CONCERNING THE TRUSTEE If the trustee becomes a creditor of the Issuer or any Guarantor, the indenture limits its right to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue (if the indenture has been qualified under the Trust Indenture Act) or resign. The holders of a majority in principal amount of the then outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee, subject to certain exceptions. The indenture provides that in case an Event of Default 123 occurs and is continuing, the trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in the conduct of such person's own affairs. Subject to such provisions, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any holder of notes, unless such holder has offered to the trustee security and indemnity satisfactory to it against any loss, liability or expense. ADDITIONAL INFORMATION Anyone who receives this prospectus may obtain a copy of the indenture and registration rights agreement without charge by writing to MAAX Corporation, 1010 Sherbrooke Street West, Suite 1610, Montreal (Quebec), Canada H3A 2R7, Attention: Secretary. ENFORCEABILITY OF JUDGMENTS Since a substantial portion of the Issuer's assets are outside the United States, any judgment obtained in the United States against the Issuer, including judgments with respect to the payment of principal, premium, if any, or interest on the notes, may not be collectible within the United States. The Issuer has been informed by its Nova Scotia counsel, McInnes Cooper, that the laws of the Province of Nova Scotia and the federal laws of Canada applicable therein permit an action to be brought against the Issuer in a court of competent jurisdiction in such Province on any final and conclusive judgment in personam of any federal or state court located in the Borough of Manhattan in The City of New York ("NEW YORK COURT") with respect to the indenture or the notes that has not been stayed and is not impeachable as void or voidable under the internal laws of the State of New York and that is for a sum certain if (1) the New York Court rendering such judgment had jurisdiction over the judgment debtor, as recognized by the courts of the Province of Nova Scotia (and submission by the Issuer in the indenture to the jurisdiction of the New York Court will be sufficient for that purpose); (2) such judgment was not obtained by fraud or in a manner contrary to natural justice and the enforcement thereof would not be inconsistent with public policy, as such term is understood under the laws of the Province of Nova Scotia, for example because that would be contrary to any order made by the Attorney General of Canada under the Foreign Extraterritorial Measures Act (Canada), or the enforcement of such judgment would constitute, directly or indirectly, the enforcement of foreign revenue, expropriatory or penal laws; (3) there is no manifest error on the face of the judgment; and (4) the action to enforce such judgment is commenced within the applicable limitation period. The Issuer has been advised by such counsel that they do not know of any reason under present laws of the Province of Nova Scotia and the federal laws of Canada applicable therein for avoiding enforcement of such judgments of New York Courts under either the indenture or the notes based upon public policy. CERTAIN DEFINITIONS Set forth below are certain defined terms used in the indenture. Reference is made to the indenture for a full definition of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "ACQUIRED DEBT" means, with respect to any specified Person: (1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person; and (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of 124 this definition, "control," as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. "ASSET SALE" means: (1) the sale, lease, conveyance or other disposition of any assets other than in the ordinary course of business; provided that the sale, conveyance or other disposition of all or substantially all of the assets of Holdings and the Restricted Subsidiaries taken as a whole will be governed by the provisions of the indenture described above under the caption "-- Offer to Purchase -- Change of Control" and/or the provisions described above under the caption "-- Certain Covenants -- Merger, Consolidation or Sale of Assets" and not by the provisions of the Asset Sale covenant; and (2) the issuance of Equity Interests in any of the Restricted Subsidiaries or the sale of Equity Interests in any of the Restricted Subsidiaries. Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale: (1) any single transaction or series of related transactions that involves assets having a Fair Market Value of less than $2.5 million; (2) a transfer of assets between or among Holdings and/or the Restricted Subsidiaries; (3) an issuance of Equity Interests by a Restricted Subsidiary to Holdings or to another Restricted Subsidiary or the issuance of Equity Interests by a Restricted Subsidiary in which Holdings' percentage interest (direct and indirect) in the Equity Interests of such Restricted Subsidiary, after giving effect to such issuance, is at least equal to its percentage interest prior thereto; (4) the sale, lease, conveyance or other disposition of assets in the ordinary course of business and any sale or other disposition of damaged, worn-out or obsolete assets in the ordinary course of business; (5) the sale or other disposition of cash or Cash Equivalents; (6) a Restricted Payment that does not violate the covenant described above under the caption "-- Certain Covenants -- Restricted Payments" or a Permitted Investment; (7) sales of accounts receivable pursuant to Permitted Factoring Arrangements; (8) the licensing or sublicensing of intellectual property or other general intangibles and licenses, leases or subleases of other property in the ordinary course of business which do not materially interfere with the business of Holdings and the Restricted Subsidiaries; and (9) the sale of Permitted Investments (other than sales of Equity Interests of any of the Restricted Subsidiaries) made by Holdings or any Restricted Subsidiary after the date of the indenture, if such Permitted Investments were (a) received in exchange for, or purchased out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of Holdings) of, Equity Interests of Holdings (other than Disqualified Stock) or (b) received in the form of, or were purchased from the proceeds of, a substantially concurrent contribution of common equity capital to Holdings. "BENEFICIAL OWNER" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is 125 exercisable only after the passage of time. The terms "Beneficially Owns" and "Beneficially Owned" have a corresponding meaning. "BOARD OF DIRECTORS" means: (1) with respect to a corporation, the board of directors of the corporation or, other than for purposes of the definition of "Change of Control" and "Continuing Directors," any committee thereof duly authorized to act on behalf of such board; and (2) with respect to any other Person, the functional equivalent of a board of directors of a corporation or, other than for purposes of the definition of "Change of Control" and "Continuing Directors," any committee thereof duly authorized to act on behalf thereof. "CANADIAN DOLLAR EQUIVALENT" means, as to any amount denominated in U.S. Dollars as of any date of determination, the amount of Canadian Dollars which would be required to purchase such amount of U.S. Dollars at the Bank of Canada noon (Toronto time) spot rate on such date or, if such date of determination is not a Business Day, on the Business Day immediately preceding such date of determination. "CANADIAN HOLDING COMPANY" means Maax Canada Inc., a Canada corporation governed by the Canada Business Corporations Act, and its predecessors. "CAPITAL LEASE OBLIGATION" means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP. "CAPITAL STOCK" means: (1) in the case of a corporation or unlimited company, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock. "CASH EQUIVALENTS" means, as at any date of determination, (1) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States or Canada and maturing within one year of the date of acquisition thereof or (b) issued by any agency of the United States or Canada the obligations of which are backed by the full faith and credit of the United States or Canada, in each case maturing within one year after the date of acquisition thereof; (2) marketable direct obligations issued by any state of the United States of America or province of Canada or any political subdivision of any such state or province or any public instrumentality thereof, in each case maturing within one year after the date of acquisition thereof and having a rating of at least A-2 from Standard & Poor's Rating Services ("S&P") or at least P-2 from Moody's Investors Service, Inc. ("MOODY'S"); (3) commercial paper maturing no more than one year from the date of acquisition thereof and having a rating of at least A-2 from S&P, at least P-2 from Moody's or at least R-2 (high) from Dominion Bond Rating Services Limited; (4) certificates of deposit, time deposits or bankers' acceptances maturing within one year after the date of acquisition thereof and issued or accepted by any lender under any Credit Facility or by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that is at least "adequately capitalized" (as defined in the regulations of its primary Federal banking regulator) and has Tier 1 capital (as defined in such regulations) of not less than $100.0 million; (5) financial instruments maturing within one year after the date of acquisition 126 thereof and issued by any Canadian chartered bank which has a long-term debt rating of at least A+ by S&P, A2 by Moody's or A (high) by Dominion Bond Rating Services Limited; (6) repurchase agreements with a term of not more than 30 days for underlying securities of the types described in clause (1) or (2) entered into with any bank meeting the qualifications specified in clause (4) or (5), which repurchase obligations are secured by a perfected first priority security interest in the underlying securities; (7) shares of any money market mutual fund that (a) has substantially all of its assets invested continuously in the types of investments referred to in clauses (1) and (5) above, (b) has net assets of not less than $500.0 million and (c) has the highest rating obtainable from either S&P or Moody's; and (8) in the case of any European Subsidiary, investments made locally of a type comparable to those described in clauses (1) through (7) of this definition. "CHANGE OF CONTROL" means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger, amalgamation or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of Holdings and its Subsidiaries taken as a whole to any "person" (as that term is used in Section 13(d) of the Exchange Act) other than an Equity Sponsor or a Control Investment Affiliate of an Equity Sponsor; (2) the adoption of a plan relating to the liquidation or dissolution of Holdings or the Issuer (other than a transaction that complies with the provisions described under the caption "-- Certain Covenants -- Merger, Consolidation or Sale of Assets"); (3) the consummation of any transaction (including, without limitation, any merger, amalgamation or consolidation), the result of which is that any "person" (as defined in clause (1) above) other than an Equity Sponsor or a Control Investment Affiliate of an Equity Sponsor becomes the Beneficial Owner, directly or indirectly, of Voting Stock of Holdings representing 50% or more of the total voting power of the Voting Stock of Holdings; provided that this clause (3) shall not be deemed to be triggered by any Person that is deemed to be a Beneficial Owner of Voting Stock of the Issuer by virtue of its relationship with (other than ownership directly or indirectly of Capital Stock of) an Equity Sponsor or a Control Investment Affiliate of an Equity Sponsor; (4) after an initial public offering of Holdings or any Parent Company, the first day on which a majority of the members of the Board of Directors of Holdings are not Continuing Directors; provided, however, that the Equity Sponsor and their Control Investment Affiliates do not, at such time, in the aggregate, (a) Beneficially Own, directly or indirectly, Voting Stock of Holdings representing more than 50% of the total voting power of the Voting Stock of Holdings or (b) have the right or ability by voting power, contract or otherwise to elect or designate a majority of the Board of Directors of Holdings; or (5) Holdings shall cease to Beneficially Own all of the Equity Interests of the Issuer. "CONSOLIDATED CASH FLOW" means, for any period, for any Person, an amount determined for such Person and its Restricted Subsidiaries on a consolidated basis equal to (i) Consolidated Net Income for such period plus (ii) the sum, without duplication, of the amounts for such Person and its Restricted Subsidiaries for such period (in each case to the extent reducing such Consolidated Net Income) of (a) Fixed Charges; (b) provision for taxes based on income; (c) total depreciation expenses; (d) total amortization expenses; 127 (e) other non-cash items reducing such Consolidated Net Income (excluding any such non-cash item to the extent that it represents an accrual or reserve for potential cash items in any future period or amortization of a prepaid cash item that was paid in a prior period); (f) relocation costs and expenses incurred to move the headquarters of Holdings and its Subsidiaries from Sainte-Marie, Canada to Montreal, Canada; (g) costs and expenses incurred on or prior to the Issue Date during the fiscal year ending February 28, 2005 in connection with the transactions described under "Use of Proceeds" in this prospectus; (h) Restructuring Expenses in an aggregate amount not to exceed $5.0 million in any four-quarter period; (i) other non-recurring, non-operating losses in an aggregate amount not to exceed $5.0 million in any four-quarter period; (j) cash gains realized under Hedging Obligations relating to currency exchange rates; and (k) minority interest (if negative) with respect to any Subsidiary Guarantor; minus (iii) the sum, without duplication, of the amounts for such period (in each case to the extent increasing such Consolidated Net Income) of (a) non-cash items increasing such Consolidated Net Income (excluding any such non-cash item to the extent it represents the reversal of an accrual or reserve for potential cash item in any prior period); (b) non-recurring, non-operating gains; (c) cash losses realized under Hedging Obligations relating to currency exchange rates; and (d) minority interest (if positive) with respect to any Subsidiary Guarantor; plus or minus (iv) without duplication of any amounts referred to above or in the definition of Consolidated Net Income, with respect to any part of a four-quarter period that is part of the fiscal year ended February 29, 2004, the pro forma adjustments to net income set forth in the section "Unaudited Pro Forma Financial Data" in this prospectus and the adjustments to net income to derive "EBITDA" and to "EBITDA" to derive "Adjusted EBITDA" set forth in the section "Summary -- Summary Historical and Pro Forma Consolidated Financial Data"; provided that the items listed in clauses (ii)(a) through (e) of a Restricted Subsidiary will be included in Consolidated Cash Flow only to the extent (and in the same proportion) that the net income of such Subsidiary was included in calculating Consolidated Net Income for such period. "CONSOLIDATED NET INCOME" means, for any period, the net income (or net loss) of Holdings and the Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with GAAP, adjusted to the extent included in calculating such net income or loss by excluding: (1) any net after-tax extraordinary gains or losses (less all fees and expenses relating thereto); (2) any net after-tax gains or losses (less all fees and expenses relating thereto) attributable to Asset Sales, dispositions of securities or returned surplus assets of any pension plan, 128 (3) the net income (but not the net loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting, except to the extent of the amount of dividends or other distributions actually paid to Holdings or any Restricted Subsidiary in cash during such period; (4) the net income (but not the net loss) of any Restricted Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary is at the date of determination prohibited, directly or indirectly, except to the extent that such net income is actually paid to Holdings or any Restricted Subsidiary by loans, advances, intercompany transfers, principal repayments or otherwise; and (5) the cumulative effect of a change in accounting principles; provided, further, that Consolidated Net Income shall be reduced by (A) the product of (x) the amount of all dividends on Designated Preferred Stock (other than dividends paid in Qualified Equity Interests) paid, accrued or scheduled to be paid or accrued during such period times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state, provincial and local statutory tax rate of Holdings and its Subsidiaries, expressed as a decimal, and (B) payments made to any Parent Company pursuant to clause (8) of the covenant described under "-- Transactions with Affiliates." "CONSOLIDATED NET TANGIBLE ASSETS" means the aggregate amount of assets of Holdings (less applicable reserves and other properly deductible items) after deducting therefrom (to the extent otherwise included therein) (a) all current liabilities (other than the obligations under the indenture or current maturities of long-term Indebtedness), and (b) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles, all as set forth on the books and records of Holdings and the Restricted Subsidiaries on a consolidated basis and in accordance with GAAP. "CONTINUING DIRECTORS" means, as of any date of determination, any member of the Board of Directors of Holdings who: (1) was a member of such Board of Directors on the Issue Date; (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election; or (3) was nominated by one or more of the Equity Sponsors or their Control Investment Affiliates. "CONTROL INVESTMENT AFFILIATE" means, as to any Person, any other Person which directly or indirectly is in control of, is controlled by, or is under common control with such Person and is organized by such Person (or any Person controlling such Person) primarily for making equity or debt investments in portfolio companies. "CREDIT AGREEMENT" means that certain credit agreement, on or about the Issue Date, by and among Holdings, the Issuer, certain subsidiaries of the Issuer, Goldman Sachs Credit Partners L.P., Royal Bank of Canada and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and certain of their affiliates and the lenders from time to time party thereto, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case, as amended, restated, modified, renewed, refunded, replaced (whether upon termination or otherwise) or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time. "CREDIT FACILITIES" means one or more debt facilities (including, without limitation, the Credit Agreement) or commercial paper facilities, in each case, with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of 129 receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time. "DAYLIGHT LOANS" means Indebtedness owed by Holdings to a third party; provided that, on the date of incurrence of such Indebtedness, (i) Holdings shall use all of the proceeds of such Indebtedness to purchase Capital Stock issued and sold by Canadian Holding Company, (ii) Canadian Holding Company shall use all of the proceeds of such issuance and sale to make payments to the Issuer in respect of the Special Intercompany Note, (iii) the Issuer shall dividend or otherwise distribute (whether by an interest-free advance or otherwise) to Holdings all of such payments received by it and (iv) Holdings shall use such dividend or other distribution to repay all Indebtedness owed by it referred to in this definition. "DEFAULT" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "DESIGNATED PREFERRED STOCK" means preferred stock (including, without limitation, Disqualified Stock) issued and sold for cash in a bona fide financing transaction that is designated as Designated Preferred Stock pursuant to an officers' certificate on the issuance date thereof, the net cash proceeds of which are excluded from the calculation set forth in clause (3) of the first paragraph of the "-- Restricted Payments" covenant and are not used for purposes of clause (b) of the second paragraph thereof. "DESIGNATED SENIOR DEBT" means (1) the Credit Facility and all Hedging Obligations with respect thereto and (2) any other Senior Debt permitted under the indenture (a) the principal amount of which is $25.0 million or more and (b) that has been designated by the Issuer as "Designated Senior Debt." "DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the issuer to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the asset sale or change of control provisions applicable to such Capital Stock provide that the issuer may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption "-- Certain Covenants -- Restricted Payments." The amount of Disqualified Stock deemed to be outstanding at any time for purposes of the indenture will be the maximum amount that Holdings and the Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock. "EQUITY INTERESTS" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "EQUITY OFFERING" means (i) any issuance and sale by Holdings of its Qualified Equity Interests or by any Parent Company of its Equity Interests; provided, however, that in the case of an issuance and sale of Equity Interests of any Parent Company, cash proceeds therefrom equal to not less than 100% of the aggregate principal amount of any notes to be redeemed are received by Holdings as a contribution to its common equity capital or consideration for the issuance and sale of Qualified Equity Interests immediately prior to such redemption or (ii) any issuance and sale by Holdings of its Qualified Equity Interests in connection with the conversion of Holdings to an income trust or by any 130 Parent Company or any Affiliate of Holdings (other than any of its Subsidiaries) of its Equity Interests in connection with the conversion of such Parent Company or Affiliate to an income trust; provided, however, that in the case of an issuance and sale of Equity Interests of such Parent Company or Affiliate, cash proceeds therefrom equal to not less than 100% of the aggregate principal amount of any notes to be redeemed are received by Holdings as a contribution to its common equity capital or consideration for the issuance and sale of Qualified Equity Interests immediately prior to such redemption. "EQUITY SPONSORS" means John W. Childs, J.W. Childs Equity Funding III, L.P., Borealis Private Equity Limited Partnership, Borealis (QLP) Private Equity Limited Partnership and Ontario Municipal Employees Retirement Board. "EUROPEAN SUBSIDIARIES" means any Subsidiary of the Issuer which was not formed under the laws of the United States or any state of the United States or the District of Columbia or under the laws of Canada or any province or territory thereof. "EXISTING INDEBTEDNESS" means Indebtedness of the Issuer and its Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the date of the indenture after giving effect to the issuance of the notes and the borrowing under the Credit Agreement on the Issue Date and the use of proceeds therefrom, until such amounts are repaid. "FAIR MARKET VALUE" means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the Board of Directors of the Issuer. "FIXED CHARGE COVERAGE RATIO" means, with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any Restricted Subsidiary incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made occurred (the "CALCULATION DATE"), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of calculating the Fixed Charge Coverage Ratio: (1) acquisitions that have been made by the specified Person or any Restricted Subsidiary, including through mergers or consolidations, or any Person or any Restricted Subsidiary acquired by the specified Person or any Restricted Subsidiary, and including any related financing transactions and including increases in ownership of Restricted Subsidiaries, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date will be given pro forma effect (in accordance with Regulation S-X under the Securities Act but giving effect to Pro Forma Cost Savings) as if they had occurred on the first day of the four-quarter reference period; (2) the Consolidated Cash Flow attributable to operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date will be excluded; (3) the Fixed Charges attributable to operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any Restricted Subsidiary following the Calculation Date; 131 (4) any Person that is a Restricted Subsidiary on the Calculation Date (or would become a Restricted Subsidiary on such Calculation Date in connection with the transaction requiring determination of such Consolidated Cash Flow) will be deemed to have been a Restricted Subsidiary at all times during such four-quarter period; (5) any Person that is not a Restricted Subsidiary on the Calculation Date (or would cease to be a Restricted Subsidiary on such Calculation Date in connection with the transaction requiring determination of such Consolidated Cash Flow) will be deemed not to have been a Restricted Subsidiary at any time during such four-quarter period; and (6) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months). "FIXED CHARGES" means, with respect to any specified Person for any period, the sum, without duplication, of: (1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations in respect of interest rates; plus (2) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus (3) any interest accruing on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such guarantee or Lien is called upon; plus (4) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of such Person or any Restricted Subsidiary, other than dividends on Equity Interests payable solely in Equity Interests of the Issuer (other than Disqualified Stock) or to the Issuer or a Restricted Subsidiary of the Issuer, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "GAAP" means generally accepted accounting principles in the United States of America, as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession which are in effect from time to time. "GOVERNMENT SECURITIES" means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit. "GUARANTEE" means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner, including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement condition or otherwise). 132 "GUARANTEE" means the guarantee by each Guarantor of the Issuer's obligations under the indenture and on the notes, executed pursuant to the provisions of the indenture. "GUARANTORS" means Holdings and the Subsidiary Guarantors. "HEDGING OBLIGATIONS" of any Person means the obligations of such Person under swap, cap, collar, forward purchase or similar agreements or arrangements dealing with interest rates, currency exchange rates or commodity prices, either generally or under specific contingencies. "HOLDINGS" means Beauceland Corporation, a Nova Scotia unlimited company. "INDEBTEDNESS" means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent: (1) in respect of borrowed money; (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (3) in respect of bankers' acceptances; (4) representing Capital Lease Obligations; (5) representing the balance deferred and unpaid of the purchase price of any property or services due more than six months after such property is acquired or such services are completed, except any such balance that represents an accrued expense or trade payable; or (6) representing any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person), but only to the extent that the aggregate amount of such Indebtedness does not exceed the Fair Market Value of the asset, and, to the extent not otherwise included, the guarantee by the specified Person of any Indebtedness of any other Person. In no event will obligations or liabilities in respect of any Capital Stock constitute Indebtedness hereunder. "INVESTMENTS" means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including guarantees or other obligations), advances or capital contributions, purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If Holdings or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any Restricted Subsidiary such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary, Holdings will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of Holdings' Investments in such Restricted Subsidiary that were not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described above under the caption "-- Certain Covenants -- Restricted Payments." The acquisition by Holdings or any Restricted Subsidiary of a Person that holds an Investment in a third Person will be deemed to be an Investment by Holdings or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in the final paragraph of the covenant described above under the caption "-- Certain Covenants -- Restricted Payments." Except as otherwise provided in the indenture, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value. Notwithstanding the foregoing, Restricted Payments of the type described in clause (iii) of the definition thereof will not be deemed to be Investments. 133 "ISSUE DATE" means the date on which the notes are first issued under the indenture. "LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest, hypothec or encumbrance of any kind in respect of such asset, whether or not filed, recorded, registered or otherwise perfected under applicable law, including any conditional sale or other title retention agreement; provided that in no event shall an operating lease that is not a Capital Lease Obligation be deemed to constitute a Lien. "NET PROCEEDS" means the aggregate cash proceeds received by Holdings or any Restricted Subsidiary in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale, including, without limitation, (a) fees and expenses related to such Asset Sale (including legal, accounting and investment banking fees and discounts, and sales and brokerage commissions, and any relocation expenses incurred as a result of the Asset Sale), (b) taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, (c) amounts required to be applied to the repayment of Indebtedness, other than Indebtedness under a Credit Facility, secured by a Lien on the asset or assets that were the subject of such Asset Sale, (d) any reserve in accordance with GAAP against any liabilities associated with such Asset Sale and retained by the seller after such Asset Sale, including pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale and (e) cash escrows (until released from escrow to the seller). "NON-RECOURSE DEBT" means Indebtedness: (1) as to which neither Holdings nor any Restricted Subsidiary (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender; (2) no default with respect to which would permit upon notice, lapse of time or both any holder of any Indebtedness of Holdings or any Restricted Subsidiary to declare a default on such Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity; and (3) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of Holdings or any Restricted Subsidiary. "OBLIGATIONS" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "PARENT COMPANIES" means MAAX Holdings, Inc., a Delaware corporation, and any of its Subsidiaries that directly or indirectly owns Equity Interests of Holdings. "PERMITTED BUSINESS" means any business conducted by Holdings or any Restricted Subsidiary on the Issue Date and any businesses that, in the good faith judgment of the Board of Directors of Holdings, are reasonably related, ancillary or complementary thereto, or reasonable extensions thereof. "PERMITTED FACTORING ARRANGEMENTS" means the Sodex Factoring Agreement, as amended from time to time, and other factoring agreements on similar terms that, in each case, are not materially less favorable to Holdings and the Restricted Subsidiaries, taken as a whole, than the arrangements contained in the Sodex Factoring Agreement, as in effect on the Issue Date. "PERMITTED INVESTMENTS" means: (1) any Investment in Cash Equivalents; (2) any Investment in Holdings or in a Restricted Subsidiary; 134 (3) any Investment by Holdings or any Restricted Subsidiary in a Person, if as a result of such Investment: (a) such Person becomes a Restricted Subsidiary; or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, Holdings or a Restricted Subsidiary; (4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption "-- Offer to Purchase -- Asset Sales"; (5) any Investment made for consideration consisting of Qualified Equity Interests; (6) any Investment received in compromise or resolution of (A) obligations of trade creditors or customers that were incurred in the ordinary course of business of Holdings or any Restricted Subsidiary, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (B) litigation, arbitration or other disputes with Persons that are not Affiliates; (7) Investments represented by Hedging Obligations permitted under the indenture; (8) loans or advances to employees of Holdings or any of its Subsidiaries (x) in the ordinary course of business in an aggregate amount not to exceed $5.0 million at any time outstanding or (y) in connection with the purchase by such Persons of Equity Interests of Holdings or any Parent Company so long as the cash proceeds of such purchase received by any Parent Company are contemporaneously contributed to the common equity capital of Holdings; (9) Investments in existence on the Issue Date; (10) Investments in prepaid expenses, negotiable instruments held for collection and lease, endorsements for deposit or collection in the ordinary course of business, utility or workers compensation, performance and similar deposits entered into as a result of the operations of the business in the ordinary course of business; (11) pledges or deposits permitted under clause (6) of the definition of Permitted Liens; (12) receivables owing to Holdings or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms as Holdings or such Restricted Subsidiary deems reasonable under the circumstances; and (13) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (13) that are at the time outstanding, not to exceed the greater of (x) $20.0 million and (y) 7.0% of Consolidated Net Tangible Assets at such time. "PERMITTED JUNIOR SECURITIES" means: (1) Equity Interests in Holdings or any of its Subsidiaries; or (2) debt securities of the Issuer or any Guarantor that are subordinated to all Senior Debt and any debt securities issued in a confirmed plan of reorganization in exchange for Senior Debt to substantially the same extent as, or to a greater extent than, the notes and the Guarantees are subordinated to Senior Debt pursuant to the provisions of the indenture. 135 "PERMITTED LIENS" means: (1) Liens securing Senior Debt; (2) Liens on assets of the Issuer or any Guarantor securing Indebtedness and other Obligations under Credit Facilities and/or securing Hedging Obligations; (3) Liens in favor of Holdings or any Restricted Subsidiary; (4) Liens on property (including Capital Stock) of a Person existing at the time such Person is merged with or into or consolidated with Holdings or any Subsidiary of Holdings; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with Holdings or the Subsidiary; (5) Liens on property (including Capital Stock) existing at the time of acquisition of the property by Holdings or any Subsidiary of Holdings; provided that such Liens were in existence prior to, such acquisition, and not incurred in contemplation of, such acquisition; (6) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (7) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (4) of the second paragraph of the covenant entitled "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock" covering only the assets acquired with or financed by such Indebtedness; (8) Liens existing on the date of the indenture; (9) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent more than 30 days or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor; (10) Liens imposed by law, such as carriers', warehousemen's, landlords', suppliers' and mechanics' Liens, in each case, incurred in the ordinary course of business; (11) survey exceptions, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the operation of the business of the Issuer and its Restricted Subsidiaries, taken as a whole; (12) Liens created for the benefit of (or to secure) the notes (or the Guarantees) or payment obligations to the trustee; (13) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under the indenture; provided, however, that the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to such property or proceeds or distributions thereof); (14) judgment Liens not giving rise to an Event of Default; (15) Liens and rights of setoff in favor of a bank imposed by law and incurred in the ordinary course of business on deposit accounts maintained with such bank and cash and Cash Equivalents in such accounts; (16) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances issued or created for the 136 account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods; (17) pledges or deposits by a Person under worker's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business; (18) Liens securing obligations under Permitted Factoring Arrangements on the accounts receivable subject to Permitted Factoring Arrangements; and (19) Liens incurred in the ordinary course of business of Holdings or any Restricted Subsidiary with respect to obligations that do not exceed $7.5 million at any one time outstanding. "PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of Holdings or any Restricted Subsidiary issued in exchange for, or the net proceeds of which are used to refund, refinance, replace, defease or discharge, other Indebtedness of Holdings or any Restricted Subsidiary; provided that: (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums incurred in connection therewith); (2) such Permitted Refinancing Indebtedness has a final maturity date not earlier than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to, the notes on terms at least as favorable to the holders of notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (4) such Indebtedness is incurred either by Holdings or by the Restricted Subsidiary that is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, unlimited company or government or other entity. "PRO FORMA COST SAVINGS" means, with respect to any period, the reductions in costs that occurred during the four-quarter period that are (1) directly attributable to an asset acquisition and calculated on a basis that is consistent with Article 11 of Regulation S-X under the Securities Act or (2) implemented, committed to be implemented or the commencement of implementation of which was begun in good faith by the business that was the subject of any such asset acquisition within six months of the date of the asset acquisition and that are supportable and quantifiable by the underlying records of such business, as if, in the case of each of clauses (1) and (2), all such reductions in costs had been effected as of the beginning of such period, decreased by any incremental expenses incurred or to be incurred during the four-quarter period in order to achieve such reduction in costs. "QUALIFIED EQUITY INTERESTS" means Equity Interests of Holdings other than Disqualified Stock. 137 "REGISTRATION RIGHTS AGREEMENT" means (i) the Exchange and Registration Rights Agreement dated as of the Issue Date among the Issuer, the Guarantors and the initial purchasers of the notes issued on the Issue Date and (ii) any other exchange and registration rights agreement entered into in connection with an issuance of additional notes in a private offering after the Issue Date. "RELATED AGREEMENTS" means (i) the merger agreement and the amalgamation agreement described in "Summary -- The Transactions"; and (ii) the purchase agreement and registration rights agreement entered into in connection with the issuance of notes on the Issue Date and any other purchase or similar agreement and registration rights agreement entered into in connection with the issuance of additional notes. "REPRESENTATIVE" means the indenture trustee or other trustee, agent or representative in respect of any Designated Senior Debt; provided that if, and for so long as, any Designated Senior Debt lacks such a representative, then the Representative for such Designated Senior Debt shall at all times constitute the holders of a majority in outstanding principal amount of such Designated Senior Debt. "RESTRICTED INVESTMENT" means an Investment other than a Permitted Investment. "RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. Unless otherwise indicated, references to Restricted Subsidiaries shall be deemed to be to Restricted Subsidiaries of Holdings, including the Issuer. "RESTRUCTURING EXPENSES" means losses, expenses and charges incurred in connection with restructuring by Holdings and/or one or more of the Restricted Subsidiaries, including in connection with integration of acquired businesses or persons, disposition of one or more Restricted Subsidiaries or businesses, exiting of one or more lines of business and relocation or consolidation of facilities, including severance, lease termination and other non-ordinary-course, non-operating costs and expenses in connection therewith. "SENIOR DEBT" means the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of the Issuer or any Guarantor, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the notes or the Guarantee of such Guarantor. Without limiting the generality of the foregoing, "Senior Debt" shall include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of: (1) all monetary obligations of every nature under, or with respect to, the Credit Facilities, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities (and guarantees thereof); and (2) all Hedging Obligations in respect of the Credit Facilities; in each case whether outstanding on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Senior Debt" shall not include: (1) any Indebtedness owed to any Parent Company or any of its Subsidiaries; (2) obligations to trade creditors and other amounts incurred (but not under the Credit Facilities) in connection with obtaining goods, materials or services; (3) any liability for taxes owed or owing by the Issuer or any Guarantor; 138 (4) that portion of any Indebtedness incurred in violation of the covenant described under the caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock" (but, as to any such obligation, no such violation shall be deemed to exist for purposes of this clause (4) if the holder(s) of such obligation or their representative shall have received an officers' certificate of the Issuer to the effect that the incurrence of such Indebtedness does not (or, in the case of revolving credit Indebtedness, that the incurrence of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate such provisions of the indenture); (5) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to the Issuer or any Guarantor; and (6) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of the Issuer or any Guarantor. "SIGNIFICANT SUBSIDIARY" means any Subsidiary of Holdings that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of the indenture. "SODEX FACTORING AGREEMENT" means that certain factoring agreement, dated as of February 24, 2004, among MAAX Inc., MAAX Canada Inc., MAAX Spas (Ontario) Inc., MAAX Westco Inc., MAAX Spas (BC) Inc., MAAX-KSD Corporation, MAAX Southeast Inc., Pearl Baths, Inc., MAAX-Hydro Swirl Manufacturing Corp., MAAX Midwest Inc., MAAX Spas (Arizona), Inc., Cuisine Expert -- C.E. Cabinets, Inc., 9022-3751 Quebec Inc., Aker Plastics Company, Inc. and NatExport and Sodex, both divisions of the National Bank of Canada. "SPECIAL INTERCOMPANY NOTE" means that certain note, dated on or about the date of the indenture, made by the Canadian Holding Company in favor of the Issuer, as such note may be amended, restated, supplemented or otherwise modified from time to time. "SPECIAL INTEREST" means (i) "Special Interest" as defined in the registration rights agreement with respect to the notes issued on the Issue Date and (ii) "Special Interest", "Additional Interest", "Liquidated Damages" or any similar term as such term is defined in any registration rights agreement with respect to additional notes issued after the Issue Date. "STATED MATURITY" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the date of the indenture, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "SUBSIDIARY" means, with respect to any specified Person: (1) any corporation, company, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders' agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof). 139 "SUBSIDIARY GUARANTOR" means each Subsidiary of the Issuer that executes a Guarantee in accordance with the provisions of the indenture and its successors and assigns, until such Subsidiary is released from its Guarantee in accordance with the provisions of the indenture. "UNRESTRICTED SUBSIDIARY" means any Subsidiary of Holdings (other than the Issuer) that is designated by the Board of Directors of Holdings as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary: (1) has no Indebtedness other than Non-Recourse Debt; (2) except as permitted by the covenant described above under the caption "-- Certain Covenants -- Affiliate Transactions," is not party to any agreement, contract, arrangement or understanding with Holdings or any Restricted Subsidiary unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to Holdings or such Restricted Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of Holdings; (3) is a Person with respect to which neither Holdings nor any Restricted Subsidiary has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of Holdings or any Restricted Subsidiary. Any designation of a Subsidiary of Holdings as an Unrestricted Subsidiary will be evidenced to the trustee by filing with the trustee a certified copy of the Board Resolution giving effect to such designation and an officers' certificate certifying that such designation complied with the preceding conditions and was permitted by the covenant described above under the caption "-- Certain Covenants -- Restricted Payments." If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of the indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock," Holdings will be in default of such covenant. The Board of Directors of Holdings may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if (1) such Indebtedness is permitted under the covenant described under the caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock," calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no Default or Event of Default would be in existence following such designation. "U.S. DOLLAR EQUIVALENT" means, as to any amount denominated in Canadian Dollars as of any date of determination, the amount of U.S. Dollars which would be required to purchase such amount of Canadian Dollars at the Bank of Canada noon (Toronto time) spot rate on such date or, if such date of determination is not a Business Day, on the Business Day immediately preceding such date of determination. "VOTING STOCK" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, 140 including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (2) the then outstanding principal amount of such Indebtedness. GLOBAL NOTES Exchange notes will be represented by one or more Notes in registered, global form without interest coupons (collectively, the "GLOBAL NOTES"). We will deposit the Global Notes upon issuance with the Trustee as custodian for The Depository Trust Company ("DTC"), in New York, New York, and register the Global Notes in the name of DTC or its nominee, in each case for credit to an account of a direct or indirect participant in DTC as described below. Except as set forth below, the Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. You may not exchange your beneficial interest in the Global Notes for Notes in certificated form except in the limited circumstances described below under "-- Exchanges of Book-Entry Notes for Certificated Notes." In addition, you may not exchange your beneficial interests in the Restricted Global Note for beneficial interests in the Regulation S Global Note or vice versa. EXCHANGES OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES You may not exchange your beneficial interest in a Global Note for a Note in certificated form unless: (1) DTC (a) notifies us that it is unwilling or unable to continue as depository for the Global Note or (b) has ceased to be a clearing agency registered under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and in either case we thereupon fail to appoint a successor depository; or (2) an Event of Default shall have occurred and be continuing with respect to the Notes. In all cases, certificated Notes delivered in exchange for any Global Note or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depository (in accordance with its customary procedures). Any certificated Notes issued in exchange for an interest in a Global Note will bear the legend restricting transfers that is borne by such Global Note. Any such exchange will be effected through the DTC Deposit/Withdraw at Custodian ("DWAC") system and an appropriate adjustment will be made in the records of the Security Registrar to reflect a decrease in the principal amount of the relevant Global Note. CERTAIN BOOK ENTRY PROCEDURES The description of the operations and procedures of DTC, Euroclear Bank S.A./N.V. (as operator of the Euroclear system, "EUROCLEAR") or Clearstream Banking Luxembourg ("CLEARSTREAM") that follows is provided solely as a matter of convenience. These operations and procedures are solely within their control and are subject to changes by them from time to time. We take no responsibility for these operations and procedures and urge you to contact the system or their participants directly to discuss these matters. DTC has advised us as follows: DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "Clearing Agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants ("PARTICIPANTS") and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical transfer and delivery of certificates. Participants include securities 141 brokers and dealers, banks, trust companies and clearing corporations and may include certain other organizations. Indirect access to the DTC system is available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly ("INDIRECT PARTICIPANTS"). DTC has advised us that its current practice, upon the issuance of the Global Notes, is to credit, on its internal system, the respective principal amount of the individual beneficial interests represented by such Global Notes to the accounts with DTC of the participants through which such interests are to be held. Ownership of beneficial interests in the Global Notes will be shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominees (with respect to interests of participants). AS LONG AS DTC, OR ITS NOMINEE, IS THE REGISTERED HOLDER OF A GLOBAL NOTE, DTC OR SUCH NOMINEE, AS THE CASE MAY BE, WILL BE CONSIDERED THE SOLE OWNER AND HOLDER OF THE NOTES REPRESENTED BY SUCH GLOBAL NOTE FOR ALL PURPOSES UNDER THE INDENTURE GOVERNING THE NOTES AND THE NOTES. Except in the limited circumstances described above under "-- Exchanges of Book-Entry Notes for Certificated Notes," you will not be entitled to have any portions of a Global Note registered in your name, will not receive or be entitled to receive physical delivery of Notes in definitive form and will not be considered the owner or Holder of a Global Note (or any Note represented thereby) under the indenture governing the Notes or the Notes. You may hold your interests in the Global Notes directly through DTC, if you are participants in such system, or indirectly through organizations (including Euroclear and Clearstream) which are participants in such system. The depositories, in turn, will hold such interests in such Global Note in customers' securities accounts in the depositories' names on the books of DTC. All interests in a Global Note, including those held through Euroclear or Clearstream, will be subject to the procedures and requirements of DTC. Those interests held through Euroclear or Clearstream will also be subject to the procedures and requirements of such system. The laws of some states require that certain persons take physical delivery in definitive form of securities that they own. Consequently, your ability to transfer your beneficial interests in a Global Note to such persons may be limited to that extent. Because DTC can act only on behalf of its participants, which in turn act on behalf of indirect participants and certain banks, your ability to pledge your interests in a Global Note to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests. We will make payments of the principal of, premium, if any, and interest on Global Notes to DTC or its nominee as the registered owner thereof. Neither we nor the Trustee nor any of our or their respective agents will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. We expect that DTC or its nominee, upon receipt of any payment of principal or interest in respect of a Global Note representing any Notes held by it or its nominee, will immediately credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Note for such Notes as shown on the records of DTC or its nominee. We also expect that payments by participants to owners of beneficial interests in such Global Note held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in "street name." Such payment will be the responsibility of such participants. Except for trades involving only Euroclear and Clearstream participants, interests in the Global Note will trade in DTC's settlement system, and secondary market trading activity in such interests will therefore settle in immediately available funds, subject in all cases to the rules and procedures of DTC and its participants. Transfers between participants in DTC will be effected in accordance with 142 DTC's procedures, and will be settled in same-day funds. Transfers between participants in Euroclear and Clearstream will be effected in the ordinary way in accordance with their respective rules and operating procedures. Cross-market transfers between DTC participants, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected by DTC in accordance with DTC's rules on behalf of Euroclear or Clearstream, as the case may be, by its respective depository; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depository to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Note in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the depositories for Euroclear or Clearstream. Because of time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a Global Note from a DTC participant will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the DTC settlement date. Cash received in Euroclear or Clearstream as a result of sales of interests in a Global Note by or through a Euroclear or Clearstream participant to a DTC participant will be received with value on the DTC settlement date but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following the DTC settlement date. DTC has advised us that DTC will take any action permitted to be taken by a Holder of Notes (including the presentation of Notes for exchange as described below and the conversion of Notes) only at the direction of one or more participants to whose account with DTC interests in the Global Notes are credited and only in respect of such portion of the aggregate principal amount of the Notes as to which such participant or participants has or have given such direction. However, if there is an Event of Default under the Notes, the Global Notes will be exchanged for legended Notes in certificated form, and distributed to DTC's participants. Although DTC, Euroclear and Clearstream have agreed to the foregoing procedures in order to facilitate transfers of beneficial ownership interests in the Global Notes among participants of DTC, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. None of we, the Trustee or any of our or their respective agents will have any responsibility for the performance by DTC, Euroclear and Clearstream, their participants or indirect participants of their respective obligations under the rules and procedures governing their operations, including maintaining, supervising or reviewing the records relating to, or payments made on account of, beneficial ownership interests in Global Notes. 143 INCOME TAX CONSIDERATIONS U.S. FEDERAL INCOME TAX CONSIDERATIONS GENERAL The following is a general discussion of certain material United States federal income tax considerations generally applicable to purchasers of the notes, who purchased the original notes pursuant to the offering at the initial offering price. The federal income tax considerations set forth below are based upon currently existing provisions of the Internal Revenue Code of 1986, as amended, or the Code, applicable permanent, temporary and proposed United States Treasury Regulations, or Treasury Regulations, judicial authority, and current administrative rulings and pronouncements of the Internal Revenue Service, or IRS. There can be no assurance that the IRS will not take a contrary view, and no ruling from the IRS has been, or will be, sought on the issues discussed herein. Legislative, judicial, or administrative changes or interpretations may be forthcoming that could alter or modify the statements and conclusions set forth herein. Any such changes or interpretations may or may not be retroactive and could affect the tax consequences discussed below. The summary is not a complete analysis or description of all potential federal income tax considerations that may be relevant to, or of the actual tax effect that any of the matters described herein will have on, particular U.S. Holders, and does not address foreign, state, local or other tax consequences. This summary does not purport to address special classes of taxpayers (such as partnerships or other pass-through entities, S corporations, mutual funds, insurance companies, financial institutions, small business investment companies, regulated investment companies, expatriates, broker-dealers and tax-exempt organizations) who are subject to special treatment under the federal income tax laws, or persons that hold notes that are a hedge against, or that are hedged against, currency risk or that are part of a straddle or conversion transaction, or persons whose functional currency is not the U.S. dollar. This discussion assumes that the notes will be held as capital assets within the meaning of section 1221 of the Code. Furthermore, estate and gift tax consequences are not discussed herein. No opinion of counsel will be requested with respect to any of the matters discussed herein. As used herein, the term "U.S. Holder" means (i) a citizen or resident of the United States for U.S. federal income tax purposes, (ii) a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, that was created or organized under the laws of the United States or any political subdivision thereof, (iii) an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source, or (iv) a trust if (a) a U.S. court can exercise primary supervision over the administration of such trust and one or more U.S. fiduciaries has the authority to control all of the substantial decisions of such trust or (b) such trust has a valid election in place to be treated as a U.S. person. As used herein, the term "Non-U.S. Holder" means a beneficial holder of notes that is a nonresident alien or a corporation, estate or trust that is not a U.S. Holder. A partnership for U.S. federal income tax purposes is not subject to income tax on income derived from holding the notes. A partner of the partnership may be subject to tax on such income under rules similar to the rules for U.S. Holders or Non-U.S. Holders depending on whether (i) the partner is a U.S. or a non-U.S. person, and (ii) the partnership is or is not engaged in a U.S. trade or business to which income or gain from the notes is effectively connected. If you are a partner of a partnership acquiring the notes, you should consult your tax advisor about the U.S. tax consequences of holding and disposing of the notes. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH PROSPECTIVE PURCHASER OF THE NOTES IS STRONGLY URGED TO CONSULT HIS OR HER OWN TAX ADVISOR WITH RESPECT TO HIS OR HER PARTICULAR TAX SITUATION AND AS TO ANY FEDERAL, FOREIGN, STATE, LOCAL OR OTHER TAX CONSIDERATIONS (INCLUDING ANY 144 POSSIBLE CHANGES IN TAX LAW) AFFECTING THE PURCHASE, HOLDING AND DISPOSITION OF THE NOTES. TAX CHARACTERIZATION OF THE ISSUER The U.S. federal income tax consequences to persons purchasing the notes depend in part on who is treated as the issuer of the notes for U.S. federal income tax purposes. Because MAAX Corporation (i) is incorporated as a Nova Scotia unlimited company (ii) is wholly owned by another Nova Scotia unlimited company, Beauceland Corporation, which is wholly-owned by MAAX Holdings, which is a U.S. corporation, and (iii) neither MAAX Corporation nor Beauceland Corporation has made an election to be treated as other than a "disregarded entity" for U.S. federal income tax purposes, MAAX Holdings will be treated as the issuer of the notes for U.S. federal income tax purposes. If the IRS were to successfully challenge this treatment, the tax consequences to persons holding the notes may be different than those described herein. Prospective investors should consult their own tax advisors concerning those potential different consequences. The remainder of this discussion assumes that MAAX Holdings will be treated as the issuer of the notes for U.S. federal income tax purposes. U.S. FEDERAL INCOME TAX CONSEQUENCES TO U.S. HOLDERS This section describes certain U.S. federal income tax consequences to U.S. Holders. Non-U.S. Holders should see the discussion under the heading "Federal Income Tax Consequences to Non-U.S. Holders" for a discussion of certain tax consequences applicable to them. INTEREST. Interest on the notes will be taxable to a U.S. Holder as ordinary interest income at the time such amounts are accrued or received, in accordance with the U.S. Holder's method of accounting for U.S. federal income tax purposes. EXCHANGE OFFER. The exchange of the notes for the exchange notes will not constitute a taxable exchange. See "The Exchange Offer." As a result, (1) a U.S. Holder will not recognize taxable gain or loss as a result of exchanging such holder's notes; (2) the holding period of the exchange notes received will be the same as the holding period of the notes exchanged therefor; and (3) the adjusted tax basis of the exchange notes received will be the same as the adjusted tax basis of the notes exchanged therefor immediately before such exchange. DISPOSITION OF THE NOTES. Unless a nonrecognition provision applies, the sale, exchange (other than pursuant to the Exchange Offer), redemption (including pursuant to an offer by the company) or other disposition of a note, will be a taxable event for U.S. federal income tax purposes. In such event, a U.S. Holder of notes will generally recognize gain or loss equal to the difference between (i) the amount of cash plus the fair market value of property received (except to the extent attributable to accrued interest on the notes which will be treated as interest as described above) and (ii) the U.S. Holder's tax basis in the notes. A U.S. Holder's tax basis in a note will generally equal its cost therefor. Any such gain or loss generally will be long-term capital gain or loss, provided the notes have been held for more than one year. The deductibility of capital losses is subject to limitations. BACKUP WITHHOLDING. Under section 3406 of the Code and applicable Treasury Regulations, a noncorporate holder of the notes may be subject to backup withholding at the current rate of 28 percent (subject to future adjustment) with respect to "reportable payments," which include interest paid on the notes or the proceeds of a sale, exchange or redemption of the notes. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a TIN to the payor in the manner required, (ii) the IRS notifies the payor that the TIN furnished by the payee is incorrect, (iii) there has been a "notified payee under reporting" described in section 3406(c) of the Code or (iv) there has been a failure of the payee to certify under penalty of perjury that the payee is not subject to withholding under section 3406(a)(1)(C) of the Code. Amounts paid as backup withholding do not constitute an additional tax and will be refunded or 145 credited against the holder's federal income tax liabilities, so long as the required information is timely provided to the IRS. U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS The following information describes the U.S. federal income tax treatment of "Non-U.S. Holders." EFFECTIVELY CONNECTED INCOME. If the income or gain on the notes is "effectively connected with the conduct of a trade or business within the United States" by a Non-U.S. Holder, such income or gain will generally be subject to U.S. federal income tax essentially in the same manner as if the notes were held by a U.S. Holder, as described above, unless an applicable tax treaty provides otherwise, and in the case of a Non-U.S. Holder that is a corporation, may also be subject to U.S. branch profits tax. Such Non-U.S. Holder will not be subject to withholding taxes, however, if it provides a properly executed Form W-8ECI. INTEREST. Interest on the notes held by Non-U.S. Holders that is not effectively connected with the conduct of a U.S. trade or business may be subject to withholding of up to 30 percent of each payment made to the holders or other payee unless the "portfolio interest exemption" applies. The interest paid on the notes generally should qualify for the portfolio interest exemption. Accordingly, interest paid on the notes to a Non-U.S. Holder should not be subject to withholding if (1) the Non-U.S. Holder provides a statement signed under penalties of perjury, certifying that such owner is not a U.S. person on IRS Form W-8BEN (or successor form), or an alternative method of satisfying the certification requirement is met; (2) such Non-U.S. Holder does not actually or constructively own 10 percent or more of the total combined voting power of all classes of stock in MAAX Holdings; (3) such Non-U.S. Holder is not a "controlled foreign corporation" (within the meaning of section 957 of the Code) related to MAAX Holdings; and (4) the Non-U.S. Holder is not a foreign "bank" receiving the interest on an extension of credit pursuant to a loan agreement entered into in the ordinary course of its trade or business. If you do not claim, or do not qualify for, the benefit of the portfolio interest exemption, you may be subject to a 30 percent withholding tax on interest payments on the notes. However, you may be able to claim the benefit of a reduced withholding tax rate under an applicable income tax treaty. The required information for claiming treaty benefits is generally submitted, under current regulations, on Form W-8BEN. SALE OR OTHER DISPOSITION OF THE NOTES. A Non-U.S. Holder will generally not be subject to U.S. federal income tax or withholding tax on gain recognized on a sale, exchange, redemption, retirement, or other disposition of the notes. A Non-U.S. Holder may, however, be subject to U.S. federal income tax on such gain if: (1) it is a nonresident alien individual who was present in the United States for 183 days or more in the taxable year of the disposition and certain other conditions are met or (2) the gain is effectively connected with the conduct of a U.S. trade or business (and, if a tax treaty applies, is attributable to a permanent establishment in the United States), as provided in applicable U.S. tax rules. BACKUP WITHHOLDING AND INFORMATION REPORTING. We must report annually to the IRS and to each Non-U.S. Holder any interest that is subject to U.S. withholding taxes or that is exempt from U.S. withholding taxes pursuant to an income tax treaty or certain provisions of the Code. Copies of these information returns may also be made available under the provisions of a specific tax treaty or agreement with the tax authorities of the country in which the Non-U.S. Holder resides. Furthermore, payments of interest, principal or sales proceeds may be subject to both backup withholding at the current rate of 28 percent (subject to future adjustment) and additional information reporting. Backup withholding and information reporting generally will not apply to payments on the notes if the Non-U.S. Holder certifies, on a Form W-8BEN, or successor form, that it is not a U.S. person. Any amounts withheld under the backup withholding rules may be refunded or credited against the 146 Non-U.S. Holder's U.S. federal income tax liability, if any, provided that the required information is timely furnished to the IRS. THE FOREGOING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY AND DOES NOT DISCUSS ALL ASPECTS OF U.S. FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER OF NOTES IN LIGHT OF HIS OR HER PARTICULAR CIRCUMSTANCES AND INCOME TAX SITUATION. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO ANY TAX CONSEQUENCES TO THEM FROM THE PURCHASE, OWNERSHIP, AND DISPOSITION OF NOTES, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX LAWS. CANADIAN FEDERAL INCOME TAX CONSIDERATIONS The following is a summary of the principal Canadian federal income tax considerations applicable to purchasers of the notes, who purchased the original notes pursuant to the offering at the initial offering price and who hold such notes as capital property for purposes of the Income Tax Act (Canada), or the Tax Act. Generally, the notes will be considered capital property to a holder provided the holder does not hold the notes in the course of carrying on a business and has not acquired the notes in one or more transactions considered to be an adventure in the nature of trade. This summary is based on the Canada-United States Income Tax Convention (1980), as amended, or the Convention, the relevant provisions of the Tax Act and the regulations thereunder, or the Regulations, as in effect on the date hereof, and on the current published administrative practices of the Canada Revenue Agency. It assumes that the specific proposals to amend the Tax Act and the Regulations publicly announced by the Minister of Finance of Canada prior to the date of the offering will be enacted in their present form, but the Tax Act or the Regulations may not be amended as proposed or at all. This summary does not otherwise take into account or anticipate any changes in law or administrative or assessing practice whether by legislative, regulatory, administrative or judicial action. This summary is not a complete analysis of all potential Canadian federal income tax considerations that may be relevant to, or of the actual tax effect that any of the matters described herein will have on a particular holder, and does not address provincial or territorial income tax considerations nor does it address the income tax considerations of countries other than Canada. Changes in the law or administrative practices or future court decisions may affect your tax treatment. No opinion of counsel will be requested with respect to any of the matters discussed herein. CANADIAN FEDERAL INCOME TAX CONSEQUENCES TO NON-RESIDENT HOLDERS The following commentary is generally applicable to a holder who we refer to as a "Non-Resident Holder" who, at all times for purposes of the Tax Act, deals at arm's length with us and who, for the purposes of the Convention and the Tax Act, is not and is not deemed to be a resident of Canada during any taxation year in which it owns the notes and does not use or hold, and is not deemed to use or hold, the notes in the course of carrying on a business in Canada nor does the commentary apply to an insurer or an authorized foreign bank, within the meaning of the Tax Act, carrying on an insurance business or a bank business in Canada. INTEREST PAYMENTS A Non-Resident Holder will not be subject to tax (including withholding tax) under the Tax Act on a payment of either interest or the principal amount of the notes. DISPOSITIONS Gains realized on the disposition or deemed disposition of a note by a Non-Resident Holder will not be subject to tax under the Tax Act. 147 EXCHANGE OF NOTES INTO REGISTERED NOTES The exchange of a note for a registered note by a Non-Resident Holder as described in the section entitled "The Exchange Offer" will not constitute a taxable transaction for the purposes of the Tax Act. THE PRECEDING DISCUSSION OF CANADIAN FEDERAL INCOME TAX CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT LEGAL OR TAX ADVICE. ACCORDINGLY, PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN TAX ADVISOR AS TO THEIR PARTICULAR TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF THE NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, PROVINCIAL, LOCAL OR FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE LAWS. 148 PLAN OF DISTRIBUTION There has previously been only a limited secondary market and no public market for the original notes. We do not intend to apply for the listing of the notes on a national securities exchange or for their quotation through The Nasdaq Stock Market. The original notes are eligible for trading in The PORTAL(SM) Market, an electronic screen-based system which permits the trading of eligible privately placed securities by certain qualified institutional investors which is regulated by the National Association of Securities Dealers, Inc. We have been advised by the initial purchasers that, following consummation of the exchange offer, the initial purchasers intend to make a market in the exchange notes; however, any market making may be discontinued at any time without notice. If an active public market does not develop, the market price and liquidity of the exchange notes may be adversely affected. If a trading market develops for the original notes or the exchange notes, future trading prices of such securities will depend on many factors, including, among other things, prevailing interest rates, our results of operations and the market for similar securities. Depending on such factors, such securities may trade at a discount from their offering price. With respect to resale of exchange notes, based on an interpretation by the staff of the SEC set forth in no-action letters issued to third parties, we believe that a holder (other than a person that is an affiliate of ours within the meaning of Rule 405 under the Securities Act or "broker" or "dealer" registered under the Exchange Act) who exchanges original notes for exchange notes in the ordinary course of business and who is not participating, does not intend to participate, and has no arrangement or understanding with any person to participate, in the distribution of the exchange notes, will be allowed to resell the exchange notes to the public without further registration under the Securities Act and without delivering to the purchasers of the exchange notes a prospectus that satisfies the requirements of Section 10 thereof. However, if any holder acquires exchange notes in the exchange offer for the purpose of distributing or participating in a distribution of the exchange notes, such holder cannot rely on the position of the staff of the SEC enunciated in Exxon Capital Holdings Corporation (available May 13, 1988) or similar no-action or interpretive letters and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction, and such secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 of Regulation S-K if the resales are of exchange notes obtained by such holder in exchange for original notes acquired by such holder directly from us or an affiliate of ours, unless an exemption from registration is otherwise available. As contemplated by the above-referenced no-action letters and the registration rights agreement, each holder accepting the exchange offer is required to represent to us in the letter of transmittal that: - any exchange notes to be received by it will be acquired in the ordinary course of its business; - it has no arrangement or understanding with any person to participate in the distribution of the exchange notes; and - it is not an "affiliate," as defined in the Securities Act, of ours or of any of the guarantors of the notes. In addition, each such holder will be required to make any additional representations that in the written opinion of our counsel are necessary under existing rules or regulations (or interpretations thereof) of the SEC in order for the registration statement of which this prospectus forms a part to be declared effective. If the holder is not a broker-dealer, it will be required to represent that it is not engaged in, and does not intend to engage in, the distribution of the exchange notes. If the holder is a broker-dealer 149 that will receive exchange notes for its own account in exchange for original notes that were acquired as a result of market-making activities or other trading activities, it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. Any broker or dealer registered under the Exchange Act who holds original notes that were acquired for its own account as a result of market-making activities or other trading activities (other than original notes acquired directly from us) may exchange such original notes for exchange notes pursuant to the exchange offer; however, such broker-dealer may be deemed an underwriter within the meaning of the Securities Act and, therefore, must deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the exchange notes received by it in the exchange offer, which prospectus delivery requirement may be satisfied by the delivery by such broker-dealer of this prospectus. We have agreed to use all commercially reasonable efforts to keep the registration statement of which this prospectus forms a part effective for a period beginning when exchange notes are first issued in the exchange offer and ending upon the earlier of the expiration of the 180th day after the exchange offer has been completed and such time as broker-dealers are no longer required to comply with the prospectus delivery requirements in connection with offers and sales of exchange notes. A broker-dealer that delivers such a prospectus to purchasers in connection with such resales will be subject to certain of the civil liability provisions under the Securities Act, and will be bound by the provisions of the registration rights agreement (including certain indemnification rights and obligations). The information described above concerning interpretations of, and positions taken by, the SEC is not intended to constitute legal advice, and broker-dealers should consult their own legal advisors with respect to these matters. We will not receive any proceeds from any sale of exchange notes by anyone, including broker-dealers. Exchange notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions through the writing of options on the exchange notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to a purchaser or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such exchange notes. We have agreed to pay expenses incident to the exchange offer. See "The Exchange Offer -- Fees and Expenses." 150 LEGAL MATTERS The validity of the exchange notes and certain legal matters will be passed upon for us by Kaye Scholer LLP, New York, New York. EXPERTS The balance sheet of Beauceland Corporation as of May 31, 2004 and the financial statements of MAAX Inc. as of February 28, 2003 and February 29, 2004, and for each of the three years in the period ended February 29, 2004, included in this prospectus, have been audited by KPMG LLP, independent registered public accounting firm, as stated in their reports appearing herein. The financial statements of Aker Plastics Company, Inc. as of October 31, 2002 and for its predecessor as of and for the period from October 1, 2002 to October 25, 2002 and as of the years ended September 30, 2002 and 2001 included in this prospectus have been audited by Crowe Chizek and Company LLC, independent registered public accounting firm, as stated in their report appearing herein, and are included in reliance upon the reports of this form given upon their authority as an expert in accounting and auditing. 151 WHERE YOU CAN FIND INFORMATION This prospectus forms a part of a registration statement that we filed with the SEC on Form F-4 under the Securities Act in connection with the offering of the exchange notes. This prospectus does not contain all the information contained in the registration statement, including its exhibits and schedules. You should refer to the registration statement, including the exhibits and schedules, for further information about us and the exchange notes. The registration statement, including exhibits and schedules, is on file at the offices of the SEC and may be inspected without charge. Under the terms of the indenture that governs the notes, we have agreed that, whether or not required by the rules and regulations of the SEC, so long as any original notes or exchange notes are outstanding, we will furnish to the holders of the original notes or exchange notes (i) all information that would be required to be contained in a filing with the SEC on Forms 20-F and 6-K, if we were required to file such Forms and, with respect to the annual information only, a report thereon by our independent auditors and (ii) all current reports that would be required to be filed with the SEC on Form 6-K, if we were required to file such reports. In addition, we will post all reports on our website no later than the date such information is required to be furnished to holders and keep all such reports available on our website for a period of one year from the date of such posting. In addition, we have agreed that, for so long as any original notes or exchange notes remain outstanding, we will furnish to the holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Upon effectiveness of the registration statement of which this prospectus is a part, we will become subject to the periodic reporting and to the informational requirements of the Exchange Act and during the fiscal year in which the registration statement becomes effective we will file information with the SEC, including annual and current reports. You may read and copy any document we file with the SEC at the SEC's public reference room at the following address: PUBLIC REFERENCE ROOM 450 FIFTH STREET, N.W. ROOM 1024 WASHINGTON, D.C. 20549 Please call the SEC at 1-800-SEC-0330 for further information on the operations of the public reference rooms. Our SEC filings are also available at the SEC's website at http://www.sec.gov and at our own website at http://www.maax.com. You can also obtain a copy of any of our filings, at no cost, by writing to or telephoning us at the following address: MAAX Corporation 1010 Sherbrooke Street West, Suite 1610 Montreal, Quebec Canada H3A 2R7 (514) 844-4155 152 INDEX TO FINANCIAL STATEMENTS BALANCE SHEET OF BEAUCELAND CORPORATION AS OF MAY 31, 2004 Report of Independent Registered Public Accounting Firm... F-2 Balance Sheet............................................. F-3 Note to Balance Sheet..................................... F-4 UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF MAAX, INC. FOR THE THREE-MONTH PERIOD ENDED MAY 31, 2004 Consolidated Balance Sheets as of May 31, 2003, February 29, 2004 and May 31, 2004........................................... F-5 Consolidated Statements of Income for the three months ended May 31, 2003 and May 31, 2004.................... F-6 Consolidated Statements of Cash Flows for the three months ended May 31, 2003 and May 31, 2004.................... F-7 Consolidated Statement of Shareholders' Equity............ F-8 Notes to Consolidated Financial Statements................ F-9 CONSOLIDATED FINANCIAL STATEMENTS OF MAAX INC. FOR THE YEARS ENDED FEBRUARY 28, 2002, FEBRUARY 28, 2003 AND FEBRUARY 29, 2004 Report of Independent Registered Public Accounting Firm... F-12 Consolidated Balance Sheets as of February 28, 2003 and February 29, 2004...................................... F-13 Consolidated Statements of Income for the years ended February 28, 2002 and 2003 and February 29, 2004....... F-14 Consolidated Statements of Shareholders' Equity and Other Comprehensive Income for the years ended February 28, 2002 and 2003 and February 29, 2004.................... F-15 Consolidated Statements of Cash Flows for the years ended February 28, 2002 and 2003 and February 29, 2004....... F-16 Notes to Consolidated Financial Statements................ F-17 AKER PLASTICS COMPANY, INC. AND PREDECESSOR FINANCIAL STATEMENTS (OCTOBER 31, 2002, SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001) Report of Independent Registered Public Accounting Firm... F-40 Statements of Income and Retained Earnings................ F-41 Balance Sheets............................................ F-42 Statements of Cash Flows.................................. F-43 Notes to Financial Statements............................. F-45
F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We have audited the balance sheet of Beauceland Corporation as of May 31, 2004. This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statement referred to above presents fairly, in all material respects, the financial position of the Company as of May 31, 2004 in conformity with U.S. generally accepted accounting principles. /s/ KPMG LLP -------------------------------------- Chartered Accountants Montreal, Canada June 3, 2004 F-2 BEAUCELAND CORPORATION BALANCE SHEET MAY 31, 2004 (IN US DOLLARS) ASSETS Cash...................................................... $1,000 ====== SHAREHOLDER'S EQUITY Capital stock: 100,000 common shares authorized, without par value..... 1,000 common shares issued and paid..................... $1,000 ======
See accompanying Note to Balance Sheet. F-3 BEAUCELAND CORPORATION NOTE TO BALANCE SHEET MAY 31, 2004 The Company is incorporated under the laws of Nova Scotia, Canada. The Company will acquire on June 4, 2004, all the outstanding shares of MAAX Inc., a significant designer, developer, manufacturer and distributor of bathroom and kitchen products and spas, through an amalgamation between two wholly-owned indirect subsidiaries of the Company and MAAX Inc. F-4 MAAX INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS OF US DOLLARS)
MAY 31, FEBRUARY 29, MAY 31, 2003 2004 2004 ------- ------------ ------- ASSETS Current assets: Cash...................................................... $ 5,751 $ 4,467 $ 2,793 Accounts receivables, less allowance for doubtful accounts................................................ 73,354 64,012 77,862 Inventories (note 2)...................................... 54,966 45,684 45,948 Prepaid expenses.......................................... 3,576 3,293 3,074 Deferred income taxes..................................... 2,355 3,542 3,342 -------- -------- -------- Total current assets...................................... 140,002 120,998 133,019 Property, plant and equipment............................... 96,058 100,615 98,378 Intangible assets........................................... 17,470 16,388 15,709 Goodwill.................................................... 115,991 112,519 111,687 Derivative financial instruments............................ 13,176 11,627 9,130 Other assets................................................ 1,274 1,678 1,459 Deferred income taxes....................................... 1,268 1,762 2,582 -------- -------- -------- Total assets................................................ $385,239 $365,587 $371,964 ======== ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Bank loan................................................. $ 2,670 $ -- $ -- Accounts payable and accrued liabilities.................. 50,834 52,454 52,481 Income taxes payable...................................... 1,541 4,765 343 Deferred income taxes..................................... 5,569 3,824 2,950 Current portion of long-term debt......................... 5,160 4,782 4,765 -------- -------- -------- Total current liabilities................................. 65,774 65,825 60,539 Long-term debt.............................................. 92,908 52,662 60,630 Deferred income taxes....................................... 13,673 15,701 15,823 -------- -------- -------- Total liabilities........................................... 172,355 134,188 136,992 Shareholders' equity Capital Stock............................................. 103,668 105,044 105,076 Share purchase loan....................................... (612) -- -- Additional paid-in capital................................ 232 232 232 Retained earnings......................................... 100,167 115,647 122,734 Accumulated other comprehensive income.................... 9,429 10,476 6,930 -------- -------- -------- Total shareholders' equity................................ 212,884 231,399 234,972 -------- -------- -------- Total liabilities and shareholders' equity.................. $385,239 $365,587 $371,964 ======== ======== ========
F-5 MAAX INC. CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS OF US DOLLARS EXCEPT EARNINGS PER SHARE)
THREE MONTHS ENDED MAY 31, -------------------- 2003 2004 ---- ---- Net sales................................................... $126,548 $136,136 Operating costs and expenses Cost of goods sold........................................ 86,919 93,144 Selling, general and administrative expenses (note 3)..... 12,454 27,773 Depreciation and amortization............................. 3,699 3,833 -------- -------- 103,072 124,750 Operating income............................................ 23,476 11,386 Interest expense.......................................... 1,149 1,263 -------- -------- Income before income taxes.................................. 22,327 10,123 Income taxes Current................................................... 3,289 2,936 Deferred.................................................. 3,872 (1,166) -------- -------- 7,161 1,770 Net income.................................................. $ 15,166 $ 8,353 ======== ======== Earnings per share -- basic (note 4)........................ $ 0.63 $ 0.34 ======== ======== Earnings per share -- diluted (note 4)...................... $ 0.62 $ 0.33 ======== ========
F-6 MAAX INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS OF US DOLLARS)
THREE MONTHS ENDED MAY, 31 -------------------- 2003 2004 ---- ---- Cash flows related to operating activities: Net income................................................ $ 15,166 $ 8,353 Items not affecting cash: Depreciation and amortization.......................... 3,699 3,833 Amortization of financial expenses..................... 108 115 Change in fair value of derivative financial instruments........................................... (10,475) 2,284 Deferred income taxes.................................. 3,872 (1,166) Net change in non-cash balances related to operations..... (4,797) (19,450) -------- -------- 7,573 (6,031) Cash flows related to financing activities: Proceeds from issuance of long-term debt.................. -- 34,000 Repayment of long-term debt............................... (189) (26,046) Proceeds from issuance of shares.......................... 447 32 Interest, net of income taxes, from a share purchase loan................................................... 2 -- Dividends paid............................................ (1,177) (1,266) -------- -------- (917) 6,720 Cash flows related to investing activities: Business acquisition...................................... (4) -- Additions to property, plant and equipment................ (2,364) (2,466) Proceeds from disposal of property, plant and equipment... 6 97 Other assets.............................................. (96) 37 -------- -------- (2,458) (2,332) -------- -------- Net increase (decrease) in cash............................. 4,198 (1,643) Translation adjustment on cash denominated in foreign currencies................................................ (1,114) (31) Cash, beginning of period................................... 2,667 4,467 -------- -------- Cash, end of period......................................... $ 5,751 $ 2,793 ======== ========
F-7 MAAX INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (IN THOUSANDS OF US DOLLARS)
ACCUMULATED SHARE ADDITIONAL OTHER COMPRE- COMMON PURCHASE PAID-IN RETAINED COMPREHENSIVE HENSIVE STOCK LOAN CAPITAL EARNINGS INCOME INCOME ------ -------- ---------- -------- ------------- ------- Balance as at February 29, 2003............ $103,220 $(612) $232 $86,176 $10,476 $ Net Income................................. -- -- -- 15,166 -- 15,166 Foreign currency translation............... -- -- -- -- (1,047) (1,047) ------- Total comprehensive income................. -- -- -- -- -- $14,119 ======= Dividends paid............................. -- -- -- (1,177) -- Interest, net of income taxes, from a share purchase loan............................ -- -- -- 2 -- Issuance of common shares.................. 448 -- -- -- -- -------- ----- ---- -------- ------- Balance, as at May 31, 2003................ $103,668 $(612) $232 $100,167 $ 9,429 ======== ===== ==== ======== =======
ACCUMULATED SHARE ADDITIONAL OTHER COMPRE- COMMON PURCHASE PAID-IN RETAINED COMPREHENSIVE HENSIVE STOCK LOAN CAPITAL EARNINGS INCOME INCOME ------ -------- ---------- -------- ------------- ------- Balance as at February 29, 2004............ $105,044 $ -- $232 $115,647 $10,476 $ Net Income................................. -- -- -- 8,353 -- 8,353 Foreign currency translation............... -- -- -- -- (3,546) (3,546) ------- Total comprehensive income................. -- -- -- -- -- $ 4,807 ======= Dividends paid............................. -- -- -- (1,266) -- Issuance of common shares.................. 32 -- -- -- -- -------- ----- ---- -------- ------- Balance, as at May 31, 2004................ $105,076 $ -- $232 $122,734 $ 6,930 ======== ===== ==== ======== =======
F-8 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF FINANCIAL STATEMENT PRESENTATION The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring items, considered necessary for a fair presentation of financial data have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the entire year. The consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's annual financial statements for the year ended February 29, 2004. REPORTING CURRENCY The functional currency of the Company is the Canadian dollar. However, the Company has adopted the US dollar as its reporting currency. The financial statements are translated into the reporting currency using the current rate method. Under this method, the financial statements are translated into the reporting currency as follows: assets and liabilities are translated at the exchange rate in effect at the date of the balance sheet, while revenues and expenses are translated at the annual year-to-date average exchange rate. All gains and losses resulting from the translation of the financial statements into the reporting currency are included in the accumulated other comprehensive income in shareholders' equity. COMPARATIVE FIGURES The figures shown for comparative purposes for the period ended May 31, 2003 have never been presented to shareholders under accounting principles in the United States and in US dollars reporting currency. 2. INVENTORIES
MAY 31, FEBRUARY 29, MAY 31, 2003 2004 2004 ------- ------------ ------- Raw material............................................. $31,475 $25,091 $26,998 Work in progress and finished goods...................... 23,491 20,593 18,950 ------- ------- ------- $54,966 $45,684 $45,948 ======= ======= =======
3. INFORMATION ON THE CONSOLIDATED STATEMENTS OF INCOME The selling, general and administrative expenses include the change in fair value of derivative financial instruments which represented a loss of $2,284,000 for the period ended May 31, 2004 and a gain of $10,475,000 for the corresponding period of the previous year. 4. STOCK-BASED COMPENSATION The Company has a stock-based compensation plan, which is described in Note 12 to the audited consolidated financial statements of the Company for the year ended February 29, 2004. F-9 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company accounts for this plan under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25"), and related Interpretations. Compensation cost is not recorded because the option exercise price was equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the Company has applied the fair value measurement and recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.
THREE MONTHS ENDED MAY 31, ---------------------- 2003 2004 ---- ---- Net income, as reported................................... $15,166 $8,353 Deduct: Total stock-based compensation expense determined under fair value based method........................... (337) (176) ------- ------ Pro-forma net income...................................... $14,829 $8,177 ======= ====== Earnings per share: Basic -- as reported.................................... $ 0.63 $ 0.34 Basic -- pro forma...................................... 0.62 0.34 Diluted -- as reported.................................. 0.62 0.33 Diluted -- pro forma.................................... 0.60 0.33
There were no stock options granted in the three-month period ended May 31, 2004. 5. EARNINGS PER SHARE Basic and diluted earnings per share were calculated according to the following number of shares (in thousands):
THREE MONTHS ENDED MAY 31, --------------------- 2003 2004 ---- ---- Weighted average number of common shares outstanding....... 24,105 24,387 Potential dilutive effect.................................. 501 576 ------ ------ Weighted average number of common shares and dilutive common shares............................................ 24,606 24,963 ====== ======
6. WARRANTIES AND GUARANTEES Products sold by the Company are covered by a basic limited warranty with terms and conditions that vary depending upon the product and country in which it was sold. The Company estimated the costs that may be incurred under its warranty obligations and records a liability in the amount of such costs at the time product revenue is recognized. Factors that affect the Company's warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and cost per claim. At least once a quarter, the Company assesses the adequacy of its recorded warranty liabilities and adjusts the amount as necessary. The Company has guaranteed a portion of the residual values of certain assets under operating leases with expiry dates between 2005 and 2011, for the benefit of the lessor. If the fair value of the assets, at the end of their respective lease term, is less than the residual value F-10 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) guaranteed, that the Company must, under certain conditions, compensate the lessor for a portion of the shortfall. The maximum exposure in respect of these guarantees is $191,000. The Company has not recorded any liability associated with these guarantees. 7. SEGMENTED INFORMATION: Reconciliation with the financial statements of revenues and assets by business segment are as follows:
THREE MONTHS ENDED MAY 31, -------------------- 2003 2004 ---- ---- Net sales: Bathroom and Kitchen...................................... $110,551 $121,499 Spas...................................................... 15,997 14,637 -------- -------- $126,548 $136,136 ======== ========
THREE MONTHS ENDED MAY 31, -------------------- 2003 2004 ---- ---- Operating income: Bathroom and Kitchen...................................... $21,670 $11,456 Spas...................................................... 2,286 (70) ------- ------- $23,956 $11,386 ======= =======
THREE MONTHS ENDED MAY 31, -------------------- 2003 2004 ---- ---- Depreciation and amortization: Bathroom and Kitchen...................................... $3,358 $3,611 Spas...................................................... 341 222 ------ ------ $3,699 $3,833 ====== ======
THREE MONTHS ENDED MAY 31, -------------------- 2003 2004 ---- ---- Additions to property, plant and equipment and goodwill: Bathroom and Kitchen...................................... $2,202 $2,300 Spas...................................................... 162 166 ------ ------ $2,364 $2,466 ====== ======
8. SUBSEQUENT EVENT On June 4, 2004, the merger transaction was completed which resulted in the acquisition of Maax Inc. by certain companies formed by J.W. Childs Associates, L.P., Borealis Private Equity Limited Partnership, Borealis (QLP) Private Equity Limited Partnership and Ontario Municipal Employees Retirement Board. F-11 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We have audited the consolidated balance sheets of MAAX Inc. and its subsidiaries as of February 28, 2003 and February 29, 2004 and the related consolidated statements of income, shareholders' equity and cash flows for the years ended February 28, 2002 and 2003, and February 29, 2004. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company and its subsidiaries as of February 28, 2003 and February 29, 2004 and the results of their operations and their cash flows for the years ended February 28, 2002 and 2003, and February 29, 2004 in conformity with U.S. generally accepted accounting principles. /s/ KPMG LLP Chartered Accountants Montreal, Canada April 9, 2004, except as to note 20 (g) which is dated June 4, 2004 F-12 MAAX INC. CONSOLIDATED BALANCE SHEETS FEBRUARY 28, 2003 AND FEBRUARY 29, 2004 (IN THOUSANDS OF US DOLLARS)
2003 2004 ---- ---- ASSETS Current assets: Cash...................................................... $ 2,668 $ 4,467 Accounts receivable, less allowance for doubtful accounts of $3,383 in 2003 and $3,025 in 2004.................... 57,060 64,012 Inventories (note 4)...................................... 51,370 45,684 Prepaid expenses.......................................... 3,441 3,293 Deferred income taxes (note 10)........................... 3,121 3,542 -------- -------- Total current assets...................................... 117,660 120,998 Property, plant and equipment (note 5)...................... 92,552 100,615 Intangible assets (note 6).................................. 16,816 16,388 Goodwill (notes 1 (c) and 7)................................ 112,762 112,519 Derivative financial instruments (note 17).................. 1,994 11,627 Other assets, net of accumulated amortization............... 1,236 1,678 Deferred income taxes (note 10)............................. 1,169 1,762 -------- -------- Total assets................................................ $344,189 $365,587 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Bank loan (note 8)........................................ $ 2,451 $ -- Accounts payable.......................................... 23,410 25,717 Accrued liabilities....................................... 16,677 26,737 Income taxes payable...................................... 420 4,765 Deferred income taxes (note 10)........................... 1,262 3,824 Current portion of long-term debt (note 9)................ 5,281 4,782 -------- -------- Total current liabilities................................. 49,501 65,825 Long-term debt (note 9)..................................... 92,930 52,662 Deferred income taxes (note 10)............................. 14,011 15,701 -------- -------- Total liabilities........................................... 156,442 134,188 Shareholders' equity (note 11): Common shares, without par value. Authorized in an unlimited number; issued and outstanding: 24,144,159 shares in 2003 and 24,395,459 shares in 2004............ 103,057 105,044 Share purchase loan (note 11)............................. (409) -- Additional paid-in capital (note 12)...................... 185 232 Retained earnings......................................... 86,176 115,647 Accumulated other comprehensive (loss) income............. (1,262) 10,476 -------- -------- Total shareholders' equity................................ 187,747 231,399 Commitments and contingencies (note 20) -------- -------- Total liabilities and shareholders' equity.................. $344,189 $365,587 ======== ========
See accompanying Notes to Consolidated Financial Statements. F-13 MAAX INC. CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED FEBRUARY 28, 2002, 2003 AND FEBRUARY 29, 2004 (IN THOUSANDS OF US DOLLARS, EXCEPT PER SHARE AMOUNTS)
2002 2003 2004 ---- ---- ---- Net sales.................................................. $354,937 $422,192 $495,737 Expenses: Cost of goods sold....................................... 246,207 287,762 344,431 Selling, general and administrative (note 13)............ 68,125 76,746 80,061 Depreciation and amortization (note 13).................. 13,690 12,595 15,638 Financial expenses (note 13)............................. 4,291 3,965 4,898 Impairment of goodwill (note 7).......................... -- -- 4,511 -------- -------- -------- 332,313 381,068 449,539 -------- -------- -------- Income before income taxes and cumulative effect of a change in accounting principles.......................... 22,624 41,124 46,198 Income taxes (note 10)..................................... 8,034 15,699 14,247 -------- -------- -------- Income before cumulative effect of a change in accounting principles............................................... 14,590 25,425 31,951 Cumulative effect of a change in accounting principles related to impairment of goodwill (note 1(c))............ -- (11,312) -- -------- -------- -------- Net income................................................. $ 14,590 $ 14,113 $ 31,951 ======== ======== ======== Earnings per common share (note 14): Basic: Before cumulative effect of a change in accounting principles.......................................... $ 0.61 $ 1.06 $ 1.32 Cumulative effect of a change in accounting principles.......................................... -- (0.47) -- -------- -------- -------- Net income................................................. $ 0.61 $ 0.59 $ 1.32 ======== ======== ======== Diluted: Before cumulative effect of a change in accounting principles.......................................... $ 0.61 $ 1.03 $ 1.29 Cumulative effect of a change in accounting principles.......................................... -- (0.46) -- -------- -------- -------- Net income................................................. $ 0.61 $ 0.57 $ 1.29 ======== ======== ========
See accompanying Notes to Consolidated Financial Statements. F-14 MAAX INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY YEARS ENDED FEBRUARY 28, 2002, 2003 AND FEBRUARY 29, 2004 (IN THOUSANDS OF US DOLLARS)
ACCUMULATED SHARE ADDITIONAL OTHER COMPRE- COMMON PURCHASE PAID-IN RETAINED COMPREHENSIVE HENSIVE STOCK LOAN CAPITAL EARNINGS INCOME INCOME ------ -------- ---------- -------- ------------- ------- Balance, as at February 28, 2001....... $100,734 $(613) $ -- $61,738 $ 33,667 Net income............................. -- -- -- 14,590 -- $ 14,590 Cumulative translation adjustment...... -- -- -- -- (4,867) (4,867) -------- Total comprehensive income............. -- -- -- -- -- $ 9,723 ======== Issuance of common shares on exercise of stock options (note 12)........... 319 -- -- -- -- Issuance of common shares on business acquisition (note 11)................ 154 -- -- -- -- Reimbursement of the share purchase loan (note 11)....................... -- 102 -- -- -- Interests, net of $10 of income taxes, from a share purchase loan (note 11).................................. -- -- -- 19 -- Dividends on common shares ($0.09)..... -- -- -- (2,130) -- -------- ----- ---- -------- -------- Balance, as at February 28, 2002....... 101,207 (511) -- 74,217 28,800 Net income............................. -- -- -- 14,113 -- $ 14,113 Cumulative translation adjustment...... -- -- -- -- (30,062) (30,062) -------- Total comprehensive income (loss)...... -- -- -- -- -- $(15,949) ======== Issuance of common shares on exercise of stock options (note 12)........... 1,696 -- -- -- -- Issuance of common shares on business acquisition (note 11)................ 154 -- -- -- -- Tax deduction on stock options exercised (note 12).................. -- -- 185 -- -- Reimbursement of the share purchase loan (note 11)....................... -- 102 -- -- -- Interest, net of $4 of income taxes from a share purchase loan (note 11).................................. -- -- -- 9 -- Dividends on common shares ($0.09)..... -- -- -- (2,163) -- -------- ----- ---- -------- -------- Balance, as at February 28, 2003....... 103,057 (409) 185 86,176 (1,262) Net income............................. -- -- -- 31,951 -- $ 31,951 Cumulative translation adjustment...... -- -- -- -- 11,738 11,738 -------- Total comprehensive income............. -- -- -- -- -- $ 43,689 ======== Issuance of common shares on exercise of stock options (note 12)........... 1,636 -- -- -- -- Issuance of common shares on business acquisition (note 11)................ 351 -- -- -- -- Tax deduction on stock options exercised (note 12).................. -- -- 47 -- -- Interest, net of $6 of income taxes from a share purchase loan (note 11).................................. -- -- -- 9 -- Reimbursement of the share purchase loan (note 11)....................... -- 102 -- -- -- Forgiveness of share purchase loan (note 11)............................ -- 307 -- -- -- Dividends on common shares ($0.10)..... -- -- -- (2,489) -- -------- ----- ---- -------- -------- Balance, as at February 29, 2004....... $105,044 $ -- $232 $115,647 $ 10,476 ======== ===== ==== ======== ========
See accompanying Notes to Consolidated Financial Statements. F-15 MAAX INC. CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED FEBRUARY 28, 2002, 2003 AND FEBRUARY 29, 2004 (IN THOUSANDS OF US DOLLARS)
2002 2003 2004 ---- ---- ---- Cash flows related to operating activities: Net income................................................ $ 14,590 $ 14,113 $ 31,951 Items not affecting cash: Impairment of goodwill................................. -- 11,312 4,511 Depreciation and amortization (note 13)................ 13,690 12,595 15,638 Amortization of financial expenses..................... 416 418 518 Deferred income taxes (note 10)........................ 242 5,325 2,415 Change in fair value of derivative financial instruments.......................................... (806) (2,723) (9,210) Net change in non-cash balances related to operations (note 15).............................................. 1,842 (2,661) 16,964 -------- -------- -------- 29,974 38,379 62,787 Cash flows related to financing activities: Decrease in bank overdraft................................ (412) -- -- Decrease in bank loan..................................... (600) (741) (2,637) Proceeds from issuance of long-term debt.................. 46,695 64,425 -- Repayment of long-term debt............................... (60,410) (30,151) (40,434) Proceeds from issuance of shares.......................... 417 1,794 1,748 Interests received on share purchase loan................. 29 13 15 Dividends paid............................................ (2,130) (2,163) (2,489) -------- -------- -------- (16,411) 33,177 (43,797) Cash flows related to investing activities: Business acquisitions (notes 3 and 20 (b))................ (128) (59,143) (122) Additions to property, plant and equipment................ (12,761) (10,785) (17,851) Proceeds from disposal of property, plant and equipment... 952 1,451 1,751 Other assets.............................................. (834) (347) (914) -------- -------- -------- (12,771) (68,824) (17,136) -------- -------- -------- Net increase in cash........................................ 792 2,732 1,854 Translation adjustment on cash denominated in foreign currencies................................................ 18 (874) (55) Cash, beginning of year..................................... -- 810 2,668 -------- -------- -------- Cash, end of year........................................... $ 810 $ 2,668 $ 4,467 ======== ======== ======== Interest paid............................................... $ 3,460 $ 3,438 $ 4,511 Income taxes paid........................................... 4,499 11,068 7,875 ======== ======== ========
See accompanying Notes to Consolidated Financial Statements. F-16 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED FEBRUARY 28, 2002, 2003 AND FEBRUARY 29, 2004 (TABULAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF US DOLLARS) The Company is incorporated under the Quebec Companies Act. Its principal business activity is to design, develop, manufacture and distribute bathroom and kitchen products and spas. 1. SIGNIFICANT ACCOUNTING POLICIES: (a) CONSOLIDATION: The consolidated financial statements, expressed in United States dollars, include the accounts of MAAX Inc. and all its subsidiaries (the "Company"), and are prepared in accordance with accounting principles generally accepted in the United States of America. All significant intercompany balances and transactions have been eliminated on consolidation. (b) GUARANTEES: In November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, which requires that certain disclosures be made by a guarantor about its obligations under guarantees in its interim and annual consolidated financial statements for interim periods ending after December 15, 2002 and that guarantees initially entered into or modified after January 1, 2003 be measured and recognized. A guarantee is a contract or an indemnification agreement that contingently requires the Company to make payments to the other party to the contract or agreement, based on changes in an underlying that is related to an asset, a liability or an equity security of the other party, or based on a third party failure to perform under an obligating agreement. It could be also an indirect guarantee of the indebtedness of another party, even though the payment to the other party may not be based on changes in an underlying that is related to an asset, a liability or an equity security of the other party. A liability is recorded when the Company considers probable that a payment relating to a guarantee will have to be made to the other party of the contract or agreement, considering recourse against any third party. A liability is also required to be recognized for the fair value of the obligation undertaken in issuing the guarantee at the inception of the guaranty. In the normal course of business, the Company enters into agreements containing features that meet Interpretation No. 45 criteria for a guarantee including the following: OPERATING LEASES: The Company has guaranteed a portion of the residual values of certain assets under operating leases with expiry dates between 2005 and 2011, for the benefit of the lessor. If the fair value of the assets, at the end of their respective lease terms, is less than the residual value guaranteed, then the Company must, under certain conditions, compensate the lessor for a portion of the shortfall. The maximum exposure in respect of these guarantees is $185,000. The Company did not record any liability associated with these guarantees. LONG-TERM DEBT: Under the terms of its credit agreements, the Company has agreed to indemnify its American lenders against changes in withholding taxes. These indemnifications extend for the term of the indebtedness and do not provide any limit on the maximum potential liability. The nature of the indemnification agreement prevents the Company from estimating the maximum potential liability it F-17 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) could be required to pay to lenders. Accordingly, no amount has been accrued in the consolidated financial statements with respect to these indemnifications. DIRECTORS AND OFFICERS INDEMNIFICATION AGREEMENTS: Under the law, the Company indemnifies its directors and officers, former directors and officers and individuals who act or who have acted at the Company's request to be a director or officer of an entity in which it is a shareholder or creditor, to the extent permitted by law, against any and all charges, costs, expenses, amounts paid in settlement and damages incurred by the directors and officers as a result of any lawsuit, or any judicial, administrative or investigative proceeding in which the directors and officers are sued as a result of their service. These indemnification claims are subject to any statutory or other legal limitation period. The nature of the indemnification provided in the agreements prevents the Company from making a reasonable estimate of the maximum potential amount it could be required to pay to counterparties. The Company has purchased directors' and officers' liability insurance, without any deductible. To the knowledge of management, there is no such claim. No amount has been accrued in the consolidated balance sheet with respect to these indemnifications. (c) GOODWILL AND OTHER INTANGIBLE ASSETS: On March 1, 2002, Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets" became effective. In accordance with SFAS No. 142, the Company no longer records amortization expense related to goodwill and other indefinite-lived intangible assets. The Company provides hereafter supplemental disclosure for adjusted net income and adjusted earnings per common share for the years ended February 28, 2002 and 2003, and February 29, 2004, excluding goodwill amortization expense. Prior to the adoption of SFAS 142, goodwill was amortized over a period of up to 40 years.
2002 2003 2004 ---- ---- ---- Net income, as reported..................................... $14,590 $14,113 $31,951 Goodwill amortization, net of income taxes.................. 1,803 -- -- ------- ------- ------- Net income after restatement................................ $16,393 $14,113 $31,951 ======= ======= ======= Adjusted earnings per common share: Basic..................................................... $ 0.69 $ 0.59 $ 1.32 Diluted................................................... 0.68 0.57 1.29
In accordance with the transitional provision of SFAS 142, an impairment loss, resulting from the initial application of the recommendations, is recognized as the effect of a change in accounting policy and charged to income in the year of application. During the year ended February 28, 2003, the Company recorded a goodwill impairment loss for each of its reporting units having a carrying amount exceeding its fair value. Accordingly, goodwill and net income were reduced by $11,312,000 on March 1, 2002. Prior to the implementation of SFAS 142, for its year ended February 28, 2002, the Company measured its impairment of goodwill based on undiscounted cash flows. Under the provision of SFAS 142, goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test is carried out in two steps. In the first step, the carrying amount of the reporting unit is compared with its fair value. When the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not to be impaired and the second step of the impairment test is not F-18 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) required. The second step is carried out when the carrying amount of a reporting unit exceeds its fair value, in which case the implied fair value of the reporting unit's goodwill is compared with its carrying amount to measure the amount of the impairment loss, if any. When the carrying amount of the reporting unit's goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess and is presented as a separate line item in the income statement. Intangible assets acquired in business combinations and intangible assets acquired individually or with a group of other assets, which have indefinite lives, are also tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test compares the carrying amount of the intangible asset with its fair value, and an impairment loss is recognized in the statement of income for the excess of the carrying value over its fair value, if any. Intangible assets with definite useful lives are amortized over their useful life. (d) STOCK-BASED COMPENSATION: The Company offers stock-based compensation plans, which are described in note 12. The Company applies the intrinsic-value-based method of accounting prescribed by Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations including FASB Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation, an interpretation of APB Opinion No. 25, to account for its fixed-plan stock options. Under this method, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. FASB Statement No. 123, Accounting for Stock-Based Compensation and FASB Statement No. 148, Accounting for Stock-Based Compensation -- Transition and Disclosure, an amendment of FASB Statement No. 123, established accounting and disclosure requirements using a fair-value-based method of accounting for stock-based employee compensation plans. As permitted by existing accounting standards, the Company has elected to continue to apply the intrinsic-value-based method of accounting described above, and has adopted only the disclosure requirements of Statement 123, as amended. The following table illustrates the effect on net income if the fair-value-based method had been applied to all outstanding and unvested awards in each period.
2002 2003 2004 ---- ---- ---- Net income, as reported..................................... $14,590 $14,113 $31,951 Add stock-based employee compensation expense included in reported net income....................................... -- -- -- Deduct stock-based employee compensation expense determined under the fair value method for all awards................ (1,197) (963) (979) ------- ------- ------- Pro forma net income........................................ $13,393 $13,150 $30,972 ======= ======= =======
2002 2003 2004 ---- ---- ---- Pro forma earnings per common share: Basic -- as reported...................................... $0.61 $0.59 $1.32 Basic -- pro forma........................................ 0.56 0.55 1.27 Diluted -- as reported.................................... 0.61 0.57 1.29 Diluted -- pro forma...................................... 0.56 0.54 1.25
F-19 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (e) TRADE RECEIVABLES: The Company provides an allowance for doubtful accounts on its trade receivables based on management's judgment of the credit risk related to specific accounts. Gains or losses on the sale of trade receivables are calculated by comparing the carrying amount of the trade receivables sold with the total of the cash proceeds from the sale. Costs related to the sale are recognized in income as incurred and are included in selling, general and administrative expenses. (f) INVENTORIES: Raw materials are valued at the lower of cost and replacement cost. Work in progress and finished goods are valued at the lower of cost and net realizable value. Cost is determined using the first-in, first-out basis. (g) PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated at cost including capitalized interests of $250,000 in 2002, nil in 2003 and 2004, net of government grants and investment tax credits. Depreciation is calculated mainly using the following methods, rates and periods:
ASSET METHOD RATE/PERIOD ----- ------ ----------- Paving....................................... Declining balance 4% Buildings.................................... Straight-line 40 years Moulds and dies.............................. Straight-line 2 to 7 years Furniture and equipment...................... Declining balance 10% and 20% Data processing system....................... Declining balance or straight-line 15% and 30% Automotive equipment......................... Declining balance 20% and 30%
Repair and maintenance expenditures are expensed as incurred. (h) INTANGIBLE ASSETS: Intangible assets with definite lives are stated at cost. Amortization is calculated using the straight-line method over the following periods:
ASSET PERIOD ----- ------ Enterprise Resource Planning System......................... 15 years Trademarks.................................................. 5 years Distribution network........................................ 30 years Non-compete agreement....................................... 5 years
(i) OTHER ASSETS: Deferred costs including deferred financing charges, stated at cost less accumulated amortization, are amortized using the interest method over the term of the loan. (j) REVENUE RECOGNITION: Sales are recognized upon the delivery of the products and at the date the transfer of ownership risks and benefits to the customers occurs. Net sales represent gross sales less volume rebates and vendors' discounts given to the customers. Shipping costs are generally billed to F-20 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) customers and are included in sales; costs incurred by the Company are included in the cost of goods sold. (k) INCOME TAXES: Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credits carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. (l) FOREIGN CURRENCY TRANSLATION: The Company's functional currency is the Canadian dollars, but it uses the U.S. dollar as its reporting currency. U.S. AND NETHERLANDS SUBSIDIARIES: The financial statements of the Company's subsidiaries are measured in U.S. dollars and Euros, their functional currencies, and are translated in Canadian dollars as follows: assets and liabilities of these subsidiaries are translated at exchange rates at the balance sheet date. Revenues and expenses are translated at the average exchange rate in effect during the year. The resulting cumulative translation adjustments are recorded in other comprehensive income. OTHER FOREIGN SUBSIDIARIES AND FOREIGN CURRENCY TRANSACTIONS: Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the exchange rate prevailing at the end of the year. Other assets and liabilities are translated at exchange rates prevailing at the respective transaction dates. Exchange gains or losses are included in income. Items affecting income are translated at the average exchange rate for the period. LONG-TERM DEBT DENOMINATED IN US DOLLARS AND HEDGE RELATIONSHIP: A portion of the Company's long-term debt denominated in US dollars is designated as a hedge against the net investment in U.S. subsidiaries. Any exchange gain or loss on the hedge would be recorded against the exchange loss or gain arising on translation of the financial statements of the U.S. subsidiaries included in the cumulative translation adjustment account in accumulated other comprehensive income in the shareholders' equity. Exchange gains or losses on the remaining debt denominated in US dollars are included in the current year's income. If the hedge relationship was terminated or became ineffective, the amounts included in accumulated other comprehensive income would remain in this account; gains and losses on the debt, subsequent to the termination of the hedging relationship, would be included in income. (m) COMPREHENSIVE INCOME: Comprehensive income consists of net income and foreign currency translation adjustments, and is presented in the consolidated statement of shareholders' equity. F-21 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (n) EARNINGS PER COMMON SHARE: Basic earnings per common share is computed using the weighted average number of common shares outstanding (see note 14). (o) DERIVATIVE FINANCIAL INSTRUMENTS: The Company accounts for derivatives in accordance with SFAS No. 133 "Accounting for Derivative Instruments and Certain Hedging Activities", as amended, which requires that all derivative instruments be recorded on the balance sheet at their respective fair values. The foreign exchange forward contracts and the interest rate swaps used by the Company have not been designated as hedges and, accordingly, changes in fair value of the derivatives are accounted for in income. (p) ADVERTISING EXPENSES: The cost of advertising is expensed as incurred. The advertising expenses incurred by the Company amounted to $152,000 in 2002, $321,000 in 2003 and $485,000 in 2004. (q) ENVIRONMENTAL EXPENDITURES: Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations and which are not expected to contribute to current or future operations are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are likely, and when the costs, based on a specific plan of action in terms of the technology to be used and the extent of the corrective action required, can be reasonably estimated. (r) PRODUCT WARRANTY: The Company establishes a provision for product warranties based on management's judgement and its historical experience with such warranty costs. The provision is recorded as the revenue is recognized and is presented in the accrued liabilities on the balance sheet. Changes in the warranty reserve are as follows:
2003 2004 ---- ---- Beginning balance........................................... $ 1,836 $ 2,913 Warranty accrual............................................ 6,626 7,430 Cash payments............................................... (5,628) (7,152) Translation adjustment...................................... 79 144 ------- ------- Ending balance.............................................. $ 2,913 $ 3,335 ======= =======
(s) USE OF ESTIMATES: The preparation of financial statements in conformity with United States of America generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Significant areas requiring the use of management estimates relate to the useful life of assets for amortization and evaluation of net recoverable amount, the determination of the fair value of assets acquired and liabilities assumed in business F-22 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) combinations, implied fair value of goodwill, provisions for doubtful accounts, obsolete inventories, warranties and income taxes. Accordingly, actual results could differ from these estimates. 2. EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS: The Financial Accounting Standards Board ("FASB") has recently issued several new Statements and Interpretations. The Company has adopted the provisions of Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities. Other Statements and Interpretations recently issued by the FASB that are applicable to the Company have had little or no immediate effect on the Company. Those statements included No. 143, Accounting for Asset Retirement Obligations; No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets; No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 (leases), and Technical Corrections; No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities; and No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. 3. BUSINESS ACQUISITION: There was no business acquisition during the years ended February 28, 2002 and February 29, 2004. On October 24, 2002, the Company acquired all outstanding shares of Aker Plastics Company, Inc., an important manufacturer of fibreglass bathroom equipment in the United States. The purchase price totalled $80.4 million, including $66.4 million paid cash and $14 million in notes bearing interest at a rate of 3% and payable over a three-year period. Management is of the opinion that this acquisition has contributed to its business volume and profitability through a better positioning at plumbing wholesalers, an integration of a brand with an outstanding reputation and the acceleration of the Company's expansion in the United States. This business acquisition has been accounted for using the purchase method and the results are consolidated from the date of acquisition. The fair value of the net assets acquired is summarized as follows:
AKER PLASTICS COMPANY, INC. ------------- Net working capital excluding cash.......................... $ 6,543 Property, plant and equipment............................... 16,828 Trademark................................................... 5,615 Distribution network........................................ 2,708 Non-compete agreement....................................... 572 Goodwill (attributed value and tax base).................... 41,317 Cash........................................................ 7,389 ------- 80,952 Long-term debt.............................................. (548) ------- Net assets acquired at fair value........................... $80,404 ======= Consideration: Cash...................................................... $66,404 Notes payable............................................. 14,000 ------- $80,404 =======
F-23 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following unaudited pro forma condensed financial information reflects the consolidated results of operations of the Company as if the acquisition of Aker Plastics Company, Inc. had taken place at the beginning of the respective periods. The pro forma information includes adjustments for interest expense that would have been incurred to finance the acquisition and depreciation and amortization adjustments pursuant to the purchase price allocation. The pro forma results do not reflect synergies and, accordingly, do not account for any potential increase in operating income, any estimated cost savings or adjustments to conform to accounting practices. The pro forma financial information is not necessarily indicative of the results of the operations as they would have been, if the transaction had been effected on the assumed dates. Pro forma condensed financial information:
2002 2003 ---- ---- (UNAUDITED) (UNAUDITED) Net sales............................................... $404,396 $452,530 Net income.............................................. 15,117 16,143 Earnings per common share: Basic................................................. 0.64 0.67 Diluted............................................... 0.63 0.65
4. INVENTORIES:
2003 2004 ---- ---- Raw materials............................................... $29,646 $25,091 Work in progress............................................ 2,094 2,891 Finished goods.............................................. 19,630 17,702 ------- ------- $51,370 $45,684 ======= =======
5. PROPERTY, PLANT AND EQUIPMENT:
2003 ---------------------------------- ACCUMULATED NET BOOK COST DEPRECIATION VALUE ---- ------------ -------- Land.................................................. $ 6,660 $ -- $ 6,660 Buildings and paving.................................. 53,036 8,845 44,191 Moulds and dies....................................... 17,146 10,643 6,503 Furniture and equipment............................... 59,045 29,133 29,912 Data processing system................................ 9,208 5,871 3,337 Automotive equipment.................................. 4,831 2,882 1,949 -------- ------- ------- $149,926 $57,374 $92,552 ======== ======= =======
F-24 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2004 ---------------------------------- ACCUMULATED NET BOOK COST DEPRECIATION VALUE ---- ------------ -------- Land.................................................. $ 6,985 $ -- $ 6,985 Buildings and paving.................................. 60,681 11,059 49,622 Moulds and dies....................................... 19,626 13,001 6,625 Furniture and equipment............................... 64,506 33,141 31,365 Data processing system................................ 10,498 6,698 3,800 Automotive equipment.................................. 5,315 3,097 2,218 -------- ------- -------- $167,611 $66,996 $100,615 ======== ======= ========
6. INTANGIBLE ASSETS:
2003 --------------------------------- ACCUMULATED NET BOOK COST AMORTIZATION VALUE ---- ------------ -------- Enterprise Resource Planning system.................... $ 9,239 $ 831 $ 8,408 Trademarks............................................. 5,600 391 5,209 Distribution network................................... 2,700 32 2,668 Non-compete agreement.................................. 570 39 531 ------- ------ ------- $18,109 $1,293 $16,816 ======= ====== =======
2004 --------------------------------- ACCUMULATED NET BOOK COST AMORTIZATION VALUE ---- ------------ -------- Enterprise Resource Planning system.................... $11,006 $1,702 $ 9,304 Trademarks............................................. 5,600 1,512 4,088 Distribution network................................... 2,700 122 2,578 Non-compete agreement.................................. 570 152 418 ------- ------ ------- $19,876 $3,488 $16,388 ======= ====== =======
The aggregate amortization expense for existing intangible assets at February 29, 2004, over the next five years, is $8,625,000. F-25 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 7. GOODWILL: For the years ended February 28, 2003 and February 29, 2004, the changes in the carrying amount of goodwill are as follows:
BATHROOM AND KITCHEN SPAS TOTAL ------------ ---- ----- Balance as at March 1, 2002........................... $ 67,087 $12,431 $ 79,518 Impairment of goodwill (note 1 (c))................... (11,312) -- (11,312) Goodwill acquired (note 3)............................ 41,519 -- 41,519 Contingent consideration based on earnings of a business acquired during a previous year (note 20 (b))................................................ 128 -- 128 Translation adjustment................................ 2,657 252 2,909 -------- ------- -------- Balance as at February 28, 2003....................... 100,079 12,683 112,762 Impairment of goodwill................................ -- (4,511) (4,511) Goodwill acquired..................................... 4 -- 4 Contingent consideration based on earnings of a business acquired during a previous year (note 20 (b))................................................ 117 -- 117 Translation adjustment................................ 3,866 281 4,147 -------- ------- -------- Balance as at February 29, 2004....................... $104,066 $ 8,453 $112,519 ======== ======= ========
As of February 29, 2004, the Company completed the 2004 annual goodwill test for impairment and recorded an impairment loss of $4,511,000 for its Spas reporting unit as the carrying amount of goodwill exceeded its fair value. The fair value of the Spas reporting unit was established based on discounted projected cash flows. 8. BANK LOAN: The bank loan, of an authorized amount of $2,451,000 (E2,269,000) as of February 28, 2003 was repaid and terminated in full in the year 2004. The interest was at bank prime rate plus 1%. At February 28, 2003, the interest rate was 3.9%. F-26 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 9. LONG-TERM DEBT:
EFFECTIVE INTEREST RATES AS AT YEARS OF FEBRUARY 29, 2004 MATURITY 2003 2004 ------------------ -------- ---- ---- Revolving credit(a).................... 1.9% 2006 $37,500 $ 2,000 Senior unsecured notes, $45,500(b)..... 6.7% 2009 45,500 45,500 Notes payable on a business acquisition, unsecured, $9,333 ($14,000 in 2003).................... 3.0% 2004-2006 14,000 9,333 Notes payable.......................... 8.0% 2005 485 16 Other.................................. various 2004-2014 726 595 ------- ------- 98,211 57,444 Current portion of long-term debt...... 5,281 4,782 ------- ------- $92,930 $52,662 ======= =======
- --------------- (a) The Company has a revolving credit in an amount of $112,300,000 to finance its current operations, capital expenditures and business acquisitions. The revolving credit may be extended annually subject to the approval of the lender. In the case of non-renewal, the revolving credit will become a term loan payable after two years. The agreement governing this credit contains certain covenants including the obligation to maintain certain financial ratios. The unused revolving credit facility at year-end was $74,800,000 in 2003 and $110,300,000 in 2004. The revolving credit bears interest at variable rates based on banker's acceptance rate, bank prime rate or LIBOR. The weighted average interest rate was 4.3% at February 28, 2003. (b) Senior unsecured notes in an amount of $45,500,000. These notes bear interest at the annual rate of 6.7% and are fully redeemable upon maturity in October 2008. The agreement governing these notes contains certain covenants including the obligation to maintain certain financial ratios. As at February 29, 2004, the Company was not in default on any debt covenants. The principal repayments on long-term debt, excluding the revolving credit, for each of the next five years are as follows: 2005........................................................ $ 4,782 2006........................................................ 4,740 2007........................................................ 54 2008........................................................ 49 2009........................................................ 45,548
F-27 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 10. INCOME TAXES: The Canadian and foreign components on income before income taxes and the applicable provision for income taxes are as follows:
2002 2003 2004 ---- ---- ---- Canada................................................ $12,619 $23,095 $23,564 Foreign............................................... 10,005 18,029 22,634 ------- ------- ------- Income before income taxes............................ $22,624 $41,124 $46,198 ======= ======= =======
Total provision for income tax attributable to income consists of:
2002 2003 2004 ---- ---- ---- Current: Canada............................................... $3,002 $ 4,755 $ 4,082 Foreign.............................................. 4,790 5,619 7,750 ------ ------- ------- 7,792 10,374 11,832 Deferred: Canada............................................... 1,030 3,142 3,181 Foreign.............................................. (788) 2,183 (766) ------ ------- ------- 242 5,325 2,415 ------ ------- ------- Total provision................................... $8,034 $15,699 $14,247 ====== ======= =======
Total provision for income taxes is allocated to different accounts in the statements of income as follows:
2002 2003 2004 ---- ---- ---- Income taxes........................................... $8,452 $15,699 $14,247 Amortization of goodwill............................... (418) -- -- ------ ------- ------- $8,034 $15,699 $14,247 ====== ======= =======
F-28 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The reconciliation between income tax expense calculated using combined statutory and effective tax rates is as follows:
2002 2003 2004 ------------- -------------- -------------- Income tax expense calculated using statutory rates......................... $8,416 37.2% $14,352 34.9% $15,106 32.7% Add (deduct) tax effect of the following: Credit for manufacturing and processing profits.............................. (512) (2.3) (697) (1.7) (165) (0.4) Effect of non-deductible charges and/or resulting from tax rate changes...... (2) -- 78 0.2 383 0.8 Valuation allowance on future tax assets of the European subsidiary........... -- -- 1,857 4.5 -- -- Change in tax rate related to foreign income and other differences......... 132 0.6 109 0.3 (1,077) (2.3) ------ ---- ------- ---- ------- ---- (382) (1.7) 1,347 3.3 (859) (1.9) ------ ---- ------- ---- ------- ---- $8,034 35.5% $15,699 38.2% $14,247 30.8% ====== ==== ======= ==== ======= ====
The tax effects of significant items comprising the Company's net deferred tax liabilities are as follows:
2003 2004 ---- ---- Operating losses carried forward............................ $ 4,728 $ 3,472 Difference in accounting and tax basis for: Current assets and liabilities............................ 2,296 (258) Property, plant and equipment............................. (8,608) (9,605) Deductible goodwill....................................... (5,422) (5,357) Other assets.............................................. (37) (415) Other....................................................... (439) 37 Valuation allowance on operating losses carry forward....... (3,501) (2,095) -------- -------- Deferred income taxes....................................... $(10,983) $(14,221) ======== ========
The valuation allowance increased (decreased) by $369,000 in 2002, $3,066,000 in 2003 and ($1,406,000) in 2004.
2003 2004 ---- ---- Deferred income taxes are as follows: Deferred income tax asset -- current portion.............. $ 3,121 $ 3,542 Deferred income tax asset -- long-term portion............ 1,169 1,762 Deferred income tax liability -- current portion.......... (1,262) (3,824) Deferred income tax liability -- long-term portion........ (14,011) (15,701) -------- -------- Deferred income taxes....................................... $(10,983) $(14,221) ======== ========
The Company has not recognized a deferred tax liability for the undistributed earnings of its subsidiaries in the current and prior years because the Company currently does not expect those undistributed earnings to reverse and to become taxable in the foreseeable future. A deferred tax liability will be recognized when the Company expects that it will recover those undistributed F-29 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) earnings in a taxable manner, such as sale of the investment or through receipt of dividends. Such liability is not reasonably determinable at the present time. Management believes that it is more likely than not that the amount of deferred income tax assets for which it has not provided a valuation allowance will be realized through the future operations of the Company. TAX LOSSES CARRIED FORWARD: The losses carried forward for tax purposes available to reduce future income taxes amount to $20,597,000. The Company can apply these losses against future taxable income within the following delays:
CANADA EUROPE TOTAL ------ ------ ----- 2007........................................................ $ 340 $ -- $ 340 2008........................................................ 657 -- 657 2009........................................................ 1,842 -- 1,842 2010........................................................ 5,608 -- 5,608 Indefinitely................................................ -- 12,150 12,150 ------- ------- ------- 8,447 12,150 20,597 Tax losses on which a tax benefit has been accounted for as a deferred tax asset...................................... (4,586) -- (4,586) ------- ------- ------- Tax losses on which no tax benefit has been accounted for as a deferred tax asset...................................... $3,861 $12,150 $16,011 ======= ======= =======
11. CAPITAL STOCK: AUTHORIZED IN UNLIMITED NUMBER AND WITHOUT PAR VALUE: Class A and Class B preferred shares, non-participating and non-voting. The Company's statutes authorize the issuance of Class A and Class B preferred shares in one or several series and allow directors to determine the quantity and designation of each series of shares and their attributes, without requiring the approval of the shareholders. SHARE PURCHASE LOAN: In January 2001, a loan of $613,000, recorded as a reduction of capital stock was granted to a senior executive for the purchase of 100,000 common shares of the Company. This loan was payable over three years and interest was payable quarterly, at the Company's borrowing rate. Reimbursements amounted to $102,000 in 2002, $102,000 in 2003 and $102,000 in 2004. The contract provided that, after the period of three years, the outstanding balance of the loan would be forgiven under certain conditions. These conditions were met in the year 2004 and the outstanding balance of the loan, amounting to $307,000 was forgiven. The expense related to the forgiveness was recorded in operations over the past three years. F-30 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SHARES ISSUED ON BUSINESS ACQUISITION: The Company had initially reserved 75,000 common shares at $11 per share, in connection with a purchase price balance payable in shares related to a business acquisition in 2000.
Common shares reserved...................................... 75,000 Common shares issued in: 2001...................................................... (15,000) 2002...................................................... (15,000) 2003...................................................... (15,000) 2004...................................................... (30,000) ------- -- =======
12. STOCK-BASED COMPENSATION: STOCK OPTION PURCHASE PLAN: Under the 1987 stock option purchase plan for the benefit of senior executives and management of the Company, 3,572,980 common shares were reserved. The exercise price of each option granted is based on the closing price on the Toronto Stock Exchange on the day preceding the grant. The plan provides for a maximum option term of ten years, or earlier in cases of termination of employment, retirement or death. The holder may exercise these options, subject to an annual limit of 20%, such limit being cumulative during the first five years. A summary of the status of the stock option purchase plan as at February 28, 2003 and February 29, 2004 and changes during the years ended on those dates is presented below:
2003 2004 -------------------- -------------------- WEIGHTED WEIGHTED AVERAGE AVERAGE EXERCISE EXERCISE OPTIONS PRICE OPTIONS PRICE ------- -------- ------- -------- Outstanding at beginning of year............. 1,650,000 $ 7.78 1,523,700 $ 9.40 Granted...................................... 175,000 11.23 125,000 13.57 Exercised.................................... (286,300) 6.22 (221,200) 7.55 Cancelled.................................... (15,000) 8.29 (15,000) 13.02 --------- ------ --------- ------ Outstanding at end of year................... 1,523,700 $ 8.46 1,412,500 $10.01 ========= ====== ========= ====== Vested options at end of year................ 942,700 $ 8.25 909,500 $ 9.67 ========= ====== ========= ======
In accordance with the plan, the Company grants stock options to certain employees of its US subsidiaries. Under the current US tax rules, the exercise of these stock options gives rise to a tax deduction. This tax deduction is considered to be an equity transaction and is therefore recorded as a credit to the additional paid-in capital. F-31 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table summarizes information on outstanding stock options as at February 28, 2003 and February 29, 2004:
2003 ---------------------------------------------------------- OPTIONS OUTSTANDING VESTED OPTIONS ------------------------------------- ------------------ WEIGHTED WEIGHTED AVERAGE AVERAGE RANGE OF AVERAGE EXERCISE EXERCISE EXERCISE PRICE NUMBER REMAINING LIFE PRICE NUMBER PRICE -------------- ------ -------------- -------- ------ -------- $3.03 to $ 4.18.............. 181,700 2.5 years $ 3.43 181,700 $ 3.43 $6.23 to $ 8.76.............. 744,000 6.7 years 7.40 393,000 7.45 $9.97 to $13.57.............. 598,000 6.8 years 11.31 368,000 11.48 --------- --------- ------ ------- ------ $3.03 to $13.57.............. 1,523,700 6.6 years $ 8.46 942,700 $ 8.25 ========= ========= ====== ======= ======
2004 ---------------------------------------------------------- OPTIONS OUTSTANDING VESTED OPTIONS ------------------------------------- ------------------ WEIGHTED WEIGHTED AVERAGE AVERAGE RANGE OF AVERAGE EXERCISE EXERCISE EXERCISE PRICE NUMBER REMAINING LIFE PRICE NUMBER PRICE -------------- ------ -------------- -------- ------ -------- $ 3.89 to $ 4.64............. 79,500 2.2 years $ 3.94 79,500 $ 3.94 $ 6.93 to $ 9.73............. 692,000 5.8 years 8.22 458,000 8.27 $11.08 to $15.08............. 641,000 6.6 years 12.71 372,000 12.61 --------- --------- ------ ------- ------ $ 3.89 to $15.08............. 1,412,500 6.0 years $10.01 909,500 $ 9.67 ========= ========= ====== ======= ======
Under this plan, 247,580 stock options may still be granted at the end of the year. The weighted average fair value of stock options granted was $2.20 in 2002, $5.02 in 2003 and $7.79 in 2004. The fair value of each option granted was determined using the Black-Scholes option pricing model and the following weighted average assumptions:
2002 2003 2004 ---- ---- ---- Risk free interest rate..................................... 5.36% 4.96% 4.41% Expected option life........................................ 8 years 8 years 8 years Expected volatility......................................... 25% 33% 53% Expected dividend yield..................................... $ 0.09 $ 0.09 $ 0.10
STOCK COMPENSATION PLAN: The Company has established a stock compensation plan for certain of its employees through a private utility trust. The trust will purchase on the open market, common shares from the capital stock of the Company. These shares must be purchased for the benefit of the participants through annual contributions made by the Company at its own discretion. Bonuses amounting to $254,000 (nil in 2004) have been declared and accounted for in the results of the year ended February 28, 2003. The net proceeds from these bonuses after income taxes have been used to acquire 11,700 shares under the stock compensation plan. F-32 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) DEFERRED COMPENSATION PLAN FOR DIRECTORS: The Company has established a deferred compensation plan for its directors that is effective since May 1, 2003. Under the terms of this plan, deferred share units of the Company are granted. Each deferred share unit gives the right to its holder to receive a payment in cash, upon termination of his services to the Board, equivalent to the fair market value of the shares at the payment date. This plan has been terminated by a decision of the Board of Directors on March 10, 2004. 13. INFORMATION ON THE CONSOLIDATED STATEMENTS OF INCOME:
2002 2003 2004 ---- ---- ---- Other expenses included in selling, general and administrative expenses: Interest income........................................... $ (134) $ (124) $ (355) Foreign exchange (gains) losses........................... 1,777 1,925 (7,289) Change in fair value of derivative financial instruments............................................ (806) (2,723) (9,210) Other financial expenses.................................. 1,438 3,057 3,770 ------- ------- -------- $ 2,275 $ 2,135 $(13,084) ======= ======= ======== Depreciation and amortization: Property, plant and equipment............................. $10,341 $11,502 $ 13,488 Intangible assets......................................... 342 910 2,068 Deferred costs............................................ 785 183 82 Goodwill.................................................. 2,222 -- -- ------- ------- -------- $13,690 $12,595 $ 15,638 ======= ======= ======== Financial expenses: Interest on long-term debt................................ $ 3,500 $ 3,267 $ 3,808 Interest on bank loan..................................... 375 280 572 Amortization of deferred financing charges................ 416 418 518 ------- ------- -------- $ 4,291 $ 3,965 $ 4,898 ======= ======= ========
14. EARNINGS PER COMMON SHARE: Basic earnings per share are calculated by dividing net income attributable to common shareholders by the weighted daily average number of common shares outstanding during the year, excluding the shares held as a guarantee. Diluted earnings per share are calculated by using the weighted average number of common shares outstanding adjusted to include potentially dilutive effect of the share purchase loan, the exercise of stock options, the balance payable in shares on business acquisition and the stock compensation plan.
2002 2003 2004 ---- ---- ---- (IN THOUSANDS) Weighted average number of common shares outstanding........ 23,711 23,994 24,261 Potentially dilutive effect................................. 356 603 534 ------ ------ ------ Weighted average number of common shares and dilutive common shares.................................................... 24,067 24,597 24,795 ====== ====== ======
F-33 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 15. SUPPLEMENTAL CASH FLOW INFORMATION:
2002 2003 2004 ---- ---- ---- Net change in non-cash balances related to operations: Accounts receivable....................................... $(11,888) $ 2,782 $(5,846) Inventories............................................... 5,156 (4,454) 8,089 Prepaid expenses.......................................... 586 (315) 316 Accounts payable and accrued liabilities.................. 4,768 (339) 10,303 Income taxes payable...................................... 3,220 (335) 4,102 -------- ------- ------- $ 1,842 $(2,661) $16,964 ======== ======= =======
16. PENSION PLANS: The Company maintains defined contribution pension plans for certain employees. The pension expenses related to those pension plans amounted to $559,000 in 2002, $1,253,000 in 2003 and $1,028,000 in 2004. 17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT: The Company operates and sells its products internationally and is therefore exposed to risks related to foreign exchange fluctuations and credit risk. The Company is also exposed to interest rate fluctuations. FOREIGN EXCHANGE RISK MANAGEMENT: The Company is exposed to risks related to foreign exchange fluctuations on its exports of goods manufactured in Canada. These risks are partially mitigated by the Company's purchases in the same foreign currency, its debt service and its foreign exchange forward contracts. The notional amounts of derivative financial instruments shown in the following table represent the volume of outstanding transactions and do not represent the potential gain or loss associated with market or credit risk of such instruments. The notional amounts represent the amounts to which an exchange rate will be applied to determine the amount of cash flows to be exchanged. None of these instruments is held or issued for speculative purposes. Foreign exchange forward contracts in US dollars:
2003 2004 ------------------ ------------------ NOTIONAL AVERAGE NOTIONAL AVERAGE MATURITY AMOUNTS RATE AMOUNTS RATE -------- -------- ------- -------- ------- 2004............................................ $42,000 1.5422 $ -- -- 2005............................................ 30,000 1.5533 42,000 1.5454 2006............................................ -- -- 42,000 1.5439
INTEREST RATE RISK MANAGEMENT: The Company has entered into interest rate swaps by which it is committed to exchange, at specific intervals, the difference between fixed and floating interest rates calculated by reference to the notional amounts. During the year 2002, the Company entered into an interest rate swap on its senior unsecured notes, for an amount of $45,500,000, maturing in December 2003. The swap converts the fixed interest rate into a variable interest rate based on the three-month LIBOR rate. F-34 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) During the year 2003, the Company entered into an interest rate swap on its US dollars denominated debt, for a notional amount of $30,000,000, maturing in September 2005. The swap converts the variable interest rate into a fixed interest rate of 3.48%. CREDIT RISK MANAGEMENT: The Company is exposed to credit risk on the accounts receivable from its customers. In order to reduce its credit risk, the Company monitors the financial condition of its customers on a regular basis and establishes the credit rating of all new customers. An allowance for doubtful accounts is established based on the specific credit risk of its customers, historical trends and economic circumstances. The Company does not believe that it is exposed to an unusual level of credit risk. The Company sells on a quarterly basis a portion of its accounts receivable under the terms of securitization agreements. Accounts receivable amounting to $42,035,721 in 2002, $42,701,233 in 2003 and $47,941,637 in 2004 were sold under the terms of these agreements. Accounts receivable amounting to $10,489,000 as at February 28, 2002, $11,001,000 as at February 28, 2003 and $12,819,000 as at February 29, 2004 were sold under the terms of these agreements. The Company has retained the responsibility for servicing, administering and collecting trade receivables sold. There is no recourse under the securitization agreements on the Company's other assets for failure of debtors to pay the trade receivables on due date. Expenses related to these agreements amounting to $184,000 in 2002, $164,000 in 2003 and $211,000 in 2004 have been recorded in the selling, general and administrative expenses. The Company believes that the diversity of its customer base, by product and by region, reduces its credit risk and the impact of abrupt fluctuations in product demand. FAIR VALUE OF FINANCIAL INSTRUMENTS: The carrying value of cash, accounts receivable, bank loans, accounts payable and accrued liabilities approximates their fair value as these items will be realized or paid within one year. The financial instruments' carrying values and fair values as at February 28, 2003 and February 29, 2004 are as follows:
2003 2004 -------------------- ------------------- CARRYING FAIR CARRYING FAIR VALUE VALUE VALUE VALUE -------- ----- -------- ----- Long-term debt(1).............................. $(98,211) $(103,361) $(57,444) $(61,704) Interest rate swaps............................ 390 390 (451) (451) Foreign exchange forward contracts............. 1,604 1,604 12,078 12,078
- --------------- (1) Including current portion The fair values of the financial liabilities are estimated based on discounted cash flows using year-end market yields or market value of similar instruments having the same maturity. The fair values of the derivative financial instruments are estimated using year-end market rates, and reflect the amount that the Company would receive or pay if the instruments were closed out at these dates. F-35 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 18. SEGMENTED INFORMATION: The Company designs, develops, manufactures and distributes products in two business segments, these being: bathroom and kitchen, and spas. The bathroom and kitchen segment includes sales of bathtubs and showers made of acrylic, fibreglass and ABS, as well as shower doors and medicine and kitchen cabinets. The business segments are managed separately because each business requires different technologies and marketing strategies. The management of the Company evaluates the performance of each segment based on income before income taxes. Operations are located in Canada, United States and Europe. The accounting policies used in these business segments are the same as those described in the significant accounting policies. Intersegment sales are recorded at the exchange value, which is the amount agreed to by the parties. Approximately 29% in 2002, 29% in 2003 and 24% in 2004 of total net sales originate from one client. Reconciliations with the financial statements of revenues and assets by business segment and geographic segment are:
2002 2003 2004 ---- ---- ---- By business segment: Net sales: Bathroom and kitchen..................................... $304,126 $359,901 $441,518 Spas..................................................... 50,830 62,364 54,296 Intersegment -- Spas..................................... (19) (73) (77) -------- -------- -------- 50,811 62,291 54,219 -------- -------- -------- $354,937 $422,192 $495,737 ======== ======== ========
2002 2003 2004 ---- ---- ---- Income before income taxes and amortization of goodwill: Bathroom and kitchen..................................... $ 27,561 $ 40,380 $ 54,472 Spas..................................................... (2,715) 744 (8,274) -------- -------- -------- $ 24,846 $ 41,124 $ 46,198 ======== ======== ========
2002 2003 2004 ---- ---- ---- Depreciation of property, plant and equipment and amortization of intangible assets and goodwill: Bathroom and kitchen..................................... $ 11,367 $ 11,149 $ 14,200 Spas..................................................... 1,538 1,263 1,356 -------- -------- -------- $ 12,905 $ 12,412 $ 15,556 ======== ======== ========
F-36 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2002 2003 2004 ---- ---- ---- Assets: Bathroom and kitchen..................................... $227,263 $316,697 $348,346 Spas..................................................... 35,761 27,492 17,241 -------- -------- -------- $263,024 $344,189 $365,587 ======== ======== ========
2002 2003 2004 ---- ---- ---- Additions to property, plant and equipment and goodwill: Bathroom and kitchen..................................... $ 11,608 $ 10,303 $ 17,215 Spas..................................................... 1,281 610 758 -------- -------- -------- $ 12,889 $ 10,913 $ 17,973 ======== ======== ========
2002 2003 2004 ---- ---- ---- By geographic segment: Net sales, from Canadian facilities: Canada................................................... $101,468 $116,123 $131,245 United States............................................ 78,164 93,905 89,467 Overseas................................................. 1,518 1,564 1,258 -------- -------- -------- 181,150 211,592 221,970 ======== ======== ======== Net sales, from American facilities: Canada................................................... -- 153 249 United States............................................ 164,333 200,937 257,535 Overseas................................................. 231 535 990 -------- -------- -------- 164,564 201,625 258,774 Net sales, from European facilities: Overseas................................................. 9,223 8,975 14,993 -------- -------- -------- $354,937 $422,192 $495,737 ======== ======== ========
2002 2003 2004 ---- ---- ---- Property, plant and equipment, intangible assets and goodwill: Canada................................................... $ 89,523 $ 95,992 $105,307 United States............................................ 53,986 119,226 116,799 Europe................................................... 16,937 6,912 7,416 -------- -------- -------- $160,446 $222,130 $229,522 ======== ======== ========
19. RELATED PARTY TRANSACTIONS: Under an agreement signed with a shareholder company, the Company was committed to pay, on an annual basis, management fees and a 4.3% bonus calculated on consolidated income before bonus and income taxes determined using Canadian generally accepted accounting principles. This agreement expired on February 29, 2004. F-37 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Under this agreement, the Company recorded during the following years the following transactions at their exchange value:
2002 2003 2004 ---- ---- ---- Management fees.......................................... $ 715 $ 755 $ 868 Bonus.................................................... 1,022 1,652 1,927 Non-renewal indemnity.................................... -- -- 2,760 ------ ------ ------ $1,737 $2,407 $5,555 ====== ====== ======
20. COMMITMENTS AND CONTINGENCIES: (a) CLAIM SETTLEMENT: During the year ended February 28, 2003, the Company paid and recorded an expense of an amount of $375,000 in final settlement to the sellers of an acquired business now inoperative. (b) CONTINGENT PAYMENT: A business purchase agreement provides for a remaining contingent payment of a maximum amount of $120,000 (CAN$160,000) based on the future income of an acquired business for its fiscal year 2005. Contingent payments amounted to $128,000 in 2003 and to $117,000 in 2004. During the year, the Company paid contingent consideration based on earnings to the seller of this acquired business amounting to $120,000 ($135,000 in 2003 and $125,000 in 2002). (c) OPERATING LEASES: The Company rents fixed assets under operating leases whose rentals total $20,869,000. Annual rentals under these leases for each of the next five years and thereafter are as follows: 2005........................................................ $5,919 2006........................................................ 5,090 2007........................................................ 4,184 2008........................................................ 2,656 2009........................................................ 1,561 Thereafter.................................................. 1,459
In addition, the Company must pay, for certain leases, its share of the annual operating expenses. Furthermore, the Company has purchase options on two buildings, for which the exercise price is $2,620,000 and $2,995,000, respectively, expiring in July and December 2006. (d) ROYALTIES: In connection with the purchase of Coleman Spas, Inc., the parties entered into a ten-year licensing agreement to use the Coleman Spas trademark and associated logos. As defined in the licensing agreement, the Company is required to make royalty payments equal to 1.5% of net sales up to September 30, 2004 and beginning October 1, 2004 through September 30, 2008, the royalty payments will increase to 3% of net sales. The royalty payments made by the Company were $101,640 in 2002, $321,425 in 2003 and $397,029 in 2004. F-38 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (e) ENVIRONMENT: The Company is subject to various laws, regulations and government policies relating to health and safety, to the production, storage, transportation, disposal and environment emissions of various substances, and to the protection of the environment in general. The Company believes it is in compliance with such laws, regulations and government policies, in all-material respects. Furthermore, the Company does not anticipate that compliance with such environmental statutes will have a material adverse effect upon its competitive or consolidated financial position. (f) PRODUCT RECALL: Due to a defective electrical component manufactured by a supplier of the Company and integrated in some products manufactured by the Spas sector, the supplier is replacing at its own costs this component. The total cost of this operation is estimated at $1,900,000. The Company believes that the entire responsibility of the replacement rests with the supplier of this component. Should the supplier become in default in the replacement of this component, the Company may be liable and would have to replace this part. At the date of the financial statements, the Company cannot predict the outcome of this contingency and, accordingly, no liability has been recorded in the Company's books. (g) AMALGAMATION OF THE COMPANY: On March 10, 2004, the Board of Directors decided to recommend the amalgamation of the Company with companies formed by a group of investors. This amalgamation was subject to specific conditions, including shareholders' approval at a special shareholders' meeting held on May 7, 2004. The shareholders have approved the amalgamation which took place on June 4, 2004. (h) CONTINGENCIES: A number of legal proceedings against the Company and its subsidiaries are still outstanding. In the opinion of the management of the Company and its subsidiaries, the outcome of these proceedings is not expected to have a material adverse effect on the Company's results or its financial position. 21. COMPARATIVE FIGURES: Certain comparative figures have been reclassified to conform to the financial statement presentation adopted in the current year. F-39 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Aker Plastics Company, Inc. Plymouth, Indiana We have audited the accompanying balance sheet of Aker Plastics Company, Inc. as of October 31, 2002, and the related statements of income and retained earnings and cash flows for the period from October 26, 2002 to October 31, 2002, and balance sheets of the predecessor as of September 30, 2002 and 2001, and the related statements of income and retained earnings and cash flows for the period from October 1, 2002 to October 25, 2002 and for the years ended September 30, 2002 and 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Aker Plastics Company, Inc. as of October 31, 2002, and the results of its operations and its cash flows for the period from October 26, 2002 to October 31, 2002 and the financial position of the predecessor as of September 30, 2002 and 2001, and the results of its operations and its cash flows for the period from October 1, 2002 to October 25, 2002 and for the years ended September 30, 2002 and 2001, in conformity with U.S. generally accepted accounting principles. /s/ Crowe Chizek and Company LLC Elkhart, Indiana May 7, 2004 F-40 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) AKER PLASTICS COMPANY, INC. AND PREDECESSOR STATEMENTS OF INCOME AND RETAINED EARNINGS
THE COMPANY PREDECESSOR ------------------- -------------------------------------------------- PERIOD FROM PERIOD FROM YEAR ENDED YEAR ENDED OCTOBER 26, 2002 TO OCTOBER 1, 2002 TO SEPTEMBER 30, SEPTEMBER 30, OCTOBER 31, 2002 OCTOBER 25, 2002 2002 2001 ------------------- ------------------ ------------- ------------- NET SALES...................... $1,312,021 $ 6,025,908 $77,409,686 $69,074,181 Cost of sales.................. 873,857 4,057,475 56,031,827 54,717,387 ---------- ----------- ----------- ----------- GROSS PROFIT................... 438,164 1,968,433 21,377,859 14,356,794 Operating expenses............. 191,583 986,913 10,277,169 9,197,722 ---------- ----------- ----------- ----------- INCOME BEFORE OTHER INCOME AND EXPENSE...................... 246,581 981,520 11,100,690 5,159,072 Other income (expense) Interest income.............. 990 4,547 45,145 64,405 Interest expense............. (74,330) (1,513) (33,777) (247,648) Gain (loss) on sale of assets..................... -- -- 411,202 (33,626) Other income................. -- -- 8,494 15,649 ---------- ----------- ----------- ----------- (73,340) 3,034 431,064 (201,220) ---------- ----------- ----------- ----------- INCOME BEFORE INCOME TAXES..... 173,241 984,554 11,531,754 4,957,852 Income taxes (Note 2).......... 69,000 -- -- -- ---------- ----------- ----------- ----------- NET INCOME..................... 104,241 984,554 11,531,754 4,957,852 Retained earnings at beginning of period.................... -- 21,349,679 18,903,250 16,481,665 Dividends declared............. -- -- (9,085,325) (2,536,267) ---------- ----------- ----------- ----------- Retained earnings at end of period....................... $ 104,241 $22,334,233 $21,349,679 $18,903,250 ========== =========== =========== =========== Earnings per share (basic and diluted)..................... $ 104 $ 9,201 $ 107,773 $ 46,335 Shares used in the computation of earnings per share........ 1,000 107 107 107
See accompanying notes to financial statements. F-41 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) AKER PLASTICS COMPANY, INC. AND PREDECESSOR BALANCE SHEETS
THE COMPANY PREDECESSOR ----------- ----------------------------- OCTOBER 31, SEPTEMBER 30, SEPTEMBER 30, 2002 2002 2001 ----------- ------------- ------------- ASSETS Current assets Cash and cash equivalents................ $5,672,960 $ 2,731,555 $ 2,422,323 Accounts receivable (less allowance for doubtful accounts of $70,255 at October 31, 2002, $69,254 in 2002 and $57,263 in 2001)...................... 8,184,846 8,119,600 7,228,080 Inventories (Note 3)..................... 3,373,935 3,245,386 3,216,442 Shareholder receivables (Note 4)......... -- 2,375,985 3,792 Federal income tax deposit (Note 7)...... 511,724 -- -- Other current assets..................... 336,030 125,240 106,575 ----------- ----------- ----------- Total current assets.................. 18,079,495 16,597,766 12,977,212 Property, plant and equipment (Note 5)..... 16,804,946 9,736,817 11,558,917 Goodwill (Note 6).......................... 38,954,718 -- -- Intangibles (Note 6)....................... 8,870,600 -- -- Federal income tax deposit (Note 7)........ -- 511,724 515,376 ----------- ----------- ----------- 47,825,318 511,724 515,376 ----------- ----------- ----------- $82,709,759 $26,846,307 $25,051,505 =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable......................... $1,931,974 $ 2,742,738 $ 2,446,316 Current portion of long-term debt (Note 9).................................... 38,737 38,737 582,718 Accrued payroll.......................... 1,005,201 871,877 596,452 Accrued insurance (Note 11).............. 654,692 769,930 702,173 Taxes payable............................ 356,274 305,886 442,382 Other current liabilities................ 111,255 209,905 181,930 ----------- ----------- ----------- Total current liabilities............. 4,098,133 4,939,073 4,951,971 Long-term debt (Note 9).................... 59,007,285 510,454 1,149,183 Shareholders' equity Common stock (Note 12)................... 1 47,101 47,101 Additional paid-in capital............... 19,500,099 -- -- Retained earnings........................ 104,241 21,349,679 18,903,250 ----------- ----------- ----------- 19,604,341 21,396,780 18,950,351 ----------- ----------- ----------- $82,709,759 $26,846,307 $25,051,505 =========== =========== ===========
F-42 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) AKER PLASTICS COMPANY, INC. AND PREDECESSOR STATEMENTS OF CASH FLOWS
THE COMPANY PREDECESSOR ------------------- ------------------ PERIOD FROM PERIOD FROM OCTOBER 26, 2002 TO OCTOBER 1, 2002 TO OCTOBER 31, 2002 OCTOBER 25, 2002 ------------------- ------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income...................................... $ 104,241 $ 984,554 Adjustments to reconcile net income to net cash from operating activities Depreciation................................. 31,020 139,954 Change in assets and liabilities Accounts receivable........................ (1,254,006) 1,188,760 Inventories................................ (61,969) (66,580) Other current assets....................... 9,436 (220,535) Accounts payable........................... (1,040,846) 230,082 Accrued payroll............................ 218,898 (85,574) Accrued insurance.......................... (108,946) 245,708 Taxes payable.............................. 69,000 (18,612) Other current liabilities.................. (41,806) (56,535) ------------ ---------- Net cash from operating activities...... (2,074,978) 2,341,222 CASH FLOWS FROM INVESTING ACTIVITIES Shareholder receivables......................... -- 2,375,985 Purchase of fixed assets........................ (53,450) (56,453) Purchase stock of predecessor -- net of cash acquired..................................... (70,198,712) -- ------------ ---------- Net cash from investing activities........... (70,252,162) 2,319,532 CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on long-term debt.................... 58,500,000 -- Proceeds from issuance of common stock.......... 19,500,100 -- Payments of long-term debt...................... -- (3,169) ------------ ---------- Net cash from financing activities........... 78,000,100 (3,169) ------------ ---------- Net change in cash and cash equivalents........... 5,672,960 4,657,585 Cash and cash equivalents at beginning of period.......................................... -- 2,731,555 ------------ ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD........ $ 5,672,960 $7,389,140 ============ ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest paid................................... $ 330 $ 1,513
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES: In conjunction with the acquisition of the predecessor company on October 25, 2002, liabilities totaling approximately $5,142,000 were assumed. F-43 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) AKER PLASTICS COMPANY, INC. AND PREDECESSOR STATEMENTS OF CASH FLOWS YEARS ENDED SEPTEMBER 30, 2002 AND 2001
PREDECESSOR -------------------------- 2002 2001 ------------ ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net income................................................ $ 11,531,754 $ 4,957,852 Adjustments to reconcile net income to net cash from operating activities Loss (gain) on sale of assets.......................... (411,202) 33,626 Depreciation........................................... 2,109,239 2,228,362 Change in assets and liabilities Accounts receivable.................................. (891,520) 119,648 Inventories.......................................... (28,944) 98,767 Other current assets................................. (18,665) 17,878 Accounts payable..................................... 296,422 88,615 Accrued payroll...................................... 275,425 39,886 Accrued insurance.................................... 67,757 172,640 Taxes payable........................................ (136,496) 198,467 Other current liabilities............................ 27,975 (15,564) ------------ ----------- Net cash from operating activities.............. 12,821,745 7,940,177 CASH FLOWS FROM INVESTING ACTIVITIES Shareholder receivables................................... (2,372,193) 34,130 Proceeds from fixed asset sales........................... 1,287,559 17,507 Purchase of fixed assets.................................. (1,163,497) (1,262,582) Federal tax deposit refunded.............................. 3,652 187,241 ------------ ----------- Net cash from investing activities..................... (2,244,479) (1,023,704) CASH FLOWS FROM FINANCING ACTIVITIES Net line of credit activity............................... -- (2,000,000) Payments of long-term debt................................ (1,182,709) (929,686) Dividends paid............................................ (9,085,325) (2,536,267) ------------ ----------- Net cash from financing activities..................... (10,268,034) (5,465,953) ------------ ----------- Net change in cash and cash equivalents..................... 309,232 1,450,520 Cash and cash equivalents at beginning of year.............. 2,422,323 971,803 ------------ ----------- CASH AND CASH EQUIVALENTS AT END OF YEAR.................... $ 2,731,555 $ 2,422,323 ============ =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest paid............................................. $ 37,351 $ 264,191
See accompanying notes to financial statements. F-44 MAAX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) AKER PLASTICS COMPANY, INC. AND PREDECESSOR NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2002, SEPTEMBER 30, 2002 AND 2001 NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION: On October 25, 2002, all of the outstanding stock of Aker Plastics Company, Inc. was acquired by MAAX -- AKER ACQUISITION, INC. for $78,000,000. This transaction was accounted for as a purchase. The purchase price exceeded the fair value of the net assets acquired by approximately $48,000,000. Subsequently MAAX -- AKER ACQUISITION, INC. was merged with Aker Plastics Company, Inc. with Aker Plastics Company, Inc. surviving. The Company is wholly owned by MAAX Capital, Co. The following amounts were assigned to the balance sheet accounts on the date of purchase. Cash and cash equivalents................................... $ 7,389,040 Accounts receivable......................................... 6,933,359 Inventory................................................... 3,311,966 Other current assets........................................ 854,980 Property, plant and equipment............................... 16,828,263 Goodwill.................................................... 38,954,718 Intangibles................................................. 8,870,000 Liabilities assumed......................................... (5,142,326) ----------- Total purchase price...................................... $78,000,000 ===========
The Company made an election to treat the stock acquisition as an asset purchase for tax purposes pursuant to IRC Section 338(h)(10). This election will allow the Company to amortize the Goodwill acquired for tax purposes. The financial statements for the period from October 1, 2002 to October 25, 2002 and for the years ended September 30, 2002 and 2001 included the operations of the predecessor company. The financial statements for the period October 26, 2002 through October 31, 2002 represent the results of operations of the successor company. NATURE OF BUSINESS: Aker Plastics Company, Inc. (Company) manufactures fiberglass tub-shower and whirlpool units which are distributed through wholesale plumbing supply companies. CASH AND CASH EQUIVALENTS: All temporary cash investments purchased with a maturity of three months or less are classified as cash equivalents. The Company maintains cash deposits in excess of federally insured limits at a local bank. ACCOUNTS RECEIVABLE: The Company accounts for trade receivables based on amount billed to customers. Past due receivables are determined based on contractual terms. The Company does not accrue interest on any of its trade receivables. ALLOWANCE FOR DOUBTFUL ACCOUNTS: The allowance for doubtful accounts is determined by management based on the Company's historical losses, specific customer circumstances and general economic conditions. Periodically, management reviews accounts receivable and adjusts the allowance based on current circumstances and charges off uncollectible receivables against the allowance when all attempts to collect the receivable have failed. REVENUE RECOGNITION: Revenue from product sales is recognized at time of shipment. INVENTORIES: Inventories are stated at the lower of cost or market using the FIFO (first-in, first-out) method. F-45 AKER PLASTICS COMPANY, INC. AND PREDECESSOR NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 31, 2002, SEPTEMBER 30, 2002 AND 2001 PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Costs of maintenance and repairs are charged to expense when incurred. The Company is depreciating buildings and improvements over periods of 30 years, machinery and equipment over periods of 5 to 7 years, computers and software over periods of 3 to 5 years, and vehicles over periods of 3 to 7 years. USE OF ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. An estimate that is more susceptible to change in the near term is the liability for group health insurance and the continued value of intangible assets. EVALUATION OF IMPAIRMENT OF LONG-LIVED ASSETS: In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, "Impairment or Disposal of Long-Lived Assets", the Company evaluates the carrying value of long-lived assets whenever significant events or changes in circumstances indicate the carrying value of these assets may be impaired. The Company evaluates potential impairment of long-lived assets by comparing the carrying value of the assets to the expected net future cash flows resulting from the use of the assets. Management believes no material impairment of long-lived assets exists. EARNINGS PER SHARE: Basic and diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. SEGMENT INFORMATION: The Company follows the provisions of SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." Based upon definitions contained in SFAS No. 131, the Company has determined that it operates in one segment and has no international operations. FAIR VALUE OF FINANCIAL INSTRUMENTS: The Company estimates that the fair value of all financial instruments approximates the carrying amounts. Because of the short-term maturity of cash and accounts receivable, their carrying amounts approximate fair value. The carrying value of long-term debt approximates fair value based upon the Company's effective borrowing rate. GOODWILL AND INTANGIBLE ASSETS: Goodwill resulted from the acquisition of the Company by MAAX AKER-ACQUISITION, INC. on October 25, 2002 and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. Goodwill is assessed at least annually for impairment and any such impairment will be recognized in the period identified. The intangible assets consist of the Aker tradename, distribution network and a noncompete agreement entered into as part of the acquisition. The intangibles are initially measured at fair value and are being amortized on a straight line basis over their estimated useful lives, which range from 5 to 30 years. INCOME TAXES: The Company is a member of a consolidated group for the period from October 26, 2002 to October 31, 2002 and will be included in a consolidated federal income tax return. The predecessor was an S Corporation and had elected to have its income taxed under Section 1362 of the Internal Revenue Code and similar sections of the state income tax laws which F-46 AKER PLASTICS COMPANY, INC. AND PREDECESSOR NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 31, 2002, SEPTEMBER 30, 2002 AND 2001 provide that, in lieu of corporate income taxes, the shareholders are taxed on the Company's taxable income. Federal income tax expense is allocated to the Company as if the Company filed a separate return. Deferred income tax assets and liabilities are computed based upon differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. The Company has a tax allocation agreement in place with the Parent Company. NEW ACCOUNTING PRONOUNCEMENTS: In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities ("VIEs"), an interpretation of APB No. 50," ("FIN 46"). FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46, as amended in December 2003, is effective for the Company in the first quarter of 2004. The adoption of FIN 46 will not have any effect on the Company's financial position, results of operations or financial disclosures as the Company has no VIEs. In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149 amends and clarifies the accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 149 is generally effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The Company's adoption of SFAS No. 149 effective July 1, 2003 had no impact on the Company's results of operations, financial position or financial statement disclosures. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity." SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 requires that certain financial instruments be classified as liabilities that were previously considered equity. SFAS No. 150 is effective for the Company in the first quarter of 2004. Management anticipates the adoption of this statement will not have a significant effect on the Company's financial statements. RECLASSIFICATION: Certain prior year amounts have been reclassified to conform to the current year presentation. NOTE 2 - INCOME TAXES The provision for income taxes for the Company from October 26, 2002 to October 31, 2002 is as follows: Current income taxes........................................ $69,000 =======
F-47 AKER PLASTICS COMPANY, INC. AND PREDECESSOR NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 31, 2002, SEPTEMBER 30, 2002 AND 2001 NOTE 3 - INVENTORIES Inventories at October 31, 2002, September 30, 2002 and 2001 consist of the following:
OCTOBER 31, SEPTEMBER 30, SEPTEMBER 30, 2002 2002 2001 ----------- ------------- ------------- Raw materials...................... $2,033,346 $1,954,329 $2,149,167 Work in process.................... 142,593 135,905 91,983 Finished goods..................... 1,197,996 1,155,152 975,292 ---------- ---------- ---------- Total inventories............. $3,373,935 $3,245,386 $3,216,442 ========== ========== ==========
NOTE 4 - SHAREHOLDER RECEIVABLES The shareholder receivables were due on demand and non interest bearing. NOTE 5 - PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consists of the following:
OCTOBER 31, SEPTEMBER 30, SEPTEMBER 30, 2002 2002 2001 ----------- ------------- ------------- Land............................... $1,033,000 $ 244,514 $ 244,514 Buildings and improvements......... 6,739,200 9,305,041 9,319,125 Machinery and equipment............ 3,050,044 3,709,875 3,617,270 Vehicles and trailers.............. 854,490 2,678,891 3,243,188 Airplanes.......................... -- -- 1,529,415 Furniture and equipment............ 795,769 2,071,808 1,974,755 Molds, patterns and dies........... 1,371,553 2,883,293 2,378,986 Environmental equipment............ 2,991,910 4,101,752 4,101,752 ----------- ----------- ----------- 16,835,966 24,995,174 26,409,005 Accumulated depreciation........... 31,020 15,258,357 14,850,088 ----------- ----------- ----------- $16,804,946 $ 9,736,817 $11,558,917 =========== =========== ===========
NOTE 6 - GOODWILL AND INTANGIBLES INTANGIBLES: The components of intangibles (all acquired on October 25, 2002) as of October 31, 2002 are as follows:
GROSS CARRYING AMOUNT -------------- Intangibles: Aker tradename............................................ $5,600,000 Distribution network...................................... 2,700,000 Noncompete agreement...................................... 570,000 Other..................................................... 600 ---------- $8,870,600 ==========
F-48 AKER PLASTICS COMPANY, INC. AND PREDECESSOR NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 31, 2002, SEPTEMBER 30, 2002 AND 2001 Intangibles are being amortized using the straight-line method over 5 years for the Aker tradename, 30 years for the distribution network and 5 years for the noncompete agreement. The weighted-average amortization period for all intangibles acquired on October 25, 2002 is 13.33 years, with amortization expense aggregating an immaterial amount for the period from October 26, 2002 to October 31, 2002. Estimated aggregate annual amortization expense for each of the next five years is $1,324,000 per year. GOODWILL: There was no change in the value of goodwill from October 25, 2002 to October 31, 2002. The fair market value of goodwill at October 31, 2002 was $38,954,718. NOTE 7 - FEDERAL INCOME TAX DEPOSIT TO RETAIN FISCAL YEAR The predecessor used a September 30 year end for filing its federal tax returns. In order to maintain that year end, the predecessor was required to make a deposit with the Internal Revenue Service. This deposit is adjusted annually on May 15 of the calendar year following the calendar year in which the fiscal year ends. The federal income tax deposit was $511,724 at October 31, 2002 and September 30, 2002, it was $515,376 at September 30, 2001. This represents the required deposit adjusted for amounts expected to be payable to or due from the Internal Revenue Service on May 15. The entire deposit will be refunded to the Company due to the termination of the S corporation election as a result of the October 25, 2002 transaction. NOTE 8 - SHORT-TERM NOTE As of September 30, 2002 and 2001 the Company maintained a revolving promissory note with a bank that provided for borrowings up to $3,000,000 at .5% below the current prime rate. Borrowings were secured by the equipment, inventory, and accounts receivable. As of September 30, 2002 and 2001 there were no borrowings under the agreement. F-49 AKER PLASTICS COMPANY, INC. AND PREDECESSOR NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 31, 2002, SEPTEMBER 30, 2002 AND 2001 NOTE 9 - LONG-TERM DEBT Long-term debt at October 31, 2002, September 30, 2002 and 2001 consists of the following:
OCTOBER 31, SEPTEMBER 30, SEPTEMBER 30, 2002 2002 2001 ----------- ------------- ------------- 7.7% note payable to Maax Hungary Services Limited Liability Company dated October 25, 2002; due in one installment of $38,000,000 on December 31, 2008. Payment of interest on the outstanding principal amounts are due quarterly.................................... $38,000,000 $ -- $ -- 7.7% note payable to Maax Hungary Services Limited Liability Company dated October 25, 2002; due in one installment of $10,000,000 on December 31, 2008. Payment of interest on the outstanding principal amounts are due quarterly.................................... 10,000,000 -- -- 7.7% note payable to MAAX Canada, Inc. dated October 25, 2002; due in one installment of $10,500,000 due on December 31, 2008. Payment of interest on the outstanding principal amounts are due quarterly.................... 10,500,000 -- -- ..5% under prime note payable to bank, dated September 2000; due in monthly installments of $16,667 plus interest through September 12, 2005; secured by equipment, inventory, and accounts receivable...................... -- -- 799,996 Deferred compensation agreement due in monthly installments of $5,000 through February 26, 2014 (Note 10).................. 546,022 549,191 586,412 7.85% note payable to bank, dated February 20, 1997; due in monthly installments of $62,635 including interest through February 15, 2002; secured by equipment, inventory and accounts receivable.......................... -- -- 345,493 ----------- -------- ---------- 59,046,022 549,191 1,731,901 Current maturities........................... 38,737 38,737 582,718 ----------- -------- ---------- $59,007,285 $510,454 $1,149,183 =========== ======== ==========
Long-term debt is due over the next five years as follows: 2003........................................................ $38,737 2004........................................................ 40,316 2005........................................................ 41,958 2006........................................................ 43,668 2007........................................................ 45,500
F-50 AKER PLASTICS COMPANY, INC. AND PREDECESSOR NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 31, 2002, SEPTEMBER 30, 2002 AND 2001 Maax Hungary Services Limited Liability Company and MAAX Canada, Inc. are affiliated through a common parent company. The notes payable to Maax Hungary Services Limited Liability Company are guaranteed by MAAX Holding Co. affiliated through a common parent company. Interest expense to these affiliates was $74,000 for the period ended October 31, 2002. NOTE 10 - NON-QUALIFIED DEFERRED COMPENSATION The Company has a non-qualified deferred compensation agreement with the retired president which provides for monthly payments of $5,000 over a period of 20 years through February 2014. The liability is unfunded and accrued for based upon the net present value of those payments remaining assuming a discount rate of 4% (Note 9). NOTE 11 - SELF INSURANCE The Company is responsible for health costs of substantially all of its employees. The Company has a stop loss policy for claims of individual employee families over $100,00 and in the aggregate of approximately $3,000,000. At October 31, 2002, management has estimated the amount of pending claims on this date. Future operating results could be affected should actual claims differ from management's current estimate. NOTE 12 - COMMON STOCK Common stock, with no par value, consisted of the following:
OCTOBER 31, SEPTEMBER 30, SEPTEMBER 30, 2002 2002 2001 ----------- ------------- ------------- Shares issued and outstanding...... 1,000 107 107 Shares authorized.................. 1,000 1,000 1,000
NOTE 13 - LEASES The Company rents office and warehouse facilities on a month to month basis from a former stockholder of the predecessor for $12,000 a month. Rental expense charged to operations amounted to $144,000 for each of the years ended September 30, 2002 and 2001 and $12,000 for the period from October 1, 2002 to October 31, 2002. The Company leases its semi-tractors and other equipment under operating leases expiring in various periods through 2008. The Company is obligated to buy the semi-tractors if it should terminate any lease prior to the expiration of the lease term. The total future minimum rental commitments under operating leases that have noncancelable lease terms in excess of one year are as follows: 2003........................................................ $ 729,411 2004........................................................ 662,280 2005........................................................ 608,280 2006........................................................ 446,280 2007........................................................ 397,480 2008........................................................ 191,006 ---------- $3,034,737 ==========
F-51 AKER PLASTICS COMPANY, INC. AND PREDECESSOR NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) OCTOBER 31, 2002, SEPTEMBER 30, 2002 AND 2001 Total equipment lease expense from October 26, 2002 to October 31, 2002 was $22,283 from October 1, 2002 to October 25, 2002 it was $99,301 and for the years ended September 30, 2002 and 2001 it was $1,290,700 and $1,220,416, respectively. NOTE 14 - EMPLOYEE PROFIT SHARING PLAN The Company has a qualified 401(k) profit sharing plan covering all employees meeting the necessary eligibility requirements. The contribution to the plan is at the discretion of the Company's Board of Directors and is limited to the amount deductible for federal income tax purposes. The profit sharing expense from October 26, 2002 to October 31, 2002 was $2,555 from October 1, 2002 to October 25, 2002 it was $4,485 and for the years ended September 30, 2002 and 2001 it was $117,653 and $140,282, respectively. F-52 ------------------------------------------------------ ------------------------------------------------------ UNTIL , 2004, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. --------------------- ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ MAAX CORPORATION OFFER TO EXCHANGE ALL OUTSTANDING 9.75% SENIOR SUBORDINATED NOTES DUE 2012 FOR 9.75% SENIOR SUBORDINATED NOTES DUE 2012 THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 [MAAX CORPORATION LOGO] --------------------- ------------------------------------------------------ ------------------------------------------------------ PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Our Articles of Association contain provisions that require indemnification of every director and officer who acts in such capacity against any costs, losses and expenses which any director or officer may incur or become liable by reason of any act with respect to the discharge of his duties. The Companies Act (Nova Scotia) contains no provisions that authorize or restrict the power of MAAX to indemnify directors or officers or others. Our Stockholders Agreement requires us to obtain and maintain directors' and officers' liability insurance. We are also required to provide contractual indemnities to our officers and directors having such terms and in such amounts as are determined appropriate by a majority of each of the JWC Fund III, Borealis and OMERS stockholders of MAAX Holdings. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or controlling persons pursuant to the foregoing provisions, the registrant has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act, and is therefore unenforceable. ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES.
EXHIBIT NO. EXHIBIT - ----------- ------- 2.1 Merger Agreement, dated as of March 10, 2004, among 3087052 Nova Scotia Company, 3087053 Nova Scotia Company, 9139-4460 Quebec Inc., 9139-7158 Quebec Inc. and MAAX Inc. 2.2 Amalgamation Agreement, dated as of March 10, 2004, among 9139-4460 Quebec Inc., 9139-7158 Quebec Inc., 3087053 Nova Scotia Company and MAAX Inc. 3.1 Charter of MAAX Corporation (f/k/a 3087229 Nova Scotia Company). 3.2 Bylaws of MAAX Corporation (f/k/a 3087229 Nova Scotia Company). 3.3 Charter of 4200217 Canada Inc. 3.4 Bylaws of 4200217 Canada Inc. 3.5 Charter of 9022-3751 Quebec Inc. (unofficial English translation). 3.6 Bylaws of 9022-3751 Quebec Inc. (unofficial English translation). 3.7 Charter of Aker Plastics Company, Inc. 3.8 Bylaws of MAAX-Aker Acquisition, Co. (adopted by Aker Plastics Company, Inc. pursuant to Articles of Merger dated October 25, 2002). 3.9 Charter of Beauceland Corporation (f/k/a 3081946 Nova Scotia Company). 3.10 Bylaws of Beauceland Corporation (f/k/a 3081946 Nova Scotia Company). 3.11 Charter of Cuisine Expert -- C.E. Cabinets Inc. (unofficial English translation). 3.12 Bylaws of Cuisine Expert -- C.E. Cabinets Inc. (unofficial English translation). 3.13 Charter of MAAX Canada Inc. (unofficial English translation). 3.14 Bylaws of MAAX Canada Inc. 3.15 Charter of MAAX Holding Co. 3.16 Bylaws of MAAX Holding Co. 3.17 Charter of MAAX-Hydro Swirl Manufacturing Corp. 3.18 Bylaws of MAAX-Hydro Swirl Manufacturing Corp. 3.19 Charter of MAAX-KSD Corporation. 3.20 Bylaws of MAAX-KSD Corporation. 3.21 Charter of MAAX LLC.
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EXHIBIT NO. EXHIBIT - ----------- ------- 3.22 Limited Liability Company Agreement of MAAX LLC. 3.23 Charter of MAAX Midwest, Inc. (f/k/a Bremen Glas, Inc.). 3.24 Bylaws of MAAX Midwest, Inc. (f/k/a Bremen Glas, Inc.). 3.25 Charter of MAAX Spas (Arizona), Inc. (f/k/a Coleman Spas, Inc. and California Cooperage). 3.26 Bylaws of MAAX Spas (Arizona), Inc. (f/k/a Coleman Spas, Inc. and California Cooperage). 3.27 Charter of MAAX Spas (B.C.) Inc. (f/k/a 508696 B.C. Ltd.). 3.28 Charter of MAAX Spas (Ontario) Inc. (f/k/a Acryx Industries Inc. and 2850290 Canada Inc.). 3.29 Bylaws of MAAX Spas (Ontario) Inc. (f/k/a Acryx Industries Inc. and 2850290 Canada Inc.). 3.30 Charter of Pearl Baths, Inc. 3.31 Restated Bylaws of Pearl Baths, Inc. 4.1 Indenture, dated as of June 4, 2004, among MAAX Corporation, the Guarantors named therein and U.S. Bank Trust National Association, as Trustee. 4.2 Exchange and Registration Rights Agreement, dated as of June 4, 2004, among MAAX Corporation, the Guarantors named therein, Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the several Purchasers. 4.3 Form of 9.75% Senior Subordinated Note due 2012 (included in Exhibit 4.1). 4.4 Guarantee, dated as of June 4, 2004, executed by the Guarantors identified therein. 5.1 Opinion of Kaye Scholer LLP. 5.2 Opinion of Fasken Martineau DuMoulin LLP. 5.3 Opinion of McInnes Cooper. 5.4 Opinion of Dorsey & Whitney LLP. 5.5 Opinion of Saul Ewing LLP. 5.6 Opinion of Beers Mallers Backs & Salin, LLP. 5.7 Opinion of Foster Pepper & Shefelman PLLC. 8.1 Opinion of Kaye Scholer LLP as to certain tax matters. 10.1 Management Agreement, dated as of June 4, 2004, among J.W. Childs Associates, L.P., Borealis Capital Corporation, Ontario Municipal Employees Retirement Board, MAAX Holdings, Inc. and MAAX Corporation. 10.2 Employment Agreement, dated as of June 4, 2004, among MAAX Corporation, MAAX Canada Inc. and Andre Heroux. 10.3 Employment Agreement, dated as of June 4, 2004, between MAAX Inc. and Denis Aubin. 10.4 Employment Agreement, dated as of June 4, 2004, between MAAX Inc. and Benoit Boutet. 10.5 Employment Agreement, dated as of June 4, 2004, between MAAX Inc. and Patrice Henaire. 10.6 Employment Agreement, dated as of June 4, 2004, between MAAX Inc. and Jean Rochette. 10.7 Employment Agreement, dated as of June 4, 2004, between MAAX Inc. and Guy Berard. 10.8 Employment Agreement, dated as of June 4, 2004, between MAAX Inc. and Terry Rake. 10.9 Employment Agreement, dated as of December 1, 2003, among MAAX-KSD Corporation, MAAX Inc. and Daniel Stewart. 10.10 Management Agreement, dated as of January 10, 2001, between Gestion Camada Inc. and MAAX Inc., as amended (unofficial English translation).
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EXHIBIT NO. EXHIBIT - ----------- ------- 10.11 Form of Consulting Agreement, dated as of March 1, 2004, between MAAX Inc. and each of Richard Garneau, David Poulin and Marie-France Poulin. 10.12 Form of Non-Competition Agreement, dated as of June 4, 2004, between MAAX Corporation and each of Placide Poulin, Richard Garneau, David Poulin and Marie-France Poulin. 10.13 Credit and Guaranty Agreement, dated as of June 4, 2004, among MAAX Corporation, Beauceland Corporation ("Holdings"), the subsidiaries of Holdings party thereto as Guarantors, the lenders party thereto, and Goldman Sachs Credit Partners, L.P., Royal Bank of Canada and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, as agents and arrangers. 10.14 Sodex Factoring Agreement, dated as of February 24, 2004, among MAAX Inc., MAAX Canada Inc., MAAX Spas (Ontario) Inc., MAAX Westco Inc., MAAX Spas (BC) Inc., MAAX-KSD Corporation, MAAX Southeast Inc., Pearl Baths, Inc., MAAX-Hydro Swirl Manufacturing Corp., MAAX Midwest Inc., MAAX Spas (Arizona), Inc., Cuisine Expert -- C.E. Cabinets, Inc., 9022-3751 Quebec Inc., Aker Plastics Company, Inc. and NatExport and Sodex, both divisions of the National Bank of Canada. 10.15 Form of Retention Package for each of the persons listed in Exhibit 99.3. 10.16 Purchase Agreement, dated as of May 27, 2004, among MAAX Corporation, the Guarantors named therein, Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the several Purchasers. 12.1 Computation of Ratio of Earnings to Fixed Charges. 21.1 Subsidiaries of Registrant. 23.1 Consents of KPMG LLP. 23.2 Consent of Crowe Chizek and Company LLC. 23.3 Consent of Kaye Scholer LLP (included in Exhibit 5.1). 23.4 Consent of Fasken Martineau DuMoulin LLP (included in Exhibit 5.2). 23.5 Consent of McInnes Cooper (included in Exhibit 5.3). 23.6 Consent of Dorsey & Whitney LLP (included in Exhibit 5.4). 23.7 Consent of Saul Ewing LLP (included in Exhibit 5.5). 23.8 Consent of Beers Mallers Backs & Salin, LLP (included in Exhibit 5.6). 23.9 Consent of Foster Pepper & Shefelman PLLC (included in Exhibit 5.7). 23.10 Consent of Kaye Scholer LLP (included in Exhibit 8.1). 24.1 Power of Attorney for MAAX Corporation (included in the signature pages hereto). 24.2 Power of Attorney for 4200217 Canada Inc. (included in the signature pages hereto). 24.3 Power of Attorney for 9022-3751 Quebec Inc. (included in the signature pages hereto). 24.4 Power of Attorney for Aker Plastics Company, Inc. (included in the signature pages hereto). 24.5 Power of Attorney for Beauceland Corporation (included in the signature pages hereto). 24.6 Power of Attorney for Cuisine Expert -- C.E. Cabinets Inc. (included in the signature pages hereto). 24.7 Power of Attorney for MAAX Canada Inc. (included in the signature pages hereto). 24.8 Power of Attorney for MAAX Holding Co. (included in the signature pages hereto). 24.9 Power of Attorney for MAAX-Hydro Swirl Manufacturing Corp. (included in the signature pages hereto). 24.10 Power of Attorney for MAAX-KSD Corporation (included in the signature pages hereto). 24.11 Power of Attorney for MAAX LLC (included in the signature pages hereto). 24.12 Power of Attorney for MAAX Midwest, Inc. (included in the signature pages hereto). 24.13 Power of Attorney for MAAX Spas (Arizona), Inc. (included in the signature pages hereto).
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EXHIBIT NO. EXHIBIT - ----------- ------- 24.14 Power of Attorney for MAAX Spas (B.C.) Inc. (included in the signature pages hereto). 24.15 Power of Attorney for MAAX Spas (Ontario) Inc. (included in the signature pages hereto). 24.16 Power of Attorney for Pearl Baths, Inc. (included in the signature pages hereto). 25.1 Statement of Eligibility on Form T-1 of Trustee under the Indenture, dated as of September 1, 2004 among MAAX Corporation, the Guarantors named therein and U.S. Bank Trust National Association, as Trustee. 99.1 Form of Letter of Transmittal. 99.2 Form of Notice of Guaranteed Delivery. 99.3 List of parties to the form of agreement in Exhibit 10.15.
ITEM 22. UNDERTAKINGS. 1. The undersigned registrant hereby undertakes: (a) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (b) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; and (d) To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, provided, that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph 1(d) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. 2. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing II-4 provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 3. The undersigned registrant hereby undertakes: (i) to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means; and (ii) to arrange or provide for a facility in the U.S. for the purpose of responding to such requests. The undertaking in subparagraph (i) above includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. 4. The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-5 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Quebec, Canada on September 15, 2004. MAAX CORPORATION By: /s/ ANDRE HEROUX ------------------------------------ Name: Andre Heroux Title: President and Chief Executive Officer POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Andre Heroux and Denis Aubin, and either of them, with full power of substitution and resubstitution, as his true and lawful attorney-in-fact, to sign and file with the Securities and Exchange Commission on his behalf, individually and in all capacities, all amendments and post-effective amendments to this registration statement, with exhibits thereto, and other documents in connection therewith.
SIGNATURE TITLE DATE --------- ----- ---- /s/ ARTHUR BYRNE Non-Executive Chairman of the September 15, 2004 ------------------------------------------ Board of Directors Arthur Byrne /s/ ANDRE HEROUX President and Chief Executive September 15, 2004 ------------------------------------------ Officer and Director Andre Heroux (principal executive officer) /s/ DENIS AUBIN Executive Vice President, September 15, 2004 ------------------------------------------ Chief Financial Officer and Denis Aubin Secretary (principal financial and accounting officer) /s/ BENOIT BOUTET Vice President and September 15, 2004 ------------------------------------------ Corporate Controller Benoit Boutet /s/ MICHAEL GRAHAM Director September 15, 2004 ------------------------------------------ Michael Graham /s/ ANDRE LAFORGE Director September 15, 2004 ------------------------------------------ Andre LaForge /s/ JAMES RHEE Director September 15, 2004 ------------------------------------------ James Rhee /s/ STEVEN SEGAL Director September 15, 2004 ------------------------------------------ Steven Segal
II-6 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Quebec, Canada on September 15, 2004. 4200217 CANADA INC. By: /s/ ANDRE HEROUX ------------------------------------ Name: Andre Heroux Title: President POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Andre Heroux and Denis Aubin, and either of them, with full power of substitution and resubstitution, as his true and lawful attorney-in-fact, to sign and file with the Securities and Exchange Commission on his behalf, individually and in all capacities, all amendments and post-effective amendments to this registration statement, with exhibits thereto, and other documents in connection therewith.
SIGNATURE TITLE DATE --------- ----- ---- /s/ ANDRE HEROUX President and Director September 15, 2004 ------------------------------------------ (principal executive officer) Andre Heroux /s/ DENIS AUBIN Vice President and Secretary September 15, 2004 ------------------------------------------ and Director (principal Denis Aubin financial and accounting officer) /s/ BENOIT BOUTET Vice President and Director September 15, 2004 ------------------------------------------ Benoit Boutet
II-7 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Quebec, Canada on September 15, 2004. 9022-3751 QUEBEC INC. By: /s/ ANDRE HEROUX ------------------------------------ Name: Andre Heroux Title: President POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Andre Heroux and Denis Aubin, and either of them, with full power of substitution and resubstitution, as his true and lawful attorney-in-fact, to sign and file with the Securities and Exchange Commission on his behalf, individually and in all capacities, all amendments and post-effective amendments to this registration statement, with exhibits thereto, and other documents in connection therewith.
SIGNATURE TITLE DATE --------- ----- ---- /s/ ANDRE HEROUX President and Director September 15, 2004 ------------------------------------------ (principal executive officer) Andre Heroux /s/ DENIS AUBIN Vice President and Secretary September 15, 2004 ------------------------------------------ and Director (principal Denis Aubin financial and accounting officer) /s/ BENOIT BOUTET Vice President and Director September 15, 2004 ------------------------------------------ Benoit Boutet
II-8 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Quebec, Canada on September 15, 2004. AKER PLASTICS COMPANY, INC. By: /s/ HIRAM RIVERA ------------------------------------ Name: Hiram Rivera Title: President POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Andre Heroux and Denis Aubin, and either of them, with full power of substitution and resubstitution, as his true and lawful attorney-in-fact, to sign and file with the Securities and Exchange Commission on his behalf, individually and in all capacities, all amendments and post-effective amendments to this registration statement, with exhibits thereto, and other documents in connection therewith.
SIGNATURE TITLE DATE --------- ----- ---- /s/ HIRAM RIVERA President and Director September 15, 2004 ------------------------------------------ (principal executive officer) Hiram Rivera /s/ DENIS AUBIN Treasurer and Secretary and September 15, 2004 ------------------------------------------ Director (principal financial Denis Aubin and accounting officer) /s/ BENOIT BOUTET Vice President and Director September 15, 2004 ------------------------------------------ Benoit Boutet /s/ ROBERT MARTIN Vice President and Director September 15, 2004 ------------------------------------------ Robert Martin /s/ KEITH R. RUCK Vice President and Director September 15, 2004 ------------------------------------------ Keith R. Ruck
II-9 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Quebec, Canada on September 15, 2004. BEAUCELAND CORPORATION By: /s/ ANDRE HEROUX ------------------------------------ Name: Andre Heroux Title: President and Chief Executive Officer POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Andre Heroux and Denis Aubin, and either of them, with full power of substitution and resubstitution, as his true and lawful attorney-in-fact, to sign and file with the Securities and Exchange Commission on his behalf, individually and in all capacities, all amendments and post-effective amendments to this registration statement, with exhibits thereto, and other documents in connection therewith.
SIGNATURE TITLE DATE --------- ----- ---- /s/ ARTHUR BYRNE Non-Executive Chairman of the September 15, 2004 ------------------------------------------ Board of Directors Arthur Byrne /s/ ANDRE HEROUX President and Chief Executive September 15, 2004 ------------------------------------------ Officer and Director Andre Heroux (principal executive officer) /s/ DENIS AUBIN Executive Vice President and September 15, 2004 ------------------------------------------ Chief Financial Officer and Denis Aubin Secretary (principal financial and accounting officer) /s/ BENOIT BOUTET Vice President and September 15, 2004 ------------------------------------------ Corporate Controller Benoit Boutet /s/ MICHAEL GRAHAM Director September 15, 2004 ------------------------------------------ Michael Graham /s/ ANDRE LAFORGE Director September 15, 2004 ------------------------------------------ Andre LaForge /s/ JAMES RHEE Director September 15, 2004 ------------------------------------------ James Rhee /s/ STEVEN SEGAL Director September 15, 2004 ------------------------------------------ Steven Segal
II-10 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Quebec, Canada on September 15, 2004. CUISINE EXPERT -- C.E. CABINETS INC. By: /s/ ANDRE HEROUX ------------------------------------ Name: Andre Heroux Title: President POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Andre Heroux and Denis Aubin, and either of them, with full power of substitution and resubstitution, as his true and lawful attorney-in-fact, to sign and file with the Securities and Exchange Commission on his behalf, individually and in all capacities, all amendments and post-effective amendments to this registration statement, with exhibits thereto, and other documents in connection therewith.
SIGNATURE TITLE DATE --------- ----- ---- /s/ ANDRE HEROUX President and Director September 15, 2004 ------------------------------------------ (principal executive officer) Andre Heroux /s/ DENIS AUBIN Vice President and Secretary September 15, 2004 ------------------------------------------ and Director (principal Denis Aubin financial and accounting officer) /s/ BENOIT BOUTET Vice President and Director September 15, 2004 ------------------------------------------ Benoit Boutet
II-11 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Quebec, Canada on September 15, 2004. MAAX CANADA INC. By: /s/ ANDRE HEROUX ------------------------------------ Name: Andre Heroux Title: President POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Andre Heroux and Denis Aubin, and either of them, with full power of substitution and resubstitution, as his true and lawful attorney-in-fact, to sign and file with the Securities and Exchange Commission on his behalf, individually and in all capacities, all amendments and post-effective amendments to this registration statement, with exhibits thereto, and other documents in connection therewith.
SIGNATURE TITLE DATE --------- ----- ---- /s/ ANDRE HEROUX President and Director September 15, 2004 ------------------------------------------ (principal executive officer) Andre Heroux /s/ DENIS AUBIN Vice President and Secretary September 15, 2004 ------------------------------------------ and Director (principal Denis Aubin financial and accounting officer) /s/ BENOIT BOUTET Vice President and Director September 15, 2004 ------------------------------------------ Benoit Boutet
II-12 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Quebec, Canada on September 15, 2004. MAAX HOLDING CO. By: /s/ HIRAM RIVERA ------------------------------------ Name: Hiram Rivera Title: President POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Andre Heroux and Denis Aubin, and either of them, with full power of substitution and resubstitution, as his true and lawful attorney-in-fact, to sign and file with the Securities and Exchange Commission on his behalf, individually and in all capacities, all amendments and post-effective amendments to this registration statement, with exhibits thereto, and other documents in connection therewith.
SIGNATURE TITLE DATE --------- ----- ---- /s/ HIRAM RIVERA President and Director September 15, 2004 ------------------------------------------ (principal executive officer) Hiram Rivera /s/ DENIS AUBIN Treasurer and Secretary and September 15, 2004 ------------------------------------------ Director (principal financial Denis Aubin and accounting officer) /s/ BENOIT BOUTET Vice President and Director September 15, 2004 ------------------------------------------ Benoit Boutet /s/ ROBERT MARTIN Vice President and Director September 15, 2004 ------------------------------------------ Robert Martin /s/ KEITH R. RUCK Vice President and Director September 15, 2004 ------------------------------------------ Keith R. Ruck
II-13 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Quebec, Canada on September 15, 2004. MAAX-HYDRO SWIRL MANUFACTURING CORP. By: /s/ HIRAM RIVERA ------------------------------------ Name: Hiram Rivera Title: President POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Andre Heroux and Denis Aubin, and either of them, with full power of substitution and resubstitution, as his true and lawful attorney-in-fact, to sign and file with the Securities and Exchange Commission on his behalf, individually and in all capacities, all amendments and post-effective amendments to this registration statement, with exhibits thereto, and other documents in connection therewith.
SIGNATURE TITLE DATE --------- ----- ---- /s/ HIRAM RIVERA President and Director September 15, 2004 ------------------------------------------ (principal executive officer) Hiram Rivera /s/ DENIS AUBIN Treasurer and Secretary and September 15, 2004 ------------------------------------------ Director (principal financial Denis Aubin and accounting officer) /s/ BENOIT BOUTET Vice President and Director September 15, 2004 ------------------------------------------ Benoit Boutet /s/ ROBERT MARTIN Vice President and Director September 15, 2004 ------------------------------------------ Robert Martin /s/ KEITH R. RUCK Vice President and Director September 15, 2004 ------------------------------------------ Keith R. Ruck
II-14 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Quebec, Canada on September 15, 2004. MAAX-KSD CORPORATION By: /s/ HIRAM RIVERA ------------------------------------ Name: Hiram Rivera Title: President POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Andre Heroux and Denis Aubin, and either of them, with full power of substitution and resubstitution, as his true and lawful attorney-in-fact, to sign and file with the Securities and Exchange Commission on his behalf, individually and in all capacities, all amendments and post-effective amendments to this registration statement, with exhibits thereto, and other documents in connection therewith.
SIGNATURE TITLE DATE --------- ----- ---- /s/ HIRAM RIVERA President and Director September 15, 2004 ------------------------------------------ (principal executive officer) Hiram Rivera /s/ DENIS AUBIN Treasurer and Secretary and September 15, 2004 ------------------------------------------ Director (principal financial Denis Aubin and accounting officer) /s/ BENOIT BOUTET Vice President and Director September 15, 2004 ------------------------------------------ Benoit Boutet /s/ ROBERT MARTIN Vice President and Director September 15, 2004 ------------------------------------------ Robert Martin /s/ KEITH R. RUCK Vice President and Director September 15, 2004 ------------------------------------------ Keith R. Ruck
II-15 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Quebec, Canada on September 15, 2004. MAAX LLC By: /s/ HIRAM RIVERA ------------------------------------ Name: Hiram Rivera Title: President POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Andre Heroux and Denis Aubin, and either of them, with full power of substitution and resubstitution, as his true and lawful attorney-in-fact, to sign and file with the Securities and Exchange Commission on his behalf, individually and in all capacities, all amendments and post-effective amendments to this registration statement, with exhibits thereto, and other documents in connection therewith.
SIGNATURE TITLE DATE --------- ----- ---- /s/ HIRAM RIVERA President and Director September 15, 2004 ------------------------------------------ (principal executive officer) Hiram Rivera /s/ DENIS AUBIN Treasurer and Secretary and September 15, 2004 ------------------------------------------ Director (principal financial Denis Aubin and accounting officer) /s/ BENOIT BOUTET Vice President and Director September 15, 2004 ------------------------------------------ Benoit Boutet /s/ ROBERT MARTIN Vice President and Director September 15, 2004 ------------------------------------------ Robert Martin /s/ KEITH R. RUCK Vice President and Director September 15, 2004 ------------------------------------------ Keith R. Ruck
II-16 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Quebec, Canada on September 15, 2004. MAAX MIDWEST, INC. By: /s/ HIRAM RIVERA ------------------------------------ Name: Hiram Rivera Title: President POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Andre Heroux and Denis Aubin, and either of them, with full power of substitution and resubstitution, as his true and lawful attorney-in-fact, to sign and file with the Securities and Exchange Commission on his behalf, individually and in all capacities, all amendments and post-effective amendments to this registration statement, with exhibits thereto, and other documents in connection therewith.
SIGNATURE TITLE DATE --------- ----- ---- /s/ HIRAM RIVERA President and Director September 15, 2004 ------------------------------------------ (principal executive officer) Hiram Rivera /s/ DENIS AUBIN Treasurer and Secretary and September 15, 2004 ------------------------------------------ Director (principal financial Denis Aubin and accounting officer) /s/ BENOIT BOUTET Vice President and Director September 15, 2004 ------------------------------------------ Benoit Boutet /s/ ROBERT MARTIN Vice President and Director September 15, 2004 ------------------------------------------ Robert Martin /s/ KEITH R. RUCK Vice President and Director September 15, 2004 ------------------------------------------ Keith R. Ruck
II-17 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Quebec, Canada on September 15, 2004. MAAX SPAS (ARIZONA), INC. By: /s/ HIRAM RIVERA ------------------------------------ Name: Hiram Rivera Title: President POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Andre Heroux and Denis Aubin, and either of them, with full power of substitution and resubstitution, as his true and lawful attorney-in-fact, to sign and file with the Securities and Exchange Commission on his behalf, individually and in all capacities, all amendments and post-effective amendments to this registration statement, with exhibits thereto, and other documents in connection therewith.
SIGNATURE TITLE DATE --------- ----- ---- /s/ HIRAM RIVERA President and Director September 15, 2004 ------------------------------------------ (principal executive officer) Hiram Rivera /s/ DENIS AUBIN Treasurer and Secretary and September 15, 2004 ------------------------------------------ Director (principal financial Denis Aubin and accounting officer) /s/ BENOIT BOUTET Vice President and Director September 15, 2004 ------------------------------------------ Benoit Boutet /s/ ROBERT MARTIN Vice President and Director September 15, 2004 ------------------------------------------ Robert Martin /s/ KEITH R. RUCK Vice President and Director September 15, 2004 ------------------------------------------ Keith R. Ruck
II-18 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Quebec, Canada on September 15, 2004. MAAX SPAS (B.C.) INC. By: /s/ ANDRE HEROUX ------------------------------------ Name: Andre Heroux Title: President POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Andre Heroux and Denis Aubin, and either of them, with full power of substitution and resubstitution, as his true and lawful attorney-in-fact, to sign and file with the Securities and Exchange Commission on his behalf, individually and in all capacities, all amendments and post-effective amendments to this registration statement, with exhibits thereto, and other documents in connection therewith.
SIGNATURE TITLE DATE --------- ----- ---- /s/ ANDRE HEROUX President and Director September 15, 2004 ------------------------------------------ (principal executive officer) Andre Heroux /s/ DENIS AUBIN Vice President and Secretary September 15, 2004 ------------------------------------------ and Director (principal Denis Aubin financial and accounting officer) /s/ BENOIT BOUTET Vice President and Director September 15, 2004 ------------------------------------------ Benoit Boutet
II-19 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Quebec, Canada on September 15, 2004. MAAX SPAS (ONTARIO) INC. By: /s/ ANDRE HEROUX ------------------------------------ Name: Andre Heroux Title: President POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Andre Heroux and Denis Aubin, and either of them, with full power of substitution and resubstitution, as his true and lawful attorney-in-fact, to sign and file with the Securities and Exchange Commission on his behalf, individually and in all capacities, all amendments and post-effective amendments to this registration statement, with exhibits thereto, and other documents in connection therewith.
SIGNATURE TITLE DATE --------- ----- ---- /s/ ANDRE HEROUX President and Director September 15, 2004 ------------------------------------------ (principal executive officer) Andre Heroux /s/ DENIS AUBIN Vice President and Secretary September 15, 2004 ------------------------------------------ and Director (principal Denis Aubin financial and accounting officer) /s/ BENOIT BOUTET Vice President and Director September 15, 2004 ------------------------------------------ Benoit Boutet
II-20 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Montreal, Quebec, Canada on September 15, 2004. PEARL BATHS, INC. By: /s/ HIRAM RIVERA ------------------------------------ Name: Hiram Rivera Title: President POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes and appoints Andre Heroux and Denis Aubin, and either of them, with full power of substitution and resubstitution, as his true and lawful attorney-in-fact, to sign and file with the Securities and Exchange Commission on his behalf, individually and in all capacities, all amendments and post-effective amendments to this registration statement, with exhibits thereto, and other documents in connection therewith.
SIGNATURE TITLE DATE --------- ----- ---- /s/ HIRAM RIVERA President and Director September 15, 2004 ------------------------------------------ (principal executive officer) Hiram Rivera /s/ DENIS AUBIN Treasurer and Secretary and September 15, 2004 ------------------------------------------ Director (principal financial Denis Aubin and accounting officer) /s/ BENOIT BOUTET Vice President and Director September 15, 2004 ------------------------------------------ Benoit Boutet /s/ ROBERT MARTIN Vice President and Director September 15, 2004 ------------------------------------------ Robert Martin /s/ KEITH R. RUCK Vice President and Director September 15, 2004 ------------------------------------------ Keith R. Ruck
II-21 EXHIBIT INDEX
EXHIBIT NO. EXHIBIT - ----------- ------- 2.1 Merger Agreement, dated as of March 10, 2004, among 3087052 Nova Scotia Company, 3087053 Nova Scotia Company, 9139-4460 Quebec Inc., 9139-7158 Quebec Inc. and MAAX Inc. 2.2 Amalgamation Agreement, dated as of March 10, 2004, among 9139-4460 Quebec Inc., 9139-7158 Quebec Inc., 3087053 Nova Scotia Company and MAAX Inc. 3.1 Charter of MAAX Corporation (f/k/a 3087229 Nova Scotia Company). 3.2 Bylaws of MAAX Corporation (f/k/a 3087229 Nova Scotia Company). 3.3 Charter of 4200217 Canada Inc. 3.4 Bylaws of 4200217 Canada Inc. 3.5 Charter of 9022-3751 Quebec Inc. (unofficial English translation). 3.6 Bylaws of 9022-3751 Quebec Inc. (unofficial English translation). 3.7 Charter of Aker Plastics Company, Inc. 3.8 Bylaws of MAAX-Aker Acquisition, Co. (adopted by Aker Plastics Company, Inc. pursuant to Articles of Merger dated October 25, 2002). 3.9 Charter of Beauceland Corporation (f/k/a 3081946 Nova Scotia Company). 3.10 Bylaws of Beauceland Corporation (f/k/a 3081946 Nova Scotia Company). 3.11 Charter of Cuisine Expert -- C.E. Cabinets Inc. (unofficial English translation). 3.12 Bylaws of Cuisine Expert -- C.E. Cabinets Inc. (unofficial English translation). 3.13 Charter of MAAX Canada Inc. (unofficial English translation). 3.14 Bylaws of MAAX Canada Inc. 3.15 Charter of MAAX Holding Co. 3.16 Bylaws of MAAX Holding Co. 3.17 Charter of MAAX-Hydro Swirl Manufacturing Corp. 3.18 Bylaws of MAAX-Hydro Swirl Manufacturing Corp. 3.19 Charter of MAAX-KSD Corporation. 3.20 Bylaws of MAAX-KSD Corporation. 3.21 Charter of MAAX LLC. 3.22 Limited Liability Company Agreement of MAAX LLC. 3.23 Charter of MAAX Midwest, Inc. (f/k/a Bremen Glas, Inc.). 3.24 Bylaws of MAAX Midwest, Inc. (f/k/a Bremen Glas, Inc.). 3.25 Charter of MAAX Spas (Arizona), Inc. (f/k/a Coleman Spas, Inc. and California Cooperage). 3.26 Bylaws of MAAX Spas (Arizona), Inc. (f/k/a Coleman Spas, Inc. and California Cooperage). 3.27 Charter of MAAX Spas (B.C.) Inc. (f/k/a 508696 B.C. Ltd.). 3.28 Charter of MAAX Spas (Ontario) Inc. (f/k/a Acryx Industries Inc. and 2850290 Canada Inc.). 3.29 Bylaws of MAAX Spas (Ontario) Inc. (f/k/a Acryx Industries Inc. and 2850290 Canada Inc.). 3.30 Charter of Pearl Baths, Inc. 3.31 Restated Bylaws of Pearl Baths, Inc. 4.1 Indenture, dated as of June 4, 2004, among MAAX Corporation, the Guarantors named therein and U.S. Bank Trust National Association, as Trustee.
II-22
EXHIBIT NO. EXHIBIT - ----------- ------- 4.2 Exchange and Registration Rights Agreement, dated as of June 4, 2004, among MAAX Corporation, the Guarantors named therein, Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the several Purchasers. 4.3 Form of 9.75% Senior Subordinated Note due 2012 (included in Exhibit 4.1). 4.4 Guarantee, dated as of June 4, 2004, executed by the Guarantors identified therein. 5.1 Opinion of Kaye Scholer LLP. 5.2 Opinion of Fasken Martineau DuMoulin LLP. 5.3 Opinion of McInnes Cooper. 5.4 Opinion of Dorsey & Whitney LLP. 5.5 Opinion of Saul Ewing LLP. 5.6 Opinion of Beers Mallers Backs & Salin, LLP. 5.7 Opinion of Foster Pepper & Shefelman PLLC. 8.1 Opinion of Kaye Scholer LLP as to certain tax matters. 10.1 Management Agreement, dated as of June 4, 2004, among J.W. Childs Associates, L.P., Borealis Capital Corporation, Ontario Municipal Employees Retirement Board, MAAX Holdings, Inc. and MAAX Corporation. 10.2 Employment Agreement, dated as of June 4, 2004, among MAAX Corporation, MAAX Canada, Inc. and Andre Heroux. 10.3 Employment Agreement, dated as of June 4, 2004, between MAAX Inc. and Denis Aubin. 10.4 Employment Agreement, dated as of June 4, 2004, between MAAX Inc. and Benoit Boutet. 10.5 Employment Agreement, dated as of June 4, 2004, between MAAX Inc. and Patrice Henaire. 10.6 Employment Agreement, dated as of June 4, 2004, between MAAX Inc. and Jean Rochette. 10.7 Employment Agreement, dated as of June 4, 2004, between MAAX Inc. and Guy Berard. 10.8 Employment Agreement, dated as of June 4, 2004, between MAAX Inc. and Terry Rake. 10.9 Employment Agreement, dated as of December 1, 2003, among MAAX-KSD Corporation, MAAX Inc. and Daniel Stewart. 10.10 Management Agreement, dated as of January 10, 2001, between Gestion Camada Inc. and MAAX Inc., as amended (unofficial English translation). 10.11 Form of Consulting Agreement, dated as of March 1, 2004, between MAAX Inc. and each of Richard Garneau, David Poulin and Marie-France Poulin. 10.12 Form of Non-Competition Agreement, dated as of June 4, 2004, between MAAX Corporation and each of Placide Poulin, Richard Garneau, David Poulin and Marie-France Poulin. 10.13 Credit and Guaranty Agreement, dated as of June 4, 2004, among MAAX Corporation, Beauceland Corporation ("Holdings"), the subsidiaries of Holdings party thereto as Guarantors, the lenders party thereto, and Goldman Sachs Credit Partners, L.P., Royal Bank of Canada and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, as agents and arrangers. 10.14 Sodex Factoring Agreement, dated as of February 24, 2004, among MAAX Inc., MAAX Canada Inc., MAAX Spas (Ontario) Inc., MAAX Westco Inc., MAAX Spas (BC) Inc., MAAX-KSD Corporation, MAAX Southeast Inc., Pearl Baths, Inc., MAAX-Hydro Swirl Manufacturing Corp., MAAX Midwest Inc., MAAX Spas (Arizona), Inc., Cuisine Expert -- C.E. Cabinets, Inc., 9022-3751 Quebec Inc., Aker Plastics Company, Inc. and NatExport and Sodex, both divisions of the National Bank of Canada. 10.15 Form of Retention Package for each of the persons listed in Exhibit 99.3.
II-23
EXHIBIT NO. EXHIBIT - ----------- ------- 10.16 Purchase Agreement, dated as of May 27, 2004, among MAAX Corporation, the Guarantors named therein, Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the several Purchasers. 12.1 Computation of Ratio of Earnings to Fixed Charges. 21.1 Subsidiaries of Registrant. 23.1 Consents of KPMG LLP. 23.2 Consent of Crowe Chizek and Company LLC. 23.3 Consent of Kaye Scholer LLP (included in Exhibit 5.1). 23.4 Consent of Fasken Martineau DuMoulin LLP (included in Exhibit 5.2). 23.5 Consent of McInnes Cooper (included in Exhibit 5.3). 23.6 Consent of Dorsey & Whitney LLP (included in Exhibit 5.4). 23.7 Consent of Saul Ewing LLP (included in Exhibit 5.5). 23.8 Consent of Beers Mallers Backs & Salin, LLP (included in Exhibit 5.6). 23.9 Consent of Foster Pepper & Shefelman PLLC (included in Exhibit 5.7). 23.10 Consent of Kaye Scholer LLP (included in Exhibit 8.1). 24.1 Power of Attorney for MAAX Corporation (included in the signature pages hereto). 24.2 Power of Attorney for 4200217 Canada Inc. (included in the signature pages hereto). 24.3 Power of Attorney for 9022-3751 Quebec Inc. (included in the signature pages hereto). 24.4 Power of Attorney for Aker Plastics Company, Inc. (included in the signature pages hereto). 24.5 Power of Attorney for Beauceland Corporation (included in the signature pages hereto). 24.6 Power of Attorney for Cuisine Expert -- C.E. Cabinets Inc. (included in the signature pages hereto). 24.7 Power of Attorney for MAAX Canada Inc. (included in the signature pages hereto). 24.8 Power of Attorney for MAAX Holding Co. (included in the signature pages hereto). 24.9 Power of Attorney for MAAX-Hydro Swirl Manufacturing Corp. (included in the signature pages hereto). 24.10 Power of Attorney for MAAX-KSD Corporation (included in the signature pages hereto). 24.11 Power of Attorney for MAAX LLC (included in the signature pages hereto). 24.12 Power of Attorney for MAAX Midwest, Inc. (included in the signature pages hereto). 24.13 Power of Attorney for MAAX Spas (Arizona), Inc. (included in the signature pages hereto). 24.14 Power of Attorney for MAAX Spas (B.C.) Inc. (included in the signature pages hereto). 24.15 Power of Attorney for MAAX Spas (Ontario) Inc. (included in the signature pages hereto). 24.16 Power of Attorney for Pearl Baths, Inc. (included in the signature pages hereto). 25.1 Statement of Eligibility on Form T-1 of Trustee under the Indenture, dated as of September 1, 2004 among MAAX Corporation, the Guarantors named therein and U.S. Bank Trust National Association, as Trustee. 99.1 Form of Letter of Transmittal. 99.2 Form of Notice of Guaranteed Delivery. 99.3 List of parties to the form of agreement in Exhibit 10.15.
II-24 EX-2.1 2 y99327exv2w1.txt MERGER AGREEMENT EXECUTION COPY EXHIBIT 2.1 3087052 NOVA SCOTIA COMPANY - AND - 3087053 NOVA SCOTIA COMPANY - AND - 9139-4460 QUEBEC INC. - AND - 9139-7158 QUEBEC INC. - AND - MAAX INC. MERGER AGREEMENT MARCH 10, 2004 TABLE OF CONTENTS
Page ---- ARTICLE 1 INTERPRETATION...................................................................... 2 1.1 Definitions.................................................................... 2 1.2 Interpretation Not Affected by Headings, etc................................... 10 1.3 Currency....................................................................... 11 1.4 Number, etc.................................................................... 11 1.5 Date For Any Action............................................................ 11 1.6 Entire Agreement............................................................... 11 1.7 Knowledge...................................................................... 11 ARTICLE 2 AMALGAMATION........................................................................ 12 2.1 Terms of Amalgamation.......................................................... 12 2.2 Implementation Steps by MAAX................................................... 12 2.3 MAAX Circular.................................................................. 12 2.4 Securities and Corporate Compliance............................................ 12 2.5 Preparation of Filings......................................................... 13 ARTICLE 3 REPRESENTATIONS AND WARRANTIES...................................................... 14 3.1 Representations and Warranties of MAAX......................................... 14 3.2 Representations and Warranties of the Newco Parties............................ 14 3.3 Investigation.................................................................. 14 3.4 Survival....................................................................... 14 ARTICLE 4 REGULATORY APPROVALS................................................................ 14 4.1 Applications................................................................... 14 4.2 Obtaining of Appropriate Regulatory Approvals.................................. 15 ARTICLE 5 COVENANTS........................................................................... 15 5.1 Recommendation of Amalgamation................................................. 15 5.2 Debt Financing................................................................. 15 5.3 General........................................................................ 17 5.4 Operation of Business.......................................................... 19 5.5 Covenants of the Newco Parties................................................. 22 5.6 Covenants Regarding Non-Solicitation........................................... 23 5.7 Notice by MAAX of Superior Proposal Determination.............................. 24 5.8 Access to Information.......................................................... 25 5.9 Insurance Coverage............................................................. 26 ARTICLE 6 CONDITIONS.......................................................................... 26 6.1 Mutual Conditions Precedent.................................................... 26 6.2 Additional Conditions Precedent to the Obligations of the Newco Parties........ 27 6.3 Additional Conditions Precedent to the Obligations of MAAX..................... 29 6.4 Notice and Cure Provisions..................................................... 30
i TABLE OF CONTENTS (continued)
Page ---- 6.5 Satisfaction of Conditions..................................................... 30 ARTICLE 7 AMENDMENT AND TERMINATION........................................................... 31 7.1 Amendment...................................................................... 31 7.2 Termination.................................................................... 31 7.3 Termination Fee................................................................ 33 7.4 Expenses....................................................................... 34 ARTICLE 8 GENERAL............................................................................. 34 8.1 Notices........................................................................ 34 8.2 Assignment..................................................................... 37 8.3 Cooperation / Further Assurances............................................... 37 8.4 Expenses....................................................................... 37 8.5 Public Announcements........................................................... 37 8.6 Governing Law.................................................................. 37 8.7 Forum; Jurisdiction............................................................ 38 8.8 Invalidity of Provisions....................................................... 38 8.9 Counterparts................................................................... 38 8.10 Investigation by Parties....................................................... 38 8.11 Time........................................................................... 38 8.12 Amendments..................................................................... 38 8.13 Specific Performance and other Equitable Rights................................ 38 8.14 No Third Parties Beneficiaries................................................. 38 8.15 Waiver......................................................................... 39
SCHEDULES Schedule 1.1.4 Amalgamation Agreement Schedule 1.1.5 Appropriate Regulatory Approvals Schedule 1.1.19 Derivative Contracts Schedule 1.1.46 Senior Employees Schedule 1.1.57 Third Party Consents Schedule 3.1 Representations and Warranties of MAAX Schedule 3.1.1(d) Collective Agreements Schedule 3.1.3(a) Capitalization Schedule 3.1.3(c) MAAX Options and MAAX Rights Schedule 3.1.10 Licenses Schedule 3.1.15 Material Contracts Schedule 3.1.19 Encumbrances Schedule 3.1.25 Non-Arm's Length Transactions Schedule 3.1.27(a) Employee Plans Schedule 3.1.28(a) Real Properties Schedule 3.1.28(b) Leased Properties Schedule 3.1.30 Intellectual Property Rights Schedule 3.1.31 Insurance Schedule 3.1.33 Product Warranties Schedule 3.2 Representations and Warranties of the Newco Parties iii MERGER AGREEMENT MEMORANDUM OF AGREEMENT made as of the 10th day of March, 2004, between 3087052 NOVA SCOTIA COMPANY, a company governed under the laws of the Province of Nova Scotia (hereinafter referred to as "NEWCO") and 3087053 NOVA SCOTIA COMPANY, a company governed under the laws of the Province of Nova Scotia (hereinafter referred to as "NEWCO II") and 9139-4460 QUEBEC INC., a company governed under the laws of the Province of Quebec (hereinafter referred to as "SUBCO") and 9139-7158 QUEBEC INC., a company governed under the laws of the Province of Quebec (hereinafter referred to as "SUBCO II") AND MAAX INC., a company governed under the laws of the Province of Quebec (hereinafter referred to as "MAAX"). WHEREAS Newco was incorporated under the Companies Act (Nova Scotia) on March 5, 2004; WHEREAS Newco II was incorporated under the Companies Act (Nova Scotia) on March 5, 2004 and is a wholly-owned Subsidiary of Newco; WHEREAS Subco was incorporated under Part IA of the Companies Act (Quebec) by certificate of incorporation dated February 27, 2004 and is a wholly-owned Subsidiary of Newco II; WHEREAS Subco II was incorporated under Part IA of the Companies Act (Quebec) by certificate of incorporation dated March 5, 2004 and is a wholly-owned Subsidiary of Newco; WHEREAS MAAX was amalgamated under Part IA of the Companies Act (Quebec) by certificate of amalgamation dated August 1, 1990; WHEREAS Newco, Newco II, Subco, Subco II and MAAX wish to enter into a merger agreement providing for the amalgamation of Subco, Subco II and MAAX under Part IA of the Companies Act (Quebec) on and subject to the terms and conditions of this Agreement, the result of which shall be the acquisition of control of MAAX and its subsidiaries; WHEREAS, as a result of such amalgamation, Newco II will hold all of the issued and outstanding common shares in the share capital of the company resulting from the amalgamation; WHEREAS, Newco II covenants and agrees to issue to Newco, upon such amalgamation, and Newco agrees to receive, additional shares in the share capital of Newco II in consideration for the cancellation of all common shares and redeemable preferred shares of Subco II held by Newco; NOW THEREFORE this Agreement witnesses that, in consideration of the respective covenants and agreements herein contained, the parties hereto covenant and agree as follows: ARTICLE 1 INTERPRETATION 1.1 DEFINITIONS. In this Agreement, unless there is something in the subject matter or context inconsistent therewith, the following terms shall have the following meanings, respectively: 1.1.1 "AFFILIATES" has the meaning ascribed thereto in the Securities Act; 1.1.2 "AMALCO" means the company resulting from the Amalgamation; 1.1.3 "AMALGAMATION" means an amalgamation between Subco, Subco II and MAAX under Part IA of the Companies Act giving effect to the transactions described in the Amalgamation Agreement; 1.1.4 "AMALGAMATION AGREEMENT" means the agreement between Subco, Subco II, Newco II and MAAX dated the date hereof in relation to the transactions contemplated hereby attached hereto as Schedule 1.1.4; 1.1.5 "APPROPRIATE REGULATORY APPROVALS" (individually, an "APPROPRIATE REGULATORY APPROVAL") means those sanctions, rulings, consents, orders, exemptions, permits, declarations, filings and other approvals (including the lapse, without objection, of a prescribed time under a statute, rule or regulation that states that a transaction may be implemented if a prescribed time lapses following the giving of notice without an objection being made) of Governmental Entities, regulatory agencies or self-regulatory organizations, as set out on Schedule 1.1.5 hereto; 1.1.6 "ARTICLES OF AMALGAMATION" means the articles confirming the Amalgamation required under the Companies Act to be filed with the Enterprise Registrar; 1.1.7 "BOARD OF DIRECTORS" means the board of directors of MAAX; 1.1.8 "BUSINESS DAY" means any day, other than a Saturday, Sunday or a statutory holiday in the Province of Quebec, the Province of Ontario or in the State of Massachusetts, on which banks are open for business in the City of Montreal, the City of Toronto and the City of Boston; 1.1.9 "CAPITAL LEASE" means any lease of any property (whether real, personal or mixed) by MAAX or any of its Subsidiaries as lessee that, in accordance with GAAP, either would be required to be classified and accounted for as a capital lease on a balance sheet of such Person or would otherwise be disclosed as such in a note to such balance sheet; 1.1.10 "CAPITALIZED LEASE OBLIGATIONS" means, as of any date, the amount of the obligation of MAAX or any of its Subsidiaries as lessee under a Capital Lease that, in accordance with GAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease or otherwise be disclosed as such in a note to such balance sheet; 1.1.11 "CERTIFICATE OF AMALGAMATION" means the certificate issued by the Enterprise Registrar attesting to the Amalgamation pursuant to Section 123.119 of the Companies Act; 2 1.1.12 "CIRCULAR" means the notice of the MAAX Meeting and accompanying management information circular in the French and English languages, including all schedules thereto, to be prepared and sent by MAAX to Shareholders in connection with the MAAX Meeting; 1.1.13 "CLAIMS" includes claims, demands, accusations, notices, proceedings, complaints, actions, suits, causes of action, assessments or reassessments, charges, judgments, grievances, debts, liabilities, expenses, costs, damages or losses (including loss of value), professional fees (including fees and charges of legal counsel on a solicitor and his or her own client basis) and all costs incurred in investigating or pursuing any of the foregoing or any proceeding relating to any of the foregoing (including the costs of enforcement of this Agreement); 1.1.14 "COMPANIES ACT" means the Companies Act (Quebec) as now in effect and as it may be amended from time to time prior to the Effective Date; 1.1.15 "CONFIDENTIALITY AGREEMENT" means collectively (i) the letter agreement dated November 7, 2003, as amended from time to time, between MAAX and Ontario Municipal Employees Retirement Board, (ii) the letter agreement dated October 14, 2003, as amended from time to time, between MAAX, Borealis Private Equity Limited Partnership and Borealis (QLP) Private Equity Limited Partnership, and (iii) the letter agreement dated November 21, 2003, as amended from time to time, between MAAX and J.W. Childs Associates, L.P., relating to the confidentiality of negotiations and information; 1.1.16 "CONTRACTS" (individually, a "CONTRACT") means all written outstanding contracts and agreements (including quotations, purchase orders and rebates), Collective Agreements (as defined in Schedule 3.1 hereto), leases (including the Real Property Leases (as defined in Schedule 3.1 hereto)), deeds, indentures, instruments, entitlements, commitments, undertakings and orders made by or to which MAAX or any of its Subsidiaries is a party or by which MAAX or any of its Subsidiaries is bound or under which MAAX or any of its Subsidiaries has, or will have, any rights or obligations and includes rights to use, franchises, license agreements and agreements for the purchase and sale of assets or shares; 1.1.17 "DEBT COMMITMENT LETTER" means the executed commitment letter from Goldman Sachs Credit Partners L.P., Merrill Lynch Capital Corporation and Royal Bank of Canada to Borealis Private Equity Limited Partnership, Borealis (QLP) Private Equity Limited Partnership, Ontario Municipal Employees Retirement Board and J.W. Childs Associates, L.P. and Newco dated March 10, 2004, committing to provide debt facilities to finance in part the transactions contemplated herein, a copy of which has been delivered to MAAX prior to the execution of this Agreement; 1.1.18 "DEBT FINANCING" means (i) the senior secured term loan facilities, (ii) the senior secured revolving credit facility and (iii) the issuance by MAAX of unsecured senior subordinated notes or the senior subordinated increasing rate bridge loans, as the case may be, in connection with the transactions contemplated herein, as described in the Debt Commitment Letter; 3 1.1.19 "DERIVATIVE CONTRACTS" means all Contracts involving foreign exchange, currency swaps, interest rate swaps, cap or collar agreements or other similar agreements or arrangements designed to alter risk arising from fluctuations in currency values or interest rates, in each case whether contingent or matured, used by or binding MAAX or its Subsidiaries, the whole as set forth in Schedule 1.1.19 attached hereto; 1.1.20 "DISCLOSURE LETTER" means the letter dated as of the date hereof delivered by MAAX to Newco and Newco II prior to the execution of this Agreement; 1.1.21 "EFFECTIVE DATE" means the date shown on the Certificate of Amalgamation; 1.1.22 "EFFECTIVE TIME" means 8:30 a.m. on the Effective Date; 1.1.23 "ENCUMBRANCES" means pledges, liens (statutory or otherwise), charges, security interests, leases, offers to lease, pledges, privileges, license agreements, title retention agreements, mortgages, hypothecs, trust deeds, assignments by way of security, security interests, conditional sales contracts or other title retention agreements, or other similar interests or instruments charging, or creating a security interest in, or against title, restrictions, development or similar agreements, easements, servitudes, rights-of-way, restrictive covenants, title defects, restrictions, executions, tax arrears, permissions, options or adverse Claims, encroachments or encumbrances of any kind or character whatsoever or however arising, or any agreement to enter into or create any of the foregoing, on or affecting all or any part of any of the assets of MAAX or any of its Subsidiaries or any interest therein, or any direct or indirect interest in MAAX or any of its Subsidiaries, including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic's, materialmen's and other similar liens, legal hypothecs and encumbrances; 1.1.24 "ENTERPRISE REGISTRAR" means the enterprise registrar acting under the Companies Act; 1.1.25 "GAAP" means the generally accepted accounting principles stated in the Handbook of the Canadian Institute of Chartered Accountants, including the accounting recommendations and interpretations contained therein; 1.1.26 "GOVERNMENTAL ENTITY" (collectively, the "GOVERNMENTAL ENTITIES") means any (a) multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (b) any subdivision, agent, commission, board, or authority of any of the foregoing, or (c) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing; 1.1.27 "GUARANTEED INDEBTEDNESS" means, with respect to MAAX or any of its Subsidiaries, any obligation guaranteeing or providing indemnification or insurance with respect to, any indebtedness, lease, dividend, or other obligation (a "PRIMARY OBLIGATION") of any other Person (the "PRIMARY OBLIGOR") in any manner, including any obligation or arrangement of such Person: 4 (a) to purchase or repurchase any such primary obligation; (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor; (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation; or (d) to indemnify the owner of such primary obligation against Loss in respect thereof; 1.1.28 "INCONSISTENT TRANSACTION" has the meaning ascribed thereto in Section 5.6.1; 1.1.29 "INDEBTEDNESS" in relation to MAAX or any of its Subsidiaries means: (a) all indebtedness of MAAX or any of its Subsidiaries for borrowed money or for the deferred purchase price of property or services (including reimbursement and all other obligations with respect to surety bonds, letters of credit, note purchase obligations and bankers' acceptances, whether or not matured); (b) all obligations of MAAX or any of its Subsidiaries evidenced by notes, bonds, debentures or similar instruments or covenants to create the same; (c) all indebtedness of MAAX or any of its Subsidiaries created or arising under any conditional sale or other title retention agreements with respect to acquired property (even if the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property); (d) all Capitalized Lease Obligations of MAAX or any of its Subsidiaries and obligations under sale leasebacks of MAAX or any of its Subsidiaries; (e) all Guaranteed Indebtedness of MAAX or any of its Subsidiaries; (f) all Purchase-Money Indebtedness of MAAX or any of its Subsidiaries; (g) all obligations of MAAX or any of its Subsidiaries under commodity purchase or option agreements or other commodity price hedging arrangements, in each case whether contingent or matured; (h) all obligations of MAAX or any of its Subsidiaries under Derivative Contracts; (i) all obligations of MAAX or any of its Subsidiaries under factoring Contracts; and 5 (j) all indebtedness of MAAX or any of its Subsidiaries of the type referred to in the preceding items of this definition secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Encumbrance upon or in property (including accounts and contract rights) owned by MAAX or any of its Subsidiaries, even if MAAX or any of its Subsidiaries has not assumed or become liable for the payment of such Indebtedness; 1.1.30 "LAWS" (individually, a "LAW") means all laws, statutes, codes, ordinances, decrees, rules, regulations, by-laws, statutory rules, principles of law, published policies and guidelines, judicial or arbitral or administrative or ministerial or departmental or regulatory judgments, orders, decisions, rulings or awards and terms and conditions of any grant of approval, permission, authority or License of any Governmental Entity, self-regulatory authority or statutory body (including The Toronto Stock Exchange or any other stock exchange) and the term "applicable" with respect to such Laws and in the context that refers to one or more Persons, means that such Laws apply to such Person or Persons or its or their business, undertaking, property or securities and emanate from a Person having legal jurisdiction over the Person or Persons or its or their business, undertaking, property or securities; 1.1.31 "LOSS" means any and all loss, liability, damage, cost, expense, charge, fine, penalty or assessment, resulting from or arising out of any Claim, including the costs and expenses of any action, suit, proceeding, demand, assessment, judgment, settlement or compromise relating thereto and all interest, punitive damages, fines and penalties and reasonable legal fees and expenses incurred in connection therewith, including loss of profits and consequential damages; 1.1.32 "MAAX MEETING" means the special meeting of Shareholders (including any adjournment thereof) that is to be convened to consider and, if deemed advisable, to approve the Amalgamation; 1.1.33 "MAAX OPTIONS" means the Share purchase options outstanding and unexercised at any given date and granted under any stock option plans established by MAAX and any of its Subsidiaries, as the case may be, including the stock option plan for the benefit of senior executives and management of MAAX and its Subsidiaries adopted by the Board of Directors on June 3, 1987 and ratified by the Shareholders on June 6, 1988, as amended by By-Law No. 5 adopted on April 15, 1993, by resolutions of the Board of Directors dated June 28, 1995 and April 29, 1996 and by By-Law No. 7 adopted on April 28, 1998; 1.1.34 "MAAX RIGHTS" means all outstanding options (other than MAAX Options) granted by MAAX or any of its Subsidiaries to acquire shares in the share capital of MAAX or any of its Subsidiaries (including the stock compensation plan for employees of MAAX and its Subsidiaries dated March 25, 2002), and other securities, rights, warrants, calls, instruments, shareholder agreements, voting trusts, voting agreements, pooling agreements, shareholder rights plans, agreements or commitments of any character whatsoever, written or verbal, (other than this Agreement) established by MAAX or any of its Subsidiaries requiring the issuance, acquisition, sale or transfer by MAAX of any shares in the share capital of MAAX or any of its Subsidiaries or any securities convertible or exchangeable into, or exercisable for, shares in the share capital of MAAX or any of its Subsidiaries or entitling the holder thereof to acquire, or 6 have a Claim against MAAX or any of its Subsidiaries in respect of, shares in the share capital of MAAX or any of its Subsidiaries or other securities of MAAX or any of its Subsidiaries; 1.1.35 "MATERIAL ADVERSE CHANGE" means any change or changes in (or any condition, event, circumstance or development involving a prospective change) the business (including a material loss of business from an important customer), operations, affairs, assets, liabilities (including any contingent liabilities that may arise through outstanding, pending or threatened litigation or otherwise), capitalization, results of operations, cash flows, condition (financial or otherwise), Licenses (as defined in Schedule 3.1 hereto), rights, privileges of MAAX or any of its Subsidiaries which has or could reasonably be expected to materially and adversely change MAAX and its Subsidiaries, taken as a whole, other than any such change or changes (i) which arises out of a matter that has been publicly disclosed prior to the date of this Agreement or otherwise disclosed in the Disclosure Letter, or (ii) contemplated by Section 6.2.15; 1.1.36 "MATERIAL ADVERSE EFFECT" means the effect of a Material Adverse Change; 1.1.37 "MATERIAL FACT" has the meaning ascribed thereto in the Securities Act (Ontario); 1.1.38 "MEETING DATE" means any date on which the MAAX Meeting occurs; 1.1.39 "NEWCO PARTIES" means collectively Newco, Newco II, Subco and Subco II; 1.1.40 "OUT-OF-POCKET FEES" has the meaning ascribed thereto in Section 7.4.1; 1.1.41 "PERMITTED ENCUMBRANCES" means: (a) applicable municipal by-laws, development agreements, subdivision agreements, site plan agreements and building restrictions which do not in the aggregate materially adversely affect the use or value of the Real Property affected thereby and provided the same have been complied with in all material respects up to the Effective Date including the posting of any required security for performance of obligations thereunder, (b) any registered easements, servitudes, rights-of-way, licenses, agreements, restrictive covenants, restrictions that run with the land and other minor Encumbrances (including easements, rights-of-way and agreements for railways, sewers, drains, gas and water mains or electric light and power or telephone, telecommunications or cable conduits, poles, wires and cables) which do not materially adversely affect the use or value of the Real Property affected thereby and provided the same have been complied with in all material respects up to the Effective Date; (c) defects or irregularities in title to the Real Properties which are of a minor nature and do not materially adversely affect the use or value of the Real Property affected thereby; (d) reservations, limitations, provisos, conditions or exceptions, if any, expressed in any original grants of land by a Governmental Entity which do not materially adversely affect the use or value of the Real Property affected thereby and 7 provided the same have been complied with in all material respects up to the Effective Date; (e) encumbrances of mechanics, labourers, workmen, builders, contractors, suppliers of material or architects or other similar encumbrances incidental to construction, maintenance or repair operations which have either been registered or filed pursuant to Laws against the Real Properties or MAAX or any of its Subsidiaries or not yet registered or filed and which, in any such case, relate to obligations not due and payable; (f) statutory encumbrances relating to obligations not due and payable; (g) Encumbrances for Taxes, assessments, Governmental Entity charges or levies not due and payable as at the Effective Date; (h) Encumbrances for public utilities not due and payable as at the Effective Date; (i) rights of equipment lessors under equipment Contracts provided the terms of such equipment Contracts have been complied with in all material respects up to the Effective Date; (j) financing statements and other similar registrations evidencing the rights of equipment lessors under equipment Contracts in and to the equipment and vehicles which are subject to such Contracts provided the terms of such equipment Contracts have been complied with in all material respects up to the Effective Date; and (k) any privilege in favour of any lessor, licensor or permitter for rent to become due or for other obligations or acts, the performance of which is required under Contracts so long as the payment of or the performance of such other obligation or act is not delinquent and provided that such Encumbrances or privileges do not adversely affect the use or value of the assets affected thereby; (l) any right of expropriation, access, use or any other right conferred or reserved by or in any of the Laws where any of the Real Properties are located; 1.1.42 "PERSON" includes any individual, firm, partnership, joint venture, venture capital fund, association, trust, trustee, 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; 1.1.43 "PURCHASE-MONEY INDEBTEDNESS" means, with respect to MAAX or any of its Subsidiaries, all obligations (i) consisting of the deferred purchase price of any property, conditional sale obligations, obligations under any title retention agreement and other purchase money obligations, in each case, where the maturity of such obligation does not exceed the anticipated useful life of the property or (ii) incurred to finance the acquisition of such property, including additions and improvements; 8 1.1.44 "REAL PROPERTIES" (individually, a "REAL PROPERTY") has the meaning ascribed thereto in Section 3.1.28(b) of Schedule 3.1 attached hereto; 1.1.45 "SECURITIES ACT" means the Securities Act (Quebec), as now in effect and as it may be amended from time to time prior to the Effective Date; 1.1.46 "SENIOR EMPLOYEE" means any employee of MAAX or any of its Subsidiaries listed in Schedule 1.1.46 attached hereto; 1.1.47 "SENIOR MANAGEMENT" has the meaning ascribed thereto in Section 1.7; 1.1.48 "SHAREHOLDER" (collectively, the "SHAREHOLDERS") means a registered holder of the Shares, from time to time; 1.1.49 "SHARES" (individually, a "SHARE") means all common shares in the share capital of MAAX; 1.1.50 "SUBSIDIARY" (collectively, the "SUBSIDIARIES") has the meaning ascribed thereto in the Securities Act; 1.1.51 "SUPERIOR PROPOSAL" means a bona fide unsolicited offer or proposal for an Inconsistent Transaction made to MAAX in writing and duly authorized by the board of directors of the Person making the offer or proposal (i) to purchase or otherwise acquire, directly or indirectly (including by means of a take-over bid, amalgamation, plan of arrangement, business combination, purchase of assets (including transfer of assets in favour of an income trust) or similar transaction), all the Shares or assets of MAAX, (ii) that to the extent it offers cash consideration, is fully financed (subject to usual terms and conditions on the drawing of such financing), (iii) that the Board of Directors determines in good faith (after consultation with financial advisors and after receiving advice of outside counsel with respect to the Board of Directors' fiduciary duties) would, if consummated in accordance with its terms, result in a transaction (x) more favourable to the Shareholders than the transactions contemplated by this Agreement, having regard to all circumstances, and (y) having a value per Share greater than $22.50 and (z) that the Board of Directors intends to recommend to the Shareholders; 1.1.52 "SUPPORT AND VOTING AGREEMENTS" means collectively (i) the agreement between the Newco Parties, Mr. Placide Poulin and Gestion Camada Inc., (ii) the agreement between the Newco Parties and Mr. Andre Heroux, (iii) the agreement between the Newco Parties and Ms. Marie-France Poulin, (iv) the agreement between the Newco Parties and Mr. David Poulin, and (v) the agreement between the Newco Parties, Mr. Richard Garneau and Gestion Sori Inc., in all cases, dated the date hereof in relation to the transactions contemplated by this Agreement; 1.1.53 "SUPPORTING SHAREHOLDERS" means Mr. Placide Poulin, Gestion Camada Inc., Mr. Andre Heroux, Ms. Marie-France Poulin, Mr. David Poulin, Mr. Richard Garneau and Gestion Sori Inc. being those Shareholders that have entered into the Support and Voting Agreements; 1.1.54 "TAIL PERIOD" has the meaning ascribed thereto in Section 7.3.1; 9 1.1.55 "TARGET COMPLETION DATE" means June 1, 2004, provided that the Target Completion Date may be extended by either party from time to time by notice in writing until July 1, 2004 if as of that date, any of the conditions set forth in Sections 6.1 or 6.2 have not been satisfied, have not been waived and the party requesting the extension is not in breach under this Agreement and is making commercially reasonable efforts to cause all such conditions to be satisfied. The Target Completion Date may be further extended by either party until the later of (i) August 1, 2004, if as of that date any of the conditions set forth in Sections 6.1 or 6.2 for which the Newco Parties are not responsible (including receipt of all Appropriate Regulatory Approvals and Third Party Consents) have not been satisfied or have not been waived by the Newco Parties and if the party requesting the extension is not in breach under this Agreement and is making commercially reasonable efforts to cause all such conditions to be satisfied or (ii) up to 45 days from the delivery by MAAX to the Newco Parties of all financial statements required in connection with the Debt Financing as set forth in Section 5.2.1(h) other than supplemental information required under items (i) and (ii) thereof; 1.1.56 "TAX" and "TAXES" includes any taxes, duties, fees, premiums, assessments, imposts, levies and other charges of any kind whatsoever imposed by any Governmental Entity, including all interest, penalties, fines, additions to tax or other additional amounts imposed by any Governmental Entity in respect thereof, and including those levied on, or measured by, or referred to as, income, gross receipts, profits, capital, transfer, land transfer, sales, goods and services, harmonized sales, use, local, value-added, excise, stamp, withholding, business, franchising, property, development, occupancy, employer health, payroll, employment, health, social services, education and social security taxes, all surtaxes, all customs duties and import and export taxes, countervail and anti-dumping, all license agreements, franchise and registration fees and all employment insurance, health insurance and Canada, Quebec and other Governmental Entity pension plan premiums or contributions; 1.1.57 "TAX RETURNS" (individually, a "TAX RETURN") shall mean all returns, reports, forms, declarations, statements, information, estimates, schedules, filings or documents (including any related or supporting information) filed or required by any Governmental Entity to be filed with respect to Taxes, including all information returns, Claims for refund, amended returns, declarations of estimated Tax, and requests for extensions of time to file any of the preceding items; 1.1.58 "THIRD PARTY CONSENTS" means all third party consents, approvals or waivers (other than the Appropriate Regulatory Approvals) necessary or otherwise required to consummate the transactions contemplated by this Agreement or the Amalgamation as set forth in Schedule 1.1.58 and as may be supplemented by MAAX at any time prior to the Effective Date, upon notice to the Newco Parties. 1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this Agreement into Articles, Sections, Schedules and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof. Unless otherwise indicated, all references to an "Article", "Section" or "Schedule" followed by a number and/or a letter refer to the specified Article, Section or Schedule of this Agreement. The terms "this Agreement", "hereof", "herein" and "hereunder" and similar expressions refer to this 10 Agreement (including the Schedules hereto) and not to any particular Article, Section or other portion hereof and include any agreement or instrument supplementary or ancillary hereto. 1.3 CURRENCY. All sums of money referred to in this Agreement are expressed in Canadian dollars. 1.4 NUMBER, ETC. Unless the context otherwise requires, words importing the singular shall include the plural and vice versa and words importing any gender shall include all genders. 1.5 DATE FOR ANY ACTION. In the event that any date on which any action is required to be taken hereunder by any of the parties hereto is not a Business Day, such action shall be required to be taken on the next succeeding day which is a Business Day. 1.6 ENTIRE AGREEMENT. This Agreement, the Amalgamation Agreement and the Confidentiality Agreement (which shall terminate on the Effective Date) constitute the entire agreement between the parties hereto pertaining to the terms of the Amalgamation and ancillary arrangements and supersede all other prior agreements, understandings, negotiations and discussions, whether oral or written, between the parties hereto with respect to the terms of the Amalgamation and such arrangements, including the Letter of Expression of Interest signed by Borealis Private Equity Limited Partnership, Borealis (QLP) Private Equity Limited Partnership, Ontario Municipal Employees Retirement Board, J.W. Childs Associates, L.P. and MAAX dated December 19, 2003, as amended on January 8, 2004, January 12, 2004, January 13, 2004, January 16, 2004, February 3, 2004, February 19, 2004 and February 28, 2004. 1.7 KNOWLEDGE. Where any representation or warranty contained in this Agreement is expressly qualified by reference to the "knowledge" of MAAX, it shall be deemed to refer to the actual knowledge of each of MAAX and any of its Subsidiaries, Mr. Placide Poulin, Chairman of the Board of Directors and of the Executive Committee of MAAX, Mr. Andre Heroux, President and Chief Executive Officer of MAAX, Richard Garneau, Executive Vice-President and Chief Financial Officer of MAAX, Ms. Marie-France Poulin, Executive Vice-President, Sales of MAAX, Mr. David Poulin, Executive Vice-President, Operations of MAAX, Mr. Guy Berard, Vice-President and General Manager, Kitchen Cabinets of MAAX, Mr. Benoit Boutet, Corporate Vice-President, Finance of MAAX, Mr. Patrice Henaire, Corporate Vice-President, Marketing and R&D of MAAX, Mr. Terry Rake, Vice-President and General Manager, Spas of MAAX, Mr. Jean Rochette, Vice-President and General Manager, Bathroom Products of MAAX, Mr. Dan Stewart, Vice-President and General Manager of MAAX KSD, Gerth Jan Kloppers, SaniNova's General Manager, Michel Tremblay, Corporate Vice President, Information Technology, Jean-Francois Doyon, Corporate Environmental Manager of MAAX and Dave Turgeon, Corporate Secretary of MAAX (collectively, the "SENIOR MANAGEMENT") and to the knowledge they would have had, in their respective areas of responsibilities, if they had conducted a diligent inquiry into the relevant subject matter. MAAX confirms that it has made due and diligent inquiry of such Persons (including appropriate officers of MAAX and its Subsidiaries) as it considers necessary as to the matters that are the subject of such representations and warranties. 11 ARTICLE 2 AMALGAMATION 2.1 TERMS OF AMALGAMATION. 2.1.1 Subject to the terms and conditions contained herein, MAAX, Subco and Subco II agree that they shall amalgamate under Part IA of the Companies Act on the terms and conditions set forth in the Amalgamation Agreement. 2.1.2 Newco hereby agrees to the cancellation of all common shares and redeemable preferred shares of Subco II held by it upon the Amalgamation in consideration for the allotment and issuance of shares in the share capital of Newco II (and Newco II hereby agrees to so allot and issue such shares in consideration for such agreement) having an aggregate value equal to the fair market value of all issued and outstanding common shares and redeemable preferred shares of Subco II held by Newco immediately prior to the Amalgamation, on the basis of one issued, fully paid and assessable common share of Newco II for each issued and outstanding common share and redeemable preferred share of Subco II. 2.2 IMPLEMENTATION STEPS BY MAAX. MAAX covenants and agrees in favour of the Newco Parties that MAAX shall: 2.2.1 convene and hold the MAAX Meeting no later than May 7, 2004; and 2.2.2 subject to obtaining the approval of (i) at least two-thirds of the votes cast on a resolution approving the by-law relating to the Amalgamation by the Shareholders, present in person or represented by proxy at the MAAX Meeting and (ii) any other required Shareholders approval to comply with any securities Laws, as soon as reasonably practicable thereafter, and subject to the satisfaction or waiver of the other conditions herein contained in favour of each party, file with the Enterprise Registrar the Articles of Amalgamation, and such other documents as may be required under the Companies Act to give effect to the Amalgamation. 2.3 MAAX CIRCULAR. MAAX shall use commercially reasonable efforts to prepare the Circular together with any other documents required by the Securities Act or other applicable Laws in connection with the Amalgamation and MAAX shall cause the Circular and other documentation required in connection with the MAAX Meeting to be sent to each Shareholder (and other Person) and filed as required by applicable Laws as soon as reasonably practicable and in any event no later than 25 days after the date of this Agreement, provided that the Circular and other documentation required in connection with the Amalgamation shall not be sent, except with Newco and Newco II's prior written consent, which consent shall not be unreasonably withheld. Newco, Newco II and their counsels shall be given reasonable opportunity to review and comment upon draft versions of the Circular prior to its being sent to each Shareholder (and other Person) and filed as required by applicable Laws and MAAX shall consider such comments in good faith. 2.4 SECURITIES AND CORPORATE COMPLIANCE. MAAX shall (with Newco, Newco II and their counsels) diligently do all such acts and things as may be necessary to comply with National Instrument 54-101 in relation to the MAAX Meeting and, without limiting the generality of the 12 foregoing, shall, in consultation with Newco and Newco II, use commercially reasonable efforts to accelerate the timing contemplated by such instrument. 2.5 PREPARATION OF FILINGS. 2.5.1 Newco, Newco II and MAAX shall cooperate in: (a) the preparation of any application for the orders and the preparation of any other documents reasonably deemed by the Newco Parties or MAAX to be necessary to discharge their respective obligations under applicable Laws in connection with the Amalgamation and all other matters contemplated by this Agreement; and (b) the taking of all such action as may be required under applicable Laws in connection with the Amalgamation and all other matters contemplated by this Agreement. 2.5.2 MAAX shall furnish to Newco and Newco II all such information concerning it, its Subsidiaries and the Shareholders as may be required in connection with Sections 2.3 and 2.4 and the foregoing provisions of this Section 2.5, and covenants that no information furnished by it in connection with such actions or otherwise in connection with the Amalgamation will contain any untrue statement of a material fact or omit to state a material fact required to be stated in any such document or necessary in order to make any information so furnished for use in any such document not misleading in light of the circumstances in which it is furnished or to be used. Newco and Newco II shall furnish to MAAX all such information concerning the Newco Parties as may be required in connection with Sections 2.3 and 2.4 and the foregoing provisions of this Section 2.5, and covenants that no information furnished by them in connection with such actions or otherwise in connection with the Amalgamation will contain any untrue statement of a material fact or omit to state a material fact required to be stated in any such document or necessary in order to make any information so furnished for use in any such document not misleading in light of the circumstances in which it is furnished or to be used. 2.5.3 MAAX shall promptly notify Newco and Newco II if at any time before the Effective Time it becomes aware that the Circular or an application for any order referred to in Section 2.5.1(a) contains any misrepresentation that is likely to affect the value of the market price of the Shares or any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in light of the circumstances in which they are made, or that otherwise requires an amendment or supplement to the Circular or such application. In any such event, MAAX shall prepare a supplement or amendment to the Circular or such other document, as required and as the case may be, and, if required, shall cause the same to be distributed to Shareholders and/or filed with the relevant securities regulatory authorities, provided that such document shall not be sent, except with Newco and Newco II's prior written consent, which consent shall not be unreasonably withheld. Newco, Newco II and their counsels shall be given reasonable opportunity to review and comment upon draft versions of any such supplement or amendment to the Circular or any such other document prior to its being sent to each Shareholder (and other 13 Person) and filed as required by applicable Laws and MAAX shall consider such comments in good faith. 2.5.4 MAAX shall ensure that the Circular complies with all applicable Laws and, without limiting the generality of the foregoing, that the Circular does not contain any misrepresentation that is likely to affect the value of the market price of the Shares or any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in light of the circumstances in which they are made (other than with respect to any information relating to and provided by Newco and Newco II). Without limiting the generality of the foregoing, MAAX shall ensure that the Circular provides Shareholders with information in sufficient detail to permit them to form a reasoned judgment concerning the matters to be placed before them at the MAAX Meeting. ARTICLE 3 REPRESENTATIONS AND WARRANTIES 3.1 REPRESENTATIONS AND WARRANTIES OF MAAX. MAAX represents and warrants to and in favour of the Newco Parties as set forth in Schedule 3.1 and acknowledges that the Newco Parties are relying upon such representations and warranties in connection with the matters contemplated by this Agreement. 3.2 REPRESENTATIONS AND WARRANTIES OF THE NEWCO PARTIES. The Newco Parties represent and warrant to and in favour of MAAX as set forth in Schedule 3.2 and acknowledge that MAAX is relying upon such representations and warranties in connection with the matters contemplated by this Agreement. 3.3 INVESTIGATION. Any investigation by a party hereto or its advisors shall not mitigate, diminish or affect the representations and warranties of the other parties to this Agreement. 3.4 SURVIVAL. For greater certainty, the representations and warranties of each of MAAX and the Newco Parties contained herein shall survive the execution and delivery of this Agreement and shall terminate on the earlier of the termination of this Agreement in accordance with its terms and the day after the Effective Date. ARTICLE 4 REGULATORY APPROVALS 4.1 APPLICATIONS. 4.1.1 MAAX and the Newco Parties covenant and agree to proceed diligently, in a coordinated fashion, to apply for, and obtain the Appropriate Regulatory Approvals including, without limitation, filing, within 14 days from the date hereof, any appropriate applications under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (United States), Competition Act (Canada) and Investment Canada Act. 4.1.2 Without limiting the generality of Section 4.1.1, MAAX and the Newco Parties covenant and agree with each other (i) to take promptly all actions reasonably necessary to cause the filings required by the parties and their respective Subsidiaries to obtain all Appropriate 14 Regulatory Approvals to be made as soon as possible; (ii) to comply at the earliest practicable date with any request for additional information received by any party or its Subsidiaries from any Governmental Entities, including without limitation, the Competition Bureau, the Federal Trade Commission, the Antitrust Division of the Department of Justice or Industry Canada in connection with obtaining any Appropriate Regulatory Approval; and (iii) to cooperate with each other in connection with their respective filings with respect to obtaining any Appropriate Regulatory Approval and in connection with resolving any investigation or other inquiry concerning the transactions contemplated by this Agreement commenced by any of the Governmental Entity mentioned in (ii) above. 4.2 OBTAINING OF APPROPRIATE REGULATORY APPROVALS. For purposes of this Agreement, no Appropriate Regulatory Approval shall be considered to have been obtained unless it is on terms satisfactory to Newco and Newco II, acting reasonably. In addition, no Appropriate Regulatory Approval shall be considered to have been obtained if an appeal, stop-order or proceedings seeking a stop-order or any revocation proceedings has been instituted from the granting of any Appropriate Regulatory Approval and remains outstanding on the Effective Date. ARTICLE 5 COVENANTS 5.1 RECOMMENDATION OF AMALGAMATION. MAAX hereby covenants and agrees that it will, through its Board of Directors: 5.1.1 unanimously recommend in the Circular and at the MAAX Meeting that Shareholders vote all of their Shares in favour of the Amalgamation and MAAX, through its Board of Directors, shall publicly reconfirm such recommendation upon the reasonable request in writing from time to time of Newco or Newco II. All public comment by MAAX in relation to the Amalgamation shall be made in accordance with Section 8.5 and shall be consistent with and supportive of such recommendation. MAAX shall not act or fail to act in any way that might reasonably be expected to discourage the Shareholders from voting in favour of the Amalgamation or that might reasonably encourage the Shareholders to vote against the Amalgamation; 5.1.2 not withdraw its recommendation that Shareholders vote in favour of the Amalgamation as set out in Section 5.1.1; and 5.1.3 use commercially reasonable efforts to cause the senior officers of MAAX and its Subsidiaries to support the Amalgamation and vote the Shares held by them at the MAAX Meeting in favour of the Amalgamation. 5.2 DEBT FINANCING. 5.2.1 MAAX hereby also covenants and agrees in favour of the Newco Parties that from the date hereof until the earlier of (i) the Effective Date, or (ii) this Agreement having been terminated pursuant to Article 7 hereof, MAAX shall use commercially reasonable efforts to perform, and shall cause its Subsidiaries to use commercially reasonable efforts to perform, all obligations required to be performed by MAAX or any of its Subsidiaries under this Agreement in connection with the implementation of the Debt Financing and shall use commercially 15 reasonable efforts to do all such other acts and things as may be necessary in order to implement and make effective, as soon as reasonably practicable, the Debt Financing and, without limitation, MAAX shall, and where appropriate shall cause its Subsidiaries to: (a) cooperate in the preparation of an information package regarding MAAX and its Subsidiaries, including, without limitation, the delivery of all information relating to the transactions contemplated hereby, deemed reasonably necessary by the lenders under the Debt Commitment Letter to complete the syndication of the Debt Financing; (b) cooperate in the presentation of an information package acceptable to the lenders under the Debt Commitment Letter in lender meetings and other communications with prospective lenders in connection with the syndication of the Debt Financing, including, without limitation, direct contact between Senior Management and representatives of the Newco Parties with prospective lenders and participation of such persons in lender meetings; (c) cooperate in the preparation of a version of the information package and presentation in connection with the syndication of the Debt Financing that does not contain material non-public information concerning MAAX and its Subsidiaries; (d) cooperate with respect to the implementation, on the Effective Date or prior thereto, in contemplation of the closing of the Debt Financing, of the security interests, claims and hypothecs in all assets, including, without limitation, all personal, real, mixed moveable and immoveable property, of MAAX and its Subsidiaries; (e) cooperate in the pay-off and retiring of such existing Indebtedness of and related security interests, claims and hypothecs granted by MAAX and/or any of its Subsidiaries, as may be designated by Newco or Newco II, and shall, without limitation, give timely pre-payment notice as may be applicable and provide Newco and Newco II, at least three days prior to the Effective Date, with estimated balance, penalties, fees, per diem and other particulars as may be required by Newco or Newco II to effect payment on the Effective Date; (f) cooperate in the preparation of a prospectus, offering memorandum or private placement memorandum suitable for use in a customary "high-yield road show" and the participation of the senior management of MAAX and its Subsidiaries and representatives of the Newco Parties in the road show; (g) cooperate in the rating agency process, as reasonably requested by the lenders; (h) prepare any financial statements of MAAX or any of its predecessors or Subsidiaries, whether audited or not, (including internal unaudited monthly financial statements) which are consistent with customary "high-yield" disclosure documents as mutually agreed by the respective accounting experts of MAAX and the Newco Parties in the letter addressed to Newco (or any of its Affiliates) and delivered to MAAX prior to the execution of this Agreement and supplemented, as the case may be (i) to comply with the United States Securities and Exchange Commission rules and regulations or (ii) as 16 may otherwise reasonably be required by the lenders under the Debt Commitment Letter; and, in any event, which shall include audited historical consolidated financial statements of (x) MAAX for the three years ended February 29, 2004, prepared under both GAAP and United States generally accepted accounting principles, and (y) Aker Plastics Company, Inc. for the period of five months and 24 days ended October 24, 2002 under United States generally accepted accounting principles, in each case with a clean audit opinion from KPMG LLP, on or prior to April 26, 2004; (i) take all necessary actions regarding the implementation of internal procedures required for the reporting, commencing after the Effective Date, of internal unaudited monthly financial statements; and (j) cause its auditors to deliver comfort letters as the lenders may reasonably request and to consent to the use of their auditors' report relating to the audited financial statements referred to in Section 5.2.1(h) for any period covered by such audited financial statements. 5.2.2 MAAX hereby agrees and acknowledges that the information regarding the Debt Financing and information provided by MAAX and its Subsidiaries to the lenders under the Debt Commitment Letter in connection with the Debt Financing may be disseminated to potential lenders and other Persons through one or more internet sites and hereby authorizes the use of its and its Subsidiaries' logos in connection with any such dissemination. MAAX and MAAX's counsel shall be given reasonable opportunity to review and comment on any such information and on the presentation of any such information through one or more internet sites prior to the public dissemination of such information through one or more internet sites. 5.3 GENERAL. MAAX hereby also covenants and agrees in favour of the Newco Parties that, from the date hereof until the earlier of (i) the Effective Date, or (ii) this Agreement having been terminated pursuant to Article 7 hereof, MAAX shall perform, and shall cause its Subsidiaries to perform, all obligations required to be performed by MAAX or any of its Subsidiaries under this Agreement and shall do all such other acts and things as may be necessary in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated hereby and, without limitation, MAAX shall, subject to Sections 5.6 and 5.7, and where appropriate shall cause its Subsidiaries to: 5.3.1 use commercially reasonable efforts to cause the conditions in Section 6.1 and Section 6.2 to be satisfied on or prior to the Target Completion Date; 5.3.2 use commercially reasonable efforts to promptly update Schedule 1.1.57 and obtain all Third Party Consents; 5.3.3 use commercially reasonable efforts to assist the Newco Parties to successfully complete the transactions contemplated by this Agreement, including co-operating with the Newco Parties, by making all requisite regulatory filings and in obtaining all requisite regulatory approvals (whether before or after the Effective Date), including the Appropriate Regulatory Approvals, and making submissions and giving evidence in relation thereto, in mailing or otherwise making and successfully completing the Amalgamation; 17 5.3.4 effect all necessary registrations, filings and submissions of information required by Governmental Entities from MAAX or any of its Subsidiaries; 5.3.5 provide lists of Shareholders of all classes and series of securities of MAAX prepared by MAAX or the transfer agent of MAAX and a list of holders of MAAX Options and MAAX Rights (with full particulars as to, among others, the purchase, exercise or conversion price, vesting and expiry date) prepared by MAAX (as well as a security position listing from each depository, including The Canadian Depository for Securities Limited) and deliver such lists to Newco and Newco II within two Business Days after execution of this Agreement and obtain and deliver to Newco and Newco II thereafter on a weekly basis (or as otherwise reasonably requested by Newco or Newco II) during the term of this Agreement supplemental lists setting out any changes thereto, all such deliveries to be both in printed form and, if available, in computer-readable format; 5.3.6 notify Newco and Newco II forthwith upon becoming aware of any notice regarding any MAAX Options and MAAX Rights, and corresponding information for each of its Subsidiaries, and inform Newco and Newco II of all information (including the identity of the giver thereof) known to it regarding such notice; 5.3.7 not amend the Circular and any other documents prepared in connection with the MAAX Meeting, including not change the date of, or adjourn, the MAAX Meeting without the consent of Newco and Newco II which consent shall not be unreasonably withheld; 5.3.8 use commercially reasonable efforts to obtain the approval of the Shareholders to the Amalgamation and cooperate with Newco and Newco II upon Newco or Newco II's request, in soliciting proxies on behalf of management of MAAX pursuant to the Circular (and in accordance with the Companies Act); 5.3.9 not to retain any dealer-manager to solicit proxies from Shareholders in respect of the MAAX Meeting without the written consent of Newco and Newco II, which consent shall not be unreasonably withheld; 5.3.10 provide or cause to be provided to Newco and Newco II all proxy return information with respect to the MAAX Meeting on a timely basis upon request by Newco or Newco II; 5.3.11 except as specifically permitted pursuant to this Agreement and except as required in the ordinary and regular course of business, immediately cease to provide and cause its Subsidiaries to cease to provide, to any person (other than the Newco Parties) access to MAAX's and its Subsidiaries' information, properties, books, records, agreements or commitments; 5.3.12 defend all lawsuits or other legal, regulatory or other proceedings, including, without limitation, use commercially reasonable efforts to have lifted or rescinded any injunction or restraining order or other order relating to MAAX or any of its Subsidiaries, challenging or affecting this Agreement, the Amalgamation or the consummation of the transactions contemplated by this Agreement; 18 5.3.13 use commercially reasonable efforts to comply promptly with all requirements which applicable Laws may impose on MAAX or its Subsidiaries with respect to the transactions contemplated hereby; 5.3.14 not, and cause each of its Subsidiaries not to, enter into any transaction or perform any act which would (i) interfere or be inconsistent with the successful completion of the Amalgamation, (ii) render incorrect any of the representations and warranties set forth herein if such representations and warranties were made at a date subsequent to such transaction or act and all references to the date hereof were to such later date, or (iii) adversely affect MAAX's ability to perform and comply with its covenants and agreements under this Agreement; 5.3.15 promptly advise, first orally and then in writing, Newco and Newco II of (i) any fact, event or any change occurring after the date hereof that would render any representation or warranty of MAAX contained in this Agreement, if made on or as of the date of such event or the Effective Date, untrue or incorrect; (ii) any Material Adverse Change; (iii) any breach by MAAX or any of its Subsidiaries of any covenant or agreement contained in this Agreement or (iv) any death, disability, resignation, termination of employment or other departure of any Senior Employee of MAAX or any of its Subsidiaries; 5.3.16 provide such information and take such actions as may be provided in the Disclosure Letter; and 5.3.17 on or prior to the Effective Date, MAAX shall, and shall cause each of its Subsidiaries to, take such actions as are necessary to facilitate or implement, effective immediately prior to or after the closing of the transactions contemplated by this Agreement, such reorganization of the capital, assets or liabilities of MAAX or any of its Subsidiaries, including the liquidation of inactive holding companies, as Newco or Newco II may reasonably require, in accordance with the outline of the preliminary reorganization plan prepared by Newco Parties' tax advisors (a copy of which has been delivered to MAAX prior to the execution of this Agreement), as may be modified from time to time by the Newco Parties with the consent of MAAX, which consent shall not be unreasonably withheld; provided that in the case of irreversible actions, MAAX shall only be required to effect such irreversible action if there is certainty that the transactions contemplated by this Agreement will be consummated. 5.4 OPERATION OF BUSINESS. MAAX hereby covenants and agrees from the date hereof until the earlier of (i) the Effective Date or (ii) the date this Agreement is terminated pursuant to Article 7 hereof, (except as has been publicly disclosed by MAAX prior to the date of this Agreement or has been disclosed in the Disclosure Letter or as Newco and Newco II shall otherwise consent) that it shall: 5.4.1 carry on, and shall cause its Subsidiaries to carry on, business only in the ordinary and regular course consistent with past practice; 5.4.2 not, and shall cause each of its Subsidiaries not to, take any action (directly or indirectly) with respect to any of the following, except to the extent contemplated by or necessary to give effect to the transactions and obligations under this Agreement: 19 (a) any take-over bid, tender offer, issuer bid, merger, amalgamation (other than the Amalgamation), plan of arrangement, reorganization (including transfer of assets in favour of an income trust) or other business combination or similar transaction or the acquisition of all or a material portion of the Shares, assets or business of any Person, involving MAAX or any of its Subsidiaries; (b) directly or indirectly reduce the stated capital of MAAX or any of its Subsidiaries; (c) the sale, lease, transfer, Encumbrance or other disposition of any of MAAX's and its Subsidiaries' assets including, without limitation, all personal, movable, real, immovable and mixed property of MAAX and its Subsidiaries, other than (i) Permitted Encumbrances, in the case of Encumbrances and (ii) in the ordinary and regular course of business consistent with past practice, in all other cases; (d) any joint venture, strategic alliance, non competition or similar restrictive covenant or other transaction with strategic implications for MAAX or a Subsidiary of MAAX, as the case may be, or which may have a material and adverse effect on Newco and Newco II; (e) making of any change in its debt or equity capitalization (including, but not limited to, any increase in the amount or maturity of its consolidated borrowings) or any conversion of short term borrowings into long term borrowings other than accessing existing credit facilities in the ordinary and regular course of business; (f) any change in its accounting methods, principles and practices; (g) incurring any Indebtedness guaranteeing any indebtedness, making any loans, advances or capital contributions to, or other investments in, any other Person, or the issuance or sale of any debt securities, other than in the ordinary and regular course of business consistent with past practice; (h) the declaration or payment of any dividend or the declaration, authorization or making of any distribution of, on or in respect of any of its securities whether payable in cash, securities or otherwise, including any dividend or distribution under any existing programs of MAAX or any of its Subsidiaries, other than MAAX's regular $0.07 per Share semestrial dividend consistent with past practice; (i) the amendment of the articles or by-laws of MAAX or the constating documents of any of its Subsidiaries; (j) the split, combination or reclassification of any shares of its share capital or the allotment, reservation, setting aside, issuance, authorization, purchase, redemption, delivery, Encumbrance or disposition of, or any proposal relating thereto, any shares in its share capital, any securities or any MAAX Options or MAAX Rights (including the acceleration of any vesting periods except for the purposes of complying with Section 6.2.8), except for the issuance of Shares pursuant to fully vested MAAX Options granted prior to the date hereof; 20 (k) instituting, cancelling or modifying in any material respect any pension plan or other employee benefit arrangement of MAAX; (l) commencing to undertake a substantial expansion of its business facilities or an expansion that is out of the ordinary and regular course of business consistent with prior practice in light of current market and economic conditions; (m) other than in the ordinary course of business, (i) entering into any new material line of business or (ii) incurring or committing to any capital expenditures or any liabilities or obligations in connection therewith; (n) adopting a plan of complete or partial liquidation, consolidation, restructuring, recapitalization or other restructuring; (o) transferring or licensing to any Person or otherwise extending, amending or modifying any rights to intellectual property owned by MAAX or any of its Subsidiaries, other than in the ordinary course of business; and (p) preventing, delaying or impeding the consummation of the Amalgamation or the other transactions contemplated hereby. 5.4.3 not amend, vary or modify, or take any other action under any pension plan, other employee benefit arrangement of MAAX or any stock option plan of MAAX and its Subsidiaries, except as, in the opinion of MAAX's counsel, is necessary to comply with applicable Laws or required by existing provisions of such plans or arrangements, with the prior consent of Newco and Newco II which consent shall not be unreasonably withheld; 5.4.4 not, and shall not permit any of its Subsidiaries to, (i) grant to any employee or officer of MAAX or any of its Subsidiaries any increase in compensation or in severance or termination pay (whether or not payable in cash) or enter into any employment agreement with any Senior Employees or any agreement to pay severance amounts for termination or termination packages; or (ii) hire any additional Senior Employees; 5.4.5 not acquire or agree to acquire any Shares or other outstanding securities, whether by public or private transaction, pursuant to any normal course or substantial issuer bid, or otherwise, or any shares or other outstanding securities of any of its Subsidiaries; 5.4.6 except as otherwise contemplated hereby or in the ordinary and regular course of business, not, and shall not permit any of its Subsidiaries to, enter into, amend or terminate existing Contracts having a term in excess of one year and/or involve obligations of more than $100,000 for MAAX or any of its Subsidiaries; 5.4.7 not violate or fail to perform any material obligation or duty imposed upon it or any of its Subsidiaries by any applicable Laws; 5.4.8 pay all debts and Taxes when due and payable; 21 5.4.9 subject to Section 5.9.2, use commercially reasonable efforts to keep in force all insurance policies on terms at least as favourable as current terms; 5.4.10 not commence any litigation or proceeding or settle or compromise any litigation except in the ordinary and regular course of business consistent with past practice and except for any settlement or compromise having an aggregate cost to MAAX or any of its Subsidiaries of not more than $100,000; 5.4.11 use commercially reasonable efforts to expedite the completion of its audited financial statements for the financial year ended February 29, 2004 and any other financial statement referred to in Section 5.2.1(h), together with an unqualified auditors' report thereon and deliver such financial statements and such other information by April 26, 2004; 5.4.12 not prepare or file any Tax Returns inconsistent with past practice nor, on any such Tax Returns, take any position, make any election, or adopt any method that is inconsistent with positions taken, elections made or methods used in preparing or filing similar Tax Returns in prior periods, and not amend any Tax Returns; 5.4.13 make or rescind any express or deemed Tax election related to Taxes or change any of its or their methods of reporting income or deductions for Tax purposes or make a request for a Tax ruling or enter into any agreement with any taxing authority; 5.4.14 cause each of its Subsidiaries to use commercially reasonable efforts to preserve intact in all material respects their respective business organizations and goodwill and to keep available in all material respects the services of their respective officers and Senior Employees and to maintain in all material respects satisfactory relationships with suppliers, distributors, customers and others with whom they have business relationships; 5.4.15 use commercially reasonable efforts to maintain and preserve, and shall cause its Subsidiaries to use commercially reasonable efforts to maintain and preserve, on a basis consistent with the ordinary and regular course of business and past practice, all personal, movable, real, immovable and mixed property of MAAX and its Subsidiaries material to the conduct of its business and keep such property in good repair, working order and condition; and 5.4.16 use commercially reasonable efforts to maintain good business relationship with National Bank of Canada in order to allow MAAX to keep in place after Effective Time, upon the same terms and conditions, the (i) Interest Rate SWAP Transaction Agreement entered into between MAAX and National Bank of Canada on November 5, 2002, (ii) Foreign Exchange Forward Contracts entered into between MAAX and its Subsidiaries and National Bank of Canada on June 6, 2002 and March 19, 2003 and (iii) Factoring Agreement entered into between MAAX and Sodex (a subsidiary of National Bank of Canada) on February 1, 2004. 5.5 COVENANTS OF THE NEWCO PARTIES. The Newco Parties hereby covenant that, from the date hereof until the earlier of (i) the Effective Date, or (ii) this Agreement having been terminated pursuant to Article 7 hereof, they shall: 5.5.1 use commercially reasonable efforts to successfully complete the transactions contemplated hereby, including co-operating with MAAX, by making all requisite regulatory 22 filings and in obtaining all requisite regulatory approvals (whether before or after the Effective Date), including the Appropriate Regulatory Approvals, and making submissions and giving evidence in relation thereto, in mailing or otherwise making and successfully completing the Amalgamation; and 5.5.2 use commercially reasonable efforts to cause the conditions in Sections 6.1 and 6.3 to be satisfied prior to the Target Completion Date. The Newco Parties also covenant that if the conditions precedent to the issuance of the Notes (as defined in the Debt Commitment Letter) are met and the Notes are not issued on the Effective Date, Newco shall, or will cause one or more of its Affiliates to, draw down on the Bridge Loans (as defined in the Debt Commitment Letter) to the extent the conditions for funding set forth in the Debt Commitment Letter have been met. 5.6 COVENANTS REGARDING NON-SOLICITATION. 5.6.1 MAAX shall not, directly or indirectly, through any officer, director, employee, representative or agent of MAAX or any of its Subsidiaries, take any action of any kind which might reduce the likelihood of, or interfere with, the completion of the Amalgamation, including, but not limited to, any action to (i) solicit, assist, initiate or encourage (including by way of furnishing non-public information, soliciting proxies (within the meaning of the Securities Act) or entering into any form of agreement or arrangement) any inquiries, submissions, proposals or offers regarding any merger, amalgamation (other than the Amalgamation), take-over bid, sale of material assets (including transfer of assets in favour of an income trust or any lease, long-term supply agreement or other arrangement having the same economic effect as a sale) or material sale of Shares or rights or interests therein or thereto or similar transactions involving MAAX or any of its Subsidiaries, or a proposal to do so, other than with the Newco Parties (each, an "INCONSISTENT TRANSACTION"); (ii) participate in any discussions or negotiations regarding any Inconsistent Transaction; (iii) withdraw or modify in a manner adverse to Newco and Newco II the approval of the Board of Directors of the transactions contemplated hereby; (iv) approve or recommend any Inconsistent Transaction; or (v) cause MAAX to enter into any agreement related to any Inconsistent Transaction. Notwithstanding the preceding part of this Section 5.6.1 and any other provision of this Agreement, nothing shall prevent the Board of Directors prior to the filing of the Articles of Amalgamation from complying with MAAX's disclosure obligations under applicable Laws with respect to the MAAX Meeting and the Amalgamation or from considering, participating in any discussions or negotiations, or entering into a confidentiality agreement on substantially the same terms as the Confidentiality Agreement, including a standstill undertaking for a period of 18 months and providing information pursuant to Section 5.6.3, regarding an unsolicited bona fide Inconsistent Transaction in writing that did not otherwise result from a breach of this Section 5.6 and that the Board of Directors determines, constitutes a Superior Proposal. 5.6.2 MAAX hereby represents and warrants in favour of the Newco Parties that as of this date, there is no current Inconsistent Transaction and hereby agrees and undertakes to promptly notify Newco and Newco II, at first orally and then in writing, of all future Inconsistent Transactions, of which MAAX's directors or Senior Management are or become aware, or any 23 amendments to the foregoing, or any request for non-public information relating to MAAX or any of its Subsidiaries in connection with an Inconsistent Transaction or for access to the properties, books or records of MAAX or any of its Subsidiaries by any Person that informs MAAX or such Subsidiary that such Person is considering making, or has made, an Inconsistent Transaction. Such notice shall include a description of the material terms and conditions of any proposal and provide such details of the proposal, inquiry or contact as Newco or Newco II may reasonably request including the identity of the Person making such proposal, inquiry or contact. MAAX further agrees and undertakes to request forthwith and use commercially reasonable efforts to cause all Persons who have executed a confidentiality agreement within the period of 12 months preceding the date hereof in connection with an Inconsistent Transaction, (i) to destroy all confidential MAAX information and confirm to MAAX in writing such destruction; or (ii) to return all confidential MAAX information to MAAX. 5.6.3 If MAAX receives a request for material non-public information from a Person who proposes a bona fide Inconsistent Transaction in writing in respect of MAAX (the existence and content of which have been disclosed to Newco and Newco II), and the Board of Directors determines that such proposal constitutes a Superior Proposal then, and only in such case, the Board of Directors may, subject to the execution by such Person of a non-disclosure agreement on substantially the same terms as the Confidentiality Agreement, provide such Person with access to information regarding MAAX or any of its Subsidiaries; provided, however, that the Person making the Inconsistent Transaction shall not be precluded under such non-disclosure agreement from making the Inconsistent Transaction, and provided further that MAAX sends a copy of any such non-disclosure agreement to Newco and Newco II promptly upon its execution and that Newco and Newco II are provided with a list of or, in the case of information that was not previously made available to Newco and Newco II, copies of any information provided to such Person. 5.6.4 MAAX shall use commercially reasonable efforts to ensure that its officers, directors, employees, representatives and agents and its Subsidiaries and their officers, directors, employees, representatives and agents and any financial advisors or other advisors or representatives retained by it are aware of the provisions of this Section 5.6, and it shall be responsible for any breach of this Section 5.6 by its financial advisors or other advisors or representatives. 5.7 NOTICE BY MAAX OF SUPERIOR PROPOSAL DETERMINATION. 5.7.1 Subject to Section 5.6, MAAX shall not, accept, approve, recommend or enter into any agreement relating to an Inconsistent Transaction (other than a non-disclosure agreement contemplated by Section 5.6.3) and the Board of Directors shall not withdraw, modify or amend, in a manner adverse to Newco and Newco II, its recommendation that Shareholders vote in favour of the Amalgamation unless the Board of Directors shall have determined in good faith that the Inconsistent Transaction constitutes a Superior Proposal and unless it has provided Newco and Newco II with notice in writing that (i) there is a Superior Proposal together with documentation detailing in all material respects the Superior Proposal including a true and final copy of the agreement relating to the Inconsistent Transaction and (ii) MAAX is proposing itself to accept, approve, recommend or enter into an agreement relating to such Inconsistent 24 Transaction. The above referred notice has to be provided at least three Business Days prior to the date on which the Board of Directors proposes to accept, approve, recommend or enter into any agreement relating to such Inconsistent Transaction. 5.7.2 During the three Business Day period which is after the notice referred to in Section 5.7.1, MAAX acknowledges that the Newco Parties shall have the opportunity, but not the obligation, to offer to amend the terms of this Agreement and the Amalgamation. The Board of Directors shall review any amendment proposed by the Newco Parties to the terms of this Agreement in good faith in order to determine, in its discretion in the exercise of its fiduciary duties, whether the Newco Parties' amendment to the terms of this Agreement (upon acceptance by MAAX) would result in the Inconsistent Transaction not being a Superior Proposal. If the Board of Directors so determines, MAAX shall enter into an amendment to this Agreement with the Newco Parties reflecting the Newco Parties' amended proposal. 5.7.3 If MAAX provides Newco and Newco II with the notice referred to in Section 5.7.1 on a date that is less than three Business Days before the MAAX Meeting and the Newco Parties have not made an offer to amend the terms of this Agreement and the Amalgamation as set forth in Section 5.7.2, then, subject to applicable Law, MAAX may or, at Newco or Newco II's request shall, postpone or adjourn the MAAX Meeting to a date that is at least five Business Days but not more than ten Business Days after the scheduled date of the MAAX Meeting. 5.7.4 MAAX shall promptly reaffirm its recommendation of the Amalgamation by press release after (i) any Inconsistent Transaction (which is determined not to be a Superior Proposal) is publicly announced or made or (ii) the Newco Parties and MAAX enter into an amended agreement under Section 5.7.2; any such press release shall be prepared in accordance with Section 8.5. 5.7.5 MAAX also acknowledges and agrees that each successive amendment of any Inconsistent Transaction shall constitute a new Inconsistent Transaction for purposes of this Section 5.7. 5.8 ACCESS TO INFORMATION. Notwithstanding the pre-agreement investigation of MAAX conducted by or on behalf of Newco and Newco II, MAAX shall give Newco, Newco II and their authorized agents (including prospective lenders) reasonable ongoing access during the term of this Agreement, upon reasonable notice to MAAX, to all of MAAX's and its Subsidiaries' material information, senior personnel, material properties, books, records, agreements and commitments, as Newco or Newco II may reasonably require, on and subject to the terms set forth in the Confidentiality Agreement. In addition, MAAX shall co-operate with Newco, Newco II and any such authorized persons in their review and furnish such persons with all material information with respect to MAAX and its Subsidiaries and their ongoing operations and activities as Newco, Newco II or any authorized person may reasonably request, provided that Newco and Newco II shall designate the individual or individuals to co-ordinate such access and further provided that Newco and Newco II shall not disrupt the normal business operations of MAAX or its Subsidiaries. MAAX's obligations under this Section are subject to any legally binding obligations of confidentiality in favour of any third party. The provisions of the 25 Confidentiality Agreement shall continue to apply, mutatis mutandis, to all information so provided to Newco and Newco II. 5.9 INSURANCE COVERAGE. 5.9.1 From and after the Effective Date, Newco and Newco II shall cause MAAX or any successor to MAAX to indemnify and hold harmless all past and present officers and directors of MAAX and of its Subsidiaries to the same extent and in the same manner such persons are indemnified as of the date of this Agreement by MAAX and its Subsidiaries pursuant to their respective governing Laws and the articles, by-laws or other constating documents of MAAX and its Subsidiaries and existing indemnity agreements for acts or omissions occurring at or prior to the Effective Date. 5.9.2 Notwithstanding Section 5.9.1, MAAX intends to purchase run-off insurance, for such term and such premium(s) as may be considered reasonable by it (but which in any event shall not exceed six years from the Effective Date and total premium(s) in excess of $615,000), for its past and present directors and officers in respect of all matters relating to the period when they were directors and/or officers. 5.9.3 In the absence of the run-off insurance described in Section 5.9.2, Newco and Newco II shall use commercially reasonable efforts to cause MAAX or any successor to MAAX to provide coverage (but shall not be required to do so if premiums exceed 125% of current premiums), for an aggregate period of not less than six years from the Effective Date, for MAAX's current and former directors and officers under an insurance and indemnification policy for events occurring prior to the Effective Date that is substantially similar to MAAX's existing policy. ARTICLE 6 CONDITIONS 6.1 MUTUAL CONDITIONS PRECEDENT. The respective obligations of the parties hereto to complete the Amalgamation and the other transactions contemplated by this Agreement shall be subject to the satisfaction, on or before the Effective Date, of the following conditions precedent, each of which may be waived only by the mutual consent of Newco, Newco II and MAAX: 6.1.1 a quorum of Shareholders at the MAAX Meeting shall have been present and the Amalgamation shall have been approved at the MAAX Meeting by (i) at least two-thirds of the votes cast on a resolution approving the by-law relating to the Amalgamation by Shareholders, present in person or represented by proxy at the MAAX Meeting and (ii) any other required Shareholders approval to comply with any securities Laws; 6.1.2 the Appropriate Regulatory Approvals shall have been obtained in accordance with Article 4 and shall be in full force and effect and shall not be the subject of any appeal, stop-order or proceedings seeking a stop-order or any revocation proceedings; 6.1.3 there shall not be in force any order or decree restraining or enjoining the consummation of the transactions contemplated by this Agreement and there shall be no proceeding, of a judicial or administrative nature or otherwise in progress (or threatened in 26 writing by a Governmental Entity) that relates to or results from the transactions contemplated by this Agreement that would, if successful, result in an order or ruling that would (i) reasonably be expected to cease trade, enjoin, prohibit or impose material limitations or conditions on the completion of the Amalgamation in accordance with its terms or (ii) otherwise be inconsistent with the Appropriate Regulatory Approvals which have been obtained; and 6.1.4 this Agreement shall not have been terminated pursuant to Article 7. 6.2 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE NEWCO PARTIES. The obligations of the Newco Parties to complete the transactions contemplated by this Agreement shall also be subject to the satisfaction, on or before the Effective Date, of each of the following conditions precedent (each of which is for the Newco Parties' exclusive benefit and may be waived by the Newco Parties and any one or more of which, if not satisfied or waived, will relieve the Newco Parties of any obligation under this Agreement): 6.2.1 all acts, undertakings, obligations, agreements and covenants of MAAX under this Agreement or under the Amalgamation Agreement to be performed on or before the Effective Date shall have been duly performed in all material respects by MAAX and the Newco Parties shall have received a certificate of MAAX addressed to the Newco Parties and dated as of the Effective Date, signed on behalf of MAAX by the Chief Executive Officer and Chief Financial Officer of MAAX, without personal liability, confirming same; 6.2.2 all representations and warranties of MAAX under this Agreement shall be true and correct in all material respects or, where such representations and warranties are qualified by materiality, true and correct in all respects, on the Effective Date as if made on and as of such date (except to the extent such representations and warranties speak as of an earlier date, in which event such representations and warranties shall be true and correct in all material respects or, where such representations and warranties are qualified by materiality, true and correct in all respects, as of such earlier date, or except as affected by transactions contemplated or permitted by this Agreement) and the Newco Parties shall have received a certificate of MAAX, addressed to the Newco Parties and dated on each of such dates, signed on behalf of MAAX by the Chief Executive Officer and Chief Financial Officer of MAAX, without personal liability, confirming the same; 6.2.3 the written opinion dated the date hereof delivered by the financial advisors to the independent committee of the Board of Directors concluding that the consideration provided under the Amalgamation is fair, from a financial point of view, to the Shareholders shall not have been modified or withdrawn; 6.2.4 the Board of Directors shall have adopted all necessary resolutions and all other necessary corporate action shall have been taken by MAAX and the Subsidiaries, to permit the Amalgamation and the other transactions contemplated hereby; 6.2.5 the Board of Directors shall have made and shall not have modified or amended, in a manner adverse to Newco and Newco II, prior to the MAAX Meeting, an affirmative unanimous recommendation that Shareholders vote in favour of the Amalgamation; 27 6.2.6 MAAX shall have entered into an employment agreement (which shall provide, among others, for eligibility under the share option plan) and a share ownership agreement with Mr. Andre Heroux, in accordance with the executed term sheet delivered to MAAX prior to the execution of this Agreement; 6.2.7 MAAX shall have entered into non-competition agreements (containing non-solicitation and non-disparagement provisions) with each of Mr. Placide Poulin, Ms. Marie-France Poulin, Mr. David Poulin and Mr. Richard Garneau, having a duration of five years and covering North America, in accordance with the executed term sheets delivered to them prior to the execution of this Agreement; 6.2.8 all MAAX Options and MAAX Rights shall have been exercised, accelerated, surrendered, terminated or otherwise dealt with in a manner satisfactory to Newco and Newco II, acting reasonably; 6.2.9 all Third Party Consents shall have been obtained; 6.2.10 between the date hereof and the Effective Date, there shall not have occurred, in the judgment of Newco and Newco II, acting reasonably, a Material Adverse Change; 6.2.11 between the date hereof and the Effective Date, there shall not have occurred, in the judgment of Newco and Newco II, acting reasonably, with respect to MAAX or any of its Subsidiaries, a breach, default or event permitting third parties to exercise rights against any of MAAX and its Subsidiaries which has or could reasonably be expected to have a Material Adverse Change as a result of Amalgamation becoming effective; 6.2.12 Newco and Newco II shall be satisfied that (i) no action, suit or proceeding shall have been taken or instituted (or threatened in writing to be taken or instituted by a Governmental Entity) before or by any domestic or foreign arbitrator, court or tribunal or Governmental Entity or by any elected or appointed public official or private Person in Canada or elsewhere, whether or not having the force of Law, and (ii) no Law shall have been proposed, enacted, promulgated or applied, in the case of (i) or (ii) above: (a) to cease trade, enjoin, prohibit or impose material limitations or conditions on the completion of the Amalgamation or the right of Newco II to own or exercise full rights of ownership of all of the outstanding Shares and all of the outstanding shares of MAAX's Subsidiaries owned by MAAX; (b) which, if the Amalgamation was completed, could in Newco and Newco II's reasonable judgment, materially and adversely affect MAAX and its Subsidiaries considered on a consolidated basis; or (c) to prohibit or restrict the completion of the Amalgamation in accordance with the provisions herein; 6.2.13 at the Effective Date, there shall not exist any prohibition at Law against Newco II owning or exercising full rights of ownership of all of the outstanding shares of Amalco; 28 6.2.14 the conditions to funding under the Debt Commitment Letter shall have been satisfied and Newco and Newco II shall have received on or prior to the Effective Date the full proceeds of the Debt Financing as contemplated under the Debt Commitment Letter or on terms and conditions which are, in the reasonable judgment of Newco and Newco II, no less favourable to Newco and Newco II than those set forth in the Debt Commitment Letter; and 6.2.15 there shall not have occurred any event of national or international consequence or any Law which materially adversely affects or may materially adversely affect the financial markets in Canada or the United States or the financial condition of MAAX or its Subsidiaries, taken as a whole. The Newco Parties may not rely on the failure to satisfy any of the above conditions precedent as a basis for non-compliance by the Newco Parties with its obligations under this Agreement if the condition precedent would have been satisfied but for a default by the Newco Parties in complying with its obligations hereunder. 6.3 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF MAAX. The obligations of MAAX to complete the transactions contemplated by this Agreement shall also be subject to the satisfaction, on or before the Effective Date, of each of the following conditions precedent (each of which is for the exclusive benefit of MAAX and may be waived by MAAX and any one or more of which, if not satisfied or waived, will relieve MAAX of any obligation under this Agreement): 6.3.1 all acts, undertakings, obligations, agreements and covenants of the Newco Parties under this Agreement or under the Amalgamation Agreement to be performed on or before the Effective Date shall have been duly performed in all material respects by the Newco Parties and MAAX shall have received a certificate of the Newco Parties addressed to MAAX and dated as of the Effective Date, signed on behalf of the Newco Parties by the President and Secretary of each of the Newco Parties without personal liability, confirming same; 6.3.2 all representations and warranties of the Newco Parties under this Agreement shall be true and correct in all material respects or, where such representations and warranties are qualified by materiality, true and correct in all respects, on the Effective Date as if made on and as of such date (except to the extent such representations and warranties speak as of an earlier date, in which event such representations and warranties shall be true and correct in all material respects or, where such representations and warranties are qualified by materiality, true and correct in all respects, as of such earlier date, or except as affected by transactions contemplated or permitted by this Agreement) and MAAX shall have received a certificate of the Newco Parties, addressed to MAAX and dated on each of such dates, signed on behalf of the Newco Parties by the President and Secretary of each of the Newco Parties, without personal liability, confirming the same; and 6.3.3 the board of directors of Newco, Newco II, Subco, Subco II and Amalco, as the case may be, shall have adopted all necessary resolutions, and all other necessary corporate action shall have been taken by Newco, Newco II, Subco, Subco II and Amalco, as the case may be, to permit the Amalgamation and the redemption of the redeemable preferred shares to be 29 issued to the Shareholders upon the Amalgamation in accordance with the Articles of Amalgamation. 6.3.4 Newco and Newco II shall have subscribed and fully paid for redeemable preferred shares of Subco II and Subco, respectively, in an amount equal to the total redemption price of Amalco's redeemable preferred shares or shall otherwise have provided evidence reasonably acceptable to MAAX that Amalco will, at the Effective Time, have legally available funds for the redemption and payment in full of all its redeemable preferred shares outstanding as a result of the Amalgamation. MAAX may not rely on the failure to satisfy any of the above conditions precedent as a basis for non-compliance by MAAX with its obligations under this Agreement if the condition precedent would have been satisfied but for a default by MAAX in complying with its obligations hereunder. 6.4 NOTICE AND CURE PROVISIONS. Newco and Newco II, on the one hand, and MAAX, on the other hand, will give prompt notice to the other of the occurrence, or failure to occur, at any time from the date hereof until the Effective Date, of any event or state of facts which occurrence or failure would, or would be likely to: 6.4.1 constitute a material breach of any of its representations or warranties contained herein or which would cause such representations and warranties to be untrue or incorrect in any material respect on the Effective Date; or 6.4.2 result in the failure to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by the other hereunder prior to the Effective Date. Neither Newco, Newco II nor MAAX may elect not to complete the Amalgamation or the other transactions contemplated hereby pursuant to any of the conditions precedent contained in Sections 6.1, 6.2 or 6.3, or exercise any termination right arising therefrom, unless forthwith and in any event prior to the filing of the Articles of Amalgamation with the Enterprise Registrar, the Newco Parties or MAAX, as the case may be, have delivered a written notice to the other specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which the Newco Parties or MAAX, as the case may be, are asserting as the basis for the non-fulfilment of the applicable condition precedent or the exercise of the termination right, as the case may be. If any such notice is delivered, provided that the Newco Parties or MAAX, as the case may be, are proceeding diligently to cure such matter, if such matter is susceptible to being cured, the other may not terminate this Agreement until the later of the Target Completion Date and the expiration of a period of 30 days from such notice. 6.5 SATISFACTION OF CONDITIONS. The conditions precedent set out in Sections 6.1, 6.2 and 6.3 shall be conclusively deemed to have been satisfied, waived or released when, with the agreement of Newco, Newco II and MAAX, a Certificate of Amalgamation is issued by the Enterprise Registrar. 30 ARTICLE 7 AMENDMENT AND TERMINATION 7.1 AMENDMENT. This Agreement may, at any time and from time to time before or after the holding of the MAAX Meeting but not later than the date of filing of the Articles of Amalgamation with the Enterprise Registrar, be amended by mutual written agreement of the parties hereto, and any such amendment may, without limitation: 7.1.1 change the time for performance of any of the obligations or acts of the parties; 7.1.2 waive any inaccuracies or modify any representation or warranty contained herein or in any document delivered pursuant hereto; 7.1.3 waive compliance with or modify any of the covenants herein contained and waive or modify performance of any of the obligations of the parties; and 7.1.4 waive compliance with or modify any conditions precedent herein contained; provided that, notwithstanding the foregoing, the terms of this Agreement shall not be amended in a manner materially prejudicial to the Shareholders without the approval of the Shareholders given in the same manner as required by Law for the approval of the Amalgamation. 7.2 TERMINATION. 7.2.1 Termination by MAAX. MAAX, when not in default in any material respect in the performance of its obligations under this Agreement (including when a condition contained in Section 6.1 is not satisfied without any default by MAAX) may, without prejudice to any other rights, terminate this Agreement by written notice to Newco and Newco II if: (a) any condition contained in Section 6.1 or 6.3 is not satisfied by the Target Completion Date to the satisfaction of MAAX, acting reasonably; (b) any representation or warranty of the Newco Parties in this Agreement shall not have been as of the date hereof, as of the date on which the Circular is mailed and as of the Target Completion Date, true and correct in all material respects or, where such representation or warranty is qualified by materiality, true and correct in all respects; (c) the Newco Parties fail to comply in any material respect with any of their obligations under this Agreement; (d) for any reason other than the default of MAAX hereunder or the Supporting Shareholders pursuant to the Support and Voting Agreements, the Effective Date has not occurred on or before the Target Completion Date; or (e) Newco and Newco II have been notified in writing by MAAX of a Superior Proposal in accordance with Section 5.7 and the Newco Parties have not made an offer to amend the terms of this Agreement under Section 5.7.2 or, if the Newco Parties have made such an offer, the Newco Parties and MAAX have not entered into an 31 amended agreement in accordance with Section 5.7.2, provided that MAAX has fulfilled its obligation to pay the amount required under Section 7.3 at the time of such termination of this Agreement. 7.2.2 Termination by the Newco Parties. The Newco Parties, when not in default in any material respect in the performance of their obligations under this Agreement (including when a condition in Section 6.1 is not satisfied without any default by the Newco Parties), may, without prejudice to any other rights, terminate this Agreement by written notice to MAAX if: (a) any condition contained in Section 6.1 or 6.2 is not satisfied by the Target Completion Date to the satisfaction of Newco and Newco II, acting reasonably; (b) any representation or warranty of MAAX in this Agreement shall not have been as of the date hereof, as of the date on which the Circular is mailed and as of the Target Completion Date, true and correct in all material respects or, where such representation or warranty is qualified by materiality, true and correct in all respects; (c) MAAX fails to comply in any material respect with any of its obligations under this Agreement; (d) for any reason other than the default of the Newco Parties hereunder or pursuant to the Support and Voting Agreements, the Effective Date has not occurred on or before the Target Completion Date; (e) Newco and Newco II have been notified in writing by MAAX of a Superior Proposal in accordance with Section 5.7 and the Newco Parties have not made an offer to amend the terms of this Agreement under Section 5.7.2 or, if the Newco Parties have made such an offer, the Newco Parties and MAAX have not entered into an amended agreement in accordance with Section 5.7.2; or (f) Newco and Newco II become entitled to any payment under Article 7. 7.2.3 Mutual Termination. This Agreement may, at any time before or after the holding of the MAAX Meeting but not later than the Effective Time: (a) be terminated by the mutual agreement of MAAX, Newco and Newco II (without further action on the part of the Shareholders if terminated after the holding of the MAAX Meeting); (b) be terminated by Newco or Newco II, or the one hand, or by MAAX, on the other hand, by written notice to the other upon the failure of the Shareholders to approve the Amalgamation at the MAAX Meeting (except where the failure of the Shareholders to approve the Amalgamation is due to the failure of such party to comply with its obligations under this Agreement); or (c) be terminated by Newco or Newco II, on the one hand, or by MAAX, on the other hand, by written notice to the other upon receipt of a Governmental Entity's 32 final, non-appealable order permanently restraining, enjoining or otherwise prohibiting the transactions contemplated hereby. 7.2.4 Effect of Termination. In the case of any termination of this Agreement pursuant to this Article 7, this Agreement shall be of no further force and effect except for Sections 7.3, 7.4, 8.1, 8.4 and 8.6, which shall continue in full force and effect, and provided that no termination of this Agreement and no payment of any fee or any expense reimbursement under Sections 7.3 and 7.4 shall relieve any party from liability for any breach of this Agreement or affect the obligations of the parties under the Confidentiality Agreement. 7.3 TERMINATION FEE. 7.3.1 If (i) the Board of Directors fails to unanimously recommend to Shareholders that they vote in favour of the Amalgamation; or (ii) having made the recommendation referred to in clause (i) above, the Board of Directors subsequently modifies (in a manner adverse to Newco and Newco II) or withdraws such recommendation made by the Board of Directors that Shareholders vote in favour of the Amalgamation or fails to reconfirm same after a request to do so by Newco or Newco II as contemplated in Section 5.1; or (iii) a third party commences a take over bid for MAAX and the Board of Directors fails to issue a statement within 10 days thereof that recommends rejection of the take over bid; (iv) MAAX breaches in any material respect any of its obligations contained in Section 5.1.1 or 5.1.2; or (v) MAAX terminates this Agreement pursuant to Section 7.2.1(e) or the Newco Parties terminate this Agreement pursuant to Section 7.2.2(e); or (vi) at any time during the period from the date hereof to the date which is six months following the termination of this Agreement (the "TAIL PERIOD"), subject to Section 7.3.2, any Person (other than the Newco Parties) enters into any definitive agreement with MAAX with respect to any merger, amalgamation (other than the Amalgamation), take-over bid, acquisition of material assets (including transfer of assets in favour of an income trust or any lease, long-term supply agreement or other arrangement having the same economic effect as a sale) or material acquisition of Shares or rights or interests therein or thereto or similar transactions involving MAAX or any of its Subsidiaries; then, in any such event, MAAX shall pay to Newco and Newco II in cash a termination fee of $0.5625 per Share, on a fully diluted basis, within two Business Days after notice by Newco or Newco II or, in the case of termination by MAAX pursuant to Section 7.2.1(e), at the time of such termination by MAAX. 7.3.2 Notwithstanding the foregoing, the termination fee shall not be payable by MAAX in connection with any event referred to in Section 7.3.1(vi) above occurring during the Tail Period if, prior to termination of the Agreement: (a) the Newco Parties are in breach in any material respect of any of their obligations under this Agreement; or (b) provided that MAAX is not in breach in any material respect of any of its obligation under this Agreement, either (i) a condition contained in any of Sections 6.1.1, 6.1.2, 6.2.6 and 6.2.14 was not satisfied, fulfilled or waived, as the case may be, or (ii) the condition contained in Section 6.2.9 was not satisfied, fulfilled or waived with respect to existing third party financing sources of MAAX or any of its Subsidiaries. 33 7.4 EXPENSES. 7.4.1 Subject to Section 7.4.2, if the Newco Parties terminate this Agreement for any reason (other than by reason of any of the conditions contained in Sections 6.2.6 and 6.2.14 not being satisfied, fulfilled or waived, as the case may be), provided that the Newco Parties are not then in breach in any material respect of any of their obligations under this Agreement, the Newco Parties shall send a notice to MAAX (which shall include reasonable information evidencing the payment by the Newco Parties of the relevant fees or expenses) describing all reasonable out-of-pocket third party fees and expenses (including, without limitation (A) all fees and expenses payable to legal counsel, accountants and other professional advisors to the Newco Parties, including financial advisors, (B) all solicitation, printing and mailing costs, (C) all regulatory filing fees, and (D) travel expenses) (the "OUT-OF-POCKET FEES") incurred by the Newco Parties or on their behalf in connection with this Agreement and the Amalgamation and MAAX shall reimburse the Newco Parties for up to the first $3,000,000 of the Out-of-Pocket Fees in excess of the first $1,000,000. 7.4.2 Notwithstanding Section 7.4.1, if the Agreement is terminated by reason (a) of the breach by MAAX in any material respect of any of its obligations under this Agreement, or (b) that any representation or warranty made by MAAX to the Newco Parties in this Agreement is not true and correct in all material respects or, where such representation or warranty is qualified by materiality, true and correct in all respects at the date hereof, or (c) of the condition contained in Section 6.2.9 not being satisfied, fulfilled or waived, except with respect to existing third party financing sources of MAAX or any of its Subsidiaries, provided that in any such case the Newco Parties are not then in breach in any material respect of any of their obligations under this Agreement, then MAAX shall, not later then 30 days after the transmission of a notice to MAAX (which shall include reasonable information evidencing the payment by the Newco Parties of the relevant fees or expenses), reimburse the Newco Parties for the Out-of-Pocket Fees incurred by the Newco Parties or on their behalf in connection with this Agreement and the Amalgamation, provided that such fees and expenses shall not in any event exceed a maximum aggregate amount of $3,750,000. 7.4.3 No expense reimbursement shall be payable pursuant to this Section 7.4 in the event that the termination fee is paid to Newco and Newco II pursuant to Section 7.3. For more certainty, no Out-of-Pocket Fees may be taken into account more than once for the purposes of Sections 7.4.1 and 7.4.2 and MAAX shall in no circumstances be required or called upon to reimburse or pay indemnity for an Out-of-Pocket Fee more than once thereunder. ARTICLE 8 GENERAL 8.1 NOTICES. All notices and other communications which may or are required to be given pursuant to any provision of this Agreement shall be given or made in writing and shall be deemed to be validly given if served personally, by telecopy or e-mail, in each case addressed to the particular party at: 34 8.1.1 the Newco Parties, as follows: 3087052 Nova Scotia Company and 3087053 Nova Scotia Company c/o J.W. Childs Associates, L.P. 111 Huntington Avenue Suite 2900 Boston, MA 02199 Attention: Steven G. Segal Telecopier: (617) 753-1101 E-mail: ssegal@jwchilds.com Telephone: (617) 753-1100 With a copy to: Borealis Capital Corporation 1 Adelaide Street East Suite 2800 Toronto, Ontario, M5C 2V9 Attention: Andre La Forge Telecopier: (416) 361-5042 E-mail: alaforge@borealis-capital.com Telephone: (416) 361-5815 Ontario Municipal Employees Retirement Board One University Avenue Suite 700 Toronto, Ontario M5J 2P1 Attention: Michael Graham Telecopier: (416) 369-0675 E-mail: mgraham@omers.com Telephone: (416) 369-2400 35 J.W. Childs Associates, L.P. 111 Huntington Avenue Suite 2900 Boston, MA 02199 Attention: Steven G. Segal Telecopier: (617) 753-1101 E-mail: ssegal@jwchilds.com Telephone: (617) 753-1100 Fasken Martineau DuMoulin LLP 800 Square Victoria Suite 3400 Montreal, Quebec H4Z 1E9 Attention: Robert Pare Telecopier: (514) 397-7600 E-mail: rpare@mtl.fasken.com Telephone: (514) 397-7517 Kaye Scholer LLP 425 Park Avenue New York, New York 10022 Attention: Stephen C. Koval Telecopier: (212) 836-8689 E-mail: skoval@kayescholer.com Telephone: (212) 836-8019 8.1.2 MAAX, as follows: MAAX Inc. 640 Cameron Sainte-Marie, Quebec G6E 1B2 Attention: Raymond Garneau, Chairman of the Independent Committee and Dave Turgeon, Corporate Secretary Telecopier: (514) 499-6652 and (418) 386-3487 E-mail: dturgeon@maax.com Telephone: (418) 387-8055 36 With a copy to: Borden Ladner Gervais LLP 1000 de la Gauchetiere Street West Suite 900 Montreal, Quebec H3B 5H4 Attention: F.R. Allen and H. John Godber Telecopier: (514) 954-1905 E-mail: fallen@blgcanada.com and jgodber@blgcanada.com Telephone: (514) 879-1212 or at such other address of which any party may, from time to time, advise the other parties by notice in writing given in accordance with the foregoing. The date of receipt of any such notice shall be deemed to be the date of delivery, telecopying or e-mailing thereof. 8.2 ASSIGNMENT. This Agreement shall not be assigned by any party hereto without the prior written consent of the other parties, except that Newco or Newco II may assign this Agreement to any of its wholly-owned Affiliates without the prior consent of MAAX. 8.3 COOPERATION / FURTHER ASSURANCES. Each of the parties hereto agrees to cooperate in good faith and to take all reasonable steps and actions after the date hereof, as are not adverse to the party requested to take any such step or action, to complete the Amalgamation and the other transactions contemplated hereby. Each party hereto shall, from time to time, and at all times hereafter, at the request of another party hereto, but without further consideration, do all such further acts and execute and deliver all such further documents and instruments as shall be reasonably required in order to fully perform, carry out or better evidence the terms and intent hereof. 8.4 EXPENSES. Except as otherwise provided in Article 7, each of the parties shall pay its own legal, financial, advisory, accounting and other costs and expenses incurred in connection with the preparation, execution and delivery of this Agreement and the Amalgamation and any other costs and expenses whatsoever and howsoever incurred. 8.5 PUBLIC ANNOUNCEMENTS. Except to the extent required by Law, no public announcement or press release concerning the matters referred to in this Agreement may be made by the Newco Parties or MAAX without the prior consent of the other party. Except to the extent required by Law, no copy of this Agreement may be provided by the Newco Parties or MAAX to any other person, except their respective directors, officers, employees, advisors or prospective lenders, without the prior consent of the other party. The provisions of this Agreement may be summarized in the Circular, and in any material change report filed by MAAX in connection with the public announcement of the Amalgamation. 8.6 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the Laws of the Province of Quebec and the Laws of Canada applicable therein. 37 8.7 FORUM; JURISDICTION. The parties hereby submit to the exclusive jurisdiction of the competent court in the judicial district of Montreal, Province of Quebec for any dispute, disagreement, controversy or Claim arising out of or in connection with the transactions contemplated by this Agreement. 8.8 INVALIDITY OF PROVISIONS. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law, 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. 8.9 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall be deemed to constitute one and the same instrument. 8.10 INVESTIGATION BY PARTIES. No investigations made by or on behalf of either party or any of their respective authorized agents at any time shall have the effect of waiving, diminishing the scope of or otherwise affecting any representation, warranty or covenant made by the other party in or pursuant to this Agreement. 8.11 TIME. Time shall be of the essence of this Agreement. 8.12 AMENDMENTS. This Agreement may not be modified, amended, altered or supplemented except in the manner contemplated herein and upon the execution and delivery of a written agreement executed by all parties, save and except Section 2.1.2 which may be amended by Newco and Newco II without the consent of any of the other parties. 8.13 SPECIFIC PERFORMANCE AND OTHER EQUITABLE RIGHTS. Each of the parties recognizes and acknowledges that the Newco Parties would not have agreed to pursue the Amalgamation, and MAAX would not have agreed to recommend that Shareholders vote in favour of the Amalgamation, unless this Agreement was executed and, accordingly, acknowledges and agrees that a breach by a party of any obligation in this Agreement will cause the other party to sustain injury for which it would not have an adequate remedy at Law for money damages. Therefore, each of the parties agrees that in the event of any such breach, the aggrieved party shall be entitled to specific performance of such obligation and provisional interlocutory and permanent injunctive relief and other equitable remedies in addition to any other remedy to which it may be entitled, at Law or in equity, and the parties further agree to waive any requirement for the securing or posting of any bond in connection with the obtaining of any such injunctive relief or other equitable remedies. 8.14 NO THIRD PARTIES BENEFICIARIES. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever 38 under or by reason of this Agreement, other than under Section 5.9 (which are intended to be for the benefit of the Persons covered thereby and may be enforced by such Persons at any time). 8.15 WAIVER. No waiver, whether by conduct or otherwise, of any of the provisions of this Agreement shall be deemed to constitute a waiver of any other provisions (whether or not similar) nor shall such waiver constitute a continuing waiver unless otherwise expressly provided in an instrument duly executed by the parties to be bound thereby. (Signatures on next page) 39 IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first written above. 3087052 NOVA SCOTIA COMPANY 3087053 NOVA SCOTIA COMPANY Per: /s/ James C. Rhee Per: /s/ James C. Rhee -------------------------------- ------------------------------- James C. Rhee James C. Rhee Secretary Secretary 9139-4460 QUEBEC INC. 9139-7158 QUEBEC INC. Per: /s/ James C. Rhee Per: /s/ James C. Rhee -------------------------------- -------------------------------- James C. Rhee James C. Rhee Secretary Secretary MAAX INC. Per: /s/ Placide Poulin -------------------------------- Placide Poulin Chairman of the Board of Directors 40 EX-2.2 3 y99327exv2w2.txt AMALGAMATION AGREEMENT Exhibit 2.2 EXECUTION COPY 9139-4460 QUEBEC INC. -AND- 9139-7158 QUEBEC INC. -AND- 3087053 NOVA SCOTIA COMPANY -AND - MAAX INC. - -------------------------------------------------------------------------------- AMALGAMATION AGREEMENT - -------------------------------------------------------------------------------- MARCH 10, 2004 TABLE OF CONTENTS
Page ---- ARTICLE 1 INTERPRETATION.............................................. 2 1.1 Definitions................................................. 2 1.2 Interpretation Not Affected by Headings, etc................ 4 1.3 Currency.................................................... 4 1.4 Number, etc................................................. 4 1.5 Date For Any Action......................................... 4 ARTICLE 2 AMALGAMATION................................................ 4 2.1 Amalgamation................................................ 4 2.2 Rights and Obligations...................................... 4 2.3 Name........................................................ 4 2.4 Head Office................................................. 5 2.5 Activities.................................................. 5 2.6 Share Capital............................................... 5 2.7 Restrictions on Transfer and Other Provisions............... 5 2.8 By-Laws..................................................... 5 ARTICLE 3 BOARD OF DIRECTORS.......................................... 5 3.1 Board of directors.......................................... 5 ARTICLE 4 AMALGAMATION EVENTS......................................... 6 4.1 Amalgamation Events......................................... 6 ARTICLE 5 TERMINATION................................................. 6 5.1 Termination................................................. 6 ARTICLE 6 ARTICLES OF AMALGAMATION.................................... 7 6.1 Articles of Amalgamation.................................... 7 ARTICLE 7 GENERAL..................................................... 7 7.1 Cooperation / Further Assurances............................ 7 7.2 Governing Law............................................... 7 7.3 Forum; Jurisdiction......................................... 7 7.4 Counterparts................................................ 7 7.5 Time........................................................ 8 7.6 Amendments.................................................. 8
i AMALGAMATION AGREEMENT MEMORANDUM OF AGREEMENT made as of the 10th day of March, 2004, BETWEEN: 9139-4460 QUEBEC INC., a company incorporated under the laws of the Province of Quebec (hereinafter referred to as "SUBCO") AND: 9139-7158 QUEBEC INC., a company governed under the laws of the Province of Quebec (hereinafter referred to as "SUBCO II") AND: 3087053 NOVA SCOTIA COMPANY, a company governed under the laws of the Province of Nova Scotia (hereinafter referred to as "NEWCO II") AND: MAAX INC., a company amalgamated under the laws of the Province of Quebec (hereinafter referred to as "MAAX") WHEREAS Subco was incorporated under Part IA of the Companies Act (Quebec) by certificate of incorporation dated February 27, 2004; WHEREAS Subco II was incorporated under Part IA of the Companies Act (Quebec) by certificate of incorporation dated March 5, 2004; WHEREAS Newco II was incorporated under the Companies Act (Nova Scotia) on March 5, 2004; WHEREAS MAAX was amalgamated under Part IA of the Companies Act (Quebec) by certificate of amalgamation dated August 1, 1990; WHEREAS the authorized share capital of MAAX consists of an unlimited number of common shares, class A preferred shares and class B preferred shares, all without par value, of which 24,395,459 common shares and no class A preferred shares and no class B preferred shares have been issued and are outstanding as at the date hereof as fully paid and non-assessable; WHEREAS the authorized share capital of each of Subco and Subco II consists of an unlimited number of (i) common shares, without par value, and (ii) redeemable preferred shares, with a par value of $100 per share, of which 500 common shares and no redeemable preferred shares have been issued and are outstanding as of the date hereof as fully paid and non-assessable; WHEREAS Subco, Subco II, Newco II, MAAX and 3087052 Nova Scotia Company have entered into a merger agreement dated the date hereof with respect to the transactions contemplated herein (the "MERGER AGREEMENT"); WHEREAS, as contemplated in the Merger Agreement, Subco, Subco II and MAAX, availing themselves of Part IA of the Companies Act (Quebec), wish to amalgamate on the terms and conditions set forth herein and in the Merger Agreement; NOW THEREFORE this Agreement witnesses that, in consideration of the respective covenants and agreements herein contained, the parties hereto covenant and agree as follows: ARTICLE 1 INTERPRETATION 1.1 DEFINITIONS In this Agreement, unless there is something in the subject matter or context inconsistent therewith, the following terms shall have the following meanings, respectively: 1.1.1 "AMALCO" means MAAX Inc., the company resulting from the Amalgamation; 1.1.2 "AMALGAMATION" means an amalgamation between Subco, Subco II and MAAX under Part IA of the Companies Act giving effect to the transactions described in this Agreement; 1.1.3 "ARTICLES OF AMALGAMATION" means the articles confirming the Amalgamation required under the Companies Act to be filed with the Enterprise Registrar, substantially in the form attached hereto as Schedule 1.1.3; 1.1.4 "BUSINESS DAY" means any day, other than a Saturday, Sunday or a statutory holiday in the Province of Quebec, the Province of Ontario or in the State of Massachusetts, on which banks are open for business in the City of Montreal, the City of Toronto and the City of Boston; 1.1.5 "CERTIFICATE OF AMALGAMATION" means the certificate issued by the Enterprise Registrar attesting to the Amalgamation pursuant to Section 123.119 of the Companies Act; 1.1.6 "CIRCULAR" means the notice of the MAAX Meeting and accompanying management information circular in the French and English languages, including all schedules thereto, to be prepared and sent by MAAX to Shareholders in connection with the MAAX Meeting; 1.1.7 "COMMON SHARES" (individually, a "COMMON SHARE") means the common shares in the share capital of Amalco; 1.1.8 "COMPANIES ACT" means the Companies Act (Quebec) as now in effect and as it may be amended from time to time prior to the Effective Date; 1.1.9 "DEPOSITORY" means National Bank Trust Inc. or any other depository designated by Subco or Subco II; 2 1.1.10 "EFFECTIVE DATE" means the date shown on the Certificate of Amalgamation; 1.1.11 "ENTERPRISE REGISTRAR" means the enterprise registrar acting under the Companies Act; 1.1.12 "GOVERNMENTAL ENTITY" (collectively, the "GOVERNMENTAL ENTITIES") means any (a) multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (b) any subdivision, agent, commission, board, or authority of any of the foregoing, or (c) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing; 1.1.13 "LAWS" (individually, a "LAW") means all laws, statutes, codes, ordinances, decrees, rules, regulations, by-laws, statutory rules, principles of law, published policies and guidelines, judicial or arbitral or administrative or ministerial or departmental or regulatory judgments, orders, decisions, rulings or awards and terms and conditions of any grant of approval, permission, authority or license of any Governmental Entity, self-regulatory authority or statutory body (including The Toronto Stock Exchange or any other stock exchange), and the term "applicable" with respect to such Laws and in the context that refers to one or more Persons, means that such Laws apply to such Person or Persons or its or their business, undertaking, property or securities and emanate from a Person having legal jurisdiction over the Person or Persons or its or their business, undertaking, property or securities; 1.1.14 "LETTER OF TRANSMITTAL" means the form letter of transmittal enclosed with the Circular; 1.1.15 "MAAX MEETING" means the special meeting of Shareholders (including any adjournment thereof) that is to be convened to consider and, if deemed advisable, to approve the Amalgamation; 1.1.16 "MAAX SHARES" (individually, a "MAAX SHARE") means all common shares in the share capital of MAAX; 1.1.17 "MERGER AGREEMENT" has the meaning ascribed thereto in the preambule of this Agreement; 1.1.18 "PERSON" includes any individual, firm, partnership, joint venture, venture capital fund, association, trust, trustee, 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; 1.1.19 "REDEEMABLE SHARES" means the redeemable preferred shares in the share capital of Amalco; 3 1.1.20 "SHAREHOLDER" (collectively, the "SHAREHOLDERS") means a registered holder of the MAAX Shares, from time to time. 1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this Agreement into Articles, Sections, Schedules and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof. Unless otherwise indicated, all references to an "Article", "Section" or "Schedule" followed by a number and/or a letter refer to the specified Article, Section or Schedule of this Agreement. The terms "this Agreement", "hereof", "herein" and "hereunder" and similar expressions refer to this Agreement (including the Schedules hereto) and not to any particular Article, Section or other portion hereof and include any agreement or instrument supplementary or ancillary hereto. 1.3 CURRENCY All sums of money referred to in this Agreement are expressed in Canadian dollars. 1.4 NUMBER, ETC. Unless the context otherwise requires, words importing the singular shall include the plural and vice versa and words importing any gender shall include all genders. 1.5 DATE FOR ANY ACTION In the event that any date on which any action is required to be taken hereunder by any of the parties hereto is not a Business Day, such action shall be required to be taken on the next succeeding day which is a Business Day. ARTICLE 2 AMALGAMATION 2.1 AMALGAMATION MAAX, Subco and Subco II hereby agree to amalgamate and to continue as one company effective on the Effective Date pursuant to the provisions of Part IA of the Companies Act, on the terms and conditions set forth herein and in the Merger Agreement. 2.2 RIGHTS AND OBLIGATIONS From the Effective Date, Amalco shall (a) possess all of the property, rights and assets of MAAX, Subco and Subco II, and (b) assume all of their obligations. 2.3 NAME The name of Amalco shall be "MAAX Inc.". 4 2.4 HEAD OFFICE The head office of Amalco shall be situated in the Judicial District of Beauce, Province of Quebec. 2.5 ACTIVITIES There will be no limitations on the activities of Amalco. 2.6 SHARE CAPITAL 2.6.1 The authorized share capital of Amalco shall consist of an unlimited number of (i) Common Shares, without par value, and (ii) Redeemable Shares, with a par value of $22.50 per share; and 2.6.2 The rights, privileges, conditions and restrictions attached to the Common Shares and the Redeemable Shares are described in Schedule 1 of the draft articles of amalgamation attached hereto as Schedule 1.1.3. 2.7 RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS 2.7.1 The restrictions on transfer attached to the Common Shares and Redeemable Shares are described in Schedule 2 of the draft articles of amalgamation attached hereto as Schedule 1.1.3; and 2.7.2 The other provisions attached to the Common Shares and Redeemable Shares are described in Schedule 3 and Schedule 4 of the draft articles of amalgamation attached hereto as Schedule 1.1.3. 2.8 BY-LAWS The by-laws of Amalco shall be those of Subco, unless and until repealed or amended. ARTICLE 3 BOARD OF DIRECTORS 3.1 BOARD OF DIRECTORS The board of directors of Amalco shall consist of a minimum of three and a maximum of ten directors. The initial board of directors of Amalco shall consist of four directors. The name, occupation and address of the first directors shall be as follows: NAME OCCUPATION ADDRESS Steven G. Segal Partner [address] James C. Rhee Vice President [address] 5 NAME OCCUPATION ADDRESS Andre La Forge Senior Vice President [address] Michael Graham Portfolio Manager [address] ARTICLE 4 AMALGAMATION EVENTS 4.1 AMALGAMATION EVENTS Upon the Effective Date: 4.1.1 all issued and outstanding MAAX Shares shall be converted into fully paid and non-assessable Redeemable Shares, each having a paid up capital equal to its par value, on the basis of one issued, fully paid and non-assessable Redeemable Share for each issued and outstanding MAAX Share; 4.1.2 all issued and outstanding common shares of Subco and all redeemable preferred shares of Subco shall be converted into Common Shares, having an aggregate paid up capital representing the amount by which the aggregate paid up capital of (i) all issued and outstanding common shares and redeemable preferred shares of Subco, (ii) all issued and outstanding common shares and redeemable preferred shares of Subco II, and (iii) all issued and outstanding MAAX Shares, exceeds the aggregate paid up capital of the Redeemable Shares, on the basis of one issued, fully paid and non-assessable Common Share for each issued and outstanding common share or redeemable preferred share of Subco; and 4.1.3 all issued and outstanding common shares and redeemable preferred shares of Subco II shall be cancelled in consideration of the issuance by Newco II to 3087052 Nova Scotia Company of shares, having an aggregate value equal to the fair market value of all issued and outstanding common shares and redeemable preferred shares of Subco II held by 3087052 Nova Scotia Company immediately prior to the Amalgamation, on the basis of one issued, fully paid and assessable share of Newco II for each issued and outstanding common share and redeemable preferred share of Subco II. ARTICLE 5 TERMINATION 5.1 TERMINATION Without prejudice to any other rights or recourses of the parties hereto and notwithstanding any other provision hereof, this Agreement shall automatically 6 terminate, without notice, immediately upon the termination of the Merger Agreement, and be of no further force or effect. ARTICLE 6 ARTICLES OF AMALGAMATION 6.1 ARTICLES OF AMALGAMATION Subject to the confirmation of a by-law approving this Agreement by the Shareholders at the MAAX Meeting in accordance with the Companies Act and other applicable Laws and provided that the conditions specified in the Merger Agreement have been satisfied or waived and provided further that this Agreement has not otherwise been terminated, MAAX, Subco and Subco II shall as promptly as practicable thereafter complete the Amalgamation and file with the Enterprise Registrar the Articles of Amalgamation pursuant to the Companies Act and such other documents as may be required pursuant to the Companies Act. ARTICLE 7 GENERAL 7.1 COOPERATION / FURTHER ASSURANCES Each of the parties hereto agrees to cooperate in good faith and to take all reasonable steps and actions after the date hereof, as are not adverse to the party requested to take any such step or action, to complete the Amalgamation and the other transactions contemplated hereby. Each party hereto shall, from time to time, and at all times hereafter, at the request of another party hereto, but without further consideration, do all such further acts and execute and deliver all such further documents and instruments as shall be reasonably required in order to fully perform, carry out or better evidence the terms and intent hereof. 7.2 GOVERNING LAW This Agreement shall be governed by and construed in accordance with the Laws of the Province of Quebec and the Laws of Canada applicable therein. 7.3 FORUM; JURISDICTION The parties hereby submit to the exclusive jurisdiction of the competent court in the judicial district of Montreal, Province of Quebec for any dispute, disagreement, controversy or Claim arising out of or in connection with the transactions contemplated by this Agreement. 7.4 COUNTERPARTS This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall be deemed to constitute one and the same instrument. 7 7.5 TIME Time shall be of the essence of this Agreement. 7.6 AMENDMENTS This Agreement may not be modified, amended, altered or supplemented except in the manner contemplated herein and upon the execution and delivery of a written agreement executed by all parties, except that Newco II may change the consideration that it provides to 3087052 Nova Scotia Company without having to obtain the consent of the other parties hereto. (Signatures on next page) 8 IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first written above. 9139-7158 QUEBEC INC. 9139-4460 QUEBEC INC. Per: /s/ James C. Rhee Per: /s/ James C. Rhee ---------------------------- --------------------------- James C. Rhee James C. Rhee Secretary Secretary 3087053 NOVA SCOTIA COMPANY MAAX INC. Per: /s/ James C. Rhee Per: /s/ Placide Poulin ---------------------------- --------------------------- James C. Rhee Placide Poulin Secretary Chairman of the Board of Directors 9 EX-3.1 4 y99327exv3w1.txt CHARTER OF MAAX CORPORATION EXHIBIT 3.1 COMPANIES ACT CHAPTER 81, R.S.N.S. 1989 MEMORANDUM OF ASSOCIATION OF 3087229 NOVA SCOTIA COMPANY - -------------------------------------------------------------------------------- 1 - The name of the Company is 3087229 NOVA SCOTIA COMPANY. - -------------------------------------------------------------------------------- 2 - There are no restrictions on the objects and powers of the Company. - -------------------------------------------------------------------------------- 3 - Pursuant to subsection 26(11) of the Companies Act, with the intent that subsection 26(9) of the Companies Act not apply to the Company, the following powers are hereby expressly conferred upon the Company: (a) to sell or dispose of its undertaking or a substantial part thereof; (b) subject to the provisions of the Companies Act with respect to reduction of capital, to distribute any of its property in specie among its members; and (c) to amalgamate with any company or other body of persons. - -------------------------------------------------------------------------------- 4 - The liability of all of the members is unlimited. - -------------------------------------------------------------------------------- 5 - The undersigned, whose name and address is subscribed, is desirous of being formed into a company, in pursuance of this Memorandum of Association, and agrees to take the number and kind of shares in the capital stock of the company set opposite its name. - -------------------------------------------------------------------------------- NAME AND ADDRESS NUMBER AND KIND OF SHARES OF SUBSCRIBER TAKEN BY THE SUBSCRIBER - -------------------------------------------------------------------------------- 2435239 NOVA SCOTIA LIMITED One (1) share without nominal or par value Per: /s/ Sydney Smith --------------------------- SYDNEY SMITH - ASSISTANT SECRETARY Summit Place, 6th Floor 1601 Lower Water Street Halifax, NS B3J 3P6 - -------------------------------------------------------------------------------- TOTAL SHARES TAKEN: One (1) share without nominal or par value. - -------------------------------------------------------------------------------- DATED the 6th day of March, 2004. WITNESS to the above signature: Michael P. Simms /s/ Michael P. Simms - -------------------------------------------------------------------------------- [SEAL] CERTIFICATE OF NAME CHANGE Companies Act Registry Number 3087229 Name of Company 3087229 NOVA SCOTIA COMPANY I hereby certify that the above-mentioned company has with approval of the Registrar of Joint Stocks changed its name to: MAAX CORPORATION /s/ McInnes Cooper May 7, 2004 - ------------------------------------------------ ------------------------- Agent of the Registrar of Joint Stock Companies Date of Name Change EX-3.2 5 y99327exv3w2.txt BYLAWS OF MAAX CORPORATION EXHIBIT 3.2 COMPANIES ACT (NOVA SCOTIA) UNLIMITED COMPANY ARTICLES OF ASSOCIATION OF 3087229 NOVA SCOTIA COMPANY 1. In these Articles, unless there be something in the subject or context inconsistent therewith: "Act" means the Companies Act (Nova Scotia) as amended; "Board" means the directors of the Company for the time being; "Company" means the company named above; "dividend" includes bonus; "member" and "Shareholder" are used interchangeably; "Memorandum" means the Memorandum of Association of the Company and all amendments thereto; "Month" means calendar month; "Office" means the registered office for the time being of the Company; "Proxyholder" includes an alternate proxyholder; "Register" means the register of members to be kept pursuant to Section 42 of the Act; "Registrar" means the Registrar of Joint Stock Companies for the time being; "Reporting Company" and "Reporting Issuer" have the meanings given to them respectively by the Act; "Secretary" includes any person appointed to perform the duties of Secretary of the Company temporarily; "Shareholder" means member as that term is used in the Act in connection with an unlimited company having share capital; "Special Resolution" has the meaning assigned by Section 87 of the Act; "these Presents" and "these Articles" includes these Articles of Association (and schedules thereto) and any modification or alteration thereof for the time being in force; "written" and "in writing" mean and include words printed, lithographed, represented or reproduced in any mode in a visible form; Words importing the singular number only, include the plural number and vice versa; Words importing the masculine gender only, include the feminine gender; and Words importing persons include corporations. 2. The regulations contained in Table "A" in the first schedule to the Act shall not apply to the Company. 3. The directors may enter into and carry into effect or adopt and carry into effect any agreement or agreements from time to time made by or with the promoters of the Company by or on behalf of the Company with full power nevertheless from time to time to agree to any modification of the terms of such agreement or agreements either before or after execution thereof. 4. The directors may, out of any moneys of the Company for the time being in their hands, pay all expenses incurred in or about the formation and establishment of the Company, including the expenses of registration. 5. The business of the Company may be commenced as soon after incorporation as the directors may think fit, and notwithstanding that part only of the shares may have been allotted. SHARES 6. THE AUTHORIZED CAPITAL OF THE COMPANY CONSISTS OF ONE HUNDRED THOUSAND (100,000) SHARES WITHOUT NOMINAL OR PAR VALUE, with power to divide the shares in the capital for the time being into several classes and/or to attach thereto respectively any preferential, common, deferred or qualified rights, privileges or conditions, including restrictions on voting and including redemption or purchase of such shares, subject, however, to the Act and amendments thereto. 7. Subject to the provisions of the agreement or agreements mentioned in Article 3 hereof, the shares shall be under the control of the directors who may allot or otherwise dispose of the same to such persons on such terms and conditions and at such times as the directors may think fit and with full power to give to any person the call of any shares during such time and for such consideration as the directors think fit. The Directors may pay on behalf of the Company a reasonable commission to any person in consideration of his subscribing or agreeing to subscribe, (whether absolutely or conditionally), for any shares in the Company, or his procuring or agreeing to procure subscriptions for any shares in the Company. The commission may be paid or satisfied in cash or in shares, debentures or debenture stock of the Company. 8. Shares may be registered in the names of any number of persons not exceeding three as joint holders thereof. 9. Save as herein otherwise provided, the Company shall be entitled to treat the registered holder of any share as the absolute owner thereof, and accordingly shall not, except as ordered by a Court of competent jurisdiction, or as by statute required, be bound to recognize any equitable or other claim to or interest in such share on the part of any other person. CERTIFICATES 10. Certificates of title to shares shall be signed by the President or Vice-President or a director and either the Secretary or an Assistant Secretary or by such other person as the directors may authorize. The signature of the President or Vice-President may be engraved, lithographed or printed upon the certificates or any one or more of them, and any certificates bearing such engraved, lithographed or printed signature of the President or Vice-President, when signed by the Secretary or an Assistant Secretary or by such other persons as the directors may authorize, shall be valid and binding upon the Company. 11. Every member shall be entitled to one certificate for all his shares, or to several certificates each for one or more of such shares. 12. Where shares are registered in the names of two or more persons, the Company shall not be bound to issue more than one certificate or one set of certificates, and such certificate or set of certificates shall be delivered to the person first named on the Register. 13. If any certificate be worn out or defaced, then upon production thereof to the directors, they may order the same to be cancelled, and may issue a new certificate in lieu thereof; and if any certificate is lost or destroyed, then upon proof thereof to the satisfaction of the directors, and on such indemnity as the directors deem adequate being given, a new certificate in lieu thereof shall be given to the person entitled to such lost or destroyed certificate. 14. The directors may cause to be kept in any place or places either in or outside of Nova Scotia, one or more branch Registers. LIEN ON SHARES AND LIABILITY OF MEMBERS 15. The Company shall have a first and paramount lien upon all shares registered in the name of each member (whether solely or jointly with others) and upon the proceeds of sale thereof for his debts, liabilities and other engagements, solely or jointly with any other person, to or with the Company whether the period for the payment, fulfilment or discharge thereof shall have actually arrived or not, and no equitable interest in any share shall be created except upon the condition that Article 9 of these Articles is to have full effect. Such lien shall extend to all dividends from time to time declared in respect of such shares. Unless otherwise agreed, the registration of a transfer of shares shall operate as a waiver of the Company's lien, if any, on such shares. 16. For the purpose of enforcing such lien, the directors may sell the shares subject thereto in such manner as they think fit; but no sale shall be made until notice in writing of the intention to sell has been given to such member, his executors, administrators, successors or assigns and default shall have been made by him or them in the payment, fulfilment or discharge of such debts, liabilities or engagements for seven (7) days after such notice. The net proceeds of any such sale after payment of the cost of such sale shall be applied in or towards the satisfaction of such debts, liabilities or engagements and the residue, if any, paid to such member or his executors, administrators, successors or assigns. 17. Upon any sale for enforcing a lien, in purported exercise of the powers given by these Articles, the directors may cause the purchaser's name to be entered in the Register in respect of the shares sold, and the purchaser shall not be bound to see to the regularity of the proceedings or the application of the purchase money and, after his name has been entered in the Register in respect of such shares, the validity of the sale shall not be impeached by any person and the remedy of any person aggrieved by this sale shall be in damages only and against the Company exclusively. TRANSFER OF SHARES 18. No share of any class or series of shares shall be transferred, except (a) with the prior consent of the directors of the Company expressed by a resolution of the directors; or (b) with the prior consent of the holders(s) of the shares entitled to vote at an ordinary general meeting expressed by a resolution of the holders of those shares. The Company shall decline to register any other purported transfer of shares by any person in any circumstances. 19. The instrument of transfer of any share in the Company shall be signed by the transferor and the transferor shall be deemed to remain the holder of such share until the name of the transferee is entered in the Register in respect thereof, and shall be entitled to receive any dividend declared thereon before the registration of transfer. 20. The instrument of transfer of any share shall be in writing in the following form, or as near thereto as circumstances will permit: For value received ........................... hereby, sell, assign and transfer unto .................................. Shares of the Capital Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint ................... attorney to transfer the said stock on the books of the within named Company with the full power of substitution in the premises, Dated the day of , 20 . WITNESS: 21. Every instrument of transfer shall be left at the Office for registration, accompanied by the certificate of the shares to be transferred, and such other evidence as the Company may require to prove the title of the transferor or his right to transfer the shares. 22. Every instrument of transfer shall, after the registration thereof, remain in the custody of the Company, but any instrument of transfer which the directors decline to register shall be returned to the person depositing the same. INCREASE AND REDUCTION OF CAPITAL 23. Subject to the rights, if any, of the holders of shares of any class or series of shares to vote separately as a class or series thereon, the Company in general meeting may, from time to time, increase the capital by the creation or issue of new shares of such amount as it thinks expedient. 24. Subject to the rights, if any, of the holders of shares of any class or series of shares to vote separately as a class or series thereon, the Act and the restrictions on allotment, disposition and transferability in these Articles, the new shares may be issued upon such terms and conditions, and with such rights and privileges annexed thereto, as the general meeting resolving upon the creation thereof shall direct; and if no direction be given, as the directors shall determine, and in particular such shares may be issued with a preferential or qualified right to dividends and in the distribution of assets of the Company, and with a special or without any right of voting. 25. Except so far as otherwise provided by the conditions of issue, or by these Articles, any capital raised by the creation of new shares shall be considered part of the original capital, and shall be subject to the provisions herein contained including, without limitation, those provisions referring to transfer of and the Company's lien on shares. 26. Subject to the rights, if any, of the holders of shares of any class or series of shares to vote separately as a class or series thereon, the Company shall reduce all or a portion of the paid-up capital on its shares by returning same to the holders thereof if such reduction and return is authorized by resolution at a meeting of the Shareholders who are the registered owners of seventy-five percent (75%) or more of the shares which entitle the holders thereof to vote at a general meeting. If the return of paid-up capital is so authorized, the Shareholders approving of such return at such meeting shall determine when the paid-up capital shall be returned on the shares of the Company, the amount of paid-up capital to be returned on each such share and whether such paid-up capital should be returned to the holders of such shares in the form of cash, a promissory note or other assets of the Company. The amount of the reduction in the paid-up capital of the shares shall be recorded in the accounts of the Company. 27. Subject to the rights, if any, of the holders of shares of any class or series of shares to vote separately as a class or series thereon, (a) the Company may from time to time in general meeting consolidate and divide all or any of its share capital into shares of larger amount than its existing shares (and, for greater certainty, consolidate and divide all of its issued and/or unissued shares of a particular class of shares into a smaller number of shares than the existing issued and/or unissued shares, as the case may be, of that particular class of shares); (b) the Company may from time to time in general meeting convert all or any of its paid-up shares into stock, and reconvert that stock into paid-up shares of any denomination; (c) the Company may from time to time by special resolution subdivide its shares, or any of them, into shares of smaller amount than is fixed by these Articles (and, for greater certainty, subdivide all of its issued and/or unissued shares of a particular class of shares into a larger number of shares than the existing issued and/or unissued shares, as the case may be, of that particular class of shares) so, however, that in the sub-division the proportion between the amount paid and the amount if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived. The special resolution whereby any share is subdivided may determine that, as between the holders of the shares, resulting from such subdivision, one or more of such shares shall have some preference or special advantage as regards dividend, capital, voting, or otherwise, over, or as compared with, the others or other; (d) the Company may from time to time in general meeting exchange shares of one denomination for another; (e) the Company may from time to time in general meeting cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled; (f) the Company may from time to time by special resolution convert any part of its issued or unissued share capital into preference shares redeemable or purchasable by the Company in the manner provided in the Act; (g) the Company may from time to time by special resolution provide for the issue of shares without any nominal or par value; (h) the Company may from time to time by special resolution convert all or any of its previously authorized unissued or issued and fully paid-up shares, with nominal or par value, into the same number of shares without any nominal or par value, and reduce, maintain or increase accordingly its liability on any of its shares so converted; and (i) the Company may from time to time by special resolution convert all or any of its previously authorized unissued or issued and fully paid-up shares, without nominal or par value, into the same or a different number of shares with nominal or par value. For such purpose the shares issued without nominal or par value and replaced by shares with a nominal or par value shall be considered as fully paid, but their aggregate par value shall not exceed the value of the net assets of the Company as represented by the shares without par value issued before the conversion. 28. The purpose of this Article is to restrict the operation of subsection 12(1) of the Third Schedule to the Act in the manner permitted by that Section. In the case of an amendment to the Memorandum or Articles of the Company of the kind referred to in clause (a), (b) or (e) of subsection 2(2) of the Third Schedule to the Act, any class of shares or any series of shares affected by the amendment in a manner different from other shares of the same class shall not carry the right to vote separately as a class or series upon any such amendment. CLASSES OF SHARES 29. Subject to the rights, if any, of the holders of shares of any class or series of shares entitled to vote separately as a class or series thereon, and subject to the provisions of these Articles, and without prejudice to any special rights previously conferred on the holders of existing shares, any share may be issued with such preferred, deferred or other special rights, or such restrictions, whether in regard to dividends, voting, return of share capital or otherwise, as the Company may from time to time by Special Resolution determine. Any preference shares may with the sanction of a Special Resolution of the Company be issued on the terms that they are, at the option of the Company, liable to be redeemed or purchased by the Company. BORROWING POWERS 30. The directors on behalf of the Company may from time to time in their discretion: (a) raise or borrow money for the purposes of the Company or any of them; (b) secure the repayment of moneys so raised or borrowed in such manner and upon such terms and conditions in all respects as they think fit, and in particular by the execution and delivery of mortgages of the Company's real or personal property, or by the issue of bonds, debentures or debenture stock of the Company secured by mortgage or otherwise or charged upon all or any part of the property of the Company, both present and future, including its uncalled capital for the time being; (c) sign or endorse bills, notes, acceptances, cheques, contracts, and other evidence of or securities for money borrowed or to be borrowed for the purposes aforesaid; and (d) pledge debentures as security for loans. 31. Bonds, debentures, debenture stock and other securities may be made assignable, free from any equities between the Company and the person to whom the same may be issued. 32. Any bonds, debentures, debenture stock, and other securities may be issued at a discount, premium, or otherwise, and with any special privileges as to redemption, surrender, drawings, allotment of shares, attending and voting at general meetings of the Company, appointment of directors, and otherwise. RECORD DATES 33. (1) For the purpose of determining (a) Shareholders entitled to receive payment of a dividend, or (b) who is a Shareholder for any other purpose except the right to receive notice of, or to vote at, a meeting, the directors may fix in advance a date as the record date for the determination of Shareholders, but the record date so fixed shall not precede by more than fifty days the particular action to be taken. (2) For the purpose of determining Shareholders entitled to receive notice of a meeting of Shareholders, the directors may fix in advance a date as the record date for the determination of Shareholders, but the record date so fixed shall not precede the date on which the meeting is to be held by more than fifty days or less than twenty-one days. (3) If no record date is fixed pursuant to subarticle (1) or (2), (a) the record date for the determination of Shareholders for any purpose, other than to establish a Shareholder's right to receive notice of, or to vote at, a meeting, is the day on which the directors pass the resolution relating to the particular purpose; and (b) the record date for the determination of Shareholders entitled to receive notice of, or to vote at, a meeting of Shareholders is (i) the day immediately preceding the day on which the notice is given, or (ii) if no notice is given, the day on which the meeting is held. (4) Subject to subarticle (5), where a record date is fixed for the Company, notice thereof shall, not less than seven days before the record date, be given (a) by advertisement in a newspaper in general circulation in the place where the head office of the Company is situated and in each place in Canada where the Company has a transfer agent or where a transfer of the Company's shares may be recorded; and (b) by written notice to each stock exchange, if any, in Canada on which the shares of the Company are listed for trading. (5) Notice of a record date fixed for the Company need not be given where notice of the record date is waived in writing by every holder of a share of the class or series affected whose name is set out in the Register at the close of business on the date the directors fix the record date. MEETINGS 34. The first meeting of the Company shall be held within eighteen months from the date of the registration of the Memorandum of Association of the Company and at such place as the directors may determine. 35. Other general meetings shall be held once at least in every calendar year, at such time and place as may be determined by the directors and not more than fifteen months after the preceding general meeting. 36. The general meetings referred to in the next preceding Article shall be called ordinary general meetings; and all other meetings of the Company shall be called special general meetings. 37. The directors, whenever they think fit, may convene a special general meeting and, on the requisition of members of the Company holding not less than five percent of the shares of the Company carrying the right to vote at the meeting sought to be held, the directors shall forthwith proceed to convene a special general meeting of the Company to be held at such time and place as may be determined by the directors. 38. The requisition must state the objects of the meeting required, and must be signed by the members making the same and shall be deposited at the Office, and may consist of several documents in like form each signed by one or more of the requisitionists. 39. If the directors do not proceed to cause a meeting to be held, within twenty-one days from the date of the requisition being so deposited, the requisitionists, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene the meeting, but any meeting so convened shall not be held after three months from the date of such deposit. 40. If at any such meeting a resolution requiring confirmation at another meeting is passed, the directors shall forthwith convene a further special general meeting for the purpose of considering such resolution; and if thought fit, of confirming it as a Special Resolution; and if the directors do not convene the meeting within seven days from the date of the passing of the first resolution, the requisitionists, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene the meeting. 41. Any meeting convened under the foregoing provisions by the requisitionists shall be convened in the same manner as nearly as possible as that in which meetings are to be convened by directors. 42. At least twenty-one days' notice of every general meeting specifying the place, day and hour of the meeting, and, in the case of special business, the general nature of such business, shall be sent to the members entitled to be present at such meeting by notice sent by post or otherwise served as hereinafter provided; and, with the consent in writing of all the members entitled to vote at such meeting, a meeting may be convened by shorter notice and in any manner they think fit, or if all the members are present at a meeting, either in person or by proxy, notice of time, place and purpose of the meeting may be waived. 43. Where it is proposed to pass a Special Resolution, the two meetings may be convened by one and the same notice, and it shall be no objection to such notice that it only convenes the second meeting contingently upon the resolution being passed by the required majority at the first meeting. 44. The accidental omission to give any such notice to any of the members or the non-receipt of any such notice by any of the members shall not invalidate any resolution passed at any such meeting. PROCEEDINGS AT GENERAL MEETINGS 45. The business of an ordinary general meeting shall be to receive and consider the financial statements of the Company, the reports of the directors and of the auditors, if any, to elect directors in the place of those retiring and to transact any other business which under these Articles ought to be transacted at an ordinary general meeting. 46. (1) Two members (where there is more than one member) personally present or represented by proxy and entitled to vote shall be a quorum for a general meeting. A corporation which is a member of the Company, and which has duly appointed a representative under the provisions of the Act who is personally present at the meeting, shall, for the purposes of this Article, be considered as if personally present thereat. (2) If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of the members of the Company pursuant to Article 37, shall be dissolved; but in any other case it shall stand adjourned, to the same day, in the next week, at the same time, and place, and if at such adjourned meeting a quorum is not present, those members entitled to vote as aforesaid who are present shall be a quorum, and may transact the business for which the meeting was called. 47. No business shall be transacted at any general meeting unless the quorum requisite be present at the commencement of the business. 48. The Chairman of the Board shall be entitled to take the chair at every general meeting, or if there be no Chairman of the Board, or if at any meeting he shall not be present within fifteen minutes after the time appointed for holding such meeting, the President, or failing him a Vice-President who is a director, shall be entitled to take the chair, and if none of the Chairman of the Board, the President, or such a Vice-President shall be present within fifteen minutes after the time appointed for holding the meeting, the members present entitled to vote at the meeting shall choose another director as Chairman and if no director is present or if all the directors present decline to take the chair, then the members present entitled to vote shall choose one of their number to be Chairman. 49. Every question submitted to a meeting shall be decided, in the first instance, by a show of hands, and in the case of an equality of votes, the Chairman shall not, whether on a show of hands or on a poll, have a casting vote in addition to the vote or votes to which he may be entitled as a member. 50. At any general meeting, a resolution put to the meeting shall be decided by a show of hands, unless a poll is (before or on the declaration of the result of a show of hands) demanded by the Chairman, a member, or a Proxyholder, and, unless a poll is so demanded, a declaration by the Chairman that a resolution has been carried, or carried by a particular majority, or lost, or not carried by a particular majority, and an entry to that effect in the book of proceedings of the Company, shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour or against such resolution. Subject to the Act and these Articles, a resolution shall be carried if more than fifty percent (50%) of the votes are cast in favour of such resolution by the members entitled to vote thereon. 51. If a poll is demanded as aforesaid, it shall be taken in such manner, at such time and place as the Chairman of the meeting directs, and either at once, or after an interval or adjournment or otherwise, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand of a poll may be withdrawn. In case of any dispute as to the admission or rejection of a vote, the Chairman shall determine the same, and such determination made in good faith, shall be final and conclusive. 52. The Chairman of a general meeting may, with the consent of the meeting, adjourn the same from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. 53. Any poll demanded on the election of a Chairman of a meeting or any question of adjournment shall be taken at the meeting, and without adjournment. 54. The demand of a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which a poll has been demanded. VOTES OF MEMBERS 55. (1) Subject to the Act, the provisions applicable to any shares issued under conditions limiting or excluding the right of holders thereof to vote at general meetings and these Articles, on a show of hands every member present in person and every Proxyholder, subject to subsection 85F(2) of the Act, shall have one vote, and upon a poll every member present in person or by proxy shall have one vote for every share held by him. (2) Where a company being a member is represented by a Proxyholder who is not a member or by a representative duly authorized under the Act, such Proxyholder or representative shall be entitled to vote for such company either on a show of hands or on a poll. 56. Where there are joint registered holders of any share, any one of such persons may vote at any meeting either personally or by proxy, in respect of such share, as if he were solely entitled thereto; and if more than one of such joint holders is present at any meeting, personally or by proxy, that one of the said persons so present, whose name stands first on the Register in respect of such share, shall alone be entitled to vote in respect thereof. 57. Votes may be given either personally or by proxy or, in the case of a company, by a representative duly authorized under the Act. 58. (1) A proxy shall be in writing under the hand of the appointer or of his attorney duly authorized in writing, or, if such appointer is a company, under its common seal or the hand of its attorney or representative authorized in the manner referred to in clause 86(1)(a) of the Act. (2) Holders of share warrants shall not be entitled to vote by proxy in respect of the shares included in such warrants unless otherwise expressed in such warrants. 59. A member of unsound mind, in respect of whom an order has been made by any Court of competent jurisdiction, may vote by his guardian or other person in the nature of a guardian appointed by that Court and any such guardian or other person may vote by proxy. 60. A proxy and the power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of that power or authority, shall be deposited with the Chairman of the meeting before or at the meeting or adjourned meeting at which it is to be voted. A proxy shall cease to be valid one year after its date. 61. A vote given in accordance with the terms of a proxy shall be valid notwithstanding the previous death of the principal, or revocation of the proxy, or transfer of the share in respect of which the vote is given, provided no intimation in writing of the death, revocation, or transfer shall have been received before the meeting at the Office of the Company, or by the Chairman of the meeting before the vote is given. 62. Every form of proxy, whether for a specific meeting or otherwise, shall, as nearly as circumstances will admit, be in the form or to the effect following, or in such other form complying with the regulations made pursuant to the Act as the directors may from time to time determine: I ........................ of .................... in the County of .................. being a member of 3087229 NOVA SCOTIA COMPANY, hereby appoint ........................................ of (or failing him .................. of ............... or failing him ...................... of ..............) as my proxy to attend and vote for me and on my behalf at the ordinary general (or special general as the case may be) meeting of the Company, to be held on the ....... day of .................. and at any adjournment thereof, or at any meeting of the Company which may be held within .................... months from the date thereof. [if the proxy solicited by or on behalf of management of the Company, a statement to that effect] As witness my hand this ....... day of .............., 20... Witness ................. Shareholder .................. 63. Any resolution passed by the directors, notice whereof shall be given to the members in the manner in which notices are hereinafter directed to be given and which shall, within one month after it has been passed, be ratified and confirmed in writing by members entitled on a poll to three-fifths of the votes, shall be as valid and effectual as a resolution of a general meeting, but this Article shall not apply to a resolution for winding up the Company, to a resolution passed in respect of any matter which by statute or these presents ought to be dealt with by Special Resolution, or any action which, by virtue of subsection 12(1) of the Third Schedule to the Act, requires approval in accordance with that subsection. 64. (1) A resolution, including a Special Resolution, in writing and signed by every Shareholder who would be entitled to vote on the resolution at a meeting is as valid as if it were passed by such Shareholders at a meeting and satisfied all the requirements of the Act respecting meetings of the Shareholders. (2) A copy of every resolution referred to in subarticle (1) of this Article shall be kept with the minutes of proceedings of Shareholders. DIRECTORS 65. The number of directors shall be a minimum of one(1) and a maximum of ten (10) natural persons. 66. The first directors shall be appointed by the subscribers hereto, or the majority of them, by an instrument in writing. 67. The directors shall have power at any time and from time to time to appoint any other person as a director either to fill a casual vacancy or as an addition, but the total number of directors shall not at any time exceed the maximum number, fixed as above, and no such appointment shall be effective unless two-thirds of the directors concur therein. 68. A director is not required to hold a share in the Company to qualify as a director. 69. The continuing directors may act notwithstanding any vacancy in their body, but if the number of continuing directors falls below the minimum fixed as above, the directors shall not, except in emergencies or for the purpose of filling up vacancies, act so long as the number is below the minimum. 70. The directors shall be paid out of the funds of the Company by way of remuneration for their service such sums, if any, as the Company in general meeting may determine, and such remuneration shall be divided among them in such proportions and manner as the directors may determine. The directors may also be paid their reasonable travelling and hotel and other expenses incurred in consequence of their attendance at meetings of the Board and otherwise in the execution of their duties as directors. 71. A director may, in conjunction with the office of director, and on such terms as to remuneration and otherwise as the directors arrange or determine, hold any other office or place of profit under the Company or under any company in which the Company shall be a shareholder or otherwise interested or under any other company. 72. The office of a director shall ipso facto be vacated: (a) if he becomes bankrupt or makes an authorized assignment or suspends payment, or compounds with his creditors; (b) if he is found to be of unsound mind by a Court of competent jurisdiction; (c) if by notice in writing to the Company he resigns his office; or (d) if he is removed by resolution of the Company as provided in Article 77 hereof. 73. No director shall be disqualified by his office from contracting with the Company either as vendor, purchaser, or otherwise, nor shall any such contract, or any contract or arrangement entered into or proposed to be entered into by or on behalf of the Company in which any director shall be in any way interested, either directly or indirectly, be voided, nor shall any director so contracting or being so interested be liable to account to the Company for any profit realized by any such contract or arrangement by reason only of such director holding that office or of the fiduciary relations thereby established; but it is declared that the nature of his interest must be declared by him in the manner required by the Act. No director shall as a director vote in respect of any contract or arrangement in which he is so interested as aforesaid, and if he does so vote, his vote shall not be counted, but this prohibition may at any time or times be suspended or relaxed to any extent by a general meeting, and such prohibition shall not apply to any contract by or on behalf of the Company to give to the directors or any of them any security for advances or by way of indemnity or to the agreement or agreements referred to in Article 3 of these Articles or to any modification of such agreement or agreements or any agreement or agreements substituted therefor or any matter arising therefrom. ELECTION OF DIRECTORS 74. At every ordinary general meeting, all the directors shall retire from office, but shall hold office until the dissolution of the meeting at which their successors are elected. The Company shall at such meeting fill up the vacant offices by electing a like manner of persons to be directors, unless it is determined at such meeting to reduce or increase the number of directors. A retiring director shall be eligible for re-election. 75. If at any ordinary general meeting at which an election of directors ought to take place, no such election takes place, or if no ordinary general meeting is held in any year or period of years, the retiring directors shall continue in office until their successors are elected and a general meeting for that purpose may on notice be held at any time. 76. The Company in general meeting may from time to time increase or reduce the number of directors, and may determine or alter their qualifications. 77. The Company may, by Special Resolution, remove any director before the expiration of his period of office and appoint another person who may be qualified or become qualified in his stead; and the person so appointed shall hold office during such time only as the director in whose place he is appointed would have held the same if he had not been removed. THE PRESIDENT AND VICE-PRESIDENT 78. The directors shall appoint the President of the Company and may determine the period for which he is to hold office. The President shall have general supervision of the business of the Company and shall perform such duties as may be assigned to him by the Board from time to time. 79. The directors may also appoint one or more Vice-Presidents, and may determine the period for which each of them are to hold office. A Vice-President shall, at the request of the Board and subject to its directions, perform the duties of the President during the absence, illness or incapacity of the President, or during such period as the President may request him so to do. 80. The directors may elect or appoint such other officers of the Company, having such powers and duties as they think fit. If the directors so decide, the same person may hold more than one of the offices provided for in these Articles. CHAIRMAN OF THE BOARD 81. The directors may elect one of their number to be Chairman of the Board and may determine the period during which he is to hold office. He shall perform such duties and receive such special remuneration as the Board may from time to time provide. PROCEEDINGS OF DIRECTORS 82. The directors may meet together for the dispatch of business, adjourn, and otherwise regulate their meetings and proceedings, as they think fit. The quorum necessary for the transaction of business shall be a majority of the directors, provided that if a quorum is not present at any meeting of directors, such meeting shall be adjourned to another date determined by the Chairman of the Board, and at such adjourned meeting the quorum will be those directors present. 83. Meetings of directors may be held either within or without the Province of Nova Scotia and the directors may from time to time make arrangements relating to the time and place of holding directors' meetings. In any event, (a) meetings of directors shall be regularly scheduled at the end of the calendar year of the Company for the immediately following calendar year of the Company and notice of all of those meetings shall be delivered or mailed or telegraphed, telephoned or telefaxed to each director at least 48 hours before the meeting is to take place; (b) in the case of a meeting of directors, other than a meeting described in paragraph (a) immediately above and an adjourned meeting, notice of every such meeting shall be delivered or mailed or telegraphed, telephoned or telefaxed to each director at least five (5) business days before the meeting is to take place; (c) in the case of a meeting of directors that has been adjourned pursuant to Article 82, notice of every such adjourned meeting shall be delivered or mailed or telegraphed, telephoned or telefaxed to each director at least seventy-two (72) hours before the meeting is to take place; and (d) a meeting of directors may be held without formal notice if all the directors are present and waive notice, or if those absent have signified their assent to such meeting or their consent to the business transacted thereat. 84. A director may participate in a meeting of directors or of a committee of directors by means of such telephone or other communications facilities as permit all persons participating in the meeting to hear each other, and a director participating in such a meeting by such means is deemed to be present at that meeting. 85. The President or any director may at any time, and the Secretary, upon the request of the President or a director shall, convene a meeting of the directors. 86. Questions arising at any meeting of directors shall be decided by a majority of votes, and in case of an equality of votes, the Chairman shall not have a second or casting vote. 87. The Chairman of the Board shall preside at the meeting of the directors. If no Chairman of the Board is elected, or if at any meeting of directors he is not present within five minutes after the time appointed for holding the same, the President shall preside, and if the President is not present at the time appointed for holding the meeting, a Vice-President who is a director shall preside, and if neither the President nor such a Vice-President is present at any meeting within the time aforesaid, the directors present shall choose some one of their number to be Chairman of such meeting. 88. A meeting of the directors at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretion by or under the statutes in that behalf or of the regulations of the Company vested in or exercisable by the directors generally. 89. Subject to any other Article in these Articles, the directors may delegate any of their powers to committees, consisting of such number of members of their body as they think fit. Any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on them by the directors. 90. The meetings and proceedings of any committee consisting of two or more members shall be governed by the provisions contained in these Articles for regulating the meetings and proceedings of the directors so far as the same are applicable thereto and are not superseded by any regulations made by the directors under the next preceding Article. 91. All acts done at any meeting of the directors or of a committee of directors, or by any person acting as a director, shall, notwithstanding that it shall afterwards be discovered that there was some defect in the appointment of such directors or persons acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a director. 92. (1) A resolution in writing and signed by every director who would be entitled to vote on the resolution at a meeting is as valid as if it were passed by such directors at a meeting. (2) A copy of every resolution referred to in subsection (1) of this Article shall be kept with the minutes of proceedings of the directors or committee thereof, as the case may be. 93. If any one or more of the directors are called upon to perform extra services or to make any special exertions in going or residing abroad or otherwise for any of the purposes of the Company, or the business thereof, the Company may remunerate the director or directors so doing, either by a fixed sum or by a percentage of profits or otherwise, as may be determined by the directors, and such remuneration may be either in addition to or in substitution for his share in the remuneration above provided. 94. If a resolution authorizes the entering into of an agreement or the performance of any act, that resolution shall be deemed to authorize the execution of such further documents and the doing of such further things as may be necessary or desirable in connection therewith by the persons authorized to act by the resolution. REGISTERS 95. The directors shall cause a proper Register to be kept in accordance with the provisions of the Act. 96. The directors may cause to be kept in any place outside of Nova Scotia a branch Register in accordance with the provisions of the Act. 97. The directors shall also cause to be kept a proper register, containing the names and addresses and occupations of its directors or managers in accordance with the provisions of the Act. 98. The directors shall cause a proper register of the holders of debentures to be kept at the Office in accordance with the provisions of the Act. 99. The directors may cause to be kept in any place outside of Nova Scotia a branch register of the holders of debentures in accordance with the provisions of the Act. MINUTES 100. The directors shall cause minutes to be duly entered in books for that purpose: (a) of all appointments of officers; (b) of the names of the directors present at each meeting of the directors and of any committees of directors; (c) of all orders made by the directors and committees of directors; and (d) of all resolutions and proceedings of meetings of the Shareholders and of meetings of the directors. Any such minutes of any meeting of the directors or of any committee, or of the Company, if purporting to be signed by the Chairman of such meeting or by the Chairman of the next succeeding meeting, shall be receivable as prima facie evidence of the matters stated in such minutes. POWERS OF DIRECTORS 101. The management of the business of the Company shall be vested in the directors, who, in addition to the powers and authorities by these Articles or otherwise expressly conferred upon them, may exercise all such powers and do all such acts and things as may be exercised or done by the Company and are not hereby or by statute expressly directed or required to be exercised or done by the Company in general meeting, but subject nevertheless to the provisions of the statutes in that behalf and of these Articles and to any regulations from time to time made by the Company in general meeting; provided that no regulation so made shall invalidate any prior act of the directors, which would have been valid if such regulation had not been made. 102. Without restricting the generality of the terms of the last preceding Article and without prejudice to the general powers conferred thereby, and the other powers conferred or restrictions imposed by these Articles on the powers of the directors, it is hereby expressly declared that the directors shall have the following powers, that is to say power from time to time: (a) to take such steps as they think fit to carry into effect any agreement or contract made by or on behalf of the Company; (b) to pay the costs, charges and expenses, preliminary and incidental to the promotion, formation, establishment, and registration of the Company; (c) to purchase, or otherwise acquire, for the Company any property, rights or privileges which the Company is authorized to acquire, and at such price and generally on such terms and conditions as they think fit; (d) at their discretion, to pay for any property, rights, or privileges acquired by or services rendered to the Company, either wholly or partially in cash or in shares, bonds, debentures or other securities of the Company, and any such shares may be issued either as fully paid up, or with such amount credited as paid up thereon as may be agreed upon; and any such bonds, debentures, or other securities may be either specifically charged upon all or any part of the property of the Company, or not so charged; (e) to secure the fulfilment of any contracts or engagements entered into by the Company, by mortgage or charge of all or any of the property of the Company and its unpaid capital for the time being, or in such other manner as they may think fit; (f) to appoint, and at their discretion remove or suspend, such experts, managers, secretaries, treasurers, officers, clerks, agents and servants for permanent, temporary or special services, as they from time to time think fit, and to determine their powers and duties, and fix their salaries or emoluments, and to require security in such instances and to such amounts as they think fit; (g) to accept from any member insofar as the law permits, and on such terms and conditions as shall be agreed upon, a surrender of his shares or any part thereof; provided that the Company forthwith cancel such surrendered shares or any part thereof, as the case may be; (h) to appoint any person or persons (whether incorporated or not) to accept and hold in trust for the Company any property belonging to the Company, or in which it is interested, and for any other purposes, and to execute and do all such deeds and things as may be requisite in relation to any such trust, and to provide for the remuneration of any such trustee or trustees; (i) to institute, conduct, defend, compound, or abandon any legal proceedings by or against the Company, or its officers, or otherwise concerning the affairs of the Company, and also to compound and allow time for payment or satisfaction of any debts due, and of any claims or demands by or against the Company; (j) to refer any claims or demands by or against the Company to arbitration, and observe and perform the awards; (k) to make and give receipts, releases and other discharges for money payable to the Company and for claims and demands of the Company; (l) to determine who shall be entitled to exercise the borrowing powers of the Company and sign on the Company's behalf bonds, debentures or other securities, bills, notes, receipts, acceptances, assignments, transfers, hypothecation, pledges, endorsements, cheques, drafts, releases, contracts, agreements and all other instruments and documents; (m) to provide for the management of the affairs of the Company abroad in such manner as they think fit, and in particular to appoint any persons to be the attorneys or agents of the Company with such powers (including power to sub-delegate) and upon such terms as may be thought fit; (n) to invest and deal with any of the moneys of the Company not immediately required for the purposes thereof upon such securities and in such manner as they think fit, and from time to time to vary or realize such investments; (o) to execute in the name and on behalf of the Company, in favour of any director or any other person who may incur or be about to incur any personal liability for the benefit of the Company, such mortgages of the Company's property, present and future, as they think fit, and any such mortgages may contain a power of sale, and such other powers, covenants and provisions as shall be agreed on; (p) to set aside out of the profits of the Company before declaring any dividend, such sums as they think proper as a reserve fund to meet contingencies, or to provide for dividends, or for depreciation, or for repairing, improving and maintaining any of the property of the Company and for such other purposes as the directors shall in their absolute discretion think conducive to the interests of the Company; and to invest the several sums so set aside upon such investments other than shares of the Company as they may think fit, and from time to time to deal with and vary such investments, and to dispose of all or any part thereof for the benefit of the Company, and to divide the reserve fund into such special funds as they think fit, with full power to employ the assets constituting the reserve fund in the business of the Company; and that without being bound to keep the same separate from the other assets; (q) from time to time to make, vary and repeal by-laws for the regulation of the business of the Company, or of its officers and servants, or the members of the Company, or any section or class thereof; (r) to enter into all such negotiations and contracts, and rescind and vary all such contracts, and execute and do all such acts, deeds, and things in the name and on behalf of the Company as they may consider expedient for or in relation to any of the matters aforesaid, or otherwise for the purposes of the Company; and (s) to provide for the management of the affairs of the Company in such manner as they shall think fit. SOLICITORS 103. The Company may employ or retain a solicitor or solicitors, and such solicitor(s) may, at the request of the Board, or on instructions of the Chairman of the Board, or the President, attend meetings of the directors or Shareholders, whether or not he, himself, is a member or director of the Company. If a solicitor is also a director, he may nevertheless charge for services rendered to the Company as a solicitor. SECRETARY AND TREASURER 104. There shall be a Secretary of the Company, who shall keep the minutes of Shareholders' and directors' meetings and shall perform such other duties as may be assigned to him by the Board. The Board may also appoint a Treasurer of the Company to carry out such duties as the Board may assign. 105. The Secretary and Treasurer of the Company shall be appointed by the directors. If the directors think fit, the same person may hold both offices. 106. If the directors think fit, the same person may hold the offices of President and Secretary. 107. The directors may appoint a temporary substitute for the Secretary, who shall, for the purposes of these Articles, be deemed to be the Secretary. THE SEAL 108. The directors shall procure a seal for the Company and shall provide for its safe custody. DIVIDENDS 109. The profits of the Company, subject to the provisions of the Memorandum of Association, and of these presents and to the rights of persons, if any, entitled to shares with special rights as to dividends, may be divided among the Shareholders in accordance with the terms of the shares held by them. 110. The directors may from time to time declare such dividend upon the shares of the Company as they may deem proper according to the rights of the members and the respective classes thereof, and may determine the date upon which the same shall be payable, and provide that any such dividend shall be payable to the persons registered as the holders of the shares in respect of which the same is declared at the close of business upon such date as the directors may specify, and no transfer of such shares made or registered, after the date so specified, shall pass any right to the dividend so declared. 111. No dividend shall carry interest as against the Company. 112. The declaration of the directors as to the amount of the net profits of the Company shall be conclusive. 113. The directors may from time to time pay to the members such interim dividends as in their judgment the position of the Company justifies. 114. The directors may retain any dividends on which the Company has a lien, and may apply the same in or towards satisfaction of the debts, liabilities or engagements in respect of which the lien exists. 115. The directors, on declaring a dividend, may resolve that such dividend be paid wholly or in part by the distribution of specific assets, and in particular of paid up shares, debentures, bonds or debenture stock of the Company or paid up shares, debentures, bonds or debenture stock of any other company, or in any one or more of such ways. 116. The directors may resolve that any moneys, investments, or other assets forming part of the undivided profits of the Company in the hands of the Company and available for dividend, or representing premiums received on the issue of shares and standing to the credit of the share premium account, be capitalized and distributed amongst such of the Shareholders as would be entitled to receive the same if distributed by way of dividend and in the same proportions on the footing that they become entitled thereto as capital and that all or any part of such capitalized fund be applied on behalf of such Shareholders in paying up in full either at par or at such premium as the resolution may provide, any unissued shares or debentures or debenture stock of the Company which shall be distributed accordingly or in or towards payment of the uncalled liability on any issued shares or debentures or debenture stock, and that such distribution or payment shall be accepted by such Shareholders in full satisfaction of their interest in the said capitalized sum. 117. For the purposes of giving effect to any resolution under the two last preceding Articles, the directors may settle any difficulty which may arise in regard to the distribution as they think expedient, and in particular may issue fractional certificates, and may fix the value for distribution of any specific assets, and may determine that cash payment shall be made to any members upon the footing of the value so fixed, or that fractions of less value than $5.00 may be disregarded in order to adjust the rights of all parties, and may vest any such cash or specific assets in trustees upon such trusts for the persons entitled to the dividend or capitalized fund as may seem expedient to the directors. Where requisite, a proper memorandum shall be filed in accordance with the Act. 118. A transfer of shares shall not pass the right to any dividend declared thereon after such transfer and before the registration of the transfer. 119. Any one of several persons who is registered as the joint holder of any share may give effectual receipts for all dividends and payments on account of dividends in respect of such share. 120. Unless otherwise determined by the directors, any dividend may be paid by a cheque or warrant delivered to or sent through the post to the registered address of the member entitled, or, in the case of joint holders, to the registered address of that one whose name stands first on the Register, in respect of the joint holding; and every cheque or warrant so delivered or sent shall be made payable to the order of the person to whom it is delivered or sent. 121. Notice of the declaration of any dividend, whether interim or otherwise, shall be given to the holders of registered shares in the manner hereinafter provided. 122. All dividends unclaimed for one year after having been declared may be invested or otherwise made use of by the directors for the benefit of the Company until claimed. ACCOUNTS 123. The directors shall cause proper books of account to be kept of the sums of money received and expended by the Company, and the matters in respect of which such receipts and expenditures take place, and of all sales and purchases of goods by the Company, and of the assets and credits and liabilities of the Company. 124. The books of account shall be kept at the Office of the Company or such other place as the directors think fit. 125. The directors shall from time to time determine whether, and to what extent, the accounts and books of the Company, or any of them, shall be open to the inspection of the members, and no member shall have any right of inspecting any account or book or document of the Company except as conferred by statute, or authorized by the directors, or by a resolution of the Company in general meeting. 126. At the ordinary general meeting in every year, the directors shall lay before the Company the financial statements required by the Act, the report of the auditor, if any, to the members and, if the Company is a Reporting Issuer, the report of the directors. 127. The financial statements shall be approved by the Board and such approval shall be evidenced by the signatures of two directors to the balance sheet or by the sole director where there is only one. 128. The directors not less than seven days before the date of the ordinary general meeting shall send copies of the financial statements and the report of the auditor, if any, thereon to all members holding voting securities or otherwise entitled to receive notice of the general meeting. AUDIT 129. Unless in respect of a financial year the Company is exempt from the requirements of the Act regarding the appointment and duties of an auditor, an auditor shall be appointed in accordance with the Act. The auditor's duties will be regulated in accordance with the Act. 130. Every account of the directors, when audited and approved by a general meeting, shall be conclusive, except as regards an error discovered therein within three months next after the approval thereof. Whenever any such error is discovered within the period, the account shall forthwith be corrected, and thenceforth shall be conclusive. NOTICES 131. A notice, statement or report may be given or delivered by the Company to any Shareholder or director either by delivery to him personally or by sending it by registered mail or facsimile to him to his last known address (if sent by mail) or facsimile number (if sent by facsimile) indicated in the records of the Company. Where a notice, statement or report is sent by mail or by facsimile, service or delivery of the notice, statement or report shall be deemed to be effected if properly addressed and mailed (if sent by mail) or properly transmitted and telefaxed (if sent by facsimile) and to have been given five days (excluding Saturdays and Sundays) following the date of mailing (if sent by mail) or one day (excluding Saturdays and Sundays) following the date the facsimile was telefaxed (if sent by facsimile). A certificate signed by the Secretary or other officer of the Company that the letter, envelope or facsimile containing the notice, statement or report was so addressed and delivered shall be conclusive evidence thereof. 132. A notice, statement or report may be given or delivered by the Company to the joint holders of a share by giving the notice to the joint holder first named in the Register in respect of the share. 133. Notice of every general meeting or meeting of Shareholders holding a class of shares shall be given in a manner hereinbefore authorized to every Shareholder holding, at the time of the issue of the notice or the date fixed for determining the Shareholders entitled to such notice, whichever is the earlier, shares which confer the right to notice of and to attend or vote at any such meeting. No other person except the auditor of the Company and the directors of the Company shall be entitled to receive notices of any such meeting. INDEMNITY 134. Every director, manager, Secretary, Treasurer, and other officer or servant of the Company shall be indemnified by the Company against, and it shall be the duty of the directors out of the funds of the Company to pay, all costs, losses and expenses which any director, manager, Secretary, Treasurer or other officer or servant may incur or become liable to by reason of any contract entered into, or act or thing done by him as such officer or servant, or in any way in the discharge of his duties, including travelling expenses, and the amount for which such indemnity is proved shall immediately attach as a lien on the property of the Company and have priority as against the members over all other claims. 135. No director or officer of the Company, in his capacity as a director or officer, respectively, shall be liable for acts, receipts, neglects or defaults of any other director or officer, or for joining in any receipt or other act for conformity, or for any loss or expense happening to the Company through the insufficiency or deficiency of title to any property acquired by order of the directors for or on behalf of the Company or through the insufficiency or deficiency of any security in or upon which any of the moneys of the Company shall be invested, or for any loss or damage arising from the bankruptcy, insolvency or tortious act of any person with whom any money, securities or effects shall be deposited, or for any loss occasioned by error of judgment or oversight on his part, or for any other loss, damage or misfortune whatever which shall happen in the execution of the duties of his office or in relation thereto, unless the same happen through his own dishonesty. PRIVATE COMPANY 136. To the end that the Company may qualify as a private company as that term is defined by the Securities Act (Nova Scotia), (a) in this Article, "prescribed securities" means the securities prescribed from time to time by the Nova Scotia Securities Commission for the purpose of the definition of private company under the Securities Act; (b) no transfer of prescribed securities of the Company, other than as permitted in Article 18, shall be effective; (c) the number of holders of prescribed securities of the Company, exclusive of persons who own a prescribed security and who are in its employment or the employment of an affiliate and exclusive of persons who, having been formerly in the employment of the Company or an affiliate, were while in that employment the owners of, and have continued after termination of that employment to own, at least one prescribed security of the Company, is limited to not more than fifty, two or more persons or companies who are the joint registered owners of one or more prescribed securities of the Company being counted as one holder; and (d) the Company shall not distribute any of its prescribed securities or securities convertible into or exchangeable for prescribed securities to the public. NAMES AND ADDRESSES OF SUBSCRIBERS Dated the 6th day of March, 2004. 2435239 NOVA SCOTIA LIMITED Summit Place, 6th Floor Per /s/ Sydney Smith 1601 Lower Water Street ---------------------------------- Sydney Smith - Assistant Secretary Halifax, NS B3J 3P6 Witness to the above signatures. /s/ Michael P. Simms - -------------------------------------- Michael P. Simms Summit Place, 6th Floor 1601 Lower Water Street Halifax, NS B3J 3P6 Occupation: Legal Assistant EX-3.3 6 y99327exv3w3.txt CHARTER OF 4200217 CANADA INC. . . . EXHIBIT 3.3
Industry Canada Industrie Canada FORM 1 FORMULE 1 Canada Business Loi canadienne sur les ARTICLES OF INCORPORATION STATUTS CONSTITUTIFS Corporations Act societes par actions (SECTION 6) (ARTICLE 6) - ---------------- ---------------------- --------------- --------- --------------------
1 - Name of Corporation Denomination de la societe 4200217 CANADA INC. - -------------------------------------------------------------------------------- 2 - The province or territory in Canada La province ou le territoire au Canada where the registered office is ou est situe le siege social situated Province of Quebec. - -------------------------------------------------------------------------------- 3 - The classes and any maximum number Categories et tout nombre maximal d' of shares that the corporation is actions que la societe est autorisee authorized to issue a emettre Schedule 1 attached hereto is incorporated herein by reference as if herein set forth at length. - -------------------------------------------------------------------------------- 4 - Restrictions, if any, on share Restrictions sur le transfert transfers des actions, s'il y a lieu Schedule 2 attached hereto is incorporated herein by reference as if herein set forth at length. - -------------------------------------------------------------------------------- 5 - Number (or minimum and maximum Nombre (ou nombre minimal et maximal) number) of directors d'administrateurs Minimum 1 - Maximum 10 - -------------------------------------------------------------------------------- 6 - Restrictions, if any, on business Limites imposees a l'activite the corporation may carry on commerciale de la societe, s'il y a lieu None. - -------------------------------------------------------------------------------- 7 - Other provisions, if any Autres dispositions, s'il y a lieu Schedule 3 attached hereto is incorporated herein by reference as if herein set forth at length. - -------------------------------------------------------------------------------- 8 - Incorporators - Fondateurs
Address (including postal code) Name(s) -- Nom(s) Adresse (inclure le code postal) Signature - -------------------------- -------------------------------- ------------------ Ranger, Alain Stock Exchange Tower, Suite 3400 /s/ Alain Ranger P.O. Box 242, 800 Place-Victoria Montreal (Quebec) H4Z 1E9
- -------------------------------------------------------------------------------- FOR DEPARTMENTAL USE ONLY -- A L'USAGE DU MINISTERE SEULEMENT Corporation No.-- N degrees de la societe Filed -- Deposee 420021-7 - -------------------------------------------------------------------------------- IC 3419 (2001/11) CANADA SCHEDULE 1 DESCRIPTION OF SHARE CAPITAL The Corporation is authorized to issue an unlimited number of Class A, B and C shares. 1. CLASS A SHARES Subject to the rights, privileges, conditions and restrictions attached to the other classes of shares, the Class A shares shall carry the following rights and restrictions: 1.1 VOTING RIGHT. Holders of Class A shares shall have the right to receive notice of any meeting of shareholders of the Corporation, to attend such meeting and to vote thereat on the basis of one (1) vote per Class A share held. 1.2 DIVIDEND. Holders of Class A shares shall have the right to receive any dividend declared by the Corporation. 1.3 REMAINING PROPERTY. Upon the winding-up of the Corporation, holders of Class A shares shall have the right to share the remaining property of the Corporation. 1.4 RESTRICTION. Notwithstanding subsection 1.2 hereinabove, no dividend or purchase price may be paid on the Class A shares if payment thereof would cause the realizable value of the net assets of the Corporation to be insufficient to proceed with the redemption and payment of the outstanding Class C shares. 2. CLASS B SHARES The Class B shares shall carry the following rights, privileges, conditions and restrictions: 2.1 VOTING RIGHT. Except where the right to vote is conferred specifically thereon by the Canada Business Corporations Act, the Class B shares shall not confer upon their holders the right to vote at meetings of shareholders, to be convened to or to attend such meetings. 2.2 DIVIDEND. Holders of Class B shares shall have the right to receive, for each fiscal year of the Corporation and to the extent that the directors so declare, a non-cumulative dividend in a maximum annual amount equal to four percent (4%) of the amount credited to the stated capital account for such shares on the date of declaration of the dividend; such dividend being non-cumulative, if, for a given fiscal year, the directors do not declare it or declare only a part thereof, the right of holders of Class B shares to the undeclared portion of such dividend for such fiscal year shall be forever extinguished; such dividend shall rank after the dividend payable on the Class C shares. 2.3 UNILATERAL REDEMPTION. Subject to the provisions of the Canada Business Corporations Act and subsection 2.6, the Corporation shall have the right, by resolution of the board of directors, to redeem, at all times, unilaterally, all or part of the Class B shares then outstanding, the whole in accordance with the following terms and conditions: 2.3.1 the Corporation shall give a written notice of redemption to each registered holder of Class B shares or send such notice by mail to the last known address of the holder; such notice shall inform the holder of the redemption and shall specify the date on which such redemption shall take effect (the "Redemption Date"), such date being required to be no less than 10 days subsequent to the date on which the Corporation delivered or sent the notices of redemption; any holder may waive the sending of a notice of redemption; 2.3.2 on the Redemption Date, the Class B shares redeemed shall be cancelled automatically and their holders shall have the right, upon delivery of the duly endorsed certificates representing such shares, to the payment of their "Redemption Value" as defined hereinbelow, as well as the payment of any dividend then declared and unpaid thereon. If a part only of the Class B shares represented by such certificates is redeemed, a new certificate shall be issued for the remaining shares; 2.3.3 in respect of holders of redeemed Class B shares who fail to deliver for cancellation the certificates representing such shares, the Corporation may deposit an amount corresponding to their "Redemption Value" with the Minister of Finance of the Province of Quebec, in accordance with the provisions of the Deposit Act, R.S.Q., c. D-5, or at any other location designated in the notice of redemption, for such holders. The rights of such holders shall be limited to receiving the amount so deposited to their credit upon delivery of the certificates representing the redeemed shares, and, as the case may be, to having new certificates issued by the Corporation for their remaining Class B shares; 2.3.4 if the redemption is partial, it shall be carried out rateably to the number of Class B shares outstanding, without taking into account fractional shares, or in any other manner proposed by the Corporation and accepted unanimously by the holders of such shares. 2.4 REDEMPTION ON DEMAND. Any holder of Class B shares may demand at any time that the Corporation redeem to it all or part of such shares, and the Corporation shall be obliged to proceed with such redemption, the whole in accordance with the following terms and conditions: 2.4.1 the demand for redemption shall be signed by the registered holder of the Class B shares or by his attorney and given to the secretary of the Corporation, together with the duly endorsed certificate or certificates representing the Class B shares to be redeemed. The demand for 2 redemption shall specify the number of Class B shares that the holder wishes to have redeemed; 2.4.2 on the tenth business day following the date of receipt of the demand for redemption (the "Redemption Date"), the Corporation shall proceed with the redemption of all of the Class B shares indicated in such demand, and the holder thereof shall receive: (a) the payment of the entire portion of the Redemption Value, as defined hereinbelow, of the Class B shares redeemed that the Corporation may pay without contravening the provisions of section 36(2) of the Canada Business Corporations Act and also without contravening the provisions of subsection 2.6 hereinbelow; (b) the payment of any dividend declared and unpaid on such shares, subject to subsection 2.6; and (c) as the case may be, a certificate for the balance of the Class B shares represented by the certificate or certificates delivered to the Corporation in accordance with paragraph 2.4.1, if the demand for redemption bears on a part only of such shares; 2.4.3 on the Redemption Date, subject however to adjustment in accordance with paragraph 2.4.5 hereinbelow: (a) all of the Class B shares redeemed shall be deemed to be irrevocably cancelled, and their holders shall cease to benefit from the rights attached to such shares, except the right to receive payment of their Redemption Value and the dividends declared and unpaid thereon; (b) the stated capital account maintained for the Class B shares shall be debited in accordance with the Canada Business Corporations Act; 2.4.4 holders of Class B shares redeemed but not fully paid-up on the Redemption Date shall be entitled to be paid the balance of the Redemption Value of such shares as and when the Corporation may legally make payment thereof; 2.4.5 holders of Class B shares redeemed but not fully paid-up on the Redemption Date, within fifteen (15) days following the time they are notified that they cannot receive full payment of the Redemption Value of their shares, may, by written notice, request that the Corporation apply the amount they received to the full payment of the Redemption Value of part of such shares as well as the dividends declared and unpaid thereon, without taking into account fractional shares, and withdraw their demands for redemption pertaining to the balance of such shares. Upon receipt of 3 such a notice, the Corporation shall proceed with the necessary adjustments in its registers and its stated capital account, such that on the Redemption Date only the fully paid-up portion of the Class B shares indicated in the demand for redemption shall be redeemed and cancelled. Certificates representing the Class B shares for which the demands for redemption have been withdrawn shall be delivered to their holders. The period of fifteen (15) days mentioned in this paragraph is of the essence; after such period, holders may no longer avail themselves of the provisions of this paragraph. 2.5 REDEMPTION VALUE. The Redemption Value of each Class B share shall correspond to the amount credited to the stated capital account in respect of such class of shares, divided by the number of such shares outstanding. 2.6 RESTRICTION. Notwithstanding the foregoing, no dividend or purchase or redemption price shall be paid on the Class B shares which would cause the realizable value of the net assets of the Corporation to be insufficient to proceed with the redemption and payment of the Class C shares outstanding. 2.7 REIMBURSEMENT. In the event of the winding-up of the Corporation, holders of Class B shares shall rank after holders of Class C shares and shall receive, prior to holders of Class A shares, an amount equal to the "Redemption Value" of their Class B shares, as defined hereinabove. 2.8 ADDITIONAL PARTICIPATION. Holders of Class B shares shall not participate further in the property or profits of the Corporation. 3. CLASS C SHARES The Class C shares shall carry the following rights, privileges, conditions and restrictions: 3.1 VOTING RIGHT. Except where the Canada Business Corporations Act specifically confers the right to vote, the Class C shares shall not confer upon their holders the right to vote at meetings of shareholders, to be convened to or to attend such meetings. 3.2 DIVIDEND. Holders of Class C shares shall have the right to receive, for each month in the fiscal year of the Corporation and to the extent that the directors so declare, a preferred non-cumulative dividend in a maximum amount equal to four-fifths of one percent (4/5ths of 1%) per month on the "Redemption Value" of such shares, as defined hereinbelow, on the date of declaration of the dividend; such dividend being non-cumulative, if, for a given month, the directors do not declare it or declare only a part thereof, the right of holders of Class C shares to the undeclared portion of such dividend for such month shall be forever extinguished; such dividend being preferred, no dividend may be declared, paid or set aside for payment on the Class A and B shares, at any time whatsoever during any month, unless during such same month, the full amount of the dividend prescribed on the 4 Class C shares has been declared and paid in full or set aside for payment on all of the Class C shares then outstanding. 3.3 UNILATERAL REDEMPTION. Subject to the provisions of the Canada Business Corporations Act, the Corporation shall have the right, by resolution of the board of directors, to redeem, at all times, unilaterally, all or part of the Class C shares then outstanding, the whole in accordance with the following terms and conditions: 3.3.1 the Corporation shall deliver to each registered holder of Class C shares a written notice of redemption or send such notice by mail to the last known address of the holder; such notice shall inform the holder of the redemption and shall specify the date on which such redemption shall take effect (the "Redemption Date"), such date being required to be no less than 10 days subsequent to the date on which the Corporation delivered or sent the notices of redemption; any holder may waive the sending of a notice of redemption; 3.3.2 on the Redemption Date, the Class C shares redeemed shall be cancelled automatically and their holders shall have the right, upon delivery of the duly endorsed certificates representing such shares, to the payment of their Redemption Value as defined hereinbelow, as well as the payment of any dividend then declared and unpaid thereon. If a part only of the Class C shares represented by such certificates is redeemed, a new certificate shall be issued for the remaining shares; 3.3.3 in respect of holders of redeemed Class C shares who fail to deliver for cancellation the certificates representing such shares, the Corporation may deposit an amount corresponding to their Redemption Value with the Minister of Finance of the Province of Quebec, in accordance with the provisions of the Deposit Act, R.S.Q., c. D-5, or at any other location designated in the notice of redemption, for such holders. The rights of such holders shall be limited to receiving the amount so deposited to their credit upon delivery of the certificates representing the redeemed shares, and, as the case may be, to having new certificates issued by the Corporation for their remaining Class C shares; 3.3.4 if the redemption is partial, it shall be carried out rateably to the number of Class C shares outstanding, without taking into account fractional shares, or in any other manner proposed by the Corporation and accepted unanimously by the holders of such shares. 3.4 REDEMPTION ON DEMAND. Any holder of Class C shares may demand at all times that the Corporation redeem all or part of such shares, and the Corporation shall be obliged to proceed with such redemption, the whole in accordance with the following terms and conditions: 5 3.4.1 the demand for redemption shall be signed by the registered holder of the Class C shares or by its attorney and given to the secretary of the Corporation, together with the duly endorsed certificate or certificates representing the Class C shares to be redeemed. The demand for redemption shall specify the number of Class C shares that the holder wishes to have redeemed; 3.4.2 on the tenth business day following the date of receipt of the demand for redemption (the "Redemption Date"), the Corporation shall proceed with the redemption of all of the Class C shares indicated in such demand, and the holder thereof shall receive: (a) payment of the entire portion of the Redemption Value, as defined hereinbelow, of the Class C shares redeemed which the Corporation may pay without contravening the provisions of section 36(2) of the Canada Business Corporations Act; (b) payment of any dividend declared and unpaid on such shares; and (c) as the case may be, a certificate for the balance of the Class C shares represented by the certificate or certificates delivered to the Corporation in accordance with paragraph 3.4.1, if the demand for redemption bears on a part only of such shares; 3.4.3 on the Redemption Date, subject however to adjustment in accordance with paragraph 3.4.5 hereinbelow: (a) all of the Class C shares redeemed shall be deemed to be irrevocably cancelled, and their holders shall cease to benefit from the rights attached to such shares, except the right to receive payment of their Redemption Value and the dividends declared and unpaid thereon; (b) the stated capital account maintained for the Class C shares shall be debited in accordance with the Canada Business Corporations Act; 3.4.4 holders of Class C shares redeemed but not fully paid-up on the Redemption Date shall be entitled to be paid the balance of the Redemption Value of such shares as and when the Corporation may legally make payment thereof; 3.4.5 holders of Class C shares redeemed but not fully paid-up on the Redemption Date, within fifteen (15) days following the time they are notified that they cannot receive full payment of the Redemption Value of their shares, may, by written notice, request that the Corporation apply the amount they have received to the full payment of the Redemption Value of part of such shares as well as the dividends declared and unpaid thereon, 6 without taking into account fractional shares, and withdraw their demands for redemption pertaining to the balance of such shares. Upon receipt of such a notice, the Corporation shall proceed with the necessary adjustments in its registers and its stated capital account, such that on the Redemption Date only the fully paid-up portion of the Class C shares indicated in the demand for redemption shall be redeemed and cancelled. Certificates representing the Class C shares for which the demands for redemption have been withdrawn shall be delivered to their holders. The period of fifteen (15) days mentioned in this paragraph is of the essence; after such period, holders may no longer avail themselves of the provisions of this paragraph. 3.5 REDEMPTION VALUE. The "Redemption Value" for each of the Class C shares shall be equal to the portion of the total amount credited to the stated capital account for such shares, plus a premium equal to the difference between the fair market value, upon the issuance of the Class C share, of the consideration received by the Corporation in exchange for the issuance of such Class C share and the total composed of: (a) the amount paid into the stated capital account for such shares; and (b) the fair market value of any property, other than the Class C shares, given in payment of such consideration. 3.6 ADJUSTMENT. The fair market value of the consideration mentioned in the preceding subsection shall be that established by the Corporation and the subscriber of the Class C shares upon the issuance of such shares. However, in the event that following an income-tax assessment or a draft income-tax assessment, such consideration were to be attributed a fair market value that is different from the fair market value so established, the amount of the premium payable upon the redemption of the Class C shares would be increased or reduced in accordance with any new valuation determined by the fiscal authorities, failing which such amount would be established by final, enforceable judgment of a competent court. In the event of a discrepancy between the valuations so established with the federal and provincial fiscal authorities respectively, the adjustment set forth hereinabove will be effected on the basis of the lower of such valuations. 3.7 REIMBURSEMENT. In the event of the winding-up of the Corporation, holders of Class C shares shall receive, prior to holders of Class A and Class B shares, an amount equal to the "Redemption Value" of their Class C shares, as defined hereinabove. 3.8 ADDITIONAL PARTICIPATION. Holders of Class C shares shall not participate further in the property or profits of the Corporation. 7 SCHEDULE 2 RESTRICTIONS ON TRANSFER OF SHARES No shares of the share capital of the Corporation shall be transferred without the approval of the directors evidenced by a resolution of the board, provided that approval of any transfer of shares may be given as aforesaid after the transfer has been effected upon the books of the Corporation in which event, unless the said resolution stipulates otherwise, the said transfer shall be valid and shall take effect as from the date of its entry upon the books of the Corporation. SCHEDULE 3 OTHER PROVISIONS 1. The number of shareholders of the Corporation shall be limited to fifty (50), not including shareholders who are or were employees of the Corporation or of a subsidiary, two (2) or more persons holding one (1) or more shares jointly being counted as a single shareholder. 2. Any distribution of securities to the public is prohibited. EX-3.4 7 y99327exv3w4.txt BYLAWS OF 4200217 CANADA INC. EXHIBIT 3.4 4200217 CANADA INC. - -------------------------------------------------------------------------------- (Name of the Corporation) GENERAL BY-LAWS enacted in accordance with the provisions of the Canada Business Corporations Act Adopted as of _______________, 2004 GENERAL BY-LAWS OF THE CORPORATION enacted in accordance with the provisions of the Canada Business Corporations Act INDEX
Page ---- DEFINITIONS............................................................................................... 1 SITUATION OF REGISTERED OFFICE AND OFFICES................................................................ 1 1. Registered Office....................................................................... 1 2. Offices................................................................................. 1 SHAREHOLDERS.............................................................................................. 1 3. Annual Meeting.......................................................................... 1 4. Special Meetings........................................................................ 2 5. Place of Meetings....................................................................... 2 6. Notice of Meetings...................................................................... 2 7. Waiver of Notice........................................................................ 3 8. Chairperson............................................................................. 3 9. Quorum.................................................................................. 3 10. Proxy................................................................................... 3 11. Participation by Telephone or Electronic Means and Meetings Held by Telephone or Electronic Means........................................................................ 4 12. Voting Right............................................................................ 4 13. Decisions Taken by the Majority......................................................... 4 14. Casting Vote............................................................................ 4 15. Vote by a Show of Hands................................................................. 4 16. Voice Vote.............................................................................. 4 17. Secret Ballot........................................................................... 4 18. Electronic voting....................................................................... 5 19. Procedure at Meetings................................................................... 5
20. Scrutineers............................................................................. 5 21. Addresses of Shareholders and Subsequent Transferees.................................... 5 22. Signed Resolutions...................................................................... 5 BOARD OF DIRECTORS........................................................................................ 6 23. Number.................................................................................. 6 24. Qualifications.......................................................................... 6 25. Election and term of office............................................................. 6 26. Consent................................................................................. 6 27. Resignation............................................................................. 6 28. Removal................................................................................. 6 29. Vacancy................................................................................. 7 30. Filling of Vacancies.................................................................... 7 31. Remuneration............................................................................ 7 32. General Powers of Directors............................................................. 7 33. Irregularity............................................................................ 7 34. Use of Property or Information.......................................................... 8 35. Conflicts of Interest................................................................... 8 36. Contracts or transactions with the Corporation.......................................... 8 MEETINGS OF THE BOARD OF DIRECTORS........................................................................ 9 37. Calling of Meetings..................................................................... 9 38. Participation by Telephone or Electronic Means.......................................... 10 39. Quorum.................................................................................. 10 40. Meeting Chairperson and Secretary....................................................... 10 41. Procedure............................................................................... 10 42. Voting.................................................................................. 10 43. Signed Resolution....................................................................... 11 OFFICERS.................................................................................................. 11 44. Officers................................................................................ 11 45. Chairperson of the Board................................................................ 11 46. President............................................................................... 11 47. Vice-President.......................................................................... 11 48. Managing Director or General Manager.................................................... 11
ii 49. Comptroller............................................................................. 12 50. Secretary............................................................................... 12 51. Treasurer............................................................................... 12 52. Removal, Discharge and Resignation...................................................... 12 53. Vacancy................................................................................. 12 54. Remuneration............................................................................ 12 EXECUTIVE COMMITTEE....................................................................................... 12 55. Election................................................................................ 12 56. Officers, Quorum and Procedure.......................................................... 13 57. Chairpersonship......................................................................... 13 58. Secretary............................................................................... 13 59. Powers.................................................................................. 13 60. Supervisory Power of the Board of Directors............................................. 13 61. Participation by Telephone and Signed Resolutions....................................... 13 62. Meetings................................................................................ 13 63. Remuneration............................................................................ 13 64. Removal and Filling of Vacancies........................................................ 13 OTHER COMMITTEES.......................................................................................... 14 65. Other Committees........................................................................ 14 INDEMNIFICATION OF DIRECTORS AND OFFICERS................................................................. 14 66. Indemnity............................................................................... 14 67. Insurance............................................................................... 14 68. Reimbursement and advance of costs...................................................... 14 CAPITAL STOCK............................................................................................. 14 69. Issue and Stock Options................................................................. 14 70. Share Certificates and Share Transfers.................................................. 15 71. Securities Register..................................................................... 15 72. Lost or Destroyed Certificates.......................................................... 15 DIVIDENDS................................................................................................. 15 73. Dividends............................................................................... 15 FISCAL YEAR AND AUDIT..................................................................................... 15
iii 74. Fiscal Year............................................................................. 15 75. Audit................................................................................... 15 CORPORATION'S REPRESENTATION FOR CERTAIN PURPOSES......................................................... 16 76. Declaration............................................................................. 16 77. Representation at Meetings.............................................................. 16 78. Signature of Documents.................................................................. 16 79. Declarations in the Register............................................................ 17 MISCELLANEOUS PROVISIONS.................................................................................. 17 80. Conflict with the Articles.............................................................. 17 81. Amendments.............................................................................. 17
iv GENERAL BY-LAWS OF THE CORPORATION enacted in accordance with the provisions of the Canada Business Corporations Act DEFINITIONS For the purposes of these By-laws, unless otherwise provided: "Act" means the Canada Business Corporations Act, R.S.C. (1985) ch. C-44, as well as any amendment which may be made thereto, and any act which may be substituted therefore. "Auditor" means the auditor of the Corporation and includes an auditing firm. "Ordinary Resolution" means a resolution adopted by the majority of the votes cast by the shareholders who voted in respect of that resolution. "Resident Canadian" has the particular meaning as described by the Act to such expression but, as a summary, includes a Canadian citizen and a permanent resident within the meaning of the Immigration Act, habitually residing in Canada. "Special Resolution" means a resolution adopted by two-thirds at least of the votes cast by the shareholders who voted in respect of that resolution or signed by all the shareholders entitled to vote on that resolution. "Unanimous Shareholders Agreement" means an agreement described in subsection 146(2) of the Act entered into among all the shareholders of the Corporation. SITUATION OF REGISTERED OFFICE AND OFFICES 1. Registered Office. The registered office of the Corporation is situated in the Province specified in the Articles, at such address as the Board of Directors may determine. 2. Offices. The Corporation may, in addition to its registered office, establish and maintain any other offices and agencies elsewhere within or outside Canada. SHAREHOLDERS 3. Annual Meeting. The annual meeting of the shareholders of the Corporation shall be held on such date each year and at such time as may be fixed by the Board of Directors, to receive and consider the financial statements with the report of the Auditor, to elect directors, to appoint an Auditor and to fix or to authorize the Board of Directors to fix his remuneration, and to consider, deal with and dispose of such other business as may lawfully come before the meeting. The annual meeting of the shareholders of the Corporation shall be called no later than six (6) months after the end of the preceding financial year. 4. Special Meetings. Special meetings of the shareholders may be called at any time as determined by the President or the Board of Directors and shall be called by the Board of Directors when required by one or more shareholders holding no less than 5% of the outstanding voting shares in conformity with the Act. 5. Place of Meetings. Meetings of the shareholders shall be held at the registered office of the Corporation or at any other place in Canada that may be fixed by the Board of Directors. Meetings of the shareholders may be held outside Canada at the place specified in the Articles or if all shareholders entitled to vote thereat so agree; a shareholder who attends a meeting held outside Canada is deemed to have agreed to it being held outside Canada except when he attends for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully held. 6. Notice of Meetings. Notice of each annual meeting and of each special meeting of the shareholders shall be delivered to the shareholders entitled to vote thereat, the directors and the Auditor or, in the discretion of the person charged with the giving of such notice, mailed by ordinary mail or transmitted by facsimile or e-mail to the shareholders entered in the books of the Corporation, the directors and the Auditor, at their respective addresses or facsimile numbers, not less than twenty-one (21) days and not more than sixty (60) days prior to the date fixed for the meeting. If the address of the shareholder is not entered in the books of the Corporation, the notice may be sent as aforesaid to the address that the person sending the notice considers to be most likely to reach such shareholder promptly. The irregularity in the notice of meeting or the delivery thereof, including the accidental omission of giving it or the non-reception by a shareholder, a director or the Auditor, does not affect the validity of the procedures at the meeting. Such notice shall specify the date, time and place of each meeting. The notice of the annual meeting may, but need not, specify the nature of the business when such meeting is called only to consider the financial statements with the report of the Auditor, to elect directors and to re-appoint the incumbent Auditor. The notice of the annual meeting at which other business shall be transacted, as well as the notice of special meeting, shall state: (a) the nature of business to be considered in sufficient detail to permit the shareholders to form a reasoned judgment thereon; and (b) the text of any Special Resolution to be submitted to the meeting. It is not necessary to give notice of the reconvening of an adjourned meeting other than by announcement at the earliest meeting that is adjourned; a new notice of meeting is, however, required if the meeting of the shareholders is adjourned one (1) or more times for an aggregate of thirty (30) days or more. The signature to any notice of meeting may be written, stamped, typewritten, printed or otherwise mechanically reproduced thereon. A certificate of the Secretary or of any other duly authorized officer of the Corporation in office at the time of the making of the certificate shall be conclusive evidence that may be set up against any shareholder, director or the Auditor of the sending or delivery of a notice of meeting. 2 7. Waiver of Notice. A shareholder or any other person entitled to attend a meeting of shareholders may waive the notice of a meeting of the shareholders prior to, during or after the holding of such meeting. His sole attendance at a meeting is a waiver except where he attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called. 8. Chairperson. The President of the Corporation, or such other person as may from time to time be appointed for that purpose by the Board of Directors, shall preside at meetings of shareholders. 9. Quorum. One (1) or more persons present in person or represented in accordance with Section 10 below and holding not less than fifty percent (50%) plus one of the aggregate number of votes attached to all the voting shares for such meeting shall constitute a quorum at an annual or special meeting of the shareholders, regardless of the actual number of persons physically present. If a quorum is present at the opening of a meeting, the shareholders present or represented may proceed with the business of the meeting, even though a quorum is not maintained throughout the meeting. If a quorum is not present at the opening of a meeting, the shareholders present or represented may, by a majority vote to that effect, adjourn the meeting to a fixed time and place, but may not transact any other business. If a quorum is present at the reconvening of the meeting so adjourned, said meeting may proceed, failing which, a new meeting shall be called. 10. Proxy. Shareholders shall be entitled to vote in person or, if a body corporate, through a representative duly authorized by resolution of the directors or other governing body of such body corporate. Shareholders shall also be entitled to vote by proxy. A proxyholder need not be a shareholder of the Corporation and may serve as proxyholder for several shareholders. The proxy appointing a proxyholder may be in the following form or in any other appropriate form: "I/We, the undersigned, being a shareholder of _______________ hereby nominate, constitute and appoint ________ or failing him, _____________, my/our attorney, representative and/or proxyholder with full power and authority to attend, vote and otherwise act for me/us in my/our name and on my/our behalf at the annual (or special) meeting of shareholders of the Corporation, to be held at _______________ on the ____________ day of _________ and at any and all adjournments thereof, with full power of substitution, and I/we, the undersigned, hereby revoke all other proxy given by me/us, the undersigned, which might be used in respect of such meeting and at any and all adjournments thereof. 3 Given this __________ day of ________. (signed)" Signatures of proxies need not be witnessed. The Board of Directors may, in the notice of a meeting of shareholders, specify a date and a time limit when proxies to be used at a meeting must be deposited with the Corporation or its mandatory; such date and time limits shall not precede the meeting by more than forty-eight (48) hours, excluding Saturdays and statutory holidays. 11. Participation by Telephone or Electronic Means and Meetings Held by Telephone or Electronic Means. Any person entitled to attend a meeting of shareholders may participate in the meeting using means permitting all participants to communicate adequately with each other, if the Corporation makes available such a communication facility, in particular, telephonic or electronic means. A person participating in a meeting by such means is deemed to be present at the meeting. The directors or the shareholders, as the case may be, who call a meeting may determine that the meeting shall be held entirely by means permitting all participants to communicate adequately with each other, in particular, by telephonic or electronic means. 12. Voting Right. Subject to the provisions of the Articles and the Act, each shareholder shall have as many votes as he has voting shares of the Corporation. 13. Decisions Taken by the Majority. Unless otherwise provided in the Act, all matters submitted to a meeting of shareholders will be decided by Ordinary Resolutions. 14. Casting Vote. In the event of an equality in the voting, the Chairperson will have no casting vote. 15. Vote by a Show of Hands. Unless a voice vote or a vote by secret ballot is requested, the vote shall be taken by a show of hands. In such case, the shareholders or their proxyholders shall vote by raising their hands, and the number of votes shall be calculated in accordance with the number of raised hands. 16. Voice Vote. If the Chairperson so orders or if another person holding or representing by proxy not less than ten percent (10%) of the votes attached to the outstanding voting shares so requests (notwithstanding withdrawal of such request), and if a vote by secret ballot is not requested, a voice vote shall be taken. In such case, each shareholder or proxyholder shall verbally declare his name and that of each shareholder for whom he holds a proxy, the number of votes he has and the manner in which he shall cast such votes. The number of votes so casts shall determine whether or not a resolution is carried. 17. Secret Ballot. If the Chairperson so orders or a shareholder or proxyholder entitled to vote so requests, the vote shall be taken by secret ballot. A request for a vote by secret ballot may be made at any time prior to the adjournment of the meeting, even after the holding of a vote by a show of hands or a voice vote, and such a request may also be withdrawn. Each 4 shareholder or proxyholder shall remit to the scrutineers one or more ballots, on which he shall enter the manner in which he shall cast the votes he has and, as the case may be, his name and the number of votes he has. Whether or not a vote by a show of hands or a voice vote has previously been taken on the same matter, the result of a secret ballot shall be deemed to represent the resolution of the meeting in respect thereof. 18. Electronic voting. The Corporation may allow the shareholders and their proxyholders to vote by means of a telephonic or electronic communication facility it makes available for that purpose and in conformity with the explanation and instructions it provides them, inasmuch as this facility enables the votes to be gathered in a manner that permits their subsequent verification and permits the tallied votes to be presented to the Corporation without it being possible for the Corporation to identify how each shareholder or group of shareholders voted. 19. Procedure at Meetings. The Chairperson of any meeting of shareholders shall be responsible for conducting the procedure thereat in all respects, and his decision on any matter, even a matter pertaining to the validity or non-validity of a proxy and the receivability or nonreceivability of a motion, shall be final and binding on all the shareholders. Unless a ballot is demanded a declaration by the Chairperson that a resolution has been carried or defeated, with or without qualification of unanimity, by a particular majority, and an entry to this effect in the minutes of the meeting shall be conclusive evidence of the fact. At all times during the meeting, the Chairperson, of his own initiative or without the assent of the shareholders given by a simple majority, for a valid reason, such as a disturbance or confusion rendering the harmonious and orderly conduct of the meeting impossible, may adjourn the meeting from time to time and no notice of any such adjourned meeting need be given; a new notice of meeting is, however, required if the meeting of the shareholders is adjourned one (1) or more times for an aggregate of thirty (30) days or more. Should the Chairperson fail to carry out his duties in good faith, the shareholders may remove him at any time and replace him by another person chosen from among their number. The directors of the Corporation shall be entitled, in such sole capacity, to attend meetings of shareholders and to take the floor thereat. 20. Scrutineers. The Chairperson at any meeting of shareholders may appoint scrutineers (who may but need not be directors, officers, employees, or shareholders of the Corporation), who shall act in accordance with the directives of the Chairperson. 21. Addresses of Shareholders and Subsequent Transferees. Every shareholder shall furnish to the Corporation a mailing or electronic address to which all notices intended for such shareholder may be sent to him. Every person who, by operation of law, transfer or other means whatsoever, shall be entitled to any share, shall be bound by every notice in respect of such share which was given before his name and address were entered on the register to the person whose name appears on the register at the time such notice is given. 22. Signed Resolutions. A resolution in writing signed by all the shareholders entitled to vote on that resolution at a meeting of shareholders shall be as valid as if it had been passed at a 5 meeting of the shareholders. A copy of each signed resolution shall be kept with the minutes of the meetings of shareholders. BOARD OF DIRECTORS 23. Number. The Corporation shall be managed by a Board of Directors composed of the fixed number of directors indicated in its Articles. If the Articles establish a minimum and a maximum number of directors, the Board of Directors shall be composed of the fixed number of directors established by by-law passed by the Board of Directors or, failing this, selected by the shareholders within such limits. 24. Qualifications. Any natural person may be a director, except a person who is less than eighteen (18) years of age, a person under tutorship or curatorship, a person declared incapable by a court in Canada or in another country, an undischarged bankrupt or a person prohibited by the court from holding the office of director. Unless otherwise provided in the Articles, a director need not be a shareholder. At least twenty-five percent (25%) of the directors shall be Resident Canadians, unless otherwise set out in the Act. A retiring director, if otherwise qualified, shall be eligible for re-election. 25. Election and term of office. Unless the Articles of the Corporation provide for cumulative voting, or confer upon the holders of a category or a series of shares the exclusive right to elect one (1) or more directors, in which case, the provisions of the Articles shall prevail, each director shall be elected at the annual meeting at which an election of directors is required, except for appointing a director following a vacancy occurring during the term or for the election of one or more additional directors. Each director shall be elected either for a fixed term, which shall terminate no later than at the close of the third following annual meeting, or an indeterminate term, which shall terminate at the close of the first following annual meeting. It shall not be necessary for all the directors to have the same term of office. Provided that no new directors have been elected in a meeting of shareholders, the term of the directors continue until the election of their successors. 26. Consent. A director who is elected or appointed must consent to hold office as such, (i) by not refusing to hold office if he is present at the meeting when the election or appointment takes place, (ii) by consenting to hold office in writing before the election or appointment or within ten (10) days if he is not present at the meeting, or (iii) by acting as a director pursuant to his election or appointment. 27. Resignation. A director may resign his office by written notice to the Corporation. Reasons need not be given for a resignation. Unless a subsequent date is stipulated in such notice, the resignation shall take effect on the date it is sent. 28. Removal. Subject to the Articles of the Corporation, any director may be removed by Ordinary Resolution at a special meeting of shareholders. The removal of a director, as well as his election, shall be at the discretion of the shareholders. A director informed of his imminent removal may state in a written statement to the Corporation the reason for his opposition to such 6 removal, and the Corporation shall forward such written declaration to the shareholders authorized to vote in the circumstances and to the Director of Corporations. A vacancy created by the removal of a director may be filled by the shareholders at the meeting at which the removal took place; where such is the case, the notice of calling of the meeting shall mention that an election is to be held if the resolution for removal is carried. Where the holders of a specific class or series of shares have an exclusive right to elect a director, he may only be removed by Ordinary Resolution at a special meeting of such shareholders called for that purpose. The removal of a director, as well as his election, shall be at the discretion of the shareholders. A director may be removed at any time and such removal need not be based on any particular grounds, whether serious or not. Neither the Corporation nor the shareholders voting in favour of the removal shall incur any liability toward the director by the mere fact of his removal, even if there be no grounds therefore. 29. Vacancy. The office of a director shall become vacant as of the moment his resignation or removal takes effect; likewise, a vacancy shall be created the moment a director is no longer qualified to fulfill his duties in accordance with Section 24, or if he should die. 30. Filling of Vacancies. If a vacancy occurs in the Board of Directors, the directors then in office shall have the power to appoint for the remainder of the term any other qualified person as a director. However, the directors may continue to act notwithstanding one or more vacancies provided a quorum exists. If there is no quorum, the remaining directors shall forthwith call a special meeting of shareholders to fill the vacancy, in accordance with Section 111 of the Act. 31. Remuneration. Subject to restrictions in the Articles of the Corporation, the remuneration to be paid to the directors shall be such as the directors shall fix from time to time by resolution of the Board of Directors and such remuneration shall be in addition to the salary or remuneration of any officer, employee or supplier of services of the Corporation who is also a member of the Board of Directors, unless a resolution states otherwise. The directors may also be reimbursed for travel and other expenses incurred by them in connection with their duties. 32. General Powers of Directors. Subject to restrictions in a Unanimous Shareholders Agreement, the directors of the Corporation shall manage or supervise the management of the business and affairs of the Corporation and may make or cause to be made for the Corporation any contract which it may by law enter into. The directors shall exercise all such powers and authority as the Corporation by statute or by its Articles is authorized to exercise and do. The directors shall always act by resolution. The directors may, in particular, purchase or dispose of, by purchase, sale, lease, exchange, hypothec or otherwise, stocks, rights, warrants, options and other securities, buildings and other movable or immovable property or any right or interest therein; for each transaction, they shall fix the consideration and other conditions. 33. Irregularity. Notwithstanding that it be subsequently discovered that there was some defect in the election of the board of directors or of any director or in the appointment of any 7 officer, or the absence or loss of his qualification, all acts regularly done by them shall be as valid and binding upon the Corporation as if the election or appointment had been regular or each person had been qualified. 34. Use of Property or Information. All directors and officers shall, in exercising their powers and discharging their duties, act honestly and in good faith with a view to the best interests of the Corporation. No director may mingle the Corporation's property with his own property or use for his own profit or that of a third person any property of the Corporation or any information he obtains by reason of his duties, unless he is expressly and specifically authorized to do so by the shareholders of the Corporation. 35. Conflicts of Interest. Each director shall avoid placing himself in any situation where his personal interest would be in conflict with his obligations as a director of the Corporation. He shall promptly disclose to the Corporation any interest he has in an enterprise or other entity that may place him in a situation of conflict of interest and any right he may set up against it, indicating their nature and extent, where applicable. Such disclosure of interest shall be entered in the minutes of the meetings of directors. A general disclosure shall be valid as long as the facts have not changed, and the director need not repeat it for a specific subsequent transaction. 36. Contracts or transactions with the Corporation. A director or an officer may, even in performing his duties, acquire, directly or indirectly, rights in the Corporation's property or enter into material contracts or transactions with the Corporation, or be a director, an officer or a holder of a material interest in a party to such contract or transaction. He shall then, in accordance with Section 120 of the Act, disclose in writing to the Corporation or request to have entered in the minutes of meetings of directors the nature and extent of his interest in such contract or transaction, even if such contract or transaction, within the scope of the normal business activity of the Corporation, does not require the approval of either the directors or the shareholders. For the purposes of this by-law, a general notice that the director or officer is a director, an officer or a holder of a material interest in a body corporate and is to be regarded as interested in any contract or transaction made with that body corporate, is a sufficient declaration of interest. A director who is so interested in a contract shall not discuss or vote on such resolution to approve the contract or transaction unless the contract or transaction is one of the contracts or transactions referred in subsection 120(5) of the Act, that is, relating primarily to the remuneration or indemnification of such director, or a contract with an affiliate of the Corporation. At the request of the President or any director, the interested director shall leave the meeting while the Board of Directors discusses and votes on the contract concerned. Neither the Corporation nor any of its shareholders may contest the validity of a contract or transaction entered into with a director or an officer of the Corporation, or with a party of which such director or officer is a director, an officer or a holder of a material interest, for such sole reason or for the reason that he was present or was counted to determine whether a quorum 8 existed at the meeting, provided such director or officer has disclosed his interest as aforementioned, the Board of Directors of the Corporation has approved the contract or transaction, and the contract or transaction was, at that time, reasonable and fair for the Corporation. Such a contract or transaction is not invalid by reason only of the interest of a director or officer in it or of his failure to disclose this interest as aforementioned, provided such director or officer acted honestly and in good faith, the contract or transaction is approved or confirmed by Special Resolution at a meeting of the shareholders, disclosure of the interest is made to the shareholders in a manner sufficient to indicate its nature before such contract or transaction is approved or confirmed, and the contract or transaction is reasonable and fair to the Corporation when it is approved or confirmed. MEETINGS OF THE BOARD OF DIRECTORS 37. Calling of Meetings. Every year, immediately after the annual meeting of the shareholders, a meeting of the new directors present shall be held without further notice if they constitute a quorum, to elect or appoint the officers of the Corporation and consider, deal with and dispose of any other matter. Meetings of the Board of Directors may be called by or by order of the Chairperson of the Board of Directors, if any, the President of the Corporation or two (2) directors and may be held anywhere within or outside Canada. A notice of each meeting, specifying the place, date and time, shall be sent to each director at his residence or usual place of business. The notice shall be sent no less than two (2) days prior to the date fixed for the meeting by ordinary or registered mail or by facsimile or electronic mail. In the absence of an address for a director, the notice may be sent to the address at which the sender considers that the notice is most likely to reach the director promptly. The Board of Directors may resolve to hold periodic or fixed meetings of the Board of Directors at such place, within Canada or elsewhere, with or without notices of meeting. It is not necessary to give notice of the reconvening of an adjourned meeting if the date, time and place of the reconvening of this meeting are announced at the initial meeting. Any director may waive in writing the notice of a meeting of the Board of Directors before, during or after the holding thereof. His sole presence is equivalent to a waiver unless he attended the meeting solely to object to the holding of the meeting on the ground that the manner of calling it was irregular. Except in the case of matters referred to in subsection 115(3) of the Act, including, in particular, the declaration of dividends, the issuance of securities, the acquisition of shares issued by the Corporation, the approval of the annual financial statements, vacancies in the Board of Directors or in the office of Auditor and the adoption, amendment or repeal of the by-laws, no notice of any meeting of the Board of Directors need specify the purpose or the business to be transacted at a meeting. 9 38. Participation by Telephone or Electronic Means. Directors may, if all are in agreement, participate in a board meeting using means permitting all participants to communicate adequately with each other, in particular, by telephonic or electronic means. A director participating in the meeting by such means shall be deemed to have been present at that meeting. The directors participating by telephonic means shall then vote by a voice vote, in derogation of Section 42 hereinbelow. An electronic vote is deemed to have been given by show of hands or by ballot, as the case may be. 39. Quorum. A majority of the directors in office shall constitute a quorum for a meeting of the Board of Directors. A quorum shall be present for the entire duration of the meeting. If the Board of Directors is composed of a sole director, the decision of such director recorded in writing constitutes the meeting. When the quorum is reached, notwithstanding any vacancy on the Board of Directors, the directors may exercise all their powers; however, no business shall be transacted at a meeting of directors unless at least twenty-five per cent (25%) of the directors present thereat are Resident Canadian directors, except where (a) a Resident Canadian director who is unable to be present approves in writing, or by telephonic, electronic or other communication facility, the business transacted at the meeting and (b) at least twenty-five per cent (25%) of the directors present thereat would have been Resident Canadian directors had that director been present at that meeting. 40. Meeting Chairperson and Secretary. Meetings of the Board of Directors shall be chaired by the Chairperson of the Board of Directors, if any, or, failing him, by the President of the Corporation if he is a director or, failing him, by a Vice-President who is a director and is designated for such purpose by the President. The Secretary of the Corporation shall act as secretary of the meetings. The directors present at a meeting may nevertheless appoint any other person as Chairperson or secretary of such meeting. 41. Procedure. The meeting Chairperson ensures that the meeting is conducted smoothly and submits to the Board the motions on which a vote is to be taken and generally conducts the procedure thereat in all respects, in which regard his decision shall be final and binding on all the directors. Should the meeting Chairperson fail to submit a motion, any director may submit it himself before the meeting is adjourned or closed and, if such motion lies within the competence of the Board of Directors, the Board of Directors shall consider it. For such purpose, the agenda of each meeting of the Board of Directors shall be deemed to include a period for the submission of motions by the directors. Should the meeting Chairperson fail to carry out his duties in good faith, the directors may remove him at any time and replace him by another person. 42. Voting. Each director shall be entitled to one vote and all matters shall be decided by the majority of the votes cast. The vote shall be taken by a show of hands unless the meeting Chairperson or a director requests a ballot, in which case the vote shall be taken by ballot. If the vote is taken by ballot, the meeting secretary shall act as scrutineer and count the ballots. The fact of having voted by ballot shall not deprive a director of the right to express his dissidence in respect of the resolution concerned and to cause such dissidence to be entered. Voting by proxy shall not be permitted, and the meeting Chairperson shall have no casting vote in the case of an equality of votes. 10 43. Signed Resolution. A resolution in writing, signed by all the directors entitled to vote on that resolution at a meeting of directors, shall be as valid as if it had been passed at a meeting of directors. A copy of each signed resolution shall be kept with the minutes of the proceedings of the directors. OFFICERS 44. Officers. The officers of the Corporation shall be the Chairperson of the Board, if appointed, the President, and, if elected or appointed, one or more Vice-Presidents, the Managing Director, the General Manager, the Comptroller, the Secretary, the Treasurer, and such other officers as the Board of Directors may appoint and whose duties it may determine by resolution. Subject to those powers which, pursuant to the Act, may only be exercised by the Board of Directors, the officers of the Corporation shall have the powers, functions and duties prescribed by the Board of Directors, in addition to those specified in the by-laws. The same person may hold more than one office. Other than the President, or, if appointed, the Chairperson of the Board of Directors or, if any, the Managing Director, who shall be a director, none of the officers shall be required to be a director or a shareholder of the Corporation. The Board of Directors may also appoint other agents, officers and employees of the Corporation within or outside Canada; the titles, powers, authority, and duties of such persons shall be determined by the Board of Directors. In case of the absence of an officer or for any other reason that the Board of Directors may deem sufficient, the Board of Directors may delegate the powers and authority of such officer to any other officer or to a director of the Corporation. If the Board of Directors consists of one (1) director, that director may hold the offices of President, Secretary or of any other officer of the Corporation. 45. Chairperson of the Board. The Chairperson of the Board shall preside at all meetings of the Board of Directors. 46. President. The President shall be the chief officer of the Corporation and, subject to the control of the Board of Directors and the appointment of a Managing Director or General Manager, shall supervise, administer and manage the business and affairs of the Corporation generally. The President shall preside at all meetings of the shareholders and, in the event of the absence, inability or failure of the Chairperson of the Board to act, the President shall preside at all meetings of the Board of Directors. 47. Vice-President. In case of absence, incapacity and failure to act of the President, the Vice-President or, if more than one, any Vice-President or other officer designated for that purpose by the Board of Directors, shall assume the powers and duties of the President. The powers, functions and duties of a Vice-President shall be those which the Board of Directors or the President prescribe. 48. Managing Director or General Manager. The Managing Director or General Manager shall, subject to the control of the President, manage the operations of the Corporation generally. He shall comply with all instructions received from the Board of Directors and shall give to the 11 Board of Directors or the members thereof the information that they require concerning the affairs of the Corporation. The Board of Directors may delegate to such Managing Director or General Manager any of the powers of the Board except those that by law a Managing Director has no authority to exercise. The Managing Director shall be a Resident Canadian and a director. 49. Comptroller. The Comptroller shall, subject to the control of the President, be the chief accounting officer of the Corporation. He shall, upon request, render account to the President and the directors of the financial situation of the Corporation and all its transactions. He shall be entrusted with and have custody of the books of account. 50. Secretary. The Secretary shall attend to the preparation and sending of all notices of the Corporation. He shall act as secretary at all shareholders' meetings and shall keep the minutes of all meetings of the Board of Directors, the committees of directors and the shareholders in a book or books to be kept for that purpose. He shall have charge of the records of the Corporation including books containing the names and addresses of the members of the Board of Directors of the Corporation, together with copies of all reports made by the Corporation and such other books or documents as the directors may prescribe. He shall be responsible for the keeping and filing of all books, reports, certificates and all other documents required by law to be kept and filed by the Corporation. He shall be subject to the control of the President. 51. Treasurer. Subject to the control of the President, the Treasurer shall have general charge of the finances of the Corporation. He shall deposit the money and other valuable effects of the Corporation in the name and to the credit of the Corporation in a bank or another deposit institution designated by the Board of Directors. 52. Removal, Discharge and Resignation. The Board of Directors may, by the affirmative vote of the absolute majority of the Board, remove any officer, with or without cause, at any time. Any agent or employee who is not an officer of the Corporation may be discharged by the President or any other officer authorized for such purpose, with or without cause, at any time. Any officer may resign his office at any time by delivering his resignation in writing to the President or the Secretary of the Corporation, or at a meeting of the Board of Directors, unless otherwise agreed. 53. Vacancy. Any vacancy occurring in the office of any officer may be filled by the Board of Directors. 54. Remuneration. The remuneration of all officers shall be fixed by the Board of Directors. The remuneration of all other agents, officers and employees of the Corporation shall be fixed by the President or any other officer authorized for such purpose. EXECUTIVE COMMITTEE 55. Election. The Board of Directors may appoint among their number one committee of the Board of Directors, designated as "Executive Committee". 12 56. Officers, Quorum and Procedure. The Executive Committee shall have power to appoint officers thereto, to fix its quorum, which quorum shall consist of not less than a majority of its members, and to determine its own procedure. 57. Chairpersonship. Meetings of the Executive Committee shall be chaired by the Chairperson of the Board of Directors or, if none is appointed, by the President of the Corporation. In his absence, meetings of the Executive Committee shall be chaired by the person whom the members of the Executive Committee present choose amongst themselves. 58. Secretary. The Secretary of the Corporation shall act as secretary of the Executive Committee unless some other secretary be appointed by such committee. 59. Powers. The Executive Committee shall possess the powers and authority of the Board of Directors for the administration of the day-to-day business and affairs of the Corporation, except the powers which, by law, must be exercised by the Board of Directors, as well as the powers which the Board of Directors may expressly reserve for itself. 60. Supervisory Power of the Board of Directors. All acts of the Executive Committee shall be subject to the supervision of the Board of Directors and shall be reported to the Board of Directors when the Board of Directors so directs. The Board of Directors may invalidate or modify decisions taken by the Executive Committee, provided that the rights of third parties are not affected. 61. Participation by Telephone and Signed Resolutions. Sections 37 and 42 shall apply, mutatis mutandis, to meetings of the Executive Committee. 62. Meetings. Meetings of the Executive Committee may be held at the head office of the Corporation or at such other place within or outside Canada as the Executive Committee may determine. Meetings of the Executive Committee may be called by or by the order of the President or by two members of such committee. A member of the Executive Committee may waive in writing a notice of a meeting of the Executive Committee, prior to or after the holding of the meeting. His sole attendance at a meeting is a waiver except where he attends a meeting solely for the purpose of objecting to the transaction of any business on the grounds that the meeting was not lawfully called. 63. Remuneration. The members of the Executive Committee shall be entitled to receive such remuneration for their services as members of the Executive Committee as the Board of Directors may determine. 64. Removal and Filling of Vacancies. The Board of Directors may from time to time remove any member of the Executive Committee from office. The Board of Directors may also fill any vacancy which may occur in the membership of the Executive Committee. 13 OTHER COMMITTEES 65. Other Committees. The Board of Directors may appoint any other committee that it may deem fit. Any such committee shall only have advisory power. The members of any such committee need not be members of the Board of Directors. Except as otherwise provided by the Board of Directors, each such committee shall have the power to fix its quorum, which quorum shall consist of no less than a majority of its members, to appoint it own president, and to determine its own procedure. INDEMNIFICATION OF DIRECTORS AND OFFICERS 66. Indemnity. Subject to the limitations provided by the Act, the Corporation shall indemnify a director or officer of the Corporation, a former director or officer of the Corporation or a person who acts or acted at the Corporation's request as a director or officer, or a person acting in a similar capacity, of another entity, and his heirs and legal representatives, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by him in respect of any civil, criminal, administrative or investigative or other proceeding in which he is involved by reason of being or having been a director or officer of the Corporation or as a director or officer, or a person acting in a similar capacity, of such entity, if: (a) he acted honestly and in good faith with a view to the best interests of the Corporation or, as the case may be, the entity; and (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, he had reasonable grounds for believing that his conduct was lawful. 67. Insurance. The Corporation may purchase and maintain insurance for the benefit of any person referred to in Section 66 against such liability as the Board of Directors may from time to time determine, and as permitted by the Act. 68. Reimbursement and advance of costs. Subject to a contract specifying and restraining this obligation, the Corporation shall reimburse the director, officer and any other agent for the reasonable and necessary costs paid by him during the execution of his duties. This reimbursement shall be done after the presentation of all relevant documents. Moreover, the Corporation shall at his request advance moneys to such individual for the costs, charges and expenses referred to in Section 66, and the individual must repay the moneys if he does not fulfil the conditions set out in Section 66. CAPITAL STOCK 69. Issue and Stock Options. Subject to all provisions contained in the Articles of the Corporation or in a Unanimous Shareholders Agreement limiting the allocation or issue of shares of the capital stock of the Corporation, the directors may accept subscriptions for, allot, distribute, issue, in whole or in part, the unissued shares of the Corporation, grant options thereon or otherwise dispose thereof to any person, corporation, company, body corporate or other entity, upon the conditions and for the lawful consideration in compliance with the Articles 14 of the Corporation which is determined by the directors, without any requirement to offer such unissued shares to persons who are already shareholders rateably to the shares held by them. 70. Share Certificates and Share Transfers. Certificates representing the shares of the capital stock of the Corporation shall bear the signature of the President or a Vice-President and that of the Secretary or an Assistant Secretary. Such signatures may be engraved, lithographed or otherwise mechanically reproduced. Any certificate bearing a facsimile of the signatures of such authorized officers shall be deemed to have been signed manually, notwithstanding the fact that the deemed signatory has since ceased to be an officer of the Corporation. 71. Securities Register. A central securities register shall be maintained by the Corporation or its agent at the registered office or at any other place in Canada designated by the directors. The directors may from time to time provide that one (1) or more branch securities registers shall be maintained at such places within Canada or elsewhere as may be designated by a resolution and may appoint officers or agents to maintain the same and to effect and record therein transfers of shares of the capital stock of the Corporation. 72. Lost or Destroyed Certificates. The Board of Directors may, upon conditions it shall establish, direct that one or more new certificates of shares may be issued to replace any certificate or certificates of shares theretofore issued by the Corporation that have been worn out, lost, stolen, or destroyed, and the Board of Directors, when authorizing the issuance of such new certificate or certificates, may, in its discretion, and as a condition precedent thereto, require the owner of the worn-out, lost, stolen or destroyed certificate or certificates or his legal representatives to give to the Corporation, a bond in such sum as it may direct, as indemnity against any claim that may be made against them for or in respect of the shares represented by such certificates alleged to have been worn out, lost, stolen or destroyed. DIVIDENDS 73. Dividends. The Board of Directors may, periodically and in compliance with the law, declare and pay dividends to the shareholders, in accordance with their respective rights. The Board of Directors may stipulate that a dividend be payable, in whole or in part, in shares of the Corporation. A transfer of shares shall not transfer the right to the dividends declared thereon before the registration of the transfer of shares. When two (2) or more persons are registered as joint holders of one share, each of them may give a valid receipt for any dividend payable or paid on such share. FISCAL YEAR AND AUDIT 74. Fiscal Year. The fiscal year of the Corporation shall be determined by the Board of Directors. 75. Audit. The shareholders, at each annual meeting, shall appoint an Auditor, who shall hold such office until the next annual meeting or until a successor has been appointed, unless he dies or resigns or his position otherwise becomes vacant. At least once in every fiscal year such 15 Auditor shall examine the accounts of the Corporation and the financial statements to be presented at the annual meeting and shall report thereon to the shareholders. The remuneration of the Auditor shall be fixed by the shareholders or, if not so fixed, by the Board of Directors. The Auditor shall be independent of the Corporation, of its affiliates, or the directors or officers of the Corporation or its affiliates in accordance with the Act. The shareholders may remove the Auditor from office at any time at a special meeting. A vacancy created by the removal of the Auditor may be filled at the meeting at which the Auditor is removed or, if not so filled, may be filled by the Board of Directors. Any other vacancy which may occur shall be filled by the directors in accordance with Section 166 of the Act. The shareholders may decide not to appoint an auditor for any fiscal year, by resolution receiving the consent of all the shareholders including those who otherwise are not qualified to vote. The resolution shall be valid only until the next annual meeting. CORPORATION'S REPRESENTATION FOR CERTAIN PURPOSES 76. Declaration. The President, the Chairperson of the Board of Directors, any Vice-President, the Managing Director, the General Manager, the Comptroller, the Secretary and the Treasurer and each of them and, with the authorization of the Board of Directors, any other officer, employee or person shall be authorized and empowered to answer for the Corporation to all writs, orders or examinations upon articulated facts issued by any court and to declare for and on behalf of the Corporation any answer to writs of attachment by way of garnishment in which the Corporation is garnishee and to sign all affidavits and sworn declarations in connection therewith or any and all judicial proceedings to which the Corporation is a party and to make demands for assignment of property or petition for winding-up or receivership orders upon any debtor of the Corporation and to attend and vote at all meetings of creditors of the Corporation's debtors and grant proxies in connection therewith. 77. Representation at Meetings. The President, the Chairperson of the Board of Directors, any Vice-President, the Managing Director, the General Manager, the Comptroller, the Secretary and the Treasurer or any one of them or any other officer or person authorized by the Board of Directors shall represent the Corporation and attend and vote at any and all meetings of shareholders or members of any entity in which the Corporation holds shares or is otherwise interested, and any action taken or vote cast by them at any such meeting shall be deemed to be the act or vote of the Corporation. 78. Signature of Documents. Contracts, documents, written acts, including discharges and releases, requiring the signature of the Corporation may be validly executed by the President alone, or by any two of the following persons, any Vice-President, the Managing Director, the General Manager, the Secretary and the Treasurer, acting jointly, and hence be binding on the Corporation. The Board of Directors may also designate any other person to execute, alone or in conjunction with one or more other persons, and to deliver on behalf of the Corporation all contracts, documents and written acts, and such authorization may be given by resolution in general or specific terms. 16 79. Declarations in the Register. Declarations to be filed with The Enterprises Registrar in accordance with the Act respecting the legal publicity of sole proprietorships, partnerships and legal persons shall be signed by the President, any director of the Corporation or any other person authorized for such purpose by resolution of the Board of Directors. Any director having ceased to hold such office as a result of his resignation, removal or otherwise shall be authorized to sign on behalf of the Corporation and file an amending declaration to the effect that he has ceased to be a director, from fifteen (15) days after the date of such cessation, unless he receives proof that the Corporation has filed such a declaration. MISCELLANEOUS PROVISIONS 80. Conflict with the Articles. In the event of conflict between the provisions of a by-law and those of the Articles, the latter shall prevail. 81. Amendments. The Board of Directors is empowered to adopt, abrogate or modified a by-law, but these measures apply only until the next annual or special meeting of shareholders. If the adoption, abrogation or modification is not confirmed or modified by Ordinary Resolution during the annual or special meeting, it will cease to apply, but only from this date. Any shareholder shall, according to Section 137 of the Act, propose the adoption, modification or abrogation of a by-law during an annual meeting. /s/ Steven G. Segal ------------------------------------ Steven G. Segal President 17 EX-3.5 8 y99327exv3w5.txt CHARTER OF 9022-3751 QUEBEC INC. EXHIBIT 3.5 Government of Quebec INSPECTOR GENERAL OF FINANCIAL INSTITUTIONS (unofficial English Translation) Form 1 ARTICLES OF INCORPORATION Companies Act, R.S.Q., c. C-38 Part 1A 1. Name 9022-3751 Quebec Inc. 2 Quebec Judicial District of the company head office Saint-Francois 3 Precise number or minimum and maximum number of directors Minimum 1 Maximum 10 4 Effective date, if later than date of filing 5 Description of share capital See Schedule A, which is part of the forgoing 6 Restrictions on the transfer of shares, if any See Schedule B, which is part of the forgoing 7 Limits on activity, if any N/A 8 Other provisions See Schedule C, which is part of the forgoing 9 Incorporators Name Address with zip code (if a corporation, indicate head office and incorporation jurisdiction) Signature of each incorporator (if a corporation, signature of the authorized person) Fondateurs Inteltex Inc. Inteltex Incorporators Inc. 651, rue Notre-Dame ouest 3e etage Montreal (Quebec) H3C 1J1 (s) James Smith President If the space provided is not sufficient, include an appendix, in two copies Space reserved Government of Quebec Filed on June 26, 1995 Inspector General of Financial Institutions SCHEDULE A RELATING TO SHARE CAPITAL The unlimited share capital of the company contains seven (7) classes of shares, without per value, with the following rights, privileges, restrictions and conditions: A) CLASS A SHARES: The rights, privileges, restrictions and conditions attached to an unlimited number of class A shares, are as follows: 1) Dividends and participation: Subject to the rights and privileges attached to other classes of shares, holders of class A shares shall have the right, pari passu with holders of class B shares: a) to participate in the property, profits and surplus assets of the company, and for that purpose, to receive any dividend declared by the company, and b) to receive the remaining property of the company upon dissolution. 2) Restriction: In addition to the provisions of section 123.70 of the Companies Act, no dividend shall be paid on class A shares, nor can such shares be acquired by the company, if payment of such dividend or purchase price would result in the realizable value of the net assets of the company being insufficient to redeem class D and E shares. 3) Right to vote: Holders of class A shares have the right to vote at any meeting of the shareholders of the company. Each class A share confers one (1) vote, except at meetings at which only the holders of some other class of shares are entitled to vote. 4) Right to Exchange: Subject to the approval of the directors and shareholders holding the majority of class D shares in circulation, the shareholders of the class A have the right to request, for the entirety or part of their shares and upon request, a class D share in exchange for any class A share, subject to the followings conditions: the conversion rate will be one class D share for every class A share exchanged, the new class D shares will have an identical value as that of the amount added to the stated capital account for class A shares exchanged. B) CLASS B SHARES: The rights, privileges, restrictions and conditions attached to an unlimited number of class B shares, are as follow: 1) Dividends and participation: Subject to the rights and privileges attached to other classes of shares, holders of class B shares shall have the right, pari passu with holders of class A shares: a) to participate in the property, profits and surplus assets of the company, and for that purpose, to receive any dividend declared by the company, and b) to receive the remaining property of the company upon dissolution. 2) Restriction: In addition to the provisions of section 123.70 of the Companies Act, no dividend shall be paid on class B shares nor can such shares be acquired by the company if payment of such dividend or purchase price would result in the realizable value of the net assets of the company being insufficient to redeem class D and E shares. 3) Right to vote: Holders of class B shares shall have the right to vote at any meeting of the shareholders of the company. Each class B shares confers one (1) vote, except at meetings at which only the holders of some other class of shares are entitled to vote. C) CLASS C SHARES: The rights, privileges, restrictions and conditions attached to an unlimited number of class C shares, are as follows: 1) Dividends and participation: Holders of class C shares shall not participate in the profits and surplus assets of the company and, for that purpose, shall not have a right to any dividend declared by the company. 2) Reimbursement: In the event the property of the company should be distributed following its dissolution, voluntary or forced liquidation or otherwise, holders of class C shares shall have the right, prior to the holders of all other classes of shares, to be reimbursed the amount added to the stated capital account for class C shares. 3) Right to vote: Holders of class C shares shall have the right to vote at any meeting of the shareholders of the company. Each class C shares confers one (1) vote, except at meetings at which only the holders of some other class of shares are entitled to vote. 4) Automatic redemption: Subject to the provisions of subsection 123.54 of the Companies Act, the company shall redeem all class C shares owned by a class C shareholder and held immediately prior to his death, at the value which they were worth immediately prior to his death, namely the amount added to the stated capital account for these shares, plus the amount of any declared unpaid dividends on the shares, on reception of the certificates that represent the repurchased shares. On the date of purchase, the purchased class C shares shall automatically be cancelled, and the company shall reduce its stated capital account for class C shares according to the provisions of section 123.51 of the Companies Act. 5) Right to redeem: Subject to the provisions of article 123.56 of the Companies Act, the company may, at any time, without notice and without regard to other classes of shares, purchase all or part of the outstanding class C shares at will and at the best possible price. On the date of purchase, the purchased class C shares shall automatically be cancelled, and the company shall reduce its stated capital account for class C shares according to the provisions of section 123.51 of the Companies Act. 6) Power of Veto: No conversion of class C shares, and no creation of other class of shares on the same level or previous class C shares will be authorized, nor any amendment to the foregoing provisions relevant to the class C shares, nor any amendments to any other class of shares, in a manner to give these shares equal or superior privileges to those attached to the class C shares, unless this creation, conversion or modification has been approved by a vote of at least 3/4 of class C shares represented by their holders along with other formalities foreseen by the Companies Act. D) CLASS D SHARES: The rights, privileges, restrictions and conditions attached to an unlimited number of class D shares, are as follows: 1) Dividends: When the company declares a dividend, the shareholders of the class D shares have the right to receive, up to an equal amount of the declared dividend, in priority to holders of class A, B, E, F and G, from applicable funds available for payment of dividend, a preferential and non-cumulative dividend of one percent (1%) per month, calculated on the "re-purchase value" of class D shares, as indicated on paragraph 5 hereafter. The company cannot declare this dividend for more than one month at a time, it is up to the directors to determine the date, hour and method of payment of this dividend. 2) Reimbursement: In the event the property of the company should be distributed following its dissolution, voluntary or forced liquidation or otherwise, holders of class D shares shall have the right, prior to holders of class A, B, E, F and G shares, but after holders of class C shares, to be reimbursed the redemption value of class D shares as defined in section 5) hereunder, plus the amount of any declared unpaid dividends on class D shares. 3) Additional participation: Holders of class D shares shall not otherwise participate in the profits or surplus assets of the company. 4) Right to vote: Subject to the provisions of the Companies Act, holders of class D shares shall not be entitled, as class D shareholders only, to vote at any meeting of shareholders of the company, nor to attend same and to receive a notice thereof. 5) Right to redeem: Subject to the provisions of subsection 123.54 of the Companies Act, holders of class D shares shall have the right, at any time and upon written notice, to request their shares to be redeemed by the company at a price equal to the amount added to the stated capital account for these shares, plus a premium equal to the difference between the amount added to the stated capital account for these shares, and the fair market value of the class A shares exchanged for these class D shares, at the moment of the exchange. Such a price of redemption shall be considered as the redemption value of class D shares and the company shall, in addition, remit to the holders of class D shares so redeemed, the amount of the declared unpaid dividends on these shares, as the case may be. The company and class D holders shall base their calculation of the aforementioned premium on the fair market value of class A shares at the moment of their exchange for class D shares. In the event the federal and/or provincial Revenue Departments should attribute to class A shares exchanged a fair market value different from that determined by the aforementioned persons, the departmental evaluations shall be conclusive and the amount of the premium shall be reduced or increased consequently, provided that the corporation and holders of class D shares had an opportunity to contest the validity of such departmental evaluations with the departments or before the Courts, and provided that should there be a discrepancy between the provincial and federal evaluations, the above adjustments shall be based on the lowest evaluation determined following an unquestioned assessments or a final Court decision, as the case may be. On the date of redemption, the class D shares redeemed, as requested by shareholder, shall be cancelled, and the company shall reduce its stated capital account for class D shares according to the provisions of section 123.51 of the Companies Act. 6) Right to purchase: Subject to the provisions of article 123.56 of the Companies Act, the company may, at any time, without notice and without regard to other classes of shares, purchase all or part of the outstanding class D shares at a price agreed to by the company and the holder of the class D shares being purchased, which in no way shall exceed the aforementioned redemption price nor the realizable value of the net assets of the company. On the date of redemption, the class D shares redeemed shall be cancelled, and the company shall reduce its stated capital account for class D shares according to the provisions of section 123.51 of the Companies Act. 7) Power of Veto: No conversion of class D shares, and no creation of other class of shares on the same level or previous class D shares will be authorized, nor any amendment to the foregoing provisions relevant to the class D shares, nor any amendments to any other class of shares, in a manner to give these shares equal or superior privileges to those attached to the class D shares, unless this creation, conversion or modification has been approved by a vote of at least -3/4 of class D shares represented by their holders along with other formalities foreseen by the Companies Act. E) CLASS E SHARES: The rights, privileges, restrictions and conditions attached to an unlimited number of class E shares are as follows: 1) Dividends: When the company declares a dividend, the shareholders of the class D shares have the right to receive, up to an equal amount of the declared dividend, in priority to holders of class A, B, F and G, but subsequent to the shareholders of class D, from applicable funds available for payment of dividend, a preferential and non-cumulative dividend of one percent (1%) per month, calculated on the "re-purchase value" of class E shares, as indicated on paragraph 5. The company cannot declare this dividend for more than one month at a time, it is up to the directors to determine the date, hour and method of payment. 2) Reimbursement: In the event the property of the company should be distributed following its dissolution, voluntary or forced liquidation or otherwise, holders of class E shares shall have the right, prior to holders of class A, B, F and G shares, but after holders of class C and D shares, to be reimbursed the redemption value of class E shares as defined in subsection 5) hereunder, plus the amount of any declared unpaid dividends on class E shares. 3) Additional participation: Holders of class E shares shall not otherwise participate in the profits or surplus assets of the company. 4) Right to vote: Subject to the provisions of the Companies Act, holders of class E shares shall not be entitled, as class E shareholders only, to vote at any meeting of shareholders of the company, nor to attend same and to receive a notice thereof. 5) Right to redeem: Subject to the provisions of subsection 123.54 of the Companies Act, the company may, at its discretion, redeem class E shares unilaterally, at any time upon written notice to their holders, and class E shares shall be redeemed by the company at any time upon written demand from the holders of class E shares, at a price equal to the amount added to the stated capital account for these shares, plus a premium equal to the difference between the fair market value of the consideration received by the company at the time of issuance for issuing these class E shares, and the total comprising: a) the amount added to the stated capital account for these shares. b) the fair market value of any property, other than class E shares, given in payment by the company for that consideration. Such a price of redemption shall be considered as the redemption value of class E shares and the company shall, in addition, remit to the holders of class E shares so redeemed, the amount of the declared unpaid dividends on these shares, as the case may be. The fair market value of the aforementioned consideration shall be as determined by the company and the subscribers to class E shares upon issuance of class E shares. In the event the federal and/or provincial Revenue Departments should attribute to this consideration a fair market value different from that determined by the aforementioned persons, the departmental evaluations shall be conclusive and the amount of the premium shall be reduced or increased consequently, provided that the company and holders of class E shares had an opportunity to contest the validity of such departmental evaluations with the departments or before the Courts, and provided that should there be a discrepancy between the provincial and federal evaluations, the above adjustments shall be based on the lowest evaluation determined following an unquestioned assessments or a final Court decision, as the case may be. The company shall proceed with the re-purchase of class E shares without taking into account other classes of shares, and has a delay of thirty (30) days following the re-purchase date, to re-mitt the repurchase price to the former shareholder of the class E shares. If the conditions of article 123.54 of the Companies Act do not allow him to respect this delay, the company will re-mitt a first portion of the re-purchase price within a delay of thirty (30) days, and re-mitts the remaining unpaid balance as soon as legally possible. On the date of redemption, the class E shares redeemed shall be cancelled, and the company shall reduce its stated capital account for class E shares according to the provisions of section 123.51 of the Companies Act. In addition, if in the event of a price adjustment, the company has already redeemed all class E shares, the company shall pay to its shareholders, as soon as it can legally do so, an additional sum, if the premium is increased, or the holders of the redeemed shares will repay any sum due in the event that the adjustment decreases the premium, with all interest at the highest rate between the one prescribed by virtue of Article 28 of AN ACT RESPECTING THE MINISTERE DU REVENU (R.S.Q., chapter M-31) or the one prescribed by Article 4301 of the federal INCOME TAX REGULATIONS, as determined for the relevant period, prorata to the class E shares held by each shareholder. If only a part of the class E shares were redeemed, the portion of the additional payment or repayment, as the case may be, corresponding to the redeemed shares will be made as soon as is legally possible, with interest at the rate hereinabove mentioned, and with regard to the shares still to be redeemed, the value of these shares will modify, either more or less, as the case may be, the amount of the premium for these shares. 6) Right to purchase: Subject to the provisions of section 123.56 of the Companies Act, the company may, at any time, without notice and without regard to other classes of shares, purchase all or part of the outstanding class E shares at a price agreed to by the company and the holder of the class E shares being purchased, which in no way shall exceed the aforementioned redemption price nor the realizable value of the net assets of the company. On the date of purchase, the purchased class E shares shall automatically be cancelled, and the company shall reduce, in accordance with article 123.51 of the Companies Act, its stated capital account for class E shares paid and emitted. 7) Power of Veto: No conversion of class E shares, and no creation of other class shares on the same level or previous class E shares will be authorized, nor any amendment to the foregoing provisions relevant to the class E shares, nor any amendments to any other class of shares, in a manner to give these shares equal or superior privileges to those attached to the class E shares, unless this creation, conversion or modification has been approved by a vote of at least -3/4 of class E shares represented by their holders along with other formalities foreseen by the Companies Act. F) CLASS F SHARES: The rights, privileges, restrictions and conditions attached to an unlimited number of class F shares, are as follows: 1) Dividends: When the company declares a dividend, the shareholders of the class F shares have the right to receive, up to an equal amount of the declared dividend, in priority of class A, B and G, but subsequent to the shareholders of class D and E, from applicable funds for the payment of dividends, an annual, preferential and non-cumulative dividend of a dollar (1$) per share; it is up to the directors to determine the moment and method of payment. 2) Reimbursement: In the event the property of the company should be distributed following its dissolution, voluntary or forced liquidation or otherwise, holders of class F shares shall have the right, prior to holders of class A, B and G shares, but subsequent to holders of class C, D and E shares, to be reimbursed the amount added to the stated capital account for class F shares and to be paid the amount of any declared unpaid dividends on class F shares. 3) Additional participation: Holders of class F shares shall not otherwise participate in the profits or surplus assets of the company. 4) Right to vote: Subject to the provisions of the Companies Act, holders of class F shares shall not be entitled, as class F shareholders of the company, nor to attend same and to receive a notice thereof. 5) Unilateral right to redeem: Subject to the provisions of subsection 123.53 of the Companies Act, the company may, at its discretion, redeem class F shares unilaterally by giving a thirty (30) day written notice and paying a price equal to the amount added to the stated capital account for these shares, plus the amount of any declared unpaid dividends on these shares. In the event of partial redemption, such redemption shall be proportionate to the number of outstanding class F shares, excluding fractions of shares. On the date of purchase, the purchased class F shares shall automatically be cancelled, and the company shall reduce, in accordance with article 123.51 of the Companies Act, its stated capital account for class F accordingly. 6) Right to purchase: Subject to the provisions of subsection 123.56 of the Companies Act, the company may, at any time, without notice and without regard to other classes of shares, purchase all or part of the outstanding class F shares at a price agreed to by the company and the holders of the class F shares being purchased. On the date of purchase, the purchased class F shares shall automatically be cancelled, and the company shall reduce, in accordance with article 123.51 of the Companies Act, its stated capital account for class F accordingly. 7) Power of Veto: No conversion of class F shares, and no creation of other class shares on the same level or previous class F shares will be authorized, nor any amendment to the foregoing provisions relevant to the class F shares, nor any amendments to any other class of shares, in a manner to give these shares equal or superior privileges to those attached to the class F shares, unless this creation, conversion or modification has been approved by a vote of at least 3/4 of class F shares represented by their holders along with other formalities foreseen by the Companies Act. G) CLASS G SHARES: The rights, privileges, restrictions and conditions attached to an unlimited number of class G shares, are as follows: 1) Dividends: When the company declares a dividend, the shareholders of the class G shares have the right to receive, up to an equal amount of the declared dividend, in priority of class A and B, but subsequent to the shareholders of class D, E and F, from applicable funds for payment of dividends, an annual, preferential and non-cumulative dividend of a dollar (1$) per share, it is up to the directors to determine the moment and method of payment of such dividend. 2) Reimbursement: In the event the property of the company should be distributed following its dissolution, voluntary or forced liquidation or otherwise, holders of class G shares shall have the right, prior to holders of class A and B shares, but subsequent to shareholders of classes C, D, E and F, to be reimbursed at a price equal to the amount added to the stated capital account for these shares, to which the amount of any unpaid declared dividend for these shares will be added. 3) Additional participation: Holders of class G shares shall not otherwise participate in the profits or surplus assets of the company. 4) Right to vote: Subject to the provisions of the Companies Act, holders of class G shares shall not be entitled, as class G shareholders of the company, nor to attend same and to receive a notice thereof. 5) Unilateral right to redeem: Subject to the provisions of subsection 123.53 of the Companies Act, the company may, at its discretion, redeem class G shares unilaterally by giving a thirty (30) day written notice and paying a price equal to the amount added to the stated capital account for these shares, plus the amount of any declared unpaid dividends on these shares. In the event of partial redemption, such redemption shall be proportionate to the number of outstanding class G shares, excluding fractions of shares. On the date of purchase, the purchased class G shares shall automatically be cancelled, and the company shall reduce its stated capital account for class G shares according to the provisions of section 123.51 of the Companies Act 6) Right to purchase: Subject to the provisions of article 123.56 of the Companies Act, the company may, at any time, without notice and without regard to other classes of shares, purchase all or part of the outstanding shares at will and at the best possible price, in total or in part all class G shares in circulation. On the date of purchase, the purchased class G shares shall automatically be cancelled, and the company shall reduce its stated capital account for class G shares according to the provisions of section 123.51 of the Companies Act 7) Power of Veto: No conversion of class G shares, and no creation of other class shares on the same level or previous class G shares will be authorized, nor any amendment to the foregoing provisions relevant to the class G shares, nor any amendments to any other class of shares, in a manner to give these shares equal or superior privileges to those attached to the class G shares, unless this creation, conversion or modification has been approved by a vote of at least 3/4 of class G shares represented by their holders along with other formalities foreseen by the Companies Act. SCHEDULE B RELATING TO RESTRICTIONS ON THE TRANSFER OF SHARES No share issued by the company shall be transferred without the consent of the directors, which shall be confirmed by a resolution of the Board of directors. Such consent may be given after the transfer has been registered in the books of the company, in which case the transfer will be valid and will take effect retroactively upon the date that the transfer was recorded. SCHEDULE C RELATING TO OTHER PROVISIONS 1. CLOSED COMPANY : The company will be a<>according to the Securities Act (R.S.Q., c. V-1.1, art. 5), and, to this end : a) The number of shareholders of the company is limited to fifty (50) exclusive of present or former employees of the company or of a subsidiary; two or more persons who hold jointly one or more shares are counted as one shareholder. b) Any distribution of securities by the company to the public is prohibited. 2. BORROWING POWER: In addition to powers given by its articles and without restricting the powers given to the directors pursuant to section 77 of the Companies Act (R.S.Q., c. V-1.1, art 5), directors can, when they deem appropriate and without having to obtain consent from the shareholders: a) borrow money upon the credit of the company; b) issue or re-issue obligations or other securities of the company, and pledge or sell the same for such sums and at such price as may be deemed expedient; c) guarantee in the name of the company the execution of an obligation by a third party, subject to the established fact of the present or future capacity of the company to discharge its liabilities when due and that the realizable value of the net assets of the company will be sufficient to perform such guarantee; d) hypothecate the moveable or immoveable property of the company or otherwise affect any kind of charge against the moveable property of the company, and e) Delegate one or several of the aforementioned powers to a director, to an executive committee, to board committee or to an officer of the company. (QUEBEC LOGO) Government of Quebec INSPECTOR GENERAL OF FINANCIAL INSTITUTIONS Form 5 ARTICLES OF AMENDMENT Companies Act, R.S.Q., c. C-38, Part 1A 1 Name 9022-3751 QUEBEC INC. 2 [ ] Amendment of articles under sections 123.140 and following of the Companies Act. 3 The articles of the company are amended as follows: The presently authorized share capital of the company is hereby cancelled and repealed, and replaced with Schedule A attached hereto and forming an integral part hereof. The restrictions on share transfers of the company are hereby cancelled and repealed, and replaced with Schedule B attached hereto and forming an integral part hereof. The other provisions of the company are hereby cancelled and repealed, and replaced with Schedule C attached hereto and forming an integral part thereof. 4 Effective date, if later than that on which the articles of amendment are filed (see instructions) 5 Name (or Quebec enterprise number) prior to the amendment (if different than the one mentioned in section 1) If the space provided is not sufficient, include an appendix, in two copies. Signature of Authorized Director_____________________________________________________________ ________________________________________________________________________________ Official use only SCHEDULE A SHARE CAPITAL OF 9022-3751 QUEBEC INC. Subject to the provisions of the Quebec Companies Act (R.S.Q., c. C-38) (hereinafter referred to as the "Act"), the authorized share capital of the Company and the shares that constitute such authorized share capital shall be as set forth below. SECTION 1. AUTHORIZED SHARE CAPITAL The Company is authorized to issue SEVEN (7) classes of shares, being Class A common shares and Class B, C, D, E, F or G preferred shares. The shares of all such classes are without nominal or par value and may be issued in unlimited numbers and for unlimited consideration, which shall be paid into a subdivision of the issued and paid-up share capital account in respect of such shares. SECTION 2. RIGHTS ATTACHING TO THE SHARES The rights, privileges, conditions and restrictions attaching to the shares constituting the authorized share capital of the Company shall be as set forth below. A. VOTING RIGHTS CLASS A COMMON SHARES: Each Class A share shall entitle the holder thereof to receive notice of, to attend and to vote at every meeting of shareholders of the Company, and each Class A share shall entitle the holder thereof to one (1) vote. CLASS B, C, D, E OR G PREFERRED SHARES: Subject to the provisions of the Act, no Class B, C, D, E or G share shall entitle the holder thereof, as such, to receive notice of, nor to attend or vote at meetings of shareholders. CLASS F PREFERRED SHARES: Each Class F share shall entitle the holder thereof to receive notice of, to attend and to vote at every meeting of shareholders of the Company, and each Class F share shall entitle the holder thereof to ten (10) votes. B. DIVIDENDS Subject to the restrictions under s. 123.70 of the Act, each Class A, B, C, D, E or G share shall entitle the holder thereof to share in the assets, profits and surplus of the Company and, for this purpose, to receive any dividend declared by the Company as provided below. The Board of Directors may, at its sole discretion, determine the amount, time and terms of payment of any dividend so declared. CLASS A COMMON SHARES: Subject to the rights and privileges attaching to the other classes of shares, each Class A share shall confer upon the holder thereof the residual right to share in the assets, profits and surplus of the Company, pro rata to the number of shares held by such holder and, for this purpose, to receive any dividend declared by the Company. CLASS B, C, D OR E PREFERRED SHARES: Each Class B, C, D or E share shall confer upon the holder thereof the preferred right to receive respectively, up to the amount of the dividend so declared, paid out of the funds available for the payment thereof, a maximum monthly dividend of between a quarter of one percent (1/4%) and one and one half of one percent (1-1/2 %) based on the redemption value, as defined below under D - ACQUISITION OF SHARES,of the Class B, C, D or E shares, according to the applicable class of shares. Such dividend is non-cumulative. CLASS F PREFERRED SHARES: Class F shares do not entitle the holder thereof to share in the assets, profits and surplus of the Company or to receive any dividend declared by the Company. CLASS G PREFERRED SHARES: Each Class G share shall confer upon the holder thereof the preferred right to receive, up to the amount of the dividend so declared, paid out of the funds available for the payment thereof, an annual maximum dividend equal to two thirds (2/3) of the Bank of Canada rate on the date on which such dividend is declared, based on the amount paid for such shares into the subdivision of the issued and paid-up share capital account in respect of Class G shares. Such dividend is non cumulative. RANKING ORDER: The ranking order for the payment of dividends on the different classes of shares shall be as follows: the Class G shares shall rank first; the Class B shares shall rank second; the Class C shares shall rank third; the Class D shares shall rank fourth; the Class E shares shall rank fifth, and the Class A shares shall rank sixth. NO ADDITIONAL PARTICIPATION: The Class B, C, D, E or G shares shall not entitle the holders thereof to share in the assets, profits or surplus of the Company otherwise than as provided above. C. REMAINING PROPERTY If, for any reason, and more particularly in the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, there is a partial or total distribution of the assets of the Company to the shareholders, the redemption of shares and participation in the remaining property of the Company shall be as provided below. CLASS A COMMON SHARES: Each Class A share shall confer upon the holder thereof the residual right to share in the remaining property of the Company, pro rata to the number of shares held by such holder. CLASS B, C, D OR E PREFERRED SHARES: Each Class B, C, D or E share shall confer upon the holder thereof the preferred right to share in the remaining property of the Company, at a price equal to the payment of the redemption value, as defined below under D - ACQUISITION OF SHARES, of such shares, according to the applicable class of shares, to which shall be added the amount of any declared and unpaid dividends, if any, on such Class B, C, D or E shares, as the case may be. CLASS G PREFERRED SHARES: Each Class G share shall confer upon the holder thereof the preferred right to share in the remaining property of the Company, at a price equal to the amount paid for such shares into the subdivision of the issued and paid-up share capital account in respect of such Class G shares, to which shall be added the amount of any declared and unpaid dividends, if any, on the the Class G shares. INSUFFICIENT ASSETS: If at any particular time, based on the ranking order set forth below, the assets of the Company are not sufficient to pay in full the amount to which the Class A, B, C, D, E or G shareholders are entitled to pursuant to the terms and conditions above, the 2 shareholders of the relevant class shall share in the balance of the assets pro rata to the number of shares of the relevant class held by them. RANKING ORDER: The ranking order for the different classes of shares as regards participation in the remaining property of the Company shall be as follows: the Class G shares shall rank first; the Class B or C or D or E shares shall rank second, pari passu; the Class A shares shall rank third. NO ADDITIONAL PARTICIPATION: The Class A, B, C, D, E or G shares do not entitle the holders thereof to share in the remaining property of the Company otherwise than as provided above. D ACQUISITION OF SHARES Subject to the provisions of the Act, the Company shall acquire all or part of the Class B, C, D or E shares then issued and outstanding pursuant to the terms and conditions set forth below. 1. SHAREHOLDER'S RIGHT OF REDEMPTION CLASS B, C, D OR E PREFERRED SHARES: Subject to the provisions of the second paragraph of s. 123.54 of the Act, any Class B, C, D or E shareholder has the right, to be exercised at any time at his sole discretion and as set forth below by written notice, to require the Company to redeem all or part of his shares, at a price equal to the "redemption value" thereof, according to the applicable class of shares, to which shall be added the amount of any declared and unpaid dividends, if any, on the Class B, C, D or E shares, as the case may be. REDEMPTION VALUE The "redemption value" of Class B, C, D, or E shares shall be equal to the amount paid for such shares into the subdivision of the issued and paid-up share capital account in respect of such shares, according to the applicable class of shares, plus a premium equal to the amount by which the fair market value of the consideration paid to the Company upon the issuance of such Class B, C, D, or E shares, as the case may be, exceeds the aggregate of: (i) the amount paid for such shares into the subdivision of the issued and paid-up share capital account in respect of the Class B, C, D or E shares, according to the applicable class of shares; and (ii) the fair market value of any property other than a Class B, C, D or E share, as the case may be, given by the Company in payment of such consideration. DETERMINING FAIR MARKET VALUE OF CONSIDERATION Upon the issuance of the Class B, C, D or E shares, the Company and each subscriber of Class B, C, D or E shares, as the case may be, shall, by mutual agreement acting in good faith, based on a method deemed to be fair and reasonable, determine the fair market value of each of the assets constituting the consideration paid to the Company upon the issuance of such Class B, C, D or E shares, as the case may be. 3 ADJUSTMENT OF THE PREMIUM IN THE EVENT OF MINISTERIAL CONTESTATION In the event of a disagreement with the Quebec Minister of Revenue and/or the Minister of National Revenue with respect to the valuation of the fair market value of one or more assets constituting the consideration paid to the Company upon the issuance of the Class B, C, D or E shares, the ministerial valuation shall prevail, and the amount of the premium relating to the redemption of the Class B, C, D or E shares shall be adjusted accordingly if the Minister provides the Company and each Class B, C, D or E shareholder or, if all the shares are being redeemed, the Company and each former Class B, C, D or E shareholder, the opportunity to contest the ministerial valuation either to the Minister or before the courts. In the event of a discrepancy between the provincial and federal valuation, the lesser of the two valuations determined according to an uncontested assessment or final judgement, if applicable, shall obtain. 2. PROCEDURE FOR THE RETRACTION OF SHARES PROCEDURE If a holder of Class B, C, D or E shares, as the case may be, wishes to exercise his redemption right, such shareholder shall deliver a written notice at the registered office of the Company or at the office of his transfer agent, indicating the number of shares of the relevant class to be redeemed by the Company and the date on which the shareholder wishes such redemption to take place, . The written notice shall be accompanied by the certificate or certificates representing the shares of the relevant class to be redeemed and shall be signed by the person registered as the holder thereof in the share register of the Company or signed by his agent duly authorized for such purpose. Upon receipt of the notice and the certificate or certificates representing the shares of the relevant class to be redemmed, the Company shall redeem the shares of the relevant class, without taking into consideration any other class of shares, and shall have a period of thirty (30) days from the redemption date to pay the redemption value of such shares to the Class B, C, D or E shareholder or, if all the shares are redeemed, to the former Class B, C, D or E shareholder. DELAYED PAYMENT If the provisions of the second paragraph of s. 123.54 of the Act do not allow the Company to pay the full redemption value to a shareholder or former shareholder in the aforementioned period, the Company shall pay a first portion of the redemption value within the thirty (30) day period, if legally authorized to do so, and shall pay the unpaid balance as soon as is legally possible. PARTIAL PURCHASE If only part of the shares then issued and outstanding of the Class B, C, D or E shareholder are to be redeemed, the Company shall, without cost to the relevant shareholder, issue to such shareholder a new share certificate representing those shares of such shareholder that have not been purchased. 4 3. CANCELLATION The Class B, C, D or E shares so purchased pursuant to any of the terms and conditions of this Section D shall automatically be cancelled upon the acquisition thereof, and the subdivision of the issued and paid-up share capital account in respect of such Class B, C, D or E shares shall be reduced accordingly by the Company, all of which pursuant to the provisions of the Act. E. RESTRICTIONS In addition to the restrictions under ss. 123.70 and 126.53 of the Act, the Company may not pay any dividend on Class A Shares nor purchase by private agreement or otherwise acquire such shares if, as a result thereof, the Company could not legally redeem or pay the redemption price of the Class B, C, D or E shares. F. VETO CLASS, B, C, D OR E PREFERRED SHARES: No conversion of all or part of the Class B, C, D, or E shares into shares of another class, whether existing or not, and no creation of new classes of shares ranking pari passu with or prior to the shares of the relevant class shall be authorized, and no amendment shall be made to the provisions above relating to the shares of the relevant class or the provisions relating to shares of other existing classes if the result of such an amendment is to confer upon the shares of such other classes rights or privileges that are equal or superior to the rights and privileges attaching to Class B, C, D or E shares, as the case may be, unless such conversion, creation or amendment has been approved by the affirmative vote of not less than three quarters (3/4) of the Class B, C, D or E shares, as the case may be, as well as by the separate vote of three-quarters (3/4) of each class of shares whose rights could be adversely affected by such conversion, creation or amendment, as represented by the holders thereof in person or represented by proxy at a special or general meeting convened for this purpose, in addition to the other formalities required by the Act. 5 SCHEDULE B RESTRICTIONS ON THE TRANSFER OF SHARES OF 9022-3751 QUEBEC INC. CONSENT OF THE DIRECTORS OR SHAREHOLDERS No assignment or transfer of shares of the Company may be made without the consent: (a) of a majority of the directors, whose consent shall be attested by a resolution of the Board of Directors or by one (1) or more instruments signed by a majority of the directors; (b) or a majority of the shareholders entitled to vote, whose consent shall be attested by a resolution of such shareholders or by one (1) or more instruments signed by a majority of such shareholders. Consent may be given after the assignment or transfer has been registered in the share register of the Company, in which case the assignment or transfer shall be valid and take effect retroactively to the date of the registration thereof. 6 SCHEDULE C OTHER PROVISIONS OF 9022-3751 QUEBEC INC. 1. CLOSED COMPANY The Company is a "closed company" within the meaning of s. 5 of the Quebec Securities Act (R.S.Q., c. V-1.1), and, as a result: (a) the number of shareholders of the Company is limited to fifty (50), excluding present of former employees of the company or a subsidiary; and two (2) or more persons who are joint holders of one (1) or more shares shall be considered as one (1) shareholder; and (b) any public distribution of shares of the Company is prohibited. 2. BORROWING POWER In addition to the powers conferred by the articles of incorporation and without limiting the generality of the powers vested in the directors under s. 123.6 and s. 77 of the Act, the directors may, pursuant to s. 123.13 of the Quebec Companies Act, R.S..Q., c. C-38 (hereinafter referred to as the "Act"), at their sole discretion and without the authorization of the shareholders: (a) borrow money upon the credit of the Company; (b) issue debentures or other securities of the Company, and pledge or sell the same for such sums and at such prices as may be deemed expedient; (c) hypothecate the movable or immovable property or otherwise encumber the movable property of the Company; (d) delegate one (1) or more of the aforementioned powers to a director, an executive committee, a committee of the Board of Directors or an officer of the Company. 3. PARTICIPATING IN MEETINGS BY TECHNICAL MEANS One (1) or more or all of the shareholders may participate in a meeting of shareholders by technical means, including by telephone, enabling them to communicate with the other shareholders or persons taking part in the meeting. In this case, such shareholders are deemed to be present at the meeting and such meeting is deemed to be held in the Province of Quebec. The shareholders present at a meeting held by technical means may discuss any question that may be raised at a meeting of shareholders. A shareholder who takes part in a meeting of shareholders through technical means may not be represented by a proxyholder. 7 4. MEETINGS OF SHAREHOLDERS OUTSIDE QUEBEC Meetings of shareholders of the Company, including annual general meetings and special meetings, may be held outside the Province of Quebec and the shareholders of the Company may take part in and vote at any meeting of shareholders held outside the Province of Quebec by any means enabling all the participants to communicate with one another. 5. UNANIMOUS SHAREHOLDERS' AGREEMENT When a power vested in the Board of Directors under the articles of incorporation has been withdrawn from the directors to be exercised by the shareholders under a unanimous shareholders' agreement pursuant to s. 123.91 of the Act, any reference in the articles to the exercise of such power by the Board of Directors or by one (1) or more directors shall be read to mean the exercise of such power by the meeting of shareholders under the unanimous shareholders' agreement. 8 SCHEDULE C (CONT'D) CONVERSION OF SHARES (a) All Class B shares of 9022-3751 QUEBEC INC. currently issued and outstanding are hereby converted into an identical number of Class A shares of the share capital resulting from this amendment, on a share for share basis, for an issued and paid up share capital that is identical to the Class B shares so converted. (b) All Class E shares of 9022-3751 QUEBEC INC. currently issued and outstanding are hereby converted into an identical number of Class G shares of the share capital resulting from this amendment, on a share for share basis, for an issued and paid up share capital that is identical to the Class E shares so converted. NEW CERTIFICATES The holders of the shares issued by the Company before the amendment shall, upon the tender of certificates representing such shares (except for such shares as have been cancelled as stated above), be entitled to receive new share certificates on the basis of the aforementioned conversion. 9 EX-3.6 9 y99327exv3w6.txt BYLAWS OF 9022-3751 QUEBEC INC. EXHIBIT 3.6 9022-3751 QUEBEC INC. - -------------------------------------------------------------------------------- (Name of the Company) (unofficial English Translation) CODE OF GENERAL BY-LAWS enacted in accordance with the provisions of Part IA of the Companies Act (Quebec) Adopted on August 24, 2004 CODE OF GENERAL BY-LAWS OF THE COMPANY enacted in accordance with the provisions of Part IA of the Companies Act (Quebec) INDEX Page DEFINITIONS....................................................................1 SITUATION OF HEAD OFFICE AND OFFICES...........................................1 1. Head Office.....................................................1 2. Offices.........................................................1 SHAREHOLDERS...................................................................1 3. Annual Meeting..................................................1 4. Special Meetings................................................2 5. Special General Meeting Called on Demand of Shareholders........2 6. Notice of Meetings..............................................2 7. Waiver of Notice................................................3 8. Chairman........................................................3 9. Quorum..........................................................3 10. Proxy...........................................................4 11. Voting Right....................................................5 12. Decisions Taken by the Majority.................................5 13. Casting Vote....................................................5 14. Vote by a Show of Hands.........................................5 15. Voice Vote......................................................5 16. Secret Ballot...................................................5 17. Procedure at Meetings...........................................5 18. Scrutineers.....................................................6 - ii - Page 19. Addresses of Shareholders and Subsequent Transferees............6 20. Signed Resolutions..............................................6 21. Participation by Telephone......................................6 BOARD OF DIRECTORS.............................................................7 22. Number..........................................................7 23. Eligibility.....................................................7 24. Election and term of office.....................................7 25. Resignation.....................................................7 26. Removal.........................................................7 27. Vacancy.........................................................8 28. Filling of Vacancies............................................8 29. Remuneration....................................................8 30. General Powers of Directors.....................................8 31. Irregularity....................................................8 32. Borrowing.......................................................8 33. Use of Property or Information..................................9 34. Conflicts of Interest...........................................9 35. Contracts with the Company......................................9 MEETINGS OF THE BOARD OF DIRECTORS............................................10 36. Calling of Meetings............................................10 37. Participation by Telephone.....................................10 38. Quorum.........................................................10 39. Meeting Chairman and Secretary.................................11 40. Procedure......................................................11 41. Voting.........................................................11 42. Signed Resolution..............................................11 OFFICERS......................................................................11 43. Officers.......................................................11 44. Chairman of the Board..........................................12 45. President......................................................12 46. Vice-President.................................................12 - iii - 47. General Manager................................................12 48. Comptroller....................................................12 49. Secretary......................................................12 50. Treasurer......................................................13 51. Removal, Discharge and Resignation.............................13 52. Vacancy........................................................13 53. Remuneration...................................................13 EXECUTIVE COMMITTEE...........................................................13 54. Election.......................................................13 55. Officers, Quorum and Procedure.................................13 56. Chairmanship...................................................14 57. Secretary......................................................14 58. Powers.........................................................14 59. Supervisory Power of the Board of Directors....................14 60. Participation by Telephone and Signed Resolutions..............14 61. Meetings.......................................................14 62. Remuneration...................................................14 63. Removal and Filling of Vacancies...............................14 INDEMNIFICATION AND EXONERATION...............................................15 64. Indemnification and Reimbursement of Expenses..................15 65. Defence - Prosecution by Third Party...........................15 66. Expenses - Criminal Proceedings................................15 67. Prosecution by the Company.....................................15 68. Director of Another Company....................................15 69. Liability Insurance............................................16 70. Reimbursement of Expenses......................................16 CAPITAL STOCK.................................................................16 71. Issue and Stock Options........................................16 72. Calls..........................................................16 73. Share Certificates and Share Transfers.........................16 74. Transfer of Shares.............................................17 - iv - 75. Record Date and Closing of Books...............................17 76. Transfer Agents and Registrars.................................17 77. Lost or Destroyed Certificates.................................17 DIVIDENDS.....................................................................18 78. Dividends......................................................18 FISCAL YEAR AND AUDIT.........................................................18 79. Fiscal Year....................................................18 80. Audit..........................................................18 COMPANY REPRESENTATION FOR CERTAIN PURPOSES...................................19 81. Declaration....................................................19 82. Representation at Meetings.....................................19 83. Signature of Documents.........................................20 84. Declarations in the Register...................................20 MISCELLANEOUS PROVISIONS......................................................20 85. Conflict with the Articles.....................................20 86. Amendments.....................................................20 CODE OF GENERAL BY-LAWS OF THE COMPANY enacted in accordance with the provisions of Part IA of the Companies Act (Quebec) DEFINITIONS For the purposes of these By-laws, unless otherwise provided: "Unanimous Agreement of the Shareholders" means an agreement described in section 123.91 of the Act entered into among all the shareholders of the Company; "Act" means the Companies Act, R.S.Q. c. C-38, as well as any amendment that may be made thereto and any law that may be substituted therefor; "Articles" means the articles of incorporation, continuance or amalgamation of the Company, as amended, as the case may be; "Auditor" means the auditor of the Company and includes an auditing firm. SITUATION OF HEAD OFFICE AND OFFICES 1. Head Office. The head office of the Company is situated in the judicial district in the province of Quebec entered in the Articles at such address as the Board of Directors may determine. 2. Offices. The Company may, in addition to its head office, establish and maintain any other offices and agencies elsewhere within or outside Quebec. SHAREHOLDERS 3. Annual Meeting. The annual meeting of the shareholders of the Company shall be held on such date and at such time as may be fixed by the Board of Directors, to receive and consider the financial statements with the report of the Auditor, to elect directors, to appoint an Auditor and to fix or to authorize the Board of Directors to fix his remuneration, and to consider, deal with and dispose of such other business as may lawfully come before the meeting. -2- The annual meeting of the shareholders shall be held at the head office of the Company or at any other place in the province of Quebec which may be determined by the Board of Directors. However, an annual meeting of the shareholders may be held outside Quebec, in such place as may be determined by the Board of Directors, if the Articles so provide or, failing any such provision in the Articles, if all shareholders entitled to attend such meeting so consent. Any annual meeting may also constitute a special meeting to consider, deal with and dispose of any business to be considered, dealt with and disposed of at any special meeting. 4. Special Meetings. Special meetings or special general meetings of the shareholders may be called at any time as determined by the President or the Board of Directors. Special meetings or special general meetings of the shareholders shall be held at the head office of the Company or at such other place, within or outside Quebec, as may be determined by the Board of Directors. However, if directors are to be elected at a special general meeting of the shareholders, such meeting may be held outside Quebec provided that the Articles of the Company so permit or, failing such provisions, that all shareholders entitled to vote thereat so consent. 5. Special General Meeting Called on Demand of Shareholders. It shall be incumbent upon the directors to call a special general meeting of the shareholders whenever required in writing to do so by the shareholders holding no less than one-tenth (1/10) of the issued shares of the Company of the class or classes that, at the date of the deposit of the requisition, carry the right to vote at the meeting so requested. The requisition shall indicate the general nature of the business to be transacted at the meeting, which business shall lie within the competence of the general meeting of the shareholders. If the meeting is not called and held within twenty-one (21) days from the date upon which the requisition for the meeting was deposited at the head office of the Company to the attention of the Secretary, all shareholders, whether or not they signed the requisition, holding not less than one-tenth (1/10) of the issued shares of the Company carrying the right to vote at the meeting requested may themselves convene such special general meeting. 6. Notice of Meetings. Notice of each annual, special or special general meeting of the shareholders shall be delivered to the shareholders entitled thereto or, at the discretion of the person charged with giving such notice, mailed by ordinary mail or transmitted by facsimile or electronic mail, the whole to the respective addresses, facsimile numbers or electronic-mail addresses of the recipients recorded in the registers of the Company, at least ten (10) days prior to the date fixed for the meeting. If the address of any shareholder does not appear in the books of the Company, then such notice may be sent to such address as the person sending the notice may consider to be the most likely address at which the notice will reach such shareholder promptly. Irregularities in the notice or in the giving thereof, including the accidental omission to give notice or the non-receipt of a notice by any of the shareholders, shall not invalidate any proceedings at any such meeting. -3- A meeting notice shall specify the date, time and place of the meeting. The notice of any annual meeting may, but need not, specify the purposes of the meeting. However, the notice of a special general meeting shall specify in general terms any by-laws and the repeal, amendment or re-enactment of any motion to ratify the adoption, repeal, amendment, or re-enactment of a by-law and any business to be transacted thereat. The notice of any special or special general meeting shall specify in general terms any business to be considered, dealt with and disposed of at such meeting. No notice of any adjourned meeting need be given. The signature on any notice of any meeting may be written, stamped, typewritten, printed or otherwise mechanically reproduced thereon. A certificate of the Secretary or of any other duly authorized officer of the Company in office at the time of the making of the certificate or of any officer, transfer agent or registrar of transfers of shares of the Company shall be conclusive evidence thereof and may be set up against any shareholder as regards the sending or delivery of a notice of meeting. 7. Waiver of Notice. A shareholder may waive the notice of a meeting of the shareholders prior to, during or after the holding of such meeting. His sole attendance at a meeting is a waiver except where he attends a meeting for the express purpose of objecting to the holding of the meeting on the ground that the manner of calling it was irregular. 8. Chairman. The President of the Company, or such other person as may from time to time be appointed for the purpose by the Board of Directors, shall preside at meetings of shareholders. 9. Quorum. One (1) or more persons present in person or represented in accordance with section 10 below and holding not less than fifty percent (50%) plus one of the aggregate number of votes attached to all the voting shares for such meeting shall constitute a quorum at an annual, special or special general meeting of the shareholders, regardless of the actual number of persons physically present. Should a quorum exist at the commencement of a meeting, the shareholders present or represented may proceed with the business for which it was originally called whether or not the quorum is maintained for the duration of the meeting. Should no quorum exist at the commencement of a meeting, the shareholders present or represented may, by a majority vote to that effect, adjourn the meeting to another date and place, though they may not proceed with any business. Should a quorum exist at a meeting so adjourned, said meeting may proceed, failing which, a new meeting shall be convened. -4- 10. Proxy. Shareholders shall be entitled to vote in person or, if a company, by a representative duly authorized by resolution of the directors or other governing body of such company. Shareholders shall also be entitled to vote by proxy. A proxy need not be a shareholder of the Company and may serve as proxy for several shareholders. The instrument appointing a proxy may be in the following form or in any other appropriate form: "I/We, the undersigned, being a shareholder of 9022-3751 Quebec Inc. hereby nominate, constitute and appoint __________ or failing him, __________, my/our attorney, representative and/or proxy with full power and authority to attend, vote and otherwise act for me/us in my/our name and on my/our behalf at the annual (or special) general meeting of shareholders of the Company, to be held at __________ on the _____ day of __________, and at any and all adjournments thereof, with full power of substitution, and I/we, the undersigned, hereby revoke all other instruments of proxy given by me/us, the undersigned, which might be used in respect of such meeting and at any and all adjournments thereof. Given this ____ day of _____________. (signed)" Signatures to instruments of proxy need not be witnessed. The instrument appointing a proxy may also contain instructions pertaining to the vote, which the proxy is required to respect, or be prepared to contemplate all meetings of shareholders generally to be held within a certain period of time, whether or not determined. If such period is not determined, the proxy shall expire one (1) year after the date of the document. The Board of Directors may, in the notice of a meeting of shareholders, specify a date and a time limit when instruments of proxy to be used at a meeting must be deposited with the Company or its mandatory; such date and time limits shall not precede the meeting by more than forty-eight (48) hours. The Board of Directors may also permit details of proxies to be used at or in connection with a meeting and deposited with the Company or its mandatory at a location other than that at which such meeting shall be held to be sent by facsimile to the Secretary -5- of the Company prior to the meeting. In such case, such proxies, if they are otherwise regular, shall be valid and the votes given under their authority shall be counted. 11. Voting Right. Subject to the provisions of the articles and the Act, each shareholder shall have as many votes as he has voting shares of the Company. A shareholder owing arrears on a call on his shares shall not be entitled to vote at the meeting. 12. Decisions Taken by the Majority. Unless otherwise provided in the Act, all matters submitted to a meeting of shareholders will be decided by a simple majority (50% + 1) of the votes validly cast. 13. Casting Vote. In the event of an equality in the voting, the meeting chairman will have a casting vote. 14. Vote by a Show of Hands. Unless a voice vote or a vote by secret ballot is requested, the vote shall be taken by a show of hands. In such case, the shareholders shall vote by raising their hands, and the number of votes shall be calculated in accordance with the number of raised hands. A declaration by the meeting chairman that a resolution has been carried, and an entry made in such regard in the minutes of the meeting shall constitute prima facie proof of such fact, without any necessity to prove the quantity or the proportion of the votes recorded in favour or against such resolution. Votes cast by proxy shall not be counted in a vote by a show of hands. 15. Voice Vote. If the meeting chairman so orders or if another person holding or representing by proxy no fewer than ten percent (10%) of the votes attached to the outstanding voting shares so requests (notwithstanding withdrawal of such request), and if a vote by secret ballot is not requested, a voice vote shall be taken. In such case, each shareholder or proxy shall verbally declare his name and that of each shareholder for whom he holds a proxy, the number of votes he has and the manner in which he shall cast such votes. The number of votes so cast shall determine whether or not a resolution is carried. 16. Secret Ballot. If the meeting chairman so orders or a person holding or representing by proxy no fewer than ten percent (10%) of the issued voting shares so requests, the vote shall be taken by secret ballot. A request for a vote by secret ballot may be made at any time prior to the adjournment of the meeting, even after the holding of a vote by a show of hands or a voice vote, and such a request may also be withdrawn. Each shareholder shall remit to the scrutineers one or more ballots, on which he shall enter the manner in which he shall cast the votes he has and, as the case may be, his name and the number of votes he has. Whether or not a vote by a show of hands or a voice vote has previously been taken on the same matter, the result of a secret ballot shall be deemed to represent the resolution of the meeting in respect thereof. 17. Procedure at Meetings. The Chairman of any meeting of shareholders shall be responsible for conducting the procedure thereat in all respects, and his decision on any matter, even a matter pertaining to the validity or non-validity of a proxy and the -6- receivability or non-receivability of a motion, shall be final and binding on all the shareholders. A declaration by the Chairman that a resolution has been carried or not carried, with or without qualification of unanimity, by a particular majority, shall be conclusive evidence of the fact. At all times during the meeting, the Chairman, of his own initiative or without the assent of the shareholders given by a simple majority, for a valid reason, such as a disturbance or confusion rendering the harmonious and orderly conduct of the meeting impossible, may adjourn the meeting from time to time and no notice of any such adjourned meeting need be given. Should the meeting chairman fail to carry out his duties loyally, the shareholders may remove him at any time and replace him with another person chosen from among their number. 18. Scrutineers. The Chairman at any meeting of shareholders may appoint scrutineers (who may but need not be directors, officers, employees, or shareholders of the Company), who shall act in accordance with the directives of the Chairman. 19. Addresses of Shareholders and Subsequent Transferees. Every shareholder shall furnish to the Company a mailing or electronic address to which all notices intended for such shareholder may be sent to him. Every person who, by operation of law, transfer or other means whatsoever, shall be entitled to any share, shall be bound by every notice in respect of such share of stock which was given before his name and address were entered on the register to the person whose name appears on the register at the time such notice is given. 20. Signed Resolutions. A resolution in writing, signed by all the shareholders entitled to vote on that resolution or their representatives at a shareholders' meeting, shall have the same effect and be as valid as if it had been passed unanimously at a meeting of such shareholders regularly called. Such a resolution duly signed shall be kept with the minutes of meetings of shareholders. 21. Participation by Telephone. Shareholders may, if the articles so permit or, failing such permission, if all the shareholders entitled to participate and to vote at such meeting so consent, participate and vote at a meeting using means permitting all participants to communicate orally amongst themselves, in particular, by telephone. Such shareholders shall then be deemed to have attended the meeting or to constitute the meeting, if all participants so participate in the meeting. They shall then vote by a voice vote by way of derogation to sections 14 and 16 hereinabove. -7- BOARD OF DIRECTORS 22. Number. The Company shall be managed by a Board of Directors composed of the fixed number of directors indicated in its articles. If the articles establish a minimum and a maximum number of directors, the Board of Directors shall be composed of the fixed number of directors established by by-law passed by the Board of Directors or, failing this, selected by the shareholders within such limits. 23. Eligibility. Any natural person may be a director, except a minor, a person of full age under tutorship or curatorship, a person declared incapable by a court in another province or in another country, an undischarged bankrupt or a person prohibited by the court from holding the office of director. Unless otherwise provided in the articles, a director need not be a shareholder. 24. Election and term of office. Except where a director is appointed to fill a vacancy created during the course of a term in office, or where one or several additional directors are elected, each director shall be elected by a majority of votes at an annual meeting of the shareholders. Unless he should decease, resign, be removed or no longer qualify during the course of a term in office, each director so elected shall remain in office until the following annual meeting or the election of his successor. 25. Resignation. A director may resign his office by written notice to the Company. Reasons need not be given for a resignation. Unless a subsequent date is stipulated in such notice, the resignation shall take effect on the date of its delivery. 26. Removal. Unless otherwise provided in the articles of the Company, the shareholders may, by resolution, remove a director, at a special general meeting called for that purpose. The director concerned shall receive a notice of the place, date and time of the meeting within the same period as the shareholders; he may attend the meeting and be heard thereat or file a written statement destined to be read aloud by the chairman of the meeting in order to explain his reasons for opposing his removal. A vacancy created by the removal of a director may be filled by the shareholders at the meeting at which the removal took place; where such is the case, the notice of calling of the meeting shall mention that an election is to be held if the resolution for removal is carried. Where the holders of a specific class of shares have an exclusive right to elect a director, he may only be removed at a special meeting of such shareholders called for that purpose in the same manner as at a special general meeting of the shareholders of the Company. The removal of a director, as well as his election, shall be at the discretion of the shareholders. A director may be removed at any time and such removal need not be based on any particular grounds, whether serious or not. Neither the Company nor the -8- shareholders voting in favour of the removal shall incur any liability toward the director by the mere fact of his removal, even if there be no grounds therefor. 27. Vacancy. The office of a director shall become vacant as of the moment his resignation or removal takes effect; likewise, a vacancy shall be created the moment a director is no longer qualified to fulfill his duties in accordance with section 23, or if he should decease. 28. Filling of Vacancies. If a vacancy occurs in the Board of Directors, the directors then in office shall have the power to appoint for the remainder of the term any other qualified person as a director. However, the directors may continue to act notwithstanding one or more vacancies provided a quorum exists. 29. Remuneration. The remuneration to be paid to the directors shall be such as the directors shall determine and such remuneration shall be in addition to the salary or remuneration of any officer, employee or supplier of services of the Company who is also a member of the Board of Directors, unless a resolution states otherwise. The directors may also be reimbursed for travel and other expenses incurred by them in connection with their duties. 30. General Powers of Directors. Subject to restrictions in a Unanimous Agreement of the Shareholders, the directors of the Company shall manage and administer the Company and may make or cause to be made for the Company any contract which it may by law enter into. The directors shall exercise all such powers and authority as the Company by statute or by its articles is authorized to exercise and do. The directors shall always act by resolution. The directors may, in particular, purchase or dispose of, by purchase, sale, lease, exchange or otherwise, stocks, rights, warrants, options and other securities, buildings and other movable or immovable property or any right or interest therein; for each transaction, they shall fix the consideration and other conditions. 31. Irregularity. Notwithstanding that it be subsequently discovered that there was some defect in the election of any such Board of Directors or in the election or appointment of an administrator, or the absence or loss of eligibility thereof, acts regularly done by them shall be as valid and as binding on the Company as if the election had been regular or each person eligible. 32. Borrowing. The directors may when they deem expedient: (a) borrow money upon the credit of the Company; (b) issue debentures or other securities of the Company and pledge or sell the same for such sums and at such prices as may be deemed expedient; -9- (c) hypothecate the immovables and movables or otherwise affect the movable property of the Company; (d) delegate in whole or in part the powers mentioned hereinabove to one or more officers of the Company, to the extent and in accordance with the terms and conditions set out in the delegation resolution. This by-law shall be regarded as additional to and not replaced by any borrowing by-law adopted by the Company for banking purposes unless otherwise specifically stipulated in such by-law. 33. Use of Property or Information. No director may mingle the Company's property with his own property or use for his own profit or that of a third person any property of the Company or any information he obtains by reason of his duties, unless he is expressly and specifically authorized to do so by the shareholders of the Company. 34. Conflicts of Interest. Each director shall avoid placing himself in any situation where his personal interest would be in conflict with his obligations as a director of the Company. He shall promptly declare to the Company any interest he has in an enterprise or other entity that may place him in a situation of conflict of interest and any right he may set up against it, indicating their nature and value, where applicable. Such declaration of interest shall be recorded in the minutes of the proceedings of the Board of Directors. A general declaration shall be valid as long as the facts have not changed, and the director need not repeat it for a specific subsequent transaction. 35. Contracts with the Company. A director may, even in carrying on his duties, acquire, directly or indirectly, rights in the Company's property or enter into contracts with the Company, to the extent that he immediately informs the Company of such fact, indicating the nature and value of the rights he is acquiring, and that he requests that such fact be recorded in the minutes of the proceedings of the Board of Directors or the written resolution equivalent thereto. A director who is so interested in an acquisition of property or a contract shall abstain, except if required, from the discussion and voting on the question and, if he votes, his vote shall not be counted. However, this rule does not apply to questions concerning the remuneration or conditions of employment of the director. At the request of the President or any director, the interested director shall leave the meeting while the Board of Directors discusses and votes on the acquisition or contract concerned. Neither the Company nor its shareholders may contest the validity of an acquisition of property or a contract involving the Company on one hand and directly or indirectly a director on the other, for the sole reason that the director is a party thereto or is interested -10- therein, if such director made the declaration mentioned hereinabove immediately and correctly. MEETINGS OF THE BOARD OF DIRECTORS 36. Calling of Meetings. Every year, immediately after the annual meeting of the shareholders, a meeting of the new directors present shall be held without further notice if they constitute a quorum, to elect or appoint the officers of the Company and consider, deal with and dispose of any other matter. Meetings of the Board of Directors may be called by or by order of the Chairman of the Board of Directors, if any, the President of the Company or two (2) directors and may be held anywhere within or outside Quebec. A notice of each meeting, specifying the place, date and time, shall be sent to each director at his residence or workplace. The notice shall be sent no less than two (2) days prior to the date fixed for the meeting by ordinary or registered mail or by facsimile or electronic mail. In the absence of an address for a director, the notice may be sent to the address at which the sender considers that the notice is most likely to reach the director promptly. The Board of Directors may resolve to hold periodic or fixed meetings of the Board of Directors, with or without notices of meeting, at any place in Quebec or elsewhere. The purposes for which a meeting of the Board of Directors is called need not be specified. Any director may waive in writing the notice of a meeting of the Board of Directors before, during or after the holding thereof. His sole presence is equivalent to a waiver unless he attended the meeting solely to object to the holding of the meeting on the ground that the manner of calling it was irregular. 37. Participation by Telephone. Directors may, if all are in agreement, participate in a board meeting using means permitting all participants to communicate orally amongst themselves, in particular, by telephone. A director participating in the meeting by such means shall be deemed to have attended the meeting. The directors shall then vote by a voice vote, in derogation of section 41 hereinbelow. 38. Quorum. A majority of the directors in office shall constitute a quorum for a meeting of the Board of Directors. A quorum shall be present for the entire duration of the meeting. If the Board of Directors is composed of a sole director, the decision of such director recorded in writing constitutes the meeting. -11- 39. Meeting Chairman and Secretary. Meetings of the Board of Directors shall be chaired by the Chairman of the Board of Directors, if any, or, failing him, by the President of the Company or, failing him, by a Vice-President designated for such purpose by the President. The Secretary of the Company shall act as secretary of the meetings. The directors present at a meeting may nevertheless appoint any other person as Chairman or secretary of such meeting. 40. Procedure. The meeting chairman ensures that the meeting is conducted smoothly and submits to the Board the motions on which a vote is to be taken and generally conducts the procedure thereat in all respects, in which regard his decision shall be final and binding on all the directors. Should the meeting chairman fail to submit a motion, any director may submit it himself before the meeting is adjourned or closed and, if such motion lies within the competence of the Board of Directors, the Board of Directors shall consider it. For such purpose, the agenda of each meeting of the Board of Directors shall be deemed to include a period for the submission of motions by the directors. Should the meeting chairman fail to carry out his duties loyally, the directors may remove him at any time and replace him by another person. 41. Voting. Each director shall be entitled to one vote, and all matters shall be decided by the majority of the votes cast. The vote shall be taken by a show of hands unless the meeting chairman or a director requests a ballot, in which case the vote shall be taken by ballot. If the vote is taken by ballot, the meeting secretary shall act as scrutineer and count the ballots. The fact of having voted by ballot shall not deprive a director of the right to express his dissidence in respect of the resolution concerned and to cause such dissidence to be entered. Voting by proxy shall not be permitted, and the meeting chairman shall have no casting vote in the case of an equality of votes. 42. Signed Resolution. A written resolution, signed by all the directors, shall be valid and shall have the same effect as if it had been adopted at a meeting of the Board of Directors duly called and held. Each signed resolution shall be inserted in the register of the minutes of the Company, in accordance with its date, in the same manner as minutes. OFFICERS 43. Officers. The officers of the Company shall be the Chairman of the Board, if appointed, the President, and, if elected or appointed, one or more Vice-Presidents, the General Manager, the Comptroller, the Secretary, the Treasurer, and such other officers as the Board of Directors may appoint and whose duties it may determine by resolution. The officers of the Company shall have the powers, functions and duties prescribed by the Board of Directors, in addition to those specified in the by-laws. The same person may hold more than one office. Other than the President, or, if appointed, the Chairman of the Board of Directors, who shall be a director, none of the officers shall be required to be a director or a shareholder of the Company. -12- The Board of Directors may also appoint other officers and servants of the Company within or outside Quebec; the titles, powers, authority, and duties of such persons shall be determined by the Board of Directors. In case of the absence of an officer or for any other valid reason, the Board of Directors may delegate the powers and authority of such officer to any other officer or to a director of the Company. If the Board of Directors consists of one (1) director, that director may hold the offices of President, Secretary or of any other officer of the Company. 44. Chairman of the Board. The Chairman of the Board shall preside at all meetings of the Board of Directors. 45. President. The President shall be the principal officer of the Company and, subject to the control of the Board of Directors and the appointment of a General Manager, shall supervise, administer and manage the affairs of the Company generally. The President shall preside at all meetings of the shareholders and, in the event of the absence, inability or failure of the Chairman of the Board to act, the President shall preside at all meetings of the Board of Directors. 46. Vice-President. In case of absence, incapacity and failure to act of the President, the Vice-President or, if more than one, the First Vice-President and, failing him, the Second Vice-President and so on, shall assume the powers and duties of the President. The powers, functions and duties of a Vice-President shall be those which the Board of Directors or the President prescribe. 47. General Manager. The General Manager shall, subject to the control of the President, manage the operations of the Company generally. He shall comply with all instructions received from the Board of Directors and shall give to the Board of Directors or the members thereof the information that they require concerning the affairs of the Company. When the General Manager is also a director, he may be designated as "Managing Director". 48. Comptroller. The Comptroller shall, subject to the control of the President, be the chief accounting officer of the Company. He shall, upon request, render account to the President and the directors of the financial situation of the Company and all its transactions. He shall be entrusted with and have custody of the books of account. 49. Secretary. The Secretary shall attend to the preparation and sending of all notices of the Company. He shall act as secretary at all shareholders' meetings and shall keep the minutes of all meetings of the Board of Directors, the Executive Committee and the shareholders in a book or books to be kept for that purpose. He shall have charge of the -13- records of the Company including books containing the names and addresses of the members of the Board of Directors of the Company, together with copies of all reports made by the Company and such other books or documents as the directors may prescribe. He shall be responsible for the keeping and filing of all books, reports, certificates and all other documents required by law to be kept and filed by the Company. He shall be subject to the control of the President. 50. Treasurer. Subject to the control of the President, the Treasurer shall have general charge of the finances of the Company. He shall deposit the money and other valuable effects of the Company in the name and to the credit of the Company in a bank or another deposit institution designated by the Board of Directors. 51. Removal, Discharge and Resignation. The Board of Directors may, by the affirmative vote of the absolute majority of the Board, remove any officer, with or without cause, at any time, unless the resolution or contract providing for his appointment provides otherwise. Any mandatary, officer or servant who is not an officer of the Company may be discharged by the President or any other officer authorized for such purpose, with or without cause, at any time, unless the contract providing for his appointment stipulates otherwise. Any officer may resign his office at any time by delivering his resignation in writing to the President or the Secretary of the Company, or at a meeting of the Board of Directors, unless otherwise agreed. 52. Vacancy. Any vacancy occurring in the office of any officer may be filled by the Board of Directors. 53. Remuneration. The remuneration of all officers shall be fixed by the Board of Directors. The remuneration of all other mandataries, officers and servants of the Company shall be fixed by the President or any other officer authorized for such purpose. EXECUTIVE COMMITTEE 54. Election. The Board of Directors may, whenever the Board of Directors consists of more than six (6) members, elect from among their number an Executive Committee of no fewer than three (3) members including, ex officio, the Chairman of the Board of Directors or, if not appointed, the President of the Company. 55. Officers, Quorum and Procedure. The Executive Committee shall have power to appoint officers thereto, to fix its quorum, which quorum shall consist of not less than a majority of its members, and to determine its own procedure. -14- 56. Chairmanship. Meetings of the Executive Committee shall be chaired by the Chairman of the Board of Directors or, if none is appointed, by the President of the Company. In his absence, meetings of the Executive Committee shall be chaired by the person whom the members of the Executive Committee present choose amongst themselves. 57. Secretary. The Secretary of the Company shall act as secretary of the Executive Committee unless some other secretary be appointed by such committee. 58. Powers. The Executive Committee shall possess the powers and authority of the Board of Directors for the administration of the day-to-day affairs of the Company, except the powers which, by law, must be exercised by the Board of Directors, as well as the powers which the Board of Directors may expressly reserve for itself. 59. Supervisory Power of the Board of Directors. All acts of the Executive Committee shall be subject to the supervision of the Board of Directors and shall be reported to the Board of Directors when the Board of Directors so directs. The Board of Directors may invalidate or modify decisions taken by the Executive Committee, provided that the rights of third parties are not affected. 60. Participation by Telephone and Signed Resolutions. Sections 37 and 42 shall apply, mutatis mutandis, to meetings of the Executive Committee. 61. Meetings. Meetings of the Executive Committee may be held at the head office of the Company or at such other place within or outside Quebec as the Executive Committee may determine. Meetings of the Executive Committee may be called by or by the order of the President or by two members of such committee. A member of the Executive Committee may waive in writing a notice of a meeting of the Executive Committee, prior to or after the holding of the meeting. His sole attendance at a meeting is a waiver except where he attends a meeting solely for the purpose of objecting to the holding of the meeting on the ground that the manner of calling it was irregular. 62. Remuneration. The members of the Executive Committee shall be entitled to receive such remuneration for their services as members of the Executive Committee as the Board of Directors may determine. 63. Removal and Filling of Vacancies. The Board of Directors may from time to time remove any member of the Executive Committee from office. The Board of Directors may also fill any vacancy which may occur in the membership of the Executive Committee. -15- INDEMNIFICATION AND EXONERATION 64. Indemnification and Reimbursement of Expenses. The Company is required to indemnify a director, officer or other mandatary for any prejudice suffered by reason or in respect of the performance of his duties and shall also reimburse him for reasonable expenses incurred for the same purposes, in each case in accordance with the provisions set out hereinbelow. 65. Defence - Prosecution by Third Party. The Company shall assume the defence of a director, an officer or a mandatary prosecuted by a third party for an act done in the exercise of his duties and shall pay damages, if any, resulting from that act, unless he has committed a grievous offence or a personal offence separable from the exercise of his duties. In particular, such an offence will include the violation by a director, officer or mandatary of his duties of loyalty and honesty toward the Company, especially by placing himself in a situation of conflict of interest. Such assumption of defence shall involve the payment or reimbursement of reasonable judicial and extra-judicial costs incurred by the director, officer or other mandatary who is prosecuted by a third party. The payment of damages shall include the amounts paid to settle an action out of court and any fine imposed. 66. Expenses - Criminal Proceedings. However, in a penal or criminal proceeding, the Company shall assume the payment of the expenses of a director, officer or other mandatary only if he had reasonable grounds to believe that his conduct was in compliance with the law, or if he has been freed or acquitted. 67. Prosecution by the Company. If the Company prosecutes a director, officer or other mandatary for an act or omission in the exercise of his duties, it shall undertake to assume the reasonable judicial and extra-judicial costs reasonably incurred by such director, officer or other mandatary, if it loses its case and the court so decides. If the Company wins its case only in part, the court may determine the amount of the expenses it shall assume. 68. Director of Another Company. The Company shall indemnify, in the manner set out in sections 64 to 67 hereinabove, any person who acts at its request as a director for another legal person of which it is a shareholder or creditor. 69. Liability Insurance. The Company may purchase and maintain for the benefit of its directors, officers and other mandataries, as well as their heirs, legatees and assigns, insurance covering their personal liability by reason of the fact that they perform such duties or act as directors of a legal person of which the Company is a shareholder or creditor. However, such insurance is subject to the exclusions and restrictions imposed by -16- the insurer, and it shall never cover the liability arising from the failure to act honestly and loyally toward the Company, a grievous offence or a personal offence separable from the execution of the duties performed for the Company. 70. Reimbursement of Expenses. Subject to a contractual agreement specifying or restricting this obligation, the Company is required to reimburse a director, an officer or another mandatary for reasonable and necessary expenses incurred by him in the exercise of his duties, plus interest from the date on which such expenses were paid by him. Such reimbursement shall be made upon presentation of all relevant vouchers. CAPITAL STOCK 71. Issue and Stock Options. Subject to all provisions contained in the articles of the Company or in a Unanimous Agreement of the Shareholders limiting the allocation or issue of shares of the capital stock of the Company, the directors may accept subscriptions for, allot, distribute, issue, in whole or in part, the unissued shares of the Company, grant options thereon or otherwise dispose thereof to any person, enterprise, corporation, company, or legal person, upon the conditions and for the lawful consideration in compliance with the articles of the Company which is determined by the directors, without any requirement to offer such unissued shares to persons who are already shareholders rateably to the shares held by them. 72. Calls. The directors may at all times request or call upon the shareholders for the payment in whole or in part of an amount still unpaid on shares subscribed or held by them. The request shall mention that, in the event of non-payment, the shares contemplated by the call shall be liable to forfeiture. Each shareholder shall pay the call on his shares at the times and places fixed by the directors. Each call shall bear interest at the rate of six percent (6%) per year from the date designated for the payment of such call up to the date on which such payment is actually made. 73. Share Certificates and Share Transfers. Certificates representing the shares of the capital stock of the Company shall bear the signature of the President or a Vice-President or that of the Secretary or an Assistant Secretary. Such signatures may be engraved, lithographed or otherwise mechanically reproduced. Any certificate bearing a facsimile of the signatures of the authorized officers shall be deemed to have been signed manually, notwithstanding the fact that the deemed signatory has since ceased to be an officer of the Company. It is not necessary to affix the official seal of the Company on a share certificate. 74. Transfer of Shares. Subject to section 76, the Secretary or another officer entrusted with such duty shall keep at the office of the Company a register of transfers in which shall be recorded the particulars of every transfer of shares of the capital stock of the Company. The directors may also decide that one or more additional registers of shareholders or -17- transfers shall also be kept in Quebec or elsewhere, in the specified locations and may appoint officers or mandataries to keep them and to record therein transfers of shares of the capital stock of the Company. No transfer may be made of shares on which arrears are owing following a call. No transfer of shares whereof the full price has not been paid shall be made without the consent of the directors, and the directors may decline to register a transfer of fully paid shares belonging to a shareholder who is indebted to the Company. When a share upon which a call is unpaid is transferred, the transferee shall be liable for the call to the same extent and subject to the same remedy for forfeiture of the share, as if he had been the original holder of the share, and the transferor shall also remain liable for the call until it has been paid. The Company shall not be bound to see to the execution of a trust on any shares. The receipt by the shareholder in whose name a share is recorded in the books of the Company shall be a valid and appropriate discharge to the Company for any dividend or amount payable in respect of such share, whether or not the trust has been disclosed to the Company, and the Company shall not be bound to inquire about the use of the amount represented by the receipt. 75. Record Date and Closing of Books. The Board of Directors may fix a date preceding by no more than thirty (30) days the date of payment of a dividend or an allocation of rights, as the record date for the determination of the shareholders entitled to such dividend or such rights; hence, only shareholders recorded on the date so fixed shall be entitled thereto, notwithstanding any transfer of shares on the books of the Company between the record date and the date on which the dividend is paid or the rights allocated. The Board of Directors may also close the principal and additional registers of transfers for thirty (30) days in one (1) year by giving notice in the manner established by law. 76. Transfer Agents and Registrars. The Board of Directors may appoint or remove transfer agents and/or registrars of transfers of shares and make by-laws on share transfers and the registration of shares. Any certificate of shares thereafter issued after such appointment shall, on pain of invalidity, be countersigned by one of the transfer agents or one of registrars of transfers. 77. Lost or Destroyed Certificates. The Board of Directors may, upon conditions it shall establish, direct that one or more new certificates of shares may be issued to replace any certificate or certificates of shares theretofore issued by the Company that have been worn out, lost, stolen, or destroyed, and the Board of Directors, when authorizing the issuance of such new certificate or certificates, may, in its discretion, and as a condition precedent thereto, require the owner of the worn-out, lost, stolen or destroyed certificate or certificates or his legal representatives to give to the Company or transfer agents and to such registrar or registrars as may be authorized or required to countersign such a new certificate, a bond in such sum as it may direct, as indemnity against any claim that may be -18- made against them for or in respect of the shares of stock represented by the certificates alleged to have been worn out, lost, stolen or destroyed. DIVIDENDS 78. Dividends. The Board of Directors may, periodically and in compliance with the law, declare and pay dividends to the shareholders, in accordance with their respective rights. Dividends payable on a share which is not fully paid up shall be reduced in proportion to the amount remaining to be paid. The Board of Directors may stipulate that a dividend be payable, in whole or in part, in Company stock. For such purpose, it may authorize the issue of shares of the capital stock of the Company as fully paid up or, with the consent of the recipients of such dividend, partially paid up. A transfer of shares shall not affect allocation of the rights to the dividends declared thereon as long as the transfer is not recorded. When two (2) or more persons are recorded as joint holders of one share, each of them may give a valid receipt for any dividend payable or paid on such share. FISCAL YEAR AND AUDIT 79. Fiscal Year. The fiscal year end date of the Company shall be the last day of February. 80. Audit. The shareholders, at each annual meeting, shall appoint an auditor, who shall hold such office until the next annual meeting or until a successor has been appointed, unless he resigns or his position otherwise becomes vacant. At least once in every fiscal year such auditor shall examine the accounts of the Company and any balance sheet laid before the Company at any annual meeting and shall report thereon to the shareholders. His remuneration shall be fixed by the shareholders or the Board of Directors, if the shareholders so authorize. No director or officer of the Company or any person who is affiliated therewith may be appointed as auditor. In the event of a vacancy in the office of auditor, the Board of Directors may fill the position and appoint thereto a qualified replacement, who shall hold that office until the term expires. To the extent that the Company has not effected any public distribution of its securities, the shareholders may decide not to appoint an auditor for a fiscal year, by -19- resolution adopted unanimously, including by shareholders who are not otherwise qualified to vote. The resolution shall be valid only until the next annual meeting. COMPANY REPRESENTATION FOR CERTAIN PURPOSES 81. Declaration. The President, the Chairman of the Board of Directors, any Vice-President, the General Manager, Comptroller, Secretary or Treasurer and each of them or, with the authorization of the Board of Directors, any other officer, servant or person shall be authorized and eligible to make answer for the Company to all writs, orders or interrogatories upon articulated facts issued by any court and to declare for and on behalf of the Company any answer to writs of attachment by way of garnishment in which the Company is garnishee and to make all affidavits and sworn declarations in connection therewith or any and all judicial proceedings to which the Company is a party and to make demands for assignment of property or petition for winding-up or receivership orders upon any debtor of the Company and to attend and vote at all meetings of creditors of the Company's debtors and grant proxies in connection therewith. 82. Representation at Meetings. The President, the Chairman of the Board of Directors, any Vice-President, the General Manager, Comptroller, Secretary and Treasurer or any one of them or any other officer or person authorized by the Board of Directors shall represent the Company and attend and vote at any and all meetings of shareholders or members of any enterprise, company, legal person, or syndicate in which the Company holds shares or is otherwise interested, and any measure taken or vote cast by them shall be deemed to be the act or vote of the Company. Two of the following persons acting jointly, namely the President, the Chairman of the Board of Directors, any Vice-President, the General Manager, the Comptroller, the Secretary and the Treasurer acting jointly shall moreover be empowered to authorize any person (whether an officer of the Company or not) to attend, vote and otherwise act at any and all meetings of shareholders or members of any firm, company, corporation, or syndicate in which the Company holds shares or is otherwise interested, and for such purpose shall be empowered to execute and use, for and on behalf and in the name of the Company, an instrument or instruments of proxy in such form and in accordance with such terms as such officers so executing and delivering the same may see fit, including therein but without in any way limiting or restricting the generality of the foregoing, provisions for the appointment of a substitute proxy and the revocation of all instruments of proxy given by the Company prior thereto with respect to a meeting. 83. Signature of Documents. Contracts, documents, written acts, including discharges and releases, requiring the signature of the Company may be validly signed by the President alone, or by any two of any Vice-President, the General Manager, the Secretary and the Treasurer acting jointly, and hence be binding on the Company. The Board of Directors may also designate any other person to sign, alone or in conjunction with one or -20- more other persons, and to deliver on behalf of the Company all contracts, documents and written acts, and such authorization may be given by resolution in general or specific terms. 84. Declarations in the Register. Declarations to be filed with the Inspector General of Financial Institutions in accordance with the Act respecting the legal publicity of sole proprietorships, partnerships and legal persons shall be signed by the President, any director of the Company or any other person authorized for such purpose by resolution of the Board of Directors. Any director having ceased to hold such office as a result of his resignation, removal or otherwise shall be authorized to sign on behalf of the Company and file an amending declaration to the effect that he has ceased to be a director, from fifteen (15) days after the date of such cessation, unless he receives proof that the Company has filed such a declaration. MISCELLANEOUS PROVISIONS 85. Conflict with the Articles. In the event of conflict between the provisions of a by-law and those of the articles, the latter shall prevail. 86. Amendments. The board of directors shall have the power to repeal or amend any by-law, but any such repeal or amendment will be in force only until the next annual meeting of the shareholders, unless in the interim it is confirmed by a special general meeting of the shareholders called for such purpose. If such repeal or amendment is not confirmed by the simple majority of the votes of the shareholders of such annual meeting, it will cease, but from such day only, to be in force. /s/ Andre Heroux -------------------------------- Andre Heroux President EX-3.7 10 y99327exv3w7.txt CHARTER OF AKER PLASTICS COMPANY, INC. EXHIBIT 3.7 AMENDED AND RESTATED ARTICLES OF INCORPORATION OF AKER PLASTICS COMPANY INC. The Articles of Incorporation of Aker Plastics Company Inc. (the "Corporation"), were filed with the Secretary of State on February 1, 1971, pursuant to an Agreement and Plan of Merger dated as of October 25, 2002, the Corporation hereby adopts these Amended and Restated Articles of Incorporation which are being duly executed and filed pursuant to the Indiana Business Corporation Law (the "Law"). ARTICLE I NAME The name of the Corporation is Aker Plastics Company Inc. ARTICLE II PURPOSES AND POWERS Section 2.1. Purposes of the Corporation. The purposes for which the Corporation is formed are (a) to engage in commercial business, and to carry on such activities of every kind or nature as may be allied or incidental to such general business, and (b) to engage in the transaction of any or all lawful business for which corporations may now or hereafter be incorporated under the Corporation Law. Section 2.2. Powers of the Corporation. The Corporation shall have (a) all powers now or hereafter authorized by or vested in corporations pursuant to the provisions of the Corporation Law, (b) all powers now or hereafter vested in corporations by common law or any other statute or act, and (c) all powers authorized by or vested in the Corporation by the provisions of these Amended and Restated Articles of Incorporation or by the provisions of its Bylaws as from time to time in effect. ARTICLE III TERM OF EXISTENCE The period during which the Corporation shall continue is perpetual. ARTICLE IV REGISTERED OFFICE AND AGENT The street address of the Corporation's registered office is 205 West Jefferson Boulevard, Suite 250, South Bend, Indiana 46601 and the name of its registered agent at such office is Peter G. Trybula. ARTICLE V SHARES Section 5.1. Authorized Class and Number of Shares. The capital stock of the Corporation shall be of one class and kind, which may be referred to as common shares. The total number of shares which the Corporation has authority to issue shall be One Million (1,000,000) shares. The Corporation's shares do not have any par or stated value, except that, solely for the purpose of any statute or regulation of any jurisdiction imposing any tax or fee based upon the capitalization of the Corporation, each of the Corporation's shares shall have no par value per share. Section 5.2. Voting Rights of Shares. Except as otherwise provided by the Corporation Law and subject to such shareholder disclosure and recognition procedures (which may include voting prohibition sanctions) as the Corporation may by action of its Board of Directors establish, the Corporation's shares have unlimited voting rights and each outstanding share shall, when validly issued by the Corporation, entitle the record holder thereof to one vote at all shareholders' meetings on all matters submitted to a vote of the shareholders of the Corporation. Section 5.3. Other Terms of Shares. The Corporation's shares shall be equal in every respect insofar as their relationship to the Corporation is concerned (but such equality of rights shall not imply equality of treatment as to redemption or other acquisition of shares by the Corporation) The holders of shares shall be entitled to share ratably in such dividends or other distributions (other than purchases, redemptions or other acquisitions of shares by the Corporation), if any, as are declared and paid from time to time on the shares at the discretion of the Board of Directors. In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, the holders of shares shall be entitled to share, ratably according to the number of shares held by them, in all remaining assets of the Corporation available for distribution to its shareholders. When the Corporation receives the consideration specified in a subscription agreement entered into before incorporation, or for which the Board of Directors authorized the issuance of shares, as the case may be, the shares issued therefor shall be fully paid and nonassessable. The Corporation shall have the power to declare and pay dividends or other distributions upon the issued and outstanding shares of the Corporation, subject to the limitation that a dividend or other distribution may not be made if, after giving it effect, the Corporation 2 would not be able to pay its debts as they become due in the usual course of business or the Corporation's total assets would be less than its total liabilities. The Corporation shall have the power to issue shares as a share dividend or other distribution in respect of issued and outstanding shares. The Corporation shall have the power to acquire (by purchase, redemption or otherwise), hold, own, pledge, sell, transfer, assign, reissue, cancel or otherwise dispose of the shares of the Corporation in the manner and to the extent now or hereafter permitted by the laws of the State of Indiana (but such power shall not imply an obligation on the part of the owner or holder of any share to sell or otherwise transfer such share to the Corporation), including the power to purchase, redeem or otherwise acquire the Corporation's own shares, directly or indirectly, and without pro rata treatment of the owners or holders thereof, unless, after giving effect thereto, the Corporation would not be able to pay its debts as they become due in the usual course of business or the Corporation's total assets would be less than its total liabilities. Shares of the Corporation purchased, redeemed or otherwise acquired by it shall constitute authorized but unissued shares, unless the Board of Directors adopts a resolution providing that such shares constitute authorized and issued but not outstanding shares. The Board of Directors of the Corporation may dispose of, issue and sell shares in accordance with, and in such amounts as may be permitted by, the laws of the State of Indiana and the provisions of these Amended and Restated Articles of Incorporation and for such consideration, at such price or prices, at such time or times and upon such terms and conditions (including the privilege of selectively repurchasing the same) as the Board of Directors of the Corporation shall determine, without the authorization or approval by any shareholders of the Corporation. Shares may be disposed of, issued and sold to such persons, firms or corporations as the Board of Directors may determine, without any preemptive or other right on the part of the owners or holders of other shares of the Corporation to acquire such shares by reason of their ownership of such other shares. ARTICLE VI DIRECTORS Section 6.1. Number. The initial Board of Directors shall be comprised of three (3) members, which number may be changed by amendment to the Bylaws. Section 6.2. Qualifications. Directors need not be shareholders of the Corporation or residents of this or any other state in the United States. Section 6.3. Vacancies. Vacancies occurring in the Board of Directors shall be filled in the manner provided in the Bylaws or, if the Bylaws do not provide for the filling of vacancies, in the manner provided by the Corporation Law. The Bylaws may also provide that in certain circumstances specified therein, vacancies occurring in the Board of Directors may be filled by vote of the shareholders at a special meeting called for that purpose or at the next annual meeting of shareholders. 3 Section 6.4. Liability of Directors. A Director's responsibility to the Corporation shall be limited to discharging his or her duties as a Director, including his duties as a member of any committee of the Board of Directors upon which he or she may serve, in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the Director reasonably believes to be in the best interests of the Corporation, all based on the facts then known to the Director. In discharging his or her duties, a Director is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by: (a) One (1) or more officers or employees of the Corporation whom the Director reasonably believes to be reliable and competent in the matters presented; (b) Legal counsel, public accountants, or other persons as to matters the Director reasonably believes are within such person's professional or expert competence; or (c) A committee of the Board of which the Director is not a member if the Director reasonably believes the Committee merits confidence; but a Director is not acting in good faith if the Director has knowledge concerning the matter in question that makes reliance otherwise permitted by this Section 6.4 unwarranted. A Director may, in considering the best interests of the Corporation, consider the effects of any action on shareholders, employees, suppliers and customers of the Corporation, and communities in which offices or other facilities of the Corporation are located, and any other factors the Director considers pertinent. A Director shall not be liable for any action taken as a Director, or any failure to take any action, unless (a) the Director has breached or failed to perform the duties of the Director's office in compliance with this Section 6.4, and (b) the breach or failure to perform constitutes willful misconduct or recklessness. Section 6.5. Removal of Directors. Any one or more of the members of the Board of Directors may be removed, with or without cause, only at a meeting of the shareholders called expressly for that purpose, by the affirmative vote of the holders of outstanding shares representing at least a majority of all the votes then entitled to be cast at an election of Directors. No Director may be removed except as provided in this Section 6.5. ARTICLE VII PROVISIONS FOR REGULATION OF BUSINESS AND CONDUCT OF AFFAIRS OF CORPORATION Section 7.1. Meetings of Shareholders. Meetings of the shareholders of the Corporation shall be held at such time and at such place, either within or without the State of Indiana, as may be stated in or fixed in accordance with the Bylaws of the Corporation and specified in the respective notices or waivers of notice of any such meetings. 4 Section 7.2. Special Meetings of Shareholders. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by the Corporation Law, may be called at any time by the Board of Directors or the person or persons authorized to do so by the Bylaws and shall be called by the Board of Directors if the Secretary of the Corporation receives one (1) or more written, dated and signed demands for a special meeting, describing in reasonable detail the purpose or purposes for which it is to be held, from the holders of shares representing at least twenty-five percent (25%) of all the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting. If the Secretary receives one (1) or more proper written demands for a special meeting of shareholders, the Board of Directors may set a record date for determining shareholders entitled to make such demand. Section 7.3. Meetings of Directors. Meetings of the Board of Directors of the Corporation shall be held at such place, either within or without the State of Indiana, as may be authorized by the Bylaws and specified in the respective notices or waivers of notice of any such meetings or otherwise specified by the Board of Directors. Unless the Bylaws provide otherwise (b) regular meetings of the Board of Directors may be held without notice of the date, time, place, or purpose of the meeting and (b) the notice for a special meeting need not describe the purpose or purposes of the special meeting. Section 7.4. Action Without Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors or shareholders, or of any committee of such Board, may be taken without a meeting, if the action is taken by all members of the Board or all shareholders entitled to vote on the action, or by all members of such committee, as the case may be. The action must be evidenced by one (1) or more written consents describing the action taken, signed by each Director, or all the shareholders entitled to vote on the action, or by each member of such committee, as the case may be, and, in the case of action by the Board of Directors or a committee thereof, included in the minutes or filed with the corporate records reflecting the action taken or, in the case of action by the shareholders, delivered to the Corporation for inclusion in the minutes or filing with the corporate records. Action taken under this Section 7.4 is effective when the last director, shareholder or committee member, as the case may be, signs the consent, unless the consent specifies a different prior or subsequent effective date, in which case the action is effective on or as of the specified date. Such consent shall have the same effect as a unanimous vote of all members of the Board, or all shareholders, or all members of the committee, as the case may be, and may be described as such in any document. Section 7.5. Bylaws. The Board of Directors shall have the exclusive power to make, alter, amend or repeal, or to waive provisions of, the Bylaws of the Corporation by the affirmative vote of a majority of the entire number of Directors at the time, except as expressly provided by the Corporation Law. Any provisions for the regulation of the business and management of the affairs of the Corporation not stated in these Amended and Restated Articles of Incorporation may be stated in the Bylaws. The Board of Directors may adopt Emergency Bylaws of the Corporation and shall have the exclusive power (except as may otherwise be provided therein) to make, alter, amend or repeal, or to waive provisions of, the Emergency Bylaws by the affirmative vote of a majority of the entire number of Directors at such time. 5 Section 7.6. Interest of Directors. (a) A conflict of interest transaction is a transaction with the Corporation in which a Director of the Corporation has a direct or indirect interest. A conflict of interest transaction is not voidable by the Corporation solely because of the Director's interest in the transaction if any one (1) of the following is true: (1) The material facts of the transaction and the Director's interest were disclosed or known to the Board of Directors or a committee of the Board of Directors and the Board of Directors or committee authorized, approved, or ratified the transaction. (2) The material facts of the transaction and the Director's interest were disclosed or known to the shareholders entitled to vote and they authorized, approved, or ratified the transaction. (3) The transaction was fair to the Corporation. (b) For purposes of this Section 7.6, a Director of the Corporation has an indirect interest in a transaction if: (1) Another entity in which the Director has a material financial interest or in which the Director is a general partner is a party to the transaction; or (2) Another entity of which the Director is a director, officer, or trustee is a party to the transaction and the transaction is, or is required to be, considered by the Board of Directors of the Corporation. (c) For purposes of Section 7.6(a)(1), a conflict of interest transaction is authorized, approved, or ratified if it receives the affirmative vote of a majority of the Directors on the Board of Directors (or on the committee) who have no direct or indirect interest in the transaction, but a transaction may not be authorized, approved, or ratified under this section by a single Director. If a majority of the Directors who have no direct or indirect interest in the transaction vote to authorize, approve, or ratify the transaction, a quorum shall be deemed present for the purpose of taking action under this Section 7.6. The presence of, or a vote cast by, a Director with a direct or indirect interest in the transaction does not affect the validity of any action taken under Section 7.6(0(l), if the transaction is otherwise authorized, approved, or ratified as provided in such subsection. (d) For purposes of Section 7.6(a)(2), shares owned by or voted under the control of a Director who has a direct or indirect interest in the transaction, and shares owned by or voted under the control of an entity described in Section 7.6(b), may be counted in such a vote of shareholders to determine whether to authorize, approve or ratify a conflict of interest transaction. 6 Section 7.7. Nonliability of Shareholders. Shareholders of the Corporation are not personally liable for the acts or debts of the Corporation, nor is private property of shareholders subject to the payment of corporate debts. Section 7.8. Indemnification of Officers, Directors and Other Eligible Persons. (a) To the extent not inconsistent with applicable law, every Eligible Person shall be indemnified by the Corporation against all Liability and reasonable Expense that may be incurred by him or her in connection with or resulting from any Claim, (i) if such Eligible Person is Wholly Successful with respect to the Claim, or (ii) if not Wholly Successful, then if such Eligible Person is determined, as provided in either Section 7.8(f) or 7.8(g), to have acted in good faith, in what he or she reasonably believed to be the best interests of the Corporation or at least not opposed to its best interests and, in addition, with respect to any criminal claim is determined to have had reasonable cause to believe that his or her conduct was lawful or had no reasonable cause to believe that his or her conduct was unlawful. The termination of any Claim, by judgment, order, settlement (whether with or without court approval), or conviction or upon a plea of guilty or of nolo contendere, or its equivalent, shall not create a presumption that an Eligible Person did not meet the standards of conduct set forth in clause (ii) of this subsection (a). The actions of an Eligible Person with respect to an employee benefit plan subject to the Employee Retirement Income Security Act of 1974 shall be deemed to have been taken in what the Eligible Person reasonably believed to be the best interests of the Corporation or at least not opposed to its best interests if the Eligible Person reasonably believed he or she was acting in conformity with the requirements of such Act or he or she reasonably believed his or her actions to be in the interests of the participants in or beneficiaries of the plan. (b) The term "Claim" as used in this Section 7.8 shall include every pending, threatened or completed claim, action, suit or proceeding and all appeals thereof (whether brought by or in the right of this Corporation or any other corporation or otherwise), civil, criminal, administrative or investigative, formal or informal, in which an Eligible Person may become involved, as a party or otherwise: (i) by reason of his or her being or having been an Eligible Person, or (ii) by reason of any action taken or not taken by him or her in his or her capacity as an Eligible Person, whether or not he or she continued in such capacity at the time such Liability or Expense shall have been incurred. (c) The term "Eligible Person" as used in this Section 7.8 shall mean every person (and the estate, heirs and personal representatives of such person) who is or was a Director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, agent or fiduciary of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other organization or entity, whether for profit or not. An Eligible Person shall also be considered to have been serving an employee benefit plan at the request of the Corporation if his or her duties to the Corporation also imposed duties on, or otherwise involved services by, him or her to the plan or to participants in or beneficiaries of the plan. 7 (d) The terms "Liability" and "Expense" as used in this Section 7.8 shall include, but shall not be limited to, counsel fees and disbursements and amounts of judgments, fines or penalties against (including excise taxes assessed with respect to an employee benefit plan), and amounts paid in settlement by or on behalf of, an Eligible Person. (e) The term "Wholly Successful" as used in this Section 7.8 shall mean (i) termination of any Claim against the Eligible Person in question without any finding of liability or guilt against him, (ii) approval by a court or agency, with knowledge of the indemnity herein provided, of a settlement of any Claim, or (iii) the expiration of a reasonable period of time after the threatened making of any Claim without commencement of an action, suit or proceeding and without any payment or promise made to induce a settlement. (f) Every Eligible Person claiming indemnification hereunder (other than one who has been Wholly Successful with respect to any Claim) shall be entitled to indemnification (i) if special independent legal counsel, which may be regular counsel of the Corporation or other disinterested person or persons, in either case selected by the Board of Directors, whether or not a disinterested quorum exists (such counsel or person or persons being hereinafter called the "Referee"), shall deliver to the Corporation a written finding that such Eligible Person has met the standards of conduct set forth in Section 7.8(a)(ii), and (ii) if the Board of Directors, acting upon such written finding, so determines. The Board of Directors shall, if an Eligible Person is found to be entitled to indemnification pursuant to the preceding sentence, also determine the reasonableness of the Eligible Person's Expenses. The Eligible Person claiming indemnification shall, if requested, appear before the Referee, answer questions that the Referee deems relevant and shall be given ample opportunity to present to the Referee evidence upon which he or she relies for indemnification. The Corporation shall, at the request of the Referee, make available facts, opinions or other evidence in any way relevant to the Referee's finding that are within the possession or control of the Corporation. (g) If an Eligible Person claiming indemnification pursuant to Section 7.8(f) is found not to be entitled thereto, or if the Board of Directors fails to select a Referee under Section 7.8(f) within a reasonable amount of time following a written request of an Eligible Person for the selection of a Referee, or if the Referee or the Board of Directors fails to make a determination under Section 7.8(1) within a reasonable amount of time following the selection of a Referee, the Eligible Person may apply for indemnification with respect to a Claim to a court of competent jurisdiction, including a court in which the Claim is pending against the Eligible Person. On receipt of an application, the court, after giving notice to the Corporation and giving the Corporation ample opportunity to present to the court any information or evidence relating to the claim for indemnification that the Corporation deems appropriate, may order indemnification if it determines that the Eligible Person is entitled to indemnification with respect to the Claim because such Eligible Person met the standards of conduct set forth in Section 7.8(a)(ii). If the court determines that the Eligible Person is entitled to indemnification, the court shall also determine the reasonableness of the Eligible Person's Expenses. (h) The rights of indemnification provided in this Section 7.8 shall be in addition to any rights to which any Eligible Person may otherwise be entitled. Irrespective of the provisions of this Section 7.8, the Board of Directors may, at any time and from time to time, (i) approve indemnification of any Eligible Person to the full extent permitted by the provisions 8 of applicable law at the time in effect, whether on account of past or future transactions, and (ii) authorize the Corporation to purchase and maintain insurance on behalf of any Eligible Person against any Liability asserted against him or any Liability or Expense incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him against such Liability or Expense. (i) Expenses incurred by an Eligible Person with respect to any Claim, may be advanced by the Corporation (by action of the Board of Directors, whether or not a disinterested quorum exists) prior to the final disposition thereof upon receipt of an undertaking by or on behalf of the Eligible Person to repay such amount if he or she is determined not to be entitled to indemnification. (j) The provisions of this Section 7.8 shall be deemed to be a contract between the Corporation and each Eligible Person, and an Eligible Person's rights hereunder shall not be diminished or otherwise adversely affected by any repeal, amendment or modification of this Section 7.8 that occurs subsequent to such person becoming an Eligible Person. (k) The provisions of this Section 7.8 shall be applicable to Claims made or commenced after the adoption hereof, whether arising from acts or omissions to act occurring before or after the adoption hereof. ARTICLE VIII BOARD OF DIRECTORS The name and post office address of the members of the current Board of Directors of the Corporation are as follows:
Name Address ---- -------- Richard Garneau [address] Jeff Kubsch [address] Larry Winters [address]
ARTICLE X MISCELLANEOUS PROVISIONS Section 10.1. Amendment or Repeal. Except as otherwise expressly provided for in these Amended and Restated Articles of Incorporation, the Corporation shall be deemed, for all purposes, to have reserved the right to amend, alter, change or repeal any provision contained in these Amended and Restated Articles of Incorporation to the extent and in the 9 manner now or hereafter permitted or prescribed by statute, and all rights herein conferred upon shareholders are granted subject to such reservation. Section 10.2. Headings. The headings of the Amended and Restated Articles and Sections of these Amended and Restated Articles of Incorporation have been inserted for convenience of reference only and do not in any way define, limit, construe or describe the scope or intent of any Article or Section hereof. IN WITNESS WHEREOF, the undersigned, being a duly authorized officer of the Corporation, executes these Amended and Restated Articles of Incorporation this 25th day of October, 2002. /s/Richard Garneau ------------------------------ Richard Garneau, President This instrument was prepared by Peter G. Trybula, Attorney at Law, Baker & Daniels, Suite 250, 205 W. Jefferson Blvd., South Bend, Indiana 46601. 10 EX-3.8 11 y99327exv3w8.txt BYLAWS OF MAAX-AKER ACQUISITION, CO. EXHIBIT 3.8 BYLAWS OF MAAX-AKER ACQUISITION, CO. Adopted by Aker Plastics Company Inc pursuant to Articles of Merger dated Oct. 25, 2002 ARTICLE I MEETINGS OF SHAREHOLDERS Section 1.1. Annual Meetings. Annual meetings of the shareholders of the Corporation shall be held on the 1st of May of each year, beginning in the year 2003, at such hour and at such place within or without the State of Indiana as shall be designated by the Board of Directors. In the absence of designation, the meeting shall be held on the date established hereby at the principal office of the Corporation at 11:00 a.m., local time. The Board of Directors may, by resolution, change the date or time of such annual meeting. If the day fixed for any annual meeting of shareholders shall fall on a legal holiday, then such annual meeting shall be held on the first following day that is not a legal holiday. Section 1.2. Special Meetings. Special meetings of the shareholders of the Corporation may be called at any time by the Board of Directors or the President and shall be called by the Board of Directors if the Secretary receives written, dated and signed demands for a special meeting, describing in reasonable detail the purpose or purposes for which it is to be held, from the holders of shares representing at least twenty-five percent (25%) of all votes entitled to be cast on any issue proposed to be considered at the proposed special meeting. If the Secretary receives one (1) or more proper written demands for a special meeting of shareholders, the Board of Directors may set a record date for determining shareholders entitled to make such demand. The Board of Directors or the President, as the case may be, calling a special meeting of shareholders shall set the date, time and place of such meeting, which may be held within or without the State of Indiana. Section 1.3. Notices. A written notice, stating the date, time and place of any meeting of the shareholders, and in the case of a special meeting the purpose or purposes for which such meeting is called, shall be delivered or mailed by the Secretary of the Corporation, to each shareholder of record of the Corporation entitled to notice of or to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. In the event of a special meeting of shareholders required to be called as the result of a demand therefor made by shareholders, such notice shall be given no later than the sixtieth (60th) day after the Corporation's receipt of the demand requiring the meeting to be called. Notice of shareholders' meetings, if mailed, shall be mailed, postage prepaid, to each shareholder at his or her address shown in the Corporation's current record of shareholders. A shareholder or his or her proxy may at any time waive notice of a meeting if the waiver is in writing and is delivered to the Corporation for inclusion in the minutes or filing with the Corporation's records. A shareholder's attendance at a meeting, whether in person or by proxy, (a) waives objection to lack of notice or defective notice of the meeting, unless the shareholder or his or her proxy at the beginning of the meeting objects to holding the meeting or transacting business at the meeting, and (b) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder or his or her proxy objects to considering the matter when it is presented. Each shareholder who has in the manner above provided waived notice or objection to notice of a shareholders' meeting shall be conclusively presumed to have been given due notice of such meeting, including the purpose or purposes thereof. If an annual or special shareholders' meeting is adjourned to a different date, time or place, notice need not be given of the new date, time or place if the new date, time or place is announced at the meeting before adjournment, unless a new record date is or must be established for the adjourned meeting. Section 1.4. Voting. Except as otherwise provided by the Indiana Business Corporation Law or the Corporation's Articles of Incorporation, each share of the capital stock of any class of the Corporation that is outstanding at the record date established for any annual or special meeting of shareholders and is outstanding at the time of and represented in person or by proxy at the annual or special meeting, shall entitle the record holder thereof, or his or her proxy, to one (1) vote on each matter voted on at the meeting. Section 1.5. Quorum. Unless the Corporation's Articles of Incorporation or the Indiana Business Corporation Law provide otherwise, at all meetings of shareholders a majority of the votes entitled to be cast on a matter, represented in person or by proxy, constitutes a quorum for action on the matter. Action may be taken at a shareholders' meeting only on matters with respect to which a quorum exists; provided, however, that any meeting of shareholders, including annual and special meetings and any adjournments thereof, may be adjourned to a later date although less than a quorum is present. Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting. Section 1.6. Vote Required to Take Action. If a quorum exists as to a matter to be considered at a meeting of shareholders, action on such matter (other than the election of Directors) is approved if the votes properly cast favoring the action exceed the votes properly cast opposing the action, except as the Corporation's Articles of Incorporation or the Indiana Business Corporation Law require a greater number of affirmative votes. Directors shall be elected by a plurality of the votes properly cast. Section 1.7. Record Date. Only those persons shall be entitled to notice of or to vote, in person or by proxy, at any shareholders' meeting who appear as shareholders upon the books of the Corporation as of the record date for such meeting set by the Board of Directors, which date may not be earlier than the date seventy (70) days immediately preceding the meeting. In the absence of such determination, the record date shall be the thirtieth (30th) day immediately 2 preceding the date of such meeting. Unless otherwise provided by the Board of Directors, shareholders shall be determined as of the close of business on the record date. Section 1.8. Proxies. A shareholder may vote his or her shares either in person or by proxy. A shareholder may appoint a proxy to vote or otherwise act for the shareholder (including authorizing the proxy to receive, or to waive, notice of any shareholders' meetings within the effective period of such proxy) by signing an appointment form, either personally or by the shareholder's attorney-in-fact. An appointment of a proxy is effective when received by the Secretary or other officer or agent authorized to tabulate votes and is effective for eleven (11) months unless a shorter or longer period is expressly provided in the appointment form. The proxy's authority may be limited to a particular meeting or may be general and authorize the proxy to represent the shareholder at any meeting of shareholders held within the time provided in the appointment form. Subject to the Indiana Business Corporation Law and to any express limitation on the proxy's authority appearing on the face of the appointment form, the Corporation is entitled to accept the proxy's vote or other action as that of the shareholder making the appointment. Section 1.9. Removal of Directors. Any one or more of the members of the Board of Directors may be removed, with or without cause, only at a meeting of the shareholders called expressly for that purpose, by a vote of the holders of shares representing a majority of the votes then entitled to be cast at an election of Directors. Section 1.10. Written Consents. Any action required or permitted to be taken at a shareholders' meeting may be taken without a meeting if the action is taken by all the shareholders entitled to vote on the action. The action must be evidenced by one (1) or more written consents describing the action taken, signed by all the shareholders entitled to vote on the action, and delivered to the Corporation for inclusion in the minutes or filing with the corporate records. Action taken under this Section 1.10 is effective when the last shareholder signs the consent, unless the consent specifies a different prior or subsequent effective date, in which case the action is effective on or as of the specified date. Such consent shall have the same effect as a unanimous vote of all shareholders and may be described as such in any document. Section 1.11. Participation by Conference Telephone. The President may authorize any or all shareholders to participate in any shareholders' meeting by, or through the use of, any means of communication, such as conference telephone, by which all shareholders participating may simultaneously hear each other during the meeting. Any shareholder participating in a meeting by such means is deemed to be present in person for all purposes at the meeting. ARTICLE II DIRECTORS Section 2.1. Number and Term. The business and affairs of the Corporation shall be managed under the direction of a Board of Directors. The number of Directors comprising the Board of Directors is three (3). 3 Each Director shall be elected for a term of office to expire at the annual meeting of shareholders next following his or her election. Despite the expiration of a Director's term, the Director shall continue to serve until his or her successor is elected and qualified, or until the earlier of his or her death, resignation, disqualification or removal, or until there is a decrease in the number of Directors by action of the Board of Directors. Any vacancy occurring in the Board of Directors, from whatever cause arising, shall be filled by selection of a successor by a majority vote of the remaining members of the Board of Directors (although less than a quorum); provided, however, that if such vacancy or vacancies leave the Board of Directors with no members or if the remaining members of the Board are unable to agree upon a successor or determine not to select a successor, such vacancy may be filled by a vote of the shareholders at a special meeting called for that purpose or at the next annual meeting of shareholders. The term of a Director elected or selected to fill a vacancy shall expire at the end of the term for which such Director's predecessor was elected. The Directors and each of them shall have no authority to bind the Corporation except when acting as a Board. Section 2.2. Quorum and Vote Required to Take Action. A majority of the whole Board of Directors shall be necessary to constitute a quorum for the transaction of any business, except the filling of vacancies. If a quorum is present when a vote is taken, the affirmative vote of a majority of the Directors present shall be the act of the Board of Directors, unless the act of a greater number is required by the Indiana Business Corporation Law, the Corporation's Articles of Incorporation or these Bylaws. Section 2.3. Annual and Regular Meetings. The Board of Directors shall meet annually, without notice, immediately following the annual meeting of the shareholders, for the purpose of transacting such business as properly may come before the meeting. Other regular meetings of the Board of Directors, in addition to said annual meeting, shall be held on such dates, at such times and at such places as shall be fixed by resolution adopted by the Board of Directors and specified in a notice of each such regular meeting, or otherwise communicated to the Directors. The Board of Directors may at any time alter the date for the next regular meeting of the Board of Directors. Section 2.4. Special Meetings. Special meetings of the Board of Directors may be called by any member of the Board of Directors upon not less than twenty-four (24) hours' notice given to each Director of the date, time and place of the meeting, which notice need not specify the purpose or purposes of the special meeting. Such notice may be communicated in person (either in writing or orally), by telephone, telegraph, teletype or other form of wire or wireless communication, or by mail, and shall be effective at the earlier of the time of its receipt or, if mailed, five (5) days after its mailing. Notice of any meeting of the Board may be waived in writing at any time if the waiver is signed by the Director entitled to the notice and is filed with the minutes or corporate records. A Director's attendance at or participation in a meeting waives any required notice to the Director of the meeting, unless the Director at the beginning of the meeting (or promptly upon the Director's arrival) objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting. 4 Section 2.5. Written Consents. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if the action is taken by all members of the Board. The action must be evidenced by one (1) or more written consents describing the action taken, signed by each Director, and included in the minutes or filed with the corporate records reflecting the action taken. Action taken under this Section 2.5 is effective when the last Director signs the consent, unless the consent specifies a different prior or subsequent effective date, in which cases the action is effective on or as of the specified date. A consent signed under this Section 2.5 shall have the same effect as a unanimous vote of all members of the Board and may be described as such in any document. Section 2.6. Participation by Conference Telephone. The Board of Directors may permit any or all Directors to participate in a regular or special meeting by, or through the use of, any means of communication, such as conference telephone, by which all Directors participating may simultaneously hear each other during the meeting. A Director participating in a meeting by such means shall be deemed to be present in person at the meeting. Section 2.7. Committees. (a) The Board of Directors may create one (1) or more committees and appoint members of the Board of Directors to serve on them, by resolution of the Board of Directors adopted by a majority of all the Directors in office when the resolution is adopted. Each committee may have one (1) or more members, and all the members of a committee shall serve at the pleasure of the Board of Directors. (b) To the extent specified by the Board of Directors in the resolution creating a committee, each committee may exercise all of the authority of the Board of Directors; provided, however, that a committee may not: (1) Authorize dividends or other distributions, except a committee (or an executive officer of the Corporation designated by the Board of Directors) may authorize or approve a reacquisition of shares or other distribution if done according to a formula or method, or within a range, prescribed by the Board of Directors; (2) Approve or propose to shareholders action that is required to be approved by shareholders; (3) Fill vacancies on the Board of Directors or on any of its committees; (4) Except to the extent permitted by subdivision (7), amend the Corporation's Articles of Incorporation under IC 23-1-38-2; (5) Adopt, amend, repeal or waive provisions of these Bylaws; (6) Approve a plan of merger not requiring shareholder approval; or 5 (7) Authorize or approve the issuance or sale or a contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares, except the Board of Directors may authorize a committee (or an executive officer of the Corporation designated by the Board of Directors) to take action described in this subdivision within limits prescribed by the Board of Directors. (c) Except to the extent inconsistent with the resolutions creating a committee, Sections 2.1 through 2.6 of these Bylaws, which govern meetings, action without meetings, notice and waiver of notice, quorum and voting requirements and telephone participation in meetings of the Board of Directors, apply to each committee and its members as well. Section 2.8. Compensation. The Board of Directors may fix the compensation of Directors. ARTICLE III OFFICERS Section 3.1. Designation, Selection and Terms. The officers of the Corporation shall consist of the President, the Secretary and the Treasurer. The Board of Directors may also elect such Vice Presidents, Assistant Secretaries, Assistant Treasurers, and other officers or assistant officers as it may from time to time determine by resolution creating the office and defining the duties thereof. In addition, the President may, by a certificate of appointment creating the office and defining the duties thereof delivered to the Secretary for inclusion with the corporate records, from time to time create and appoint such assistant officers as the President deems desirable. The officers of the Corporation shall be elected by the Board of Directors (or in the case of assistant officers appointed by the President as provided above) and need not be selected from among the members of the Board of Directors. Any two (2) or more offices may be held by the same person. All officers shall serve at the pleasure of the Board of Directors and, with respect to the assistant officers appointed by the President, also at the pleasure of such officer. The election or appointment of an officer does not itself create contract rights. Section 3.2. Removal. The Board of Directors may remove any officer at any time with or without cause. An assistant officer appointed by the President may also be removed at any time, with or without cause, by such officer. Vacancies in such offices, however occurring, may be filled by the Board of Directors at any meeting of the Board of Directors (or by appointment by the President, to the extent provided in Section 3.1 of these Bylaws). Section 3.3. President. The President shall exercise the powers and perform the duties which ordinarily appertain to that office and shall manage and operate the business and affairs of the Corporation in conformity with the policies established by the Board of Directors, or as may be provided for in these Bylaws. 6 Section 3.4. Vice Presidents. Each Vice President, if any, shall have such powers and perform such duties as the Board of Directors may, from time to time, prescribe and as the President may, from time to time, delegate to him or her. Section 3.5. Treasurer. The Treasurer shall perform all of the duties customary to that office, including the duty of supervising the keeping of the records of the receipts and disbursements of the Corporation. The Treasurer shall submit to the Board of Directors at such times as the Board may require full statements showing in detail the financial condition and affairs of the Corporation. Section 3.6. Assistant Treasurer. In the absence or inability of the Treasurer, the Assistant Treasurer, if any, shall perform only such duties as are specifically assigned to him or her, in writing, by the Board of Directors, the President or the Treasurer. Section 3.7. Secretary. The Secretary shall be the custodian of the books, papers and records of the Corporation and of its corporate seal, if any, and shall be responsible for seeing that the Corporation maintains the records required by the Indiana Business Corporation Law (other than accounting records) and that the Corporation files with the Indiana Secretary of State the annual report required by the Indiana Business Corporation Law. The Secretary shall be responsible for preparing minutes of the meetings of the shareholders and of the Board of Directors and for authenticating records of the Corporation, and shall perform all of the other duties usual in the office of Secretary of a corporation. Section 3.8. Assistant Secretary. In the absence or inability of the Secretary, the Assistant Secretary, if any, shall perform only such duties as are provided herein or specifically assigned to him or her, in writing, by the Board of Directors, the President or the Secretary. Section 3.9. Salary. The Board of Directors may, at its discretion, from time to time, fix the salary of any officer by resolution included in the minute book of the Corporation. ARTICLE IV CHECKS All checks, drafts or other orders for payment of money shall be signed in the name of the Corporation by such officers or persons as shall be designated from time to time by resolution adopted by the Board of Directors and included in the minute book of the Corporation; and in the absence of such designation, such checks, drafts or other orders for payment shall be signed by either the President or the Treasurer. ARTICLE V LOANS Such of the officers of the Corporation as shall be designated from time to time by any resolution adopted by the Board of Directors and included in the minute book, and in the absence of any such designation, the President of the Corporation shall have the power, with such limitations thereon as may be fixed by the Board of Directors, to borrow money in the 7 Corporation's behalf, to establish credit, to discount bills and papers, to pledge collateral and to execute such notes, bonds, debentures or other evidences of indebtedness, and such mortgages, trust indentures and other instruments in connection therewith, as may be authorized from time to time by such Board of Directors. ARTICLE VI EXECUTION OF DOCUMENTS The President may, in the Corporation's name, sign all deeds, leases, contracts or similar documents that may be authorized by the Board of Directors unless otherwise directed by the Board of Directors or otherwise provided herein or in the Corporation's Articles of Incorporation, or as otherwise required by law. ARTICLE VII STOCK Section 7.1. Execution. Certificates for shares of the capital stock of the Corporation shall be signed by the President and the Secretary and the seal of the Corporation (or a facsimile thereof), if any, may be thereto affixed. Where any such certificate is also signed by a transfer agent or a registrar, or both, the signatures of the officers of the Corporation may be facsimiles. The Corporation may issue and deliver any such certificate notwithstanding that any such officer who shall have signed, or whose facsimile signature shall have been imprinted on, such certificate shall have ceased to be such officer. Section 7.2. Contents. Each certificate shall state on its face the name of the Corporation and that the Corporation is organized under the laws of the State of Indiana, the name of the person to whom it is issued, the number and class of shares that the certificate represents and such other information as may be required from time to time by resolution of the Board of Directors. Section 7.3. Transfers. Except as otherwise provided by law or by resolution of the Board of Directors, transfers of shares of the capital stock of the Corporation shall be made only on the books of the Corporation by the holder thereof in person or by duly authorized attorney, on payment of all taxes thereon and surrender for cancellation of the certificate or certificates for such shares (except as hereinafter provided in the case of loss, destruction or mutilation of certificates) properly endorsed by the holder thereof or accompanied by the proper evidence of succession, assignment or authority to transfer, and delivered to the Secretary or an Assistant Secretary, if any. Section 7.4. Stock Transfer Records. There shall be entered upon the stock records of the Corporation the number of each certificate issued, the name and address of the registered holder of such certificate, the number, kind and class of shares represented by such certificate, the date of issue, whether the shares are originally issued or transferred, the registered holder from whom transferred and such other information as is commonly required to be shown by such records. The stock records of the Corporation shall be kept at its principal office. 8 Section 7.5. Loss, Destruction or Mutilation of Certificates. The holder of any of the capital stock of the Corporation shall immediately notify the Corporation of any loss, destruction or mutilation of the certificate therefor, and the Board of Directors may, in its discretion, cause to be issued to the holder a new certificate or certificates of stock, upon the surrender of the mutilated certificate, or, in the case of loss or destruction, upon satisfactory proof of such loss or destruction. The Board of Directors may, in its discretion, require the holder of the lost or destroyed certificate or his or her legal representative to give the Corporation a bond in such sum and in such form, and with such surety or sureties as it may direct, to indemnify the Corporation, its transfer agents and registrars, if any, against any claim that may be made against them or any of them with respect to the capital stock represented by the certificate or certificates alleged to have been lost or destroyed, but the Board of Directors may, in its discretion, refuse to issue a new certificate or certificates, save upon the order of a court having jurisdiction in such matters. Section 7.6. Form of Certificates. The form of the certificates for shares of the capital stock of the Corporation shall conform to the requirements of Section 7.2 of these Bylaws and be in such printed form as shall from time to time be approved by resolution of the Board of Directors. ARTICLE VIII SEAL The corporate seal of the Corporation shall, if the Corporation elects to have one, be in the form of a disc, with the name of the Corporation and "INDIANA" on the periphery thereof and the word "SEAL" in the center. ARTICLE IX MISCELLANEOUS Section 9.1. Indiana Business Corporation Law. The provisions of the Indiana Business Corporation Law, as amended, applicable to all matters relevant to, but not specifically covered by, these Bylaws are hereby, by reference, incorporated in and made a part of these Bylaws. Section 9.2. Fiscal Year. The fiscal year of the Corporation shall end on the ____ of _____ of each year. February 28th Modified Oct. 26, 2002. Section 9.3. Amendments. These Bylaws may be rescinded, changed or amended, and provisions hereof may be waived, at any meeting of the Board of Directors by the affirmative vote of a majority of the entire number of Directors at the time, except as otherwise required by the Corporation's Articles of Incorporation or by the Indiana Business Corporation Law. Section 9.4. Definition of Articles of Incorporation. The term "Articles of Incorporation" as used in these Bylaws means the Articles of Incorporation of the Corporation as from time to time are in effect. 9 EX-3.9 12 y99327exv3w9.txt CHARTER OF BEAUCELAND CORPORATION EXHIBIT 3.9 COMPANIES ACT CHAPTER 81, R.S.N.S. 1989 MEMORANDUM OF ASSOCIATION OF 3081946 NOVA SCOTIA COMPANY - -------------------------------------------------------------------------------- 1 - The name of the Company is 3081946 NOVA SCOTIA COMPANY. - -------------------------------------------------------------------------------- 2 - There are no restrictions on the objects and powers of the Company. - -------------------------------------------------------------------------------- 3 - Pursuant to subsection 26(11) of the Companies Act, with the intent that subsection 26(9) of the Companies Act not apply to the Company, the following powers are hereby expressly conferred upon the Company: (a) to sell or dispose of its undertaking or a substantial part thereof; (b) subject to the provisions of the Companies Act with respect to reduction of capital, to distribute any of its property in specie among its members; and (c) to amalgamate with any company or other body of persons. - -------------------------------------------------------------------------------- 4 - The liability of all of the members is unlimited. - -------------------------------------------------------------------------------- 5 - The undersigned, whose name and address is subscribed, is desirous of being formed into a company, in pursuance of this Memorandum of Association, and agrees to take the number and kind of shares in the capital stock of the company set opposite its name. - -------------------------------------------------------------------------------- NAME AND ADDRESS NUMBER AND KIND OF SHARES OF SUBSCRIBER TAKEN BY THE SUBSCRIBER - -------------------------------------------------------------------------------- 2435239 NOVA SCOTIA LIMITED One (1) share without nominal or par value Per: /s/ David C. Hicks ---------------------- DAVID C. HICKS - ASSISTANT SECRETARY Summit Place, 6th Floor 1601 Lower Water Street Halifax, NS B3J 3P6 - -------------------------------------------------------------------------------- TOTAL SHARES TAKEN: One (1) share without nominal or par value. - -------------------------------------------------------------------------------- DATED the 2nd day of October, 2003. WITNESS to the above signature: /s/ Joanne Gray - -------------------------------------------------------------------------------- [SEAL] CERTIFICATE OF NAME CHANGE Companies Act Registry Number 3081946 Name of Company 3081946 NOVA SCOTIA COMPANY I hereby certify that the above-mentioned company has with approval of the Registrar of Joint Stocks changed its name to: BEAUCELAND CORPORATION /s/ McInnes Cooper May 7, 2004 - ------------------------------------------------ ------------------------- Agent of the Registrar of Joint Stock Companies Date of Name Change EX-3.10 13 y99327exv3w10.txt BYLAWS OF BEAUCELAND CORPORATION EXHIBIT 3.10 COMPANIES ACT (NOVA SCOTIA) UNLIMITED COMPANY ARTICLES OF ASSOCIATION OF 3081946 NOVA SCOTIA COMPANY 1. In these Articles, unless there be something in the subject or context inconsistent therewith: "Act" means the Companies Act (Nova Scotia) as amended; "Board" means the directors of the Company for the time being; "Company" means the company named above; "dividend" includes bonus; "member" and "Shareholder" are used interchangeably; "Memorandum" means the Memorandum of Association of the Company and all amendments thereto; "Month" means calendar month; "Office" means the registered office for the time being of the Company; "Proxyholder" includes an alternate proxyholder; "Register" means the register of members to be kept pursuant to Section 42 of the Act; "Registrar" means the Registrar of Joint Stock Companies for the time being; "Reporting Company" and "Reporting Issuer" have the meanings given to them respectively by the Act; "Secretary" includes any person appointed to perform the duties of Secretary of the Company temporarily; "Shareholder" means member as that term is used in the Act in connection with an unlimited company having share capital; "Special Resolution" has the meaning assigned by Section 87 of the Act; "these Presents" and "these Articles" includes these Articles of Association (and schedules thereto) and any modification or alteration thereof for the time being in force; "written" and "in writing" mean and include words printed, lithographed, represented or reproduced in any mode in a visible form; Words importing the singular number only, include the plural number and vice versa; Words importing the masculine gender only, include the feminine gender; and Words importing persons include corporations. 2. The regulations contained in Table "A" in the first schedule to the Act shall not apply to the Company. 3. The directors may enter into and carry into effect or adopt and carry into effect any agreement or agreements from time to time made by or with the promoters of the Company by or on behalf of the Company with full power nevertheless from time to time to agree to any modification of the terms of such agreement or agreements either before or after execution thereof. 4. The directors may, out of any moneys of the Company for the time being in their hands, pay all expenses incurred in or about the formation and establishment of the Company, including the expenses of registration. 5. The business of the Company may be commenced as soon after incorporation as the directors may think fit, and notwithstanding that part only of the shares may have been allotted. SHARES 6. THE AUTHORIZED CAPITAL OF THE COMPANY CONSISTS OF ONE HUNDRED THOUSAND (100,000) SHARES WITHOUT NOMINAL OR PAR VALUE, with power to divide the shares in the capital for the time being into several classes and/or to attach thereto respectively any preferential, common, deferred or qualified rights, privileges or conditions, including restrictions on voting and including redemption or purchase of such shares, subject, however, to the Act and amendments thereto. 7. Subject to the provisions of the agreement or agreements mentioned in Article 3 hereof, the shares shall be under the control of the directors who may allot or otherwise dispose of the same to such persons on such terms and conditions and at such times as the directors may think fit and with full power to give to any person the call of any shares during such time and for such consideration as the directors think fit. 8. Shares may be registered in the names of any number of persons not exceeding three as joint holders thereof. 9. Save as herein otherwise provided, the Company shall be entitled to treat the registered holder of any share as the absolute owner thereof, and accordingly shall not, except as ordered by a Court of competent jurisdiction, or as by statute required, be bound to recognize any equitable or other claim to or interest in such share on the part of any other person. CERTIFICATES 10. Certificates of title to shares shall be signed by the President or Vice-President or a director and either the Secretary or an Assistant Secretary or by such other person as the directors may authorize. The signature of the President or Vice-President may be engraved, lithographed or printed upon the certificates or any one or more of them, and any certificates bearing such engraved, lithographed or printed signature of the President or Vice-President, when signed by the Secretary or an Assistant Secretary or by such other persons as the directors may authorize, shall be valid and binding upon the Company. 11. Every member shall be entitled to one certificate for all his shares, or to several certificates each for one or more of such shares. 12. Where shares are registered in the names of two or more persons, the Company shall not be bound to issue more than one certificate or one set of certificates, and such certificate or set of certificates shall be delivered to the person first named on the Register. 13. If any certificate be worn out or defaced, then upon production thereof to the directors, they may order the same to be cancelled, and may issue a new certificate in lieu thereof; and if any certificate is lost or destroyed, then upon proof thereof to the satisfaction of the directors, and on such indemnity as the directors deem adequate being given, a new certificate in lieu thereof shall be given to the person entitled to such lost or destroyed certificate. 14. The directors may cause to be kept in any place or places either in or outside of Nova Scotia, one or more branch Registers. LIEN ON SHARES AND LIABILITY OF MEMBERS 15. The Company shall have a first and paramount lien upon all shares registered in the name of each member (whether solely or jointly with others) and upon the proceeds of sale thereof for his debts, liabilities and other engagements, solely or jointly with any other person, to or with the Company whether the period for the payment, fulfilment or discharge thereof shall have actually arrived or not, and no equitable interest in any share shall be created except upon the condition that Article 9 of these Articles is to have full effect. Such lien shall extend to all dividends from time to time declared in respect of such shares. Unless otherwise agreed, the registration of a transfer of shares shall operate as a waiver of the Company's lien, if any, on such shares. 16. For the purpose of enforcing such lien, the directors may sell the shares subject thereto in such manner as they think fit; but no sale shall be made until notice in writing of the intention to sell has been given to such member, his executors, administrators, successors or assigns and default shall have been made by him or them in the payment, fulfilment or discharge of such debts, liabilities or engagements for seven (7) days after such notice. The net proceeds of any such sale after payment of the cost of such sale shall be applied in or towards the satisfaction of such debts, liabilities or engagements and the residue, if any, paid to such member or his executors, administrators, successors or assigns. 17. Upon any sale for enforcing a lien, in purported exercise of the powers given by these Articles, the directors may cause the purchaser's name to be entered in the Register in respect of the shares sold, and the purchaser shall not be bound to see to the regularity of the proceedings or the application of the purchase money and, after his name has been entered in the Register in respect of such shares, the validity of the sale shall not be impeached by any person and the remedy of any person aggrieved by this sale shall be in damages only and against the Company exclusively. TRANSFER OF SHARES 18. No share of any class or series of shares shall be transferred, except (a) with the prior consent of the directors of the Company expressed by a resolution of the directors; or (b) with the prior consent of the holders(s) of the shares entitled to vote at an ordinary general meeting expressed by a resolution of the holders of those shares. The Company shall decline to register any other purported transfer of shares by any person in any circumstances. 19. The instrument of transfer of any share in the Company shall be signed by the transferor and the transferor shall be deemed to remain the holder of such share until the name of the transferee is entered in the Register in respect thereof, and shall be entitled to receive any dividend declared thereon before the registration of transfer. 20. The instrument of transfer of any share shall be in writing in the following form, or as near thereto as circumstances will permit: For value received ........................... hereby, sell, assign and transfer unto .................................. Shares of the Capital Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint ................... attorney to transfer the said stock on the books of the within named Company with the full power of substitution in the premises, Dated the day of , 20 . WITNESS: 21. Every instrument of transfer shall be left at the Office for registration, accompanied by the certificate of the shares to be transferred, and such other evidence as the Company may require to prove the title of the transferor or his right to transfer the shares. 22. Every instrument of transfer shall, after the registration thereof, remain in the custody of the Company, but any instrument of transfer which the directors decline to register shall be returned to the person depositing the same. INCREASE AND REDUCTION OF CAPITAL 23. Subject to the rights, if any, of the holders of shares of any class or series of shares to vote separately as a class or series thereon, the Company in general meeting may, from time to time, increase the capital by the creation or issue of new shares of such amount as it thinks expedient. 24. Subject to the rights, if any, of the holders of shares of any class or series of shares to vote separately as a class or series thereon, the Act and the restrictions on allotment, disposition and transferability in these Articles, the new shares may be issued upon such terms and conditions, and with such rights and privileges annexed thereto, as the general meeting resolving upon the creation thereof shall direct; and if no direction be given, as the directors shall determine, and in particular such shares may be issued with a preferential or qualified right to dividends and in the distribution of assets of the Company, and with a special or without any right of voting. 25. Except so far as otherwise provided by the conditions of issue, or by these Articles, any capital raised by the creation of new shares shall be considered part of the original capital, and shall be subject to the provisions herein contained including, without limitation, those provisions referring to transfer of and the Company's lien on shares. 26. Subject to the rights, if any, of the holders of shares of any class or series of shares to vote separately as a class or series thereon, the Company shall reduce all or a portion of the paid-up capital on its shares by returning same to the holders thereof if such reduction and return is authorized by resolution at a meeting of the Shareholders who are the registered owners of seventy-five percent (75%) or more of the shares which entitle the holders thereof to vote at a general meeting. If the return of paid-up capital is so authorized, the Shareholders approving of such return at such meeting shall determine when the paid-up capital shall be returned on the shares of the Company, the amount of paid-up capital to be returned on each such share and whether such paid-up capital should be returned to the holders of such shares in the form of cash, a promissory note or other assets of the Company. The amount of the reduction in the paid-up capital of the shares shall be recorded in the accounts of the Company. 27. Subject to the rights, if any, of the holders of shares of any class or series of shares to vote separately as a class or series thereon, (a) the Company may from time to time in general meeting consolidate and divide all or any of its share capital into shares of larger amount than its existing shares (and, for greater certainty, consolidate and divide all of its issued and/or unissued shares of a particular class of shares into a smaller number of shares than the existing issued and/or unissued shares, as the case may be, of that particular class of shares); (b) the Company may from time to time in general meeting convert all or any of its paid-up shares into stock, and reconvert that stock into paid-up shares of any denomination; (c) the Company may from time to time by special resolution subdivide its shares, or any of them, into shares of smaller amount than is fixed by these Articles (and, for greater certainty, subdivide all of its issued and/or unissued shares of a particular class of shares into a larger number of shares than the existing issued and/or unissued shares, as the case may be, of that particular class of shares) so, however, that in the sub-division the proportion between the amount paid and the amount if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived. The special resolution whereby any share is subdivided may determine that, as between the holders of the shares, resulting from such subdivision, one or more of such shares shall have some preference or special advantage as regards dividend, capital, voting, or otherwise, over, or as compared with, the others or other; (d) the Company may from time to time in general meeting exchange shares of one denomination for another; (e) the Company may from time to time in general meeting cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled; (f) the Company may from time to time by special resolution convert any part of its issued or unissued share capital into preference shares redeemable or purchasable by the Company in the manner provided in the Act; (g) the Company may from time to time by special resolution provide for the issue of shares without any nominal or par value; (h) the Company may from time to time by special resolution convert all or any of its previously authorized unissued or issued and fully paid-up shares, with nominal or par value, into the same number of shares without any nominal or par value, and reduce, maintain or increase accordingly its liability on any of its shares so converted; and (i) the Company may from time to time by special resolution convert all or any of its previously authorized unissued or issued and fully paid-up shares, without nominal or par value, into the same or a different number of shares with nominal or par value. For such purpose the shares issued without nominal or par value and replaced by shares with a nominal or par value shall be considered as fully paid, but their aggregate par value shall not exceed the value of the net assets of the Company as represented by the shares without par value issued before the conversion. 28. The purpose of this Article is to restrict the operation of subsection 12(1) of the Third Schedule to the Act in the manner permitted by that Section. In the case of an amendment to the Memorandum or Articles of the Company of the kind referred to in clause (a), (b) or (e) of subsection 2(2) of the Third Schedule to the Act, any class of shares or any series of shares affected by the amendment in a manner different from other shares of the same class shall not carry the right to vote separately as a class or series upon any such amendment . CLASSES OF SHARES 29. Subject to the rights, if any, of the holders of shares of any class or series of shares entitled to vote separately as a class or series thereon, and subject to the provisions of these Articles, and without prejudice to any special rights previously conferred on the holders of existing shares, any share may be issued with such preferred, deferred or other special rights, or such restrictions, whether in regard to dividends, voting, return of share capital or otherwise, as the Company may from time to time by Special Resolution determine. Any preference shares may with the sanction of a Special Resolution of the Company be issued on the terms that they are, at the option of the Company, liable to be redeemed or purchased by the Company. BORROWING POWERS 30. The directors on behalf of the Company may from time to time in their discretion: (a) raise or borrow money for the purposes of the Company or any of them; (b) secure the repayment of moneys so raised or borrowed in such manner and upon such terms and conditions in all respects as they think fit, and in particular by the execution and delivery of mortgages of the Company's real or personal property, or by the issue of bonds, debentures or debenture stock of the Company secured by mortgage or otherwise or charged upon all or any part of the property of the Company, both present and future, including its uncalled capital for the time being; (c) sign or endorse bills, notes, acceptances, cheques, contracts, and other evidence of or securities for money borrowed or to be borrowed for the purposes aforesaid; and (d) pledge debentures as security for loans. 31. Bonds, debentures, debenture stock and other securities may be made assignable, free from any equities between the Company and the person to whom the same may be issued. 32. Any bonds, debentures, debenture stock, and other securities may be issued at a discount, premium, or otherwise, and with any special privileges as to redemption, surrender, drawings, allotment of shares, attending and voting at general meetings of the Company, appointment of directors, and otherwise. RECORD DATES 33. (1) For the purpose of determining (a) Shareholders entitled to receive payment of a dividend, or (b) who is a Shareholder for any other purpose except the right to receive notice of, or to vote at, a meeting, the directors may fix in advance a date as the record date for the determination of Shareholders, but the record date so fixed shall not precede by more than fifty days the particular action to be taken. (2) For the purpose of determining Shareholders entitled to receive notice of a meeting of Shareholders, the directors may fix in advance a date as the record date for the determination of Shareholders, but the record date so fixed shall not precede the date on which the meeting is to be held by more than fifty days or less than twenty-one days. (3) If no record date is fixed pursuant to subarticle (1) or (2), (a) the record date for the determination of Shareholders for any purpose, other than to establish a Shareholder's right to receive notice of, or to vote at, a meeting, is the day on which the directors pass the resolution relating to the particular purpose; and (b) the record date for the determination of Shareholders entitled to receive notice of, or to vote at, a meeting of Shareholders is (i) the day immediately preceding the day on which the notice is given, or (ii) if no notice is given, the day on which the meeting is held. (4) Subject to subarticle (5), where a record date is fixed for the Company, notice thereof shall, not less than seven days before the record date, be given (a) by advertisement in a newspaper in general circulation in the place where the head office of the Company is situated and in each place in Canada where the Company has a transfer agent or where a transfer of the Company's shares may be recorded; and (b) by written notice to each stock exchange, if any, in Canada on which the shares of the Company are listed for trading. (5) Notice of a record date fixed for the Company need not be given where notice of the record date is waived in writing by every holder of a share of the class or series affected whose name is set out in the Register at the close of business on the date the directors fix the record date. MEETINGS 34. The first meeting of the Company shall be held within eighteen months from the date of the registration of the Memorandum of Association of the Company and at such place as the directors may determine. 35. Other general meetings shall be held once at least in every calendar year, at such time and place as may be determined by the directors and not more than fifteen months after the preceding general meeting. 36. The general meetings referred to in the next preceding Article shall be called ordinary general meetings; and all other meetings of the Company shall be called special general meetings. 37. The directors, whenever they think fit, may convene a special general meeting and, on the requisition of members of the Company holding not less than five percent of the shares of the Company carrying the right to vote at the meeting sought to be held, the directors shall forthwith proceed to convene a special general meeting of the Company to be held at such time and place as may be determined by the directors. 38. The requisition must state the objects of the meeting required, and must be signed by the members making the same and shall be deposited at the Office, and may consist of several documents in like form each signed by one or more of the requisitionists. 39. If the directors do not proceed to cause a meeting to be held, within twenty-one days from the date of the requisition being so deposited, the requisitionists, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene the meeting, but any meeting so convened shall not be held after three months from the date of such deposit. 40. If at any such meeting a resolution requiring confirmation at another meeting is passed, the directors shall forthwith convene a further special general meeting for the purpose of considering such resolution; and if thought fit, of confirming it as a Special Resolution; and if the directors do not convene the meeting within seven days from the date of the passing of the first resolution, the requisitionists, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene the meeting. 41. Any meeting convened under the foregoing provisions by the requisitionists shall be convened in the same manner as nearly as possible as that in which meetings are to be convened by directors. 42. At least twenty-one days' notice of every general meeting specifying the place, day and hour of the meeting, and, in the case of special business, the general nature of such business, shall be sent to the members entitled to be present at such meeting by notice sent by post or otherwise served as hereinafter provided; and, with the consent in writing of all the members entitled to vote at such meeting, a meeting may be convened by shorter notice and in any manner they think fit, or if all the members are present at a meeting, either in person or by proxy, notice of time, place and purpose of the meeting may be waived. 43. Where it is proposed to pass a Special Resolution, the two meetings may be convened by one and the same notice, and it shall be no objection to such notice that it only convenes the second meeting contingently upon the resolution being passed by the required majority at the first meeting. 44. The accidental omission to give any such notice to any of the members or the non-receipt of any such notice by any of the members shall not invalidate any resolution passed at any such meeting. PROCEEDINGS AT GENERAL MEETINGS 45. The business of an ordinary general meeting shall be to receive and consider the financial statements of the Company, the reports of the directors and of the auditors, if any, to elect directors in the place of those retiring and to transact any other business which under these Articles ought to be transacted at an ordinary general meeting. 46. (1) Two members (where there is more than one member) personally present or represented by proxy and entitled to vote shall be a quorum for a general meeting. A corporation which is a member of the Company, and which has duly appointed a representative under the provisions of the Act who is personally present at the meeting, shall, for the purposes of this Article, be considered as if personally present thereat. (2) If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of the members of the Company pursuant to Article 37, shall be dissolved; but in any other case it shall stand adjourned, to the same day, in the next week, at the same time, and place, and if at such adjourned meeting a quorum is not present, those members entitled to vote as aforesaid who are present shall be a quorum, and may transact the business for which the meeting was called. 47. No business shall be transacted at any general meeting unless the quorum requisite be present at the commencement of the business. 48. The Chairman of the Board shall be entitled to take the chair at every general meeting, or if there be no Chairman of the Board, or if at any meeting he shall not be present within fifteen minutes after the time appointed for holding such meeting, the President, or failing him a Vice-President who is a director, shall be entitled to take the chair, and if none of the Chairman of the Board, the President, or such a Vice-President shall be present within fifteen minutes after the time appointed for holding the meeting, the members present entitled to vote at the meeting shall choose another director as Chairman and if no director is present or if all the directors present decline to take the chair, then the members present entitled to vote shall choose one of their number to be Chairman. 49. Every question submitted to a meeting shall be decided, in the first instance, by a show of hands, and in the case of an equality of votes, the Chairman shall not, whether on a show of hands or on a poll, have a casting vote in addition to the vote or votes to which he may be entitled as a member. 50. At any general meeting, a resolution put to the meeting shall be decided by a show of hands, unless a poll is (before or on the declaration of the result of a show of hands) demanded by the Chairman, a member, or a Proxyholder, and, unless a poll is so demanded, a declaration by the Chairman that a resolution has been carried, or carried by a particular majority, or lost, or not carried by a particular majority, and an entry to that effect in the book of proceedings of the Company, shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour or against such resolution. Subject to the Act and these Articles, a resolution shall be carried if more than fifty percent (50%) of the votes are cast in favour of such resolution by the members entitled to vote thereon. 51. If a poll is demanded as aforesaid, it shall be taken in such manner, at such time and place as the Chairman of the meeting directs, and either at once, or after an interval or adjournment or otherwise, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand of a poll may be withdrawn. In case of any dispute as to the admission or rejection of a vote, the Chairman shall determine the same, and such determination made in good faith, shall be final and conclusive. 52. The Chairman of a general meeting may, with the consent of the meeting, adjourn the same from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. 53. Any poll demanded on the election of a Chairman of a meeting or any question of adjournment shall be taken at the meeting, and without adjournment. 54. The demand of a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which a poll has been demanded. VOTES OF MEMBERS 55. (1) Subject to the Act, the provisions applicable to any shares issued under conditions limiting or excluding the right of holders thereof to vote at general meetings and these Articles, on a show of hands every member present in person and every Proxyholder, subject to subsection 85F(2) of the Act, shall have one vote, and upon a poll every member present in person or by proxy shall have one vote for every share held by him. (2) Where a company being a member is represented by a Proxyholder who is not a member or by a representative duly authorized under the Act, such Proxyholder or representative shall be entitled to vote for such company either on a show of hands or on a poll. 56. Where there are joint registered holders of any share, any one of such persons may vote at any meeting either personally or by proxy, in respect of such share, as if he were solely entitled thereto; and if more than one of such joint holders is present at any meeting, personally or by proxy, that one of the said persons so present, whose name stands first on the Register in respect of such share, shall alone be entitled to vote in respect thereof. 57. Votes may be given either personally or by proxy or, in the case of a company, by a representative duly authorized under the Act. 58. (1) A proxy shall be in writing under the hand of the appointer or of his attorney duly authorized in writing, or, if such appointer is a company, under its common seal or the hand of its attorney or representative authorized in the manner referred to in clause 86(1)(a) of the Act. (2) Holders of share warrants shall not be entitled to vote by proxy in respect of the shares included in such warrants unless otherwise expressed in such warrants. 59. A member of unsound mind, in respect of whom an order has been made by any Court of competent jurisdiction, may vote by his guardian or other person in the nature of a guardian appointed by that Court and any such guardian or other person may vote by proxy. 60. A proxy and the power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of that power or authority, shall be deposited with the Chairman of the meeting before or at the meeting or adjourned meeting at which it is to be voted. A proxy shall cease to be valid one year after its date. 61. A vote given in accordance with the terms of a proxy shall be valid notwithstanding the previous death of the principal, or revocation of the proxy, or transfer of the share in respect of which the vote is given, provided no intimation in writing of the death, revocation, or transfer shall have been received before the meeting at the Office of the Company, or by the Chairman of the meeting before the vote is given. 62. Every form of proxy, whether for a specific meeting or otherwise, shall, as nearly as circumstances will admit, be in the form or to the effect following, or in such other form complying with the regulations made pursuant to the Act as the directors may from time to time determine: I ........................ of .................... in the County of .................. being a member of 3081946 NOVA SCOTIA COMPANY, hereby appoint ........................................ of (or failing him .................. of ............... or failing him ...................... of ..............) as my proxy to attend and vote for me and on my behalf at the ordinary general (or special general as the case may be) meeting of the Company, to be held on the ....... day of .................. and at any adjournment thereof, or at any meeting of the Company which may be held within .................... months from the date thereof. [if the proxy solicited by or on behalf of management of the Company, a statement to that effect] As witness my hand this ....... day of .............., 20... Witness ................. Shareholder .................. 63. Any resolution passed by the directors, notice whereof shall be given to the members in the manner in which notices are hereinafter directed to be given and which shall, within one month after it has been passed, be ratified and confirmed in writing by members entitled on a poll to three-fifths of the votes, shall be as valid and effectual as a resolution of a general meeting, but this Article shall not apply to a resolution for winding up the Company, to a resolution passed in respect of any matter which by statute or these presents ought to be dealt with by Special Resolution, or any action which, by virtue of subsection 12(1) of the Third Schedule to the Act, requires approval in accordance with that subsection. 64. (1) A resolution, including a Special Resolution, in writing and signed by every Shareholder who would be entitled to vote on the resolution at a meeting is as valid as if it were passed by such Shareholders at a meeting and satisfied all the requirements of the Act respecting meetings of the Shareholders. (2) A copy of every resolution referred to in subarticle (1) of this Article shall be kept with the minutes of proceedings of Shareholders. DIRECTORS 65. The number of directors shall be a minimum of one(1) and a maximum of ten (10) natural persons. 66. The first directors shall be appointed by the subscribers hereto, or the majority of them, by an instrument in writing. 67. The directors shall have power at any time and from time to time to appoint any other person as a director either to fill a casual vacancy or as an addition, but the total number of directors shall not at any time exceed the maximum number, fixed as above, and no such appointment shall be effective unless two-thirds of the directors concur therein. 68. A director is not required to hold a share in the Company to qualify as a director. 69. The continuing directors may act notwithstanding any vacancy in their body, but if the number of continuing directors falls below the minimum fixed as above, the directors shall not, except in emergencies or for the purpose of filling up vacancies, act so long as the number is below the minimum. 70. The directors shall be paid out of the funds of the Company by way of remuneration for their service such sums, if any, as the Company in general meeting may determine, and such remuneration shall be divided among them in such proportions and manner as the directors may determine. The directors may also be paid their reasonable travelling and hotel and other expenses incurred in consequence of their attendance at meetings of the Board and otherwise in the execution of their duties as directors. 71. A director may, in conjunction with the office of director, and on such terms as to remuneration and otherwise as the directors arrange or determine, hold any other office or place of profit under the Company or under any company in which the Company shall be a shareholder or otherwise interested or under any other company. 72. The office of a director shall ipso facto be vacated: (a) if he becomes bankrupt or makes an authorized assignment or suspends payment, or compounds with his creditors; (b) if he is found to be of unsound mind by a Court of competent jurisdiction; (c) if by notice in writing to the Company he resigns his office; or (d) if he is removed by resolution of the Company as provided in Article 77 hereof. 73. No director shall be disqualified by his office from contracting with the Company either as vendor, purchaser, or otherwise, nor shall any such contract, or any contract or arrangement entered into or proposed to be entered into by or on behalf of the Company in which any director shall be in any way interested, either directly or indirectly, be voided, nor shall any director so contracting or being so interested be liable to account to the Company for any profit realized by any such contract or arrangement by reason only of such director holding that office or of the fiduciary relations thereby established; but it is declared that the nature of his interest must be declared by him in the manner required by the Act. No director shall as a director vote in respect of any contract or arrangement in which he is so interested as aforesaid, and if he does so vote, his vote shall not be counted, but this prohibition may at any time or times be suspended or relaxed to any extent by a general meeting, and such prohibition shall not apply to any contract by or on behalf of the Company to give to the directors or any of them any security for advances or by way of indemnity or to the agreement or agreements referred to in Article 3 of these Articles or to any modification of such agreement or agreements or any agreement or agreements substituted therefor or any matter arising therefrom. ELECTION OF DIRECTORS 74. At every ordinary general meeting, all the directors shall retire from office, but shall hold office until the dissolution of the meeting at which their successors are elected. The Company shall at such meeting fill up the vacant offices by electing a like manner of persons to be directors, unless it is determined at such meeting to reduce or increase the number of directors. A retiring director shall be eligible for re-election. 75. If at any ordinary general meeting at which an election of directors ought to take place, no such election takes place, or if no ordinary general meeting is held in any year or period of years, the retiring directors shall continue in office until their successors are elected and a general meeting for that purpose may on notice be held at any time. 76. The Company in general meeting may from time to time increase or reduce the number of directors, and may determine or alter their qualifications. 77. The Company may, by Special Resolution, remove any director before the expiration of his period of office and appoint another person who may be qualified or become qualified in his stead; and the person so appointed shall hold office during such time only as the director in whose place he is appointed would have held the same if he had not been removed. THE PRESIDENT AND VICE-PRESIDENT 78. The directors shall appoint the President of the Company and may determine the period for which he is to hold office. The President shall have general supervision of the business of the Company and shall perform such duties as may be assigned to him by the Board from time to time. 79. The directors may also appoint one or more Vice-Presidents, and may determine the period for which each of them are to hold office. A Vice-President shall, at the request of the Board and subject to its directions, perform the duties of the President during the absence, illness or incapacity of the President, or during such period as the President may request him so to do. 80. The directors may elect or appoint such other officers of the Company, having such powers and duties as they think fit. If the directors so decide, the same person may hold more than one of the offices provided for in these Articles. CHAIRMAN OF THE BOARD 81. The directors may elect one of their number to be Chairman of the Board and may determine the period during which he is to hold office. He shall perform such duties and receive such special remuneration as the Board may from time to time provide. PROCEEDINGS OF DIRECTORS 82. The directors may meet together for the dispatch of business, adjourn, and otherwise regulate their meetings and proceedings, as they think fit. The quorum necessary for the transaction of business shall be a majority of the directors, provided that if a quorum is not present at any meeting of directors, such meeting shall be adjourned to another date determined by the Chairman of the Board, and at such adjourned meeting the quorum will be those directors present. 83. Meetings of directors may be held either within or without the Province of Nova Scotia and the directors may from time to time make arrangements relating to the time and place of holding directors' meetings. In any event, (a) meetings of directors shall be regularly scheduled at the end of the calendar year of the Company for the immediately following calendar year of the Company and notice of all of those meetings shall be delivered or mailed or telegraphed, telephoned or telefaxed to each director at least 48 hours before the meeting is to take place; (b) in the case of a meeting of directors, other than a meeting described in paragraph (a) immediately above and an adjourned meeting, notice of every such meeting shall be delivered or mailed or telegraphed, telephoned or telefaxed to each director at least five (5) business days before the meeting is to take place; (c) in the case of a meeting of directors that has been adjourned pursuant to Article 82, notice of every such adjourned meeting shall be delivered or mailed or telegraphed, telephoned or telefaxed to each director at least seventy-two (72) hours before the meeting is to take place; and (d) a meeting of directors may be held without formal notice if all the directors are present and waive notice, or if those absent have signified their assent to such meeting or their consent to the business transacted thereat. 84. A director may participate in a meeting of directors or of a committee of directors by means of such telephone or other communications facilities as permit all persons participating in the meeting to hear each other, and a director participating in such a meeting by such means is deemed to be present at that meeting. 85. The President or any director may at any time, and the Secretary, upon the request of the President or a director shall, convene a meeting of the directors. 86. Questions arising at any meeting of directors shall be decided by a majority of votes, and in case of an equality of votes, the Chairman shall not have a second or casting vote. 87. The Chairman of the Board shall preside at the meeting of the directors. If no Chairman of the Board is elected, or if at any meeting of directors he is not present within five minutes after the time appointed for holding the same, the President shall preside, and if the President is not present at the time appointed for holding the meeting, a Vice-President who is a director shall preside, and if neither the President nor such a Vice-President is present at any meeting within the time aforesaid, the directors present shall choose some one of their number to be Chairman of such meeting. 88. A meeting of the directors at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretion by or under the statutes in that behalf or of the regulations of the Company vested in or exercisable by the directors generally. 89. Subject to any other Article in these Articles, the directors may delegate any of their powers to committees, consisting of such number of members of their body as they think fit. Any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on them by the directors. 90. The meetings and proceedings of any committee consisting of two or more members shall be governed by the provisions contained in these Articles for regulating the meetings and proceedings of the directors so far as the same are applicable thereto and are not superseded by any regulations made by the directors under the next preceding Article. 91. All acts done at any meeting of the directors or of a committee of directors, or by any person acting as a director, shall, notwithstanding that it shall afterwards be discovered that there was some defect in the appointment of such directors or persons acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a director. 92. (1) A resolution in writing and signed by every director who would be entitled to vote on the resolution at a meeting is as valid as if it were passed by such directors at a meeting. (2) A copy of every resolution referred to in subsection (1) of this Article shall be kept with the minutes of proceedings of the directors or committee thereof, as the case may be. 93. If any one or more of the directors are called upon to perform extra services or to make any special exertions in going or residing abroad or otherwise for any of the purposes of the Company, or the business thereof, the Company may remunerate the director or directors so doing, either by a fixed sum or by a percentage of profits or otherwise, as may be determined by the directors, and such remuneration may be either in addition to or in substitution for his share in the remuneration above provided. 94. If a resolution authorizes the entering into of an agreement or the performance of any act, that resolution shall be deemed to authorize the execution of such further documents and the doing of such further things as may be necessary or desirable in connection therewith by the persons authorized to act by the resolution. REGISTERS 95. The directors shall cause a proper Register to be kept in accordance with the provisions of the Act. 96. The directors may cause to be kept in any place outside of Nova Scotia a branch Register in accordance with the provisions of the Act. 97. The directors shall also cause to be kept a proper register, containing the names and addresses and occupations of its directors or managers in accordance with the provisions of the Act. 98. The directors shall cause a proper register of the holders of debentures to be kept at the Office in accordance with the provisions of the Act. 99. The directors may cause to be kept in any place outside of Nova Scotia a branch register of the holders of debentures in accordance with the provisions of the Act. MINUTES 100. The directors shall cause minutes to be duly entered in books for that purpose: (a) of all appointments of officers; (b) of the names of the directors present at each meeting of the directors and of any committees of directors; (c) of all orders made by the directors and committees of directors; and (d) of all resolutions and proceedings of meetings of the Shareholders and of meetings of the directors. Any such minutes of any meeting of the directors or of any committee, or of the Company, if purporting to be signed by the Chairman of such meeting or by the Chairman of the next succeeding meeting, shall be receivable as prima facie evidence of the matters stated in such minutes. POWERS OF DIRECTORS 101. The management of the business of the Company shall be vested in the directors, who, in addition to the powers and authorities by these Articles or otherwise expressly conferred upon them, may exercise all such powers and do all such acts and things as may be exercised or done by the Company and are not hereby or by statute expressly directed or required to be exercised or done by the Company in general meeting, but subject nevertheless to the provisions of the statutes in that behalf and of these Articles and to any regulations from time to time made by the Company in general meeting; provided that no regulation so made shall invalidate any prior act of the directors, which would have been valid if such regulation had not been made. 102. Without restricting the generality of the terms of the last preceding Article and without prejudice to the general powers conferred thereby, and the other powers conferred or restrictions imposed by these Articles on the powers of the directors, it is hereby expressly declared that the directors shall have the following powers, that is to say power from time to time: (a) to take such steps as they think fit to carry into effect any agreement or contract made by or on behalf of the Company; (b) to pay the costs, charges and expenses, preliminary and incidental to the promotion, formation, establishment, and registration of the Company; (c) to purchase, or otherwise acquire, for the Company any property, rights or privileges which the Company is authorized to acquire, and at such price and generally on such terms and conditions as they think fit; (d) at their discretion, to pay for any property, rights, or privileges acquired by or services rendered to the Company, either wholly or partially in cash or in shares, bonds, debentures or other securities of the Company, and any such shares may be issued either as fully paid up, or with such amount credited as paid up thereon as may be agreed upon; and any such bonds, debentures, or other securities may be either specifically charged upon all or any part of the property of the Company, or not so charged; (e) to secure the fulfilment of any contracts or engagements entered into by the Company, by mortgage or charge of all or any of the property of the Company and its unpaid capital for the time being, or in such other manner as they may think fit; (f) to appoint, and at their discretion remove or suspend, such experts, managers, secretaries, treasurers, officers, clerks, agents and servants for permanent, temporary or special services, as they from time to time think fit, and to determine their powers and duties, and fix their salaries or emoluments, and to require security in such instances and to such amounts as they think fit; (g) to accept from any member insofar as the law permits, and on such terms and conditions as shall be agreed upon, a surrender of his shares or any part thereof; provided that the Company forthwith cancel such surrendered shares or any part thereof, as the case may be; (h) to appoint any person or persons (whether incorporated or not) to accept and hold in trust for the Company any property belonging to the Company, or in which it is interested, and for any other purposes, and to execute and do all such deeds and things as may be requisite in relation to any such trust, and to provide for the remuneration of any such trustee or trustees; (i) to institute, conduct, defend, compound, or abandon any legal proceedings by or against the Company, or its officers, or otherwise concerning the affairs of the Company, and also to compound and allow time for payment or satisfaction of any debts due, and of any claims or demands by or against the Company; (j) to refer any claims or demands by or against the Company to arbitration, and observe and perform the awards; (k) to make and give receipts, releases and other discharges for money payable to the Company and for claims and demands of the Company; (l) to determine who shall be entitled to exercise the borrowing powers of the Company and sign on the Company's behalf bonds, debentures or other securities, bills, notes, receipts, acceptances, assignments, transfers, hypothecation, pledges, endorsements, cheques, drafts, releases, contracts, agreements and all other instruments and documents; (m) to provide for the management of the affairs of the Company abroad in such manner as they think fit, and in particular to appoint any persons to be the attorneys or agents of the Company with such powers (including power to sub-delegate) and upon such terms as may be thought fit; (n) to invest and deal with any of the moneys of the Company not immediately required for the purposes thereof upon such securities and in such manner as they think fit, and from time to time to vary or realize such investments; (o) to execute in the name and on behalf of the Company, in favour of any director or any other person who may incur or be about to incur any personal liability for the benefit of the Company, such mortgages of the Company's property, present and future, as they think fit, and any such mortgages may contain a power of sale, and such other powers, covenants and provisions as shall be agreed on; (p) to set aside out of the profits of the Company before declaring any dividend, such sums as they think proper as a reserve fund to meet contingencies, or to provide for dividends, or for depreciation, or for repairing, improving and maintaining any of the property of the Company and for such other purposes as the directors shall in their absolute discretion think conducive to the interests of the Company; and to invest the several sums so set aside upon such investments other than shares of the Company as they may think fit, and from time to time to deal with and vary such investments, and to dispose of all or any part thereof for the benefit of the Company, and to divide the reserve fund into such special funds as they think fit, with full power to employ the assets constituting the reserve fund in the business of the Company; and that without being bound to keep the same separate from the other assets; (q) from time to time to make, vary and repeal by-laws for the regulation of the business of the Company, or of its officers and servants, or the members of the Company, or any section or class thereof; (r) to enter into all such negotiations and contracts, and rescind and vary all such contracts, and execute and do all such acts, deeds, and things in the name and on behalf of the Company as they may consider expedient for or in relation to any of the matters aforesaid, or otherwise for the purposes of the Company; and (s) to provide for the management of the affairs of the Company in such manner as they shall think fit. SOLICITORS 103. The Company may employ or retain a solicitor or solicitors, and such solicitor(s) may, at the request of the Board, or on instructions of the Chairman of the Board, or the President, attend meetings of the directors or Shareholders, whether or not he, himself, is a member or director of the Company. If a solicitor is also a director, he may nevertheless charge for services rendered to the Company as a solicitor. SECRETARY AND TREASURER 104. There shall be a Secretary of the Company, who shall keep the minutes of Shareholders' and directors' meetings and shall perform such other duties as may be assigned to him by the Board. The Board may also appoint a Treasurer of the Company to carry out such duties as the Board may assign. 105. The Secretary and Treasurer of the Company shall be appointed by the directors. If the directors think fit, the same person may hold both offices. 106. If the directors think fit, the same person may hold the offices of President and Secretary. 107. The directors may appoint a temporary substitute for the Secretary, who shall, for the purposes of these Articles, be deemed to be the Secretary. THE SEAL 108. The directors shall procure a seal for the Company and shall provide for its safe custody. DIVIDENDS 109. The profits of the Company, subject to the provisions of the Memorandum of Association, and of these presents and to the rights of persons, if any, entitled to shares with special rights as to dividends, may be divided among the Shareholders in accordance with the terms of the shares held by them. 110. The directors may from time to time declare such dividend upon the shares of the Company as they may deem proper according to the rights of the members and the respective classes thereof, and may determine the date upon which the same shall be payable, and provide that any such dividend shall be payable to the persons registered as the holders of the shares in respect of which the same is declared at the close of business upon such date as the directors may specify, and no transfer of such shares made or registered, after the date so specified, shall pass any right to the dividend so declared. 111. No dividend shall carry interest as against the Company. 112. The declaration of the directors as to the amount of the net profits of the Company shall be conclusive. 113. The directors may from time to time pay to the members such interim dividends as in their judgment the position of the Company justifies. 114. The directors may retain any dividends on which the Company has a lien, and may apply the same in or towards satisfaction of the debts, liabilities or engagements in respect of which the lien exists. 115. The directors, on declaring a dividend, may resolve that such dividend be paid wholly or in part by the distribution of specific assets, and in particular of paid up shares, debentures, bonds or debenture stock of the Company or paid up shares, debentures, bonds or debenture stock of any other company, or in any one or more of such ways. 116. The directors may resolve that any moneys, investments, or other assets forming part of the undivided profits of the Company in the hands of the Company and available for dividend, or representing premiums received on the issue of shares and standing to the credit of the share premium account, be capitalized and distributed amongst such of the Shareholders as would be entitled to receive the same if distributed by way of dividend and in the same proportions on the footing that they become entitled thereto as capital and that all or any part of such capitalized fund be applied on behalf of such Shareholders in paying up in full either at par or at such premium as the resolution may provide, any unissued shares or debentures or debenture stock of the Company which shall be distributed accordingly or in or towards payment of the uncalled liability on any issued shares or debentures or debenture stock, and that such distribution or payment shall be accepted by such Shareholders in full satisfaction of their interest in the said capitalized sum. 117. For the purposes of giving effect to any resolution under the two last preceding Articles, the directors may settle any difficulty which may arise in regard to the distribution as they think expedient, and in particular may issue fractional certificates, and may fix the value for distribution of any specific assets, and may determine that cash payment shall be made to any members upon the footing of the value so fixed, or that fractions of less value than $5.00 may be disregarded in order to adjust the rights of all parties, and may vest any such cash or specific assets in trustees upon such trusts for the persons entitled to the dividend or capitalized fund as may seem expedient to the directors. Where requisite, a proper memorandum shall be filed in accordance with the Act. 118. A transfer of shares shall not pass the right to any dividend declared thereon after such transfer and before the registration of the transfer. 119. Any one of several persons who is registered as the joint holder of any share may give effectual receipts for all dividends and payments on account of dividends in respect of such share. 120. Unless otherwise determined by the directors, any dividend may be paid by a cheque or warrant delivered to or sent through the post to the registered address of the member entitled, or, in the case of joint holders, to the registered address of that one whose name stands first on the Register, in respect of the joint holding; and every cheque or warrant so delivered or sent shall be made payable to the order of the person to whom it is delivered or sent. 121. Notice of the declaration of any dividend, whether interim or otherwise, shall be given to the holders of registered shares in the manner hereinafter provided. 122. All dividends unclaimed for one year after having been declared may be invested or otherwise made use of by the directors for the benefit of the Company until claimed. ACCOUNTS 123. The directors shall cause proper books of account to be kept of the sums of money received and expended by the Company, and the matters in respect of which such receipts and expenditures take place, and of all sales and purchases of goods by the Company, and of the assets and credits and liabilities of the Company. 124. The books of account shall be kept at the Office of the Company or such other place as the directors think fit. 125. The directors shall from time to time determine whether, and to what extent, the accounts and books of the Company, or any of them, shall be open to the inspection of the members, and no member shall have any right of inspecting any account or book or document of the Company except as conferred by statute, or authorized by the directors, or by a resolution of the Company in general meeting. 126. At the ordinary general meeting in every year, the directors shall lay before the Company the financial statements required by the Act, the report of the auditor, if any, to the members and, if the Company is a Reporting Issuer, the report of the directors. 127. The financial statements shall be approved by the Board and such approval shall be evidenced by the signatures of two directors to the balance sheet or by the sole director where there is only one. 128. The directors not less than seven days before the date of the ordinary general meeting shall send copies of the financial statements and the report of the auditor, if any, thereon to all members holding voting securities or otherwise entitled to receive notice of the general meeting. AUDIT 129. Unless in respect of a financial year the Company is exempt from the requirements of the Act regarding the appointment and duties of an auditor, an auditor shall be appointed in accordance with the Act. The auditor's duties will be regulated in accordance with the Act. 130. Every account of the directors, when audited and approved by a general meeting, shall be conclusive, except as regards an error discovered therein within three months next after the approval thereof. Whenever any such error is discovered within the period, the account shall forthwith be corrected, and thenceforth shall be conclusive. NOTICES 131. A notice, statement or report may be given or delivered by the Company to any Shareholder or director either by delivery to him personally or by sending it by registered mail or facsimile to him to his last known address (if sent by mail) or facsimile number (if sent by facsimile) indicated in the records of the Company. Where a notice, statement or report is sent by mail or by facsimile, service or delivery of the notice, statement or report shall be deemed to be effected if properly addressed and mailed (if sent by mail) or properly transmitted and telefaxed (if sent by facsimile) and to have been given five days (excluding Saturdays and Sundays) following the date of mailing (if sent by mail) or one day (excluding Saturdays and Sundays) following the date the facsimile was telefaxed (if sent by facsimile). A certificate signed by the Secretary or other officer of the Company that the letter, envelope or facsimile containing the notice, statement or report was so addressed and delivered shall be conclusive evidence thereof. 132. A notice, statement or report may be given or delivered by the Company to the joint holders of a share by giving the notice to the joint holder first named in the Register in respect of the share. 133. Notice of every general meeting or meeting of Shareholders holding a class of shares shall be given in a manner hereinbefore authorized to every Shareholder holding, at the time of the issue of the notice or the date fixed for determining the Shareholders entitled to such notice, whichever is the earlier, shares which confer the right to notice of and to attend or vote at any such meeting. No other person except the auditor of the Company and the directors of the Company shall be entitled to receive notices of any such meeting. INDEMNITY 134. Every director, manager, Secretary, Treasurer, and other officer or servant of the Company shall be indemnified by the Company against, and it shall be the duty of the directors out of the funds of the Company to pay, all costs, losses and expenses which any director, manager, Secretary, Treasurer or other officer or servant may incur or become liable to by reason of any contract entered into, or act or thing done by him as such officer or servant, or in any way in the discharge of his duties, including travelling expenses, and the amount for which such indemnity is proved shall immediately attach as a lien on the property of the Company and have priority as against the members over all other claims. 135. No director or officer of the Company, in his capacity as a director or officer, respectively, shall be liable for acts, receipts, neglects or defaults of any other director or officer, or for joining in any receipt or other act for conformity, or for any loss or expense happening to the Company through the insufficiency or deficiency of title to any property acquired by order of the directors for or on behalf of the Company or through the insufficiency or deficiency of any security in or upon which any of the moneys of the Company shall be invested, or for any loss or damage arising from the bankruptcy, insolvency or tortious act of any person with whom any money, securities or effects shall be deposited, or for any loss occasioned by error of judgment or oversight on his part, or for any other loss, damage or misfortune whatever which shall happen in the execution of the duties of his office or in relation thereto, unless the same happen through his own dishonesty. PRIVATE COMPANY 136. To the end that the Company may qualify as a private company as that term is defined by the Securities Act (Nova Scotia), (a) in this Article, "prescribed securities" means the securities prescribed from time to time by the Nova Scotia Securities Commission for the purpose of the definition of private company under the Securities Act; (b) no transfer of prescribed securities of the Company, other than as permitted in Article 18, shall be effective; (c) the number of holders of prescribed securities of the Company, exclusive of persons who own a prescribed security and who are in its employment or the employment of an affiliate and exclusive of persons who, having been formerly in the employment of the Company or an affiliate, were while in that employment the owners of, and have continued after termination of that employment to own, at least one prescribed security of the Company, is limited to not more than fifty, two or more persons or companies who are the joint registered owners of one or more prescribed securities of the Company being counted as one holder; and (d) the Company shall not distribute any of its prescribed securities or securities convertible into or exchangeable for prescribed securities to the public. NAMES AND ADDRESSES OF SUBSCRIBERS Dated the 2nd day of October, 2003. 2435239 NOVA SCOTIA LIMITED Summit Place, 6th Floor Per: /s/ David C. Hicks 1601 Lower Water Street ------------------------------------ Halifax, NS B3J 3P6 DAVID C. HICKS - ASSISTANT SECRETARY Witness to the above signatures. /s/ Joanne Gray - ------------------------ Joanne Gray Summit Place, 6th Floor 1601 Lower Water Street Halifax, NS B3J 3P6 Occupation: Legal Secretary EX-3.11 14 y99327exv3w11.txt CHARTER OF CUISINE EXPERT Exhibit 3.11 (Unofficial English Translation) (CANADIAN FLAG) Industry Canada Industrie Canada CERTIFICATE CERTIFICAT OF AMENDMENT DE MODIFICATION CANADA BUSINESS LOI CANADIENNE SUR CORPORATIONS ACT IES SOCIETE PAR ACTIONS CUISINE EXPERT - CE CABINETS INC. Name of corporation-Denomination de la societe I hereby certify that the articles of the above-named corporation were amended: [ ] a) under section 13 of the Canada Business Corporations Act in, accordance with the attached notice; [ ] b) under section 27 of the Canada Business Corporations Act as set out in the attached articles of amendment. designating a series of shares; [X] c) under section 179 of the Canada Business Corporations Act as set out in the attached articles of amendment; [ ] d) under section 191 of the Canada Business Corporations Act as set out in .the attached articles of reorganization; 313472-5 Corporation number-Numero de la societe Je certifie que.les statuts de la societe susmentionnee ont ete modifies: [ ] a) en vertu de l'article 13 de la Loi canadienne sur les societe par actions, conformement a l'avis ci-joint; [ ] b) en vertu de l'article 27 de la Loi canadienne sur les societes par actions, tel qu'il est indique dans les clauses modificatrices ci-jointes designant une serie d'actions; [X] c) en vertu de l'article 179 de la Loi canadienne sur les societes par actions, tel qu'il est indique dans les clauses modificatrices ci-jointes; [ ] d) en vertu de l`article 191 de la Loi canadienne sur les societes par actions, tel qu'il est indique dans les clauses de reorganisation ci-jointes; JULY 6, 2000 / LE 6 JUILLET 2000 Director - Directeur Date of Amendment - Date de modification (CANADIAN FLAG) CANADA Industry Canada Industrie Canada Canada Business Loi canadienne sur les societes Corporations Act canadiennes par actions FORM 4 FORMULE 4 ARTICLES OF AMENDMENT CLAUSES MODIFICATRICES (SECTION 27 OR 177) (ARTICLES 27 OU 177) 1 - Name of corporation - Denomination de la societe NOVAX MODULAR GROUP INC. 2 - Corporation No. - No de la societe 313472-5 3 - The articles of the above-named corporation are amended as follows: Les statuts de la societe ci-dessus sont modifies de la facon suivante: THE NAME OF THE CORPORATION IS AMENDED TO BE HENCEFORTH: CUISINE EXPERT - C.E. CABINETS INC. Date Signature Title - Titre June 9, 2000 President FOR DEPARTMENTAL USE ONLY - A L'USAGE DU MINISTERE SEULEMENT Filed - Deposee Consumer and Consommation et Affaires CorporateAffairs Canada commerciales Canada Canada Business Loi regissant les societes Corporations Act par actions de regime federal FORM 4 FORMULE 4 ARTICLES OF AMENDMENT CLAUSES MODIFICATRICES (SECTION 27 OR 177) (ARTICLES 27 OU 177) 1 - Name of corporation - Denomination de la societe GROUPE MODULAIRE NOVAX INC. / NOVAX MODULAR GROUP INC. 2 - Corporation No. - No de la societe 313472-5 3 - The articles of the above-named corporation are amended as follows: Les statuts de la societe ci-dessus sont modifies de la facon suivante: Section 3 of the articles of amalgamation accompanying the certificate of amalgamation dated March 31, 1995, as amended by the articles of amendment accompanying the certificate of amendment dated November 3, 1995, is further amended 3.1 by the creation of an unlimited number of class "C" preferred shares; 3.2 by the amendment and replacement of the rights, privileges, conditions and restrictions attaching to the shares of Corporation with those described in the enclosed Schedule 1, which forms an integral part hereof. so that the authorized capital of the Corporation henceforth consists of an unlimited number of common shares and class "A", class "B" and class "C" preferred shares. Date Signature Title - Titre December - , 1996 Signed (illegible) Director 21-936-1387 (01-93) 46 FOR DEPARTMENTAL USE ONLY - A L'USAGE DU MINISTERE SEULEMENT Filed - Deposee DEC 20 1996 GROUPE MODULAIRE NOVAX INC./ NOVAX MODULAR GROUP INC. SCHEDULE 1 COMMON SHARES 1. The rights, privileges, conditions and restrictions attaching to the common shares are set forth hereinafter. VOTING 1.1 The common shares confer upon the registered holders thereof the right to vote on the basis of one vote per share at all meetings of shareholders, with the exception of meetings at which only registered holders of shares of certain specific classes are entitled to vote. DIVIDENDS 1.2 Subject to the rights of registered holders of other classes of shares, registered holders of common shares shall have the right to receive all dividends declared by the Corporation. RESTRICTION CONCERNING DIVIDENDS 1.3 Registered holders of common shares shall not be entitled to receive any dividends the payment whereof would have the effect of decreasing the Corporation's net asset value to a value lower than the redemption price of the outstanding class "A", class "B" and class "C" preferred shares. WINDING-UP, DISSOLUTION AND DISTRIBUTION 1.4 Registered holders of common shares shall have the right to share the remaining property upon the winding-up or dissolution of the Corporation or upon any other distribution of its assets to its shareholders, pro rata to the number of shares held by them. RESTRICTION ON THE PURCHASE OF COMMON SHARES BY THE CORPORATION 1.5 The Corporation shall not be entitled to purchase common shares if the payment of their purchase price would have the effect of decreasing the Corporation's net asset value to a value lower than the redemption price of the outstanding class "A", class "B" and class "C" preferred shares. CLASS "A", CLASS "B" AND CLASS "C" PREFERRED SHARES 2. The rights, privileges, conditions and restrictions attaching to the class "A", class "B" and class "C" preferred shares are set forth hereinafter. DEFINITION 2.1 For purposes of this Article 2, the expression "PROFIT BEFORE TAXES" shall mean the Corporation's consolidated net profit before taxes, as established in accordance with accounting principles generally accepted in Canada, applied on a consistent basis, and as it appears in the consolidated and audited financial statements of the Corporation for the financial year preceding the financial year in question. VOTING 2.2 Save as expressly provided for in the Canada Business Corporations Act (the "Act"), registered holders of class "A", class "B" and class "C" preferred shares shall not, in their capacity as such, be entitled to receive notices of meetings of shareholders, attend same or vote thereat. DIVIDENDS AND PARTICIPATION 2.3 As of January 1, 1996, during each financial year for which the Corporation's Profit Before Taxes is less than three million dollars ($3,000,000), registered holders of class "A" preferred shares shall have the right to receive, as and when declared by the directors, from the funds of the Corporation which may then legally be used for such purpose, a fixed, cumulative, preferred dividend at a rate of 8% of the redemption price of each class "A" preferred share held by them, as such price is determined in subsection 2.13.1. These registered holders shall not be entitled to any other dividends. 2.4 During each financial year, registered holders of class "B" and class "C" preferred shares shall have the right to receive, as and when declared by the directors, from the funds of the Corporation which may then legally be used for such purpose, a fixed, cumulative, preferred dividend at a rate of 8% of the redemption price of each class "B" or class "C" preferred share held by them. These registered holders shall not be entitled to any other dividends. RANKING 2.5 No dividends shall be declared or paid on the Corporation's shares unless the following ranking is observed: 2 2.5.1 if dividends are payable on the class "A" preferred shares in accordance with the provisions of section 2.3, the ranking shall be as follows: 2.5.1.1 class "C" preferred shares; 2.5.1.2 class "A" preferred shares; 2.5.1.3 class "B" preferred shares; and 2.5.1.4 common shares; 2.5.2 if no dividends are payable on the class "A" preferred shares in accordance with the provisions of section 2.3, the ranking shall be as follows: 2.5.2.1 class "C" preferred shares; 2.5.2.2 class "B" preferred shares; and 2.5.2.3 common shares. The directors shall not be entitled to declare dividends on a lower ranking class of shares if the dividends on the higher ranking class of shares have not been declared in full and paid, unless sufficient provision has been made for the payment thereof. WINDING-UP, DISSOLUTION AND DISTRIBUTION 2.6 Upon the winding-up or dissolution of the Corporation or any other distribution of its assets to its shareholders, registered holders of class "A", class "B" and class "C" preferred shares 2.6.1 shall have the right to receive, from its assets, an amount equal to the redemption price of each share held by them, prior to any distribution to registered holders of common shares; and 2.6.2 shall not be entitled to any other distribution of assets after having received this amount. INSUFFICIENT FUNDS UPON WINDING-UP 2.7 If the Corporation's assets are insufficient to fully pay the amount due to the registered holders of class "A", class "B" and class "C" preferred shares, the collocation shall be as follows: 2.7.1 class "C" preferred shares; 2.7.2 if a balance remains, the class "A" preferred shares; and 3 2.7.3 if a balance remains, the class "B" preferred shares. When there are insufficient funds to fully pay the amount due to registered holders of a given class, each such holder shall share in the assets or the balance of the assets, as the case may be, in the proportion that the redemption price of the holder's shares of that class represents with respect to the total redemption price of all the shares of that class, to the exclusion of the lower ranking class or classes. REDEMPTION 2.8 Subject to the relevant provisions of the Act, the class "B" and class "C" preferred shares shall be redeemable, in whole or in part, at any time, at the Corporation's option. A partial redemption within a given class shall be made in proportion to the number of shares held by each shareholder of the class in question, as indicated in the Corporation's records on the date on which the redemption notice is given, without taking into account any share fractions. Nonetheless, the shares to be redeemed may be chosen in any other manner, with the unanimous consent of the registered holders of all the outstanding shares of the said class. PROCEDURE FOR SENDING NOTICE 2.9 At least 10 days before the date set for the redemption, the Corporation shall give a notice thereof to each registered holder of the shares in question. The said notice shall be sent to the address of the registered holder as indicated in the Corporation's records or, failing same, to his last known address. However, the unintentional failure to send the notice to any of the registered holders shall not affect the validity of the redemption of the said shares. LAPSE OF HOLDERS' RIGHTS 2.10 Once the notice has been given and as of the date set for the redemption (unless the Corporation does not make the funds necessary for the payment of the redemption price available), the registered holders of the shares in question shall cease to have the rights attaching to such shares, except for the right to receive the redemption price thereof in consideration for the delivery of the share certificates for the redeemed shares. DEPOSIT OF THE REDEMPTION PRICE 2.11 However, if the Corporation declares that it will deposit the redemption price, before or on the date set for the redemption, with a bank or trust company specified in the notice, the registered holders of the shares in question shall, as of the date of the deposit, cease to have the rights attaching to those shares and shall contact only the depositary of the funds to obtain the redemption price; they shall not, under any 4 circumstances, contact the Corporation directly. In the event the above-mentioned deposit is made, after the date set for the redemption the registered holders of the shares that have been redeemed shall be entitled, on a pro rata basis, to such interest as the bank or trust company may grant on the funds deposited. REDEMPTION PRICE OF A CLASS "B" OR CLASS "C" PREFERRED SHARE 2.12 The redemption price of a class "B" or class "C" preferred share shall be $1, plus the current dividends and any accrued and unpaid dividends. OBLIGATION TO REDEEM THE CLASS "A" SHARES UPON THE SALE OF THE CORPORATION THROUGH A SALE OF SHARES OR A SALE OF ASSETS 2.13 Subject to the relevant provisions of the Act, the Corporation shall be obliged to redeem all the class "A" preferred shares then outstanding in the event of a sale of the Corporation either through a sale of shares or through a sale of an enterprise within the meaning of the Civil Code of Quebec which relates to all or a significant portion of the enterprise and which occurs outside the ordinary course of business of the Corporation, and 2.13.1 if the selling price, in the event of a sale of shares, or the net selling price, namely the amount of the selling price less the amount of all liabilities assumed by the purchaser, in the event of a sale of an enterprise, is thirty million dollars ($30,000,000) or less, the redemption price of the class "A" preferred shares shall be equal to the total contribution received by the Corporation upon the issuance of the class "A" preferred shares, plus a premium of $0.570728 per share and any accrued and unpaid dividends on such shares; or 2.13.2 if the said price exceeds thirty million dollars ($30,000,000), the aggregate redemption price of all the class "A" preferred shares then outstanding shall be one dollar ($1). 2.14 The redemption price provided for in subsection 2.13.1 or in subsection 2.13.2, as the case may be, shall be paid to the holder in question within thirty (30) days following the date of such sale. OBLIGATION TO REDEEM CLASS "A" SHARES BASED ON THE PROFIT BEFORE TAXES 2.15 Subject to the relevant provisions of the Act, the Corporation shall be obliged to redeem class "A" preferred shares in accordance with the following terms and conditions and in the following proportions: 5 2.15.1 if the Corporation's Profit Before Taxes for the financial year ending December 31, 1996 is equal to, or greater than three million dollars ($3,000,000), the Corporation shall redeem five hundred thousand (500,000) class "A" preferred shares for an aggregate price of one dollar ($1); and 2.15.2 if the Corporation's Profit Before Taxes for the financial year ending December 31, 1997 is equal to, or greater than three million six hundred thousand dollars ($3,600,000), the Corporation shall redeem five hundred thousand (500,000) class "A" preferred shares for an aggregate price of one dollar ($1). RESTRICTION ON THE PURCHASE OR REDEMPTION OF CLASS "A" PREFERRED SHARES 2.16 The Corporation shall not be entitled to purchase or redeem class "A" preferred shares as long as all the class "B" and class "C" preferred shares have not been purchased or redeemed. OBLIGATION TO REDEEM 2.17 Subject to the relevant provisions of the Act, the Corporation shall be obliged to redeem the class "C" preferred shares of a registered holder who so requests in writing, which redemption shall be made in the proportion determined by the holder and at the redemption price of the shares. RESTRICTION ON THE PURCHASE OR REDEMPTION OF CLASS "B" PREFERRED SHARES 2.18 The Corporation shall not be entitled to purchase or redeem class "B" preferred shares as long as all the class "C" preferred shares have not been purchased or redeemed. PURCHASE 2.19 Subject to the relevant provisions of the Act, the Corporation shall also have the right, from time to time and at any time, to purchase by mutual agreement all or part of the class "A", class "B" or class "C" preferred shares of a registered holder at a price which shall not exceed their redemption price. REDUCTION OF THE REDEMPTION PRICE 2.20 If the Corporation reduces the amount of its stated capital related to the shares of a given class in order to refund to the shareholders any part of its stated capital, the redemption price or purchase price of the shares of that class shall be reduced by the same amount. 6 CANCELLATION OF SHARES 2.21 The class "A", class "B" and class "C" preferred shares which have been redeemed or purchased in accordance with the provisions hereinabove shall be cancelled. RECORD DATE FOR THE PAYMENT OF DIVIDENDS 3. The directors may select, in advance, the latest date of registration (the "Record Date") for determining the shareholders entitled to receive dividends, which date shall fall within the 50 days preceding the date of payment of the dividends. Only shareholders of record on the Record Date shall be entitled to receive such dividends, notwithstanding any transfer of shares on the books of the Corporation after such date. * * * 7 Consumer and Corporate Consommation et Affaires Affairs Canada commerciales Canada Canada Business Loi regissant les societes Corporations Act par actions de regime federal FORM 4 FORMULE 4 ARTICLES OF AMENDMENT CLAUSES MODIFICATRICES (SECTION 27 OR 177) (ARTICLES 27 OU 177) 1 - Name of corporation - Denomination de la societe CUISINE EXPERT LTEE 2 - Corporation No. - No de la societe 313472-5 3 - The articles of the above-named corporation are amended as follows: Les statuts de la societe ci-dessus sont modifies de la facon suivante: 3.1 the name of the Corporation is changed from CUISINE EXPERT LTEE to GROUPE MODULAIRE NOVAX INC. and its English version, NOVAX MODULAR GROUP INC.; and 3.2 the place in Canada where the head office of the Corporation is situated is changed from The Montreal Urban Community to the City of Laval, Province of Quebec. Date Signature Title - Titre February - , 1996 Signed Serge Boucher Financial vice-president, assistant secretary FOR DEPARTMENTAL USE ONLY - A L'USAGE DU MINISTERE SEULEMENT Filed - Deposee Consumer and Corporate Consommation et Affaires Affairs Canada commerciales Canada Canada Business Loi regissant les societes Corporations Act par actions de regime federal FORM 4 FORMULA 4 ARTICLES OF AMENDMENT CLAUSES MODIFICATRICES (SECTION 27 OR 177) (ARTICLES 27 OU 177) 1 - Name of corporation - Denomination de la societe CUISINE EXPERT LTEE 2 - Corporation No. - No de la societe 313472-5 3 - The articles of the above-named corporation are amended as follows: Les statuts de la societe ci-dessus sont modifies de la facon suivante: Section 3 of the articles of amendment of the Corporation is modified as follow 3.1 by the creation of an unlimited number of new class "A" and class "B" preferred shares; 3.2 by the subdivision of the 100 commons shares currently outstanding in 2,887,500 commons shares on the basis of 28,875 commons shares for each commons shares so subdivided; 3.3 by the cancellation of the previously authorized and unissued preferred shares and, consequently, of the class itself; and 3.4 by the modification and replacement of the rights, privileges, conditions and restrictions attaching to the shares of the Corporation with those described in the enclosed Schedule 1, which forms integral part hereof. Date Signature Title - Titre November - , 1996 Signed (elligible) Director FOR DEPARTMENTAL USE ONLY - A L'USAGE DU MINISTERE SEULEMENT Filed - Deposee CUISINE EXPERT LTEE SCHEDULE 1 COMMON SHARES 1. The rights, privileges, conditions and restrictions attaching to the common shares are set forth hereinafter. VOTING 1.1 The common shares confer upon the registered holders thereof the right to vote on the basis of one vote per share at all meetings of shareholders, with the exception of meetings at which only registered holders of shares of certain specific classes are entitled to vote. DIVIDENDS 1.2 Subject to the rights of registered holders of other classes of shares, registered holders of common shares shall have the right to receive all dividends declared by the Corporation. RESTRICTION CONCERNING DIVIDENDS 1.3 Registered holders of common shares shall not be entitled to receive any dividends the payment whereof would have the effect of decreasing the Corporation's net asset value to a value lower than the redemption price of the outstanding class "A" and class "B" preferred shares. WINDING-UP, DISSOLUTION AND DISTRIBUTION 1.4 Registered holders of common shares shall have the right to share the remaining property upon the winding-up or dissolution of the Corporation or upon any other distribution of its assets to its shareholders, pro rata to the number of shares held by them. RESTRICTION ON THE PURCHASE OF COMMON SHARES BY THE CORPORATION 1.5 The Corporation shall not be entitled to purchase common shares if the payment of their purchase price would have the effect of decreasing the Corporation's net asset value to a value lower than the redemption price of the outstanding class "A" and class "B" preferred shares. CLASS "A" AND CLASS "B" PREFERRED SHARES 2. The rights, privileges, conditions and restrictions attaching to the class "A" and class "B" preferred shares are set forth hereinafter. DEFINITION 2.1 For purposes of this Article 2, the expression "PROFIT BEFORE TAXES" shall mean the Corporation's consolidated net profit before taxes, as established in accordance with accounting principles generally accepted in Canada, applied on a consistent basis, and as it appears in the consolidated and audited financial statements of the Corporation for the financial year preceding the financial year in question. VOTING 2.2 Save as expressly provided for in the Canada Business Corporations Act (the "Act"), registered holders of class "A" and class "B" preferred shares shall not, in their capacity as such, be entitled to receive notices of meetings of shareholders, attend same or vote thereat. DIVIDENDS AND PARTICIPATION 2.3 As of January 1, 1996, during each financial year for which the Corporation's Profit Before Taxes is less than three million dollars ($3,000,000), registered holders of class "A" preferred shares shall have the right to receive, as and when declared by the directors, from the funds of the Corporation which may then legally be used for such purpose, a fixed, cumulative, preferred dividend at a rate of 8% of the redemption price of each class "A" preferred share held by them, as such price is determined in subsection 2.13.1. These registered holders shall not be entitled to any other dividends. 2.4 During each financial year, registered holders of class "B" preferred shares shall have the right to receive, as and when declared by the directors, from the funds of the Corporation which may then legally be used for such purpose, a fixed, cumulative, preferred dividend at a rate of 8% of the redemption price of each class "B" preferred share held by them. These registered holders shall not be entitled to any other dividends. RANKING 2.5 No dividends shall be declared or paid on the Corporation's shares unless the following ranking is observed: 2 2.5.1 if dividends are payable on the class "A" preferred shares in accordance with the provisions of section 2.3 above, the ranking shall be as follows: 2.5.1.1 class "B" preferred shares; 2.5.1.2 class "A" preferred shares; 2.5.1.3 common shares; 2.5.2 if no dividends are payable on the class "A" preferred shares in accordance with the provisions of section 2.3 above, the ranking shall be as follows: 2.5.2.1 class "B" preferred shares; 2.5.2.2 common shares. For greater certainty, the directors shall not be entitled to declare dividends on a lower ranking class of shares if the dividends on the higher ranking class of shares have not been declared in full and paid, unless sufficient provision has been made for the payment thereof. WINDING-UP, DISSOLUTION AND DISTRIBUTION 2.6 Upon the winding-up or dissolution of the Corporation or any other distribution of its assets to its shareholders, registered holders of class "A" and class "B" preferred shares 2.6.1 shall have the right to receive, from its assets, an amount equal to the redemption price of each share held by them, prior to any distribution to registered holders of common shares; and 2.6.2 shall not be entitled to any other distribution of assets after having received this amount. INSUFFICIENT FUNDS UPON WINDING-UP 2.7 If the Corporation's assets are insufficient to fully pay the amount due to the registered holders of class "A" and class "B" preferred shares, the collocation shall be as follows: 2.7.1 class "B" preferred shares; 2.7.2 if a balance remains, the class "A" preferred shares; When there are insufficient funds to fully pay the amount due to registered holders of a given class, each such holder shall share in the assets or the balance of the assets, as the case may be, in the proportion that the 3 redemption price of the holder's shares of that class represents with respect to the total redemption price of all the shares of that class, to the exclusion of the lower ranking class or classes. REDEMPTION 2.8 Subject to the relevant provisions of the Act, the class "B" preferred shares shall be redeemable, in whole or in part, at any time, at the Corporation's option. A partial redemption within a given class shall be made in proportion to the number of shares held by each shareholder of the class in question, as indicated in the Corporation's records on the date on which the redemption notice is given, without taking into account any share fractions. Nonetheless, the shares to be redeemed may be chosen in any other manner, with the unanimous consent of the registered holders of all the outstanding shares of the said class. PROCEDURE FOR SENDING NOTICE 2.9 At least 10 days before the date set for the redemption, the Corporation shall give a notice thereof to each registered holder of the shares in question. The said notice shall be sent to the address of the registered holder as indicated in the Corporation's records or, failing same, to his last known address. However, the unintentional failure to send the notice to any of the registered holders shall not affect the validity of the redemption of the said shares. LAPSE OF HOLDERS' RIGHTS 2.10 Once the notice has been given and as of the date set for the redemption (unless the Corporation does not make the funds necessary for the payment of the redemption price available), the registered holders of the shares in question shall cease to have the rights attaching to such shares, except for the right to receive the redemption price thereof in consideration for the delivery of the share certificates for the redeemed shares. DEPOSIT OF THE REDEMPTION PRICE 2.11 However, if the Corporation declares that it will deposit the redemption price, before or on the date set for the redemption, with a bank or trust company specified in the notice, the registered holders of the shares in question shall, as of the date of the deposit, cease to have the rights attaching to those shares and shall contact only the depositary of the funds to obtain the redemption price; they shall not, under any circumstances, contact the Corporation directly. In the event the above-mentioned deposit is made, after the date set for the redemption the registered holders of the shares that have been redeemed shall be entitled, on a pro rata basis, to such interest as the bank or trust company may grant on the funds deposited. 4 REDEMPTION PRICE OF A CLASS "B" PREFERRED SHARE 2.12 The redemption price of a class "B" preferred share shall be $1, plus the current dividends and any accrued and unpaid dividends. OBLIGATION TO REDEEM THE CLASS "A" SHARES UPON THE SALE OF THE CORPORATION THROUGH A SALE OF SHARES OR A SALE OF ASSETS 2.13 Subject to the relevant provisions of the Act, the Corporation shall be obliged to redeem all the class "A" preferred shares then outstanding in the event of a sale of the Corporation either through a sale of shares or through a sale of an enterprise within the meaning of the Civil Code of Quebec which relates to all or a significant portion of the enterprise and which occurs outside the ordinary course of business of the Corporation, and 2.13.1 if the selling price, in the event of a sale of shares, or the net selling price, namely the amount of the selling price less the amount of all liabilities assumed by the purchaser, in the event of a sale of an enterprise, is thirty million dollars ($30,000,000) or less, the redemption price of the class "A" preferred shares shall be equal to the total contribution received by the Corporation upon the issuance of the class "A" preferred shares, plus a premium of $0.570728 per share and any accrued and unpaid dividends on such shares; or 2.13.2 if the said price exceeds thirty million dollars ($30,000,000), the aggregate redemption price of all the class "A" preferred shares then outstanding shall be one dollar ($1). 2.14 The redemption price provided for in subsection 2.13.1 or in subsection 2.13.2, as the case may be, shall be paid to the holder in question within thirty (30) days following the date of such sale. OBLIGATION TO REDEEM CLASS "A" SHARES BASED ON THE PROFIT BEFORE TAXES 2.15 Subject to the relevant provisions of the Act, the Corporation shall be obliged to redeem class "A" preferred shares in accordance with the following terms and conditions and in the following proportions: 2.15.1 if the Corporation's Profit Before Taxes for the financial year ending December 31, 1996 is equal to, or greater than three million dollars ($3,000,000), the Corporation shall redeem five hundred thousand (500,000) class "A" preferred shares for an aggregate price of one dollar ($1); and 5 2.15.2 if the Corporation's Profit Before Taxes for the financial year ending December 31, 1997 is equal to, or greater than three million six hundred thousand dollars ($3,600,000), the Corporation shall redeem five hundred thousand (500,000) class "A" preferred shares for an aggregate price of one dollar ($1). RESTRICTION ON THE PURCHASE OR REDEMPTION OF CLASS "A" PREFERRED SHARES 2.16 The Corporation shall not be entitled to redeem class "A" preferred shares as long as all the class "B" preferred shares have not been redeemed. PURCHASE 2.17 Subject to the relevant provisions of the Act, the Corporation shall also have the right, from time to time and at any time, to purchase by mutual agreement all or part of the class "A" or class "B" preferred shares of a registered holder at a price which shall not exceed their redemption price. REDUCTION OF THE REDEMPTION PRICE 2.18 If the Corporation reduces the amount of its stated capital related to the shares of a given class in order to refund to the shareholders any part of its stated capital, the redemption price or purchase price of the shares of that class shall be reduced by the same amount. CANCELLATION OF SHARES 2.19 The class "A" and class "B" preferred shares which have been redeemed or purchased in accordance with the provisions hereinabove shall be cancelled. RECORD DATE FOR THE PAYMENT OF DIVIDENDS 3. The directors may select, in advance, the latest date of registration (the "Record Date") for determining the shareholders entitled to receive dividends, which date shall fall within the 50 days preceding the date of payment of the dividends. Only shareholders of record on the Record Date shall be entitled to receive such dividends, notwithstanding any transfer of shares on the books of the Corporation after such date. * * * 6
Industry Canada Industrie Canada FORM 9 FORMULE 9 Canada Business Loi regissant les societes ARTICLES OF AMALGAMATION STATUTS DE FUSION Corporation Act par actions de regime federal (SECTION 185) (ARTICLE 185) --------------- ----------------------------- ------------- ------------- 1 - Name of the amalgamated corporation Denomination de la societe issue de la fusion CUISINE EXPERT LTEE 2 - The place in Canada where the registered office is to Lieu au Canada ou doit etre situe le siege social be situated Montreal Urban Community, Province of Quebec 3 - The classes and ay maximum number of shares that the Categories et tout nombre maximal d'actions que la societe est corporation is authorized to issue autorisee a emettre An unlimited number of common shares and an unlimited number of preferred shares, all of them without par value. The attached Schedule 1 is an integral part of this form. 4 - Restrictions, if any, on share transfers Restrictions sur le transfert des actions, s'il y a lieu The attached Schedule 2 forms an integral part hereof. 5 - Number (or minimum and maximum number) of directors Nombre (ou nombre minimal ou maximal) d'administrateurs Minimum: 1 - Maximum: 15 6 - Restrictions, if any, on business the corporation may carry on Limites imposees a l'activite commerciale de la societe, N/A s'il y a lieu 7 - Other provisions, if any Autres dispositions, s'il y a lieu The attached Schedules 3 and 4 form an integral parts hereof. 8 - The amalgamation has been approved pursuant to that section 8 - La fusion a ete approuvee en accord avec l'article ou le or subsection of the Act which is indicated as follows: paragraphe de la Loi indique ci-apres.
[X] 183 [ ] 184(1) [ ] 184(2)
Corporation No. 9 - Name of the amalgamating corporations No de la Title Denomination des societes fusionnantes societe Signature Date Titre -------------------------------------- ------- --------- ---- ----- CUISINE EXPERT LTEE 085383-6 Signed (illegible) 03-31-95 Director 3131734 CANADA INC. 313173-4 Signed (illegible) 03-31-95 Director FOR DEPARTMENTAL USE ONLY - A L'USAGE DU MINISTERE Filed - Deposee SEULEMENT Corporation No. - No de la societe 313472-4 APR - 3 1995
CUISINE EXPERT LTEE SCHEDULE 1 COMMON SHARES 1. The rights, privileges, conditions and restrictions attaching to the common shares are set forth hereinafter. VOTING 1.1 The common shares confer upon the registered holders thereof the right to vote on the basis of one vote per share at all meetings of shareholders, with the exception of meetings at which only registered holders of shares of certain specific classes are entitled to vote. DIVIDENDS 1.2 Subject to the rights of registered holders of other classes of shares, registered holders of common shares shall have the right to receive all dividends declared by the Corporation. WINDING-UP, DISSOLUTION AND DISTRIBUTION 1.3 Registered holders of common shares shall have the right to share the remaining property upon the winding-up or dissolution of the Corporation or upon any other distribution of its assets to its shareholders, pro rata to the number of shares held by them. PREFERRED SHARES 2. The rights, privileges, conditions and restrictions attaching to the preferred shares are set forth hereinafter. VOTING 2.1 Save as expressly provided for in the Canada Business Corporations Act (the "Act"), registered holders of preferred shares shall not, in their capacity as such, be entitled to receive notices of meetings of shareholders, attend same or vote thereat. DIVIDENDS AND PARTICIPATION 2.2 During each financial year, registered holders of preferred shares shall have the right to receive, as and when declared by the directors, from the funds of the Corporation which may then legally be used for such purpose, a fixed, non-cumulative, preferred dividend at a rate of 9% of the total amount of the contribution received by the Corporation in consideration of each preferred share held by such holders. These registered holders shall not be entitled to any other dividends, and if any dividend is not declared in full or in part during a financial year, their right to receive this dividend or the balance of this dividend, for this financial year, terminates forever. RANKING 2.3 No dividends shall be declared or paid on the common shares during a financial year if the preferred dividends on the preferred shares have not been declared in full and paid, unless sufficient provision has been made for the payment thereof. WINDING-UP, DISSOLUTION AND DISTRIBUTION 2.4 Upon the winding-up or dissolution of the Corporation or any other distribution of its assets to its shareholders, registered holders of preferred shares 2.4.1 shall have the right to receive, from its assets, an amount equal to the redemption price of each share held by them, prior to any distribution to registered holders of common shares; and 2.4.2 shall not be entitled to any other distribution of assets after having received this amount. INSUFFICIENT FUNDS UPON WINDING-UP 2.5 When there are insufficient funds to fully pay the amount due to registered holders of a given class, each such holder shall share in the assets or the balance of the assets, as the case may be, in the proportion that the redemption price of the holder's shares of that class represents with respect to the total redemption price of all the shares of that class, to the exclusion of the lower ranking class or classes. REDEMPTION 2.6 Subject to the relevant provisions of the Act, the preferred shares shall be redeemable, in whole or in part, at any time, at the Corporation's option. A partial redemption within a given class shall be made in proportion to the number of shares held by each shareholder of the class in question, as indicated in the Corporation's records on the date on which the redemption notice is given, without taking into account any share fractions. Nonetheless, the shares to be redeemed may be chosen in any other manner, with the unanimous consent of the registered holders of all the outstanding shares of the said class. 2 PROCEDURE FOR SENDING NOTICE 2.7 At least 10 days before the date set for the redemption, the Corporation shall give a notice thereof to each registered holder of the shares in question. The said notice shall be sent to the address of the registered holder as indicated in the Corporation's records or, failing same, to his last known address. However, the unintentional failure to send the notice to any of the registered holders shall not affect the validity of the redemption of the said shares. LAPSE OF HOLDERS' RIGHTS 2.8 Once the notice has been given and as of the date set for the redemption (unless the Corporation does not make the funds necessary for the payment of the redemption price available), the registered holders of the shares in question shall cease to have the rights attaching to such shares, except for the right to receive the redemption price thereof in consideration for the delivery of the share certificates for the redeemed shares. DEPOSIT OF THE REDEMPTION PRICE 2.9 However, if the Corporation declares that it will deposit the redemption price, before or on the date set for the redemption, with a bank or trust company specified in the notice, the registered holders of the shares in question shall, as of the date of the deposit, cease to have the rights attaching to those shares and shall contact only the depositary of the funds to obtain the redemption price; they shall not, under any circumstances, contact the Corporation directly. In the event the above-mentioned deposit is made, after the date set for the redemption the registered holders of the shares that have been redeemed shall be entitled, on a pro rata basis, to such interest as the bank or trust company may grant on the funds deposited. REDEMPTION PRICE OF PREFERRED SHARE 2.10 The redemption price of a preferred share shall be equal to the full contribution received by the Corporation upon the issue of such share, plus the declared and unpaid dividends, if any. PURCHASE 2.11 Subject to the relevant provisions of the Act, the Corporation shall also have the right, from time to time and at any time, to purchase by mutual agreement all or part of the preferred shares of a registered holder at a price which shall not exceed their redemption price. 3 REDUCTION OF THE REDEMPTION PRICE 2.12 If the Corporation reduces the amount of its stated capital related to the shares of a given class in order to refund to the shareholders any part of its stated capital, the redemption price or purchase price of the shares of that class shall be reduced by the same amount. CANCELLATION OF SHARES 2.13 The preferred shares which have been redeemed or purchased in accordance with the provisions hereinabove shall be cancelled. RECORD DATE FOR THE PAYMENT OF DIVIDENDS 3. The directors may select, in advance, the latest date of registration (the "Record Date") for determining the shareholders entitled to receive dividends, which date shall fall within the 50 days preceding the date of payment of the dividends. Only shareholders of record on the Record Date shall be entitled to receive such dividends, notwithstanding any transfer of shares on the books of the Corporation after such date. * * * 4 CUISINE EXPERT LTEE SCHEDULE 2 No share from the share capital of the Corporation shall be transferred or assigned without the consent of the directors or the shareholders given by way of a resolution. * * * CUISINE EXPERT LTEE SCHEDULE 3 1. The number of shareholders of the Corporation is limited to 50, excluding those who are or have been employees of the Corporation or any of its subsidiaries. Two persons or more holding jointly one or several shares are counted as one shareholder. 2. Any public offering by the Corporation is prohibited. 3. Without limiting the scope of Section 189 of the Canada Business Corporations Act, to secure the payment of bonds, debentures and debentures-stocks, authorized to be issued by the governing statutes, the Corporation may hypothecate, pledge or charge its real or personal property, owned or subsequently acquired. 4. The directors of the Corporation can designate one or more directors for a term of office expiring no later than the close of the next annual meeting, provided that the total number of directors so designated does not exceed the third of the number of directors elected at the last annual meeting. * * * CUISINE EXPERT LTEE SCHEDULE 4 TERMS OF CONVERSION The terms governing the conversion of the shares of CUISINE EXPERT LTEE ("CUISINE") and 3131734 CANADA INC. ("3131734") for shares of the amalgamated corporation are as follows: 1.1. each common share of the share capital of CUISINE currently outstanding is converted into 1 common share of the share capital of the amalgamated corporation; 1.2. each common share of CUISINE currently outstanding held by 3131734 is cancelled without repayment of capital represented by such share; and 1.3. each class "A" share of 3131734 currently outstanding is converted in 1 common share of the share capital of the amalgamated Corporation * * * * EX-3.12 15 y99327exv3w12.txt BYLAWS OF CUISINE EXPERT EXHIBIT 3.12 GENERAL BY-LAWS OF CUISINE EXPERT - C.E. CABINETS INC. (Unofficial English Translation) BY-LAW ONE INTERPRETATION The following words and phrases, wherever used in the by-laws of the Corporation, shall, unless there be something in the context inconsistent therewith, have the following meanings: 1.1 "Act" means an Act respecting Canadian business corporations and any other statute which may be substituted therefor, as amended from time to time; 1.2 "articles" means the original or restated articles of incorporation, articles of amendment, articles of amalgamation, articles of continuance, articles of reorganization, articles of arrangement, articles of dissolution, articles of revival and includes any amendments thereto; 1.3 "by-laws" means the general by-laws of the Corporation, numbered one to thirteen inclusive, and all other by-laws of the Corporation from time to time in force and effect; 1.4 "Corporation" means the corporation incorporated by certificate of incorporation under the Act and therein named Cuisine Expert - C.E. Cabinets Inc.; 1.5 "director" means a person occupying the position of director by whatever name called and "directors" and "Board of Directors" include a single director; 1.6 "regulations" means the Canada Business Corporations Regulations (2001) and any other regulations which may be substituted therefor, as amended from time to time. Save as aforesaid, words and expressions defined in the Act have the same meanings when used herein. The titles herein have been inserted for convenience of reference only and shall not affect the interpretation of the terms and provisions hereof. -2- Words importing the singular number only shall include the plural and vice versa and words importing the masculine gender shall include the feminine gender. BY-LAW TWO NAME OF CORPORATION, REGISTERED OFFICE AND CORPORATE SEAL ARTICLE 2.1 NAME The corporate name of the Corporation is as set out in the articles of the Corporation. ARTICLE 2.2 REGISTERED OFFICE The head office of the Corporation, being its registered office, is to be situated in the place set out in the articles of the Corporation and at the address stated in the notice of registered office filed at the time of incorporation or at such other address within the province set out in the articles which may be determined by resolution of the Board of Directors. The Corporation may establish and maintain, in addition to its registered office and chief place of business, such other offices, places of business and agencies elsewhere, within or without Canada, as the Board of Directors may determine, from time to time, by resolution. ARTICLE 2.3 SEAL The corporate seal of the Corporation, if the Board of Directors decides to adopt one, shall be circular in form and shall bear the name of the Corporation and, if deemed appropriate, the year of its incorporation. The Chairman of the Board, the President, any Vice-President, the Secretary, the Treasurer, any Assistant-Secretary, Assistant-Treasurer or director or such other officer of the Corporation as the Board of Directors may appoint, from time to time, shall each and all have authority to affix the corporate seal of the Corporation to any document requiring same. -3- BY-LAW THREE SHAREHOLDERS ARTICLE 3.l ANNUAL MEETINGS The annual meeting of the shareholders shall be called not later than eighteen (18) months after the Corporation comes into existence and thereafter not later than fifteen (15) months after holding the last preceding annual meeting but not later than six (6) months after the end of each financial year. The annual meeting of the shareholders shall be held on such date as the Board of Directors may determine, from time to time, by resolution. Annual meetings of the shareholders shall be held at the registered office of the Corporation or at any other place, in Canada, previously approved by resolution of the Board of Directors or at any other place outside Canada specified in the articles or agreed to by all the shareholders entitled to vote thereat. ARTICLE 3.2 SPECIAL MEETINGS Special meetings of the shareholders may be called, at any time and from time to time, by the Chairman of the Board or the President or the Managing Director or by the Board of Directors, by resolution, and shall be called whenever the holders of not less than five percent (5%) of the outstanding shares of the Corporation carrying voting rights at such meeting shall, in writing, request the same, fractional shares represented by certificate or by scrip certificates in bearer form, if any, not to be deemed, in determining this proportion, as outstanding shares. Any such resolution or requisition shall state the business to be transacted at the meeting and each of these requisitions shall be sent to each director and to the registered office of the Corporation. It shall be the duty of the Chairman of the Board or, in his absence, the President or, in his absence, the Managing Director, upon adoption of such a resolution or on receipt of such a requisition, to cause the meeting to be called forthwith by the Secretary of the Corporation in conformity with the terms of such resolution or requisition. If the Secretary of the Corporation does not within twenty-one (21) days after the adoption of the resolution or the receipt of the requisition call the meeting, any director may call such meeting or the same may be called by any shareholder who signed the requisition in accordance with and subject to the provisions of the Act. Special meetings of the shareholders shall be held at the registered office of the Corporation or at any other place in Canada previously approved by resolution of the Board of Directors or at any other place outside Canada specified in the articles or agreed to by all the shareholders entitled to vote thereat. -4- ARTICLE 3.3 NOTICE OF MEETINGS Notice specifying the time and place of each annual and of each special meeting of shareholders shall be given by sending the notice to each shareholder entitled to vote at the meeting through the mail, postage prepaid, to his latest address as shown on the books of the Corporation, to each director and to the auditor of the Corporation, provided the Corporation is not a distributing corporation, not less than five (5) days nor more than sixty (60) days prior to the date fixed for such meeting, the day upon which such notice is sent (terminus a quo) and the day upon which such meeting is to be held (terminus ad quem) not to be counted in determining the delay of such notice. The notice of meeting may determine that the meeting shall be held entirely by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting. In the case of joint holders of a share, all notices shall be given to that one of them whose name stands first in the books of the Corporation, and notice so given shall be sufficient notice to each of such joint holders. A shareholder and any other person entitled to attend a meeting of shareholders may in any manner waive notice of a meeting of shareholders, either before or after the holding thereof, and attendance of any such person at a meeting of shareholders is a waiver of notice of the meeting, except where he attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called. Notice of a meeting of shareholders at which special business is to be transacted shall state: (a) the nature of that business in sufficient detail to permit the shareholder to form a reasoned judgment thereon; and (b) the text of any special resolution to be submitted to the meeting. All business transacted at a special meeting of shareholders and all business transacted at an annual meeting of shareholders, except consideration of the financial statements, auditor's report, election of directors and reappointment of the incumbent auditor, is deemed to be special business. Irregularities in the notice or in the giving thereof to, or the accidental omission to give notice to, or the non-receipt of any such notice by any of the shareholders shall not invalidate any action taken by or at any such meeting. -5- ARTICLE 3.4 CHAIRMAN OF THE MEETING The Chairman of the Board or, in his absence, the President or, in his absence, one of the Vice-Presidents who is a director (to be designated by the meeting, in the event of more than one such Vice-President being present) shall preside at all meetings of the shareholders. If all of the aforesaid officers be absent or decline to act, the persons present may choose some one from among their number to act as chairman of the meeting. In the event of an equality of votes, the chairman of any meeting shall not be entitled to cast a second or casting vote in respect of any matter submitted to the vote of the meeting. ARTICLE 3.5 QUORUM, VOTING AND ADJOURNMENTS A quorum for an annual meeting of shareholders, as well as a quorum for a special meeting of shareholders, is present, irrespective of the number of persons actually present at the meeting, if the holders of shares entitled to more than fifty per cent (50%) of the votes which may be cast at such meeting are present in person or represented by proxy. The acts of the holder or holders of a majority of the shares represented and carrying voting rights thereat shall be the acts of the shareholders, except as to matters on which the vote or consent of a greater number of shares is required or directed by the Act, by the articles of the Corporation or by the by-laws of the Corporation. Subject to the foregoing, the vote of the holder or holders of a majority of the shares represented at any annual meeting and carrying voting rights thereat shall be sufficient for the valid ratification of any previous action of the Board of Directors and of the officers of the Corporation. Should a quorum not be present at any meeting of the shareholders, the meeting, if convened on the requisition of shareholders, shall be dissolved. In any other case, those present in person and entitled to be counted for the purpose of forming a quorum shall have power to adjourn the meeting to the place, date and hour fixed by them by resolution. If a meeting of shareholders is adjourned for less than thirty (30) days, it is not necessary to give notice of the adjourned meeting other than by announcement at the earliest meeting that is adjourned. If a meeting of shareholders is adjourned by one or more adjournments for an aggregate of thirty (30) days or more, notice of the adjourned meeting shall be given in the manner and within the delay stipulated in article 3.3 of this by-law three. The quorum, at this second meeting or adjourned meeting, shall consist solely of the persons present thereat in person and entitled to vote. -6- At this second meeting or adjourned meeting, any business may be transacted which might have been transacted at the original meeting. ARTICLE 3.6 RIGHT TO VOTE Any body corporate or association which holds shares in the capital stock of the Corporation carrying voting rights at any meeting of shareholders, or at any meeting of shareholders of any class of the Corporation, shall act and vote thereat through a duly authorized representative who need not necessarily be a shareholder of the Corporation and who may exercise all the powers of an individual shareholder. At all meetings of shareholders, each shareholder entitled to vote thereat, who shall be present or represented at such meeting, shall be entitled, on a show of hands, to one (l) vote and, upon a poll, to one (1) vote for each share carrying voting rights at such meeting and registered in his or its name on the books of the Corporation, unless, under the terms of the articles of the Corporation, some other scale of voting is fixed, in which event, such other scale of voting shall be followed. Any matter submitted to a meeting of shareholders shall be decided by a show of hands unless a poll be demanded in accordance with the following paragraph. The chairman of the meeting as well as any shareholder or proxy, including the authorized representative of a body corporate or association, may demand a poll in respect of any matter submitted to the vote of the shareholders. Shareholders, including a body corporate or association, entitled to vote thereat may vote, upon a poll, by written proxy, at all meetings of the shareholders. The same applies with respect to the authorized representative of a body corporate or association if he is duly authorized for that purpose by said body corporate or association. In the case of joint holders of a share, the vote of the senior of them who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of any other joint holders, and, for this purpose, the senior shall be the one whose name stands first in the books of the Corporation. Any person entitled to attend a meeting of shareholders may participate in the meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting, if the Corporation makes available such a communication facility, and shall then be deemed to be present at the meeting. -7- ARTICLE 3.7 PROXY AND PROXIES SOLICITATION Any shareholder entitled to vote at a meeting of shareholders may by means of a proxy appoint a proxyholder or one or more alternate proxyholders who are not required to be shareholders, to attend and act at the meeting in the manner and to the extent authorized by the proxy and with the authority conferred by the proxy. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor be a body corporate, either under the hand of an officer or attorney so authorized; such proxy is valid only at the meeting in respect of which it is given or any adjournment thereof. A shareholder may revoke a proxy by depositing an instrument in writing executed by him or by his attorney authorized in writing at the registered office of the Corporation at any time up to and including the last business day preceding the day of the meeting, or an adjournment thereof, at which the proxy is to be used, or with the chairman of the meeting on the day of the meeting or an adjournment thereof. The directors may specify in a notice calling a meeting of shareholders a time not exceeding forty-eight (48) hours, excluding Saturdays and holidays, preceding the meeting or an adjournment thereof before which time proxies to be used at the meeting must be deposited with the Corporation or its agent. If the Corporation is a distributing corporation or has more than fifty (50) shareholders, two or more joint holders being counted as one shareholder, the management of the Corporation shall, concurrently with giving notice of a meeting of shareholders, send a form of proxy and a proxy circular, both in the form prescribed by the Act, to the auditor of the Corporation, to each shareholder who is entitled to receive notice of the meeting and to the Director appointed under the Act. Subject to the provisions of the Act dealing with the solicitation of proxies, any instrument appointing a proxy may be in accordance with the following form: P R O X Y KNOW ALL MEN BY THESE PRESENTS that I, the undersigned, , of , being the registered holder of ( ) outstanding shares of the share capital of CUISINE EXPERT - C.E. CABINETS INC. do hereby nominate, constitute and appoint , of , or failing him, , of , as my proxy and my true and lawful attorney to attend and to vote, according to the number of votes which I may now or then be entitled to cast, and otherwise act, for me, on my behalf and in my name, place and stead, at the annual (or special) meeting of the shareholders of the Corporation, to be held at , on , the day of , 20 , at the hour of o'clock of the noon, and at any adjournment or adjournments thereof, as fully as I might or could do if personally present, with full power of substitution and revocation, for the purpose of -8- and (as the case may be) I hereby revoke my proxy dated as of the day of , 20 , in favour of . AND I hereby approve, ratify, sanction and confirm all that my said proxy and true and lawful attorney, or his substitute may lawfully do or cause to be done for me, on my behalf and in my name, place and stead, by virtue of these presents. DATED and SIGNED at , as of the day of , 20 . IN THE PRESENCE OF: - ---------------------------- ---------------------- Witness Shareholder ARTICLE 3.8 SCRUTINEERS The chairman at any meeting of shareholders may appoint one (1) or more persons (who need not be shareholders) to act as scrutineer or scrutineers at such meeting. ARTICLE 3.9 ADDRESSES OF SHAREHOLDERS Every shareholder shall furnish to the Corporation an address to or at which all corporate notices intended for such shareholder shall be mailed or served upon him, and, if any shareholder does not furnish such address, any such notice may be addressed to him at any other address of such shareholder at that time appearing on the books of the Corporation. If no address appears on the books of the Corporation, such notice may be mailed to such address as the person sending the notice may consider to be the most likely to result in such notice promptly reaching such shareholder. ARTICLE 3.10 AGENDA The agenda of the annual meeting of the shareholders may generally be the following: (a) meeting called to order; (b) reading of the notice, if any, and filing of proof of the sending or waiving thereof; (c) ascertainment of a quorum; -9- (d) reading of the minutes of the last annual meeting and of the special meetings of shareholders held since, if any, and, if deemed appropriate, approval thereof; (e) filing of the annual report of the directors, if any; (f) filing of the balance sheet, statement of retained earnings, statement of income and expenditures and statement of changes in financial position; (g) discussion of the auditor's report, if any, and of the financial statements and, if deemed appropriate, approval thereof; (h) election of the directors; (i) appointment of the auditor and determination of his remuneration; (j) approval, ratification, sanction and confirmation, provided that mention thereof was made in the notice, of the enactment, repeal or amendment of by-laws, if any; (k) approval, ratification, sanction and confirmation of the actions, decisions and resolutions of the directors and/or officers since the last annual meeting; (l) other business, if any, provided that mention thereof was made in the notice; and (m) termination of meeting. ARTICLE 3.11 RESOLUTIONS IN WRITING All motions or resolutions of shareholders shall be adopted at duly convened meetings. However, except in those cases where by the Act the convocation of the shareholders at a meeting is required, the signature of all the shareholders of the Corporation, entitled to vote thereat, to any instrument (which may be signed in counterparts) setting out a motion or resolution which could be adopted by the shareholders shall give to such motion or resolution the same force and effect as if the same had been adopted by the shareholders entitled to vote at a meeting duly convened and held for that purpose. ARTICLE 3.12 ONE SHAREHOLDER MEETING If the Corporation has only one shareholder, or only one holder of any class or series of shares, this shareholder present in person or by proxy constitutes a meeting. -10- BY-LAW FOUR BOARD OF DIRECTORS ARTICLE 4.l NUMBER OF DIRECTORS The Board of Directors of the Corporation shall consist of the fixed number or minimum and maximum numbers of directors set out in the articles of the Corporation, the precise number thereof in that latter case to be that which corresponds to the number of directors elected at the last annual meeting of the shareholders or, as the case may be, that which is determined from time to time by resolution of the Board of Directors. ARTICLE 4.2 QUALIFICATION AND TERM OF OFFICE Each director shall (except as herein otherwise provided) be elected at the annual meeting of the shareholders by a majority of the votes cast in respect of such election. It shall not be necessary that the voting for the election of the directors be conducted by poll, unless voting by poll is requested by someone present and entitled to vote at the meeting at which such election takes place. Each director so elected shall hold office until the election of his successor, unless he shall resign or his office become vacant by death, removal or other cause. If a meeting of shareholders fails to elect the number or the minimum number of directors required by the articles by reason of the lack of consent, disqualification, incapacity or death of any candidates, the directors elected at that meeting may exercice all the powers of the directors if the number of directors so elected constitutes a quorum. The office of a director shall ipso facto be vacated in any of the following events, to wit: (a) if he becomes bankrupt or makes an authorized assignment of his property for the general benefit of his creditors or is declared insolvent; or (b) if he is interdicted or becomes of unsound mind or his incapacity is otherwise declared by law. At least twenty-five per cent (25%) of the directors of the Corporation must be resident Canadians. However, if the Corporation has less than four (4) directors, at least one director or the sole director, as the case may be, must be a resident Canadian. -11- An individual who is elected or appointed to hold office as director is not a director and is deemed not to have been elected or appointed to hold office as a director unless: a) he was present at the meeting when the election or appointment took place and he did not refuse to hold office as a director; or b) he was not present at the meeting when the election or appointment took place and (i) he consented to hold office as a director in writing before the election or appointment or within ten (10) days thereafter or (ii) he has acted as director pursuant to the election or appointment. ARTICLE 4.3 GENERAL POWERS OF DIRECTORS Subject to any unanimous shareholder agreement, the directors shall manage, or supervise the management of, the business and affairs of the Corporation in all respects and make or cause to be made for the Corporation, in its name, any description of contract which the Corporation may lawfully enter into and generally, save as hereinafter provided, may exercise all such other powers and do all such other acts and things as the Corporation is, by its articles or otherwise, authorized to exercise and do. Without in any way restricting the generality of the foregoing, the directors are expressly empowered, at any time and from time to time, to purchase, lease or otherwise acquire, alienate, sell, exchange or otherwise dispose of lands, buildings and/or other property, moveable or immoveable, or mixed, real or personal, or any right, title or interest or estate therein or thereto and/or to underwrite, purchase or otherwise acquire, hold, alienate, sell, exchange or otherwise dispose of, or deal in and with shares, scrip, stocks, rights, warrants, options and/or other securities, for such consideration, upon such terms and subject to such conditions as they may deem advisable. All acts done by any meeting of the directors or by any person acting as a director, so long as his successor shall not have been duly elected or appointed, shall, notwithstanding that it be afterwards discovered that there was some defect in the election of the directors or of such person acting as a director or that they or any of them were disqualified, be as valid as if the directors or such other person, as the case may be, had been duly elected and were or was qualified to be directors or a director of the Corporation. -12- ARTICLE 4.4 POWER TO ALLOT STOCK AND GRANT OPTIONS The shares in the capital stock of the Corporation shall be, at all times, under the control of the directors, who may, subject to the Act and the provisions of the articles of the Corporation, by resolution, from time to time, accept subscriptions, allot, issue, grant options in respect of or otherwise dispose of the whole or any part of the unissued shares in the capital stock of the Corporation to such directors, persons or entities, upon such terms and subject to such conditions, for such consideration (not contrary to the Act or to the articles of the Corporation) and at such times as such resolutions shall prescribe. ARTICLE 4.5 POWER TO DECLARE DIVIDENDS The directors may, from time to time, as they may deem advisable, but subject to the Act, declare and pay dividends to the shareholders, out of any funds available for dividends, according to their respective rights and interest in the Corporation. The directors may, before declaring any dividend or making any distribution of profits, set aside, out of the profits of the Corporation, such sums as they think proper as a reserve or reserves which shall at the discretion of the directors be applicable for any purpose to which the profits of the Corporation may be properly applied. The directors may, by resolution, provide that the amount of any dividend that they may lawfully declare shall be paid, in whole or in part, in shares of the capital stock of the Corporation, and, for that purpose, they may authorize the allotment and issue of shares in the capital stock of the Corporation as fully paid. Any dividend may be paid by cheque or warrant made payable to, and mailed to the address on the books of the Corporation, of the shareholder or person entitled thereto and, in the case of joint holders, to that one of them whose name stands first in the books of the Corporation, and the mailing of such cheque or warrant shall constitute payment, unless the cheque or warrant is not paid upon presentation. ARTICLE 4.6 TIME AND PLACE OF MEETINGS AND NOTICE Immediately after the first meeting of shareholders and, thereafter, immediately after the annual meeting of the shareholders in each year, a meeting, called "annual meeting", of such of the newly elected directors as are then present shall be held, without further notice, provided they shall constitute a quorum, for the election and/or appointment of the officers of the Corporation, and the transaction of such other business as may come before them. -13- Regular meetings of the Board of Directors may be held at such places, within or outside Canada, at such time and upon such notice as may be determined, from time to time, by resolution of the Board of Directors. A copy of any resolution of the Board of Directors determining the place and date of such regular meetings shall be sent to each director immediately after its adoption, but no other notice will be required for a regular meeting, except when the Act requires that the object of the meeting and the business to be transacted thereat be specified. Any meeting of the Board of Directors convened otherwise than in conformity with the foregoing provisions of this article shall be a special meeting. Special meetings of the Board of Directors may be called, at any time and from time to time, by or on the order of the Chairman of the Board, the President, the Managing Director or by any two (2) directors. Notice specifying the place, day and hour of such meeting shall be served upon each of the directors or left at his usual residence or usual place of business, or shall be mailed, postage prepaid, or sent by fax or telegram, addressed to each of the directors, at his address as it appears on the books of the Corporation, at least forty-eight (48) hours prior to the hour and date fixed for such meeting. If the address of any director does not appear in the books of the Corporation, then such notice shall be mailed, cabled or telegraphed, as the case may be, at such address as the person sending the notice may consider to be the most likely to result in such notice promptly reaching such director. Any special meeting so convened may be held at the registered office of the Corporation or at such other place, within or outside Canada, approved by resolution of the directors. In the case where the convening of a meeting is considered by the Chairman of the Board, the President or the Managing Director, in his discretion, to be a matter of urgency, he may give verbal or written notice of a meeting of the Board of Directors by fax or telegram or telephone or otherwise, not less than one (1) hour before such meeting is to be held, and such notice shall be adequate for the meeting so convened. Special meetings of the Board of Directors may be held at such time and place and for such purposes, without notice, when all directors are present or when those absent shall have waived in writing notice of said meeting either before or after the holding thereof. Any director may waive notice of a meeting, either before or after the holding thereof, and attendance of a director at a meeting of directors is a waiver of notice of the meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called. A director may, if all the directors of the Corporation consent, participate in a meeting of directors or of a committee of directors by means of telephonic, electronic or other communication facility as permit all persons participating in the meeting to communicate adequately with each other, and a director participating in such a meeting by such means is deemed to be present at that meeting. -14- ARTICLE 4.7 CHAIRMAN OF THE MEETING The Chairman of the Board or, in his absence, the President or, in his absence, the Managing Director or in his absence, one of the Vice-Presidents who is a director (to be designated by the meeting, in the event of more than one such Vice-President being present) shall preside at all meetings of the directors. If all of the aforesaid officers be absent or decline to act, the persons present may choose one of their number to act as chairman of the meeting. The chairman of any meeting of the directors shall be entitled to vote as director in respect of any matter submitted to the vote of the meeting, but, in the event of an equality of votes, shall not be entitled to cast a second or casting vote. ARTICLE 4.8 QUORUM Subject to the Act, the directors may, from time to time, fix by resolution the quorum for meetings of directors, but until otherwise fixed, a majority of directors in office from time to time shall constitute a quorum. Any meeting of directors at which a quorum is present, provided that twenty-five per cent (25%) of the directors present are resident Canadians or, if the Corporation has less than four (4) directors, at least one (1) of the directors present is a resident Canadian, shall be competent to exercise all or any of the authorities, powers and discretions by the Act or under the articles or by-laws of the Corporation for the time being vested in or exercisable by the directors generally, notwithstanding any vacancy among the directors. Notwithstanding the provisions of the preceding paragraph, directors may transact business at a meeting of directors where the number of resident Canadian directors required hereunder is not present if: (a) a resident Canadian director who is unable to be present approves in writing or by telephonic, electronic or other communication facility the business transacted at the meeting; and (b) the required number of resident Canadian directors would have been present had that director been present at the meeting. Questions arising at any meetings of directors shall be decided by the affirmative vote of a majority of the directors present thereat. ARTICLE 4.9 RESIGNATION OF DIRECTORS Any director may, at any time, tender his resignation in writing. Such resignation need not be justified and no liability is incurred by the director towards the Corporation even though such resignation is not justified, provided that such resignation -15- is not tendered at an inopportune time and no prejudice is thereby suffered by the Corporation. ARTICLE 4.10 REMOVAL OF DIRECTORS Any director may, by ordinary resolution adopted at any special meeting of the shareholders called for that purpose, be removed from office, either with or without cause, and another duly qualified person may, by resolution adopted at the same meeting, be elected in his stead. The person so elected shall hold office during such time only as the director in whose place he was elected would have held the same if he had not been removed. ARTICLE 4.11 VACANCIES Except for a vacancy resulting from an increase in the number or the minimum or maximum number of directors or from a failure to elect the number or minimum number of directors provided for in the articles of the Corporation, the directors then in office may, if they constitute a quorum, fill any vacancy among the directors, and any director so appointed shall, subject to the provisions of article 4.10 of this by-law four, hold office for the unexpired term of his predecessor and shall then be eligible for re-election. If the directors then in office do not constitute a quorum or if the vacancy results from an increase in the number or minimum number of directors or from a failure to elect the number or minimum number of directors required by the articles of the Corporation, the directors then in office shall immediately call a special meeting of the shareholders for the purpose of filling the vacancy. If the directors fail to call such a meeting or if there are no directors then in office, any shareholder of the Corporation may call said meeting. ARTICLE 4.12 REMUNERATION OF DIRECTORS Each of the directors shall receive such remuneration as the Board of Directors shall fix, from time to time, by resolution. The directors shall be entitled to be repaid by the Corporation all such reasonable travelling (including hotel and incidental) expenses as they may incur in attending meetings of the directors or shareholders or which they may otherwise incur in or about the business of the Corporation. Any director who, by request, performs special services for the Corporation may be paid such extra remuneration as the directors may determine. -16- ARTICLE 4.13 BY-LAWS AND RESOLUTIONS All by-laws and resolutions of the directors shall be enacted or adopted at duly convened meetings. However, the signature of all the directors of the Corporation to any instrument (which may be signed in counterparts) setting out a by-law or resolution which could be enacted or adopted by the directors shall give to such by-law or resolution the same force and effect as if the same had been enacted or adopted, as the case may be, by vote of the directors at a meeting duly convened and held. ARTICLE 4.14 ONE DIRECTOR MEETING Where the Corporation has only one director, that director may constitute a meeting. BY-LAW FIVE COMMITTEES ARTICLE 5.1 COMMITTEE OF DIRECTORS The board may appoint from their number a committee of directors, however designated, and delegate to such committee any of the powers of the board except those which under the Act, a committee of directors has no authority to exercise. Members of such committee need not be resident Canadians. ARTICLE 5.2 TRANSACTION OF BUSINESS Subject to the provisions of the last paragraph of article 4.6 of by-law four, the powers of a committee of directors may be exercised by a meeting at which a quorum is present or by resolution in writing signed by all the members of such committee who would have been entitled to vote on that resolution at a meeting of the committee. Meetings of such committee may be held at any place in or outside Canada. ARTICLE 5.3 ADVISORY COMMITTEES The directors may from time to time appoint such other committees as they may deem advisable, but the functions of any such other committees shall be advisory only. -17- ARTICLE 5.4 PROCEDURE Unless otherwise determined by the directors, each committee shall have the power to fix its quorum at not less than a majority of its members, to elect its chairman and to regulate its procedure. BY-LAW SIX OFFICERS ARTICLE 6.1 MANAGEMENT The management of the Corporation shall consist of a President and, if deemed appropriate, one or more Vice-Presidents (one of whom may be appointed Executive Vice-President), a Treasurer and a Secretary. There may also be elected or appointed a Chairman of the Board, one or more Assistant-Secretaries and/or Assistant-Treasurers and/or a Managing Director. Such officers shall be appointed by the Board of Directors, at its first meeting after the first meeting of the shareholders, and, thereafter, at the first meeting of the Board of Directors after each annual meeting of the shareholders and shall hold office until their successors shall have been appointed. There may also be appointed such other officers as the Board of Directors may, from time to time, deem necessary. Such officers shall respectively perform such duties, in addition to those specified in the by-laws of the Corporation, as shall, from time to time, be prescribed by the Board of Directors. The same person may hold more than one office. None of such officers of the Corporation need be a shareholder of the Corporation and none of them, except the Chairman of the Board, the President and the Managing Director, need be a director of the Corporation. ARTICLE 6.2 CHAIRMAN OF THE BOARD The Chairman of the Board shall be chosen from among the directors. He shall preside at all meetings of the Board of Directors and shareholders. He shall have such other powers and duties as the Board of Directors may determine, from time to time, by resolution, subject to the Act. ARTICLE 6.3 PRESIDENT The President shall be chosen from among the directors. He shall, in the absence of the Chairman of the Board, preside at all meetings of the Board of Directors and of the shareholders. He shall be the chief executive officer of the -18- Corporation and, if there is no Managing Director, shall exercise a general control of and supervision over its affairs. He shall have such other powers and duties as the Board of Directors may determine, from time to time, by resolution, subject to the Act. ARTICLE 6.4 VICE-PRESIDENT OR VICE-PRESIDENTS The Vice-President or Vice-Presidents, whether or not chosen from among the directors, shall have such powers and duties as may be assigned to him or them respectively, by resolution of the Board of Directors. In case of absence or disability of the Chairman of the Board and of the President and of the Managing Director, such Vice-President as may have been appointed Executive Vice-President or such other Vice-President as may be designated by the Chairman of the Board or the President or the Managing Director may exercise the powers and perform the duties of the Chairman of the Board or of the President or of the Managing Director and if any such Vice-President exercises any of the powers or performs any of the duties of the Chairman of the Board or of the President or of the Managing Director, the absence or disability of the Chairman of the Board or of the President or of the Managing Director shall be presumed. ARTICLE 6.5 TREASURER AND ASSISTANT-TREASURERS The Treasurer shall have general charge of the finances of the Corporation. He shall deposit all moneys and other valuable effects of the Corporation in the name and to the credit of the Corporation, in such banks, savings and credit unions, trust companies or other depositaries, as the Board of Directors may, from time to time, designate, by resolution. He shall render to the Board of Directors, whenever directed by the Board, an account of the financial condition of the Corporation and of all his transactions as Treasurer; and as soon as possible after the close of each financial year, he shall make and submit to the Board of Directors a like report for such financial year. He shall have charge and custody of and be responsible for the keeping of the books, accounts and other documents required under the laws governing the Corporation. He shall perform all the acts relating to the office of Treasurer, as well as those that may be assigned to him, from time to time, by resolution of the Board of Directors, the whole subject to the control of the Board of Directors and subject to the Act. Assistant-Treasurers may perform any of the duties of the Treasurer delegated to them, from time to time, by the Board of Directors or by the Treasurer, subject to the Act. ARTICLE 6.6 SECRETARY AND ASSISTANT-SECRETARIES The Secretary shall attend to the giving of all notices of the Corporation and shall draft and keep the minutes of all meetings of the shareholders and of the -19- Board of Directors and of Committees of Directors in a book or books to be kept for that purpose. He shall keep in safe custody the corporate seal of the Corporation. He shall have charge of the records of the Corporation, including books containing the names and addresses of the shareholders and members of the Board of Directors, together with copies of all reports made by the Corporation, and such other books and papers as the Board of Directors may direct and/or entrust to him. He shall be responsible for the keeping and filing of all books, reports, certificates and other documents required by law to be kept and filed by the Corporation. He shall perform such other duties as appertain to his office or as may be required by resolution of the Board of Directors, subject to the Act. Assistant-Secretaries may perform any of the duties of the Secretary delegated to them, from time to time, by the Board of Directors or by the Secretary, subject to the Act. ARTICLE 6.7 SECRETARY-TREASURER Whenever the Secretary shall also be the Treasurer, he may, at the option of the Board of Directors, be designated the "Secretary-Treasurer". ARTICLE 6.8 MANAGING DIRECTOR The directors of the Corporation may, from time to time, appoint from their number a Managing Director who is a resident Canadian. He shall manage the affairs of the Corporation, under the supervision of the Board of Directors, and shall execute such powers as may be delegated to him, from time to time, by resolution of the Board of Directors, subject to the Act, and such authority may be either general or specific. ARTICLE 6.9 REMOVAL The Board of Directors may, by resolution, remove and discharge any officers or employees of the Corporation, either with or without cause, at any meeting called for that purpose and may elect or appoint others in their place or places. Any employee of the Corporation, other than a director or an officer appointed by the Board of Directors, may also be removed and discharged, either with or without cause, by the Chairman of the Board, the President, any Vice-President or the Managing Director. If, however, there be no cause for such removal or discharge and there be a special contract derogating from the provisions of this article, such removal or discharge shall be subject to the provisions of such contract. -20- ARTICLE 6.10 REMUNERATION The remuneration of all officers of the Corporation shall be fixed, from time to time, by resolution of the Board of Directors. BY-LAW SEVEN SECURITIES ARTICLE 7.1 SECURITY CERTIFICATES Certificates representing securities of the Corporation shall be in such form as shall be approved by the Board of Directors. Such certificates shall bear the signature of the President or any Vice-President and that of the Secretary or any Assistant-Secretary of the Corporation, but the signature of the President or Vice-President may be engraved, lithographed or otherwise mechanically reproduced thereon, as well as, should the Corporation have appointed a transfer agent, the signature of the Secretary or any Assistant-Secretary. Any certificate bearing the facsimile reproductions of the signature of any of such authorized officers shall be deemed to have been manually signed by them and shall be as valid, to all intents and purposes, as if they had been manually signed, notwithstanding that the persons whose signatures are so reproduced shall, at the time that the certificate is issued or on the date of such certificate, have ceased to be officers of the Corporation. Share warrants, if any, shall be governed by any by-law that may be enacted from time to time in that respect. ARTICLE 7.2 SECURITIES REGISTER A central securities register shall be kept at the registered office or chief place of business of the Corporation and one (1) or more branch securities registers may be kept at such office or offices of the Corporation or other place or places, in Canada or elsewhere, as may, from time to time, be designated by resolution of the Board of Directors. Such central securities register and branch securities registers shall be kept by the Secretary or by such other officer or officers as may be especially charged with the duty or by such agent or agents as may be appointed, from time to time, for that purpose, by resolution of the Board of Directors. Subject to the provisions of any by-law respecting the issue of share warrants, the names, alphabetically arranged, and the latest known address of each person who is or has been a security holder, the number of securities held by each security holder and the date and particulars of the issue and transfer or transmission of securities shall be recorded in the central securities register. A branch securities register shall only contain particulars of securities issued or transferred at that branch -21- and particulars of each issue or transfer of a security registered in a branch securities register shall also be kept in the corresponding central securities register. Subject to any such by-law, entry of the issue or transfer or transmission of any security of the Corporation in the central securities register or in a branch securities register, whether kept at the registered office or chief place of business of the Corporation or elsewhere, shall be a complete and valid registration for all purposes. All securities of the Corporation shall, subject to any such by-law, be transferable on the central securities register or on any branch securities register, regardless of where the certificate representing the securities to be transferred or transmitted shall have been issued. Such registers shall, during usual business hours of every day, except Sundays and holidays, at the place or places where they are respectively authorized by the Board of Directors to be kept, pursuant to the provisions of this by-law, be open to the inspection of shareholders and creditors of the Corporation and their representatives and of any judgment creditor of a shareholder, and every such shareholder, creditor or representative may take extracts therefrom, free of charge. Subject to the provisions of any by-law respecting the issue of share warrants, no transfer or transmission of securities of the Corporation shall be valid nor shall the same be entered in such central securities register or branch securities register, unless or until the certificates representing the securities to be transferred and transmitted, as the case may be, have been surrendered and cancelled. ARTICLE 7.3 RECORD DATE The Board of Directors may at any time and from time to time, fix in advance, within the period prescribed from time to time by the regulations, a date as the record date for the purpose of determining the shareholders: (a) entitled to receive payment of a dividend; (b) entitled to participate in a liquidation distribution; (c) entitled to receive notice of a meeting of shareholders; (d) entitled to vote at a meeting of shareholders; or (e) for any other purpose. Subject to any amendment to the regulations, for the purposes of paragraphs (a), (b) and (e) above, the period prescribed for the directors to fix the record date is not more than sixty (60) days before the particular action to be taken and, for the purposes of paragraphs (c) and (d), is not less than thirty-five (35) days and not more than sixty (60) days before the date of the meeting. -22- Unless notice is waived in writing by every holder entitled thereto, a notice of the record date fixed as aforesaid shall be given within the period prescribed from time to time by the regulations by advertisement in a daily newspaper published or distributed in the place where the Corporation has its registered office and in each place in Canada where it has a transfer agent or where a transfer of its shares may be recorded and by written notice to each stock exchange in Canada on which the shares of the Corporation are listed for trading, as the case may be. Subject to any amendment to the regulations, the directors shall provide notice of the record date not less than seven (7) days before the date fixed. Only shareholders of record on any record date fixed as aforesaid shall be entitled to take advantage of the rights hereinabove mentioned, but failure to receive a notice does not deprive a shareholder of the right to vote at the meeting. ARTICLE 7.4 TRANSFER AGENTS AND REGISTRARS The Board of Directors may appoint or remove by resolution, from time to time, transfer agents and registrars of transfers and transmission of securities of the Corporation and make regulations generally, from time to time, with reference to the transfer and transmission of the securities of the Corporation. Upon any such appointment being made, all certificates representing securities of the Corporation thereafter issued shall be countersigned by one of such transfer agents and/or of such registrars of transfers and shall not be valid unless so countersigned. ARTICLE 7.5 LOST AND DESTROYED CERTIFICATES The Board of Directors shall direct that a new security certificate of the Corporation be issued to replace any certificate theretofore issued by the Corporation that has been worn out, lost, destroyed or wrongfully taken if the owner: (a) so requests before the Corporation has received notice that this security certificate has been acquired by a bona fide purchaser; (b) furnishes the Corporation with a sufficient indemnity bond; and (c) satisfies any other reasonable requirements imposed by the Corporation. ARTICLE 7.6 RESTRICTIONS AS TO SECURITIES AND SHAREHOLDERS The securities and shareholders of the Corporation are subject to the restrictions, if any, that are or will be stipulated concerning same in the articles of the Corporation. -23- BY-LAW EIGHT FINANCIAL YEAR, ACCOUNTS AND AUDIT ARTICLE 8.l FINANCIAL YEAR The financial year of the Corporation shall end on the last day of February in each year. ARTICLE 8.2 ACCOUNTS The directors shall cause to be kept proper books of account with respect to all sums of money received and expended by the Corporation and the matters in respect of which such receipts and expenditures take place, all sales and purchases of goods by the Corporation, the assets and liabilities of the Corporation and all other financial transactions affecting the financial position of the Corporation. The books of account shall be kept at the registered office of the Corporation or at such other place as the Board of Directors think fit, and shall, at all times, be open to inspection by any director. If the accounting records of the Corporation are kept outside Canada, there shall be kept at the registered office or any other place in Canada designated by the directors accounting records adequate to enable the directors to ascertain the financial position of the Corporation with reasonable accuracy on a quarterly basis. Despite the foregoing, but subject to the Income Tax Act and any other act administered by the Minister of National Revenue, the Corporation may keep all or any of its corporate records and accounting records at a place outside Canada, if (a) the records are available for inspection, by means of a computer terminal or other technology, during regular office hours at the registered office or any other place in Canada designated by the directors, and (b) the Corporation provides the technical assistance to facilitate the aforementioned inspection. ARTICLE 8.3 AUDIT The appointment, rights and duties of the auditor or auditors of the Corporation are regulated by the Act. The auditor or auditors shall be appointed each year by the shareholders of the Corporation at their annual meeting, unless the shareholders decide unanimously, in accordance with the relevant provisions of the Act, not to appoint an auditor. -24- BY-LAW NINE CONTRACTS, CHEQUES, DRAFTS, BANK ACCOUNTS ARTICLE 9.1 CONTRACTS All deeds, documents, transfers, contracts, engagements, bonds, debentures and other instruments requiring execution by the Corporation shall be signed by the Chairman of the Board or the President or any Vice-President or the Managing Director or any director and countersigned by the Secretary or Treasurer or any Assistant-Secretary or any Assistant-Treasurer or any other director of the Corporation. The Board of Directors may authorize, from time to time, by resolution any other person to sign on behalf of the Corporation. Any such authorization may be general or confined to specific instances. Save as aforesaid or as otherwise provided in the by-laws of the Corporation, no director, officer, agent or employee shall have any power or authority either to bind the Corporation by any contract or engagement or to pledge its credit. Subject to the Act, the Corporation may enter into contracts or transact business with one or more of its directors or officers or with any firm of which one or more of its directors or officers are members or employees or with any other corporation or partnership of which one or more of its directors are shareholders, directors, officers or employees. The director or officer of the Corporation who is a party to a material contract or material transaction, whether made or proposed,with the Corporation or is a director or an officer (or an individual acting in a similar capacity) of or has a material interest in any person who is a party to a material contract or transaction with the Corporation shall disclose in writing to the Corporation or request to have entered in the minutes of meetings of directors the nature and extent of his interest at the time and in the manner provided by the Act and such a director shall not vote on any resolution to approve the contract or transaction, except as provided by the Act. ARTICLE 9.2 CHEQUES AND DRAFTS All cheques, bills of exchange or other orders for the payment of money, notes or other evidences of indebtedness issued, accepted or endorsed in the name of the Corporation shall be signed by such director or directors, officer or officers, agent or agents of the Corporation and in such manner as shall be determined, from time to time, by resolution of the Board of Directors; any one of such directors, officers or agents may alone endorse notes and drafts for collection on account of the Corporation through its bankers or other depositaries and endorse notes and cheques for deposit with the Corporation's bankers or other depositaries for the credit of the Corporation or the same may be endorsed "for collection" or "for deposit" with the -25- bankers or other depositaries of the Corporation by using the Corporation's rubber stamp for the purpose. Any one of such directors, officers or agents so appointed may arrange, settle, balance and certify all books and accounts between the Corporation and the Corporation's bankers or other depositaries and may receive all paid cheques and vouchers and sign all the bank's forms of settlement of balance and release on verification slips. ARTICLE 9.3 DEPOSITS The funds of the Corporation may be deposited, from time to time, to the credit of the Corporation with one or more banks, savings and credit unions or other depositaries as the Board of Directors may, by resolution, appoint as bankers of the Corporation. ARTICLE 9.4 DEPOSIT OF SECURITIES FOR SAFEKEEPING The securities of the Corporation shall be deposited for safekeeping with one or more banks, savings and credit unions, trust companies, or other depositaries in Canada, in the United States of America or elsewhere to be selected by the Board of Directors. Any and all securities so deposited may be withdrawn, from time to time, only upon the written order of the Corporation, signed by such director or directors, officer or officers, agent or agents of the Corporation and in such manner as shall be determined, from time to time, by resolution of the Board of Directors. Such authority may be general or confined to specific instances. Any institution which may be so selected as custodian by the Board of Directors shall be fully protected in acting in accordance with the directions of the Board of Directors and shall in no event be liable for the due application of the securities so withdrawn from deposit or the proceeds thereof. BY-LAW TEN AUTHORIZED REPRESENTATIVES AND PROXIES ARTICLE 10.1 DECLARATIONS The Chairman of the Board, the President, any Vice-President, the Managing Director, the Treasurer, the Secretary, the Secretary-Treasurer, any Assistant-Treasurer, any Assistant-Secretary, the Accountant, any Assistant- Accountant and chief clerk and any other officer or person nominated for the purpose by the President or any Vice-President are, and each of them is, authorized and empowered to appear and make answer for, on behalf and in the name of the Corporation, to all writs, orders and interrogatories upon articulated facts issued out of any court and to declare for, on behalf and in the name of the Corporation, and answer -26- to writs of attachment by way of garnishment in which the Corporation is garnishee and to make all affidavits and sworn declarations in connection therewith or in connection with any and all judicial proceedings to which the Corporation is a party and to make demands of abandonment or petition for winding-up or bankruptcy orders upon any debtor of the Corporation and to attend and vote at all meetings of creditors of the Corporation's debtors and grant proxies in connection therewith. ARTICLE 10.2 SHARES IN OTHER COMPANIES OR CORPORATIONS The President or, in his absence, any Vice-President or, in his absence, the Managing Director or, in his absence, the Secretary or, in his absence, the Treasurer of the Corporation or any other person so authorized by resolution of the Board of Directors shall have full power and authority to represent the Corporation and act on its behalf at any meeting of shareholders of any company or corporation of which the Corporation is a shareholder, to attend and to vote thereat, to waive notice of any meeting and execute any document setting out a motion or resolution and to exercise any and all rights and privileges attached to such shareholdings. Any officer or person authorized under the preceding paragraph shall, in addition, be empowered to date and execute, under the seal of the Corporation, any instrument appointing any of the aforesaid persons proxy or attorney to represent the Corporation at any such meeting. ARTICLE 10.3 NOTICES, ANNUAL RETURNS, OTHER DECLARATIONS Any director or officer of the Corporation, or any individual who has the relevant knowledge of the Corporation and who is authorized to do so by the directors, may sign the notice of change of address of the registered office, the notice of directors or notice of change of directors and the annual return required under the Act as well as all declarations prescribed under An Act respecting the legal publicity of sole proprietorships, partnerships and legal persons. BY-LAW ELEVEN INDEMNIFICATION OF DIRECTORS AND OFFICERS ARTICLE 11.1 INDEMNIFICATION The Corporation may indemnify a director or officer of the Corporation, a former director or officer of the Corporation or another individual who acts or acted at the Corporation's request as a director or officer or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the -27- individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the Corporation or other entity. ARTICLE 11.2 ADVANCE OF COSTS The Corporation may advance moneys to a director, officer or other individual for the costs, charges and expenses of a proceeding referred to in subsection 11.1. The individual shall repay the moneys if the individual does not fulfil the conditions of subsection 11.3. ARTICLE 11.3 LIMITATION The Corporation may not indemnify an individual under subsection 11.1 unless the individual: -28- (a) acted honestly and in good faith with a view to the best interests of the Corporation, or, as the case may be, to the best interests of the other entity for which the individual acted as director or officer or in a similar capacity at the Corporation's request; and (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that the individual's conduct was lawful. ARTICLE 11.4 INDEMNIFICATION IN DERIVATIVE ACTIONS The Corporation may, with the approval of a court, indemnify an individual referred to in subsection 11.1, or advance moneys under subsection 11.2, in respect of an action by or on behalf of the Corporation or other entity to procure a judgment in its favour, to which the individual is made a party because of the individual's association with the Corporation or other entity as described in subsection 11.1 against all costs, charges and expenses reasonably incurred by the individual in connection with such action, if the individual fulfils the conditions set out in subsection 11.3. ARTICLE 11.5 RIGHT TO INDEMNITY Despite subsection 11.1, an individual referred to in that subsection is entitled to indemnity from the Corporation in respect of all costs, charges and expenses reasonably incurred by the individual in connection with the defense of any civil, criminal, administrative, investigative, or other proceeding to which the individual is subject because of the individual's association with the Corporation or other entity as described in subsection 11.1, if the individual seeking indemnity: (a) was not judged by the court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done; and (b) fulfils the conditions set out in subsection 11.3. -29- ARTICLE 11.6 INSURANCE The Corporation may purchase and maintain insurance for the benefit of an individual referred to in subsection 11.1 against any liability incurred by the individual: (a) in the individual's capacity as a director or officer of the Corporation; or (b) in the individual's capacity as a director or officer, or similar capacity, of another entity, if the individual acts or acted in that capacity at the Corporation's request. BY-LAW TWELVE GENERAL BORROWING POWERS The Board of Directors is hereby authorized, at any time and from time to time: (a) to borrow money and obtain advances, upon the credit of the Corporation, from any bank, savings and credit union, lending institution, corporation, firm or person, upon such terms, covenants and conditions, at such time, in such sums, to such extent and in such manner as the Board of Directors, in its discretion, may deem expedient; (b) to limit or increase the amount to be borrowed; (c) to issue or cause to be issued bonds, debentures, notes or other securities of the Corporation and to give as security or sell the same for such sums, upon such terms, covenants and conditions, and at such prices as may be deemed expedient by the Board of Directors; (d) to secure any such bonds, debentures, notes or other securities or any other present or future borrowing or liability of the Corporation by mortgage, hypothec or any other charge of all or any currently owned or subsequently acquired real and personal, moveable and immoveable property of the Corporation and the undertaking and rights of the Corporation; (e) as security for any discounts, overdrafts, loans, credits, advances or other indebtedness or liability of the Corporation to any bank, savings and credit union, lending institution, corporation, firm or -30- person, as well as for the interest thereon, to hypothecate or otherwise affect in favour of any bank, savings and credit union, lending institution, corporation, firm or person, any or all of the Corporation's property, real or personal, moveable or immoveable or mixed, now owned or hereafter acquired, or both, and to give such security thereon as may be taken by a bank under the provisions of the Bank Act, and to renew, alter, vary or substitute such security from time to time, with authority to enter into promises to give such security under the Bank Act for any indebtedness contracted or to be contracted by the Corporation to any bank; (f) subject to the Act, to raise and assist in raising money for, and to aid by way of bonus, loan, promise, endorsement, guarantee or otherwise, any other company, firm or person and to guarantee the performance or fulfilment of any contracts or obligations of any such company, firm or person and, in particular, to guarantee the payment of the principal of and interest on debentures or other securities, hypothecs and liabilities of any such company, firm or person; (g) to exercise generally all or any of the rights or powers which the Corporation itself may exercise under its articles and the laws governing it; and (h) to delegate, subject to the limitations contained in the Act, to such officer(s) or director(s) of the Corporation, by resolution or by-law, all or any of the foregoing powers hereby conferred upon the Board of Directors. AND the powers of borrowing and giving security hereby authorized shall be deemed to be continuing powers and not to be exhausted by the first exercise thereof, but may be exercised from time to time hereafter, until the repeal of this by-law and notice thereof has been given in writing to whomsoever may be acting on the faith thereof. BY-LAW THIRTEEN ENACTMENT, REPEAL AND AMENDMENT OF BY-LAWS The Board of Directors may, from time to time, enact or pass by-laws not contrary to the Act or to the articles of the Corporation and may repeal, amend or re-enact by-laws of the Corporation. Every such by-law (excepting such by-laws as by the provisions of the Act are required to be ratified, sanctioned, approved and confirmed by the shareholders -31- before becoming effective) and every repeal, amendment or re-enactment thereof, is effective from the date of the resolution of the directors and shall be submitted to the shareholders at the next meeting of shareholders, and the shareholders may, by ordinary resolution, confirm, reject or amend the by-law, amendment or repeal. If a by-law, an amendment or a repeal is rejected by the shareholders, or if the directors do not submit a by-law, an amendment or a repeal to the shareholders, the by-law, amendment or repeal ceases to be effective. Enacted by the directors on August 24, 2004. Ratified by the sole shareholder on August 24, 2004. /s/ Andre Heroux ------------------------------ Andre Heroux President EX-3.13 16 y99327exv3w13.txt CHARTER OF MAAX CANADA INC. Exhibit 3.13 (CANADIAN FLAG) Industry Canada Industrie Canada (Unofficial English Translation) CERTIFICATE CERTIFICAT OF AMALGAMATION DE FUSION CANADA BUSINESS LOI CANADIENNE SUR CORPORATIONS ACT IES SOCIETES PAR ACTIONS MAAX CANADA INC. -------------------------------------------------- Name of corporation-Denomination de la societe I hereby certify that the articles of the above-named corporation resulted from an amalgamation, under section 185 of the Canada Business Corporations Act, of the corporations set out in the attached articles of amalgamation. 424325-1 -------------------------------------------------- Corporation number-Numero de la societe Je certifie que les statuts de la societe susmentionnee est issue d'une fusion, en vertu de l'article 185 de la Loi canadienne sur les societes par actions, des societes dont les denominations apparaissent dans les statuts de fusion ci-joints. JUNE 4, 2004 / LE 4 JUIN 2004 Director - Directeur Date of Amalgamation - Date de fusion (CANADIAN FLAG) CANADA (CANADIAN FLAG) Industry Canada Industrie Canada CANADA BUSINESS LOI CANADIENNE SUR CORPORATIONS ACT IES SOCIETES PAR ACTIONS I HEREBY CERTIFY THAT THE ATTACHED IS A TRUE COPY OF THE DOCUMENT MAINTAINED IN THE RECORDS OF THE DIRECTOR. JE CERTIFIE, PAR LES PRESENTES, QUE LE DOCUMENT CI-JOINT EST UNE COPIE EXACTE D'UN DOCUMENT CONTENU DANS LES LIVRES TENUS PAR LE DIRECTEUR. Canada Business Corporations Deputy Director - Directeur adjoint Date June (Juin) 09 2004 Loi canadienne sur les societes par actions (CANADIAN FLAG) CANADA (CANADIAN FLAG) Industry Canada Industrie Canada Canada Business Loi canadienne sur les Corporation Act societes par actions FORM 9 FORMULE 9 ARTICLES OF AMALGAMATION STATUTS DE FUSION (SECTION 185) (ARTICLE 185) - ------------------------------------------------------------------------------------------------------------------------------------ 1 - Name of the amalgamated corporation Denomination sociale de la societe issue de la fusion MAAX CANADA INC. - ------------------------------------------------------------------------------------------------------------------------------------ 2 - The province or territory in Canada where the registered La province ou le territoire au Canada ou se situera le siege office is to be situated social PROVINCE OF QUEBEC. - ------------------------------------------------------------------------------------------------------------------------------------ 3 - The classes and any maximum number of shares that the Categories et tout nombre maximal d'actions que la societe est corporation is authorized to issue autorisee a emettre SCHEDULE 1 ATTACHED HERETO IS INCORPORATED HEREIN BY REFERENCE AS IF HEREIN SET FORTH AT LENGTH. - ------------------------------------------------------------------------------------------------------------------------------------ 4 - Restrictions, if any, on share transfers Restrictions sur le transfert des actions, s'il y a lieu SCHEDULE 2 ATTACHED HERETO IS INCORPORATED HEREIN BY REFERENCE AS IF HEREIN SET FORTH AT LENGTH. - ------------------------------------------------------------------------------------------------------------------------------------ 5 - Number (or minimum and maximum number) of directors Nombre (ou nombre minimal et maximal) d'administrateurs MINIMUM 1 - MAXIMUM 10 - ------------------------------------------------------------------------------------------------------------------------------------ 6 - Restrictions, if any, on business the corporation may carry on Limites imposees a l'activite commerciale de la societe, s'il y a lieu NONE. - ------------------------------------------------------------------------------------------------------------------------------------ 7 - Other provisions, if any Autres dispositions, s'il y a lieu SCHEDULE3 ATTACHED HERETO IS INCORPORATED HEREIN BY REFERENCE AS IF HEREIN SET FORTH AT LENGTH. - ------------------------------------------------------------------------------------------------------------------------------------ 8 - The amalgamation has been approved pursuant to that section La fusion a ete approuvee en accord avec l'article ou le or subsection of the Act which is indicated as follows: paragraphe de la Loi indique ci-apres: ( ) 183 (X ) 184(1) ( ) 184(2) - ------------------------------------------------------------------------------------------------------------------------------------ 9 - Name of the amalgamating corporations Corporation No. Signature Date Title Denomination sociale des societes fusionnantes No de la societe Titre - ------------------------------------------------------------------------------------------------------------------------------------ MAAX CANADA INC. 051263-0 ANDRE HEROUX MAY 28, 2004 PRESIDENT - ------------------------------------------------------------------------------------------------------------------------------------ 4200209 CANADA INC. 4200209 JAMES C. RHEE MAY 28, 2004 DIRECTOR ==================================================================================================================================== For Departmental Use Only - A l'usage du ministere Filed - Deposee Corporation No. (CANADIAN FLAG) No de la societe > JUNE 4, 2004 CANADA JUIN IC 3190 (2001/11) DM_MTL/119509-00004/907907.2
SCHEDULE 1 DESCRIPTION OF SHARE CAPITAL The Corporation is authorized to issue an unlimited number of Class A, B and C shares. 1. CLASS A SHARES Subject to the rights, privileges, conditions and restrictions attached to the other classes of shares, the Class A shares shall carry the following rights and restrictions: 1.1 VOTING RIGHT. Holders of Class A shares shall have the right to receive notice of any meeting of shareholders of the Corporation, to attend such meeting and to vote thereat on the basis of one (1) vote per Class A share held. 1.2 DIVIDEND. Holders of Class A shares shall have the right to receive any dividend declared by the Corporation. 1.3 REMAINING PROPERTY. Upon the winding-up of the Corporation, holders of Class A shares shall have the right to share the remaining property of the Corporation. 1.4 RESTRICTION. Notwithstanding subsection 1.2 hereinabove, no dividend or purchase price may be paid on the Class A shares if payment thereof would cause the realizable value of the net assets of the Corporation to be insufficient to proceed with the redemption and payment of the outstanding Class C shares. 2. CLASS B SHARES The Class B shares shall carry the following rights, privileges, conditions and restrictions: 2.1 VOTING RIGHT. Except where the right to vote is conferred specifically thereon by the Canada Business Corporations Act, the Class B shares shall not confer upon their holders the right to vote at meetings of shareholders, to be convened to or to attend such meetings. 2.2 DIVIDEND. Holders of Class B shares shall have the right to receive, for each fiscal year of the Corporation and to the extent that the directors so declare, a non-cumulative dividend in a maximum annual amount equal to four percent (4%) of the amount credited to the stated capital account for such shares on the date of declaration of the dividend; such dividend being non-cumulative, if, for a given fiscal year, the directors do not declare it or declare only a part thereof, the right of holders of Class B shares to the undeclared portion of such dividend for such fiscal year shall be forever extinguished; such dividend shall rank after the dividend payable on the Class C shares. -2- 2.3 UNILATERAL REDEMPTION. Subject to the provisions of the Canada Business Corporations Act and subsection 2.6, the Corporation shall have the right, by resolution of the board of directors, to redeem, at all times, unilaterally, all or part of the Class B shares then outstanding, the whole in accordance with the following terms and conditions: 2.3.1 the Corporation shall give a written notice of redemption to each registered holder of Class B shares or send such notice by mail to the last known address of the holder; such notice shall inform the holder of the redemption and shall specify the date on which such redemption shall take effect (the "Redemption Date"), such date being required to be no less than 10 days subsequent to the date on which the Corporation delivered or sent the notices of redemption; any holder may waive the sending of a notice of redemption; 2.3.2 on the Redemption Date, the Class B shares redeemed shall be cancelled automatically and their holders shall have the right, upon delivery of the duly endorsed certificates representing such shares, to the payment of their "Redemption Value" as defined hereinbelow, as well as the payment of any dividend then declared and unpaid thereon. If a part only of the Class B shares represented by such certificates is redeemed, a new certificate shall be issued for the remaining shares; 2.3.3 in respect of holders of redeemed Class B shares who fail to deliver for cancellation the certificates representing such shares, the Corporation may deposit an amount corresponding to their "Redemption Value" with the Minister of Finance of the Province of Quebec, in accordance with the provisions of the Deposit Act, R.S.Q., c. D-5, or at any other location designated in the notice of redemption, for such holders. The rights of such holders shall be limited to receiving the amount so deposited to their credit upon delivery of the certificates representing the redeemed shares, and, as the case may be, to having new certificates issued by the Corporation for their remaining Class B shares; 2.3.4 if the redemption is partial, it shall be carried out rateably to the number of Class B shares outstanding, without taking into account fractional shares, or in any other manner proposed by the Corporation and accepted unanimously by the holders of such shares. 2.4 REDEMPTION ON DEMAND. Any holder of Class B shares may demand at any time that the Corporation redeem to it all or part of such shares, and the Corporation shall be obliged to proceed with such redemption, the whole in accordance with the following terms and conditions: 2.4.1 the demand for redemption shall be signed by the registered holder of the Class B shares or by his attorney and given to the secretary of the Corporation, together with the duly endorsed certificate or certificates representing the Class B shares to be redeemed. The demand for redemption shall specify the number of Class B shares that the holder wishes to have redeemed; -3- 2.4.2 on the tenth business day following the date of receipt of the demand for redemption (the "Redemption Date"), the Corporation shall proceed with the redemption of all of the Class B shares indicated in such demand, and the holder thereof shall receive: (a) the payment of the entire portion of the Redemption Value, as defined hereinbelow, of the Class B shares redeemed that the Corporation may pay without contravening the provisions of section 36(2) of the Canada Business Corporations Act and also without contravening the provisions of subsection 2.6 hereinbelow; (b) the payment of any dividend declared and unpaid on such shares, subject to subsection 2.6; and (c) as the case may be, a certificate for the balance of the Class B shares represented by the certificate or certificates delivered to the Corporation in accordance with paragraph 2.4.1, if the demand for redemption bears on a part only of such shares; 2.4.3 on the Redemption Date, subject however to adjustment in accordance with paragraph 2.4.5 hereinbelow: (a) all of the Class B shares redeemed shall be deemed to be irrevocably cancelled, and their holders shall cease to benefit from the rights attached to such shares, except the right to receive payment of their Redemption Value and the dividends declared and unpaid thereon; (b) the stated capital account maintained for the Class B shares shall be debited in accordance with the Canada Business Corporations Act; 2.4.4 holders of Class B shares redeemed but not fully paid-up on the Redemption Date shall be entitled to be paid the balance of the Redemption Value of such shares as and when the Corporation may legally make payment thereof; 2.4.5 holders of Class B shares redeemed but not fully paid-up on the Redemption Date, within fifteen (15) days following the time they are notified that they cannot receive full payment of the Redemption Value of their shares, may, by written notice, request that the Corporation apply the amount they received to the full payment of the Redemption Value of part of such shares as well as the dividends declared and unpaid thereon, without taking into account fractional shares, and withdraw their demands for redemption pertaining to the balance of such shares. Upon receipt of such a notice, the Corporation shall proceed with the necessary adjustments in its registers and its stated capital account, such that on the Redemption Date only the fully paid-up portion of the Class B shares indicated in the demand for redemption shall be redeemed and cancelled. Certificates representing the Class B shares for which the demands for redemption have been withdrawn shall be delivered to their holders. The period of fifteen (15) days mentioned in this paragraph is of the essence; after such -4- period, holders may no longer avail themselves of the provisions of this paragraph. 2.5 REDEMPTION VALUE. The Redemption Value of each Class B share shall correspond to the amount credited to the stated capital account in respect of such class of shares, divided by the number of such shares outstanding. 2.6 RESTRICTION. Notwithstanding the foregoing, no dividend or purchase or redemption price shall be paid on the Class B shares which would cause the realizable value of the net assets of the Corporation to be insufficient to proceed with the redemption and payment of the Class C shares outstanding. 2.7 REIMBURSEMENT. In the event of the winding-up of the Corporation, holders of Class B shares shall rank after holders of Class C shares and shall receive, prior to holders of Class A shares, an amount equal to the "Redemption Value" of their Class B shares, as defined hereinabove. 2.8 ADDITIONAL PARTICIPATION. Holders of Class B shares shall not participate further in the property or profits of the Corporation. 3. CLASS C SHARES The Class C shares shall carry the following rights, privileges, conditions and restrictions: 3.1 VOTING RIGHT. Except where the Canada Business Corporations Act specifically confers the right to vote, the Class C shares shall not confer upon their holders the right to vote at meetings of shareholders, to be convened to or to attend such meetings. 3.2 DIVIDEND. Holders of Class C shares shall have the right to receive, for each month in the fiscal year of the Corporation and to the extent that the directors so declare, a preferred non-cumulative dividend in a maximum amount equal to four-fifths of one percent (4/5ths of 1%) per month on the "Redemption Value" of such shares, as defined hereinbelow, on the date of declaration of the dividend; such dividend being non-cumulative, if, for a given month, the directors do not declare it or declare only a part thereof, the right of holders of Class C shares to the undeclared portion of such dividend for such month shall be forever extinguished; such dividend being preferred, no dividend may be declared, paid or set aside for payment on the Class A and B shares, at any time whatsoever during any month, unless during such same month, the full amount of the dividend prescribed on the Class C shares has been declared and paid in full or set aside for payment on all of the Class C shares then outstanding. 3.3 UNILATERAL REDEMPTION. Subject to the provisions of the Canada Business Corporations Act, the Corporation shall have the right, by resolution of the board of directors, to redeem, at all times, unilaterally, all or part of the Class C shares then outstanding, the whole in accordance with the following terms and conditions: -5- 3.3.1 the Corporation shall deliver to each registered holder of Class C shares a written notice of redemption or send such notice by mail to the last known address of the holder; such notice shall inform the holder of the redemption and shall specify the date on which such redemption shall take effect (the "Redemption Date"), such date being required to be no less than 10 days subsequent to the date on which the Corporation delivered or sent the notices of redemption; any holder may waive the sending of a notice of redemption; 3.3.2 on the Redemption Date, the Class C shares redeemed shall be cancelled automatically and their holders shall have the right, upon delivery of the duly endorsed certificates representing such shares, to the payment of their Redemption Value as defined hereinbelow, as well as the payment of any dividend then declared and unpaid thereon. If a part only of the Class C shares represented by such certificates is redeemed, a new certificate shall be issued for the remaining shares; 3.3.3 in respect of holders of redeemed Class C shares who fail to deliver for cancellation the certificates representing such shares, the Corporation may deposit an amount corresponding to their Redemption Value with the Minister of Finance of the Province of Quebec, in accordance with the provisions of the Deposit Act, R.S.Q., c. D-5, or at any other location designated in the notice of redemption, for such holders. The rights of such holders shall be limited to receiving the amount so deposited to their credit upon delivery of the certificates representing the redeemed shares, and, as the case may be, to having new certificates issued by the Corporation for their remaining Class C shares; 3.3.4 if the redemption is partial, it shall be carried out rateably to the number of Class C shares outstanding, without taking into account fractional shares, or in any other manner proposed by the Corporation and accepted unanimously by the holders of such shares. 3.4 REDEMPTION ON DEMAND. Any holder of Class C shares may demand at all times that the Corporation redeem all or part of such shares, and the Corporation shall be obliged to proceed with such redemption, the whole in accordance with the following terms and conditions: 3.4.1 the demand for redemption shall be signed by the registered holder of the Class C shares or by its attorney and given to the secretary of the Corporation, together with the duly endorsed certificate or certificates representing the Class C shares to be redeemed. The demand for redemption shall specify the number of Class C shares that the holder wishes to have redeemed; 3.4.2 on the tenth business day following the date of receipt of the demand for redemption (the "Redemption Date"), the Corporation shall proceed with the redemption of all of the Class C shares indicated in such demand, and the holder thereof shall receive: -6- (a) payment of the entire portion of the Redemption Value, as defined hereinbelow, of the Class C shares redeemed which the Corporation may pay without contravening the provisions of section 36(2) of the Canada Business Corporations Act; (b) payment of any dividend declared and unpaid on such shares; and (c) as the case may be, a certificate for the balance of the Class C shares represented by the certificate or certificates delivered to the Corporation in accordance with paragraph 3.4.1, if the demand for redemption bears on a part only of such shares; 3.4.3 on the Redemption Date, subject however to adjustment in accordance with paragraph 3.4.5 hereinbelow: (a) all of the Class C shares redeemed shall be deemed to be irrevocably cancelled, and their holders shall cease to benefit from the rights attached to such shares, except the right to receive payment of their Redemption Value and the dividends declared and unpaid thereon; (b) the stated capital account maintained for the Class C shares shall be debited in accordance with the Canada Business Corporations Act; 3.4.4 holders of Class C shares redeemed but not fully paid-up on the Redemption Date shall be entitled to be paid the balance of the Redemption Value of such shares as and when the Corporation may legally make payment thereof; 3.4.5 holders of Class C shares redeemed but not fully paid-up on the Redemption Date, within fifteen (15) days following the time they are notified that they cannot receive full payment of the Redemption Value of their shares, may, by written notice, request that the Corporation apply the amount they have received to the full payment of the Redemption Value of part of such shares as well as the dividends declared and unpaid thereon, without taking into account fractional shares, and withdraw their demands for redemption pertaining to the balance of such shares. Upon receipt of such a notice, the Corporation shall proceed with the necessary adjustments in its registers and its stated capital account, such that on the Redemption Date only the fully paid-up portion of the Class C shares indicated in the demand for redemption shall be redeemed and cancelled. Certificates representing the Class C shares for which the demands for redemption have been withdrawn shall be delivered to their holders. The period of fifteen (15) days mentioned in this paragraph is of the essence; after such period, holders may no longer avail themselves of the provisions of this paragraph. 3.5 REDEMPTION VALUE. The "Redemption Value" for each of the Class C shares shall be equal to the portion of the total amount credited to the stated capital account for such shares, plus a premium equal to the difference between the fair market value, upon the -7- issuance of the Class C share, of the consideration received by the Corporation in exchange for the issuance of such Class C share and the total composed of: (a) the amount paid into the stated capital account for such shares; and (b) the fair market value of any property, other than the Class C shares, given in payment of such consideration. 3.6 ADJUSTMENT. The fair market value of the consideration mentioned in the preceding subsection shall be that established by the Corporation and the subscriber of the Class C shares upon the issuance of such shares. However, in the event that following an income-tax assessment or a draft income-tax assessment, such consideration were to be attributed a fair market value that is different from the fair market value so established, the amount of the premium payable upon the redemption of the Class C shares would be increased or reduced in accordance with any new valuation determined by the fiscal authorities, failing which such amount would be established by final, enforceable judgment of a competent court. In the event of a discrepancy between the valuations so established with the federal and provincial fiscal authorities respectively, the adjustment set forth hereinabove will be effected on the basis of the lower of such valuations. 3.7 REIMBURSEMENT. In the event of the winding-up of the Corporation, holders of Class C shares shall receive, prior to holders of Class A and Class B shares, an amount equal to the "Redemption Value" of their Class C shares, as defined hereinabove. 3.8 ADDITIONAL PARTICIPATION. Holders of Class C shares shall not participate further in the property or profits of the Corporation. SCHEDULE 2 RESTRICTIONS ON TRANSFER OF SHARES, No shares of the share capital of the Corporation shall be transferred without the approval of the directors evidenced by a resolution of the board, provided that approval of any transfer of shares may be given as aforesaid after the transfer has been effected upon the books of the Corporation in which event, unless the said resolution stipulates otherwise, the said transfer shall be valid and shall take effect as from the date of its entry upon the books of the Corporation. SCHEDULE 3 OTHER PROVISIONS 1. The number of shareholders of the Corporation shall be limited to fifty (50), not including shareholders who are or were employees of the Corporation or of a subsidiary, two (2) or more persons holding one (1) or more shares jointly being counted as a single shareholder. 2. Any distribution of securities to the public is prohibited. EX-3.14 17 y99327exv3w14.txt BYLAWS OF MAAX CANADA INC. EXHIBIT 3.14 MAAX CANADA INC. ------------------------- (Name of the Corporation) GENERAL BY-LAWS enacted in accordance with the provisions of the Canada Business Corporations Act Adopted as of June 4, 2004. GENERAL BY-LAWS OF THE CORPORATION enacted in accordance with the provisions of the Canada Business Corporations Act INDEX
Page ---- DEFINITIONS................................................................................................... 1 SITUATION OF REGISTERED OFFICE AND OFFICES.................................................................... 1 1. Registered Office.................................................................................... 1 2. Offices.............................................................................................. 1 SHAREHOLDERS.................................................................................................. 1 3. Annual Meeting....................................................................................... 1 4. Special Meetings..................................................................................... 2 5. Place of Meetings.................................................................................... 2 6. Notice of Meetings................................................................................... 2 7. Waiver of Notice..................................................................................... 3 8. Chairperson.......................................................................................... 3 9. Quorum............................................................................................... 3 10. Proxy................................................................................................ 3 11. Participation by Telephone or Electronic Means and Meetings Held by Telephone or Electronic Means.... 4 12. Voting Right......................................................................................... 4 13. Decisions Taken by the Majority...................................................................... 4 14. Casting Vote......................................................................................... 4 15. Vote by a Show of Hands.............................................................................. 4 16. Voice Vote........................................................................................... 4 17. Secret Ballot........................................................................................ 4 18. Electronic voting.................................................................................... 5 19. Procedure at Meetings................................................................................ 5 20. Scrutineers.......................................................................................... 5 21. Addresses of Shareholders and Subsequent Transferees................................................. 5 22. Signed Resolutions................................................................................... 5
i BOARD OF DIRECTORS............................................................................................ 6 23. Number............................................................................................... 6 24. Qualifications....................................................................................... 6 25. Election and term of office.......................................................................... 6 26. Consent.............................................................................................. 6 27. Resignation.......................................................................................... 6 28. Removal.............................................................................................. 6 29. Vacancy.............................................................................................. 7 30. Filling of Vacancies................................................................................. 7 31. Remuneration......................................................................................... 7 32. General Powers of Directors.......................................................................... 7 33. Irregularity......................................................................................... 7 34. Use of Property or Information....................................................................... 8 35. Conflicts of Interest................................................................................ 8 36. Contracts or transactions with the Corporation....................................................... 8 MEETINGS OF THE BOARD OF DIRECTORS............................................................................ 9 37. Calling of Meetings.................................................................................. 9 38. Participation by Telephone or Electronic Means....................................................... 10 39. Quorum............................................................................................... 10 40. Meeting Chairperson and Secretary.................................................................... 10 41. Procedure............................................................................................ 10 42. Voting............................................................................................... 10 43. Signed Resolution.................................................................................... 11 OFFICERS...................................................................................................... 11 44. Officers............................................................................................. 11 45. Chairperson of the Board............................................................................. 11 46. President............................................................................................ 11 47. Vice-President....................................................................................... 11 48. Managing Director or General Manager................................................................. 11 49. Comptroller.......................................................................................... 12 50. Secretary............................................................................................ 12 51. Treasurer............................................................................................ 12 52. Removal, Discharge and Resignation................................................................... 12
ii 53. Vacancy.............................................................................................. 12 54. Remuneration......................................................................................... 12 EXECUTIVE COMMITTEE........................................................................................... 12 55. Election............................................................................................. 12 56. Officers, Quorum and Procedure....................................................................... 13 57. Chairpersonship...................................................................................... 13 58. Secretary............................................................................................ 13 59. Powers............................................................................................... 13 60. Supervisory Power of the Board of Directors.......................................................... 13 61. Participation by Telephone and Signed Resolutions.................................................... 13 62. Meetings............................................................................................. 13 63. Remuneration......................................................................................... 13 64. Removal and Filling of Vacancies..................................................................... 13 OTHER COMMITTEES.............................................................................................. 14 65. Other Committees..................................................................................... 14 INDEMNIFICATION OF DIRECTORS AND OFFICERS..................................................................... 14 66. Indemnity............................................................................................ 14 67. Insurance............................................................................................ 14 68. Reimbursement and advance of costs................................................................... 14 CAPITAL STOCK................................................................................................. 14 69. Issue and Stock Options.............................................................................. 14 70. Share Certificates and Share Transfers............................................................... 15 71. Securities Register.................................................................................. 15 72. Lost or Destroyed Certificates....................................................................... 15 DIVIDENDS..................................................................................................... 15 73. Dividends............................................................................................ 15 FISCAL YEAR AND AUDIT......................................................................................... 15 74. Fiscal Year.......................................................................................... 15 75. Audit................................................................................................ 15 CORPORATION'S REPRESENTATION FOR CERTAIN PURPOSES............................................................. 16 76. Declaration.......................................................................................... 16 77. Representation at Meetings........................................................................... 16 78. Signature of Documents............................................................................... 16
iii 79. Declarations in the Register......................................................................... 17 MISCELLANEOUS PROVISIONS...................................................................................... 17 80. Conflict with the Articles........................................................................... 17 81. Amendments........................................................................................... 17
iv GENERAL BY-LAWS OF THE CORPORATION enacted in accordance with the provisions of the Canada Business Corporations Act DEFINITIONS For the purposes of these By-laws, unless otherwise provided: "Act" means the Canada Business Corporations Act, R.S.C. (1985) ch. C-44, as well as any amendment which may be made thereto, and any act which maybe substituted therefore. "Auditor" means the auditor of the Corporation and includes an auditing firm; "Ordinary Resolution" means a resolution adopted by the majority of the votes cast by the shareholders who voted in respect of that resolution. "Resident Canadian" has the particular meaning as described by the Act to such expression but, as a summary, includes a Canadian citizen and a permanent resident within the meaning of the Immigration Act, habitually residing in Canada. "Special Resolution" means a resolution adopted by two-thirds at least of the votes cast by the shareholders who voted in respect of that resolution or signed by all the shareholders entitled to vote on that resolution. "Unanimous Shareholders Agreement" means an agreement described in subsection 146(2) of the Act entered into among all the shareholders of the Corporation. SITUATION OF REGISTERED OFFICE AND OFFICES 1. Registered Office. The registered office of the Corporation is situated in the Province specified in the Articles, at such address as the Board of Directors may determine. 2. Offices. The Corporation may, in addition to its registered office, establish and maintain any other offices and agencies elsewhere within or outside Canada. SHAREHOLDERS 3. Annual Meeting. The annual meeting of the shareholders of the Corporation shall be held on such date each year and at such time as may be fixed by the Board of Directors, to receive and consider the financial statements with the report of the Auditor, to elect directors, to appoint an Auditor and to fix or to authorize the Board of Directors to fix his remuneration, and to consider, deal with and dispose of such other business as may lawfully come before the meeting. The annual meeting of the shareholders of the Corporation shall be called no later than six (6) months after the end of the preceding financial year. 4. Special Meetings. Special meetings of the shareholders may be called at any time as determined by the President or the Board of Directors and shall be called by the Board of Directors when required by one or more shareholders holding no less than 5% of the outstanding voting shares in conformity with the Act. 5. Place of Meetings. Meetings of the shareholders shall be held at the registered office of the Corporation or at any other place in Canada that may be fixed by the Board of Directors. Meetings of the shareholders may be held outside Canada at the place specified in the Articles or if all shareholders entitled to vote thereat so agree; a shareholder who attends a meeting held outside Canada is deemed to have agreed to it being held outside Canada except when he attends for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully held. 6. Notice of Meetings. Notice of each annual meeting and of each special meeting of the shareholders shall be delivered to the shareholders entitled to vote thereat, the directors and the Auditor or, in the discretion of the person charged with the giving of such notice, mailed by ordinary mail or transmitted by facsimile or e-mail to the shareholders entered in the books of the Corporation, the directors and the Auditor, at their respective addresses or facsimile numbers, not less than twenty-one (21) days and not more than sixty (60) days prior to the date fixed for the meeting. If the address of the shareholder is not entered in the books of the Corporation, the notice may be sent as aforesaid to the address that the person sending the notice considers to be most likely to reach such shareholder promptly. The irregularity in the notice of meeting or the delivery thereof, including the accidental omission of giving it or the non-reception by a shareholder, a director or the Auditor, does not affect the validity of the procedures at the meeting. Such notice shall specify the date, time and place of each meeting. The notice of the annual meeting may, but need not, specify the nature of the business when such meeting is called only to consider the financial statements with the report of the Auditor, to elect directors and to re-appoint the incumbent Auditor. The notice of the annual meeting at which other business shall be transacted, as well as the notice of special meeting, shall state: (a) the nature of business to be considered in sufficient detail to permit the shareholders to form a reasoned judgment thereon; and (b) the text of any Special Resolution to be submitted to the meeting. It is not necessary to give notice of the reconvening of an adjourned meeting other than by announcement at the earliest meeting that is adjourned; a new notice of meeting is, however, required if the meeting of the shareholders is adjourned one (1) or more times for an aggregate of thirty (30) days or more. The signature to any notice of meeting may be written, stamped, typewritten, printed or otherwise mechanically reproduced thereon. A certificate of the Secretary or of any other duly authorized officer of the Corporation in office at the time of the making of the certificate shall be conclusive evidence that may be set up against any shareholder, director or the Auditor of the sending or delivery of a notice of meeting. 2 7. Waiver of Notice. A shareholder or any other person entitled to attend a meeting of shareholders may waive the notice of a meeting of the shareholders prior to, during or after the holding of such meeting. His sole attendance at a meeting is a waiver except where he attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called. 8. Chairperson. The President of the Corporation, or such other person as may from time to time be appointed for that purpose by the Board of Directors, shall preside at meetings of shareholders. 9. Quorum. One (1) or more persons present in person or represented in accordance with Section 10 below and holding not less than fifty percent (50%) plus one of the aggregate number of votes attached to all the voting shares for such meeting shall constitute a quorum at an annual or special meeting of the shareholders, regardless of the actual number of persons physically present. If a quorum is present at the opening of a meeting, the shareholders present or represented may proceed with the business of the meeting, even though a quorum is not maintained throughout the meeting. If a quorum is not present at the opening of a meeting, the shareholders present or represented may, by a majority vote to that effect, adjourn the meeting to a fixed time and place, but may not transact any other business. If a quorum is present at the reconvening of the meeting so adjourned, said meeting may proceed, failing which, a new meeting shall be called. 10. Proxy. Shareholders shall be entitled to vote in person or, if a body corporate, through a representative duly authorized by resolution of the directors or other governing body of such body corporate. Shareholders shall also be entitled to vote by proxy. A proxyholder need not be a shareholder of the Corporation and may serve as proxyholder for several shareholders; The proxy appointing a proxyholder may be in the following form or in any other appropriate form: "I/We, the undersigned, being a shareholder of __________ hereby nominate, constitute and appoint __________ or failing him, __________, my/our attorney, representative and/or proxyholder with full power and authority to attend, vote and otherwise act for me/us in my/our name and on my/our behalf at the annual (or special) meeting of shareholders of the Corporation, to be held at ___________ on the ___ day of __________; and at any and all adjournments thereof, with full power of substitution, and I/we, the undersigned, hereby revoke all other proxy given by me/us, the undersigned, which might be used in respect of such meeting and at any and all adjournments thereof. 3 Given this ____ day of __________. (signed)" Signatures of proxies need not be witnessed. The Board of Directors may, in the notice of a meeting of shareholders, specify a date and a time limit when proxies to be used at a meeting must be deposited with the Corporation or its mandatory; such date and time limits shall not precede the meeting by more than forty-eight (48) hours, excluding Saturdays and statutory holidays. 11. Participation by Telephone or Electronic Means and Meetings Held by Telephone or Electronic Means. Any person entitled to attend a meeting of shareholders may participate in the meeting using means permitting all participants to communicate adequately with each other, if the Corporation makes available such a communication facility, in particular, telephonic or electronic means. A person participating in a meeting by such means is deemed to be present at the meeting. The directors or the shareholders, as the case may be, who call a meeting may determine that the meeting shall be held entirely by means permitting all participants to communicate adequately with each other, in particular, by telephonic or electronic means. 12. Voting Right. Subject to the provisions of the Articles and the Act, each shareholder shall have as many votes as he has voting shares of the Corporation. 13. Decisions Taken by the Majority. Unless otherwise provided in the Act, all matters submitted to a meeting of shareholders will be decided by Ordinary Resolutions. 14. Casting Vote. In the event of an equality in the voting, the Chairperson will have no casting vote. 15. Vote by a Show of Hands. Unless a voice vote or a vote by secret ballot is requested, the vote shall be taken by a show of hands. In such case, the shareholders or their proxyholders shall vote by raising their hands, and the number of votes shall be calculated in accordance with the number of raised hands. 16. Voice Vote. If the Chairperson so orders or if another person holding or representing by proxy not less than ten percent (10%) of the votes attached to the outstanding voting shares so requests (notwithstanding withdrawal of such request), and if a vote by secret ballot is not requested, a voice vote shall be taken. In such case, each shareholder or proxyholder shall verbally declare his name and that of each shareholder for whom he holds a proxy, the number of votes he has and the manner in which he shall cast such votes. The number of votes so casts shall determine whether or not a resolution is carried. 17. Secret Ballot. If the Chairperson so orders or a shareholder or proxyholder entitled to vote so requests, the vote shall be taken by secret ballot. A request for a vote by secret ballot may be made at any time prior to the adjournment of the meeting, even after the holding of a vote by a show of hands or a voice vote, and such a request may also be withdrawn. Each 4 shareholder or proxyholder shall remit to the scrutineers one or more ballots, on which he shall enter the manner in which he shall cast the votes he has and, as the case may be, his name and the number of votes he has. Whether or not a vote by a show of hands or a voice vote has previously been taken on the same matter, the result of a secret ballot shall be deemed to represent the resolution of the meeting in respect thereof. 18. Electronic voting. The Corporation may allow the shareholders and their proxyholders to vote by means of a telephonic or electronic communication facility it makes available for that purpose and in conformity with the explanation and instructions it provides them, inasmuch as this facility enables the votes to be gathered in a manner that permits their subsequent verification and permits the tallied votes to be presented to the Corporation without it being possible for the Corporation to identify how each shareholder or group of shareholders voted. 19. Procedure at Meetings. The Chairperson of any meeting of shareholders shall be responsible for conducting the procedure thereat in all respects, and his decision on any matter, even a matter pertaining to the validity or non-validity of a proxy and the receivability or non-receivability of a motion, shall be final and binding on all the shareholders. Unless a ballot is demanded a declaration by the Chairperson that a resolution has been carried or defeated, with or without qualification of unanimity, by a particular majority, and an entry to this effect in the minutes of the meeting shall be conclusive evidence of the fact. At all times during the meeting, the Chairperson, of his own initiative or without the assent of the shareholders given by a simple majority, for a valid reason, such as a disturbance or confusion rendering the harmonious and orderly conduct of the meeting impossible, may adjourn the meeting from time to time and no notice of any such adjourned meeting need be given; a new notice of meeting is, however, required if the meeting of the shareholders is adjourned one (1) or more times for an aggregate of thirty (30) days or more. Should the Chairperson fail to carry out his duties in good faith, the shareholders may remove him at any time and replace him by another person chosen from among their number. The directors of the Corporation shall be entitled, in such sole capacity, to attend meetings of shareholders and to take the floor thereat. 20. Scrutineers. The Chairperson at any meeting of shareholders may appoint scrutineers (who may but need not be directors, officers, employees, or shareholders of the Corporation), who shall act in accordance with the directives of the Chairperson. 21. Addresses of Shareholders and Subsequent Transferees. Every shareholder shall furnish to the Corporation a mailing or electronic address to which all notices intended for such shareholder may be sent to him. Every person who, by operation of law, transfer or other means whatsoever, shall be entitled to any share, shall be bound by every notice in respect of such share which was given before his name and address were entered on the register to the person whose name appears on the register at the time such notice is given. 22. Signed Resolutions. A resolution in writing signed by all the shareholders entitled to vote on that resolution at a meeting of shareholders shall be as valid as if it had been passed at a 5 meeting of the shareholders. A copy of each signed resolution shall be kept with the minutes of the meetings of shareholders. BOARD OF DIRECTORS 23. Number. The Corporation shall be managed by a Board of Directors composed of the fixed number of directors indicated in its Articles. If the Articles establish a minimum and a maximum number of directors, the Board of Directors shall he composed of the fixed number of directors established by by-law passed by the Board of Directors or, failing this, selected by the shareholders within such limits. 24. Qualifications. Any natural person may be a director, except a person who is less than eighteen (18) years of age, a person under tutorship or curatorship, a person declared incapable by a court in Canada or in another country, an undischarged bankrupt or a person prohibited by the court from holding the office of director. Unless otherwise provided in the Articles, a director need not be a shareholder. At least twenty-five percent (25%) of the directors shall be Resident Canadians, unless otherwise set out in the Act. A retiring director, if otherwise qualified, shall be eligible for re-election. 25. Election and term of office. Unless the Articles of the Corporation provide for cumulative voting, or confer upon the holders of a category or a series of shares the exclusive right to elect one (1) or more directors, in which case, the provisions of the Articles shall prevail, each director shall be elected at the annual meeting at which an election of directors is required, except for appointing a director following a vacancy occurring during the term or for the election of one or more additional directors. Each director shall be elected either for a fixed term, which shall terminate no later than at the close of the third following annual meeting, or an indeterminate term, which shall terminate at the close of the first following annual meeting. It shall not be necessary for all the directors to have the same term of office. Provided that no new directors have been elected in a meeting of shareholders, the term of the directors continues until the election of their successors. 26. Consent. A director who is elected or appointed must consent to hold office as such, (i) by not refusing to hold office if he is present at the meeting when the election or appointment takes place, (ii) by consenting to hold office in writing before the election or appointment or within ten (10) days if he is not present at the meeting, or (iii) by acting as a director pursuant to his election or appointment. 27. Resignation. A director may resign his office by written notice to the Corporation. Reasons need not be given for a resignation. Unless a subsequent date is stipulated in such notice, the resignation shall take effect on the date it is sent. 28. Removal. Subject to the Articles of the Corporation, any director may be removed by Ordinary Resolution at a special meeting of shareholders. The removal of a director, as well as his election, shall be at the discretion of the shareholders. A director informed of his imminent removal may state in a written statement to the Corporation the reason for his opposition to such 6 removal, and the Corporation shall forward such written declaration to the shareholders authorized to vote in the circumstances and to the Director of Corporations. A vacancy created by the removal of a director may be filled by the shareholders at the meeting at which the removal took place; where such is the case, the notice of calling of the meeting shall mention that an election is to be held if the resolution for removal is carried. Where the holders of a specific class or series of shares have an exclusive right to elect a director, he may only be removed by Ordinary Resolution at a special meeting of such shareholders called for that purpose. The removal of a director, as well as his election, shall be at the discretion of the shareholders. A director may be removed at any time and such removal need not be based on any particular grounds, whether serious or not. Neither the Corporation nor the shareholders voting in favour of the removal shall incur any liability toward the director by the mere fact of his removal, even if there be no grounds therefore. 29. Vacancy. The office of a director shall become vacant as of the moment his resignation or removal takes effect; likewise, a vacancy shall be created the moment a director is no longer qualified to fulfill his duties in accordance with Section 24, or if he should die. 30. Filling of Vacancies. If a vacancy occurs in the Board of Directors, the directors then in office shall have the power to appoint for the remainder of the term any other qualified person as a director. However, the directors may continue to act notwithstanding one or more vacancies provided a quorum exists. If there is no quorum, the remaining directors shall forthwith call a special meeting of shareholders to fill the vacancy, in accordance with Section 111 of the Act. 31. Remuneration. Subject to restrictions in the Articles of the Corporation, the remuneration to be paid to the directors shall be such as the directors shall fix from time to time by resolution of the Board of Directors and such remuneration shall be in addition to the salary or remuneration of any officer, employee or supplier of services of the Corporation who is also a member of the Board of Directors, unless a resolution states otherwise. The directors may also be reimbursed for travel and other expenses incurred by them in connection with their duties. 32. General Powers of Directors. Subject to restrictions in a Unanimous Shareholders Agreement, the directors of the Corporation shall manage or supervise the management of the business and affairs of the Corporation and may make or cause to be made for the Corporation any contract which it may by law enter into. The directors shall exercise all such powers and authority as the Corporation by statute or by its Articles is authorized to exercise and do. The directors shall always act by resolution. The directors may, in particular, purchase or dispose of, by purchase, sale, lease, exchange, hypothec or otherwise, stocks, rights, warrants, options and other securities, buildings and other movable or immovable property or any right or interest therein; for each transaction, they shall fix the consideration and other conditions. 33. Irregularity. Notwithstanding that it be subsequently discovered that there was some defect in the election of the board of directors or of any director or in the appointment of any 7 officer, or the absence or loss of his qualification, all acts regularly done by them shall be as valid and binding upon the Corporation as if the election or appointment had been regular or each person had been qualified. 34. Use of Property or Information. All directors and officers shall, in exercising their powers and discharging their duties, act honestly and in good faith with a view to the best interests of the Corporation. No director may mingle the Corporation's property with his own property or use for his own profit or that of a third person any property of the Corporation or any information he obtains by reason of his duties, unless he is expressly and specifically authorized to do so by the shareholders of the Corporation. 35. Conflicts of Interest. Each director shall avoid placing himself in any situation where his personal interest would be in conflict with his obligations as a director of the Corporation. He shall promptly disclose to the Corporation any interest he has in an enterprise or other entity that may place him in a situation of conflict of interest and any right he may set up against it, indicating their nature and extent, where applicable. Such disclosure of interest shall be entered in the minutes of the meetings of directors. A general disclosure shall be valid as long as the facts have not changed, and the director need not repeat it for a specific subsequent transaction. 36. Contracts or transactions with the Corporation. A director or an officer may, even in performing his duties, acquire, directly or indirectly, rights in the Corporation's property or enter into material contracts or transactions with the Corporation, or be a director, an officer or a holder of a material interest in a party to such contract or transaction. He shall then, in accordance with Section 120 of the Act, disclose in writing to the Corporation or request to have entered in the minutes of meetings of directors the nature and extent of his interest in such contract or transaction, even if such contract or transaction, within the scope of the normal business activity of the Corporation, does not require the approval of either the directors or the shareholders. For the purposes of this by-law, a general notice that the director or officer is a director, an officer or a holder of a material interest in a body corporate and is to be regarded as interested in any contract or transaction made with that body corporate, is a sufficient declaration of interest. A director who is so interested in a contract shall not discuss or vote on such resolution to approve the contract or transaction unless the contract or transaction is one of the contracts or transactions referred in subsection 120(5) of the Act, that is, relating primarily to the remuneration or indemnification of such director, or a contract with an affiliate of the Corporation. At the request of the President or any director, the interested director shall leave the meeting while the Board of Directors discusses and votes on the contract concerned. Neither the Corporation nor any of its shareholders may contest the validity of a contract or transaction entered into with a director or an officer of the Corporation, or with a party of which such director or officer is a director, an officer or a holder of a material interest, for such sole reason or for the reason that he was present or was counted to determine whether a quorum 8 existed at the meeting, provided such director or officer has disclosed his interest as aforementioned, the Board of Directors of the Corporation has approved the contract or transaction, and the contract or transaction was, at that time, reasonable and fair for the Corporation. Such a contract or transaction is not invalid by reason only of the interest of a director or officer in it or of his failure to disclose this interest as aforementioned, provided such director or officer acted honestly and in good faith, the contract or transaction is approved or confirmed by Special Resolution at a meeting of the shareholders, disclosure of the interest is made to the shareholders in a manner sufficient to indicate its nature before such contract or transaction is approved or confirmed, and the contract or transaction is reasonable and fair to the Corporation when it is approved or confirmed. MEETINGS OF THE BOARD OF DIRECTORS 37. Calling of Meetings. Every year, immediately after the annual meeting of the shareholders, a meeting of the new directors present shall be held without further notice if they constitute a quorum, to elect or appoint the officers of the Corporation and consider, deal with and dispose of any other matter. Meetings of the Board of Directors may be called by or by order of the Chairperson of the Board of Directors, if any, the President of the Corporation or two (2) directors and may be held anywhere within or outside Canada. A notice of each meeting, specifying the place, date and time, shall be sent to each director at his residence or usual place of business. The notice shall be sent no less than two (2) days prior to the date fixed for the meeting by ordinary or registered mail or by facsimile or electronic mail. In the absence of an address for a director, the notice may be sent to the address at which the sender considers that the notice is most likely to reach the director promptly. The Board of Directors may resolve to hold periodic or fixed meetings of the Board of Directors at such place, within Canada or elsewhere, with or without notices of meeting. It is not necessary to give notice of the reconvening of an adjourned meeting if the date, time and place of the reconvening of this meeting are announced at the initial meeting. Any director may waive in writing the notice of a meeting of the Board of Directors before, during or after the holding thereof. His sole presence is equivalent to a waiver unless he attended the meeting solely to object to the holding of the meeting on the ground that the manner of calling it was irregular. Except in the case of matters referred to in subsection 115(3) of the Act, including, in particular, the declaration of dividends, the issuance of securities, the acquisition of shares issued by the Corporation, the approval of the annual financial statements, vacancies in the Board of Directors or in the office of Auditor and the adoption, amendment or repeal of the by-laws, no notice of any meeting of the Board of Directors need specify the purpose or the business to be transacted at a meeting. 9 38. Participation by Telephone or Electronic Means. Directors may, if all are in agreement, participate in a board meeting using means permitting all participants to communicate adequately with each other, in particular, by telephonic or electronic means. A director participating in the meeting by such means shall be deemed to have been present at that meeting, The directors participating by telephonic means shall then vote by a voice vote, in derogation of Section 42 hereinbelow. An electronic vote is deemed to have been given by show of hands or by ballot, as the case may be. 39. Quorum. A majority of the directors in office shall constitute a quorum for a meeting of the Board of Directors. A quorum shall be present for the entire duration of the meeting. If the Board of Directors is composed of a sole director, the decision of such director recorded in writing constitutes the meeting. When the quorum is reached, notwithstanding any vacancy on the Board of Directors, the directors may exercise all their powers; however, no business shall be transacted at a meeting of directors unless at least twenty-five per cent (25%) of the directors present thereat are Resident Canadian directors, except where (a) a Resident Canadian director who is unable to be present approves in writing, or by telephonic, electronic or other communication facility, the business transacted at the meeting and (b) at least twenty-five per cent (25%) of the directors present thereat would have been Resident Canadian directors had that director been present at that meeting. 40. Meeting Chairperson and Secretary. Meetings of the Board of Directors shall be chaired by the Chairperson of the Board of Directors, if any, or, failing him, by the President of the Corporation if he is a director or, failing him, by a Vice-President who is a director and is designated for such purpose by the President. The Secretary of the Corporation shall act as secretary of the meetings. The directors present at a meeting may nevertheless appoint any other person as Chairperson or secretary of such meeting. 41. Procedure. The meeting Chairperson ensures that the meeting is conducted smoothly and submits to the Board the motions on which a vote is to be taken and generally conducts the procedure thereat in all respects, in which regard his decision shall be final and binding on all the directors. Should the meeting Chairperson fail to submit a motion, any director may submit it himself before the meeting is adjourned or closed and, if such motion lies within the competence of the Board of Directors, the Board of Directors shall consider it. For such purpose, the agenda of each meeting of the Board of Directors shall be deemed to include a period for the submission of motions by the directors. Should the meeting Chairperson fail to carry out his duties in good faith, the directors may remove him at any time and replace him by another person. 42. Voting. Each director shall be entitled to one vote and all matters shall be decided by the majority of the votes cast. The vote shall be taken by a show of hands unless the meeting Chairperson or a director requests a ballot, in which case the vote shall be taken by ballot. If the vote is taken by ballot, the meeting secretary shall act as scrutineer and count the ballots. The fact of having voted by ballot shall not deprive a director of the right to express his dissidence in respect of the resolution concerned and to cause such dissidence to be entered. Voting by proxy shall not be permitted, and the meeting Chairperson shall have no casting vote in the case of an equality of votes. 10 43. Signed Resolution. A resolution in writing, signed by all the directors entitled to vote on that resolution at a meeting of directors, shall be as valid as if it had been passed at a meeting of directors. A copy of each signed resolution shall be kept with the minutes of the proceedings of the directors. OFFICERS 44. Officers. The officers of the Corporation shall be the Chairperson of the Board, if appointed, the President, and, if elected or appointed, one or more Vice-Presidents, the Managing Director, the General Manager, the Comptroller, the Secretary, the Treasurer, and such other officers as the Board of Directors may appoint and whose duties it may determine by resolution. Subject to those powers which, pursuant to the Act, may only be exercised by the Board of Directors, the officers of the Corporation shall have the powers, functions and duties prescribed by the Board of Directors, in addition to those specified in the by-laws. The same person may hold more than one office. Other than the President, or, if appointed, the Chairperson of the Board of Directors or, if any, the Managing Director, who shall be a director, none of the officers shall be required to be a director or a shareholder of the Corporation. The Board of Directors may also appoint other agents, officers and employees of the Corporation within or outside Canada; the titles, powers, authority, and duties of such persons shall be determined by the Board of Directors. In case of the absence of an officer or for any other reason that the Board of Directors may deem sufficient, the Board of Directors may delegate the powers and authority of such officer to any other officer or to a director of the Corporation. If the Board of Directors consists of one (1) director, that director may hold the offices of President, Secretary or of any other officer of the Corporation. 45. Chairperson of the Board. The Chairperson of the Board shall preside at all meetings of the Board of Directors. 46. President. The President shall be the chief officer of the Corporation and, subject to the control of the Board of Directors and the appointment of a Managing Director or General Manager, shall supervise, administer and manage the business and affairs of the Corporation generally. The President shall preside at all meetings of the shareholders and, in the event of the absence, inability or failure of the Chairperson of the Board to act, the President shall preside at all meetings of the Board of Directors. 47. Vice-President. In case of absence, incapacity and failure to act of the President, the Vice-President or, if more than one, any Vice-President or other officer designated for that purpose by the Board of Directors, shall assume the powers and duties of the President. The powers, functions and duties of a Vice-President shall be those which the Board of Directors or the President prescribe. 48. Managing Director or General Manager. The Managing Director or General Manager shall, subject to the control of the President, manage the operations of the Corporation generally. He shall comply with all instructions received from the Board of Directors and shall give to the 11 Board of Directors or the members thereof the information that they require concerning the affairs of the Corporation. The Board of Directors may delegate to such Managing Director or General Manager any of the powers of the Board except those that by law a Managing Director has no authority to exercise. The Managing Director shall be a Resident Canadian and a director. 49. Comptroller. The Comptroller shall, subject to the control of the President, be the chief accounting officer of the Corporation. He shall, upon request, render account to the President and the directors of the financial situation of the Corporation and all its transactions. He shall he entrusted with and have custody of the books of account. 50. Secretary. The Secretary shall attend to the preparation and sending of all notices of the Corporation. He shall act as secretary at all shareholders' meetings and shall keep the minutes of all meetings of the Board of Directors, the committees of directors and the shareholders in a book or books to be kept for that purpose. He shall have charge of the records of the Corporation including books containing the names and addresses of the members of the Board of Directors of the Corporation, together with copies of all reports made by the Corporation and such other books or documents as the directors may prescribe. He shall be responsible for the keeping and filing of all books, reports, certificates and all other documents required by law to be kept and filed by the Corporation. He shall be subject to the control of the President. 51. Treasurer. Subject to the control of the President, the Treasurer shall have general charge of the finances of the Corporation. He shall deposit the money and other valuable effects of the Corporation in the name and to the credit of the Corporation in a bank or another deposit institution designated by the Board of Directors. 52. Removal, Discharge and Resignation. The Board of Directors may, by the affirmative vote of the absolute majority of the Board, remove any officer, with or without cause, at any time. Any agent or employee who is not an officer of the Corporation may be discharged by the President or any other officer authorized for such purpose, with or without cause, at any time. Any officer may resign his office at any time by delivering his resignation in writing to the President or the Secretary of the Corporation, or at a meeting of the Board of Directors, unless otherwise agreed. 53. Vacancy. Any vacancy occurring in the office of any officer may be filled by the Board of Directors. 54. Remuneration. The remuneration of all officers shall be fixed by the Board of Directors. The remuneration of all other agents, officers and employees of the Corporation shall be fixed by the President or any other officer authorized for such purpose. EXECUTIVE COMMITTEE 55. Election. The Board of Directors may appoint among their number one committee of the Board of Directors, designated as "Executive Committee". 12 56. Officers, Quorum and Procedure. The Executive Committee shall have power to appoint officers thereto, to fix its quorum, which quorum shall consist of not less than a majority of its members, and to determine its own procedure. 57. Chairpersonship. Meetings of the Executive Committee shall be chaired by the Chairperson of the Board of Directors or, if none is appointed, by the President of the Corporation. In his absence, meetings of the Executive Committee shall be chaired by the person whom the members of the Executive Committee present choose amongst themselves. 58. Secretary. The Secretary of the Corporation shall act as secretary of the Executive Committee unless some other secretary be appointed by such committee. 59. Powers. The Executive Committee shall possess the powers and authority of the Board of Directors for the administration of the day-to-day business and affairs of the Corporation, except the powers which, by law, must be exercised by the Board of Directors, as well as the powers which the Board of Directors may expressly reserve for itself. 60. Supervisory Power of the Board of Directors. All acts of the Executive Committee shall be subject to the supervision of the Board of Directors and shall be reported to the Board of Directors when the Board of Directors so directs. The Board of Directors may invalidate or modify decisions taken by the Executive Committee, provided that the rights of third parties are not affected. 61. Participation by Telephone and Signed Resolutions. Sections 37 and 42 shall apply, mutatis mutandis, to meetings of the Executive Committee. 62. Meetings. Meetings of the Executive Committee may be held at the head office of the Corporation or at such other place within or outside Canada as the Executive Committee may determine. Meetings of the Executive Committee may be called by or by the order of the President or by two members of such committee. A member of the Executive Committee may waive in writing a notice of a meeting of the Executive Committee, prior to or after the holding of the meeting. His sole attendance at a meeting is a waiver except where he attends a meeting solely for the purpose of objecting to the transaction of any business on the grounds that the meeting was not lawfully called. 63. Remuneration. The members of the Executive Committee shall be entitled to receive such remuneration for their services as members of the Executive Committee as the Board of Directors may determine. 64. Removal and Filling of Vacancies. The Board of Directors may from time to time remove any member of the Executive Committee from office. The Board of Directors may also fill any vacancy which may occur in the membership of the Executive Committee. 13 OTHER COMMITTEES 65. Other Committees. The Board of Directors may appoint any other committee that it may deem fit. Any such committee shall only have advisory power. The members of any such committee need not be members of the Board of Directors. Except as otherwise provided by the Board of Directors, each such committee shall have the power to fix its quorum, which quorum shall consist of no less than a majority of its members, to appoint it own president, and to determine its own procedure. INDEMNIFICATION OF DIRECTORS AND OFFICERS 66. Indemnity. Subject to the limitations provided by the Act, the Corporation shall indemnify a director or officer of the Corporation, a former director or officer of the Corporation or a person who acts or acted at the Corporation's request as a director or officer, or a person acting in a similar capacity, of another entity, and his heirs and legal representatives, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by him in respect of any civil, criminal, administrative or investigative or other proceeding in which he is involved by reason of being or having been a director or officer of the Corporation or as a director or officer, or a person acting in a similar capacity, of such entity, if: (a) he acted honestly and in good faith with a view to the best interests of the Corporation or, as the case may be, the entity; and (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, he had reasonable grounds for believing that his conduct was lawful. 67. Insurance. The Corporation may purchase and maintain insurance for the benefit of any person referred to in Section 66 against such liability as the Board of Directors may from time to time determine, and as permitted by the Act. 68. Reimbursement and advance of costs. Subject to a contract specifying and restraining this obligation, the Corporation shall reimburse the director, officer and any other agent for the reasonable and necessary costs paid by him during the execution of his duties. This reimbursement shall be done after the presentation of all relevant documents. Moreover, the Corporation shall at his request advance moneys to such individual for the costs, charges and expenses referred to in Section 66, and the individual must repay the moneys if he does not fulfill the conditions set out in Section 66. CAPITAL STOCK 69. Issue and Stock Options. Subject to all provisions contained in the Articles of the Corporation or in a Unanimous Shareholders Agreement limiting the allocation or issue of shares of the capital stock of the Corporation, the directors may accept subscriptions for, allot, distribute, issue, in whole or in part, the unissued shares of the Corporation, grant options thereon or otherwise dispose thereof to any person, corporation, company, body corporate or other entity, upon the conditions and for the lawful consideration in compliance with the Articles 14 of the Corporation which is determined by the directors, without any requirement to offer such unissued shares to persons who are already shareholders rateably to the shares held by them. 70. Share Certificates and Share Transfers. Certificates representing the shares of the capital stock of the Corporation shall bear the signature of the President or a Vice-President and that of the Secretary or an Assistant Secretary. Such signatures may be engraved, lithographed or otherwise mechanically reproduced. Any certificate bearing a facsimile of the signatures of such authorized officers shall be deemed to have been signed manually, notwithstanding the fact that the deemed signatory has since ceased to be an officer of the Corporation. 71. Securities Register. A central securities register shall be maintained by the Corporation or its agent at the registered office or at any other place in Canada designated by the directors. The directors may from time to time provide that one (1) or more branch securities registers shall be maintained at such places within Canada or elsewhere as may be designated by a resolution and may appoint officers or agents to maintain the same and to effect and record therein transfers of shares of the capital stock of the Corporation. 72. Lost or Destroyed Certificates. The Board of Directors may, upon conditions it shall establish, direct that one or more new certificates of shares may be issued to replace any certificate or certificates of shares theretofore issued by the Corporation that have been worn out, lost, stolen, or destroyed, and the Board of Directors, when authorizing the issuance of such new certificate or certificates, may, in its discretion, and as a condition precedent thereto, require the owner of the worn-out, lost, stolen or destroyed certificate or certificates or his legal representatives to give to the Corporation, a bond in such sum as it may direct, as indemnity against any claim that may be made against them for or in respect of the shares represented by such certificates alleged to have been worn out, lost, stolen or destroyed. DIVIDENDS 73. Dividends. The Board of Directors may, periodically and in compliance with the law, declare and pay dividends to the shareholders, in accordance with their respective rights. The Board of Directors may stipulate that a dividend be payable, in whole or in part, in shares of the Corporation. A transfer of shares shall not transfer the right to the dividends declared thereon before the registration of the transfer of shares. When two (2) or more persons are registered as joint holders of one share, each of them may give a valid receipt for any dividend payable or paid on such share. FISCAL YEAR AND AUDIT 74. Fiscal Year. The fiscal year of the Corporation shall be determined by the Board of Directors. 75. Audit. The shareholders, at each annual meeting, shall appoint an Auditor, who shall hold such office until the next annual meeting or until a successor has been appointed, unless he dies or resigns or his position otherwise becomes vacant. At least once in every fiscal year such 15 Auditor shall examine the accounts of the Corporation and the financial statements to be presented at the annual meeting and shall report thereon to the shareholders. The remuneration of the Auditor shall be fixed by the shareholders or, if not so fixed, by the Board of Directors. The Auditor shall be independent of the Corporation, of its affiliates, or the directors or officers of the Corporation or its affiliates in accordance with the Act. The shareholders may remove the Auditor from office at any time at a special meeting. A vacancy created by the removal of the Auditor may be filled at the meeting at which the Auditor is removed or, if not so filled, may be filled by the Board of Directors. Any other vacancy which may occur shall be filled by the directors in accordance with Section 166 of the Act. The shareholders may decide not to appoint an auditor for any fiscal year, by resolution receiving the consent of all the shareholders including those who otherwise are not qualified to vote. The resolution shall be valid only until the next annual meeting. CORPORATION'S REPRESENTATION FOR CERTAIN PURPOSES 76. Declaration. The President, the Chairperson of the Board of Directors, any Vice-President, the Managing Director, the General Manager, the Comptroller, the Secretary and the Treasurer and each of them and, with the authorization of the Board of Directors, any other officer, employee or person shall be authorized and empowered to answer for the Corporation to all writs, orders or examinations upon articulated facts issued by any court and to declare for and on behalf of the Corporation any answer to writs of attachment by way of garnishment in which the Corporation is garnishee and to sign all affidavits and sworn declarations in connection therewith or any and all judicial proceedings to which the Corporation is a party and to make demands for assignment of property or petition for winding-up or receivership orders upon any debtor of the Corporation and to attend and vote at all meetings of creditors of the Corporation's debtors and grant proxies in connection therewith. 77. Representation at Meetings. The President, the Chairperson of the Board of Directors, any Vice-President, the Managing Director, the General Manager, the Comptroller, the Secretary and the Treasurer or any one of them or any other officer or person authorized by the Board of Directors shall represent the Corporation and attend and vote at any and all meetings of shareholders or members of any entity in which the Corporation holds shares or is otherwise interested, and any action taken or vote cast by them at any such meeting shall be deemed to be the act or vote of the Corporation. 78. Signature of Documents. Contracts, documents, written acts, including discharges and releases, requiring the signature of the Corporation may be validly executed by the President alone, or by any two of the following persons, any Vice-President, the Managing Director, the General Manager, the Secretary and the Treasurer, acting jointly, and hence be binding on the Corporation. The Board of Directors may also designate any other person to execute, alone or in conjunction with one or more other persons, and to deliver on behalf of the Corporation all contracts, documents and written acts, and such authorization may be given by resolution in general or specific terms. 16 79. Declarations in the Register. Declarations to be filed with The Enterprises Registrar in accordance with the Act respecting the legal publicity of sole proprietorships, partnerships and legal persons shall be signed by the President, any director of the Corporation or any other person authorized for such purpose by resolution of the Board of Directors. Any director having ceased to hold such office as a result of his resignation, removal or otherwise shall be authorized to sign on behalf of the Corporation and file an amending declaration to the effect that he has ceased to be a director, from fifteen (15) days after the date of such cessation, unless he receives proof that the Corporation has filed such a declaration. MISCELLANEOUS PROVISIONS 80. Conflict with the Articles. In the event of conflict between the provisions of a by-law and those of the Articles, the latter shall prevail. 81. Amendments. The Board of Directors is empowered to adopt, abrogate or modify a by-law, but these measures apply only until the next annual or special meeting of shareholders. If the adoption, abrogation or modification is not confirmed or modified by Ordinary Resolution during the annual or special meeting, it will cease to apply, but only from this date. Any shareholder shall, according to Section 137 of the Act, propose the adoption, modification or abrogation of a by-law during an annual meeting. /s/ Steven G. Segal -------------------------- Steven G. Segal President 17 EX-3.15 18 y99327exv3w15.txt CHARTER OF MAAX HOLDING CO. EXHIBIT 3.15 CERTIFICATE OF INCORPORATION OF MAAX HOLDING CO. The undersigned incorporator, for the purpose of incorporating and organizing a corporation under the General Corporation Law of the State of Delaware, does hereby certify as follows: FIRST: The name of this corporation is "Maax Holding Co." SECOND: The address of the corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801. The name of the corporation's registered agent at such address is The Corporation Trust Company. THIRD: The purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH: The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of capital stock, and the par value of each such share is $.01 per share. FIFTH: The Board of Directors of the corporation is authorized to adopt, amend or repeal any or all of the bylaws of the corporation, subject to the power of the stockholders to adopt, amend or repeal such bylaws, whether adopted by them or otherwise. SIXTH: Election of directors need not be by written ballot, except as provided in the bylaws. SEVENTH: The name and mailing address of the incorporator is: Nancy C. Aiken 2400 IDS Center Minneapolis, Minnesota 55402 EIGHTH: No director of the corporation shall be liable to the corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of Delaware or (iv) for any transaction from which the director derived an improper personal benefit. Any repeal or modification of the foregoing paragraph by the stockholders of the corporation shall not adversely affect any right or protection of any person existing at the time of such repeal or modification. THE UNDERSIGNED, being the corporation's incorporator, does make, file and record this Certificate of Incorporation, and does certify that this is my act and deed and the facts herein stated are true, and I have accordingly hereunto set my hand this 11th day of March, 1994. /s/ Nancy C. Aiken ---------------------------------------- Nancy C. Aiken, Incorporator 2 STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 04:30 PM 05/27/1994 944096624 - 2385155 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION Maax Holding Co., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"). DOES HEREBY CERTIFY: FIRST: That the Board of Directors of the Corporation, at a meeting duly held, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of the Corporation: RESOLVED, that ARTICLE FOURTH of the Certificate of Incorporation of the Corporation shall be amended to read in its entirety as follows: "FOURTH: The total number of shares of stock which the corporation shall have authority to issue is two thousand (2,000) shares of capital stock, and the par value of each such share is $.01 per share." SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given written consent to said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware, and written notice of the adoption of the amendment has been given, as provided to Section 228 of the General Corporation Law of the State of Delaware, to every stockholder entitled to such notice. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said Maax Holding Co. has caused this certificate to be signed by Placide Poulin, its President, and attested by Richard Garneau, its Secretary, this 27th day of May, 1994. By /s/ Placide Poulin ---------------------------------------- Placide Poulin, President ATTEST: By /s/ Richard Garneau ---------------------------------- Richard Garneau, Secretary STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 04:30 PM 07/07/1998 981264320 - 2385155 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION Maax Holding Co., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"). DOES HEREBY CERTIFY: FIRST: That the Board of Directors of the Corporation, at a meeting duly held, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of the Corporation: RESOLVED, that ARTICLE FOURTH of the Certificate of Incorporation of the Corporation shall be amended to read in its entirety as follows: "FOURTH: The total number of shares of stock which the corporation shall have authority to issue is ten thousand (10,000) shares of capital stock, and the par value of each such share is $.01 per share." SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given written consent to said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware, and written notice of the adoption of the amendment has been given, as provided in Section 228 of the General Corporation Law of the State of Delaware, to every stockholder entitled to such notice. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said Maax Holding Co. has caused this certificate to be signed by Placide Poulin, its President, this 6th day of July, 1998. By /s/ Placide Poulin ---------------------------------------- Placide Poulin, President EX-3.16 19 y99327exv3w16.txt BYLAWS OF MAAX HOLDING CO. EXHIBIT 3.16 BYLAWS OF MAAX HOLDING CO. (A DELAWARE CORPORATION) ARTICLE I OFFICES Section 1. Registered Office. The address of the registered office of the Corporation shall be Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801. The registered office need not be identical with the principal office of the Corporation and may be changed from time to time by the Board of Directors. Section 2. Other Offices. The Corporation may have offices at such other places within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation requires. ARTICLE II STOCKHOLDERS Section 1. Annual Meeting. An annual meeting of stockholders for the purpose of electing directors and of transacting such other business as may come before the meeting will generally be called annually by the Board of Directors at its discretion, and such meetings may be held at such date and time as may be specified by the Board of Directors. Section 2. Place of Meeting. All meetings of the stockholders of the Corporation for the election of directors and for any other purposes may be held at such place either within or without the State of Delaware as may be authorized by the Board of Directors and stated in the notice of the meeting. Section 3. Special Meetings. Special meetings of the stockholders for any purpose or purposes prescribed in the notice of the meeting may be called at any time by the Board of Directors (by action taken by a majority of the total number of directors) or by the President of the Corporation. A special meeting of the stockholders shall also be called by the President of the Corporation upon the written request, stating the date, time, place and purpose or purposes of the meeting, of stockholders who together own of record a majority of the outstanding stock of all classes entitled to vote at such meeting. Section 4. Action Without Meeting by Stockholders. Any action required to be taken or which may be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Section 5. Notice of Meeting. Written notice of every meeting of stockholders, stating the place, date and hour where it is to be held, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given by or at the direction of the Board of Directors or the President of the Corporation by the Secretary or an Assistant Secretary, to each stockholder of the Corporation entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date fixed for such meeting, except as may otherwise be provided in these Bylaws, the Certificate of Incorporation or the General Corporation Law of the State of Delaware from time to time in effect. If mailed, such notice shall be deemed to have been given when deposited in the United States mail, postage prepaid, addressed to each stockholder at his, her or its address as it appears on the books of the Corporation. When a meeting is adjourned to another place, date or time, written notice need not be given of the adjourned meeting if the place, date and time thereof are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than thirty (30) days after the date of the meeting for which notice was originally given, or if a new record date is fixed for the adjourned meeting, written notice of the place, date and time of the adjourned meeting shall be given in conformity with the provisions of this Section 5. At any adjourned meeting, any business may be transacted which might have been transacted at the meeting for which notice was originally given. Section 6. Quorum. Except as otherwise provided by law or in the Certificate of Incorporation or elsewhere in these Bylaws, at any meeting of stockholders, the holders of a majority of the issued and outstanding shares of each class of stock entitled to vote at the meeting shall be present or represented by proxy in order to constitute a quorum for the transaction of any business. In the absence of a quorum, a majority in interest of the stockholders present who are entitled at any time to vote or the chairman of the meeting may adjourn the meeting from time to time until a quorum shall be present. The stockholders present at a duly organized meeting may continue to transact business until adjournment notwithstanding the withdrawal of the holders of a sufficient number of shares entitled to vote at the meeting to leave less than a quorum then present at the meeting. Section 7. Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix in advance a date as the record date for any such determination of stockholders, which date, unless otherwise provided by law, shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting nor more than sixty (60) days prior to any other such action. If no record date is fixed by the Board of Directors, the record date for determining stockholders (i) entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (ii) entitled to express consent to the corporate action in writing without a meeting when no prior action by the Board of Directors is necessary, shall be the day on which the first written consent is expressed; and (iii) for any other purpose, shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this Section 7, such determination shall apply to 2 any adjournment thereof unless the Board of Directors, in its discretion, determines to fix a new record date with respect to the adjourned meeting. Section 8. Voting of Shares; Proxies. Except as otherwise provided by law or by the Certificate of Incorporation, each stockholder of record having the right to vote shall be entitled at every meeting of the stockholders of the Corporation to one vote for each share of stock having voting power and standing in the name of such stockholder on the books of the Corporation and such votes may be cast either in person or by written proxy. Every proxy must be executed in writing by the stockholder or by his, her or its duly authorized attorney. Each proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. All voting, except on the election of directors and where otherwise required by law, may be by voice vote; provided, however, that upon demand therefor by a stockholder entitled to vote or by his, her or its proxy, a stock vote shall be taken. Every stock vote shall be taken by ballots, each of which shall state the name of the stockholder or proxy voting and such other information as may be required under the procedure established for the meeting. Every vote taken by ballots shall be counted by an inspector or inspectors appointed by the chairman of the meeting. Section 9. Vote Required. At any meeting duly called and held for the election of directors at which a quorum is present, directors shall be elected by a plurality of the votes cast, and except as otherwise required by law or the Certificate of Incorporation, all other matters shall be determined by a majority of the votes cast at such meeting by the holders of outstanding shares of stock of all classes of stock of the Corporation entitled to vote thereon who are present in person or by proxy and who cast their votes with respect to such matter. Section 10. Waiver of Notice. Except as otherwise required by law or the Certificate of Incorporation, any stockholder may at any time waive any or all notice to him, her or it of any meeting of stockholders by delivering to the Corporation a writing to that effect signed by him, her or it either before or after the meeting, and the presence of any stockholder in person or by proxy at a meeting of stockholders shall constitute waiver by him, her or it of notice of the meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. ARTICLE III BOARD OF DIRECTORS Section 1. General Powers. The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors, except as may be otherwise provided in the Certificate of Incorporation or the Delaware General Corporation Law. Section 2. Number and Tenure. The number of directors shall be fixed from time to time by the Board of Directors. The directors shall be elected by the holders of shares entitled to vote thereon at the annual meeting of stockholders, and each shall serve until the next succeeding annual meeting of stockholders and until his or her respective successor has been elected and qualified, or until his or her earlier resignation, death or removal from office. 3 Section 3. Chairman of the Board. The directors may elect one of their members to be the Chairman of the Board of Directors. The Chairman shall be subject to the control of and may be removed by the Board of Directors. The Chairman shall perform such duties as may from time to time be assigned to him or her by the Board of Directors. Section 4. Vacancies. Any vacancy occurring on the Board of Directors by reason of death, resignation, removal or disqualification may be filled by a majority of the remaining directors, even though less than a quorum, at any regular or special meeting. Vacancies on the Board resulting from newly created directorships may be filled only by a majority vote of the directors serving at the time of the increase. Section 5. Meetings. The Board of Directors shall hold regular meetings during each calendar year at such time and place as shall from time to time be determined by the Board of Directors and stated in the notice of the meeting. Regular meetings of the Board of Directors may be held without notice at such date, time and place as shall from time to time be determined by resolution of the Board of Directors. Special meetings of the Board of Directors shall be held at such time and place as shall be designated in the notice of the meeting whenever called by the Chairman of the Board, if any, the President of the Corporation, or by a majority of the directors then in office. Section 6. Notice of Meetings. Notice of every regular (unless the Board of Directors has fixed by resolution the date, time and place of its regular meetings) and special meeting of the Board of Directors stating the date, time and place of the meeting shall be delivered to each director at his or her business address or at such other address as he or she shall have previously specified in writing directed to the Secretary of the Corporation. Notice, if by mail, shall be given not later than the fifth day preceding the date of the meeting. The notice shall be deemed to be given when deposited in the United States mail, duly addressed with postage prepaid. Notice, if given by telegram, cable, telex or similar communication, shall be given at least 48 hours preceding the time of the meeting. Such notice shall be deemed to be given when delivered to the telegraph or cable company or, in the case of a telex or similar communication, when transmitted. Notice may also be given in person or by telephone at least 24 hours preceding the time of the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or in any waiver of notice of such meeting. Section 7. Waiver of Notice. Except as otherwise required by law or by the Certificate of Incorporation, any director may waive at any time any or all notice to him or her of any meeting of the Board of Directors or of any committee of the Board by delivering to the Corporation a writing to that effect signed by him or her either before or after such meeting, and the presence of any director at any meeting of the Board of Directors or of any committee of the Board shall constitute a waiver by him or her of notice of such meeting if such director does not protest, prior to the meeting or at its commencement, the lack of notice. Section 8. Quorum. At all meetings of the Board of Directors a majority of the entire Board shall constitute a quorum sufficient for the transaction of business, and any act of a majority of the directors present at a meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise required by law, the Certificate of Incorporation 4 or these Bylaws. If a quorum is present at any meeting of directors, a majority of the directors present thereat may adjourn the meeting from time to time without notice other than announcement at the meeting of the time and place of such adjourned meeting. Section 9. Action Without Meeting. Unless otherwise restricted by law or by the Certificate of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee of the Board of Directors, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing. Each such consent in writing shall be filed with the minutes of the proceedings of the Board of Directors or committee. Section 10. Committees. The Board of Directors may designate two or more of their number to constitute an executive committee, which, to the extent determined by the Board and allowed by law, shall have and exercise the authority of the Board in the management of the business of the Corporation. Such executive committee shall act only in the interval between meetings of the Board and shall be subject at all times to the control and direction of the Board. The Board of Directions may also appoint one or more natural persons who need not be Board members to serve on such other committees as the Board may determine. Such other committees shall have such powers and duties as shall from time to time be prescribed by the Board. A majority of the members of any committee shall constitute a quorum for the transaction of business by the committee. All committees shall keep accurate minutes of their meetings, which minutes shall be made available upon request to members of that committee and to any director. Section 11. Meetings by Conference Telephone. The Board of Directors, or any committee thereof, may participate in a meeting of the Board or such committee by means of conference telephone call or similar communications equipment by means of which all persons participating in the meeting can hear each other and such participation shall constitute presence in person at such meeting. ARTICLE IV OFFICERS Section 1. Election of Officers. The executive officers of the Corporation shall be a President and a Secretary, each of whom shall be elected by the Board of Directors and may be designated by such title or titles as the Board may determine. The Board of Directors may elect or appoint such other officers as it may deem necessary or desirable. Each officer shall hold office for such term as may be prescribed by the Board of Directors from time to time. Section 2. President. The President shall have charge of the business and operations of the Corporation, subject to the control of the Board of Directors. He or she shall in general supervise and cause all orders and resolutions of the Board of Directors to be carried into effect, shall do and perform all acts and things incident to the position of President, and shall have such other duties as may be prescribed from time to time by the Board of Directors. Section 3. Vice Presidents. The Vice President, if any, or Vice Presidents in case there be more than one, shall have such powers and perform such duties as the President or the Board of Directors may from time to time prescribe. In the absence of the President or in the 5 event of the President's death, inability or refusal to act, the Vice President, or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board of Directors, or, in the absence of any designation, in the order of their election, shall perform the duties of the President, and, when so acting, shall have all the powers of and be subject to all of the restrictions upon the President. Section 4. Chief Financial Officer. The chief financial officer shall be in charge of the financial affairs of the Corporation under the direction of the Board of Directors and the supervision of the President. He or she shall supervise the activities of any treasurer and controller or assistant treasurers and assistant controllers and shall report periodically to the Board of Directors concerning the financial condition of the Corporation and shall perform such other duties as shall be ordered by the Board of Directors or the chief executive officer. Section 5. Secretary. The Secretary, or his or her designee, shall attend all meetings of the Board of Directors and of the stockholders, and record all proceedings of the meetings of the Board of Directors and of the stockholders in books to be kept for that purpose and shall perform like duties for other committees of the Board of Directors when directed to do so by the Board. He or she shall give, or cause to be given, notice of all meetings of the stockholders and regular, if required, and special meetings of the Board of Directors and shall perform such other duties as may be prescribed by the Board of Directors or the President. ARTICLE V CAPITAL STOCK Section 1. Certificates. Certificates representing shares of capital stock of the Corporation shall be in such form as shall be determined by the Board of Directors and as may be required by law. Stock certificates shall be signed by the President and the Secretary or any assistant secretary of the Corporation. Where any such certificate is countersigned by a transfer agent or registrar other than the Corporation or an employee, the signatures of any such officers upon such certificates may be facsimiles. All certificates for shares shall be consecutively numbered or otherwise identified, and shall state the name of the Corporation, that it is organized under the laws of the State of Delaware, the name of the person to whom the shares are issued, the number and class of shares and the designation of the series, if any, that the certificate represents. The name of the person to whom the shares are issued with the number of shares and the date of issue shall be entered on the books of the Corporation. Section 2. Transfer of Shares. The shares of stock of the Corporation shall be transferrable upon its books only by the persons named in the certificates or by their attorneys-in-fact or legal representatives duly authorized in writing, and upon surrender to the Corporation of the old stock certificates, properly endorsed, to the Secretary of the Corporation, or to such other persons as the Board of Directors may designate, by whom they shall be cancelled. New certificates for the shares shall thereupon be issued to the person entitled to such new certificates. A record shall be made of each transfer. Section 3. Lost Certificates. The Board of Directors or any transfer agent of the Corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed 6 upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. When authorizing the issuance of a new certificate or certificates under such circumstances, the Board of Directors (or any transfer agent of the Corporation authorized to do so by resolution of the Board of Directors) may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates to give the Corporation a bond in such sum as the Board of Directors (or any transfer agent so authorized) shall direct to indemnify the Corporation against any claim that may be made against the Corporation with respect to the certificate or certificates alleged to have been lost, stolen or destroyed or the issuance by the Corporation of such new certificate or certificates, and such requirement may be general or confined to specific instances. Section 4. Dividends. The Board of Directors may from time to time declare and the Corporation may pay dividends upon its outstanding shares of capital stock in the manner and upon the terms and conditions provided by law. Section 5. Reserves. There may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for the purchase of additional property or for such other purpose as the Board shall deem to be consistent with the interests of the Corporation, and the Board may modify or abolish any such reserve. ARTICLE VI CONTRACTS, LOANS, CHECKS, AND DEPOSITS Section 1. Contracts. The Board of Directors may authorize such officers or agents as it shall designate to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances. Section 2. Loans to Officers. Subject to contractual limitations or restrictions, if any, the Corporation may lend money to, guarantee any obligation of or otherwise assist any officer or other employee of the Corporation or any subsidiary of the Corporation, including any such officer or employee who is a director of the Corporation or any subsidiary of the Corporation, whenever, in the judgment of the Board of Directors, such loan, guaranty or assistance may reasonably be expected to benefit the Corporation. Any such loan, guaranty or assistance may be with or without interest and may be unsecured or secured in manner as the Board of Directors shall approve, including a pledge of shares of stock of the Corporation. Section 3. Checks; Drafts. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officers or agents of the Corporation as shall be designated and in such manner as shall from time to time be determined by resolution of the Board of Directors. Section 4. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks or other financial institutions as the Board of Directors may select. 7 ARTICLE VII INDEMNIFICATION Section 1. Indemnification of Officers, Directors and Employees. Each person (i) made or threatened to be made a party to any action by or in the right of the Corporation to procure a judgment in its favor, by reason of the fact that he or she, his or her testator or intestate, is or was a director, officer or employee of the Corporation and (ii) made or threatened to be made a party to any action or proceeding, other than one by or in the right of the Corporation to procure a judgment in its favor, whether civil or criminal, including any action by or in the right of any other corporation of any type or kind, domestic or foreign, which any director, officer or employee of the Corporation served in any capacity at the request of the Corporation by reason of the fact that he or she, his or her testator or intestate, is or was a director, officer or employee of the Corporation, or served such corporation in any capacity, shall be indemnified by the Corporation against all expenses and other amounts for which indemnification may be made under law. The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification, and to the advancement of expenses to any director, officer, employee or agent of a subsidiary or related entity of the Corporation or to any employee or agent of the Corporation to the fullest extent of the provisions of this Section with respect to the indemnification and advancement of expenses of directors and officers of the Corporation. The indemnification provided for herein shall be made at the times, in the manner and to the extent provided by law. Section 2. Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or subsidiary or related entity against any expense, liability or loss, whether or not the Corporation would have the power to indemnity such person against such expense, liability or loss under the Delaware General Corporation Law. ARTICLE VIII MISCELLANEOUS Section 1. Stock of other Corporations or other Interests. Unless otherwise ordered by the Board of Directors, the President, the Secretary, and such other attorneys or agents of the Corporation as may from time to time be authorized by the Board of Directors or the President, shall have full power and authority on behalf of the Corporation to attend and to act and vote in person or by proxy at any meeting of the holders of securities of any corporation or other entity in which this Corporation may own or hold shares or other securities, and at such meetings shall possess and may exercise all the rights and powers incident to the ownership of such shares or other securities which this Corporation, as the owner or holder thereof, might have possessed and exercised if present. The President, the Secretary or such attorneys or agents may also execute and deliver on behalf of the Corporation powers of attorney, proxies, consents, waivers and other instruments relating to the shares or securities owned or held by this Corporation. Section 2. Fiscal Year. The fiscal year of the Corporation shall be such twelve-month period as may be set by a resolution of the Board of Directors; provided, however, that the first fiscal year of the Corporation may be a shorter period if permitted by law. 8 Section 3. Seal. The Corporation shall have no seal. Section 4. Amendments. Except as limited by the Certificate of Incorporation, these Bylaws may be altered or amended by the Board of Directors at any meeting of directors to the full extent permitted by law, subject, however, to the power of the stockholders of this Corporation to alter or repeal such bylaws. 9 EX-3.17 20 y99327exv3w17.txt CHARTER OF MAAX-HYDRO SWIRL MANUFACTURING CORP. Exhibit 3.17 ARTICLES OF INCORPORATION OF MAAX-HYDRO SWIRL MANUFACTURING CORP. ARTICLE I --------- NAME The name of this Corporation is MAAX-Hydro Swirl Manufacturing Corp. ARTICLE II ---------- PURPOSES This Corporation is organized for the following purposes: To engage in any business, trade or activity which may be conducted lawfully by a corporation organized under the Washington Business Corporation Act. ARTICLE III ----------- SHARES The total number of shares which the Corporation is authorized to issue is 100, consisting of 100 shares of Common Stock having no par value. ARTICLE IV ---------- NO PREEMPTIVE RIGHTS Shareholders of this Corporation shall not have preemptive rights to acquire additional shares issued by this Corporation. ARTICLE V --------- NO CUMULATIVE VOTING Shareholders of this Corporation shall not have cumulative voting rights for directors. ARTICLE VI ---------- BYLAWS The Board of Directors shall have the power to adopt, amend or repeal the Bylaws or adopt new Bylaws. Nothing herein shall deny the concurrent power of the shareholders to adopt, alter, amend or repeal the Bylaws. ARTICLE VII ----------- REGISTERED OFFICE AND AGENT The name of the initial registered agent of this Corporation and the address of its initial registered office are as follows: BD Services Corporation 300 N. Commercial Street Bellingham, Washington 98225 ARTICLE VIII ------------ DIRECTORS (a) The number of directors of this Corporation shall be determined in the manner specified by the Bylaws and may be increased or decreased from time to time in the manner provided there. The initial Board of Directors shall consist of two (2) directors and their names and addresses are as follows: Name Address ---- ------- Placide Poulin, 583, Ste-Madeleine, Ste-Marie-de-Beauce, Quebec, Canada G6E 1L1 Richard Garneau, 1048, Georges-Cantin, St-Jean-de-Beauce, Quebec, Canada G6E 1L1 (b) The term of the initial directors shall be until the first annual meeting of the shareholders or until their successors are elected and qualified, unless removed in accordance with the provisions of the Bylaws. ARTICLE IX ---------- SHAREHOLDER APPROVAL OF CERTAIN TRANSACTIONS The affirmative vote of a majority of all of the votes entitled to be cast on the matter shall be sufficient, valid, and effective, after due consideration and reconsideration of such action by the Board of Directors, as required by law, to approve and authorize the following acts of the Corporation: (a) an amendment to these Articles of Incorporation; (b) the merger of this Corporation into another corporation or the merger of one or more other corporations into this Corporation; (c) the acquisition by another corporation of all of the outstanding shares of one or more classes or series of this Corporation; or 2 (d) the sale, lease, exchange, or other disposition by this Corporation of all, or substantially all, of its property other than in the usual and regular course of business. ARTICLE X --------- INCORPORATOR The name and address of the incorporator is as follows:
Name Address ---- ------- Larry Daugert [address]
ARTICLE XI ---------- LIMITATION OF DIRECTORS' LIABILITY No director of the Corporation shall be personally liable to the Corporation or its shareholders for monetary damages for his or her conduct as a director, which conduct takes place on or after the date this Article becomes effective, except for (i) acts or omissions that involve intentional misconduct or a knowing violation of law by the director, (ii) conduct violating RCW 23B.08.310, or (iii) any transaction from which the director will personally receive a benefit in money, property or services to which the director is not legally entitled. If, after this Article becomes effective, the Washington Business Corporation Act is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be deemed eliminated or limited to the fullest extent permitted by the Washington Business Corporation Act, as so amended. Any amendment to or repeal of this Article shall not adversely affect any right or protection of a director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. This provision shall not eliminate or limit the liability of a director for any act or omission occurring prior to the date this Article becomes effective. ARTICLE XII ----------- SHAREHOLDER AUTHORIZED INDEMNIFICATION AND EXPENSES In accordance with RCW 23B.08.540, the shareholders grant the power to the Corporation to indemnify a director made a party to a proceeding and to advance or reimburse expenses incurred in a proceeding, without regard to the limitations contained in RCW 23B.08.510 through 23B.08.550, provided that no such indemnity shall indemnify any director from or on account of: (a) Acts or omissions of the director finally adjudged to be intentional misconduct or a knowing violation of law; 3 (b) Conduct of the director finally adjudged to be in violation of RCW 23B.08.310 (Liability for Unlawful Distributions); or (c) Any transaction with respect to which it was finally adjudged that such director personally received a benefit in money, property, or services to which the director was not legally entitled. The undersigned person, of the age of eighteen years of more, as incorporator of this Corporation under the Washington Business Corporation Act, adopts these Articles of Incorporation. Dated: October , 1995. /s/ Larry Daugert --- --------------------------------------- Larry Daugert, Incorporator 4 ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF MAAX-HYDRO SWIRL MANUFACTURING CORP. TO: RALPH MUNRO, THE SECRETARY OF STATE OF THE STATE OF WASHINGTON: Pursuant to the provisions of RCW 23B.10.30 of the Washington Business Corporation Act, Articles of Amendment to the Articles of Incorporation of MAAX-Hydro Swirl Manufacturing Corp. are hereby adopted by the corporation: 1. The name of the corporation is MAAX-Hydro Swirl Manufacturing Corp. 2. The amendment to the Articles of Incorporation adopted by the corporation is as follows: Revise Article III of the Articles of Incorporation to read: ARTICLE III SHARES The total number of shares which the Corporation is authorized to issue is 1,000,000, consisting of 1,000,000 shares of Common Stock having no par value. 3. This Amendment was unanimously adopted by the Board of Directors, submitted to the shareholders entitled to vote thereon, and unanimously adopted by the holders of the Common Stock of the corporation pursuant to a Consent in Lieu of Special Meeting of the Board of Directors and Shareholder of MAAX-Hydro Swirl Manufacturing Corp., dated June 21, 1996, in accordance with the provisions of RCW 23B.10.030. and RCW B.10.040. 4. This amendment does not provide for an exchange, reclassification or cancellation of issued shares of the corporation. DATED this 25 day of June, 1996. /s/ Placide Poulin ---------------------------------------- Placide Poulin, President EX-3.18 21 y99327exv3w18.txt BYLAWS OF MAAX-HYDRO SWIRL MANUFACTURING CORP. EXHIBIT 3.18 BYLAWS OF MAAX-HYDRO SWIRL MANUFACTURING CORP. ARTICLE 1 SHAREHOLDERS Section 1: Annual Meeting. The annual meeting of the shareholders shall be held at the registered office of the Corporation, or at such other place as may be designated in the notice of meeting, on the third Thursday of October of each year, unless this day is a legal holiday, in which event the meeting shall be held at the same place on the next succeeding business day. In the event that the annual meeting is omitted by oversight or otherwise on the established date, the Directors shall cause an alternative annual meeting of shareholders to be held as soon after the scheduled meeting as practicable and any business transacted or elections held at that meeting shall be as valid as if transacted or held at the scheduled annual meeting. Section 2: Special Meetings. The President or a majority of the Board of Directors may call special meetings of the shareholders for any purpose. At the request of the holders of not less than one hundred percent (100%) of all the outstanding shares of the Corporation entitled to vote on any issue proposed or considered at the meeting, the President shall call a special meeting of the shareholders. The Board of Directors shall select the time and place of any special meeting. Section 3: Notice of Meeting. Written notice of annual or special meetings of shareholders stating the place, day, and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given by the Corporation to each shareholder of record entitled to vote on any issue proposed or considered at the meeting (unless required by law to send notice to all shareholders, regardless of whether or not all shareholders are entitled to vote). Such notice shall be given not less than ten (10) days (unless the meeting is to consider amendment of the Articles of Incorporation, a merger or share exchange, a sale or substantially all of the Corporation's assets other than in the ordinary course of business or dissolution of the Corporation in which case notice shall be given not less than twenty (20) days) nor more than sixty (60) days prior to the date of the meeting, and shall be mailed to the shareholders' addresses as they appear on the current record of shareholders of the Corporation. Section 4: Waiver of Notice. Notice of the time, place, and purpose of any meeting may be waived in writing (either before or after such meeting) and will be waived by any shareholder by his attendance thereat in person or by proxy, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting or by the shareholder's failure to object at the time of presentation of a matter not within the purpose(s) described in the notice of the meeting. Any shareholder so waiving shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given. Section 5: Quorum and Adjourned Meetings. A majority of the outstanding shares of the corporation entitled to vote on a matter, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders with respect to such matter. A majority of the shares represented at a meeting, even if less than a quorum, may adjourn the meeting from time to time without further notice. At such reconvened meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If a meeting is adjourned to a different date, time or place, notice need not be given to such new date, time or place if a new date, time or place is announced at the meeting before adjournment; however, if a new record date for the adjourned meeting is or must be fixed in accordance with the corporate laws of the state of Washington, notice of the adjourned meeting must be given to persons who are shareholders as of the new record date. The shareholders present at a duly organized meeting may continue to transact business at such meeting and at any adjournment of such meeting (unless a new record date is or must be set for the adjourned meeting), notwithstanding the withdrawal of enough shareholders from either meeting to leave less than a quorum. Section 6: Proxies. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by the shareholder's attorney in fact and filed with the Secretary of the Corporation before or at the time of the meeting. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. Section 7: Action by Shareholders Without a Meeting. Any action required or permitted to be taken at a meeting of the shareholders may be taken without a meeting if a written consent setting forth the action so taken is signed by all shareholders entitled to vote with respect to the matter. The written consent shall be inserted in the minute book as if it were the minutes of the meeting of the shareholders. Section 8: Voting of Shares. Except as otherwise provided by applicable law, in the Articles of Incorporation or in these Bylaws, every shareholder of record shall have the right at every shareholders' meeting to one vote for every share standing in his name on the books of the Corporation, and the affirmative vote of a majority of the shares represented at a meeting and entitled to vote thereat shall be 2 necessary for the adoption of a motion or for the determination of all questions and business which shall come before the meeting. Section 9: Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or any adjournment thereof, or entitled to receive payment of any dividend, the Board of Directors may fix in advance a record date for any such determination of shareholders, such date to be not more than seventy (70) days prior to the date on which the particular action requiring such determination of shareholders is to be taken. If no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the day before the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof, unless the Board of Directors fixes a new record date, which it must do if the meeting is adjourned more than one hundred twenty (120) days after the date is fixed for the original meeting. ARTICLE 2 BOARD OF DIRECTORS Section 1: Powers. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, the Board of Directors, except as otherwise provided in the Articles of Incorporation. Section 2: Composition. The Board of Directors shall consist of two (2) Directors. Each Director will serve until the next annual meeting and until his successor is elected and qualified unless he resigns or is removed or unless a reduction in the number of Directors eliminates his position as of such annual meeting. Directors must be at least eighteen (18) years old, but need not be shareholders of the Corporation. Section 3: Election of Directors. The terms of each initial Director will expire at the first shareholders' meeting at which Directors are elected and qualified, unless he resigns or is removed. In the election of Directors, each shareholder of record will have one vote for each share owned by the shareholder. Shareholders may not cumulate their votes in the election of Directors. 3 Section 4: Vacancies. Vacancies in the Board of Directors shall be filled by the remaining members of the Board, whether they constitute a quorum or not, and each person so elected shall be a Director until a successor is elected by the shareholders, who may make such election at the next annual meeting of the shareholders, or at any prior special meeting duly called for the purpose. Section 5: Meetings. (a) The annual meeting of the Board of Directors shall be held immediately after the annual shareholders' meeting at the same place as the annual shareholders' meeting or at such other place and at such time as may be determined by the Directors. No notice of the annual meeting of the Board of Directors shall be necessary. (b) Special meetings may be called at any time and place upon the call of the president, secretary, or any Director. Notice of the time and place of each special meeting shall be given by the secretary, or the persons calling the meeting, by mail, private carrier, radio, telegraph, telegram, facsimile transmission, personal communication by telephone or otherwise at least two (2) days in advance of the time of the meeting. The purpose of the meeting need not be given in the notice. Notice of any special meeting may be waived in writing by any method allowed for giving written notice of the meeting (either before or after such meeting) and will be waived by any Director by attendance thereat. (c) Regular meetings of the Board of Directors shall be held at such place and on such day and hour as shall from time to time be fixed by resolution of the Board of Directors. No notice of regular meetings of the Board of Directors shall be necessary. (d) At any meeting of the Board of Directors, any business may be transacted, and the Board may exercise all of its powers. Section 6: Quorum and Voting. (a) A majority of the Directors in office at the time of any meeting shall constitute a quorum, but a lesser number may adjourn any meeting from time to time until a quorum is obtained, and no further notice thereof need be given. (b) At each meeting of the Board of Directors at which a quorum is present, the act of a majority of the Directors present at the meeting shall be the act of the Board of Directors. The Directors present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough Directors to leave less than a quorum. Section 7: Removal. At a special meeting of the shareholders called expressly for that purpose one (1) or more members of the Board of Directors (including the entire Board) may be removed, with or without cause, by a vote of a majority of the shareholders then entitled to vote on the election of Directors. 4 Section 8: Compensation. By Board resolution, Directors may be paid their expenses, if any, of attendance at each Board meeting or a fixed sum for attendance at each Board meeting or a stated salary as a Director or any combination of the foregoing. No such payment shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Section 9: Presumption of Assent. A Director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless: (a) The Director objects at the beginning of the meeting, or promptly upon the Director's arrival, to holding it or transacting business at the meeting; (b) The Director's dissent or abstention from the action taken is entered in the minutes of the meeting; or (c) The Director delivers written notice of the Director's dissent or abstention to the presiding officer of the meeting before its adjournment or to the corporation within a reasonable time after adjournment of the meeting. The right of dissent or abstention is not available to a Director who votes in favor of the action taken. Section 10: Action by Directors Without a Meeting. Any action required or permitted to be taken at a meeting of the Board may be taken without a meeting if a written consent setting forth the action to be taken is signed by each of the Directors. Any such written consent shall be inserted in the minute book as if it were the minutes of a Board meeting. Section 11: Committees. The Board of Directors, by resolution adopted by a majority of the full Board of Directors, may designate from among its members one or more committees, each of which must have two or more members and, to the extent provided in such resolution, shall have and may exercise all the authority of the Board of Directors, except that no such committee shall have the authority to: authorize or approve a distribution except according to a general formula or method prescribed by the Board of Directors; approve or propose to shareholders action that the Washington Business Corporation Act requires to be approved by shareholders; fill vacancies on the Board of Directors or on any of its committees; amend any Articles of Incorporation not requiring shareholder approval; adopt, amend or repeal Bylaws; approve a plan of merger not requiring shareholder approval; or authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares, except that the Board of Directors may authorize a committee, or a senior executive 5 officer of the Corporation, to do so within limits specifically prescribed by the Board of Directors. ARTICLE 3 SPECIAL MEASURES FOR CORPORATE ACTION Section 1: Actions by Written Consent. Any corporate action required or permitted by the Articles of Incorporation, Bylaws, or the laws under which the Corporation is formed, to be voted upon or approved at a duly called meeting of the Directors, committee of Directors, or shareholders may be accomplished without a meeting if one or more unanimous written consents of the respective Directors or shareholders, setting forth the actions so taken, shall be signed, either before or after the action taken, by all the Directors, committee members, or shareholders, as the case may be. Action taken by unanimous written consent is effective when the last Director or committee member signs the consent, unless the consent specifies a later effective date. Action taken by unanimous written consent of the shareholders is effective when all consents are in possession of the Corporation, unless the consent specifies a later effective date. Section 2: Meetings by Conference Telephone. Members of the Board of Directors, members of a committee of Directors, or shareholders may participate in their respective meetings by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time; participation in a meeting by such means shall constitute presence in person at such meeting. ARTICLE 4 OFFICERS Section 1: Election & Term of Office. The officers of the Corporation shall be a President, one or more Vice Presidents, a Secretary and a Treasurer, who shall be elected by the Board of Directors at the annual meeting of the Board, to serve until the next annual meeting and until their successors are elected and have qualified. Vacancies in any term of office may be filled by the Board of Directors at any meeting. Any two or more offices may be held by the same person. Section 2: President. Except as otherwise provided by the Board of Directors, the President shall preside at all Directors' and shareholders' meetings, shall have general management of the affairs of the Corporation, shall sign all written contracts of the Corporation, shall appoint and discharge all agents and employees, subject always to the approval of the Board of Directors, and subject to the right of the Board of Directors to remove or discharge the same, and shall perform all of such 6 other duties as are incident to the office or as may be required of the President by the Board of Directors. Section 3: Vice President. The Vice President shall in the absence or incapacity of the President perform the duties of that office and any other duties specified by the Board of Directors. Section 4: Secretary. The Secretary of the Corporation shall keep the minutes of all Directors' and shareholders' meetings. The Secretary shall attend to the giving and serving of all notices of the Corporation, shall have charge of all corporate record books, shall be custodian of the corporate seal, shall attest by signature all written contracts of the Corporation, and shall perform all such other duties as are incident to the office or may be required of the Secretary by the Board of Directors. Section 5: Treasurer. The Treasurer shall keep regular books of account, and shall submit them, together with all corporate records and papers, to the Board of Directors at any meeting when required to do so. The Treasurer shall, if required to do so by the Board of Directors, give such bond for the faithful performance of the office as the Board may determine, and shall perform all such other duties as are incident to the office or as may be required by the Board of Directors. Section 6: Other Officers. In addition to the foregoing officers, the Board of Directors may, from time to time, elect such other officers as they may see fit, with such duties as the Board may deem proper. Section 7: Removal. The Board of Directors shall have the right to remove any officer whenever in its judgment the best interests of the Corporation will be served thereby. Section 8: Salaries. The salaries of all officers of the Corporation shall be fixed by the Board of Directors. ARTICLE 5 STOCK Section 1: Issuance, Form and Execution of Certificates. No shares of the Corporation shall be issued unless authorized by the Board. Such authorization shall include the maximum number of shares to be issued, the consideration to be received for each share, the value of noncash consideration, and a statement that the Board has determined that such consideration is adequate. Certificates for shares of the Corporation shall be in such 7 form as is consistent with the provisions of the Washington Business Corporation Act and shall state: (a) The name of the Corporation and that the Corporation is organized under the laws of this State; (b) The name of the person to whom issued; and (c) The number and class of shares and the designation of the series, if any, which such certificate represents. They shall be signed by one or more officers of the Corporation, and the seal of the Corporation may be affixed thereto. Certificates may be issued for fractional shares. No certificate shall be issued for any share until the consideration established for its issuance has been paid. Section 2: Transfer of Shares. Transfer of shares of the Corporation shall be made only on the stock transfer books of the Corporation by the shareholder of record or by the shareholder's legal representative, who must furnish proper evidence of authority to transfer, or by the shareholder's attorney in fact authorized by power of attorney duly executed and filed with the Secretary of the Corporation, and on surrender for cancellation of the certificates for such shares. The person in whose name shares stand on the books of the Corporation shall be the only one entitled to notice of shareholders' meetings or to vote the shares. Section 3: Loss or Destruction of Certificates. In case of loss or destruction of any certificate of shares, another may be issued in its place upon proof of such loss or destruction and upon the giving of security, satisfactory to the Secretary, against loss to the Corporation. The new certificate may be issued without requiring any bond when in the judgment of the Board of Directors it is proper to do so. Any new certificate must be plainly marked "Duplicate" on its face. ARTICLE 6 WAIVER OF NOTICE Whenever any notice is required to be given to any shareholder or Director of the Corporation under the provisions of these Bylaws or under the provisions of the Articles of Incorporation or under the provisions of the Washington Business Corporation Act, a waiver of the notice in writing, signed by the person or persons entitled to such notice, will substitute for the required notice. 8 ARTICLE 7 CONTRACTS, LOANS, CHECKS & DEPOSITS Section 1: Contracts. The Board may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of the Corporation, and such authority may be general or confined to specific instances. Section 2: Loans. No loans shall be contracted on behalf of the Corporation and no evidences of any indebtedness shall be issued in its name unless authorized by a resolution of the Board. Such authority may be general or confined to specific instances. Section 3: Loans to Officers & Directors. No loans shall be made by the Corporation to its officers or Directors, unless first approved by the holders of two-thirds (2/3) of the shares, and no loans shall be made by the Corporation secured by its shares. Section 4: Checks, Drafts, Etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation, shall be signed by such officer or officers, agent or agents, of the Corporation and in such manner as is from time to time determined by resolution of the Board. Section 5: Deposits. All funds from the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board may elect. ARTICLE 8 FISCAL YEAR The fiscal year of the Corporation shall be set by resolution of the Board of Directors. ARTICLE 9 SEAL The seal of the Corporation shall consist of the name of the Corporation and the signature of its President or Vice President. 9 ARTICLE 10 INDEMNIFICATION OF OFFICERS, DIRECTORS EMPLOYEES AND AGENTS 1. Definitions. For purposes of this Article: (a) "Corporation" includes any domestic or foreign predecessor entity of the Corporation in a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction. (b) "Director" means an individual who is or was a Director of the Corporation or an individual who, while a Director of the Corporation, is or was serving at the Corporation's request as a Director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise. A Director is considered to be serving an employee benefit plan at the Corporation's request if the director's duties to the Corporation also impose duties on, or otherwise involve services by, the Director to the plan or to participants in or beneficiaries of the plan. "Director" includes, unless the context requires otherwise, the estate or personal representative of a Director. (c) "Expenses" include counsel fees. (d) "Liability" means the obligation to pay a judgment, settlement, penalty, fine, including an excise tax assessed with respect to an employee benefit plan, or reasonable expenses incurred with respect to a proceeding. (e) "Official capacity" means: (i) When used with respect to a Director, the office of Director in the Corporation; and (ii) when used with respect to an individual other than a Director, as contemplated in Section 8 of this Article, the office in the Corporation held by the officer or the employment or agency relationship undertaken by the employee or agent on behalf of the Corporation. "Official capacity" does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, employee benefit plan, or other enterprise. (f) "Party" includes an individual who was, is or is threatened to be made a named defendant or respondent in a proceeding. (g) "Proceeding" means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal. 2. Mandatory Indemnification. (a) The Corporation shall indemnify a Director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the Director was a party because of being a Director of the Corporation against reasonable expenses incurred by the Director in connection with the proceeding. 10 (b) Except as provided in subsection (e) of this Section 2, the Corporation shall indemnify an individual made a party to a proceeding because the individual is or was a Director against liability incurred in the proceeding if: (i) The individual acted in good faith; and (ii) The individual reasonably believed: (A) In the case of conduct in the individual's official capacity with the Corporation, that the individual's conduct was in the Corporation's best interests; (B) In all other cases, that the individual's conduct was at least not opposed to the Corporation's best interests; and (iii) In the case of any criminal proceeding, the individual had no reasonable cause to believe the individual's conduct was unlawful. (c) A Director's conduct with respect to an employee benefit plan for a purpose the Director reasonably believed to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of subsection (b)(ii) of this Section 2. (d) The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the Director did not meet the standard of conduct described in this Section. (e) The Corporation shall not indemnify a Director under this Section 2: (i) In connection with a proceeding by or in the right of the Corporation in which the Director was adjudged liable to the Corporation; or (ii) In connection with any other proceeding charging improper personal benefit to the Director, whether or not involving action in the Director's official capacity, in which the Director was adjudged liable on the basis that personal benefit was improperly received by the Director. (f) Indemnification under Section 2 of this Article in connection with a proceeding by or in the right of the Corporation is limited to reasonable expenses incurred in connection with the proceeding. 3. Advance for Expenses. (a) The Corporation shall pay for or reimburse the reasonable expenses incurred by a Director who is a party to a proceeding in advance of final disposition of the proceeding if: 11 (i) The Director furnishes the Corporation a written affirmation of the Director's good faith belief that the Director has met the standard of conduct described in Section 2 of this Article; and (ii) The Director furnishes the Corporation a written undertaking, executed personally or on the Director's behalf, to repay the advance if it is ultimately determined that the Director did not meet the standard of conduct. (b) The undertaking required by subsection (a)(i) of this Section 3 must be an unlimited general obligation of the Director but need not be secured and may be accepted without reference to financial ability to make repayment. 4. Court-Ordered Indemnification. A Director of the Corporation who is a party to a proceeding may apply for indemnification or advance of expenses to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court after giving any notice the court considers necessary, may order indemnification or advance of expenses if it determines: (a) The Director is entitled to mandatory indemnification under Section 2 of this Article, in which case the court shall also order the Corporation to pay the Director's reasonable expenses incurred to obtain court-ordered indemnification; (b) The Director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the Director met the standard of conduct set forth in Section 2 of this Article, but if the Director was adjudged so liable, the Director's indemnification is limited to reasonable expenses incurred; or (c) In the case of an advance of expenses, the Director is entitled pursuant to the Articles of Incorporation, Bylaws or any applicable resolution or contract, to payment or reimbursement of the Director's reasonable expenses incurred as a party to the proceeding in advance of final disposition of the proceeding. 5. Determination and Authorization of Indemnification. (a) The Corporation shall not indemnify a Director under this Article unless authorized in the specific case after a determination has been made that indemnification of the Director is permissible in the circumstances because the Director has met the standard of conduct set forth in Section 2(b) of this Article. (b) The determination shall be made: (i) By the Board of Directors by majority vote of a quorum consisting of Directors not at the time parties to the proceeding; (ii) If a quorum cannot be obtained under (i) of this subsection, by majority vote of a committee duly designated by the Board of Directors, in which designation Directors who are parties may participate, consisting solely of two or more Directors not at the time parties to the proceeding; 12 (iii) By special legal counsel: (A) Selected by the Board of Directors or its committee in the manner prescribed in (i) or (ii) of this subsection; or (B) If a quorum of the Board of Directors cannot be obtained under (i) of this subsection and a committee cannot be designated under (ii) of this subsection, selected by a majority vote of the full Board of Directors, in which selection Directors who are parties may participate; or (iv) By the shareholders, but shares owned by or voted under the control of Directors who are at the time parties to the proceeding may not be voted on the determination. (c) Authorization of indemnification and evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under subsection (b)(iii) of this Section to select counsel. 6. Indemnification of Officers, Employees, and Agents. (a) An officer of the Corporation who is not a Director is entitled to mandatory indemnification under Section 2(a) of this Article, and is entitled to apply for court-ordered indemnification under Section 4 of this Article, in each case to the same extent as a Director; and (b) The Corporation may indemnify and advance expenses to an officer, employee, or agent of the Corporation who is not a director to the same extent as to a Director under this Article. (c) The Corporation may also indemnify and advance expenses to an officer, employee, or agent who is not a Director to the extent, consistent with law, that may be provided by a general or specific action of its Board of Directors, or contract. 7. Insurance. The Corporation may purchase and maintain insurance on behalf of an individual who is or was a Director, officer, employee, or agent of the Corporation, or who, while a Director, officer, employee, or agent of the Corporation, is or was serving at the request of the Corporation as a Director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise, against liability asserted against or incurred by the individual in that capacity or arising from the individual's status as a Director, officer, employee, or agent, whether or not the Corporation would have power to indemnify the individual against the same liability under this Article. 8. Indemnification as a Witness. This Article does not limit a Corporation's power to pay or reimburse expenses incurred by a Director in connection with the Director's appearance 13 as a witness in a proceeding at a time when the director has not been made a named defendant or respondent to the proceeding. 9. Report to Shareholders. If the Corporation indemnifies or advances expenses to a Director pursuant to this Article in connection with a proceeding by or in the right of the Corporation, the Corporation shall report the indemnification or advance in writing to the shareholders with or before the notice of the next shareholders' meeting. 10. Shareholder Authorized Indemnification. (a) If authorized by a resolution adopted or ratified, before or after the event, by the shareholders of the Corporation, the Corporation shall have the power to indemnify or agree to indemnify a Director made a party to a proceeding, or obligate itself to advance or reimburse expenses incurred in a proceeding, without regard to the limitations contained in this Article (other than this Section 10); provided that no such indemnity shall indemnify any Director from or on account of: (i) Acts or omissions of the Director finally adjudged to be intentional misconduct or a knowing violation of law; (ii) Conduct of the Director finally adjudged to be an unlawful distribution under RCW 23B.08.310; or (iii) Any transaction with respect to which it was finally adjudged that such Director personally received a benefit in money, property or services to which the Director was not legally entitled. (b) Unless a resolution adopted or ratified by the shareholders of the Corporation provides otherwise, any determination as to any indemnity or advance of expenses under subsection (a) of this Section 10 shall be made in accordance with Section 5 of this Article. 11. Amendment; Notice. All Directors and officers of the Corporation shall be given at least thirty (30) days advance written notice of any action contemplated by the Board of Directors of the Corporation to amend or repeal any of the provisions of this Article, and no amendments or modifications to the provisions of this Article shall be effective unless and until such notice is given. All notices shall be given in writing and shall be deemed effective at the earliest of the following: (i) when received, (ii) five days after its deposit in the United States mail, if mailed with first-class postage, prepaid and correctly addressed; or (iii) on the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee. Any amendment to or repeal of this Article shall not adversely affect any right or protection of a Director, officer, employee or agent of the Corporation for or with respect to any acts or omissions of such persons occurring prior to such amendment or repeal. 14 12. Validity of Indemnification. A provision addressing the Corporation's indemnification of or advance for expenses to Directors that is contained in these bylaws, a resolution of its shareholders or Board of Directors, or in a contract or otherwise, is valid only if and to the extent the provision is consistent with RCW 238.08.500 through 238.08.580. ARTICLE 11 AMENDMENT OF BYLAWS Section 1: Shareholder Amendment. These Bylaws may be amended by the shareholders of the Corporation at any annual meeting, or at any special meeting properly called for that purpose at which a quorum is present, by the affirmative vote of a majority of the outstanding shareholders actually present and represented in person or by proxy. Section 2: Board Amendment. These Bylaws may be amended by the Board of Directors at any annual meeting or at any special meeting properly called for that purpose, at which a quorum is present, by the affirmative vote of a majority of the Directors present; subject to the power of the shareholders to change or repeal such Bylaws. The Board of Directors shall not make or alter any Bylaws fixing their qualifications, classification, term of office or compensation. ADOPTED by the Board of Directors this 19 day of October, 1995. /s/ Richard Garneau ---------------------------------------- Richard Garneau, Secretary Attest: /s/ Placide Poulin - -------------------------------------- Placide Poulin, President 15 EX-3.19 22 y99327exv3w19.txt CHARTER OF MAAX-KSD CORPORATION EXHIBIT 3.19 Microfilm Number_________ Filed with the Department of State on March 6, 1998 Entity Number 2804136 /s/_____________________________________ Secretary of the Commonwealth ARTICLES OF INCORPORATION - FOR PROFIT OF Maax-KSD Corporation Name of Corporation A TYPE OF CORPORATION INDICATED BELOW Indicate type of domestic corporation: [X] Business-stock (15 Pa.C.S. Section 1306) [ ] Management (15 Pa.C.S. Section 2702) [ ] Business-nonstock (15 Pa.C.S. Section 2102) [ ] Professional (15 Pa.C.S. Section 2903) [ ] Business-statutory close (15 Pa.C.S. [ ] Insurance (15 Pa.C.S. Section 3101) Section 2303)
[ ] Cooperative (15 Pa.C.S. Section 7102) DSCB: 15-1306/2102/2303/2702/2903/3101/7102A (Rev. 91) In compliance with the requirements of the applicable provisions of 15 Pa.C.S. (relating to corporations and unincorporated associations) the undersigned, desiring to incorporate a corporation for profit hereby, state(s) that: 1. The name of the corporation is Maax-KSD Corporation 2. The (a) address of this corporation's initial registered office in this Commonwealth or (b) name of its commercial registered office provider and the county of that venue is: (a) Second Street Pike and Keystone Road Southampton PA 18966 Bucks County ------------------------------------ ----------- ----- ----- ------------ Number and Street City State Zip County (b) c/o: N/A N/A --------------------------------------------- ------ Name of Commercial Registered Office Provider County For a corporation represented by a commercial registered office provider, the county in (b) shall be deemed the county in which the corporation is located for venue and official publication purposes. 3. The corporation is incorporated under the provisions of the Business Corporation Law of 1988. 4. The aggregate number of shares authorized is 1,000 ($1.00 par/share) (other provisions, if any, attach 8 1/2 x 11 sheet). 5. The name and address, including number and street, if any, of each incorporator is: Name Address Cynthia L. Woolhester 600 Grant Street, 42nd Floor Pittsburgh, PA 15219 6. The specified effective date, if any, is: ________________________________ month day year hour, if any 7. Additional provisions of the articles, if any, attach an 8 1/2 x 11 sheet. 8. Statutory close corporation only: Neither the corporation nor any shareholder shall make an offering of any of its shares of any class that would constitute a "public offering" within the meaning of the Securities Act of 1933 (15 U.S.C. Section 77a et seq.). 9. Cooperative corporations only: (Complete and strike out inapplicable term) The common bond of membership among its members/shareholders is: . -------- IN TESTIMONY WHEREOF, the incorporator(s) has (have) signed these Articles of Incorporation this 6th day of March, 1998. /s/ Cynthia L. Woolheater - ------------------------------------- -------------------------- (Signature) (Signature) EX-3.20 23 y99327exv3w20.txt BYLAWS OF MAAX-KSD CORPORATION Exhibit 3.20 BYLAWS OF Maax-KSD Corporation ADOPTED ON __________________________ Last Amended (If Applicable): ___________________ TABLE of CONTENTS OF Maax-KSD Corporation
Page ---- ARTICLE I General...................................................................... 1 Section 1.1. Name............................................................... 1 Section 1.2. Office............................................................. 1 Section 1.3. Seal............................................................... 1 Section 1.4. Fiscal Year........................................................ 1 ARTICLE II Shareholders................................................................ 1 Section 2.1. Place of Meetings.................................................. 1 Section 2.2. Annual Meeting..................................................... 1 Section 2.3. Special Meetings................................................... 2 Section 34.4. Notice of Meetings................................................. 2 Section 34.5. Waiver of Notice................................................... 2 Section 2.6. Quorum............................................................. 3 Section 2.7. Adjournments of Meetings........................................... 3 Section 2.8. Notice of Adjourned Meetings....................................... 3 Section 2.9. Informal Action by the Shareholders................................ 3 Section 2.10. Telephonic Meetings................................................ 4 Section 2.11. Voting Power....................................................... 4 Section 2.12. Presiding Officer.................................................. 4 Section 2.13. Proxies ........................................................... 4 Section 2.14. Reports to Shareholders............................................ 5 ARTICLE III Directors.................................................................. 5 Section 3.1. Number and Qualification........................................... 5 Section 3.2. Election and Term of Directors..................................... 5 Section 3.3. Vacancies.......................................................... 5 Section 3.4. Alternate Directors................................................ 6 Section 3.5. Director's Duties and Obligations.................................. 6 Section 3.6. Notation of Dissent................................................ 7 Section 3.7. Compensation of Directors.......................................... 7 Section 3.8. Regular Meetings................................................... 7 Section 3.9. Special Meetings................................................... 7 Section 3.10. Notice of Meetings................................................. 7 Section 3.11. Place of Meeting of Directors...................................... 8 Section 3.12. Committees of Directors............................................ 8 Section 3.13. Informal Action by the Directors or Any Committee Thereof.......... 9
Exhibit "1"
Page ---- Section 3.14. Telephonic Meetings................................................ 9 Section 3.15. Quorum and Voting Requirements at Meetings of Directors............ 9 Section 3.16. Presiding Officer.................................................. 9 Section 3.17. Interested Director or Officer Contracts........................... 9 Section 3.18. Limitation of Personal Liability of Directors...................... 10 ARTICLE IV Officers.................................................................... 10 Section 4.1. Number and Election................................................ 10 Section 4.2. Qualifications..................................................... 10 Section 4.3. Term of Office..................................................... 11 Section 4.4. President.......................................................... 11 Section 4.5. Vice Presidents.................................................... 11 Section 4.6. Secretary and Assistant Secretary.................................. 11 Section 4.7. Treasurer and Assistant Treasurer.................................. 11 Section 4.8. Standard of Care................................................... 12 ARTICLE V Execution of Documents....................................................... 12 Section 5.1. Checks, Notes, etc................................................. 12 Section 5.2. Other Documents.................................................... 12 ARTICLE VI Share Certificates and Transfers............................................ 12 Section 6.1. Share Certificates................................................. 12 Section 6.2. Loss or Destruction of Share Certificate........................... 13 Section 6.3. Transfers of Stock; Transfer Agent................................. 13 Section 6.4. Registered Shareholders............................................ 13 ARTICLE VII Indemnification of Directors, Officers and Employees....................... 13 Section 7.1. Right to Indemnification........................................... 13 Section 7.2. Right to Advancement of Expenses................................... 14 Section 7.3. Right of Indemnitee to Initiate Action............................. 14 Section 7.4. Insurance and Funding.............................................. 15 Section 7.5. Nonexclusivity; Nature and Extent of Rights........................ 15 ARTICLE VIII Amendments................................................................ 15 Section 8.1. Amendments to By-laws.............................................. 15
ii BY-LAWS OF Maax-KSD Corporation ARTICLE I General Section 1.1. Name. The name of the Corporation shall be Maax-KSD Corporation. Section 1.2. Office. The principal office of the Corporation shall be at such place or places as the Board of Directors may from time to time determine. Section 1.3. Seal. The Corporation may have a seal which shall be circular in form and shall bear such inscription as the Board of Directors from time to time may determine. Section 1.4. Fiscal Year. The fiscal year of the Corporation shall be the period ending on February 28th (or on February 29th in any leap year, or such other fiscal year as shall be fixed by resolution of the Board of Directors. ARTICLE II Shareholders Section 2.1. Place of Meetings. Each meeting of the shareholders shall be held at the principal office of the Corporation or at such other place, within or without the Commonwealth of Pennsylvania, as shall be designated by resolution of the Board of Directors. Section 2.2. Annual Meeting. The annual meeting of the shareholders shall be held on the third Monday in January of each year at the registered office of the Corporation, or at such other time and/or place as the Board of Directors shall, from time to time, determine by resolution. At each such annual meeting, the shareholders shall elect the Corporation's Board of Directors and shall transact such other business as shall properly be presented at the meeting. Appendix "A" Section 2.3. Special Meetings. Special meetings of the shareholders may be called at any time by the President, any Vice President, the Board of Directors or, unless provided to the contrary in the Corporation's Articles of Incorporation, shareholders entitled to cast at least 20% of the votes that all shareholders are entitled to cast at the particular meeting. At any time, upon written request of any person who has called a special meeting, it shall be the duty of the Secretary to fix the time of the meeting which shall be held not more than 60 days after the receipt of the request. Section 2.4. Notice of Meetings. Written notice of every meeting of the shareholders shall be given by, or at the direction of, the Secretary or other person as may be designated from time to time by the Board of Directors, to each shareholder of record entitled to vote at the meeting at least five days prior to the day named for the meeting or such other prior notice as may be required to be given under Section 1704 of the Pennsylvania Business Corporation Law of 1988 (the "BCL"). Such notice shall be given either personally or by sending a copy thereof by first class or express mail, postage prepaid, or by telegram (with messenger service specified), telex or TWX (with answerback received) or courier service, charges prepaid, or by telecopier, to the shareholder's address (or to his telex, TWX, telecopier or telephone number) appearing on the books of the Corporation. If the notice is sent by mail, telegraph or courier service, it shall be deemed to have been given to the person entitled thereto when deposited in the United States mail or with a telegraph office or courier service for delivery to that person or, in the case of a telex or TWX, when dispatched. Such notice shall specify the place, day and hour of the meeting and, in the case of a special meeting of shareholders, the general nature of the business to be transacted. If the Secretary or other person as may be designated from time to time by the Board of Directors neglects or refuses to give notice of a meeting, the person or persons calling the meeting may do so. Section 2.5. Waiver of Notice. Whenever any written notice is required to be given to shareholders by law or pursuant to these By-laws or the Corporation's Articles of Incorporation, a waiver thereof in writing signed by the shareholder or shareholders entitled to the notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of the notice. Except in the case of a special meeting, neither the business to be transacted at, nor the purpose of, a meeting need be specified in the waiver of notice of the meeting. In the case of a special meeting of shareholders, the waiver of notice shall specify the general nature of the business to be transacted. Attendance of a shareholder at any meeting shall constitute a waiver of notice of the meeting except where a shareholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting was not lawfully called or convened. 2 Section 2.6. Quorum. A meeting of shareholders duly called shall not be organized for the transaction of business unless a quorum is present. The presence of shareholders entitled to cast at least a majority of the votes that all shareholders are entitled to cast on a particular matter to be acted upon at the meeting shall constitute a quorum for the purposes of consideration and action on the matter. The shareholders present at a duly organized meeting can continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. If a meeting cannot be organized because a quorum has not attended, those present may, except as otherwise provided in this Article II, adjourn the meeting to such time and place as they may determine. Those shareholders entitled to vote who attend a meeting called for the election of directors that has been previously adjourned for lack of a quorum, although less than a quorum as fixed in this Section 6, shall nevertheless constitute a quorum for the purpose of electing directors. Those shareholders entitled to vote who attend a meeting of shareholders that has been previously adjourned for one or more periods aggregating at least 15 days because of an absence of a quorum, although less than a quorum as fixed in this Section 6, shall nevertheless constitute a quorum for the purpose of acting upon any matter set forth in the notice of the meeting if the notice states that those shareholders who attend the adjourned meeting shall nevertheless constitute a quorum for the purpose of acting upon the matter. Section 2.7. Adjournments of Meetings. Adjournments of any regular or special meeting of the shareholders may be taken, but any meeting at which directors are to be elected shall be adjourned only from day to day, or for such longer periods not exceeding 15 days each as the shareholders present and entitled to vote shall direct, until the directors have been elected. Section 2.8. Notice of Adjourned Meetings. When a meeting of shareholders is adjourned, it shall not be necessary to give any notice of the adjourned meeting or of the business to be transacted at an adjourned meeting, other than by announcement at the meeting at which the adjournment is taken, unless the Board of Directors fixes a new record date for the adjourned meeting. Section 2.9. Informal Action by the Shareholders. Any action required or permitted to be taken at a meeting of the shareholders or of a class of shareholders may be taken without a meeting upon the written consent of shareholders who would have been entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting. The consents shall be filed with the Secretary of the Corporation. If fewer than all shareholders consent, the action shall not become effective until after at least 10 days' written notice of the action has been given to each shareholder entitled to vote thereon who has not consented thereto. 3 Section 2.10. Telephonic Meetings. One or more shareholders may participate in a meeting of the shareholders by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this Section 10 shall constitute presence in person at the meeting. Section 2.11. Voting Power. Every shareholder of record shall be entitled to one vote for every share of the common stock of the Corporation standing in his name on the books of the Corporation. The majority of the votes cast at a duly organized meeting of shareholders by the holders of shares entitled to vote thereon shall be required for the taking of any corporate action to be taken by a vote of the shareholders. Section 2.12. Presiding Officer. All meetings of the shareholders shall be called to order and presided over by the President, or in his absence by the Chairman of the Board of Directors, or in his absence (of if no such Chairman has been elected by a Vice President, or in the absence of all of them by the Treasurer, or if none of such persons is present, by a chairman elected by the shareholders. Section 2.13. Proxies. Every shareholder entitled to vote at a meeting of shareholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person to act for him by proxy. The presence of, or vote or other action at a meeting of shareholders, or the expression of consent or dissent to corporate action in writing, by a proxy of a shareholder shall constitute the presence of, or vote or action by, or written consent or dissent of the shareholder for the purposes of these By-laws. Where two or more proxies of a shareholder are present, the Corporation shall, unless otherwise expressly provided in the proxy, accept as the vote of all shares represented thereby the vote cast by a majority of them and, if a majority of the proxies cannot agree whether the shares represented shall be voted or upon the manner of voting the shares, the voting of the shares shall be divided equally among those persons. Every proxy shall be executed in writing by the shareholder or by his duly authorized attorney-in-fact and filed with the Secretary of the Corporation. A proxy, unless coupled with an interest, shall be revocable at will, notwithstanding any other agreement or any provision in the proxy to the contrary, but the revocation of a proxy shall not be effective until written notice thereof has been given to the Secretary of the Corporation. An unrevoked proxy shall not be valid after three years from the date of its execution unless a longer time is expressly provided therein. A proxy shall not be revoked by the death or incapacity of the maker unless, before the vote is counted or the authority is exercised, written notice of the death or incapacity is given to the Secretary of the Corporation. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the share itself or an interest in the Corporation generally. As used in these By-laws, the term "proxy coupled with an interest" includes: 4 (1) a vote pooling or similar arrangement among shareholders; (2) any agreement among shareholders, or among or between the Corporation and one or more shareholders, regarding the voting of their shares; and (3) An unrevoked proxy in favor of an existing or potential creditor of a shareholder. Section 2.14. Reports to Shareholders. Unless otherwise agreed to between the Corporation and a shareholder pursuant to Section 1554(c) of the BCL, the Corporation shall furnish to each shareholder the annual financial statements described in Section 1554(a) of the BCL pursuant to and in the manner provided in said Section 1554. ARTICLE III Directors Section 3.1. Number and Qualification. All powers vested in the Corporation by the BCL shall be exercised by, or under the authority of, and the business and affairs of the Corporation shall be managed by, or under the direction of, a Board of Directors, who need not be residents of the Commonwealth of Pennsylvania or shareholders of the Corporation, but must be natural persons of 18 years of age or older. The Board of Directors shall consist of three (3) members, unless and until another number of members is selected from time to time in accordance with these By-laws and applicable provisions of the BCL. Section 3.2. Election and Term of Directors. The Board of Directors shall be elected by a vote of the shareholders at the annual meeting of the shareholders. A director may succeed himself without limitation as to number of terms. Section 3.3. Vacancies. Vacancies in the Board of Directors, including vacancies resulting from an increase in the number of directors, shall be filled by a majority of the remaining members of the Board though less than a quorum, or by a sole remaining director, and each person so elected shall be a director to serve for the balance of the unexpired term. When one or more directors resigns from the Board effective at a future date, the directors then in office, including those who have so resigned, shall have the power by the applicable vote to fill the vacancies and the vote thereon will take effect when said resignations become effective. In the event the Corporation has a classified Board of Directors, any director chosen to fill a vacancy, including a vacancy resulting in an increase in the number of directors, shall hold office until the next selection of the 5 class for which such director has been chosen, and until his successor has been selected and qualified or until his earlier death, resignation or removal. Section 3.4. Alternate Directors. Shareholders entitled to elect directors may select an alternate for each such director. In the absence of a director from a meeting of the Board, his alternate may, without any notice, attend the meeting or execute a written consent and exercise at the meeting or in such consent the powers of the absent director. When so exercising the powers of the absent director, the alternate shall be subject in all respects to the provisions contained in Section 1725 of the BCL. Section 3.5. Director's Duties and Obligations. (a) Standard of Care. A director of the Corporation shall stand in a fiduciary relation to the Corporation and shall perform his duties as a director, including his duties as a member of any committee of the Board upon which he may serve, in good faith, in a manner he reasonably believes to be in the best interests of the Corporation, and with such care, including reasonable inquiry, skill and diligence, as a person of ordinary prudence would use under similar circumstances. In performing his duties, a director shall be entitled to rely in good faith on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by any of the following: (i) One or more officers or employees of the Corporation whom the director reasonably believes to be reliable and competent in the matters presented. (ii) Counsel, public accountants or other persons as to matters which the director reasonably believes to be within the professional or expert competence of such person. (iii) A committee of the Board upon which he does not serve, duly designated in accordance with law, as to matters within its designated authority, which committee the director reasonably believes to merit confidence. A director shall not be considered to be acting in good faith if he has knowledge concerning the matter in question that would cause his reliance to be unwarranted. (b) Consideration of Factors. In discharging the duties of their respective positions, the Board of Directors, committees of the Board and individual directors may, in considering the best interests of the Corporation, consider the effects of any action upon employees, upon suppliers and customers of the Corporation and upon communities in which offices or other establishments of the Corporation are located, and all other pertinent factors. The consideration of those factors shall not constitute a violation of the standard set forth in Subsection (a) above. 6 (c) Presumption. Absent breach of fiduciary duty, lack of good faith or self-dealing, actions taken as a director or any failure to take any action shall be presumed to be in the best interests of the Corporation. Section 3.6. Notation of Dissent. A director of the Corporation who is present at a meeting of the Board of Directors or of a committee of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent is entered in the minutes of the meeting or unless the director files his written dissent to the action with the secretary of the meeting before the adjournment thereof or transmits such dissent in writing to the Secretary of the Corporation immediately after the adjournment of the meeting. The right to dissent shall not be available to a director who has voted in favor of such action. Section 3.7. Compensation of Directors. Directors shall not receive any stated salary for their services as such; but each director may be paid a fixed sum, together with reimbursement for all or some of the expenses incurred, for attendance at each regular or special meeting of the Board of Directors, in such amounts, if any, as may be approved, from time to time, by resolution of the Board of Directors. Nothing herein contained shall be construed to preclude any directors from serving the Corporation in any other capacity and receiving compensation therefor. Section 3.8. Regular Meetings. A meeting of the Board of Directors for the election of officers and the transaction of such other business as may properly come before the meeting shall be held, without notice, immediately after the annual meeting of the shareholders, or after the last adjournment thereof. The Board of Directors shall hold such other regular meetings at such times and places as it may determine. Section 3.9. Special Meetings. The Board of Directors shall hold such special meetings as shall be called at the direction of the President, any Vice President, the Secretary, or a majority of the members of the Board of Directors. Each such meeting shall be held at such time and place as shall be designated in the notice of such meeting. Section 3.10. Notice of Meetings. Meetings of the Board of Directors need not be preceded with notice of such meetings, and neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors must be specified in any notice of the meeting. Written notice of meetings of the Board of Directors, if any, may be given by, or at the direction of, the person or persons calling such meeting either personally or by sending a copy thereof by first class or express mail, postage prepaid, or by telegram (with messenger service specified), telex or TWX (with answer back received) or courier service, charges prepaid, or by telecopier to each director's address (or to his telex, TWX, telecopier or telephone number) supplied by him to the 7 Corporation for the purpose of notice. If the notice is sent by mail, telegraph or courier service, it shall be deemed to have been given to the director when deposited in the United States mail or with a telegraph office or courier service for delivery to that person or, in the case of telex or TWX, when dispatched. Section 3.11. Place of Meeting of Directors. Each regular and special meeting of directors shall be held at the registered office of the Corporation or at such other place, within or without the Commonwealth of Pennsylvania, as the Board of Directors may from time to time designate or as may be designated in the notice of the meeting. Section 3.12. Committees of Directors. The Board of Directors may, by resolution adopted by a majority of the directors in office, establish one or more committees to consist of one or more directors of the Corporation. Any committee, to the extent provided in the resolution of the Board of Directors or in these By-laws, shall have and may exercise all of the powers and authority of the Board of Directors, except that a committee shall not have any power or authority as to the following: (i) The submission to shareholders of any action requiring approval of shareholders under these By-laws. (ii) The creation or filling of vacancies in the Board of Directors. (iii) The adoption, amendment or repeal of these By-laws. (iv) The amendment or repeal of any resolution of the Board that by its terms is amendable or repealable only by the Board. (v) Action on matters committed by these By-laws or resolution of the Board of Directors to another committee of the Board. The Board may designate one or more directors as alternate members of any committee who may replace any absent or disqualified member at any meeting of the committee or for the purposes of any written action by the committee. In the absence or disqualification of a member and alternate member or members of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another director to act at the meeting in the place of the absent or disqualified member. Each committee of the Board shall serve at the pleasure of the Board. The term "Board of Directors" or "Board," when used in any provision of these By-laws relating to the organization or procedures of or the manner of taking action by the Board 8 of Directors, shall be construed to include and refer to any executive or other committee of the Board. Any provision of these By-laws relating or referring to action to be taken by the Board of Directors or the procedure required therefor shall be satisfied by the taking of corresponding action by a committee of the Board of Directors to the extent authority to take the action has been delegated to the committee pursuant to these By-laws. Section 3.13. Informal Action by the Directors or Any Committee Thereof. Any action required or permitted to be taken at a meeting of the directors may be taken without a meeting if, prior or subsequent to the action, a consent or consents thereto by all of the directors in office is filed with the Secretary of the Corporation. Section 3.14. Telephonic Meetings. One or more directors may participate in a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this Section 14 shall constitute presence in person at the meeting. Section 3.15. Quorum and Voting Requirements at Meetings of Directors. A majority of the directors in office shall be necessary to constitute a quorum for the transaction of business, and the acts of a majority of the directors present and voting at a meeting at which a quorum is present shall be the acts of the Board of Directors. Section 3.16. Presiding Officer. All meetings of the Board of Directors shall be called to order and presided over by the Chairman, who shall be a member of and elected by the Board of Directors or, in his absence (or if no such Chairman has been elected), a member of the Board of Directors to be selected to preside by the members present. The Secretary of the Corporation shall act as secretary at all meetings of the Board of Directors, and in the absence of the Secretary, the Chairman of the meeting may designate any person to act as secretary of the meeting. Section 3.17. Interested Director or Officer Contracts. A contract or transaction between the Corporation and any one or more of its directors or officers or between the Corporation and another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise in which one or more of the Corporation's directors or officers are directors or officers or have a financial or other interest, shall not be void or voidable solely because (a) of such reason or interest, (b) the director or officer is present at or participates in the meeting of the Board of Directors that authorizes the contract or transaction, or (c) the vote of such director or officer is counted in authorizing the contract or transaction; provided, however, that with respect to each of the foregoing, one or more of the following three conditions are satisfied: (i) The material facts as to the relationship or interest and as to the contract or transaction are disclosed or are known to 9 the Board of Directors and the Board authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors even though the disinterested directors are less than a quorum; or (ii) The material facts as to the relationship or interest and as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon and the contract or transaction is specifically approved in good faith by vote of those shareholders; or (iii) The contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors or the shareholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board which authorizes a contract or transaction as specified above. Section 3.18. Limitation of Personal Liability of Directors. To the fullest extent that the laws of the Commonwealth of Pennsylvania, as in effect on the date of the adoption of this Section 18, or as such laws are thereafter amended, permit elimination or limitation of the liability of directors, no director of the Corporation shall be personally liable as such for monetary damages for any action taken, or any failure to take any action, as a director. Any amendment or repeal of this Section 18 or adoption of any other provision of these By-laws or the Corporation's Articles of Incorporation which has the effect of increasing director liability shall operate prospectively only and shall not have any effect with respect to any action taken, or failure to act, prior to the adoption of such amendment, repeal or other provision. ARTICLE IV Officers Section 4.1. Number and Election. The Board of Directors at its annual meeting shall elect a President, one or more Vice Presidents, a Secretary, and/or an Assistant Secretary, a Treasurer and/or an Assistant Treasurer, and may elect a Chairman and such other officers and assistant officers and appoint such agents as the Board may deem appropriate. Section 4.2. Qualifications. The officers and assistant officers may, but need not, be directors of the Corporation. All officers of the Corporation, as between themselves and the Corporation, shall have such authority and perform such duties in the management of the Corporation as may be determined by or pursuant to these By-laws and any resolutions or orders of the Board of 10 Directors. The President, each Vice President and the Secretary of the Corporation shall be natural persons 18 years of age or older. The Treasurer of the Corporation may be a corporation or a natural person 18 years of age or older. Section 4.3. Term of Office. All officers of the Corporation shall be elected for annual terms and until his successor has been selected and qualified, or until his earlier death, resignation or removal. Any officer of the Corporation may be removed by the Board of Directors with or without cause, and such removal shall be without prejudice to the contract rights, if any, of any person so removed. Election or appointment of an officer shall not of itself create contract rights. Section 4.4. President. The President shall serve ex-officio as Chairman of the Board of Directors and as presiding officer at all meetings of the Board of Directors and of the shareholders, unless some other person shall have been designated to serve in those capacities by the Board of Directors or by the shareholders. The President shall have the authority and duty generally to supervise and manage the affairs of the Corporation, and shall have the authority and duty to perform all other duties ordinarily incidental to that office, all in accordance with and subject to the policies and decisions of the Board of Directors. Section 4.5. Vice Presidents. Each Vice President shall have such powers and perform such duties as the President may from time to time delegate to him. At the request of the President, any Vice President may, in the case of the absence or inability to act of the President, temporarily act in his place. In the case of the death of the President, or in the case of his absence or inability to act without having designated a Vice President to act temporarily in his place, the Vice President longest in service as Vice President shall perform the duties of the President except as shall be otherwise designated by the Board of Directors. A Vice President who is not a director shall not preside at any meeting of the Board of Directors. Section 4.6. Secretary and Assistant Secretary. The Secretary shall attend the meetings of the shareholders and of the directors and keep minutes thereof. Unless some other person is delegated to give such notice, the Secretary shall send out notices of all meetings of shareholders and of directors. The Assistant Secretary shall perform the functions of the Secretary in the event of the absence or disability of the Secretary. The Secretary and the Assistant Secretary shall perform such other duties as may be assigned to them by the President or the Board of Directors. Section 4.7. Treasurer and Assistant Treasurer. The Treasurer shall have the care and custody of all the funds and securities of the Corporation, and shall deposit the same in the name of the Corporation in such bank or banks as the directors may elect. The Treasurer shall perform such other duties as may be assigned to him 11 by the President or the Board of Directors; and he shall give such bonds, if any, for the faithful performance of his duties, as the Board of Directors may, from time to time, determine. Section 4.8. Standard of Care. Subject to any contrary provision contained in the Corporation's Articles of Incorporation, an officer of the Corporation shall perform his duties as an officer in good faith, in a manner he reasonably believes to be in the best interests of the Corporation and with such care, including reasonable inquiry, skill and diligence, as a person of ordinary prudence would use under similar circumstances. A person who so performs his duties shall not be liable by reason of having been an officer of the Corporation. ARTICLE V Execution of Documents Section 5.1. Checks, Notes, etc. The Board of Directors shall from time to time designate the officers or agents of the Corporation who shall have the power, in its name, to sign and endorse checks and other instruments and to borrow money for the Corporation, and in its name, to make notes or other evidences of indebtedness. Section 5.2. Other Documents. Any note, mortgage, evidence of indebtedness, contract or other document, or any assignment or endorsement thereof, executed and entered into between the Corporation and any other person, when signed by one or more officers or agents having actual or apparent authority to sign it, or by the President or Vice President and Secretary or Assistant Secretary or Treasurer or Assistant Treasurer of the Corporation, shall be held to have been properly executed for and on behalf of the Corporation. ARTICLE VI Share Certificates and Transfers Section 6.1. Share Certificates. Shares of the Corporation's stock shall be represented by certificates. Each of the Corporation's share certificates shall state that the Corporation is incorporated under the laws of the Commonwealth of Pennsylvania, the name of the person to whom it is issued, the number and class of shares and the designation of the series, if any, that the certificate represents. In the event the Corporation is authorized to issue shares of more than one class or series, the Corporation's share certificates shall set forth upon their face or back a full or summary statement of designations, voting rights, preferences, limitations and special rights of the shares of each class or series authorized to be issued so far as they have been fixed and determined, and the authority of the Board of Directors to fix and determine the designations, voting rights, 12 preferences, limitations and special rights of the classes and series of the shares of the Corporation; or, in lieu thereof, a statement that the Corporation will furnish such information to any shareholder upon request and without charge. Every share certificate shall be executed, by facsimile or otherwise, by or on behalf of the Corporation in such manner as the Board of Directors may determine. Section 6.2. Loss or Destruction of Share Certificate. In case of loss or destruction of a certificate of stock, no new certificate shall be issued in lieu thereof except upon satisfactory proof to the Board of Directors or their delegate of such loss or destruction, and upon the giving to the Corporation of satisfactory security against loss by bond or otherwise. Any such new certificate shall be plainly marked "Duplicate" upon its face. Section 6.3. Transfers of Stock; Transfer Agent. Transfers of stock shall be made only upon the books of the Corporation and only upon surrender of the share certificate, unless such certificate is lost or destroyed. The Board of Directors may appoint a transfer agent and a registrar of transfers, and may require all stock certificates to bear the signature of such transfer agent and of such registrar of transfers. Section 6.4. Registered Shareholders. The Corporation shall be entitled to treat the holder of record of any share or shares as holder in fact thereof and it shall not be bound to recognize any equitable or other interest or claim in or to any share on the part of any other person; and the Corporation shall not be liable for any registration or transfer of shares which are registered or to be registered in the name of a fiduciary or nominee, and will not be committing a breach of trust in requesting such registration or transfer, unless with actual knowledge of such facts as to cause the participation of the Corporation in such transfer to constitute an act of bad faith. ARTICLE VII Indemnification of Directors, Officers and Employees Section 7.1. Right to Indemnification. Except as prohibited by law, every director and officer of the Corporation shall be entitled as of right to be indemnified by the Corporation against all expenses, liability and loss (including without limitation, attorney's fees, judgments, fines, taxes, penalties and amounts paid in settlement) paid or incurred by such person in connection with any actual or threatened claim, action, suit or proceeding, civil, criminal, administrative, investigative or other, whether brought by or in the right of the Corporation or otherwise, in which he may be involved, as a party or otherwise, by reason of such person being or having been a director or officer of the Corporation or by reason of the fact such person is or was serving at the request of the Corporation as a director, officer, employee, fiduciary or other representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust, employee benefit plan or 13 other entity or enterprise (such claim, action, suit or proceeding hereinafter being referred to as an "Action"); provided, that no such right of indemnification shall exist with respect to an Action brought by an Indemnitee (as hereinafter defined) against the Corporation except as provided in the last sentence of this Section 1. Persons who are not directors or officers of the Corporation may be similarly indemnified in respect of service to the Corporation or to another such entity at the request of the Corporation to the extent the Board of Directors at any time denominates any of such persons as entitled to the benefits of this Article VII. As used in this Article VII, "Indemnitee" shall include each director and officer of the Corporation and each other person denominated by the Board of Directors as entitled to the benefits of this Article VII. An Indemnitee shall be entitled to be indemnified pursuant to this Section 1 for expenses incurred in connection with any Action brought by such Indemnitee against the Corporation only if the Action is a claim for indemnity or expenses under Section 3 of this Article VII or otherwise and either (i) the Indemnitee is successful in whole or in part in the Action for which expenses are claimed or (ii) the indemnification for expenses is included in a settlement of the Action or is awarded by a court. Section 7.2. Right to Advancement of Expenses. Every Indemnitee shall be entitled as of right to have his expenses in any Action (other than an Action brought by such Indemnitee against the Corporation) paid in advance by the Corporation prior to final disposition of such Action, subject to any obligation which may be imposed by law or by provision of the Corporation's Articles of Incorporation, these By-laws, an agreement or otherwise to reimburse the Corporation in certain events. Section 7.3. Right of Indemnitee to Initiate Action. If a written claim under Section 1 or Section 2 of this Article VII is not paid in full by the Corporation within thirty days after such claim has been received by the Corporation, the Indemnitee may at any time thereafter initiate an Action against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the Indemnitee shall also be entitled to be paid the expenses of prosecuting such Action. It shall be a defense to any Action to recover a claim under Section 1 of this Article VII that the Indemnitee's conduct was such that under Pennsylvania law the Corporation is prohibited from indemnifying the Indemnitee for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel and its shareholders) to have made a determination prior to the commencement of such Action that indemnification of the Indemnitee is proper in the circumstances, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel or its shareholders) that the Indemnitee's conduct was such that indemnification is prohibited by law, shall be a defense to such Action or create a presumption that the Indemnitee's conduct was such that indemnification is prohibited by law. The only defense to any such Action to receive payment of expenses in advance under Section 2 of this Article VII shall be failure to make an undertaking to reimburse if such an undertaking is required by law or by provision of the Corporation's Articles of Incorporation, these By-laws, an agreement or otherwise. 14 Section 7.4. Insurance and Funding. The Corporation may purchase and maintain insurance to protect itself and any person eligible to be indemnified hereunder against any expense, liability or loss asserted or incurred by such person in connection with any Action, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss by law or under the provisions of this Article VII. The Corporation may create a trust fund, grant a security interest, cause a letter of credit to be issued or use other means (whether or not similar to the foregoing) to ensure the payment of such sums as may become necessary to effect indemnification as provided herein. Section 7.5. Nonexclusivity; Nature and Extent of Rights. The rights of indemnification and advancement of expenses provided for in this Article VII (i) shall not be deemed exclusive of any other rights, whether now existing or hereafter created, to which any Indemnitee may be entitled under the Corporation's Articles of Incorporation or these By-laws, any agreement, any vote of shareholders or directors or otherwise, (ii) shall be deemed to create contractual rights in favor of each Indemnitee, (iii) shall continue as to each person who has ceased to have the status pursuant to which he was entitled or was denominated as entitled to indemnification hereunder and shall inure to the benefit of the heirs and legal representatives of each Indemnitee and (iv) shall be applicable to Actions commenced after the adoption hereof, whether arising from acts or omissions occurring before or after the adoption hereof. The rights of indemnification provided in this Article VII may not be amended or repealed so as to limit in any way the indemnification or the right to advancement of expenses provided for herein with respect to any acts or omissions occurring prior to the adoption of any such amendment or repeal. ARTICLE VIII Amendments Section 8.1. Amendments to By-laws. Except with respect to those matters that are by statute reserved exclusively to the shareholder by statute, and subject to any provision contained in the Corporation's Articles of Incorporation, the Board of Directors may adopt, amend or repeal these By-laws by a vote of a majority of all votes cast on the adoption, amendment or repeal at any regular or special meeting duly convened for that purpose; subject, however, to the power of the shareholders by a vote of a majority of all votes cast to change or repeal these By-laws at any annual or special meeting duly convened for such purpose. Any meeting of shareholders for the purpose of changing or repealing these By-laws shall be preceded by the giving of written notice to each shareholder stating that the purpose or one of the purposes of the meeting is to consider the adoption, amendment or repeal of these By-laws, and such notice shall contain or include a copy of the proposed amendment or a summary of the changes to be effected thereby. Any change in these By-laws shall take effect when adopted unless otherwise provided in the resolution effecting the change. 15 EX-3.21 24 y99327exv3w21.txt CHARTER OF MAAX LLC. EXHIBIT 3.21 CERTIFICATE OF FORMATION OF MAAX LLC This Certificate of Formation of Maax LLC (the "LLC"), dated as of August 18, 2003, has been duly executed and is being filed by the undersigned, as an authorized person, to form a limited liability company under the Delaware Limited Liability Company Act (6 Del.C. Section 18-101, et seq.). FIRST. The name of the limited liability company formed hereby is Maax LLC. SECOND. The address of the registered office of the LLC in the State of Delaware is c/o RL&F Service Corp., One Rodney Square, 10th Floor, Tenth and King Streets, Wilmington, New Castle County, Delaware 19801. THIRD. The name and address of the registered agent for service of process on the LLC in the State of Delaware are RL&F Service Corp., One Rodney Square, 10th Floor, Tenth and King Streets, Wilmington, New Castle County, Delaware 19801. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation as of the date first above written. /s/ James L. Winters -------------------------- Name: James L. Winters Authorized Person EX-3.22 25 y99327exv3w22.txt LIMITED LIABILITY COMPANY AGREEMENT OF MAAX LLC. EXHIBIT 3.22 LIMITED LIABILITY COMPANY AGREEMENT OF MAAX LLC This Limited Liability Company Agreement of Maax LLC (the "Company") is made as of August 19, 2003 at 9:49 a.m. EDT, by Maax Canada Inc., a corporation organized under the laws of Canada, as the sole initial member of the Company (the "Initial Member"). WHEREAS, the Initial Member (i) desires to form a limited liability company pursuant to the Delaware Limited Liability Company Act, 6 Del. C. Section 18-101, et seq., as amended from time to time (the "Delaware Act"), by filing a Certificate of Formation of the Company with the office of the Secretary of State of the State of Delaware and (ii) agrees as follows: ARTICLE I DEFINED TERMS Section 1.1 Definitions. Unless the context otherwise requires, the terms defined in this Article I shall, for the purposes of this Agreement, have the meanings herein specified. "Additional Members" has the meaning set forth in Section 11.1 hereof. "Affiliate" means with respect to a specified Person, any Person that directly or indirectly controls, is controlled by, or is under common control with, the specified Person. As used in this definition, the term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. "Agreement" means this Limited Liability Company Agreement of the Company, together with the schedules and exhibits hereto, as amended, modified, supplemented or restated from time to time. "Board" means the committee of managers of the Company established pursuant to Section 6.1 hereof. "Capital Contribution" means, with respect to any Member, the aggregate amount of money and the fair market value of any property (other than money) contributed to the Company by such Member pursuant to Section 4.1 hereof. "Certificate" means the Certificate of Formation of the Company and any and all amendments thereto and restatements thereof filed on behalf of the Company with the office of the Secretary of State of the State of Delaware pursuant to the Delaware Act. "Company" means Maax LLC, the limited liability company formed and continued under and pursuant to the Delaware Act and this Agreement. "Covered Person" means a Member, a Director, an Officer, a Manager, any Affiliate of a Member, a Director, an Officer or a Manager, any officers, directors, shareholders, partners, employees, representatives or agents of a Member, a Director, an Officer or a Manager, or their respective Affiliates, or any employee or agent of the Company or its Affiliates. "Delaware Act" means the Delaware Limited Liability Company Act, 6 Del.C. ` 18-101, et seq., as amended from time to time. "Director" means a natural person designated as a director of the Company pursuant to Section 6.1 hereof "Fiscal Year" means (i) the period commencing upon the formation of the Company and ending on February 28, 2004, or (ii) any subsequent twelve (12) month period commencing on March 1 and ending on February 28 (or February 29, as the case may be). "Initial Member" means Maax Canada Inc. "Interest" means a Member's limited liability company interest in the Company. "Laws" means: (i) all constitutions, treaties, laws, statutes, codes, ordinances, orders, decrees, rules, regulations and municipal by-laws, whether domestic, foreign or international; (ii) all judgments, orders, writs, injunctions, decisions, rulings, decrees and awards of any governmental body; (iii) all policies, practices and guidelines of any governmental body; and (iv) any amendment, modification, re-enactment, restatement or extension of the foregoing, in each case binding on or affecting the party or Person referred to in the context in which such word is used; and "Law" shall mean any one of them. "Liquidation" shall have the meaning set forth in Section 13.3 hereof. "Liquidation Preference" shall have the meaning set forth in Section 5.6 hereof. "Majority Vote" means the written approval of, or the affirmative vote by, Members holding a majority of the Liquidation Preference of all the issued and outstanding PIShares. "Manager" means any Person designated by the Members as a "manager" (within the meaning of the Delaware Act) of the Company and shall include, without further designation, the Directors. 2 "Member" means each of Maax Canada Inc. and any Person admitted as an Additional Member or a Substitute Member pursuant to the provisions of this Agreement, in such Person's capacity as a member of the Company, and "Members" means two (2) or more of such Persons when acting in their capacities as members of the Company. "Officer" means a natural person designated as an officer of the Company. "Person" includes any individual, corporation, association, partnership (general or limited), joint venture, trust, estate, limited liability company, or other legal entity or organization. "PIShares" shall have the meaning set forth in Section 5.6(i) hereof. "RIShares" shall have the meaning set forth in Section 5.6(ii) hereof. "Secretary" means the Person appointed by the Board as the secretary of the Company, who shall perform the duties described in Section 7.4 of this Agreement. "Substitute Member" means a Person who is admitted to the Company as a Member pursuant to Section 12.1 hereof, and who is named as a Member on Schedule A to this Agreement. Section 1.2 Headings. The headings and subheadings in this Agreement are included for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof. ARTICLE II FORMATION AND TERM Section 2.1 Formation. (i) The Initial Member hereby forms the Company as a limited liability company under and pursuant to the provisions of the Delaware Act and agrees that the rights, duties and liabilities of the Members shall be as provided in the Delaware Act, except as otherwise provided herein. (ii) Upon the execution of this Agreement and payment to the Company of US $1,000 for one (1) PIShare and US $100 for one (1) RIShare, Maax Canada Inc. shall be admitted as a Member, owning one (1) PIShare and one (1) RIShare. (iii) The name and mailing address of each Member, the amount contributed to the capital of the Company, the number and type of Interest held by such Member, and the number of the share certificate representing such Interest shall be listed on Schedule A attached hereto. The Secretary shall be required to update Schedule A from time to time as necessary to accurately reflect the information therein. Any amendment or revision to Schedule A made in accordance with this Agreement shall not be deemed an 3 amendment to this Agreement. Any reference in this Agreement to Schedule A shall be deemed to be a reference to Schedule A as amended and in effect from time to time. (iv) James L. Winters, as an authorized person within the meaning of the Delaware Act, has executed, delivered and filed the Certificate with the Secretary of State of the State of Delaware. Upon the filing of the Certificate, his powers as an authorized person ceased, and the Secretary thereupon became the designated authorized person and shall continue as the designated authorized person within the meaning of the Delaware Act. Section 2.2 Name. The name of the Company formed hereby is Maax LLC. The business of the Company may be conducted upon compliance with all applicable Laws under any other name designated by the Board. Section 2.3 Term. The term of the Company commenced on the date the Certificate was filed in the office of the Secretary of State of the State of Delaware and shall continue until the Company is dissolved. The existence of the Company as a separate legal entity shall continue until cancellation of the Certificate in the manner required by the Delaware Act. Section 2.4 Registered Agent and Office. The Company's registered agent and office in the State of Delaware shall be RL&F Service Corp., One Rodney Square, Tenth and King Streets, 10th Floor, Wilmington, New Castle County, Delaware 19801. At any time, the Members may designate another registered agent and/or registered office in the State of Delaware. Section 2.5 Principal Place of Business. The principal place of business of the Company shall be at 2121 Walter Glaub Drive, Plymouth, Indiana, United States. At any time, the Board may change the location of the Company's principal place of business to another location in the United States. Section 2.6 Qualification in Other Jurisdictions. The Board shall cause the Company to be qualified, formed or registered under assumed or fictitious name statutes or similar Laws in any jurisdiction in which the Company transacts or intends to transact business. The Secretary, as an authorized person within the meaning of the Delaware Act, shall execute, deliver and file any certificates (and any amendments and/or restatements thereof) necessary for the Company to qualify to do business in a jurisdiction in which the Company may wish to conduct business. ARTICLE III PURPOSE AND POWERS OF THE COMPANY Section 3.1 Purpose. The Company is formed for the object and purpose of, and the nature of the business to be conducted and promoted by the Company is, engaging in any lawful act or activity for which limited liability companies may be formed under the Delaware Act and engaging in any and all activities necessary, convenient, desirable or incidental to the foregoing, including, without limitation, (i) to acquire, hold and dispose of investments, 4 including investments in Affiliates of the Company, (ii) to lend money to, borrow money from, act as surety, guarantor or endorser for, provide collateral for, and transact other business with third parties, including Members and Affiliates of the Company, and (iii) to acquire, hold, manage, operate and dispose of interests in real and personal property. Section 3.2 Powers of the Company. (i) The Company shall have the power and authority to take any and all actions necessary, appropriate, proper, advisable, incidental or convenient to or for the furtherance of the purpose set forth in Section 3.1, including, but not limited to, the power: (a) to conduct its business, carry on its operations and have and exercise the powers granted to a limited liability company by the Delaware Act in any state, territory, district or possession of the United States, or in any foreign country, that may be necessary, convenient or incidental to the accomplishment of the purpose of the Company; (b) to enter into, perform and carry out contracts of any kind, including, without limitation, contracts with the Directors, the Officers, any Manager, any Member, any Affiliate thereof, or any agent or Affiliate of the Company necessary to, in connection with, convenient to, or incidental to the accomplishment of the purpose of the Company; (c) to lend money to, borrow money from, act as surety, guarantor or endorser for, provide collateral for, and transact other business with third parties including Members and Affiliates of the Company; (d) to purchase, take, receive, subscribe for or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise dispose of, and otherwise use and deal in and with, shares or other interests in or obligations of domestic or foreign corporations, associations, general or limited partnerships (including, without limitation, the power to be admitted as a partner thereof and to exercise the rights and perform the duties created thereby), trusts, limited liability companies (including, without limitation, the power to be admitted as a member or appointed as a manager thereof and to exercise the rights and perform the duties created thereof), or individuals or direct or indirect obligations of the United States or of any government, state, territory, governmental district or municipality or of any instrumentality of any of them; (e) to lend money for its proper purpose, to invest and reinvest its funds, and to take and hold real and personal property for the payment of funds so loaned or invested; (f) to sue and be sued, complain and defend, and participate in administrative or other proceedings, in its name; 5 (g) to appoint employees and agents of the Company, and. define their duties and fix their compensation; (h) to indemnify any Person in accordance with the Delaware Act and to obtain any and all types of insurance; (i) to cease its activities and cancel its Certificate; (j) to negotiate, enter into, renegotiate, extend, renew, terminate, modify, amend, waive, execute, acknowledge or take any other action with respect to any lease, contract or security agreement in respect of any assets of the Company; (k) to borrow money and issue evidences of indebtedness, and to secure the same by a mortgage, pledge or other lien on the assets of the Company; (l) to pay, collect, compromise, litigate, arbitrate or otherwise adjust or settle any and all other claims or demands of or against the Company or to hold such proceeds against the payment of contingent liabilities; and (m) to make, execute, acknowledge and file any and all documents or instruments necessary, convenient or incidental to the accomplishment of the purpose of the Company. (ii) The Board may authorize any Person (including, without limitation, any Member, Manager or Officer) to enter into and perform any other document on behalf of the Company. (iii) The Company may merge with, or consolidate into, another Delaware limited liability company or other business entity (as defined in Section 18-209(a) of the Delaware Act) upon a Majority Vote. ARTICLE IV CAPITAL CONTRIBUTIONS, INTERESTS Section 4.1 Capital Contributions. (i) Each Member has contributed or is deemed to have contributed to the capital of the Company the amount set forth opposite the Member's name on Schedule A attached hereto. The agreed value of the Capital Contributions made or deemed to have been made by each Member shall be set forth on Schedule A. (ii) No Member shall be required to make any additional capital contribution to the Company. However, a Member may make additional capital contributions to the Company with the written consent of all of the Members. 6 Section 4.2 Member's Interest. A Member's Interest shall for all purposes be personal property. A Member has no interest in specific Company property. (i) No Member shall receive any interest, salary or drawing with respect to its Capital Contributions or for services rendered on behalf of the Company or otherwise in its capacity as a Member, except as otherwise specifically provided in this Agreement. (ii) Except as otherwise provided herein and by applicable law, the Members shall be liable only to make their Capital Contributions pursuant to Section 4.1 hereof, and no Member shall be required to lend any funds to the Company or, after a Member's Capital Contributions have been fully paid pursuant to Section 4.1 hereof, to make any additional capital contributions to the Company. No Member shall have any personal liability for the repayment of any Capital Contribution of any other Member. ARTICLE V MEMBERS Section 5.1 Powers of Members. The Members shall have the power to exercise any and all rights or powers granted to the Members pursuant to the express terms of this Agreement. The Members shall also have the power to authorize the Board, by Majority Vote, to possess and exercise any right or power not already vested in the Board pursuant to Article VI or any other provision of this Agreement. Except as provided herein, the Members shall have no power to bind the Company and shall have no power to manage the business or affairs of the Company. Section 5.2 Reimbursements. The Company shall reimburse the Members for all ordinary and necessary out-of-pocket expenses incurred by the Members on behalf of the Company. Such reimbursement shall not be deemed to constitute a distribution upon, or a return of capital of, the PIShares or RIShares. Section 5.3 Partition. Each Member waives any and all rights that it may have to maintain an action for partition of the Company's property. Section 5.4 Resignation. A Member may not resign from the Company prior to the dissolution and winding up of the Company. Section 5.5 Meetings of Members. (i) The annual meeting of the Members for the election of Directors and the transaction of other business shall be held, in each year, at such place either within or outside the State of Delaware but within the United States as shall be designated by the Board and stated in the notice of the meeting. Special meetings of Members for any purpose or purposes may be held at such time and place, within or outside the State of Delaware but within the United States, and shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. 7 (ii) At the annual meeting of the Members, holders of PIShares constituting a Majority Vote shall elect Directors and transact such other business as may properly be brought before the meeting, unless a different vote is expressly provided for by law or this Agreement. (iii) Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each Member entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. (iv) Special meetings of the Members, for any purpose or purposes, may be called by any Director. (v) Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called shall be given to each Member entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. (vi) Business transacted at any special meeting of Members shall be limited to the purposes stated in the notice, unless otherwise agreed to by all of the Members entitled to vote. (vii) Members holding a majority of the Liquidation Preference of all the PIShares issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the Members for the transaction of business except as otherwise provided by this Agreement. If, however, such quorum shall not be present or represented at any meeting of the Members, the Members entitled to vote thereat, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each Member of record entitled to vote at the meeting. (viii) When a quorum is present at any meeting, a Majority Vote shall decide any question brought before such meeting, unless the question is one upon which by law or express provision of this Agreement, a different vote is required in which case such express provision shall govern and control the decision of such question. (ix) Unless otherwise provided in this Agreement, each Member owning a PIShare shall at every meeting of the Members be entitled to vote in person or by proxy, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. (x) Members may exceptionally participate in a meeting of the Members by means of conference telephone, video-conference or similar communications equipment, provided all persons participating in the meeting can hear each other, and such 8 participation in a meeting shall constitute presence in person at the meeting. If all the participants are participating by conference telephone, video-conference or similar communications equipment, the meeting shall be deemed to be held at the principal place of business of the Company. (xi) Unless otherwise provided in this Agreement, any action required to be taken at any annual or special meeting of the Members or any action which may be taken at any annual or special meeting of such Members, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by Members having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all Members entitled to vote thereon were present and voted. Prompt notice of taking of the action without a meeting by less than unanimous consent shall be given to those Members who have not consented in writing. Section 5.6 Member Interests. The Company's limited liability company interests shall consist of the following two classes of limited liability company interests: (i) Preferred limited liability company interests ("PIShares"). Such PIShares shall have the following attributes: (a) Full and exclusive voting power on all matters to be voted upon by the Members. All matters subject to a vote shall be determined by a vote of the Majority Holders, unless another vote is required by law or expressly provided for in this Agreement. (b) Rights to any and all distributions declared or made prior to the Liquidation, such distributions to be made pro rata based upon the Liquidation Preference of the PIShares then outstanding. The "Liquidation Preference" with respect to a PIShare shall mean an amount equal to the amount contributed therefore, denominated in Canadian dollars. In the case of contributions in currency other than Canadian dollars, such amount shall be based upon the spot currency exchange rate at the time of contribution as determined by the Company, and in the case of contributions of assets other than currency, shall be the value thereof as determined by the Company. The Liquidation Preference of a PIShare maybe reduced from time to time at the sole discretion of the Board in an amount equal to a distribution made to the holder of such PIShare that is designated by the Board as a reduction of the Liquidation Preference. In the case of such distribution or reduction in currency other than Canadian dollars, the amount of such reduction shall be based on the spot currency exchange rate at the time of such distribution as determined by the Company, and in the case of distributions of assets other than currency, shall be the value thereof as determined by the Company. (c) Upon the dissolution and winding up of the Company, rights to receive an amount equal to the Liquidation Preference prior to any distribution being made with respect to the RIShares. 9 (d) Upon the dissolution and winding up of the Company, a PIShare shall not be entitled to any distributions in excess of its Liquidation Preference. (ii) Remainder limited liability company interests ("RIShares"). Such RIShares shall have the following attributes: (a) No voting rights, other than any rights, if any, required by law or otherwise expressly provided by this Agreement. (b) No rights to distributions made or declared other than as listed in Section 5.6(ii)(c) below. (c) The right to any remaining assets of the Company upon Liquidation (after distributions are made with respect to the PIShares), such assets to be distributed pro rata based on the number of RIShares then outstanding. PIShares and RIShares shall be evidenced by certificates in the forms attached hereto as Exhibit A and Exhibit B, respectively. Each Director and each Officer is designated as an authorized signer to sign any such stock certificate on behalf of the Company. The Company may elect to buy back PIShares or RIShares, in such amounts and at such prices as may be determined by the Board in its sole discretion. Notwithstanding the foregoing, no such buy back shall be made hereunder if such buy back would violate applicable law. In any such buy back, no Member shall have the right to demand or receive property other than cash, except as may be specifically provided in this Agreement or as may be specifically agreed to by all of the Members. ARTICLE VI MANAGEMENT Section 6.1 Board of Directors. Subject to Section 5.1 of this Agreement, the business and affairs of the Company shall be managed by or under the direction of a committee of managers of the Company (the "Board") consisting of one or more natural persons designated as directors of the Company as provided below ("Directors"). The Board shall initially consist of three Directors who shall be Christian Perron, James L. Winters and Richard Garneau. The Members at their annual meeting shall determine the number of Directors to constitute the Board for the ensuing year, provided that thereafter the authorized number of Directors may be increased by the Members or decreased by the Members. The Directors shall be elected at the annual meeting of the Members, except as provided in this Article, and each Director elected shall hold office until a successor is elected and qualified or until such Director's earlier death, resignation or removal. Directors need not be Members. Vacancies, except vacancies caused by removal pursuant to Section 6.7 of this Article VI, and newly created directorships resulting from any increase in the authorized number of Directors may be filled by a majority of the Directors then in office, though less than a quorum, or by a sole remaining Director, and the Directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. 10 Section 6.2 Meetings of the Board. The Board may hold meetings, both regular and special, within or outside the State of Delaware but within the United States. The first meeting of each newly elected Board shall be held immediately after the annual meeting of Members and at the same place, and no notice of such meeting shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum shall be present. In the event such meeting is not held at that time and place, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board, or as shall be specified in a written waiver signed by all of the Directors. Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board. Special meetings of the Board may be called by any Director on three (3) days' notice to each Director, either personally, by telephone, by mail, by telegram or by any other means of communication. Section 6.3 Quorum and Acts of the Board. At all meetings of the Board a majority of the Directors shall constitute a quorum for the transaction of business and, except as otherwise provided in Section 6.9 of this Agreement or any other provision of this Agreement, the act of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board. If a quorum shall not be present at any meeting of the Board, the Directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case maybe, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. Section 6.4 Electronic Communications. Members of the Board, or any committee designated by the Board, may exceptionally participate in a meeting of the Board, or any committee, by means of conference telephone, video-conference or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. If all the participants are participating by conference telephone, video-conference or similar communications equipment, the meeting shall be deemed to be held at the principal place of business of the Company. Section 6.5 Committees of Directors. The Board may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the Directors. The Board may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company, but no such committee shall have the power or authority to take any of 11 the actions described in Section 6.9 of this Agreement unless authorized in writing by each Director. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board. Each committee shall keep regular minutes of its meetings and report the same to the Board when required. Section 6.6 Compensation of Directors. The Board shall have the authority to fix the compensation of Directors. The Directors may be paid their expenses, if any, of attendance at meetings of the Board and may be paid a fixed sum for attendance at each meeting of the Board or a stated salary as Director. No such payment shall preclude any Director from serving the Company in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. Section 6.7 Removal of Directors. Unless otherwise restricted by Law, any Director or the entire Board may be removed, with or without cause, by Majority Vote. Any vacancy caused by any such removal may be filled by a Majority Vote. Section 6.8 Directors as Agents. The Directors, to the extent of their powers set forth in this Agreement, are agents of the Company for the purpose of the Company's business, and the actions of the Directors taken in accordance with such powers shall bind the Company. Section 6.9 Actions Requiring Unanimous Approval of the Board. Notwithstanding any other provision of this Agreement to the contrary, none of the Board, any Director or any Officer shall take any of the following actions on behalf of the Company unless authorized to do so unanimously by the Board: (i) the sale, exchange or other disposition of any of the assets of the Company except for sales in the ordinary course of business; (ii) the commencement of a voluntary proceeding seeking reorganization or other relief with respect to the Company under any bankruptcy or other similar law or seeking the appointment of a trustee, receiver, custodian or other similar official of the Company or any substantial part of its property, or the making by the Company of a general assignment for the benefit of creditors; (iii) the declaration or making of any distributions to Members; (iv) the entering into by the Company of any joint venture, partnership, subcontracting, license, sub-license, manufacturing, marketing, distribution or other similar arrangement with any Person; (v) the formation or organization of any subsidiary of the Company and the appointment of directors of (or persons with comparable authority with respect to) any such subsidiary; (vi) the commitment to any material capital expenditure by the Company in any Fiscal Year of the Company; 12 (vii) the adoption of a business plan and annual operating budget for the Company (or any updates to each thereof); (viii) the entering into, amendment or termination of employment contracts with Officers or other contracts with Directors, Officers, Managers, or Members or their respective Affiliates; (ix) the appointment or change of the independent auditors or deposit banks of the Company; or (x) the acquisition or lease by the Company of any real property, or any sale, lease or sublease of, or similar arrangement affecting, any real property owned or leased by the Company. ARTICLE VII OFFICERS Section 7.1 Officers. The Board may select natural persons who are agents or employees of the Company to be designated as officers of the Company ("Officers"), with such titles as the Board shall determine. Any number of offices may be held by the same person. The Board at its first meeting after each annual meeting of Members shall choose a President, a Secretary and a Treasurer. The Board at its first meeting may appoint such other Officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board. The salaries of all Officers and agents of the Company shall be fixed by or in the manner prescribed by the Board. The Officers shall hold office until their successors are chosen and qualify. Any Officer elected or appointed by the Board may be removed at any time by the affirmative vote of a majority of the Board. Any vacancy occurring in any office of the Company shall be filled by the Board. Section 7.2 The President. The President shall be the chief executive officer of the Company, shall preside at all meetings of the Members and the Board, shall have general and active management of the business of the Company and shall see that all orders and resolutions of the Board are carried into effect. The President shall execute bonds, mortgages and other contracts, except where required or permitted by Law to be otherwise signed and executed and except where signing and execution thereof shall be expressly delegated by the Board to some other Officer or agent of the Company or except as otherwise permitted in Section 7.3 hereof. Section 7.3 The Vice President. In the absence of the President or in the event of the President's inability to act, the Vice President, if any (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. The Vice Presidents, if any, shall perform such other duties and have such other powers as the Board may from time to time prescribe. 13 Section 7.4 The Secretary and Assistant Secretary. The Secretary shall be responsible for filing legal documents and maintaining records for the Company. The Secretary shall attend all meetings of the Board and all meetings of the Members and record all the proceedings of the meetings of the Company and of the Board in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the Members and special meetings of the Board, and shall perform such other duties as may be prescribed by the Board or President, under whose supervision the Secretary shall be. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board (or if there be no such determination, then in order of their election) shall, in the absence of the Secretary or in the event of the Secretary's inability to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board may from time to time prescribe. Section 7.5 The Treasurer and Assistant Treasurer. The Treasurer shall have the custody of the Company funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company and shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Board. The Treasurer shall disburse the funds of the Company as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the President and the Board, at its regular meetings, or when the Board so requires, an account of all of the Treasurer's transactions and of the financial condition of the Company. The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of the Treasurer's inability to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board may from time to time prescribe. Section 7.6 Officers as Agents. The Officers, to the extent of their powers set forth in this Agreement or otherwise vested in them by action of the Board, are agents of the Company for the purpose of the Company's business, and the actions of the Officers taken in accordance with such powers shall bind the Company. Section 7.7 Duties of Board and Officers. Except to the extent modified herein, each Director and Officer shall have the fiduciary duty of loyalty and care similar to those of directors and officers of business corporations organized under the General Corporation Law of the State of Delaware. ARTICLE VIII DISTRIBUTIONS Section 8.1 Except as otherwise provided in Article XIII hereof (relating to the dissolution of the Company) or a buy back of PIShares or RIShares pursuant to Article V hereof, any distribution of cash or other assets of the Company shall be made solely to Members of the Company owning PIShares, such distributions to be made pro rata in accordance with the Liquidation Preference thereof. 14 Section 8.2 Distribution Rules. All distributions pursuant to Section 8.1 hereof shall be at such times and in such amounts as shall be determined by the Board in its sole discretion. Section 8.3 Limitations on Distribution. Notwithstanding any provision to the contrary contained in this Agreement, the Company, and the Board on behalf of the Company, shall not make a distribution to any Member on account of its Interest in the Company if such distribution would violate Section 18-607 of the Delaware Act or other applicable Law. ARTICLE IX BOOKS AND RECORDS Section 9.1 Books, Records and Financial Statements. (i) At all times during the continuance of the Company, the Company shall maintain, at its principal place of business, separate books of account for the Company that shall show a true and accurate record of all costs and expenses incurred, all charges made, all credits made and received and all income derived in connection with the operation of the Company business in accordance with generally accepted accounting principles consistently applied, and, to the extent inconsistent therewith, in accordance with this Agreement. Such books of account, together with a copy of this Agreement and of the Certificate, shall at all times be maintained at the principal place of business of the Company and shall be open to inspection and examination at reasonable times by each Member and its duly authorized representative for any purpose reasonably related to such Member's interest in the Company. (ii) The Company, and the Board on behalf of the Company, shall prepare and maintain, or cause to be prepared and maintained, the books of account of the Company. The Company, and the Board on behalf of the Company, shall prepare and file, or cause to be prepared and filed, all applicable federal and state tax returns or forms, if any. Section 9.2 Accounting Method. For both financial and tax reporting purposes, the books and records of the Company shall be kept on the accrual method of accounting applied in a consistent manner in accordance with generally accepted accounting principles and shall reflect all Company transactions and be appropriate and adequate for the Company's business. Section 9.3 Annual Audit. At any time at a Member's sole discretion, the financial statements of the Company may be audited by an independent certified public accountant, selected by such Member, with such audit to be accompanied by a report of such accountant containing its opinion. The cost of such audits will be an expense of the Company. A copy of any such audited financial statements and accountant's report will be made available for inspection by the Members. 15 ARTICLE X LIABILITY, EXCULPATION AND INDEMNIFICATION Section 10.1 Liability. Except as otherwise provided by the Delaware Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member or Manager shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member or Manager. Section 10.2 Exculpation. (i) To the fullest extent permitted by applicable law, no Covered Person shall be liable to the Company or any other Person bound by this Agreement for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of authority conferred on such Covered Person by this Agreement, except that a Covered Person shall be liable for any such loss, damage or claim incurred by reason of such Covered Person's gross negligence or willful misconduct. (ii) A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any Person as to matters the Covered Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Company. Section 10.3 Fiduciary Duty. To the extent that, at law or in equity, a Covered Person has duties (including fiduciary duties) and liabilities relating thereto to the Company or to any Member or Manager, a Covered Person acting under this Agreement shall not be liable to the Company or to any Person bound by this Agreement for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of a Covered Person otherwise existing at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of such Covered Person. Section 10.4 Indemnification. To the fullest extent permitted by applicable law, a Covered Person shall be entitled to indemnification from the Company for any loss, damage or claim incurred by such Covered Person by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of authority conferred on such Covered Person by this Agreement, except that no Covered Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Covered Person by reason of gross negligence or willful misconduct with respect to such acts or omissions; provided, however, that any indemnity under this Section 10.4 shall be provided out of and to the extent of Company assets only, and no Covered Person shall have any personal liability with respect to such indemnity. 16 Section 10.5 Expenses. To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by a Covered Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Company of an undertaking by or on behalf of the Covered Person to repay such amount if it shall be determined that the Covered Person is not entitled to be indemnified as authorized in Section 10.4 hereof. Section 10.6 Insurance. The Company may purchase and maintain insurance, to the extent and in such amounts as the Board shall, in its sole discretion, deem reasonable, on behalf of Covered Persons and such other Persons as the Board shall determine, against any liability that may be asserted against or expenses that may be incurred by any such Person in connection with the activities of the Company or such indemnities, regardless of whether the Company would have the power to indemnify such Person against such liability under the provisions of this Agreement. The Company may enter into indemnity contracts with Covered Persons and such other Persons as the Board shall determine and adopt written procedures pursuant to which arrangements are made for the advancement of expenses and the funding of obligations under Section 10.5 hereof and containing such other procedures regarding indemnification as are appropriate. Section 10.7 Outside Businesses. Notwithstanding any duty otherwise existing at law or in equity, any Member, Manager or Affiliate thereof may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Company, and the Company and the Members shall have no rights by virtue of this Agreement in and to such independent ventures or the income or profits derived therefrom, and the pursuit of any such venture, even if competitive with the business of the Company, shall not be deemed wrongful or improper. Notwithstanding any duty otherwise existing at law or in equity, no Member, Manager or Affiliate thereof shall be obligated to present any particular investment opportunity to the Company even if such opportunity is of a character that, if presented to the Company, could be taken by the Company, and any Member or Affiliate thereof shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment opportunity. ARTICLE XI ADDITIONAL MEMBERS Section 11.1 Admission. By approval of all of the Members, including Members owning RIShares, the Company is authorized to admit any Person as an additional member of the Company (each, an "Additional Member" and collectively, the "Additional Members"), to hold such number and type of interest as the Members shall unanimously agree upon. Each such Person shall be admitted as an Additional Member at the time such Person (i) executes this Agreement or a counterpart of this Agreement and (ii) is named as a Member on Schedule A hereto. 17 ARTICLE XII ASSIGNABILITY AND SUBSTITUTE MEMBERS Section 12.1 Assignability of Interests. (i) No Member may assign the whole or any part of its Interests without the prior written consent of each other Member, including Members holding RIShares, which consent may be given or withheld in the sole and absolute discretion of each such other Member. If the prior written consent of all of the other Members is obtained for any such assignment, such assignment shall, nevertheless, not entitle the assignee to become a Substitute Member or to be entitled to exercise or receive any of the rights, powers or benefits of a Member other than the right to receive distributions to which the assigning Member would be entitled, unless the assigning Member designates, in a written instrument delivered to the other Members, its assignee to become a Substitute Member and all of the other Members, in their sole and absolute discretion, consent to the admission of such assignee as a Member; and provided further, that such assignee shall not become a Substitute Member without having first executed an instrument reasonably satisfactory to the other Members accepting and agreeing to the terms and conditions of this Agreement, including a counterpart of this Agreement, and without having paid to the Company a fee sufficient to cover all reasonable expenses of the Company in connection with such assignee's admission as a Substitute Member. (ii) If a Member assigns all of its Interest in the Company and the assignee of such interest is entitled to become a Substitute Member pursuant to this Section 12.1, such assignee shall be admitted to the Company effective immediately prior to the effective date of the assignment, and, immediately following such admission, the assigning Member shall cease to be a member of the Company. In such event, the Company shall continue without dissolution. (iii) If a Member assigns all or part of its Interest in accordance with this Section 12.1, the certificate evidencing the Interest shall be delivered to the Company, executed by the Member and assignee on the reverse side thereof. After receiving the Member's certificate, the Company shall cancel such certificate and issue a new certificate to the assignee for the number of shares being assigned, and, if applicable, shall issue to the Member a new certificate for the number of shares that the Member did not assign and continues to own. Section 12.2 Recognition of Assignment by Company. No assignment, or any part thereof, that is in violation of this Article XII shall be valid or effective, and neither the Company nor the Members shall recognize the same. Neither the Company nor the Members shall incur any liability as a result of refusing to make any distributions to the assignee of any such invalid assignment. Section 12.3 Effective Date of Assignment. Any valid assignment of a Member's Interest, or part thereof, pursuant to the provisions of Section 12.1 hereof shall be effective as of the close of business on the day in which all the other Members give their written 18 consent to such assignment. The Company shall, from the effective date of such assignment, thereafter pay all further distributions on account of the Interest (or part thereof) so assigned, to the assignee of such Interest, or part thereof. Section 12.4 Pledge. No Member may pledge or otherwise encumber the whole or any part of its Interests without the prior written consent of each other Member, including holders of RIShares, which consent may be given or withheld in the sole and absolute discretion of each such other Member. ARTICLE XIII DISSOLUTION, LIQUIDATION AND TERMINATION Section 13.1 No Dissolution. The Company shall not be dissolved by the admission of Additional Members or Substitute Members in accordance with the terms of this Agreement. Section 13.2 Events Causing Dissolution. The Company shall be dissolved and its affairs shall be wound up upon the occurrence of any of the following events: (i) the written consent of all Members; (ii) the termination of the legal existence of the last remaining member of the Company or the occurrence of any other event which terminates the continued membership of the last remaining member of the Company in the Company unless the Company is continued without dissolution in a manner permitted by the Delaware Act; or (iii) the entry of a decree of judicial dissolution of the Company under Section 18-802 of the Delaware Act. Section 13.3 Liquidation. Upon dissolution of the Company, the Board shall carry out the winding up of the Company and shall immediately commence to wind up the Company's affairs (collectively, the "Liquidation"); provided, however, that a reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the satisfaction of liabilities to creditors so as to enable the Members to minimize the normal losses attendant upon a liquidation. The proceeds of liquidation shall be distributed in the following order and priority: (i) to creditors of the Company, including Members, Directors, Officers, Managers and agent of the Company who are creditors, to the extent otherwise permitted by law, in satisfaction of the liabilities of the Company (whether by payment or the making of reasonable provision for payment thereof); (ii) to the holders of PIShares, pro rata in accordance with the Liquidation Preference thereof, until such holders have received an amount equal to the aggregate Liquidation Preference of all PIShares then outstanding; and (iii) to the holders of RIShares, if any, pro rata based upon the number of RIShares outstanding. 19 Section 13.4 Termination. The Company shall terminate when all of the assets of the Company, after payment of or due provision for all debts, liabilities and obligations of the Company, shall have been distributed to the Members in the manner provided for in this Article XIII and the Certificate shall have been canceled in the manner required by the Delaware Act. Section 13.5 Claims of the Members. The holders of PIShares shall look solely to the Company's assets for the return of their Liquidation Preference, and if the assets of the Company remaining after payment of or due provision for all debts, liabilities and obligations of the Company are insufficient to return such Liquidation Preference, the holders of PIShares shall have no recourse against the Company or any other Member. If the assets of the Company remaining after payment of or due provision for all debts, liabilities and obligations of the Company and payments to holders of PIShares are insufficient to pay holders of RIShares the amount of their Capital Contribution, the holders of RIShares shall have no recourse against the Company or any other Member. ARTICLE XIV MISCELLANEOUS Section 14.1 Notices. All notices provided for in this Agreement shall be in writing, duly signed by the party giving such notice, and shall be delivered, mailed via an overnight courier service, telecopied or mailed by registered or certified mail, as follows: (i) If given to the Company at the address specified in Section 2.5 of this Agreement; (ii) if given to a Director, at such Director's mailing address as provided to the Company; or (iii) if given to any Member at the address set forth opposite its name on Schedule A attached hereto, or at such other address as such Member may hereafter designate by written notice to the Company. All such notices shall be deemed to have been given when received. Section 14.2 Failure to Pursue Remedies. The failure of any party to seek redress for violation of, or to insist upon the strict performance of, any provision of this Agreement shall not prevent a subsequent act, which would have originally constituted a violation, from having the effect of an original violation. Section 14.3 Cumulative Remedies. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by Law or otherwise. Section 14.4 Binding Effect. This Agreement shall be binding upon and inure to the benefit of all of the parties and, to the extent permitted by this Agreement, their successors, legal representatives and assigns. 20 Section 14.5 Interpretation. Throughout this Agreement, nouns, pronouns and verbs shall be construed as masculine, feminine, neuter, singular or plural, whichever shall be applicable. All references herein to "Articles," "Sections" and "Paragraphs" shall refer to corresponding provisions of this Agreement. Section 14.6 Severability. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted. Section 14.7 Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document. All counterparts shall be construed together and shall constitute one instrument. Section 14.8 Integration. This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto. Section 14.9 Governing Law. This Agreement and the rights of the parties hereunder shall be interpreted in accordance with the laws of the State of Delaware, and all rights and remedies shall be governed by such laws without regard to principles of conflict of laws. Section 14.10 Amendments. Any amendment to this Agreement shall be adopted and be effective as an amendment hereto if it received the affirmative vote of all of the Members, including Members holding RIShares, provided that such amendment be in writing and executed by all of the Members. Section 14.11 No Implied Rights or Remedies. Nothing expressed or implied shall be construed to confer upon any Person, except the Members and Managers, any rights or remedies under or by reason of this Agreement. Section 14.12 Effectiveness. Pursuant to Section 18-201(d) of the Delaware Act, this Agreement shall be effective as of the time of the filing of the Certificate of Formation with the Office of the Delaware Secretary of State on August 19, 2003 at 9:49 a.m. EDT. IN WITNESS WHEREOF, the undersigned has executed this Agreement as the Member as of the date first above stated. MAAX CANADA INC. By: /s/ Richard Garneau ----------------------- Name: Richard Garneau Title: Vice-President 21 EX-3.23 26 y99327exv3w23.txt CHARTER OF MAAX MIDWEST, INC. EXHIBIT 3.23 NOTE: This form may now also be used Corporate Form No. 101 (Jan. 1977)-- for incorporating pursuant to the Page One Medical Professional Corporation Act, the Dental Professional Corporation ARTICLES OF INCORPORATION Act, and the Professional Corporation Act of 1965, as well as the General Larry A. Conrad, Secretary of State of Corporation Act. If the corporation is Indiana to be formed pursuant to the authority of one of these statutes other than Use White Paper--Size 8 1/2 x 11--For the General Corporation Act, so Inserts indicate in the preamble below by striking the references to the three Filing Requirements--Present 2 inappropriate statutes. Professional originally signed and fully executed Accounting Corporations are considered copies to Secretary of State, Room 155, to be formed pursuant to the authority State House, Indianapolis 46204 of the Indiana General Corporation Act, but subject to the provisions of Recording Requirements--Recording of IC 23-1-13.5, and appropriate Articles of Incorporation in the Office statutory reference should be made in of the County Recorder is no longer the preamble or Article II below. required by the Indiana General Corporation Act. ARTICLES OF INCORPORATION OF BREMEN GLAS, INC. The undersigned incorporator or incorporators, desiring to form a corporation (hereinafter referred to as the "Corporation") pursuant to the provisions of the Indiana General Corporation Act (Medical Professional Corporation Act/ Dental Professional Corporation Act/Professional Corporation Act of 1965), as amended (hereinafter referred to as the "Act"), execute the following Articles of Incorporation. ARTICLE I NAME The name of the Corporation is Bremen Glas, Inc. ARTICLE II PURPOSES The purposes for which the Corporation is formed are: See attached Exhibit A. Prescribed by Larry A. Conrad, Secretary of State (Jan. 1977) ARTICLE III PERIOD OF EXISTENCE The period during which the Corporation shall continue is Perpetual ARTICLE IV RESIDENT AGENT AND PRINCIPAL OFFICE Section 1. Resident Agent. The name and address of the Corporation's Resident Agent for service of process is Landa E. Stone, [address] ---------------------------------------------------------- (Name) (Number and Street or Building) Bremen, Indiana 46506 - -------------------------------------------------------------------------------- (City) (State) (Zip Code) Section 2. Principal Office. The post office address of the principal office of the Corporation is 1010 West Dewey Street, Bremen Indiana 46506 - -------------------------------------------------------------------------------- (Number and Street or Building) (City) (State) (Zip Code) ARTICLE V AUTHORIZED SHARES Section 1. Number of Shares: The total number of shares which the Corporation is to have authority to issue is 5,000. ----- A. The number of authorized shares which the corporation designates as having par value is none with a par value of $_______. B. The number of authorized shares which the corporation designates as without par value is 5,000. ----- Section 2. Terms of Shares (if any): One class of voting common stock of no par value, one vote for each share. 2 ARTICLE VI REQUIREMENTS PRIOR TO DOING BUSINESS The Corporation will not commence business until consideration of the value of at least $1,000 (one thousand dollars) has been received for the issuance of shares. ARTICLE VII DIRECTOR(S) Section 1. Number of Directors: The initial Board of Directors is composed of three (3) member(s). The number of directors may be from time to time fixed by the By-Laws of the Corporation at any number. In the absence of a By-Law fixing the number of directors, the number shall be three (3). Section 2. Names and Post Office Addresses of the Director(s): The name(s) and post office address(es) of the initial Board of Director(s) of the Corporation is (are) :
Name Number and Street or Building City State Zip Code ---- ----------------------------- ---- ----- -------- Landa E. Stone [address] Bremen, Indiana 46506 Allen Hand [address] Nappanee, Indiana 46550 David R. Holmes [address] Bremen, Indiana 46506
Section 3. Qualifications of Directors (if any): None. Directors need not be Shareholders. 3 ARTICLE VIII INCORPORATOR (S) The name(s) and post office address(es) of the incorporator(s) of the Corporation is (are):
Name Number and Street or Building City State Zip Code ---- ----------------------------- ---- ----- -------- Landa E. Stone [address] Bremen, Indiana 46506 Allen Hand [address] Nappanee, Indiana 46550 David R. Holmes [address] Bremen, Indiana 46506
ARTICLE IX PROVISIONS FOR REGULATION OF BUSINESS AND CONDUCT OF AFFAIRS OF CORPORATION ("Powers" of the Corporation, its directors or shareholders) To be established by the Corporation By-Laws. 4 IN WITNESS WHEREOF, the undersigned, being all of the incorporator(s) designated in Article VIII, execute(s) these Articles of Incorporation and certify to the truth of the facts herein stated, this 5th day of April, 1980. /s/ Landa E. Stone /s/ Allen Hand - -------------------------------------- ---------------------------------------- (Written Signature) (Written Signature) /s/ Landa E. Stone /s/ Allen Hand - -------------------------------------- ---------------------------------------- (Printed Signature) (Printed Signature) /s/ David R. Holmes ---------------------------------------- (Written Signature) /s/ David R. Holmes ---------------------------------------- (Printed Signature) STATE OF INDIANA COUNTY OF ) ) ss: COUNTY OF MARSHALL ) I, the undersigned, a Notary Public duly commissioned to take acknowledgements and administer oaths in the State of Indiana, certify that Landa E. Stone, Allen Hand and David R. Holmes, being all of the incorporator(s) referred to in Article VIII of the foregoing Articles of Incorporation, personally appeared before me; acknowledged the execution thereof; and swore to the truth of the facts therein stated. Witness my hand and Notarial Seal this 5th day of April, 1980 /s/ Dean A. Coalvin ---------------------------------------- (Written Signature) /s/ Dean A. Coalvin ---------------------------------------- (Printed Signature) My Commission Expires: Notary Public 4-12-80 A RESIDENT OF MARSHALL CO. 5 EXHIBIT A 1) To manufacture, sell at wholesale or retail, distribute, and transport fiberglass products and to generally deal with fiberglass products of all types and all other matters incident thereto. 2) To construct, own, buy, sell, lease, equip, manage, operate, supervise, and deal in real estate and equipment necessary to manufacturing, selling, and distribution of fiberglass products or similar enterprises. 3) To apply for, obtain, and use all necessary permits, applications or licenses in connection with the purposes herein set forth. 4) To transact any and all lawful business for which corporations may be incorporated under the Indiana General Corporation Act, as amended, and to have and to exercise all powers conferred by the laws of the State of Indiana under said Act. 6 ARTICLES OF AMENDMENT OF THE SUE ANNE GILROY [SEAL] ARTICLES OF INCORPORATION SECRETARY OF STATE State Form 38333 (R8 / 12-96) CORPORATIONS DIVISION Approved by State Board of Accounts 1995 302 W. WASHINGTON ST, RM. E018 INDIANAPOLIS, IN 46204 TELEPHONE: (317) 232-6576
INSTRUCTIONS: USE 8 1/2" X 11" WHITE PAPER FOR INSERTS. INDIANA CODE 23-1-38-1 ET ESQ. PRESENT ORIGINAL AND TWO COPIES TO ADDRESS IN UPPER RIGHT HAND CORNER OF THIS FORM. FILING FEE: $30.00 PLEASE TYPE OR PRINT.
ARTICLES OF AMENDMENT OF THE ARTICLES OF INCORPORATION OF: NAME OF CORPORATION DATE OF INCORPORATION BREMEN GLAS, INC. APRIL 7, 1980 THE UNDERSIGNED OFFICERS OF THE ABOVE REFERENCED CORPORATION (HEREINAFTER REFERRED TO AS THE "CORPORATION") EXISTING PURSUANT TO THE PROVISIONS OF: (INDICATE APPROPRIATE ACT) [X] INDIANA BUSINESS CORPORATION LAW [ ] INDIANA PROFESSIONAL CORPORATION ACT OF 1983 AS AMENDED (HEREINAFTER REFERRED TO AS THE "ACT"), DESIRING TO GIVE NOTICE OF CORPORATE ACTION EFFECTUATING AMENDMENT TO CERTAIN PROVISIONS OF ITS ARTICLES OF INCORPORATION, CERTIFY THE FOLLOWING FACTS: ARTICLE I AMENDMENT(S) THE EXACT TEXT OF ARTICLE(S) 1 OF THE ARTICLES (NOTE: IF AMENDING THE NAME OF CORPORATION, WRITE ARTICLE "I" IN SPACE ABOVE AND WRITE "THE NAME OF THE CORPORATION IS _____________________." BELOW.) THE NAME OF THE CORPORATION IS MAAX MIDWEST, INC. ARTICLE II DATE OF EACH AMENDMENT'S ADOPTION: June 21st, 1999 (CONTINUED ON THE REVERSE SIDE) 7 ARTICLE III Manner of Adoption and Vote MARK APPLICABLE SECTION: NOTE - ONLY IN LIMITED SITUATIONS DOES INDIANA LAW PERMIT AN AMENDMENT WITHOUT SHAREHOLDER APPROVAL. BECAUSE A NAME CHANGE REQUIRES SHAREHOLDER APPROVAL, SECTION 2 MUST BE MARKED AND EITHER A OR B COMPLETED. [ ] SECTION 1 THIS AMENDMENT WAS ADOPTED BY THE BOARD OF DIRECTORS OR INCORPORATORS AND SHAREHOLDER ACTION WAS NOT REQUIRED. [X] SECTION 2 THE SHAREHOLDERS OF THE CORPORATION ENTITLED TO VOTE IN RESPECT TO THE AMENDMENT ADOPTED THE PROPOSED AMENDMENT. THE AMENDMENT WAS ADOPTED BY: (SHAREHOLDER APPROVAL MAY BE BY EITHER A OR B.) A. VOTE OF SUCH SHAREHOLDERS DURING A MEETING CALLED BY THE BOARD OF DIRECTORS. THE RESULT OF SUCH VOTE IS AS FOLLOWS: SHARES ENTITLED TO VOTE. NUMBER OF SHARES REPRESENTED AT THE MEETING. SHARES VOTED IN FAVOR. SHARES VOTED AGAINST. B. UNANIMOUS WRITTEN CONSENT EXECUTED ON JUNE 21, 1999 AND SIGNED BY ALL SUCH SHAREHOLDERS ENTITLED TO VOTE. ARTICLE IV COMPLIANCE WITH LEGAL REQUIREMENTS THE MANNER OF THE ADOPTION OF THE ARTICLES OF AMENDMENT AND THE VOTE BY WHICH THEY WERE ADOPTED CONSTITUTE FULL LEGAL COMPLIANCE WITH THE PROVISIONS OF THE ACT, THE ARTICLES OF INCORPORATION, AND THE BY-LAWS OF THE CORPORATION. I HEREBY VERIFY, SUBJECT TO THE PENALTIES OF PERJURY, THAT THE STATEMENTS CONTAINED HEREIN ARE TRUE, THIS 21 DAY OF JUNE 1999. SIGNATURE OF CURRENT OFFICER OR CHAIRMAN OF THE BOARD PRINTED NAME OF OFFICER OR CHAIRMAN OF THE BOARD /s/ Placide Poulin Placide Poulin
SIGNATURE'S TITLE: President 8 EX-3.24 27 y99327exv3w24.txt BYLAWS OF MAAX MIDWEST, INC. EXHIBIT 3.24 BY-LAWS ARTICLE I IDENTIFICATION Section 1 -- Name. The name of the corporation shall be Bremen Glas, Inc., (hereinafter referred to as the "corporation"). Section 2 -- Seal. The corporation shall have a corporate seal which shall be as follows: A circular disc, on the outer margin of which shall appear the corporate name and State of Incorporation, with the words "Corporate Seal" through the center, so mounted that it may be used to impress these words in raised letters upon paper. The seal shall be in charge of the Secretary. Section 3 -- Fiscal Year. The fiscal year of the corporation shall begin at the beginning of the first day of August and end at the close of the last day of July next succeeding. ARTICLE II CAPITAL STOCK Section 1 -- Consideration for Shares. The Board of Directors shall cause the corporation to issue the capital stock of the corporation for such consideration as has been fixed by such board in accordance with the provisions of the Articles of Incorporation. Section 2 -- Payment of Shares. Subject to the provisions of the Articles of Incorporation, the consideration for the issuance of shares of the capital stock of the corporation may be paid, in whole or in part, in money, in other property, tangible or intangible, or in labor actually performed for, or services actually rendered to, the corporation; provided, however, that the part of the surplus of a corporation which is transferred to capital upon the issuance of shares as a share dividend shall be deemed to be the consideration for the issuance of such shares. When payment of the consideration for which a share was authorized to be issued shall have been received by the corporation, or when surplus shall have been transferred to capital upon the issuance of a share BY-LAWS(Continued) dividend, such share shall be declared and taken to be fully paid and not liable to any further call or assessment, and the holder thereof shall not be liable for any further payments thereon. In the absence of actual fraud in the transaction, the judgment of the board of directors as to the value of such property, labor or services received as consideration, or the value placed by the board of directors upon the corporate assets in the event of a share dividend shall be conclusive. Promissory notes or future services shall not be accepted in payment or part payment of any of the capital stock of the corporation. Section 3 -- Certificates for Shares. The corporation shall issue to each shareholder a certificate signed by the president or a vice-president, and the secretary of the corporation certifying the number of shares owned by him in the corporation. Where such certificate is also signed by a transfer agent or registrar, the signatures of the president, vice-president or secretary may be facsimiles. The certificate shall state the name of the registered holder, the number of shares represented thereby, the par value of each share or a statement that such shares have no par value, and whether such shares have been fully paid up, the certificate shall be legibly stamped to indicate the per centum which has been paid up, and as further payments are made thereon the certificate shall be stamped accordingly. If the corporation issues more than one class, every certificate issued shall state the kind and class of shares represented thereby, and the relative rights, interests, preferences and restrictions of such class, or a summary thereof. Section 4 -- Form of Certificates. The stock certificates to represent the shares of the capital stock of this corporation shall be in such form, not inconsistent with the laws of the State of Indiana, as may be adopted by the board of directors. - Section 5 -- Transfer of Stock. Title to a certificate and to the shares represented thereby can be transferred only: (1) By delivery of the certificate endorsed either in blank or to a specified person by the person appearing by the certificate to be the owner of the shares represented thereby; or (2) By delivery of the certificate and a separate document containing a written assignment of the certificate or a power of attorney to sell, assign, or transfer the same or the shares represented thereby, signed by the person appearing by the certificate to be the owner of the shares represented thereby. Such assignment or power of attorney may be either in blank or to a specified person. (3) After the stock has been offered for sale to the corporation and then subsequently to the other shareholders of the corporation. Such offer shall be in writing and on the same terms and conditions as the shareholder proposes to sell the stock to third parties and 2 BY-LAWS(Continued) the corporation shall have twenty (20) days in which to accept such offer to purchase the stock and other shareholders shall have an additional seven (7) days, thereafter, should the corporation fail to accept the offer. (3) No stock of this corporation shall be issued or transferred to any person who is not an officer or director of this corporation, except with the consent of the Board of Directors evidenced by a resolution duly passed at a regular meeting of the board, or at a special meeting called for that purpose. Every shareholder who desires to sell his stock, and every shareholder who for any reason shall cease to be an officer or a director, his personal representatives, legatees, or assigns, shall be required, at the time of the taking of the next inventory, as hereinafter provided for, to offer in writing to sell to the Board of Directors the number of shares of the capital stock held by him to such person or persons as the Board of Directors shall designate by a resolution duly passed, at and for the same sum per share as is equalled by the quotient obtained by dividing the total net amount of the inventory and assets of the corporation by the number of shares then outstanding, and any such shareholder, his personal representatives, legatees, or assigns, shall immediately, on the payment or tender to him in cash of such price per share, transfer and assign the shares of the stock held to such person or persons so designated by the board of directors. In the event, however, that the Board of Directors shall refuse or neglect to designate such person or persons at the next regular meeting after such offer is made, or in the event of the refusal or neglect of such person or persons to pay or tender to such shareholder the price per share for each and every share held, within ninety (90) days after such designation and the completion of the inventory, then such shareholder, his personal representatives, legatees, or assigns, may hold the shares of stock or sell or transfer them to any person or persons, the shares to be held absolutely free from the conditions and restrictions contained or referred to in the stock certificates. Before the holder of the certificate for any shares of the capital stock who shall have obtained it by bequest, or in the distribution of the estate of any shareholder who may hereafter die, or by purchase at any sale made under an execution issued against any shareholder, or any legal process, or otherwise, shall be entitled to have the stock transferred from the books of this corporation, the shares shall first be offered to and refused by such person or persons designated by the board of directors at a price computed as set forth above and subject to the same conditions. No sale whatever of any shares of the capital stock shall pass any title thereto or be transferred on the books of this corporation, unless and until all the preceding conditions and requirements have been complied with, and no holder of any certificate of shares shall be entitled to any dividends thereon, or to participate in any of the profits of this corporation, until the shares are regularly transferred to him on the books of this corporation. Section 6 -- Closing of Transfer Books. The transfer books shall be closed for a period of ten days prior to the date set for any meeting of shareholders, and during such period no new certificate of stock shall be issued by this corporation and no change or transfer shall be made upon the records thereof. 3 BY-LAWS(Continued) ARTICLE III MEETINGS OF SHAREHOLDERS Section 1 -- Place of Meetings. All meetings of shareholders shall be held within this state and at the principal office of the corporation, unless otherwise provided in the Articles of Incorporation. Section 2 -- Annual Meeting. The annual meeting of the shareholders for the election of directors and for the transaction of such other business as may properly come before the meeting, shall be held at ten o'clock in the forenoon of the 2nd Monday in August of each year, if such day is not a legal holiday, and if a holiday, then on the first following day that that is not a legal holiday. If for any reason the annual meeting of the shareholders shall not be held at the time and place herein provided, the same may be held at any time thereafter, but not later than five months after the close of each fiscal year of the corporation. Section 3 -- Special Meetings. Special meetings of the shareholders may be called by the president, by the board of directors, or by shareholders holding not less than one-fourth of all the shares of capital stock outstanding and entitled by the Articles of Incorporation to vote on the business proposed to be transacted thereat. Section 4 -- Notice of Meetings. A written or printed notice, stating the place, day and hour of the meeting, and in case of a special meeting the purpose or purposes for which the meeting is called, shall be delivered or mailed by the secretary or by the officers or persons calling the meeting, to each holder of the capital stock of the corporation at the time entitled to vote, at such address as appears upon the records of the corporation, at least ten days before the date of the meeting. Notice of any such meeting may be waived in writing by any shareholder if the waiver sets forth in reasonable detail the purpose or purposes for which the meeting is called, and the time and place thereof. Attendance at any meeting, in person or by proxy shall constitute a waiver of notice of such meeting. Section 5 -- Voting at Meetings. Except as otherwise provided by the provisions of the Articles of Incorporation, every shareholder shall have the right at every shareholders' meeting of the corporation to one vote for each share of stock standing in his name on the books of the corporation. No share shall be voted at any meeting: (1) Upon which an installment is due and unpaid; or 4 (2) Which shall have been transferred on the books of the corporation within ten days next preceding the date of the meeting; or (3) Which belongs to the corporation that issued the share. Section 6 -- Proxies. A shareholder may vote, either in person or by proxy executed in writing by the shareholder or a duly authorized attorney-in-fact. No proxy shall be valid after eleven (11) months from the date of its execution, unless a longer time is expressly provided therein. Section 7 -- Quorum. Unless otherwise provided by the Articles of Incorporation, at any meeting of shareholders, a majority of the shares of the capital stock outstanding and entitled by the Articles of Incorporation to vote, represented in person or by proxy, shall constitute a quorum. Section 8 -- Organization. The president and in his absence, the vice-president, and in their absence any shareholder chosen by the shareholders present, shall call meetings of the shareholders to order and shall act as chairman of such meetings, and the secretary of the company shall act as secretary of all meetings of the shareholders. In the absence of the secretary the presiding officer may appoint a shareholder to act as secretary of the meeting. ARTICLE IV BOARD OF DIRECTORS Section 1 -- Board of Directors. The board of directors shall consist of seven members, who shall be elected annually by a majority of the shares represented at the annual meeting of the shareholders. Such directors shall hold office until the next annual meeting of the shareholders and until their successors are elected and qualified Directors need not be shareholders unless the Articles of Incorporation so require. Section 2 -- Duties. The corporate power of this corporation shall be vested in the board of directors, who shall have the management and control of the business of the corporation. They shall employ such agents and servants as they may deem advisable, and fix the rate of compensation of all agents, employes and officers. Section 3 -- Resignation. A director may resign at any time by filing his written resignation with the secretary. 5 Section 4 -- Removal. At a meeting of shareholders called expressly for that purpose, directors may be removed in the manner provided in this section, unless otherwise provided in the articles of incorporation. Any or all of the members of the board of directors may be removed, with or without cause, by a vote of the holders of a majority of the shares then entitled to vote, at an election of directors. Section 5 -- Vacancies. In case of any vacancy in the board of directors through death, resignation, removal or other cause, the remaining directors by the affirmative vote of a majority thereof may elect a successor to fill such vacancy until the next annual meeting and until his successor is elected and qualified. If the vote of the remaining members of the board shall result in a tie, the vacancy shall be filled by shareholders at the annual meeting or a special meeting called for the purpose. Shareholders shall be notified of the name, address, principal occupation and other pertinent information about any director elected by the board of directors to fill any vacancy. Section 6 -- Annual Meetings. The board of directors shall meet each year immediately after the annual meeting of the shareholders, at the place where such meeting of the shareholders has been held, for the purpose of organization, election of officers, and consideration of any other business that may be brought before the meeting. No notice shall be necessary for the holding of this annual meeting. If such meeting is not held as above provided, the election of officers may be had at any subsequent meeting of the board specifically called in the manner provided in Section 7 following. Section 7 -- Other Meetings. Other meetings of the board of directors may to held upon the call of the president, or of two or more members of the board of directors, at any place within or without the State of Indiana, upon forty-eight hours' notice, specifying the time, place and general purposes of the meeting, given to each director, either personally, by mailing, or by telegram. At any meeting at which all directors are present, notice of the time, place and purpose thereof shall be deemed waived; and similar notice may likewise be waived by absent directors, either by written instrument or by telegram. Section 8 -- Quorum. At any meeting of the board of directors, the presence of a majority of the members of the board elected and qualified shall constitute a quorum for the transaction of any business except the filling of vacancies in the board of directors. 6 BY-LAWS(Continued) Section 9 -- Organization. The president and in his absence the vice-president and in their absence any director chosen by the directors present, shall call meetings of the board of directors to order, and shall act as chairman of such meetings. The secretary of the company shall act as secretary of the board of directors, but in the absence of the secretary the presiding officer may appoint any director to act as secretary of the meeting. Section 10 -- Order of Business. The order of business at all meetings of the board of directors shall be as follows: (1) Roll call, (2) Reading of the Minutes of the preceding meeting and action thereon, (3) Reports of officers, (4) Reports of committees, (5) Unfinished business, (6) Miscellaneous business, (7) New business. ARTICLE V OFFICERS OF THE CORPORATION Section 1 -- Officers. The officers of the corporation shall consist of a president, one or more vice-presidents, a secretary and a treasurer. Any two or more offices may be held by the same person, except that the duties of the president and secretary shall not be performed by the same person. The board of directors by resolution may create and define the duties of other offices in the corporation and shall elect or appoint persons to fill all such offices. Election or appointment of an officer shall not of itself create contract rights. Section 2 -- Vacancies. Whenever any vacancies shall occur in any office by death, resignation, increase in the number of offices of the corporation, or otherwise, the same shall be filled by the board of directors, and the officer so elected shall hold office until his successor is chosen and qualified. Section 3 -- President. The president shall preside at all meetings of shareholders and directors, discharge all the duties which devolve upon a presiding officer, and perform such other duties as this code of by-laws provides, or the board of directors may prescribe. The president shall have full authority to execute proxies in behalf of the corporation, to vote stock owned by it in any other corporation, and to execute, with the secretary, powers of attorney appointing other corporations, partnerships, or individuals the agent 7 BY-LAWS(Continued) of the corporation, all subject to the provisions of The Indiana General Corporation Act of 1929, as amended; the Articles of Incorporation and this code of by-laws. Section 4 -- Vice-President. The vice-president shall perform all duties incumbent upon the president during the absence or disability of the president, and perform such other duties as this code of by-laws may require or the board of directors may prescribe. Section 5 -- Secretary. The secretary shall have the custody and care of the corporate seal, records, minutes and stock books of the corporation. He shall attend all meetings of the shareholders and of the board of directors, and shall keep, or cause to be kept in a book provided for the purpose, a true and complete record of the proceedings of such meetings, and shall perform a like duty for all standing committees appointed by the board of directors, when required. He shall attend to the giving and serving of all notices of the corporation, shall file and take charge of all papers and documents belonging to the corporation and shall perform such other duties as this code of by-laws may require or the board of directors may prescribe. Section 6 -- Treasurer. The treasurer shall keep correct and complete records of account, showing accurately at all times, the financial condition of the corporation. He shall be the legal custodian of all moneys, notes, securities and other valuables which may from time to time come into the possession of the corporation. He shall immediately deposit all funds of the corporation coming into his hands in some reliable bank or other depositary to be designated by the board of directors, and shall keep such bank account in the name of the corporation. He shall furnish at meetings of the board of directors, or whenever requested, a statement of the financial condition of the corporation, and shall perform such other duties as this code of by-laws may require or the board of directors may prescribe. The treasurer may be required to furnish bond in such amount as shall be determined by the board of directors. Section 7 -- Delegation of Authority. In case of the absence of any officer of the corporation, or for any other reason that the board of directors may deem sufficient, the board of directors may delegate the powers or duties of such officer to any other officer or to any director, for the time being, provided a majority of the entire board of directors concurs therein. Section 8 -- Execution of Documents. Unless otherwise provided by the board of directors, all contracts, leases, commercial paper and other instruments in writing and legal documents, shall be signed by the president and attested by the secretary. All bonds, deeds and mortgages shall be signed by the president and attested by the secretary. All certificates of stock shall be signed by the president and attested by the secretary. 8 BY-LAWS(Continued) All checks, drafts, notes and orders for the payment of money shall be signed by those officers or employees of the corporation as the directors may from time to time designate. Section 9 -- Loans to Officers. No loan of money or property or any advance on account of services to be performed in the future shall be made to any officer or director of the corporation. ARTICLE VI CORPORATE BOOKS Section 1 -- Place of Keeping, In General. Except as otherwise provided by the laws of the State of Indiana, by the Articles of Incorporation of the corporation or by these by-laws, the books and records of the corporation may be kept at such place or places, within or without the State of Indiana, as the board of directors may from time to time by resolution determine. Section 2 -- Stock Register or Transfer Book. The original or duplicate stock register or transfer book shall contain a complete and accurate shareholders list, alphabetically arranged, giving the names and addresses of all shareholders, the number and classes of shares held by each, and shall be kept at the principal office of the corporation in the State of Indiana. ARTICLE VII AMENDMENTS Section 1 -- Amendments By-Laws may be adopted, amended or repealed at any meeting of the board of directors by the vote of a majority thereof, unless the Articles of Incorporation provide for the adoption, amendment or repeal by the shareholders, in which event, action thereon may be taken at any meeting of the shareholders by the vote of a majority of the voting shares outstanding. 9 EX-3.25 28 y99327exv3w25.txt CHARTER OF MAAX SPAS (ARIZONA), INC. EXHIBIT 3.25 ARTICLES OF INCORPORATION OF CALIFORNIA COOPERAGE We, the undersigned, citizens and residents of the State of California, do hereby voluntarily associate ourselves for the purpose of forming a private corporation under the laws of the State of California, and do certify: I That the name of the corporation is CALIFORNIA COOPERAGE. II That the corporation's purposes are: (a) Primarily to engage in the specific business of manufacturing and wholesale retail sale of therapeutic spas, wooden soaking tubs, ad related health care equipment. (b) To engage generally in the business of owning, conducting, operating, maintaining and carrying on the business of marketing and selling the above named and related equipment. (c) To engage in any business related or un-related to those described in clauses (a) and (b) of this Article II and from time to time authorized or approved by the Board of Directors of this corporation; (d) To act as partner or joint venturer or in any other legal capacity in any transaction; (e) To do business anywhere in the world; (f) To have and exercise all rights and powers from time to time granted to a corporation by law. The above purpose clauses shall not be limited by reference to or inference from one another, but each such purpose clause shall be construed as a separate statement conferring independent purposes and powers upon the corporation. III The County in the State of California where the principal office for the transaction of the business of the corporation is located is SAN LUIS OBISPO. IV (a) The number of directors of the corporation is five. (b) The names and addresses of the persons who are appointed to act as first directors are: CLIFFORD BRANCH [address] MICHAEL J. DISKIN [address] THOMAS J. SPALDING [address] JOHN E. KING [address] J. EDMUND SMITH [address] 2 V The total number of shares which the corporation is authorized to issue is 750,000. The aggregate par value of said shares is $75,000.00, and the par value of each share is $0.10. No distinction shall exist between the shares of the corporation or the holders thereof. VI Each shareholder of this corporation shall be entitled to full pre-emptive or preferential rights, as such rights are defined by law, to subscribe for or purchase his prorata part of any shares which may be issued at any time by this corporation. 3 IN WITNESS WHEREOF, for the purpose of forming this corporation under the laws of the State of California, we, the undersigned, constituting the incorporators of said corporation, being the persons named hereinabove as the first directors of said corporation, have executed these Articles of Incorporation this 30th day of November, 1976. /s/ Clifford Branch ---------------------------------- CLIFFORD BRANCH /s/ Michael J. Diskin ---------------------------------- MICHAEL J. DISKIN /s/ Thomas J. Spalding ---------------------------------- THOMAS J. SPALDING /s/ John E. King ---------------------------------- JOHN E. KING /s/ J. Edmund Smith ---------------------------------- J. EDMUND SMITH 4 STATE OF CALIFORNIA ) : SS. COUNTY OF SAN LUIS OBISPO ) On the 30th day of November, 1976, before me, the undersigned, a Notary Public in and for said State, personally appeared CLIFFORD BRANCH, MICHAEL J. DISKIN, THOMAS J. SPALDING, JOHN E. KING, and J. EDMUND SMITH, known to me to be the persons whose names are subscribed to the ARTICLES OF INCORPORATION OF CALIFORNIA COOPERAGE and acknowledge that they executed the same. WITNESS my hand and official seal. /s/ ---------------------------------- Notary Public in and for said County and State 5 CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF CALIFORNIA COOPERAGE CLIFFORD BRANCH and GARY GATEL certify that: 1. They are the Chairman of the Board of Directors and the Secretary, respectively, of California Cooperage, a California Corporation. 2. Article V of the Articles of Incorporation of said corporation shall be amended to read in full as follows: "The corporation is authorized to issue two classes of shares, designated respectively `common shares' and `preferred shares.' The number of common shares authorized is 750,000, and the par value of each common share shall be $.10 cents. The number of preferred shares authorized is 1,000, no par value. The preferred shares shall (i) be entitled to dividends at the rate of $20.00 per share, per annum, payable annually, but shall not be entitled to any voting rights under any circumstances whatsoever in the event dividends are in arrears or upon the occurrence of any other event; (ii) be redeemable, in whole or in part, on a pro-rata basis or by lots, by action of the Board of Directors, following payment of a redemption price equal to $200.00 per share plus unpaid dividends accrued thereon to the date fixed for redemption; (iii) be entitled to receive, upon liquidation, dissolution or winding up of the corporation, $200.00 per share plus unpaid dividends accrued thereon to the date of liquidation, dissolution or winding up; and (iv) be entitled to no notice of shareholders' meetings and no vote on the election of directors or any other matter. The holders of common shares shall have the exclusive right to notice of shareholders' meetings and to all voting rights." "On the amendment of this Article to read as hereinabove set forth, each outstanding share is converted into or reconstituted as one common share." 3. This amendment has been approved by the Board of Directors. 4. This amendment has been approved by the required vote of the shareholders in accordance with Sections 902 and 903 of the California Corporations Code. The corporation has only one class of shares. Each outstanding share is entitled to one vote. The corporation has 2,600 shares issued and outstanding. This amendment was approved by the affirmative vote of one hundred percent (100%) of all the issued and outstanding shares. /s/ Clifford Branch ---------------------------------- CLIFFORD BRANCH, CHAIRMAN /s/ Gary Gatel ---------------------------------- GARY GATEL, SECRETARY 2 Each of the undersigned declares under penalty of perjury that the matters set forth in the foregoing certificate are true and correct of his own knowledge, and that this declaration was executed on December 3, 1981, at San Luis Obispo, California. /s/ Clifford Branch ---------------------------------- CLIFFORD BRANCH, CHAIRMAN /s/ Gary Gatel ---------------------------------- GARY GATEL, SECRETARY 3 CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF CALIFORNIA COOPERAGE * * * * * We, Jerry M. Meyer, the President and Mary L. Williams, the Secretary of CALIFORNIA COOPERAGE, a corporation duly organized and existing under the laws of the State of California, do hereby certify: 1. That they are the President and the Secretary, respectively of CALIFORNIA COOPERAGE, a California corporation. 2. That an amendment to the Articles of Incorporation of this corporation has been approved by the board of directors. 3. The amendment so approved by the board of directors is as follows: Article I of the Articles of Incorporation of this corporation is amended to read as follows: "I: That the name of the corporation is: COLEMAN SPAS, INC." 4. That the shareholders have approved said amendment by a vote at a meeting. That the wording of said amendment as approved by the vote of the shareholders is the same as that set forth in Article 3 above. That the amendment was approved by the affirmative vote of the holders of outstanding shares having not less than the minimum number of required votes of shareholders necessary to approve said amendment in accordance with Section 902 of the California Corporations Code. 5. The designation of the total number of outstanding shares of any class or series entitled to vote on said amendment or a class or series and the minimum percentage vote required of each class or series for approval of said amendment are as follows:
Number of shares Minimum percentage Outstanding Vote required to Designation Entitled to vote Approve Common 750,000 More than 50 Percent Preferred 1,000 More than 50 Percent
5. That the number of shares of each class which voted in favor of said amendment equaled or exceeded the minimum percentage vote required of each class entitled to vote. Said minimum percentage vote is set forth in Article 5 of this certificate. Each of the undersigned declares under penalty of perjury that the statements contained in the foregoing certificate are true of their own knowledge. Executed at Wichita, Kansas on May 19, 1986. /s/ Jerry M. Meyer ---------------------------------- Jerry M. Meyer President /s/ Mary L. Williams ---------------------------------- Mary L. Williams, Secretary 2 CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF COLEMAN SPAS, INC., A CALIFORNIA CORPORATION Richard Garneau hereby certifies that: 1. He is the Vice-President and Treasurer/Chief Financial Officer of Coleman Spas, Inc., a California corporation. 2. Article I of the Articles of Incorporation of this corporation is amended to read in its entirety as follows: "I The name of this corporation is: MAAX Spas (Arizona), Inc." 3. The foregoing amendment of the Articles of Incorporation has been duly approved by the Board of Directors of this corporation. 4. The foregoing amendment of the Articles of Incorporation has been duly approved by the required vote of shareholders in accordance with Section 902 of the Corporations Code. The corporation's authorized capital stock consists of Common Stock and Preferred Stock. There are 3,562 shares of Common Stock outstanding and 1,000 shares of Preferred Stock outstanding. The number of shares voting in favor of the amendments exceeded the vote required for approval, such required vote being a majority of the outstanding Common Stock and a majority of the outstanding Preferred Stock. I further declare under penalty of perjury under the laws of the State of California that the matters set forth in this Certificate are true and correct of my own knowledge. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment at Ste - Marie, Quebec on November 27, 1998. /s/ Richard Garneau ---------------------------------- Richard Garneau Vice President /s/ Richard Garneau ---------------------------------- Richard Garneau Chief Financial Officer/Treasurer EX-3.26 29 y99327exv3w26.txt BYLAWS OF MAAX SPAS (ARIZONA), INC. EXHIBIT 3.26 Adopted: 10-11-84 BYLAWS OF CALIFORNIA COOPERAGE A California Corporation ARTICLE 1 OFFICES, SEAL SECTION 1. PRINCIPAL OFFICE. The principal place of business of the Company shall be 250 North St. Francis, Wichita, Kansas. The principal business office in the State of California shall be 880 Industrial Way, San Luis Obispo, California. The Company may have such other offices within or without the State of California or within or without the United States of America as the Board of Directors may designate or as the business of the Company may require from time to time. SECTION 2. REGISTERED OFFICE. The Corporation, by resolution of its Board of Directors, may change the location of its registered office as designated in the Articles of Incorporation to any other place in California. By like resolution the resident agent at such registered office may be changed to any other person or corporation, including itself. SECTION 3. SEAL. The Company shall not be required to have a corporate seal nor shall the validity of any of the Company's Acts or its executions be affected by the absence of a corporate seal. Any seal that is utilized shall include the full corporate name of the Company and the State of its incorporation. ARTICLE 2 SHAREHOLDERS SECTION 1. PLACE OF MEETINGS. All meetings of shareholders shall be held at the principal place of business of the Corporation unless another place within or without the State of Kansas or the United States is designated either by the Board of Directors pursuant to authority hereinafter granted to said Board, or by the written consent of all shareholders entitled to vote thereat, given either before or after the meeting and filed with the Secretary of the Company. SECTION 2. ANNUAL SHAREHOLDERS MEETINGS. The annual meeting of shareholders shall be held on the first Wednesday in October of each year, at 10:00 a.m., or, if that day is a legal holiday, on the next succeeding day which is not a legal holiday. At such meeting, directors shall be elected, reports of the affairs of the Corporation shall be considered, and any other business may be transacted which is within the powers of the shareholders. Written notice of each annual meeting shall be given to each shareholder entitled to vote, either personally or by first class mail or other equally or more prompt means of written communication, charges prepaid, addressed to such shareholder at his address appearing on the books of the Company or given by him to the Company for the purpose of notice. If a shareholder gives no address, notice shall be deemed to have been given if sent by mail or other means of written communication addressed to the place where the principal office of the Company is situated, or if published at least once in some newspaper of general circulation in the county in which said office is located. All such notices shall be sent to each shareholder entitled thereto not less than ten (10) days nor more than fifty nine (59) days before each annual meeting and shall specify the place, the date and the hour of such meeting, and shall state such other matters, if any, as may be expressly required by statute. SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders, for any purpose or purposes whatsoever, may be called at any time by the Board, the Chairman of the Board, the President, the Secretary, or the holders of shares entitled to cast not less than 10 per cent of the votes at the meeting. Except where other express provision is made by statute, notice of such special meetings shall be given in the same manner as for annual meetings of shareholders. SECTION 4. ADJOURNED MEETINGS AND NOTICE THEREOF. Any shareholders' meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the shares, the holders of which are either present in person or represented by proxy thereat, but in the absence of a quorum, no other business may be transacted at such meeting. When any shareholders' meeting, either annual or special, is adjourned for forty five (45) days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Except as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting, if the time and place thereof are announced at the meeting at which such adjournment is taken. SECTION 5. VOTING. Unless the Board of Directors has fixed in advance a record date for purposes of determining entitlement to vote at the meeting, the record date shall be as of the close of business on the day next preceding the date on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting shall be held. Such vote may be by voice or by ballot; provided, however, that all elections for directors must be by ballot upon demand made by a shareholder at any election and before the voting begins. Every shareholder entitled to vote at any election for directors shall have the right to cumulate his votes and give one candidate a number of votes to which his shares are entitled, or to distribute his votes on the same principle among as many candidates as he shall think fit. The candidates receiving the highest number of votes up to the number of directors to be elected shall be elected. SECTION 6. QUORUM. The presence in person or by proxy of persons entitled to vote a majority of the voting shares at any business meeting shall constitute a quorum for the 2 transaction of business. The shareholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. SECTION 7. CONSENT OF ABSENTEES. The transactions of any meeting of shareholders, either annual or special, however called and noticed, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each of the shareholders entitled to vote, not present in person or by proxy, signs a written waiver of notice, or a consent to the holdings of such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. SECTION 8. SHAREHOLDERS ACTION WITHOUT MEETING. Any action which under any provision of the California General Corporation Law may be taken at a meeting of the shareholders may be taken without a meeting if authorized by a writing signed by all of the persons who would be entitled to vote upon such action at a meeting, and filed with the Secretary of the Company, or such other procedure followed as may be prescribed by statute. SECTION 9. PROXIES. Every person entitled to vote or execute consents shall have the right to do so either in person or by one or more agents authorized by a written proxy executed by such person or his duly authorized agent and filed with the Secretary of the Company, provided that no such proxy shall be valid after the expiration of eleven (11) months from the date of its execution, unless the person executing it specified therein the length of time for which such proxy is to continue in force. Any such proxy is revocable as provided by statute. SECTION 10. INSPECTION OF BYLAWS. The Company shall keep in its principal office for the transaction of business the original or a copy of these bylaws as amended or otherwise altered to date, certified by the Secretary, which shall be open to inspection by the shareholders at all reasonable times during ordinary business hours. ARTICLE 3 DIRECTORS SECTION 1. POWERS. Subject to limitations of the Articles of Incorporation, of the Bylaws, and of the California General Corporation Law as to action which shall be authorized or approved by the shareholders, and subject to the duties of directors as prescribed by the Bylaws; all corporate powers shall be exercised by or under the authority of, and the business and affairs of the Company shall be controlled by, the Board of Directors. Each director shall perform the duties of a director including duties as a member of any committee of the Board in good faith in a manner the director believes is in the best interests of the corporation and with such care, including reasonable inquiry, as an ordinary prudent person in a like position would use under similar circumstances. SECTION 2. NUMBER OF DIRECTORS. The authorized number of directors of the Corporation shall be four (4) and may be increased or decreased at any time and from time to 3 time by the Board of Directors without amendment to the Bylaws, but in no event shall the number of directors be reduced to less than three (3) nor increased to more than five (5). SECTION 3. ELECTION AND TERM OF OFFICE. The directors shall be elected at each annual meeting of shareholders, but if any such annual meeting is not held, or the directors are not elected thereat, the directors may be elected at a special meeting of shareholders held for that purpose as soon thereafter as conveniently may be. All directors shall hold office until the expiration of their term and their respective successors are elected and qualified. A director who has been declared of unsound mind by an order of court or convicted of a felony can be removed from office at any time, however, by a majority vote of the Board of Directors. A Director may also be removed without cause by a majority vote of the shareholders, unless he shall have sufficient shareholder support that by use of cumulative voting he would otherwise be able to maintain his position on the board in a regular election of Board members. SECTION 4. VACANCIES. All vacancies on the Board of Directors, including but not limited to vacancies with respect to newly created directorships resulting from an increase in the number of directors but, excluding vacancies created by the removal of a director, may be filled by the affirmative vote of a majority of the directors or, if the number of directors then in office is less than a quorum, by (1) unanimous written consent of the directors then in office or (2) the affirmative vote of a majority of the directors then in office at a meeting held pursuant to notice or waivers of notice, or (3) a sole remaining director, with each director so selected to fill a vacancy to serve until the next annual meeting of stockholders and until his successor is duly elected and qualified or until his earlier death, resignation, or removal. If a Director resigns with resignation to take effect at a future time, the Board shall have power to elect a successor to take office when the resignation is to become effective. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of his term of office. SECTION 5. PLACE OF MEETING. Regular and special meetings of the Board of Directors shall be held at any place within or without the State of Kansas or the United States which has been designated in the notice of meeting, or if not stated in the notice or if there is no notice, designated from time to time by resolution of the Board or by written consent of all members of the Board. In the absence of such designation, all meetings shall be held at the principal office of the Company. SECTION 6. ANNUAL DIRECTORS MEETING. Immediately following each annual meeting of shareholders, the Board of Directors shall hold a regular meeting at the principal offices of the company at 11:00 a.m. for the purpose of organization, election of officers, and the transaction of other business. Notice of such meeting is hereby dispensed with. SECTION 7. OTHER REGULAR MEETINGS. Other regular meetings of the Board of Directors shall be held without call at such time as the Board of Directors may from time to time designate in advance of such meetings; provided, however, should said day fall upon a legal holiday, then said meeting shall be held at the same time on the next day thereafter ensuing which is not a 4 legal holiday. Notice of all such regular meetings of the Board of Directors is hereby dispensed with. SECTION 8. SPECIAL MEETINGS. Special meetings of the Board of Directors for any purpose or purposes shall be called at any time by the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Secretary or any two directors. Notice of such special meetings, unless waived as provided hereinafter, shall be given by written notice mailed at least four (4) days before the date of such meeting or be hand delivered or notified by telegram at least forty-eight (48) hours before the date such meeting is to be held. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with postage thereon addressed to the director at his residence or usual place of business. If notice be given by telegraph, such notice shall be deemed to be delivered when the same is delivered to the telegraph company. SECTION 9. NOTICE OF ADJOURNMENT. Notice of the time and place of holding an adjourned meeting need not be given to absent directors if the time and place be fixed at the meeting adjourned and the meeting is adjourned for 24 hours or less. If a meeting is adjourned for more than 24 hours to another time and place, notice thereof shall be given to the directors who were not present at the time of adjournment. SECTION 10. WAIVER OF NOTICE. The transactions of any meeting of the Board of Directors, however called and noticed or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present, and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, or a consent to holding such meeting, or an approval of the minutes thereof and if any director in attendance does not protest the failure to provide notice prior to or during the meeting. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. SECTION 11. QUORUM. A majority of the authorized number of directors shall be necessary to constitute a quorum for the transaction of business, except to adjourn as hereinafter provided. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors, unless a greater number be required by law or by the Articles of Incorporation. The directors present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum if any action taken is approved by at least a majority of the required quorum for such meeting. SECTION 12. MEETINGS BY TELEPHONE. Members of the Board of Directors of the Corporation, or of any committee designated by such board, may participate in a meeting of the Board of Directors, or of the committee, by means of conference telephone or similar communications equipment, so long as all persons participating in the meeting can hear one another. Such participation in a meeting shall constitute presence in person at the meeting. 5 SECTION 13. ADJOURNMENT. A majority of the directors present may adjourn any directors' meeting to meet again at a stated day and hour or until the time fixed for the next regular meeting of the Board. SECTION 14. DIRECTORS ACTION WITHOUT MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing. Such written consent or consents shall be filed with the minutes of proceedings of said Board and shall have the same force and effect as a unanimous vote of such directors. SECTION 15. BOARD COMMITTEES. The Board of Directors may, by resolution adopted by a majority of the authorized number of directors, designate one or more committees, each consisting of two or more directors to serve at the pleasure of the Board. Any such committee shall have the authority of the Board, to the extent provided in the resolution, except that it shall not have authority to: (1) fill vacancies on the Board or in any Board committee; (2) fix the compensation of any director for serving on the Board or on any Board committee; (3) change any bylaw; (4) declare a dividend or otherwise distribute assets of the corporation to shareholders; or, (5) establish other Board committees or appoint Board members to any Board committee. ARTICLE 4 OFFICERS SECTION 1. OFFICERS. The officers of the Corporation shall be a Chairman of the Board, a President, a Secretary, and a Chief Financial Officer. The Corporation may also have at the discretion of the Board of Directors, a Chief Executive Officer, one or more Vice-Presidents, a Treasurer, one or more Assistant Secretaries and one or more Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article 4. Any number of offices may be held by the same person. SECTION 2. ELECTION. The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 3 or Section 4 of this Article 4 shall be chosen annually by the Board of Directors, and each shall hold his office until he shall resign or shall be removed or otherwise disqualified to serve, or his successor shall be elected and qualified. SECTION 3. SUBORDINATE OFFICERS, ETC. The Board of Directors or a duly authorized committee of the Board of Directors may appoint such other officers as the business of the Corporation may require, each of whom shall have authority and perform such duties as are provided in these Bylaws or as the Board of Directors may from time to time specify, and shall hold office until he shall resign or shall be removed or otherwise disqualified to serve. SECTION 4. VACANCIES. A vacancy in any office may be filled at any time in the manner prescribed in these Bylaws for regular appointments to such office. 6 SECTION 5. CHAIRMAN OF THE BOARD. The Chairman of the Board, shall, if present, preside at all meetings of the Board, cause minutes thereof to be taken, and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board or prescribed by the Bylaws. In the event the corporation shall not have an elected Chief Executive Officer or President, the Chairman of the Board shall also have the authority and perform the duties as provided for those offices in the following Section of this Article. SECTION 6. CHIEF EXECUTIVE OFFICER. Subject to such supervisory powers, if any, as may be given by the Board to the Chairman of the Board, if there be such an officer, the Chief Executive Officer, if there shall be such an officer, shall, subject to the control of the Board, have general supervision, direction and control of the business and officers of the corporation, including the President. He shall be ex officio a member of all standing committees, including the Executive Committee, if any, and shall have the general powers and duties of management usually vested in the office of the Chief Executive Officer of a corporation and shall have such powers and duties as may be prescribed by the Board or the Bylaws. In the absence of the Chairman of the Board, or if there is none, the Chief Executive Officer shall preside at all meetings of the Board. SECTION 7. PRESIDENT. Shall be the Chief Operating Officer of the corporation and is subject to the control of the Board and the Chief Executive Officer of the corporation and shall have general supervision, direction and control of the business and officers of the corporation. He shall be ex officio a member of all the standing committees, including the Executive Committee, if any, and shall have the general powers and duties of management usually vested in the office of President of a corporation, and shall have other powers and duties as may be prescribed by the Board or the Bylaws. SECTION 8. REMOVAL AND RESIGNATION. Any officer may be removed, either with or without cause, by a majority of the directors at the time in office, at any regular or special meeting of the Board, or, except in case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the Board of Directors. SECTION 9. POWERS AND DUTIES. Each officer of the Company shall have such powers and duties as normally pertain or are incident to his office except as such powers and duties may at any time and from time to time be enlarged or restricted by the Board of Directors, as well as all additional powers and duties at any time and from time to time conferred upon or required of him by the Board of Directors. ARTICLE 5 MISCELLANEOUS SECTION 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS AND OTHER AGENTS AND EMPLOYEES. The Board of Directors shall have the right to indemnify corporate officers, directors, employees, and agents to the maximum extent permitted by the California Business Corporation Act as now in effect and as hereafter amended. That right shall include the right to indemnify any person who is or was a party, or is threatened to be made a party, to any 7 threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, by reason of the fact that such person is or was a director, officer, employee, or agent of this Corporation, or is or was serving at the request of this Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses, judgments, fines, and amounts paid in settlement actually incurred by such person in connection with such threatened, pending, or completed action, suit, or proceeding, to the maximum extent permitted by law. Such indemnification may be authorized only upon a determination that in the specific case indemnification is advisable and is permitted by law, which determination shall be made by the Board of Directors by majority vote of a quorum of the directors who are not and were not parties to such action, suit, or proceeding, for which purposes a majority of all directors who are not and were not parties to such action, suit, or proceeding shall constitute a quorum to vote upon and make or reject such determination, regardless of whether the meeting is also attended by one or more of the directors whose indemnification is being considered at the meeting. Without regard to whether a quorum of disinterested directors is obtainable, such determination may also be made by majority vote of a quorum of the Corporation's stockholders, or by the Board of Directors in accordance with a written opinion from legal counsel, other than one or more of the Corporations' own full-time corporate counsel, that such indemnification is permitted by law under the existing circumstances. SECTION 2. STOCK CERTIFICATES. Every holder of stock in the Company shall be entitled to have a certificate signed by or in the name of the Company by the Chairman of the Board of Directors, or by the Chief Executive Officer, or by the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or by the Secretary or an Assistant Secretary of the Company, certifying the number of shares owned of record by him. SECTION 3. REPRESENTATION OF SECURITIES OF OTHER CORPORATIONS OR ENTITIES. The Chairman of the Board, Chief Executive Officer, President or any Vice President, and the Secretary or Assistant Secretary of the Company are authorized to vote, represent and exercise on behalf of the Company all rights incident to any and all securities of any other corporation or entity standing in the name of the Company. The authority herein granted to said officers to vote or represent on behalf of the Company any and all securities held by the Company in any other corporation or entity may be exercised either by such officers in person or by any person authorized to do so by proxy or power of attorney duly executed by said officers. ARTICLE 6 AMENDMENTS SECTION 1. POWER OF DIRECTORS. The power to amend, alter, or repeal these Bylaws and to adopt new Bylaws in lieu of those repealed is vested in the Board of Directors, subject to the rights of the Company's common stockholders pursuant to the California General Corporation Law. 8 EX-3.27 30 y99327exv3w27.txt CHARTER OF MAAX SPAS (B.C.) INC. . . . Exhibit 3.27 [LOGO] INDUSTRY CANADA INDUSTRIE CANADA FORM 11 FORMULE 11 ARTICLES OF CONTINUANCE CLAUSES DE PROROGATION CANADA BUSINESS LOI CANADIENNE SUR LES (SECTION 187) (ARTICLE 187) CORPORATIONS ACT SOCIETES PAR ACTIONS - ------------------------------------------------------------------------------------------------------------------------- 1 - NAME OF CORPORATION DENOMINATION DE LA SOCIETE MAAX SPAS (B.C.) INC. - ------------------------------------------------------------------------------------------------------------------------- 2 - THE PLACE IN CANADA WHERE THE REGISTERED OFFICE IS LIEU AU CANADA OU DOIT ETRE SITUE LE SIEGE SOCIAL TO BE SITUATED Judicial district of Beauce, Province of Quebec - ------------------------------------------------------------------------------------------------------------------------- 3 - THE CLASSES AND ANY MAXIMUM NUMBER OF SHARES THAT THE CATEGORIES EL TOUT NOMBRE MAXIMAL D'ACTIONS QUE LA CORPORATION IS AUTHORIZED TO ISSUE SOCIETE ESL AUTORISEE A EMETTRE an unlimited number of Common shares without par value - ------------------------------------------------------------------------------------------------------------------------- 4 - RESTRICTIONS, IF ANY, ON SHARE TRANSFERS RESTRICTIONS SUR LE TRANSFERT DES ACTIONS, S'IL Y A LIEU Schedule I annexed hereto is incorporated into this form. - ------------------------------------------------------------------------------------------------------------------------- 5 - NUMBER (OR MINIMUM AND MAXIMUM NUMBER) OF DIRECTORS NOMBRE (OU NOMBRE MINIMAL ET MAXIMAL) D'ADMINISTRATEURS No less than one (1) and no more than ten (10) directors - ------------------------------------------------------------------------------------------------------------------------- 6 - RESTRICTIONS, IF ANY, ON BUSINESS THE CORPORATION LIMITES IMPOSEES A LACTIVITE COMMERCIALE DE LA SOCIETE, MAY CARRY ON S'IL Y A LIEU None - ------------------------------------------------------------------------------------------------------------------------- 7 - (1) IF CHANGE OF NAME EFFECTED, PREVIOUS NAME (1) S'IL Y A CHANGEMENT DE DENOMINATION, DENOMINATION ANTERIEURE 508696 B.C. Ltd. Incorporation November 22, 1995, under British Columbia Company Act (2) DETAILS OF INCORPORATION (2) DETAILS DE LA CONSTITUTION Incorporation November 22, 1995, under British Columbia Company Act - ------------------------------------------------------------------------------------------------------------------------- 8 - OTHER PROVISIONS, IF ANY AUTRES DISPOSITIONS, S'IL Y A LIEU Schedule II annexed hereto is incorporated into this form - ------------------------------------------------------------------------------------------------------------------------- DATE SIGNATURE_ TITLE - TITRE 1998-12-15 /s/ Director - ------------------------------------------------------------------------------------------------------------------------- FOR DEPARTMENTAL USE ONLY AL USAGE DU MINISTERE SEULEMENT FILED - DEPOSEE CORPORATION NO - Ndegrees DE LA SOCIETE 357038-0 30938093 January 12, 1999
SCHEDULE II Corporation may Borrow Funds 1. If authorized by the Directors and confirmed by ordinary resolution, the directors of the Corporation may from time to time: (a) Borrow money upon the credit of the corporation; (b) Issue, reissue, sell or pledge debt obligations of the Corporation; and (c) Mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of the Corporation, owned or subsequently acquired to secure any debt obligation. The words "debt obligations" as used in this paragraph mean bonds, debentures, notes or other evidences of indebtedness or guarantees of the Corporation, whether secured on unsecured. 2. The Directors may from time to time by resolution delegate to the President and the Secretary or to any two individuals (including the President or the Secretary) each of whom is an officer of the Corporation all or any of the powers conferred on the Directors by paragraph 1 of this schedule, to the full extent thereof or such lessor extent as the Directors may in any such resolution provide. 3. The powers herein conferred shall be deemed to be in supplement of and not in substitute for any powers to borrow money for the purposes of the Corporation possessed by its Directors and Officers independently of this schedule. Pre-Emptive Rights It is hereby provided that no shares of a class of shares shall be issued unless the shares have first been offered to the shareholders holding shares of that class, and those shareholders have a pre-emptive right to acquire the offered shares in proportion to their holdings of the shares of that class, at such price and on such terms as those shares are to be offered to others. Vacancy Among Directors Any vacancy among the directors shall be filled by a vote of the shareholders. Public Distribution of Securities The distribution of securities of the Corporation to the public is prohibited. Maximum Number of Shareholders The number of shareholders of the Corporation is limited to fifty (50), exclusive of present or former employees of the Corporation or of a subsidiary. EX-3.28 31 y99327exv3w28.txt CHARTER OF MAAX SPAS (ONTARIO) INC. . . . EXHIBIT 3.28 Consumer and ______________________ FORM 1 FORMULE 1 Corporate Affairs Canada et Corporations Canada ARTICLES OF INCORPORATION STATUTS CONSTITUTIFS (SECTION 6) (ARTICLE 6) Canada Business Loi regissant les societes Corporations Act per actions de regime federal - ------------------------------------------------------------------------------------------------------------------------- Name of Corporation Denomination de la societe 2850290 CANADA INC. - ------------------------------------------------------------------------------------------------------------------------- 2 - The place in Canada where the registered Lieu au Canada ou doit etre situe le siege social office is to be situated County of Brant, Province of Ontario - ------------------------------------------------------------------------------------------------------------------------- 3 - The classes and any maximum number of shares that the Categories et tout nombre maximal d'actions que la societe est corporation is authorized to issue autorisee a emettre The annexed Schedule 1 is incorporated in this form - ------------------------------------------------------------------------------------------------------------------------- 4 - Restrictions if any on share transfers Restrictions sur le transfert des actions, s'il y a lieu The annexed Schedule 2 is incorporated in this form - ------------------------------------------------------------------------------------------------------------------------- 5 - Number (or minimum and maximum number) of directors Nombre (ou nombre minimum et maximum) d'administrateurs Minimum of 1 and Maximum of 10 - ------------------------------------------------------------------------------------------------------------------------- 6 - Restrictions if any on business the corporation may Limites imposees quani aux activites commerciales que la carry on societe peut exploiter, s'il y a lieu None - ------------------------------------------------------------------------------------------------------------------------- 7 - Other provisions if any Autres dispositions s'il y a lieu The annexed Schedule 3 is incorporated in this form - ------------------------------------------------------------------------------------------------------------------------- 8 - Incorporators Fondateurs - -------------------------------------------------------------------------------------------------------------------------
Address (include postal code) Names -- Noms Adresse (inclure le code postal) Signature - ------------------------------------------------------------------------------------------------------------------------- Douglas A. Laver [address] /s/ Douglas A. Laver ------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------
FOR DEPARTMENTAL USE ONLY -- A L'USAGE DU MINISTERE SEULEMENT Corporation No. -- Ndegrees de la societe Filed -- Deposee 285029-0 SEP 23 1992 SCHEDULE 1 ARTICLES OF INCORPORATION THE CLASSES OF SHARES THAT THE CORPORATION IS AUTHORIZED TO ISSUE The Corporation is authorized to issue Class "A" shares, Class "B" shares, Class "C" shares, Class "D" shares, Class "E" shares, Class "F" shares and Class "G" shares. The rights, privileges, restrictions and conditions attaching to the said Class "A" shares, Class "B" shares, Class "C" shares, Class "D" shares, Class "E" shares, Class "F" shares and Class "G" shares are as follows: 1. The holders of the Class "A" shares shall be entitled to one (1) vote for each share held by them at all meetings of shareholders except meetings at which only holders of a specified class of shares, other than the Class "A" shares, are entitled to vote, and they shall be entitled to notice of all meetings of shareholders of the Corporation. 2. Except as otherwise specifically provided in the Canada Business Corporations Act, the Class "B" shares shall not carry any right to vote nor shall the holders thereof be entitled to notice of or to attend shareholders' meetings. 3. The Class "A" shares and Class "B" shares shall, subject to the rights of the Class "C" shares, Class "D" shares, Class "E" shares, Class "F" shares and Class "G" shares, be entitled at all times and from time to time, in the sole, absolute and unfettered discretion of the directors, to an unfixed non-cumulative dividend in any amount. Each Class "A" share and Class "B" share shall rank pari passu with respect to any such dividend. 4. The Class "A" shares and the Class "B" shares shall rank pari passu in every other respect, and the holders of such Class "A" shares and Class "B" shares, shall, subject to the rights of the holders of the Class "C" shares, Class "D" shares, Class "E" shares, Class "F" shares and Class "G" shares, be entitled to receive the remaining property of the Corporation upon a dissolution. 5. For purposes of this Schedule 1 the term "Redemption Amount" shall mean: (a) In the case of a Class "C" share, Class "D" share, Class "E" share and Class "F" share, an amount equal to the consideration for which each such share had been issued or in the event such share had been issued in consideration of property or past services, an amount equal to the fair equivalent of money that the Corporation would have received if such share had been issued for money, and (b) In the case of a Class "G" share, an amount equal to $1.00. 6. Each Class "C" share, Class "D" share, Class "E" share, Class "F" share and Class "G" share shall, in priority to the Class "A" shares and Class "B" shares, carry the right, in the discretion of the directors, to a fixed monthly non-cumulative preferential dividend in the case of the Class "C" shares, Class "D" shares, Class "E" shares and Class "F" shares in an amount equal to one-half (1/2) of one percent (1%) of the amount of the consideration for which each share had been issued or in the event such share had been issued in consideration of property or past services, in an amount equal to one-half (1/2) of one percent (1%) of the amount of the fair equivalent of money that the Corporation would have received if such share had been issued for money and in the case of the Class "G" shares, in an amount equal to one-half (1/2) of one cent. 7. Each Class "C" share, Class "D" share, Class "E" share, Class "F" share and Class "G" share shall, in priority to the Class "A" shares and Class "B" shares, carry the right, in the event of the liquidation or winding-up of the Corporation, to repayment of an amount equal to the Redemption Amount. 8. In the event that only part of the amount of the consideration received by the Corporation for any share issued by the Corporation is added to the stated capital account for the class or series of shares of which such share forms part, such share shall be deemed to have been issued for the full amount of the consideration received therefor for all purposes other than stated capital but including dividends, redemptions, purchases, liquidation and dissolution. If shares of the Corporation are issued in payment of a dividend, the declared amount of the dividend stated as an amount of money shall be added to the stated capital account maintained for the shares of the class or seises issued in payment of the dividend and such shares shall be deemed to be issued for a consideration equal to the declared amount of such dividend. 9. The Class "C" shares, Class "D" shares, Class "E" shares, Class "F" shares and Class "G" shares shall not carry the right to any further participation in profits or assets. 10. The holders of the Class "C" shares and Class "E" shares shall be entitled to one (1) vote for each share held by them at all meetings of shareholders except meetings at which only holders of a specified class of shares, other than the Class "C" shares and Class "E" shares are entitled to vote, and they shall be entitled to notice of all meetings of shareholders of the Corporation. 11. Except as otherwise specifically provided in the Canada Business Corporations Act, the Class "D" shares, the Class "F" shares and the Class "G" shares shall not carry any right to vote nor shall the holders thereof be entitled to notice of or to attend shareholders' meetings. 12. Each Class "C" share, Class "D" share, Class "E" share, Class "F" share and Class "G" share shall be redeemable, at the option of the Corporation, for a price equal to the Redemption Amount. The Corporation may redeem all or any part of 2 the Class "C" shares, Class "D" shares, Class "E" shares, Class "F" shares or Class "G" shares, at any time at the option of the directors of the Corporation upon a notice of seven (7) days without the consent of the holders thereof, and if less than the whole amount of the then outstanding Class "C" shares, Class "D" shares, Class "E" shares, Class "F" shares or Class "G" shares shall be so redeemed, the shares to be redeemed shall be selected pro rata, by lot or in any other manner as the directors may determine. 13. Each Class "E" share, Class "F" share and Class "G" share shall be redeemable, at the option of the holder of such share for a price equal to the Redemption Amount. 14. The Class "C" shares, Class "D" shares, Class "E" shares, Class "F" shares and Class "G" shares shall rank pari passu in every other respect. 3 SCHEDULE 2 ARTICLES OF INCORPORATION RESTRICTIONS ON SHARE TRANSFERS No shareholder shall be entitled to sell, transfer or otherwise dispose of any share or shares in the capital stock of the Corporation, or any securities thereof, without either: (a) The previous express sanction of the holders of a majority of the Class "A", Class "C" and Class "E" shares in the capital stock of the Corporation for the time being outstanding expressed by a resolution passed at a meeting of the Class "A", Class "C" and Class "E" shareholders or by an instrument or instruments in writing signed by the holders of a majority of the Class "A", Class "C" and Class "E" shares in the capital stock of the Corporation for the time being outstanding; or (b) The previous express lawful sanction of the board of directors of the Corporation at a duly constituted meeting of the board or in lieu thereof the previous express sanction of the directors of the Corporation as evidenced by the lawful adoption of a resolution to that effect. 4 SCHEDULE 3 ARTICLES OF INCORPORATION OTHER PROVISIONS 1. The number of shareholders of the Corporation is limited to fifty (50), not including persons who are in the employment of the Corporation and persons, who, having been formerly in the employment of the Corporation were, while in that employment and have continued after the termination of that employment to be shareholders of the Corporation, two or more persons bolding one or more shares jointly being counted as a single shareholder. 2. Any invitation to the public to subscribe for any shares, debentures or any other securities of the Corporation is prohibited. 3. The directors of the Corporation may, without authorization of the shareholders: (a) borrow money upon the credit of the Corporation; (b) issue, reissue, sell or pledge debt obligations of the Corporation; and (c) mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of the Corporation, owned or subsequently acquired, to secure any debt obligation of the Corporation. Nothing herein limits or restricts the borrowing of money by the Corporation on bills of exchange or promissory notes made, drawn, accepted or endorsed by or on behalf of the Corporation. 4. Subject to the provisions of the Canada Business Corporations Act, the Corporation may purchase or otherwise acquire any shares issued by it. 5. The Corporation shall have a lien on the shares registered in the name of a shareholder or his legal representative for any indebtedness owed by him to the Corporation, and such lien shall be enforceable in accordance with the by-laws of the Corporation or otherwise. 6. Subject to Schedule 1 of the Articles of Incorporation and the Canada Business Corporations Act, the holder of a fractional share shall be entitled to that number of votes equal to one multiplied by the fraction represented by such share and to notice of all meetings of shareholders of the Corporation. 5 EX-3.29 32 y99327exv3w29.txt BYLAWS OF MAAX SPAS (ONTARIO) INC. EXHIBIT 3.29 BY-LAW NO. 1 A BY-LAW RELATING GENERALLY TO THE TRANSACTION OF THE BUSINESS AND AFFAIRS OF 2850290 CANADA INC. BE IT ENACTED and it is hereby enacted as a by-law of 2850290 CANADA INC. (hereinafter called the "Corporation") as follows: GENERAL BUSINESS REGISTERED OFFICE 1. The directors may from time to time by resolution fix the location of the registered office of the Corporation within the place in Canada designated as such by the articles of the Corporation. SEAL 2. The Corporation may have a seal which shall be adopted and may be changed by resolution of the directors. FINANCIAL YEAR 3. The first financial year of the Corporation shall terminate on a date to be determined by the directors of the Corporation and thereafter on the anniversary date thereof in each year, until changed by resolution of the directors of the Corporation. BANKING ARRANGEMENTS 4. The banking business of the Corporation, or any part thereof, shall be transacted with such bank, trust company or other firm or corporation carrying on a banking business as the directors may designate, appoint or authorize from time to time by resolution and all such banking business or any part thereof shall be transacted on the Corporation's behalf by such one or more officers and/or other persons as the board may designate, direct or authorize from time to time by resolution and to the extent therein provided, including, without restricting the generality of the foregoing, the operation of the Corporation's accounts; the making, signing, drawing, accepting, endorsing, negotiating, allotting, depositing or transferring of any cheques, promissory notes, drafts, acceptances, bills of exchange and orders for the payment of money; the giving of receipts for and orders relating to any property of the Corporation; the execution of any agreement relating to any banking business and defining the rights and powers of the parties thereto; and the authorizing of any officer of such banker to do any act or thing on the Corporation's behalf to facilitate such banking business. EXECUTION OF INSTRUMENTS 5. Deeds, transfers, assignments, contracts, obligations and other instruments in writing requiring the signature of the Corporation may be signed on behalf of the Corporation by the President and the Secretary and the corporate seal shall be fixed to such instruments as may be required by any person so authorized to sign on behalf of the Corporation. Notwithstanding any provisions of the contrary contained in the by-laws of the Corporation, the directors may at any time and from time to time by resolution direct the manner in which, and the person or persons by whom any particular deed, transfer, contract, obligation or other instrument in writing or any class of deeds, transfers, contracts, obligations or other instruments in writing requiring signature by the Corporation may or shall be signed. DIRECTORS 6. Power of Directors. The directors shall manage the business and affairs of the Corporation. 2 7. Number of Directors and Quorum. Subject to the articles of the Corporation, the number of directors of the Corporation shall be that number of directors appointed by the incorporators or elected by the shareholders from time to time within the minimum and maximum as permitted by the articles of the Corporation of whom ____________ shall constitute a quorum for the transaction of the business at any meeting of the directors. Notwithstanding vacancies, the remaining directors may exercise all the powers of the board of directors so long as the quorum of the board of directors remains in office. QUALIFICATIONS 8. Each director shall be Eighteen (18) or more years of age and no person who is not an individual, who has the status of a bankrupt or who is of unsound mind and has been so found by a court in Canada or elsewhere shall be a director. If a director acquires the status of a bankrupt or becomes of unsound mind and is so found, he shall thereupon cease to be a director. RESIDENT CANADIANS 9. A majority of the directors shall be resident Canadians and no business shall be transacted by the board of directors unless a majority of the directors present are resident Canadians unless a resident Canadian director who is unable to be present, approves in writing or by telephone or other communications facilities, the business transacted at the meeting and a majority of resident Canadian directors would have been present had the director been present at the meeting. Provided that if the Corporation comes within the exception as set out in Section 100 (4) of the Act, only one-third of the directors need be resident Canadians. ELECTION AND TERM 10. The directors shall be elected yearly to hold office until the next annual meeting of the shareholders of the Corporation or until their successors shall have been duly 3 elected. The whole board shall be elected at each annual meeting and all the directors then in office shall retire, but, if qualified, are eligible for re-election. The election may be by a show of hands or by a resolution of the shareholders unless a ballot be demanded by any shareholder. REMOVAL OF DIRECTORS 11. The shareholders may by resolution passed by a majority of votes cast at a special meeting, of which notice specifying the intention to pass such resolution has been given, remove any director or directors from office before the expiration of his term of office, and may by a majority of votes cast at that meeting elect any person in his stead for the remainder of his term. VACANCIES 12. Vacancies on the board of directors, except a vacancy resulting from an increase in the minimum number of directors or from a failure to elect the minimum number of directors required by the articles may be filled for the remainder of its term of office by qualified persons by the remaining directors if they constitute a quorum. If there is not a quorum of directors, or if a vacancy results from an increase in the minimum number of directors or if there has been a failure to elect the minimum number of directors required by the articles of the Corporation, the directors then in office shall forthwith call a special meeting of shareholders to fill the vacancy and if they fail to call a meeting or if there are no directors then in office, the meeting may be called by any shareholder. CALLING OF MEETINGS 13. Meetings of the board of directors shall be held from time to time at such place, at such time and on such day as the President or a Vice-President who is a director or any Two (2) directors may determine, and the Secretary shall call meetings when directed or authorized by the President or by a Vice-President who is a director or by any Two (2) directors. 4 Notice of every meeting so called shall be given to each director not less than Forty-Eight hours (excluding any part of a Sunday or Holiday as defined by the Interpretation Act of Canada for the time being in force) before the time when the meeting is to be held and such notice shall specify the general nature of any business to be transacted, save that no notice of a meeting shall be necessary if all the directors are present, and do not object to the holding of the meeting, or if those absent have waived notice of or have otherwise signified their consent to the holding of such meeting. REGULAR MEETINGS 14. The board of directors may appoint a day or days in any month or months for regular meetings at a place and hour to be named. A copy of any resolution of the board of directors fixing the place and time of regular meetings of the board shall be sent to each director forthwith after being passed, but no other notice shall be required for any such regular meetings. FIRST MEETING OF NEW BOARD 15. Each newly elected board may, without notice, hold its first meeting for the purpose of organization and the election and appointment of officers immediately following the meeting of the shareholders at which such board was elected, provided a quorum of directors be present. PLACE OF MEETING 16. Meetings of the board may be held at the registered office of the Corporation or at any other place within or outside of Canada. PARTICIPATION BY TELEPHONE 17. With the unanimous consent of all the directors, a director may participate in any meeting of directors by means of such telephone or other communications facilities as 5 permit all persons participating in the meeting to hear each other, and a director participating in such a meeting by such means is deemed to be present at that meeting. VOTES TO GOVERN 18. At all meetings of the board of directors every question shall be decided by a majority of the votes cast on the question and in case of an equality of votes, the Chairman of the meeting shall be entitled to a second or casting vote. REMUNERATION OF DIRECTORS 19. The directors of the Corporation shall be paid such remuneration as may be determined by the board of directors. Any remuneration so payable to a director who is also an officer or any employee of the Corporation or who is counsel or solicitor to the Corporation or otherwise serves it in a professional capacity shall be, in addition to his salary as such officer, or his professional fees as the case may be. The directors shall also be paid such sums in respect of their out-of-pocket expenses incurred in attending board, committee or shareholders meetings or otherwise in respect of the performance by them of their duties as the board of directors may from time to time determine. TRANSACTION OF BUSINESS BY SIGNATURE 20. A resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of directors is as valid as if it had been passed at a meeting of directors duly called, constituted and held for that purpose. ONE DIRECTOR 21. Where the Corporation has only One director, the business and affairs of the Corporation shall be managed by such director and all business which may be transacted at a meeting of the board of directors shall be transacted by such director in the manner provided for in paragraph 20 hereof. 6 DECLARATION OF INTEREST 22. Every director or officer of the Corporation who is a party to a material contract or a proposed material contract for the Corporation or who is the director or an officer of or has a material interest in any person who is a party to a material contract, or a proposed material contract with the Corporation shall disclose in writing to the Corporation or request to have entered in the minutes of meetings of directors, the nature and extent of his interest. All such disclosures shall be made at the time required by the applicable provisions of the Act and directors shall refrain from voting in respect of the material contract or proposed material contract if and when prohibited by the Act. AVOIDANCE STANDARDS 23. A material contract between the Corporation and One or more of its directors or officers or between the Corporation and another person of which a director or officer of the Corporation is a director or officer or in which he has a material interest is neither void nor voidable by reason only of that relationship or by reason only that a director with an interest in the contract is present at or is counted to determine the presence of a quorum at a meeting of directors that authorized the contract, if the director disclosed his interest in accordance with paragraph 22 and the contract was approved by the directors or the shareholders and it was reasonable and fair to the Corporation at the time it was approved. PROTECTION OF DIRECTORS AND OFFICERS 24. No director or officer of the Corporation shall be liable for the acts, receipts, neglects or defaults of any other director or officer or for joining in any receipts or other acts for conformity or for any loss or expense happening to the Corporation through the insufficiency or deficiency of title to any property acquired by the order of the board of directors for or on behalf of the Corporation or for the insufficiency or deficiency of any security in or 7 upon which any of the monies of the Corporation shall be invested or for any loss or damage arising from the bankruptcy, insolvency or tortious act of any person with whom any of the monies, securities or effects of the Corporation shall be deposited, or for any loss occasioned by the error of judgment or oversight on his part or for any loss, damage or misfortune whatever, which shall happen in the execution of the duties of his office or in relation thereto unless in or as a result of any action, suit or proceeding he is adjudged to be in breach of any duty or responsibility imposed on him under the Act or under any other statute. INDEMNITY OF DIRECTORS AND OFFICERS 25. The Corporation shall indemnify the directors or officers of the Corporation, former directors or officers of the Corporation or any person who acts or acted at the Corporation's request as a director or officer of a body corporate of which the Corporation is or was a shareholder or creditor and his heirs and legal representatives against all costs, charges and expenses including an amount paid to settle an action or satisfy a judgment reasonably incurred by him in respect of any civil, criminal or administrative action or proceeding to which he has been made a party by reason of being or having been a director or officer of such Corporation or body corporate if: (a) he acted honestly and in good faith with a view to the best interest of the Corporation; and (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, he had reasonable grounds for believing that his conduct was lawful. The Corporation shall also indemnify such directors or officers who have been substantially successful in the defense of any civil, criminal or administrative action or proceeding to which he is made a party by reason of being or having been a director or officer of the Corporation or body 8 corporate against all costs, charges and expenses reasonably incurred by him in respect of such action or proceeding. INSURANCE FOR DIRECTORS AND OFFICERS 26. The Corporation may purchase and maintain insurance for the benefit of any director or officer against liabilities, costs, charges and expenses sustained or incurred by such director or officer for failure to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. LOANS TO SHAREHOLDERS 27. The directors of the Corporation may from time to time give financial assistance by means of a loan, guarantee or otherwise: (a) On account of expenditures incurred or to be incurred on behalf of the Corporation; (b) to a holding body corporate if the Corporation is a wholly owned subsidiary of the holding body corporate; (c) to employees of the Corporation of any of its affiliates whether or not they are shareholders or directors: (i) to enable or assist them to purchase or erect living accomodation for their own occupation; or (ii) in accordance with a plan for the purchase of shares of the Corporation or any of its affiliates to be held by a trustee; and (d) in any other case, unless there are reasonable grounds for believing that: (i) the Corporation is or would after giving the financial assistance be unable to pay its liabilities as they become due; or 9 (ii) the realizable value of the Corporation's assets excluding the amount of any financial assistance in the form of a loan and in the form of assets pledged or encumbered to secure a guarantee would, after giving the financial assistance, be less than the aggregate of the Corporation's liabilities and stated capital of all classes. OFFICERS 28. Appointed Officers. At the first meeting of the board of directors after the election of directors, the directors shall appoint from among its members, the President. The prior incumbent, if a member of the board of directors, shall continue to hold office until after the election at such meeting and, in default of such election, shall continue to hold office after such meeting. In case the office of President becomes vacant at any time, such vacancy may be filled by the board from among its members. The board of directors shall also appoint a Secretary and may appoint One or more Vice-Presidents, a General Manager, a Treasurer and such other officers as the board of directors may determine including One or more assistants to any of the officers so appointed. The officers so appointed, other than the President, may but need not be members of the board of directors. One person may hold more than one office and if the same person holds both the office of Secretary and the office of Treasurer, he may be known as the Secretary-Treasurer. TERM OF OFFICE AND REMUNERATION 29. In absence of a written agreement to the contrary, the board of directors may remove at its pleasure any officer of the Corporation. The terms of employment and remuneration of the President and other officers appointed by it shall be settled from time to time by the board of directors. 10 PRESIDENT 30. The President shall, when present, preside at all meetings of the shareholders and of the board of directors and shall be charged with the general supervision of the business and affairs of the Corporation. Except when the board of directors has appointed a general manager or managing director, the President shall also have the powers and be charged with the duties of that office. VICE -PRESIDENT 31. During the absence or inability of the President his duties may be performed and his powers may be exercised by the Vice-President, or if there are more than one, by the Vice-President in order of seniority (as determined by the board of directors) save that no Vice-President shall preside at a meeting of the board of directors or at a meeting of shareholders who is not qualified to attend the meeting as a director, as the case may be. If a Vice-President exercises any such duty or power, the absence or inability of the President shall be presumed with reference thereto. A Vice-President shall also perform such duties and exercise such powers as the President may from time to time delegate to him or the board may prescribe. GENERAL MANAGER 32. The General Manager, if one be appointed, shall have the general management and direction, subject to the authority of the board of directors and the supervision of the President, of the Corporation's business and affairs and the power to appoint and remove any and all officers, employees and agents of the Corporation not elected or appointed directly by the board of directors and to settle the terms of their employment and remuneration. If and so long as the general manager is a director he may but need not be known as the managing director. 11 SECRETARY 33. The Secretary shall give, or cause to be given, all notices required to be given to shareholders, directors, auditors and members of committees; he shall attend all meetings of the directors and of the shareholders and shall enter or cause to be entered in books kept for that purpose minutes of all proceedings at such meetings; he shall be the custodian of the stamp or mechanical device generally used for affixing the corporate seal of the Corporation and of all books, papers, records, documents and other instruments belonging to the Corporation; and he shall perform such other duties as may from time to time be prescribed by the board of directors. TREASURER 34. The Treasurer shall keep full and accurate books of account in which shall be recorded all receipts and disbursements of the Corporation and, under the direction of the board of directors, shall control the deposit of money, the safekeeping of securities and the disbursements of the funds of the Corporation; he shall render to the board of directors at the meetings thereof, or whenever required of him an account of all his transactions as Treasurer and of the financial position of the Corporation; and he shall perform such other duties as may from time to time be prescribed by the board of directors. OFFICERS 35. The duties of all other officers of the Corporation shall be such as the terms of their engagement call for or the board of directors requires of them. Any of the powers and duties of an officer to whom an assistant has been appointed may be exercised and performed by such assistant, unless the board of directors otherwise directs. 12 VARIATION OF DUTIES 36. From time to time the board may vary, add to or limit the powers and duties of any officer or officers. AGENTS AND ATTORNEYS 37. The board of directors shall have power from time to time to appoint agents or attorneys for the Corporation in or out of Canada with such powers of management or otherwise (including the power to sub-delegate) as may be thought fit. FIDELITY BONDS 38. The board of directors may require such officers, employees and agents of the Corporation as the board of directors deems advisable to furnish bonds for the faithful discharge of their duties, in such form and with such surety as the board of directors may from time to time prescribe. SHARES ALLOTMENT 39. The board of directors may from time to time allot or grant options to purchase the whole or any part of the authorized and unissued shares in the Corporation including any shares created by an amendment to the articles of the Corporation to such person or persons or class of persons as the board of directors shall by resolution determine. PAYMENT OF COMMISSION 40. The directors acting in good faith and with a view to the best interest of the Corporation may authorize the Corporation to pay a commission to any person in consideration of his purchasing or agreeing to purchase shares of the Corporation from the Corporation or from any other person or procuring or agreeing to procure purchasers for any such shares. 13 SHARE CERTIFICATES 41. Every shareholder shall be entitled, in the case of initial issuance without payment, and in the case of any subsequent transfer upon payment of a fee of not more than Three Dollars ($3.00) to a share certificate stating the number and class of shares held by him as shown by the books of the Corporation. Share certificates shall be in such form or forms as the board of directors shall from time to time approve. Unless otherwise ordered by the board of directors, they shall be signed by the President or a Vice-President and by the Secretary or an assistant Secretary and need not be under the corporate seal; provided that certificates representing shares in respect of which a transfer agent and registrar (which term shall include a branch transfer agent and registrar) have been appointed shall not be valid unless countersigned by or on behalf of such transfer agent and registrar. If authorized by resolution of the board of directors, the corporate seal of the Corporation and the signature of one of the signing officers, or in the case of share certificates representing shares in respect of which a transfer agent and registrar have been appointed, the signatures of both signing officers, may be printed, engraved, lithographed, or otherwise mechanically reproduced in facsimile upon share certificates and every such facsimile signature shall for all purposes be deemed to be the signature of the officer whose signature it reproduces and shall be valid notwithstanding that one or both of the officers whose signature (whether manual or facsimile) appears thereon no longer holds office at the date of issue or delivery of the certificate. REPLACEMENT OF SHARE CERTIFICATES 42. The board of directors may by resolution prescribe, either generally or in a particular case, reasonable conditions upon which a new share certificate may be issued in lieu of and upon cancellation of the share certificate which has become mutilated or in substitution for a certificate which has been lost, stolen or destroyed. 14 CENTRAL AND BRANCH REGISTERS 43. The Corporation shall maintain a central securities register and may from time to time maintain one or more branch securities registers. The board of directors may from time to time by resolution appoint a registrar to keep the register of security holders and a transfer agent to keep the register of transfers and may also appoint one or more branch registrars to keep branch registers of security holders and one or more branch transfer agents to keep branch registers of transfers. A registrar and transfer agent may but need not be the same individual or Corporation. TRANSFER OF SECURITIES 44. Transfers of securities of the Corporation shall be registerable on the register of transfers or on one of the branch registers of transfers (if any) kept by or for the Corporation in respect thereof upon surrender of the security properly endorsed together with such additional assurance as the Corporation shall require and subject to the provisions of the Act and the restrictions on transfer set forth in the articles of the Corporation. DEALINGS WITH REGISTERED HOLDER 45. The Corporation may, subject to the Act, treat as absolute owner of the security the person in whose name the security is registered in a securities register as if that person had full legal capacity and authority to exercise all rights of ownership irrespective of any knowledge or notice to the contrary or any description in its records or on the security certificate indicating a pledge, a representative or fiduciary relationship, a reference to any other instrument or the rights of any other person. JOINT HOLDERS 46. If Two or more persons are registered as joint holders of any security, any One of such persons may give effectual receipts for the certificate in respect thereof and for any 15 dividend, bonus, return of capital or other money payable or warrant issuable in respect of such security. RECORD DATE 47. The directors may fix in advance a date preceding by not more than Fifty (50) days or by less than Twenty-One (21) days a record date for the determination of persons entitled to receive notice of a meeting of shareholders and notice thereof shall be given in accordance with the provisions of the Act. The directors may also fix in advance a date as the record date for determination of shareholder entitled to receive payment of a dividend, entitled to participate in a liquidation distribution, or for any other purpose except the right to receive notice of to vote at a meeting which such record date shall not precede by more than Fifty (50) days, the date on which such particular action is to be taken. SHAREHOLDERS ANNUAL MEETINGS 48. The annual meeting of shareholders shall be held subject to the provisions of paragraph 65 hereof, at such place within Canada as the directors may determine or at such place outside of Canada as the directors may determine and all the shareholders entitled to vote at that meeting so agree at such time and on such day in each year as the directors may from time to time by resolution determine for the purpose of hearing and receiving the reports and statements required by the Act to be read and laid before the shareholders at any annual meeting, electing directors, appointing, if necessary, the auditor and fixing or authorizing the board of directors to fix his remuneration and for the transaction of such other business as may properly be brought before the meeting. 16 SPECIAL MEETING 49. The board of directors or the President or a Vice-President who is a director shall have the power at any time to call a special meeting of the shareholders of the Corporation to be held at such time and at such place within Canada as the directors may determine or at such place outside of Canada as the directors may determine and all the shareholders entitled to vote at that meeting so agree. The phrase "meeting of shareholders" where ever it occurs in this by-law shall mean and include the annual meeting of shareholders and a special meeting of shareholders and shall also include a meeting of any class or classes of shareholders. NOTICES 50. No public notice or advertisement of any meeting of shareholders shall be required, but notice of the time and place of each such meeting shall be given not less than Twenty-One (21) days nor more than Fifty (50) days before the day on which the meeting is to be held, to the auditor, if any, the directors and to each shareholder of record entitled to vote at the meeting. Notice of a special meeting of shareholders shall state the nature of the business to be transacted in sufficient detail to permit the shareholder to form a reasoned judgment thereon together with the text of any special resolution to be submitted to the meeting. A meeting of shareholders may be held at any time without notice if all the shareholders entitled to vote thereat are present or represented by proxy and do not object to the holding of the meeting or those not so present or represented by a proxy have waived notice, if all the directors are present or have waived notice and if the auditor, if any, is present or has waived such notice. REPORTS TO SHAREHOLDERS 51. Subject to the provisions of the Act, a copy of the financial statements and a copy of the auditor's report, if any, shall be sent to each shareholder not less than Twenty-One 17 (21) days before each annual meeting of shareholders or before the transaction of the annual business of the Corporation pursuant to paragraph 64 hereof. PERSONS ENTITLED TO BE PRESENT 52. Persons entitled to attend a meeting of shareholders shall be those entitled to vote thereat, the auditor, if any, of the Corporation and others who although not entitled to vote are entitled or required under the provisions of the Act or by-laws of the Corporation to be present at the meeting. Any other person may be admitted only on the invitation of the Chairman of the meeting or with the consent of the meeting. QUORUM 53. Two persons present in person and each entitled to vote thereat shall constitute a quorum for the transaction of business at any meeting of shareholders. RIGHT TO VOTE 54. At each meeting of shareholders every shareholder shall be entitled to vote who is, subject to paragraph 47, entered on the books of the Corporation as a holder of One or more shares carrying the right to vote at such meeting or where a record date has been fixed, satisfactory evidence is produced not later than Ten (10) days before the meeting that such person owns shares in the Corporation and demands that his name be included on the list of shareholders entitled to vote at the meeting; save that, if the share or shares in question have been mortgaged or hypothecated, the person who mortgaged or hypothecated such share or shares (or is proxy) may nevertheless represent the shares at meetings and vote in respect thereof unless in the instrument creating the mortgage or hypothec he has expressly empowered the holder of such mortgage or hypothec to vote thereon, in which case such holder (or his proxy) may attend meetings to vote in respect of such shares upon filing with the Secretary of the meeting sufficient proof of the terms of such instrument. 18 REPRESENTATIVES 55. An executor, administrator, committee of a mentally incompetent person, guardian or trustee and where a Corporation is such executor, administrator, committee, guardian or trustee of a testator, intestate, mentally incompetent person, ward or cestui que trust, any person duly appointed a proxy for such corporation, upon filing with the Secretary of the meeting sufficient proof of his appointment, shall represent the shares in his or its hands at all meetings of the shareholders of the Corporation and may vote accordingly as a shareholder in the same manner and to the same extent as the shareholder of record. If there be more than one executor, administrator, committee, guardian or trustee, the provisions of paragraph 57 shall apply. PROXIES 56. Every shareholder, including a corporate shareholder, entitled to vote at meetings of shareholders may by instrument in writing appoint a proxy, who need not be a shareholder, to attend and act at the meeting in the same manner, to the same extent and with the same power as if the shareholder were present at the meeting in the manner, to the extent and with the power conferred by the proxy. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney, authorized in writing, or if the appointer is a corporation, under the corporate seal or under the hand of an officer or attorney, authorized in writing, and shall cease to be valid after the expiration of One year from the date thereof. The instrument appointing a proxy may be in such form as the directors may from time to time prescribe or in such other form as the chairman of the meeting may accept as sufficient, and shall be deposited with the Secretary of the meeting before any vote is cast under its authority, or at such earlier time and in such manner as the board of directors may prescribe in accordance with the Act. 19 JOINT SHAREHOLDERS 57. If shares are held jointly by Two or more persons, any One of them present or represented by proxy at a meeting of the shareholders of the Corporation, may, in the absence of the other or others vote thereon, but if more than one of them are present or represented by proxy they shall vote together as One on the shares jointly held by them. SCRUTINEERS 58. At each meeting of shareholders One or more scrutineers may be appointed by a resolution of the meeting or by the Chairman with the consent of the meeting to serve at the meeting. Such scrutineers need not be shareholders of the Corporation. VOTES TO GOVERN 59. At all meetings of shareholders every question shall, unless otherwise required by articles or by-laws of the Corporation or by law, be decided by the majority of the votes duly cast on the question. SHOW OF HANDS 60. At all meetings of shareholders every question shall be decided by a show of hands unless a poll thereon be required by the Chairman or be demanded by any shareholder present in person or represented by proxy and entitled to vote. Upon a show of hands every shareholder present in person and entitled to vote shall have one vote, but the shareholder represented by proxy shall have no vote. After a show of hands has been taken upon any question the Chairman may require or any shareholder present in person or represented by proxy and entitled to vote may demand a poll thereon. Whenever a vote by show of hands shall have been taken upon a question, unless a poll thereon be so required or demanded, a declaration by the Chairman of the meeting that the vote upon the question has been carried or carried by a particular majority or not carried and an entry to that effect in the minutes of the proceedings at 20 the meeting shall be prima facie evidence of the fact without proof of the number or proportions of the votes recorded in favour of or against any resolution or other proceeding in respect of the said question, and the result of the vote so taken shall be the decision of the Corporation in annual or special meeting, as the case may be, upon the question. A demand for a poll may be withdrawn at any time prior to the taking of the poll. POLLS 61. If a poll be required by the Chairman of the meeting or be duly demanded by any shareholder and the demand be not withdrawn, a poll upon the question shall be taken in such manner as the Chairman of the meeting shall direct. Upon a poll each shareholder who is present in person or represented by proxy shall be entitled to one vote for each share in respect of which he is entitled to vote at the meeting and the result of the poll shall be the decision of the Corporation in annual or special meeting, as the case may be, upon the question. CASTING VOTE 62. In case of an equality of votes at any meeting of shareholders, either upon a show of hands or upon a poll, the Chairman of the meeting shall be entitled to a second or casting vote. ADJOURNMENT 63. The Chairman of a meeting of shareholders may, with the consent of the meeting and subject to such conditions as the meeting may decide, adjourn the meeting from time to time and from place to place. TRANSACTION OF BUSINESS BY SIGNATURE 64. Subject to the provisions of the Act a resolution in writing signed by all the shareholders entitled to vote on that resolution at a meeting of shareholders and a resolution in writing dealing with all matters required by the Act to be dealt with at a meeting of 21 shareholders and signed by all the shareholders entitled to vote at that meeting are as valid and effective as if passed at a meeting of the shareholders duly called, constituted and held for that purpose. ONE SHAREHOLDER 65. Where the Corporation has only One shareholder, all business which the Corporation may transact at an annual or special meeting of shareholders shall be transacted in the manner provided for in paragraph 64 hereof. DIVIDENDS 66. The board of directors may from time to time declare dividends payable to the shareholders according to their respective rights and interests in the Corporation. A dividend payable in cash shall be paid by cheque drawn on the Corporation's bankers or one of them to the order of each registered holder of shares of the class in respect of which it has been declared and mailed by ordinary mail, postage prepaid, to such registered holder at his last address appearing on the books of the Corporation. In the case of joint holders the cheque shall, unless such joint holders otherwise direct, be made payable to the order of all of such joint holders and if more than one address appears on the books of the Corporation in respect of such joint holding the cheque shall be mailed to the first address so appearing. The mailing of such cheque as aforesaid shall satisfy and discharge all liability for the dividend to the extent of the sum represented thereby, unless such cheque be not paid at par on due presentation. In the event of non-receipt of any cheques for dividends by the person to whom it is so sent as aforesaid, the Corporation on proof of such non-receipt and upon satisfactory indemnity being given to it, shall issue to such person a replacement cheque for a like amount. Any dividend which remains unclaimed after a period of Twelve (12) years after the date on which it has been declared payable shall be forfeited and revert to the Corporation. 22 NOTICES METHOD OF GIVING 67. Any notice, communication or other document to be given by the Corporation to a shareholder, director, officer, or auditor of the Corporation under any provision of the articles or by-laws shall be sufficiently given if delivered personally to the person to whom it is to be given or if delivered to his last address as recorded in the books of the Corporation or if mailed by prepaid ordinary or air mail in a sealed envelope addressed to him at his last address as recorded in the books of the Corporation or if sent by means of wire or wireless or any other form of transmitted or recorded communication. The Secretary may change the address on the books of the Corporation of any shareholder in accordance with any information believed by him to be reliable. A notice, communication or document so delivered shall be deemed to have been given when it is delivered personally or at the address aforesaid; and a notice, communication or document so mailed shall be deemed to have been given when deposited in a post office or public letter box; and a notice sent by any means of wire or wireless or any other form of transmitted or recorded communication shall be deemed to have been given when delivered to the appropriate communication company or agency or its representative for dispatch. COMPUTATION OF TIME 68. In computing the date when notice must be given under any provision of the articles or by-laws requiring a specified number of days, notice of any meeting or other event, the date of giving the notice and the date of the meeting or other event shall be excluded. OMISSIONS AND ERRORS 69. The accidental omission to give any notice to any shareholder, director, officer or auditor or any error in any notice not effecting the substance thereof shall not 23 invalidate any action taken at any meeting held pursuant to such notice or otherwise founded thereon. NOTICE TO JOINT SHAREHOLDERS 70. All notices with respect to any shares registered in more than one name may if more than one address appears on the books of the Corporation in respect of such joint holding, be given to such joint shareholders at the first address so appearing, and notice so given shall be sufficient notice to all the holders of such shares. PERSONS ENTITLED BY DEATH OR OPERATION OF LAW 71. Every person who by operation of law, transfer, death of a shareholder or by any means whatsoever, shall become entitled to any share or shares, shall be bound by every notice in respect of such share or shares which shall have been duly given to the person from whom he derives his title to such share or shares, previously to his name and address being entered on the books of the Corporation (whether it be before or after the happening of the event upon which he became entitled). WAIVER OF NOTICE 72. Any shareholder (or his duly appointed proxy), director, officer or auditor may waive any notice required to be given under any provision of the articles or by-laws of the Corporation or of the Act, and such waiver, whether given before or after the meeting or other event of which notice is required to be given, shall cure any default in giving such notice. INTERPRETATION 73. In this by-law and all other by-laws of the Corporation, words importing the singular number only shall include the plural and vice-versa; words importing the masculine gender shall include the feminine and neuter genders; words importing persons shall include companies, corporations, partnerships and any number or aggregate of persons; "resident 24 Canadian" means an individual who is determined to be a resident Canadian as defined by the Act; "articles" shall include the original or restated articles of incorporation, articles of amendment, articles of amalgamation, articles of continuance, articles of reorganization, articles of dissolution, articles of revival and any amendments thereto; "the Act" shall mean the Canada Business Corporations Act as amended from time to time or any act that may hereafter be substituted therefore. PASSED the 23rd day of September, 1992. WITNESS the corporate seal of the Corporation. /s/ Douglas A. Laver /s/ Rivella Mintz - -------------------------------------- ---------------------------------------- President Secretary 25 BY-LAW NO. 2 A by-law respecting the borrowing of money, the issuing of debt obligations and the securing of liabilities by 2850290 CANADA INC. BE IT ENACTED as a by-law of 2850290 CANADA INC. (hereinafter referred to as the "Corporation") as follows: The directors of the Corporation may from time to time: (a) borrow money upon the credit of the Corporation; (b) issue, reissue, sell or pledge debt obligations of the Corporation; and (c) mortgage, hypothecate, pledge or otherwise create security interest in all or any property of the Corporation owned or subsequently acquired, to secure any debt obligation of the Corporation. PASSED the 23rd day of September, 1992. WITNESS the corporate seal of the Corporation /s/ Douglas A. Laver C.S. /s/ Rivella Mintz - -------------------------------------- ----------------------------------- President Secretary 2850290 CANADA INC. SPECIAL BY-LAW NO. 3 BE IT ENACTED AS A SPECIAL BY-LAW OF THE CORPORATION AS FOLLOWS: The Directors of the Corporation are hereby authorized from time to time (a) to borrow money upon the credit of the Corporation in such amounts and on such terms as may be deemed expedient by obtaining loans or advances or by way of overdraft or otherwise; (b) to issue debt obligations of the Corporation; (c) to pledge or sell such debt obligations for such sums and at such prices as may be deemed expedient; (d) to mortgage, hypothecate, charge or pledge, or give security in any manner whatever upon all or any currently owned or subsequently acquired property, real and personal, immovable and movable, undertaking, book debts, powers, franchises and rights of the Corporation, to secure any debt obligations of the Corporation, present or future, or any money borrowed or to be borrowed or any other debt or liability of the Corporation, present or future; (e) to delegate to such officer(s) or Director(s) of the Corporation as the Directors may designate all or any of the foregoing powers to such extent and in such manner as the Directors may determine. This Special By-law shall remain in force and be binding upon the Corporation as regards any party acting on the faith thereof, until a copy, certified by the Secretary of the Corporation under the Corporation's seal of a Special By-law repealing or replacing this Special By-law shall have been received by such party and duly acknowledged in writing. ENACTED this 23rd day of September, 1992. AS WITNESS the corporate seal of the Corporation. /s/ Douglas A. Laver ---------------------------------- President /s/ Rivella Mintz ---------------------------------- Secretary EX-3.30 33 y99327exv3w30.txt CHARTER OF PEARL BATHS, INC. EXHIBIT 3.30 RESTATED ARTICLES OF INCORPORATION OF PEARL BATHS, INC. James Grogan and Pearl Higgenbotham hereby certify that they are, respectively, the President and Secretary of PEARL BATHS, INC., a corporation duly organized and existing under and by virtue of the laws of the State of Minnesota; that on May 24, 1984, at the annual stockholders meeting held at 1800 Midwest Plaza, Minneapolis, Minnesota 55402, the holders of all issued and outstanding voting shares, by the affirmative vote of the holders of two-thirds or more of said outstanding voting shares, authorized and adopted the following resolution: RESOLVED: That Pearl Baths, Inc. hereby adopts the Restated Articles of Incorporation presented to this meeting, which Restated Articles of Incorporation shall supersede and take the place of the existing Articles of Incorporation of this corporation and all amendments thereto heretofore made. ARTICLE I NAME The name of this corporation is "PEARL BATHS, INC." ARTICLE II REGISTERED OFFICE The registered office of this corporation within the State of Minnesota is located at 6801 Shingle Creek Parkway, Minneapolis, Minnesota 55430. ARTICLE III CAPITAL This corporation is authorized to issue an aggregate of 250 shares of stock, at a par value of One Hundred and No/100 Dollars ($100.00) each. ARTICLE IV CLASSES AND SERIES OF STOCK In addition to, and not by way of limitation of, the powers granted to the Board of Directors by Minnesota Statutes, Chapter 302A, the Board of Directors of this corporation shall have the power and authority to fix by resolution any designation, class, series, voting power, preference, right, qualification, limitation, restriction, dividend, sinking or purchase fund rights, time and price of redemption, time and price of liquidation, and conversion right with respect to any stock of this corporation. The Board of Directors shall further have the authority to issue shares of a class or series to holders of another class or series to effectuate share dividends, splits, or conversion of its outstanding shares. ARTICLE V CUMULATIVE VOTING AND PREEMPTIVE RIGHTS DENIED (1) No holder of stock of this corporation shall be entitled to any cumulative voting rights. (2) No holder of stock of this corporation shall have any preferential, pre-emptive or other rights of subscription to any shares of any class of stock of this corporation allotted or sold or to be allotted or sold and now or hereafter authorized, or to any obligations or securities convertible into any class of stock of this corporation nor any right of subscription to any part thereof. 2 ARTICLE VI RIGHTS AND OPTIONS The corporation may grant rights to convert any of its securities into shares of stock of any class or classes, or options to purchase or subscribe for shares of any class or classes, and may issue share purchase or subscription warrants or other evidence of such option rights, setting forth the terms, provisions and conditions thereof, including the price or prices at which such shares may be purchased or subscribed for, and such options may be transferable or nontransferable and separable or inseparable from other shares or securities of the corporation. The Board of Directors is authorized to fix the terms, provisions and conditions of such rights or options, including the conversion basis or bases and the option price or prices at which shares may be purchased or subscribed for, and to authorize the issuance thereof. IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 15th day of November, 1984. PEARL BATHS, INC. By /s/ James M. Grogan --------------------------------- Its President By /s/ Pearl Higgenbotham --------------------------------- Its Secretary 3 EX-3.31 34 y99327exv3w31.txt RESTATED BYLAWS OF PEARL BATHS, INC. EXHIBIT 3.31 PEARL BATHS, INC. RESTATED BY LAWS ARTICLE I. CORPORATE OFFICES AND SEAL Section 1.01. Offices. The corporation may have offices within the State of Minnesota or at such other places as the Board of Directors may from time to time appoint or the business of the corporation may require. Section 1.02. Seal. The corporation shall not have a seal. ARTICLE II. MEETINGS OF STOCKHOLDERS Section 2.01. Place of Meetings. Meetings of the stockholders may be held at any place, within or without the State of Minnesota, as designated by the President or the Board of Directors in the notice of meeting, and in the absence of such designation, shall be held at the office of the corporation in the State of Minnesota. Section 2.02. Regular Meetings. Regular meetings of the stockholders of this corporation may be held at the discretion of the Board of Directors on an annual or less frequent periodic basis on such date and at such time and place as may be designated by the President or the Board of Directors in the notice of meeting. At regular meetings, the stockholders shall elect directors and transact such business as may be appropriate for action by the stockholders. If a regular meeting of stockholders has not been held for a period of fifteen (15) months, one or more stockholders holding not less than three percent (3%) of all voting stock of the corporation may call a regular meeting of stockholders by delivering to the President or Treasurer a written demand for a regular meeting. Within thirty (30) days after receipt of such written demand by the President and Treasurer, the Board of Directors shall cause a regular meeting of stockholders to be called and held on notice no later than ninety (90) days after the receipt of written demand, all at the expense of the corporation. Section 2.03. Special Meetings. Special meetings of the stockholders, for any purpose or purposes appropriate for action by stockholders, may be called by the President, by a Vice President in the absence of the President, by the Treasurer, or by the Board of Directors or any two or more members thereof. Such meetings shall be held on such date and at such time and place as shall be fixed by the person or persons calling the meeting and designated in the notice of meeting. Special meetings may also be called by one or more stockholders holding not less than ten percent (10%) of the voting shares of the corporation by delivering to the President or Treasurer a written demand for a special meeting, which demand shall contain the purposes of the meeting. Within thirty (30) days after the receipt of such a written demand for a special meeting of stockholders by the President or Treasurer, the Board of Directors shall cause a special meeting of stockholders to be called and held on notice no later than ninety (90) days after the receipt of such written demand, all at the expense of the corporation. Business trans-acted at any special meeting of the stockholders shall be limited to the purpose or purposes stated in the notice of meeting. Section 2.04. Notice of Meetings. Except where a meeting of stockholders is an adjourned meeting and the dates, time and place of such meeting were announced at the time of adjournment, notice of all meetings of stockholders stating the date, time, and place thereof, and any other information required by law or desired by the Board of Directors or by any other person or persons calling the meeting, and in the case of a special meeting, the purpose thereof, 2 shall be given to each stockholder of record entitled to vote at such meeting not less than seven (7) nor more than sixty (60) days prior to the date of such meeting. In the event that a plan of merger, exchange, sale or other disposition of all or substantially all of the assets of the corporation is to be considered at a meeting of stockholders, notice of such meeting shall be given to every stockholder, whether or not entitled to vote, not less than fourteen (14) days prior to the date of such meeting. Section 2.05. Quorum; Adjourned Meetings. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum, and the presence of such majority stockholders shall be required at all meetings of the stockholders for the transaction of business, except as otherwise provided by law, by the Articles of Incorporation, or by these Bylaws. If, however, such majority shall not be present or represented at any meeting of stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of voting stock shall be present. At any such adjourned meeting at which the requisite amount of voting stock shall be represented, any business may be transacted which might have been transacted at the meeting as originally called. Section 2.06. Voting and Proxies. At each meeting of the stockholders, every stockholder having the right to vote shall be entitled to vote in person or by proxy appointed by an instrument in writing subscribed by such stockholder and conforming to the requirements established by law. Each stockholder shall have one vote for each share of stock having voting power registered in his or her name on the books of the corporation. All questions regarding the qualification of voters, the validity of appointments of proxies, and the acceptance or rejection of 3 votes shall be decided by the presiding officer of the meeting. The vote of the holders of a majority of the shares having voting power present in person or represented by proxy shall decide any question brought before any duly held meeting, except as to any question upon which any different vote is required by law, the Articles of Incorporation, or these Bylaws. ARTICLE III. DIRECTORS Section 3.01. Powers. The property, affairs and business of the corporation shall be managed by the Board of Directors which shall consist of such number of directors as may be determined, from time to time, by the Board of Directors by the affirmative vote of a majority of the entire Board. In addition to the powers and authorities by these Bylaws expressly conferred upon it, the Board may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders. Section 3.02. Qualifications; Term of Office. Directors need not be stockholders. A director shall hold office until the annual meeting for the year in which his or her term expires and until his or her successor shall be elected and shall qualify, subject however to prior death, resignation, retirement or removal for cause. Section 3.03. Notice of Nominations of the Directors. Nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors. Notice of nominations which are proposed by the Board of Directors shall be given by the President or the Chairman of the Board of Directors on behalf of the Board of Directors. Section 3.04. Vacancies; Newly Created Directorships. Any vacancy occurring in the Board of Directors may be filled for the unexpired term by the affirmative vote of a 4 majority of the directors remaining in office, even though said remaining directors be less than a quorum. Any newly created directorship resulting from an increase in the authorized number of directors by action of the Board of Directors may be filled, for a term determined by the Board of Directors consistent with the Articles of Incorporation, by a majority vote of the directors serving at the time of such increase. Section 3.05. Meetings. Meetings of the Board of Directors shall be held immediately after, and at the same place as, regular meetings of stockholders. Other meetings of the Board of Directors may be held at such times and places as shall from time to time be determined by the Board of Directors. Meetings of the Board of Directors also may be called by any director, in which case the person or persons calling such meeting may fix the date, time, and place thereof, and shall cause notice of meeting to be given. Section 3.06. Notice of Meetings. If the date, time, and place of the meeting of the Board of Directors has been announced at the previous meeting, no notice is required. In all other cases, twenty-four (24) hours' notice of meetings of the Board of Directors, stating the date and time thereof and any other information required by law or desired by the person or persons calling such a meeting, shall be given to each director. If notice of meeting is required, and such notice does not state the place of the meeting, such meeting shall be held at the principal executive office of the corporation. Notice of meetings of the Board of Directors shall be given to directors in the manner provided in Article VI of these Bylaws for the giving of notice. Section 3.07. Meetings by Electronic Communication. Members of the Board of Directors or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or of any such committee by means of conference telephone or similar communication equipment by means of which all persons participating in the meeting can 5 simultaneously hear each other, and participation in such a manner shall constitute presence in person at such meeting. Section 3.08. Quorum and Voting. A majority of the directors currently holding office shall constitute a quorum for the transaction of business at any meeting of the Board of Directors. In the absence of a quorum, a majority of the directors present may adjourn the meeting from time to time until a quorum is present. The Board of Directors shall take action by the affirmative vote of the majority of the directors present at any duly held meeting, except as to any question upon which any different vote is required by law, the Articles of Incorporation, or these Bylaws. Section 3.09. Committees. The Board of Directors, by resolution approved by the affirmative vote of the majority of the directors then holding office, may establish one or more committees of one or more persons having the authority of the Board of Directors in the management of the business of the corporation to the extent provided in such resolution. Such committees, however, shall at all times be subject to the direction and control of the Board of Directors. Committee members need not be directors and shall be appointed by the affirmative vote of a majority of the directors present. The majority of the members of any such committee shall constitute a quorum for the transaction of business at a meeting of any such committee. In other matters of procedure, the provisions of these Bylaws shall apply to the committees and the members thereof to the same extent they apply to the Board of Directors and directors, including, without limitation, the provisions with respect to meetings and notice thereof, absent members, written actions, electronic communications, and valid acts. Each committee shall keep regular minutes of its proceedings and report the same to the Board of Directors. 6 Section 3.10. Advance Written Consent. A director may give advance written consent or opposition to a proposal to be acted on at a meeting of the Board of Directors and such written notice or opposition, while not substituting for the director's presence for purposes of quorum, shall be counted as a vote on the proposal. ARTICLE IV. OFFICERS Section 4.01. Number. The officers of the corporation shall be chosen by the directors, and shall consist of a Chairman of the Board (if one is elected by the Board), a President, one or more Vice Presidents, a Secretary, a Treasurer and such Assistant Secretaries and Assistant Treasurers and such other officers and agents as the Board of Directors from time to time shall elect or appoint. Any two offices may be held by the same person. Section 4.02. Term of Office; Removal; and Vacancies. Any officer shall hold office until his or her successor shall have been duly elected, unless prior thereto he or she shall have resigned or been removed from office as hereinafter provided. Any officer or agent elected or appointed by the Board of Directors shall hold office at the pleasure of the Board of Directors and may be removed, with or without cause, at any time by the vote of a majority of the Board of Directors. Any vacancy in an office of the corporation shall be filled by the Board of Directors. Section 4.03. Chairman of the Board. The Chairman of the Board, if one is elected, shall preside at all meetings of the stockholders and directors and shall have such other duties as may be prescribed from time to time, by the Board of Directors. Section 4.04. President. The President shall be the chief executive officer of the corporation. In the absence of the Chairman of the Board, the President shall: preside at all meetings of stockholders and directors; be responsible for general and active management of the business of the corporation; and see that all orders and resolutions of the Board are carried into 7 effect. The President shall have the general powers and duties usually vested in the office of the President and chief executive officer and shall have such other powers and perform such other duties as the Board of Directors may from time to time prescribe. Section 4.05. Vice President. The Vice President, if any, or Vice Presidents in case there be more than one, shall have such powers and perform such duties as the President or the Board of Directors may from time to time prescribe. Section 4.06. Secretary. The Secretary shall attend all meetings of the Board of Directors and of the stockholders and shall maintain records of, and whenever necessary, certify all proceedings of the Board of Directors and of the stockholders. The Secretary shall keep the stock books of the corporation, and when so directed by the Board of Directors, shall give or cause to be given notice of meetings of the stockholders and meetings of the Board of Directors. He or she shall also perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe. Section 4.07. Treasurer. The Treasurer shall be the chief financial officer of the corporation. He or she shall have the care and custody of the corporate funds and securities of the corporation and shall disburse the funds of the corporation as may be ordered from time to time by the President or the Board of Directors. The Treasurer shall keep full and accurate financial records for the corporation and shall have such other powers and perform such other duties as the President or the Board of Directors may from time to time prescribe. Section 4.08. Other Officers. The Assistant Secretaries and Assistant Treasurers in the order of their seniority, unless otherwise determined by the Board of Directors, shall, in the absence or disability of the Secretary or Treasurer, perform the duties and exercise the powers of the Secretary and Treasurer respectively. Such Assistant Secretaries and Assistant 8 Treasurers shall have such other powers and perform such other duties as the President or the Board of Directors may from time to time prescribe. Any other officer appointed by the Board of Directors shall hold office at the pleasure of the Board of Directors, and shall have such powers, perform such duties, and be responsible to such other officers as the Board of Directors may from time to time prescribe. Section 4.09. Delegation of Duties. In case of the absence of any officer of the corporation, or for any other reason that the Board may deem sufficient, the Board may delegate for the time being the powers and duties, or any of them of such officer to any other officer or to any director or directors. ARTICLE V. CERTIFICATES OF STOCK Section 5.01. Certificates. Certificates of stock of the corporation shall be numbered and shall be entered into the books of the corporation as they are issued. Each such certificate shall exhibit the holder's name and number of shares, and shall contain any other information required by law or desired by the Board of Directors and shall be signed by the President or any Vice President and the Treasurer or the Assistant Treasurer, or the Secretary or Assistant Secretary. Section 5.02. Loss of Certificates. Any person claiming a certificate of stock to be lost or destroyed shall make an affidavit in such manner as the Board of Directors may require, and shall, if the Directors so require, give the corporation a bond of indemnity in form and amount and with one or more sureties satisfactory to the Board, whereupon a new certificate may be issued of the same tenor and for the same number of shares as the one alleged to be lost or destroyed. 9 ARTICLE VI. NOTICES Section 6.01. General. Whenever notice is required to be given to any stockholder or director, such notice may be given by either oral or written communication. A written notice shall be delivered by hand or mailed to the stockholder or director for whom it is intended at such address as appears on the books of the corporation or shall be given by any other method which conforms to law. Notice by mail shall be deemed given when deposited in the United States mail with sufficient postage affixed. Section 6.02. Waiver of Notice. Whenever any notice is required to be given to any stockholder, director or officer under the provisions of these Bylaws, the Articles of Incorporation or by statute, such notice may be waived in the manner provided by law. ARTICLE VII. INDEMNIFICATION Section 7.01. The corporation shall indemnify its officers, directors, employees and agents to the full extent permitted by the laws of the State of Minnesota, as now in effect, or as the same may be hereafter amended. ARTICLE VIII. AMENDMENTS Section 8.01. These Bylaws may be amended or altered by the Board of Directors at any meeting provided that notice of any such proposed amendment shall have been given in the notice given to the directors of such meeting. Such authority in the Board of Directors is subject to the power of the stockholders to change or repeal such Bylaws. 10 EX-4.1 35 y99327exv4w1.txt INDENTURE EXHIBIT 4.1 ================================================================================ MAAX CORPORATION, as Issuer, the GUARANTORS party hereto, as Guarantors, and U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee ------------------------ INDENTURE ------------------------ Dated as of June 4, 2004 ------------------------ 9.75% Senior Subordinated Notes due 2012 =============================================================================== CROSS-REFERENCE TABLE
Trust Indenture Act Indenture Section Section - ------------------- ----------------- 310 (a)(1)................................ 7.10 (a)(2)................................ 7.10 (a)(3)................................ N.A. (a)(4)................................ N.A. (a)(5)................................ 7.08; 7.10 (b)................................... 7.08; 7.10; 12.02 (c)................................... N.A. 311 (a)................................... 7.11 (b)................................... 7.11 (c)................................... N.A. 312 (a)................................... 2.05 (b)................................... 12.03 (c)................................... 12.03 313 (a)................................... 7.06 (b)(1)................................ 7.06 (b)(2)................................ 7.06 (c)................................... 7.06; 12.02 (d)................................... 7.06 314 (a)................................... 4.06; 4.18; 12.02 (b)................................... N.A. (c)(1)................................ 7.02; 12.04; 12.05 (c)(2)................................ 7.02; 12.04; 12.05 (c)(3)................................ N.A. (d)................................... N.A. (e)................................... 12.05 (f)................................... N.A. 315 (a)................................... 7.01(b); 7.02(a) (b)................................... 7.05; 12.02 (c)................................... 7.01 (d)................................... 6.05; 7.01(c) (e)................................... 6.11 316 (a)(last sentence).................... 2.09 (a)(1)(A)............................. 6.05 (a)(1)(B)............................. 6.04 (a)(2)................................ 9.02 (b)................................... 6.07 (c)................................... 9.05 317 (a)(1)................................ 6.08 (a)(2)................................ 6.09 (b)................................... 2.04
Trust Indenture Act Trust Indenture Act Section Section - ------------------- --------- 318 (a).......................................... 12.01 (c)........................................ 12.01
- ------------ N.A. means Not Applicable Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of this Indenture. TABLE OF CONTENTS
Page ---- ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE........................................ 1 SECTION 1.01. Definitions....................................................................... 1 SECTION 1.02. Other Definitions................................................................. 26 SECTION 1.03. Incorporation by Reference of Trust Indenture Act................................. 27 SECTION 1.04. Rules of Construction............................................................. 27 ARTICLE TWO THE NOTES......................................................................... 28 SECTION 2.01. Form and Dating................................................................... 28 SECTION 2.02. Execution, Authentication and Denomination; Additional Notes; Exchange Securities...................................................................... 29 SECTION 2.03. Registrar and Paying Agent........................................................ 30 SECTION 2.04. Paying Agent To Hold Assets in Trust.............................................. 31 SECTION 2.05. Holder Lists...................................................................... 31 SECTION 2.06. Transfer and Exchange............................................................. 31 SECTION 2.07. Replacement Notes................................................................. 32 SECTION 2.08. Outstanding Notes................................................................. 32 SECTION 2.09. Treasury Notes.................................................................... 33 SECTION 2.10. Temporary Notes................................................................... 33 SECTION 2.11. Cancellation...................................................................... 33 SECTION 2.12. Defaulted Interest................................................................ 33 SECTION 2.13. CUSIP and ISIN Numbers............................................................ 34 SECTION 2.14. Deposit of Moneys................................................................. 34 SECTION 2.15. Book-Entry Provisions for Global Notes............................................ 34 SECTION 2.16. Special Transfer and Exchange Provisions.......................................... 35 ARTICLE THREE REDEMPTION........................................................................ 39 SECTION 3.01. Notices to Trustee................................................................ 39 SECTION 3.02. Selection of Notes To Be Redeemed................................................. 39 SECTION 3.03. Notice of Redemption.............................................................. 40 SECTION 3.04. Effect of Notice of Redemption.................................................... 41 SECTION 3.05. Deposit of Redemption Price....................................................... 41 SECTION 3.06. Notes Redeemed in Part............................................................ 41 ARTICLE FOUR COVENANTS......................................................................... 41 SECTION 4.01. Payment of Notes.................................................................. 41 SECTION 4.02. Maintenance of Office or Agency................................................... 42 SECTION 4.03. Corporate Existence............................................................... 42 SECTION 4.04. Payment of Taxes.................................................................. 42 SECTION 4.05. Reserved.......................................................................... 43 SECTION 4.06. Compliance Certificate; Notice of Default......................................... 43 SECTION 4.07. Payments for Consent.............................................................. 43 SECTION 4.08. Waiver of Stay, Extension or Usury Laws........................................... 43
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Page ---- SECTION 4.09. Change of Control................................................................. 44 SECTION 4.10. Incurrence of Indebtedness and Issuance of Preferred Stock........................ 45 SECTION 4.11. Limitations on Restricted Payments................................................ 49 SECTION 4.12. Limitations on Liens.............................................................. 52 SECTION 4.13. Limitations on Asset Sales........................................................ 52 SECTION 4.14. Limitations on Transactions with Affiliates....................................... 55 SECTION 4.15. Dividend and Other Payment Restrictions Affecting Subsidiaries.................... 57 SECTION 4.16. Subsidiary Guarantees............................................................. 59 SECTION 4.17. Limitations on Layering Indebtedness.............................................. 60 SECTION 4.18. Reports to Holders................................................................ 60 SECTION 4.19. Limitations on Designation of Restricted and Unrestricted Subsidiaries............ 61 SECTION 4.20. Business Activities............................................................... 61 SECTION 4.21. Additional Amounts................................................................ 62 ARTICLE FIVE SUCCESSOR CORPORATION............................................................. 64 SECTION 5.01. Mergers, Consolidations, Etc...................................................... 64 ARTICLE SIX DEFAULT AND REMEDIES.............................................................. 66 SECTION 6.01. Events of Default................................................................. 66 SECTION 6.02. Acceleration...................................................................... 68 SECTION 6.03. Other Remedies.................................................................... 69 SECTION 6.04. Waiver of Past Defaults........................................................... 69 SECTION 6.05. Control by Majority............................................................... 69 SECTION 6.06. Limitation on Suits............................................................... 69 SECTION 6.07. Rights of Holders To Receive Payment.............................................. 70 SECTION 6.08. Collection Suit by Trustee........................................................ 70 SECTION 6.09. Trustee May File Proofs of Claim.................................................. 70 SECTION 6.10. Priorities........................................................................ 71 SECTION 6.11. Undertaking for Costs............................................................. 71 ARTICLE SEVEN TRUSTEE........................................................................... 72 SECTION 7.01. Duties of Trustee................................................................. 72 SECTION 7.02. Rights of Trustee................................................................. 73 SECTION 7.03. Individual Rights of Trustee...................................................... 74 SECTION 7.04. Trustee's Disclaimer.............................................................. 74 SECTION 7.05. Notice of Default................................................................. 74 SECTION 7.06. Reports by Trustee to Holders..................................................... 75 SECTION 7.07. Compensation and Indemnity........................................................ 75 SECTION 7.08. Replacement of Trustee............................................................ 76 SECTION 7.09. Successor Trustee by Merger, Etc.................................................. 77 SECTION 7.10. Eligibility; Disqualification..................................................... 77 SECTION 7.11. Preferential Collection of Claims Against the Issuer.............................. 77 ARTICLE EIGHT DISCHARGE OF INDENTURE; DEFEASANCE................................................ 78 SECTION 8.01. Termination of the Issuer's Obligations........................................... 78
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Page ---- SECTION 8.02. Option to Effect Legal Defeasance or Covenant Defeasance.......................... 79 SECTION 8.03. Legal Defeasance.................................................................. 79 SECTION 8.04. Covenant Defeasance............................................................... 80 SECTION 8.05. Conditions to Legal or Covenant Defeasance........................................ 80 SECTION 8.06. Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions........................................................ 82 SECTION 8.07. Repayment to Issuer............................................................... 82 SECTION 8.08. Reinstatement..................................................................... 82 ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS............................................... 83 SECTION 9.01. Without Consent of Holders........................................................ 83 SECTION 9.02. With Consent of Holders........................................................... 84 SECTION 9.03. Effect on Senior Debt............................................................. 85 SECTION 9.04. Compliance with the Trust Indenture Act........................................... 85 SECTION 9.05. Revocation and Effect of Consents................................................. 85 SECTION 9.06. Notation on or Exchange of Notes.................................................. 86 SECTION 9.07. Trustee To Sign Amendments, Etc................................................... 86 ARTICLE TEN SUBORDINATION OF NOTES............................................................ 87 SECTION 10.01. Notes Subordinated to Senior Debt................................................. 87 SECTION 10.02. Suspension of Payment When Senior Debt Is in Default.............................. 87 SECTION 10.03. Notes Subordinated to Prior Payment of All Senior Debt on Dissolution, Liquidation or Reorganization of the Issuer..................................... 88 SECTION 10.04. Payments May Be Made on Notes..................................................... 90 SECTION 10.05. Holders To Be Subrogated to Rights of Holders of Senior Debt...................... 90 SECTION 10.06. Obligations of the Issuer Unconditional........................................... 90 SECTION 10.07. Notice to Trustee................................................................. 91 SECTION 10.08. Reliance on Judicial Order or Certificate of Liquidating Agent.................... 91 SECTION 10.09. Trustee's Relation to Senior Debt................................................. 91 SECTION 10.10. Subordination Rights Not Impaired by Acts or Omissions of the Issuer or Holders of Senior Debt.................................................................. 92 SECTION 10.11. Holders Authorize Trustee To Effectuate Subordination of Notes.................... 92 SECTION 10.12. This Article Ten Not To Prevent Events of Default................................. 93 SECTION 10.13. Trustee's Compensation Not Prejudiced............................................. 93 ARTICLE ELEVEN NOTE GUARANTEE.................................................................... 93 SECTION 11.01. Unconditional Guarantee........................................................... 93 SECTION 11.02. Subordination of Note Guarantee................................................... 94 SECTION 11.03. Limitation on Guarantor Liability................................................. 94 SECTION 11.04. Execution and Delivery of Note Guarantee.......................................... 95 SECTION 11.05. Release of a Subsidiary Guarantor................................................. 95 SECTION 11.06. Waiver of Subrogation............................................................. 96 SECTION 11.07. Immediate Payment................................................................. 96 SECTION 11.08. No Set-Off........................................................................ 96 SECTION 11.09. Guarantee Obligations Absolute.................................................... 97
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Page ---- SECTION 11.10. Note Guarantee Obligations Continuing............................................. 97 SECTION 11.11. Note Guarantee Obligations Not Reduced............................................ 97 SECTION 11.12. Note Guarantee Obligations Reinstated............................................. 97 SECTION 11.13. Note Guarantee Obligations Not Affected........................................... 97 SECTION 11.14. Waiver............................................................................ 99 SECTION 11.15. No Obligation to Take Action Against the Issuer................................... 99 SECTION 11.16. Dealing with the Issuer and Others................................................ 99 SECTION 11.17. Default and Enforcement........................................................... 99 SECTION 11.18. Acknowledgment.................................................................... 100 SECTION 11.19. Costs and Expenses................................................................ 100 SECTION 11.20. No Merger or Waiver; Cumulative Remedies.......................................... 100 SECTION 11.21. Survival of Note Guarantee Obligations............................................ 100 SECTION 11.22. Note Guarantee in Addition to Other Guarantee Obligations......................... 100 SECTION 11.23. Severability...................................................................... 100 SECTION 11.24. Successors and Assigns............................................................ 101 ARTICLE TWELVE MISCELLANEOUS..................................................................... 101 SECTION 12.01. Trust Indenture Act Controls...................................................... 101 SECTION 12.02. Notices........................................................................... 101 SECTION 12.03. Communications by Holders with Other Holders...................................... 102 SECTION 12.04. Certificate and Opinion as to Conditions Precedent................................ 102 SECTION 12.05. Statements Required in Certificate or Opinion..................................... 103 SECTION 12.06. Rules by Paying Agent or Registrar................................................ 103 SECTION 12.07. Legal Holidays.................................................................... 103 SECTION 12.08. Governing Law..................................................................... 103 SECTION 12.09. No Adverse Interpretation of Other Agreements..................................... 103 SECTION 12.10. No Recourse Against Others........................................................ 103 SECTION 12.11. Successors........................................................................ 104 SECTION 12.12. Duplicate Originals............................................................... 104 SECTION 12.13. Severability...................................................................... 104 SECTION 12.14. Agent for Service and Waiver of Immunities........................................ 104 SECTION 12.15. Judgment Currency................................................................. 105 Signatures................................................................................................... S-1
Exhibit A - Form of Note Exhibit B - Form of Legends Exhibit C - Form of Certificate To Be Delivered in Connection with Transfers to Non-QIB Accredited Investors Exhibit D - Form of Certificate To Be Delivered in Connection with Transfers Pursuant to Regulation S Exhibit E - Form of Certificate To Be Delivered in Connection with Transfers of Temporary Regulation S Global Note Exhibit F - Form of Notation of Subsidiary Guarantee Note: This Table of Contents shall not, for any purpose, be deemed to be part of this Indenture. iv INDENTURE dated as of June 4, 2004 among MAAX Corporation, a Nova Scotia unlimited company (the "ISSUER"), and each of the Guarantors named herein, as Guarantors, and U.S. Bank Trust National Association, a national banking association, as Trustee (the "TRUSTEE"). The Issuer has duly authorized the creation of an issue of 9.75% Senior Subordinated Notes due 2012 and, to provide therefor, the Issuer and the Guarantors have duly authorized the execution and delivery of this Indenture. All things necessary to make the Notes, when duly issued and executed by the Issuer and authenticated and delivered hereunder, the valid and binding obligations of the Issuer and to make this Indenture a valid and binding agreement of the Issuer and the Guarantors has been done. For and in consideration of the premises and the purchase of the Notes by the Holders thereof, the parties hereto covenant and agree, for the equal and proportionate benefit of all Holders, as follows: ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions. Set forth below are certain defined terms used in this Indenture. "144A GLOBAL NOTE" has the meaning given to such term in Section 2.01. "ACQUIRED DEBT" means, with respect to any specified Person: (1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person; and (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. "AGENT" means any Registrar or Paying Agent. "APPLICABLE PREMIUM" means, with respect to a Note at any Redemption Date, the greater of: (1) 1.0% of the principal amount of such Note; and (2) the excess of: (a) the present value at such Redemption Date of (1) the Redemption Price of such Note on the Fourth Anniversary (such Redemption Price being that described in Section 5(a) of the Notes) plus (2) all required remaining scheduled interest payments due on such Note through the Fourth Anniversary, other than accrued interest to such Redemption Date, computed using a discount rate equal to the Treasury Rate plus 50 basis points, discounted on a semi-annual bond equivalent basis, over (b) the principal amount of such Note on such Redemption Date. Calculation of the Applicable Premium shall be made by the Issuer or on behalf of the Issuer by such Person as the Issuer shall designate; provided, however, that such calculation shall not be a duty or obligation of the Trustee. "ASSET SALE" means: (1) the sale, lease, conveyance or other disposition of any assets other than in the ordinary course of business; provided that the sale, conveyance or other disposition of all or substantially all of the assets of Holdings and the Restricted Subsidiaries taken as a whole shall be governed by the provisions of Sections 4.09 and/or 5.01 and not by the provisions of Section 4.13; and (2) the issuance of Equity Interests in any of the Restricted Subsidiaries or the sale of Equity Interests in any of the Restricted Subsidiaries. Notwithstanding the preceding, none of the following items shall be deemed to be an Asset Sale: (1) any single transaction or series of related transactions that involves assets having a Fair Market Value of less than US$2.5 million; (2) a transfer of assets between or among Holdings and/or the Restricted Subsidiaries; (3) an issuance of Equity Interests by a Restricted Subsidiary to Holdings or to another Restricted Subsidiary or the issuance of Equity Interests by a Restricted Subsidiary in which Holdings' percentage interest (direct and indirect) in the Equity Interests of such Restricted Subsidiary, after giving effect to such issuance, is at least equal to its percentage interest prior thereto; 2 (4) the sale, lease, conveyance or other disposition of assets in the ordinary course of business and any sale or other disposition of damaged, worn-out or obsolete assets in the ordinary course of business; (5) the sale or other disposition of cash or Cash Equivalents; (6) a Restricted Payment that does not violate Section 4.11 or a Permitted Investment; (7) sales of accounts receivable pursuant to Permitted Factoring Arrangements; (8) the licensing or sublicensing of intellectual property or other general intangibles and licenses, leases or subleases of other property in the ordinary course of business which do not materially interfere with the business of Holdings and the Restricted Subsidiaries; and (9) the sale of Permitted Investments (other than sales of Equity Interests of any of the Restricted Subsidiaries) made by Holdings or any Restricted Subsidiary after the date of this Indenture, if such Permitted Investments were (a) received in exchange for, or purchased out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of Holdings) of, Equity Interests of Holdings (other than Disqualified Stock) or (b) received in the form of, or were purchased from the proceeds of, a substantially concurrent contribution of common equity capital to Holdings. "BANKRUPTCY LAW" means Title 11 of the United States Code, as amended, or any applicable United States federal or state law for the relief of debtors or Canadian federal or provincial bankruptcy, insolvency, reorganization or other similar law, including without limitation the Bankruptcy and Insolvency Act (Canada) and the Companies' Creditors Arrangement Act (Canada). "BENEFICIAL OWNER" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms "Beneficially Owns" and "Beneficially Owned" have a corresponding meaning. "BOARD OF DIRECTORS" means: (1) with respect to a corporation, the board of directors of the corporation or, other than for purposes of the definition of "Change of Control" and "Continuing Directors," any committee thereof duly authorized to act on behalf of such board; and (2) with respect to any other Person, the functional equivalent of a board of directors of a corporation or, other than for purposes of the definition of "Change of 3 Control" and "Continuing Directors," any committee thereof duly authorized to act on behalf thereof. "BUSINESS DAY" means a day other than a Saturday, Sunday or other day on which banking institutions in New York or Montreal, Quebec are authorized or required by law to close. "CANADIAN DOLLAR EQUIVALENT" means, as to any amount denominated in U.S. Dollars as of any date of determination, the amount of Canadian Dollars which would be required to purchase such amount of U.S. Dollars at the Bank of Canada noon (Toronto time) spot rate on such date or, if such date of determination is not a Business Day, on the Business Day immediately preceding such date of determination. "CANADIAN HOLDING COMPANY" means MAAX Canada Inc., a corporation governed by the Canada Business Corporations Act, and its predecessors. "CAPITAL LEASE OBLIGATION" means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP. "CAPITAL STOCK" means: (1) in the case of a corporation or unlimited company, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock. "CASH EQUIVALENTS" means, as at any date of determination, (1) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States or Canada and maturing within one year of the date of acquisition thereof or (b) issued by any agency of the United States or Canada the obligations of which are backed by the full faith and credit of the United States or Canada, in each case maturing within one year after the date of acquisition thereof; (2) marketable direct obligations issued by any state of the United States of America or province of Canada or any political subdivision of any such state or province or any public instrumentality thereof, in each case maturing within one year after the date of acquisition thereof and having a rating of at least A 2 from Standard & Poor's Rating Services or at least P 2 from Moody's Investors Service, Inc.; (3) commercial paper maturing no more than one year from the date of acquisition thereof and having a rating of at least A 2 from 4 S&P, at least P 2 from Moody's or at least R 2 (high) from Dominion Bond Rating Services Limited; (4) certificates of deposit, time deposits or bankers' acceptances maturing within one year after the date of acquisition thereof and issued or accepted by any lender under any Credit Facility or by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that is at least "adequately capitalized" (as defined in the regulations of its primary Federal banking regulator) and has Tier 1 capital (as defined in such regulations) of not less than US$100.0 million; (5) financial instruments maturing within one year after the date of acquisition thereof and issued by any Canadian chartered bank which has a long-term debt rating of at least A+ by S&P, A2 by Moody's or A (high) by Dominion Bond Rating Services Limited; (6) repurchase agreements with a term of not more than 30 days for underlying securities of the types described in clause (1) or (2) entered into with any bank meeting the qualifications specified in clause (4) or (5), which repurchase obligations are secured by a perfected first priority security interest in the underlying securities; (7) shares of any money market mutual fund that (a) has substantially all of its assets invested continuously in the types of investments referred to in clauses (1) and (5) above, (b) has net assets of not less than US$500.0 million and (c) has the highest rating obtainable from either S&P or Moody's; and (8) in the case of any European Subsidiary, investments made locally of a type comparable to those described in clauses (1) through (7) of this definition. "CHANGE OF CONTROL" means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger, amalgamation or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of Holdings and its Subsidiaries taken as a whole to any "person" (as that term is used in Section 13(d) of the Exchange Act) other than an Equity Sponsor or a Control Investment Affiliate of an Equity Sponsor; (2) the adoption of a plan relating to the liquidation or dissolution of Holdings or the Issuer (other than a transaction that complies with the provisions of Section 5.01); (3) the consummation of any transaction (including, without limitation, any merger, amalgamation or consolidation), the result of which is that any "person" (as defined in clause (1) above) other than an Equity Sponsor or a Control Investment Affiliate of an Equity Sponsor becomes the Beneficial Owner, directly or indirectly, of Voting Stock of Holdings representing 50% or more of the total voting power of the Voting Stock of Holdings; provided that this clause (3) shall not be deemed to be triggered by any Person that is deemed to be a Beneficial Owner of Voting Stock of the Issuer by virtue of its relationship with (other than ownership directly or indirectly of Capital Stock of) an Equity Sponsor or a Control Investment Affiliate of an Equity Sponsor; (4) after an initial public offering of Holdings or any Parent Company, the first day on which a majority of the members of the Board of Directors of Holdings are not Continuing Directors; provided, however, that the Equity Sponsor and their Control Investment Affiliates do not, at such time, in the aggregate, (a) Beneficially Own, directly or indirectly, Voting Stock of Holdings representing more than 50% of the total voting 5 power of the Voting Stock of Holdings or (b) have the right or ability by voting power, contract or otherwise to elect or designate a majority of the Board of Directors of Holdings; or (5) Holdings shall cease to Beneficially Own all of the Equity Interests of the Issuer. "CONSOLIDATED CASH FLOW" means, for any period, for any Person, an amount determined for such Person and its Restricted Subsidiaries on a consolidated basis equal to (i) Consolidated Net Income for such period plus (ii) the sum, without duplication, of the amounts for such Person and its Restricted Subsidiaries for such period (in each case to the extent reducing such Consolidated Net Income) of (a) Fixed Charges; (b) provision for taxes based on income; (c) total depreciation expenses; (d) total amortization expenses; (e) other non-cash items reducing such Consolidated Net Income (excluding any such non-cash item to the extent that it represents an accrual or reserve for potential cash items in any future period or amortization of a prepaid cash item that was paid in a prior period); (f) relocation costs and expenses incurred to move the headquarters of Holdings and its Subsidiaries from Sainte-Marie, Canada to Montreal, Canada; (g) costs and expenses incurred on or prior to the Issue Date during the fiscal year ending February 28, 2005 in connection with the transactions described under "Use of Proceeds" in the Offering Circular; (h) Restructuring Expenses in an aggregate amount not to exceed US$5.0 million in any four-quarter period; (i) other non-recurring, non-operating losses in an aggregate amount not to exceed US$5.0 million in any four-quarter period; (j) cash gains realized under Hedging Obligations relating to currency exchange rates; and (k) minority interest (if negative) with respect to any Subsidiary Guarantor; minus 6 (iii) the sum, without duplication, of the amounts for such period (in each case to the extent increasing such Consolidated Net Income) of (a) non-cash items increasing such Consolidated Net Income (excluding any such non-cash item to the extent it represents the reversal of an accrual or reserve for potential cash item in any prior period); (b) non-recurring, non-operating gains; (c) cash losses realized under Hedging Obligations relating to currency exchange rates; and (d) minority interest (if positive) with respect to any Subsidiary Guarantor; plus or minus (iv) without duplication of any amounts referred to above or in the definition of Consolidated Net Income, with respect to any part of a four-quarter period that is part of the fiscal year ended February 29, 2004, the pro forma adjustments to net income set forth in the section "Unaudited Pro Forma Financial Data" in the Offering Circular and the adjustments to net income to derive "EBITDA" and to "EBITDA" to derive "Adjusted EBITDA" set forth in the section "Summary -- Summary Historical and Pro Forma Consolidated Financial Data" in the Offering Circular; provided that the items listed in clauses (ii)(a) through (e) of a Restricted Subsidiary shall be included in Consolidated Cash Flow only to the extent (and in the same proportion) that the net income of such Subsidiary was included in calculating Consolidated Net Income for such period. "CONSOLIDATED NET INCOME" means, for any period, the net income (or net loss) of Holdings and the Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with GAAP, adjusted to the extent included in calculating such net income or loss by excluding: (1) any net after-tax extraordinary gains or losses (less all fees and expenses relating thereto); (2) any net after-tax gains or losses (less all fees and expenses relating thereto) attributable to Asset Sales, dispositions of securities or returned surplus assets of any pension plan; (3) the net income (but not the net loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting, except to the extent of the amount of dividends or other distributions actually paid to Holdings or any Restricted Subsidiary in cash during such period; (4) the net income (but not the net loss) of any Restricted Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary is at the date of determination prohibited, directly or indirectly, except to the extent that such net income is actually paid to Holdings or any Restricted 7 Subsidiary by loans, advances, intercompany transfers, principal repayments or otherwise; and (5) the cumulative effect of a change in accounting principles; provided, further, that Consolidated Net Income shall be reduced by (A) the product of (x) the amount of all dividends on Designated Preferred Stock (other than dividends paid in Qualified Equity Interests) paid, accrued or scheduled to be paid or accrued during such period times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state, provincial and local statutory tax rate of Holdings and its Subsidiaries, expressed as a decimal, and (B) payments made to any Parent Company pursuant to clause (8) of Section 4.14(b). "CONSOLIDATED NET TANGIBLE ASSETS" means the aggregate amount of assets of Holdings (less applicable reserves and other properly deductible items) after deducting therefrom (to the extent otherwise included therein) (a) all current liabilities (other than the obligations under this Indenture or current maturities of long-term Indebtedness), and (b) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles, all as set forth on the books and records of Holdings and the Restricted Subsidiaries on a consolidated basis and in accordance with GAAP. "CONTINUING DIRECTORS" means, as of any date of determination, any member of the Board of Directors of Holdings who: (1) was a member of such Board of Directors on the Issue Date; (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election; or (3) was nominated by one or more of the Equity Sponsors or their Control Investment Affiliates. "CONTROL INVESTMENT AFFILIATE" means, as to any Person, any other Person which directly or indirectly is in control of, is controlled by, or is under common control with such Person and is organized by such Person (or any Person controlling such Person) primarily for making equity or debt investments in portfolio companies. "CORPORATE TRUST OFFICE" means the corporate trust office of the Trustee located at 100 Wall Street, Suite 1600, New York, NY 10005, Attention: Corporate Trust Services, or such other office, designated by the Trustee by written notice to the Issuer, at which at any particular time its corporate trust business shall be administered. "CREDIT AGREEMENT" means that certain credit agreement dated on or about the Issue Date, by and among Holdings, the Issuer, certain subsidiaries of the Issuer, Goldman Sachs Credit Partners L.P., Royal Bank of Canada and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and certain of their affiliates and the lenders from time to time party thereto, including any related notes, guarantees, collateral documents, instruments and 8 agreements executed in connection therewith, and in each case, as amended, restated, modified, renewed, refunded, replaced (whether upon termination or otherwise) or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time. "CREDIT FACILITIES" means one or more debt facilities (including, without limitation, the Credit Agreement) or commercial paper facilities, in each case, with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time. "CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. "DAYLIGHT LOANS" means Indebtedness owed by Holdings to a third party; provided that, on the date of incurrence of such Indebtedness, (i) Holdings shall use all of the proceeds of such Indebtedness to subscribe and pay for shares to be issued by Canadian Holding Company, (ii) Canadian Holding Company shall use all of the proceeds of such issuance and sale to make payments to the Issuer in respect of the Special Intercompany Note, (iii) the Issuer shall dividend or otherwise distribute (whether by an interest-free advance or otherwise) to Holdings all of such payments received by it and (iv) Holdings shall use such dividend or other distribution to repay all Indebtedness owed by it referred to in this definition. "DEFAULT" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "DEPOSITORY" means The Depository Trust Company, New York, New York, or a successor thereto registered under the Exchange Act or other applicable statute or regulation. "DESIGNATED PREFERRED STOCK" means preferred stock (including, without limitation, Disqualified Stock) issued and sold for cash in a bona fide financing transaction that is designated as Designated Preferred Stock pursuant to an Officers' Certificate on the issuance date thereof, the net cash proceeds of which are excluded from the calculation set forth in clause (3) of the first paragraph of Section 4.11 and are not used for purposes of clause (b) of the second paragraph thereof. "DESIGNATED SENIOR DEBT" means (1) the Credit Facility and all Hedging Obligations with respect thereto and (2) any other Senior Debt permitted under this Indenture (a) the principal amount of which is US$25.0 million or more and (b) that has been designated by the Issuer as "Designated Senior Debt." "DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any 9 Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the issuer to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock if the asset sale or change of control provisions applicable to such Capital Stock provide that the issuer may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.11. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Indenture shall be the maximum amount that Holdings and the Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock. "EQUITY INTERESTS" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "EQUITY OFFERING" means (i) any issuance and sale by Holdings of its Qualified Equity Interests or by any Parent Company of its Equity Interests; provided, however, that in the case of an issuance and sale of Equity Interests of any Parent Company, cash proceeds therefrom equal to not less than 100% of the aggregate principal amount of any Notes to be redeemed are received by Holdings as a contribution to its common equity capital or consideration for the issuance and sale of Qualified Equity Interests immediately prior to such redemption or (ii) any issuance and sale by Holdings of its Qualified Equity Interests in connection with the conversion of Holdings to an income trust or by any Parent Company or any Affiliate of Holdings (other than any of its Subsidiaries) of its Equity Interests in connection with the conversion of such Parent Company or Affiliate to an income trust; provided, however, that in the case of an issuance and sale of Equity Interests of such Parent Company or Affiliate, cash proceeds therefrom equal to not less than 100% of the aggregate principal amount of any Notes to be redeemed are received by Holdings as a contribution to its common equity capital or consideration for the issuance and sale of Qualified Equity Interests immediately prior to such redemption. "EQUITY SPONSORS" means John W. Childs, J.W. Childs Equity Funding III, Borealis Private Equity Limited Partnership, Borealis (QLP) Private Equity Limited Partnership and Ontario Municipal Employees Retirement Board. "EUROPEAN SUBSIDIARIES" means any Subsidiary of the Issuer which was not formed under the laws of the United States or any state of the United States or the District of Columbia or under the laws of Canada or any province or territory thereof. "EXCHANGE ACT" means the U.S. Securities Exchange Act of 1934, as amended. "EXCHANGE OFFER" means an offer that may be made by the Issuer pursuant to the Registration Rights Agreement to exchange Notes bearing the Private Placement Legend for the Exchange Securities. "EXCHANGE OFFER REGISTRATION STATEMENT" has the meaning given to such term in the Registration Rights Agreement. 10 "EXCHANGE SECURITIES" has the meaning set forth in the Registration Rights Agreement. "EXISTING INDEBTEDNESS" means Indebtedness of the Issuer and its Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the date of this Indenture after giving effect to the issuance of the Notes and the borrowing under the Credit Agreement on the Issue Date and the use of proceeds therefrom, until such amounts are repaid. "FAIR MARKET VALUE" means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the Board of Directors of the Issuer. "FIXED CHARGE COVERAGE RATIO" means, with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any Restricted Subsidiary incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made occurred (the "CALCULATION DATE"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of calculating the Fixed Charge Coverage Ratio: (1) acquisitions that have been made by the specified Person or any Restricted Subsidiary, including through mergers or consolidations, or any Person or any Restricted Subsidiary acquired by the specified Person or any Restricted Subsidiary, and including any related financing transactions and including increases in ownership of Restricted Subsidiaries, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be given pro forma effect (in accordance with Regulation S-X under the Securities Act but giving effect to Pro Forma Cost Savings) as if they had occurred on the first day of the four-quarter reference period; (2) the Consolidated Cash Flow attributable to operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date shall be excluded; (3) the Fixed Charges attributable to operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges shall not be obligations of the specified Person or any Restricted Subsidiary following the Calculation Date; (4) any Person that is a Restricted Subsidiary on the Calculation Date (or would become a Restricted Subsidiary on such Calculation Date in connection with the 11 transaction requiring determination of such Consolidated Cash Flow) shall be deemed to have been a Restricted Subsidiary at all times during such four-quarter period; (5) any Person that is not a Restricted Subsidiary on the Calculation Date (or would cease to be a Restricted Subsidiary on such Calculation Date in connection with the transaction requiring determination of such Consolidated Cash Flow) shall be deemed not to have been a Restricted Subsidiary at any time during such four-quarter period; and (6) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months). "FIXED CHARGES" means, with respect to any specified Person for any period, the sum, without duplication, of: (1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations in respect of interest rates; plus (2) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus (3) any interest accruing on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such guarantee or Lien is called upon; plus (4) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of such Person or any Restricted Subsidiary, other than dividends on Equity Interests payable solely in Equity Interests of the Issuer (other than Disqualified Stock) or to the Issuer or a Restricted Subsidiary of the Issuer, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "GAAP" means generally accepted accounting principles in the United States of America, as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as 12 have been approved by a significant segment of the accounting profession which are in effect from time to time. "GOVERNMENT SECURITIES" means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit. "GUARANTEE" means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner, including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement condition or otherwise). "GUARANTEE" OR "NOTE GUARANTEE" means the guarantee by each Guarantor of the Issuer's obligations under this Indenture and on the Notes, executed pursuant to the provisions of this Indenture. "GUARANTORS" means Holdings and the Subsidiary Guarantors. "HEDGING OBLIGATIONS" of any Person means the obligations of such Person under swap, cap, collar, forward purchase or similar agreements or arrangements dealing with interest rates, currency exchange rates or commodity prices, either generally or under specific contingencies. "HOLDER" means any registered Holder, from time to time, of the Notes. "HOLDINGS" means Beauceland Corporation, a Nova Scotia unlimited company. "INDEBTEDNESS" means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent: (1) in respect of borrowed money; (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (3) in respect of bankers' acceptances; (4) representing Capital Lease Obligations; (5) representing the balance deferred and unpaid of the purchase price of any property or services due more than six months after such property is acquired or such services are completed, except any such balance that represents an accrued expense or trade payable; or (6) representing any Hedging Obligations, 13 if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person), but only to the extent that the aggregate amount of such Indebtedness does not exceed the Fair Market Value of the asset, and, to the extent not otherwise included, the guarantee by the specified Person of any Indebtedness of any other Person. In no event shall obligations or liabilities in respect of any Capital Stock constitute Indebtedness hereunder. "INDENTURE" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof. "INITIAL GLOBAL NOTES" has the meaning given to such term in Section 2.01. "INITIAL NOTES" has the meaning given to such term in Section 2.02. "INITIAL PURCHASERS" means Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and RBC Capital Markets Corporation. "INSTITUTIONAL ACCREDITED INVESTOR" or "IAI" means an "accredited investor" with the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "INTEREST" means, with respect to the Notes, interest and Special Interest, if any, on the Notes. "INTEREST PAYMENT DATE" means the Stated Maturity of an installment of interest on the Notes. "INVESTMENTS" means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including guarantees or other obligations), advances or capital contributions, purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If Holdings or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any Restricted Subsidiary such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary, Holdings shall be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of Holdings' Investments in such Restricted Subsidiary that were not sold or disposed of in an amount determined as provided in the penultimate paragraph of Section 4.11. The acquisition by Holdings or any Restricted Subsidiary of a Person that holds an Investment in a third Person shall be deemed to be an Investment by Holdings or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in the penultimate paragraph of Section 4.11. Except as otherwise provided in this Indenture, the amount of an Investment shall be determined at the time the Investment is made and without giving effect to subsequent changes in value. Notwithstanding the foregoing, Restricted Payments of the type described in clause (ii) of the definition thereof shall not be deemed to be Investments. 14 "ISSUE DATE" means June 4, 2004. "LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest, hypothec or encumbrance of any kind in respect of such asset, whether or not filed, recorded, registered or otherwise perfected under applicable law, including any conditional sale or other title retention agreement; provided that in no event shall an operating lease that is not a Capital Lease Obligation be deemed to constitute a Lien. "MATURITY DATE" means June 15, 2012. "MOODY'S" means Moody's Investors Service, Inc. and its successors. "NET PROCEEDS" means the aggregate cash proceeds received by Holdings or any Restricted Subsidiary in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale, including, without limitation, (a) fees and expenses related to such Asset Sale (including legal, accounting and investment banking fees and discounts, and sales and brokerage commissions, and any relocation expenses incurred as a result of the Asset Sale), (b) taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, (c) amounts required to be applied to the repayment of Indebtedness, other than Indebtedness under a Credit Facility, secured by a Lien on the asset or assets that were the subject of such Asset Sale, (d) any reserve in accordance with GAAP against any liabilities associated with such Asset Sale and retained by the seller after such Asset Sale, including pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale and (e) cash escrows (until released from escrow to the seller). "NON-RECOURSE DEBT" means Indebtedness: (1) as to which neither Holdings nor any Restricted Subsidiary (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender; (2) no default with respect to which would permit upon notice, lapse of time or both any Holder of any Indebtedness of Holdings or any Restricted Subsidiary to declare a default on such Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity; and (3) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of Holdings or any Restricted Subsidiary. "NON-U.S. PERSON" has the meaning assigned to such term in Regulation S. "NOTE GUARANTEE" means the subordinated guarantee by each Guarantor of the Issuer's payment obligations under this Indenture and the Notes, executed pursuant to this Indenture. 15 "NOTES" means, collectively, the Issuer's 9.75% Senior Subordinated Notes due 2012 issued in accordance with Section 2.02 (whether issued on the Issue Date, issued as Additional Notes, issued as Exchange Securities or otherwise issued after the Issue Date) treated as a single class of securities under this Indenture, as amended or supplemented from time to time in accordance with the terms of this Indenture. "OBLIGATIONS" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "OFFERING CIRCULAR" means the offering circular of the Issuer relating to the Notes dated May 27, 2004. "OFFICER" means any of the following of the Issuer: the Chairman of the Board of Directors, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer or the Secretary. "OFFICERS' CERTIFICATE" means a certificate signed by two Officers. "OPINION OF COUNSEL" means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of, or counsel to, the Issuer, a Guarantor or the Trustee. "PARENT COMPANIES" means MAAX Holdings, Inc., a Delaware corporation, and any of its Subsidiaries that directly or indirectly owns Equity Interests of Holdings. "PARI PASSU INDEBTEDNESS" means any Indebtedness of the Issuer or any Guarantor that ranks pari passu in right of payment with the Notes or the Guarantees, as applicable. "PERMANENT REGULATION S GLOBAL NOTE" has the meaning given to such term in Section 2.01. "PERMITTED BUSINESS" means any business conducted by Holdings or any Restricted Subsidiary on the Issue Date and any businesses that, in the good faith judgment of the Board of Directors of Holdings, are reasonably related, ancillary or complementary thereto, or reasonable extensions thereof. "PERMITTED FACTORING ARRANGEMENTS" means the Sodex Factoring Agreement, as amended from time to time, and other factoring agreements on similar terms that, in each case, are not materially less favorable to Holdings, as amended from time to time, and the Restricted Subsidiaries, taken as a whole, than the arrangements contained in the Sodex Factoring Agreement, as in effect on the Issue Date. "PERMITTED INVESTMENTS" means: (1) any Investment in Cash Equivalents; 16 (2) any Investment in Holdings or in a Restricted Subsidiary; (3) any Investment by Holdings or any Restricted Subsidiary in a Person, if as a result of such Investment: (a) such Person becomes a Restricted Subsidiary; or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, Holdings or a Restricted Subsidiary; (4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.13; (5) any Investment made for consideration consisting of Qualified Equity Interests; (6) any Investment received in compromise or resolution of (A) obligations of trade creditors or customers that were incurred in the ordinary course of business of Holdings or any Restricted Subsidiary, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (B) litigation, arbitration or other disputes with Persons that are not Affiliates; (7) Investments represented by Hedging Obligations permitted under this Indenture; (8) loans or advances to employees of Holdings or any of its Subsidiaries (x) in the ordinary course of business in an aggregate amount not to exceed US$5.0 million at any time outstanding or (y) in connection with the purchase by such Persons of Equity Interests of Holdings or any Parent Company so long as the cash proceeds of such purchase received by any Parent Company are contemporaneously contributed to the common equity capital of Holdings; (9) Investments in existence on the Issue Date; (10) Investments in prepaid expenses, negotiable instruments held for collection and lease, endorsements for deposit or collection in the ordinary course of business, utility or workers compensation, performance and similar deposits entered into as a result of the operations of the business in the ordinary course of business; (11) pledges or deposits permitted under clause (6) of the definition of Permitted Liens; (12) receivables owing to Holdings or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms as Holdings or such Restricted Subsidiary deems reasonable under the circumstances; and 17 (13) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (13) that are at the time outstanding, not to exceed the greater of (x) US$20.0 million and (y) 7.0% of Consolidated Net Tangible Assets at such time. "PERMITTED JUNIOR SECURITIES" means: (1) Equity Interests in Holdings or any of its Subsidiaries; or (2) debt securities of the Issuer or any Guarantor that are subordinated to all Senior Debt and any debt securities issued in a confirmed plan of reorganization in exchange for Senior Debt to substantially the same extent as, or to a greater extent than, the Notes and the Guarantees are subordinated to Senior Debt pursuant to the provisions of this Indenture. "PERMITTED LIENS" means: (1) Liens securing Senior Debt; (2) Liens on assets of the Issuer or any Guarantor securing Indebtedness and other Obligations under Credit Facilities and/or securing Hedging Obligations; (3) Liens in favor of Holdings or any Restricted Subsidiary; (4) Liens on property (including Capital Stock) of a Person existing at the time such Person is merged with or into or consolidated with Holdings or any Subsidiary of Holdings; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with Holdings or the Subsidiary; (5) Liens on property (including Capital Stock) existing at the time of acquisition of the property by Holdings or any Subsidiary of Holdings; provided that such Liens were in existence prior to, such acquisition, and not incurred in contemplation of, such acquisition; (6) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (7) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (4) of Section 4.10(b) covering only the assets acquired with or financed by such Indebtedness; (8) Liens existing on the date of this Indenture; (9) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent more than 30 days or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor; 18 (10) Liens imposed by law, such as carriers', warehousemen's, landlords', suppliers' and mechanics' Liens, in each case, incurred in the ordinary course of business; (11) survey exceptions, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the operation of the business of the Issuer and its Restricted Subsidiaries, taken as a whole; (12) Liens created for the benefit of (or to secure) the Notes (or the Guarantees) or payment obligations to the Trustee; (13) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under this Indenture; provided, however, that the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to such property or proceeds or distributions thereof); (14) judgment Liens not giving rise to an Event of Default; (15) Liens and rights of setoff in favor of a bank imposed by law and incurred in the ordinary course of business on deposit accounts maintained with such bank and cash and Cash Equivalents in such accounts; (16) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods; (17) pledges or deposits by a Person under worker's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business; (18) Liens securing obligations under Permitted Factoring Arrangements on the accounts receivable subject to Permitted Factoring Arrangements; and (19) Liens incurred in the ordinary course of business of Holdings or any Restricted Subsidiary with respect to obligations that do not exceed US$7.5 million at any one time outstanding. "PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of Holdings or any Restricted Subsidiary issued in exchange for, or the net proceeds of which are used to refund, refinance, replace, defease or discharge, other Indebtedness of Holdings or any Restricted Subsidiary; provided that: 19 (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums incurred in connection therewith); (2) such Permitted Refinancing Indebtedness has a final maturity date not earlier than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to, the Notes on terms at least as favorable to the Holders as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (4) such Indebtedness is incurred either by Holdings or by the Restricted Subsidiary that is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, unlimited company or government or other entity. "PRINCIPAL" means, with respect to the Notes, the principal of, and premium, if any, on the Notes. "PRIVATE PLACEMENT LEGEND" means the legends initially set forth on the Notes in the form set forth in Exhibit B. "PRO FORMA COST SAVINGS" means, with respect to any period, the reductions in costs that occurred during the four-quarter period that are (1) directly attributable to an asset acquisition and calculated on a basis that is consistent with Article 11 of Regulation S-X under the Securities Act or (2) implemented, committed to be implemented or the commencement of implementation of which was begun in good faith by the business that was the subject of any such asset acquisition within six months of the date of the asset acquisition and that are supportable and quantifiable by the underlying records of such business, as if, in the case of each of clauses (1) and (2), all such reductions in costs had been effected as of the beginning of such period, decreased by any incremental expenses incurred or to be incurred during the four-quarter period in order to achieve such reduction in costs. "QUALIFIED EQUITY INTERESTS" means Equity Interests of Holdings other than Disqualified Stock. "QUALIFIED INSTITUTIONAL BUYER" or "QIB" shall have the meaning specified in Rule 144A under the Securities Act. 20 "RECORD DATE" means the applicable Record Date specified in the Notes; provided that if any such date is not a Business Day, the Record Date shall be the first day immediately succeeding such specified day that is a Business Day. "REDEMPTION DATE," when used with respect to any Note to be redeemed, means the date fixed for such redemption pursuant to this Indenture and the Notes. "REDEMPTION PRICE," when used with respect to any Note to be redeemed, means the price fixed for such redemption, payable in immediately available funds, pursuant to this Indenture and the Notes. "REGISTRATION RIGHTS AGREEMENT" means (i) the Exchange and Registration Rights Agreement dated as of the Issue Date among the Issuer, the Guarantors and the initial purchasers of the Notes issued on the Issue Date and (ii) any other exchange and registration rights agreement entered into in connection with an issuance of Additional Notes in a private offering after the Issue Date. "REGULATION S" means Regulation S under the Securities Act. "RELATED AGREEMENTS" means (i) the merger agreement and the amalgamation agreement described in the section of the Offering Circular entitled "Summary -- The Transactions"; and (ii) the purchase agreement and registration rights agreement entered into in connection with the issuance of Notes on the Issue Date and any other purchase or similar agreement and registration rights agreement entered into in connection with the issuance of Additional Notes. "REPRESENTATIVE" means the Indenture Trustee or other trustee, agent or representative in respect of any Designated Senior Debt; provided that if, and for so long as, any Designated Senior Debt lacks such a representative, then the Representative for such Designated Senior Debt shall at all times constitute the holders of a majority in outstanding principal amount of such Designated Senior Debt. "RESPONSIBLE OFFICER" means, when used with respect to the Trustee, any officer in the Corporate Trust Office of the Trustee to whom any corporate trust matter is referred because of such officer's knowledge of and familiarity with the particular subject and shall also mean any officer who shall have direct responsibility for the administration of this Indenture. "RESTRICTED INVESTMENT" means an Investment other than a Permitted Investment. "RESTRICTED SECURITY" means a Note that constitutes a "Restricted Security" within the meaning of Rule 144(a)(3) under the Securities Act; provided, however, that the Trustee shall be entitled to request and conclusively rely on an Opinion of Counsel with respect to whether any Note constitutes a Restricted Security. "RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. Unless otherwise indicated, references to Restricted Subsidiaries shall be deemed to be to Restricted Subsidiaries of Holdings, including the Issuer. 21 "RESTRUCTURING EXPENSES" means losses, expenses and charges incurred in connection with restructuring by Holdings and/or one or more of the Restricted Subsidiaries, including in connection with integration of acquired businesses or Persons, disposition of one or more Restricted Subsidiaries or businesses, exiting of one or more lines of business and relocation or consolidation of facilities, including severance, lease termination and other non-ordinary-course, non-operating costs and expenses in connection therewith. "RULE 144A" means Rule 144A under the Securities Act. "S&P" means Standard & Poor's Ratings Services, a division of the McGraw-Hill Companies, Inc., and its successors. "SEC" means the U.S. Securities and Exchange Commission. "SECURITIES ACT" means the U.S. Securities Act of 1933, as amended. "SENIOR DEBT" means the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of the Issuer or any Guarantor, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Notes or the Guarantee of such Guarantor. Without limiting the generality of the foregoing, "Senior Debt" shall include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of: (1) all monetary obligations of every nature under, or with respect to, the Credit Facilities, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities (and guarantees thereof); and (2) all Hedging Obligations in respect of the Credit Facilities; in each case whether outstanding on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Senior Debt" shall not include: (1) any Indebtedness owed to any Parent Company or any of its Subsidiaries; (2) obligations to trade creditors and other amounts incurred (but not under the Credit Facilities) in connection with obtaining goods, materials or services; (3) any liability for taxes owed or owing by the Issuer or any Guarantor; 22 (4) that portion of any Indebtedness incurred in violation of Section 4.10 (but, as to any such obligation, no such violation shall be deemed to exist for purposes of this clause (4) if the Holder(s) of such obligation or their representative shall have received an Officers' Certificate of the Issuer to the effect that the incurrence of such Indebtedness does not (or, in the case of revolving credit Indebtedness, that the incurrence of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate such provisions of this Indenture); (5) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to the Issuer or any Guarantor; and (6) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of the Issuer or any Guarantor. "SIGNIFICANT SUBSIDIARY" means any Subsidiary of Holdings that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of this Indenture. "SODEX FACTORING AGREEMENT" means that certain factoring agreement, dated as of February 24, 2004, among MAAX Inc., MAAX Canada Inc., MAAX Spas (Ontario) Inc., MAAX Westco Inc., MAAX Spas (BC) Inc., MAAX-KSD Corporation, MAAX Southeast Inc., Pearl Baths, Inc., MAAX-Hydro Swirl Manufacturing Corp., MAAX Midwest Inc., MAAX Spas (Arizona), Inc., Cuisine Expert - C.E. Cabinets, Inc., 9022-3751 Quebec Inc., Aker Plastics Company Inc. and NatExport and Sodex, both divisions of the National Bank of Canada. "SPECIAL INTERCOMPANY NOTE" means that certain Note, dated on or about the date of this Indenture, made by the Canadian Holding Company in favor of the Issuer, as such Note may be amended, restated, supplemented or otherwise modified from time to time. "SPECIAL INTEREST" means (i) "Special Interest" as defined in the registration rights agreement with respect to the Notes issued on the Issue Date and (ii) "Special Interest", "Additional Interest", "Liquidated Damages" or any similar term as such term is defined in any registration rights agreement with respect to Additional Notes issued after the Issue Date. "STATED MATURITY" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the date of this Indenture, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "SUBSIDIARY" means, with respect to any specified Person: (1) any corporation, company, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders' agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other 23 business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof). "SUBSIDIARY GUARANTOR" means each Subsidiary of the Issuer that executes a Guarantee in accordance with the provisions of this Indenture and its successors and assigns, until such Subsidiary is released from its Guarantee in accordance with the provisions of this Indenture. "TEMPORARY REGULATION S GLOBAL NOTE" has the meaning given to such term in Section 2.01. "TRANSACTIONS" has the meaning set forth in the Offering Circular under the caption "Summary -- The Transactions." "TREASURY RATE" means, with respect to a Redemption Date, the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) that has become publicly available at least two Business Days prior to such Redemption Date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from such Redemption Date to the Fourth Anniversary; provided, however, that if the period from such Redemption Date to the Fourth Anniversary is not equal to the constant maturity of the United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from such Redemption Date to the Fourth Anniversary is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended. "TRUSTEE" means the party named as such in this Indenture until a successor replaces it in accordance with the provisions of this Indenture and thereafter means such successor. "UNRESTRICTED SUBSIDIARY" means any Subsidiary of Holdings (other than the Issuer) that is designated by the Board of Directors of Holdings as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary: (1) has no Indebtedness other than Non-Recourse Debt; (2) except as permitted by Section 4.14, is not party to any agreement, contract, arrangement or understanding with Holdings or any Restricted Subsidiary unless the terms of any such agreement, contract, arrangement or understanding are no 24 less favorable to Holdings or such Restricted Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of Holdings; (3) is a Person with respect to which neither Holdings nor any Restricted Subsidiary has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of Holdings or any Restricted Subsidiary. Any designation of a Subsidiary of Holdings as an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the preceding conditions and was permitted by Section 4.11. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.10, Holdings shall be in default of such covenant. The Board of Directors of Holdings may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (1) such Indebtedness is permitted under Section 4.10, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no Default or Event of Default would be in existence following such designation. "U.S. DOLLAR EQUIVALENT" means, as to any amount denominated in Canadian Dollars as of any date of determination, the amount of U.S. Dollars which would be required to purchase such amount of Canadian Dollars at the Bank of Canada noon (Toronto time) spot rate on such date or, if such date of determination is not a Business Day, on the Business Day immediately preceding such date of determination. "U.S. LEGAL TENDER" means such coin or currency of the United States of America that at the time of payment shall be legal tender for the payment of public and private debts. "VOTING STOCK" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the 25 number of years (calculated to the nearest one-twelfth) that shall elapse between such date and the making of such payment; by (2) the then outstanding principal amount of such Indebtedness. SECTION 1.02. Other Definitions.
Term Defined in Section - -------------------------------------------------------------- ------------------ "acceleration declaration".................................... 6.02 "Additional Amounts".......................................... 4.21 "Additional Notes"............................................ 2.02 "Affiliate Transaction"....................................... 4.14 "Alternate Offer" ............................................ 4.09 "Asset Sale Offer" ........................................... 4.13 "Asset Sale Payment Date"..................................... 4.13 "Authentication Order"........................................ 2.02 "Authorized Agent"............................................ 12.14 "Change of Control Offer"..................................... 4.09 "Change of Control Payment"................................... 4.09 "Covenant Defeasance"......................................... 8.02 "Documentary Taxes"........................................... 4.21 "Event of Default"............................................ 6.01 "Excess Proceeds"............................................. 4.13 "Excluded Taxes".............................................. 4.21 "First Currency".............................................. 1.04 "Global Note"................................................. 2.01 "Guarantee Obligations"....................................... 11.01 "IAI Global Note"............................................. 2.01 "Incur"....................................................... 4.10 "Legal Defeasance"............................................ 8.03 "Non-Payment Default"......................................... 10.02 "Offered Price"............................................... 4.13 "Other Currency".............................................. 1.04 "Participants"................................................ 2.15 "Paying Agent"................................................ 2.03 "Payment Blockage Notice"..................................... 10.02 "Payment Blockage Period"..................................... 10.02 "Payment Default"............................................. 10.02 "Permitted Debt".............................................. 4.10 "Physical Notes".............................................. 2.01 "Registrar"................................................... 2.03 "Regulation S Global Note".................................... 2.01 "Relevant Taxing Jurisdiction"................................ 4.21 "Restricted Payments" ........................................ 4.11 "Taxes" ...................................................... 4.21
26 SECTION 1.03. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the Trust Indenture Act, such provision is incorporated by reference in, and made a part of, this Indenture. The following Trust Indenture Act terms used in this Indenture have the following meanings: "indenture securities" means the Notes. "indenture security Holder" means a Holder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Issuer, any Guarantor or any other obligor on the Notes. All other Trust Indenture Act terms used in this Indenture that are defined by the Trust Indenture Act, defined by Trust Indenture Act reference to another statute or defined by SEC rule and not otherwise defined herein have the meanings assigned to them therein. SECTION 1.04. Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and words in the plural include the singular; (5) provisions apply to successive events and transactions; (6) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (7) the words "including," "includes" and similar words shall be deemed to be followed by "without limitation;" (8) references to "$" or dollars are to Canadian dollars and references to "US$" and "U.S. dollars" are to U.S. dollars; and (9) except as otherwise provided in this Indenture, for purpose of the construction of this Indenture or of the Notes, in the event that any amount is stated herein in the currency of one nation (the "FIRST CURRENCY"), as of any date such amount 27 shall also be deemed to represent the amount in the currency of any other relevant nation (the "OTHER CURRENCY") which is required to purchase such amount in the First Currency at the Bank of Canada noon (Toronto time) spot rate on the date of determination. ARTICLE TWO THE NOTES SECTION 2.01. Form and Dating. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. The Issuer shall approve the form of the Notes and any notation, legend or endorsement on them. Each Note shall be dated the date of its issuance and show the date of its authentication. Each Note shall have an executed Note Guarantee from each of the Guarantors existing on the Issue Date endorsed thereon substantially in the form of Exhibit F. The terms and provisions contained in the Notes and the Note Guarantees shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Issuer, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. Notes offered and sold in reliance on Rule 144A shall be issued initially in the form of a single permanent global Note in registered form, substantially in the form set forth in Exhibit A (the "144A GLOBAL NOTE"), deposited with the Trustee, as custodian for the Depository, duly executed by the Issuer (and having an executed Note Guarantee from each of the Guarantors endorsed thereon) and authenticated by the Trustee as hereinafter provided and shall bear the legends set forth in Exhibit B. Notes offered and sold in offshore transactions in reliance on Regulation S shall be issued initially in the form of a single temporary global Note in registered form, substantially in the form of Exhibit A (the "TEMPORARY REGULATION S GLOBAL NOTE"), deposited with the Trustee, as custodian for the Depository, duly executed by the Issuer (and having an executed Note Guarantee from each of the Guarantors endorsed thereon) and authenticated by the Trustee as hereinafter provided and shall bear the legends set forth in Exhibit B. Reasonably promptly following the date that is 40 days after the later of the commencement of the offering of the Notes in reliance on Regulation S and the Issue Date, upon receipt by the Trustee and the Issuer of a duly executed certificate certifying that the Holder of the beneficial interest in the Temporary Regulation S Global Note is a Non-U.S. Person, substantially in the form of Exhibit E from the Depository, a single permanent global Note in registered form substantially in the form of Exhibit A (the "PERMANENT REGULATION S GLOBAL NOTE," and together with the Temporary Regulation S Global Note, the "REGULATION S GLOBAL NOTE") duly executed by the Issuer (and having an executed Note Guarantee from each of the Guarantors endorsed thereon) and authenticated by the Trustee as hereinafter provided shall be deposited with the 28 Trustee, as custodian for the Depository, and the Registrar shall reflect on its books and records the cancellation of the Temporary Regulation S Global Note and the issuance of the Permanent Regulation S Global Note. The initial offer and resale of the Notes shall not be to an Institutional Accredited Investor. The Notes resold to Institutional Accredited Investors in connection with the first transfer made pursuant to Section 2.16(a) shall be issued initially in the form of a single permanent Global Note in registered form, substantially in the form set forth in Exhibit A (the "IAI GLOBAL NOTE," and, together with the 144A Global Note and the Regulation S Global Note, the "INITIAL GLOBAL NOTES"), deposited with the Trustee, as custodian for the Depository, duly executed by the Issuer (and having an executed Note Guarantee from each of the Guarantors endorsed thereon) and authenticated by the Trustee as hereinafter provided and shall bear the legend set forth in Exhibit B. Notes issued after the Issue Date shall be issued initially in the form of one or more global Notes in registered form, substantially in the form set forth in Exhibit A, deposited with the Trustee, as custodian for the Depository, duly executed by the Issuer (and having an executed Note Guarantee from each of the Guarantors endorsed thereon) and authenticated by the Trustee as hereinafter provided and shall bear any legends required by applicable law (together with the Initial Global Notes, the "GLOBAL NOTES") or as Physical Notes. The aggregate principal amount of the Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depository, as hereinafter provided. Notes issued in exchange for interests in a Global Note pursuant to Section 2.16 may be issued in the form of permanent certificated Notes in registered form in substantially the form set forth in Exhibit A and bearing the applicable legends, if any, (the "PHYSICAL NOTES"). SECTION 2.02. Execution, Authentication and Denomination; Additional Notes; Exchange Securities One Officer of the Issuer (who shall have been duly authorized by all requisite corporate actions) shall sign the Notes for such Issuer by manual or facsimile signature. One Officer of a Guarantor (who shall have been duly authorized by all requisite corporate actions) shall sign the Note Guarantee for such Guarantor by manual or facsimile signature. If an Officer whose signature is on a Note or Note Guarantee, as the case may be, was an Officer at the time of such execution but no longer holds that office at the time the Trustee authenticates the Note, the Note shall nevertheless be valid. A Note (and the Note Guarantees in respect thereof) shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall authenticate (i) on the Issue Date, Notes for original issue in the aggregate principal amount not to exceed US$150,000,000 (the "INITIAL NOTES"), (ii) additional Notes (the "ADDITIONAL NOTES") having identical terms and conditions to the Initial Notes, except 29 for issue date, issue price and first interest payment date, in an unlimited amount (so long as not otherwise prohibited by the terms of this Indenture, including, without limitation, Section 4.10) and (iii) Exchange Securities (x) in exchange for a like principal amount of Initial Notes or (y) in exchange for a like principal amount of Additional Notes in each case upon a written order of the Issuer in the form of a certificate of an Officer of the Issuer (an "AUTHENTICATION ORDER"). Each such Authentication Order shall specify the amount of Notes to be authenticated and the date on which the Notes are to be authenticated, whether the Notes are to be Initial Notes, Exchange Securities or Additional Notes and whether the Notes are to be issued as certificated Notes or Global Notes or such other information as the Trustee may reasonably request. All Notes issued under this Indenture shall be treated as a single class for all purposes under this Indenture. The Additional Notes shall bear any legend required by applicable law. The Trustee may appoint an authenticating agent reasonably acceptable to the Issuer to authenticate Notes. Unless otherwise provided in the appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Issuer and Affiliates of the Issuer. The Trustee shall have the right to decline to authenticate and deliver any Notes under this Indenture if the Trustee, being advised by counsel, determines that such action may not lawfully be taken or if the Trustee in good faith shall determine that such action would expose the Trustee to personal liability. The Notes shall be issuable only in registered form without coupons in denominations of US$1,000 and integral multiples of US$1,000 thereof. SECTION 2.03. Registrar and Paying Agent. The Issuer shall maintain or cause to be maintained an office or agency in the Borough of Manhattan, The City of New York, where (a) Notes may be presented or surrendered for registration of transfer or for exchange ("REGISTRAR"), (b) Notes may, subject to Section 2 of the Notes, be presented or surrendered for payment ("PAYING AGENT") and (c) notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served. The Issuer may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Issuer of its obligation to maintain or cause to be maintained an office or agency in the Borough of Manhattan, The City of New York, for such purposes. Holdings or any Subsidiary of Holdings may act as Registrar or Paying Agent, except that for the purposes of Article Eight, neither the Issuer nor any Affiliate of the Issuer shall act as Paying Agent. The Registrar shall keep a register of the Notes and of their transfer and exchange. The Issuer, upon notice to the Trustee, may have one or more co-registrars and one or more additional paying agents reasonably acceptable to the Trustee. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Issuer initially appoints the 30 Trustee as Registrar and Paying Agent until such time as the Trustee has resigned or a successor has been appointed. The Issuer shall enter into an appropriate agency agreement with any Agent not a party to this Indenture, which agreement shall implement the provisions of this Indenture that relate to such Agent. The Issuer shall notify the Trustee, in advance, of the name and address of any such Agent. If the Issuer fails to maintain a Registrar or Paying Agent, the Trustee shall act as such. SECTION 2.04. Paying Agent To Hold Assets in Trust. The Issuer shall require each Paying Agent other than the Trustee or Holdings or any Subsidiary of Holdings to agree in writing that, subject to Article Ten and Section 11.02, each Paying Agent shall hold in trust for the benefit of Holders or the Trustee all assets held by the Paying Agent for the payment of principal of, premium or Special Interest, if any, or interest on, the Notes (whether such assets have been distributed to it by the Issuer or any other obligor on the Notes), and shall notify the Trustee of any Default by the Issuer (or any other obligor on the Notes) in making any such payment. The Issuer at any time may require a Paying Agent to distribute all assets held by it to the Trustee and account for any assets disbursed and the Trustee may at any time during the continuance of any Payment Default, upon written request to a Paying Agent, require such Paying Agent to distribute all assets held by it to the Trustee and to account for any assets distributed. Upon distribution to the Trustee of all assets that shall have been delivered by the Issuer to the Paying Agent, the Paying Agent (if other than Holdings or a Subsidiary of Holdings) shall have no further liability for such assets. If Holdings or a Subsidiary of Holdings acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Issuer, the Trustee shall serve as Paying Agent for the Notes. SECTION 2.05. Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Issuer shall furnish to the Trustee at least two (2) Business Days prior to each Interest Payment Date and at such other times as the Trustee may request in writing a list, in such form and as of such date as the Trustee may reasonably require, of the names and addresses of Holders, which list may be conclusively relied upon by the Trustee. SECTION 2.06. Transfer and Exchange. Subject to Sections 2.15 and 2.16, when Notes are presented to the Registrar with a request to register the transfer of such Notes or to exchange such Notes for an equal principal amount of Notes of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transaction are met; provided, however, that the Notes surrendered for transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Issuer and the 31 Registrar, duly executed by the Holder thereof or his or her attorney duly authorized in writing. To permit registrations of transfers and exchanges, the Issuer shall execute and the Trustee shall authenticate Notes at the Registrar's request. No service charge shall be made for any registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith. Without the prior written consent of the Issuer, the Registrar shall not be required to register the transfer of or exchange of any Note (i) during a period beginning at the opening of business 15 days before the mailing of a notice of redemption of Notes and ending at the close of business on the day of such mailing, (ii) selected for redemption in whole or in part pursuant to Article Three, except the unredeemed portion of any Note being redeemed in part, and (iii) beginning at the opening of business on any Record Date and ending on the close of business on the related Interest Payment Date. Any Holder of a beneficial interest in a Global Note shall, by acceptance of such beneficial interest, agree that transfers of beneficial interests in such Global Notes may be effected only through a book-entry system maintained by the Holder of such Global Note (or its agent) in accordance with the applicable legends thereon, and that ownership of a beneficial interest in the Note shall be required to be reflected in a book-entry system. SECTION 2.07. Replacement Notes. If a mutilated Note is surrendered to the Trustee or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Issuer shall issue and the Trustee shall authenticate a replacement Note if the Trustee's requirements are met. Such Holder must provide an indemnity bond or other indemnity, sufficient in the judgment of both the Issuer and the Trustee, to protect the Issuer, the Trustee or any Agent from any loss which any of them may suffer if a Note is replaced. The Issuer may charge such Holder for its reasonable expenses in replacing a Note pursuant to this Section 2.07, including reasonable fees and expenses of counsel and of the Trustee. Every replacement Note is an additional obligation of the Issuer and every replacement Note Guarantee shall constitute an additional obligation of the Guarantor thereof. SECTION 2.08. Outstanding Notes. Notes outstanding at any time are all the Notes that have been authenticated by the Trustee except those cancelled by it, those delivered to it for cancellation and those described in this Section as not outstanding. A Note does not cease to be outstanding because the Issuer, the Guarantors or any of their respective Affiliates hold the Note (subject to the provisions of Section 2.09). If a Note is replaced pursuant to Section 2.07 (other than a mutilated Note surrendered for replacement), it ceases to be outstanding unless a Responsible Officer of the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note and replacement thereof pursuant to Section 2.07. 32 If the principal amount of any Note is considered paid under Section 4.01, it ceases to be outstanding and interest ceases to accrue. If on a Redemption Date or the Maturity Date the Trustee or Paying Agent (other than the Issuer or an Affiliate thereof) holds U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the principal and interest due on the Notes payable on that date, then on and after that date such Notes cease to be outstanding and interest on them ceases to accrue. SECTION 2.09. Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuer or any of its Affiliates shall be disregarded, except that, for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned shall be disregarded. SECTION 2.10. Temporary Notes. Until definitive Notes are ready for delivery, the Issuer may prepare and the Trustee shall, upon receipt of an authentication order, authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Issuer considers appropriate for temporary Notes. Without unreasonable delay, the Issuer shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Until such exchange, temporary Notes shall be entitled to the same rights, benefits and privileges as definitive Notes. Notwithstanding the foregoing, so long as the Notes are represented by a Global Note, such Global Note may be in typewritten form. SECTION 2.11. Cancellation. The Issuer at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for transfer, exchange or payment. The Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent (other than the Issuer or a Subsidiary), and no one else, shall cancel and, at the written direction of the Issuer, shall dispose of all Notes surrendered for transfer, exchange, payment or cancellation in accordance with its customary procedures. Subject to Section 2.07, the Issuer may not issue new Notes to replace Notes that it has paid or delivered to the Trustee for cancellation. If the Issuer or any Guarantor shall acquire any of the Notes, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Notes unless and until the same are surrendered to the Trustee for cancellation pursuant to this Section 2.11. SECTION 2.12. Defaulted Interest. If the Issuer defaults in a payment of interest on the Notes, it shall pay the defaulted interest, plus (to the extent lawful) any interest payable on the defaulted interest, in any lawful manner, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Issuer may pay the defaulted interest to the persons who are Holders on a subsequent special record date, which date shall be the fifteenth day next preceding the date fixed by the Issuer for the payment of defaulted interest or the next succeeding Business Day if such date is not a 33 Business Day. At least 15 days before any such subsequent special record date, the Issuer or, at the Issuer's request, the Trustee, shall mail to each Holder, with a copy to the Trustee, a notice that states the subsequent special record date, the payment date and the amount of defaulted interest, and interest payable on such defaulted interest, if any, to be paid. SECTION 2.13. CUSIP and ISIN Numbers. The Issuer in issuing the Notes may use "CUSIP" or "ISIN" numbers, and if so, the Trustee shall use the "CUSIP" or "ISIN" numbers in notices of redemption or exchange as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness or accuracy of the "CUSIP" or "ISIN" numbers printed in the notice or on the Notes, and that reliance may be placed only on the other identification numbers printed on the Notes. The Issuer shall promptly notify the Trustee of any change in the "CUSIP" or "ISIN" numbers. SECTION 2.14. Deposit of Moneys. Subject to Section 2 of the Notes, prior to 1:00 p.m. New York City time on each Interest Payment Date, Maturity Date, Redemption Date, Change of Control Payment Date and Asset Sale Payment Date, the Issuer shall have deposited with the Paying Agent in immediately available funds money sufficient to make cash payments, if any, due on such Interest Payment Date, Maturity Date, Redemption Date, Change of Control Payment Date and Asset Sale Payment Date, as the case may be, in a timely manner which permits the Paying Agent to remit payment to the Holders on such Interest Payment Date, Maturity Date, Redemption Date, Change of Control Payment Date and Asset Sale Payment Date, as the case may be. SECTION 2.15. Book-Entry Provisions for Global Notes. (a) The Global Notes initially shall (i) be registered in the name of the Depository or the nominee of such Depository, (ii) be delivered to the Trustee as custodian for such Depository and (iii) bear legends as set forth in Exhibit B, as applicable. Members of, or participants in, the Depository ("PARTICIPANTS") shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depository, or the Trustee as its custodian, or under the Global Note, and the Depository may be treated by the Issuer, the Trustee and any agent of the Issuer or the Trustee as the absolute owner of the Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Trustee or any agent of the Issuer or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and Participants, the operation of customary practices governing the exercise of the rights of a Holder of any Note. (b) Transfers of Global Notes shall be limited to transfers in whole, but not in part, to the Depository, its successors or their respective nominees. Interests of beneficial owners in the Global Notes may be transferred or exchanged for Physical Notes in accordance with the rules and procedures of the Depository and the provisions of Section 2.16. In addition, Physical Notes shall be transferred to all beneficial owners in exchange for their beneficial interests in Global Notes if (i) (a) the Depository notifies the Issuer that it is unwilling or unable 34 to act as Depository for any Global Note or (b) has ceased to be a clearing agency registered under the Exchange Act, the Issuer so notifies the Trustee in writing and a successor Depository is not appointed by the Issuer within 90 days of such notice or (ii) an Event of Default has occurred and is continuing and the Registrar has received a request from any owner of a beneficial interest in a Global Note to issue Physical Notes. Upon any issuance of a Physical Note in accordance with this Section 2.15(b) the Trustee is required to register such Physical Note in the name of, and cause the same to be delivered to, such person or persons (or the nominee of any thereof). All such Physical Notes shall bear the applicable legends, if any. (c) In connection with any transfer or exchange of a portion of the beneficial interest in a Global Note to beneficial owners pursuant to paragraph (b) of this Section 2.15, the Registrar shall (if one or more Physical Notes are to be issued) reflect on its books and records the date and a decrease in the principal amount of such Global Note in an amount equal to the principal amount of the beneficial interest in the Global Note to be transferred, and the Issuer shall execute, and the Trustee shall authenticate and deliver, one or more Physical Notes of authorized denominations in an aggregate principal amount equal to the principal amount of the beneficial interest in the Global Note so transferred. (d) In connection with the transfer of a Global Note as an entirety to beneficial owners pursuant to paragraph (b) of this Section 2.15, such Global Note shall be deemed to be surrendered to the Trustee for cancellation, and (i) the Issuer shall execute, (ii) the Guarantors shall execute notations of Note Guarantees on and (iii) the Trustee shall upon written instructions from the Issuer authenticate and deliver, to each beneficial owner identified by the Depository in exchange for its beneficial interest in such Global Note, an equal aggregate principal amount of Physical Notes of authorized denominations. (e) Any Physical Note constituting a Restricted Security delivered in exchange for an interest in a Global Note pursuant to paragraph (b) or (c) of this Section 2.15 shall, except as otherwise provided by Section 2.16, bear the Private Placement Legend. (f) The Holder of any Global Note may grant proxies and otherwise authorize any Person, including Participants and Persons that may hold interests through Participants, to take any action which a Holder is entitled to take under this Indenture or the Notes. SECTION 2.16. Special Transfer and Exchange Provisions. (a) Transfers to Non-QIB Institutional Accredited Investors. The following provisions shall apply with respect to the registration of any proposed transfer of a Restricted Security to any Institutional Accredited Investor which is not a QIB: (i) the Registrar shall register the transfer of any Restricted Security, whether or not such Note bears the Private Placement Legend, if (x) the requested transfer is after the second anniversary of the Issue Date; provided, however, that neither the Issuer nor any Affiliate of the Issuer has held any beneficial interest in such Note, or portion thereof, at any time on or prior to the second anniversary of the Issue Date or (y) the proposed transferee has delivered to the Registrar a certificate substantially in the form of 35 Exhibit C hereto and any legal opinions and certifications as may be reasonably requested by the Trustee and the Issuer; (ii) if the proposed transferee is a Participant and the Notes to be transferred consist of Physical Notes which after transfer are to be evidenced by an interest in the IAI Global Note, upon receipt by the Registrar of the Physical Note and (x) written instructions given in accordance with the Depository's and the Registrar's procedures and (y) the certificate, if required, referred to in clause (y) of paragraph (i) above (and any legal opinion or other certifications), the Registrar shall register the transfer and reflect on its books and records the date and an increase in the principal amount of the IAI Global Note in an amount equal to the principal amount of Physical Notes to be transferred, and the Registrar shall cancel the Physical Notes so transferred; and (iii) if the proposed transferor is a Participant seeking to transfer an interest in a Global Note, upon receipt by the Registrar of (x) written instructions given in accordance with the Depository's and the Registrar's procedures and (y) the certificate, if required, referred to in clause (y) of paragraph (i) above, the Registrar shall register the transfer and reflect on its books and records the date and (A) a decrease in the principal amount of the Global Note from which such interests are to be transferred in an amount equal to the principal amount of the Notes to be transferred and (B) an increase in the principal amount of the IAI Global Note in an amount equal to the principal amount of the Notes to be transferred. (b) Transfers to QIBs. The following provisions shall apply with respect to the registration of any proposed transfer of a Restricted Security to a QIB: (i) the Registrar shall register the transfer of any Restricted Security, whether or not such Note bears the Private Placement Legend, if (x) the requested transfer is after the second anniversary of the Issue Date; provided, however, that neither the Issuer nor any Affiliate of the Issuer has held any beneficial interest in such Note, or portion thereof, at any time on or prior to the second anniversary of the Issue Date or (y) such transfer is being made by a proposed transferor who has checked the box provided for on the applicable Global Note stating, or has otherwise advised the Issuer and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the applicable Global Note stating, or has otherwise advised the Issuer and the Registrar in writing, that it is purchasing the Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; (ii) if the proposed transferee is a Participant and the Notes to be transferred consist of Physical Notes which after transfer are to be evidenced by an interest in the 144A Global Note, upon receipt by the Registrar of the Physical Note and written 36 instructions given in accordance with the Depository's and the Registrar's procedures, the Registrar shall register the transfer and reflect on its book and records the date and an increase in the principal amount of the 144A Global Note in an amount equal to the principal amount of Physical Notes to be transferred, and the Registrar shall cancel the Physical Notes so transferred; and (iii) if the proposed transferor is a Participant seeking to transfer an interest in the IAI Global Note or the Regulation S Global Note, upon receipt by the Registrar of written instructions given in accordance with the Depository's and the Registrar's procedures, the Registrar shall register the transfer and reflect on its books and records the date and (A) a decrease in the principal amount of the IAI Global Note or the Regulation S Global Note, as the case may be, in an amount equal to the principal amount of the Notes to be transferred and (B) an increase in the principal amount of the 144A Global Note in an amount equal to the principal amount of the Notes to be transferred. (c) Transfers of Interests in the Temporary Regulation S Global Note. The following provisions shall apply with respect to the registration of any proposed transfer of interests in the Temporary Regulation S Global Note: (i) the Registrar shall register the transfer of an interest in the Temporary Regulation S Global Note, whether or not such Global Note bears the Private Placement Legend if the proposed transferor has delivered to the Registrar a certificate substantially in the form of Exhibit E stating, among other things, that the proposed transferee is a Non-U.S. Person (except for a transfer to an Initial Purchaser); (ii) if the proposed transferee is a Participant, upon receipt by the Registrar of the documents referred to in clause (i)(x) above, if required, and instructions given in accordance with the Depository's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and amount of such transfer of an interest in the Temporary Regulation S Global Note. (d) Transfers to Non-U.S. Persons. The following provisions shall apply with respect to any transfer of a Restricted Security to a Non-U.S. Person under Regulation S: (i) the Registrar shall register any proposed transfer of a Restricted Security to a Non-U.S. Person upon receipt of a certificate substantially in the form of Exhibit D from the proposed transferor and such certifications, legal opinions and other information as the Trustee or the Issuer may reasonably request; and (ii) (a) if the proposed transferor is a Participant holding a beneficial interest in the Rule 144A Global Note or the IAI Global Note or the Note to be transferred consists of Physical Notes, upon receipt by the Registrar of (x) the documents required by paragraph (i) and (y) instructions in accordance with the Depository's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and a decrease in the principal amount of the Rule 144A Global Note or the IAI Global Note, as the case may be, in an amount equal to the principal amount of the beneficial interest in the Rule 144A Global Note or the IAI Global Note, as the case may be, to be transferred or 37 cancel the Physical Notes to be transferred, and (b) if the proposed transferee is a Participant, upon receipt by the Registrar of instructions given in accordance with the Depository's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Permanent Regulation S Global Note in an amount equal to the principal amount of the Rule 144A Global Note, the IAI Global Note or the Physical Notes, as the case may be, to be transferred. (e) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Issuer shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate one or more Global Notes and/or Physical Notes not bearing the Private Placement Legend in an aggregate principal amount equal to the principal amount of the beneficial interests in the Initial Global Notes or Physical Notes, as the case may be, tendered for acceptance in accordance with the Exchange Offer and accepted for exchange in the Exchange Offer; provided that, an Exchange Security issued to a person resident in a province or territory of Canada shall be subject to the provisions of Exhibit B applicable to such person. (f) Restrictions on Transfer and Exchange of Global Notes. Notwithstanding any other provisions of this Indenture, a Global Note may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. (g) Private Placement Legend. Upon the transfer, exchange or replacement of Notes not bearing the Private Placement Legend unless otherwise required by applicable law, the Registrar shall deliver Notes that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Notes bearing the Private Placement Legend, the Registrar shall deliver only Notes that bear the Private Placement Legend unless (i) there is delivered to the Trustee an Opinion of Counsel reasonably satisfactory to the Issuer and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act or (ii) such Note has been offered and sold (including pursuant to the Exchange Offer) pursuant to an effective registration statement under the Securities Act. (h) General. By its acceptance of any Note bearing the Private Placement Legend, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it shall transfer such Note only as provided in this Indenture. The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.15 or Section 2.16. The Issuer shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or 38 among Depository Participants or beneficial owners of interests in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. The Trustee shall have no responsibility for the actions or omissions of the Depository, or the accuracy of the books and records of the Depository. (i) Cancellation and/or Adjustment of Global Note. At such time as all beneficial interests in a particular Global Note have been exchanged for Physical Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Note or for Physical Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. ARTICLE THREE REDEMPTION SECTION 3.01. Notices to Trustee. If the Issuer elects to redeem Notes pursuant to Section 5, Section 6 or Section 10 of the Notes, it shall notify the Trustee in writing of the Redemption Date, the Redemption Price and the principal amount of Notes to be redeemed. The Issuer shall give notice of redemption to the Trustee at least 30 days but not more than 60 days before the Redemption Date (unless a shorter notice shall be agreed to by the Trustee), together with such documentation and records as shall enable the Trustee to select the Notes to be redeemed. SECTION 3.02. Selection of Notes To Be Redeemed. If less than all of the Notes are to be redeemed at any time, the Trustee shall select Notes for redemption as follows: (x) if the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the Notes are listed; or (a) if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; 39 provided that, in the case of a partial redemption pursuant to Section 6 of the Notes, the Trustee shall select the Notes or portions thereof on a pro rata basis or on as nearly a pro rata basis as practicable (subject to the procedures of the Depository) unless that method is otherwise prohibited. No Notes of US$1,000 or less shall be redeemed in part. The Trustee will promptly notify the Issuer in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed or purchased. SECTION 3.03. Notice of Redemption. At least 30 days but not more than 60 days before a Redemption Date, the Issuer shall mail or cause to be mailed a notice of redemption by first class mail, postage prepaid, to each Holder whose Notes are to be redeemed at its registered address (except that a notice issued in connection with a redemption referred to in Article VIII may be more than 60 days before such Redemption Date). At the Issuer's request, the Trustee shall forward the notice of redemption in the Issuer's name and at the Issuer's expense. Each notice for redemption shall identify the Notes (including the CUSIP or ISIN number) to be redeemed and shall state: (1) the Redemption Date; (2) the Redemption Price and the amount of accrued interest, if any, to be paid; (3) the name and address of the Paying Agent; (4) that Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price plus accrued interest, if any; (5) that, unless the Issuer defaults in making the redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date, and the only remaining right of the Holders of such Notes is to receive payment of the Redemption Price upon surrender to the Paying Agent of the Notes redeemed; (6) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the Redemption Date, and upon surrender and cancellation of such Note, a new Note or Notes in aggregate principal amount equal to the unredeemed portion thereof shall be issued; (7) if fewer than all the Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption; and (8) the Section of the Notes or this Indenture, as applicable, pursuant to which the Notes are to be redeemed. 40 The notice, if mailed in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the Holder of any Note designated for redemption in whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. Notices of redemption may not be conditional. SECTION 3.04. Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.03, Notes called for redemption become due and payable on the Redemption Date and at the Redemption Price plus accrued interest, if any. Upon surrender to the Trustee or Paying Agent, such Notes called for redemption shall be paid at the Redemption Price (which shall include accrued interest thereon to, but not including, the Redemption Date), but installments of interest, the maturity of which is on or prior to the Redemption Date, shall be payable to Holders of record at the close of business on the relevant Record Dates. On and after the Redemption Date interest shall cease to accrue on Notes or portions thereof called for redemption unless the Issuer shall have not complied with its obligations pursuant to Section 3.05. SECTION 3.05. Deposit of Redemption Price. On or before 1:00 p.m. New York time on the Redemption Date, the Issuer shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price plus accrued and unpaid interest, if any, of all Notes to be redeemed on that date. If the Issuer complies with the preceding paragraph, then, unless the Issuer defaults in the payment of such Redemption Price plus accrued interest, if any, interest on the Notes to be redeemed shall cease to accrue on and after the applicable Redemption Date, whether or not such Notes are presented for payment. SECTION 3.06. Notes Redeemed in Part. If any Note is to be redeemed in part only, the notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note or Notes in principal amount equal to the unredeemed portion of the original Note or Notes shall be issued in the name of the Holder thereof upon surrender and cancellation of the original Note or Notes. ARTICLE FOUR COVENANTS SECTION 4.01. Payment of Notes. The Issuer shall pay the principal of (and premium, if any) and interest on the Notes in the manner provided in the Notes, the Registration Rights Agreement and this Indenture. An installment of principal of, or interest on, the Notes shall be considered paid on the date it is due if the Trustee or Paying Agent (other than the Issuer or a Subsidiary of Holdings) holds on that date U.S. Legal Tender designated for and sufficient to pay the 41 installment. Interest on the Notes shall be computed on the basis of a 360-day year comprised of twelve 30-day months. For the purposes of disclosure under the Interest Act (Canada), the yearly rate of interest which is equivalent to the rate payable under the Notes is the rate payable multiplied by the actual number of days in the year and divided by 360. The Issuer shall pay interest on overdue principal (including, without limitation, post petition interest in a proceeding under any Bankruptcy Law), and overdue interest, to the extent lawful, at the same rate per annum borne by the Notes. SECTION 4.02. Maintenance of Office or Agency. The Issuer shall maintain in the Borough of Manhattan, The City of New York, the office or agency required under Section 2.03 (which may be an office of the Trustee or an affiliate of the Trustee or Registrar). The Issuer shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuer shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 12.02. The Issuer may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Issuer shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Issuers hereby designate the Corporate Trust Office of the Trustee as one such office or agency of the Issuers in accordance with Section 2.03 of this Indenture. SECTION 4.03. Corporate Existence. Except as otherwise permitted by Section 4.13 or Article Five, Holdings shall do or cause to be done all things reasonably necessary to preserve and keep in full force and effect its corporate existence and the corporate, partnership or other existence of each Restricted Subsidiary in accordance with the respective organizational documents of each such Restricted Subsidiary and the material rights (charter and statutory) and material franchises of the Issuer and each Restricted Subsidiary; provided, however, that Holdings shall not be required to preserve any such right, franchise or corporate existence with respect to itself or any Restricted Subsidiary, if the loss thereof would not, individually or in the aggregate, have a material adverse effect on the Issuer and the Guarantors, taken as a whole. SECTION 4.04. Payment of Taxes. The Issuer and the Guarantors shall, and shall cause each of the Restricted Subsidiaries to, pay or discharge or cause to be paid or discharged, before the same shall become delinquent, all material taxes, assessments and governmental charges levied or imposed upon it or any of the Restricted Subsidiaries or upon the income, profits or property of it or any of the Restricted Subsidiaries; provided, however, that the Issuer and the Guarantors shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge 42 or claim whose amount the applicability or validity is being contested in good faith by appropriate actions and for which appropriate provision has been made, or any such tax, assessment, charge or claim that would not reasonably be expected to have a material adverse effect on the Issuer and the Guarantors taken as a whole. SECTION 4.05. Reserved. SECTION 4.06. Compliance Certificate; Notice of Default. (a) The Issuer shall deliver to the Trustee, within 120 days after the close of each fiscal year, an Officers' Certificate stating that a review of the activities of the Issuer and the Guarantors has been made under the supervision of the signing Officers with a view to determining whether the Issuer and the Guarantors have kept, observed, performed and fulfilled their obligations under this Indenture and further stating, as to each such Officer signing such certificate, that to the best of such Officer's knowledge, the Issuer and the Guarantors during such preceding fiscal year has kept, observed, performed and fulfilled each and every such covenant and no Default or Event of Default occurred during such year and at the date of such certificate there is no Default or Event of Default that has occurred and is continuing or, if such signers do know of such Default or Event of Default, the certificate shall specify such Default or Event of Default and what action, if any, the Issuer is taking or proposes to take with respect thereto. The Officers' Certificate shall also notify the Trustee should the Issuer elect to change the manner in which it fixes the fiscal year end. (b) The Issuer shall deliver to the Trustee promptly and in any event within seven days after any Officer of the Issuer becomes aware of the occurrence of any Default an Officers' Certificate specifying the Default or Event of Default and what action, if any, the Issuer is taking or proposes to take with respect thereto. SECTION 4.07. Payments for Consent. Holdings shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid or is paid to all Holders that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. SECTION 4.08. Waiver of Stay, Extension or Usury Laws. The Issuer and each Guarantor covenants (to the extent permitted by applicable law) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture, and (to the extent permitted by applicable law) each hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted. 43 SECTION 4.09. Change of Control. If a Change of Control occurs, the Issuer shall be required to make an offer to purchase all Notes as described below (the "CHANGE OF CONTROL OFFER"). In the Change of Control Offer, the Issuer shall offer a payment in cash ("CHANGE OF CONTROL PAYMENT") equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest and Special Interest, if any, on the Notes purchased, to the date of purchase, subject to the rights of Holders on the relevant Record Date to receive interest due on the relevant Interest Payment Date. Within thirty days following any Change of Control, the Issuer shall mail or cause to be mailed a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the Change of Control Payment Date specified in the notice, which date shall be a Business Day no earlier than 30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures described below. Such notice shall state: (1) that the Change of Control Offer is being made pursuant to this Section 4.09 and that all Notes tendered and not withdrawn shall be accepted for payment; (2) the purchase price (including the amount of accrued interest) and the Change of Control Payment Date; (3) that any Note not tendered shall continue to accrue interest; (4) that, unless the Issuer defaults in making payment therefor, any Note accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (5) that Holders electing to have a Note purchased pursuant to a Change of Control Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day prior to the Change of Control Payment Date; (6) that Holders shall be entitled to withdraw their election if the Paying Agent receives, not later than the second Business Day prior to the Change of Control Payment Date, a telegram, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; and (7) that Holders whose Notes are purchased only in part shall be issued new Notes in a principal amount equal to the unpurchased portion of the Notes surrendered (equal to $1,000 or an integral multiple thereof). On the Change of Control Payment Date, the Issuer shall, to the extent lawful: 44 (1) accept for payment all Notes or portions of Notes in minimum amounts equal to US$1,000 or an integral multiple of US$1,000 in excess thereof, properly tendered pursuant to the Change of Control Offer; (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and (3) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Issuer. The Paying Agent shall promptly mail to each Holder properly tendered the Change of Control Payment for such Notes, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each new Note shall be in a principal amount of US$1,000 or an integral multiple of US$1,000. The Issuer shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Issuer shall not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Issuer and purchases all Notes properly tendered and not withdrawn under such Change of Control Offer or (2) a notice of redemption has been given pursuant to Section 5 of the Notes, unless and until there is a default in payment of the applicable Redemption Price. The Issuer shall comply, and shall cause any third party making a Change of Control Offer to comply, with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with a repurchase of the Notes as a result of a Change of Control. To the extent the provisions of any applicable securities laws or regulations conflict with the provisions of this Section 4.09, the Issuer shall not be deemed to have breached its obligations under this Section 4.09 by virtue of such compliance. Notwithstanding the foregoing, the Issuer shall not be required to make a Change of Control Offer, as provided above, if, in connection with or in contemplation of any Change of Control, it or a third party has made an offer to purchase (an "ALTERNATE OFFER") any and all Notes validly tendered at a cash price equal to or higher than the Change of Control Payment and has purchased all Notes properly tendered in accordance with the terms of such Alternate Offer. SECTION 4.10. Incurrence of Indebtedness and Issuance of Preferred Stock. (a) Holdings shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "INCUR") any Indebtedness (including Acquired Debt), and Holdings shall not issue any Disqualified Stock and 45 shall not permit any Restricted Subsidiary to issue any shares of preferred stock; provided, however, that Holdings may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and any Subsidiary Guarantor may incur Indebtedness (including Acquired Debt) or issue preferred stock, if the Fixed Charge Coverage Ratio of Holdings for its most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued, as the case may be, would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period. (b) Notwithstanding Section 4.10(a), the incurrence of any of the following items of Indebtedness shall be permitted (collectively, "PERMITTED DEBT"): (1) the incurrence by the Issuer and any Guarantor of Indebtedness and letters of credit under Credit Facilities in an aggregate amount at any time outstanding under this clause (1) (with letters of credit being deemed to have an amount equal to the maximum potential liability of Holdings and the Restricted Subsidiaries thereunder) not to exceed the greater of (a) the sum of (x) US$165.0 million and (y) Can$180.0 million (including the Canadian Dollar Equivalent of any amount under this clause (y) denominated in U.S. dollars) less the aggregate amount of all Net Proceeds of Asset Sales applied by Holdings or any Restricted Subsidiary since the date of this Indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.13 and (b) the amount that is 2.5 times Consolidated Cash Flow of Holdings for its most recently ended four full fiscal quarters for which internal financial statements are available; (2) the incurrence by Holdings and the Restricted Subsidiaries of the Existing Indebtedness; (3) the incurrence of the Notes on the Issue Date, the Guarantees and the Exchange Securities to be issued pursuant to the Registration Rights Agreement; (4) the incurrence by Holdings or any Restricted Subsidiary of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used or useful in the business of Holdings or any Restricted Subsidiary, and refinancings thereof, in an aggregate amount not to exceed US$10.0 million at any time outstanding; (5) the incurrence by Holdings or any Restricted Subsidiary of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance, replace, defease or discharge, Indebtedness (other than intercompany Indebtedness) permitted to be incurred under Sections 4.10(a), (b)(2), (b)(3) or (b)(5); 46 (6) the incurrence by Holdings or any Restricted Subsidiary of intercompany Indebtedness between or among Holdings and/or any Restricted Subsidiary; provided, however, that: (a) if the Issuer or any Guarantor is the obligor on such Indebtedness and the payee is not the Issuer or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Issuer, or the Guarantee, in the case of a Guarantor; and (b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than Holdings or a Restricted Subsidiary and (ii) any sale or other transfer of any such Indebtedness to a Person that is neither Holdings nor a Restricted Subsidiary shall be deemed, in each case, to constitute an incurrence of such Indebtedness by Holdings or such Restricted Subsidiary, as the case may be, that is not permitted by this clause (6); (7) the issuance by any of the Restricted Subsidiaries to Holdings or to any Restricted Subsidiary of preferred stock; provided, however, that (a) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than Holdings or a Restricted Subsidiary and (b) any sale or other transfer of any such preferred stock to a Person that is neither Holdings nor a Restricted Subsidiary shall be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that is not permitted by this clause (7); (8) the incurrence by Holdings or any Restricted Subsidiary of Hedging Obligations in the ordinary course of business; (9) the guarantee by the Issuer or any Guarantor of Indebtedness of Holdings or a Restricted Subsidiary that was permitted to be incurred by another provision of this Section 4.10; provided that if the Indebtedness being guaranteed is subordinated to the Notes or the Guarantees, then the guarantee shall be subordinated to the same extent as the Indebtedness guaranteed; (10) the incurrence by Holdings or any Restricted Subsidiary of Indebtedness in respect of workers' compensation claims, self-insurance obligations, indemnities, bankers' acceptances, performance, completion and surety bonds or guarantees, and similar types of obligations in the ordinary course of business; (11) the incurrence by Holdings or any Restricted Subsidiary of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five business days; (12) the incurrence by Holdings or any Restricted Subsidiary of Indebtedness consisting of guarantees, earn-outs, indemnities or obligations in respect of purchase price adjustments in connection with the acquisition or disposition of assets, including, without limitation, shares of Capital Stock; provided that the maximum aggregate 47 liability in respect of all such obligations outstanding under this clause (12) shall at no time exceed (a) in the case of an acquisition, US$10.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the consolidated balance sheet of Holdings (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by Holdings and the Restricted Subsidiaries in connection with such disposition; (13) Daylight Loans incurred by Holdings from time to time; (14) Indebtedness in respect of Permitted Factoring Arrangements; and (15) the incurrence by Holdings or any Restricted Subsidiary of additional Indebtedness in an aggregate amount at any time outstanding, including all Indebtedness incurred to refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (15), not to exceed US$25.0 million. (c) For purposes of determining compliance with this Section 4.10, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (15) of Section 4.10(b), or is entitled to be incurred pursuant to Section 4.10(a), the Issuer is permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.10. Indebtedness under Credit Facilities outstanding on the Issue Date shall initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of Section 4.10(b). (d) The accrual of interest, the accrual of dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.10; provided, in each such case, that the amount thereof is included in Fixed Charges of Holdings as accrued. Notwithstanding any other provision of this Section 4.10, the maximum amount of Indebtedness that Holdings or any Restricted Subsidiary may incur pursuant to this Section 4.10 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. (e) The amount of any Indebtedness outstanding as of any date shall be: (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; (2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and (3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of: 48 (A) the Fair Market Value of such assets at the date of determination; and (B) the amount of the Indebtedness of the other Person that is secured by such assets. SECTION 4.11. Limitations on Restricted Payments. (a) Holdings shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of the Equity Interests of Holdings or any Restricted Subsidiary (including, without limitation, any payment in connection with any merger, amalgamation or consolidation involving Holdings or any Restricted Subsidiary) or to the direct or indirect holders of the Equity Interests of Holdings or any Restricted Subsidiary in their capacity as such (other than (A) dividends or distributions payable in Qualified Equity Interests, (B) dividends or distributions payable to Holdings or any Restricted Subsidiary and (C) any dividend, payment or distribution made on the Issue Date in connection with the amalgamation as described in the Offering Circular under the caption "Use of Proceeds"; (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger, amalgamation or consolidation involving Holdings) any Equity Interests of Holdings or any Parent Company; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Indebtedness of the Issuer or any Guarantor that is contractually subordinated to the Notes or any Guarantee (excluding any Indebtedness owed to and held by Holdings or any Restricted Subsidiary), other than (x) payments of interest or principal at the Stated Maturity thereof and (y) payments, purchases, redemptions, defeasances or other acquisitions or retirements for value in anticipation of satisfying a scheduled maturity, sinking fund or amortization or other installment obligation or mandatory redemption, in each case, due within one year of the Stated Maturity thereof; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "RESTRICTED PAYMENTS"), unless, at the time of and after giving effect to such Restricted Payment: (1) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; (2) Holdings would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least US$1.00 of 49 additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.10(a); and (3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by Holdings and the Restricted Subsidiaries since the date of this Indenture (excluding Restricted Payments permitted by clauses (2), (3), (4), (5), (6), (7), (8), (9) and (10) of the next succeeding paragraph), is not greater than the sum, without duplication, of: (a) 50% of the Consolidated Net Income of Holdings for the period (taken as one accounting period) from the beginning of the fiscal quarter in which the Issue Date occurs to the end of Holdings' most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus (b) 100% of the aggregate net cash proceeds received by Holdings, and 100% of the Fair Market Value at the time of receipt of assets other than cash, if any, received by Holdings, after the date of this Indenture as a contribution to its common equity capital or from the issue or sale of Qualified Equity Interests or from the issue or sale (other than to a Subsidiary of Holdings) of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of Holdings that have been converted into or exchanged for Qualified Equity Interests; plus (c) to the extent that any Restricted Investment that was made after the date of this Indenture is sold for cash or Holdings or a Restricted Subsidiary otherwise receives Cash Equivalents therefor, the return of capital in cash or Cash Equivalents with respect to such Restricted Investment (less the cost of disposition, if any); plus (d) to the extent that any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary after the date of this Indenture, the Fair Market Value of the Investment of Holdings and the Restricted Subsidiaries in such Subsidiary as of the date of such redesignation. The preceding provisions shall not prohibit: (1) the payment of any dividend within 60 days after the date of declaration of the dividend, if at the date of declaration the dividend payment would have complied with the provisions of this Indenture; (2) the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of Holdings) of, Qualified Equity Interests or from the substantially concurrent contribution of common equity capital to Holdings; provided that the amount of any such net cash proceeds that is utilized for any such Restricted Payment shall be excluded from clause (3)(b) of the preceding paragraph; 50 (3) the payment, defeasance, redemption, repurchase or other acquisition or retirement for value of Indebtedness of the Issuer or any Guarantor that is contractually subordinated to the Notes or to any Guarantee with the net cash proceeds from a substantially concurrent incurrence of Permitted Refinancing Indebtedness; (4) the payment of any dividend (or, in the case of any partnership, limited liability company or unlimited company, any similar distribution) by a Restricted Subsidiary of Holdings to the holders of its Equity Interests on a pro rata basis taking into account the relative preferences, if any, of the various classes of equity interests in such Restricted Subsidiary; (5) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of Holdings or any Restricted Subsidiary, or payments by Holdings to any Parent Company to permit, and which are used by, any Parent Company to repurchase, redeem or otherwise acquire or retire for value any Equity Interests of any Parent Company, in each case, held by any current or former officer, director, consultant or employee of Holdings or any Restricted Subsidiary (or permitted transferees, assigns, estates or heirs of any of the foregoing); provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed US$5.0 million in any calendar year (excluding for purposes of calculating such amount the purchase price of Equity Interests repurchased, redeemed, acquired or retired with the proceeds from the repayment of loans by Holdings or a Restricted Subsidiary made for the purpose of purchasing such Equity Interests), with unused amounts being available to be used in the following calendar year, but not in any succeeding calendar year; (6) the repurchase of Equity Interests deemed to occur upon the exercise of stock options to the extent such Equity Interests represent a portion of the exercise price of those stock options; (7) the declaration and payment of dividends on Designated Preferred Stock in accordance with the certificate of designations therefor; provided that at the time of issuance of such Designated Preferred Stock, Holdings would, after giving pro forma effect thereto as if such issuance had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least US$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.10(a); (8) payments made to purchase, redeem, defease or otherwise acquire or retire for value any Equity Interests of Holdings or any Restricted Subsidiary or any Indebtedness of the Issuer or any Guarantor that is contractually subordinated to the Notes or to any Guarantee, in each case, pursuant to provisions requiring such Person to offer to purchase, redeem, defease or otherwise acquire or retire for value such Equity Interests or subordinated Indebtedness upon the occurrence of a "change of control" or with the proceeds of "asset sales" as defined in the charter provisions, agreements or instruments governing such Equity Interests or subordinated Indebtedness; provided, however, that a Change of Control Offer or Asset Sale Offer, as applicable, has been made and the Issuer has purchased all Notes validly tendered in connection with that Change of Control Offer or Asset Sale Offer; 51 (9) payments pursuant to Sections 4.14(b)(4), (8) or (10); and (10) other Restricted Payments in an aggregate amount not to exceed US$20.0 million since the date of this Indenture; provided that in the case of any Restricted Payment pursuant to clause (5), (7), (8) or (10), no Default shall have occurred and be continuing. The amount of all Restricted Payments (other than cash) shall be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by Holdings or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. For purposes of determining compliance with this Section 4.11, if a Restricted Payment meets the criteria of more than one of the exceptions described in clauses (1) through (10) above or is entitled to be made according to Section 4.11(a), Holdings may, in its sole discretion, classify the Restricted Payment in any manner that complies with this Section 4.11. SECTION 4.12. Limitations on Liens. Holdings shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist any Lien of any kind on any asset now owned or hereafter acquired, except Permitted Liens, which Lien secures Indebtedness or trade payables, unless contemporaneously therewith: (1) in the case of any Lien securing an obligation that ranks pari passu with the Notes or a Guarantee, effective provision is made to secure the Notes or such Guarantee, as the case may be, at least equally and ratably with or prior to such obligation with a Lien on the same collateral; and (2) in the case of any Lien securing an obligation that is subordinated in right of payment to the Notes or a Guarantee, effective provision is made to secure the Notes or such Guarantee, as the case may be, with a Lien on the same collateral that is prior to the Lien securing such subordinated obligation, in each case, for so long as such obligation is secured by such Lien. SECTION 4.13. Limitations on Asset Sales. (a) Holdings shall not, and shall not permit any Restricted Subsidiary to, consummate an Asset Sale unless: (1) Holdings (or a Restricted Subsidiary) receives consideration at the time of the Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of; and (2) at least 75% of the consideration received in the Asset Sale by Holdings or such Restricted Subsidiary is in the form of cash or Cash Equivalents. 52 (b) For purposes of this provision, each of the following shall be deemed to be cash: (1) any liabilities, as shown on Holdings' most recent consolidated balance sheet, of Holdings or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes or any Guarantee) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases Holdings or such Restricted Subsidiary from such liabilities; (2) any securities, notes or other obligations received by Holdings or any such Restricted Subsidiary from such transferee that are, within 180 days of the Asset Sale, converted by Holdings or such Restricted Subsidiary into cash or Cash Equivalents, to the extent of the cash or Cash Equivalents received in that conversion; and (3) any stock or assets of the kind referred to in clause (2) or (4) of Section 4.13(c). (c) Within 365 days after the receipt of any Net Proceeds from an Asset Sale, Holdings (or a Restricted Subsidiary) may apply those Net Proceeds at its option: (1) to repay any Senior Debt and, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; (2) to acquire all or substantially all of the assets of, or any Capital Stock of, a Person engaged in a Permitted Business; provided that in the case of acquisition of Capital Stock of any Person, such acquisition is permitted by Section 4.11 (without giving effect to clause (4) of the definition of "Permitted Investments"); (3) to make a capital expenditure; or (4) to acquire other assets that are not classified as current assets under GAAP and that are used or useful in a Permitted Business. Pending the final application of any Net Proceeds, Holdings (or a Restricted Subsidiary) may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by this Indenture. (d) Any Net Proceeds from Asset Sales that are not applied or invested as provided in Section 4.13(b) shall constitute "EXCESS PROCEEDS." When the aggregate amount of Excess Proceeds exceeds US$15.0 million, the Issuer shall make an offer to purchase (an "ASSET SALE OFFER"), to all Holders and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets, the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds (the "Payment Amount"). The offer price for the Notes in any Asset Sale Offer shall be equal to 100% of principal amount of the Notes plus accrued and unpaid interest and Special Interest thereon, if any, to the date of purchase (the "Offered Price"), and shall be payable in cash, and the offer or redemption price for such pari passu Indebtedness shall be as set forth in the related 53 documentation governing such Indebtedness. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Issuer may use those Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such other pari passu Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. (e) Upon the commencement of a Asset Sale Offer, the Issuer shall send, by first class mail, a notice to the Trustee and to each Holder at is registered address. The notice shall contain all instructions and materials necessary to enable such Holder to tender Notes pursuant to the Asset Sale Offer. Any Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state: (1) that the Asset Sale Offer is being made pursuant to this Section; (2) the Payment Amount, the Offered Price, and the date on which Notes tendered and accepted for payment shall be purchased, which date shall be at least 30 days and not later than 60 days from the date such notices is mailed (the "ASSET SALE PAYMENT DATE"); (3) that any Notes not tendered or accepted for payment shall continue to accrue interest; (4) that, unless the Issuer defaults in making such payment, any Notes accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest on and after the Asset Sale Payment Date; (5) that Holders electing to have any Notes purchased pursuant to any Asset Sale Offer shall be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, or transfer by book-entry transfer, to the Issuer, a depository, if appointed by the Issuer, or the Paying Agent at the address specified in the notice at least three days before the Asset Sale Payment Date; (6) that Holders shall be entitled to withdraw their election if the Issuer, the Depository or the Paying Agent, as the case may be, receives, not later than the Asset Sale Payment Date, a notice setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; (7) that if the aggregate principal amount of Notes surrendered by Holders exceeds the Payment Amount, the Issuer shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Issuer so that only Notes in denominations of US$1,000, or integral multiples thereof, shall be purchased); and 54 (8) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry). (f) On the Asset Sale Payment Date, the Issuer shall, to the extent lawful: (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Asset Sale Offer, subject to pro ration if the aggregate Notes tendered exceed the Payment Amount allocable to the Notes; (2) deposit with the Paying Agent U.S. Legal Tender equal to the lesser of the Payment Amount allocable to the Notes and the amount sufficient to pay the Offered Price in respect of all Notes or portions thereof so tendered; and (3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being repurchased by the Issuer. The Issuer shall publicly announce the results of the Asset Sale Offer on the Asset Sale Payment Date. (g) The Paying Agent shall promptly mail to each Holder so tendered the Offered Price for such Notes, and the Trustee shall promptly authenticate pursuant to an Authentication Order and mail (or cause to be transferred by book-entry) to each Holder a new Note equal in principal amount to any unrepurchased portion of the Notes surrendered, if any; provided that each such new Note shall be in principal amount of $1,000 or an integral multiple thereof. However, if the Asset Sale Payment Date is on or after an interest record date and on or before the related Interest Payment Date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Asset Sale Offer. The Issuer shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sale provisions of this Section 4.13, the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.13 by virtue of such compliance. SECTION 4.14. Limitations on Transactions with Affiliates. (a) Holdings shall not, and shall not permit any Restricted Subsidiary to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of Holdings (each, an "AFFILIATE TRANSACTION"), unless: (1) the Affiliate Transaction is on terms that are not materially less favorable to Holdings or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by Holdings or such Restricted Subsidiary with an unrelated Person; and (2) Holdings delivers to the Trustee: 55 (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of US$5.0 million, a resolution of the Board of Directors of Holdings set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with this Section 4.14 and that such Affiliate Transaction has been approved by a majority of the disinterested members of such Board of Directors; and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of US$20.0 million, an opinion as to the fairness to Holdings or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing in the United States or Canada. (b) The following items shall not be deemed to be Affiliate Transactions and, therefore, shall not be subject to the provisions of the prior paragraph: (1) reasonable director, officer, consultant and employee compensation, benefit and indemnification agreements, plans and arrangements entered into by Holdings or any Restricted Subsidiary in the ordinary course of business and payments pursuant thereto; (2) transactions between or among Holdings and/or the Restricted Subsidiaries; (3) transactions with a Person (other than an Unrestricted Subsidiary of Holdings) that is an Affiliate of Holdings solely because Holdings owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person; (4) to the extent that Holdings or one or more of the Restricted Subsidiaries are members of a consolidated, combined or similar income tax group of which a direct or indirect parent of Holdings is the common parent, payment of dividends or other distributions by Holdings or one or more of the Restricted Subsidiaries pursuant to a tax sharing agreement or otherwise to the extent necessary to pay, and which are used to pay, any income taxes of such tax group that are attributable to Holdings and/or the Restricted Subsidiaries (or would be attributable to Holdings if Holdings were a U.S. corporation) and are not payable directly by Holdings and/or the Restricted Subsidiaries; provided that the amount of any such dividends or distributions (plus any such taxes payable directly by Holdings and/or the Restricted Subsidiaries) shall not exceed the amount of such taxes that would have been payable directly by Holdings and/or the Restricted Subsidiaries had Holdings been the U.S. common parent of a separate tax group that included only Holdings and the Restricted Subsidiaries; (5) any issuance of Qualified Equity Interests (and the exercise of any warrants, options or other rights to acquire Qualified Equity Interests); (6) Restricted Payments that do not violate Section 4.11; 56 (7) loans or advances to employees of Holdings or any Restricted Subsidiary (x) in the ordinary course of business in an aggregate amount not to exceed US$5.0 million at any time outstanding or (y) in connection with the purchase by such Persons of Equity Interests of Holdings or any Parent Company so long as the cash proceeds of such purchase received by any Parent Company are contemporaneously contributed to the common equity capital of Holdings; (8) payments by Holdings to or on behalf of any Parent Company in an amount sufficient to pay out-of-pocket legal, accounting and filing and other general corporate overhead costs of such Parent Company and franchise taxes and other fees required to maintain its existence actually incurred by such Parent Company, in any case in an aggregate amount not to exceed US$1.0 million in any calendar year; (9) the agreements described in the Offering Circular under the caption "Certain Relationships and Related Party Transactions," as in effect on the date of this Indenture or as amended thereafter (so long as the amended agreement is not more disadvantageous to the Holders, taken as a whole, in any material respect than such agreement immediately prior to such amendment) or any transaction contemplated thereby (other than payment of management fees referred to in clause (10) below); and (10) so long as no Event of Default exists, the existence or performance by Holdings or any Restricted Subsidiary of the provisions of the Management Agreement described in the Offering Circular under "Certain Relationships and Related Party Transactions" or any amendment thereto or replacement agreement therefor or any transaction contemplated thereby so long as such amendment or replacement is not more disadvantageous to the Holders, taken as a whole, in any material respect than the original agreements as in effect on the date of this Indenture. SECTION 4.15. Dividend and Other Payment Restrictions Affecting Subsidiaries. Holdings shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (1) pay dividends or make any other distributions on its Capital Stock to Holdings or any Restricted Subsidiary, or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to Holdings or any Restricted Subsidiary; (2) make loans or advances to Holdings or any Restricted Subsidiary; or (3) transfer any of its properties or assets to Holdings or any Restricted Subsidiary. However, the preceding restrictions shall not apply to encumbrances or restrictions existing under or by reason of: 57 (1) agreements governing Existing Indebtedness and Credit Facilities as in effect on the date of this Indenture and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of those agreements; provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the date of this Indenture; (2) this Indenture, the Notes and the Guarantees; (3) applicable law, rule, regulation or order; (4) any instrument governing Indebtedness or Capital Stock of a Person acquired by Holdings or any Restricted Subsidiary as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be incurred; (5) customary non-assignment provisions in contracts and licenses entered into in the ordinary course of business; (6) purchase money obligations for property acquired in the ordinary course of business and Capital Lease Obligations that impose restrictions on the property purchased or leased of the nature described in clause (3) of the preceding paragraph; (7) any agreement for the sale or other disposition of a Restricted Subsidiary or an asset that restricts distributions by that Restricted Subsidiary or transfers of such asset pending the sale or other disposition; (8) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; (9) Liens permitted to be incurred under the provisions of Section 4.12 that limit the right of the debtor to dispose of the assets subject to such Liens; (10) provisions limiting the disposition or distribution of assets or property in joint venture agreements, partnership agreements, limited liability company operating agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements entered into with the approval of the Board of Directors of Holdings, which limitation is applicable only to the assets that are the subject of such agreements; 58 (11) restrictions on cash or other deposits or net worth imposed under contracts entered into in the ordinary course of business; (12) restrictions under Permitted Factoring Arrangements on the disposition of accounts receivable subject to Permitted Factoring Arrangements; and (13) agreements governing Indebtedness permitted to be incurred pursuant to Section 4.10; provided that the provisions relating to such encumbrance or restriction contained in such Indebtedness, taken as a whole, are not materially more restrictive to the Issuer or Holdings, as applicable, as determined by the Board of Directors of the Issuer or Holdings, as applicable, in its reasonable and good faith judgment, than the provisions contained in the Credit Agreement or this Indenture as in effect on the date of this Indenture. SECTION 4.16. Subsidiary Guarantees. (a) If any Restricted Subsidiary (including any newly formed or newly acquired Restricted Subsidiary) guarantees any Indebtedness under any Credit Facility, then within 30 days of the date on which it guaranteed such Indebtedness, the Issuer shall: (1) execute and deliver to the Trustee (a) a supplemental indenture in form reasonably satisfactory to the Trustee pursuant to which such Restricted Subsidiary shall unconditionally guarantee all of the Issuer's obligations under the Notes and this Indenture and (b) a notation of guarantee in respect of its Note Guarantee; and (2) deliver to the Trustee an Opinion of Counsel that such supplemental indenture has been duly authorized, executed and delivered by such Restricted Subsidiary and constitutes a valid and legally binding and enforceable obligation of such Restricted Subsidiary, subject to customary exceptions. Thereafter, such Restricted Subsidiary shall be a Subsidiary Guarantor for all purposes of this Indenture. (b) The Issuer shall not permit any Subsidiary Guarantor to, directly or indirectly, consolidate, amalgamate or merge with or into another Person (whether or not such Guarantor is the surviving Person) unless: (1) such Guarantor is the surviving Person or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than a Guarantor or the Issuer) expressly assumes all the obligations of such Guarantor under the Guarantee of such Guarantor, this Indenture and the Registration Rights Agreement pursuant to agreements reasonably satisfactory to the Trustee; and (2) immediately after such transaction, no Default or Event of Default exists. (c) Notwithstanding Section 4.16(b), the Guarantee of a Subsidiary Guarantor shall automatically and unconditionally be released: 59 (1) in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) Holdings or any Restricted Subsidiary, if the sale or other disposition does not violate Section 4.13; (2) in connection with any sale or other disposition of all of the Capital Stock of that Guarantor to a Person that is not (either before or after giving effect to such transaction) Holdings or any Restricted Subsidiary, if the sale or other disposition does not violate Section 4.13; (3) if Holdings designates such Subsidiary Guarantor to be an Unrestricted Subsidiary in accordance with Section 4.19; (4) upon legal defeasance or satisfaction and discharge of the Notes as provided below under Sections 8.01 and 8.02; or (5) if such Subsidiary Guarantor shall not guarantee any Indebtedness under any Credit Facility (other than if such Subsidiary Guarantor no longer guarantees any Indebtedness under any Credit Facility as a result of payment under any guarantee of any such Indebtedness by any Subsidiary Guarantor); provided that a Subsidiary Guarantor shall not be permitted to be released from its Guarantee if it is an obligor with respect to Indebtedness that would not, under Section 4.10, be permitted to be incurred by a Restricted Subsidiary that is not a Guarantor. SECTION 4.17. Limitations on Layering Indebtedness. The Issuer shall not, directly or indirectly, incur any Indebtedness that is, or purports to be by its terms (or by the terms of any agreement governing such Indebtedness), subordinate or junior in right of payment to any Senior Debt of the Issuer and senior in any respect in right of payment to the Notes. No Guarantor shall, directly or indirectly, incur any Indebtedness that is, or purports to be by its terms (or by the terms of any agreement governing such Indebtedness), subordinate or junior in right of payment to any Senior Debt of such Guarantor and senior in any respect in right of payment to such Guarantor's Guarantee. For purposes hereof, unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness solely because it is unsecured, and Indebtedness that is not guaranteed by a particular Person shall not be deemed to be subordinate or junior to Indebtedness solely because it is not so guaranteed. SECTION 4.18. Reports to Holders. So long as any Notes are outstanding, the Issuer shall furnish to the Holders or cause the Trustee to furnish to the Holders, within the time periods that such information would have otherwise been required to have been provided to the Commission if the rules and regulations applicable to the filing of such information were applicable to the Issuer: (1) all quarterly and annual information that would be required to be filed with the Commission on (a) if the Issuer is a domestic issuer, Forms 10-Q and 10-K if the Issuer were required to file such reports or (b) if the Issuer is a foreign private issuer, on 60 Form 6-K and Form 20-F or Form 40-F (if eligible) if the Issuer were required to file such forms; and (2) all current reports that would be required to be (a) filed if the Issuer is a domestic issuer with the Commission on Form 8-K if the Issuer were required to file such reports or (b) furnished if the Issuer is a foreign private issuer, to the Commission on Form 6-K if the Issuer were required to furnish such reports. The availability of the foregoing materials on either the Commission's EDGAR service or on the Issuer's website shall be deemed to satisfy the Issuer's delivery obligation. All such reports shall be prepared in all material respects in accordance with all of the rules and regulations applicable to such reports. Each annual report shall include a report on the Issuer's consolidated financial statements by the Issuer's certified independent accountants. In addition, the Issuer shall cause a copy of all of the information and reports referred to in clauses (1) and (2) above to be posted no later than the date such information is required to be furnished to registered Holders, on the website of the Issuer (and remain there for a period of one year from the date of such posting). The Issuer shall also agree that, for so long as any Notes remain outstanding, if at any time the Issuer and the Guarantors are not required to file reports under the Exchange Act with the Commission, the Issuer shall furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. If any Parent Company has complied with the reporting requirements of Section 13 or 15(d) of the Exchange Act, if applicable, or has furnished the Holders or posted on its or the Issuer's website the reports described herein with respect to such Parent Company (including any consolidating financial information required by Regulation S-X relating to the Issuer and the Guarantors), the Issuer shall be deemed to be in compliance with the provisions of this Section 4.18. SECTION 4.19. Limitations on Designation of Restricted and Unrestricted Subsidiaries. The Board of Directors of Holdings may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by Holdings and the Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary shall be deemed to be an Investment made as of the time of the designation and shall reduce the amount available for Restricted Payments under Section 4.11 or under one or more clauses of the definition of "Permitted Investments," as determined by Holdings. That designation shall only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors of Holdings may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if that redesignation would not cause a Default. SECTION 4.20. Business Activities. Holdings shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Issuer and its Restricted Subsidiaries taken as a whole. 61 SECTION 4.21. Additional Amounts. All amounts paid or credited by the Issuer under or with respect to the Notes, or by any Guarantor pursuant to the Guarantees, shall be made free and clear of and without withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and other liabilities or expenses related thereto) (hereinafter, "TAXES") imposed or levied by or on behalf of the Government of Canada or the United States or of any province, territory, state or other political subdivision thereof or by any authority or agency therein or thereof having power to tax (each, a "RELEVANT TAXING JURISDICTION"), unless the Issuer or such Guarantor, as the case may be, is required to withhold or deduct any amount for or on account of Taxes by law or by the interpretation or administration thereof. If the Issuer or any Guarantor is required to withhold or deduct any amount for or on account of any such Taxes from any amount paid or credited under or with respect to the Notes or the Guarantees, the Issuer or such Guarantor shall pay such additional amounts (the "Additional Amounts") as may be necessary so that the net amount received by each owner of a beneficial interest in the Notes (an "owner" for the purposes of this "ADDITIONAL AMOUNTS" section) (including Additional Amounts) after such withholding or deduction (including any withholding or deduction in respect of Additional Amounts) shall not be less than the amount such owner would have received if such Taxes had not been withheld or deducted; provided, however, that Additional Amounts shall not be payable to an owner or Holder with respect to any Taxes to the extent such Taxes ("EXCLUDED TAXES") would not have been imposed but for such owner or Holder being an owner or Holder: (1) in the case of Canadian Taxes, with which the Issuer or such Guarantor does not deal at arm's length (within the meaning of the Income Tax Act (Canada)) at the time of making a payment; (2) which is subject to such Taxes by reason of such owner or Holder being connected with the Relevant Taxing Jurisdiction other than solely by reason of the mere acquisition or holding of notes, the receipt of payments thereunder or the enforcement of the Holder's or owner's rights thereunder; (3) which failed to duly and timely comply with a timely request of the Issuer to provide information, documents, certification or other evidence concerning such owner's or Holder's nationality, residence, entitlement to treaty benefits, identity or connection with a Relevant Taxing Authority, but only if such owner or Holder is legally entitled to comply with such request and only to the extent that due and timely compliance with such request would have resulted in the reduction or elimination of the Taxes in question; (4) in the case of United States Taxes, which do not qualify for the "portfolio interest exception" contained in Sections 871(h) and 881(c) of the U.S. Internal Revenue Code of 1986, as amended; or (5) which is a fiduciary, a partnership or not the beneficial owner of a Note, if and to the extent that any beneficiary or settlor of such fiduciary, any partner in such partnership or the beneficial owner of such Note (as the case may be) would not have 62 been entitled to receive Additional Amounts with respect to the payment in question if such beneficiary, settlor, partner or beneficial owner had been the Holder of such Note (but only if there is no material cost or expense associated with transferring such Note to such beneficiary, settlor, partner or beneficial owner and no restriction on such transfer that is outside the control of such beneficiary, settlor, partner or beneficial owner). The Issuer or such Guarantor shall also (a) make such withholding or deduction and (b) remit the full amount deducted or withheld to the relevant authority in accordance with and in the time required under applicable law. The Issuer or the Guarantor shall furnish the Holders, within 30 days after the date the payment of any Taxes is due pursuant to applicable law, evidence of such payment by the Issuer or such Guarantor. The Issuer and the Guarantors shall indemnify and hold harmless each Holder and owner from and against (x) any Taxes (other than Excluded Taxes) levied or imposed on such Holder or owner as a result of payments or credits made under or with respect to the Notes or the Guarantees, and (y) any Taxes (other than Excluded Taxes) so levied or imposed with respect to any indemnification payments under the foregoing clause (x) or this clause (y) such that the net amount received by such Holder or owner after such indemnification payments shall not be less than the net amount the Holder or owner would have received if the Taxes described in clauses (x) and (y) above had not been imposed. At least 30 days prior to each date on which any payment under or with respect to the Notes is due and payable, if the Issuer or any Guarantor shall be obligated to pay Additional Amounts with respect to such payment, the Issuer or such Guarantor shall deliver to the Trustee an Officers' Certificate stating the fact that such Additional Amounts shall be payable and the amounts so payable and shall set forth such other information necessary to enable the Trustee to pay such Additional Amounts to holders or owners on the payment date. Whenever in this Indenture there is mentioned, in any context, the payment of principal, premium, if any, redemption price, Change of Control Payment, Asset Sale Offer purchase price, interest or any other amount payable under or with respect to any Note, such mention shall be deemed to include mention of the payment of Additional Amounts or indemnification payments to the extent that, in such context, Additional Amounts or indemnification payments are, were or would be payable in respect thereof. The Issuer and the Guarantors shall pay any present or future stamp, court, documentary or other excise or property Taxes, charges or similar levies that arise in any Relevant Taxing Jurisdiction from the execution, delivery or registration of, or enforcement of rights under, the Notes, this Indenture, any Guarantee or any related document ("DOCUMENTARY TAXES"). The obligation to pay any Additional Amounts (and any associated indemnification payments) and Documentary Taxes under the terms and conditions described above shall survive any termination, defeasance or discharge of this Indenture. 63 ARTICLE FIVE SUCCESSOR CORPORATION SECTION 5.01. Mergers, Consolidations, Etc. (a) The Issuer may not, directly or indirectly: (1) consolidate, amalgamate or merge with or into another Person (whether or not the Issuer is the surviving Person); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Issuer and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless: (1) either: (a) the Issuer is the surviving Person; or (b) the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Issuer) or to which such sale, assignment, transfer, conveyance or other disposition has been made (x) is a Nova Scotia unlimited company or a corporation, limited liability company or limited partnership organized or existing under the laws of Canada, any province or territory thereof, the United States, any state of the United States or the District of Columbia and (y) assumes all the obligations of the Issuer under the Notes, this Indenture and the registration rights agreement pursuant to agreements reasonably satisfactory to the Trustee; (2) immediately after such transaction, no Default or Event of Default exists; and (3) either (a) the Issuer or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Issuer), or to which such sale, assignment, transfer, conveyance or other disposition has been made, shall, on the date of such transaction after giving pro forma effect thereto and to any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least US$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.10(a) or (b) the Fixed Charge Coverage Ratio of Holdings or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Issuer), or to which such sale, assignment, transfer, conveyance or other disposition has been made, after giving effect to the transaction and any related financings, would not be less than the Fixed Charge Coverage Ratio of Holdings immediately prior to such transaction. In addition, the Issuer may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries, the Equity Interests of which constitute all or substantially all of the properties and assets of the Issuer, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Issuer. 64 (b) Holdings may not, directly or indirectly: (1) consolidate, amalgamate or merge with or into another Person (whether or not Holdings is the surviving Person); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of Holdings and the Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless: (1) either: (a) Holdings is the surviving Person; or (b) the Person formed by or surviving any such consolidation, amalgamation or merger (if other than Holdings) or to which such sale, assignment, transfer, conveyance or other disposition has been made (x) is a Nova Scotia unlimited company or a corporation, limited liability company or limited partnership organized or existing under the laws of Canada, any province or territory thereof, the United States, any state of the United States or the District of Columbia and (y) assumes all the obligations of Holdings under the Guarantee, this Indenture and the registration rights agreement pursuant to agreements reasonably satisfactory to the Trustee; (2) immediately after such transaction, no Default or Event of Default exists; and (3) either (a) Holdings or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than Holdings), or to which such sale, assignment, transfer, conveyance or other disposition has been made shall, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least US$1.00 of additional Indebtedness pursuant to Section 4.10(a) or (b) the Fixed Charge Coverage Ratio of Holdings or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than Holdings), or to which such sale, assignment, transfer, conveyance or other disposition has been made, after giving effect to the transaction and any related financings, would not be less than the Fixed Charge Coverage Ratio of Holdings immediately prior to such transaction. In addition, Holdings may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries, the Equity Interests of which constitute all or substantially all of the properties and assets of Holdings, shall be deemed to be the transfer of all or substantially all of the properties and assets of Holdings. (c) This Section 5.01 shall not apply to a merger of the Issuer or a Guarantor with an Affiliate solely for the purpose, and with the effect, of reincorporating the Issuer or such Guarantor, as the case may be, in another jurisdiction of the United States or Canada. In addition, nothing in this Section 5.01 shall prohibit any Restricted Subsidiary from consolidating or amalgamating with, merging with or into or conveying, transferring or leasing, in one transaction or a series of transactions, all or substantially all of its assets to Holdings or another Restricted Subsidiary. 65 ARTICLE SIX DEFAULT AND REMEDIES SECTION 6.01. Events of Default. Each of the following is an "EVENT OF DEFAULT": (1) default for 30 days in the payment when due of interest on, or Special Interest with respect to, the Notes (whether or not such payment is prohibited by the subordination provisions of this Indenture); (2) default in payment when due of the principal of, or premium, if any, on the Notes (whether or not such payment is prohibited by the subordination provisions of this Indenture); (3) failure by Holdings or any Restricted Subsidiary to comply (a) for 30 days after written notice with the provisions described under Sections 4.09 and 4.13 or (b) with Section 5.01; (4) failure by Holdings or any Restricted Subsidiary for 60 days after written notice has been given to the Issuer by the Trustee or to the Issuer and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes then outstanding to comply with any of the other agreements in this Indenture; (5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by Holdings or any Restricted Subsidiary (or the payment of which is guaranteed by Holdings or any Restricted Subsidiary), whether such Indebtedness or guarantee now exists or is created after the Issue Date, if that default: (a) is caused by a failure to pay any such Indebtedness at its stated final maturity after giving effect to any applicable grace periods (a "PAYMENT DEFAULT"); or (b) results in the acceleration of such Indebtedness prior to its stated final maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates US$20.0 million or more; (6) failure by Holdings or any Restricted Subsidiary to pay final judgments aggregating in excess of US$20.0 million in excess of amounts that are covered by insurance, which judgments are not paid, discharged or stayed for a period of 60 days; 66 (7) except as permitted by this Indenture, the Guarantee of Holdings or any Restricted Subsidiary that is a Significant Subsidiary shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Guarantee; (8) Holdings, the Issuer or any of Holdings' Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary as debtor in an involuntary case, pursuant to or within the meaning of any Bankruptcy Law: (a) commences a voluntary case or proceeding, (b) consents to the entry of an order for relief or decree against it in an involuntary case or proceeding, (c) consents to the appointment of a Custodian of it or for all or substantially all of its assets, or (d) makes a general assignment for the benefit of its creditors; (e) admits in writing its inability to pay its debts generally as they become due; or (f) files a petition or answer or consent seeking reorganization or relief. (9) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (a) is for relief against Holdings, the Issuer or any of Holdings' Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary as debtor in an involuntary case or proceeding; (b) appoints a Custodian of Holdings, the Issuer or any of Holdings' Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, or a Custodian for all or substantially all of the assets of Holdings, the Issuer or any of Holdings' Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary or adjudges any such entity or group a bankrupt or insolvent or approves as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of such entity or group; or (c) orders the winding up or liquidation of Holdings, the Issuer or any of Holdings' Restricted Subsidiaries that is a Significant Subsidiary or any group 67 of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary. and the order or decree remains unstayed and in effect for 60 consecutive days; and (10) the amalgamation contemplated by the merger agreement described under "Summary -- The Transactions" is not consummated on or before June 7, 2004. SECTION 6.02. Acceleration. (a) In the case of an Event of Default specified in clause (8) or (9) of Section 6.01, with respect to Holdings, the Issuer, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, or an Event of Default specified in clause (10) of Section 6.01 occurs, all outstanding Notes shall become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare (an "ACCELERATION DECLARATION") all the Notes to be due and payable. Upon an acceleration declaration, the aggregate principal of and accrued and unpaid interest on the outstanding Notes shall become due and payable immediately without further action or notice (a) if there is no Indebtedness outstanding under any Credit Facility at such time, immediately and (b) if otherwise, upon the earlier of (x) the final maturity (after giving effect to any applicable grace period or extensions thereof) or an acceleration of any Indebtedness under any Credit Facility prior to the express final stated maturity thereof and (y) five business days after the Representative under each Credit Facility receives the acceleration declaration, but, in the case of this clause (b) only, if such Event of Default is then continuing; provided, however, that after such acceleration, but before a judgment or decree based on acceleration, the Holders of a majority in aggregate principal amount of such outstanding Notes may rescind and annul such acceleration: (1) if the rescission would not conflict with any judgment or decree; (2) if all existing Events of Default have been cured or waived except non-payment of principal and interest that has become due solely because of this acceleration; (3) if the Issuer has paid to the Trustee its reasonable compensation and reimbursed the Trustee of its expenses, disbursements and advances; and (4) in the event of a cure or waiver of an Event of Default of the type set forth in Section 6.01(8) or (9), the Trustee shall have received an Officers' Certificate and an Opinion of Counsel that such Event of Default has been cured or waived. No such rescission shall affect any subsequent Default or impair any right consequent thereto. In addition, in the event of an acceleration declaration because an Event of Default has occurred and is continuing as a result of the acceleration of any Indebtedness described in clause (5) of Section 6.01, the acceleration declaration shall be automatically annulled if the holders of any Indebtedness described in clause (5) have rescinded the declaration of acceleration in respect of such Indebtedness and if (x) the annulment of the acceleration of the 68 notes would not conflict with any judgment or decree of a court of competent jurisdiction and (y) all existing Events of Default, except nonpayment of principal or interest on the notes that became due solely because of the acceleration of the notes, have been cured or waived. SECTION 6.03. Other Remedies. If a Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of, or interest on, the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law. SECTION 6.04. Waiver of Past Defaults. Subject to Sections 2.09, 6.07 and 9.02, the Holders of a majority in principal amount of the outstanding Notes (which may include consents obtained in connection with a tender offer or exchange offer of Notes) by notice to the Trustee may waive an existing Default or Event of Default and its consequences, except a Default or Event of Default in the payment of principal of, or interest or premium on, any Note as specified in Section 6.01(1) or (2). The Issuer shall deliver to the Trustee an Officers' Certificate stating that the requisite percentage of Holders have consented to such waiver and attaching copies of such consents. When a Default or Event of Default is waived, it is cured and ceases. SECTION 6.05. Control by Majority. The Holders of not less than a majority in principal amount of the outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it. Subject to Section 7.01, however, the Trustee may refuse to follow any direction that conflicts with any law or this Indenture, that the Trustee determines may be unduly prejudicial to the rights of another Holder, or that may involve the Trustee in personal liability; provided that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. In the event the Trustee takes any action or follows any direction pursuant to this Indenture, the Trustee shall be entitled to indemnification against any loss or expense caused by taking such action or following such direction. SECTION 6.06. Limitation on Suits. No Holder shall have any right to institute any proceeding with respect to this Indenture or for any remedy thereunder, unless: 69 (1) such Holder has previously given the Trustee written notice that an Event of Default is continuing; (2) Holders of at least 25% in aggregate principal amount of the outstanding Notes have requested in writing that the Trustee pursue the remedy; (3) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense; (4) the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and (5) Holders of a majority in aggregate principal amount of the outstanding Notes have not given the Trustee a written direction inconsistent with such request within such 60-day period. However, such limitations do not apply to a suit instituted by a Holder of any Note for enforcement of payment of the principal of or interest or premium on such Note on or after the due date therefor (after giving effect to the grace period specified in Section 6.01(1)). A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over such other Holder. SECTION 6.07. Rights of Holders To Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of, and interest on, a Note, on or after the respective due dates therefor, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of the Holder. SECTION 6.08. Collection Suit by Trustee. If an Event of Default in payment of principal, interest and premium specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Issuer or any other obligor on the Notes for the whole amount of principal and accrued interest and fees remaining unpaid, together with interest on overdue principal and, to the extent that payment of such interest is lawful, interest on overdue installments of interest, in each case at the rate per annum borne by the Notes and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relating to the Issuer, their creditors or their 70 property and shall be entitled and empowered to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same, and any Custodian in any such judicial proceedings is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agent and counsel, and any other amounts due the Trustee under Section 7.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. The Trustee shall be entitled to participate as a member of any official committee of creditors in the matters as it deems necessary or advisable. SECTION 6.10. Priorities. If the Trustee collects any money or property pursuant to this Article Six, it shall pay out the money or property in the following order: First: to the Trustee for amounts due under Section 7.07; Second: to Holders for interest accrued on the Notes, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for interest; Third: to Holders for principal amounts due and unpaid on the Notes, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal; and Fourth: to the Issuer or, if applicable, the Guarantors, as their respective interests may appear. The Trustee, upon prior notice to the Issuer, may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in principal amount of the outstanding Notes. 71 ARTICLE SEVEN TRUSTEE SECTION 7.01. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (b) Except during the continuance of an Event of Default: (1) The Trustee need perform only those duties as are specifically set forth herein or in the Trust Indenture Act and no duties, covenants, responsibilities or obligations shall be implied in this Indenture against the Trustee. (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates (including Officers' Certificates) or opinions (including Opinions of Counsel) furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) Notwithstanding anything to the contrary herein, the Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) This paragraph does not limit the effect of Section 7.01(b). (2) The Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05. (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or to take or omit to take any action under this Indenture or take any action at the request or direction of Holders if it shall have reasonable grounds for believing that repayment of such funds is not assured to it. (e) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to this Section 7.01. 72 (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuer. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. (g) In the absence of bad faith, negligence or willful misconduct on the part of the Trustee, the Trustee shall not be responsible for the application of any money by any Paying Agent other than the Trustee. SECTION 7.02. Rights of Trustee. Subject to Section 7.01: (a) The Trustee may rely conclusively on any resolution, certificate (including any Officers' Certificate), statement, instrument, opinion (including any Opinion of Counsel), notice, request, direction, consent, order, bond, debenture, or other paper or document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate and an Opinion of Counsel, which shall conform to the provisions of Section 12.05. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent (other than an agent who is an employee of the Trustee) appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers under this Indenture. (e) The Trustee may consult with counsel of its selection and the advice or opinion of such counsel as to matters of law shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture whether on its own motion or at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby. (g) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate (including any Officers' Certificate), statement, instrument, opinion (including any Opinion of Counsel), notice, request, direction, consent, order, bond, debenture, or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit and, if the Trustee shall determine to make such further inquiry or 73 investigation, it shall be entitled, upon reasonable notice to the Issuer, to examine the books, records, and premises of the Issuer, personally or by agent or attorney at the sole cost of the Issuer. (h) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder. (i) The permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as duties. (j) Except with respect to Section 4.01 and 4.06, the Trustee shall have no duty to inquire as to the performance of the Issuer with respect to the covenants contained in Article Four. In addition, the Trustee shall not be deemed to have knowledge of a Default or Event of Default except (i) any Default or Event of Default occurring pursuant to Sections 4.01, 6.01(1) or 6.01(2) or (ii) any Default or Event of Default of which the Trustee shall have received written notification. (k) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder. SECTION 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer, its Subsidiaries or its respective Affiliates with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue as Trustee (if this Indenture has been qualified under the TIA) or resign. Any Agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuer's use of the proceeds from the Notes, and it shall not be responsible for any statement of the Issuer in this Indenture or any document issued in connection with the sale of Notes or any statement in the Notes other than the Trustee's certificate of authentication. The Trustee makes no representations with respect to the effectiveness or adequacy of this Indenture. SECTION 7.05. Notice of Default. If a Default or Event of Default occurs and is continuing and the Trustee receives actual notice of such Default or Event of Default, the Trustee shall mail to each Holder notice of the uncured Default or Event of Default within 30 days after such Default or Event of Default occurs. Except in the case of a Default in payment of principal of, or interest on, any Note, including an accelerated payment and the failure to make a payment on the Change of Control 74 Payment Date pursuant to a Change of Control Offer or the Asset Sale Payment Date pursuant to a Asset Sale Offer, the Trustee may withhold the notice if and so long as the Board of Directors, the executive committee, or a trust committee of directors and/or Responsible Officers, of the Trustee in good faith determines that withholding the notice is in the interest of the Holders. SECTION 7.06. Reports by Trustee to Holders. Within 60 days after each August 15, beginning with August 15, 2005, the Trustee shall, to the extent that any of the events described in Trust Indenture Act Section 313(a) occurred within the previous twelve months, but not otherwise, mail to each Holder a brief report dated as of such date that complies with Trust Indenture Act Section 313(a). The Trustee also shall comply with Trust Indenture Act Sections 313(b), 313(c) and 313(d). A copy of each report at the time of its mailing to Holders shall be mailed by the Trustee to the Issuer and filed by the Trustee with the SEC and each securities exchange, if any, on which the Notes are listed. The Issuer shall notify the Trustee if the Notes become listed on any securities exchange or of any delisting thereof and the Trustee shall comply with Trust Indenture Act Section 313(d). SECTION 7.07. Compensation and Indemnity. The Issuer shall pay to the Trustee from time to time such compensation as the Issuer and the Trustee shall from time to time agree in writing for its services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall reimburse the Trustee promptly upon request for all reasonable disbursements, expenses and advances (including reasonable fees and expenses of counsel) incurred or made by it in addition to the compensation for its services, except any such disbursements, expenses and advances as may be attributable to the Trustee's negligence, bad faith or willful misconduct. Such expenses shall include the reasonable fees and expenses of the Trustee's agents and counsel. The Issuer shall indemnify each of the Trustee or any predecessor Trustee and its agents for, and hold them harmless against, any and all loss, damage, claims including taxes (other than taxes based upon, measured by or determined by the income of the Trustee), liability or expense incurred by them except for such actions to the extent caused by any negligence, bad faith or willful misconduct on their part, arising out of or in connection with the acceptance or administration of this trust including the reasonable costs and expenses of defending themselves against or investigating any claim or liability in connection with the exercise or performance of any of the Trustee's rights, powers or duties hereunder. The Trustee shall notify the Issuer promptly of any claim asserted against the Trustee or any of its agents for which it may seek indemnity. The Issuer shall defend the claim and the Trustee shall cooperate in the defense. The Trustee and its agents subject to the claim may have separate counsel and the Issuer shall pay the reasonable fees and expenses of such counsel; provided, however, that the Issuer shall not be required to pay such fees and expenses if there is no conflict of interest between the Issuer and the Trustee and its agents subject to the claim in connection with such defense as reasonably 75 determined by the Trustee. The Issuer need not pay for any settlement made without its written consent. The Issuer need not reimburse any expense or indemnify against any loss or liability to the extent incurred by the Trustee through the Trustee's negligence, bad faith or willful misconduct. To secure the Issuer's payment obligations in this Section 7.07, the Trustee shall have a Lien prior to the Notes against all money or property held or collected by the Trustee, in its capacity as Trustee, except money or property held in trust to pay principal and interest on particular Notes. The obligations of the Issuer and the Guarantors under this Section shall not be subordinated to the payment of Senior Debt pursuant to Article Ten or Section 11.02 except assets or money held in trust to pay principal of or interest on particular Notes. When the Trustee incurs expenses or renders services after a Default specified in Section 6.01(8) or (9) occurs, such expenses and the compensation for such services shall be paid to the extent allowed under any Bankruptcy Law. Notwithstanding any other provision in this Indenture, the foregoing provisions of this Section 7.07 shall survive the satisfaction and discharge of this Indenture or the appointment of a successor Trustee. SECTION 7.08. Replacement of Trustee. The Trustee may resign at any time by so notifying the Issuer in writing. The Holders of a majority in principal amount of the outstanding Notes may remove the Trustee by so notifying the Issuer and the Trustee and may appoint a successor Trustee. The Issuer may remove the Trustee if: (1) the Trustee fails to comply with Section 7.10; (2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuer shall notify each Holder of such event and shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuer. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer. Immediately after that, the retiring Trustee shall transfer, after payment of all sums then owing to the Trustee pursuant to Section 7.07, all property held by it as Trustee to the successor Trustee, subject to the Lien provided in Section 7.07, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all 76 the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Holder. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the Holders of at least 10% in principal amount of the outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee at the expense of the Issuer. If the Trustee fails to comply with Section 7.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Issuer's obligations under Section 7.07 shall continue for the benefit of the retiring Trustee. SECTION 7.09. Successor Trustee by Merger, Etc. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the resulting, surviving or transferee corporation without any further act shall, if such resulting, surviving or transferee corporation is otherwise eligible hereunder, be the successor Trustee; provided that such corporation shall be otherwise qualified and eligible under this Article Seven. SECTION 7.10. Eligibility; Disqualification. This Indenture shall always have a Trustee who satisfies the requirement of Trust Indenture Act Sections 310(a)(1), 310(a)(2) and 310(a)(5). The Trustee shall have a combined capital and surplus of at least US$100,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with Trust Indenture Act Section 310(b); provided, however, that there shall be excluded from the operation of Trust Indenture Act Section 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Issuer are outstanding, if the requirements for such exclusion set forth in Trust Indenture Act Section 310(b)(1) are met. The provisions of Trust Indenture Act Section 310 shall apply to the Issuer and any other obligor of the Notes. SECTION 7.11. Preferential Collection of Claims Against the Issuer. The Trustee, in its capacity as Trustee hereunder, shall comply with Trust Indenture Act Section 311(a), excluding any creditor relationship listed in Trust Indenture Act Section 311(b). A Trustee who has resigned or been removed shall be subject to Trust Indenture Act Section 311(a) to the extent indicated. 77 ARTICLE EIGHT DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.01. Termination of the Issuer's Obligations. The Issuer may terminate its obligations under the Notes and this Indenture and the obligations of the Guarantors under the Note Guarantees and this Indenture and this Indenture shall cease to be of further effect, except those obligations referred to in the penultimate paragraph of this Section 8.01, when: (a) either: (1) all the Notes that have been authenticated and delivered, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from the trust, have been delivered to the Trustee for cancellation, or (2) all Notes that have not been delivered to the Trustee for cancellation otherwise have become due and payable by reason of a mailing of a notice of redemption or otherwise, will become due and payable within one year, or may be called for redemption, within one year or have been called for redemption pursuant to Section 5, Section 6 or Section 10 of the Notes and the Issuer or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as shall be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not delivered to the Trustee for cancellation, for principal, premium and Special Interest, if any, and accrued interest to the date of maturity or redemption, (b) the Issuer or any Guarantor has paid or caused to be paid all sums payable by it under this Indenture, and (c) the Issuer has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or the Redemption Date, as the case may be. In addition, the Issuer must deliver an Officers' Certificate and an Opinion of Counsel stating that all conditions precedent to satisfaction and discharge have been complied with. In the case of clause (2) of this Section 8.01, and subject to the next sentence and notwithstanding the foregoing paragraph, the Issuer's obligations in Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 4.03 (as to legal existence of the Issuer only), 7.07, 8.07 and 8.08 shall survive until the Notes are no longer outstanding pursuant to the last paragraph of Section 2.08. After 78 the Notes are no longer outstanding, the Issuer's obligations in Sections 4.21, 7.07, 8.05 and 8.06 shall survive. After such delivery or irrevocable deposit, the Trustee upon request shall acknowledge in writing the discharge of the Issuer's obligations under the Notes and this Indenture except for those surviving obligations specified above. SECTION 8.02. Option to Effect Legal Defeasance or Covenant Defeasance. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, and at any time, elect to have either Section 8.03 or 8.04 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 8. SECTION 8.03. Legal Defeasance. Upon the Issuer's exercise under Section 8.02 of the option applicable to this Section 8.03, the Issuer and each of the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.05, be deemed to have been discharged from their obligations with respect to all outstanding Notes (including the Guarantees) on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Issuer and the Guarantors shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes (including the Guarantees), which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.06 and the other Sections of this Indenture referred to in clauses (1) and (2) below, and to have satisfied all of their other obligations under such Notes, the Subsidiary Guarantees and this Indenture (and the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (1) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, or interest or premium and Special Interest, if any, on such Notes when such payments are due from the trust referred to in Section 8.06; (2) the Issuer's obligations with respect to such Notes under Article 2 and Section 4.02; (3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Issuer's and the Guarantors' obligations in connection therewith; and (4) Section 4.21 and this Article 8. Subject to compliance with this Article 8, the Issuer may exercise its option under this Section 8.03 notwithstanding the prior exercise of its option under Section 8.04. 79 SECTION 8.04. Covenant Defeasance. Upon the Issuer's exercise under Section 8.02 of the option applicable to this Section 8.04, the Issuer and each of the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.05, be released from each of their obligations under the covenants contained in Sections 4.03 (other than with respect to the legal existence of the Issuer), 4.04, 4.07, 4.09 through 4.21, clause (3) of Section 5.01(a) and clause (3) of Section 5.01(b) with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.05 are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes and Guarantees, the Issuer and the Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01, but, except as specified above, the remainder of this Indenture and such Notes and Subsidiary Guarantees shall be unaffected thereby. In addition, upon the Issuer's exercise under Section 8.02 of the option applicable to this Section 8.04, subject to the satisfaction of the conditions set forth in Section 8.04, Sections 6.01(3) through 6.01(6) and Section 6.01(8) shall not constitute Events of Default. SECTION 8.05. Conditions to Legal or Covenant Defeasance. In order to exercise either Legal Defeasance or Covenant Defeasance under either Sections 8.03 or 8.04: (1) the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as shall be sufficient, without consideration of any reinvestment of interest, in the opinion of an investment bank, appraisal firm, or firm of independent public accountants nationally recognized in the United States, to pay the principal of, premium and Special Interest, if any, and interest on the outstanding Notes on the Stated Maturity or on the applicable Redemption Date, as the case may be, and the Issuer must specify whether the Notes are being defeased to maturity or to a particular Redemption Date; (2) in the case of an election under Section 8.03 hereof, the Issuer must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that: (A) the Issuer has received from, or there has been published by, the U.S. Internal Revenue Service a ruling; or 80 (B) since the date of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes shall not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and shall be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (3) in the case of an election under Section 8.04, the Issuer must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes shall not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and shall be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (4) in the case of an election under Section 8.03 or 8.04, the Issuer must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders and beneficial owners of the outstanding Notes shall not recognize income, gain or loss for Canadian federal, provincial, territorial income tax or other tax purposes as a result of such Legal Defeasance or Covenant Defeasance, as applicable, and shall be subject to Canadian federal, provincial or territorial income tax and other tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance or Covenant Defeasance, as the case may be, had not occurred (which condition may not be waived by any Holder of outstanding Notes or the Trustee); (5) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit); (6) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which Holdings, the Issuer or any of Holdings' Restricted Subsidiaries that are Significant Subsidiaries is a party or by which Holdings, the Issuer or any of Holdings' Restricted Subsidiaries that are Significant Subsidiaries is bound; (7) the Issuer must deliver to the Trustee an Officers' Certificate stating that the deposit was not made by the Issuer with the intent of preferring the Holders over the other creditors of the Issuer with the intent of defeating, hindering, delaying or defrauding creditors of the Issuer or others; and (8) the Issuer must deliver to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with. 81 SECTION 8.06. Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions. Subject to Section 8.07, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.06, the "Trustee") pursuant to Article Eight in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium and Special Interest, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Issuer shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.05 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Notwithstanding anything in this Article 8 to the contrary, the Trustee shall deliver or pay to the Issuer from time to time upon the request of the Issuer any money or non-callable Government Securities held by it as provided in Section 8.04 which, in the opinion of a firm of independent public accountants nationally recognized in the United States expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(1)), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. SECTION 8.07. Repayment to Issuer. Any money deposited with the Trustee or any Paying Agent, in trust for the payment of the principal of, premium or Special Interest, if any, or interest on any Note and remaining unclaimed for two years after such principal, premium or Special Interest, if any, or interest has become due and payable shall be paid to the Issuer on its request or shall be discharged from such trust; and the Holder of such Note shall thereafter be permitted to look only to the Issuer for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuer as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuer cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining shall be repaid to the Issuer. SECTION 8.08. Reinstatement. If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with this Article VIII, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or 82 otherwise prohibiting such application, then the Issuer's and the Guarantors' obligations under this Indenture and the Notes and the Subsidiary Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to this Article VIII until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with this Article VIII, as the case may be; provided, however, that, if the Issuer makes any payment of principal of, premium or Special Interest, if any, or interest on any Note following the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS SECTION 9.01. Without Consent of Holders. (a) Subject to Section 9.03, the Issuer, the Guarantors and the Trustee, together, may amend or supplement this Indenture, the Notes or the Note Guarantees without notice to or consent of any Holder: (1) to cure any ambiguity, defect or inconsistency; (2) to provide for uncertificated Notes in addition to or in place of certificated Notes; (3) to provide for the assumption of the Issuer's or a Guarantor's obligations to Holders and Guarantees in the case of a merger or consolidation or sale of all or substantially all of the Issuer's or such Guarantor's assets, as applicable; (4) to make any change that would provide any additional rights or benefits to the Holders or that does not materially adversely affect the legal rights under this Indenture of any such Holder; (5) to comply with requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act; (6) to allow any Guarantor to execute a supplemental indenture and a Guarantee with respect to the Notes; or (7) to evidence and provide for the acceptance of appointment under this Indenture by a successor Trustee. provided that the Issuer has delivered to the Trustee an Opinion of Counsel and an Officers' Certificate, each stating that such amendment or supplement complies with the provisions of this Section 9.01. No amendment of, or supplement or waiver to, this Indenture shall adversely affect the rights of any Holder of Senior Debt under the subordination provisions of this Indenture, without the consent of such Holder or, in accordance with the terms of such Senior 83 Debt, the consent of the agent or representative of such Holder or the requisite Holders of such Senior Debt. SECTION 9.02. With Consent of Holders. (a) Subject to Sections 6.07 and 9.03, the Issuer, the Guarantors and the Trustee, together, with the written consent of the Holder or Holders of at least a majority in aggregate principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), may amend or supplement this Indenture, the Notes or the Note Guarantees, and any existing Default or Event of Default or compliance with any provision of this Indenture or the Notes or the Guarantees may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes). Subject to Sections 6.07 and 9.03, the Holder or Holders of a majority in aggregate principal amount of the outstanding Notes may waive compliance with any provision of this Indenture, the Notes or the Note Guarantees without notice to any other Holders; (b) Notwithstanding Section 9.02(a), without the consent of each Holder affected, no amendment, supplement or waiver may (with respect to any Notes held by a non-consenting Holder): (1) reduce the principal amount of Notes whose holders must consent to an amendment, supplement or waiver; (2) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption of the Notes (it being understood that this clause (2) does not apply to Sections 4.09 and 4.13); (3) reduce the rate of or change the time for payment of interest on any Note; (4) waive a Default or Event of Default in the payment of principal of, or interest or premium, or Special Interest, if any, on the Notes (except a rescission of acceleration of the Notes by the holders of at least a majority in aggregate principal amount of the then outstanding Notes in accordance with the provisions of this Indenture and a waiver of the payment default that resulted from such acceleration); (5) make any Note payable in money other than that stated in the Notes; (6) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of, or interest or premium or Special Interest, if any, on the Notes; (7) waive a redemption payment with respect to any Note (it being understood that this clause (7) does not apply to a payment required by Sections 4.09 or 4.13); 84 (8) release Holdings or any other Guarantor that is a Significant Subsidiary from any of its obligations under its Guarantee or this Indenture, except in accordance with the terms of this Indenture; (9) in the event that the obligation to make a Change of Control Offer or an Asset Sale Offer has arisen, amend, change or modify in any material respect the obligation of the Issuer to make and consummate such Change of Control Offer or such Asset Sale Offer, as the case may be; (10) modify or change any provision of this Indenture or the related definitions affecting the subordination of the Notes or any Guarantee in a manner that adversely affects the Holders; or (11) make any change in these amendment and waiver provisions. (c) It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, supplement or waiver but it shall be sufficient if such consent approves the substance thereof. (d) A consent to any amendment, supplement or waiver under this Indenture by any Holder given in connection with an exchange (in the case of an exchange offer) or a tender (in the case of a tender offer) of such Holder's Notes shall not be rendered invalid by such tender or exchange. (e) After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Issuer shall mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Issuer to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, supplement or waiver. SECTION 9.03. Effect on Senior Debt. No amendment of, or supplement or waiver to, this Indenture shall adversely affect the rights of any holder of Senior Debt under Article Ten and Section 11.02 and the defined terms as used therein without the consent of such holder or its Representative or, in accordance with the terms of such Senior Debt, the consent of the agent or representative of such Holder or the requisite holders of such Senior Debt or Designated Senior Debt. SECTION 9.04. Compliance with the Trust Indenture Act. From the date on which this Indenture is qualified under the Trust Indenture Act, every amendment, waiver or supplement of this Indenture, the Notes or the Note Guarantees shall comply with the Trust Indenture Act as then in effect. SECTION 9.05. Revocation and Effect of Consents. Until an amendment, waiver or supplement becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Note or portion 85 of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder or subsequent Holder may revoke the consent as to his Note or portion of his Note by notice to the Trustee or the Issuer received before the date on which the Trustee receives an Officers' Certificate certifying that the Holders of the requisite principal amount of Notes have consented (and not theretofore revoked such consent) to the amendment, supplement or waiver. The Issuer may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver, which record date shall be prior to the first solicitation of such consent. If a record date is fixed, then notwithstanding the last sentence of the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date. The Issuer shall inform the Trustee in writing of the fixed record date if applicable. After an amendment, supplement or waiver becomes effective, it shall bind every Holder, unless it makes a change described in any of clauses (1) through (11) of Section 9.02(b), in which case, the amendment, supplement or waiver shall bind only each Holder of a Note who has consented to it and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note; provided that any such waiver shall not impair or affect the right of any Holder to receive payment of principal of, and interest on, a Note, on or after the respective due dates therefor, or to bring suit for the enforcement of any such payment on or after such respective dates without the consent of such Holder. SECTION 9.06. Notation on or Exchange of Notes. If an amendment, supplement or waiver changes the terms of a Note, the Issuer may require the Holder to deliver it to the Trustee. The Issuer shall provide the Trustee with an appropriate notation on the Note about the changed terms and cause the Trustee to return it to the Holder at the Issuer's expense. Alternatively, if the Issuer or the Trustee so determines, the Issuer in exchange for the Note shall issue, and the Trustee shall authenticate, a new Note that reflects the changed terms. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. SECTION 9.07. Trustee To Sign Amendments, Etc. The Trustee shall execute any amendment, supplement or waiver authorized pursuant to this Article Nine; provided that the Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver which affects the Trustee's own rights, duties or immunities under this Indenture. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel and an Officers' Certificate each stating that the execution of any amendment, supplement or waiver authorized pursuant to this Article Nine is authorized or permitted by this Indenture. Such Opinion of Counsel shall be at the expense of the Issuer. 86 ARTICLE TEN SUBORDINATION OF NOTES SECTION 10.01. Notes Subordinated to Senior Debt. Anything herein to the contrary notwithstanding, each of the Issuer, for itself and its successors, and each Holder, by his or her acceptance of Notes, agrees that the payment of all Obligations owing to the Holders in respect of the Notes is subordinated, to the extent and in the manner provided in this Article Ten, to the prior payment in full of all Senior Debt in cash or cash equivalents, whether outstanding on the Issue Date or thereafter incurred. Notwithstanding anything in this Article Ten to the contrary, payments and distributions (A) of Permitted Junior Securities and (B) made relating to the Notes from the trusts established pursuant to Article Eight shall not be so subordinated in right of payment, so long as, with respect to (B), (i) the conditions specified in Article Eight (without any waiver or modification of the requirement that the deposits pursuant thereto do not conflict with the terms of the Credit Facilities or any other Senior Debt) are satisfied on the date of any deposit pursuant to said trust and (ii) such payments and distributions did not violate the provisions of this Article Ten or Section 11.02 when made. This Article Ten shall constitute a continuing offer to all Persons who become Holders of, or continue to hold, Senior Debt, such provisions are made for the benefit of the Holders of Senior Debt and such Holders are made obligees hereunder and any one or more of them may enforce such provisions. SECTION 10.02. Suspension of Payment When Senior Debt Is in Default. (a) If any default occurs and is continuing beyond the applicable grace period, if any, in the payment when due, whether at maturity, upon any redemption, by declaration or otherwise, of any principal of, interest on, unpaid drawings for letters of credit issued in respect of, or fees with respect to, any Senior Debt (for purposes of this Article X only, a "PAYMENT DEFAULT"), then no payment or distribution of any kind or character shall be made by the Issuer with respect to any Obligations on or relating to the Notes or to acquire any of the Notes for cash or assets or otherwise. (b) If any other event of default (other than a Payment Default) occurs and is continuing with respect to any Designated Senior Debt (as such event of default is defined in the instrument creating or evidencing such Designated Senior Debt) permitting the Holders of such Designated Senior Debt then outstanding to accelerate the maturity thereof (a "NON-PAYMENT DEFAULT") and if the Representative for the respective issue of Designated Senior Debt gives written notice of the Non-Payment Default to the Trustee stating that such notice is a payment blockage notice (a "PAYMENT BLOCKAGE NOTICE"), then during the period (the "PAYMENT BLOCKAGE PERIOD") beginning upon the delivery of such Payment Blockage Notice and ending on the earliest of (1) the date on which all such nonpayment defaults are cured or waived, (2) 179 days after the date on which the applicable Payment Blockage Notice is received or (3) the date on which the Trustee receives notice from the Representative for such Designated Senior Debt rescinding the Payment Blockage Notice (unless the maturity of any Designated Senior Debt has been accelerated), the Issuer shall not (x) make any payment of any kind or character with 87 respect to any Obligations on or with respect to the Notes or (y) acquire any of the Notes for cash or assets or otherwise. Notwithstanding anything herein to the contrary, (x) in no event shall a Payment Blockage Period extend beyond 179 days from the date the applicable Payment Blockage Notice is received by the Trustee and (y) no new Payment Blockage Notice may be delivered unless and until 360 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice. For all purposes of this Section 10.02(b), no Non-Payment Default which existed or was continuing on the date of the commencement of any Payment Blockage Period with respect to the Designated Senior Debt shall be, or be made, the basis for the commencement of a subsequent Payment Blockage Period by the Representative of such Designated Senior Debt whether or not within a period of 360 consecutive days, unless such Non-Payment Default shall have been cured or waived for a period of not less than 90 consecutive days. Any subsequent action, or any breach of any financial covenants for a period ending after the date of delivery of such Payment Blockage Notice that, in either case, would give rise to a Non-Payment Default pursuant to any provisions under which a Non-Payment Default previously existed or was continuing shall constitute a new Non-Payment Default for this purpose. (c) In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee or any Holder when such payment is prohibited by the foregoing provisions of this Section 10.02, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Debt (pro rata to such holders on the basis of the respective amount of Senior Debt held by such Holders) or their respective Representatives, as their respective interests may appear. The Trustee shall be entitled to rely on information regarding amounts outstanding on the Senior Debt, if any, received from the holders of the Senior Debt (or their Representatives). Nothing contained in this Article Ten shall limit the right of the Trustee or the Holders take any action to accelerate the maturity of the Notes pursuant to Section 6.02 or to pursue any rights or remedies hereunder; provided that all Senior Debt thereafter due or declared to be due shall first be paid in full in cash or cash equivalents before the Holders are entitled to receive any payment of any kind or character with respect to Obligations on the Notes. SECTION 10.03. Notes Subordinated to Prior Payment of All Senior Debt on Dissolution, Liquidation or Reorganization of the Issuer. (a) Upon any payment or distribution of assets of the Issuer of any kind or character, whether in cash, assets or securities, to creditors upon any total or partial liquidation, dissolution, winding-up, assignment for the benefit of creditors or marshaling of assets and liabilities of the Issuer or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to the Issuer or its assets, whether voluntary or involuntary, all Obligations due or to become due on all Senior Debt shall first be paid in full in cash or cash equivalents, or such payment duly provided for to the satisfaction of the holders of Senior Debt, before any payment or distribution of any kind or character is made on account of any Obligations on or relating to the Notes, or for the acquisition of any of the Notes for cash or assets or otherwise. Upon any such dissolution, winding-up, liquidation, reorganization, receivership or similar proceeding, any payment or distribution of assets of the Issuer of any kind or character, whether in cash, assets or securities, to which the Holders or the Trustee under this 88 Indenture would be entitled, except for the provisions hereof, shall be paid by the Issuer or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders or by the Trustee under this Indenture if received by them, directly to the holders of Senior Debt (pro rata to such holders on the basis of the respective amounts of Senior Debt held by such holders) or their respective Representatives, or to the Trustee or trustees under any indenture pursuant to which any of such Senior Debt may have been issued, as their respective interests may appear, for application to the payment of Senior Debt remaining unpaid until all such Senior Debt has been paid in full in cash or cash equivalents after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of Senior Debt. (b) To the extent any payment of Senior Debt (whether by or on behalf of the Issuer, as proceeds of security or enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then, if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person, the Senior Debt or part thereof originally intended to be satisfied shall be for purpose of this Article Ten deemed to be reinstated and outstanding as if such payment had not occurred. It is further agreed that any diminution (whether pursuant to court decree or otherwise, including without limitation for any of the reasons described in the preceding sentence) of the Issuer's obligation to make any distribution or payment pursuant to any Senior Debt, except to the extent such diminution occurs by reason of the repayment (which has not been disgorged or returned) of such Senior Debt in cash or cash equivalents, shall have no force or effect for purposes of the subordination provisions contained in this Article Ten, with any turnover of payments as otherwise calculated pursuant to this Article Ten to be made as if no such diminution had occurred. (c) In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Issuer of any kind or character, whether in cash, assets or securities, shall be received by any Holder when such payment or distribution is prohibited by this Section 10.03, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Debt (pro rata to such holders on the basis of the respective amount of Senior Debt held by such holders) or their respective Representatives, or to the Trustee or trustees under any indenture pursuant to which any of such Senior Debt may have been issued, as their respective interests may appear, for application to the payment of Senior Debt remaining unpaid until all such Senior Debt has been paid in full in cash or cash equivalents, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Senior Debt. (d) The consolidation of the Issuer with, or the merger of the Issuer with or into, another Person or the liquidation or dissolution of the Issuer following the conveyance or transfer of all or substantially all of its assets, to another Person upon the terms and conditions provided in Article Five hereof shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section if such other Person shall, as a part of such 89 consolidation, merger, conveyance or transfer, assume the Issuer's obligations hereunder in accordance with Article Five hereof. SECTION 10.04. Payments May Be Made on Notes. Nothing contained in this Article Ten or elsewhere in this Indenture shall prevent (i) the Issuer, except under the conditions described in Sections 10.02 and 10.03, from making payments at any time for the purpose of making payments of principal of, and interest on, the Notes, or from depositing with the Trustee any moneys for such payments, or (ii) in the absence of actual knowledge by the Trustee that a given payment would be prohibited by Section 10.02 or 10.03, the application by the Trustee of any moneys deposited with it for the purpose of making such payments of principal of, and interest on, the Notes to the Holders entitled thereto unless at least two Business Days prior to the date upon which such payment would otherwise become due and payable a Responsible Officer of the Trustee shall have actually received the written notice provided for in the first sentence of Section 10.02(b) or in Section 10.07 (provided that, notwithstanding the foregoing, the Holders receiving any payments made in contravention of Section 10.02 and/or 10.03 (and the respective such payments) shall otherwise be subject to the provisions of Section 10.02 and Section 10.03). Notwithstanding anything to the contrary contained in this Article Ten or elsewhere in this Indenture, payments and distributions from the funds deposited pursuant to Article Eight shall be permitted to be made and shall not be subject to the provisions of this Article Ten so long as such funds were deposited in accordance with the provisions of Article Eight and did not violate the provisions of this Article Ten when such funds were so deposited. The Issuer shall give prompt written notice to the Trustee of any dissolution, winding-up, liquidation or reorganization of the Issuer, although any delay or failure to give any such notice shall have no effect on the subordination provisions contained herein. SECTION 10.05. Holders To Be Subrogated to Rights of Holders of Senior Debt. Subject to the payment in full of all Senior Debt in cash or cash equivalents, the Holders shall be subrogated to the rights of the holders of Senior Debt to receive payments or distributions of cash, assets or securities of the Issuer applicable to the Senior Debt until the Notes shall be paid in full; and, for the purposes of such subrogation, no such payments or distributions to the holders of the Senior Debt by or on behalf of the Issuer, or by or on behalf of the Holders by virtue of this Article Ten, which otherwise would have been made to the Holders shall, as between the Issuer and the Holders, be deemed to be a payment by the Issuer to or on account of the Senior Debt, it being understood that the provisions of this Article Ten are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of Senior Debt, on the other hand. SECTION 10.06. Obligations of the Issuer Unconditional. Nothing contained in this Article Ten or elsewhere in this Indenture or in the Notes is intended to or shall impair, as between the Issuer, and the Holders, the obligation of the Issuer, which is absolute and unconditional, to pay to the Holders the principal of, and any interest on, the Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Issuer other than the holders of the Senior Debt, nor shall anything herein or therein prevent the 90 Holder of any Note or the Trustee on its behalf from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, of the holders of Senior Debt in respect of cash, assets or securities of the Issuer received upon the exercise of any such remedy. SECTION 10.07. Notice to Trustee. The Issuer shall give prompt written notice to the Trustee of any fact known to the Issuer which would prohibit the making of any payment to or by the Trustee in respect of the Notes pursuant to the provisions of this Article Ten, although any delay or failure to give any such notice shall have no effect on the subordination provisions contained herein. Regardless of anything to the contrary contained in this Article Ten or elsewhere in this Indenture, the Trustee shall not be charged with knowledge of the existence of any default or event of default with respect to any Senior Debt or of any other facts which would prohibit the making of any payment to or by the Trustee unless and until the Trustee shall have received notice in writing from the Issuer, or from a holder of Senior Debt or a Representative therefor and, prior to the receipt of any such written notice, the Trustee shall be entitled to assume (in the absence of actual knowledge to the contrary) that no such facts exist. The Trustee shall be entitled to rely on the delivery to it of any notice pursuant to this Section 10.07 to establish that such notice has been given by a holder of Senior Debt (or a Representative thereof). In the event that the Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article Ten, the Trustee may request such Person to furnish evidence to the satisfaction of the Trustee as to the amounts of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article Ten, and if such evidence is not furnished the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 10.08. Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of the Issuer referred to in this Article Ten, the Trustee, subject to the provisions of Article Seven hereof, and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any insolvency, bankruptcy, receivership, dissolution, winding-up, liquidation, reorganization or similar case or proceeding is pending, or upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, assignee for the benefit of creditors, agent or other person making such payment or distribution, delivered to the Trustee or the Holders, for the purpose of ascertaining the persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other Indebtedness of the Issuer, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Ten. SECTION 10.09. Trustee's Relation to Senior Debt. The Trustee and any agent of the Issuer or the Trustee shall be entitled to all the rights set forth in this Article Ten with respect to any Senior Debt which may at any time be held 91 by it in its individual or any other capacity to the same extent as any other holder of Senior Debt and nothing in this Indenture shall deprive the Trustee or any such agent of any of its rights as such holder. With respect to the holders of Senior Debt, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article Ten, and no implied covenants or obligations with respect to the holders of Senior Debt shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt. Whenever a distribution is to be made or a notice given to holders or owners of Senior Debt, the distribution may be made and the notice may be given to their Representative, if any. SECTION 10.10. Subordination Rights Not Impaired by Acts or Omissions of the Issuer or Holders of Senior Debt. No right of any present or future holders of any Senior Debt to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Issuer or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Issuer with the terms of this Indenture, regardless of any knowledge thereof, which any such holder may have or otherwise be charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Debt may, at any time and from time to time, without the consent of or notice to the Trustee, without incurring responsibility to the Trustee or the Holders and without impairing or releasing the subordination provided in this Article Ten or the obligations hereunder of the Holders to the holders of the Senior Debt, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt, or otherwise amend or supplement in any manner Senior Debt, or any instrument evidencing the same or any agreement under which Senior Debt is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt; (iii) release any Person liable in any manner for the payment or collection of Senior Debt; and (iv) exercise or refrain from exercising any rights against the Issuer and any other Person. SECTION 10.11. Holders Authorize Trustee To Effectuate Subordination of Notes. Each Holder by its acceptance of them authorizes and expressly directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate, as between the holders of Senior Debt and the Holders, the subordination provided in this Article Ten, and appoints the Trustee its attorney-in-fact for such purposes, including, in the event of any dissolution, winding-up, liquidation or reorganization of the Issuer (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of credits or otherwise) tending towards liquidation of the business and assets of the Issuer, the filing of a claim for the unpaid balance of its Notes and accrued interest in the form required in those proceedings. 92 If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or claims, then the holders of the Senior Debt or their Representative are or is hereby authorized to have the right to file and are or is hereby authorized to file an appropriate claim for and on behalf of the Holders of said Notes. Nothing herein contained shall be deemed to authorize the Trustee or the holders of Senior Debt or their Representative to authorize, consent to, accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee or the holders of Senior Debt or their Representative to vote in respect of the claim of any Holder in any such proceeding. SECTION 10.12. This Article Ten Not To Prevent Events of Default. The failure to make a payment on account of principal of, or interest on, the Notes by reason of any provision of this Article Ten shall not be construed as preventing the occurrence of an Event of Default. SECTION 10.13. Trustee's Compensation Not Prejudiced. Nothing in this Article Ten shall apply to amounts due to the Trustee (other than payments of Obligations owing to Holders in respect of the Notes) pursuant to other Sections of this Indenture. ARTICLE ELEVEN NOTE GUARANTEE SECTION 11.01. Unconditional Guarantee. Subject to the provisions of this Article Eleven, each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Issuer or any other Guarantors to the Holders or the Trustee hereunder or thereunder: (a) (x) the due and punctual payment of the principal of, premium, if any, and interest on the Notes when and as the same shall become due and payable, whether at maturity, upon redemption or repurchase, by acceleration or otherwise, (y) the due and punctual payment of interest on the overdue principal and (to the extent permitted by law) interest, if any, on the Notes and (z) the due and punctual payment and performance of all other obligations of the Issuer and all other obligations of the other Guarantors (including under the Note Guarantees), in each case, to the Holders or the Trustee hereunder or thereunder (including amounts due the Trustee under Section 7.07), all in accordance with the terms hereof and thereof (collectively, the "GUARANTEE OBLIGATIONS"); and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, the due and punctual payment and performance of Guarantee Obligations in accordance with the terms of the extension or renewal, whether at maturity, upon redemption or repurchase, by acceleration or otherwise. Failing payment when due of any amount so guaranteed, or failing performance of any other obligation of the Issuer to the Holders under this Indenture or under the Notes, for whatever reason, each Guarantor shall be obligated 93 to pay, or to perform or cause the performance of, the same immediately. An Event of Default under this Indenture or the Notes shall constitute an event of default under the Note Guarantees, and shall entitle the Holders to accelerate the obligations of the Guarantors thereunder in the same manner and to the same extent as the obligations of the Issuer. Each of the Guarantors hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, any release of any other Guarantor, the recovery of any judgment against the Issuer, any action to enforce the same, whether or not a Note Guarantee is affixed to any particular Note, or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Guarantor (other than payment). To the fullest extent permitted by law and subject to Section 6.06, each of the Guarantors hereby waives the benefit of diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever and covenants that its Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes, this Indenture and this Note Guarantee. This Note Guarantee is a guarantee of payment and not of collection. If any Holder or the Trustee is required by any court or otherwise to return to the Issuer or to any Guarantor, or any custodian, Trustee, liquidator or other similar official acting in relation to the Issuer or such Guarantor, any amount paid by the Issuer or such Guarantor to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (a) subject to this Article Eleven, the maturity of the obligations guaranteed hereby may be accelerated as provided in Article Six for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (b) in the event of any acceleration of such obligations as provided in Article Six, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. SECTION 11.02. Subordination of Note Guarantee. The obligations of each Guarantor under its Note Guarantee pursuant to this Article Eleven shall be junior and subordinated to the prior payment in full of the Senior Debt of such Guarantor in cash or cash equivalents on the same basis as the Notes are junior and subordinated to Senior Debt of the Issuer. For the purposes of the foregoing sentence, the Trustee and the Holders shall have the right to receive and/or retain payments by any of the Guarantors only at such times as they may receive and/or retain payments in respect of the Notes pursuant to this Indenture, including Article Ten. SECTION 11.03. Limitation on Guarantor Liability. Each Subsidiary Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Note Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal, 94 foreign, provincial or state law to the extent applicable to any Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Subsidiary Guarantors hereby irrevocably agree (to the extent required by such laws) that the obligations of such Guarantor under its Note Guarantee and this Article Eleven shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Guarantor (including any guarantee under the Credit Agreement) that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Guarantor under this Article Eleven, result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance. Each Subsidiary Guarantor that makes a payment for distribution under its Note Guarantee is entitled to a contribution from each other Subsidiary Guarantor in a pro rata amount based on the adjusted net assets of each Subsidiary Guarantor. SECTION 11.04. Execution and Delivery of Note Guarantee. To further evidence its Note Guarantee set forth in Section 11.01, each Guarantor hereby agrees that a notation of such Note Guarantee, substantially in the form of Exhibit F hereto, shall be endorsed on each Note authenticated and delivered by the Trustee. Such Note Guarantee shall be executed on behalf of each Guarantor by either manual or facsimile signature of one Officer or other person duly authorized by all necessary corporate action of each Guarantor who shall have been duly authorized to so execute by all requisite corporate action. The validity and enforceability of any Note Guarantee shall not be affected by the fact that it is not affixed to any particular Note. Each of the Guarantors hereby agrees that its Note Guarantee set forth in Section 11.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. If an Officer of a Guarantor whose signature is on this Indenture or a Note Guarantee no longer holds that office at the time the Trustee authenticates the Note on which such Note Guarantee is endorsed or at any time thereafter, such Guarantor's Note Guarantee of such Note shall nevertheless be valid. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of any Note Guarantee set forth in this Indenture on behalf of each Guarantor. SECTION 11.05. Release of a Subsidiary Guarantor. Notwithstanding Section 4.16(a), a Subsidiary Guarantor shall be automatically and unconditionally released from its obligations under its Note Guarantee and its obligations under this Indenture and the Registration Rights Agreement in accordance with Section 4.16(c). The Trustee shall execute an appropriate instrument prepared by the Issuer evidencing the release of a Guarantor from its obligations under its Note Guarantee upon receipt of a request by the Issuer or such Guarantor accompanied by an Officers' Certificate and an Opinion of Counsel certifying as to the compliance with this Section 11.05; provided, however, 95 that the legal counsel delivering such Opinion of Counsel may rely as to matters of fact on one or more Officers' Certificates of the Issuer. Except as set forth in Articles Four and Five and this Section 11.05, nothing contained in this Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Issuer or another Guarantor or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Issuer or another Guarantor. SECTION 11.06. Waiver of Subrogation. Until this Indenture is discharged and all of the Notes are discharged and paid in full, each Guarantor hereby irrevocably waives and agrees not to exercise any claim or other rights which it may now or hereafter acquire against the Issuer that arise from the existence, payment, performance or enforcement of the Issuer's obligations under the Notes or this Indenture and such Guarantor's obligations under this Note Guarantee and this Indenture, in any such instance including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, and any right to participate in any claim or remedy of the Holders against the Issuer, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Issuer, directly or indirectly, in cash or other assets or by set-off or in any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Guarantor in violation of the preceding sentence and any amounts owing to the Trustee or the Holders under the Notes, this Indenture, or any other document or instrument delivered under or in connection with such agreements or instruments, shall not have been paid in full, such amount shall have been deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Trustee or the Holders and shall forthwith be paid to the Trustee for the benefit of itself or such Holders to be credited and applied to the obligations in favor of the Trustee or the Holders, as the case may be, whether matured or unmatured, in accordance with the terms of this Indenture. Each Guarantor acknowledges that it shall receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the waiver set forth in this Section 11.06 is knowingly made in contemplation of such benefits. SECTION 11.07. Immediate Payment. Each Guarantor agrees to make immediate payment to the Trustee on behalf of the Holders of all Guarantee Obligations owing or payable to the respective Holders upon receipt of a demand for payment therefor by the Trustee to such Guarantor in writing. SECTION 11.08. No Set-Off. Each payment to be made by a Guarantor hereunder in respect of the Guarantee Obligations shall be payable in the currency or currencies in which such Guarantee Obligations are denominated, and, to the fullest extent permitted by law, shall be made without set-off, counterclaim, reduction or diminution of any kind or nature. 96 SECTION 11.09. Guarantee Obligations Absolute. The obligations of each Guarantor hereunder are and shall be absolute and unconditional and any monies or amounts expressed to be owing or payable by each Guarantor hereunder which may not be recoverable from such Guarantor on the basis of a Note Guarantee shall be recoverable from such Guarantor as a primary obligor and principal debtor in respect thereof. SECTION 11.10. Note Guarantee Obligations Continuing. The obligations of each Guarantor hereunder shall be continuing and shall remain in full force and effect until all such obligations have been paid and satisfied in full. Each Guarantor agrees with the Trustee that it shall from time to time deliver to the Trustee suitable acknowledgments of this continued liability hereunder and under any other instrument or instruments in such form as counsel to the Trustee may advise and as shall prevent any action brought against it in respect of any default hereunder being barred by any statute of limitations now or hereafter in force and, in the event of the failure of a Guarantor so to do, it hereby irrevocably appoints the Trustee the attorney and agent of such Guarantor to make, execute and deliver such written acknowledgment or acknowledgments or other instruments as may from time to time become necessary or advisable, in the judgment of the Trustee on the advice of counsel, to fully maintain and keep in force the liability of such Guarantor hereunder. SECTION 11.11. Note Guarantee Obligations Not Reduced. The obligations of each Guarantor hereunder shall not be satisfied, reduced or discharged solely by the payment of such principal, premium, if any, interest, fees and other monies or amounts as may at any time prior to discharge of this Indenture pursuant to Article Eight be or become owing or payable under or by virtue of or otherwise in connection with the Notes or this Indenture. SECTION 11.12. Note Guarantee Obligations Reinstated. The obligations of each Guarantor hereunder shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment which would otherwise have reduced the obligations of any Guarantor hereunder (whether such payment shall have been made by or on behalf of the Issuer or by or on behalf of a Guarantor) is rescinded or reclaimed from any of the Holders upon the insolvency, bankruptcy, liquidation or reorganization of the Issuer or any Guarantor or otherwise, all as though such payment had not been made. If demand for, or acceleration of the time for, payment by the Issuer or any other Guarantor is stayed upon the insolvency, bankruptcy, liquidation or reorganization of the Issuer or such Guarantor, all such Indebtedness otherwise subject to demand for payment or acceleration shall nonetheless be payable by each Guarantor as provided herein. SECTION 11.13. Note Guarantee Obligations Not Affected. To the fullest extent permitted by law, the obligations of each Guarantor hereunder shall not be affected, impaired or diminished in any way by any act, omission, matter or thing whatsoever, occurring before, upon or after any demand for payment hereunder (and 97 whether or not known or consented to by any Guarantor or any of the Holders) which, but for this provision, might constitute a whole or partial defense to a claim against any Guarantor hereunder or might operate to release or otherwise exonerate any Guarantor from any of its obligations hereunder or otherwise affect such obligations, whether occasioned by default of any of the Holders or otherwise, including, without limitation: (a) any limitation of status or power, disability, incapacity or other circumstance relating to the Issuer or any other Person, including any insolvency, bankruptcy, liquidation, reorganization, readjustment, composition, dissolution, winding-up or other proceeding involving or affecting the Issuer or any other Person; (b) any irregularity, defect, unenforceability or invalidity in respect of any indebtedness or other obligation of the Issuer or any other Person under this Indenture, the Notes or any other document or instrument; (c) any failure of the Issuer or any other Guarantor, whether or not without fault on its part, to perform or comply with any of the provisions of this Indenture, the Notes or any Note Guarantee, or to give notice thereof to a Guarantor; (d) the taking or enforcing or exercising or the refusal or neglect to take or enforce or exercise any right or remedy from or against the Issuer or any other Person or their respective assets or the release or discharge of any such right or remedy; (e) the granting of time, renewals, extensions, compromises, concessions, waivers, releases, discharges and other indulgences to the Issuer or any other Person; (f) any change in the time, manner or place of payment of, or in any other term of, any of the Notes, or any other amendment, variation, supplement, replacement or waiver of, or any consent to departure from, any of the Notes or this Indenture, including, without limitation, any increase or decrease in the principal amount of or premium, if any, or interest on any of the Notes; (g) any change in the ownership, control, name, objects, businesses, assets, capital structure or constitution of the Issuer or a Guarantor; (h) any merger or amalgamation of the Issuer or a Guarantor with any Person or Persons; (i) the occurrence of any change in the laws, rules, regulations or ordinances of any jurisdiction by any present or future action of any governmental authority or court amending, varying, reducing or otherwise affecting, or purporting to amend, vary, reduce or otherwise affect, any of the Guarantee Obligations or the obligations of a Guarantor under its Note Guarantee; and (j) any other circumstance, including release of a Guarantor pursuant to Section 11.05 (other than by complete, irrevocable payment) that might otherwise constitute a legal or equitable discharge or defense of the Issuer under this Indenture or the Notes or of a Guarantor in respect of its Note Guarantee hereunder. 98 SECTION 11.14. Waiver. Without in any way limiting the provisions of Section 11.01, each Guarantor hereby waives notice of acceptance hereof, notice of any liability of any Guarantor hereunder, notice or proof of reliance by the Holders upon the obligations of any Guarantor hereunder, and diligence, presentment, demand for payment on the Issuer, protest, notice of dishonor or non-payment of any of the Guarantee Obligations, or other notice or formalities to the Issuer or any Guarantor of any kind whatsoever. SECTION 11.15. No Obligation to Take Action Against the Issuer. Neither the Trustee nor any other Person shall have any obligation to enforce or exhaust any rights or remedies against the Issuer or any other Person or any property of the Issuer or any other Person before the Trustee is entitled to demand payment and performance by any or all Guarantors of their liabilities and obligations under their Note Guarantees or under this Indenture. SECTION 11.16. Dealing with the Issuer and Others. The Holders, without releasing, discharging, limiting or otherwise affecting in whole or in part the obligations and liabilities of any Guarantor hereunder and without the consent of or notice to any Guarantor, may (a) grant time, renewals, extensions, compromises, concessions, waivers, releases, discharges and other indulgences to the Issuer or any other Person; (b) take or abstain from taking security or collateral from the Issuer or from perfecting security or collateral of the Issuer; (c) release, discharge, compromise, realize, enforce or otherwise deal with or do any act or thing in respect of (with or without consideration) any and all collateral, mortgages or other security given by the Issuer or any third party with respect to the obligations or matters contemplated by this Indenture or the Notes; (d) accept compromises or arrangements from the Issuer; (e) apply all monies at any time received from the Issuer or from any security upon such part of the Guarantee Obligations as the Holders may see fit or change any such application in whole or in part from time to time as the Holders may see fit; and (f) otherwise deal with, or waive or modify their right to deal with, the Issuer and all other Persons and any security as the Holders or the Trustee may see fit. SECTION 11.17. Default and Enforcement. If any Guarantor fails to pay in accordance with Section 11.07 hereof, the Trustee may proceed in its name as trustee hereunder in the enforcement of the Note Guarantee of any such Guarantor and such Guarantor's obligations thereunder and hereunder by any remedy 99 provided by law, whether by legal proceedings or otherwise, and to recover from such Guarantor the obligations. SECTION 11.18. Acknowledgment. Each Guarantor hereby acknowledges communication of the terms of this Indenture and the Notes and consents to and approves of the same. SECTION 11.19. Costs and Expenses. Each Guarantor shall pay on demand by the Trustee any and all reasonable costs, fees and expenses (including, without limitation, reasonable legal fees on a solicitor and client basis) incurred by the Trustee, its agents, advisors and counsel or any of the Holders in enforcing any of their rights under any Note Guarantee. SECTION 11.20. No Merger or Waiver; Cumulative Remedies. No Note Guarantee shall operate by way of merger of any of the obligations of a Guarantor under any other agreement, including, without limitation, this Indenture. No failure to exercise and no delay in exercising, on the part of the Trustee or the Holders, any right, remedy, power or privilege hereunder or under this Indenture or the Notes, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or under this Indenture or the Notes preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges in the Note Guarantee and under this Indenture, the Notes and any other document or instrument between a Guarantor and/or the Issuer and the Trustee are cumulative and not exclusive of any rights, remedies, powers and privilege provided by law. SECTION 11.21. Survival of Note Guarantee Obligations. Without prejudice to the survival of any of the other obligations of each Guarantor hereunder, the obligations of each Guarantor under Section 11.01 shall survive the payment in full of the Guarantee Obligations and shall be enforceable against such Guarantor, to the fullest extent permitted by law, without regard to and without giving effect to any defense, right of offset or counterclaim available to or which may be asserted by the Issuer or any Guarantor. SECTION 11.22. Note Guarantee in Addition to Other Guarantee Obligations. The obligations of each Guarantor under its Note Guarantee and this Indenture are in addition to and not in substitution for any other obligations to the Trustee or to any of the Holders in relation to this Indenture or the Notes and any guarantees or security at any time held by or for the benefit of any of them. SECTION 11.23. Severability. Any provision of this Article Eleven which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions and any such prohibition or 100 unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction unless its removal would substantially defeat the basic intent, spirit and purpose of this Indenture and this Article Eleven. SECTION 11.24. Successors and Assigns. Each Note Guarantee shall be binding upon and inure to the benefit of each Guarantor and the Trustee and the other Holders and their respective successors and permitted assigns, except that no Guarantor may assign any of its obligations hereunder or thereunder. ARTICLE TWELVE MISCELLANEOUS SECTION 12.01. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required or deemed to be included in this Indenture by the Trust Indenture Act, such required or deemed provision shall control. SECTION 12.02. Notices. Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by telex, by nationally recognized overnight courier service, by telecopier or registered or certified mail, postage prepaid, return receipt requested, addressed as follows: if to the Issuer or a Guarantor: c/o MAAX Corporation 640 Cameron Road Sainte-Marie, Quebec G6E 1B2 Canada Attention: Denis Aubin Telephone: (418) 387-4155 Facsimile: (418) 387-3507 with a copy to: J.W. Childs Associates L.P. 111 Huntington Avenue - Suite 2900 Boston, Massachusetts 02199 Attention: Steven G. Segal Facsimile: (617) 753-1101 101 if to the Trustee: U.S. Bank Trust National Association 100 Wall Street, Suite 1600 New York, NY 10005 Attention: Corporate Trust Services Telephone: 212-361-6159 Facsimile: 212-361-6153 Each of the Issuer and the Trustee by written notice to each other such Person may designate additional or different addresses for notices to such Person. Any notice or communication to the Issuer and the Trustee, shall be deemed to have been given or made as of the date so delivered if personally delivered; when replied to; when receipt is acknowledged, if telecopied; five (5) calendar days after mailing if sent by registered or certified mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee); and next Business Day if by nationally recognized overnight courier service. Any notice or communication mailed to a Holder shall be mailed to him by first class mail or other equivalent means at his address as it appears on the registration books of the Registrar and shall be sufficiently given to him if so mailed within the time prescribed. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 12.03. Communications by Holders with Other Holders. Holders may communicate pursuant to Trust Indenture Act Section 312(b) with other Holders with respect to their rights under this Indenture, the Notes or the Note Guarantees. The Issuer, the Trustee, the Registrar and any other Person shall have the protection of Trust Indenture Act Section 312(c). SECTION 12.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Issuer to the Trustee to take any action under this Indenture, the Issuer shall furnish to the Trustee at the request of the Trustee: (1) an Officers' Certificate, in form and substance reasonably satisfactory to the Trustee, stating that, in the opinion of the signers, all conditions precedent to be performed or effected by the Issuer, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. 102 SECTION 12.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture, other than the Officers' Certificate required by Section 4.06, shall include: (1) a statement that the Person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with or satisfied; and (4) a statement as to whether or not, in the opinion of each such Person, such condition or covenant has been complied with; provided, however, that with respect to matters of fact, an Opinion of Counsel may rely on an Officers' Certificate or certificates of public officials. SECTION 12.06. Rules by Paying Agent or Registrar. The Paying Agent or Registrar may make reasonable rules and set reasonable requirements for their functions. SECTION 12.07. Legal Holidays. If a payment date is not a Business Day, payment may be made on the next succeeding day that is a Business Day. SECTION 12.08. Governing Law. THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SECTION 12.09. No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of any of the Issuer or any of its Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 12.10. No Recourse Against Others. No director, officer, employee, incorporator, member or (except as prohibited by applicable law) shareholder of the Issuer or any Guarantor, as such, shall have any liability for any obligations of the Issuer under the Notes or this Indenture or of any Guarantor under its Note 103 Guarantee or this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. Such waiver and release are part of the consideration for issuance of the Notes. SECTION 12.11. Successors. All agreements of the Issuer and the Guarantors in this Indenture, the Notes and the Note Guarantees shall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successor. SECTION 12.12. Duplicate Originals. All parties may sign any number of copies of this Indenture. Each signed copy or counterpart shall be an original, but all of them together shall represent the same agreement. SECTION 12.13. Severability. To the extent permitted by applicable law, in case any one or more of the provisions in this Indenture, in the Notes or in the Note Guarantees shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law. SECTION 12.14. Agent for Service and Waiver of Immunities. By the execution and delivery of this Indenture, the Issuer and each Guarantor (i) acknowledge that they will designate and appoint within sixty days of the Issue Date National Registered Agents, Inc. or another Person satisfactory to the Trustee (the "Authorized Agent"), as their authorized agent upon which process may be served in any suit or proceeding arising out of or relating to this Indenture or the Notes that may be instituted in any federal or state court in the State of New York or brought under federal or state securities laws, and acknowledge that the Authorized Agent has accepted such designation, (ii) submit to the jurisdiction of any such court in any such suit or proceeding, and (iii) agree that service of process upon the Authorized Agent and written notice of said service to the Issuer or any Guarantor in accordance with Section 12.02 shall be deemed effective service of process upon the Issuer or such Guarantor in any such suit or proceeding. The Issuer and each Guarantor further agree to take any reasonable action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of the Authorized Agent in full force and effect so long as any of the Notes shall be outstanding; provided, however, that the Issuer and each Guarantor may, by written notice to the Trustee, designate such additional or alternative agent for service of process under this Section 12.14 that (i) maintains an office located in the Borough of Manhattan, City of New York, in the State of New York, (ii) is either (x) counsel for the Issuer or (y) a corporate service company which acts as agent for service of process for other persons in the ordinary course of its business and (iii) agrees to act as agent for service of process in accordance with this Section 12.14. Such written notice shall identify the name of such agent for process and the address of the office of such agent for process in the Borough of Manhattan, City of New York, State of New York. Upon the written request of any Holder, the Trustee shall 104 deliver a copy of such notice to such Holder. Notwithstanding the foregoing, there shall, at all times, be at least one agent for service of process for the Issuer appointed and acting in accordance with this Section 12.14. SECTION 12.15. Judgment Currency. The Issuer and each Guarantor agree to indemnify each Holder and each Person, if any, who controls any Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any loss incurred by such party as a result of any judgment or order being given or made against the Issuer or any Guarantor for any United States dollar amount due under this Indenture and such judgment or order being expressed and paid in a currency (the "JUDGMENT CURRENCY") other than United States dollars and as a result of any variation as between (i) the rate of exchange at which the United States dollar amount is converted into the Judgment Currency for the purpose of such judgment or order and (ii) the spot rate of exchange in The City of New York at which such party on the date of payment of such judgment or order is able to purchase United States dollars with the amount of the Judgment Currency actually received by such party if such party had utilized such amount of Judgment Currency to purchase United States dollars as promptly as practicable upon such party's receipt thereof. The foregoing indemnity shall continue in full force and effect notwithstanding any such judgment or order as aforesaid. The term "spot rate of exchange" shall include any premiums and costs of exchange payable in connection with the purchase of, or conversion into, United States dollars. 105 SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed all as of the date first written above. MAAX CORPORATION, as Issuer By: /s/ James C. Rhee ------------------------------------- Name: James C. Rhee Title: Secretary BEAUCELAND CORPORATION, as Guarantor By: /s/ James C. Rhee ------------------------------------- Name: James C. Rhee Title: Secretary 4200217 CANADA INC., as a Guarantor By: /s/ James C. Rhee ------------------------------------- Name: James C. Rhee Title: Secretary MAAX HOLDING CO. MAAX-KSD CORPORATION PEARL BATHS, INC. MAAX-HYDRO SWIRL MANUFACTURING CORP. MAAX MIDWEST, INC. MAAX SPAS (ARIZONA), INC. AKER PLASTICS COMPANY INC. MAAX CANADA INC. CUISINE EXPERT - C.E. CABINETS INC. 9022-3751 QUEBEC INC. MAAX SPAS (ONTARIO) INC. MAAX SPAS (B.C.) INC., each as a Guarantor By: /s/ Denis Aubin ------------------------------------- Name: Denis Aubin Title: Director & Officer S-1 MAAX LLC, as a Guarantor By: /s/ Dennis Aubin ------------------------------------- Name: Dennis Aubin Title: Director & Officer S-2 U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: /s/ Cheryl L. Clarke ------------------------------------- Name: Cheryl L. Clarke Title: Assistant Vice President S-3 EXHIBIT A [INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF THE INDENTURE] [INSERT THE PRIVATE PLACEMENT LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF THE INDENTURE] MAAX CORPORATION 9.75% Senior Subordinated Notes 2012 No. CUSIP No. US$ MAAX CORPORATION, a Nova Scotia unlimited company (the "ISSUER"), for value received promise to pay to ____________ or its registered assigns, the principal sum of [or such other amount as is provided in a schedule attached hereto](a) on June 15, 2012. Interest Payment Dates: June 15 and December 15, commencing December 15, 2004. Record Dates: June 1 and December 1. Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place. - -------------- (a) This language should be included only if the Note is issued in global form. A-1 IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually or by facsimile by its duly authorized officer. Dated: MAAX CORPORATION, as Issuer By: ------------------------------------- Name: Title: A-2 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the 9.75% Senior Subordinated Notes due 2012 described in the within mentioned Indenture. Dated: U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: ------------------------------------- Authorized Signatory A-3 (Reverse of Note) 9.75% Senior Subordinated Notes due 2012 Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. SECTION 1. Interest. MAAX Corporation, a Nova Scotia unlimited company (the "ISSUER"), promises to pay interest (including Special Interest, if applicable) on the principal amount of this Note at 9.75% per annum from June 4, 2004 until maturity. The Issuer will pay interest semi-annually in arrears on June 15 and December 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "INTEREST PAYMENT DATE"), commencing December 15, 2004. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance. The Issuer shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand to the extent lawful at the interest rate applicable to the Notes; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest shall be computed on the basis of a 360 day year of twelve 30 day months. For the purposes of disclosure under the Interest Act (Canada), the yearly rate of interest which is equivalent to the rate payable under the Notes is the rate payable multiplied by the actual number of days in the year and divided by 360. SECTION 2. Method of Payment. The Issuer shall pay interest on the Notes to the Persons who are registered Holders at the close of business on June 1 or December 1 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes shall be issued in denominations of US$1,000 and integral multiples thereof. The Issuer shall pay principal, premium, if any, and interest on the Notes in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts ("U.S. LEGAL TENDER"). Principal, premium, if any, interest and Special Interest, if any, on the Notes will be payable at the office or agency of the Issuer maintained for such purpose except that, at the option of the Issuer, the payment of interest may be made by check mailed to the Holders at their respective addresses set forth in the register of Holders; provided that for Holders owning at least $5.0 million in principal amount of Notes that have given wire transfer instructions to the Issuer at least ten Business Days prior to the applicable payment date, the Issuer shall make all payments of principal, premium and interest by wire transfer of immediately available funds to the accounts specified by the Holders thereof. Until otherwise designated by the Issuer, the Issuer's office or agency in New York shall be the office of the Trustee maintained for such purpose. SECTION 3. Paying Agent and Registrar. Initially, U.S. Bank Trust National Association, the Trustee under the Indenture, shall act as Paying Agent and Registrar. The Issuer may change any Paying Agent or Registrar without notice to any Holder. Except as provided in the Indenture, Holdings or any of its Subsidiaries may act in any such capacity. A-4 SECTION 4. Indenture and Subordination. The Issuer issued the Notes under an Indenture dated as of June 4, 2004 ("INDENTURE") by and among the Issuer, the Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb) (the "TRUST INDENTURE ACT"). The Notes are subject to all such terms, and Holders are referred to the Indenture and the Trust Indenture Act for a statement of such terms. The payment of the Notes shall, to the extent set forth in the Indenture, be subordinated in right of payment to the prior payment in full in cash or cash equivalents of all Senior Debt. SECTION 5. Optional Redemption. (a) On or after June 15, 2008 (the "FOURTH ANNIVERSARY"), the Issuer may on any one or more occasions redeem all or a part of the Notes at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Special Interest, if any, on the Notes redeemed to the applicable Redemption Date, if redeemed during the twelve-month period beginning June 15 of the years indicated below, subject to the rights of Holders on the relevant Record Date to receive interest on the relevant Interest Payment Date:
YEAR PERCENTAGE - ---- ---------- 2008........................................... 104.875% 2009........................................... 102.438% 2010 and thereafter............................ 100.000%
(b)At any time prior to the Fourth Anniversary, the Issuer may on any one or more occasions redeem all or a part of the Notes, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium, plus accrued and unpaid interest and Special Interest, if any, on the Notes to be redeemed to the date of redemption, subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date; provided that in the case of any redemption in part, at least 50% of the aggregate principal amount of Notes issued under the Indenture (including any Additional Notes) remains outstanding after giving effect to such redemption. SECTION 6. Redemption With Proceeds From Equity Offerings. At any time prior to June 15, 2007, the Issuer may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture (including any Additional Notes) at a redemption price of 109.750% of the principal amount, plus accrued and unpaid interest and Special Interest, if any, on the Notes to be redeemed to the Redemption Date, with the net cash proceeds of one or more Equity Offerings; provided that: (1) at least 65% of the aggregate principal amount of Notes issued under the Indenture (including any Additional Notes, but excluding Notes held by the Issuer or any of its Affiliates) remains outstanding immediately after the occurrence of such redemption; and (2) the redemption occurs within 90 days of the date of the closing of such Equity Offering. SECTION 7. Notice of Redemption. Notice of redemption shall be mailed by first class mail at least 30 days but not more than 60 days before the Redemption Date to each Holder to be redeemed at its registered address. Notes in denominations larger than US$1,000 may be redeemed in part. If any Note is to be redeemed in part only, the notice of redemption A-5 that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof shall be issued in the name of the Holder thereof upon cancellation of the original Note. On and after the Redemption Date interest ceases to accrue on Notes or portions thereof called for redemption. SECTION 8. Mandatory Redemption. For the avoidance of doubt, an offer to purchase pursuant to Section 9 hereof shall not be deemed a redemption. The Issuer shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes. SECTION 9. Repurchase at Option of Holder. Upon the occurrence of a Change of Control, and subject to certain conditions set forth in the Indenture, the Issuer shall be required to offer to purchase all of the outstanding Notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest and Special Interest, if any, thereon to the date of repurchase. The Issuer is, subject to certain conditions and exceptions, obligated to make an offer to purchase Notes at 100% of their principal amount, plus accrued and unpaid interest, if any, thereon to the date of repurchase, with certain net cash proceeds of certain sales or other dispositions of assets in accordance with the Indenture. SECTION 10. Redemption for Changes in Withholding Taxes. The Issuer may redeem all, but not less than all, of the Notes at any time, upon not less than 30 nor more than 60 days' notice, at 100% of the aggregate principal amount of the Notes, together with accrued and unpaid interest and Special Interest, if any, to the Redemption Date, if the Issuer has become or would become obligated to pay, on the next date on which any amount would be payable with respect to the Notes, any Additional Amounts as a result of a change in the laws (including any regulations promulgated thereunder) of a Relevant Taxing Jurisdiction, or any change in any official position of any governmental agency, taxing authority or regulatory authority regarding the application or interpretation of such laws or regulations, which change is announced on or after the date of this offering circular (a "CHANGE IN LAW"), and the Issuer cannot avoid such obligation by taking reasonable measures available to it. Before the Issuer publishes or mails notice of redemption of the Notes as described above, the Issuer shall deliver to the Trustee an Officers' Certificate to the effect that it cannot avoid its obligation to pay Additional Amounts by taking reasonable measures available to it and an opinion of independent legal counsel of recognized standing stating that the Issuer would be obligated to pay Additional Amounts as a result of a Change in Law. No such notice of redemption may be given more than 60 days before or more than 90 days after the Issuer first becomes aware of its liability to pay any Additional Amounts as a result of a Change in Law. SECTION 11. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of US$1,000 and integral multiples of US$1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuer may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuer and the Registrar are not required to transfer or exchange any Note selected for redemption. Also, the Issuer and the Registrar are A-6 not required to transfer or exchange any Notes for a period of 15 days before a selection of Notes to be redeemed. SECTION 12. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes. SECTION 13. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture and the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding, and any existing Default or compliance with any provision may be waived with the consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture and the Notes to, among other things, cure any ambiguity, defect or inconsistency in the Indenture, provide for uncertificated Notes in addition to certificated Notes, comply with any requirements of the Commission in connection with the qualification of the Indenture under the Trust Indenture Act, or make any change that does not materially adversely affect the rights of any Holder of a Note. SECTION 14. Defaults and Remedies. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes generally may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency as set forth in the Indenture, with respect to the Issuer, all outstanding Notes shall become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default (except a Default relating to the payment of principal or interest including an accelerated payment or the failure to make a payment on the Change of Control Payment Date or the Asset Sale Payment Date pursuant to a Asset Sale Offer or a Default in complying with the provisions of Article Five of the Indenture) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default and its consequences under the Indenture except a continuing Default in the payment of interest on, or the principal of, or the premium on, the Notes. SECTION 15. Restrictive Covenants. The Indenture contains certain covenants that, among other things, limit the ability of the Issuer and its Restricted Subsidiaries to make restricted payments, to incur indebtedness, to create liens, to sell assets, to permit restrictions on dividends and other payments by Restricted Subsidiaries of the Issuer, to consolidate, merge or sell all or substantially all of its assets or to engage in transactions with affiliates. The limitations are subject to a number of important qualifications and exceptions. The Issuer must annually report to the Trustee on compliance with such limitations and other provisions in the Indenture. SECTION 16. No Recourse Against Others. No director, officer, employee, incorporator, member or (except as prohibited by applicable law) shareholder of the Issuer or any Guarantor, as such, shall have any liability for any obligations of the Issuer under the Notes or A-7 this Indenture or of any Guarantor under its Note Guarantee or this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. Such waiver and release are part of the consideration for issuance of the Notes. SECTION 17. Note Guarantees. This Note shall be entitled to the benefits of certain Note Guarantees made for the benefit of the Holders. Reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and obligations thereunder of the Guarantors, the Trustee and the Holders. SECTION 18. Trustee Dealings with the Issuer. Subject to certain terms, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Issuer, their Subsidiaries or their respective Affiliates as if it were not the Trustee. SECTION 19. Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. SECTION 20. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entirety), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). SECTION 21. Additional Rights of Holders of Restricted Global Notes and Restricted Definitive Notes. Pursuant to, but subject to the exceptions in, the Registration Rights Agreement, the Issuer and the Guarantors shall be obligated to use their commercially reasonable efforts to consummate an exchange offer pursuant to which the Holder of this Note shall have the right to exchange this Note for a 9.75% Senior Subordinated Note due 2012 of the Issuer which shall have been registered under the Securities Act, in like principal amount and having terms identical in all material respects to this Note (except that such Note shall not be entitled to Special Interest and shall not contain terms with respect to transfer restrictions); provided that, an Exchange Security issued to a person resident in a province or territory of Canada shall be subject to the provisions of Exhibit B to the Indenture applicable to such person. The Holders shall be entitled to receive certain Special Interest in the event such exchange offer is not consummated or the Notes are not offered for resale and upon certain other conditions, all pursuant to and in accordance with the terms of the Registration Rights Agreement.(a) SECTION 22. CUSIP and ISIN Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP and ISIN numbers to be printed on the Notes and the Trustee may use CUSIP or ISIN numbers in notices of redemption as a convenience to Holders. No representation is made - --------------- (a) This Section not to appear on Exchange Securities or Additional Notes unless required by the terms of such Additional Notes. A-8 as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. SECTION 23. Governing Law. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. The Issuer shall furnish to any Holder upon written request and without charge a copy of the Indenture. A-9 ASSIGNMENT FORM I or we assign and transfer this Note to ________________________________________________________________________________ ________________________________________________________________________________ (Print or type name, address and zip code of assignee or transferee) ________________________________________________________________________________ (Insert Social Security or other identifying number of assignee or transferee) and irrevocably appoint _______________________________________ agent to transfer this Note on the books of the Issuer. The agent may substitute another to act for him. Dated: _________________ Signed: ________________________________________ (Sign exactly as name appears on the other side of this Note) Signature Guarantee: ___________________________________________________________ Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Trustee) In connection with any transfer of this Note occurring prior to the date which is the date following the second anniversary of the original issuance of this Note, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and is making the transfer pursuant to one of the following: [Check One] (1)___ to the Issuer or a subsidiary thereof; or (2)___ to a person who the transferor reasonably believes is a "qualified institutional buyer" pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"); or (3)___ to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that has furnished to the Trustee a signed letter containing certain representations and agreements (the form of which letter can be obtained from the Trustee); or (4)___ outside the United States to a non-"U.S. person" as defined in Rule 902 of Regulation S under the Securities Act in compliance with Rule 904 of Regulation S under the Securities Act; or A-10 (5)___ pursuant to the exemption from registration provided by Rule 144 under the Securities Act or pursuant to another exemption available under the Securities Act; or (6)___ pursuant to an effective registration statement under the Securities Act. and unless the box below is checked, the undersigned confirms that such Note is not being transferred to an "affiliate" of the Issuer as defined in Rule 144 under the Securities Act (an "Affiliate"): [ ] The transferee is an Affiliate of the Issuer. Unless one of the foregoing items (1) through (6) is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered Holder thereof; provided, however, that if item (3), (4) or (5) is checked, the Issuer or the Trustee may require, prior to registering any such transfer of the Notes, in their sole discretion, such written legal opinions, certifications (including an investment letter in the case of box (3) or (4)) and other information as the Trustee or the Issuer has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. If none of the foregoing items (1) through (6) are checked, the Trustee or Registrar shall not be obligated to register this Note in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.16 of the Indenture shall have been satisfied. Dated: _________________ Signed:_________________________________________ (Sign exactly as name appears on the other side of this Note) Signature Guarantee: ___________________________________________________________ Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Trustee) TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: _________________ Signed: ________________________________________ NOTICE: To be executed by an executive officer A-11 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.09 or Section 4.13 of the Indenture, check the appropriate box: Section 4.09 [ ] Section 4.13 [ ] If you want to elect to have only part of this Note purchased by the Issuer pursuant to Section 4.09 or Section 4.13 of the Indenture, state the amount (in denominations of US$1,000 and integral multiples thereof): US$___________ Dated: _________________ Signed: _______________________________ (Sign exactly as name appears on the other side of this Note) Signature Guarantee: _______________________________________ Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Trustee) A-12 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(a) The following exchanges of a part of this Global Note for an interest in another Global Note or for a Physical Note, or exchanges of a part of another Global Note or Physical Note for an interest in this Global Note, have been made:
Principal Amount of Amount of decrease this Global Note Signature of in Principal Amount Amount of increase in following such authorized officer of Principal Amount of decrease of Trustee or Note Date of Exchange this Global Note this Global Note (or increase) Custodian - ---------------- ------------------- --------------------- ------------------- ------------------
- ------------- (a) This schedule should be included only if the Note is issued in global form. A-13 EXHIBIT B FORM OF LEGENDS Each Global Note and Physical Note that constitutes a Restricted Security shall bear the following legend (the "Private Placement Legend") on the face thereof until after the second anniversary of the Issue Date, unless otherwise agreed by the Issuer and the Holder thereof or if such legend is no longer required by Section 2.16(g) of the Indenture: THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS. Each Global Note authenticated and delivered hereunder shall also bear the following legend: THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. B-1 UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.16 OF THE INDENTURE. Each Temporary Regulation S Global Note shall also bear the following legend: "THIS GLOBAL NOTE IS A TEMPORARY GLOBAL NOTE FOR PURPOSES OF REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). NEITHER THIS TEMPORARY GLOBAL NOTE NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD OR DELIVERED, EXCEPT AS PERMITTED UNDER THE INDENTURE REFERRED TO BELOW. "NO BENEFICIAL OWNERS OF THIS TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF PRINCIPAL OR INTEREST HEREON UNLESS THE REQUIRED CERTIFICATIONS HAVE BEEN DELIVERED PURSUANT TO THE TERMS OF THE INDENTURE." Each Note sold to a person resident in a province or territory of Canada and each Note issued as an Exchange Security to a person resident in a province or territory of Canada shall also bear the following legend, or the related confirmation or other ownership statement in the event that a book-entry system is used shall bear the following legend or restriction, in either case until such legend or restriction shall no longer be necessary or advisable because such Note is no longer subject to the restrictions on transfer contained therein: "UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY IN OR TO A PERSON IN ANY PROVINCE OR TERRITORY OF CANADA BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE LATER OF (i) [INSERT THE DISTRIBUTION DATE], AND (ii) THE DATE B-2 THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY." B-3 EXHIBIT C Form of Certificate To Be Delivered in Connection with Transfers to Non-QIB Institutional Accredited Investors [ ], [ ] U.S. Bank Trust National Association 100 Wall Street, Suite 1600 New York, NY 10005 Attention: Corporate Trust Services Ladies and Gentlemen: In connection with our proposed purchase of 9.75% Senior Subordinated Notes due 2012 (the "NOTES") of MAAX CORPORATION, a Nova Scotia unlimited company (the "ISSUER"), we confirm that: 1. We understand that any subsequent transfer of the Notes is subject to certain restrictions and conditions set forth in the Indenture relating to the Notes (the "Indenture") and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the "Securities Act"), and all applicable state securities laws. 2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes may not be offered, sold, pledged or otherwise transferred except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell, offer, pledge or otherwise transfer any Notes, we will do so only (i) to the Issuer or any of its subsidiaries, (ii) inside the United States in a transaction meeting the requirements of Rule 144A under the Securities Act to a person who we reasonably believe to be a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act), (iii) inside the United States to an institutional "accredited investor" (as defined below) that is purchasing at least US$250,000 of Notes for its own account or for the account of an institutional accredited investor and who, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to the Trustee (as defined in the Indenture) a signed letter containing certain representations and agreements relating to the restrictions on transfer of the Notes (the form of which letter can be obtained from the Trustee), (iv) outside the United States to a person that is not a U.S. person (as defined in Rule 902 under the Securities Act) in accordance with Regulation S promulgated under the Securities Act, (v) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available) or another available exemption under the Securities Act or (vi) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person C-1 purchasing any of the Notes from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. 3. We are not acquiring the Notes for or on behalf of, and will not transfer the Notes to, any pension or welfare plan (as defined in Section 3 of the Employee Retirement Income Security Act of 1974, as amended) or plan (as defined in Section 4975 of the Internal Revenue Code of 1986, as amended), except as permitted in the section entitled "Notice to Investors" of the Offering Circular. 4. We understand that, on any proposed resale of any Notes, we will be required to furnish to the Trustee and the Issuer such certification, legal opinions and other information as the Trustee and the Issuer may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect. 5. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or their investment, as the case may be. 6. We are acquiring the Notes purchased by us for our account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. C-2 You, as Trustee, the Issuer, counsel for the Issuer and others are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Transferee] By: ------------------------------------ Name: Title: C-3 EXHIBIT D Form of Certificate To Be Delivered in Connection with Transfers Pursuant to Regulation S [ ], [ ] U.S. Bank Trust National Association 100 Wall Street, Suite 1600 New York, NY 10005 Attention: Corporate Trust Services Re: MAAX Corporation (the "Issuer") 9.75% Senior Subordinated Notes due 2012 (the "Notes") Ladies and Gentlemen: In connection with our proposed sale of US$[ ] aggregate principal amount of the Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent that: (1) the offer of the Notes was not made to a person in the United States; (2) either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither we nor any person acting on our behalf knows that the transaction has been prearranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and (5) we have advised the transferee of the transfer restrictions applicable to the Notes. You, as Trustee, the Issuer, counsel for the Issuer and others are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. D-1 Very truly yours, [Name of Transferor] By: ------------------------------------ Authorized Signatory D-2 EXHIBIT E FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS OF TEMPORARY REGULATION S GLOBAL NOTE ________________,______ U.S. Bank Trust National Association 100 Wall Street, Suite 1600 New York, NY 10005 Attention: Corporate Trust Services Re: MAAX Corporation (the "Issuer") 9.75% Senior Subordinated Notes due 2012 (the "Notes") Dear Sirs: This letter relates to U.S. $ ______________ principal amount of Notes represented by a certificate (the "LEGENDED CERTIFICATE") which bears a legend outlining restrictions upon transfer of such Legended Certificate. Pursuant to Section 2.16(c) of the Indenture (the "INDENTURE") dated as of June 4, 2004 relating to the Notes, we hereby certify that we are (or we will hold such securities on behalf of) a person outside the United States (or to an Initial Purchaser (as defined in the Indenture)) to whom the Notes could be transferred in accordance with Rule 904 of Regulation S promulgated under the U.S. Securities Act of 1933, as amended. You, as Trustee, the Issuer, counsel for the Issuer and others are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this letter have the meanings set forth in Regulation S. Very truly yours, [Name of Holder] By: ----------------------------------- Authorized Signature E-1 EXHIBIT F NOTE GUARANTEE For value received, each of the undersigned hereby unconditionally guarantees, jointly and severally, to the extent set forth in the Indenture (as defined below) to the Holder of this Note the payment of principal, premium, if any, and interest on this Note in the amounts and at the times when due and interest on the overdue principal, premium, if any, and interest, if any, of this Note when due, if lawful, and, to the extent permitted by law, the payment or performance of all other obligations of the Issuer under the Indenture or the Notes, to the Holder of this Note and the Trustee, all in accordance with and subject to the terms and limitations of this Note, the Indenture, including Article Eleven thereof, and this Note Guarantee. This Note Guarantee will become effective in accordance with Article Eleven of the Indenture and its terms shall be evidenced therein. The validity and enforceability of any Note Guarantee shall not be affected by the fact that it is not affixed to any particular Note. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Indenture dated as of June 4, 2004, among MAAX Corporation, a Nova Scotia unlimited company (the "Issuer"), the Guarantors named therein and U.S. Bank Trust, N.A., as Trustee (the "Trustee"), as amended or supplemented (the "Indenture"). The obligations of the undersigned to the Holders and to the Trustee pursuant to this Note Guarantee and the Indenture are expressly set forth in Article Eleven of the Indenture and reference is hereby made to the Indenture for the precise terms of the Note Guarantee and all of the other provisions of the Indenture to which this Note Guarantee relates. No director, officer, employee, incorporator, stockholder, member, partner or manager of any Guarantor, as such, shall have any liability for any obligations of such Guarantors under such Guarantors' Note Guarantee or the Indenture or for any claim based on, in respect of, or by reason of, such obligation or its creation. This Note Guarantee is subordinated in right of payment, in the manner and to the extent set forth in Article Eleven of the Indenture, to the prior payment in full in cash or cash equivalents of all Senior Debt of the Guarantors, whether outstanding on the date of the Indenture or thereafter created, incurred, assumed or guaranteed. THIS NOTE GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. This Note Guarantee is subject to release upon the terms set forth in the Indenture. F-1 IN WITNESS WHEREOF, each Guarantor has caused its Note Guarantee to be duly executed. Date: BEAUCELAND CORPORATION By: ----------------------------------- Name: Title: 4200217 CANADA INC. By: ----------------------------------- Name: Title: MAAX HOLDING CO. MAAX-KSD CORPORATION PEARL BATHS, INC. MAAX-HYDRO SWIRL MANUFACTURING CORP. MAAX MIDWEST, INC. MAAX SPAS (ARIZONA), INC. AKER PLASTICS COMPANY INC. MAAX CANADA INC. CUISINE EXPERT - C.E. CABINETS INC. 9022-3751 QUEBEC INC. MAAX SPAS (ONTARIO) INC. MAAX SPAS (B.C.) INC. By: ----------------------------------- Name: Title: MAAX LLC By: ----------------------------------- Name: Title: F-2 EX-4.2 36 y99327exv4w2.txt EXCHANGE AND REGISTRATION RIGHTS AGREEMENT EXHIBIT 4.2 MAAX Corporation 9 3/4% Senior Subordinated Notes due 2012 unconditionally guaranteed as to the payment of principal, premium, if any, and interest by the Guarantors listed on the signature pages hereof Exchange and Registration Rights Agreement June 4, 2004 Goldman, Sachs & Co. Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated As representatives of the several Purchasers named in Schedule I to the Purchase Agreement, c/o Goldman Sachs & Co. 85 Broad Street New York, New York 10004 Ladies and Gentlemen: MAAX Corporation, a Nova Scotia unlimited company (the "Company"), proposes to issue and sell to the Purchasers (as defined herein) upon the terms set forth in the Purchase Agreement (as defined herein) an aggregate of US$150,000,000 principal amount of its 9 3/4% Senior Subordinated Notes due 2012, which are unconditionally guaranteed by Beauceland Corporation (the "Parent Guarantor"), certain of the Company's subsidiaries listed on the signature pages hereof (the "Subsidiary Guarantors", together with the Parent Guarantor the "Guarantors," and such Guarantors, together with the Company, the "Issuers"). As an inducement to the Purchasers to enter into the Purchase Agreement and in satisfaction of a condition to the obligations of the Purchasers thereunder, the Issuers, jointly and severally, agree with the Purchasers for the benefit of holders (as defined herein) from time to time of the Registrable Securities (as defined herein) as follows: 1. Certain Definitions. For purposes of this Exchange and Registration Rights Agreement, the following terms shall have the following respective meanings: "Base Interest" shall mean the interest that would otherwise accrue on the Securities under the terms thereof and the Indenture, without giving effect to the provisions of this Exchange and Registration Rights Agreement. The term "broker-dealer" shall mean any broker or dealer registered as such under the Exchange Act. "Canadian Securities Laws" shall mean the securities laws, rules, regulations and policies applicable in the provinces and territories of Canada. "Closing Date" shall mean the date on which the Securities are initially issued. "Commission" shall mean the United States Securities and Exchange Commission, or any other federal agency at the time administering the Exchange Act or the Securities Act, whichever is the relevant statute for the particular purpose. "Effective Time," in the case of (a) an Exchange Registration, shall mean the time and date as of which the Commission declares the Exchange Registration Statement effective or as of which the Exchange Registration Statement otherwise becomes effective and (b) a Shelf Registration, shall mean the time and date as of which the Commission declares the Shelf Registration Statement effective or as of which the Shelf Registration Statement otherwise becomes effective. "Electing Holder" shall mean any holder of Registrable Securities that has returned a completed and signed Notice and Questionnaire to the Company in accordance with Section 3(d)(ii) or 3(d)(iii) hereof. "Exchange Act" shall mean the Securities Exchange Act of 1934, or any successor thereto, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be amended from time to time. "Exchange Offer" shall have the meaning assigned thereto in Section 2(a) hereof. "Exchange Registration" shall have the meaning assigned thereto in Section 3(c) hereof. "Exchange Registration Statement" shall have the meaning assigned thereto in Section 2(a) hereof. "Exchange Securities" shall have the meaning assigned thereto in Section 2(a) hereof. The term "holder" shall mean each of the Purchasers and other persons who acquire Registrable Securities from time to time (including any successors or assigns), in each case for so long as such person owns any Registrable Securities. "Indenture" shall mean the Indenture, dated as of June 4, 2004, between the Issuers and U.S. Bank Trust, N.A., as trustee (the "Trustee"), as the same shall be amended from time to time. 2 "Notice and Questionnaire" means a Notice of Registration Statement and Selling Securityholder Questionnaire substantially in the form of Exhibit A hereto. The term "person" shall mean any individual, corporation, association, partnership, limited liability company, unlimited company, trust or unincorporated organization, business, individual, government or political subdivision thereof or governmental agency. "Purchase Agreement" shall mean the Purchase Agreement, dated as of May 27, 2004 between the Purchasers and the Issuers relating to the Securities. "Purchasers" shall mean the Purchasers named in Schedule I to the Purchase Agreement. "Registrable Securities" shall mean each Security until the earlier to occur of: (a) the date on which such Security has been exchanged by a person other than a broker-dealer for an Exchange Security in the Exchange Offer; (b) following the exchange by a broker-dealer in the Exchange Offer of a Security for an Exchange Security, the date on which such Exchange Security is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Registration Statement; (c) the date on which such Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement; or (d) the date on which such Security is distributed to the public pursuant to Rule 144. "Registration Default" shall have the meaning assigned thereto in Section 2(c) hereof. "Registration Expenses" shall have the meaning assigned thereto in Section 4 hereof. "Resale Period" shall have the meaning assigned thereto in Section 2(a) hereof. "Restricted Holder" shall mean (a) a holder that is an affiliate of the Company within the meaning of Rule 405, (b) a holder who acquires Exchange Securities outside the ordinary course of such holder's business, (c) a holder who has arrangements or understandings with any person to participate in the Exchange Offer for the purpose of distributing Exchange Securities and (d) a holder that is a broker-dealer, but only with respect to Exchange Securities received by such broker-dealer pursuant to an Exchange Offer in exchange for Registrable Securities acquired by the broker-dealer directly from the Company. "Rule 144," "Rule 144A," "Rule 405" and "Rule 415" shall mean, in each case, such rule promulgated under the Securities Act (or any successor provision), as the same shall be amended from time to time. "Securities" shall mean, collectively, the 9 3/4% Senior Subordinated Notes due 2012 of the Company to be issued and sold to the Purchasers, and notes of the Company issued in exchange therefor or in lieu thereof pursuant to the Indenture and this Exchange and 3 Registration Rights Agreement. Each Security is entitled to the benefit of the guarantees provided for in the Indenture (the "Guarantees") and, unless the context otherwise requires, any reference herein to a "Security," an "Exchange Security" or a "Registrable Security" shall include a reference to the related Guarantees. "Securities Act" shall mean the Securities Act of 1933, or any successor thereto, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be amended from time to time. "Shelf Registration" shall have the meaning assigned thereto in Section 2(b) hereof. "Shelf Registration Statement" shall have the meaning assigned thereto in Section 2(b) hereof. "Special Interest" shall have the meaning assigned thereto in Section 2(c) hereof. "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, or any successor thereto, and the rules, regulations and forms promulgated thereunder, all as the same shall be amended from time to time. Unless the context otherwise requires, any reference herein to a "Section" or "clause" refers to a Section or clause, as the case may be, of this Exchange and Registration Rights Agreement, and the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Exchange and Registration Rights Agreement as a whole and not to any particular Section or other subdivision. 2. Registration Under the Securities Act. (a) Except as set forth in Section 2(b) below, the Issuers agree to file under the Securities Act, as soon as practicable, but no later than 150 days after the Closing Date, a registration statement relating to an offer to exchange (such registration statement, the "Exchange Registration Statement", and such offer, the "Exchange Offer") any and all of the Registrable Securities for a like aggregate principal amount of debt securities issued by the Company and guaranteed by the Guarantors, which debt securities and guarantees are substantially identical to the Securities and the related Guarantees, respectively (and are entitled to the benefits of a trust indenture which is substantially identical to the Indenture or is the Indenture and which has been qualified under the Trust Indenture Act) (other than such changes to the Indenture or any such trust indenture as are necessary to comply with any requirements of the Commission to effect or maintain the qualification thereof under the Trust Indenture Act or which eliminate the transfer restrictions on the Securities or provisions for the payment of additional interest contemplated in Section 2(c) below), except that they have been registered pursuant to an effective registration statement under the Securities Act and do not contain a restrictive legend or provisions for the additional interest contemplated in Section 2(c) below (such new debt securities hereinafter called "Exchange Securities"). The Issuers agree to use their commercially reasonable efforts to cause the Exchange Registration Statement to become 4 effective under the Securities Act as soon as practicable, but no later than 300 days after the Closing Date. The Exchange Offer will be registered under the Securities Act on the appropriate form and will comply with all applicable tender offer rules and regulations under the Exchange Act. The Issuers further agree to (A) complete the Exchange Offer promptly, but no later than 30 days after such Exchange Registration Statement has become effective, or such later date as is required by the Securities Act, (B) hold the Exchange Offer open for at least 30 days and (C) exchange Exchange Securities for all Registrable Securities that have been properly tendered and not withdrawn on or prior to the expiration of the Exchange Offer. The Exchange Offer will be deemed to have been "completed" only if the debt securities and related guarantees received by holders other than Restricted Holders in the Exchange Offer for Registrable Securities are, upon receipt, transferable by each such holder without restriction under the Securities Act and the Exchange Act and without material restrictions under the blue sky or securities laws of a substantial majority of the States of the United States of America. Subject to the preceding sentence, the Exchange Offer shall be deemed to have been completed upon the earlier to occur of (i) the Issuers having exchanged the Exchange Securities for all outstanding Registrable Securities pursuant to the Exchange Offer and (ii) the Issuers having exchanged, pursuant to the Exchange Offer, Exchange Securities for all Registrable Securities that have been properly tendered and not withdrawn before the expiration of the Exchange Offer. Each holder who participates in the Exchange Offer will be required to represent (i) that any Exchange Securities received by it will be acquired in the ordinary course of its business, (ii) that at the time of the consummation of the Exchange Offer, such holder will have no arrangement or understanding with any Person to participate in the distribution of the Exchange Securities, (iii) that such holder is not an affiliate of any Issuer within the meaning of the Securities Act, and (iv) any additional representations that in the written opinion of counsel to the Issuers are necessary under then-existing rules or regulations (or interpretations thereof) of the Commission in order for the Exchange Registration Statement to be declared effective. The Issuers agree (x) to include in the Exchange Registration Statement a prospectus for use in any resales by any holder of Exchange Securities that is a broker-dealer and (y) to use their commercially reasonable efforts to keep such Exchange Registration Statement effective for a period (the "Resale Period") beginning when Exchange Securities are first issued in the Exchange Offer and ending upon the earlier of the expiration of the 180th day after the Exchange Offer has been completed or such time as such broker-dealers are no longer required to comply with the prospectus delivery requirements in connection with offers and sales of the Exchange Securities. With respect to such Exchange Registration Statement, such holders shall have the benefit of the rights of indemnification and contribution set forth in Sections 6(a), (c), (d) and (e) hereof. (b) If (i) the Issuers are not permitted to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy or (ii) any holder of Registrable Securities notifies the Issuers prior to the 20th day following consummation of the Exchange Offer that: (a) it is prohibited by applicable law in the United States or Canada or policy of the Commission or securities regulatory authorities in Canada from participating in the Exchange Offer; (b) it may not resell the Exchange Securities acquired by it in the Exchange Offer to the public without delivering a prospectus and the prospectus contained in the Exchange Registration Statement is not appropriate or available for such resales or (c) it is a broker-dealer and owns Exchange Securities acquired directly from the Issuers or an affiliate of 5 any Issuer, the Issuers shall, in lieu of (or, in the case of clause (ii), in addition to) conducting the Exchange Offer contemplated by Section 2(a) hereof, file under the Securities Act as soon as practicable, but no later than the later of 150 days after the time such obligation to file arises, a "shelf" registration statement providing for the registration of, and the sale on a continuous or delayed basis by the holders of, all applicable Registrable Securities, pursuant to Rule 415 or any similar rule that may be adopted by the Commission (such filing, the "Shelf Registration" and such registration statement, the "Shelf Registration Statement"). The Issuers agree to use their commercially reasonable efforts (x) to cause the Shelf Registration Statement to become or be declared effective no later than 300 days after such obligation arises and to keep such Shelf Registration Statement continuously effective for a period ending on the earlier of the second anniversary of the Effective Time or such time as there are no longer any applicable Registrable Securities outstanding, provided, however, that no holder shall be entitled to be named as a selling securityholder in the Shelf Registration Statement or to use the prospectus forming a part thereof for resales of Registrable Securities unless such holder is an Electing Holder, and (y) on no more than one occasion after the Effective Time of the Shelf Registration Statement, promptly upon the request of any holder of Registrable Securities that is not then an Electing Holder (1) mail the Notice and Questionnaire to all holders of Registrable Securities that are not then Electing Holders and (2) not more than 60 nor less than 45 days after mailing the Notice and Questionnaire, take any action reasonably necessary to enable any such holders providing a completed and signed Notice and Questionnaire to the Company to use the prospectus forming a part of the Shelf Registration Statement for resales of Registrable Securities, including, without limitation, any action necessary to identify such holder as a selling security holder in the Shelf Registration Statement, provided, however, that nothing in this clause (y) shall relieve any such holder of the obligation to return a completed and signed Notice and Questionnaire to the Company in accordance with Section 3(d)(iii) hereof, provided, further, that the failure of a Shelf Registration Statement to remain effective due to the filing of any amendment to such Shelf Registration Statement pursuant to this clause (y) shall not constitute a Registration Default (as defined below) or a breach of this Exchange and Registration Rights Agreement, so long as the Issuers use their commercially reasonable efforts to cause such Shelf Registration Statement, as so amended, to be declared effective as soon as reasonably practicable. The Issuers further agree to supplement or make amendments to the Shelf Registration Statement, as and when required by the rules, regulations or instructions applicable to the registration form used by the Issuers for such Shelf Registration Statement or by the Securities Act for shelf registration, and the Issuers agree to furnish to each Electing Holder copies of any such supplement or amendment prior to its being used or promptly following its filing with the Commission. (c) In the event that (i) the Issuers have not filed the Exchange Registration Statement or Shelf Registration Statement on or before the date on which such registration statement is required to be filed pursuant to Section 2(a) or 2(b), respectively, or (ii) such Exchange Registration Statement or Shelf Registration Statement has not become effective or been declared effective by the Commission on or before the date on which such registration statement is required to become or be declared effective pursuant to Section 2(a) or 2(b), respectively, or (iii) the Exchange Offer has not been consummated within 30 days after the initial effective date of the Exchange Registration Statement relating to the Exchange Offer (if the Exchange Offer is then required to be made) or (iv) any Exchange Registration Statement or 6 Shelf Registration Statement required by Section 2(a) or 2(b) hereof is filed and declared effective but shall thereafter either be withdrawn by the Issuers or shall become subject to an effective stop order issued pursuant to Section 8(d) of the Securities Act suspending the effectiveness of such registration statement (except as specifically permitted herein) without being succeeded immediately by an additional registration statement filed and declared effective (each such event referred to in clauses (i) through (iv), a "Registration Default" and each period during which a Registration Default has occurred and is continuing, a "Registration Default Period"), then, as liquidated damages for such Registration Default, subject to the provisions of Section 9(b), special interest ("Special Interest"), in addition to the Base Interest, shall accrue at a per annum rate of 0.25% for the first 90 days of the Registration Default Period, increasing by 0.25% for each successive 90 days of the Registration Default Period, to a maximum Special Interest rate of 2.0% for the remaining portion of the Registration Default Period. Notwithstanding anything to the contrary set forth herein, (w) upon filing of the Exchange Registration Statement or the Shelf Registration Statement, as the case may be, in the case of clause (i) above, (x) upon the effectiveness of the Exchange Registration Statement or the Shelf Registration Statement, as the case may be, in the case of clause (ii) above, (y) upon consummation of the Exchange Offer, in the case of clause (iii) above, or (z) upon the occurrence of any event (including the filing of an appropriate amendment to the relevant Registration Statement, the declaring effective of another Registration Statement or the taking of other appropriate action) that causes the Exchange Registration Statement or the Shelf Registration Statement, as the case may be, to again be declared effective or made usable in the case of clause (iv) above, the Special Interest payable as a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease to accrue. Any amounts of Special Interest due pursuant to this Section 2(c) shall be payable by the Issuers to the Trustee, on behalf of the holders of the relevant Securities, in cash on the interest payment dates specified in the relevant Securities, commencing with the first such interest payment date occurring after any such Special Interest commences to accrue. The Special Interest provided for in this Section 2(c) shall be the exclusive monetary remedy available to holders of Securities for Registration Defaults. (d) The Issuers shall use their commercially reasonable efforts to take all actions reasonably necessary or advisable to be taken by them to ensure that the transactions contemplated herein are effected as so contemplated, including all actions reasonably necessary or desirable to register the Guarantees under the registration statement contemplated in Section 2(a) or 2(b) hereof, as applicable. (e) Any reference herein to a registration statement as of any time shall be deemed to include any document incorporated, or deemed to be incorporated, therein by reference as of such time and any reference herein to any post-effective amendment to a registration statement as of any time shall be deemed to include any document incorporated, or deemed to be incorporated, therein by reference as of such time. 7 3. Registration Procedures. If the Issuers file a registration statement pursuant to Section 2(a) or 2(b) hereof, the following provisions shall apply: (a) At or before the Effective Time of the Exchange Registration Statement or the Shelf Registration Statement, as the case may be, the Issuers shall qualify either the Indenture or such other substantially identical indenture under the Trust Indenture Act. (b) In the event that such qualification would require the appointment of a new trustee under either the Indenture or such other substantially identical indenture, the Issuers shall appoint a new trustee thereunder pursuant to the applicable provisions of either the Indenture or such other substantially identical indenture. (c) In connection with the Issuers' obligations with respect to the registration of Exchange Securities as contemplated by Section 2(a) (the "Exchange Registration"), if applicable, the Issuers shall, as soon as practicable (or as otherwise specified): (i) prepare and file with the Commission, as soon as practicable but no later than 150 days after the Closing Date, an Exchange Registration Statement on any form which may be utilized by the Issuers, and, if a prospectus contained in an Exchange Registration Statement is required to be delivered under the Securities Act by any broker-dealer who seeks to sell Exchange Securities during the Resale Period and has advised the Issuers of such fact before the filing of any Exchange Registration Statement, which shall permit the Exchange Offer and resales of Exchange Securities by broker-dealers during the Resale Period to be effected as contemplated by Section 2(a), and use their commercially reasonable efforts to cause such Exchange Registration Statement to become effective as soon as practicable thereafter, but no later than 300 days after the Closing Date; (ii) prepare and file with the Commission such amendments and supplements to such Exchange Registration Statement and the prospectus included therein as may be necessary to effect and maintain the effectiveness of such Exchange Registration Statement for the periods and purposes contemplated in Section 2(a) hereof and as may be required by the applicable rules and regulations of the Commission and the instructions applicable to the form of such Exchange Registration Statement, and promptly provide each broker-dealer holding Exchange Securities with such number of copies of the prospectus included therein (as then amended or supplemented, if applicable), in conformity in all material respects with the requirements of the Securities Act and the Trust Indenture Act (and, in the case of holders in Canada, the Canadian wrapper (if the delivery of one is required by Canadian Securities Laws) used in connection with the private placement of the Exchange Securities in Canada), as such broker-dealer reasonably may request prior to the expiration of the Resale Period, for use in connection with resales of Exchange Securities; (iii) promptly notify each broker-dealer holding Exchange Securities that has requested copies of the prospectus included in such Exchange Registration Statement, and confirm such advice in writing, (A) when such Exchange Registration 8 Statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to such Exchange Registration Statement or any post-effective amendment, when the same has become effective, (B) of any request by the Commission for amendments or supplements to such Exchange Registration Statement or prospectus, (C) of the issuance by the Commission of any stop order suspending the effectiveness of such Exchange Registration Statement or the initiation or threatening of any proceedings for that purpose, (D) if at any time the representations and warranties of the Issuers contemplated by Section 5 cease to be true and correct in all material respects, (E) of the receipt by the Issuers of any notification with respect to the suspension of the qualification of the Exchange Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, or (F) at any time during the Resale Period when a prospectus is required to be delivered under the Securities Act, that such Exchange Registration Statement, prospectus, prospectus amendment or supplement or post-effective amendment does not conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act or contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (iv) in the event that the Issuers would be required, pursuant to Section 3(c)(iii)(F) above, to notify any broker-dealers holding Exchange Securities, without delay prepare and furnish to each such broker-dealer a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of such Exchange Securities during the Resale Period, such prospectus shall conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (v) use their commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of such Exchange Registration Statement or any post-effective amendment thereto at the earliest practicable date; (vi) use their commercially reasonable efforts to (A) register or qualify the Exchange Securities under the securities laws or blue sky laws of such jurisdictions as are contemplated by Section 2(a) and comply with any requirements under Canadian Securities Laws in respect of the exchange and distribution of Exchange Securities to be received by holders in Canada no later than the commencement of the Exchange Offer, (B) keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers, sales and dealings therein in such jurisdictions until the expiration of the Resale Period and (C) take any and all other actions as may be reasonably necessary or advisable to enable each broker-dealer holding Exchange Securities to consummate the disposition thereof in such jurisdictions; provided, however, that no Issuer shall be required for any such purpose to (1) qualify as a foreign corporation in any jurisdiction wherein it would not otherwise be required to qualify but 9 for the requirements of this Section 3(c)(vi), (2) consent to general service of process in any such jurisdiction, (3) take any other action that would subject it to general service of process or to taxation in excess of a nominal amount in respect of doing business in any jurisdiction in which it is not otherwise subject or (4) make any changes to its organizational documents or any agreement between it and its equityholders; (vii) use their commercially reasonable efforts to obtain the consent or approval of each governmental agency or authority, whether federal, state, provincial or local, which may be required to effect the Exchange Registration, the Exchange Offer and the offering and sale of Exchange Securities by broker-dealers during the Resale Period; (viii) provide a CUSIP number for all Exchange Securities, not later than the applicable Effective Time; and (ix) comply with all applicable rules and regulations of the Commission, and make generally available to its securityholders as soon as practicable but no later than eighteen months after the effective date of such Exchange Registration Statement, an earning statement of the Company and its subsidiaries or the Parent Guarantor and its subsidiaries complying with Section 11(a) of the Securities Act (including, at the option of the Company, Rule 158 thereunder). (d) In connection with the Issuers' obligations with respect to the Shelf Registration, if applicable, the Issuers shall, as soon as practicable (or as otherwise specified): (i) prepare and file with the Commission, as soon as practicable but in any case within the time periods specified in Section 2(b), a Shelf Registration Statement on any form which may be utilized by the Company and which shall register all of the applicable Registrable Securities for resale by the holders thereof in accordance with such method or methods of disposition as may be specified by such of the holders as, from time to time, may be Electing Holders and use their commercially reasonable efforts to cause such Shelf Registration Statement to become effective as soon as practicable but in any case within the time periods specified in Section 2(b); (ii) not less than 30 calendar days prior to the Effective Time of the Shelf Registration Statement, mail the Notice and Questionnaire to the holders of Registrable Securities; no holder shall be entitled to be named as a selling securityholder in the Shelf Registration Statement as of the Effective Time, and no holder shall be entitled to use the prospectus forming a part thereof for resales of Registrable Securities at any time, unless such holder has returned a completed and signed Notice and Questionnaire to the Company by the deadline for response set forth therein; provided, however, holders of Registrable Securities shall have at least 28 calendar days from the date on which the Notice and Questionnaire is first mailed to such holders to return a completed and signed Notice and Questionnaire to the Company; 10 (iii) on no more than one occasion after the Effective Time of the Shelf Registration Statement, upon the request of any holder of Registrable Securities that is not then an Electing Holder, promptly send a Notice and Questionnaire to all remaining holders of Registrable Securities that are not then Electing Holders; provided that the Issuers shall not be required to take any action to name any such holder as a selling securityholder in the Shelf Registration Statement or to enable any such holder to use the prospectus forming a part thereof for resales of Registrable Securities until any such holder has returned a completed and signed Notice and Questionnaire to the Company; (iv) as soon as practicable prepare and file with the Commission such amendments and supplements to such Shelf Registration Statement and the prospectus included therein as may be necessary to effect and maintain the effectiveness of such Shelf Registration Statement for the period specified in Section 2(b) hereof and as may be required by the applicable rules and regulations of the Commission and the instructions applicable to the form of such Shelf Registration Statement, and promptly furnish to each Electing Holder who so requests one copy of any such supplement or amendment; provided, however, that notwithstanding the foregoing, the Issuers may allow any such Shelf Registration Statement to cease to become effective and usable for no more than 90 days in any 360 day period if (A) the Board of Directors of the Company determines in good faith that such action would impede, delay or otherwise interfere with any proposed or pending material corporate transaction involving the Company or that such action would require the disclosure of material non-public information, the disclosure of which at such time would not be in the best interests of the Company or its stockholders, and the Company notifies the holders within two business days after the Board of Directors makes such determination or (B) the prospectus contained in any such Shelf Registration Statement contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, provided that, the periods referred to in Section 2(b) hereof during which such Shelf Registration Statement is required to be effective and usable shall be extended by the number of days during which such Shelf Registration Statement was not effective or usable pursuant to the foregoing provisions (but in no event past the second anniversary of the Effective Time); (v) provide (A) the underwriters (which term, for purposes of this Exchange and Registration Rights Agreement, shall include a person deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act), if any, thereof, (B) any sales or placement agent therefor and (C) counsel for any such underwriter or agent the opportunity to participate in the preparation of such Shelf Registration Statement, each prospectus included therein or filed with the Commission and each amendment or supplement thereto; (vi) for a reasonable period prior to the filing of such Shelf Registration Statement, and throughout the period specified in Section 2(b), make available at reasonable times at the Company's principal place of business or such other reasonable place for inspection, during reasonable business hours, by the persons referred to in 11 Section 3(d)(v) who shall certify to the Company that they have a current intention to sell the Registrable Securities pursuant to the Shelf Registration such financial and other information and pertinent corporate books and records of the Company, and cause the officers, employees, counsel and independent certified public accountants of the Company to respond to such inquiries, as shall be reasonably necessary, in the judgment of the respective counsel referred to in such Section, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that each such party shall be required to maintain in confidence and not to disclose to any other person any information or records reasonably designated by the Company as being confidential, until such time as (A) such information becomes a matter of public record other than as a result of a disclosure or failure to safeguard by any such party, or (B) such person shall be required so to disclose such information pursuant to a subpoena or order of any court or other governmental agency or body having jurisdiction over the matter (subject to the requirements of such order, and only after such person shall have given the Company prompt prior written notice of such requirement and allowed the Company to undertake appropriate action to obtain a protective order or otherwise prevent disclosure of the information at its expense), or (C) such information is required to be set forth in such Shelf Registration Statement or the prospectus included therein or in an amendment to such Shelf Registration Statement or an amendment or supplement to such prospectus in order that such Shelf Registration Statement, prospectus, amendment or supplement, as the case may be, complies with applicable requirements of the United States federal securities laws and the rules and regulations of the Commission and does not contain an untrue statement of a material fact or omit to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (vii) promptly notify each of the Electing Holders, any sales or placement agent therefor and any underwriter thereof (which notification may be made through any managing underwriter that is a representative of such underwriter for such purpose) and confirm such advice in writing, (A) when such Shelf Registration Statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to such Shelf Registration Statement or any post-effective amendment, when the same has become effective, (B) of any request by the Commission for amendments or supplements to such Shelf Registration Statement or prospectus, (C) of the issuance by the Commission of any stop order suspending the effectiveness of such Shelf Registration Statement or the initiation or threatening of any proceedings for that purpose, (D) if at any time the representations and warranties of the Issuers contemplated by Section 3(d)(xvi) or Section 5 cease to be true and correct in all material respects, (E) of the receipt by the Issuers of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, or (F) if at any time when a prospectus is required to be delivered under the Securities Act, that such Shelf Registration Statement, prospectus, prospectus amendment or supplement or post-effective amendment does not conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act or contains 12 an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (viii) use their commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of such Shelf Registration Statement or any post-effective amendment thereto at the earliest practicable date; (ix) if requested by any managing underwriter or underwriters, any placement or sales agent or any Electing Holder, promptly incorporate in a prospectus supplement or post-effective amendment such information as is required by the applicable rules and regulations of the Commission and as such managing underwriter or underwriters, such agent or such Electing Holder specifies should be included therein relating to the terms of the sale of such Registrable Securities, including information with respect to the principal amount of Registrable Securities being sold by such Electing Holder or agent or to any underwriters, the name and description of such Electing Holder, agent or underwriter, the offering price of such Registrable Securities and any discount, commission or other compensation payable in respect thereof, the purchase price being paid therefor by such underwriters and with respect to any other terms of the offering of the Registrable Securities to be sold by such Electing Holder or agent or to such underwriters; and make all required filings of such prospectus supplement or post-effective amendment promptly after notification of the matters to be incorporated in such prospectus supplement or post-effective amendment; (x) furnish to each Electing Holder, each placement or sales agent, if any, therefor, each underwriter, if any, thereof and the respective counsel referred to in Section 3(d)(v), upon request, an executed copy (or, in the case of an Electing Holder, a conformed copy) of such Shelf Registration Statement, each such amendment and supplement thereto (in each case including all exhibits thereto (in the case of an Electing Holder of Registrable Securities, upon request) and documents incorporated by reference therein to the extent such exhibits or documents are not available on the Commission's EDGAR system) and such number of copies of such Shelf Registration Statement (excluding exhibits thereto and documents incorporated by reference therein unless specifically so requested by such Electing Holder, agent or underwriter, as the case may be, and in such cases only to the extent such exhibits or documents are not available on the Commission's EDGAR system) and of the prospectus included in such Shelf Registration Statement (including each preliminary prospectus and any summary prospectus), in conformity in all material respects with the applicable requirements of the Securities Act and the Trust Indenture Act, and such other documents, as such Electing Holder, agent, if any, and underwriter, if any, may reasonably request in order to facilitate the offering and disposition of the Registrable Securities owned by such Electing Holder, offered or sold by such agent or underwritten by such underwriter and to permit such Electing Holder, agent and underwriter to satisfy the prospectus delivery requirements of the Securities Act; and the Issuers hereby consent to the use of such prospectus (including such preliminary and summary prospectus) and any amendment or 13 supplement thereto by each such Electing Holder and by any such agent and underwriter, in each case in the form most recently provided to such person by the Company, in connection with the offering and sale of the Registrable Securities covered by the prospectus (including such preliminary and summary prospectus) or any supplement or amendment thereto; (xi) use their commercially reasonable efforts to (A) register or qualify the Registrable Securities to be included in such Shelf Registration Statement under such securities laws or blue sky laws of such jurisdictions as any Electing Holder and each placement or sales agent, if any, therefor and underwriter, if any, thereof shall reasonably request in writing; provided that where Securities are offered pursuant to an underwritten offering, counsel to the underwriters shall, at the cost and expense of the Company, perform Blue Sky investigations and file registrations and qualifications required to be filed pursuant to this Section 3(d)(xi), prior to any public offering of Registrable Securities or any delivery of a prospectus contained in the Shelf Registration Statement, if so required, (B) keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers, sales and dealings therein in such jurisdictions during the period the Shelf Registration is required to remain effective under Section 2(b) above and for so long as may be necessary to enable any such Electing Holder, agent or underwriter to complete its distribution of Securities pursuant to such Shelf Registration Statement and (C) take any and all other actions as may be reasonably necessary or advisable to enable each such Electing Holder, agent, if any, and underwriter, if any, to consummate the disposition in such jurisdictions of such Registrable Securities; provided, however, that no Issuer shall be required for any such purpose to (1) qualify as a foreign corporation in any jurisdiction wherein it would not otherwise be required to qualify but for the requirements of this Section 3(d)(xi), (2) consent to general service of process in any such jurisdiction, (3) take any other action that would subject it to general service of process or to taxation in excess of a nominal amount in respect of doing business in any jurisdiction in which it is not otherwise subject or (4) make any changes to its organizational documents or any agreement between it and its equityholders; (xii) use their commercially reasonable efforts to obtain the consent or approval of each governmental agency or authority, whether federal, state or local, which may be required to effect the Shelf Registration or the offering or sale in connection therewith or to enable the selling holder or holders to offer, or to consummate the disposition of, their Registrable Securities; (xiii) unless any Registrable Securities shall be in book-entry only form, cooperate with the Electing Holders and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, which certificates, if so required by any securities exchange upon which any Registrable Securities are listed, shall be penned, lithographed or engraved, or produced by any combination of such methods, on steel engraved borders, and which certificates shall not bear any restrictive legends; and, in the case of an underwritten offering, enable 14 such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request at least two business days prior to any sale of the Registrable Securities; (xiv) provide a CUSIP number for all Registrable Securities, not later than the applicable Effective Time; (xv) enter into one or more underwriting agreements, engagement letters, agency agreements, "best efforts" underwriting agreements or similar agreements as are customary in underwritten offerings of debt securities similar to the Securities, as appropriate, including customary provisions relating to indemnification and contribution, and take such other actions in connection therewith as any Electing Holders aggregating at least 25% in aggregate principal amount of the Registrable Securities at the time outstanding shall request in order to expedite or facilitate the disposition of such Registrable Securities; (xvi) if an agreement of the type referred to in Section 3(d)(xv) hereof is entered into, (A) make such representations and warranties to the Electing Holders and the placement or sales agent, if any, therefor and the underwriters, if any, thereof in form, substance and scope as are customarily made in connection with an offering of debt securities pursuant to any appropriate agreement or to a registration statement filed on the form applicable to the Shelf Registration; (B) obtain an opinion of counsel to the Issuers in customary form and covering such matters, of the type customarily covered by such an opinion, as the managing underwriters, if any, or as any Electing Holders of at least 25% in aggregate principal amount of the Registrable Securities at the time outstanding may reasonably request, addressed to such Electing Holder or Electing Holders and the placement or sales agent, if any, therefor and the underwriters, if any, thereof and dated the effective date of such Shelf Registration Statement covering such matters customarily covered in opinions requested in underwritten offerings of debt securities similar to the Securities (and if such Shelf Registration Statement contemplates an underwritten offering of a part or all of the Registrable Securities, dated the date of the closing under the underwriting agreement relating thereto); (C) obtain a "cold comfort" letter or letters from the independent certified public accountants ------------ of the Company addressed to the selling Electing Holders, the placement or sales agent, if any, therefor or the underwriters, if any, thereof, dated (i) the effective date of such Shelf Registration Statement and (ii) the effective date of any prospectus supplement to the prospectus included in such Shelf Registration Statement or post-effective amendment to such Shelf Registration Statement which includes unaudited or audited financial statements as of a date or for a period subsequent to that of the latest such statements included in such prospectus (and, if such Shelf Registration Statement contemplates an underwritten offering pursuant to any prospectus supplement to the prospectus included in such Shelf Registration Statement or post-effective amendment to such Shelf Registration Statement which includes unaudited or audited financial statements as of a date or for a period subsequent to that of the latest such statements included in such prospectus, dated the date of the closing under the underwriting agreement relating thereto), such letter or 15 letters to be in customary form and covering such matters of the type customarily covered by letters of such type; (D) deliver such documents and certificates, including officers' certificates, as may be reasonably requested by any Electing Holders of at least 25% in aggregate principal amount of the Registrable Securities at the time outstanding or the placement or sales agent, if any, therefor and the managing underwriters, if any, thereof to evidence the accuracy of the representations and warranties made pursuant to clause (A) above or those contained in Section 5(a) hereof and the compliance with or satisfaction of any agreements or conditions contained in the underwriting agreement or other agreement entered into by any Issuer; and (E) undertake such obligations relating to expense reimbursement, indemnification and contribution as are provided in Section 6 hereof; (xvii) notify in writing each holder of Registrable Securities of any proposal by the Issuers to amend or waive any provision of this Exchange and Registration Rights Agreement pursuant to Section 9(h) hereof and of any amendment or waiver effected pursuant thereto, each of which notices shall contain the text of the amendment or waiver proposed or effected, as the case may be; (xviii) in the event that any broker-dealer registered under the Exchange Act shall underwrite any Registrable Securities or participate as a member of an underwriting syndicate or selling group or "assist in the distribution" (within the meaning of the Conduct Rules (the "Conduct Rules") of the National Association of Securities Dealers, Inc. ("NASD") or any successor thereto, as amended from time to time) thereof, whether as a holder of such Registrable Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, assist such broker-dealer in complying with the requirements of such Conduct Rules, including by (A) if such Conduct Rules shall so require, engaging a "qualified independent underwriter" (as defined in such Conduct Rules) to participate in the preparation of the Shelf Registration Statement relating to such Registrable Securities, to exercise usual standards of due diligence in respect thereto and, if any portion of the offering contemplated by such Shelf Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Registrable Securities, (B) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 6 hereof (or to such other customary extent as may be requested by such underwriter), and (C) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the Conduct Rules; and (xix) comply with all applicable rules and regulations of the Commission, and make generally available to its securityholders as soon as practicable but in any event not later than eighteen months after the effective date of such Shelf Registration Statement, an earning statement of the Company and its subsidiaries or the Parent Guarantor and its subsidiaries complying with Section 11(a) of the Securities Act (including, at the option of the Company, Rule 158 thereunder). 16 (e) In the event that the Issuers would be required, pursuant to Section 3(d)(vii)(F) above, to notify the Electing Holders, the placement or sales agent, if any, therefor and the managing underwriters, if any, thereof, the Issuers shall without delay prepare and furnish to each of the Electing Holders, to each placement or sales agent, if any, and to each such underwriter, if any, in each case, upon request, a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of Registrable Securities, such prospectus shall conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. Each Electing Holder agrees, by acquisition of Securities, that upon receipt of any notice from the Issuers pursuant to Section 3(d)(vii)(C), 3(d)(vii)(E) or 3(d)(vii)(F) hereof, such Electing Holder shall forthwith discontinue the disposition of Registrable Securities pursuant to the Shelf Registration Statement applicable to such Registrable Securities until such Electing Holder is advised in writing by the Issuers that the disposition of Registrable Securities pursuant to the Shelf Registration Statement may be resumed, and has received copies of such amended or supplemented prospectus, and if so directed by the Issuers, such Electing Holder shall deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Electing Holder's possession of the prospectus covering such Registrable Securities at the time of receipt of such notice. (f) In the event of a Shelf Registration, in addition to the information required to be provided by each Electing Holder in its Notice and Questionnaire, the Company may require such Electing Holder to furnish to the Company such additional information regarding such Electing Holder and such Electing Holder's intended method of distribution of Registrable Securities as the Company may reasonably request in order to comply with the Securities Act. Each such Electing Holder agrees to notify the Company as promptly as practicable of any inaccuracy or change in information previously furnished by such Electing Holder to the Company or of the occurrence of any event in either case as a result of which any prospectus relating to such Shelf Registration contains or would contain an untrue statement of a material fact regarding such Electing Holder or such Electing Holder's intended method of disposition of such Registrable Securities or omits to state any material fact regarding such Electing Holder or such Electing Holder's intended method of disposition of such Registrable Securities required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly to furnish to the Company any additional information required to correct and update any previously furnished information or required so that such prospectus shall not contain, with respect to such Electing Holder or the disposition of such Registrable Securities, an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. The Company may exclude from such registration the Registrable Securities of any seller who fails to furnish such information within a reasonable time after receiving such request. 17 4. Registration Expenses. The Issuers, jointly and severally, agree to bear and to pay or cause to be paid promptly all expenses incident to the Issuers' performance of or compliance with this Exchange and Registration Rights Agreement, including (a) all Commission and any NASD registration, filing and review fees and expenses including reasonable fees and disbursements of counsel for the placement or sales agent or underwriters in connection with such registration, filing and review, (b) all fees and expenses in connection with the qualification of the Securities for offering and sale under the State securities and blue sky laws and compliance with the other requirements referred to in Sections 3(c)(vi) and 3(d)(xi) hereof and determination of their eligibility for investment under the laws of such jurisdictions as any managing underwriters or the Electing Holders may designate, including any reasonable fees and disbursements of counsel for the Electing Holders or underwriters in connection with such qualification and determination, (c) all filing fees in respect of any initial trade in Exchange Securities by way of a private placement in Canada, (d) all expenses relating to the preparation, printing, production, distribution and reproduction of each registration statement required to be filed hereunder, each prospectus included therein or prepared for distribution pursuant hereto, each amendment or supplement to the foregoing (including, without limitation, any Canadian wrapper), the expenses of preparing the Securities for delivery and the expenses of printing or producing any underwriting agreements, agreements among underwriters, selling agreements and blue sky or legal investment memoranda and all other documents in connection with the offering, sale or delivery of Securities to be disposed of (including certificates representing the Securities), (e) messenger, telephone and delivery expenses relating to the offering, sale or delivery of Securities and the preparation of documents referred in clause (d) above, (f) fees and expenses of the Trustee under the Indenture, any agent of the Trustee and any counsel for the Trustee and of any collateral agent or custodian, (g) internal expenses (including all salaries and expenses of the Company's officers and employees performing legal or accounting duties), (h) fees, disbursements and expenses of counsel and independent certified public accountants of the Company (including the expenses of any opinions or "cold comfort" letters required by or incident to such performance and compliance), (i) fees, disbursements and expenses of any "qualified independent underwriter" engaged pursuant to Section 3(d)(xviii) hereof, (j) fees, disbursements and expenses of one counsel for the Electing Holders retained in connection with a Shelf Registration, as selected by the Electing Holders of at least a majority in aggregate principal amount of the Registrable Securities held by Electing Holders (which counsel shall be reasonably satisfactory to the Company), (k) any fees charged by securities rating services for rating the Securities, and (l) fees, expenses and disbursements of any other persons, including special experts, retained by any Issuer in connection with such registration (collectively, the "Registration Expenses"). To the extent that any Registration Expenses are incurred, assumed or paid by any holder of Registrable Securities or any placement or sales agent therefor or underwriter thereof, the Issuers shall reimburse such person for the full amount of the Registration Expenses so incurred, assumed or paid promptly after receipt of a request therefor. Notwithstanding the foregoing, the holders of the Registrable Securities being registered shall pay all agency fees and commissions and underwriting discounts and commissions and transfer taxes attributable to the sale of such Registrable Securities and the fees and disbursements of any 18 counsel or other advisors or experts retained by such holders (severally or jointly), other than the counsel and experts specifically referred to above. 5. Representations and Warranties. The Issuers, jointly and severally, represent and warrant to, and agree with, each Purchaser and each of the holders from time to time of Registrable Securities that: (a) Each registration statement covering Registrable Securities and each prospectus (including any preliminary or summary prospectus) contained therein or furnished pursuant to Section 3(d) or Section 3(c) hereof and any further amendments or supplements to any such registration statement or prospectus, when it becomes effective or is filed with the Commission, as the case may be, and, in the case of an underwritten offering of Registrable Securities, at the time of the closing under the underwriting agreement relating thereto, will conform in all material respects to the requirements of the Securities Act and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and at all times subsequent to the Effective Time when a prospectus would be required to be delivered under the Securities Act, other than from (i) such time as a notice has been given to holders of Registrable Securities pursuant to Section 3(c)(iii)(C), 3(c)(iii)(E) or 3(c)(iii)(F) or Section 3(d)(vii)(C), 3(d)(vii)(E), 3(d)(vii)(F) hereof until (ii) such time as the Issuers furnish an amended or supplemented prospectus pursuant to Section 3(e) or Section 3(c)(iv) hereof, each such registration statement, and each prospectus (including any summary prospectus) contained therein or furnished pursuant to Section 3(d) or Section 3(c) hereof, as then amended or supplemented, will conform in all material respects to the requirements of the Securities Act and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in the light of the circumstances then existing; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Issuers by a holder of Registrable Securities or by a broker-dealer, agent or underwriter expressly for use therein. (b) Any documents incorporated by reference in any prospectus referred to in Section 5(a) hereof, when they become or became effective or are or were filed with the Commission, as the case may be, will conform or conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and none of such documents will contain or contained an untrue statement of a material fact or will omit or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Issuers by a holder of Registrable Securities or by a broker-dealer, agent or underwriter expressly for use therein. 19 (c) The compliance by the Issuers with all of the provisions of this Exchange and Registration Rights Agreement and the consummation of the transactions herein contemplated will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Issuers or any subsidiaries of the Issuers are a party or by which the Issuers or any subsidiaries of the Issuers are bound or to which any of the property or assets of the Issuers or any subsidiaries of the Issuers are subject, (ii) result in any violation of the provisions of the organizational documents of the Issuers or any subsidiaries of the Issuers, (iii) (assuming compliance with all applicable state securities or "Blue Sky" laws) result in any violation of the provisions of any law or statute or any order, rule, regulation, judgment or decree of any court or governmental agency or body having jurisdiction over the Issuers or any subsidiaries of the Issuers or any of their properties or assets, except in the case of clauses (i) and (iii) for such conflicts, breaches, violations, defaults or liens that, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the current or future business management, financial position, shareholders' equity or results of operations of the Issuers, taken as a whole; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the consummation by the Issuers of the transactions contemplated by this Exchange and Registration Rights Agreement, except the registration under the Securities Act of the Securities, qualification of the Indenture under the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under State securities or blue sky laws or the Canadian Securities Laws in connection with the offering and distribution of the Securities. (d) This Exchange and Registration Rights Agreement has been duly authorized, executed and delivered by the Issuers and constitutes a valid and legally binding obligation of the Issuers, enforceable against the Issuers in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights or limiting the availability of, and public policy against, indemnification and contribution and to general equity principles. 6. Indemnification. (a) Indemnification by the Issuers. The Issuers, jointly and severally, will indemnify and hold harmless each of the holders of Registrable Securities included in an Exchange Registration Statement and each of the Electing Holders of Registrable Securities included in a Shelf Registration Statement against any losses, claims, damages or liabilities, joint or several, to which such holder may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Exchange Registration Statement or Shelf Registration Statement, as the case may be, under which such Registrable Securities were registered under the Securities Act, or any preliminary, final or summary prospectus contained therein or furnished by the Company to any such holder or Electing Holder or any amendment or supplement thereto if the Company shall have furnished any amendments or supplements thereto, or arise out of or are based upon the omission or 20 alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and will reimburse such holder and such Electing Holder for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that no Issuer shall be liable to any such person in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission of material fact made in such registration statement, or preliminary, final or summary prospectus, or amendment or supplement thereto, in reliance upon and in conformity with written information furnished to any of the Issuers by such person expressly for use therein. (b) Indemnification by the Holders and any Agents and Underwriters. The Issuers may require, as a condition to including any Registrable Securities in any registration statement filed pursuant to Section 2(b) hereof and to entering into any underwriting agreement with respect thereto, that the Issuers shall have received an undertaking reasonably satisfactory to it from the Electing Holder of such Registrable Securities and from each underwriter named in any such underwriting agreement, severally and not jointly, to (i) indemnify and hold harmless the Issuers, and all other holders of Registrable Securities, against any losses, claims, damages or liabilities to which the Issuers, or such other holders of Registrable Securities may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such registration statement, or any preliminary, final or summary prospectus contained therein or furnished by the Company to any such Electing Holder, agent or underwriter, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Electing Holder or underwriter expressly for use therein, and (ii) reimburse the Issuers for any legal or other expenses reasonably incurred by the Issuers in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that no such Electing Holder shall be required to undertake liability to any person under this Section 6(b) for any amounts in excess of the dollar amount of the proceeds to be received by such Electing Holder from the sale of such Electing Holder's Registrable Securities pursuant to such registration. (c) Notices of Claims, Etc. Promptly after receipt by an indemnified party under subsection (a) or (b) above of written notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party pursuant to the indemnification provisions of or contemplated by this Section 6, notify such indemnifying party in writing of the commencement of such action; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under the indemnification provisions of or contemplated by Section 6(a) or 6(b) hereof. In case any such action shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, such indemnifying 21 party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, such indemnifying party shall not be liable to such indemnified party for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party (which consent shall not be unreasonably withheld or delayed), effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) Contribution. If for any reason the indemnification provisions contemplated by Section 6(a) or Section 6(b) are unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 6(d) were determined by pro rata allocation (even if the holders or any agents or underwriters or all of them were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 6(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6(d), no holder shall be required to contribute any amount in excess of the amount by which the dollar amount of the proceeds received by such holder from the sale of any Registrable Securities (after deducting any fees, discounts and commissions applicable thereto) exceeds the amount of any damages which such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and no underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities 22 underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The holders' and any underwriters' obligations in this Section 6(d) to contribute shall be several in proportion to the principal amount of Registrable Securities registered or underwritten, as the case may be, by them and not joint. (e) The obligations of each Issuer under this Section 6 shall be in addition to any liability which each Issuer may otherwise have and shall extend, upon the same terms and conditions, to each officer, director and partner of each holder, agent and underwriter and each person, if any, who controls any holder, agent or underwriter within the meaning of the Securities Act; and the obligations of the holders and any agents or underwriters contemplated by this Section 6 shall be in addition to any liability which the respective holder, agent or underwriter may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of each Issuer (including any person who, with his consent, is named in any registration statement as about to become a director of any Issuer and to each person, if any, who controls any Issuer within the meaning of the Securities Act. 7. Underwritten Offerings. (a) Selection of Underwriters. If any of the Registrable Securities covered by the Shelf Registration are to be sold pursuant to an underwritten offering, the managing underwriter or underwriters thereof shall be designated by Electing Holders holding at least a majority in aggregate principal amount of the Registrable Securities to be included in such offering, provided that such designated managing underwriter or underwriters is or are reasonably acceptable to the Company. (b) Participation by Holders. Each holder of Registrable Securities, by acceptance of Registrable Securities, agrees with each other such holder that no such holder may participate in any underwritten offering hereunder unless such holder (i) agrees to sell such holder's Registrable Securities on the basis provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 8. Rule 144. The Company covenants to the holders of Registrable Securities that it shall comply with the reporting and information covenant in the Indenture. Upon the request of any holder of Registrable Securities in connection with that holder's sale pursuant to Rule 144, the Company shall deliver to such holder a written statement as to whether it has complied with such requirements. 23 9. Miscellaneous. (a) No Inconsistent Agreements. The Issuers represent, warrant, covenant and agree that they have not granted, and shall not grant, registration rights with respect to Registrable Securities or any other securities which would be inconsistent with the terms contained in this Exchange and Registration Rights Agreement. (b) Specific Performance. The parties hereto acknowledge that there would be no adequate remedy at law if any Issuer fails to perform any of its obligations hereunder and that the Purchasers and the holders from time to time of the Registrable Securities may be irreparably harmed by any such failure, and accordingly agree that the Purchasers and such holders, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to compel specific performance of the obligations of the Issuers under this Exchange and Registration Rights Agreement in accordance with the terms and conditions of this Exchange and Registration Rights Agreement, in any court of the United States or any State thereof having jurisdiction. (c) Notices. All notices, requests, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, if delivered personally or by courier, or three days after being deposited in the mail (registered or certified mail, postage prepaid, return receipt requested), or when sent by a nationally recognized overnight courier service guaranteeing delivery on the next business day as follows: If to any Issuer, to the Company at 640 Cameron Road, Sainte-Marie (Quebec), Canada G6E 1B2, with a copy to Kaye Scholer LLP, 425 Park Avenue, New York, NY 10022, Attention: Stephen C. Koval, and if to a holder, to the address of such holder set forth in the security register or other records of the Company, or to such other address as the Company or any such holder may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. (d) Parties in Interest. All the terms and provisions of this Exchange and Registration Rights Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and the holders from time to time of the Registrable Securities and the respective successors and assigns of the parties hereto and such holders. In the event that any transferee of any holder of Registrable Securities shall acquire Registrable Securities, in any manner, whether by gift, bequest, purchase, operation of law or otherwise, such transferee shall, without any further writing or action of any kind, be deemed a beneficiary hereof for all purposes and such Registrable Securities shall be held subject to all of the terms of this Exchange and Registration Rights Agreement, and by taking and holding such Registrable Securities such transferee shall be entitled to receive the benefits of, and be conclusively deemed to have agreed to be bound by all of the applicable terms and provisions of this Exchange and Registration Rights Agreement. By taking and holding Registrable Securities, any such successor, assign or transferee shall be conclusively deemed to agree to acquire and hold the Registrable Securities subject to all of the applicable terms hereof. (e) Survival. The respective indemnities, agreements, representations, warranties and each other provision set forth in this Exchange and Registration Rights 24 Agreement or made pursuant hereto shall remain in full force and effect regardless of any investigation (or statement as to the results thereof) made by or on behalf of any holder of Registrable Securities, any director, officer or partner of such holder, any agent or underwriter or any director, officer or partner thereof, or any controlling person of any of the foregoing, and shall survive delivery of and payment for the Registrable Securities pursuant to the Purchase Agreement and the transfer and registration of Registrable Securities by such holder and the consummation of an Exchange Offer. (f) GOVERNING LAW. THIS EXCHANGE AND REGISTRATION RIGHTS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. (g) Headings. The descriptive headings of the several Sections and paragraphs of this Exchange and Registration Rights Agreement are inserted for convenience only, do not constitute a part of this Exchange and Registration Rights Agreement and shall not affect in any way the meaning or interpretation of this Exchange and Registration Rights Agreement. (h) Entire Agreement; Amendments. This Exchange and Registration Rights Agreement and the other writings referred to herein (including the Indenture, the Purchase Agreement and the form of Securities) or delivered pursuant hereto which form a part hereof (i) contain the entire understanding of the parties with respect to its subject matter, and (ii) supersede all prior agreements and understandings between the parties with respect to its subject matter. This Exchange and Registration Rights Agreement may be amended and the observance of any term of this Exchange and Registration Rights Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument duly executed by the Issuers and the holders of at least a majority in aggregate principal amount of the Registrable Securities at the time outstanding. Each holder of any Registrable Securities at the time or thereafter outstanding shall be bound by any amendment or waiver effected pursuant to this Section 9(h), whether or not any notice, writing or marking indicating such amendment or waiver appears on such Registrable Securities or is delivered to such holder. (i) Inspection. For so long as this Exchange and Registration Rights Agreement shall be in effect, this Exchange and Registration Rights Agreement and a complete list of the names and addresses of all the holders of Registrable Securities shall be made available for inspection and copying on any business day, during normal business hours, by any holder of Registrable Securities for proper purposes only (which shall include any purpose related to the rights of the holders of Registrable Securities under the Securities, the Indenture and this Agreement) at the offices of the Company at the address thereof set forth in Section 9(c) above and at the office of the Trustee under the Indenture. (j) Counterparts. This agreement may be executed by the parties in counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. 25 (k) Judgment Currency. The Issuers, jointly and severally, agree to indemnify each Purchaser, each of the holders of Registrable Securities included in an Exchange Registration Statement and each of the Electing Holders of Registrable Securities included in a Shelf Registration Statement and each of their respective affiliates and each person, if any, who controls such parties within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any loss incurred by such party in respect of any judgment or order given or made for any amount due hereunder that is expressed and paid in a currency (the "judgment currency") other than United States dollars, against any loss incurred by such party as a result of any variation as between (i) the rate of exchange at which the United States dollar amount is converted into the judgment currency for the purpose of such judgment or order and (ii) the rate of exchange at which such party is able to purchase United States dollars with the amount of judgment currency actually received by such party. The foregoing indemnity shall constitute a separate and independent obligation of each Issuer and shall continue in full force and effect notwithstanding any such judgment or order as aforesaid. The term "rate of exchange" shall include any premiums and costs of exchange payable in connection with the purchase of or conversion into United States dollars. If the foregoing is in accordance with your understanding, please sign and return to us seven counterparts hereof, and upon the acceptance hereof by you, on behalf of each of the Purchasers, this letter and such acceptance hereof shall constitute a binding agreement among the Purchasers and the Issuers. It is understood that your acceptance of this letter on behalf of each of the Purchasers is pursuant to the authority set forth in a form of Agreement among Purchasers, the form of which shall be submitted to the Issuers for examination upon request, but without warranty on your part as to the authority of the signers thereof. Very truly yours, MAAX CORPORATION, as Issuer By: /s/ James C. Rhee --------------------------------------- Name: James C. Rhee Title: Secretary BEAUCELAND CORPORATION, as Parent Guarantor By: /s/ James C. Rhee --------------------------------------- Name: James C. Rhee Title: Secretary 26 4200217 Canada Inc., as a Guarantor By: /s/ James C. Rhee --------------------------------------- Name: James C. Rhee Title: Secretary MAAX HOLDING CO. MAAX-KSD CORPORATION PEARL BATHS, INC. MAAX-HYDRO SWIRL MANUFACTURING CORP. MAAX MIDWEST, INC. MAAX SPAS (ARIZONA), INC. AKER PLASTICS COMPANY INC. MAAX (2004) LLC MAAX CANADA INC. CUISINE EXPERT - C.E. CABINETS INC. 9022-3751 QUEBEC INC. MAAX SPAS (ONTARIO) INC. MAAX SPAS (B.C.) INC., each as a Guarantor By: /s/ Denis Aubin --------------------------------------- Name: Denis Aubin Title: Director & Officer MAAX LLC, as a Guarantor By: /s/ Denis Aubin --------------------------------------- Name: Denis Aubin Title: Director & Officer 27 Accepted as of the date hereof: Goldman, Sachs & Co. By: /s/ Goldman, Sachs & Co. --------------------------------------- (Goldman, Sachs & Co.) Merrill Lynch, Pierce, Fenner & Smith Incorporated By: /s/ Greg Margolies --------------------------------------- Name: Greg Margolies Title: Managing Director On behalf of each of the Purchasers 28 EXHIBIT A MAAX CORPORATION INSTRUCTION TO DTC PARTICIPANTS (Date of Mailing) URGENT - IMMEDIATE ATTENTION REQUESTED DEADLINE FOR RESPONSE: [DATE] * The Depository Trust Company ("DTC") has identified you as a DTC Participant through which beneficial interests in MAAX Corporation (the "Company") 9 3/4% Senior Subordinated Notes due 2012 (the "Securities") are held. The Company is in the process of registering the Securities under the Securities Act of 1933 for resale by the beneficial owners thereof. In order to have their Securities included in the registration statement, beneficial owners must complete and return the enclosed Notice of Registration Statement and Selling Securityholder Questionnaire. It is important that beneficial owners of the Securities receive a copy of the enclosed materials as soon as possible as their rights to have the Securities included in the registration statement depend upon their returning the Notice and Questionnaire by [Deadline For Response]. Please forward a copy of the enclosed documents to each beneficial owner that holds interests in the Securities through you. If you require more copies of the enclosed materials or have any questions pertaining to this matter, please contact MAAX Corporation, 640 Cameron Road, Sainte-Marie (Quebec) Canada G6E 1B2, Tel: (418) 387-4155.(1) - ---------------- (1) Not Less than 28 calendar days from date of mailing. A-1 MAAX CORPORATION Notice of Registration Statement and Selling Securityholder Questionnaire (Date) Reference is hereby made to the Exchange and Registration Rights Agreement (the "Exchange and Registration Rights Agreement") between MAAX Corporation (the "Company"), the guarantors party thereto (the "Guarantors" and together with the Company, the "Issuers") and the Purchasers named therein. Pursuant to the Exchange and Registration Rights Agreement, the Issuers intend to file or have filed with the United States Securities and Exchange Commission (the "Commission") a registration statement on Form [__] (the "Shelf Registration Statement") for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the "Securities Act"), of the Issuers' 9 3/4 % Senior Subordinated Notes due 2012 (the "Securities"). A copy of the Exchange and Registration Rights Agreement is attached hereto. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Exchange and Registration Rights Agreement. Each beneficial owner of Registrable Securities (as defined below) is entitled to have the Registrable Securities beneficially owned by it included in the Shelf Registration Statement. In order to have Registrable Securities included in the Shelf Registration Statement, this Notice of Registration Statement and Selling Securityholder Questionnaire ("Notice and Questionnaire") must be completed, executed and delivered to the Company's counsel at the address set forth herein for receipt ON OR BEFORE [Deadline for Response]. Beneficial owners of Registrable Securities who do not complete, execute and return this Notice and Questionnaire by such date (i) will not be named as selling securityholders in the Shelf Registration Statement and (ii) may not use the Prospectus forming a part thereof for resales of Registrable Securities. Certain legal consequences arise from being named as a selling securityholder in the Shelf Registration Statement and related Prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Shelf Registration Statement and related Prospectus. The term "Registrable Securities" is defined in the Exchange and Registration Rights Agreement. A-2 ELECTION The undersigned holder (the "Selling Securityholder") of Registrable Securities hereby elects to include in the Shelf Registration Statement the Registrable Securities beneficially owned by it and listed below in Item (3). The undersigned, by signing and returning this Notice and Questionnaire, agrees to be bound with respect to such Registrable Securities by the terms and conditions of this Notice and Questionnaire and the Exchange and Registration Rights Agreement, including, without limitation, Section 6 of the Exchange and Registration Rights Agreement, as if the undersigned Selling Securityholder were an original party thereto. Upon any sale of Registrable Securities pursuant to the Shelf Registration Statement, the Selling Securityholder will be required to deliver to the Company and Trustee the Notice of Transfer set forth as Exhibit B to the Exchange and Registration Rights Agreement. The Selling Securityholder hereby provides the following information to the Company and represents and warrants that such information is accurate and complete: A-3 QUESTIONNAIRE (1) (a) Full Legal Name of Selling Securityholder: (b) Full Legal Name of Registered Holder (if not the same as in (a) above) of Registrable Securities Listed in Item (3) below: (c) Full Legal Name of DTC Participant (if applicable and if not the same as (b) above) Through Which Registrable Securities Listed in Item (3) below are Held: (2) Address for Notices to Selling Securityholder: Telephone: Fax: Contact Person: (3) Beneficial Ownership of Securities: Except as set forth below in this Item (3), the undersigned does not beneficially own any Securities. (a) Principal amount of Registrable Securities beneficially owned: CUSIP NO(S). OF SUCH REGISTRABLE SECURITIES: A-4 (b) Principal amount of Securities other than Registrable Securities beneficially owned: CUSIP No(s). of such other Securities: (c) Principal amount of Registrable Securities which the undersigned wishes to be included in the Shelf Registration Statement: CUSIP No(s). of such Registrable Securities to be included in the Shelf Registration Statement: (4) Beneficial Ownership of Other Securities of the Company: Except as set forth below in this Item (4), the undersigned Selling Securityholder is not the beneficial or registered owner of any other securities of the Company, other than the Securities listed above in Item (3). State any exceptions here: (5) Relationships with the Company: Except as set forth below, neither the Selling Securityholder nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years. State any exceptions here: (6) Plan of Distribution: Except as set forth below, the undersigned Selling Securityholder intends to distribute the Registrable Securities listed above in Item (3) only as follows (if at all): Such Registrable Securities may be sold from time to time directly by the undersigned Selling Securityholder or, alternatively, through underwriters, broker-dealers or agents. Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales may be effected in transactions (which may involve crosses or block A-5 transactions) (i) on any national securities exchange or quotation service on which the Registered Securities may be listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii) in transactions otherwise than on such exchanges or services or in the over-the-counter market, or (iv) through the writing of options. In connection with sales of the Registrable Securities or otherwise, the Selling Securityholder may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Registrable Securities in the course of hedging the positions they assume. The Selling Securityholder may also sell Registrable Securities short and deliver Registrable Securities to close out such short positions, or loan or pledge Registrable Securities to broker-dealers that in turn may sell such securities. State any exceptions here: By signing below, the Selling Securityholder acknowledges that it understands its obligation to comply, and agrees that it will comply, with the provisions of the Exchange Act and the rules and regulations thereunder, particularly Regulation M. In the event that the Selling Securityholder transfers all or any portion of the Registrable Securities listed in Item (3) above after the date on which such information is provided to the Company, the Selling Securityholder agrees to notify the transferee(s) at the time of the transfer of its rights and obligations under this Notice and Questionnaire and the Exchange and Registration Rights Agreement. By signing below, the Selling Securityholder consents to the disclosure of the information contained herein in its answers to Items (1) through (6) above and the inclusion of such information in the Shelf Registration Statement and related Prospectus. The Selling Securityholder understands that such information will be relied upon by the Company in connection with the preparation of the Shelf Registration Statement and related Prospectus. In accordance with the Selling Securityholder's obligation under Section 3(d) of the Exchange and Registration Rights Agreement to provide such information as may be required by law for inclusion in the Shelf Registration Statement, the Selling Securityholder agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein which may occur subsequent to the date hereof at any time while the Shelf Registration Statement remains in effect. All notices hereunder and pursuant to the Exchange and Registration Rights Agreement shall be made in writing, by hand-delivery, first-class mail, or air courier guaranteeing overnight delivery as follows: (i) To the Company: MAAX CORPORATION 640 Cameron Road Sainte-Marie, Quebec Canada G6E 1B2 A-6 (ii) With a copy to: KAYE SCHOLER LLP 425 Park Avenue New York, NY 10022 Attn: Stephen C. Koval Once this Notice and Questionnaire is executed by the Selling Securityholder and received by the Company's counsel, the terms of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives, and assigns of the Company and the Selling Securityholder (with respect to the Registrable Securities beneficially owned by such Selling Securityholder and listed in Item (3) above. This Agreement shall be governed in all respects by the laws of the State of New York. IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent. Dated: Selling Securityholder (Print/type full legal name of beneficial owner of Registrable Securities) By: _____________________________________ Name: Title: PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT: MAAX CORPORATION 640 Cameron Road Sainte-Marie, Quebec Canada G6E 1B2 With a copy to: KAYE SCHOLER LLP 425 Park Avenue New York, NY 10022 Attn: Stephen C. Koval A-7 EXHIBIT B NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT U.S. Bank Trust National Association 100 Wall Street, Suite 1600 New York, NY 10005 Attention: Corporate Trust Services Re: MAAX Corporation (the "Company") 9 3/4% Senior Subordinated Notes due 2012 Dear Sirs: Please be advised that [ ] has transferred $[ ] aggregate principal amount of the above-referenced Notes pursuant to an effective Registration Statement on Form [ ] (File No. 333- ) filed by the Issuers. We hereby certify that the prospectus delivery requirements, if any, of the Securities Act of 1933, as amended, have been satisfied and that the above-named beneficial owner of the Notes is named as a "Selling Holder" in the Prospectus dated [date] or in supplements thereto, and that the aggregate principal amount of the Notes transferred are the Notes listed in such Prospectus opposite such owner's name. Dated: Very truly yours, (Name) By:________________________________________ (Authorized Signature) B-1 EX-4.4 37 y99327exv4w4.txt GUARANTEE EXHIBIT 4.4 NOTE GUARANTEE For value received, each of the undersigned hereby unconditionally guarantees, jointly and severally, to the extent set forth in the Indenture (as defined below) to the Holder of this Note the payment of principal, premium, if any, and interest on this Note in the amounts and at the times when due and interest on the overdue principal, premium, if any, and interest, if any, of this Note when due, if lawful, and, to the extent permitted by law, the payment or performance of all other obligations of the Issuer under the Indenture or the Notes, to the Holder of this Note and the Trustee, all in accordance with and subject to the terms and limitations of this Note, the Indenture, including Article Eleven thereof, and this Note Guarantee. This Note Guarantee will become effective in accordance with Article Eleven of the Indenture and its terms shall be evidenced therein. The validity and enforceability of any Note Guarantee shall not be affected by the fact that it is not affixed to any particular Note. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Indenture dated as of June 4, 2004, among MAAX Corporation, a Nova Scotia unlimited company (the "Issuer"), the Guarantors named therein and U.S. Bank Trust, N.A., as Trustee (the "Trustee"), as amended or supplemented (the "Indenture"). The obligations of the undersigned to the Holders and to the Trustee pursuant to this Note Guarantee and the Indenture are expressly set forth in Article Eleven of the Indenture and reference is hereby made to the Indenture for the precise terms of the Note Guarantee and all of the other provisions of the Indenture to which this Note Guarantee relates. No director, officer, employee, incorporator, stockholder, member, partner or manager of any Guarantor, as such, shall have any liability for any obligations of such Guarantors under such Guarantors' Note Guarantee or the Indenture or for any claim based on, in respect of, or by reason of, such obligation or its creation. This Note Guarantee is subordinated in right of payment, in the manner and to the extent set forth in Article Eleven of the Indenture, to the prior payment in full in cash or cash equivalents of all Senior Debt of the Guarantors, whether outstanding on the date of the Indenture or thereafter created, incurred, assumed or guaranteed. THIS NOTE GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. This Note Guarantee is subject to release upon the terms set forth in the Indenture. IN WITNESS WHEREOF, each Guarantor has caused its Note Guarantee to be duly executed. Date: June 4, 2004 BEAUCELAND CORPORATION By: /s/ James C. Rhee -------------------------------------------- Name: James C. Rhee Title: Secretary 4200217 CANADA INC. By: /s/ James C. Rhee -------------------------------------------- Name: James C. Rhee Title: Secretary MAAX HOLDING CO. MAAX-KSD CORPORATION PEARL BATHS, INC. MAAX-HYDRO SWIRL MANUFACTURING CORP. MAAX MIDWEST, INC. MAAX SPAS (ARIZONA), INC. AKER PLASTICS COMPANY INC. MAAX CANADA INC. CUISINE EXPERT - C.E. CABINETS INC. 9022-3751 QUEBEC INC. MAAX SPAS (ONTARIO) INC. MAAX SPAS (B.C.) INC. By: /s/ Denis Aubin -------------------------------------------- Name: Denis Aubin Title: Director and Officer MAAX LLC By: /s/ Denis Aubin -------------------------------------------- Name: Denis Aubin Title: Director and Officer EX-5.1 38 y99327exv5w1.txt OPINION OF KAYE SCHOLER LLP EXHIBIT 5.1 (KAYE SCHOLER LLP) 425 Park Avenue New York, New York 10022-3598 212 836-8000 Fax 212 836-8689 www.kayescholer.com September 14, 2004 MAAX Corporation 1010 Sherbrooke Street West Suite 1610 Montreal, Quebec, Canada H3A 2R7 The Parties Identified on Schedule A hereto Ladies and Gentlemen: We are acting as special United States counsel to MAAX Corporation, a Nova Scotia unlimited company (the "Company") and the parties identified on Schedule A hereto (the "Guarantors") in connection with the registration under the Securities Act of 1933, as amended (the "Securities Act"), of up to $150 million of the Company's 9.75% Senior Subordinated Notes due 2012 (the "Exchange Notes") to be offered in exchange for its outstanding 9.75% Senior Subordinated Notes due 2012 (the "Original Notes") that were issued pursuant to the Indenture, dated as of June 4, 2004 (the "Indenture"), among the Company, the Guarantors and U.S. Bank Trust National Association, as trustee (the "Trustee"). This opinion is being delivered to you for filing as an exhibit to the Registration Statement on Form F-4 (the "Registration Statement") being filed by the Company and the Guarantors with the Securities and Exchange Commission (the "Commission") on the date hereof. In connection herewith, we have examined the (i) Registration Statement, (ii) Indenture, (iii) Original Notes, (iv) Exchange Notes (and the related Guarantee of the Guarantors (the "Guarantee")) (the Indenture, the Exchange Notes and the Guarantee are collectively referred to herein as the "Documents") and (v) such corporate records, certificates and other documents, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion. On the basis of the foregoing and subject to the qualifications and assumptions set forth herein, we are of the opinion that: 1. When (A) the Registration Statement has been declared effective, (B) the Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended (the "TIA"), NEW YORK CHICAGO LOS ANGELES WASHINGTON, D.C. WEST PALM BEACH FRANKFURT HONG KONG LONDON SHANGHAI (KAYE SCHOLER LLP) MAAX Corporation and the Parties Identified on Schedule A hereto 2 September 14, 2004 and (C) the Exchange Notes have been duly executed by the Company and authenticated by the Trustee in accordance with the terms of the Indenture and duly issued and delivered against exchange of the Original Notes as described in the Registration Statement, the Exchange Notes will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization and similar laws affecting creditors' rights generally and general principles of equity (regardless of whether such principles are considered in a proceeding in equity or at law). 2. When (A) the Registration Statement has been declared effective, (B) the Indenture has been duly qualified under the TIA, and (C) the Exchange Notes have been duly executed by the Company and authenticated by the Trustee in accordance with the terms of the Indenture and duly issued and delivered against exchange of the Original Notes as described in the Registration Statement, the Guarantee of the Exchange Notes by the Guarantors will constitute a valid and binding obligation of each Guarantor, enforceable against each Guarantor in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization and similar laws affecting creditors' rights generally and general principles of equity (regardless of whether such principles are considered in a proceeding in equity or at law). 3. Assuming that the Indenture has been duly authorized, executed and delivered by the Trustee, the Indenture constitutes a valid and binding obligation of the Company and the Guarantors, enforceable against the Company and the Guarantors in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization and similar laws affecting creditors' rights generally and general principles of equity (regardless of whether such principles are considered in a proceeding in equity or at law). The foregoing opinions are limited to the laws of the State of New York and we do not express any opinion on the law of any other jurisdiction other than the laws of the State of New York and the federal law of the United States of America. In particular, we do not purport to pass on any matter governed by the laws of any other jurisdiction in the United States (including, without limitation, the states of California, Minnesota, Pennsylvania, Indiana or Washington) or the laws of Canada (including, without limitation, the provinces of Quebec, Ontario, Alberta, British Columbia and Nova Scotia). To the extent that any opinions stated herein are affected by the laws of any such jurisdiction, we have, with your approval, relied upon (i) the opinion, dated on or about the date hereof, of Fasken Martineau DuMoulin LLP, (ii) the opinion, dated on or about the date hereof, of McInnes Cooper, (iii) the opinion, dated on or about the date hereof, of Dorsey & Whitney LLP, (iv) the opinion, dated on or about the date hereof, of Saul Ewing LLP, (v) the opinion, dated on or about the date hereof, of Beers Mallers Backs & Salin, LLP and (vi) the opinion, dated on or about the date hereof, of Foster Pepper & Shefelman PLLC, and such opinions stated herein, insofar as they may be affected by the laws of any such jurisdiction, are subject to the same assumptions, qualifications and limitations as are contained in such opinions. NEW YORK CHICAGO LOS ANGELES WASHINGTON, D.C. WEST PALM BEACH FRANKFURT HONG KONG LONDON SHANGHAI (KAYE SCHOLER LLP) MAAX Corporation and the Parties Identified on Schedule A hereto 3 September 14, 2004 We consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement and to the use of our name under the caption "Legal Matters" in the prospectus included therein. Our opinion is rendered solely for your information in connection with the foregoing, and may not be relied upon by any other person or for any other purpose without our prior written consent. In giving this opinion, we do not thereby admit that we are within the category of persons whose consent is required by the Securities Act or the rules and regulations of the Commission. Very truly yours, /s/ KAYE SCHOLER LLP NEW YORK CHICAGO LOS ANGELES WASHINGTON, D.C. WEST PALM BEACH FRANKFURT HONG KONG LONDON SHANGHAI (KAYE SCHOLER LLP) MAAX Corporation and the Parties Identified on Schedule A hereto 4 September 14, 2004 SCHEDULE A 4200217 Canada Inc. 9022-3751 Quebec Inc. Aker Plastics Company, Inc. Beauceland Corporation Cuisine Expert - C.E. Cabinets Inc. MAAX Canada Inc. MAAX Holding Co. MAAX-Hydro Swirl Manufacturing Corp. MAAX-KSD Corporation MAAX LLC MAAX Midwest, Inc. MAAX Spas (Arizona), Inc. MAAX Spas (B.C.) Inc. MAAX Spas (Ontario) Inc. Pearl Baths, Inc. NEW YORK CHICAGO LOS ANGELES WASHINGTON, D.C. WEST PALM BEACH FRANKFURT HONG KONG LONDON SHANGHAI EX-5.2 39 y99327exv5w2.txt OPINION OF FASKEN MARTINEAU DUMOULIN LLP. [FASKEN MARTINEAU DUMOULIN LLP LETTERHEAD] Exhibit 5.2 September 10, 2004 MAAX CORPORATION 1010 Sherbrooke Street West Suite 1610 Montreal, Quebec H3A 2R7, Canada Dear Sirs: Re: Registration of US $150,000,000 9.75% Senior Subordinated Notes due 2012 issued by MAAX Corporation - -------------------------------------------------------------------------------- We have acted as special Canadian counsel to 4200217 Canada Inc. ("4200217"), MAAX Canada Inc. ("MAAX Canada"), Cuisine Expert - C.E. Cabinets Inc. ("Cuisine"), 9022-3751 Quebec Inc. ("3751 Quebec"), MAAX Spas (Ontario) Inc. ("Spas Ontario") and MAAX Spas (B.C.) Inc. ("Spas BC") in connection with the issue and sale by MAAX Corporation (the "Company") on June 4, 2004 of US $150,000,000 9.75% senior subordinated notes (the "Notes") due 2012 pursuant to a purchase agreement (the "Purchase Agreement") entered into on May 27, 2004 between Goldman, Sachs & Co., Merrill Lynch & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the purchasers listed in Schedule 1 to the Purchase Agreement (hereinafter collectively referred to as the "Purchasers"). The Notes are guaranteed by 4200217, MAAX Canada, Cuisine, 3751 Quebec, Spas Ontario and Spas BC (collectively, the "Guarantors") pursuant to an indenture entered into on June 4, 2004 between MAAX Corporation, the Guarantors, certain other guarantors and U.S. Bank Trust National Association (the "Indenture"). In giving our opinions, we have examined, inter alia, originals or copies certified or authenticated to our satisfaction of the following documents: (a) the articles and by-laws of each of the entities referred to in Schedule 1 and Schedule 2 hereto certified to be those currently in effect; (b) certificates of compliance issued by Industry Canada (the "Certificates of Compliance") dated September 7, 2004 in respect of 4200217 and MAAX Canada; (c) Certificates of Compliance dated September 8, 2004 in respect of Cuisine, Spas Ontario and Spas BC; (d) certificates of attestations dated September 7, 2004 issued by The Enterprises Registrar (the "Certificates of Attestations") in respect of each of the entities referred to in Schedule 3 hereto; (e) a certificate of status dated September 7, 2004 issued by the Registrar under the Business Corporations Act (Alberta) (the "Certificate of Status") in respect of MAAX Canada; (f) a certificate of good standing dated September 8, 2004 issued by the Registrar of Companies (British Columbia) (the "BC Certificate of Good Standing") in respect of MAAX Canada; (g) the exchange and registration rights agreement entered into on June 4, 2004 among MAAX Corporation, the Guarantors, certain other guarantors and the Purchasers (the "Registration Rights Agreement"); (h) the Indenture and the Notes issued thereunder; (i) the note guarantee (the "Note Guarantee") dated June 4, 2004 entered into by each of the Guarantors for the purposes of guaranteeing the obligations of the Company and each of the guarantors under the Indenture; (j) certified extracts dated September 10, 2004 of resolutions adopted on June 4, 2004 by the board of directors of each of the entities referred to in Schedule 1 and Schedule 2 hereto in connection with the issuance of the Notes; (k) certificates of officers of each of the entities referred to in Schedule 1 and Schedule 2 hereto dated September 10, 2004 confirming that, as of the date hereof, no amendment was made to the Registration Rights Agreement, the Indenture, the Note and the Note Guarantee; and (l) certificates of officers of each of the entities referred to in Schedule 1 and Schedule 2 hereto dated September 10, 2004 regarding the jurisdictions where each such entities carries on business. The Registration Rights Agreement, the Indenture, the Notes and the Note Guarantee are hereinafter collectively referred to as the "Offering Documents". -2- In our examination of such documents, we have assumed, without independent investigation or verification: (a) the capacity of all individuals, the genuineness of all signatures, the authenticity and completeness of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as certified, photostatic, facsimile or electronically retrieved copies; and (b) the completeness, truth and accuracy of all facts set forth in official public records, certificates and documents supplied by public officials or otherwise conveyed to us by public officials. We are qualified to practice law in the Provinces of Quebec, Ontario, Alberta and British Columbia (the "Provinces") and, express no opinion as to laws of any jurisdiction other than those applicable in the Provinces and the federal laws of Canada applicable therein, as such laws exist and are construed as of the date hereof (the "Applicable Laws"), and do not assume responsibility to inform the addressee hereof of any change in law subsequent to this date that does or may affect the opinions we express herein. Our opinions expressed in paragraphs 2, 2, 3, 7, 8, 9 and 10(i) are limited to the laws of the Province of Quebec and the federal laws of Canada applicable therein. Our opinion expressed in paragraph 4 is limited to the laws of the Province of Alberta and the federal laws of Canada applicable therein. Our opinion expressed in paragraph 5 is limited to the laws of the Province of British Columbia and the federal laws of Canada applicable therein. Our opinion expressed in paragraph 6 is limited to the laws of the Province of Ontario and the federal laws of Canada applicable therein. Our opinion expressed in paragraph 1 as it relates to the existence of the company is based solely on a Certificate of Attestation and we have assumed that such certificate bearing today's date would be available if requested. Our opinion expressed in paragraph 2 as it relates to the existence of the corporations referred to in Schedule 2 is based solely on the Certificates of Compliance and we have assumed that such certificates bearing today's date would be available if requested. Our opinion expressed in paragraph 3 is based solely on the Certificates of Attestations and we have assumed that such certificates bearing today's date would be available if requested. Our opinion expressed in paragraph 4 as it relates to the extra-provincial registration of MAAX Canada in Alberta is based solely on the Certificate of Status and we have assumed that such certificates bearing today's date would be available if requested. -3- Our opinion expressed in paragraph 5 as it relates to the extra-provincial registration of MAAX Canada is based solely on the BC Certificate of Good Standing and we have assumed that such certificate bearing today's date would be available if requested. Our opinions expressed in paragraphs 4, 5 and 6 as they relate to the jurisdictions where such entities carry on business are based solely on officers' certificates referred to in paragraph (l) above. Our opinions expressed in paragraph 10, as they relate to Applicable Laws exclude the securities laws of the Provinces. For the purposes of our opinions, the expression "securities laws" means the Securities Acts or equivalent legislation enacted and in full force and effect as of the date hereof in each of the Provinces, the regulations made thereunder, the published rules, policy statements, multilateral instruments, national instruments, blanket orders and notices in force and effect as of the date hereof and decisions made or issued by the securities commissions, the Canadian Securities Administrators or stock exchanges, where applicable, of the Provinces. For the purposes of our opinions expressed in paragraph 10(ii), we have assumed that the construction, meaning and interpretation of the Offering Documents under New York law would be the same as under any of the Applicable Laws. However, our opinions expressed in that paragraph do not apply with respect to: (i) reference in the Offering Documents to any statute law, decree, order or rule of any governmental or regulating body, agency or similar entity, other than one constituting, established under, or governed by any of the Applicable Laws; and (ii) any legal concept which is non-existent under or incompatible with the Applicable Laws. No opinion is given herein on the enforceability of the Offering Documents. Based upon the foregoing and subject to the qualifications set forth below, we are of the opinion that: 1. 3751 Quebec is a company incorporated and validly subsisting under the Companies Act (Quebec). 2. Each of the entities referred to in Schedule 2 hereof is a corporation incorporated or continued and validly subsisting under the Canada Business Corporations Act ("CBCA"). 3. Each of the entities referred to in Schedule 3 is registered under the Act respecting the legal publicity of sole proprietorships, partnerships and legal persons (Quebec) (the "Act") and, as of September 7, 2004, was not in default to file an annual declaration under such Act, was not in default to comply with a request made to it under Section 38 of the Act and was not in the process of being dissolved. 4. MAAX Canada carries on business in Alberta and is a valid and subsisting extra-provincial corporation in Alberta. -4- 5. MAAX Canada carries on business in British Columbia and is an extra-provincial company duly registered under the laws of the Province of British Columbia. 6. Spas Ontario carries on business in Ontario without the need to obtain a license under the Extra-Provincial Corporations Act (Ontario) and has filed an initial return pursuant to the Corporations Information Act (Ontario). 7. Each of the entities referred to in Schedule 1 and Schedule 2 hereto has the requisite corporate power and authority to enter into, deliver and perform its obligations under the Offering Documents to which it is a party; 8. Each of the entities referred to in Schedule 1 and Schedule 2 hereto has taken all corporate action necessary to authorize the execution and delivery by it of the Offering Documents to which it is a party and the performance of its obligations thereunder. 9. Each of the entities referred to in Schedule 1 and Schedule 2 hereto duly executed and delivered the Offering Documents to which it is a party. 10. Neither the execution and delivery of the Offering Documents by each of the entities referred to in Schedule 1 and Schedule 2 hereto to which it is a party, nor the consummation of the transactions contemplated therein (i) conflicts with or results in a violation of the provisions of such entity's constating documents, by-laws or the laws governing their existence; or (ii) to the extent subject to or regulated by any of the Applicable Laws, if any, is prohibited by or contravenes any of the Applicable Laws. Our opinions expressed herein can only be relied upon by the party to whom they are addressed, except that said opinions may be relied upon by Kaye Scholer LLP in connection with the filing of a registration statement (the "Registration Statement") to qualify the Notes. Our opinions may not be quoted from or referred to in another document without our prior written consent. We consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. Yours truly, /s/ Fasken Martineau DuMoulin LLP -5- SCHEDULE 1 9022-3751 Quebec Inc. SCHEDULE 2 Cuisine-Expert - C.E. Cabinets Inc. MAAX Spas (Ontario) Inc. MAAX Spas (B.C.) Inc. MAAX Canada Inc. 4200217 Canada Inc. SCHEDULE 3 MAAX Canada Inc. MAAX Spas (B.C.) Inc. 9022-3751 Quebec Inc. Cuisine Expert - C.E. Cabinets Inc. 4200217 Canada Inc. EX-5.3 40 y99327exv5w3.txt OPINION OF MCINNES COOPER Exhibit 5.3 [MCINNES COOPER LETTERHEAD] Our File: BH-1284 September 14, 2004 MAAX CORPORATION 1010 Sherbrooke Street West Montreal, Quebec H3A 2R7 Canada Att: Denis Aubin KAYE SCHOLER LLP 425 Park Avenue New York, NY 10022-3598 USA Ladies and Gentlemen: RE: MAAX CORPORATION ---------------- In connection with the registration of US$150,000,000 aggregate principal amount of 9.75% Senior Subordinated Notes due 2012 (the "Exchange Notes") by MAAX CORPORATION (the "Company") under the Securities Act of 1933 (United States of America), as amended (the "Act"), on Form F-4 being filed with the Securities and Exchange Commission (the "SEC") on the date hereof (the "Registration Statement") and the concurrent registration under the Act of a guarantee (the "Guarantee") of the Exchange Notes by BEAUCELAND CORPORATION ("Holdings"), you have requested our opinion with respect to the matters set forth below. The Exchange Notes will be issued and the Guarantee was issued pursuant to an indenture (the "Indenture") dated as of June 4, 2004 among the Company, Holdings and certain other guarantors specified therein (the "Issuers") and U.S. Bank Trust National Association ("Trustee"). The Exchange Notes are proposed to be issued in exchange for up to US$150,000,000 principal amount of issued and outstanding US$ 150,000,000 9.75% Senior Subordinated Notes due 2012 (the "Original Notes") previously sold by the Company and guaranteed by, inter alia, Holdings. The Exchange Notes, Indenture and Guarantee are herein sometimes referred to Page 2 of 5 collectively as the "Transaction Documents". In rendering the opinions hereinafter set forth, we have reviewed final forms of the Transaction Documents and: a. the Memorandum and Articles of Association of each of the Company and Holdings; b. a resolution of the board of directors of each of the Company and Holdings, authorizing, among other things, the execution, delivery and performance of the Transaction Documents to which they are parties; c. certificates of status dated September 10, 2004 issued in respect of each of the Company and Holdings pursuant to the Companies Act (Nova Scotia); and d. a certificate of an officer of each of the Company and Holdings with respect to certain factual matters, a copy of each of which has been delivered to you. In addition to the Transaction Documents and the other items listed above, we have examined such other documents and corporate records and questions of law as we deem necessary for the purposes of this opinion. As to matters of fact, we have also examined such certificates of public officials as we have deemed relevant and appropriate as a basis for the opinions expressed herein and the certificates of corporate officers identified above and we have made no effort to independently verify the facts set forth in such certificates. Further, in making the foregoing examinations, we have assumed A. the genuineness of all signatures; B. the legal capacity of each person signatory to any of the documents reviewed by us; C. the authenticity of all documents submitted to us as originals and the conformity to authentic original documents of all documents Page 3 of 5 submitted to us as copies; D. to the extent we deem appropriate, that, as to factual matters, all representations and warranties made in the aforesaid documents were and are true, correct and complete; E. that the certificates of status issued in respect of each of the Company and Holdings referred to above continue to be accurate as of the date of this opinion as if issued on that date; F. each of the parties to each of the Transaction Documents (other than the Company and Holdings) has been duly incorporated and is validly existing as a corporation or limited liability company under its laws of incorporation and has all requisite corporate or company power and capacity to execute and deliver each of the Transaction Documents to which it is a party and to exercise its rights and perform its obligations thereunder, and has taken all necessary corporate action to authorize the execution and delivery of each of the Transaction Documents to which it is a party and the exercise of its rights and the performance of its obligations thereunder; and G. each of the Transaction Documents has been duly executed and delivered by each party thereto (other than the Company and Holdings), are legal, valid and binding obligations of each of the parties thereto (other than the Company and Holdings) under the laws of New York enforceable against each such party in accordance with their respective terms, and have been physically delivered by the Company and Holdings free from escrow or similar restrictions. This opinion is limited to the laws of the Province of Nova Scotia and the federal laws of Canada applicable therein. Based upon and subject to the foregoing and to the qualifications expressed below, we are of the opinion that: 1. Each of the Company and Holdings has been duly incorporated and is validly existing as an unlimited company in good standing under the laws of Nova Scotia, with power and authority to own its properties and conduct its business as described in the Registration Statement and to enter into Page 4 of 5 and carry out its obligations under the Transaction Documents. 2. The Exchange Notes have been duly authorized and, when issued, executed and authenticated in accordance with the provisions of the Indenture and delivered in exchange for the Original Notes, will have been duly executed and delivered by the Company. 3. The Indenture has been duly authorized, executed and delivered by the Company and Holdings. 4. The Guarantee has been duly authorized, executed and delivered by Holdings. 5. The execution, delivery and performance of the Exchange Notes, the Indenture and the Guarantee by the Company and Holdings will not violate: (a) the provisions of the Memorandum of Association or Articles of Association of the Company or Holdings, respectively, (b) the laws of Nova Scotia (the "Applicable Law"), or (c) any order, judgment or decree, naming the Company or Holdings, of any court or governmental agency or body of Nova Scotia known to us to be applicable to Holdings, the Company and its subsidiaries. 6. No consent, approval, authorization, order, registration, filing, prospectus, exemption or qualification under any Applicable Law is required for the issue and sale of the Exchange Notes. We understand that this opinion will be relied upon by Kaye Scholer LLP in delivering their opinion with respect to the Registration Statement and the Notes; otherwise, this opinion is solely for the benefit of the addressees and their respective successors and assigns and not for the benefit of any other person. We consent to the filing of this opinion with the SEC as an exhibit to the Registration Statement. Yours very truly, /s/ McInnes Cooper EX-5.4 41 y99327exv5w4.txt OPINION OF DORSEY & WHITNEY LLP Exhibit 5.4 September 14, 2004 MAAX Corporation 1010 Sherbrooke Street West Suite 1610 Montreal, Quebec H3A 2R7 Canada Attention: Denis Aubin Ladies and Gentlemen: We have acted as special counsel in the State of Minnesota ( the "State") to MAAX Corporation, a Nova Scotia unlimited company (the "Company"), and Pearl Baths, Inc., a Minnesota corporation (the "Specified Guarantor"), in connection with the execution and delivery of and the consummation of the transactions contemplated by that certain Form F-4 Registration Statement under the Securities Act of 1933, prepared by the Company for filing with the United States Securities and Exchange Commission (the "SEC") on September 14, 2004 (the "Registration Statement"); capitalized terms used herein and not defined have the meanings assigned to such terms in the Registration Statement), relating to the offer to exchange the Company's $150.0 million aggregate principal amount of 9.75% Senior Subordinated Notes for the Company's 9.75% Senior Subordinated Exchange Notes. In rendering the opinions hereinafter set forth, we have reviewed what have been represented to us to be final forms of the following documents (collectively, the "Transaction Documents"): (i) an indenture, dated as of June 4, 2004, among the Company, Beauceland Corporation, a Nova Scotia unlimited company (the "Parent Guarantor"); the Subsidiary Guarantor; other Guarantors (as defined therein) and U.S. Bank Trust National Association, as Trustee (the "Indenture") (for the purposes hereof the Company, the Parent Guarantor and the Specified Guarantor are herein collectively called the "Issuers"); and (ii) a note guarantee, dated as of June 4, 2004, by the Parent Guarantor, Specified Guarantor and other Guarantors (the "Guarantee"); as well as the following documents relating to the Specified Guarantor (collectively the "Organizational Documents"): 1. Copy of the Articles of Incorporation of the Specified Guarantor, dated May __ [sic], 1978, filed May 23, 1978, in the office of the Secretary of State of Minnesota, as amended by Certificate of Change of Registered Office, dated May 11, 1981, filed May 18, 1981, in said office, as amended by Restated Articles of Incorporation, dated November 8, 1984, filed January 25, 1985, in said office, as amended by Certificate of Change of Registered Office, dated April 28, 1987, filed April 29, 1987, as amended by Amendment of Articles, dated April 25, 1988, filed May 11, 1988, in said office, and as amended by Amendment of Articles of Incorporation, filed January 26, 1990, in said office, certified on September 7, 2004, by the office of the Secretary of State of Minnesota; 2. Restated By-Laws of the Specified Guarantor; Page 2 3. Unanimous Written Consent in Lieu of a Meeting of the Board of Directors of the Specified Guarantor, dated September 14, 2004; 4. Secretary's Certificate for the Specified Guarantor, dated September 14, 2004; and 5. Certificate of Good Standing for the Specified Guarantor, dated September 7, 2004, from the office of the Secretary of State of Minnesota. We have reviewed the Transaction Documents, the Organizational Documents, such other instruments, documents and agreements and such questions of law as we have deemed necessary or appropriate to enable us to render the opinions hereinafter set forth. In rendering the opinions hereinafter set forth, we have assumed and relied upon, without independent investigation, the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, photostatic or other copies and the authenticity of the originals of such latter documents. In addition, in rendering said opinions, we have also assumed that: 1. All agreements or instruments relevant hereto, including but not limited to the Transaction Documents, the Organizational Documents and all documentation in connection therewith, have been duly authorized by all requisite action (partnership, corporate, company or otherwise), and executed and delivered by each of the parties thereto (other than the Specified Guarantor), and, except as herein expressly stated, that such agreements or instruments are the valid and binding obligations of such parties and are enforceable in accordance with their terms; 2. The Company, the Parent Guarantor and the other parties to the Transaction Documents (except for the Specified Guarantor) are duly organized, legally formed and validly existing entities, and are in good standing, under the laws of the respective states (or provinces) in which they are formed, and have all requisite power, authority and legal right (partnership, corporate, company or otherwise) to execute and deliver the Transaction Documents and all documents executed or delivered in connection therewith, to which they are a party, and to perform their respective obligations thereunder, and have taken all necessary actions to authorize and have duly authorized the execution and delivery of said documents; 3. The Transaction Documents have been executed and delivered by signatories authorized to execute the same and to bind the parties thereto (other than the Specified Guarantor); neither the execution and delivery of the Transaction Documents, nor the performance of the provisions of the agreements therein contained on the part of the Company, of the Parent Guarantor or of any other party thereto (except the Specified Guarantor) will contravene, violate or cause a default under any of said parties' organizational documents or, except as hereinafter expressly provided, any law, ordinance, governmental regulation, order of a court or other public authority, agreement or indenture to which any such party is a party or by which any such party or its properties are bound; and no consent or approval of any regulatory authority with respect to any such party is required by law as a prerequisite to the execution and delivery of the Transaction Documents; 4. There has been no mutual mistake of material fact, and there exists no fraud, duress, undue influence or criminal activity, with respect to the transactions described in and contemplated by the Transaction Documents (the "Transactions"); Page 3 5. There is no understanding or agreement among the parties to the Transactions not embodied in the Transaction Documents which would modify the terms of a Transaction Document or any rights or obligations of a party thereto. (We have not reviewed, and express no opinion with respect to the contents or effect of, any document referred to or incorporated by reference in the Transaction Documents.); 6. All schedules and exhibits have been properly and correctly completed and attached to the Transaction Documents, and all blanks therein have been properly and correctly filled; 7. The final Transaction Documents have not been changed from the copies of the Transaction Documents which we have received for review in any respect material to the opinions set forth herein; 8. The Transaction Documents are valid and enforceable under the law which governs them; and 9. The Issuers have received adequate consideration to support their agreements under the Transaction Documents. As to all questions of fact material to this opinion, we have relied solely upon the representations and warranties of the Issuers contained in the Transaction Documents. As used herein, "to our knowledge" means the conscious awareness of facts or other information, without any independent investigation, by Robert A. Heiberg, the lawyer in our firm actively involved in preparing this opinion. Subject to the foregoing assumptions and to the exceptions and qualifications hereinafter set forth, we are of the opinion that: 1. Based solely upon our review of the Organizational Documents, the Specified Guarantor has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State, with power and authority to own its properties and conduct its business as described in the Registration Statement and to enter into and carry out its obligations under the Transaction Documents. 2. Each of the Indenture and the Guarantee has been duly authorized, executed and delivered by the Specified Guarantor. 3. The execution and the compliance with all of the provisions of the Transaction Documents by the Specified Guarantor will not result in any violation of the provisions of (a) any Organizational Document, (b) the laws of the State (the "Applicable Laws"), except that we express no opinion with respect to the blue sky or securities laws or regulations of the State, or (c) to our knowledge, any order, judgment or decree naming the Specified Guarantor of any court or governmental agency or body of the State applicable to the Specified Guarantor. We are admitted to practice in the State. We express no opinion as to matters under or involving the laws of any jurisdiction other than the laws of the State. The opinions set forth above are subject to the following qualifications and exceptions: (a) We express no opinion as to the enforceability of the Transaction Documents. Page 4 (b) The opinions set forth herein are limited to the specific issues addressed and are limited in all respects to the laws and statutes of the State of Minnesota in effect as of the date of this letter. (c) We assume no responsibility for the accuracy or completeness of any representations or warranties contained in the Transaction Documents. The foregoing opinions are being furnished to you solely for your benefit and may not be relied upon by, nor may copies be delivered to, any other person without our prior written consent, except that said opinions may be relied upon by Kaye Scholer LLP for the purpose of the delivery of its opinion in connection with the registration of the Notes (as that term is defined in the Indenture) with the SEC, and we consent to the filing of a copy of this opinion with the SEC as an exhibit to the registration statement concerning the Notes. The opinions expressed in this letter are rendered as of the date hereof; we express no opinion as to circumstances or events that may occur subsequent to such date; and we assume no obligation to inform you of the occurrence thereof. Very truly yours, /s/ DORSEY & WHITNEY LLP EX-5.5 42 y99327exv5w5.txt OPINION OF SAUL EWING LLP Exhibit 5.5 [SAUL EWING LETTERHEAD] September 14, 2004 MAAX Corporation 1010 Sherbrooke Street West Suite 1610 Montreal, Quebec H3A 2R7 Canada Attention: Mr. Denis Aubin RE: MAAX CORPORATION $150,000,000 9.75% SENIOR SUBORDINATED NOTES Dear Mr. Aubin: We have acted as special counsel in the Commonwealth of Pennsylvania (the "State") to MAAX Corporation, a Nova Scotia unlimited company (the "Company") and MAAX-KSD Corporation, a Pennsylvania corporation ("MAAX-KSD") in connection with the filing of the Exchange and Registration Rights Agreement dated as of June 4, 2004 by and among the Company, the Guarantors and the Initial Purchasers (as defined therein) (the "Registration Rights Agreement"). Unless otherwise defined herein, capitalized term used in this opinion shall have the meanings assigned to such terms in the Registration Rights Agreement. In rendering the opinions hereinafter set forth, we have reviewed final forms of the following documents (collectively, the "Documents"): 1. the Registration Rights Agreement; 2. the Indenture dated as of June 4, 2004 by and among the Company, MAAX-KSD, certain other guarantors and U.S. Bank Trust National Association, as trustee (the "Indenture"); and 3. the Note Guarantee dated as of June 4, 2004 by MAAX-KSD and certain other guarantors (the "Note Guarantee"). We have also examined the following: 1. Articles of Incorporation of MAAX-KSD; September 14, 2004 Page 2 2. Bylaws of MAAX-KSD; 3. Certified Resolutions of the Board of Directors of MAAX-KSD dated September 14, 2004; 4. Subsistence certificate dated May 26, 2004 issued by the Department of State of the State with respect to MAAX-KSD (as supplemented by telephonic confirmation of good standing with the Department of State of the State on September 13, 2004); and 5. such other documents and matters as we have deemed necessary and appropriate to render the opinions set forth in this letter, subject to the assumptions, qualifications, limitations, exceptions and restrictions noted below. Based solely upon the foregoing, and subject to the assumptions, qualifications, limitations, exceptions and restrictions hereinafter set forth, we are of the opinion that: 1. MAAX-KSD is duly organized and validly existing and subsisting under the laws of the State, with the requisite power and authority to own its properties and conduct its business as described in the Registration Statement and to enter into and carry out its obligations under the Documents. 2. The Indenture and the Note Guarantee have each been duly authorized, executed and delivered by MAAX-KSD. 3. The execution and compliance with all of the provisions of the Documents by MAAX-KSD will not result in a violation of (a) MAAX-KSD's Articles of Incorporation (as amended) or By-Laws (as amended), (b) the laws of the State in effect (in each case) as of the date of this opinion, or (c) to our knowledge, any order, judgment or decree naming MAAX-KSD of any court or governmental agency or body of the State known to us to be applicable to MAAX-KSD. As used in this paragraph the term "to our knowledge" shall mean the conscious awareness of facts by the lawyers presently with this firm who have given substantive attention to the legal representation of MAAX-KSD in connection with the Documents. We have undertaken no independent investigation or verification of such matters. QUALIFICATIONS AND LIMITATIONS The opinions set forth in this letter are subject to the following assumptions, qualifications, limitations, exceptions and restrictions: 1. We have made the following assumptions: a. Each document submitted to us for review is accurate and complete; each such document submitted to us as an original is authentic; each such document submitted to us as a copy conforms to the original document. b. All signatures of the parties on any of the Documents are genuine. September 14, 2004 Page 3 2. The opinions set forth in this letter: a. are limited to the law of the State and the federal law of the United States of America, each to the extent applicable. We express no opinion as to the laws of any other jurisdiction or the effect thereof; b. are limited to those matters which are expressly set forth in this letter, and no opinion may be inferred or implied beyond the matters expressly set forth in this letter; c. must be read in conjunction with the assumptions, qualifications, limitations, exceptions and restrictions set forth in this letter; and d. are rendered as of the date of this letter, and we assume no obligation to update or supplement this opinion at any time or for any reason, including, without limitation, any changes in applicable law or changes of any facts or circumstances of which we become aware. We understand that this opinion will be relied upon by Kaye Scholer LLP in delivering their opinion with respect to the registration of the Notes (as that term is defined in the Indenture) with the Securities and Exchange Commission (the "SEC"); otherwise, this opinion is solely for the benefit of the addressees and their respective successors and assigns and not for the benefit of any other person. We consent to the filing of this opinion with the SEC as an exhibit to the Registration Statement. Very truly yours, /s/ Saul Ewing LLP EX-5.6 43 y99327exv5w6.txt OPINION OF BEERS MALLERS BACKS & SALIN, LLP Exhibit 5.6 G. WILLIAM FISHERING e-mail: gwfishering@beersmallers.com BEERS MALLERS BACKS & SALIN LLP ATTORNEYS AT LAW 110 W. Berry St. Suite 1100 Fort Wayne, IN 46802 T: 260.426.9706 F: 260.420.1314 108 W. Michigan St. LaGrange, IN 46761 T: 260.463.4949 F: 260.463.4905 www.beersmallers.com September 14, 2004 MAAX Corporation ATTN: Denis Aubin 1010 Sherbrooke Street W., Suite 1610 Montreal, Quebec H3A 2R7 We have acted as special counsel in the State of Indiana ( the "State") to Maax Corporation, a Nova Scotia unlimited company (the "Company") and Aker Plastics Company, Inc. ("Aker") and MAAX Midwest, Inc., (the "Subsidiaries" or the "Guarantors"), in connection with the execution and delivery today of filings with the Securities and Exchange Commission (the "SEC") of certain documents contemplated in an Exchange and Registration Rights Agreement dated June 4, 2004, among the Company, the Guarantors, certain other guarantors and Goldman Sachs & Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated as representatives of the several Purchasers (the "Exchange and Registration Rights Agreement"); capitalized terms used herein and not defined have the meanings assigned to such terms in the Exchange and Registration Rights Agreement. In rendering the opinions hereinafter set forth, we have reviewed final forms of the following documents (collectively, the "Documents"): a. the Indenture; b. the Exchange and Registration Rights Agreement; c. the Guarantee; and d. the Articles of Incorporation and By-Laws of the Subsidiaries as amended (the "Organizational Documents") We have reviewed the Documents and such other instruments, documents and agreements as we have deemed necessary or appropriate to enable us to render the opinions hereinafter set forth. In rendering the opinions hereinafter set forth, we have assumed that there has occurred due authorization, execution and delivery of the Documents and all documentation in connection therewith. We have assumed and relied upon, without independent investigation, the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such latter documents. As to all questions of fact material to this opinion that have not been independently established, we have relied upon certificates or comparable documents of officers and representatives of the Subsidiaries. As used herein, "to our knowledge" means the conscious awareness of facts or other information by any lawyer in our firm actively involved in negotiating the transactions contemplated in connection herewith. Subject to the foregoing assumptions and qualifications, we are of the opinion that: Each of the Subsidiaries has been duly incorporated and is validly existing as a corporation in good standing under the laws of Indiana, with requisite power and authority to own its properties and conduct its business as described in the Registration Statement and to enter into and carry out its obligations under the Documents. The Indenture has been duly authorized, executed and delivered by the Subsidiaries. The Guarantee has been duly authorized, executed and delivered by the Subsidiaries. The execution and the compliance with all of the provisions of the Documents by the Subsidiaries will not result in any violation of the provisions of (a) any Organizational Document, (b) the laws of the State (the "Applicable Laws"), or (c) to our knowledge, any order, judgment or decree naming the Subsidiaries of any court or governmental agency or body of the State of applicable to the Subsidiaries. We understand that this opinion will be relied upon by Kaye Scholer LLP in delivering their opinions with respect to the registration of the Notes (as that term is defined in the Indenture) with the SEC; otherwise, this opinion is solely for the benefit of the addressees and their respective successors and assigns and not for the benefit of any other person. We consent to the filing of this opinion with the SEC as an exhibit to the Registration Statement. We are admitted to practice in the State. We express no opinion as to matters under or involving the laws of any jurisdiction other than the laws of the United States and the State and its political subdivisions. The opinions rendered herein are based on the laws of the State as they exist on the date of the opinion. Very truly yours, BEERS MALLERS BACKS & SALIN, LLP EX-5.7 44 y99327exv5w7.txt OPINION OF FOSTER PEPPER & SHEFELMAN PLLC Exhibit 5.7 DIRECT PHONE (206) 447-8899 DIRECT FACSIMILE (206) 749-1963 E-MAIL KEEFR@FOSTER.COM September 14, 2004 MAAX Corporation 1010 Sherbrooke Street West Suite 1610 Montreal, Quebec, H3A 2R7 Canada Attention: Denis Aubin Ladies and Gentlemen: We have acted as special counsel in the State of Washington (the "State") to Maax-Hydro Swirl Manufacturing Corp., a Washington corporation ("Subsidiary"), a subsidiary of Maax Corporation, a Nova Scotia unlimited company (the "Company"), in connection with the execution and delivery of and the consummation of the transactions contemplated by: (i) Maax Corporation US $150,000,000 Senior Subordinated Notes ("Notes") dated June 4, 2004; (ii) Indenture for the Notes dated June 4, 2004, among U.S. Bank Trust National Association, as trustee, the Company, Subsidiary and the guarantors named therein; and (iii) Guaranty for the Notes dated June 4, 2004, of the Subsidiary and the guarantors named therein; (the documents described in (i) through (iii) are called collectively the "Transaction Documents"). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Transaction Documents. In rendering the opinions hereinafter set forth, we have reviewed final forms of the following documents (collectively, the "Documents"): (i) the Transaction Documents; and (ii) a certificate of existence/authorization for Subsidiary from the Washington Secretary of State and copies of the corporate minutes of Subsidiary furnished by counsel for the Company. We have reviewed the Documents and such other instruments, documents and agreements as we have deemed necessary or appropriate to enable us to render the opinions hereinafter set forth. We have reviewed such certificates and other September 14, 2004 Page 2 information from public officials in those jurisdictions that we have deemed appropriate and have made such review of law as we consider necessary for the purposes of this opinion. As to certain matters of fact material to the following opinions, we have relied upon certificates and reports of public officials without independently verifying the accuracy of those certificates and representations. As to certain matters of fact material to the following opinions, we have relied upon a Secretary's certificate of the Subsidiary dated September 14, 2004, without independently verifying the accuracy of those representations. We have relied as to matters of fact upon the above documents and investigation. Where we render an opinion "known to us," our opinion is based solely upon (a) the conscious awareness of facts or other information by the attorneys within the firm who have had active involvement in reviewing the Transaction Documents in preparing this opinion letter, and unless we have specifically advised otherwise in this letter, we have not undertaken or made any inquiry, search, investigation or legal or factual analysis or research to verify the accuracy of any opinion which is rendered with the phrase "known to us." No limited inquiry which we may have undertaken shall be considered an independent investigation and the fact of our engagement to render this opinion letter shall not be construed to imply knowledge of any matter on our part. In rendering the opinions hereinafter set forth, we have assumed that: (i) Each Party to the Transaction Documents (other than Subsidiary) has all requisite power and authority, under its organizational documents, and under the laws of its domiciliary state, province and country to enter into the Transaction Documents and otherwise to assume and perform the obligations on its part to be assumed and performed as contemplated by the Transaction Documents. (ii) The Transaction Documents have been executed by duly authorized individual representatives on behalf of the respective Parties thereto (other than Subsidiary) and have been delivered by each Party. (iii) Subsidiary has received consideration adequate to render its obligations under the Transaction Documents enforceable under Washington law. (iv) None of the Transaction Documents have been modified in any way by any oral agreement, written document or course of conduct. (v) No Party to the Transaction Documents (other than Subsidiary) is incorporated under the laws of the State of Washington. In addition, this opinion is qualified to the extent that enforceability of the Transaction Documents may be limited by (i) bankruptcy, insolvency, moratorium, reorganization or other laws relating to creditors' rights generally and (ii) general principles of equity, whether September 14, 2004 Page 3 considered in an action at law or in equity and the following additional assumptions, qualifications and exceptions: 1. We express no opinion as to Subsidiary's title to any of the Property. 2. We express no opinion as to provisions of the Transaction Documents which pertain to jurisdiction, venue, choice of law, service of process or waiver of the right to a jury trial. We note, however, that a Washington court may choose to follow recent cases in other jurisdictions and restrict rights to a deficiency judgment to the least favorable of Washington or New York law. 3. We express no opinion as to federal tax consequences to any Party to the Transaction. 4. We express no opinion as to compliance with the anti-fraud or other disclosure provisions of applicable securities laws or any rules or regulations promulgated thereunder. 5. Except as provided herein, we express no opinion as to any matter whatsoever relating to: (a) the accuracy or completeness of any financial, accounting, or statistical information furnished by the Subsidiary or the Company; (b) the accuracy or completeness of any representations made by the Company or the Subsidiary; or (c) the financial status of the Company or the Subsidiary. 6. Although certain members of this firm are admitted to practice in other jurisdictions, we have been asked to opine herein only as to matters of federal law and the law of the State of Washington, and we express no opinion with regard to any matter which may be governed by other than the federal law of the United States of America and the law of the State of Washington. Subject to the foregoing assumptions and qualifications, we are of the opinion that: 1. Subsidiary is a validly existing corporation under the laws of Washington and has the requisite corporate power and authority to own its properties and conduct its business as described in the Registration Statement and, for its part, to enter into and carry out its obligations under the Transaction Documents. 2. Each of the Transaction Documents has been duly authorized, executed and delivered by the Subsidiary. 3. The compliance with all of the provisions of the Transaction Documents and the consummation of the transactions therein contemplated will not result in any violation of the provisions of (a) any organizational document of Subsidiary, (b) the laws of Washington or September 14, 2004 Page 4 (c) any order, judgment or decree naming the Subsidiary of any court or governmental agency or body of Washington known to us to be applicable to Subsidiary. We are admitted to practice in the State. We express no opinion as to matters under or involving the laws of any jurisdiction other than the laws of the United States and the State and its political subdivisions. Our opinions set forth herein are limited to the matters expressly set forth in this opinion letter, and no opinion is implied or may be inferred beyond the matters expressly so stated. This opinion is provided to you as a legal opinion only, and not as a guaranty or warranty of the matters discussed herein. This opinion is rendered as of the date set forth, and we disclaim any obligation to advise you of any changes in the circumstances, laws or events that may occur after that date or to otherwise update this opinion. The opinions rendered herein may not be used or relied upon by or published or communicated to any person or entity other than the addressees hereof and their successors and assigns, for any purpose whatsoever without our prior written consent in each instance, except that Kaye Scholer LLP may rely on this opinion letter as if it were addressed to them. We consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. Very truly yours, FOSTER PEPPER & SHEFELMAN PLLC By: Richard E. Keefe, Member EX-8.1 45 y99327exv8w1.txt OPINION OF KAYE SCHOLER LLP Exhibit 8.1 [Kaye Scholer Letterhead] September 14, 2004 MAAX Corporation 1010 Sherbrooke Street West Suite 1610 Montreal, Quebec Canada H3A 2R7 Gentlemen: We have served as special counsel for MAAX Corporation, a Nova Scotia unlimited company ("MAAX") in connection with the issuance, as of June 4, 2004, by MAAX of 9.75% Senior Subordinated Notes due 2012, in the aggregate principal amount of $150 million (the "Original Notes") and the subsequent offer by MAAX (the "Exchange Offer") to exchange all of the Original Notes for new 9.75% Senior Subordinated Notes due 2012, in the aggregate principal amount of $150 million (the "Exchange Notes"). In this capacity, we have participated in the preparation of a registration statement on Form F-4 (the "Registration Statement") filed pursuant to the Securities Act of 1933, as amended (the "Securities Act"), which includes the prospectus relating to the issuance of the Exchange Notes (the "Prospectus"). Unless otherwise defined, capitalized terms referred to herein have the meanings set forth in the Prospectus. All section references, unless otherwise indicated, are to the United States Internal Revenue Code of 1986, as amended (the "Code"). We understand the relevant facts relating to the Exchange Offer to be as follows: On June 4, 2004, MAAX completed a private offering of the Original Notes. In connection with that offering, MAAX and certain guarantors entered into a registration rights agreement with the initial purchasers of the Original Notes pursuant to which MAAX agreed, among other things: (i) to file a registration statement with respect to the Exchange Offer within 150 days after the original issue date of the Original Notes; (ii) to use commercially reasonable best efforts to cause the Exchange Offer registration statement to be declared effective within 300 days after the original issue date of the Original Notes; and (iii) to keep the Exchange Offer open for at least 30 days and exchange the Exchange Notes for all the Original Notes validly tendered and not withdrawn before the expiration of the offer. MAAX Corporation 2 The terms of the Exchange Notes and of the Original Notes are identical in all material respects, except that the Exchange Notes will be freely transferable by the holders, except as specifically provided in the Prospectus. For each Original Note surrendered to MAAX pursuant to the Exchange Offer, the holder of such Note will receive an Exchange Note having a principal amount equal to that of the surrendered Original Note. The Exchange Notes will be issued pursuant to the same indenture as governs the Original Notes. You have requested our opinion regarding certain U.S. federal income tax consequences of the consummation of this Exchange Offer. This opinion is being rendered to you in response to such request. In rendering this opinion, we have relied, with your consent, upon the facts, statements, descriptions and representations set forth in the Prospectus (including the Schedules and Exhibits thereto) and such other documents pertaining to the Exchange Offer as we have deemed necessary or appropriate. In connection with rendering this opinion, we have also assumed (without any independent investigation) that: 1. Original documents (including signatures) are authentic, documents submitted to us as copies conform to the original documents, and there has been (or will be by the date on which the Exchange Notes are issued pursuant to the Exchange Offer) due execution and delivery of all documents where due execution and delivery are prerequisites to effectiveness thereof; 2. Any statement made in any of the documents referred to herein as being "to the best of the knowledge" of any person or party, or similarly qualified, is correct without such qualification; and 3. All statements, descriptions and representations contained in any of the documents referred to herein or otherwise made to us are true, correct and complete in all material respects and, at the consummation of the transactions contemplated by the Exchange Offer, will be true, correct and complete and no actions have been (or will be) taken which are inconsistent with such statements, descriptions and representations. Based on our examination of the foregoing items and subject to the assumptions, exceptions, limitations and qualifications set forth herein, it is our opinion that, if the Exchange Offer is consummated in accordance with the Prospectus, the exchange of Original Notes for Exchange Notes by holders of Original Notes pursuant to the Exchange Offer will not constitute an "exchange" for U.S. federal income tax purposes because such exchange will not effect a "significant modification" of the Original Notes within the meaning of U.S. Treasury Regulation 1.1001-3. MAAX Corporation 3 This opinion represents and is based upon our best judgment regarding the application of U.S. federal income tax laws arising under the Code, existing judicial decisions, Treasury regulations and published rulings and procedures. Our opinion is not binding upon the Internal Revenue Service or the courts, and there is no assurance that the Internal Revenue Service will not successfully assert a contrary position. Furthermore, no assurance can be given that future legislative, judicial or administrative changes, on either a prospective or retroactive basis, would not adversely affect the accuracy of the conclusions stated herein. This opinion addresses only the U.S. federal income tax matters relating to the Exchange Offer that are expressly set forth above, and does not address any other federal, state, local or foreign tax consequences that may result from the Exchange Offer or any other transaction (including any transaction undertaken in connection with the Exchange Offer). No opinion is expressed as to any transaction other than the Exchange Offer as described in the Prospectus or to any transaction whatsoever, including the Exchange Offer, if all the transactions described in the Prospectus are not consummated in accordance with the descriptions of them in the Prospectus, or if any of the representations, warranties, statements and assumptions upon which we relied are not true, correct and complete at all relevant times. In the event any one of the representations, warranties, statements or assumptions upon which we have relied to issue this opinion is incorrect, our opinion might be adversely affected and may not be relied upon. This opinion is being delivered to you for the purpose of inclusion as an exhibit to the Registration Statement. We hereby consent to the filing of this opinion with the Securities and Exchange Commission (the "Commission") as an exhibit to the Registration Statement and to the use of our name under the caption "Legal Matters" included therein. In giving this opinion, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission. Very truly yours, /s/ Kaye Scholer LLP EX-10.1 46 y99327exv10w1.txt MANAGEMENT AGREEMENT EXHIBIT 10.1 EXECUTION COPY MANAGEMENT AGREEMENT This Management Agreement (the "AGREEMENT") is entered into as of June 4, 2004, by and among J.W. Childs Associates, L.P., a Delaware limited partnership ("JWC"), Borealis Capital Corporation, an Ontario company ("BOREALIS") and Ontario Municipal Employees Retirement Board, a corporation established under the Ontario Municipal Employees Retirement System Act ("OMERS" and together with JWC and Borealis, the "CONSULTANTS"), MAAX Holdings, Inc., a Delaware corporation ("HOLDINGS") and MAAX Corporation, a Nova Scotia unlimited company (the "COMPANY"), and is made effective as of the Effective Time (as defined in the Merger Agreement (as defined below)). The Consultants, Holdings and the Company are hereinafter jointly referred to as the "PARTIES." RECITALS A. The Consultants are specifically skilled in corporate finance, strategic corporate planning and other management services and provide similar commercial services to various third parties. B. The Company has undertaken to provide corporate financing, strategic corporate planning and management skills to its subsidiaries and will enter into a definitive agreement with each of them with respect thereto. C. The Company requires assistance from the Consultants in providing such services to its subsidiaries. D. The Company does not possess the corporate financing, strategic corporate planning and management skills of the Consultants to enable the Company and its subsidiaries to maximize their full commercial potential. E. In contemplation of the acquisition of all of the issued and outstanding shares of MAAX Inc., pursuant to that certain Agreement and Plan of Merger, dated as of March 10, 2004 (the "MERGER AGREEMENT"), by and among 3087052 Nova Scotia Company, 3087053 Nova Scotia Company, 9139-4460 Quebec Inc. ("SUBCO"), 9139-7158 Quebec Inc. ("SUBCO II") and the Company, the Company will become a wholly-owned indirect subsidiary of Holdings as a result of the amalgamation of Subco, Subco II and the Company (together with the other transactions contemplated by the Merger Agreement, the "ACQUISITION"). F. Prior to the date hereof, the Consultants rendered substantial and valuable services to the Company and its subsidiaries in connection with the Acquisition, including services regarding the planning and structuring of the Acquisition and the raising of debt and equity financing therefor. G. The Company wants to retain the Consultants in order to have access to their special skills and management advisory services on a recurring basis in connection with the Company's and its subsidiaries' general business operations following the consummation of the Acquisition. H. The Consultants are willing to make such skills available and to provide such services to the Company and its subsidiaries on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the Company and its subsidiaries and the Consultants, intending to be legally bound, do hereby agree as follows: 1. Engagement. The Company hereby retains the Consultants for the Term (as hereinafter defined) and upon the terms and conditions herein set forth to provide consulting and management advisory services to the Company and/or any of its subsidiaries, on a recurrent basis. These services will be in the field of financial and strategic corporate planning and such other management areas as the Consultants and the Company shall mutually agree. In consideration of the compensation to the Consultants herein specified, the Consultants accept such engagement and agree to perform the services specified herein in the manner set out in Schedule A. 2. Term. The engagement hereunder shall be for a term commencing at the Effective Time and expiring on the fifth (5th) anniversary of such Effective Time (the "INITIAL TERM") unless terminated earlier as provided below. Upon expiration of the Initial Term, this Agreement shall automatically extend for successive periods of one (1) year each, unless terminated earlier as provided below or the Consultants or the Company shall give notice to the other at least ninety (90) days prior to the end of the Initial Term (or any annual extension thereof) indicating that it does not intend to extend the term of this Agreement. The Initial Term, together with all such annual extensions of the Initial Term, is referred to herein as the "TERM." This Agreement will automatically terminate upon a sale of all of the stock, assets or business of the Company or an initial public offering of the Company's capital stock for sale to the public pursuant to a registered offering in the United States or a prospectus in Canada. 3. Services to be Performed. The Consultants shall remain available at all times and shall devote reasonable time and efforts to the performance of the consulting and management advisory services contemplated by this Agreement. However, no precise number of hours is to be devoted by the Consultants on a weekly or monthly basis. The Consultants may perform services under this Agreement directly, through their respective employees or agents, or with such outside consultants as the Consultants may engage for such purpose. The Company acknowledges that such services to it will not be exclusive, and that the Consultants and their affiliates will render similar services to other persons. The obligations of the Consultants to provide services hereunder shall be several and not joint. 2 4. Confidentiality. The Consultants shall hold in confidence all proprietary and confidential information of the Company and/or any of its subsidiaries which may come into the Consultants' possession or knowledge as a result of their performance of services hereunder, exercising a degree of care in maintaining such confidence as is used by the respective Consultant to protect its own proprietary or confidential information that it does not wish to disclose. The Consultants shall use all reasonable efforts to ensure that their respective employees, agents and outside consultants similarly maintain the confidentiality of such proprietary and confidential information of the Company and/or any of its subsidiaries. 5. Compensation; Expense Reimbursement. 5.1 Closing Fee. In consideration of the Consultants' provision of services regarding the planning and structuring of the Acquisition and the other transactions contemplated by the Merger Agreement and raising of debt and equity financing in connection therewith, and the Consultant's execution and delivery of this Agreement, the Company shall pay (i) JWC a fee in the amount of US$2.5 million, (ii) Borealis a fee in the amount of C$1.4 million, and (iii) OMERS a fee in the amount of C$1.4 million, each of which shall be due and payable in immediately available funds immediately upon consummation of the Acquisition. 5.2 Consulting Fee. In consideration for retaining the Consultants for strategic planning and management advisory services on an ongoing basis as described hereunder, (i) JWC shall be paid an aggregate annual fee (hereinafter the "JWC CONSULTING FEE") equal to US$360,000, which JWC Consulting Fee shall be paid to JWC by the Company and/or its subsidiaries (or any one of them) in equal monthly installments of US$30,000 per month, (ii) Borealis shall be paid an aggregate annual fee (hereinafter the "BOREALIS CONSULTING FEE") equal to US$137,676, which Borealis Consulting Fee shall be paid to Borealis by the Company and/or its subsidiaries (or any one of them) in equal monthly installments of US$11,473 per month and (iii) OMERS shall be paid an aggregate annual fee (hereinafter the "OMERS CONSULTING FEE") equal to US$137,676, which OMERS Consulting Fee shall be paid to OMERS by the Company and/or its subsidiaries (or any one of them) in equal monthly installments of US$11,473 per month (the JWC Consulting Fee, Borealis Consulting Fee and the OMERS Consulting Fee together, the "CONSULTING FEES"); provided that the monthly installments due to JWC, Borealis and OMERS in respect of any calendar month during which the Term commences shall be appropriately pro-rated for the number of days in such calendar month for which the Term was in effect, and provided, further that the Consulting Fees shall not be required to be paid to the extent such Consulting Fees are not permitted to be paid under the (x) Credit and Guaranty Agreement, dated as of June 4, 2004, by and among the Company, Beauceland Corporation ("BEAUCELAND"), the Subsidiaries of Beauceland from time to time party thereto, Goldman Sachs Credit Partners L.P., Royal Bank of Canada and Merrill Lynch Capital Corporation, as agents and arrangers, and the lenders from time to time party thereto, as the same may be amended, supplemented, restated, extended, refinanced or otherwise modified from time to time or (y) Indenture, dated as of June 4, 2004, by and among the Company, the Guarantors (as defined therein) and U.S. Bank Trust National Association, as Trustee, as the same may be amended, supplemented, restated, extended, refinanced or otherwise modified from time to time. Such Consulting Fees are to be paid monthly in arrears on the first day of each calendar month, except for the installment which would otherwise be payable with respect to the calendar month in which the 3 Term commences, which shall instead be paid upon consummation of the Acquisition. The Company and/or any of their subsidiaries shall allocate the Consulting Fees among themselves according to the services received. If the Company is not able to obtain a refund of any GST/QST taxes paid to the relevant tax authorities, the Company will reduce the amount of the Borealis Consulting Fees and if subject to such taxes, the OMERS Consulting Fees, so that the net amount payable to Borealis and, if applicable, OMERS, including payment by the Company of any GST/QST taxes to such tax authorities, will not exceed US$11,473 per month. 5.3 Expenses. The Company shall reimburse the Consultants for all reasonable out-of-pocket expenses incurred in connection with strategic corporate planning and management advisory services to be provided by the Consultants hereunder, including, without limitation, costs in connection with agents or outside consultants described in Section 3, reasonable travel, lodging and similar out-of-pocket costs incurred by the Consultants in connection with or on account of their performance of services for the Company and its subsidiaries hereunder. The Consultants may from time to time establish an estimated monthly reimbursement rate whereby the Company shall remit on a monthly basis a fixed sum to offset the Consultants' estimated expenses. The Consultants shall periodically reconcile the Company's estimated expense payments with actual expenses, and the parties shall adjust future expense reimbursement payments accordingly. The Consultants shall provide reasonably itemized documentation for all billed expenses. 6. Indemnification. In addition to their agreements and obligations under this Agreement, the Company agrees, jointly and severally, to indemnify and hold harmless the Consultants, and their affiliates, including their officers, directors, stockholders, partners, members, employees and agents (collectively, the "INDEMNITEES") from and against any and all claims, liabilities, losses and damages or actions, suits or proceedings in respect thereof (collectively, the "OBLIGATIONS") as and when incurred by the Indemnitees, in any way related to the Acquisition or arising out of the performance by the Consultants of services under this Agreement, and to reimburse the Indemnitees for reasonable out-of-pocket legal and other expenses ("EXPENSES") as and when incurred by any of them in connection with or relating to investigating, preparing to defend, or defending any actions, claims or other proceedings (including any investigation or inquiry) arising in any manner out of or in connection with the Acquisition or the Consultants' performance under this Agreement (whether or not such Indemnitee is a named party in such proceeding); provided, however, that the Company shall not be responsible under this Section 6 for any Obligations or Expenses incurred by an Indemnitee to the extent that it is finally judicially determined (in an action in which such Indemnitee is a party) to result from actions taken by such Indemnitee due to such Indemnitee's gross negligence or willful misconduct. 7. Contribution. If for any reason the indemnity provided for in Section 6 is unavailable or is insufficient to hold harmless any Indemnitee from any Obligations or Expenses, then the Company shall contribute to the amount paid or payable by such Indemnitees as a result of such Obligations or Expenses in such proportion as is appropriate to reflect (i) the relative fault of the Company, on the one hand, and such Indemnitee, on the other, in connection with the state of facts giving rise to such Obligations or Expenses, (ii) if such Obligations or Expenses result from, arise out of, are based upon or relate to the Acquisition or any transaction contemplated hereby, the relative benefits received by the Company, on the one hand, and such Indemnitee, on the other, from 4 the Acquisition or the other transactions contemplated hereby, and (iii) if required by law, any other relevant equitable considerations. For purposes of this Section 7, the relative fault of the Company, on the one hand, and of the Indemnitee, on the other, shall be determined by reference to, among other things, their respective relative intent, knowledge, access to information and opportunity to correct the state of facts giving rise to such Obligations or Expenses. For purposes of this Section 7, the relative benefit of the Company, on the one hand, and of the Indemnitee, on the other, shall be determined by weighing the direct monetary proceeds to the Company, on the one hand, and such Indemnitees, on the other, from the Acquisition or such transactions contemplated hereby. The Parties hereto acknowledge and agree that it would not be just and equitable if contributions pursuant to Section 7 were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to above. The Company shall not be liable under this Section 7 for contribution to the amount paid or payable by any Indemnitee except to the extent and under such circumstances that the Company would have been liable to indemnify, defend and hold harmless such Indemnitee under Section 6, if such indemnity were enforceable under applicable law. No Indemnitee shall be entitled to contribution from the Company with respect to any Obligations or Expenses in the event that such Indemnitee is finally determined to be guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act of 1933, as amended) in connection with such Obligations or Expenses and the Company is not guilty of such fraudulent misrepresentation. 8. Third-Party Beneficiaries. All Indemnitees not signatory to this Agreement are intended beneficiaries of Sections 6 and 7 of this Agreement. 9. Notices. All notices or other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered personally, (b) upon confirmation of receipt when such notice or other communication is sent by facsimile, (c) one day after delivery to an overnight delivery courier or (d) on the fifth day following the date of deposit in the United States mail if sent first class, postage prepaid, by registered or certified mail. The addresses for such notices shall be as follows: (i) If to JWC, addressed to it at: c/o J.W. Childs Associates, L.P. 111 Huntington Avenue Suite 2900 Boston, Massachusetts 02199 Facsimile: (617) 753-1101 Attention: Steven G. Segal with a copy (which shall not constitute notice) to: Kaye Scholer LLP 425 Park Avenue New York, New York 10022 Facsimile: (212) 836-6419 5 Attention: Stephen C. Koval, Esq. Fasken Martineau DuMoulin LLP Stock Exchange Tower 800, Place Victoria, Suite 3400 P.O. Box 242 Montreal, Quebec H4Z 1E9 Fax: (514) 397-7600 Attn.: Robert Pare, Esq. (ii) If to Borealis, addressed to it at: c/o Borealis Private Equity Limited Partnership 1 Adelaide Street East, Suite 2800 Toronto, Ontario M5C 2V9 Facsimile: (416) 361-5042 Attention: Andre La Forge (iii) If to OMERS, addressed to it at: c/o Ontario Municipal Employees Retirement Board 1 University Avenue, Suite 700 Toronto, Ontario M5J 2PI Facsimile: (416) 369-0675 Attention: Michael Graham (iv) If to Holdings, addressed to it at: c/o J.W. Childs Associates, L.P. 111 Huntington Avenue Suite 2900 Boston, Massachusetts 02199 Facsimile: (617) 753-1101 Attention: Steven G. Segal with a copy (which shall not constitute notice) to: Kaye Scholer LLP 425 Park Avenue New York, New York 10022 Facsimile: (212) 836-6419 Attention: Stephen C. Koval, Esq. Fasken Martineau DuMoulin LLP Stock Exchange Tower 6 800, Place Victoria, Suite 3400 P.O. Box 242 Montreal, Quebec H4Z 1E9 Fax: (514) 397-760 Attn.: Robert Pare, Esq. (v) If to the Company, addressed to the Company at: 640 Cameron Sainte-Marie, Quebec Canada G6E 1B2 Attention: Denis Aubin Fax: (418) 387-3507 with a copy (which shall not constitute notice) to: J.W. Childs Associates, L.P. 111 Huntington Avenue Suite 2900 Boston, Massachusetts 02199 Facsimile: (617) 753-1101 Attention: Steven G. Segal Kaye Scholer LLP 425 Park Avenue New York, New York 10022 Facsimile: (212) 836-6419 Attention: Stephen C. Koval, Esq. Fasken Martineau DuMoulin LLP Stock Exchange Tower 800, Place Victoria, Suite 3400 P.O. Box 242 Montreal, Quebec H4Z 1E9 Fax: (514) 397-7600 Attn.: Robert Pare, Esq. 10. Modifications. This Agreement constitutes the entire agreement among the Parties hereto with regard to the subject matter hereof, superseding all prior understandings and agreements, whether written or oral. This Agreement may not be amended or revised except by a writing signed by the Parties. 7 11. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns, but may not be assigned by any Party without the prior written consent of the other Parties hereto. 12. Captions. Captions have been inserted solely for the convenience of reference and in no way define, limit or describe the scope or substance of any provision and shall not affect the validity of any other provision. 13. Governing Law; Jurisdiction; Service of Process. This Agreement shall, in accordance with Section 5-1401 of the General Obligations Law of the State of New York, be governed by the laws of the State of New York, without regard to any conflicts of laws principles thereof that would call for the application of the laws of any other jurisdiction. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may be brought against either of the Parties in the courts of the State of New York, or if it has or can acquire jurisdiction, in the United States District Court for the Southern District of New York, and each of the Parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world, whether within or without the State of New York. 14. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby. 15. Counterparts. This Agreement may be executed in several counterparts each of which shall be deemed an original and all of which shall together constitute one and the same instrument. [Remainder of Page Intentionally Blank] 8 IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first above written. J.W. CHILDS ASSOCIATES, L.P. By: J.W. Childs Associates, Inc., its general partner By: /s/ James C. Rhee -------------------------------------- Name: James C. Rhee Title: Vice President ONTARIO MUNICIPAL EMPLOYEES RETIREMENT BOARD By: /s/ Michael Graham -------------------------------------- Name: Michael Graham Title: Portfolio Manager By: /s/ David Rogers -------------------------------------- Name: David Rogers Title: Vice President BOREALIS CAPITAL CORPORATION By: /s/ Ian D. Collier -------------------------------------- Name: Ian D Collier Title: Chief Executive Officer By: /s/ Gerard G. McGrath -------------------------------------- Name: Gerard G McGrath Title: Executive Vice President MAAX CORPORATION By: /s/ James C. Rhee -------------------------------------- Name: James C. Rhee Title: Secretary MAAX HOLDINGS, INC. By: /s/ James C. Rhee -------------------------------------- Name: James C. Rhee Title: Secretary [Management Agreement Signature Page] SCHEDULE A The Company and its subsidiaries undertake to keep records and documents that provide a complete and accurate description of the functions performed by the Consultants. These records and documents will be kept in a file at the head office of the Company. At the end of each year, the Consultants will prepare and send to the Company a description of services rendered during the immediately preceding year. At the end of the Initial Term and at the end of each successive period for which this Agreement is extended, the Parties will review the Consulting Fees to ensure that the Consulting Fees are reasonable. JWC will not render any services in Canada. OMERS and Borealis will not perform any services in the United States. EX-10.2 47 y99327exv10w2.txt EMPLOYMENT AGREEMENT EXHIBIT 10.2 EXECUTION COPY EMPLOYMENT AGREEMENT THIS AGREEMENT (this "Agreement") is entered into as of this 4th day of June, 2004 by and between Andre Heroux ("Executive"), MAAX Corporation, a Nova Scotia unlimited company (the "Company") and MAAX Canada Inc., a Canadian corporation ("MAAX Canada," and together with the Company, the "Companies"). WHEREAS, MAAX Canada desires to obtain the benefit of the experience, supervision and services of Executive in connection with the operation of its business, and MAAX Canada desires to employ Executive upon the terms and conditions hereinafter set forth, and Executive is willing and able to accept such employment on such terms and conditions. NOW, THEREFORE, in consideration of the premises and mutual agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Companies and Executive agree as follows: 1. Agreement to Employ; No Conflicts. Upon the terms and subject to the conditions of this Agreement, MAAX Canada hereby employs Executive, and Executive hereby accepts continued employment with MAAX Canada. Executive represents that (a) he is entering into this Agreement voluntarily and that his employment hereunder and compliance with the terms and conditions hereof will not conflict with or result in the breach by him of any agreement to which he is a party or by which he may be bound, (b) he has not, and in connection with his employment with MAAX Canada will not, violate any non-competition, non-solicitation or other similar covenant or agreement by which he is or may be bound and (c) in connection with his employment with MAAX Canada, he will not use any confidential or proprietary information he may have obtained in connection with employment with any prior employer (other than MAAX Inc. or any of its subsidiaries prior to the Closing). 2. Employment Duties. During the Term (as defined below), subject to the direction and control of the Board of Directors of the Company (the "Board"), Executive shall serve as President and Chief Executive Officer of MAAX Holdings, Inc. ("Holdings"), MAAX Canada and the Company, shall oversee and direct the operations of Holdings and the Companies and shall perform such other duties as are consistent with the responsibilities of a President and Chief Executive Officer. Executive shall also serve on request during all or any portion of the Term as a director of Holdings, MAAX Canada and/or the Company, and as an officer or director of any of Holdings' subsidiaries or affiliates without any additional compensation therefor other than as specified in this Agreement. During the Term, Executive shall devote all of his business time, energy, experience and talents to such employment, shall devote his best efforts to advance the interests of the Companies and shall not engage in any other business activities, as an employee, director, consultant or in any other capacity, whether or not he receives any compensation therefor, without the prior written consent of the Board; provided, however, that Executive shall be permitted to serve as a director of one other company, with the prior written consent of the Board (which shall not be unreasonably withheld), provided that such directorship does not interfere in any way with the performance of Executive's duties hereunder. 3. Indefinite Employment. The Executive's employment hereunder shall commence on the date of this Agreement and continue indefinitely; unless terminated as provided in Section 6 hereof (the "Term"). 4. Place of Employment. Executive's principal place of employment shall be Sainte-Marie, Quebec; provided however, that no later than September 2004, Executive's principal place of employment shall be Montreal, Quebec. In the event that the principal place of employment of Executive is relocated after September 2004 to a site that is outside of Montreal, Quebec, MAAX Canada may, subject to Section 6.6(c) hereof, require Executive to relocate Executive's principal residence to within 50 miles of such site. Notwithstanding the foregoing, Executive acknowledges that the duties to be performed by Executive hereunder are such that Executive may be required to travel. 5. Compensation; Reimbursement. During the Term, MAAX Canada shall pay or provide to Executive, in full satisfaction for his services provided hereunder, the following: 5.1. Base Salary. During the Term, MAAX Canada shall pay Executive a base salary of C$500,000 per year ("Base Salary"), payable in accordance with the payroll policies of MAAX Canada for senior executives as from time to time in effect, less such amounts as may be required to be withheld by applicable federal, provincial and local law and regulations (the "Payroll Policies"). The Board will review Executive's salary annually during the Term. 5.2. Cash Bonus. For each fiscal year of MAAX Canada during the Term, Executive will be eligible to receive from MAAX Canada a cash bonus of up to 100% of his Base Salary (the "Maximum Bonus Amount"), if the Company achieves (as determined jointly by Executive and the Board (or Compensation Committee, if any)) the EBITDA (as defined below), Working Capital (as defined below) and/or strategic objective targets for such year, all as set forth in the Company's annual management budget, as approved by the Board. In each year during the Term, Executive will be entitled to (i) 40% of the Maximum Bonus Amount if the Company achieves the EBITDA target for such year (the "Annual EBITDA Target"), and will be entitled to a pro rata portion thereof if the Company achieves at least 95% of the EBITDA achieved in the prior year, calculated based on a linear extrapolation between 95% of EBITDA achieved in the prior year and the applicable year's Annual EBITDA Target (e.g., if the actual EBITDA for the applicable year is US$105 million, 95% of prior year EBITDA is US$95 million and the Annual EBITDA Target for the applicable year is US$115 million, Executive will be entitled to receive a bonus equal to 20% of the Maximum Bonus Amount [(US$105 million-US$95 million)/(US$115 million-US$95 million) x 40% = 20%], (ii) 40% of the Maximum Bonus Amount if the Company achieves the Working Capital (as defined below) target (the "Annual Working Capital Target") for such year, as set forth in the Company's annual management budget, and (iii) 20% of the Maximum Bonus Amount if the Company achieves certain other strategic objectives (e.g., lean initiatives, new customers, personnel matters, acquisition initiatives, etc.), as determined jointly by Executive and the Board (or Compensation Committee, if any) for each fiscal year during the Term, prior to the beginning of such fiscal year. In the event the Company makes an acquisition or disposition of a company or line of business or other substantial change (including a substantial increase or decrease in capital expenditures) to the business of the Company, the Annual EBITDA Target, Annual Working Capital Target and other strategic objectives may be adjusted by the Board, in good faith, to adjust for such acquisition, disposition or other change. For the purpose hereof, 2 "EBITDA" shall mean, in any fiscal year, EBITDA, as defined in the Stockholders Agreement, dated as of June 4, 2004, by and among Holdings and the stockholders set forth therein. For the purpose hereof, "Working Capital" shall mean, in any fiscal year, accounts receivable of the Company and its subsidiaries, plus inventory of the Company and its subsidiaries, minus accounts payable of the Company and its subsidiaries, all as calculated in accordance with generally accepted accounting principles consistently applied, as reflected in the Company's audited consolidated financial statements for such fiscal year. Notwithstanding the foregoing, for fiscal year 2005, Executive shall be entitled to a pro rata portion of his bonus for the period from June 1, 2004 through February 28, 2005, based on EBITDA, Working Capital and/or strategic objective targets to be agreed upon by Executive and the Board. The calculation of EBITDA, Working Capital and strategic objective targets for any fiscal year will be adjusted such that items originally denominated in Canadian dollars will be translated into U.S. dollars at the exchange rate used in the preparation of the Company's annual management budget. Management shall provide to the Board financial statements for the subsidiaries of the Companies that report their results in Canadian dollars which correspond to the audited financial statements for the applicable fiscal year. Such financial statements shall be accompanied by an analysis prepared by management that reconciles the difference, if any, between the calculation of EBITDA, Working Capital and strategic objective targets, to the extent set forth therein, based on the exchange rate used in the preparation of the Company's annual management budget and the calculations thereof based on the exchange rate used for the audited financial statements for the applicable fiscal year. 5.3. Expenses. MAAX Canada shall pay or reimburse Executive for business expenses reasonably incurred by him in the performance of his duties as an employee of MAAX Canada in accordance with MAAX Canada's usual policies upon receipt from Executive of written substantiation of such expenses. 5.4. Benefits. During the Term, Executive shall be entitled to participate in all health, life, disability, sick leave and other benefits generally made available to MAAX Canada's senior executives from time to time. 5.5. Retirement Plan. MAAX Canada will contribute to Executive's Registered Retirement Savings Plan as follows: (i) C$15,500 for calendar year 2004, (ii) C$16,500 for calendar year 2005, (iii) C$18,000 for calendar year 2006 and (iv) C$18,000 for each calendar year thereafter, such amounts to be paid by the Company with respect to each such year not later than February of the immediately following year, provided that Executive continues to be employed by MAAX Canada or any of its subsidiaries. Such contributions shall be in lieu of participation in the Company's or its subsidiaries' 401(k) plan or similar benefit plan. 5.6. Automobile. MAAX Canada will provide Executive with a vehicle of a similar category to the vehicle provided to Executive by MAAX Inc. as of March 10, 2004 and will assume the related expenses on the same terms as provided on such date. 5.7. Vacation. Executive shall be entitled to four (4) weeks of paid vacation per year during the Term without carryover accumulation. 5.8. Club Membership. Executive will be entitled to an executive club membership in a club of his choosing, provided that MAAX Canada will not be obligated to pay membership and other fees in connection therewith in excess of C$6,000 annually. 3 5.9. Stock Options. In addition to the compensation payable to Executive as set forth in this Section 5, Executive shall receive grants of stock options on the date hereof. 6. Termination. Executive's employment hereunder may be terminated as follows: 6.1. Upon Disability. If during the Term, Executive shall become physically or mentally disabled, whether totally or partially, either permanently or so that Executive, in the good faith judgment of the Board, is unable substantially and competently to perform his duties hereunder for a period of 180 consecutive days or for 180 days during any one year period during the Term (a "Disability"), MAAX Canada or the Company may terminate Executive's employment hereunder. In order to assist the Board in making that determination, Executive shall, as reasonably requested by the Board, (a) make himself available for medical examinations by one or more physicians chosen by the Board and (b) grant any such physicians access to all relevant medical information concerning him or arrange to furnish copies of all relevant medical records to such physicians chosen by the Board. If Executive's employment is terminated for Disability, Executive shall be entitled to (i) the Severance Amount (as defined below), (ii) salary payments for services already rendered, (iii) expenses incurred through the date of termination and (iv) a pro rata portion of Executive's bonus in respect of the portion of the fiscal year which has elapsed at the time of termination; provided that such bonus shall be based upon the actual bonus that Executive would have received had Executive remained employed by MAAX Canada or a subsidiary thereof for the full fiscal year, and shall not be payable until calculated by the Company after the end of such fiscal year. It is acknowledged and agreed by the parties that the actual damages to Executive in the event of termination under this Section 6.1 would be difficult if not impossible to ascertain, and, therefore, the Severance Amount and the other payment provisions set forth hereinabove shall be Executive's sole and exclusive remedy in the case of termination under this Section 6.1 and shall, as liquidated damages or severance pay or both, be considered for all purposes in lieu of any other rights or remedies, at law or in equity, which Executive may have in the case of such termination. "Severance Amount" shall mean (A) an amount equal to Executive's Base Salary for 18 months, plus an amount equal to 1.5 times the Maximum Bonus Amount for the year in which termination occurs, which Severance Amount will be payable in equal installments over 18 months in accordance with the Payroll Policies and (B) benefits (other than short-term and long-term disability coverage), to the maximum extent permissible under the benefit plans generally made available to MAAX Canada's senior executives from time to time, for 18 months following the date of termination. 6.2. Upon Death. If Executive dies during the Term, Executive's employment hereunder shall automatically terminate as of the close of business on the date of his death, and all of Executive's rights to payments and any other benefits otherwise due hereunder shall cease immediately, provided, however, that Executive's estate shall be entitled to (i) salary payments for services already rendered, (ii) expenses incurred through the date of termination and (iii) a pro rata portion of Executive's bonus in respect of the portion of the fiscal year which has elapsed at the time of termination; provided that such bonus shall be based upon the actual bonus that Executive would have received had Executive remained employed by MAAX Canada or a subsidiary thereof for the full fiscal year, and shall not be payable until calculated by the Company after the end of such fiscal year. 6.3. For Cause. MAAX Canada or the Company may terminate Executive's employment hereunder at any time, effective immediately upon written notice to Executive and a reasonable opportunity to cure (except in the case of matters which the Board determines in good faith are not able to be cured), for Cause (as defined below) and all of Executive's rights to 4 payments (other than salary payments for services already rendered and expenses incurred through the date of such termination) and any other benefits otherwise due hereunder shall cease immediately. MAAX Canada shall have "Cause" for termination of Executive if any of the following has occurred, and has not been cured (if capable of cure) within 30 days after receipt of notice thereof from MAAX Canada: (1) Executive's dishonesty, theft or fraud in connection with the performance of his duties; (2) Executive's continued failure to perform substantially his duties (other than as a result of a disability); (3) Executive's conviction of, or entering a plea of guilty or nolo contendere to, a crime that constitutes a felony or a misdemeanor involving moral turpitude; (4) any willful act or omission on Executive's part which is materially injurious to the financial condition or business reputation of Holdings or any of its subsidiaries; (5) Executive's breach of any material covenant or provision contained in this Agreement; (6) Holdings, the Company or MAAX Canada, after reasonable investigation, finds that Executive has violated material written policies and procedures of Holdings or any of its subsidiaries, including, but not limited to, policies and procedures pertaining to harassment or discrimination; (7) a failure or refusal by Executive to comply with a written directive from the Board pertaining to a material business matter (unless such directive represents an illegal act); (8) a confirmed positive illegal drug test result for Executive; or (9) the discovery of outstanding indebtedness for borrowed money incurred during the Term by Holdings or any of its subsidiaries in favor of Executive which was not approved by the Board prior to such incurrence. 6.4. Without Cause. MAAX Canada or the Company may terminate Executive's employment hereunder without Cause at any time upon written notice to Executive, and if Executive's employment is terminated by MAAX Canada without Cause, Executive shall be entitled to receive (i) the Severance Amount, (ii) salary payments for services already rendered, (iii) expenses incurred through the date of such notice and (iv) a pro rata portion of Executive's bonus in respect of the portion of the fiscal year which has elapsed at the time of termination; provided that such bonus shall be based upon the actual bonus that Executive would have received had Executive remained employed by MAAX Canada or a subsidiary thereof for the full fiscal year, and shall not be payable until calculated by the Company after the end of such fiscal year. It is acknowledged and agreed by the parties that the actual damages to Executive in the event of termination under this Section 6.4 would be difficult if not impossible to ascertain, and, therefore, the Severance Amount and other payment provisions set forth hereinabove shall be Executive's sole and exclusive remedy in the case of termination under this Section 6.4 and shall, as liquidated damages or severance pay or both, be considered for all purposes in lieu of any 5 other rights or remedies, at law or in equity, which Executive may have in the case of such termination. 6.5. Resignation Without Good Reason. Executive shall have the right at any time to terminate his employment hereunder upon 30 days' written notice to MAAX Canada, and upon such termination, all of Executive's rights to payments and any other benefits otherwise due hereunder shall cease immediately, provided, however, that Executive shall be entitled to receive (i) salary payments for services already rendered, (ii) expenses incurred through the date of such resignation and (iii) a pro rata portion of Executive's bonus in respect of the portion of the fiscal year which has elapsed at the time of termination; provided that such bonus shall be based upon the actual bonus that Executive would have received had Executive remained employed by MAAX Canada or a subsidiary thereof for the full fiscal year, and shall not be payable until calculated by the Company after the end of the fiscal year during which termination occurs. 6.6. Resignation For Good Reason. Executive shall have the right to terminate his employment hereunder at any time, effective upon two weeks' written notice to MAAX Canada, for Good Reason (as defined below), and if Executive terminates his employment for Good Reason, Executive shall be entitled to receive (i) the Severance Amount, (ii) salary payments for services already rendered, (iii) expenses incurred through the date of such resignation and (iv) a pro rata portion of Executive's bonus in respect of the portion of the fiscal year which has elapsed at the time of termination; provided that such bonus shall be based upon the actual bonus that Executive would have received had Executive remained employed by MAAX Canada or a subsidiary thereof for the full fiscal year, and shall not be payable until calculated by the Company after the end of such fiscal year. It is acknowledged and agreed by the parties that the actual damages to Executive in the event of termination under this Section 6.6 would be difficult if not impossible to ascertain, and, therefore, the Severance Amount and other payment provisions set forth hereinabove shall be Executive's sole and exclusive remedy in the case of termination under this Section 6.6 and shall, as liquidated damages or severance pay or both, be considered for all purposes in lieu of any other rights or remedies, at law or in equity, which Executive may have in the case of such termination. Executive shall have "Good Reason" for termination of his employment hereunder if, other than for Cause, any of the following has occurred: (1) his Base Salary has been reduced, other than in connection with an across the board reduction of executive compensation imposed by the Board on all senior executives in response to negative financial results or other adverse circumstances affecting the Company or its subsidiaries; (2) Holdings, the Company or MAAX Canada has substantially reduced or reassigned the duties of Executive hereunder as President and Chief Executive Officer and such action has not been rescinded within 20 business days after Executive notifies the Board that he objects thereto; or (3) the movement by the Company or MAAX Canada, without Executive's consent, of Executive's principal place of employment to a site outside of Sainte-Marie or Montreal, Quebec prior to September 2004 or outside of Montreal, Quebec after September 2004. 6.7. Release. 6 (1) Notwithstanding the foregoing, in order to be eligible for any of the payments under Section 6.1, 6.4, 6.5 or 6.6, Executive must (i) execute and deliver to Holdings and the Companies a general release, in a form reasonably satisfactory to the Board, and (ii) as determined by the Board, be and remain in compliance in all material respects with his obligations under this Agreement, including, but not limited to, those obligations set forth in Sections 7, 8 and 9. In the event the Board determines, with notice to Executive, that Executive has materially breached his obligations hereunder, including those obligations set forth in Sections 7.1, 7.2, 7.4, 7.5, 8 and 9, any and all payments or benefits provided for in Sections 6.1, 6.4, 6.5 or 6.6 shall cease immediately. (2) In the event that, after the end of his employment, the Executive engages in any activity described in Section 7.3, THE EXECUTIVE SHALL CEASE TO BE ENTITLED TO RECEIVE ANY ADDITIONAL SEVERANCE AMOUNTS AS OF SUCH TIME THAT THE EXECUTIVE ENGAGES IN ANY SUCH ACTIVITY, AND ALL OBLIGATIONS OF THE COMPANIES HEREUNDER, INCLUDING ANY AND ALL SEVERANCE PAYMENTS, SHALL CEASE IMMEDIATELY. 7. Protection of Confidential Information; Non-Competition; Non-Solicitation; Non- Disparagement. 7.1. Acknowledgment. Executive agrees and acknowledges that in the course of rendering services to the Company and its subsidiaries and their clients and customers he has acquired and will acquire access to and become acquainted with confidential information about the professional, business and financial affairs of the Company, its subsidiaries and affiliates that is non-public, confidential or proprietary in nature. Executive acknowledges that the Company and its subsidiaries are engaged in a highly competitive business and the success of the Company and its subsidiaries in the marketplace depends upon its good will and reputation for quality and dependability. Executive agrees and acknowledges that reasonable limits on his ability to engage in activities competitive with the Company and its subsidiaries are warranted to protect its substantial investment in developing and maintaining its status in the marketplace, reputation and goodwill. Executive recognizes that in order to guard the legitimate interests of the Company, it is necessary for it to protect all of its and its subsidiaries' confidential information. The existence of any claim or cause of action by Executive against the Company or its subsidiaries shall not constitute and shall not be asserted as a defense to the enforcement by the Company or MAAX Canada of this Agreement. Executive further agrees that his obligations under this Section 7 shall be absolute and unconditional. 7.2. Confidential Information. During and at all times after the Term, Executive shall keep secret all non-public information, matters and materials of the Company (including its subsidiaries and affiliates), including, but not limited to, know-how, trade secrets, mail order and customer lists, pricing policies, operational methods, any information relating to the Company's (including its subsidiaries' and affiliates') products or product development, processes, product specifications and formulations, artwork, designs, graphics, services, budgets, business and financial plans, marketing and sales plans and techniques, employee lists and other business, financial, commercial and technical information of the Company (including its subsidiaries and affiliates) (collectively, the "Confidential Information"), to which he has had or may have access and shall not use or disclose such Confidential Information to any person other than (a) the Company, its authorized employees and such other persons to whom Executive has been instructed to make disclosure by the Board, in each case only to the extent required in the course 7 of Executive's service to the Company or its subsidiaries or as otherwise expressly required in connection with court process, (b) as may be required by law and then only after consultation with the full Board to the extent possible or (c) to Executive's personal advisors for purposes of enforcing or interpreting this Agreement, or to a court for the purpose of enforcing or interpreting this Agreement, and who in each case have been informed as to the confidential nature of such Confidential Information and, as to advisors, their obligation to keep such Confidential Information confidential. "Confidential Information" shall not include any information which is in the public domain during the period of service of Executive, provided such information is not in the public domain as a consequence of disclosure by Executive in violation of this Agreement or by any other party in violation of a confidentiality or non-disclosure agreement with the Company or its subsidiaries. Upon termination of his employment for any reason, Executive shall deliver to the Company all documents, data, papers and records of any nature and in any medium (including, but not limited to, electronic media) in his possession or subject to his control that (i) belong to the Company, its subsidiaries or affiliates or (ii) contain or reflect any information concerning the Company, its subsidiaries and affiliates. 7.3. Non-Competition. During the Term and for a period of 18 months thereafter (the "Restrictive Period"), Executive shall not, in any capacity, whether for his own account or on behalf of any other person or organization, directly or indirectly, with or without compensation, (a) own, operate, manage, or control, (b) serve as an officer, director, partner, member, employee, agent, consultant, advisor or developer or in any similar capacity to or (c) have any financial interest in, or aid or assist anyone else in the conduct of, any person or enterprise that competes with the Company or any of its subsidiaries in any activity in which the Company or any of its subsidiaries is engaged at the time of termination, or to Executive's knowledge, has definitive PLANS TO BE ENGAGED IN THE FUTURE, INCLUDING BUT NOT LIMITED TO, THE PRODUCTION, DISTRIBUTION, MARKETING AND SALE (INCLUDING, WITHOUT LIMITATION, SALES THROUGH WHOLESALERS, SHOWROOMS, SPECIALTY RETAILERS, DEALERS AND HOME CENTERS) OF BATHROOM PRODUCTS, KITCHEN CABINETRY, SPAS AND RELATED ITEMS IN THE UNITED STATES OR CANADA OR WHICH COMPETES WITH ANY PRODUCT LINE OF, OR SERVICE OFFERED BY, THE COMPANY (INCLUDING ANY SUBSIDIARY OR AFFILIATE OF THE COMPANY) (A "COMPETITOR"). Nothing in this Section 7.3 shall prohibit Executive from acquiring or holding not more than five percent of any class of publicly-traded securities. 7.4. Non-Solicitation. During the Term and during the Restrictive Period, Executive shall not, in any capacity, whether for his own account or on behalf of any other person or organization, directly or indirectly, with or without compensation, (a) solicit, divert or encourage any officers, directors, employees, agents, consultants or representatives of the Company (including its subsidiaries and affiliates), to terminate his, her or its relationship with the Company (including its subsidiaries and affiliates), (b) solicit, divert or encourage any officers, directors, employees, agents, consultants or representatives of the Company (including its subsidiaries and affiliates) to become officers, directors, employees, agents, consultants or representatives of another business, enterprise or entity, (c) solicit, divert or appropriate any customers, clients, vendors, distributors or business partners of the Company (including its subsidiaries and affiliates), or (d) influence or attempt to influence any of the customers, clients, vendors, distributors or business partners of the Company (including its subsidiaries and affiliates) to transfer his, her or its business or patronage from the Company (including its subsidiaries and affiliates) to any Competitor of the Company (including its subsidiaries and affiliates). 7.5. Non-Disparagement. During the Term and during the Restrictive Period, except as required by law, Executive shall not directly or indirectly (i) engage in any conduct or make any 8 statement, whether in commercial or non-commercial speech, disparaging or criticizing in any way the Company, any subsidiary of the Company, J.W. Childs, Borealis, OMERS or any affiliate of any of the foregoing entities, or any products or services offered by any of these entities, or (ii) engage in any other conduct or make any other statement, in each case, which could be reasonably expected to (a) impair the goodwill or reputation of the foregoing entities or (b) the reputation of any of the foregoing entity's products or services or the marketing of any of the foregoing entity's products or services, except to the extent required by law and then only after consultation with J.W. Childs to the extent possible, or in connection with any dispute between Executive and any of the foregoing entities. During the Term and during the Restrictive Period, except as required by law, the Company, its subsidiaries, J.W. Childs, Borealis, OMERS and their respective affiliates shall not directly or indirectly (i) engage in any conduct or make any statement, whether in commercial or non-commercial speech, disparaging or criticizing in any way Executive or (ii) engage in any other conduct or make any other statement, in each case, which could be reasonably expected to impair the goodwill or reputation of Executive. 7.6. Remedies for Breach. The Company and Executive agree that the restrictive covenants contained in this Agreement are severable and separate, and the unenforceability of any specific covenant herein shall not affect the validity of any other covenant set forth herein. Executive acknowledges that the Company will suffer irreparable harm as a result of a breach of such restrictive covenants by Executive for which an adequate monetary remedy does not exist and a remedy at law may prove to be inadequate. Accordingly, in the event of any actual or threatened breach by Executive of any provision of this Agreement, the Company shall, in addition to any other remedies permitted by law, be entitled to obtain remedies in equity, including, but not limited to, specific performance, injunctive relief, a temporary restraining order, and/or a preliminary and/or permanent injunction in any court of competent jurisdiction, to prevent or otherwise restrain a breach of this Section 7 without the necessity of proving damages, posting a bond or other security, and to recover any and all costs and expenses, including reasonable counsel fees, incurred in enforcing this Agreement against Executive, and Executive hereby consents to the entry of such relief against him and agrees not to contest such entry. Such relief shall be in addition to and not in substitution of any other remedies available to the Company. The existence of any claim or cause of action of Executive against the Company or its subsidiaries, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of said covenants. Executive shall not defend on the basis that there is an adequate remedy at law. 7.7. Modification. The parties agree and acknowledge that the duration, scope and geographic area of the covenants described in this Section 7 are fair, reasonable and necessary in order to protect the Confidential Information, goodwill and other legitimate interests of the Company and that adequate consideration has been received by Executive for such obligations. Executive further acknowledges that after termination of his employment with MAAX Canada or any subsidiary thereof for any reason, he will be able to earn a livelihood without violating the covenants described in this Section 7 and Executive's ability to earn a livelihood without violating such covenants is a material condition to his employment with MAAX Canada or any subsidiary thereof. If, however, for any reason any court of competent jurisdiction determines that the restrictions in this Section 7 are not reasonable, that consideration is inadequate or that Executive has been prevented unlawfully from earning a livelihood, such restrictions shall be interpreted, modified or rewritten to include the maximum duration, scope and geographic area identified in this Section 7 as will render such restrictions valid and enforceable. 9 8. Certain Agreements. 8.1. Customers, Suppliers. Executive does not have, and at any time during the Term shall not have, any employment with or any direct or indirect interest in (as owner, partner, shareholder, employee, director, officer, agent, consultant or otherwise) any customer of or supplier to the Company or its subsidiaries. Nothing in this Section 8.1 shall prohibit Executive from acquiring or holding not more than five percent of any class of publicly traded securities of any business. 8.2. Certain Activities. During the Term, Executive shall not (a) give or agree to give, any gift or similar benefit of more than nominal value to any customer, supplier, or governmental employee or official or any other person who is or may be in a position to assist or hinder the Company or its subsidiaries in connection with any proposed transaction, which gift or similar benefit, if not given or continued in the future, might adversely affect the business or prospects of the Company or its subsidiaries, (b) use any corporate or other funds for unlawful contributions, payments, gifts or entertainment, (c) make any unlawful expenditures relating to political activity to government officials or others, (d) establish or maintain any unlawful or unrecorded funds in violation of Section 30A of the U.S. Securities Exchange Act of 1934, as amended, and (e) accept or receive any unlawful contributions, payments, gifts, or expenditures. 9. Intellectual Property. All copyrights, trademarks, trade names, service marks and all ideas, inventions, discoveries, secret processes and methods and improvements, together with any and all patents that may be issued thereon, and all other intangible or intellectual property rights that may be invented, conceived, developed or enhanced by Executive during the Term that relate to the business or operations of the Company or any subsidiary or affiliate thereof or that result from any work performed by Executive for the Company or any such subsidiary or affiliate shall be the sole property of the Company or such subsidiary or affiliate, as the case may be, and Executive hereby waives any right or interest that he may otherwise have in respect thereof. Upon the reasonable request of MAAX Canada, Executive shall execute, acknowledge and deliver any instrument or document reasonably necessary or appropriate to give effect to this Section 9 and, at MAAX Canada's cost, do all other acts and things reasonably necessary to enable the Company or such subsidiary or affiliate, as the case may be, to exploit the same or to obtain patents or similar protection with respect thereto. 10. Notices. All notices or other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered personally, (b) upon confirmation of receipt when such notice or other communication is sent by facsimile, (c) one day after delivery to an overnight delivery courier, or (d) on the fifth day following the date of deposit in the United States mail if sent first class, postage prepaid, by registered or certified mail. The addresses for such notices shall be as follows: (1) For notices and communications to the Company 1010 Sherbrooke Street West Suite 1610 Montreal, Quebec Canada H3A 2R7 10 Attention: Chief Financial Officer Fax: (514) 985-4155 with a copy to: J.W. Childs Associates, L.P. 111 Huntington Avenue Boston, Massachusetts 02199 Fax: (617) 753-1101 Attn: Steven G. Segal Kaye Scholer LLP 425 Park Avenue New York, New York 10022 Fax: (212) 836-8689 Attn.: Stephen C. Koval, Esq. Fasken Martineau DuMoulin LLP Stock Exchange Tower 800, Place Victoria, Suite 3400 P.O. Box 242 Montreal, Quebec H4Z 1E9 Fax: (514) 397-7600 Attn.: Robert Pare, Esq. (2) For notices and communications to Executive, to the address or facsimile set forth below his signature hereto. Any party hereto may, by notice to the other, change its address for receipt of notices hereunder. 11. General. 11.1. Governing Law; Waiver of Jury Trial. This Agreement shall be governed by the laws of the Province of Quebec, without regard to any conflicts of law principles thereof that would call for the application of the laws of any other jurisdiction. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may be brought against either of the parties in the courts of the Province of Quebec (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world, whether within or without the Province of Quebec. Each party hereby waives to the fullest extent permitted by applicable law, any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in 11 connection with this Agreement or the transactions contemplated hereby or disputes relating hereto. 11.2. Amendment: Waiver. This Agreement may be amended, modified, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance. The failure of either party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by either party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 11.3. Successors and Assigns. This Agreement shall be binding upon Executive, without regard to the duration of his employment by MAAX Canada or reasons for the cessation of such employment, and inure to the benefit of his administrators, executors, heirs and assigns, although the obligations of Executive are personal and may be performed only by him. The Company and MAAX Canada may assign this Agreement and their rights, together with their obligations, hereunder (a) in connection with any sale, transfer or other disposition of all or substantially all of its assets or business(es), whether by merger, consolidation or otherwise; or (b) in whole or in part, to any wholly owned subsidiary of the Company, provided that the Company and MAAX Canada shall remain liable for their respective obligations hereunder. This Agreement shall also be binding upon and inure to the benefit of the Company, MAAX Canada and their subsidiaries, successors and assigns. 11.4. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be considered to have the force and effect of an original. 11.5. Attorneys' Fees. In the event that any action is brought to enforce any of the provisions of this Agreement, or to obtain money damages for the breach thereof, and such action results in the award of a judgment for money damages or in the granting of any injunction in favor of one of the parties to this Agreement, all expenses, including reasonable attorneys' fees, shall be paid by the non-prevailing party. 11.6. Severability. If any portion of this Agreement is held invalid or inoperative, the other portions of this Agreement shall be deemed valid and operative and, so far as is reasonable and possible, effect shall be given to the intent manifested by the portion held invalid or inoperative. 11.7. Entire Agreement. This Agreement supersedes all prior agreements between the parties with respect to its subject matter (including without limitation any employment arrangements between Executive and MAAX Inc. or any of its subsidiaries and that certain letter agreement dated as of March 10, 2004 among J.W. Childs Equity Funding III, Inc., Borealis, OMERS and Executive) and is intended (with the documents referred to herein) as a complete and exclusive statement of the terms of the agreement between the parties with respect thereto. 12 IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the date first above written. THE COMPANY: MAAX Corporation By: /s/ James C. Rhee ------------------------------------ Name: James C. Rhee Title: Secretary MAAX CANADA: MAAX Canada Inc. By: /s/ Denis Aubin ------------------------------------ Name: Denis Aubin Title: Vice President and Secretary EXECUTIVE: /s/ Andre Heroux ------------------------------------ Andre Heroux Address and Facsimile: ------------------------- ------------------------- ------------------------- [Employment Agreement Signature Page] EX-10.3 48 y99327exv10w3.txt EMPLOYMENT AGREEMENT Exhibit 10.3 [MAAX LOGO] CONFIDENTIAL CORPORATE LETTER OF EMPLOYMENT (EFFECTIVE AT CLOSING, JUNE 4, 2004) DATE: MAY 3, 2004 NAME: DENIS AUBIN POSITION: EXECUTIVE VP AND CHIEF FINANCIAL OFFICER PLACE OF EMPLOYMENT: MONTREAL HEAD OFFICE, QUEBEC, CANADA JOB RESPONSIBILITIES - - Executive Committee member; - - Executive has four direct reports: - VP Corporate Controller - VP Corporate MIS - Director Corporate Purchasing - Director Corporate Asian Sourcing - - Responsible for "Treasury" operations; - - Responsible for capital markets and access to banks; - - Investors relations (Buy/Sell); - - Taxation; - - MAAX Risk management; HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 [MAAX LOGO] CORPORATE - - Financial controls and results of the Company - Income statement - Balance sheet - Cash management - - External audit controls and Company policies/procedures; - - Budget process including review of operational and financial performance of the Company; - - Corporate purchasing and Asian Sourcing strategies; - - MIS Strategies (Hardware IT and software business solution); - - Participation in Board of Directors meetings; - - Reports to President and CEO. REMUNERATION - - Annual salary of three hundred thousand (300,000$) dollars; - - Potential to receive an annual cash bonus of up to 50% of his annual base salary (The maximum bonus amount). MAAX bonus program is based on three components: - MAAX Conso EBITDA for 40% of maximum bonus amount; - MAAX Conso Working Capital for 40% of maximum bonus amount; - Company objectives for 20% of maximum bonus amount. - - Annual review based on your performance and the Company's performance. CAR POLICY - - You are entitled to a company vehicle of sixty-eight thousand (68,000$) dollars value. The Company will reimburse all expenses related to this vehicle. HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 LETTER OF EMPLOYMENT - DENIS AUBIN 2 [MAAX LOGO] CORPORATE SHARE OPTIONS - - Executive will be allocated 10% of the total options available under the Company's Share Options Plan (8% of the initial capitalization of the Company) based on a recommendation by CEO and approved by the Board of Directors. Such options will have an exercise price equal to the purchase price per share paid by Childs, Borealis and OMERS for their shares at the closing. 30% of the options granted under the plan will vest ratably over five (5) years (20% per year). 70% of the options granted under the plan are performance-vesting options. See Company Share Option Program for details. OTHER BENEFITS - - Entitled to participate in all health life, disability, sick leave and other benefits made available by the Company; - - Contribution to the MAAX retirement plan which is 4% of annual salary; - - Entitled to four (4) weeks paid vacation per year; - - Entitled to annual professional club membership up to four thousand/year ((4,000$/ year). TERMINATION WITHOUT CAUSE - - If the Company terminates your employment without cause, you will receive one-year base salary severance package, including targeted annual bonus. HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 LETTER OF EMPLOYMENT - DENIS AUBIN 3 [MAAX LOGO] CORPORATE INVESTMENT - EQUITY PARTICIPATION IN NEWCO - - You are entitled to invest in Newco by acquiring the same class of shares of the Company at the same purchase price as all shareholders. You must confirm by May 7, 2004. STE-MARIE, _____________________ 2004 /s/ Andre Heroux /s/ Denis Aubin - -------------------------------------- ---------------------------------------- Andre Heroux Denis Aubin President and CEO Executive VP and Chief Financial Officer HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 LETTER OF EMPLOYMENT - DENIS AUBIN 4 EX-10.4 49 y99327exv10w4.txt EMPLOYMENT AGREEMENT Exhibit 10.4 [MAAX LOGO] CONFIDENTIAL CORPORATE LETTER OF EMPLOYMENT (EFFECTIVE AT CLOSING, JUNE 4, 2004) DATE: MAY 3, 2004 NAME: BENOIT BOUTET POSITION: VP CORPORATE CONTROLLER PLACE OF EMPLOYMENT: MONTREAL HEAD OFFICE, QUEBEC, CANADA JOB RESPONSIBILITIES - - Sector Controllers FI and CO report to VP Corporate Controller; - - Responsible for the control and reporting function of MAAX; - - Produces monthly, quarterly and annual consolidated financial statements; - - Coordinates the budgeting and business planning process; - - Responsible for the design and implementation of an adequate management accounting system; - - Supports senior management in the monitoring and evaluation of business performance; - - Supports the CFO in the negotiation and implementation of financing strategies; - - Recommends and implements financial risk management strategies; - - Provides support in the acquisition and divestment of companies; - - Manages our insurance program; - - Coordinates tax planning and filing process; - - Supervises all plant, division and corporate controllers who report directly to him; HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 LETTER OF EMPLOYMENT - BENOIT BOUTET [MAAX LOGO] CORPORATE - - Member of the Executive Committee; - - Reports directly to the EVP and CFO. REMUNERATION - - Annual salary of one hundred seventy-five thousand (175,000$) dollars; - - Potential to receive an annual cash bonus of up to 50% of his annual base salary (The maximum bonus amount). MAAX bonus program is based on three components: - MAAXConso EBITDA for 40% of maximum bonus amount; - MAAX Conso Working Capital for 40% of maximum bonus amount; - Company objectives for 20% of maximum bonus amount. - - Annual review based on your performance and the Company's performance. CAR POLICY - - You are entitled to a company vehicle of forty-five thousand (45,000$) dollars value. The Company will reimburse all expenses related to this vehicle. SHARE OPTIONS - - Executive will be allocated 2% of the total options available under the Company's Share Options Plan (8% of the initial capitalization of the Company) based on a recommendation by CEO and approved by the Board of Directors. Such options will have an exercise price equal to the purchase price per share paid by Childs, Borealis and OMERS for their shares at the closing. 30% of the options granted under the plan will vest ratably over five (5) years (20% per year). 70% of the options granted under the plan are performance-vesting options. See Company Share Option Program for details. HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 LETTER OF EMPLOYMENT - BENOIT BOUTET 2 [MAAX LOGO] CORPORATE OTHER BENEFITS - - Entitled to participate in all health life, disability, sick leave and other benefits made available by the Company; - - Contribution to the MAAX retirement plan, which is 4% of annual salary; - - Entitled to four (4) weeks paid vacation per year. TERMINATION WITHOUT CAUSE - - If the Company terminates your employment without cause, you will receive one-year base salary severance package. INVESTMENT - EQUITY PARTICIPATION IN NEWCO - - You are entitled to invest in Newco by acquiring the same class of shares of the Company at the same purchase price as all shareholders; - - You are authorized to rollover your proceeds from the current MAAX Stock Option Plan which represents ten thousand (10,000) options at a value of one hundred thirty-two thousand five hundred (132,500$) dollars; - - You will receive a separate letter regarding the instructions to roll over or exercise your options. Please confirm by May 7, 2004; - - You are welcome to add a further investment if you choose so. Please advise by May 7, 2004. STE-MARIE, _____________________ 2004 /s/ Andre Heroux /s/ Benoit Boutet - -------------------------------------- -------------------------------------- Andre Heroux Benoit Boutet President and CEO VP Corporate Controller HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 LETTER OF EMPLOYMENT - BENOIT BOUTET 3 EX-10.5 50 y99327exv10w5.txt EMPLOYMENT AGREEMENT EXHIBIT 10.5 (MAAX LOGO) CONFIDENTIAL CORPORATE LETTER OF EMPLOYMENT (EFFECTIVE AT CLOSING JUNE 4, 2004) DATE: MAY 3, 2004 NAME: PATRICE HENAIRE POSITION: CORPORATE VICE PRESIDENT SALES, MARKETING AND R&D PLACE OF EMPLOYMENT: CORPORATE OFFICE IN MONTREAL, QUEBEC, CANADA - -------------------------------------------------------------------------------- JOB RESPONSIBILITIES - - Sales, Marketing and R&D strategies for MAAX; - - Corporate Customers Key Accounts strategies and relationships; - - MAAX Marketing Public Relations and Communications; - - MAAX Officer Brands Assets and strategies; - - MAAX Corporate Research and development department; - - Direct reports to Executive are: - Communications Manager (Marketing) - Graphics Design Manager (Marketing) - Research and Development Director - VP of Key Accounts Relationship - - Dotted line reports to Executive are: - Sales and Marketing Vice President in our three sectors; - Development Directors in our three sectors; - - Member of MAAX Executive Committee; - - You report to the President and CEO. HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 (MAAX LOGO) CORPORATE REMUNERATION - - Annual salary of one hundred eighty-two thousand two hundred fifty (182,250$) CDN dollars; - - Annual review based on your performance and the company's performance; - - Eligible to bonus incentive program maximum amount is 50% of the annual salary based on MAAX bonus program for senior managers, which is based on three components: - MAAX Conso EBITDA for 40% of maximum bonus amount; - MAAX Conso Working Capital for 40% of maximum bonus amount; - Company objectives for 20% of maximum bonus amount. CAR POLICY - - You are entitled to a company vehicle of forty-five thousand (45,000$) dollars value. The Company will reimburse all expenses related to this vehicle. SHARE OPTIONS - - You will be allocated 5% of the total options available under the Company's Share Options Plan (8% of the initial capitalization of the Company) based on a recommendation by CEO and approved by the Board of Directors. Such options will have an exercise price equal to the purchase price per share paid by Childs, Borealis and OMERS for their shares at the closing. 30% of the options granted under the plan will vest ratably over five (5) years (20% per year). 70% of the options granted under the plan are performance-vesting options. See Company Share Option Program for details. OTHER BENEFITS - - Entitled to participate in all health life, disability, sick leave and other benefits made available by the Company; - - Contribution to the MAAX retirement plan, which is 4% of annual salary; - - Entitled to four (4) weeks paid vacation per year. HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 2 (MAAX LOGO) CORPORATE RELOCATION COSTS - - The Company will reimburse all your incurred direct costs for your relocation to Montreal. Refer to MAAX policy on relocation for all details. TERMINATION WITHOUT CAUSE - - If the Company terminates your employment without cause, you will receive one year base salary severance package. INVESTMENT - EQUITY PARTICIPATION IN NEWCO - - You are entitled to invest in Newco by acquiring the same class of shares of the Company at the same purchase price as all shareholders; - - You are authorized to rollover your proceeds from the current MAAX Stock Option Plan which represents ten thousand (10,000) options at a value of one hundred thirty-two thousand five hundred (132,500$) dollars; - - You will receive a separate letter regarding the instructions to roll over or exercise your options. Please confirm by May 7, 2004; - - You are welcome to add a further investment if you choose so. Please advise by May 14, 2004. STE-MARIE, _____________________ 2004 /s/ Andre Heroux /s/ Pat Henaire - --------------------------------- --------------------------------------- Andre Heroux Pat Henaire President and CEO Vice President Sales, Marketing and R&D HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 3 EX-10.6 51 y99327exv10w6.txt EMPLOYMENT AGREEMENT Exhibit 10.6 [MAAX LOGO] CONFIDENTIAL CORPORATE LETTER OF EMPLOYMENT (EFFECTIVE AT CLOSING, JUNE 4, 2004) DATE: MAY 3, 2004 NAME: JEAN ROCHETTE POSITION: CORPORATE VP/GM BATHROOM SECTOR WHOLESALE/SHOWROOM PLACE OF EMPLOYMENT: ANJOU, QUEBEC (MAAX ANJOU OR MAAX LACHINE OR MAAX BEAUCE) JOB RESPONSIBILITIES - - Responsible for general management of Bathroom Sector Wholesale/Showroom for Canada and USA: - 12 plants - 12 distribution centers - 325M$ Sales revenue per year (FY2005) - 30M$ Net Income per year (FY2005) - 2,100 Employees - - Preparation and execution of Sector Business Plan accompanied by financial budgets to meet MAAX Bathroom Sector goals and objectives; - - Sector leadership and management of Human Resources throughout all divisions; - - Financial performance for his sector - EBITDA - Working Capital - - Sales and Marketing strategies for his sector; - - Manufacturing, Logistics and Distribution strategies for his sector; - - Product development implementation within MAAX strategic direction; - - Business relationships with customers; HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 [MAAX LOGO] CORPORATE - - Member of MAAX Executive Committee; - - Reports to President and CEO. REMUNERATION - - Annual salary of three hundred thousand (300,000$) dollars; - - Potential to receive an annual cash bonus of up to 75% of his annual base salary (The maximum bonus amount). MAAX bonus program is based on three components: - Sector EBITDA for 40% of maximum bonus amount; - Sector Working Capital for 40% of maximum bonus amount; - Company objectives for 20% of maximum bonus amount. - - Annual review based on your performance and the Company's performance. CAR POLICY - - You are entitled to a company vehicle of sixty thousand (60,000$) dollars value. The Company will reimburse all expenses related to this vehicle. SHARE OPTIONS - - Executive will be allocated 10% of the total options available under the Company's Share Options Plan (8% of the initial capitalization of the Company) based on a recommendation by CEO and approved by the Board of Directors. Such options will have an exercise price equal to the purchase price per share paid by Childs, Borealis and OMERS for their shares at the closing. 30% of the options granted under the plan will vest ratably over five (5) years (20% per year). 70% of the options granted under the plan are performance-vesting options. See Company Share Option Program for details. OTHER BENEFITS - - Entitled to participate in all health life, disability, sick leave and other benefits made available by the Company; - - Contribution to the MAAX retirement plan, which is 4% of annual salary; - - Entitled to four (4) weeks paid vacation per year. HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 LETTER OF EMPLOYMENT -- JEAN ROCHETTE 2 [MAAX LOGO] CORPORATE TERMINATION WITHOUT CAUSE - - If the Company terminates your employment without cause, you will receive one-year base salary and bonus as severance package. INVESTMENT - EQUITY PARTICIPATION IN NEWCO - - You are entitled to invest in Newco by acquiring the same class of shares of the Company at the same purchase price as all shareholders; - - You are authorized to rollover your proceeds from the current MAAX Stock Option Plan which represents fifty thousand (50,000) options at a value of four hundred twenty-seven thousand seven hundred and fifty (427,750$) dollars; - - You will receive a separate letter regarding the instructions to roll over or exercise your options. Please confirm by May 7, 2004; - - You are welcome to add a further investment if you choose so. Please advise by May 7, 2004. STE-MARIE, 2004 ------------------------ /s/ Andre Heroux /s/ Jean Rochette - -------------------------------------- ---------------------------------------- Andre Heroux Jean Rochette President and CEO VP/GM Bathroom Sector Wholesale/Showroom HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 LETTER OF EMPLOYMENT -- JEAN ROCHETTE 3 EX-10.7 52 y99327exv10w7.txt EMPLOYMENT AGREEMENT Exhibit 10.7 [MAAX LOGO] CONFIDENTIAL CORPORATE LETTER OF EMPLOYMENT (EFFECTIVELY AT CLOSING, JUNE 4, 2004) DATE: APRIL 23, 2004 NAME: GUY BERARD POSITION: VP/GM CABINETRY SECTOR OF MAAX PLACE OF EMPLOYMENT: LAVAL, QUEBEC (MAAX LAVAL) JOB RESPONSIBILITIES - - Responsible for general management of MAAX Cabinetry Sector: - 2 plants - 68M$ Sales revenue per year (FY2005) - 3.7M$ Net Income per year (FY2005) - 515 Employees - - Preparation and execution of Sector Business Plan accompanied by financial budgets to meet MAAX Cabinetry Sector goals and objectives; - - Sector leadership and management of Human Resources throughout bath cabinetry plants; - - Financial performance for his sector - EBITDA - Working Capital - - Sales and Marketing strategies for his sector; - - Manufacturing, Logistics and Distribution strategies for his sector; - - Product development implementation within MAAX strategic direction; - - Business relationships with customers; HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 [MAAX LOGO] CORPORATE - - Member of MAAX Executive Committee; - - Reports to President and CEO. REMUNERATION - - Annual salary of one hundred eighty-five thousand (185,000$) CDN dollars; - - Potential to receive an annual cash bonus of up to 50% of his annual base salary (the maximum bonus amount). MAAX bonus program is based on three components: - Sector EBITDA for 40% of maximum bonus amount; - Sector Working Capital for 40% of maximum bonus amount; - Company objectives for 20% of maximum bonus amount. - - Annual review based on your performance and the Company's performance. CAR POLICY - - You are entitled to a company vehicle of forty-five thousand (45,000$) dollars value. The Company will reimburse all expenses related to this vehicle. SHARE OPTIONS - - Executive will be allocated 2% of the total options available under the Company's Share Options Plan (8% of the initial capitalization of the Company) based on a recommendation by CEO and approved by the Board of Directors. Such options will have an exercise price equal to the purchase price per share paid by Childs, Borealis and OMERS for their shares at the closing. 30% of the options granted under the plan will vest ratably over five (5) years (20% per year). 70% of the options granted under the plan are performance-vesting options. See Company Share Option Program. OTHER BENEFITS - - Entitled to participate in all health life, disability, sick leave and other benefits made available by the Company; HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 2 [MAAX LOGO] CORPORATE - - Contribution to the MAAX retirement plan, which is 3% of annual salary; - - Entitled to four (4) weeks paid vacation per year. TERMINATION WITHOUT CAUSE - - If the Company terminates your employment without cause, you will receive one-year base salary severance package. INVESTMENT - EQUITY PARTICIPATION IN NEWCO - - You are entitled to invest in Newco by acquiring the same class of shares of the Company at the same purchase price as all shareholders; - - You are authorized to rollover your proceeds from the current MAAX Stock Option Plan which represents ten thousand (10,000) options at a value of forty thousand (40,000$) dollars; - - You will receive a separate letter regarding the instructions to roll over or exercise your options. Please confirm by May 7, 2004. - - You are welcome to add a further investment if you choose so. Please advise by May 7, 2004. STE-MARIE, _____________________ 2004 /s/ Andre Heroux /s/ Guy Berard - -------------------------------------- ---------------------------------------- Andre Heroux Guy Berard President and CEO VP/GM Cabinetry Sector HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 3 EX-10.8 53 y99327exv10w8.txt EMPLOYMENT AGREEMENT Exhibit 10.8 [MAAX LOGO] CONFIDENTIAL CORPORATE LETTER OF EMPLOYMENT (EFFECTIVE AT CLOSING, JUNE 4, 2004) DATE: APRIL 23, 2004 NAME: TERRY RAKE POSITION; VP/GM SPAS SECTOR OF MAAX PLACE OF EMPLOYMENT: CHANDLER, ARIZONA (MAAX CHANDLER) JOB RESPONSIBILITIES - - Responsible for general management of MAAX Spas Sector: - 2 plants - 82M$ Sales revenue per year (FY2005) - 288,313$ Net Income per year (FY2005) - 255 Employees - - Preparation and execution of Sector Business Plan accompanied by financial budgets to meet MAAX Spas Sector goals and objectives; - - Sector leadership and management of Human Resources throughout all divisions; - - Financial performance for his sector - EBITDA - Working Capital - - Sales and Marketing strategies for his sector; HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 [MAAX LOGO] CORPORATE - - Manufacturing, Logistics and Distribution strategies for his sector; - - Product development implementation within MAAX strategic direction; - - Business relationships with customers; - - Member of MAAX Executive Committee; - - Reports to President and CEO. REMUNERATION - - Annual salary of one hundred sixty thousand (160,000$) US dollars; - - Potential to receive an annual cash bonus of up to 50% of his annual base salary (The maximum bonus amount). MAAX bonus program is based on three components: - Sector EBITDA for 40% of maximum bonus amount; - Sector Working Capital for 40% of maximum bonus amount; - Company objectives for 20% of maximum bonus amount. - - Annual review based on your performance and the Company's performance. CAR POLICY - - You are entitled to a company vehicle of forty-five thousand (45,000$) US dollars value. The Company will reimburse all expenses related to this vehicle. SHARE OPTIONS - - Executive will be allocated 2% of the total options available under the Company's Share Options Plan (8% of the initial capitalization of the Company) based on a recommendation by CEO and approved by the Board of Directors. Such options will have an exercise price equal to the purchase price per share paid by Childs, Borealis and OMERS for their shares at HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 LETTER OF EMPLOYMENT -- TERRY RAKE 2 [MAAX LOGO] CORPORATE the closing. 30% of the options granted under the plan will vest ratably over five (5) years (20% per year). 70% of the options granted under the plan are performance-vesting options. See Company Share Option Program for details. OTHER BENEFITS - - Entitled to participate in all health life, disability, sick leave and other benefits made available by the Company, including 401K; - - Entitled to four (4) weeks paid vacation per year. TERMINATION WITHOUT CAUSE - - If the Company terminates your employment without cause, you will receive one-year base salary severance package. INVESTMENT - EQUITY PARTICIPATION IN NEWCO - - You are entitled to invest in Newco by acquiring the same class of shares of the Company at the same purchase price as all shareholders; - - You are authorized to rollover your proceeds from the current MAAX Stock Option Plan which represents twenty-five thousand (25,000) options at a value of two hundred eighty-nine thousand (289,000$) CDN dollars; - - You will receive a separate letter regarding the instructions to roll over or exercise your options. Please confirm by May 7, 2004; HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 LETTER OF EMPLOYMENT -- TERRY RAKE 3 [MAAX LOGO] CORPORATE - - You are welcome to add a further investment if you choose so. Please advise by May 7, 2004. STE-MARIE, _____________________ 2004 /s/ Andre Heroux /s/ Terry Rake ______________________________________ ________________________________________ Andre Heroux Terry Rake President and CEO VP/GM Spas Sector HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 LETTER OF EMPLOYMENT -- TERRY RAKE 4 EX-10.9 54 y99327exv10w9.txt EMPLOYMENT AGREEMENT Exhibit 10.9 [MAAX LOGO] EMPLOYMENT AGREEMENT entered into in Sainte-Marie, Quebec, as of December 1st, 2003 by and between: MAAX-KSD Corporation, a Pennsylvania corporation (the "Company") and: Daniel Stewart domiciled and residing at 2013 Country Club Dr, Doylestown, PA 18901, USA ("Executive") and: MAAX Inc., incorporated under the laws of the province of Quebec, having its head office at 640, Cameron, Sainte-Marie, Quebec, G6E 1B2 represented hereunder by Mr. Andre Heroux, its President and CEO, duly authorized as he so declares; 1. TERM The term of this Agreement shall be for an initial period of thirty-six (36) months beginning March 1st, 2004 and expiring on February 28, 2007. A 90-day written notice must be given by either party to terminate or renew this Agreement. 2. COMPENSATION During the Term, as compensation for performing the services required by this Agreement, Executive shall be compensated as follows: (a) Base Compensation: The Company shall pay to Executive an annual base salary (the "Base Compensation") during the Initial Term of one hundred ninety-five thousand ($195,000) dollars. (b) Performance Compensation: In addition to Base Compensation, Executive shall receive bonus compensation ("Performance Compensation") equal to 1.25% of the Company's "EBITDA" for each of the Company's fiscal years during the Term in which the Company's EBITDA equals or exceeds nine million ($9,000,000) dollars, beginning with the fiscal year from March 1st, 2004 through February 28, 2007. The Performance Compensation shall be payable quarterly, within 30 days after the end of each fiscal quarter. The term "EBITDA" means the Company's SIEGE SOCIAL / HEAD OFFICE 640, Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 1 EMPLOYMENT AGREEMENT Daniel Stewart December 2003 earnings before interest, income taxes, depreciation, amortization expenses, goodwill, depreciation and corporate fees. Calculations are determined in accordance with generally accepted accounting principles consistent with the past accounting practices. Estimates: 2004-2005 Net sales estimates $80,000,000 EBITDA $12,000,000 2005-2006 Net sales estimates $85,500,000 EBITDA $15,000,000 2006-2007 Net sales estimates $90,900,000 EBITDA $16,000,000 3. EMPLOYEE BENEFITS (a) The Company will support up to eleven thousand five hundred ($11,500) dollars to the Executive to participate in the Company's health insurance plan, or other health, life, or disability insurance at the option of the employee on an annual basis (for Executive and his family). (b) Executive shall have the right to four weeks of paid vacation during each calendar year during the Term. Any vacation that is not taken in a given calendar year shall accrue and carry over to the following year only but cannot be monetarily compensated if not taken during such period. (c) During the Term, in order to facilitate the performance of the Executive's duties hereunder and otherwise for the convenience of the Company, the Company shall provide Executive with a monthly automobile allowance of, up to eight hundred ($800) dollars. The Company shall also be responsible for and shall pay for all costs associated with the use of such automobile, including, without limitation, insurance, fuel, maintenance and repairs. (d) Employee's principal duties shall be VPGM of MAAX Keystone Operations. He shall also oversee the MAAX Home Depot business within MAAX sectors to monitor - Business relationship with Home Depot - Overall marketing Agreements with Home Depot - Customer service levels with Home Depot - Profitability margins with Home Depot (e) Employee's work location will be MAAX Southampton for the MAAX Keystone operations. SIEGE SOCIAL / HEAD OFFICE 640, Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 2 EMPLOYMENT AGREEMENT Daniel Stewart December 2003 4. EXPENSES All normal expenses associated with business as approved by the President & CEO consistent with MAAX policies. 5. TERMINATION AND TERMINATION BENEFITS (a) Expiration of the Contract: Upon the expiration of the Contract, the Executive shall be paid (in a lump sum on the date of termination) his Base Compensation through the date of termination plus any Performance Compensation payable to him at prorata for any prior fiscal quarters which have not been paid. (b) Termination by the Company With Cause: The Company may terminate Executive's employment, with "Cause," prior to the expiration of the Term. In such event, the Executive shall be paid his Base Compensation through the date of termination plus any Performance Compensation payable to him at prorata for any prior fiscal quarters, which have not been paid, and be provided with the benefits up to the effective date of such termination. Termination for cause shall be defined as employee's intentional act to harm the company, to commit fraud with respect to the operations of the company, or if the employee is convicted of fraud or a felony regardless of whether the employee was acting within the course and scope of his employment of personally. Disability: If due to illness, physical or mental disability, or other incapacity ("Disability"), the Executive shall fail, for a total of any six (6) consecutive months, to perform the principal duties required by this Agreement, the Company may terminate Executive's employment (effective upon the end of such period) upon 30 days' prior written notice to Executive. In such event, Executive shall be paid (in a lump sum on the date of termination) his Base Compensation through the date of termination, any Performance Compensation payable to him for any prior fiscal quarters which have not been paid, plus a severance amount equal to Base Compensation for a period of 90 days, less all amounts received from any insurer according to the health benefits company program. For purposes of this Agreement, "Cause" shall mean an act of dishonesty by Executive constituting a crime that resulted in or was intended to result in gain to or personal enrichment of Executive at Company's expense. SIEGE SOCIAL / HEAD OFFICE 640, Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 3 EMPLOYMENT AGREEMENT Daniel Stewart December 2003 (c) Termination by the Company without "Cause": The Company may terminate Executive's employment prior to the expiration of the contract, without Cause, upon 30 days prior written notice to Executive. Company's failure to comply with paragraph 3 shall be deemed a termination by company without cause hereunder. If the foregoing termination occurs during the Term, the Executive shall be paid, in a lump sum payable on the date of termination of employment, his Base Compensation for the remainder of the contract, PLUS any Performance Compensation payable to him for any prior fiscal quarters which have not been paid, PLUS an amount equal to the total Performance Compensation the Executive would have earned for the remainder of the Term if his employment had not been so terminated without Cause, based upon an annual EBITDA for the remaining term of the contract. Also the Executive shall be provided all personal benefits to the end of the contract excluding discretionary expenses. All provisions under paragraph six will further be waived. (d) Termination by Executive: Executive may terminate Executive's employment prior to the expiration of the Term, upon 30 days prior written notice to the Company. In such event, the Executive shall be paid his Base Compensation through the date of termination plus any Performance Compensation payable to him for any pro rata prior fiscal quarters, which have not been paid. (e) Change of control: Upon change of control of MAAX, in the case of the Executive services are no longer required by the new owner, a 12 months severance package (base salary and performance compensation) shall be paid to the Executive. Death Benefit: In the event of Executive's death during the Term, the Executive's estate shall be paid in a lump sum an amount equal to his Base Compensation through the date of death, and Base Compensation for an additional 90 days. 6. NONCOMPETITION, NONINTERFERENCE AND NONSOLICITATION (a) During his employment and for a period of two years thereafter, Executive shall not solicit, induce or encourage any person or entity, who at the time of or within six months prior to termination of Executive's employment, was a customer, employee, independent contractor or supplier of the Company, to do business with Executive in a business competitive with such Company. (b) During his employment and for a period of two years following Termination of Executive's employment for any reason, Executive shall not use for his personal SIEGE SOCIAL / HEAD OFFICE 640, Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 4 EMPLOYMENT AGREEMENT Daniel Stewart December 2003 benefit, or disclose, communicate or divulge to, or use for the benefit of any person, firm, association or company, or third party, other than the Company any information regarding the business methods, policies, procedures, techniques, research or development projects or results, trade secrets, or other knowledge or processes of or developed by the Company. 7. MISCELLANEOUS (a) Any and all references to dollar amounts in this Agreement refer to U.S. dollars only. (b) This Agreement constitutes the entire understanding between the parties; any amendment or modification may only be accompanied by a written document signed by all parties. MAAX Inc. is jointly severally guaranteeing MAAX/KSD obligations under this Agreement. (c) This Agreement is personal in nature and neither of the parties shall, without written consent of the other, assign or transfer this Agreement or any rights or obligations hereunder. This Agreement and all of the provisions herein shall be binding upon and inure to the benefit of, the parties hereto and their successors (including successors by merger, consolidation or similar transactions), permitted assigns, personal representatives, heirs, executors and administrators. (d) Any controversy or claim arising out of or relating to this Agreement or the breach thereof or otherwise arising out of Executive's employment or the termination of that employment shall, to the fullest extent permitted by law, be settled by arbitration in any forum agreed upon by the parties or, in the absence of such an Agreement, under the auspices of the American Arbitration Association (AAA) in Philadelphia, Pennsylvania, in accordance with the employment dispute resolution rules of the AAA including but not limited to, the rules and procedures applicable to the selection of arbitrators. (e) This Agreement shall be binding upon MAAX Inc. and MAAX KSD corp., its successors, assignees or affiliates. (f) This Agreement may be signed by facsimile and in counterpart, which shall be considered a legally binding original. SIEGE SOCIAL / HEAD OFFICE 640, Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 5 EMPLOYMENT AGREEMENT Daniel Stewart December 2003 IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement at the place and as of the date first written above. MAAX Inc. By: /s/ Andre Heroux -------------------------------------------- Andre Heroux President & CEO Date: -------------------------------------------- /s/ Dan Stewart -------------------------------------------- Dan Stewart Vice President, General Manager MAAX KSD & MAAX Home Depot Business Coordinator Date: -------------------------------------------- SIEGE SOCIAL / HEAD OFFICE 640, Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 6 EX-10.10 55 y99327exv10w10.txt MANAGEMENT AGREEMENT EXHIBIT 10.10 (Unofficial English Translation) MANAGEMENT AGREEMENT entered into in the city of Sainte-Marie, Judicial District of Beauce, Province of Quebec, Canada BY AND BETWEEN: MAAX INC., a corporation duly incorporated under Part 1A of the Companies Act (Quebec), having its registered office at 640, route Cameron, in Sainte-Marie, Province of Quebec G6E 1B2, in the Judicial District of Beauce, herein acting and represented by Jacques A. VACHON, Esq., its Secretary, duly authorized to act under the terms of a resolution passed by the Board of Directors on January 10, 2001, an extract of which is attached hereto as Schedule "A"; (hereinafter referred to as the "CORPORATION"); AND: GESTION CAMADA INC., a corporation duly incorporated under Part 1A of the Companies Act (Quebec), having its registered office at 583, rue Sainte-Madeleine, in Sainte-Marie, Province of Quebec G6E 3H9, herein acting and represented by Placide POULIN, its President, duly authorized to act under the terms of a resolution passed by the Board of Directors on January 10, 2001, a copy of which is attached hereto as Schedule "B"; (hereinafter referred to as the "MANAGER"); PREAMBLE THE PARTIES HERETO DECLARE AS FOLLOWS: (A) The Corporation operates a business engaged in the design, manufacture, sale and distribution of bathtubs, showers, spas, bathroom fixtures and kitchen cabinets; (B) For the purposes of internal organization, the Corporation is planning to create positions at the senior executive level and on the executive committee, which it wishes to fill; (C) The Corporation wishes to ensure that it will benefit from sound management and procure for itself all the necessary management resources to promote the growth of the Corporation; (D) The Manager is prepared to provide all the necessary resources to execute the offices of the Corporation; (E) It is the wish of the parties that the Corporation shall be managed in compliance with its mission and growth objectives in the best interests and for the benefit of its shareholders; (F) It is in the interest of the parties hereto to record the various terms and conditions of their agreement in the form of a private contract; NOW THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS: 0.00 INTERPRETATION 0.01 DEFINITIONS Unless otherwise implicitly or explicitly indicated in the text, the following words and expressions shall be interpreted according to the definitions set out below every time such words and expressions appear in this Agreement or in any document subject thereto: 0.01.01 AGREEMENT means this Agreement, including the preamble, the schedules attached hereto, any document that may be subject to this Agreement and any amendments made thereto from time to time by the parties, and the words "hereof", "herein", "hereto", "hereunder" and "hereby" and any other similar words or expressions, when used in this Agreement, shall generally refer to the entirety of the Agreement and not to any one part thereof, unless otherwise indicated. 0.01.02 CONFIDENTIAL INFORMATION generally means any information generated for business purposes by the Corporation, its suppliers or its clients, in any form whatsoever, which is not freely accessible within the Corporation and the disclosure of which to a third party could cause serious harm to the Corporation, including, without limitation, procurement sources, terms of sale offered by suppliers, product composition, production and marketing techniques and methods, price lists, client lists, particular requirements of the clients, internal reports, market research, personnel files, etc. 0.01.03 INTELLECTUAL PROPERTY means all intellectual property rights that the Corporation may lay claim to as an owner, holder, author, licensee or other user during the term of this Agreement with respect to the following incorporeal property: - logos, designs, drawings, crests, emblems, symbols, pictograms, slogans, signs, plaques, forms, software and any other work protected under the Copyright Act and used in the business of the Corporation; - trademarks, as such expression is defined in the Trade-marks Act, whether or not they are registered, and used by the Corporation in connection with the products and services sold by it; - industrial designs used in the manufacture of its products and which may be protected under the Industrial Design Act; - inventions, processes, methods and techniques, whether or not they are patented, in compliance with the Patent Act as well as trade secrets and 2 know-how used in the design, production and marketing of its products and services. 0.02 ENTIRETY OF THE AGREEMENT This Agreement constitutes the entire agreement entered into between the parties, to the exclusion of any other document, promise or previous or concurrent verbal agreement that may have been made in the course of negotiations leading to the execution of this Agreement, and no such other document, promise or verbal agreement may be used as evidence to modify any of the provisions of this Agreement or affect them in any way. 0.03 JURISDICTION 0.03.01 GOVERNING LAW This Agreement shall be governed, construed and applied in accordance with the laws of the Province of Quebec and the laws of Canada applicable therein. 0.03.02 INVALIDITY Any provision of this Agreement which is in violation of applicable law shall be deemed to be null and void to the extent that it is prohibited by any such law and any other clause that is subject or related to such provision shall be deemed to be null and void to the extent that the applicability thereof is conditional upon such provision. 0.03.03 ADAPTATION Where a provision is illegal under any law, it shall be construed in such a manner as to make it consistent with such law or otherwise in such manner as is most consistent with the intention of the parties without violating the requirements of such law. 0.03.04 CONTINUATION OR RESCISSION If any provision of this Agreement is prohibited by law, the remainder of the Agreement shall remain in full force and effect and continue to be binding upon the parties, unless the illegal provision comprises an essential and indivisible condition of this Agreement, in which case the Agreement may be rescinded and the parties restored to their previous condition, to the extent possible given the changes that have been made to their situation since the coming into force of this Agreement, for the purpose of effecting an equivalent restitution. 3 0.04 GENERAL 0.04.01 CANADIAN CURRENCY All references to currency in this Agreement are references to lawful money of Canada. 0.04.02 HEADINGS The headings included in this Agreement are not to be considered in the interpretation thereof; they serve only to identify and classify the provisions agreed to by the parties and set forth in this Agreement and, as such, have no meaning and no effect whatsoever on the interpretation of any particular provision. 1.00 ENGAGEMENT OF SERVICES Subject to the terms and conditions of this Agreement, the Corporation hereby engages the services of GESTION CAMADA INC. as MANAGER, and GESTION CAMADA INC. hereby agrees to provide at all times during the period from March 1, 2001 to February 29, 2004 all the agents necessary and qualified to act on behalf of the Corporation for the purpose of fulfilling the obligations set forth herein. 2.00 REMUNERATION In consideration of the services rendered to the Corporation by the Manager under this Agreement, the Corporation hereby agrees to pay to the Manager the remuneration described below: 2.01 BASE MANAGEMENT FEE The Corporation hereby agrees to pay to the Manager a base management fee calculated as follows: For the period from March 1 to February 28 of each year of the term of this Agreement, an amount equal to one million fifty thousand dollars ($1,050,000.00). The portion of the fee allocated to each agent and the ratio between the amount of the fee and the amount of the fringe benefits and training expenses are at the sole discretion and the sole responsibility of the Manager. The above fee shall be adjusted on March 1 of each year according to the fluctuations in the Canadian consumer price index (C.P.I.) for the region of Quebec. 4 The aforementioned fee includes the portion required by the Manager to pay deductions at source and fringe benefits and covers the training expenses required by the various levels of government with respect to each agent for each period of this Agreement. 2.02 PERFORMANCE FEE In addition to the base fee set forth in section 2.01 hereof, the Corporation hereby agrees to pay to the Manager an incentive fee based on the performance of the Corporation. The amount of the performance fee shall be equal to four and three tenths percent (4.3%) of earnings before taxes and bonuses of the Corporation, calculated on the basis of annual data and payable quarterly. The above performance fee includes the portion required by the Manager to pay deductions at source and fringe benefits as well as training expenses attributable to each of its agents. 2.03 STOCK OPTIONS 2.03.01 UPON EXECUTION OF THIS AGREEMENT Upon the execution of this Agreement and to create a greater interest in the business of the Corporation on the part of certain agents of the Manager, the Corporation hereby grants a stock option with respect to one hundred and forty thousand (140,000) Class A shares of the share capital of the Corporation. Such stock option shall be distributed as follows among the agents named below: HEROUX, Andre 65,000 POULIN, Marie-France 25,000 GARNEAU, Richard 25,000 POULIN, David 25,000 2.03.02 FOR EACH YEAR For each year between March 1, 2002 and February 29 2004, the Corporation agrees that a stock option on one hundred thousand (100,000) Class A shares of its share capital shall be granted annually, with the approval of the Board of Directors of the Corporation, to certain agents of the Manager, as follows: HEROUX, Andre 25,000 POULIN, Marie-France 25,000 GARNEAU, Richard 25,000 POULIN, David 25,000 5 2.03.03 STOCK OPTION PLAN The granting, exercise and conditions of applicability of these stock options shall be subject to the terms and conditions of the existing stock option plan of the Corporation. 2.04 ACKNOWLEDGEMENT The Manager hereby acknowledges that the fee to which it is entitled under this Management Agreement is limited to the base fee and the other forms of remuneration set forth in this Agreement and the Manager accepts and acknowledges that such fee and other forms of remuneration constitute full and final compensation for the functions which it is called upon to perform pursuant to this Agreement, unless otherwise agreed upon in writing by the parties. 3.00 TERMS OF PAYMENT 3.01 BASE FEE The base fee shall be payable in equal, consecutive, weekly payments. 3.02 PERFORMANCE FEE The performance fee shall be payable not later than within five (5) days after the statement of income has been approved by the Board of Directors of the Corporation at the end of each quarter. 4.00 OBLIGATIONS OF THE MANAGER 4.01 RESPONSIBILITIES The Manager shall assume the management of the Corporation through an executive committee and its agents. The Manager shall manage the general activities of the Corporation, including the management of the daily operations and of the short, medium and long-term objectives. The Manager shall set up the necessary structures to achieve the objectives of the Corporation. Without limiting the generality of the following, management of the daily operations shall include the following: - Developing and implementing the general policies of the Corporation; - Developing and implementing the budgets approved by the Board of Directors of the Corporation; - Evaluating and recruiting the senior management of the Corporation; 6 - Managing and coordinating the various committees; - Negotiating and managing the consolidated supplies of the Corporation; - Managing the aggregate assets of the Corporation; - Managing the liquid assets, cash flow and debt of the Corporation; - Developing the product range and new products; - Managing communications with the financial community; Without limiting the generality of the following, management of the short, medium and long-term objectives shall include the following: - Prospecting businesses for potential acquisitions; - Completing and integrating the acquisitions in compliance with criteria determined by the Board of Directors of the Corporation; - Developing strategies for the financial benefit of the shareholders; - Planning and managing capital investments; - Developing new manufacturing processes to ensure that the Corporation shall maintain and improve its competitive position. The parties may agree to make changes to the Manager's responsibilities described above without terminating this Agreement. 4.02 QUALIFICATIONS The Manager shall ensure at all times that its agents' qualifications shall satisfy the requirements of the Corporation with respect to the functions performed by such agents. 4.03 AGENTS The Manager shall at all times provide a sufficient number of sufficiently qualified agents to satisfy the requirements of the Corporation. Particular attention shall be paid to the agents who are members of the executive committee. Currently, such agents are: POULIN, Placide HEROUX, Andre GARNEAU, Richard POULIN, David POULIN, Marie-France 4.04 RENDERING ACCOUNTS The Manager hereby agrees to render account of its administration at each meeting of the Board of Directors or at the request of the Chairman of the Board, at the discretion of the same. Notwithstanding the rendering of account mentioned above, the Manager shall, at the appropriate time, provide the Board of Directors with all information that may 7 have an impact on the Corporation to allow the Corporation to participate in the making of important decisions. 4.05 BUSINESS OPPORTUNITIES The Manager acknowledges that all business opportunities presented to the Corporation by third parties shall become the property of the Corporation and the Manager hereby agrees not to divert any such business opportunity for its own benefit. 4.06 CONFIDENTIALITY The Manager hereby acknowledges that, in the performance of its duties under this Agreement, its agents will have access to confidential information relating to the business and operations of the Corporation. Furthermore, the Manager acknowledges that such confidential information could be used to the detriment of the Corporation. Therefore, the Manager hereby agrees that each of its agents shall undertake and agree not to disclose any such confidential information to any person, business or corporation during the term of this Agreement and for an additional period of TWO (2) years commencing on the date of the termination of such agent's functions as officer of the Corporation, without the prior written authorization of the Corporation. 4.07 INTELLECTUAL PROPERTY The Manager shall ensure that the intellectual property of the Corporation shall be classified internally and, if applicable, duly protected pursuant to the laws governing intellectual property that are applicable in the jurisdictions where the products and services are marketed. 4.08 NON-COMPETITION The Manager hereby undertakes and agrees, for the full term of this Agreement and for an additional term of one (1) year following the termination thereof, not to work, invest, offer its services or otherwise be involved in any way whatsoever, either directly or indirectly, as a director, officer, agent, employee, provider of funds or investor in a sole proprietorship, corporation, governmental agency or other entity that is in direct or indirect competition with the Corporation, within the following jurisdictions: - Canada - United States of America - All jurisdictions where the Corporation has a place of business. 8 5.00 OBLIGATIONS OF THE CORPORATION 5.01 AUTHORITY The Manager shall exercise the power and authority of the Board of Directors over the operations of the Corporation except for such power and authority as are by law expressly reserved for the Board of Directors. The Manager is responsible for hiring, firing and fixing the remuneration of the employees and agents of the Corporation. 5.02 INDEMNIFICATION The Corporation hereby agrees to defend and, if applicable, indemnify the Manager and each of its agents against any third-party claim that could be brought against any of them personally in connection with the performance of its functions within the Corporation. However, the Corporation is not required to fulfill this undertaking where the claimant is able to show that the Manager's agent acted in bad faith in the exercise of his or her functions. 5.03 RESOURCES The Corporation hereby agrees to provide the Manager with adequate human, financial and material resources, having regard to the circumstances and subject to availability, to enable the Manager to achieve the financial and strategic objectives of the Corporation and periodically to re-assess the requirements thereof. 5.04 PENSION FUND The Corporation hereby agrees to pay to the Manager on a yearly basis an aggregate amount equal to sixty-seven thousand five hundred dollars ($67,500) which the Manager shall use to contribute to an individual pension fund for the exclusive benefit of certain agents designated by the Manager. 6.00 MISCELLANEOUS PROVISIONS 6.01 FORCE MAJEURE No party hereto shall be considered to be in default under its obligations set forth in this Agreement if the performance of such obligations is delayed, impeded or prevented as a result of force majeure. Force majeure is any cause or event beyond the control of the parties hereto, which they could not reasonably have foreseen and against which they could not protect themselves, including, without limitation, any Act of God, fortuitous event, strike, total or partial work stoppage, lockout, fire, riot, intervention by the civil or military authorities, compliance with the regulations or orders of any governmental authority and acts of war (whether or not war has been declared). 9 6.02 NO ASSIGNMENT This Agreement is unassignable and no rights, duties or obligations thereunder may be sublet, assigned or transferred by any of the parties without the prior written authorization of the other. Any attempt to sublet, assign or transfer any rights, duties or obligations hereunder shall be null and void. 7.00 GENERAL PROVISIONS 7.01 SCHEDULES Any document attached to this Agreement and initialed by the parties for identification purposes forms an integral part hereof. 7.02 ELECTION The parties hereby agree to elect domicile in the Judicial District of Beauce in the Province of Quebec, Canada as the appropriate venue for the hearing of any claim or legal action brought on any grounds whatsoever, to the exclusion of all other Judicial Districts which may, by law, have jurisdiction over such proceedings. 7.03 AMENDMENT This Agreement may be amended or modified in whole or in part at the option of the parties, provided that no amendment or modification so made shall be valid unless effected in writing and duly signed by the parties and attached to this Agreement. 7.04 NO WAIVER Failure by a party, through silence, negligence or delay, to exercise any of its rights or remedies hereunder shall never be construed and set up against such party as a waiver of its rights and remedies, so long as the contractual or legal prescription for the exercise of such rights or remedies has not expired. 7.05 CONFIDENTIALITY The parties hereby agree not to disclose for the entire term of their mandate any confidential information brought to their attention. 8.00 EXPIRY OR TERMINATION OF THE AGREEMENT 8.01 EARLY TERMINATION 8.01.01 AUTOMATIC TERMINATION This Agreement shall terminate automatically and of right, without notice or demand, and no indemnity shall be paid to the Manager or the Corporation if any of the following events should occur: 10 - if a receiving order is rendered by a bankruptcy court against the Corporation or the Manager or if either the Corporation or the Manager makes an assignment of its property or is declared bankrupt as the result of the rejection of a proposal submitted to its creditors; - where the Manager is found guilty of theft, fraud or embezzlement with respect to the Corporation. 8.01.02 WITH PRIOR NOTICE FROM THE MANAGER Notwithstanding any provision hereof to the contrary, the Manager may terminate this Agreement in any of the following cases: - upon the expiry of a FORTY-FIVE (45) day period following the date on which the Corporation receives a notice of default sent by the Manager or the relevant agent stating that the Corporation is in default under its obligations hereunder and the Corporation does not remedy such default within the aforementioned time; - if this Agreement is terminated on the ground that the Corporation has failed to perform its obligations pursuant to this Agreement, the Manager shall be entitled to claim and receive, as liquidated damages, an indemnity equal to the base fee and performance fee that the Manager would have received had this Agreement not been terminated, which indemnity shall be payable concurrently with the termination of this Agreement. Such indemnity shall be equal to not less than the fees for one year, being the fees received by the Manager for the twelve (12) months preceding the termination of the Agreement. 8.01.03 CHANGE IN CONTROL If the business is sold or in the event of a change in control of the Corporation, the Manager or the Corporation may terminate this Agreement within TWELVE (12) months following the sale or change in control by TWELVE (12) month prior notice. If this Agreement is terminated for such a reason, the Manager shall be entitled to claim and to receive severance pay in an amount equal to the base management fee and the performance fee that the Manager would have received had the Agreement not been terminated, provided that such severance pay shall not be less than two (2) years of fees under this Agreement, based on the last twelve (12) months preceding the notice, which severance pay shall be payable concurrently with the termination of this Agreement. 8.01.04 RENEWAL OF THIS AGREEMENT The Corporation shall, by prior notice sent six (6) months before the expiry of this Agreement, notify the Manager of its intention to renew or not renew the Agreement upon the expiry thereof. In the event that this Agreement is not renewed, the Corporation shall pay to the Manager a severance pay equal to 11 twelve (12) months of base management fee and performance fee, based on the last twelve (12) months of the Agreement. 8.02 RESCISSION OF THIS AGREEMENT If, for any reason, the Corporation wishes to rescind this Agreement, the Corporation shall pay to the Manager, as liquidated damages, a lump sum equal to the base management fee and the performance fee which the Manager would have received had the Agreement not been rescinded. Such lump sum shall be equal to not less than twelve (12) months of fees, based on the last twelve (12) months preceding the notice, which indemnity shall be payable concurrently with the rescission of the Agreement. However, if this Agreement is rescinded as the result of a change in control, the specific provisions of section 8.01.03 shall apply. 9.00 COMING INTO FORCE This Agreement shall come into force on March 1, 2001, notwithstanding the date on which it is actually executed. 10.00 TERM This Agreement shall remain in full force and effect for a term of THREE (3) years until February 29, 2004. 11.00 SCOPE This Agreement shall be binding upon the parties hereto and the intervenors herein as well as their successors, heirs, legatees, administrators, assigns and other legal representatives, and shall enure to their benefit. IN WITNESS WHEREOF, THE PARTIES HAVE SIGNED IN TRIPLICATE AT SAINTE-MARIE, BEAUCE, ON JANUARY 10, 2001. THE CORPORATION MAAX INC. _____________________________ ___________________________________ Witness Jacques A. Vachon THE MANAGER GESTION CAMADA INC. _____________________________ ___________________________________ Witness Placide Poulin 12 ADDENDUM This Addendum forms an integral part of the Management Agreement entered into on January 10, 2001 between GESTION CAMADA INC. AND MAAX INC. The parties hereby acknowledge that the accounting rules respecting the amortization of goodwill have been amended since July 1, 2001 (CICA Handbook Section 3062 entitled "Goodwill and Other Intangible Assets"). In fact, the new rules provide that goodwill will no longer be amortized over time. However, goodwill will be subject to an annual amortization test. The parties hereby agree to amend section 2.02 Performance Fee to reflect the new accounting rules mentioned above. The method of calculation for determining incentive fees shall take into account the fact that, as regards the amortization of goodwill, the method of calculation in effect upon the execution of the Management Agreement shall be maintained, being an annual expenditure based on a forty-year amortization period. This calculation basis shall apply to all acquisitions prior to July 31, 2001. Therefore, the first paragraph of section 2.02 - Performance Fee shall read as follows: In addition to the base fee set forth in section 2.01 hereof, the Corporation hereby agrees to pay to the Manager an incentive fee based on the performance of the Corporation. The amount of the performance fee shall be equal to four and three tenths percent (4.3%) of earnings before taxes, consolidated bonuses and amortization of the goodwill of the Corporation minus $3,423,000 calculated on the basis of annual data and payable quarterly. IN WITNESS WHEREOF, the parties hereto have signed in triplicate at Sainte-Marie on November 1, 2001. MAAX INC. GESTION CAMADA INC. Per: Jacques A. Vachon Per: Placide Poulin ADDENDUM This Addendum forms an integral part of the Management Agreement entered into on January 10, 2001 between GESTION CAMADA INC. and MAAX INC. The parties hereby acknowledge that the resolution passed by the Board of Directors of MAAX Inc. at the October 14, 2003 meeting regarding the non-renewal of the agreement entered into with Gestion Camada Inc. has given rise to the following facts: - The agreement entered into with Gestion Camada Inc. expires on February 29, 2004 and shall not be renewed. - As a result, section 8.02 (RESCISSION OF THIS AGREEMENT) is triggered and the 12-month indemnity under section 8.02 shall be payable on February 29, 2004 as regards the equivalent of the first 9 months of the fiscal year based on the financial results as at 30-11-03. The balance, which is the equivalent of the last quarter, shall be payable upon the annual financial results of MAAX Inc. being known but not later than April 30, 2004. - As part of the sale process involving all the shares of MAAX Inc., which was initiated on September 8, 2003, section 8.01.03 (CHANGE IN CONTROL) will also be triggered pursuant to the terms and conditions thereof, regardless of whether the closing of the transaction is completed before or after 28-02-04. The severance pay payable by MAAX Inc. to Gestion Camada Inc. shall be equal to 12 months of base fee and performance fee, based on the 12 complete months preceding the date of the closing or the 12 months ended at 29-02-04 if the closing takes place after 29,02-04. The severance pay payable on the date of the closing shall be equal pro rata to 9 months ended on 30-11-03 and the balance of the severance pay, which is the equivalent of the 3 months preceding the date of the closing, shall be payable upon the annual financial results of MAAX Inc. being known but not later than 30 days after the date of the closing. IN WITNESS WHEREOF, the parties hereto have signed in triplicate at Ste-Marie on October 20, 2003. MAAX Inc. Gestion Camada Inc. Per: Per: Placide Poulin EX-10.11 56 y99327exv10w11.txt FORM OF CONSULTING AGREEMENT EXHIBIT 10.11 FORM OF CONSULTING AGREEMENT effective as of the first (1st) day of March, 2004. BETWEEN: MAAX INC.; ("COMPANY") AND: ________, _________, residing at ________________________________ ("CONSULTANT") RECITALS: A. The Consultant, prior to this day, was engaged by Gestion Camada Inc. by virtue of various agreements made between the Consultant and Gestion Camada Inc., including, without limitation, an employment agreement dated January 10, 2001, as amended, which agreements have terminated as of February 29, 2004 (collectively, the "TERMINATED AGREEMENTS"); B. The Company wishes to engage the Consultant as an independent contractor to perform certain consulting services for the Company. IN CONSIDERATION of the mutual covenants and agreements contained in this Agreement and for other good and valuable consideration (the receipt and adequacy of which are acknowledged), the parties agree as follows: 1. INTERPRETATION. 1.1 In this Agreement, including the Recitals to this Agreement, unless the context otherwise requires: (1) "AGREEMENT" means this consulting agreement as amended from time to time in accordance with its provisions. (2) "BUSINESS DAY" means any day, except Saturdays and Sundays, on which banks are generally open for business in, except for the purposes of Section 13.2, Montreal, Quebec, and for purposes of Section 13.2, in the place specified in that Section. (3) "CONFIDENTIAL INFORMATION" means all information relating to the business and affairs of the Company and all information supplied by a third party to the Company in confidence, which, at the time is confidential in nature (whether or not specifically identified as confidential), is known or should be known by the Consultant as being confidential and has been or is from time to time used by, developed by, made known to or otherwise learned by, the Consultant through the use of any of the Company's facilities or resources, in the course of conducting the business and affairs of the Company or in the course of performing its services and duties under this Agreement, and includes: (i) all intellectual property, including trade secrets; (ii) all information treated as proprietary by the Company; and (iii) all confidential facts relating to the Company. Notwithstanding the foregoing, "Confidential Information" does not include any information that at the time has become generally available to the public other than as a result of disclosure by the Consultant, was available to the Consultant on a non-confidential basis before the date of this Agreement or becomes available to the Consultant on a non-confidential basis from a Person (other than the Company or any of its representatives) who is not, to the knowledge of the Consultant, otherwise bound by confidentiality obligations to the Company or otherwise prohibited from transmitting the information to the Consultant. (4) "PERSON" is to be broadly interpreted and includes an individual, a company, a corporation, a partnership, a joint venture, a trust, an association, an unincorporated organization, a regulatory body or agency, a governmental authority or agency, an executor or administrator or other legal or personal representative, or any other juridical entity. (5) "TERM" means the three (3) month period following the date of this Agreement subject to renewal in accordance with Section 9. (6) "TRANSMISSION" has the meaning attributed to that term in Section 13. 1.2 In this Agreement: (a) the division into Sections and the insertion of headings are for convenience of reference only and do not affect the construction or interpretation of this Agreement; (b) the expressions "hereof", "herein", "hereto", "hereunder", "hereby" and similar expressions refer to this Agreement and not to any particular portion of this Agreement; and (c) unless specified otherwise or the context otherwise requires: (i) references to any Section are references to the Section of this Agreement; (ii) "including" or "includes" means "including (or includes) but is not limited to" and shall not be construed to limit any general statement preceding it to the specific or similar items or matters immediately following it; (iii) references to any legislation, statutory instrument or regulation or a section thereof, unless otherwise specified, is a reference to the legislation, statutory instrument, regulation or section as amended, restated and re-enacted from time to time; and (iv) words in the singular include the plural and vice-versa and words in one gender include all genders. 2 2. ENGAGEMENT BY THE COMPANY AND CONSULTING PERIOD The Company engages the Consultant for the Term to perform such services as the Consultant shall reasonably be directed to perform by the President and CEO of the Company, up to a maximum of twenty (20) working days during the Term. 3. ACCEPTANCE OF ENGAGEMENT BY CONSULTANT The Consultant accepts the engagement and shall render the services and perform the duties described in Section 2. In the performance of the duties and services under this Agreement, the Consultant shall act honestly and in good faith with a view to the best interests of the Company. While the Consultant shall not be obligated to provide services to the Company on an exclusive basis, the Consultant shall perform the duties and services under this Agreement on a timely basis. 4. NATURE OF RELATIONSHIP 4.1 The parties acknowledge that, (a) the relationship of the Consultant to the Company is that of an independent contractor; (b) the Consultant is not an employee, dependent contractor or agent of the Company; (c) the Company and the Consultant are not partners or joint venturers with each other; and (d) nothing in this Agreement shall be construed as (i) making the Company and the Consultant partners or joint venturers; (ii) making the Consultant an agent, employee or dependent contractor of the Company; or (iii) imposing any liability as partner, joint venturer, principal, agent, dependent contractor or employee of the Company or the Consultant, as the case may be. 4.2 Without limiting the generality of Section 4.1, the Consultant shall have no authority to act, or to hold the Consultant out, as agent of the Company or any of its Subsidiaries, or to bind the Company or any of its Subsidiaries to any third party and the Consultant shall so inform all third parties with whom the Consultant deals in the performance of the services and duties under this Agreement. The Consultant shall not use the name of the Company or any of its Subsidiaries in any advertisement or promotional or marketing material or, without the use of any such name, suggest or imply in any such material that the Consultant has a relationship with the Company or any of its Subsidiaries. 5. COMPENSATION 5.1 As compensation for its services under this Agreement, the Company shall pay to the Consultant an aggregate amount of $20,000 for the Term payable in three (3) equal monthly instalments, on the last Business Day of each month of the Term. The Consultant shall be entitled to participate in, and receive benefits under, the Company's group insurance plan until the earlier of June 30, 2004 and the closing of that certain transaction involving the purchase by J.W. Childs, Borealis and OMERS of all of the outstanding common shares of the Company. Interest shall be charged on any overdue payments at the rate of 10% per annum, calculated and compounded monthly from the due date on the outstanding daily amount. Any payment to the Consultant pursuant to this Section 5.1 shall be made by negotiable cheque or official bank draft, in each case drawn on a Canadian chartered bank. 3 5.2 The amounts to be paid by the Company to the Consultant set out in Section 5.1 are exclusive of goods and services tax and provincial sales tax. As an independent contractor, the Consultant shall be responsible for the payment of all income taxes attributable to any payments made under this Agreement. The Consultant shall indemnify and save harmless the Company from any and all fees, assessments, levies, rates, taxes, interest, penalties or other charges made, demanded, assessed or otherwise claimed by any provincial or federal government or other body of competent jurisdiction in respect of any monies paid to the Consultant under this Agreement, except goods and services and provincial sales taxes. Without limiting the foregoing, if the Company is assessed or reassessed by any applicable federal or provincial authority or if any claim is made against the Company respecting any failure by the Company to deduct or withhold any amount required by law, the Consultant shall pay to the Company the amount of money that may be required by the applicable authority to be paid by the Company to satisfy fully any claim made by the authority against the Company. 5.3 Where goods and services tax or Quebec sales tax is applicable in respect of fees or other amounts payable to the Consultant pursuant to this Agreement, the Consultant shall within ten (10) Business Days of each such payment provide to the Company such receipts or other documents as are required in order for the Company to claim input tax credits or other relief in respect of such tax. 6. EXPENSES The Company shall reimburse the Consultant his reasonable expenses incurred in connection with the performance of the services contemplated in this Agreement, the whole in accordance with the past practices of the Company. 7. CONFIDENTIALITY AND OWNERSHIP RIGHTS 7.1 Subject to Section 7.2, during and at all times after the Term, the Consultant shall hold in confidence and keep confidential all Confidential Information and shall not use for the benefit of the Consultant or others (except in connection with the business and affairs of the Company in the course of providing its services under this Agreement) any Confidential Information and shall not disclose any Confidential Information to any person except in the course of providing its services under this Agreement to a Person who is employed by the Company or with the Company's prior consent. 7.2 The prohibition in Section 7.1 shall not apply to the disclosure or use of Confidential Information where the disclosure or use is required by applicable law, regulation, judgement or order of any regulatory or governmental authority or agency. 7.3 All documents, records, software programs, working papers, notes, memoranda, files and other records of or containers of Confidential Information made or compiled by the Consultant at any time or made available to the Consultant at any time in the course of providing services under this Agreement or during the course of providing services under the Terminated Agreements, including all copies thereof, shall be the property of the Company and belong solely to it, and shall be held by the Consultant solely for the benefit of the Company and shall be 4 delivered to the Company by the Consultant on the termination of this Agreement or at any other time on request by the Company. 7.4 The Consultant shall during the Term promptly disclose to the Company in writing all ideas, inventions, formulae and discoveries relating to the business of the Company, whether or not conceived or developed on the premises of the Company. The Consultant specifically acknowledges that those ideas, inventions, formulae and discoveries shall be the property of the Company, which shall have the exclusive right to any patents, trademarks, copyrights, licences or any other protection which is issued on or which may arise with respect to those ideas, inventions, formulae and discoveries. The Consultant assigns to the Company all of the right, title and interest of the Consultant in those ideas, inventions, formulae and discoveries and in any patent, trademark, copyright, licence or any other protection which may be issued on or which may arise in respect of, those ideas, inventions, formulae and discoveries. 7.5 The Consultant shall cause each of its representatives performing any of the duties and services of the Consultant under this Agreement, prior to commencing to perform those duties or services, to enter into an agreement with the Company agreeing to be bound by the provisions of this Section 7 and the Consultant shall be liable to the Company for any breach or contravention of that agreement by the representative. 7.6 The obligations of the Consultant under this Section 7 are to remain in effect in perpetuity and shall exist and continue in full force and effect notwithstanding any breach or repudiation, or alleged breach or repudiation, by the Company of this Agreement. The obligations contained in this Section 7 are not in substitution for any obligations which the Consultant may now or hereafter owe to the Company and which exist apart from this Section 7 and do not replace any rights of the Company with respect to any such obligations. 8. REMEDIES The Consultant specifically acknowledges that a breach or threatened breach by the Consultant of any of the provisions of Section 7 would cause the Company and its shareholders irreparable harm not compensable in damages alone. The Consultant further acknowledges that it is essential to the effective enforcement of this Agreement that in addition to any other remedies to which the Company may be entitled, the Company be entitled to seek and obtain, in summary manner, from any court having jurisdiction under Section 16, interim, interlocutory and permanent injunctive relief without showing irreparable harm, specific performance and other equitable remedies. 9. RENEWAL This Agreement may be renewed by mutual agreement of the Company and the Consultant. Any such renewal shall be on such terms and for such length of time as the Company and the Consultant may agree in writing from time to time (each such renewed period to be likewise referred to herein as the "TERM"). 5 10. INDEMNIFICATION The Company shall indemnify and save harmless the Consultant from any and all costs, charges and expenses, including all amounts paid to settle an action or to satisfy a judgement, reasonably incurred by the Consultant in respect of any civil, criminal or administrative action or proceeding to which the Consultant is party by reason of being or having been engaged by the Company under this Agreement, other than an action by the Company as a result of a breach or alleged breach by the Consultant of this Agreement or of any duty owed by the Consultant to the Company, if (a) the Consultant acted honestly and in good faith with a view to the best interests of the Company; and (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the Consultant had reasonable grounds for believing that its conduct was lawful. 11. RELEASE AND DISCHARGE (a) Other than in respect of those matters set out in that certain letter agreement between the Consultant and the Company dated March 5, 2004, the Consultant hereby releases and forever discharges the Company from any and all actions, causes of action, claims, demands, covenants, obligations, contracts, liabilities, costs and damages, whether absolute or contingent and of any nature whatsoever (each, a "CLAIM"), which the Consultant, as an officer, director, creditor, consultant or employee of Gestion Camada Inc. or the Company, now has or hereafter can, shall or may have, for or by reason of or in any way arising out of any cause, matter or thing whatsoever existing up to the date of this release and, including, without limiting the generality of the foregoing, for or by reason of or in any way arising out of any claim for indebtedness of the Company to the Consultant, monies advanced, salary, wages, bonuses, commissions, expenses, retirement or pension allowances, stock option plans, fees or other remuneration by or of every nature and kind whether authorized by law, agreement, resolution or otherwise, including without limitation, the Terminated Agreements, except that this release shall not apply to any Claims arising out of this Agreement. (b) The Consultant hereby agrees that at the expiry of the Term of the Agreement or any renewal thereof, he will provide full and final release and discharge to the Company for any Claims arising out of this Agreement and hereby declares that good and valuable consideration has been provided for such (the receipt and adequacy of which is acknowledged) at the time of the execution of the presents. 12. ENTIRE AGREEMENT This Agreement constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement and supersedes all prior correspondence, agreements, negotiations, discussions and understandings, if any, written or oral and in particular the Terminated Agreements. Except as specifically set out in this Agreement, there are no representations, warranties, conditions or other agreements or acknowledgements, whether direct or collateral, express or implied, written or oral, statutory or otherwise, that form part of or affect this Agreement or which induced either party to enter into this Agreement. No reliance is placed 6 on any representation, warranty, opinion, advice or assertion of fact made either prior to, concurrently with, or after entering into, this Agreement, or any amendment or supplement thereto, by the Company or its directors, officers, employees, agents and other representatives and advisors to the Consultant or its directors, officers, employees, agents and other representatives and advisors, except to the extent the representation, warranty, opinion, advice or assertion of fact has been reduced to writing and included as a term in this Agreement, and the Consultant has not been induced to enter into this Agreement or any amendment or supplement by reason of the representation, warranty, opinion, advice or assertion of fact. There shall be no liability of any kind whatsoever assessed in relation to the representation, warranty, opinion, advice or assertion of fact, except as contemplated in this Section. 13. NOTICES 13.1 Any notice, demand or other communication (in this Section 13, a "NOTICE") required or permitted to be given or made under this Agreement must be in writing and is sufficiently given or made if (a) delivered in person and, if applicable, left with a receptionist or other responsible employee of the relevant Party at the applicable address set forth below; (b) sent by prepaid courier service or (except in the case of actual or apprehended disruption of postal service) mail; or (c) sent by facsimile transmission, with confirmation of transmission by the transmitting equipment, a "TRANSMISSION"); in the case of a notice to the Company. addressed to it at: MAAX Inc. 640 Cameron Sainte-Marie, Quebec G6E 1B2 Attention: President & CEO Telecopier: (418) 386-4520 Telephone: (418) 387-8055 and in the case of a notice to the Consultant, addressed to it at: [name] [address] Telephone: 13.2 Any notice sent in accordance with this Section 13 shall be deemed to have been received (a) if delivered prior to or during normal business hours on a Business Day, on the date of delivery; (b) if sent by mail, on the fifth Business Day after mailing in the place where the notice is received, or, in the case of disruption of postal service, on the fifth Business Day after cessation of such disruption; (c) if sent by facsimile during normal business hours on a Business Day in the place where the transmission is received, on the same day that it was received by Transmission, on production of a Transmission report from the machine from which the facsimile was sent which indicates that the facsimile was sent in its entirety to the relevant facsimile number of the recipient; or (d) if sent in any other manner, actual receipt; except that any notice delivered in person or sent by Transmission after normal business hours on a Business 7 Day or not on a Business Day shall be deemed to have been received on the next Business Day in the place where the notice is received. Either party may change its address for notice by giving notice to the other party. 14. SEVERABILITY Each provision of this Agreement is declared to constitute a separate and distinct covenant and to be severable from all other such separate and distinct covenants. If any provision of this Agreement or its application to either parry or circumstance is restricted, prohibited or unenforceable, that provision shall be ineffective only to the extent of that restriction, prohibition or unenforceability without invalidating the remaining provisions of this Agreement and, if applicable, without affecting its application to the other Parties or circumstances. To the extent permitted by applicable law, the parties waive any provision of applicable law which renders any provision of this Agreement invalid or unenforceable in any respect. 15. WAIVER OF RIGHTS Except as expressly provided in this Agreement, any waiver of, or consent to depart from, the requirements of any provision of this Agreement shall be effective only if it is in writing and signed by the party giving it, and only in the specific instance and for the specific purpose for which it has been given. No failure on the part of any party to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver of such right. No single or partial exercise of any such right shall preclude any other or further exercise of such right or the exercise of any other right. 16. JURISDICTION AND GOVERNING LAW Each Party irrevocably and unconditionally attorns to the exclusive jurisdiction of the courts of the province of Quebec. This Agreement and any dispute arising from or in relation to this Agreement shall be governed by, and interpreted and enforced in accordance with, the law of the province of Quebec and the laws of Canada applicable therein. 17. COUNTERPARTS This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one agreement. To evidence the fact that it has executed this Agreement, a party may send a copy of its executed counterpart to the other party by Transmission and the signature transmitted by Transmission shall be deemed to be its original signature for all purposes. 18. LANGUAGE The Parties have required that this Agreement and all contracts, documents or notices relating to this Agreement be in the English language. Les Parties ont exige que cette convention et tout contrat, document ou avis y afferent soient en langue anglaise. 8 IN WITNESS WHEREOF the parties have duly executed this Agreement. MAAX INC. Per: /s/ Andre Heroux ------------------------------- Name: Andre Heroux Title: President & CEO ------------------------------- Name 9 EX-10.12 57 y99327exv10w12.txt FORM OF NON-COMPETITION AGREEMENT EXHIBIT 10.12 FORM OF NON-COMPETITION AGREEMENT THIS AGREEMENT (this "Agreement") is entered into as of this 4th day of --------- June, 2004 by and between ____________ (the "Executive") and Maax Corporation, a --------- Nova Scotia unlimited company (the "Company"). ------- WHEREAS, MAAX Inc., a company governed under the laws of the Province of Quebec ("MAAX"), 3087052 Nova Scotia Company, a Nova Scotia unlimited company, 3087053 Nova Scotia Company, a Nova Scotia unlimited company, 9139-4460 Quebec Inc., a company governed under the laws of the Province of Quebec ("Subco I") ------- and 9139-7158 Quebec Inc., a company governed under the laws of the Province of Quebec ("Subco II"), have entered into a Merger Agreement (as amended, -------- supplemented, amended and restated or otherwise modified from time to time, the "Merger Agreement"), dated as of March 10, 2004; ---------------- WHEREAS, in connection with the closing of the amalgamation and the other transactions contemplated by the Merger Agreement, it is contemplated that, among other things, at the effective time of the amalgamation, Subco I and Subco II will amalgamate with MAAX to form Amalco, a company governed under the laws of the Province of Quebec, which will be a wholly-owned subsidiary of the Company; WHEREAS, in connection with the amalgamation contemplated by the Merger Agreement, Executive, as a selling shareholder under the Merger Agreement will receive the consideration specified therein in exchange for the common shares, without par value, of MAAX (the "Common Shares"), and the other securities of ------------- MAAX held by him immediately prior to the effective time of the amalgamation; WHEREAS, as a condition to the consummation of the amalgamation and the other transactions contemplated by the Merger Agreement, the parties hereto desire to enter into certain agreements restricting the activities of Executive in an effort to eliminate potential conflicts of interest that may arise in the future, to protect MAAX's legitimate business interests and for other business purposes; and WHEREAS, the Executive is entering into this Agreement as additional consideration for the consideration being paid to him in connection with the amalgamation under the Merger Agreement for his Common Shares and other securities of MAAX. NOW, THEREFORE, in consideration of the premises and mutual agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive agree as follows: 1. Protection of Confidential Information; Non-Competition; -------------------------------------------------------- Non-Solicitation; Non-Disparagement. ------------------------------------ 1.1. Acknowledgment. The Executive agrees and acknowledges that in the --------------- course of rendering services to MAAX and its clients and customers he has acquired access to and become acquainted with confidential information about the professional, business and financial affairs of MAAX, its subsidiaries and affiliates that is non-public, confidential or proprietary in nature. The Executive acknowledges that the Company is engaged in a highly competitive business and that the success of the Company in the marketplace depends upon its goodwill and reputation for quality and dependability. The Executive agrees and acknowledges that reasonable limits on his ability to engage in activities competitive with the Company are warranted to protect its substantial investment in developing and maintaining its status in the marketplace, reputation and goodwill. The Executive recognizes that in order to guard the legitimate interests of the Company, it is necessary for it to protect all of its and its subsidiaries confidential information, including, without limitation, the confidential information of MAAX and its subsidiaries acquired as a result of the Company's acquisition of MAAX and its subsidiaries. The existence of any claim or cause of action by the Executive against the Company shall not constitute and shall not be asserted as a defense to the enforcement by the Company of this Agreement. The Executive further agrees that his obligations under this Section 1 shall be absolute and unconditional. 1.2. Confidential Information. During and at all times after the date ------------------------- hereof, the Executive shall keep secret all non-public information, matters and materials of MAAX (including its subsidiaries and affiliates), including, but not limited to, know-how, trade secrets, mail order and customer lists, pricing policies, operational methods, any information relating to MAAX's (including its subsidiaries' and affiliates') products or product development, processes, product specifications and formulations, artwork, designs, graphics, services, budgets, business and financial plans, marketing and sales plans and techniques, employee lists and other business, financial, commercial and technical information of MAAX (including its subsidiaries and affiliates) (collectively, the "Confidential Information"), to which he has had access and shall not use or -------------------------- disclose such Confidential Information to any person other than (a) the Company, its authorized employees and such other persons to whom the Executive has been instructed to make disclosure by the board of directors of the Company, (b) as may be required by law and then only after providing reasonable prior written notice to the board of directors of MAAX Holdings, Inc. or (c) to the Executive's personal advisors for purposes of enforcing or interpreting this Agreement, or to a court for the purpose of enforcing or interpreting this Agreement, and who in each case have been informed as to the confidential nature of such Confidential Information and, as to advisors, their obligation to keep such Confidential Information confidential. "Confidential Information" shall not -------------------------- include any information which is in the public domain, provided such information is not in the public domain as a consequence of disclosure by the Executive in violation of this Agreement or by the Executive or any other party in violation of a confidentiality or non-disclosure agreement with MAAX or the Company. The Executive shall use his commercially reasonable efforts to deliver to the Company, at the time of consummation of the amalgamation contemplated by the Merger Agreement, all documents, data, papers and records of any nature and in any medium (including, but not limited to, electronic media) or copies 2 thereof in his possession or subject to his control that (i) belong to MAAX or (ii) contain or reflect any information (the "Company Documents"), including, ------------------- but not limited to, Confidential Information concerning MAAX, its subsidiaries and affiliates. To the extent not delivered at the time of consummation of the amalgamation, the Executive will use his commercially reasonable efforts to deliver the Company Documents as soon as reasonably practicable thereafter. 1.3. Non-Competition. For a period of five (5) years from the date hereof ---------------- (the "Restrictive Period"), the Executive shall not, in any capacity, whether -------------------- for his own account or on behalf of any other person or organization, directly or indirectly, with or without compensation, (a) own, operate, manage or control, (b) serve as an officer, director, partner, member, employee, agent, consultant, advisor or developer or in any similar capacity to or (c) have any financial interest in, or aid or assist anyone else in the conduct of, any person or enterprise engaged in North America in any of the businesses in which MAAX (including its subsidiaries and affiliates) is engaged as of the date hereof, including, but not limited to the production, distribution, marketing and sale (including, without limitation, sales through wholesalers, showrooms, specialty retailers, dealers and home centers) of bathroom products, kitchen cabinetry, spas and/or providing related services in North America (a "Competitor"). Executive shall be prohibited from acquiring or holding any direct or indirect interest in any customers, clients, vendors or distributors of the Company (including its subsidiaries and affiliates); provided, however, that nothing in this Agreement shall prohibit the Executive from acquiring or holding not more than five percent of any class of publicly-traded securities. 1.4. Non-Solicitation. During the Restrictive Period, the Executive shall ----------------- not, in any capacity, whether for his own account or on behalf of any other person or organization, directly or indirectly, with or without compensation, (i) solicit, divert or encourage any officers, directors, employees, agents, consultants or representatives of the Company (including its subsidiaries and affiliates), to terminate his, her or its relationship with the Company (including its subsidiaries and affiliates), (ii) solicit, divert or encourage any officers, directors, employees, agents, consultants or representatives of the Company (including its subsidiaries and affiliates) to become officers, directors, employees, agents, consultants or representatives of another business, enterprise or entity, (iii) solicit, divert or appropriate any customers, clients, vendors, distributors or business partners of the Company (including its subsidiaries and affiliates), or (iv) influence or attempt to influence any of the customers, clients, vendors, distributors or business partners of the Company (including its subsidiaries and affiliates) to transfer his, her or its business or patronage from the Company (including its subsidiaries and affiliates) to any Competitor of the Company (including its subsidiaries and affiliates). 1.5. Non-Disparagement. During the Restrictive Period, (a) the Executive ------------------ on the one hand, and the Company, its subsidiaries, J.W. Childs Associates, L.P. ("Childs"), Borealis Private Equity Limited Partnership and Borealis (QLP) -------- Private Equity Limited Partnership (collectively referred to herein as "Borealis") and Ontario Municipal Employees Retirement Board ("OMERS", and - ---------- ------- together with Childs and Borealis, the "Sponsors") and their respective ---------- affiliates, on the other hand, shall not, except to the extent required by law, directly or indirectly (i) engage in any conduct or make any statement, whether in commercial or non-commercial speech, disparaging or criticizing in any way the other party, or (ii) impair the goodwill or 3 reputation in any way of the other party, and (b) the Executive shall not directly or indirectly engage in any other conduct or make any other statement, whether in commercial or non-commercial speech, disparaging or criticizing, in each case, which could be reasonably expected to impair the goodwill or reputation of the foregoing entity's products or services or the marketing of any of the foregoing entity's products or services, except to the extent required by law and then, in the case of the Executive, only after consultation with the Sponsors to the extent possible, or in connection with any dispute between the Executive and any of the foregoing entities. 1.6. Remedies for Breach. The Company and the Executive agree that the -------------------- restrictive covenants contained in this Agreement are severable and separate, and the unenforceability of any specific covenant herein shall not affect the validity of any other covenant set forth herein. The Executive and the Company each acknowledge that the other party will suffer irreparable harm as a result of a breach of such restrictive covenants by the other party for which an adequate monetary remedy does not exist and a remedy at law may prove to be inadequate. Accordingly, in the event of any actual or threatened breach by either party of any provision of this Agreement, each party shall, in addition to any other remedies permitted by law, be entitled to obtain equitable remedies, including, but not limited to, specific performance, injunctive relief, a temporary restraining order, and/or a preliminary and/or permanent injunction in any court of competent jurisdiction, to prevent or otherwise restrain a breach of this Section 1 without the necessity of proving damages, posting a bond or other security, and to recover any and all costs and expenses, including reasonable counsel fees, incurred in enforcing this Agreement against the other party, and each party hereby consents to the entry of such relief against it and agrees not to contest such entry. Such relief shall be in addition to and not in substitution of any other remedies available to the parties. The existence of any claim or cause of action of either party against the other party, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by such party of said covenants. Neither party shall defend on the basis that there is an adequate remedy at law. 1.7. Modification. The parties agree and acknowledge that the duration, ------------- scope and geographic area of the covenants described in this Section 1 are fair, reasonable and necessary in order to protect the Confidential Information, goodwill and other legitimate interests of the Company and that adequate consideration has been received by the Executive for such obligations. 2. Intellectual Property. All copyrights, trademarks, trade names, service ---------------------- marks and all ideas, inventions, discoveries, secret processes and methods and improvements, together with any and all patents that may be issued thereon, and all other intangible or intellectual property rights that were invented, conceived, developed or enhanced by Executive during the term of his employment with MAAX that relate to the business or operations of MAAX or any subsidiary or affiliate thereof or that result from any work performed by the Executive for MAAX or any such subsidiary or affiliate shall be the sole property of MAAX or such subsidiary or affiliate, as the case may be, and Executive hereby waives any right or interest that he may otherwise have in respect thereof. Upon the reasonable request of the Company, Executive shall execute, acknowledge and deliver any instrument or document reasonably necessary or appropriate to give 4 effect to this Section 2 and, at the Company's cost, do all other acts and things reasonably necessary to enable the Company or such subsidiary or affiliate, as the case may be, to exploit the same or to obtain patents or similar protection with respect thereto. 3. Notices. All notices or other communications hereunder shall be in -------- writing and shall be deemed to have been duly given (a) when delivered personally, (b) upon confirmation of receipt when such notice or other communication is sent by facsimile, (c) one day after delivery to an overnight delivery courier, or (d) on the fifth day following the date of deposit in the United States mail if sent first class, postage prepaid, by registered or certified mail. The addresses for such notices shall be as follows: (a) For notices and communications to the Company: Maax Corporation 640 Cameron Road Sainte-Marie, Quebec G6E 1B2 Fax: (418) 387-4155 Attn: Andre Heroux President and Chief Executive Officer with copies to: J.W. Childs Associates, L.P. 111 Huntington Avenue Suite 2900 Boston, Massachusetts 02199 Fax: (617) 753-1101 Attn: Steven G. Segal Borealis Private Equity Limited Partnership 1 Adelaide Street East Suite 2800, Box 198 Toronto, Ontario M5C 279 Fax: (416) 361-5042 Attn: Andre LaForge Ontario Municipal Employees Retirement Board One University Avenue, Suite 700 Toronto, Ontario M5J 2P1 Fax: (416) 369-0675 Attn: Michael Graham 5 Kaye Scholer LLP 425 Park Avenue New York, New York 10022 Fax: (212) 836-8689 Attn.: Stephen C. Koval, Esq. Fasken Martineau DuMoulin LLP Stock Exchange Tower 800, Place Victoria, Suite 3400 P.O. Box 242 Montreal, Quebec H4Z 1E9 Fax: (514) 397-7600 Attn.: Robert Pare, Esq. (b) For notices and communications to the Executive, to the address or facsimile set forth below his signature hereto. Any party hereto may, by notice to the other, change its address for receipt of notices hereunder. 4. General. ------- 4.1. Governing Law. This Agreement shall be governed by the laws of the ------------- Province of Quebec, without regard to any conflicts of law principles thereof that would call for the application of the laws of any other jurisdiction. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may be brought against either of the parties in the courts of the Province of Quebec (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world, whether within or without the Province of Quebec. 4.2. Amendment; Waiver. This Agreement may be amended, modified, ----------------- superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance. The failure of either party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by either party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 4.3. Successors and Assigns. This Agreement shall be binding upon the ---------------------- Executive, and inure to the benefit of his administrators, executors, heirs and assigns, although the obligations of the Executive are personal and may be performed only by him. The Company may assign this Agreement and its rights, together with its obligations, hereunder (a) in connection 6 with any sale, transfer or other disposition of all or substantially all of its assets or business(es), whether by merger, consolidation, amalgamation or otherwise; or (b) to any wholly owned subsidiary of the Company, provided that the Company shall remain liable for all of its obligations hereunder. This Agreement shall also be binding upon and inure to the benefit of the Company and its subsidiaries, successors and assigns. 4.4. Counterparts. This Agreement may be executed in multiple ------------ counterparts, each of which shall be considered to have the force and effect of an original. 4.5. Severability. If any portion of this Agreement is held invalid or ------------ inoperative, the other portions of this Agreement shall be deemed valid and operative and, so far as is reasonable and possible, effect shall be given to the intent manifested by the portion held invalid or inoperative. 4.6. Third Party Beneficiaries. Nothing in this Agreement will confer any ------------------------- rights upon any person or entity other than the parties hereto, all subsidiaries of the Company (who are expressly made third party beneficiaries hereof) and with respect to Section 1.5 hereof, the Sponsors (who are expressly made third party beneficiaries hereof) and their respective heirs, successors and assigns. 4.7. Entire Agreement. This Agreement supersedes all prior agreements ---------------- between the parties with respect to its subject matter (including the Executive's Non-Competition Agreement Term Sheet dated March 10, 2004) and is intended as a complete and exclusive statement of the terms of the agreement between the parties with respect thereto. 4.8. Language. The parties have explicitly requested that this Agreement -------- be drafted in the English language; les parties ont expressement demande que les presentes soient redigees en anglais. 7 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. MAAX CORPORATION By: ________________________ Name: Title: EXECUTIVE: ----------------------------- Address and Facsimile: ------------------------- Address Line 1 Address Line 2 Facsimile: [Non-Competition Agreement Signature Page] EX-10.13 58 y99327exv10w13.txt CREDIT AND GUARANTY AGREEMENT EXHIBIT 10.13 CREDIT AND GUARANTY AGREEMENT DATED AS OF JUNE 4, 2004 AMONG MAAX CORPORATION, BEAUCELAND CORPORATION, CERTAIN SUBSIDIARIES OF BEAUCELAND CORPORATION, AS GUARANTORS, VARIOUS LENDERS, GOLDMAN SACHS CREDIT PARTNERS L.P., AS JOINT LEAD ARRANGER, JOINT BOOKRUNNER OF THE TRANCHE B TERM LOANS AND SYNDICATION AGENT, ROYAL BANK OF CANADA, AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT, RBC CAPITAL MARKETS, AS JOINT LEAD ARRANGER AND SOLE BOOKRUNNER OF THE TRANCHE A TERM LOANS AND REVOLVING LOANS, AND MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, AS JOINT LEAD ARRANGER, JOINT BOOKRUNNER OF THE TRANCHE B TERM LOANS AND DOCUMENTATION AGENT - -------------------------------------------------------------------------------- CAN$130.0 MILLION SENIOR SECURED TRANCHE A TERM LOAN FACILITY U.S.$115.0 MILLION SENIOR SECURED TRANCHE B TERM LOAN FACILITY CAN$50.0 MILLION SENIOR SECURED REVOLVING FACILITY - -------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE ---- SECTION 1. DEFINITIONS AND INTERPRETATION.............................................................. 2 1.1. Definitions................................................................................. 2 1.2. Accounting Terms............................................................................ 45 1.3. Interpretation, etc......................................................................... 45 SECTION 2. LOANS AND LETTERS OF CREDIT................................................................. 46 2.1. Term Loans.................................................................................. 46 2.2. Revolving Loans............................................................................. 47 2.3. Bankers' Acceptances........................................................................ 48 2.4. Swing Line Loans............................................................................ 55 2.5. Issuance of Letters of Credit and Purchase of Participations Therein........................ 60 2.6. Pro Rata Shares; Availability of Funds...................................................... 66 2.7. Use of Proceeds............................................................................. 67 2.8. Evidence of Debt; Register; Lenders' Books and Records; Notes............................... 67 2.9. Interest on Loans........................................................................... 68 2.10. Interest Act Disclosure..................................................................... 71 2.11. Conversion/Continuation..................................................................... 71 2.12. Default Interest............................................................................ 73 2.13. Fees ...................................................................................... 74 2.14. Scheduled Installments...................................................................... 75 2.15. Voluntary Prepayments/Commitment Reductions................................................. 76 2.16. Offers to Prepay and Mandatory Prepayments/Commitment Reductions............................ 78 2.17. Application of Prepayments/Reductions....................................................... 80 2.18. General Provisions Regarding Payments....................................................... 82 2.19. Ratable Sharing............................................................................. 83 2.20. Making or Maintaining Eurodollar Rate Loans................................................. 84 2.21. Increased Costs; Capital Adequacy........................................................... 86 2.22. Taxes; Withholding, etc..................................................................... 87 2.23. Obligation to Mitigate...................................................................... 90 2.24. Defaulting Lenders.......................................................................... 91 2.25. Removal or Replacement of a Lender.......................................................... 91 2.26. Incremental Facilities...................................................................... 92 2.27. Application of Funds........................................................................ 94 SECTION 3. CONDITIONS PRECEDENT........................................................................ 94 3.1. Closing Date................................................................................ 94 3.2. Conditions to Each Credit Extension......................................................... 100 SECTION 4. REPRESENTATIONS AND WARRANTIES.............................................................. 101 4.1. Organization; Requisite Power and Authority; Qualification.................................. 102 4.2. Capital Stock and Ownership................................................................. 102 4.3. Due Authorization........................................................................... 102
ii 4.4. No Conflict................................................................................. 102 4.5. Governmental Consents....................................................................... 103 4.6. Binding Obligation.......................................................................... 103 4.7. Historical Financial Statements............................................................. 103 4.8. Projections................................................................................. 103 4.9. No Material Adverse Change.................................................................. 103 4.10. No Restricted Junior Payments............................................................... 104 4.11. Adverse Proceedings, etc.................................................................... 104 4.12. Payment of Taxes............................................................................ 104 4.13. Properties.................................................................................. 105 4.14. Environmental Matters....................................................................... 105 4.15. No Defaults................................................................................. 106 4.16. Material Contracts.......................................................................... 106 4.17. Governmental Regulation..................................................................... 106 4.18. Margin Stock................................................................................ 106 4.19. Employee Matters............................................................................ 106 4.20. Employee Benefit Plans...................................................................... 107 4.21. Certain Fees................................................................................ 108 4.22. Solvency.................................................................................... 108 4.23. Related Agreements.......................................................................... 108 4.24. Compliance with Statutes, etc............................................................... 108 4.25. Disclosure.................................................................................. 109 4.26. Intellectual Property....................................................................... 109 4.27. Anti Terrorism Law.......................................................................... 110 4.28. Subordination of Senior Subordinated Notes.................................................. 110 SECTION 5. AFFIRMATIVE COVENANTS....................................................................... 110 5.1. Financial Statements and Other Reports...................................................... 111 5.2. Existence................................................................................... 115 5.3. Payment of Taxes and Claims................................................................. 115 5.4. Maintenance of Properties................................................................... 115 5.5. Insurance................................................................................... 115 5.6. Inspections................................................................................. 116 5.7. Lenders Meetings............................................................................ 116 5.8. Compliance with Laws........................................................................ 116 5.9. Environmental............................................................................... 116 5.10. Subsidiaries................................................................................ 118 5.11. Additional Real Estate Assets............................................................... 119 5.12. Interest Rate Protection.................................................................... 120 5.13. Further Assurances.......................................................................... 120 5.14. Leasehold Properties........................................................................ 120 5.15. Post Closing Obligations.................................................................... 121 SECTION 6. NEGATIVE COVENANTS.......................................................................... 122 6.1. Indebtedness................................................................................ 122 6.2. Liens ...................................................................................... 123 6.3. Equitable Lien.............................................................................. 126
iii 6.4. No Further Negative Pledges................................................................. 126 6.5. Restricted Junior Payments.................................................................. 126 6.6. Restrictions on Subsidiary Distributions.................................................... 128 6.7. Investments................................................................................. 128 6.8. Financial Covenants......................................................................... 129 6.9. Fundamental Changes; Disposition of Assets; Acquisitions.................................... 131 6.10. Transactions with Shareholders and Affiliates............................................... 133 6.11. Conduct of Business......................................................................... 134 6.12. Permitted Activities of Parent Companies.................................................... 134 6.13. Amendments or Waivers of Certain Related Agreements......................................... 134 6.14. Amendments or Waivers of or with Respect to Subordinated Indebtedness....................... 135 6.15. Fiscal Year................................................................................. 135 6.16. Anti Terrorism Law; Anti Money Laundering................................................... 135 6.17. Embargoed Person............................................................................ 135 6.18. Designated Senior Debt...................................................................... 136 6.19. Intercompany Debt Transactions.............................................................. 136 6.20. Account Maintenance......................................................................... 136 SECTION 7. GUARANTY ................................................................................... 136 7.1. Guaranty of the Obligations................................................................. 136 7.2. Contribution by Guarantors.................................................................. 136 7.3. Payment by Guarantors....................................................................... 137 7.4. Liability of Guarantors Absolute............................................................ 137 7.5. Waivers by Guarantors....................................................................... 139 7.6. Guarantors' Rights of Subrogation, Contribution, etc........................................ 140 7.7. Subordination of Other Obligations.......................................................... 141 7.8. Continuing Guaranty......................................................................... 141 7.9. Authority of Guarantors or Company.......................................................... 141 7.10. Financial Condition of Company.............................................................. 141 7.11. Bankruptcy, etc............................................................................. 142 7.12. Discharge of Guaranty....................................................................... 142 SECTION 8. EVENTS OF DEFAULT........................................................................... 143 8.1. Events of Default........................................................................... 143 SECTION 9. AGENTS ..................................................................................... 146 9.1. Appointment of the Agents................................................................... 146 9.2. Powers and Duties; General Immunity......................................................... 147 9.3. Independent Investigation by Lenders; No Responsibility for Appraisal of Creditworthiness... 149 9.4. Right to Indemnity.......................................................................... 150 9.5. Successor Agent, Swing Line Lender and Issuing Bank......................................... 150 9.6. Collateral Documents and Guaranties......................................................... 151 9.7. Administrative Agent May File Proofs of Claim............................................... 152 SECTION 10. MISCELLANEOUS............................................................................... 153 10.1. Notices..................................................................................... 153
iv 10.2. Expenses.................................................................................... 153 10.3. Indemnity................................................................................... 154 10.4. Set Off..................................................................................... 155 10.5. Amendments and Waivers...................................................................... 155 10.6. Successors and Assigns; Participations...................................................... 157 10.7. Canadian Dollar Equivalent Calculations..................................................... 160 10.8. Judgment Currency........................................................................... 161 10.9. Independence of Covenants................................................................... 161 10.10. Survival of Representations, Warranties and Agreements...................................... 161 10.11. No Waiver; Remedies Cumulative.............................................................. 162 10.12. Marshalling; Payments Set Aside............................................................. 162 10.13. Severability................................................................................ 162 10.14. Obligations Several; Independent Nature of Lenders' Rights.................................. 162 10.15. Headings.................................................................................... 163 10.16. APPLICABLE LAW.............................................................................. 163 10.17. CONSENT TO JURISDICTION..................................................................... 163 10.18. WAIVER OF JURY TRIAL........................................................................ 163 10.19. Confidentiality............................................................................. 164 10.20. Usury Savings Clause........................................................................ 164 10.21. Posting..................................................................................... 165 10.22. Counterparts................................................................................ 166 10.23. Effectiveness............................................................................... 166
APPENDICES: A-1 Tranche A Term Loan Commitments A-2 Tranche B Term Loan Commitments A-3 Revolving Commitments B Notice Addresses C Eligible Assignees D Existing Letters of Credit SCHEDULES: 1.1 Investors 3.1(g) Closing Date Mortgaged Properties 4.1 Jurisdictions of Organization 4.2 Capital Stock and Ownership 4.12 Taxes 4.13 Real Estate Assets 4.16 Material Contracts 4.26 Intellectual Property 6.1 Certain Indebtedness 6.2 Certain Liens 6.7 Certain Investments 6.10 Certain Transactions v EXHIBITS: A-1 Funding Notice A-2 Conversion/Continuation Notice A-3 Issuance Notice B-1 Tranche A Term Loan Note B-2 Tranche B Term Loan Note B-3 Revolving Loan Note B-4 BA Discount Note B-5 Swing Line Note C Compliance Certificate D-1 Opinion of Kaye Scholer LLP D-2 Opinion of Fasken Martineau DuMoulin LLP D-3 Opinion of McInnes Cooper D-4 Opinion of Pennsylvania counsel D-5 Opinion of Minnesota counsel D-6 Opinion of Washington counsel D-7 Opinion of Indiana counsel D-8 Opinion of California counsel D-9 Opinion of Georgia counsel D-10 Opinion of West Virginia counsel D-11 Opinion of Arizona counsel E Assignment Agreement F Certificate re Non-Bank Status G-1 Closing Date Certificate G-2 Solvency Certificate H Counterpart Agreement I-1 U.S. Security Agreement I-2 Canadian Security Agreement I-3 Quebec Security Documents J-1 U.S. Mortgage J-2 Canadian Mortgage K Landlord Waiver and Consent Agreement L Joinder Agreement M-1 Perfection Certificate M-2 Perfection Certificate Supplement N Intercompany Note vi CREDIT AND GUARANTY AGREEMENT This CREDIT AND GUARANTY AGREEMENT, dated as of June 4, 2004, is entered into by and among MAAX CORPORATION, a Nova Scotia unlimited company ("COMPANY"), BEAUCELAND CORPORATION, a Nova Scotia unlimited company ("HOLDINGS"), CERTAIN SUBSIDIARIES OF HOLDINGS, as Guarantors, the Lenders party hereto from time to time, GOLDMAN SACHS CREDIT PARTNERS L.P. ("GSCP"), as Joint Lead Arranger and as Syndication Agent (in such capacity, "SYNDICATION AGENT"), ROYAL BANK OF CANADA ("RBC"), as Administrative Agent (together with its permitted successors in such capacity, "ADMINISTRATIVE AGENT") and as Collateral Agent (together with its permitted successors in such capacity, "COLLATERAL AGENT"), ROYAL BANK OF CANADA, ACTING THROUGH ITS BUSINESS GROUP RBC CAPITAL MARKETS ("RBCCM"), as Joint Lead Arranger, and MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED ("MLPF&S"), as Joint Lead Arranger (in such capacity, together with RBCCM and GSCP as joint lead arrangers, the "JOINT LEAD ARRANGERS") and as Documentation Agent (in such capacity, "DOCUMENTATION AGENT"). RECITALS: WHEREAS, capitalized terms used in these Recitals shall have the respective meanings set forth for such terms in Section 1.1 hereof; WHEREAS, Lenders have agreed to extend to Company certain credit facilities consisting of Can$130.0 million aggregate principal amount of Tranche A Term Loans, U.S.$115.0 million aggregate principal amount of Tranche B Term Loans, and Can$50.0 million aggregate principal amount of Revolving Commitments; WHEREAS, on the Closing Date, the proceeds of the Term Loans and up to Can$20.0 million of Revolving Loans and Swing Line Loans shall be used to fund, in part, the Acquisition (including refinancing or retiring certain existing debt of the Acquired Business and its Subsidiaries and redeeming any preferred stock of the Acquired Business) and pay fees, commissions and expenses in connection with the Transactions; WHEREAS, on the Closing Date, the Existing Letters of Credit shall remain outstanding and shall be deemed to have been issued hereunder and governed by the terms and conditions hereof; WHEREAS, after the Closing Date, the proceeds of the Revolving Loans shall be used to provide for the ongoing working capital requirements and for general corporate purposes of Company, the Guarantor Subsidiaries and their Subsidiaries; WHEREAS, Company has agreed to secure all of its Obligations by granting to Collateral Agent, for the benefit of Secured Parties, a First Priority Lien on substantially all of its assets, including a pledge of all of the Capital Stock of each Guarantor Subsidiary held by it, 65% of all the Capital Stock of each of its Foreign Subsidiaries and all of its intercompany indebtedness; and WHEREAS, Guarantors have agreed to guarantee the obligations of Company hereunder and to secure their respective Obligations by granting to Collateral Agent, for the benefit of Secured Parties, a First Priority Lien on substantially all of their respective assets, including a pledge of all of the Capital Stock of each of their respective Subsidiaries that is Company or a Guarantor, 65% of all the Capital Stock of each of their respective Foreign Subsidiaries and all of their intercompany indebtedness. NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows: SECTION 1. DEFINITIONS AND INTERPRETATION 1.1. DEFINITIONS. The following terms used herein, including in the preamble, recitals, exhibits and schedules hereto, shall have the following meanings: "ACQUIRED BUSINESS" means MAAX Inc., a company organized under the laws of the Province of Quebec. "ACQUISITION" means the acquisition of the Acquired Business pursuant to the Merger Agreement. "ADJUSTED CANADIAN EURODOLLAR RATE" means, for any Interest Rate Determination Date with respect to an Interest Period for a Canadian Eurodollar Rate Loan, the rate per annum obtained by dividing (and rounding upward to the next whole multiple of 1/16 of 1%) (i) (a) the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate determined by Administrative Agent to be the offered rate which appears on the Reuters LIBOR 01 page, or if such page is not available, the page of the Telerate Screen (currently being page number 3740 or 3750, as applicable) which displays an average British Bankers Association Interest Settlement Rate for deposits in Canadian Dollars (for delivery on the first day of such period) with a term equivalent to such period, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (b) in the event the rate referenced in the preceding clause (a) does not appear on such pages or services or if such pages or services shall cease to be available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate determined by Administrative Agent to be the offered rate on such other page or other service which displays an average British Bankers Association Interest Settlement Rate for deposits in Canadian Dollars (for delivery on the first day of such period) with a term equivalent to such period, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (c) in the event the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the offered quotation rate to first class banks in the London interbank market by Administrative Agent for deposits (for delivery on the first day of the relevant period) in Canadian Dollars of amounts in same day funds comparable to the principal amount of the applicable Loan for which the Adjusted Canadian Eurodollar Rate is then being determined with maturities comparable to such period as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, by (ii) an amount equal to (a) one minus (b) the Applicable Reserve Requirement. 2 "ADJUSTED EURODOLLAR RATE" means, for any Interest Rate Determination Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per annum obtained by dividing (and rounding upward to the next whole multiple of 1/16 of 1%) (i) (a) the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate determined by Administrative Agent to be the offered rate which appears on the Reuters LIBOR 01 page, or if such page is not available, the page of the Telerate Screen (currently being page number 3740 or 3750, as applicable) which displays an average British Bankers Association Interest Settlement Rate for deposits in U.S. Dollars (for delivery on the first day of such period) with a term equivalent to such period, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (b) in the event the rate referenced in the preceding clause (a) does not appear on such pages or services or if such pages or services shall cease to be available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate determined by Administrative Agent to be the offered rate on such other page or other service which displays an average British Bankers Association Interest Settlement Rate for deposits in U.S. Dollars (for delivery on the first day of such period) with a term equivalent to such period, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (c) in the event the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the offered quotation rate to first class banks in the London interbank market by Administrative Agent for deposits (for delivery on the first day of the relevant period) in U.S. Dollars of amounts in same day funds comparable to the principal amount of the applicable Loan for which the Adjusted Eurodollar Rate is then being determined with maturities comparable to such period as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, by (ii) an amount equal to (a) one minus (b) the Applicable Reserve Requirement. "ADMINISTRATIVE AGENT" as defined in the preamble hereto. "ADVERSE PROCEEDING" means any action, suit, proceeding (whether administrative, judicial or otherwise) or arbitration (whether or not purportedly on behalf of Holdings or any of its Subsidiaries) at law or in equity, or before or by any Governmental Authority, domestic or foreign (including any Environmental Claims), whether pending or, to the knowledge of Holdings or any of its Subsidiaries, threatened against or affecting Holdings or any of its Subsidiaries or any property of Holdings or any of its Subsidiaries. "AFFECTED LENDER" as defined in Section 2.20(b). "AFFECTED LOANS" as defined in Section 2.20(b). "AFFILIATE" means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power (i) for purposes of Section 6.10, to vote 10% or more of the Securities having ordinary voting power for the election of directors of such Person or (ii) to direct or cause, directly or indirectly, the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise. For purposes of 3 Section 6.10, the term "Affiliate" shall also include any Person that is a director of the Person specified. "AGENT" means each of Syndication Agent, Administrative Agent, Collateral Agent and Documentation Agent. "AGENT PARTIES" as defined in Section 10.21. "AGGREGATE AMOUNTS DUE" as defined in Section 2.19. "AGGREGATE PAYMENTS" as defined in Section 7.2. "AGREEMENT" means this Credit and Guaranty Agreement, dated as of June 4, 2004, as it may be amended, supplemented or otherwise modified from time to time. "AMALGAMATION AGREEMENT" means that certain Amalgamation Agreement dated as of March 10, 2004 by and among 9139-4460 Quebec Inc., 9139-7158 Quebec Inc., 3087053 Nova Scotia Company and the Acquired Business. "ANTI-TERRORISM LAWS" as defined in Section 4.27. "APPLICABLE ECF PERCENTAGE" as defined in Section 2.16(e). "APPLICABLE MARGIN" and "APPLICABLE REVOLVING COMMITMENT FEE PERCENTAGE" mean (i) with respect to all Loans that are Eurodollar Rate Loans, Canadian Eurodollar Rate Loans or BA Discount Rate Loans and the Applicable Revolving Commitment Fee Percentage, (a) from the Closing Date until the date of delivery of the Compliance Certificate and the financial statements for the second fiscal quarter commencing after the Closing Date, a percentage, per annum, determined by reference to the following table as if the Leverage Ratio then in effect were in excess of 4.50:1.00; and (b) thereafter, a percentage, per annum, determined by reference to the Leverage Ratio in effect from time to time as set forth below:
APPLICABLE MARGIN APPLICABLE REVOLVING LEVERAGE FOR TRANCHE A TERM LOANS APPLICABLE MARGIN COMMITMENT RATIO AND REVOLVING LOANS FOR TRANCHE B TERM LOANS FEE PERCENTAGE -------- ------------------------ ------------------------ -------------------- > 4.50:1.00 2.50% 2.75% 0.50% < or = 4.50:1.00 2.25% 2.75% 0.50% > 3.50:1.00 < or = 3.50:1.00 2.00% 2.50% 0.40% >2.50:1.00 < or = 2.50:1.00 1.75% 2.50% 0.35%
and (ii) with respect to Loans that are Base Rate Loans or Prime Rate Loans, an amount equal to (a) the Applicable Margin for Eurodollar Rate Loans as set forth in clause (i)(a) or (i)(b) above, as applicable, minus (b) 0.75% per annum. No change in the Applicable Margin or the Applicable Revolving Commitment Fee Percentage shall be effective until three Business Days after the date on which Administrative Agent shall have received the applicable financial 4 statements and a Compliance Certificate pursuant to Section 5.1(d) calculating the Leverage Ratio. At any time Company has not submitted to Administrative Agent the financial statements and a Compliance Certificate calculating the Leverage Ratio as and when required under Section 5.1(d), the Applicable Margin and the Applicable Revolving Commitment Fee Percentage shall be determined as if the Leverage Ratio were in excess of 4.50:1.00 until such financial statements and Compliance Certificate are delivered to Administrative Agent. Within one Business Day of receipt of the financial statements and Compliance Certificate calculating the Leverage Ratio under Section 5.1(d), Administrative Agent shall give each Lender telefacsimile or telephonic notice (confirmed in writing) of the Applicable Margin and the Applicable Revolving Commitment Fee Percentage in effect from the day that is three Business Days after such receipt. "APPLICABLE RESERVE REQUIREMENT" means, at any time, for any Canadian Eurodollar Rate Loan or Eurodollar Rate Loan, as applicable, the maximum rate, expressed as a decimal, at which reserves (including, without limitation, any basic marginal, special, supplemental, emergency or other reserves) are required to be maintained with respect thereto against "Eurocurrency liabilities" (as such term is defined in Regulation D) under regulations issued from time to time by the Board of Governors of the Federal Reserve System or other applicable banking regulator. A Canadian Eurodollar Rate Loan or Eurodollar Rate Loan shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credit for proration, exceptions or offsets that may be available from time to time to the applicable Lender. The rate of interest on Canadian Eurodollar Rate Loans and Eurodollar Rate Loans shall be adjusted automatically on and as of the effective date of any change in the Applicable Reserve Requirement. "APPROVED CURRENCY" means each of Canadian Dollars and U.S. Dollars. "ARIZONA MORTGAGES" as defined in Section 9.2(b). "ASSET SALE" means a sale, lease or sublease (as lessor or sublessor), sale and leaseback, assignment, conveyance, transfer or other disposition to, or any exchange of property with, any Person (other than Company or any Guarantor Subsidiary), in one transaction or a series of transactions, of all or any part of Holdings' or any of its Subsidiaries' businesses, assets or properties of any kind, whether real, personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired, including the Capital Stock of any of Holdings' Subsidiaries (including by issuance of such Capital Stock), other than (i) inventory sold in the ordinary course of business, (ii) sales of other assets for aggregate consideration of less than U.S.$1.0 million with respect to any transaction or series of related transactions and less than U.S.$5.0 million in the aggregate during any Fiscal Year and (iii) issuances by Canadian Holding Company to Holdings of Capital Stock of Canadian Holding Company in connection with the Intercompany Debt Transactions. Any event described in clause (i)(b) of the definition of Net Insurance/Condemnation Proceeds shall not constitute an Asset Sale and shall constitute an event the Net Insurance/Condemnation Proceeds of which are to be applied in accordance with Section 2.16(b). "ASSIGNMENT AGREEMENT" means an Assignment Agreement substantially in the form of Exhibit E, with such amendments or modifications as may be approved by Administrative Agent. 5 "AUTHORIZED OFFICER" means, as applied to any Person, any individual holding the position of chairman of the board (if an officer), chief executive officer, president, vice president (or the equivalent thereof), chief financial officer or treasurer. "BA DISCOUNT NOTE" means a non-interest bearing promissory note of Company, denominated in Canadian Dollars, issued by Company to a Non-Acceptance Lender as part of an issuance of Bankers' Acceptances, and substantially in the form attached as Exhibit B-4 or such other form as may be agreed to by Administrative Agent, Company and such Non-Acceptance Lender. "BA DISCOUNT PROCEEDS" means, in respect of any Bankers' Acceptance, the amount obtained by multiplying (a) the aggregate face amount of such Bankers' Acceptance by (b) the amount (rounded up or down to the fifth decimal place with ..000005 being rounded up) determined by dividing one by the sum of one plus the product of (i) the BA Discount Rate, and (ii) a fraction, the numerator of which is the number of days in the BA Interest Period of such Bankers' Acceptance and the denominator of which is 365 (or 366, as the case may be). "BA DISCOUNT RATE" means: (i) in relation to a Bankers' Acceptance accepted by a Special Schedule I Lender, the CDOR Rate; (ii) in relation to a Bankers' Acceptance accepted by a Schedule II Lender or Schedule III Lender, the lesser of: (a) the average Discount Rate applicable to such issue as quoted by the Reference Lenders; and (b) the CDOR Rate plus 0.10% per annum; and (iii) in relation to a BA Equivalent Advance: (a) made by a Special Schedule I Lender, the CDOR Rate; (b) made by a Schedule II Lender or Schedule III Lender, the rate determined in accordance with subparagraph (ii) of this definition; and (c) made by any other Lender, the CDOR Rate plus 0.10% per annum. "BA DISCOUNT RATE LOAN" means a Loan denominated in Canadian Dollars bearing interest by way of discount of the face amount thereof at a rate determined by reference to the BA Discount Rate. "BA EQUIVALENT ADVANCE" means, in relation to a borrowing of, Conversion into or Rollover of Bankers' Acceptances, a Loan in Canadian Dollars made by a Non-Acceptance Lender as part of such borrowing, Conversion or Rollover, as provided in Section 2.3(i). 6 "BA INTEREST PERIOD" means, with respect to each Bankers' Acceptance, the period selected by Company hereunder and being of 1, 2, 3 or 6 months' duration (or, subject to the agreement of Administrative Agent, a longer or shorter period), subject to market availability, as selected by Company in the applicable Funding Notice or Conversion/Continuation Notice in respect thereof; provided that: (i) the last day of each BA Interest Period shall be also the first day of the next BA Interest Period in the case of a Rollover; (ii) the last day of each BA Interest Period shall be a Business Day; (iii) no BA Interest Period with respect to any portion of any Class of Term Loans shall extend beyond such Class's Term Loan Maturity Date; and (iv) no BA Interest Period with respect to any portion of the Revolving Loans shall extend beyond the Revolving Commitment Termination Date. "BAL PROPERTIES" means the real properties located at 4670 South Service Road, Beamsville, Ontario; 7800 Vauban, Montreal, Quebec; and 160 St-Joseph, Lachine, Quebec. "BANKERS' ACCEPTANCE" means a non-interest bearing draft drawn by Company in Canadian Dollars, accepted by a Lender and issued for value pursuant to this Agreement and includes a depository bill under the DBNA and a bill of exchange under the Bills of Exchange Act (Canada). "BANKRUPTCY LAWS" means (i) Title 11 of the United States Code entitled "Bankruptcy," (ii) the Bankruptcy and Insolvency Act (Canada), (iii) the Companies' Creditors Arrangement Act (Canada) and (iv) any analogous laws relating to bankruptcy and insolvency, each as now and hereafter in effect, or any successor statute. "BASE RATE" means, for any day, a rate per annum equal to the greater of (i) (x) in the case of Loans made by Lenders out of Canada only, the rate of interest quoted from time to time by Administrative Agent in Toronto, Ontario as the reference rate of interest for loans in U.S. Dollars to its Canadian borrowers and (y) in all other cases, the U.S. Prime Rate, and (ii) the Federal Funds Effective Rate in effect on such day plus -1/2 of 1%. Any change in the Base Rate due to a change in the U.S. Prime Rate or the Federal Funds Effective Rate shall be effective on the effective day of such change in the U.S. Prime Rate or the Federal Funds Effective Rate, respectively. "BASE RATE LOAN" means a Loan denominated in U.S. Dollars bearing interest at a rate determined by reference to the Base Rate. "BLACK DIAMOND" means Black Diamond Asset Management or any other entity known without additional inquiry by Administrative Agent or a Lender making an assignment pursuant to Section 10.6(c) to be an Affiliate of Black Diamond Asset Management. 7 "BOARD OF DIRECTORS" means, with respect to any Person, (i) in the case of any corporation, the board of directors of such Person and (ii) in any other case, the functional equivalent of the foregoing. "BUSINESS DAY" means any day, other than a Saturday or a Sunday or a statutory holiday in the relevant jurisdiction or jurisdictions, and (i) where used in the context of a notice, delivery, payment or other communication addressed to Administrative Agent, which is also a day on which banks are not required or authorized to close in New York City, Toronto or Montreal; and (ii) with respect to all notices, determinations, fundings and payments in connection with the Adjusted Eurodollar Rate or Adjusted Canadian Eurodollar Rate or any Eurodollar Rate Loans or Canadian Eurodollar Rate Loans, the term "Business Day" shall mean any day which is a Business Day described in clause (i) and which is also a day for trading by and between banks in U.S. Dollar deposits or Canadian Dollar deposits, as applicable, in the London interbank market. "CANADIAN BASED U.S. SWING LINE ACCOUNT" as defined in Section 2.4(b). "CANADIAN BORROWINGS" means Loans denominated in Canadian Dollars. "CANADIAN DOLLAR EQUIVALENT" means, as to any amount denominated in U.S. Dollars as of any date of determination, the amount of Canadian Dollars which would be required to purchase such amount of U.S. Dollars at the Bank of Canada noon (Toronto time) spot rate on such date or, if such date of determination is not a Business Day, on the Business Day immediately preceding such date of determination. "CANADIAN DOLLARS" and "CAN$" mean the lawful money of Canada. "CANADIAN EMPLOYEE BENEFIT PLAN" as set forth in the definition of Employee Benefit Plan. "CANADIAN EURODOLLAR RATE LOAN" means a Loan denominated in Canadian Dollars bearing interest at a rate determined by reference to the Adjusted Canadian Eurodollar Rate. "CANADIAN HOLDING COMPANY" means MAAX Canada Inc., a Canada corporation governed by the Canada Business Corporations Act, and its predecessors. "CANADIAN PENSION PLAN DEFAULT EVENT" means any fact or circumstance which could result in a Canadian Pension Plan being deregistered, being wound up (in whole or in part), being subject to an accelerated funding or special payment obligation, being less than fully funded on a going concern or solvency basis or being subject to a claim against it by the PBGF. "CANADIAN PRIME RATE" means, for any day, the greater of: (i) the rate of interest per annum established from time to time by Administrative Agent as the reference rate of interest for the determination of interest rates that Administrative Agent will charge to commercial customers in Canada for Canadian Dollar demand loans in Canada; and 8 (ii) the rate of interest per annum equal to the average annual yield rate for one-month Canadian Dollar bankers' acceptances (expressed for such purpose as a yearly rate per annum) which rate is shown on the display referred to as the "CDOR Page" (or any display substituted therefor) of Reuters Money Rates Service at 10:00 a.m. (Toronto time) on such day or, if such day is not a Business Day, on the immediately preceding Business Day, plus 1.0% per annum. "CANADIAN REVOLVING LOAN" means each Revolving Loan denominated in Canadian Dollars. "CANADIAN SECURITY AGREEMENT" means the Canadian Security Agreement to be executed by Company and each Guarantor with personal property or a chief executive office located in any Canadian province other than Quebec substantially in the form of Exhibit I-2, as it may be amended, supplemented or otherwise modified from time to time. "CANADIAN SWING LINE ACCOUNT" as defined in Section 2.4(b). "CANADIAN SWING LINE LOAN" means each Swing Line Loan denominated in Canadian Dollars. "CAPITAL LEASE" means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person. "CAPITAL STOCK" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including, without limitation, partnership interests, limited liability company interests, unlimited company interests or other equity interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing (but excluding any debt security that is exchangeable for or convertible into such Capital Stock). "CASH" means money, currency or a credit balance in any demand or Deposit Account. "CASH EQUIVALENTS" means, as at any date of determination, (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States or Canada and maturing within one year of the date of acquisition thereof or (b) issued by any agency of the United States or Canada the obligations of which are backed by the full faith and credit of the United States or Canada, in each case maturing within one year after the date of acquisition thereof; (ii) marketable direct obligations issued by any state of the United States of America or province of Canada or any political subdivision of any such state or province or any public instrumentality thereof, in each case maturing within one year after the date of acquisition thereof and having a rating of at least A-2 from S&P or at least P-2 from Moody's; (iii) commercial paper maturing no more than one year from the date of acquisition thereof and having a rating of at least A-2 from S&P, at least P-2 from Moody's or at least R-2 (high) from Dominion Bond Rating Service Limited; (iv) certificates of deposit, time deposits or bankers' acceptances maturing within one year after the date of acquisition thereof and issued or accepted by any Lender or by any commercial bank organized under the laws of the United States of 9 America or any state thereof or the District of Columbia that is at least "adequately capitalized" (as defined in the regulations of its primary Federal banking regulator) and has Tier 1 capital (as defined in such regulations) of not less than U.S.$100.0 million; (v) financial instruments maturing within one year after the date of acquisition thereof and issued by any Canadian chartered bank which has a long-term debt rating of at least A+ by S&P, A2 by Moody's or A (high) by Dominion Bond Rating Service Limited; (vi) repurchase agreements with a term of not more than 30 days for underlying securities of the types described in clause (i) or (ii) entered into with any bank meeting the qualifications specified in clause (iv) or (v), which repurchase obligations are secured by a perfected first priority security interest in the underlying securities; (vii) shares of any money market mutual fund that (a) has substantially all of its assets invested continuously in the types of investments referred to in clauses (i) and (v) above, (b) has net assets of not less than U.S.$500.0 million and (c) has the highest rating obtainable from either S&P or Moody's; and (viii) in the case of any Foreign Subsidiary, investments made locally of a type comparable to those described in clauses (i) through (vii) of this definition. "CDOR RATE" means, on any date which Bankers' Acceptances are to be issued pursuant hereto, the per annum rate of interest which is the rate determined as being the arithmetic average of the annual yield rates applicable to Canadian Dollar bankers' acceptances having identical issue and comparable maturity dates as the Bankers' Acceptances proposed to be issued by Company displayed and identified as such on the display referred to as the "CDOR Page" (or any display substituted therefor) of Reuters Monitor Money Rates Service as at approximately 10:00 a.m. (Toronto time) on such day, or if such day is not a Business Day, then on the immediately preceding Business Day (as adjusted by Administrative Agent in good faith after 10:00 a.m. (Toronto time) to reflect any error in a posted rate or in the posted average annual rate); provided if the Bankers Acceptances proposed to be issued by Company would have a BA Interest Period of any duration other than 1, 2, 3 or 6 months or if such a rate does not otherwise appear on such CDOR Page, then the CDOR Rate, on any day, shall be the Discount Rate quoted by Administrative Agent determined as of 10:00 a.m. (Toronto time) on such day which would be applicable in respect of an issue of bankers' acceptances in a comparable amount and with comparable maturity dates to the Bankers' Acceptances proposed to be issued by Company on such day, or if such day is not a Business Day, then on the immediately preceding Business Day. "CERTIFICATE RE NON-BANK STATUS" means a certificate substantially in the form of Exhibit F. "CHANGE IN LAW" means (a) the adoption of any law, rule, regulation, treaty or order by any Governmental Authority after the Closing Date, (b) any change in any law, rule or regulation, treaty or order or in the interpretation or application thereof by any Governmental Authority in each case after the Closing Date or (c) compliance by any Lender with any written request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Closing Date. "CHANGE OF CONTROL" means, at any time, (i) (a) the Permitted Holders shall cease to beneficially own and control more than 50% on a fully diluted basis of the economic and voting interests in the Capital Stock of Holdings beneficially owned and controlled by the Permitted Holders on the Closing Date after giving effect to the Transactions occurring thereon or (b) Childs shall cease to beneficially own and control more than 50% on a fully diluted basis of the 10 economic and voting interests in the Capital Stock of Holdings beneficially owned and controlled by Childs on the Closing Date after giving effect to the Transactions occurring thereon; (ii) any Person or "group" (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than the Permitted Holders (a) shall have acquired beneficial ownership of 35% or more on a fully diluted basis of the voting and/or economic interest in the Capital Stock of Holdings or (b) shall have obtained the power (whether or not exercised) to elect a majority of the members of the Board of Directors of Holdings; (iii) Holdings shall cease to beneficially own and control 100% on a fully diluted basis of the economic and voting interest in the Capital Stock of Company; (iv) the majority of the seats (other than vacant seats) on the Board of Directors of Company or Holdings cease to be occupied by Persons who either (a) were members of the Board of Directors of Company or Holdings on the Closing Date or (b) were nominated for election by the Board of Directors of Company or Holdings, a majority of whom were directors on the Closing Date or whose election or nomination for election was previously approved by a majority of such directors, provided, this clause (iv) shall not apply if the Permitted Holders have the power directly or indirectly to designate a majority of the directors serving on the Board of Directors of Company or Holdings, as the case may be; or (v) any "change of control" or similar event under the Senior Subordinated Notes Indenture shall occur. "CHILDS" means John W. Childs, J. W. Childs Associates L.P. and their Controlled Investment Affiliates. "CIVIL CODE" means the Civil Code of Quebec, as in effect from time to time. "CLASS" means (i) with respect to Lenders, each of the following classes of Lenders: (a) Tranche A Term Loan Lenders, (b) Tranche B Term Loan Lenders, (c) Revolving Lenders (including Swing Line Lender) and (d) Lenders having New Term Loan Exposure of each Series, and (ii) with respect to Loans, each of the following classes of Loans: (a) Tranche A Term Loans, (b) Tranche B Term Loans, (c) Revolving Loans (including Swing Line Loans) and (d) each Series of New Term Loans. "CLEARING HOUSE" shall have the meaning ascribed thereto in the DBNA, including for certainty The Canadian Depository For Securities Limited or its nominee, CDS & Co. "CLOSING DATE" means the date on which the Term Loans are made. "CLOSING DATE CERTIFICATE" means a Closing Date Certificate substantially in the form of Exhibit G-1. "CLOSING DATE MORTGAGED PROPERTY" as defined in Section 3.1(g)(i). "COLLATERAL" means, collectively, all of the real, personal and mixed property (including Capital Stock) in which Liens are purported to be granted pursuant to the Collateral Documents as security for the Obligations. "COLLATERAL ACCOUNT" as defined in the Canadian Security Agreement. "COLLATERAL AGENT" as defined in the preamble hereto. 11 "COLLATERAL DOCUMENTS" means the Security Agreements, the Mortgages, the Landlord Personal Property Collateral Access Agreements, if any, and all other instruments, documents and agreements delivered by any Credit Party pursuant to this Agreement or any of the other Credit Documents in order to grant to Collateral Agent, for the benefit of Lenders, a Lien on any real, personal or mixed property of that Credit Party as security for the Obligations. "COMMITMENT" means any Revolving Commitment, Term Loan Commitment or New Term Loan Commitment. "COMMITMENT LETTER" means the Commitment Letter dated as of March 10, 2004 by and among the Sponsors, GSCP, Merrill Lynch Capital Corporation, RBC and 3087052 Nova Scotia Company. "COMMODITY AGREEMENT" means any swap, cap, forward purchase, futures or other similar agreement or arrangement relating to commodity prices. "COMMUNICATIONS" as defined in Section 10.21. "COMPANY" as defined in the preamble hereto. "COMPLIANCE CERTIFICATE" means a Compliance Certificate substantially in the form of Exhibit C. "CONSOLIDATED ADJUSTED EBITDA" means, for any period, an amount determined for Holdings and its Subsidiaries on a consolidated basis equal to (i) Consolidated Net Income for such period plus (ii) the sum, without duplication, of the amounts for such period (in each case to the extent reducing such Consolidated Net Income) of (a) Consolidated Interest Expense; (b) provisions for taxes based on income; (c) total depreciation expense; (d) total amortization expense; (e) other non-cash items reducing such Consolidated Net Income (excluding any such non-cash item to the extent that it represents an accrual or reserve for potential cash items in any future period or amortization of a prepaid cash item that was paid in a prior period); (f) any after-tax losses attributable to Asset Sales or returned surplus assets of any Pension Plan and any extraordinary losses; (g) relocation costs and expenses incurred to move the headquarters of Holdings and its Subsidiaries from Sainte-Marie, Canada to Montreal, Canada; 12 (h) costs and expenses incurred on or prior to the Closing Date during the Fiscal Year ending February 28, 2005 in connection with the Transactions; (i) Restructuring Expenses in an aggregate amount not to exceed U.S.$5.0 million in any four Fiscal Quarter period; (j) other non-recurring, non-operating losses in an aggregate amount not to exceed U.S.$5.0 million in any four Fiscal Quarter period; (k) development costs that are expensed pursuant to Statement of Financial Accounting Standards No. 2, "Accounting for Research and Development Costs," but are capitalizable under accounting principles generally accepted in Canada; (l) cash gains realized under Currency Agreements; and (m) minority interest (if negative) with respect to any Guarantor Subsidiary; minus (iii) the sum, without duplication, of the amounts for such period (in each case to the extent increasing such Consolidated Net Income) of (a) non-cash items increasing such Consolidated Net Income (excluding any such non-cash item to the extent it represents the reversal of an accrual or reserve for potential cash item in any prior period); (b) any after-tax gains attributable to Asset Sales or returned surplus assets of any Pension Plan and any extraordinary gains; (c) non-recurring, non-operating gains; (d) cash losses realized under Currency Agreements; and (e) minority interest (if positive) with respect to any Guarantor Subsidiary. Notwithstanding anything to the contrary, it is agreed that Consolidated Adjusted EBITDA for the Fiscal Quarters ended August 31, 2003, November 30, 2003 and February 28, 2004 were Can$25,700,000, Can$25,300,000 and Can$20,600,000, respectively. In the event that Holdings' financial statements are reported in U.S. Dollars, such Consolidated Adjusted EBITDA amounts shall be converted to U.S. Dollars at a rate reasonably satisfactory to Company and Administrative Agent. "CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the aggregate of all expenditures of Holdings and its Subsidiaries during such period determined on a consolidated basis that, in accordance with GAAP, are or should be included in "purchase of property and equipment" or similar items reflected in the consolidated statement of cash flows of Holdings and its Subsidiaries. 13 "CONSOLIDATED CASH INTEREST EXPENSE" means, for any period, Consolidated Interest Expense for such period, excluding any amount not payable in cash in such period, but including in any event the implied cost of financing (equal to the discount factor) under the factoring arrangements permitted pursuant to Section 6.9(j). "CONSOLIDATED CURRENT ASSETS" means, as at any date of determination, the total assets of Holdings and its Subsidiaries on a consolidated basis that may properly be classified as current assets in conformity with GAAP, excluding Cash and cash equivalents. "CONSOLIDATED CURRENT LIABILITIES" means, as at any date of determination, the total liabilities of Holdings and its Subsidiaries on a consolidated basis that may properly be classified as current liabilities in conformity with GAAP, excluding the current portion of any debt. "CONSOLIDATED EXCESS CASH FLOW" means, for any period, an amount equal to the excess of (a) the sum, without duplication, of (i) Consolidated Net Income for such period; (ii) all non-cash expenses, losses and charges (including depreciation and amortization) to the extent deducted in arriving at such Consolidated Net Income; (iii) the Consolidated Working Capital Adjustment for such period; (iv) cash gains realized under Currency Agreements during such period; and (v) the aggregate amount of cash returns during such period on investments pursuant to Sections 6.7(g), (h), (i) and (k); over (b) the sum, without duplication, of (i) all non-cash income, gains and credits included in arriving at such Consolidated Net Income; (ii) scheduled repayments of Consolidated Total Debt during such period, excluding any repayment of Indebtedness to the extent made with the proceeds of capital contributions, issuances of Capital Stock, incurrences of Indebtedness or Asset Sales; (iii) the aggregate amount actually paid by Holdings or any of its Subsidiaries in cash during such period on account of Consolidated Capital Expenditures, excluding any such expenditures to the extent made with the proceeds of capital contributions, issuances of Capital Stock, incurrences of Indebtedness or Asset Sales; 14 (iv) Consolidated Cash Interest Expense for such period; (v) the amount of such Consolidated Net Income for such period that represents net income (or loss) determined in conformity with GAAP of any Person related to any Fiscal Quarter prior to the Fiscal Quarter during which such Person became a Subsidiary of Holdings, was merged into or consolidated with Holdings or any of its Subsidiaries or such Person's assets were acquired by Holdings or any of its Subsidiaries; (vi) cash losses realized under Currency Agreements during such period; (vii) payments made to shareholders of MAAX Inc. on the Closing Date in connection with the Transactions; and (viii) the aggregate amount of investments made in cash during such period pursuant to Sections 6.7(g), (h), (i) and (k) (other than investments made with proceeds of capital contributions, issuances of Capital Stock, incurrences of Indebtedness or Asset Sales). "CONSOLIDATED FIXED CHARGES" means, for any period, the sum, without duplication, of the amounts determined for Holdings and its Subsidiaries on a consolidated basis equal to (i) Consolidated Cash Interest Expense, (ii) scheduled payments of principal on Consolidated Total Debt, (iii) Consolidated Capital Expenditures, (iv) provisions for taxes based on income of MAAX Holdings and its Subsidiaries and payable in cash with respect to such period, and (v) scheduled rental payments. "CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest expense (including that portion attributable to Capital Leases in accordance with GAAP and capitalized interest) of Holdings and its Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of Holdings and its Subsidiaries, including all commissions, discounts and other fees and charges owed with respect to letters of credit and net costs under Interest Rate Agreements, plus the implied cost of financing (equal to the discount factor) under the factoring arrangements permitted pursuant to Section 6.9(j), but excluding, however, any amounts referred to in Section 2.13(d) payable on or before the Closing Date. "CONSOLIDATED NET INCOME" means, for any period, (i) the net income (or loss) of Holdings and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP, minus, without duplication, (ii) (a) the net income (but not the net loss) of any Person that is not a Subsidiary of Holdings or that is accounted for by the equity method of accounting, except to the extent of the amount of dividends or other distributions actually paid in Cash to Holdings or any of its Subsidiaries by such Person during such period, (b) the income of any Subsidiary of Holdings to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, and 15 (c) Restricted Junior Payments to any Parent Company other than Holdings pursuant to Section 6.5(d). "CONSOLIDATED TOTAL DEBT" means, as at any date of determination, the aggregate amount of all Indebtedness of Holdings and its Subsidiaries that would be reflected on a consolidated balance sheet as of such date prepared in accordance with GAAP. "CONSOLIDATED WORKING CAPITAL" means, as at any date of determination, the excess of Consolidated Current Assets over Consolidated Current Liabilities. "CONSOLIDATED WORKING CAPITAL ADJUSTMENT" means, for any period on a consolidated basis, the amount (which may be a negative number) by which Consolidated Working Capital as of the beginning of such period exceeds (or is less than) Consolidated Working Capital as of the end of such period. "CONTRACTUAL OBLIGATION" means, as applied to any Person, any provision of any Security issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject. "CONTRIBUTING GUARANTORS" as defined in Section 7.2. "CONTROLLED INVESTMENT AFFILIATE" means, as to any Person, any other Person which directly or indirectly is in control of, is controlled by, or is under common control with, such Person and is organized by such Person (or any Person controlling such Person) primarily for making equity or debt investments in MAAX Holdings or other portfolio companies. "CONVERSION" means the conversion or deemed conversion of a Loan to another Type of Loan in accordance with Section 2.11 or otherwise as occurs automatically hereunder, but in any case under the same Class under which the original Loan was made. "CONVERSION/CONTINUATION DATE" means the effective date of a continuation or Conversion, as the case may be, as set forth in the applicable Conversion/Continuation Notice. "CONVERSION/CONTINUATION NOTICE" means a Conversion/Continuation Notice substantially in the form of Exhibit A-2. "COUNTERPART AGREEMENT" means a Counterpart Agreement substantially in the form of Exhibit H delivered by a Credit Party pursuant to Section 5.10. "CREDIT DATE" means the date of a Credit Extension. "CREDIT DOCUMENT" means any of this Agreement, the Notes, if any, the Collateral Documents, any documents or certificates executed by Company in favor of an Issuing Lender relating to Letters of Credit, and all other documents, instruments or agreements executed and delivered by a Credit Party for the benefit of any Agent, Issuing Lender or any Lender in connection herewith. 16 "CREDIT EXTENSION" means the making of a Loan or the issuing of a Letter of Credit. "CREDIT PARTY" means Company and each Guarantor. "CURRENCY AGREEMENT" means any foreign exchange contract, currency swap agreement, futures contract, option contract, forward contract, synthetic cap or other similar agreement or arrangement relating to currency exchange rates. "DBNA" means the Depository Bills and Notes Act (Canada). "DEFAULT" means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default. "DEFAULT EXCESS" means, with respect to any Defaulting Lender, the excess, if any, of such Defaulting Lender's Pro Rata Share of the aggregate outstanding principal amount of Loans of all Lenders (calculated as if all Defaulting Lenders (other than such Defaulting Lender) had funded all of their respective Defaulted Loans) over the aggregate outstanding principal amount of all Loans of such Defaulting Lender. "DEFAULT PERIOD" means, with respect to any Defaulting Lender, the period commencing on the date of the applicable Funding Default and ending on the earliest of the following dates: (i) the date on which all Commitments are cancelled or terminated and/or the Obligations are declared or become immediately due and payable, (ii) the date on which (a) the Default Excess with respect to such Defaulting Lender shall have been reduced to zero other than by Company reimbursing Administrative Agent for such Default Excess in accordance with Section 2.6(b) (whether by the funding by such Defaulting Lender of any Defaulted Loans of such Defaulting Lender or by the non-pro rata application of any voluntary or mandatory prepayments of the Loans in accordance with the terms of Section 2.15 or Section 2.16 or by a combination thereof) and (b) such Defaulting Lender shall have delivered to Company and Administrative Agent a written reaffirmation of its intention to honor its obligations hereunder with respect to its Commitments, and (iii) the date on which Company, Administrative Agent and Requisite Lenders waive all Funding Defaults of such Defaulting Lender in writing. "DEFAULTED LOAN" as defined in Section 2.24. "DEFAULTING LENDER" as defined in Section 2.24. "DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit. "DESIGNATED ACCOUNT" means any account that constitutes a "Deposit Account" under any Security Agreement. "DISCOUNT RATE" means, with respect to the issuance of a bankers' acceptance in the Canadian bankers' acceptance market, the rate of interest per annum, calculated on the basis of a year of 365 days (rounded upwards, if necessary, to the nearest whole multiple of 1/100th of one percent) which is equal to the discount exacted by a purchaser taking initial delivery of such 17 bankers' acceptance, calculated as a rate per annum and as if the issuer thereof received the discount proceeds in respect of such bankers' acceptance on its date of issuance and had repaid the respective face amount of such bankers' acceptance on the maturity date thereof. "DOCUMENTATION AGENT" as defined in the preamble hereto. "DOMESTIC SUBSIDIARY" means any Subsidiary organized under the laws of the United States of America, any State thereof, the District of Columbia, Canada or any province thereof (other than MAAX (2004) LLC). "ELIGIBLE ASSIGNEES" means (i) with respect to the Tranche A Term Loans and the Revolving Loans, any entity that, on the date such entity becomes a party to this Agreement, comes within any category of entities listed on Appendix C hereof and any other entity interest payments to which, on the date such entity becomes a party to this Agreement, will not require withholding under U.S. and Canadian federal tax laws, (ii) with respect to the Tranche B Term Loans, any Person, (iii) to the extent necessary or advisable in order to ensure a Successful Syndication, any assignee of any of GSCP, RBC or MLPF&S, (iv) with respect to the Tranche A Term Loans and the Revolving Loans, any Person not described in clause (i) or (iii) that agrees that it will not have the benefit of Section 2.22 for U.S. and Canadian federal withholding taxes, other than as a result of a Change in Law occurring after the date on which such Person becomes a Lender, (v) with respect to the Tranche A Term Loans and the Revolving Loans, any Person not described in clause (i), (iii) or (iv); provided, however, that a Person described in this clause (v) shall not be entitled to any gross-up payments in respect of U.S. and Canadian federal withholding taxes that exceed the greater of (A) the gross-up payments to which such Person's assignor (the "CURRENT ASSIGNOR") was entitled immediately prior to the assignment or (B) the gross-up payments to which the current assignor's assignor would be entitled if the current assignor made an assignment back to such prior assignor, except to the extent that such entitlement to such greater gross-up payments resulted from a Change in Law occurring after the date such Person becomes a Lender, and (vi) during the existence of (x) an Event of Default pursuant to Section 8.1(a), (f) or (g) or (y) any other Event of Default that continues for 30 days or more, any Person; provided that notwithstanding the foregoing, "Eligible Assignee" shall not include (w) Caisse de depot et deplacement du Quebec, (x) any natural person, (y) Company or any of Company's Affiliates or Subsidiaries or (z) Black Diamond. "EMBARGOED PERSON" as defined in Section 6.17. "EMPLOYEE BENEFIT PLAN" means (i) any "employee benefit plan" as defined in Section 3(3) of ERISA which is or was sponsored, maintained or contributed to by, or required to be contributed to by, Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates (each, a "U.S. EMPLOYEE BENEFIT PLAN") and (ii) any plan with respect to the employees or former employees of Holdings or any of its Subsidiaries in Canada or to which Holdings or any of its Subsidiaries in Canada is a party to or bound by or to which Holdings or any of its Subsidiaries in Canada has an obligation to contribute relating to retirement savings, pensions, life or accident insurance, hospitalization, health, medical or dental treatment or expenses, disability, employment insurance benefits, vacation pay, severance or termination pay or other benefit plan (each, a "CANADIAN EMPLOYEE BENEFIT PLAN"). 18 "ENVIRONMENTAL CLAIM" means any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive, by any Governmental Authority or any other Person, arising (i) pursuant to or in connection with any actual or alleged violation of any Environmental Law; (ii) in connection with any Hazardous Material or any actual or alleged Hazardous Materials Activity; or (iii) in connection with any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment. "ENVIRONMENTAL LAWS" means any and all current or future foreign or domestic, federal, state or provincial (or any subdivision of either of them), statutes, by-laws, ordinances, orders, rules, regulations, judgments, Governmental Authorizations or rule of common law relating to pollution or protection of the environment, natural resources or public health or welfare, including those relating to any Hazardous Materials Activity or the generation, use, storage, treatment, transportation or disposal of Hazardous Materials. "EQUITY FINANCING" means common equity investments in MAAX Holdings equal to not less than 25% of the total pro forma consolidated capitalization of MAAX Holdings which shall consist of (x) cash common equity investments by the Investors, which investments shall be contributed as cash common equity to Company (it being understood that the investments by certain of the Investors may initially be in the form of convertible debt of MAAX Holdings so long as all of such debt is converted into common equity of MAAX Holdings on the Closing Date) and (y) options and shares currently held by management in the Acquired Business which are exchanged for options or shares, as applicable, of MAAX Holdings. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor thereto. "ERISA AFFILIATE" means, as applied to any Person, (i) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which that Person is a member; (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which that Person is a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member. Any former ERISA Affiliate of Holdings or any of its Subsidiaries shall continue to be considered an ERISA Affiliate of Holdings or any such Subsidiary within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of Holdings or such Subsidiary and with respect to liabilities arising after such period for which Holdings or such Subsidiary could be liable under the Internal Revenue Code or ERISA. "ERISA EVENT" means (i) a "reportable event" within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for 30-day notice to the PBGC has been waived by regulation); (ii) the failure to meet the minimum funding standard of Section 412 of the Internal Revenue Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(d) of the Internal Revenue Code) or the failure to make by its due date a required installment under 19 Section 412(m) of the Internal Revenue Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal by Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to Holdings, any of its Subsidiaries or any of their respective Affiliates pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which could reasonably constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (vi) the imposition of liability on Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal of Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability thereto, or the receipt by Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or omission which could give rise to the imposition on Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the Internal Revenue Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a material claim (other than routine claims for benefits) against any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof, or against Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates in connection with any Employee Benefit Plan; (x) receipt from the Internal Revenue Service of notice of the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code; or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan. "EURODOLLAR RATE LOAN" means a Loan denominated in U.S. Dollars bearing interest at a rate determined by reference to the Adjusted Eurodollar Rate. "EVENT OF DEFAULT" as defined in Section 8.1. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute. "EXCLUDED TAX" means with respect to Administrative Agent or any Lender (i) income, branch profits or franchise taxes that, in each case, are imposed on (or measured by) its net income by any jurisdiction in which such party is organized or resident or has its principal office or applicable lending office or with which Administrative Agent or such Lender (as the case may be) has another connection (other than a connection deemed to arise solely by reason of such Lender's entering into or being a party to this Agreement, performing its obligations under this 20 Agreement, receiving a payment under this Agreement, or enforcing its rights or exercising its remedies under this Agreement) including a withholding made pursuant to section 105 of the regulations to the Income Tax Act (Canada) or Section 1015R8 of the regulations to the Taxation Act (Quebec), (ii) any taxes attributable to any Lender's failure to comply with Section 2.22(d) of this Agreement, (iii) in the case of any Original Lender, any U.S. or Canadian federal withholding tax that is imposed in respect of the Tranche A Term Loans or the Revolving Loans under the law in effect on the Closing Date as a result of such Lender not being a Person described in clause (i) or (iii) of the definition of Eligible Assignees and (iv) with respect to any fees for services rendered under the Tranche A Term Loans or the Revolving Loans, any U.S. federal withholding tax imposed under the law in effect when Administrative Agent or such Lender (as the case may be) became a party to this Agreement unless such Lender became a Lender during the continuance of an Event of Default pursuant to clause (vi) of the definition of Eligible Assignees. "EXECUTIVE ORDER" as defined in Section 4.27. "EXISTING INDEBTEDNESS" means Indebtedness and preferred equity of Holdings, the Acquired Business and their respective Subsidiaries incurred or issued prior to the Closing Date and listed on Schedule 6.1. "EXISTING LETTERS OF CREDIT" means each of the letters of credit identified on Appendix D hereto. "FACILITY" means any real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by Holdings or any of its Subsidiaries or any of their respective predecessors. "FAIR SHARE" as defined in Section 7.2. "FAIR SHARE CONTRIBUTION AMOUNT" as defined in Section 7.2. "FEDERAL FUNDS EFFECTIVE RATE" means for any day, the rate per annum (expressed as a decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided (i) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to Administrative Agent, in its capacity as a Lender, on such day on such transactions as determined by Administrative Agent. "FINANCIAL OFFICER CERTIFICATION" means, with respect to the financial statements for which such certification is required, the certification of the chief financial officer or a vice president responsible for financial matters of Holdings that such financial statements fairly present, in all material respects, the financial condition of Holdings and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments. 21 "FINANCIAL PLAN" as defined in Section 5.1(i). "FIRST PRIORITY" means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien is the only Lien to which such Collateral is subject, other than any Permitted Lien. "FISCAL QUARTER" means a fiscal quarter of any Fiscal Year. "FISCAL YEAR" means the fiscal year of Holdings and its Subsidiaries ending on February 28 or 29 of each calendar year, as applicable. "FIXED CHARGE COVERAGE RATIO" means the ratio as of the last day of any Fiscal Quarter of (i) Consolidated Adjusted EBITDA for the four-Fiscal Quarter period then ending, to (ii) Consolidated Fixed Charges for such four-Fiscal Quarter period. "FLOOD HAZARD PROPERTY" means any Real Estate Asset in the United States subject to a mortgage in favor of Collateral Agent, for the benefit of the Lenders, and located in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards. "FONDE DE POUVOIR" as defined in Section 9.1(d). "FOREIGN SUBSIDIARY" means any Subsidiary that is not a Domestic Subsidiary. "FORWARD PURCHASE AGREEMENT" means the Forward Purchase Agreement, dated as of the date hereof, between Holdings and Canadian Holding Company, as amended, restated, supplemented or otherwise modified from time to time in accordance with this Agreement. "FPA GUARANTY" means the Limited Recourse Guaranty, dated as of the date hereof, by Company or its predecessor in favor of Canadian Holding Company, as amended, restated, supplemented or otherwise modified from time to time in accordance with this Agreement. "FPA SECURITY AGREEMENT" means the Security Agreement and Hypothec, dated as of the date hereof, between Company or its predecessor and Canadian Holding Company, as amended, restated, supplemented or otherwise modified from time to time in accordance with this Agreement. "FUNDING DEFAULT" as defined in Section 2.24. "FUNDING GUARANTORS" as defined in Section 7.2. "FUNDING NOTICE" means a notice substantially in the form of Exhibit A-1. "GAAP" means, subject to the limitations on the application thereof set forth in Section 1.2, accounting principles generally accepted in the United States in effect as of the date of determination thereof. 22 "GOVERNMENTAL AUTHORITY" means any federal, state, provincial, municipal, local, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof, any central bank or other governmental or quasi-governmental authority or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with the United States, any State thereof, the District of Columbia, Canada, any province thereof, any subdivision of any of the foregoing, or any government of any other country or subdivision thereof. "GOVERNMENTAL AUTHORIZATION" means any permit, license, approval, authorization, plan, directive, consent order or consent decree of or from any Governmental Authority. "GSCP" as defined in the preamble hereto. "GUARANTEED OBLIGATIONS" as defined in Section 7.1. "GUARANTOR" means (i) Holdings, (ii) each Domestic Subsidiary of Holdings (other than Company) on the date hereof after giving effect to the Transactions and other mergers, asset transfers and amalgamations among Holdings and its Subsidiaries occurring on the Closing Date and (iii) each Person that becomes a Guarantor Subsidiary in accordance with Section 5.10, in the case of clause (ii) or (iii), until such Person is released from its Guaranty in accordance with Section 7.12. "GUARANTOR SUBSIDIARY" means each Guarantor other than Holdings. "GUARANTY" means the guaranty of each Guarantor set forth in Section 7. "HAZARDOUS MATERIALS" means any pollutant, contaminant, chemical, material, waste, substance or constituent which is subject to regulation or exposure to which can give rise to liability under any Environmental Law. "HAZARDOUS MATERIALS ACTIVITY" means any past or current activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, Release, discharge, placement, generation, transportation, processing, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or response action with respect to any of the foregoing. "HEDGE AGREEMENT" means a Commodity Agreement, an Interest Rate Agreement or a Currency Agreement entered into in order to satisfy the requirements of this Agreement or otherwise in the ordinary course of Holdings' or any of its Subsidiaries' businesses for purposes of hedging exposure to fluctuations in commodity prices, interest rates or currency exchange rates and not for speculative purposes. "HIGHEST LAWFUL RATE" means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow. 23 "HISTORICAL FINANCIAL STATEMENTS" means the audited financial statements of the Acquired Business, consisting of consolidated balance sheets as of February 29, 2004 and February 28, 2003 and the consolidated statements of income, shareholders' equity and cash flows for the three Fiscal Years ended February 29, 2004, February 28, 2003 and February 28, 2002, reported on by the independent public accountants of the Acquired Business that they fairly present, in all material respects, the financial condition of the Acquired Business and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated. "HOLDINGS" as defined in the preamble hereto. "INCREASED AMOUNT DATE" as defined in Section 2.26. "INCREASED-COST LENDERS" as defined in Section 2.25. "INDEBTEDNESS", as applied to any Person, means, without duplication, (i) all indebtedness for borrowed money; (ii) that portion of obligations with respect to Capital Leases that is properly classified as a liability on a balance sheet in conformity with GAAP; provided that all such obligations which are limited in recourse to the property subject to such Capital Lease shall be included in Indebtedness only to the extent of the book value of such property on a balance sheet in conformity with GAAP; (iii) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money; (iv) any obligation owed for all or any part of the deferred purchase price of property or services (excluding trade payables and accrued liabilities incurred in the ordinary course of business and any such obligations incurred under ERISA), which purchase price is (a) due more than six months from the date of incurrence of the obligation in respect thereof or (b) evidenced by a note or similar written instrument; (v) all indebtedness secured by any Lien on any property or asset owned by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person, but limited to the fair market value of such property or asset; (vi) the face amount of any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings; (vii) the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another; (viii) any obligation of such Person the primary purpose or intent of which is to provide assurance to an obligee that the obligation of the obligor thereof will be paid or discharged, or any agreement relating thereto will be complied with, or the holders thereof will be protected (in whole or in part) against loss in respect thereof; (ix) any liability of such Person for an obligation of another through any agreement (contingent or otherwise) (a) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or (b) to maintain the solvency or any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclause (a) or (b) of this clause (ix), the primary purpose or intent thereof is as described in clause (viii) above; and (x) all obligations of such Person in respect of any exchange traded or over-the-counter derivative transaction to the extent required to be reflected on a balance sheet in conformity with GAAP, including, without limitation, any Interest Rate Agreement and Currency Agreement; provided that in no event shall 24 (i) obligations under any Interest Rate Agreement, Commodity Agreement or Currency Agreement be deemed "Indebtedness" for any purpose under Section 6.8 and (ii) obligations under clauses (vii)-(ix) above be deemed "Indebtedness" unless the underlying obligation related thereto constitutes Indebtedness. In no event will obligations in respect of Capital Stock constitute Indebtedness hereunder. "INDEMNIFIED LIABILITIES" means, collectively, any and all liabilities, obligations, losses, damages (including natural resource damages), penalties, claims (including Environmental Claims), costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Hazardous Materials Activity), reasonable out-of-pocket expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of (i) this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby (including the Lenders' agreement to make Credit Extensions or the use or intended use of the proceeds thereof, or any enforcement of any of the Credit Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty)); (ii) the statements contained in the Commitment Letter; or (iii) any Environmental Claim or any Hazardous Materials Activity relating to or arising from, directly or indirectly, any past or present activity, operation, land ownership, or practice of Holdings or any of its Subsidiaries. "INDEMNITEE" as defined in Section 10.3. "INITIAL AGENTS" means RBC, GSCP and MLPF&S, in their respective capacities as Agents. "INSTALLMENT" as defined in Section 2.14(a). "INSTALLMENT DATE" as defined in Section 2.14(a). "INTELLECTUAL PROPERTY" as defined in Section 4.26(a). "INTERCOMPANY DEBT TRANSACTIONS" means any one or more transactions or series of transactions effected at any time or from time to time in connection with the Intercompany Debt Documents, including those pursuant to which (a) Capital Stock is issued by Canadian Holding Company to Holdings pursuant to the Forward Purchase Agreement, (b) Liens (x) are granted by Company in favor of any Guarantor Subsidiary or by any Guarantor Subsidiary in favor of Company or another Guarantor Subsidiary, in each case to secure its obligations under one or more Intercompany Debt Documents; provided, that the assets secured thereby shall be limited to 25 the right, title and interest of such Person under the applicable Intercompany Debt Documents, and (y) encumbering the Capital Stock of Company and the rights of Company and/or one or more Guarantors under the Forward Purchase Agreement and the Special Intercompany Note, in each case consisting of requirements that (i) any transferee of the Capital Stock of Company or the Special Intercompany Note must assume the obligations of Holdings under the Forward Purchase Agreement and (ii) any transferee of the rights of Holdings under the Forward Purchase Agreement must assume the obligations of Holdings under the Forward Purchase Agreement and foreclose on the Special Intercompany Note, (c) Indebtedness is incurred, serviced and repaid by Company and/or one or more Guarantors; provided that to the extent such Indebtedness is (i) owing to a Person other than Company or a Guarantor Subsidiary, such Indebtedness shall be repaid on the date, and in the form of funds or assets, incurred and (ii) incurred by Holdings, the proceeds of such Indebtedness shall be used by Holdings to purchase Capital Stock of Canadian Holding Company pursuant to the Forward Purchase Agreement, (d) the obligations of Holdings under the Forward Purchase Agreement are guaranteed by Company; provided that the only recourse under any such guarantee shall be against the rights of Company in and under the Special Intercompany Note and (e) dividends or other distributions (whether by an interest free advance or otherwise) are made by Company or a Guarantor Subsidiary to Holdings, the proceeds of which are used by Holdings either to (i) purchase Capital Stock of Canadian Holding Company pursuant to the Forward Purchase Agreement or (ii) repay Indebtedness (including interest and fees payable in connection therewith) of Holdings owing to a Person other than Company or a Guarantor Subsidiary incurred for the purpose of purchasing Capital Stock of Canadian Holding Company pursuant to the Forward Purchase Agreement. "INTERCOMPANY DEBT DOCUMENTS" means the Special Intercompany Note, the Forward Purchase Agreement, the FPA Security Agreement, the FPA Guaranty and the SI Moveable Hypothec. "INTERCOMPANY NOTE" means a promissory note substantially in the form of Exhibit N. "INTEREST COVERAGE RATIO" means the ratio as of the last day of any Fiscal Quarter of (i) Consolidated Adjusted EBITDA for the four-Fiscal Quarter period then ended, to (ii) Consolidated Cash Interest Expense for such four-Fiscal Quarter period. "INTEREST PAYMENT DATE" means with respect to (i) any Base Rate Loan or Prime Rate Loan each March 31, June 30, September 30 and December 31 of each year, commencing on the first such date to occur after the Closing Date, and the final maturity date of such Loan; and (ii) any Eurodollar Rate Loan or Canadian Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan; provided, in the case of each Interest Period of longer than three months' duration, "Interest Payment Date" shall also include each date that is three months, or an integral multiple thereof, after the commencement of such Interest Period. If any such date is not a Business Day, then the Interest Payment Date shall be the next succeeding Business Day. "INTEREST PERIOD" means, in connection with a Canadian Eurodollar Rate Loan or a Eurodollar Rate Loan, an interest period of one, two, three or six months or, in the case of Eurodollar Rate Loans only and only if available to all applicable Lenders, twelve months, or, in the case of Canadian Eurodollar Rate Loans only and subject to the agreement of Administrative Agent, a longer or shorter period, as selected by Company in the applicable Funding Notice or 26 Conversion/Continuation Notice, (i) initially, commencing on the Credit Date or Conversion/Continuation Date thereof, as the case may be; and (ii) thereafter, commencing on the day on which the immediately preceding Interest Period expires; provided, (a) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day unless no further Business Day occurs in such month, in which case such Interest Period shall expire on the immediately preceding Business Day; (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clauses (c) and (d), of this definition, end on the last Business Day of a calendar month; (c) no Interest Period with respect to any portion of any Class of Term Loans shall extend beyond such Class's Term Loan Maturity Date; and (d) no Interest Period with respect to any portion of the Revolving Loans shall extend beyond the Revolving Commitment Termination Date. "INTEREST RATE AGREEMENT" means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement or other similar agreement or arrangement. "INTEREST RATE DETERMINATION DATE" means, with respect to any Interest Period, the date that is two Business Days prior to the first day of such Interest Period. "INTERNAL REVENUE CODE" means the U.S. Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter, and any successor statute. "INVESTMENT" means (i) any direct or indirect purchase or other acquisition by Holdings or any of its Subsidiaries of, or of a beneficial interest in, any of the Securities of any other Person (other than a Guarantor Subsidiary); (ii) any direct or indirect redemption, retirement, purchase or other acquisition for value, by Holdings or any of its Subsidiaries from any Person (other than a Guarantor Subsidiary), of any Capital Stock of such Person; and (iii) any direct or indirect loan, advance (other than advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contribution by Holdings or any of its Subsidiaries to any other Person (other than a Guarantor Subsidiary), including all indebtedness and accounts receivable from that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business. The amount of any Investment shall be the original cost of such Investment net of any returns of capital on such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment. Notwithstanding the foregoing, Restricted Junior Payments of the type described in clause (ii) or (iii) of the definition thereof will not be deemed to be Investments. "INVESTORS" means the Sponsors, their Controlled Investment Affiliates and the Persons listed on Schedule 1.1. "ISSUANCE NOTICE" means an Issuance Notice substantially in the form of Exhibit A-3. 27 "ISSUING BANK" means National Bank of Canada, New York Branch, as Issuing Bank hereunder, together with its permitted successors and assigns in such capacity. "ISSUING LENDER" means a Lender issuing a Letter of Credit pursuant to Section 2.5. "JOINDER AGREEMENT" means an agreement substantially in the form of Exhibit L. "JOINT LEAD ARRANGERS" as defined in the preamble hereto. "JOINT VENTURE" means a joint venture, partnership or other similar arrangement between Holdings or any of its Subsidiaries and a Person or Persons other than Holdings or any of its Subsidiaries, whether in corporate, partnership or other legal form; provided in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party. "JUDGMENT CURRENCY" as defined in Section 10.8(a). "JUDGMENT CURRENCY CONVERSION DATE" as defined in Section 10.8(a). "KEYSTONE PROPERTIES" means the real properties located at 505 Keystone Road, Southampton, PA; 3674 Reese Avenue, Riviera Beach, FL; 955 Mearns Road, Warminster, PA; and 5576 Ontario Mills Parkway, Unit A and B, Ontario, CA. "LANDLORD PERSONAL PROPERTY COLLATERAL ACCESS AGREEMENT" means a Landlord Waiver and Consent Agreement substantially in the form of Exhibit K with such amendments or modifications as may be approved by Collateral Agent. "LEASEHOLD PROPERTY" means any leasehold interest of any Credit Party as lessee under any lease of real property. "LENDER" means each financial institution listed on the signature pages hereto as a Lender, and any other Person that becomes a party hereto pursuant to an Assignment Agreement or a Joinder Agreement; provided that under no circumstance shall Caisse de depot et deplacement du Quebec be considered a Lender. "LENDER COUNTERPARTY" means each counterparty to a Secured Hedge Agreement that is a Lender or an Affiliate of a Lender at the time such Secured Hedge Agreement is entered into (or on the Closing Date, with respect to Secured Hedge Agreements existing on the Closing Date) (including any such Person that subsequently ceases to be a Lender); provided that such Person executes and delivers to Administrative Agent a letter agreement in form and substance acceptable to Administrative Agent pursuant to which such Person (i) appoints Collateral Agent as its agent under the applicable Credit Documents and (ii) agrees to be bound by the provisions of Sections 9, 10.17 and 10.19. "LETTER OF CREDIT" means a commercial or standby letter of credit or letter of guaranty issued or to be issued by an Issuing Lender pursuant to this Agreement, including the Existing Letters of Credit. 28 "LETTER OF CREDIT SUBLIMIT" means the lesser of (i) Can$5.0 million and (ii) the aggregate unused amount of the Revolving Commitments then in effect. "LETTER OF CREDIT USAGE" means, as at any date of determination, without duplication the sum of (i) the maximum aggregate amount which is available for drawing under all Letters of Credit then outstanding (including the Canadian Dollar Equivalent of any amount denominated in U.S. Dollars), and (ii) the aggregate amount of all drawings under Letters of Credit honored by an Issuing Lender and not theretofore reimbursed by or on behalf of Company (including the Canadian Dollar Equivalent of any amount denominated in U.S. Dollars). "LEVERAGE RATIO" means, as of any day, the ratio of (i) Consolidated Total Debt as of such day to (ii) Consolidated Adjusted EBITDA for the four-Fiscal Quarter period ended as of the most recently concluded Fiscal Quarter. "LIEN" means (i) any lien, mortgage, hypothec, pledge, assignment, security interest, charge or encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease in the nature thereof) and any option, trust or other preferential arrangement having the practical effect of any of the foregoing and (ii) in the case of Securities, any purchase option, call or similar right of a third party with respect to such Securities (other than, in the case of Securities representing an interest in a Joint Venture, such purchase option, call or similar right of a party to the Joint Venture). "LOAN" means a Tranche A Term Loan, a Tranche B Term Loan, a Revolving Loan, a Swing Line Loan or a New Term Loan, and for greater certainty shall include all Bankers' Acceptances and BA Equivalent Advances. "MAAX HOLDINGS" means MAAX Holdings, Inc., a Delaware corporation. "MANAGEMENT AGREEMENT" means the Management Agreement, dated as of the Closing Date, among Sponsors, MAAX Holdings and Company, as in effect on the Closing Date. "MARGIN STOCK" as defined in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time. "MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the business, operations, properties, assets or condition (financial or otherwise) of Holdings and its Subsidiaries taken as a whole; (ii) the ability of any Credit Party to fully and timely perform its Obligations;; or (iii) the rights, remedies and benefits available to, or conferred upon, any Agent and any Lender or any Secured Party under any Credit Document. "MATERIAL CONTRACT" means any contract or other arrangement to which Holdings or any of its Subsidiaries is a party (other than the Credit Documents) for which breach, nonperformance, cancellation or failure to renew could reasonably be expected to have a Material Adverse Effect. "MATERIAL REAL ESTATE ASSET" means (i) any fee-owned Real Estate Asset acquired after the Closing Date having a fair market value at the acquisition thereof in excess of (x) in the case of a Real Estate Asset located in the United States, U.S.$750,000 and (y) in the case of a Real 29 Estate Asset located in Canada, Can$1.0 million or (ii) any fee-owned Real Estate Asset owned on the Closing Date or acquired after the Closing Date having a fair market value at any time in excess of (x) in the case of a Real Estate Asset located in the United States, U.S.$1.5 million and (y) in the case of a Real Estate Asset located in Canada, Can$2.0 million. "MERGER AGREEMENT" means that certain Merger Agreement dated as of March 10, 2004 by and among 3087052 Nova Scotia Company, 3087053 Nova Scotia Company, 9139-4460 Quebec Inc., 9139-7158 Quebec Inc. and the Acquired Business. "MOODY'S" means Moody's Investors Service, Inc. "MORTGAGE" means a mortgage, deed of trust, debenture or deed of hypothec or other security document securing an interest in a Real Estate Asset, whether executed on or before the Closing Date with respect to a Closing Date Mortgaged Property or thereafter pursuant to Section 5.11, substantially in the form of Exhibit J-1, J-2 or I-3, as applicable, as it may be amended, supplemented or otherwise modified from time to time. "MORTGAGE LIEN" means a valid and, subject to any registering, filing and/or recording, perfected and enforceable First Priority charge, mortgage, hypothec or Lien in favor of Collateral Agent for the benefit of the Secured Parties. "MULTIEMPLOYER PLAN" means any Employee Benefit Plan which is a "multiemployer plan" as defined in Section 3(37) of ERISA (each, a "U.S. MULTIEMPLOYER PLAN") or applicable Canadian pension legislation (each, a "CANADIAN MULTIEMPLOYER PLAN"). "NAIC" means The National Association of Insurance Commissioners, and any successor thereto. "NARRATIVE REPORT" means, with respect to the financial statements for which such narrative report is required, a narrative report describing the operations of Holdings and its Subsidiaries, in the form prepared for presentation to senior management thereof for the applicable Fiscal Quarter or Fiscal Year and for the period from the beginning of the then current Fiscal Year to the end of such period to which such financial statements relate. "NET ASSET SALE PROCEEDS" means, with respect to any Asset Sale, an amount equal to: (i) Cash payments (including any Cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) received by Holdings or any of its Subsidiaries from such Asset Sale, minus (ii) any commissions and other bona fide costs, fees and expenses incurred in connection with such Asset Sale, including (a) transfer taxes or income or gains taxes payable by the seller as a result of any gain recognized in connection with such Asset Sale, (b) payment of any obligations (other than the Loans) that are secured by a Lien on the stock or assets in question and that are required to be repaid under the terms thereof as a result of such Asset Sale, (c) a reasonable reserve for any indemnification payments (fixed or contingent) attributable to the seller's indemnities and representations and warranties to the purchaser in respect of such Asset Sale undertaken by Holdings or any of its Subsidiaries in connection with such Asset Sale and (d) Cash escrows to Holdings or any of its Subsidiaries from the sale price for such Asset Sale and, without duplication, cash reserves 30 required in accordance with GAAP in connection therewith; provided that any Cash released from such escrow shall constitute Net Asset Sale Proceeds upon such release. "NET INSURANCE/CONDEMNATION PROCEEDS" means an amount equal to: (i) any Cash payments or proceeds received by Holdings or any of its Subsidiaries (a) under any casualty insurance policy in respect of a covered loss thereunder other than, so long as no Default exists, any business interruption insurance policy or (b) as a result of the taking of any assets of Holdings or any of its Subsidiaries by any Person pursuant to the power of eminent domain, condemnation or otherwise, or pursuant to a sale of any such assets to a purchaser with such power under threat of such a taking, minus (ii) (a) any reasonable costs and expenses incurred by Holdings or any of its Subsidiaries in connection with the adjustment or settlement of any claims of Holdings or such Subsidiary in respect thereof, and (b) any bona fide costs and expenses incurred in connection with any sale of such assets as referred to in clause (i)(b) of this definition, including transfer taxes and income taxes payable as a result of any gain recognized in connection therewith. "NEW TERM LOAN COMMITMENTS" as defined in Section 2.26. "NEW TERM LOAN EXPOSURE" means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the New Term Loans of such Lender. "NEW TERM LOAN LENDER" as defined in Section 2.26. "NEW TERM LOAN MATURITY DATE" means the date that New Term Loans of a Series shall become due and payable in full hereunder, as specified in the applicable Joinder Agreement, including by acceleration or otherwise. "NEW TERM LOANS" as defined in Section 2.26. "NON-ACCEPTANCE LENDER" means (i) a Lender which does not (or the relevant branch does not) or ceases to accept Bankers' Acceptances in the ordinary course of its business or (ii) in respect of Lenders which are not Canadian chartered banks or Schedule III Lenders, a Lender which, by notice in writing to Administrative Agent and Company, elects thereafter to make BA Equivalent Advances in lieu of accepting Bankers' Acceptances. "NON-CONSENTING LENDER" as defined in Section 2.25. "NON-GUARANTOR SUBSIDIARY" means each Subsidiary of Holdings other than Company and the Guarantor Subsidiaries. "NON-U.S. LENDER" as defined in Section 2.22(d). "NOTE" means a Tranche A Term Loan Note, a Tranche B Term Loan Note, a Revolving Loan Note or a Swing Line Note. "NOTES OFFERING" means the issuance on the Closing Date of U.S.$150.0 million of Senior Subordinated Notes by Company. 31 "NOTICE" means a Funding Notice, an Issuance Notice, or a Conversion/Continuation Notice. "OBLIGATION CURRENCY" as defined in Section 10.8(a). "OBLIGATIONS" means all obligations of every nature of each Credit Party from time to time owed to the Agents (including former Agents), the Lenders or any of them and Lender Counterparties under any Credit Document or Secured Hedge Agreement, whether for principal, interest (including interest which, but for the filing of a petition in bankruptcy with respect to such Credit Party, would have accrued on any Obligation, whether or not a claim is allowed or allowable against such Credit Party for such interest in the related bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit, payments for early termination of Secured Hedge Agreements, fees, expenses, indemnification or otherwise. "OBLIGEE GUARANTOR" as defined in Section 7.7. "OFAC" as defined in Section 4.27. "OFFER TO PREPAY" as defined in Section 2.16(i). "OFFER TO PREPAY AMOUNT" as defined in Section 2.17(c). "OFFER TO PREPAY DATE" as defined in Section 2.17(c). "OFFICER'S CERTIFICATE" means a certificate executed by an Authorized Officer. "OFF-TITLE SEARCHES" as defined in Section 5.15(a). "OLD SYSTEM ISSUER" means a Lender, other than a Non-Acceptance Lender, which elects not to accept Bankers' Acceptances as depository bills under the DBNA. "ORGANIZATIONAL DOCUMENTS" means (i) with respect to any corporation, its certificate or articles of incorporation, organization or amalgamation, as amended, and its by-laws, as amended, or, as the case may be, its memorandum and articles, as amended, (ii) with respect to any limited partnership, its certificate of limited partnership, as amended, and its partnership agreement, as amended, (iii) with respect to any general partnership, its partnership agreement, as amended, (iv) with respect to any limited liability company, its articles of organization, as amended, and its operating agreement and (v) with respect to any other Person, comparable instruments and documents, as amended. In the event any term or condition of this Agreement or any other Credit Document requires any Organizational Document to be certified by a secretary of state or similar governmental official, the reference to any such "Organizational Document" shall only be to a document of a type customarily certified by such governmental official. "ORIGINAL LENDER" means a Lender that executes this Agreement on the Closing Date. "OTHER LIST" as defined in Section 6.17. 32 "OTHER TAXES" means any and all stamp, documentary, excise, property or similar taxes or levies that arise on account of any payment made or required to be made under any of the Credit Documents or from the execution, delivery, registration, recording or enforcement of any Credit Document. "PARENT COMPANIES" means MAAX Holdings and each of its Subsidiaries (if any) that directly or indirectly owns Capital Stock of Company. "PBGC" means the Pension Benefit Guaranty Corporation or any successor thereto. "PBGF" means the Pension Benefits Guarantee Fund established pursuant to the Pension Benefits Act (Ontario) or any similar fund or arrangement. "PENSION PLAN" means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA (each, a "U.S. PENSION PLAN") or which is a registered pension plan as defined in the Income Tax Act (Canada) (each, a "CANADIAN PENSION PLAN"). "PERFECTION CERTIFICATE" means a certificate in the form of Exhibit M-1 or any other form approved by Collateral Agent, as the same shall be supplemented from time to time by a Perfection Certificate Supplement or otherwise. "PERFECTION CERTIFICATE SUPPLEMENT" means a certificate supplement in the form of Exhibit M-2 or any other form approved by Collateral Agent. "PERMITTED ACQUISITION" means any acquisition by Company or any of its wholly-owned Guarantor Subsidiaries, whether by purchase, merger or otherwise, of all or substantially all of the assets of, more than 50% of the Capital Stock of, or a business line or unit or a division of, any Person; provided, (i) immediately prior to, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom; (ii) all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable laws and in conformity with all applicable Governmental Authorizations; (iii) in the case of the acquisition of Capital Stock, all such Capital Stock shall be owned by Company or a Guarantor Subsidiary, and Company shall have taken, or caused to be taken, as of the date such Person becomes a Subsidiary of Company, each of the actions set forth in Sections 5.10 and/or 5.11, as applicable; (iv) Company and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 6.8 on a pro forma basis after giving effect to such acquisition in accordance with Section 6.8(e); (v) Company shall have delivered to Administrative Agent, at least five Business Days prior to such proposed acquisition, a Compliance Certificate evidencing 33 compliance with Section 6.8 as required under clause (iv) above, together with all relevant financial information with respect to such acquired assets, including the aggregate consideration for such acquisition and any other information required to demonstrate compliance with Section 6.8; (vi) any Person or assets or division as acquired in accordance herewith shall be in a business or lines of business in which Company and/or its Subsidiaries are permitted to be engaged under Section 6.11; and (vii) with respect to any transaction involving aggregate consideration of more than U.S.$20.0 million, unless Administrative Agent shall otherwise agree, Company shall have provided Administrative Agent and the Lenders with (A) historical financial statements for the last three fiscal years (or, if less, the number of years since formation) of the Person (and if the Permitted Acquisition is for less than substantially all of the Capital Stock of such Person, pro forma historical financial statements of Holdings that account for such Permitted Acquisition) or business to be acquired (audited if available and, in the case of a transaction involving aggregate consideration of more than U.S.$40.0 million, if available without undue cost or delay) and unaudited financial statements thereof for the most recent interim period which are available, (B) reasonably detailed projections for the succeeding five years pertaining to the person or business to be acquired and updated projections for Company after giving effect to such transaction, (C) a reasonably detailed description of all material documentation relating thereto and copies of all material documentation pertaining to such transaction, and (D) all such other information and data relating to such transaction or the Person or business to be acquired as may be reasonably requested by Administrative Agent or the Requisite Lenders. "PERMITTED COLLATERAL LIENS" means, subject to the following paragraph, (x) in the case of a Real Estate Asset subject to a Mortgage, Permitted Liens allowed by clauses (b), (c), (d), (e), (f), (j), (l) and (r) of Section 6.2 and (y) in all other cases, any Permitted Lien other than those allowed by clause (a) of Section 6.2. Notwithstanding the foregoing, with respect to any Real Estate Asset subject to a Mortgage, at the time of delivery of such Mortgage Permitted Collateral Liens shall mean only those Liens set forth in (x) Schedule B to the applicable Mortgage and (y) Sections 6.02(b) and (r) to the extent such Liens are obligations of Company or any Subsidiary prior to the delivery of such Mortgage. In addition, no consensual Liens other than those granted pursuant to the Collateral Documents shall extend, directly or indirectly, to any Securities Collateral or Hypothecated Securities (each as defined in the Security Agreements). "PERMITTED HOLDER DEBT" means indebtedness owed to any Permitted Holder that (i) has an aggregate principal amount of no more than Can$100.0 million, (ii) has a final maturity of at least ten years, (iii) does not provide for the cash payment of any principal, interest or other amounts until at least ten years after its issuance and (iv) the net cash proceeds of which are ultimately contributed as common equity to Company. "PERMITTED HOLDERS" means John W. Childs, Sponsors and their Controlled Investment Affiliates. 34 "PERMITTED INDEBTEDNESS" means Indebtedness permitted pursuant to Section 6.1. "PERMITTED LIENS" means the Liens permitted pursuant to Section 6.2. "PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness issued in exchange for, or the net proceeds of which are used to refund, refinance, replace, defease or discharge, other Indebtedness; provided that: (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums incurred in connection therewith); (2) such Permitted Refinancing Indebtedness has a final maturity date not earlier than the final maturity date of, and has a weighted average life to maturity equal to or greater than the weighted average life to maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Obligations, such Permitted Refinancing Indebtedness is subordinated in right of payment to, the Obligations on terms, taken as a whole, at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (4) such Indebtedness is incurred either by Company or by the Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "PERSON" means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, unlimited companies, limited liability partnerships, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and Governmental Authorities. "PLATFORM" as defined in Section 10.21. "PLEDGOR" shall mean and include each "Pledgor" and "Grantor" as defined in the Security Agreements. "PPSA" means the Personal Property Security Act (or any similar or equivalent legislation, including the applicable provisions of the Civil Code) as in effect in any applicable Canadian jurisdiction. "PREFERRED STOCK" means, with respect to any Person, any and all preferred or preference Capital Stock (however designated) of such Person. 35 "PRIME RATE LOAN" means a Loan denominated in Canadian Dollars bearing interest at a rate determined by reference to the Canadian Prime Rate. "PRINCIPAL OFFICE" means, for each of Administrative Agent, Swing Line Lender and Issuing Bank, such Person's "Principal Office" as set forth on Appendix B, or such other office as such Person may from time to time designate in writing to Company, Administrative Agent and each Lender. "PRO FORMA FINANCIAL STATEMENTS" as defined in Section 4.7(b). "PROJECTIONS" as defined in Section 4.8. "PRO RATA SHARE" means (i) with respect to all payments, computations and other matters relating to the Tranche A Term Loan of any Lender, the percentage obtained by dividing (a) the Tranche A Term Loan Exposure of that Lender by (b) the aggregate Tranche A Term Loan Exposure of all Lenders; (ii) with respect to all payments, computations and other matters relating to the Tranche B Term Loan of any Lender, the percentage obtained by dividing (a) the Tranche B Term Loan Exposure of that Lender by (b) the aggregate Tranche B Term Loan Exposure of all Lenders; (iii) with respect to all payments, computations and other matters relating to the Revolving Commitment or Revolving Loans of any Lender or any Letters of Credit issued or participations purchased therein by any Lender or any participations in any Swing Line Loans purchased by any Lender, the percentage obtained by dividing (a) the Revolving Exposure of that Lender by (b) the aggregate Revolving Exposure of all Lenders; and (iv) with respect to all payments, computations, and other matters relating to New Term Loan Commitments or New Term Loans of a particular Series, the percentage obtained by dividing (a) the New Term Loan Exposure of that Lender with respect to that Series by (b) the aggregate New Term Loan Exposure of all Lenders with respect to that Series. For all other purposes with respect to each Lender, "Pro Rata Share" means the percentage obtained by dividing (A) an amount equal to the sum of the Tranche A Term Loan Exposure, the Tranche B Term Loan Exposure, the Revolving Exposure and the New Term Loan Exposure of that Lender, by (B) an amount equal to the sum of the aggregate Tranche A Term Loan Exposure, the aggregate Tranche B Term Loan Exposure, the aggregate Revolving Exposure and the aggregate New Term Loan Exposure of all Lenders. "PURCHASE AGREEMENT" means the Purchase Agreement related to the Notes Offering dated as of May 27, 2004 among Company, the Guarantors, Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and RBC Capital Markets Corporation. "PZR" as defined in Section 3.1(g)(ii). "QUALIFIED CAPITAL STOCK" means any Capital Stock other than Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to 91 days following the latest Term Loan Maturity Date in effect at 36 the time of issuance of such Capital Stock, (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Capital Stock referred to in (a) above, in each case at any time on or prior to 91 days following the latest Term Loan Maturity Date in effect at the time of issuance of such Capital Stock, or (c) contains any repurchase obligation which may require repurchase of the Capital Stock prior to payment in full of all Obligations; provided that any Capital Stock that would constitute Qualified Capital Stock but for provisions thereof giving holders thereof (or the holders of any security into or for which such Capital Stock is convertible, exchangeable or exercisable) the right to require the issuer thereof to redeem or offer to purchase such Capital Stock upon the occurrence of a change in control or an asset sale occurring prior to 91 days following the latest Term Loan Maturity Date shall constitute Qualified Capital Stock if such Capital Stock provides that the issuer thereof will not redeem or offer to purchase any such Capital Stock pursuant to such provisions prior to the repayment in full of the Obligations. "QUEBEC SECURITY DOCUMENTS" means, collectively, (i) the Deeds of Hypothec to be granted by Company and each Guarantor with assets or a chief executive office located in Quebec, (ii) the Debenture(s) to be issued by each such entity and (iii) the Pledge of Debenture Agreement(s) to be granted by each such entity, each substantially in the form attached as part of Exhibit I-3, as each may be amended, supplemented or otherwise modified from time to time. "RBC" as defined in the preamble hereto. "RBCCM" as defined in the preamble hereto. "REAL ESTATE ASSET" means, at any time of determination, any interest (fee, leasehold or otherwise) then owned by any Credit Party in any real property. "REFERENCE LENDERS" means up to two Schedule III Lenders which are designated as such by Administrative Agent and Company from time to time (it being agreed that Administrative Agent and Company may at any time terminate the designation of a Lender as a Reference Lender and designate another Schedule III Lender as a Reference Lender in its place by delivery to the Lenders of a written notification to such effect executed by Administrative Agent), provided that if a Person ceases to be a Lender hereunder, then such Person shall thereupon cease to be a Reference Lender without further action. "REFINANCING" means the repayment in full of all Indebtedness of the Acquired Business or any of its Subsidiaries existing prior to the Closing Date other than Existing Indebtedness and Indebtedness permitted pursuant to Section 6.1(b). "REFUNDED SWING LINE LOANS" as defined in Section 2.4(d). "REGISTER" as defined in Section 2.8(b). "REGULATION D" means Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "REIMBURSEMENT DATE" as defined in Section 2.5(h). 37 "RELATED AGREEMENTS" means, collectively, the Merger Agreement, the Amalgamation Agreement, the Intercompany Debt Documents, the Senior Subordinated Notes Indenture and the Purchase Agreement. "RELATED FUND" means, with respect to any Lender that is an investment fund, any other investment fund that in the ordinary course of business regularly invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor. "RELEASE" means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater. "RELEVANT CURRENCY EQUIVALENT" means the U.S. Dollar Equivalent or the Canadian Dollar Equivalent, as applicable. "REPLACEMENT LENDER" as defined in Section 2.25. "REQUISITE CLASS LENDERS" means, at any time of determination, (i) for the Tranche A Term Loan Lenders, Lenders holding more than 50% of the aggregate Tranche A Term Loan Exposure of all Lenders; (ii) for the Tranche B Term Loan Lenders, Lenders holding more than 50% of the aggregate Tranche B Term Loan Exposure of all Lenders; (iii) for the Revolving Lenders, 50% of the aggregate Revolving Exposure of all Revolving Lenders; and (iv) for each Class of Lenders having New Term Loan Exposure, Lenders holding more than 50% of the aggregate New Term Loan Exposure of that Class. "REQUISITE LENDERS" means one or more Lenders holding more than 50% of the sum of (i) the aggregate Tranche A Term Loan Exposure of all Lenders, (ii) the aggregate Tranche B Term Loan Exposure of all Lenders, (iii) the aggregate Revolving Exposure of all Lenders and (iv) the aggregate New Term Loan Exposure of all Lenders. "RESPONSE" means (a) "response" as such term is defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required by any Governmental Authority or voluntarily undertaken to (i) clean up, remove, treat, abate or in any other way address any Hazardous Material in the environment; (ii) prevent the Release or threat of Release, or minimize the further Release, of any Hazardous Material; or (iii) perform studies and investigations in connection with, or as a precondition to, clause (i) or (ii) above. "RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution, direct or indirect, on account of any shares of any Capital Stock of Holdings or Company now or hereafter outstanding, except a dividend payable solely in shares of Qualified Capital Stock to the holders of that class; (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any Capital Stock of any Parent Company or Company now or hereafter outstanding; (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any 38 Capital Stock of any Parent Company or Company now or hereafter outstanding; (iv) the payment of management fees other than pursuant to the Management Agreement; provided that during the existence of an Event of Default or a payment Default, the payment of any management fees shall constitute a Restricted Junior Payment; and (v) any payment or prepayment of principal of, premium, if any, or interest on, or redemption, purchase, retirement, defeasance, sinking fund or similar payment with respect to, any Subordinated Indebtedness. "RESTRUCTURING EXPENSES" means losses, expenses and charges incurred in connection with restructuring by Holdings and/or one or more of its Subsidiaries, including in connection with integration of acquired businesses or persons, disposition of one or more Subsidiaries or businesses, exiting of one or more lines of businesses and relocation or consolidation of facilities, including severance, lease termination and other non-ordinary-course, non-operating costs and expenses in connection therewith. "REVOLVING COMMITMENT" means the commitment of a Lender to make or otherwise fund any Revolving Loan and to acquire participations in Letters of Credit and Swing Line Loans hereunder and "REVOLVING COMMITMENTS" means such commitments of all Lenders in the aggregate. The amount of each Lender's Revolving Commitment, if any, is set forth on Appendix A-3 or in the applicable Assignment Agreement or Joinder Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Revolving Commitments as of the Closing Date is Can$50.0 million. "REVOLVING COMMITMENT PERIOD" means the period from the Closing Date to but excluding the Revolving Commitment Termination Date. "REVOLVING COMMITMENT TERMINATION DATE" means the earliest to occur of (i) the date which is five years and three months after the Closing Date, (ii) the date the Revolving Commitments are permanently reduced to zero pursuant to Section 2.15(b) or 2.16, and (iii) the date of the termination of the Revolving Commitments pursuant to Section 8.1. "REVOLVING EXPOSURE" means, with respect to any Lender as of any date of determination, (i) prior to the termination of the Revolving Commitments, that Lender's Revolving Commitment; and (ii) after the termination of the Revolving Commitments, the sum of (a) the aggregate outstanding principal amount of the Revolving Loans of that Lender, (b) in the case of an Issuing Lender, the aggregate Letter of Credit Usage in respect of all Letters of Credit issued by that Lender (net of any participations by Lenders in such Letters of Credit), (c) the aggregate amount of all participations by that Lender in any outstanding Letters of Credit or any unreimbursed drawing under any Letter of Credit, (d) in the case of Swing Line Lender, the aggregate outstanding principal amount of all Swing Line Loans (net of any participations therein by other Lenders), and (e) the aggregate amount of all participations therein by that Lender in any outstanding Swing Line Loans, including, in each case, the Canadian Dollar Equivalent of any amount denominated in U.S. Dollars. "REVOLVING LENDERS" means the Lenders having Revolving Exposure. "REVOLVING LOAN" means a Loan made by a Revolving Lender to Company pursuant to Section 2.2(a). 39 "REVOLVING LOAN NOTE" means a promissory note in the form of Exhibit B-3, as it may be amended, supplemented or otherwise modified from time to time. "ROLLOVER" means the issuance of new Bankers' Acceptances or the making of new BA Equivalent Advances (subject to the provisions hereof) in respect of all or any portion of Bankers' Acceptances (or BA Equivalent Advances made in lieu thereof) maturing at the end of the BA Interest Period applicable thereto, all in accordance with Section 2.11. "S&P" means Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. "SCHEDULE I LENDER" means a Lender which is a U.S. branch of a Canadian chartered bank listed on Schedule I to the Bank Act (Canada). "SCHEDULE II LENDER" means a Lender which is a Canadian chartered bank listed on Schedule II to the Bank Act (Canada). "SCHEDULE III LENDER" means a Lender which is an authorized foreign bank listed on Schedule III to the Bank Act (Canada). "SDN LIST" as defined in Section 6.17. "SECTION 951 TAXES" as defined in Section 6.5(f). "SECURED HEDGE AGREEMENT" means each Hedge Agreement with a Lender Counterparty existing on the Closing Date or thereafter entered into so long as in the case of Interest Rate Agreements, such agreements do not have a notional amount in the aggregate in excess of the Loans and Commitments hereunder. "SECURED PARTIES" means, collectively, Administrative Agent, Collateral Agent, each other Agent, the Lenders and each Lender Counterparty. "SECURITIES" means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as "securities" or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing. "SECURITIES ACT" means the Securities Act of 1933, as amended from time to time, and any successor statute. "SECURITY AGREEMENTS" shall mean the U.S. Security Agreement, the Canadian Security Agreement and the Quebec Security Documents. "SENIOR SUBORDINATED NOTES" means all 9.75% Senior Subordinated Notes due 2012 of Company issued under the Senior Subordinated Notes Indenture. 40 "SENIOR SUBORDINATED NOTES INDENTURE" means the indenture dated as of the Closing Date among Company, the Guarantors and U.S. Bank Trust, N.A., as trustee, as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof. "SERIES" as defined in Section 2.26. "SI MOVEABLE HYPOTHEC" means the Moveable Hypothec dated as of the Closing Date between Canadian Holding Company and Company or its predecessor. "SODEX FACTORING AGREEMENT" means that certain Convention Cadre, dated as of February 24, 2004, by and among the Acquired Business, MAAX Canada Inc., MAAX Spas (Ontario) Inc., MAAX Westco Inc., MAAX Spas (BC) Inc., MAAX-KSD Corporation, MAAX Southeast Inc., Pearl Baths, Inc., MAAX-Hydro Swirl Manufacturing Corp., MAAX Midwest Inc., MAAX Spas (Arizona), Inc., Cuisine Expert - C.E. Cabinets, Inc., 9022-3751 Quebec Inc., Aker Plastics Company Inc. and NatExport and Sodex, both divisions of the National Bank of Canada. "SOLVENCY CERTIFICATE" means a Solvency Certificate of the chief financial officer of Holdings and Company substantially in the form of Exhibit G-2. "SOLVENT" means, with respect to any Credit Party, that as of the date of determination, both (i) (a) the sum of such Credit Party's debt (including contingent liabilities) does not exceed the present fair saleable value of such Credit Party's present assets; (b) such Credit Party's capital is not unreasonably small in relation to its business as contemplated on the Closing Date and reflected in the Projections or with respect to any transaction contemplated or undertaken after the Closing Date; and (c) such Person has not incurred and does not intend to incur, or believe that it will incur, debts beyond its ability to pay such debts as they become due (whether at maturity or otherwise); and (ii) such Person is "solvent" within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standards No. 5). "SPA BUSINESS" means the assets and business entities owned Company and its Subsidiaries engaged solely in the manufacture and sale of spas. "SPECIAL INTERCOMPANY NOTE" means that certain Note, dated on or about the Closing Date, made by Canadian Holding Company in favor of Company or its predecessor, as such note may be amended, restated, supplemented or otherwise modified from time to time. "SPECIAL SCHEDULE I LENDER" means a Lender which is a Canadian chartered bank listed on Schedule I to the Bank Act (Canada) but excludes any U.S. branch of any such Lender. 41 "SPONSORS" means J.W. Childs Associates L.P., Borealis Private Equity Limited Partnership, Borealis (QLP) Private Equity Limited Partnership and Ontario Municipal Employees Retirement Board. "ST. MARIE FACILITY" means the facility owned by the Acquired Business and located at 640, Cameron, Sainte-Marie, Quebec, Canada. "SUBJECT TRANSACTION" as defined in Section 6.8(e). "SUBORDINATED INDEBTEDNESS" means Indebtedness of any Credit Party that is by its terms subordinated in right of payment to the Obligations of such Credit Party, including the Senior Subordinated Notes. "SUBSIDIARY" means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than 50% of the total voting power of the Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; provided, in determining the percentage of ownership interests of any Person controlled by another Person, no ownership interest in the nature of a "qualifying share" of the former Person shall be deemed to be outstanding. Unless expressly stated otherwise, when reference is made herein directly or indirectly to the Subsidiaries of Company, "Subsidiaries" shall be deemed to include Canadian Holding Company and its Subsidiaries regardless of whether they are actually Subsidiaries of Company so long as they are Subsidiaries of Holdings. "SUCCESSFUL SYNDICATION" shall have the meaning given to such term in the Commitment Letter. "SUPPLEMENTAL COLLATERAL AGENT" as defined in Section 9.1(b). "SWING LINE ACCOUNTS" as defined in Section 2.4(b). "SWING LINE LENDER" means National Bank of Canada, New York Branch, in its capacity as Swing Line Lender hereunder, together with its permitted successors and assigns in such capacity. "SWING LINE LOAN" means a Loan made by Swing Line Lender to Company pursuant to Section 2.4. "SWING LINE LOAN SUBCOMMITMENT" means the commitment of Swing Line Lender to make Swing Line Loans to Company pursuant to Section 2.4(a). "SWING LINE NOTE" means a promissory note in the form of Exhibit B-5, as it may be amended, supplemented or otherwise modified from time to time. "SYNDICATION AGENT" as defined in the preamble hereto. 42 "TAX" means any and all present or future tax, levy, impost, duty, assessment, charge, fee, deduction or withholding of any nature imposed by any Governmental Authority (including all interest and penalties with respect thereto) and whatever called, by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or assessed. "TERM LOAN" means a Tranche A Term Loan, a Tranche B Term Loan or a New Term Loan. "TERM LOAN COMMITMENT" means the Tranche A Term Loan Commitment, the Tranche B Term Loan Commitment or the New Term Loan Commitment of a Lender, and "TERM LOAN COMMITMENTS" means such commitments of all Lenders. "TERM LOAN MATURITY DATE" means the Tranche A Term Loan Maturity Date, the Tranche B Term Loan Maturity Date and the New Term Loan Maturity Date of any Series of New Term Loans. "TERMINATED LENDER" as defined in Section 2.25. "TITLE POLICY" as defined in Section 3.1(g)(ii). "TOTAL UTILIZATION OF REVOLVING COMMITMENTS" means, as at any date of determination, the sum of (i) the aggregate principal amount of all outstanding Revolving Loans (other than Revolving Loans made for the purpose of repaying any Refunded Swing Line Loans or reimbursing an Issuing Lender for any amount drawn under any Letter of Credit, but not yet so applied), (ii) the aggregate principal amount of all outstanding Swing Line Loans, and (iii) the Letter of Credit Usage, in each case, including the Canadian Dollar Equivalent of any amount denominated in U.S. Dollars. "TRANCHE A TERM LOAN" means a Tranche A Term Loan made by a Lender to Company pursuant to Section 2.1(a)(i). "TRANCHE A TERM LOAN COMMITMENT" means the commitment of a Lender to make or otherwise fund a Tranche A Term Loan and "TRANCHE A TERM LOAN COMMITMENTS" means such commitments of all Lenders in the aggregate. The amount of each Lender's Tranche A Term Loan Commitment, if any, is set forth on Appendix A-1 or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Tranche A Term Loan Commitments as of the Closing Date is Can$130.0 million. "TRANCHE A TERM LOAN EXPOSURE" means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Tranche A Term Loans of such Lender; provided, at any time prior to the making of the Tranche A Term Loans, the Tranche A Term Loan Exposure of any Lender shall be equal to such Lender's Tranche A Term Loan Commitment. "TRANCHE A TERM LOAN LENDERS" means the Lenders having Tranche A Term Loan Exposure. 43 "TRANCHE A TERM LOAN MATURITY DATE" means the earlier of (i) the date which is five years and three months after the Closing Date, and (ii) the date that all Tranche A Term Loans shall become due and payable in full hereunder, whether by acceleration or otherwise. "TRANCHE A TERM LOAN NOTE" means a promissory note in the form of Exhibit B-1, as it may be amended, supplemented or otherwise modified from time to time. "TRANCHE B TERM LOAN" means a Tranche B Term Loan made by a Lender to Company pursuant to Section 2.1(a)(ii). "TRANCHE B TERM LOAN COMMITMENT" means the commitment of a Lender to make or otherwise fund a Tranche B Term Loan and "TRANCHE B TERM LOAN COMMITMENTS" means such commitments of all Lenders in the aggregate. The amount of each Lender's Tranche B Term Loan Commitment, if any, is set forth on Appendix A-2 or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Tranche B Term Loan Commitments as of the Closing Date is U.S.$115.0 million. "TRANCHE B TERM LOAN EXPOSURE" means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Tranche B Term Loans of such Lender; provided, at any time prior to the making of the Tranche B Term Loans, the Tranche B Term Loan Exposure of any Lender shall be equal to such Lender's Tranche B Term Loan Commitment. "TRANCHE B TERM LOAN LENDERS" means the Lenders having Tranche B Term Loan Exposure. "TRANCHE B TERM LOAN MATURITY DATE" means the earlier of (i) the seventh anniversary of the Closing Date, and (ii) the date that all Tranche B Term Loans shall become due and payable in full hereunder, whether by acceleration or otherwise. "TRANCHE B TERM LOAN NOTE" means a promissory note in the form of Exhibit B-2, as it may be amended, supplemented or otherwise modified from time to time. "TRANSACTIONS" means the Acquisition, the Equity Financing, the Refinancing and the Notes Offering and the other transactions contemplated by the Related Agreements. "TYPE OF LOAN" means (i) with respect to either Term Loans or Revolving Loans, a Base Rate Loan, a Prime Rate Loan, a BA Discount Rate Loan, a Eurodollar Rate Loan or a Canadian Eurodollar Rate Loan and (ii) with respect to Swing Line Loans, a Prime Rate Loan or Base Rate Loan. "UCC" means the Uniform Commercial Code as in effect in any applicable United States jurisdiction. "U.S. BORROWINGS" means Loans denominated in U.S. Dollars. 44 "U.S. DOLLAR EQUIVALENT" means, as to any amount denominated in Canadian Dollars as of any date of determination, the amount of U.S. Dollars which would be required to purchase such amount of Canadian Dollars at the Bank of Canada noon (Toronto time) spot rate on such date or, if such date of determination is not a Business Day, on the Business Day immediately preceding such date of determination. "U.S. DOLLARS" and "U.S.$" mean the lawful money of the United States of America. "U.S. EMPLOYEE BENEFIT PLAN" as set forth in the definition of Employee Benefit Plan. "U.S. PRIME RATE" means the rate of interest quoted by Administrative Agent at its New York branch as its U.S. prime rate, as in effect from time to time. The U.S. Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. Administrative Agent or any other Lender may make commercial loans or other loans at rates of interest at, above or below the U.S. Prime Rate. "U.S. REVOLVING LOAN" means each Revolving Loan denominated in U.S. Dollars. "U.S. SECURITY AGREEMENT" means the U.S. Security Agreement to be executed by Company and each Guarantor with personal property located within, or organized under the laws of, the United States or any State thereof substantially in the form of Exhibit I-1, as it may be amended, supplemented or otherwise modified from time to time. "U.S. SWING LINE ACCOUNT" as defined in Section 2.4(b). "U.S. SWING LINE LOAN" means each Swing Line Loan denominated in U.S. Dollars. 1.2. ACCOUNTING TERMS. Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. Financial statements and other information required to be delivered by Holdings or Company to Lenders pursuant to Sections 5.1(a), 5.1(b) and 5.1(c) shall be prepared in accordance with GAAP as in effect at the time of such preparation (and delivered together with the reconciliation statements provided for in Section 5.1(e), if applicable). Subject to the foregoing, calculations in connection with the financial covenants and other provisions hereof shall utilize GAAP as in effect on the Closing Date. 1.3. INTERPRETATION, ETC. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. References herein to real and personal property shall be deemed to include immovable and movable property, respectively, within the meaning of the Civil Code, references to perfect or perfection shall, in connection with any security or opinion relating to the Province of Quebec, be deemed to mean to set up or render opposable against third parties, within the meaning of the Civil Code, references to hypothec shall have the meaning ascribed to such term in the Civil Code, and references herein to corporations shall be deemed to include companies. References herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided. The use herein of the word "include" or "including", when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth 45 immediately following such word or to similar items or matters, whether or not no limiting language (such as "without limitation" or "but not limited to" or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. No Credit Party shall be deemed in violation of any covenants in Section 6.1, 6.2, 6.5, 6.7, 6.9 or 6.10 due solely to fluctuations in exchange rates. The ability to enter into any transaction pursuant to Section 6.1, 6.2, 6.5, 6.7, 6.9 or 6.10 shall be determined on the potential date of any such transaction by including the U.S. Dollar Equivalent of any applicable amounts denominated in Canadian Dollars (whether related to past transactions or the transaction being tested). SECTION 2. LOANS AND LETTERS OF CREDIT 2.1. TERM LOANS. (a) Loan Commitments. Subject to the terms and conditions hereof, (i) each Lender severally agrees to make, on the Closing Date, a Tranche A Term Loan to Company in an amount equal to such Lender's Tranche A Term Loan Commitment; and (ii) each Lender severally agrees to make, on the Closing Date, a Tranche B Term Loan to Company in an amount equal to such Lender's Tranche B Term Loan Commitment. Company may make only one borrowing under each of the Tranche A Term Loan Commitments and Tranche B Term Loan Commitments which shall be on the Closing Date. Any amount borrowed under this Section 2.1(a) and subsequently repaid or prepaid may not be reborrowed. Each Lender's Tranche A Term Loan Commitment and Tranche B Term Loan Commitment shall terminate immediately and without further action on the Closing Date after giving effect to the funding of such Lender's Tranche A Term Loan Commitment and Tranche B Term Loan Commitment on such date. (b) Borrowing Mechanics for Term Loans. (i) Company shall deliver to Administrative Agent a fully executed Funding Notice no later than 2:00 p.m. (Toronto time) at least one Business Day (or, if any Eurodollar Rate Loans or BA Discount Rate Loans are requested by Company, three Business Days) prior to the Closing Date. Promptly upon receipt by Administrative Agent of such Funding Notice, Administrative Agent shall notify each Lender of the proposed borrowing. It is understood and agreed that when a Funding Notice with respect to Tranche A Term Loans is delivered and BA Discount Rate Loans are requested, with respect to Schedule I Lenders, such request for BA Discount Rate Loans shall be deemed a request for Canadian Eurodollar Rate Loans from such Lenders with an Interest Period equal to the elected BA Interest Period. (ii) Each Lender shall make its Tranche A Term Loan and/or Tranche B Term Loan, as the case may be, available to Administrative Agent not 46 later than 12:00 noon (Toronto time) on the Closing Date, by wire transfer of same day funds in Canadian Dollars, with respect to its Tranche A Term Loans and in U.S. Dollars, with respect to its Tranche B Term Loans, at Administrative Agent's Principal Office. Upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of the Term Loans available to Company on the Closing Date by causing an amount of same day funds in Canadian Dollars, with respect to the Tranche A Term Loans and in U.S. Dollars, with respect to the Tranche B Term Loans, the sum of which is equal to the proceeds of all such Loans received by Administrative Agent from Lenders to be credited to the account of Company at Administrative Agent's Principal Office or to such other account as may be designated in writing to Administrative Agent by Company. 2.2. REVOLVING LOANS. (a) Revolving Commitments. During the Revolving Commitment Period, subject to the terms and conditions hereof, each Lender severally agrees to make Revolving Loans, in any Approved Currency specified in the applicable Funding Notice, to Company in an aggregate amount up to but not exceeding such Lender's Revolving Commitment (including the Canadian Dollar Equivalent of any amount denominated in U.S. Dollars); provided that after giving effect to the making of any Revolving Loans in no event shall the Total Utilization of Revolving Commitments exceed the aggregate Revolving Commitments then in effect. Amounts borrowed pursuant to this Section 2.2(a) may be repaid and reborrowed during the Revolving Commitment Period. Each Lender's Revolving Commitment shall expire on the Revolving Commitment Termination Date and all Revolving Loans and all other amounts owed hereunder with respect to the Revolving Loans and the Revolving Commitments shall be paid in full no later than such date. (b) Borrowing Mechanics for Revolving Loans. (i) Except pursuant to Section 2.5(h), Revolving Loans that are Prime Rate Loans, Canadian Eurodollar Rate Loans or BA Discount Rate Loans shall be made in an aggregate minimum amount of Can$1.0 million and integral multiples of Can$100,000 in excess of that amount, and Revolving Loans that are Base Rate Loans or Eurodollar Rate Loans shall be in an aggregate minimum amount of U.S.$1.0 million and integral multiples of U.S.$100,000 in excess of such amount. (ii) Whenever Company desires that Revolving Lenders make Revolving Loans, Company shall deliver to Administrative Agent a fully executed and delivered Funding Notice no later than 12:00 noon (Toronto time) (or provide the information required by such Funding Notice by telephone by such time, promptly followed by delivery in writing of such Funding Notice) at least three Business Days in advance of the proposed Credit Date in the case of a Eurodollar Rate Loan or BA Discount Rate Loan, and at least one Business Day in advance of the proposed Credit Date in the case of a Revolving Loan that is a Base Rate Loan or Prime Rate Loan. Except as otherwise provided herein, a 47 Funding Notice for a Revolving Loan that is a BA Discount Rate Loan shall be irrevocable, and a Funding Notice for a Revolving Loan that is a Eurodollar Rate Loan shall be irrevocable on and after the related Interest Rate Determination Date, and Company shall be bound to make a borrowing in accordance therewith. It is understood and agreed that when a Funding Notice with respect to Revolving Loans is delivered and BA Discount Rate Loans are requested, with respect to Schedule I Lenders, such request for BA Discount Rate Loans shall be deemed a request for Canadian Eurodollar Rate Loans from such Lenders with an Interest Period equal to the elected BA Interest Period. (iii) Notice of receipt of each Funding Notice in respect of Revolving Loans, together with the amount of each Lender's Pro Rata Share thereof, if any, together with the applicable interest rate, shall be provided by Administrative Agent to each applicable Lender by telefacsimile with reasonable promptness, but (provided Administrative Agent shall have received such notice by 10:00 a.m. (Toronto time)) not later than 2:00 p.m. (Toronto time) on the same day as Administrative Agent's receipt of such Notice from Company. (iv) Each Revolving Lender shall make the amount of its Revolving Loan available to Administrative Agent not later than 12:00 noon (Toronto time) on the applicable Credit Date by wire transfer of same day funds in Canadian Dollars, with respect to Canadian Revolving Loans, and U.S. Dollars, with respect to U.S. Revolving Loans, at Administrative Agent's Principal Office. Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of such Revolving Loans available to Company on the applicable Credit Date by causing an amount of same day funds in Canadian Dollars, with respect to Canadian Revolving Loans, and U.S. Dollars, with respect to U.S. Revolving Loans, equal to the proceeds of all such Revolving Loans received by Administrative Agent from Revolving Lenders to be credited to the account of Company at Administrative Agent's Principal Office or such other account as may be designated in writing to Administrative Agent by Company and reasonably acceptable to Administrative Agent. 2.3. BANKERS' ACCEPTANCES. (a) Bankers' Acceptances. Company may request, in accordance with the provisions of this Section 2.3, from time to time during the period from the Closing Date to but excluding the 30th day prior to the Revolving Commitment Termination Date or Tranche A Term Loan Maturity Date, as applicable, that the Lenders accept Bankers' Acceptances issued by Company or make BA Equivalent Advances to Company. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Company herein set forth, such Lenders shall accept such Bankers' Acceptances, or make BA Equivalent Advances in lieu thereof, in accordance with the provisions of this Section 2.3; provided that Company shall not request that any Lender having a Term Loan Commitment accept such Bankers' Acceptances, or make BA Equivalent Advances (and no such Lender shall do so), except 48 (i) on the Closing Date to fund the advance of the Tranche A Term Loan Commitment, if so requested in the Funding Notice therefor, (ii) as Rollovers of existing Bankers' Acceptances or BA Equivalent Advances, (iii) as Conversions from Prime Rate Loans into Bankers' Acceptances or BA Equivalent Advances, in any case in Sections 2.3(a)(i), (ii) and (iii), involving no increase in borrowing under the Tranche A Term Loan Commitment. Company shall not request that any Revolving Lender or Tranche A Term Loan Lender accept such Bankers' Acceptances, or make BA Equivalent Advances (and no Revolving Lender or Tranche A Term Loan Lender shall do so), if, after giving effect to such issuance a Bankers' Acceptance or BA Equivalent Advance would have a term ending later than the Revolving Commitment Termination Date or Tranche A Term Loan Maturity Date, as the case may be. Company shall not request that any Revolving Lender accept such Bankers' Acceptances, or make BA Equivalent Advances (and no Revolving Lender shall do so), if after giving effect to such issuances the Total Utilization of Revolving Commitments would exceed the Revolving Commitment. (b) Applicable Provisions. The following provisions shall apply to each Bankers' Acceptance hereunder: (i) the face amount at maturity of each draft drawn by Company to be accepted as a Bankers' Acceptance shall be Can$100,000 and integral multiples of Can$1000 in excess thereof; (ii) each draft drawn by Company and presented for acceptance by a Lender shall be drawn on the standard form of such Lender in effect at the time, specifying the BA Interest Period; provided that Administrative Agent may require the Lenders to use a generic form of Bankers' Acceptance, in a form satisfactory to each Lender, acting reasonably, provided by Administrative Agent for such purpose in place of the Lenders' own forms; (iii) subject to Section 2.3(b)(iv), Bankers' Acceptances shall be signed by duly authorized officers of Company or, in the alternative, the signatures of such officers may be mechanically reproduced in facsimile thereon and Bankers' Acceptances bearing such facsimile signatures shall be binding on Company as if they had been manually executed and delivered by such officers on behalf of Company. Notwithstanding that any person whose manual or facsimile signature appears on any Bankers' Acceptance may no longer be an authorized signatory for Company on the date of issuance of a Bankers' Acceptance, such signature shall nevertheless be valid and sufficient for all purposes as if such authority had remained in force at the time of such issuance and any such Bankers' Acceptance shall be binding on Company; and 49 (iv) in lieu of Company signing Bankers' Acceptances in accordance with Section 2.3(b)(iii), and for so long as the power of attorney in Section 2.3(c) is in force with respect to a given Lender, such Lender shall execute and deliver Bankers' Acceptances on behalf of Company in accordance with the provisions thereof and, for certainty, all references herein to drafts drawn by Company, Bankers' Acceptances executed by Company or similar expressions shall be deemed to include Bankers' Acceptances executed in accordance with a power of attorney, unless the context otherwise requires. If and for so long as the power of attorney referred to in Section 2.3(c) is in force with respect to each Lender, it is intended that pursuant to the DBNA, all Bankers' Acceptances accepted by the Lenders (other than Old System Issuers) under this Agreement will be issued in the form of a "depository bill" (as defined in the DBNA), and deposited with a Clearing House. In order to give effect to the foregoing, Administrative Agent will, subject to the approval of Company and the Lenders (other than Old System Issuers), establish and notify Company and the Lenders of any additional procedures, consistent with the terms of this Agreement and the DBNA, as are reasonably necessary to accomplish such intention, including: (A) any instrument held by Administrative Agent for the purposes of Bankers' Acceptances will have marked prominently and legibly on its face and within its text, at or before the time of issue, the words "This is a depository bill subject to the Depository Bills and Notes Act (Canada)"; (B) any reference to the authentication of the Bankers' Acceptance will be removed; and (C) any reference to the "bearer" will be removed and such Bankers' Acceptances will not be marked with any words prohibiting negotiation, transfer or assignment of it or of an interest in it. (c) Power of Attorney. As a condition precedent to each Lender's obligation to accept Bankers' Acceptances hereunder, Company hereby appoints each Lender, acting by any authorized signatory of the Lender in question, the attorney of Company: (i) to sign for and on behalf and in the name of Company as drawer, drafts in such Lender's standard form which are depository bills as defined in the DBNA, payable to a Clearing House; (ii) for drafts which are not depository bills, to sign for and on behalf and in the name of Company as drawer and to endorse on its behalf, Bankers' Acceptances drawn on such Lender payable to the order of such Lender; (iii) for BA Discount Notes, to sign for and on behalf and in the name of Company as drawer and to endorse on its behalf BA Discount Notes payable to the order of such Lender; 50 (iv) to fill in the amount, date and maturity date of such Bankers' Acceptances (or BA Discount Notes as applicable); and (v) to deposit and/or deliver such Bankers' Acceptances which have been accepted by such Lender or such BA Discount Notes which are payable to the order of such Lender; provided that such acts in each case are to be undertaken by the Lender in question strictly in accordance with instructions given to such Lender by Company as provided in this Section. For certainty, signatures of any authorized signatory of a Lender may be mechanically reproduced in facsimile on Bankers' Acceptances (or BA Discount Notes, as applicable) in accordance herewith and such facsimile signatures shall be binding and effective as if they had been manually executed by such authorized signatory of such Lender. The communication in writing by Company, or on behalf of Company by Administrative Agent, to the Lender of the instructions set out in the Funding Notices and Conversion/Continuation Notices referred to above shall constitute (a) the authorization and instruction of Company to the Lender to sign for and on behalf and in the name of Company as drawer of the requested Bankers' Acceptances (or BA Discount Notes, as applicable) and to complete and/or endorse Bankers' Acceptances (or BA Discount Notes, as applicable) in accordance with such information as set out above, and (b) the request of Company to the Lender to accept such Bankers' Acceptances and deposit the same with a Clearing House or deliver the same, as the case may be, in each case in accordance with this Agreement and such instructions. Company acknowledges that a Lender shall not be obligated to accept any such Bankers' Acceptances except in accordance with the provisions of this Agreement. A Lender shall be and it is hereby authorized to act on behalf of Company upon and in compliance with instructions communicated to that Lender as provided herein if the Lender reasonably believes such instructions to be genuine. If a Lender accepts Bankers' Acceptances pursuant to any such instructions, that Lender shall confirm particulars of such instructions and advise Administrative Agent that it has complied therewith by notice in writing to Administrative Agent in accordance with the provisions hereof. A Lender's actions in compliance with such instructions, confirmed and advised to Administrative Agent by such notice, shall be prima facie evidence of having been in accordance with the instructions of Company. (d) Revocation. The power of attorney in Section 2.3(c) may be revoked by Company with respect to any particular Lender at any time upon not less than 2 Business Days' prior written notice served upon the Lender in question and Administrative Agent; provided that no such revocation shall reduce, limit or otherwise affect the obligations of Company in respect of any Bankers' Acceptance (or BA Discount Note, as applicable) executed, completed, endorsed, deposited and/or delivered in accordance herewith prior to the time at which such revocation becomes effective. If the power of attorney is so revoked with respect to any Lender, Company shall, from time to time as required by the applicable Lender, provide to Administrative Agent for delivery to each such Lender drafts drawn in blank by Company (pre-endorsed and otherwise in fully negotiable form, if applicable) in quantities sufficient for each such Lender to fulfill its obligations hereunder. Any such pre-signed drafts which are delivered 51 by Company to Administrative Agent or a Lender shall be held in safekeeping by Administrative Agent or such Lender, as the case may be, with the same degree of care as if they were Administrative Agent's or such Lender's property, and shall only be dealt with by the Lenders and Administrative Agent in accordance herewith. No Lender shall be responsible or liable for its failure to make its share of any Bankers' Acceptances required hereunder if the cause of such failure is, in whole or in part, due to the failure of Company to provide such pre-signed drafts to Administrative Agent (for delivery to such Lender) on a timely basis. (e) Delivery of Drafts. By 11:00 a.m. (Toronto time) on the applicable Funding Date or Conversion/Continuation Date, Company shall (i) either deliver to each Lender in Toronto, or, if previously delivered, be deemed to have authorized each Lender to complete and accept, or (ii) where the power of attorney in Section 2.3(c) is in force with respect to a Lender, be deemed to have authorized each such Lender to sign on behalf of Company, complete and accept, drafts drawn by Company on such Lender in a principal amount at maturity equal to such Lender's share of the Bankers' Acceptances specified by Company in the relevant Funding Notice or Conversion/Continuation Notice, as the case may be, as notified to the Lenders by Administrative Agent. (f) Apportionment. Upon receipt by Administrative Agent of a Funding Notice or Conversion/Continuation Notice from Company requesting the issuance of Bankers' Acceptances, Administrative Agent shall promptly notify the Lenders thereof and advise each Lender of the aggregate face amount of Bankers' Acceptances to be accepted and purchased by such Lender, the date of issue and the BA Interest Period for such Loan; the apportionment among the Lenders of the face amounts of Bankers' Acceptances to be accepted by each Lender shall be determined by Administrative Agent by reference and in proportion to the respective applicable Commitments of each Lender; provided that, when such apportionment cannot be evenly made, Administrative Agent shall round allocations among such Lenders consistent with Administrative Agent's normal money market practices. (g) Rate Determination. On each Funding Date or Conversion/Continuation Date involving the issuance of Bankers' Acceptances: (i) on or about 10:00 a.m. (Toronto time) on such date, Administrative Agent shall determine the CDOR Rate and shall obtain quotations from the Reference Lenders in order to determine the BA Discount Rate then applicable to Bankers' Acceptances accepted by such Schedule II Lender and Schedule III Lender in respect of an issue of Bankers' Acceptances in a comparable amount and with comparable maturity to the Bankers' Acceptances proposed to be issued on such date; (ii) on or about 10:00 a.m. (Toronto time) on such date, Administrative Agent shall determine the BA Discount Rate applicable to each Lender and shall advise each Lender of the BA Discount Rate applicable to it; (iii) each Lender shall complete and accept, in accordance with the Funding Notice or Conversion/Continuation Notice delivered by Company and advised by Administrative Agent in connection with such issue, its share of the 52 Bankers' Acceptances to be issued on such date and shall purchase such Bankers' Acceptances for its own account at a purchase price which reflects the BA Discount Rate applicable to such issue; and (iv) in the case of a borrowing, each Lender shall, on the Funding Date, remit the BA Discount Proceeds or advance the BA Equivalent Advance, as the case may be, payable by such Lender (net of the stamping fee payable to such Lender pursuant to Section 2.3(k)) to Administrative Agent for the account of Company in accordance with Section 2.2(b)(iv). (h) Resale. Each Lender may at any time and from time to time hold, sell, rediscount or otherwise dispose of any or all Bankers' Acceptances accepted and purchased by it for its own account. No Person to whom Bankers' Acceptances are resold pursuant to this Section 2.3(h) shall be entitled to the benefit of Section 2.22 with respect to such resold Bankers' Acceptances. (i) BA Equivalent Advances. Notwithstanding the foregoing provisions of this Section 2.3, a Non-Acceptance Lender shall, in lieu of accepting Bankers' Acceptances, make a BA Equivalent Advance. The amount of each BA Equivalent Advance shall be equal to the BA Discount Proceeds which would be realized from a hypothetical sale of those Bankers' Acceptances which, but for this Section 2.3(i), such Lender would otherwise be required to accept as part of such a borrowing, Conversion or Rollover of Bankers' Acceptances. To determine the amount of such BA Discount Proceeds, the hypothetical sale shall be deemed to take place at the BA Discount Rate for such Loan. Any BA Equivalent Advance shall be made on the relevant Funding Date, or Rollover or Conversion date, as the case may be, and shall remain outstanding for the term of the relevant Bankers' Acceptances. Concurrent with the making of a BA Equivalent Advance, a Non-Acceptance Lender shall be entitled to deduct therefrom an amount equal to the stamping fee which, but for this Section 2.3(i), such Lender would otherwise be entitled to receive as part of such Loan. Upon the maturity date for such Bankers' Acceptances, Company shall pay to each Non-Acceptance Lender an amount equal to the face amount of the Bankers' Acceptances which such Lender would have accepted as part of such Loan if it were not a Non-Acceptance Lender. All references herein to "Bankers' Acceptances" shall, unless otherwise expressly provided herein or unless the context otherwise requires, be deemed to include BA Equivalent Advances made by a Non-Acceptance Lender as part of a borrowing, Conversion or Rollover of Bankers' Acceptances. (j) Termination of Bankers' Acceptances. If at any time a Lender ceases to accept Bankers' Acceptances in the ordinary course of its business, such Lender shall be deemed to be a Non-Acceptance Lender and shall make BA Equivalent Advances in lieu of accepting Bankers' Acceptances under this Agreement. (k) Stamping Fees. Upon the acceptance by a Lender of a Bankers' Acceptance, Company shall pay to Administrative Agent for the account of such Lender a stamping fee in Canadian Dollars equal to the Applicable Margin calculated on the principal amount at maturity of such Bankers' Acceptance and BA Equivalent Advances and for the 53 period of time from and including the date of acceptance or advance to but excluding the maturity date of such Bankers' Acceptance or BA Equivalent Advance and calculated on the basis of the number of days elapsed in a year of 365 or 366 days, as the case may be. (l) Collateralization of Bankers' Acceptances. With respect to the prepayment or cash collateralization of unmatured Bankers' Acceptances to the extent required hereunder (it being acknowledged that any requirement to pay or prepay Bankers' Acceptances prior to their maturity shall be construed as a requirement to provide cash collateral under this provision), Company shall provide for the funding of such unmatured Bankers' Acceptances by paying to and depositing with Administrative Agent cash collateral for each such unmatured Bankers' Acceptances in an amount equal to the principal amount at maturity of such Bankers' Acceptances; such cash collateral deposited by Company shall be held by Administrative Agent in the Collateral Account with interest to be credited to Company at rates prevailing at the time of deposit for similar accounts with Administrative Agent. Such Collateral Account shall be held by Administrative Agent as security for the obligations of Company in relation to such Bankers' Acceptances and the security of Administrative Agent thereby created shall rank in priority to all other Liens and adverse claims against such cash collateral. Such cash collateral shall be applied to satisfy pro tanto the obligations of Company for such Bankers' Acceptances as they mature and Administrative Agent is hereby irrevocably directed by Company to apply any such cash collateral to such maturing Bankers' Acceptances. Amounts held in such Collateral Account may not be withdrawn by Company; however, interest on such deposited amounts shall be for the account of Company and may be withdrawn by Company so long as no Default or Event of Default is then continuing. If after maturity of the Bankers' Acceptances for which such funds are held and application by Administrative Agent of the amounts in such Collateral Accounts to satisfy the obligations of Company hereunder with respect to the Bankers' Acceptances being repaid, any excess remains, such excess shall be promptly paid by Administrative Agent to Company so long as no Default or Event of Default is then continuing. (m) Market for Bankers' Acceptances. In the event that at any time subsequent to the giving of a Funding Notice or Conversion/Continuation Notice to Administrative Agent by Company with regard to any requested Bankers' Acceptances, but before the date of the borrowing, Rollover or Conversion, as the case may be, Administrative Agent makes a determination, which shall be conclusive and binding upon Company, absent manifest error, that there no longer exists an active market for Bankers' Acceptances accepted by the Lenders then: (i) the right of Company to request Bankers' Acceptances or BA Equivalent Advances from any Lender shall be suspended until Administrative Agent determines that the circumstances causing such suspension no longer exist, and so notifies Company; (ii) any outstanding Funding Notice requesting a Loan by way of Bankers' Acceptances or BA Equivalent Advances shall be deemed to be a Funding Notice requesting a Loan by way of Prime Rate Loans in the amount specified in the original Funding Notice; 54 (iii) any outstanding Conversion/Continuation Notice requesting a Conversion of a Prime Rate Loan into Bankers' Acceptances or BA Equivalent Advances shall be deemed to be revoked; and (iv) any outstanding Conversion/Continuation Notice requesting a Rollover of Bankers' Acceptances or BA Equivalent Advances shall (unless revoked by Company before the Funding Date) be deemed to be a Conversion/Continuation Notice requesting a Conversion of such Loans into Prime Rate Loans. Administrative Agent shall promptly notify Company and the Lenders of any suspension of Company's right to request Bankers' Acceptances or BA Equivalent Advances and of any termination of any such suspension. (n) Compensation for Non-Commencement of BA Interest Periods. Company shall compensate each Lender, upon written request by such Lender (which request shall set forth the basis for requesting such amounts), for all reasonable losses, expenses and liabilities (including any interest paid by such Lender to Lenders of funds borrowed by it to make or carry its BA Discount Rate Loans and any loss, expense or liability sustained by such Lender in connection with the liquidation or re-employment of such funds but excluding loss of anticipated profits) which such Lender may sustain if for any reason (other than a default by such Lender) a borrowing of any BA Discount Rate Loan does not occur on a date specified therefore in a Funding Notice or a telephonic request for borrowing, or a Conversion to or Rollover of any BA Discount Rate Loan does not occur on a date specified therefor in a Conversion/Continuation Notice or a telephonic request for Conversion or Rollover. 2.4. SWING LINE LOANS. (a) General Provisions. Swing Line Lender hereby agrees, subject to the limitations set forth below with respect to the maximum amount of Swing Line Loans permitted to be outstanding from time to time, to make a portion of the Revolving Commitments available to Company from time to time during the period from and including the Closing Date to but excluding the Revolving Commitment Termination Date by making Canadian Swing Line Loans and U.S. Swing Line Loans to Company in an aggregate amount not exceeding the amount of the Swing Line Loan Subcommitment to be used for the purposes identified in Section 2.7, notwithstanding the fact that such Swing Line Loans, when aggregated with Swing Line Lender's outstanding Revolving Loans and Swing Line Lender's Pro Rata Share of the Letter of Credit Usage then in effect, may exceed Swing Line Lender's Revolving Commitment. At the Closing Date, the Swing Line Loan Subcommitment is Can$7.5 million; provided that any reduction of the Revolving Commitments made pursuant to Section 2.17(b) that reduces the aggregate Revolving Commitments to an amount less than the then current amount of the Swing Line Loan Subcommitment shall result in an automatic corresponding reduction of the Swing Line Loan Subcommitment to the amount of the aggregate Revolving Commitments, as so reduced, without any further action on the part of Company, Administrative Agent or Swing Line Lender. The Swing Line Loan Subcommitment shall expire on the Revolving Commitment Termination Date and all Swing Line Loans and all other amounts owed hereunder with respect to the Swing Line Loans shall be paid in full no later than that date. Amounts borrowed under 55 this Section 2.4(a) may be repaid and reborrowed to but excluding the Revolving Commitment Termination Date. Swing Line Lender shall not make any Swing Line Loans (A) after the occurrence and during the continuation of a Default or Event of Default or (B) at its election, at a time when a Funding Default exists unless Swing Line Lender has entered into arrangements satisfactory to it and Company to eliminate Swing Line Lender's risk with respect to the Defaulting Lender's participation in such Swing Ling Loan, including by cash collateralizing such Defaulting Lender's Pro Rata Share of the outstanding Swing Line Loans. Anything contained in this Agreement to the contrary notwithstanding, the Swing Line Loans and the Swing Line Loan Subcommitment shall be subject to the limitation that in no event shall the Total Utilization of Revolving Commitments at any time exceed the aggregate Revolving Commitments then in effect. (b) Swing Line Accounts. Swing Line Lender will establish (i) at one of its branches in Canada a Canadian Dollar account of Company (the "CANADIAN SWING LINE ACCOUNT"), (ii) at its Principal Office a U.S. Dollar account of Company (the "U.S. SWING LINE ACCOUNT") and (iii) at one of its branches in Canada, a U.S. Dollar account of Company (the "CANADIAN BASED U.S. SWING LINE ACCOUNT" and, together with the Canadian Swing Line Account and the U.S. Swing Line Account, the "SWING LINE ACCOUNTS"). The Swing Line Accounts shall record the day-to-day banking business of Company conducted through Swing Line Lender. If, at the end of any Business Day, (i) the balance in the Canadian Swing Line Account: (1) is a credit in excess of Can$100,000, Swing Line Lender may apply the amount of the credit or any part thereof rounded down to the nearest Can$50,000, as applicable, as a repayment of any Prime Rate Loans owing to Swing Line Lender under the Swing Line Subcommitment; or (2) is a debit, Swing Line Lender shall make available a Canadian Swing Line Loan (to the extent that such advance would not, when added to the outstanding Swing Line Loans, exceed the Swing Line Loan Subcommitment), in an amount rounded up to the nearest Can$50,000, as the case maybe, to place Company in a net credit position of zero (or such other amount arrived at from such rounding). (ii) the balance in the U.S. Swing Line Account: (1) is a credit in excess of U.S.$100,000, Swing Line Lender may apply the amount of the credit or any part thereof rounded down to the nearest U.S.$50,000, as applicable, as a repayment of any Base Rate Loans owing to Swing Line Lender under the Swing Line Subcommitment; or (2) is a debit, Swing Line Lender shall make available a U.S. Swing Line Loan (to the extent that such advance would not, 56 when added to the outstanding Swing Line Loans, exceed the Swing Line Loan Subcommitment), in an amount rounded up to the nearest U.S.$50,000, as the case maybe, to place Company in a net credit position of zero (or such other amount arrived at from such rounding). (iii) the balance in the Canadian Based U.S. Swing Line Account: (1) is a credit in excess of U.S.$100,000, Swing Line Lender may apply the amount of the credit or any part thereof rounded down to the nearest U.S.$50,000, as applicable, as a repayment of any Base Rate Loans owing to Swing Line Lender under the Swing Line Subcommitment; or (2) is a debit, Swing Line Lender shall make available a U.S. Swing Line Loan (to the extent that such advance would not, when added to the outstanding Swing Line Loans, exceed the Swing Line Loan Subcommitment), in an amount rounded up to the nearest U.S.$50,000, as the case maybe, to place Company in a net credit position of zero (or such other amount arrived at from such rounding). (c) Swing Line Loans by Request. In addition to the automatic advance of Swing Line Loans pursuant to Section 2.4(b) above, Swing Line Lender also agrees to make Swing Line Loans available pursuant to a Funding Notice delivered as provided herein. (i) Canadian Swing Line Loans made pursuant to this Section 2.4(c) shall be made in an aggregate minimum amount of Can$100,000 and integral multiples of Can$50,000 in excess of that amount and U.S. Swing Line Loans made pursuant to this Section 2.4(c) shall be made in an aggregate minimum amount of U.S.$100,000 and integral multiples of U.S.$50,000 in excess of that amount. (ii) Whenever Company desires that Swing Line Lender make a Swing Line Loan, Company shall deliver to Swing Line Lender a Funding Notice no later than 12:00 noon (Toronto time) (or provide the information required by such Funding Notice by telephone by such time, promptly followed by delivery in writing of such Funding Notice) on the proposed Credit Date. (iii) Swing Line Lender shall make the amount of its Swing Line Loan available to Company not later than 2:00 p.m. (Toronto time) on the applicable Credit Date by wire transfer of same day funds in Canadian Dollars to the Canadian Swing Line Account, with respect to Canadian Swing Line Loans and in U.S. Dollars to the U.S. Swing Line Account, with respect to U.S. Swing Line Loans. (d) Swing Line Loan Prepayment with Proceeds of Other Revolving Loans. With respect to any Swing Line Loans that have not been voluntarily prepaid by Company 57 pursuant to Section 2.15(a), Swing Line Lender may at any time in its sole and absolute discretion, deliver to Administrative Agent (with a copy to Company), no later than 11:00 a.m. (Toronto time) at least one Business Day in advance of the proposed Credit Date, a notice (which shall be deemed to be a Funding Notice given by Company) requesting that each Lender holding a Revolving Commitment make Revolving Loans that are Prime Rate Loans, if such Swing Line Loans are Canadian Swing Line Loans, or Base Rate Loans, if such Swing Line Loans are U.S. Swing Line Loans, to Company on such Credit Date in an aggregate amount equal to the amount of such Swing Line Loans outstanding on the date such notice is given which Swing Line Lender requests Lenders to prepay (the "REFUNDED SWING LINE LOANS"). Company hereby authorizes the giving of any such notice and the making of any such Revolving Loans. Anything contained in this Agreement to the contrary notwithstanding, (1) the proceeds of such Revolving Loans made by Revolving Lenders other than Swing Line Lender shall be immediately delivered by Administrative Agent to Swing Line Lender (and not to Company) and applied to repay a corresponding portion of the Refunded Swing Line Loans by depositing such proceeds in the Canadian Swing Line Account, in the case of Refunded Canadian Swing Line Loans, and the U.S. Swing Line Account, in the case of Refunded U.S. Swing Line Loans and (2) on the day such Revolving Loans are made, Swing Line Lender's Pro Rata Share of the Refunded Swing Line Loans shall be deemed to be paid with the proceeds of a Revolving Loan made by Swing Line Lender, and such portion of the Swing Line Loans deemed to be so paid shall no longer be outstanding as Swing Line Loans and shall no longer be due under the Swing Line Note of Swing Line Lender but shall instead constitute part of Swing Line Lender's outstanding Revolving Loans to Company and shall be due under the Revolving Loan Note issued by Company to Swing Line Lender. Company hereby authorizes Administrative Agent and Swing Line Lender to charge Company's accounts with Administrative Agent and Swing Line Lender (up to the amount available in each such account) in order to immediately pay Swing Line Lender the amount of the Refunded Swing Line Loans to the extent of the proceeds of such Revolving Loans made by Lenders, including the Revolving Loans deemed to be made by Swing Line Lender, are not sufficient to repay in full the Refunded Swing Line Loans. If any portion of any such amount paid (or deemed to be paid) to Swing Line Lender should be recovered by or on behalf of Company from Swing Line Lender in any bankruptcy proceeding, in any assignment for the benefit of creditors or otherwise, the loss of the amount so recovered shall be apportioned among all Revolving Lenders in accordance with their Pro Rata Shares. (e) Swing Line Loan Assignments. If for any reason (1) Revolving Loans are not made upon the request of Administrative Agent as provided in Section 2.4(d) in an amount sufficient to repay any amounts owed to Swing Line Lender in respect of any outstanding Swing Line Loans on or before the third Business Day after demand for payment thereof by Swing Line Lender or (2) the Revolving Commitments are terminated at a time when any Swing Line Loans are outstanding, each Revolving Lender shall be deemed to, and hereby agrees to, have purchased an assignment of such outstanding Swing Line Loans in an amount equal to its Pro Rata Share (calculated, in the case of the foregoing clause (2), immediately prior to such termination of the Revolving Commitments) of the unpaid amount of such Swing Line Loans together with accrued interest thereon. Upon one Business Day's notice from Administrative Agent, each Revolving Lender shall deliver to Administrative Agent for payment to Swing Line Lender an amount equal to its respective assignment in same day funds at its Principal Office. In order to further evidence such assignment (and without prejudice to the effectiveness of the assignment provisions set forth above), each Revolving Lender agrees to enter into an 58 Assignment Agreement at the request of Swing Line Lender and Administrative Agent in form and substance reasonably satisfactory to Swing Line Lender and Administrative Agent. In the event any Revolving Lender fails to make available to Administrative Agent for payment to Swing Line Lender the amount of such Revolving Lender's assignment as provided in this paragraph, Swing Line Lender shall be entitled to recover such amount on demand from such Revolving Lender together with interest thereon at the rate customarily used by Swing Line Lender for the correction of errors among banks for three Business Days and thereafter at the Canadian Prime Rate or Base Rate, as applicable. In the event Swing Line Lender receives a payment of any amount in which other Revolving Lenders have purchased assignments as provided in this Section 2.4(e), Swing Line Lender shall promptly pay to Administrative Agent for distribution to each such other Revolving Lender its Pro Rata Share of such payment. (f) Revolving Lenders' Obligations. Anything contained herein to the contrary notwithstanding, each Revolving Lender's obligation to make Revolving Loans for the purpose of repaying any Refunded Swing Line Loans pursuant to Section 2.4(d) and each Revolving Lender's obligation to purchase an assignment of any unpaid Swing Line Loans pursuant to Section 2.4(e) shall be absolute and unconditional and shall not be affected by any circumstance, including (1) any set-off, counterclaim, recoupment, defense or other right which such Revolving Lender may have against Swing Line Lender, Company or any other Person for any reason whatsoever; (2) the occurrence or continuance of a Default or Event of Default; (3) any Material Adverse Effect; (4) any breach of this Agreement or any other Credit Document by any party thereto; or (5) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing; provided that such obligations of each Revolving Lender are subject to the condition that Swing Line Lender believed in good faith that all conditions under Section 3.2 to the making of the applicable Refunded Swing Line Loans or other unpaid Swing Line Loans, were satisfied at the time such Refunded Swing Line Loans or unpaid Swing Line Loans were made, or the satisfaction of any such condition not satisfied had been waived by the Requisite Lenders prior to or at the time such Refunded Swing Line Loans or other unpaid Swing Line Loans were made; provided further that the Swing Line Lender shall irrevocably be deemed to have believed in good faith that all conditions under Section 3.2 to the making of the applicable Refunded Swing Line Loans or other unpaid Swing Line Loans were satisfied at the time such Refunded Swing Line Loans or unpaid Swing Line Loans were made unless, prior to the making of the applicable Refunded Swing Line Loans or other unpaid Swing Line loans, the Swing Line Lender was notified in writing by Administrative Agent that the conditions under Section 3.2 were not or could not be met and accordingly that no further Swing Line Loans should be made until notified to the contrary. (g) Indemnification. Each Revolving Lender agrees to indemnify Swing Line Lender (to the extent not reimbursed by Company) ratably according to its Pro Rata Share from and against any and all losses and claims of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Swing Line Lender in any way relating to or arising out of any Swing Line Loans; provided that no Lender shall be liable for any portion of such losses or claims resulting from Swing Line Lender's gross negligence or willful misconduct. 59 2.5. ISSUANCE OF LETTERS OF CREDIT AND PURCHASE OF PARTICIPATIONS THEREIN. (a) Letters of Credit. Company may request, in accordance with the provisions of this Section 2.5(a), from time to time on or prior to the 10th day prior to the Revolving Commitment Termination Date, that a Revolving Lender issue one or more Letters of Credit denominated in either Approved Currency for the account of Company for the purposes specified in Section 2.7. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Company herein set forth, any Revolving Lender may, but (except as provided in Section 2.5(c) in respect of Issuing Bank) shall not be obligated to, issue such Letters of Credit in accordance with the provisions of this Section 2.5(a); provided that Company shall not request that any Revolving Lender issue (and no Revolving Lender shall issue): (i) any Letter of Credit if, after giving effect to such issuance, the Letter of Credit Usage would exceed the Letter of Credit Sublimit; (ii) any Letter of Credit having an expiration date later than the earlier of (x) 5 days prior to the Revolving Commitment Termination Date and (y) the date which is one year from the date of issuance of such Letter of Credit, provided that the immediately preceding clause (y) shall not prevent any Issuing Lender from agreeing that a Letter of Credit will automatically be extended for one or more successive periods not to exceed one year each unless such Issuing Lender elects not to extend for any such additional period; provided, further, that such Issuing Lender shall not extend such Letter of Credit if it has knowledge that an Event of Default has occurred and is continuing (which has not been waived in accordance with Section 10.5) at the time such Issuing Lender must elect whether or not to allow such extension; or (iii) any Letter of Credit issued for the purpose of supporting indebtedness for borrowed money. The Existing Letters of Credit shall be deemed to have been issued pursuant to the terms of this Section 2.5, shall be participated in by the Lenders as set forth in Section 2.5(f), and shall be subject to all other terms of this Agreement applicable to Letters of Credit. This Agreement shall constitute all of the terms and conditions with respect to the Existing Letters of Credit and supersedes any and all prior agreements, oral or written (other than the Existing Letters of Credit themselves and the related applications, each of which shall remain in full force and effect), between the Issuing Lender and the Credit Parties with respect to the Existing Letters of Credit. (b) Issuance Notice. Whenever Company desires the issuance of a Letter of Credit, it shall deliver to Administrative Agent and Issuing Bank an Issuance Notice no later than 12:00 noon (Toronto time) at least two Business Days in advance of the proposed date of issuance. The Issuing Lender, in its reasonable discretion, may require changes in the text of the proposed Letter of Credit or any documents described in or attached to the Issuance Notice, and may require an application and/or indemnity of Company in such Issuing Lender's customary form. Company may submit Issuance Notices by telefacsimile, and Administrative Agent and any Issuing Lender may rely and act upon any such Issuance Notice without receiving an 60 original signed copy thereof. Unless the Issuing Lender thereof otherwise agrees, no Letter of Credit shall require payment against a conforming demand for payment to be made thereunder within less than two (2) business days (under the laws of the jurisdiction in which the office of the Issuing Lender to which such demand for payment is required to be presented is located) from the day that such demand for payment is presented. Company shall notify the applicable Issuing Lender (and Administrative Agent, if Administrative Agent is not such Issuing Lender) prior to the issuance of any Letter of Credit in the event that any of the matters to which Company is required to certify in the applicable Issuance Notice is no longer true and correct as of the proposed date of issuance of such Letter of Credit, and upon the issuance of any Letter of Credit, Company shall be deemed to have re-certified, as of the date of such issuance, as to the matters to which Company is required to certify in the applicable Issuance Notice. (c) Determination of Issuing Lender. Upon receipt by Administrative Agent of an Issuance Notice, in the event Issuing Bank elects to issue such Letter of Credit, Administrative Agent shall promptly so notify Company, and Issuing Bank shall be the Issuing Lender with respect thereto. In the event that Issuing Bank, in its sole discretion, elects not to issue such Letter of Credit, Issuing Bank shall promptly so notify Company and Administrative Agent, whereupon Company may request any other Revolving Lender to issue such Letter of Credit by delivering to such Revolving Lender a copy of the applicable Issuance Notice. Any Revolving Lender so requested to issue such Letter of Credit shall promptly notify Company, Issuing Bank and Administrative Agent whether or not, in its sole discretion, it has elected to issue such Letter of Credit, and any such Revolving Lender that so elects to issue such Letter of Credit shall be the Issuing Lender with respect thereto; provided that if more than one Revolving Lender so elects to issue such Letter of Credit, Company shall determine which Revolving Lender shall be the Issuing Lender. In the event that all other Revolving Lenders shall have declined to issue such Letter of Credit, notwithstanding the prior election of Issuing Bank not to issue such Letter of Credit, Issuing Bank shall be obligated to issue such Letter of Credit and shall be the Issuing Lender with respect thereto, notwithstanding the fact that the Letter of Credit Usage with respect to such Letter of Credit and with respect to all other Letters of Credit issued by Issuing Bank, when aggregated with Issuing Bank's outstanding Revolving Loans, may exceed Issuing Bank's Revolving Commitment then in effect. Notwithstanding the foregoing, under no circumstance shall Issuing Bank be obligated to issue any Letter of Credit constituting a letter of guaranty if based upon the advice of its legal counsel Issuing Bank is prohibited from issuing such a Letter of Credit. In such a circumstance, Issuing Bank may if it so chooses, with the consent of Company, issue such Letter of Credit out of a branch located in Canada and, notwithstanding anything to the contrary herein (including Section 2.22 or the definition of Eligible Assignee), such branch's entitlement to benefits under Section 2.22 shall not be diminished by the fact that the Letter of Credit was not issued out of the United States and such branch shall be entitled to the full benefits of Section 2.22. If Issuing Bank has resigned as provided in Section 9.5(c) and no successor Issuing Bank has been appointed at the time of an Issuance Notice, then each Revolving Lender shall issue or cause to be issued a Letter of Credit as to its own Pro Rata Share of each requested Letter of Credit, all of which taken together would aggregate the amount requested in the Issuance Notice. 61 (d) Issuance of Letter of Credit. Upon satisfaction or waiver (in accordance with Section 10.5) of the conditions set forth in Section 3.2(a), the Issuing Lender shall issue the requested Letter of Credit in accordance with the Issuing Lender's standard operating procedures. (e) Notification to Revolving Lenders. Upon the issuance or amendment of any Letter of Credit, the applicable Issuing Lender shall promptly notify Administrative Agent and Company of such issuance or amendment in writing and such notice shall be accompanied by a copy of such Letter of Credit or amendment. Upon receipt of such notice (or, if Administrative Agent is the Issuing Lender, together with such notice), Administrative Agent shall notify each Revolving Lender in writing of such issuance or amendment and the amount of such Revolving Lender's respective participation in such Letter of Credit or amendment, and, if so requested by a Revolving Lender, Administrative Agent shall provide such Revolving Lender with a copy of such Letter of Credit or amendment. (f) Revolving Lenders' Purchase of Participations in Letters of Credit. Immediately upon the issuance of each Letter of Credit, each Revolving Lender shall be deemed to, and hereby agrees to, have irrevocably purchased from the Issuing Lender a participation in such Letter of Credit and any drawings honored thereunder in an amount equal to such Revolving Lender's Pro Rata Share of the maximum amount that is or at any time may become available to be drawn thereunder. (g) Responsibility of Issuing Lender with Respect to Drawings. In determining whether to honor any drawing under any Letter of Credit by the beneficiary thereof, the Issuing Lender shall be responsible only to examine the documents delivered under such Letter of Credit with reasonable care so as to ascertain whether they appear on their face to be in accordance with the terms and conditions of such Letter of Credit. (h) Reimbursement by Company of Amounts Paid Under Letters of Credit. In the event an Issuing Lender has determined to honor a drawing under a Letter of Credit issued by it, such Issuing Lender shall immediately notify in writing Company and Administrative Agent, and Company shall reimburse such Issuing Lender on or before the Business Day immediately following the date on which such drawing is honored (the "REIMBURSEMENT DATE") in an amount in the applicable Approved Currency and in same day funds equal to the amount of such payment; provided that, anything contained in this Agreement to the contrary notwithstanding, unless Company shall have notified Administrative Agent and such Issuing Lender prior to 2:00 p.m. (Toronto time) on the date such drawing is honored that Company intends to reimburse such Issuing Lender for the amount of such payment with funds other than the proceeds of Revolving Loans: (1) Company shall be deemed to have given a timely Funding Notice to Administrative Agent requesting Revolving Lenders to make Revolving Loans that are Prime Rate Loans, if such Letter of Credit is denominated in Canadian Dollars, and Base Rate Loans, if such Letter of Credit is denominated in U.S. Dollars, on the Reimbursement Date in an amount equal to the amount of such payment, and 62 (2) subject to satisfaction or waiver of the conditions specified in Section 3.2(a), Revolving Lenders shall, on the Reimbursement Date, make Revolving Loans that are Prime Rate Loans, if such Letter of Credit is denominated in Canadian Dollars, and Base Rate Loans, if such Letter of Credit is denominated in U.S. Dollars, in the amount of such payment, the proceeds of which shall be applied directly by Administrative Agent to reimburse such Issuing Lender for the amount of such payment; and provided, further, that if for any reason proceeds of Revolving Loans are not received by such Issuing Lender on the Reimbursement Date in an amount equal to the amount of such payment, Company shall reimburse such Issuing Lender, on demand, in an amount in same day funds equal to the excess of the amount of such payment by Issuing Lender over the aggregate amount of such Revolving Loans, if any, which are so received. Nothing in this Section 2.5(h) shall be deemed to relieve any Revolving Lender from its obligation to make Revolving Loans on the terms and conditions set forth in this Agreement, and Company shall retain any and all rights it may have against any Revolving Lender resulting from the failure of such Revolving Lender to make such Revolving Loans under this Section 2.5(h). (i) Payment by Revolving Lenders of Unreimbursed Amounts Paid Under Letters of Credit. In the event that Company shall fail for any reason to reimburse any Issuing Lender as provided in Section 2.5(h) in an amount equal to the amount of any payment by such Issuing Lender under a Letter of Credit issued by it, such Issuing Lender shall promptly notify Administrative Agent, who shall promptly notify each other Revolving Lender of the unreimbursed amount of such honored drawing and of such Revolving Lender's respective participation therein based on such Revolving Lender's Pro Rata Share. Each Revolving Lender (other than such Issuing Lender) shall make available to Administrative Agent an amount equal to its respective participation, in the Approved Currency in which the Letter of Credit giving rise to such payment is denominated, in same day funds, at Administrative Agent's Principal Office not later than 12:00 noon (Toronto time) on the first Business Day after the date notified by Administrative Agent, and Administrative Agent shall make available to such Issuing Lender in such Approved Currency, in same day funds, at the office of such Issuing Lender on such Business Day the aggregate amount of the payments so received by Administrative Agent. In the event that any Revolving Lender fails to make available to Administrative Agent on such Business Day the amount of such Revolving Lender's participation in such Letter of Credit as provided in this Section 2.5(i), such Issuing Lender shall be entitled to recover such amount on demand from such Revolving Lender together with interest thereon at the rate customarily used by such Issuing Lender for the correction of errors among banks for three Business Days and thereafter at the Canadian Prime Rate or Base Rate, as applicable. Nothing in this Section 2.5(i) shall be deemed to prejudice the right of Administrative Agent to recover, for the benefit of Revolving Lenders, from any Issuing Lender any amounts made available to such Issuing Lender pursuant to this Section 2.5(i) in the event that it is determined by the final judgment of a court of competent jurisdiction that the payment with respect to a Letter of Credit by such Issuing Lender in respect of which payments were made by Revolving Lenders constituted gross negligence or willful misconduct on the part of such Issuing Lender. (j) Distribution to Lenders of Reimbursements Received from Company. In the event any Issuing Lender shall have been reimbursed by other Revolving Lenders pursuant to 63 Section 2.5(i) for all or any portion of any payment by such Issuing Lender under a Letter of Credit issued by it, and Administrative Agent or such Issuing Lender thereafter receives any payments from Company in reimbursement of such payment under the Letter of Credit, to the extent any such payment is received by such Issuing Lender, it shall distribute such payment to Administrative Agent, and Administrative Agent shall distribute to each other Revolving Lender that has paid all amounts payable by it under Section 2.5(i) with respect to such payment such Revolving Lender's Pro Rata Share of all payments subsequently received by Administrative Agent or by such Issuing Lender from Company. (k) Obligations Absolute. The obligation of Company to reimburse each Issuing Lender for payments under the Letters of Credit issued by it and to repay any Revolving Loans made by Revolving Lenders pursuant to Section 2.5(h) and the obligations of Revolving Lenders under Section 2.5(i) shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement under all circumstances including any of the following circumstances: (i) any lack of validity or enforceability of any Letter of Credit; (ii) the existence of any claim, set-off, defense or other right which Company or any Lender may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons for whom any such transferee may be acting), any Issuing Lender or other Revolving Lender or any other Person or, in the case of a Revolving Lender, against Company, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between Company or one of its Subsidiaries and the beneficiary for which any Letter of Credit was procured); (iii) any draft or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) payment by the applicable Issuing Lender under any Letter of Credit against presentation of a draft or other document which does not strictly comply with the terms of such Letter of Credit; (v) any Material Adverse Effect; (vi) any breach of this Agreement or any other Credit Document by any party thereto; (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing; (viii) the fact that an Event of Default shall have occurred and be continuing; or 64 (ix) the fact that a Letter of Credit may have been issued even if, at the time of its issuance, the conditions set forth in Section 3.2(a) may not have been met or waived (in accordance with Section 10.5); provided, in each case, that payment by the applicable Issuing Lender under the applicable Letter of Credit shall not have constituted gross negligence or willful misconduct of such Issuing Lender under the circumstances in question (as determined by a final judgment of a court of competent jurisdiction). (l) Nature of Issuing Lenders' Duties. As between Company and any Issuing Lender, Company assumes all risks of the acts and omissions of, or misuse of the Letters of Credit issued by such Issuing Lender by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, such Issuing Lender shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of any such Letter of Credit to comply fully with any conditions required in order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of such Issuing Lender, including any act or omission by a Governmental Authority, and none of the above shall affect or impair, or prevent the vesting of, any of such Issuing Lender's rights or powers hereunder. In furtherance and extension and not in limitation of the specific provisions set forth in the first paragraph of this Section 2.5(l), any action taken or omitted by any Issuing Lender under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not put such Issuing Lender under any resulting liability to Company. Notwithstanding anything to the contrary contained in this Section 2.5(l), Company shall retain any and all rights it may have against any Issuing Lender for any liability to the extent arising out of the gross negligence or willful misconduct of such Issuing Lender, as determined by a final judgment of a court of competent jurisdiction. (m) All payments made pursuant to this Section 2.5 shall be in the Approved Currency in which the Letter of Credit giving rise to such payment is denominated. 65 (n) Collateralization of Letters of Credit. (i) With respect to funding the cash collateralization of unexpired Letters of Credit to the extent required hereunder (it being acknowledged that any requirement to pay or prepay or collateralize Letters of Credit prior to their expiry date shall be construed as a requirement to provide cash collateral under this provision), it is agreed that Company shall provide for the funding of such unexpired Letters of Credit by paying to and depositing with Administrative Agent for the benefit of the applicable Issuing Lender cash collateral for each such unexpired Letter of Credit in an amount equal to the maximum drawable amount of such Letter of Credit; such cash collateral deposited by Company shall be held by Administrative Agent for the benefit of such Issuing Lender in the Collateral Account with interest to be credited to Company at rates prevailing at the time of deposit for similar accounts with Administrative Agent. Such Collateral Account shall be held by Administrative Agent as security for the obligations of Company in relation to such Letters of Credit and the security of Administrative Agent and any Issuing Lender thereby created in such cash collateral shall rank in priority to all other Liens and adverse claims against such cash collateral. Such cash collateral shall be applied to satisfy the obligations of Company for such Letters of Credit as payments are made thereunder and the Issuing Lender is hereby irrevocably directed by Company to so apply any such cash collateral. Amounts held in such Collateral Account may not be withdrawn by Company; however, interest on such deposited amounts shall be for the account of Company and may be withdrawn by Company so long as no Default or Event of Default is then continuing. If after expiry of the Letters of Credit for which such funds are held and application by Administrative Agent and any Issuing Lender of the amounts in such Collateral Account to satisfy the obligations of Company hereunder with respect to the Letters of Credit being repaid, any excess remains, such excess shall be promptly paid by Administrative Agent to Company so long as no Default or Event of Default is then continuing. (ii) In lieu of depositing cash in the Collateral Account as provided in Section 2.5(n)(i), Company may satisfy the cash collateralization requirement by providing to the applicable Issuing Lender a letter of credit issued for its benefit by a financial institution satisfactory to it and Administrative Agent, which letter of credit is in form and substance satisfactory to the applicable Issuing Lender and Administrative Agent. 2.6. PRO RATA SHARES; AVAILABILITY OF FUNDS. (a) Pro Rata Shares. All Loans shall be made, and all participations purchased, by Lenders simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any default by any other Lender in such other Lender's obligation to make a Loan requested hereunder or purchase a participation required hereby nor shall any Term Loan Commitment or any Revolving Commitment of any Lender be increased or decreased as a result of a default by any other Lender in such other 66 Lender's obligation to make a Loan requested hereunder or purchase a participation required hereby. (b) Availability of Funds. Unless Administrative Agent shall have been notified by any Lender prior to the applicable Credit Date that such Lender does not intend to make available to Administrative Agent the amount of such Lender's Loan requested on such Credit Date, Administrative Agent may assume that such Lender has made such amount available to Administrative Agent on such Credit Date and Administrative Agent may, in its sole discretion, but shall not be obligated to, make available to Company a corresponding amount on such Credit Date. If such corresponding amount is not in fact made available to Administrative Agent by such Lender, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the customary rate set by Administrative Agent for the correction of errors among banks for three Business Days and thereafter at the Base Rate or Canadian Prime Rate, as applicable. If such Lender does not pay such corresponding amount forthwith upon Administrative Agent's demand therefor, Administrative Agent shall promptly notify Company and Company shall forthwith pay such corresponding amount to Administrative Agent together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the rate payable hereunder for Base Rate Loans (for U.S. Borrowings) or Prime Rate Loans (for Canadian Borrowings) for such Class of Loans. Nothing in this Section 2.6(b) shall be deemed to relieve any Lender from its obligation to fulfill its obligations with respect to its Term Loan Commitments and Revolving Commitments hereunder or to prejudice any rights that Company may have against any Lender as a result of any default by such Lender hereunder. 2.7. USE OF PROCEEDS. The proceeds of the Term Loans and of up to Can$20.0 million of Revolving Loans and Swing Line Loans borrowed on the Closing Date shall be applied by Company to fund, in part, the Acquisition (including refinancing or retiring all existing debt (except as otherwise permitted by this Agreement) and redeeming any preferred stock of the Acquired Business and its subsidiaries) and paying fees, commissions and expenses in connection with the Acquisition. On the Closing Date, the Existing Letters of Credit will be deemed to have been issued hereunder. The proceeds of the Revolving Loans and Swing Line Loans shall be applied, and Letters of Credit issued after the Closing Date shall be used, by Company for working capital and general corporate purposes of Company, the Guarantor Subsidiaries and their Subsidiaries, including Permitted Acquisitions and Consolidated Capital Expenditures permitted by Section 6.8(d). No portion of the proceeds of any Credit Extension shall be used in any manner that causes such Credit Extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation thereof or to violate the Exchange Act. 2.8. EVIDENCE OF DEBT; REGISTER; LENDERS' BOOKS AND RECORDS; NOTES. (a) Lenders' Evidence of Debt. Each Lender shall maintain on its internal records an account or accounts evidencing the Obligations of Company to such Lender, including the amounts of the Loans made by it and each repayment and prepayment in respect thereof. Any such recordation shall be conclusive and binding on Company, absent manifest error; provided that the failure to make any such recordation, or any error in such recordation, 67 shall not affect any Lender's Revolving Commitments or Company's Obligations in respect of any applicable Loans; and provided, further, in the event of any inconsistency between the Register and any Lender's records, the recordations in the Register shall govern. (b) Register. Administrative Agent on behalf of Company shall maintain at its Principal Office a register for the recordation of the names and addresses of Lenders and the Revolving Commitments and Loans of each Lender from time to time (the "REGISTER"). The Register shall be available for inspection by any of the Joint Lead Arrangers or, with respect to information as to itself only, any Lender at any reasonable time and from time to time upon reasonable prior notice. Administrative Agent shall record in the Register the Revolving Commitments and the Loans, and each repayment or prepayment in respect of the principal amount of and interest on the Loans, and any such recordation shall be conclusive and binding on Company and each Lender, absent manifest error; provided failure to make any such recordation, or any error in such recordation, shall not affect any Lender's Revolving Commitments or Company's Obligations in respect of any Loan. Any assignment of an interest in a Loan or a Letter of Credit will be effective only upon appropriate entries being made with respect thereto in the Register. Company hereby designates Administrative Agent to serve as Company's agent solely for purposes of maintaining the Register as provided in this Section 2.8(b), and Company hereby agrees that, to the extent Administrative Agent serves in such capacity, Administrative Agent and its officers, directors, employees, agents and Affiliates shall constitute Indemnitees. (c) Notes. If so requested by any Lender by written notice to Company (with a copy to Administrative Agent) at least two Business Days prior to the Closing Date, or at any time thereafter, Company shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 10.6) on the Closing Date (or, if such notice is delivered after the Closing Date, promptly after Company's receipt of such notice) a Note or Notes to evidence such Lender's Tranche A Term Loan, Tranche B Term Loan, New Term Loan, Revolving Loan or Swing Line Loan, as the case may be. 2.9. INTEREST ON LOANS. (a) Except as otherwise set forth herein, each Class of Loan (other than BA Discount Rate Loans) shall bear interest on the unpaid principal amount thereof from the date made through repayment (whether by acceleration or otherwise) thereof as follows: (i) in the case of Tranche A Term Loans and Canadian Revolving Loans: (1) if a Prime Rate Loan, at the Canadian Prime Rate plus the Applicable Margin; or (2) if a Canadian Eurodollar Rate Loan, at the Adjusted Canadian Eurodollar Rate plus the Applicable Margin; (ii) in the case of U.S. Swing Line Loans, at the Base Rate plus the Applicable Margin; 68 (iii) in the case of Canadian Swing Line Loans, at the Canadian Prime Rate plus the Applicable Margin; and (iv) in the case of Tranche B Term Loans and U.S. Revolving Loans: (1) if a Base Rate Loan, at the Base Rate plus the Applicable Margin; or (2) if a Eurodollar Rate Loan, at the Adjusted Eurodollar Rate plus the Applicable Margin. Bankers' Acceptances or BA Equivalent Advances shall bear interest by way of discount of the face amount thereof in accordance with Section 2.3. (b) The basis for determining the rate of interest with respect to any Loan (except a Canadian Swing Line Loan or a U.S. Swing Line Loan, which can be made and maintained only as Prime Rate Loans or Base Rate Loans, respectively), and the Interest Period or BA Interest Period with respect to any Eurodollar Rate Loan, Canadian Eurodollar Rate Loan or BA Discount Rate Loan, shall be selected by Company and notified to Administrative Agent and Lenders pursuant to the applicable Funding Notice or Conversion/Continuation Notice, as the case may be; provided until the earlier of 60 days following the Closing Date and a Successful Syndication, the Term Loans shall be maintained as either (1) Eurodollar Rate Loans, Canadian Eurodollar Rate Loans and/or BA Discount Rate Loans having an Interest Period or BA Interest Period, respectively, of no longer than one month or (2) Base Rate Loans or Prime Rate Loans, as the case may be. If on any day a Loan is outstanding with respect to which a Funding Notice or Conversion/Continuation Notice has not been delivered to Administrative Agent in accordance with the terms hereof specifying the applicable basis for determining the rate of interest, then for that day such Loan shall be a Base Rate Loan or Prime Rate Loan, as applicable. (c) In connection with BA Discount Rate Loans, Canadian Eurodollar Rate Loans and Eurodollar Rate Loans, there shall be no more than fifteen (15) BA Interest Periods and Interest Periods in the aggregate outstanding at any time. In the event Company fails to specify between a Base Rate Loan or a Eurodollar Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice for a U.S. Borrowing, such Loan (if outstanding as a Eurodollar Rate Loan) will be automatically converted into a Base Rate Loan on the last day of the then-current Interest Period for such Loan (or if outstanding as a Base Rate Loan will remain as, or (if not then outstanding) will be made as, a Base Rate Loan). In the event Company fails to specify an Interest Period for any Eurodollar Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice, Company shall be deemed to have selected an Interest Period of one month. In the event Company fails to specify between a Prime Rate Loan or a BA Discount Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice for a Canadian Borrowing, such Loan (if outstanding as a BA Discount Rate Loan or Canadian Eurodollar Rate Loan) will be automatically converted into a Prime Rate Loan on the last day of the then-current BA Interest Period or Interest Period, as applicable, for such Loan (or if outstanding as a Prime Rate Loan will remain as, or (if not then outstanding) will be made as, a Prime Rate Loan). In the event Company fails to specify a BA Interest Period, for any BA 69 Discount Rate Loan, in the applicable Funding Notice or Conversion/Continuation Notice, Company shall be deemed to have selected a BA Interest Period of one month. As soon as practicable after 10:00 a.m. (Toronto time) on each Interest Rate Determination Date, Administrative Agent shall determine (which determination shall, absent manifest error, be final, conclusive and binding upon all parties) the interest rate that shall apply to the Eurodollar Rate Loans and Canadian Eurodollar Rate Loans for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to Company and each Lender. (d) Interest payable pursuant to Section 2.9(a) shall be computed (i) in the case of Base Rate Loans and Prime Rate Loans, on the basis of a 365-day or 366-day year, as the case may be, (ii) in the case of BA Discount Rate Loans, on the basis of a 365-day year, and (iii) in the case of Eurodollar Rate Loans and Canadian Eurodollar Rate Loans, on the basis of a 360-day year, in each case for the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the date of the making of such Loan or the first day of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate Loan, or, with respect to a Prime Rate Loan being converted from a BA Discount Rate Loan or a Canadian Eurodollar Rate Loan, the date of conversion to such Prime Rate Loan, as the case may be, shall be included, and the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, or, with respect to a Prime Rate Loan being converted to a BA Discount Rate Loan or Canadian Eurodollar Rate Loan, the date of conversion of such Prime Rate Loan, as the case may be, shall be excluded; provided, if a Loan is repaid on the same day on which it is made, one day's interest shall be paid on that Loan. (e) Except as otherwise set forth herein, interest on each Loan shall be payable in arrears on and to (i) each Interest Payment Date applicable to that Loan; (ii) upon any prepayment of that Loan, whether voluntary or mandatory, to the extent accrued on the amount being prepaid (other than voluntary prepayments of Swing Line Loans and Revolving Loans); and (iii) at maturity, including final maturity. (f) Company agrees to pay to Administrative Agent, with respect to payments under any Letters of Credit issued by any Issuing Lender, interest on the amount paid by such Issuing Lender in respect of each such payment from the date a drawing is honored to but excluding the date such amount is reimbursed by Company (including any such reimbursement out of the proceeds of Revolving Loans pursuant to Section 2.5(h)) at a rate equal to (a) for the period from the date such drawing is honored to but excluding the Reimbursement Date, the rate then in effect under this Agreement with respect to Revolving Loans that (i) are Prime Rate Loans, in the case of payments made under a Letter of Credit denominated in Canadian Dollars, and (ii) are Base Rate Loans, in the case of payments made under a Letter of Credit denominated in U.S. Dollars, and (b) thereafter, a rate which is 2% per annum in excess of the rate of interest otherwise payable under this Agreement with respect to Revolving Loans that are (i) Prime Rate Loans, in the case of payments made under a Letter of Credit denominated in Canadian Dollars, and (ii) are Base Rate Loans, in the case of payments made under a Letter of Credit denominated in U.S. Dollars. Interest payable pursuant to this Section 2.9(f) shall be computed on the basis of 70 a 365-day, or 366-day, as applicable, year for the actual number of days elapsed in the period during which it accrues and shall be payable on demand or, if no demand is made, on the date on which the related drawing under a Letter of Credit is reimbursed in full. (g) Promptly upon receipt by Administrative Agent of any payment of interest pursuant to Section 2.9(f) with respect to a payment under a Letter of Credit, (i) Administrative Agent shall distribute to (x) each Revolving Lender (including any Issuing Lender) out of the interest received by Administrative Agent in respect of the period from the date such drawing is honored to but excluding the date on which the applicable Issuing Lender is reimbursed for the amount of such payment (including any such reimbursement out of the proceeds of Revolving Loans pursuant to Section 2.5(h)), the amount that such Revolving Lender would have been entitled to receive in respect of the letter of credit fee that would have been payable in respect of such Letter of Credit for such period pursuant to Section 2.13(b) if no drawing had been honored under such Letter of Credit, and (y) such Issuing Lender the amount, if any, remaining after payment of the amounts applied pursuant to clause (x), and (ii) in the event such Issuing Lender shall have been reimbursed by other Revolving Lenders pursuant to Section 2.9(f) for all or any portion of such payment, Administrative Agent shall distribute to each Revolving Lender (including such Issuing Lender) that has paid all amounts payable by it under Section 2.9(f) with respect to such payment such Revolving Lender's Pro Rata Share of any interest received by Administrative Agent in respect of that portion of such payment so made by Revolving Lenders for the period from the date on which such Issuing Lender was so reimbursed to but excluding the date on which such portion of such payment is reimbursed by Company. Any such distribution shall be made to a Revolving Lender at the account specified by such Revolving Lender. (h) All payments pursuant to this Section 2.09 shall be made in the Approved Currency in which the Loan or Letter of Credit giving rise to such payment is denominated. 2.10. INTEREST ACT DISCLOSURE. Whenever a rate of interest hereunder is calculated on the basis of a year (the "DEEMED YEAR") which contains fewer days than the actual number of days in the calendar year of calculation, such rate of interest shall be expressed as a yearly rate for purposes of the Interest Act (Canada) by multiplying such rate of interest by the actual number of days in the calendar year of calculation and dividing it by the number of days in the deemed year. 2.11. CONVERSION/CONTINUATION. (a) Subject to Section 2.20 and so long as no Default or Event of Default shall have occurred and then be continuing, Company shall have the option: 71 (i) with respect to Canadian Borrowings, to convert at any time all or any part of any Term Loan or Revolving Loan equal to Can$1.0 million and integral multiples of Can$100,000, in excess of that amount from Prime Rate Loans to an issue of BA Discount Rate Loans and Canadian Eurodollar Rate Loans, or from BA Discount Rate Loans and Canadian Eurodollar Rate Loans to Prime Rate Loans; provided that an issue of BA Discount Rate Loans may only be converted into a Prime Rate Loan on the expiration date of the BA Interest Period applicable thereto and an issue of Canadian Eurodollar Rate Loans may be converted only on the expiration of the Interest Period applicable to such Canadian Eurodollar Rate Loan unless Company shall pay all amounts due under Section 2.20 in connection with any such conversion; (ii) upon the expiration of a BA Interest Period applicable to Bankers' Acceptances and Interest Period applicable to Canadian Eurodollar Rate Loans, to roll over all or any portion of such Loan equal to Can$1.0 million and integral multiples of Can$100,000 in excess of that amount as a new issue of Bankers' Acceptances or Canadian Eurodollar Rate Loans, as applicable; (iii) with respect to U.S. Borrowings, to convert at any time all or any part of any Term Loan or Revolving Loan equal to U.S.$1.0 million and integral multiples of U.S.$100,000, in excess of that amount from Base Rate Loans to Eurodollar Rate Loans, or from Eurodollar Rate Loans to Base Rate Loans; provided a Eurodollar Rate Loan may only be converted on the expiration of the Interest Period applicable to such Eurodollar Rate Loan unless Company shall pay all amounts due under Section 2.20 in connection with any such conversion; or (iv) upon the expiration of any Interest Period applicable to any Eurodollar Rate Loan, to continue all or any portion of such Loan equal to U.S.$1.0 million and integral multiples of U.S.$100,000 in excess of that amount as a Eurodollar Rate Loan. (b) Company shall deliver a Conversion/Continuation Notice to Administrative Agent no later than 12:00 noon (Toronto time) at least one Business Day in advance of the proposed conversion date (or, in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan or a BA Discount Rate Loan, at least three Business Days in advance of the proposed conversion/continuation date). Except as otherwise provided herein, a Conversion/Continuation Notice for conversion to, or continuation of, any Eurodollar Rate Loans (or telephonic notice in lieu thereof) shall be irrevocable on and after the related Interest Rate Determination Date, and Company shall be bound to effect a conversion or continuation in accordance therewith. Administrative Agent shall notify each Lender of any Loan subject to a Notice of Conversion/Continuation. It is understood and agreed that when a Notice of Conversion/Continuation with respect to Revolving Loans or Tranche A Term Loans is delivered and a conversion to BA Discount Rate Loans is requested, with respect to Schedule I Lenders, such request for a conversion to BA Discount Rate Loans shall be deemed a request for a conversion to Canadian Eurodollar Rate Loans from such Lenders with an Interest Period equal to the elected BA Interest Period. It is understood and agreed that when a Notice of Continuation/Conversion with respect to Revolving Loans or Tranche A Term Loans is delivered 72 and a conversion from BA Discount Rate Loans is requested, with respect to Schedule I Lenders, such request shall be deemed to be a request for a conversion from Canadian Eurodollar Rate Loans made by Schedule I Lenders who made Canadian Eurodollar Rate Loans in lieu of such BA Discount Rate Loans. (c) Rollover of Bankers' Acceptances. In order to satisfy the liability of Company to a Lender for the face amount of maturing Bankers' Acceptances accepted by such Lender, such Lender shall receive and retain for its own account the BA Discount Proceeds of new Bankers' Acceptances issued on a Rollover, and Company shall on the maturity date of the Bankers' Acceptances being rolled over pay to Administrative Agent for the account of the Lenders an amount equal to the difference between the face amount of the maturing Bankers' Acceptances and the BA Discount Proceeds from the new Bankers' Acceptances, together with the stamping fees to which the Lenders are entitled pursuant to Section 2.3(k). (d) Conversion into Bankers' Acceptances. In respect of Conversions into Bankers' Acceptances, in order to satisfy the liability of Company to the Lenders for the amount of the converted Loan, each Lender shall receive and retain for its own account the BA Discount Proceeds of the Bankers' Acceptances issued upon such Conversion, and Company shall on the date for Conversion pay to Administrative Agent for the account of the Lenders an amount equal to the difference between the principal amount of the converted Loan and the aggregate BA Discount Proceeds from the Bankers' Acceptances issued on such Conversion, together with the stamping fees to which the Lenders are entitled pursuant to Section 2.3(k). (e) Conversion from Bankers' Acceptances. In order to satisfy the liability of Company to the Lenders for an amount equal to the aggregate face amount of the maturing Bankers' Acceptances converted to a Prime Rate Loan, Administrative Agent shall record the obligation of Company to the Lenders as a Prime Rate Loan. 2.12. DEFAULT INTEREST. If the principal amount of any Loan outstanding or any interest payment on any Loan or any fees or other amounts owed hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall, to the extent permitted by applicable law, thereafter bear interest (including post-petition interest in any proceeding under the Bankruptcy Laws) payable on demand at a rate that is 2% per annum in excess of the interest rate otherwise payable hereunder with respect to the applicable Loans (or, in the case of any such fees and other amounts, at a rate which is 2% per annum in excess of the interest rate otherwise payable hereunder for (i) in the case of amounts owed in U.S. Dollars, Base Rate Loans and (ii) in the case of amounts owed in Canadian Dollars, Prime Rate Loans); provided, (x) in the case of Eurodollar Rate Loans or Canadian Eurodollar Rate Loans, upon the expiration of the Interest Period in effect at the time any such increase in interest rate is effective such Eurodollar Rate Loans or Canadian Eurodollar Rate Loans shall thereupon become Base Rate Loans or Prime Rate Loans, as applicable, and shall thereafter bear interest payable upon demand at a rate which is 2% per annum in excess of the interest rate otherwise payable hereunder for Base Rate Loans or Prime Rate Loans, as applicable, and (y) in the case of Bankers' Acceptances, upon the expiration of the BA Interest Period in effect at the time any such increase in interest rate is effective, such Bankers' Acceptances shall thereupon become Prime Rate Loans and shall thereafter bear interest payable upon demand at a rate which is 2% per annum in excess of the interest rate otherwise payable under this Agreement for Prime Rate 73 Loans. Payment or acceptance of the increased rates of interest provided for in this Section 2.12 is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Administrative Agent or any Lender. 2.13. FEES. (a) Company agrees to pay to Revolving Lenders commitment fees, payable in Canadian Dollars, equal to (1) the average of the daily difference between (a) the aggregate Revolving Commitments and (b) the sum of (x) the aggregate principal amount of outstanding Revolving Loans (but not any outstanding Swing Line Loans), including the Canadian Dollar Equivalent of any amount denominated in U.S. Dollars, plus (y) the Letter of Credit Usage, times (2) the Applicable Revolving Commitment Fee Percentage. (b) Company agrees to pay the following amounts with respect to Letters of Credit issued hereunder: (i) with respect to each Letter of Credit denominated in Canadian Dollars, (A) a fronting fee, payable in Canadian Dollars, directly to the applicable Issuing Lender for its own account, equal to 0.15 % per annum of the daily amount available to be drawn under such Letter of Credit and (B) a letter of credit fee, payable in Canadian Dollars to Administrative Agent for the account of Revolving Lenders, equal to the Applicable Margin then in effect for Revolving Loans bearing interest at the BA Discount Rate per annum plus, upon the occurrence and during the continuance of an Event of Default, 2% per annum multiplied by the average daily maximum amount available to be drawn under such Letter of Credit; (ii) with respect to each Letter of Credit denominated in U.S. Dollars, (A) a fronting fee, payable in U.S. Dollars, directly to the applicable Issuing Lender for its own account, equal to 0.15 % per annum of the daily amount available to be drawn under such Letter of Credit and (B) a letter of credit fee, payable in U.S. Dollars to Administrative Agent for the account of Revolving Lenders, equal to the Applicable Margin then in effect for Revolving Loans bearing interest at the Adjusted Eurodollar Rate per annum plus, upon the occurrence and during the continuance of an Event of Default, 2% per annum multiplied by the average daily maximum amount available to be drawn under such Letter of Credit; and (iii) with respect to the issuance, administration, amendment or transfer of each Letter of Credit and each payment of a drawing made thereunder (without duplication of the fees payable under Section 2.13(b)(i)), documentary and processing charges payable directly to the applicable Issuing Lender in the Approved Currency in which such charges were incurred for its own account in accordance with such Issuing Lender's standard schedule for such charges in effect at the time. 74 For purposes of calculating any fees payable under this Section 2.13(b), the daily amount available to be drawn under any Letter of Credit shall be determined as of the close of business on any date of determination. Notwithstanding the foregoing no fronting fees shall be paid on Existing Letters of Credit. (c) All fees referred to in Sections 2.13(a), 2.13(b)(i)(B) and 2.13(b)(ii)(B) shall be paid to Administrative Agent at its Principal Office and upon receipt, Administrative Agent shall promptly distribute to each Lender its Pro Rata Share thereof. All fees referred to in Sections 2.13(a) and 2.13(b) shall be calculated on the basis of a 365-day, or 366-day, as applicable, year and the actual number of days elapsed and shall be payable in arrears (i) on the first Business Day following each March 31, June 30, September 30 and December 31 of each year during the Revolving Commitment Period, commencing with the first such date to occur after the Closing Date and (ii) on the Revolving Commitment Termination Date. (d) In addition to any of the foregoing fees, Company agrees to pay to the Agents such other fees set forth in the senior facilities fee letter dated March 10, 2004, among Sponsors, GSCP, RBC and Merrill Lynch Capital Corporation. 2.14. SCHEDULED INSTALLMENTS. The principal amounts of the Term Loans shall be repaid in consecutive quarterly installments (each, an "INSTALLMENT") in the aggregate amounts set forth below on the date set forth below or, if such date is not a Business Day, the next succeeding Business Day (each, an "INSTALLMENT DATE"):
TRANCHE A TRANCHE B TERM LOAN TERM LOAN DATE INSTALLMENTS INSTALLMENTS ---- ------------ ------------ September 30, 2004 -- -- U.S.$0.2875 million December 31, 2004 Can$1.625 million U.S.$0.2875 million March 31, 2005 Can$1.625 million U.S.$0.2875 million June 30, 2005 Can$1.625 million U.S.$0.2875 million September 30, 2005 Can$1.625 million U.S.$0.2875 million December 31, 2005 Can$3.25 million U.S.$0.2875 million March 31, 2006 Can$3.25 million U.S.$0.2875 million June 30, 2006 Can$3.25 million U.S.$0.2875 million September 30, 2006 Can$3.25 million U.S.$0.2875 million December 31, 2006 Can$4.875 million U.S.$0.2875 million March 31, 2007 Can$4.875 million U.S.$0.2875 million June 30, 2007 Can$4.875 million U.S.$0.2875 million September 30, 2007 Can$4.875 million U.S.$0.2875 million December 31, 2007 Can$6.5 million U.S.$0.2875 million March 31, 2008 Can$6.5 million U.S.$0.2875 million June 30, 2008 Can$6.5 million U.S.$0.2875 million September 30, 2008 Can$6.5 million U.S.$0.2875 million December 31, 2008 Can$16.25 million U.S.$0.2875 million
75
TRANCHE A TRANCHE B TERM LOAN TERM LOAN DATE INSTALLMENTS INSTALLMENTS ---- ------------ ------------ March 31, 2009 Can$16.25 million U.S.$0.2875 million June 30, 2009 Can$16.25 million U.S.$0.2875 million September 4, 2009 Can$16.25 million -- -- September 30, 2009 -- -- U.S.$0.2875 million December 31, 2009 -- -- U.S.$0.2875 million March 31, 2010 -- -- U.S.$0.2875 million June 30, 2010 -- -- U.S.$0.2875 million September 30, 2010 -- -- U.S.$27.025 million December 31, 2010 -- -- U.S.$27.025 million March 31, 2011 -- -- U.S.$27.025 million June 4, 2011 -- -- U.S.$27.025 million
; provided, in the event any New Term Loans are made, such New Term Loans shall be repaid on each Installment Date occurring on or after the applicable Increased Amount Date in an amount no greater than (i) the aggregate principal amount of New Term Loans of the applicable Series of New Term Loans, times (ii) the ratio (expressed as a percentage) of (y) the amount of all other Term Loans being repaid on such Installment Date and (z) the total aggregate principal amount of all other Term Loans outstanding on such Increased Amount Date. Notwithstanding the foregoing, (x) the Installments set forth above shall be reduced in connection with any voluntary or mandatory prepayments of the Tranche A Term Loans or the Tranche B Term Loans, as the case may be, in accordance with Sections 2.15, 2.16 and 2.17, as applicable; and (y) the Tranche A Term Loans and the Tranche B Term Loans, together with all other amounts owed hereunder with respect thereto, shall, in any event, be paid in full no later than the Tranche A Term Loan Maturity Date and the Tranche B Term Loan Maturity Date, respectively. 2.15. VOLUNTARY PREPAYMENTS/COMMITMENT REDUCTIONS. (a) Voluntary Prepayments. (i) Any time and from time to time: (1) with respect to Prime Rate Loans (other than Swing Line Loans), Canadian Eurodollar Rate Loans or BA Discount Rate Loans, Company may prepay any such Loans on any Business Day, in whole or in part, in an aggregate minimum amount of Can$500,000 and integral multiples of Can$50,000 in excess of that amount; (2) with respect to Base Rate Loans (other than Swing Line Loans) or Eurodollar Rate Loans, Company may prepay any such Loans on any Business Day, in whole or in part, in an aggregate minimum 76 amount of U.S.$500,000 and integral multiples of U.S.$50,000 in excess of that amount; and (3) with respect to Swing Line Loans, Company may prepay any such Loans on any Business Day, in whole or in part, in an aggregate minimum amount of Can$50,000, with respect to Canadian Swing Line Loans, or U.S.$50,000, with respect to U.S. Swing Line Loans, and integral multiples of Can$50,000 or U.S.$50,000, as applicable, in excess of that amount; provided that any aggregate amount of Swing Line Loans may be repaid if all outstanding U.S. Swing Line Loans or Canadian Swing Line Loans are repaid at such time. (ii) All such prepayments shall be made: (1) upon not less than one Business Day's prior written or telephonic notice in the case of Base Rate Loans or Prime Rate Loans (other than Swing Line Loans);] (2) upon not less than two Business Days' prior written or telephonic notice in the case of Eurodollar Rate Loans, Canadian Eurodollar Rate Loans or BA Discount Rate Loans; provided that BA Discount Rate Loans may be prepaid only on the expiration of the BA Interest Period; and (3) upon written or telephonic notice on the date of prepayment, in the case of Swing Line Loans; in each case given to Administrative Agent or Swing Line Lender, as the case may be, by 2:00 p.m. (Toronto time) on the date required and, if given by telephone, promptly confirmed in writing to Administrative Agent (and Administrative Agent will promptly transmit such telephonic or original notice for Term Loans or Revolving Loans, as the case may be, by telefacsimile or telephone to each Lender) or Swing Line Lender, as the case may be. Upon the giving of any such notice, the principal amount of the Loans specified in such notice shall become due and payable on the prepayment date specified therein. Any such voluntary prepayment shall be applied as specified in Section 2.17(a). (b) Voluntary Commitment Reductions. (i) Company may, upon not less than two Business Days' prior written or telephonic notice confirmed in writing to Administrative Agent (which original written or telephonic notice Administrative Agent will promptly transmit by telefacsimile or telephone to each applicable Lender), at any time and from time to time terminate in whole or permanently reduce in part, without premium or penalty, the Revolving Commitments; provided that (x) the Total Utilization of Revolving Commitments after giving effect to such proposed termination or reduction shall not exceed the aggregate Revolving Commitments after giving effect to any such reduction or termination; and (y) any partial reduction of the 77 Revolving Commitments shall be in an aggregate minimum amount of Can$1.0 million and integral multiples of Can$100,000 in excess of that amount. (ii) Company's notice to Administrative Agent shall designate the date (which shall be a Business Day) of such termination or reduction and the amount of any partial reduction, and such termination or reduction of the Revolving Commitments shall be effective on the date specified in Company's notice and shall reduce the Revolving Commitment of each Lender proportionately to its Pro Rata Share thereof. 2.16. OFFERS TO PREPAY AND MANDATORY PREPAYMENTS/COMMITMENT REDUCTIONS. (a) Asset Sales. No later than three Business Days following the date of receipt by Holdings or any of its Subsidiaries of any Net Asset Sale Proceeds other than pursuant to an Asset Sale permitted by Sections 6.9(a), (b), (c), (d), (e), (j), (k), (l), (m) or (o), Company shall make an Offer to Prepay the Loans and/or otherwise apply such Net Asset Sale Proceeds as set forth in Section 2.17(b) in an aggregate amount equal to such Net Asset Sale Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, with respect to aggregate Net Asset Sale Proceeds of up to U.S.$25.0 million per Fiscal Year, Company shall have the option, directly or through one or more of its Subsidiaries, to invest Net Asset Sale Proceeds within one year of receipt thereof in productive assets of the general type used or useful in the business of Company and its Subsidiaries (or to acquire at least a majority of the Capital Stock of a Person that is engaged in a business in which Company and its Subsidiaries are permitted under Section 6.11). (b) Insurance/Condemnation Proceeds. No later than three Business Days following the date of receipt by Holdings or any of its Subsidiaries, or Administrative Agent as loss payee, of any Net Insurance/Condemnation Proceeds, Company shall make an Offer to Prepay the Loans and/or otherwise apply such Net Insurance/Condemnation Proceeds as set forth in Section 2.17(b) in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Subsidiaries to invest such Net Insurance/Condemnation Proceeds within one year of receipt thereof in productive assets of the general type used or useful in the business of Company and its Subsidiaries, which investment may include the repair, restoration or replacement of the applicable assets thereof (or to acquire at least a majority of the Capital Stock of a Person that is engaged in a business in which Company and its Subsidiaries are permitted under Section 6.11). (c) Issuance of Equity Securities. On the date of receipt by any Parent Company of any Cash proceeds from a capital contribution to, or the issuance of any Capital Stock of, any Parent Company (other than (i) pursuant to any employee stock or stock option compensation plan and (ii) issuances to or capital contributions from the Permitted Holders or management of any Parent Company, Holdings or its Subsidiaries), Company shall prepay the Loans and/or otherwise apply such Cash proceeds as set forth in Section 2.17(b) in an aggregate amount equal to 50% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal, investment banking and accountants' fees and expenses. 78 (d) Issuance of Debt. On the date of receipt by Holdings or any of its Subsidiaries of any Cash proceeds from the incurrence of any Indebtedness of Holdings or any of its Subsidiaries (other than with respect to any Indebtedness permitted to be incurred pursuant to Section 6.1 or incurred pursuant to the Intercompany Debt Documents), Company shall make an Offer to Prepay the Loans and/or otherwise apply such Cash proceeds as set forth in Section 2.17(b) in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal, investment banking and accountants' fees and expenses. (e) Consolidated Excess Cash Flow. In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with the Fiscal Year ending February 28, 2005), Company shall, no later than 90 days after the end of such Fiscal Year, prepay the Loans and/or otherwise apply such Cash proceeds as set forth in Section 2.17(b) in an aggregate amount equal to the excess of (x) the Applicable ECF Percentage of such Consolidated Excess Cash Flow less (y) any voluntary prepayments of Consolidated Total Debt during such Fiscal Year, excluding (A) any repayments of Revolving Loans or Swing Line Loans to the extent there is not an equivalent permanent reduction in the Revolving Commitments in connection with such repayments and (B) any repayment of Indebtedness to the extent made with the proceeds of capital contributions, issuances of Capital Stock, incurrences of Indebtedness or Asset Sales. "APPLICABLE ECF PERCENTAGE" means, with respect to any Fiscal Year, (i) 50% if the Leverage Ratio as of the end of such Fiscal Year as set forth in the Compliance Certificate delivered pursuant to Section 5.1(d) for such Fiscal year is equal to or less than 4.5x but not less than 3.0x, (ii) 0% if the Leverage Ratio as of the end of such Fiscal Year as set forth in the Compliance Certificate delivered pursuant to Section 5.1(d) for such Fiscal year is less than 3.0x and (iii) 75% if neither clause (i) or (ii) applies. (f) Revolving Loans, Swing Loans and Letters of Credit. In the event that the Total Utilization of Revolving Commitments exceeds the Revolving Commitment by 3.0% or more due solely to fluctuations in currency exchange rates or by any amount, if not due solely to fluctuations in currency exchange rates (in either case, including on any date on which the Canadian Dollar Equivalent of any amount denominated in U.S. Dollars is determined pursuant to Section 10.7), Company shall, within five Business Days of either an Authorized Officer of Company learning thereof or the request of Administrative Agent, from time to time first, prepay the Swing Line Loans, second, prepay the Revolving Loans, and third, replace outstanding Letters of Credit or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.5(n), in an aggregate amount sufficient to eliminate such excess. In the event that the Letter of Credit Usage exceeds the Letter of Credit Sublimit then in effect (including on any date on which the Canadian Dollar Equivalent of any amount denominated in U.S. Dollars is determined pursuant to Section 10.7), Company shall, without notice or demand, immediately replace outstanding Letters of Credit or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.5(n), in an aggregate amount sufficient to eliminate such excess. In the event that the outstanding principal amount of Swing Line Loans exceeds the Swing Line Loan Subcommitment then in effect (including on any date on which the Canadian Dollar Equivalent of any amount denominated in U.S. Dollars is determined pursuant to 79 Section 10.7), Swing Line Lender is authorized by Company, without notice or demand to Company, to deliver a notice pursuant to Section 2.4(d) to have Swing Line Loans repaid with the proceeds of Revolving Loans in accordance with Section 2.4(d) in an aggregate amount sufficient to eliminate such excess. (g) Prepayment Certificate. Concurrently with any Offer to Prepay or prepayment of the Loans and/or reduction of the Revolving Commitments pursuant to Sections 2.16(a) through 2.16(e), Company shall deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the amount of the applicable net proceeds or Consolidated Excess Cash Flow, as the case may be. In the event that Company shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Company shall promptly make an additional prepayment of the Loans and/or the Revolving Commitments shall be permanently reduced in an amount equal to such excess, and Company shall concurrently therewith deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the derivation of such excess. (h) Limitation on Mandatory Prepayments. Notwithstanding Sections 2.14, 2.16(c) and 2.16(e), the aggregate amount of all prepayments and repayments by Company with respect to the Tranche B Term Loans pursuant to Sections 2.14, 2.16(c) and 2.16(e) from the Closing Date to the fifth anniversary thereof shall not exceed 25% of the initial aggregate principal amount of the Tranche B Term Loans, except for payments required as a result of an acceleration of the Obligations pursuant to Section 8. On the Business Day following the fifth anniversary of the Closing Date, Company shall repay the Tranche B Term Loans in an aggregate principal amount equal to (i) the amount of repayments that would have been required to be made (but were not so made) in respect thereof under Sections 2.14, 2.16(c) and 2.16(e) but for the limitation expressed in the preceding sentence less (ii) all voluntary prepayments of Tranche B Term Loans, and such payments shall be applied in the manner specified in Section 2.17. For greater certainty and notwithstanding any other provision of this Agreement, the failure of Company to make any prepayment or repayment required by Sections 2.14, 2.16(c) or 2.16(e) solely as a consequence of the first sentence of this paragraph shall not constitute a Default. (i) Mandatory Offers to Prepay. When required by Section 2.16(a), (b) or (d), Company shall make an offer to prepay Borrowings made by Company in accordance with the terms of Section 2.16(g), which offer may be accepted or declined by the Lenders in accordance with Section 10.5(e) (an "OFFER TO PREPAY"). If any Offer to Prepay is accepted, all prepayments shall be made in accordance with Section 2.17. The parties hereto acknowledge that failure to make an Offer to Prepay as and when required hereunder, shall constitute an "event of default" within the meaning of Section 212(1)(b)(vii) of the Income Tax Act (Canada). 2.17. APPLICATION OF PREPAYMENTS/REDUCTIONS. (a) Application of Voluntary Prepayments by Type of Loans. Any prepayment of any Loan pursuant to Section 2.15(a) shall be applied as specified by Company in the applicable notice of prepayment; provided that such prepayments of a Term Loan shall be applied first, to the next scheduled Installment of such Term Loan and then, to the then remaining Installments of such Term Loan on a pro rata basis. In the event Company fails to 80 specify the Loans to which any such prepayment shall be applied, such prepayment shall be applied as follows: first, to repay outstanding Swing Line Loans to the full extent thereof, without reduction of Commitments; second, to repay outstanding Revolving Loans to the full extent thereof, without reduction of Commitments; third, to prepay the Tranche A Term Loans and the Tranche B Term Loans on a pro rata basis (in accordance with the respective outstanding principal amounts thereof) to the full extent thereof in accordance with the proviso set forth in the preceding sentence; and fourth, to replace outstanding Letters of Credit or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.5(n). (b) Application of Offers to Prepay/Mandatory Prepayments by Type of Loans. Any amount required to be paid pursuant to Sections 2.16(c) or 2.16(e) and any amount paid pursuant to an Offer to Prepay under Section 2.16(a), (b) or (d) shall be applied as follows: first, to prepay Term Loans on a pro rata basis (in accordance with the respective outstanding principal amounts thereof) and shall be further applied on a pro rata basis to the remaining scheduled Installments of principal of the Tranche A Term Loans and Tranche B Term Loans to the full extent thereof; second, to prepay the Swing Line Loans to the full extent thereof and to permanently reduce the Revolving Commitments by the amount of such prepayment; third, to prepay the Revolving Loans to the full extent thereof and to further permanently reduce the Revolving Commitments by the amount of such prepayment; fourth, to pay the then outstanding reimbursement obligations with respect to Letters of Credit and to further permanently reduce the Revolving Commitments by the amount of such prepayment; and fifth, to cash collateralize Letters of Credit pursuant to Section 2.5(n) and to further permanently reduce the Revolving Commitments by the amount of such cash collateralization. (c) Waiver of Offer to Prepay. Anything contained herein to the contrary notwithstanding, so long as any Tranche A Term Loans are outstanding, in the event Company is required to make an Offer to Prepay pursuant to Section 2.16(a), 2.16(b) or 2.16(d) the Tranche B Term Loans, not less than three Business Days prior to the date (the "OFFER TO PREPAY DATE") on which Company is required to make such Offer to Prepay, Company shall notify Administrative Agent of the amount subject to such Offer to Prepay (the "OFFER TO PREPAY AMOUNT"), and Administrative Agent will promptly thereafter notify each Lender holding an outstanding Tranche B Term Loan of such Lender's Pro Rata Share of such Offer to Prepay 81 Amount and such Lender's option to refuse such Offer to Prepay Amount, subject to Section 10.5(e). Each such Lender may exercise such option by giving written notice to Company and Administrative Agent of its election to do so on or before the first Business Day prior to the Offer to Prepay Date (it being understood that any Lender which does not notify Company and Administrative Agent of its election to exercise such option on or before the first Business Day prior to the Offer to Prepay Date shall be deemed to have elected, as of such date, not to exercise such option). On the Offer to Prepay Date, Company shall pay to Administrative Agent the Offer to Prepay Amount, which amount shall be applied (i) in an amount equal to that portion of the Offer to Prepay Amount payable to those Lenders that have elected not to exercise such option, to prepay the Tranche B Term Loans of such Lenders (which prepayment shall be applied to the scheduled Installments of principal of the Tranche B Term Loans in accordance with Section 2.17(b)) and (ii) in an amount equal to that portion of the Offer to Prepay Amount otherwise payable to those Lenders that have elected to exercise such option, to prepay the Tranche A Term Loans (which prepayment shall be applied to the scheduled installments of principal of the Tranche A Term Loans, and if any amounts remain after such prepayment of the Tranche A Term Loans in full to prepay, cash collateralize or reduce other amounts, in accordance with Section 2.17(b) (it being understood that after the Tranche A Term Loans are prepaid in full the Lenders holding Tranche B Term Loans will have no refusal rights pursuant to this Section 2.17(c))). (d) Application of Prepayments of Loans to Base Rate Loans and Eurodollar Rate Loans. Considering each Class of Loans being prepaid separately, any prepayment thereof with respect to U.S. Borrowings shall be applied first to Base Rate Loans to the full extent thereof before application to Eurodollar Rate Loans, in each case in a manner which minimizes the amount of any payments required to be made by Company pursuant to Section 2.20(c). (e) Application of Prepayments to Prime Rate Loans and Bankers' Acceptances. Considering each Class of Loans being prepaid separately, any prepayment thereof with respect to Canadian Borrowings shall be applied first to Prime Rate Loans, in a manner which minimizes the amount of any payments required to be made by Company pursuant to Section 2.20(c), to the full extent thereof before application to Canadian Eurodollar Rate Loans or collateralization of Bankers' Acceptances in accordance with Section 2.3(l), on a pro rata basis between Canadian Eurodollar Rate Loans and Bankers' Acceptances. 2.18. GENERAL PROVISIONS REGARDING PAYMENTS. (a) All payments by Company of principal, interest, fees and other Obligations shall, to the extent not explicitly stated otherwise herein, be made in Canadian Dollars, with respect to Canadian Borrowings, and U.S. Dollars, with respect to U.S. Borrowings, in same day funds, without defense, setoff or counterclaim, free of any restriction or condition, and delivered to Administrative Agent (or Swing Line Lender with respect to interest on the Swing Line Loans) not later than 12:00 noon (Toronto time) on the date due at Administrative Agent's Principal Office (or Swing Line Lender's Principal Office with respect to interest on the Swing Line Loans) for the account of Lenders (or Swing Line Lender with respect to interest on the Swing Line Loans); funds received by Administrative Agent (or Swing Line Lender with respect to interest on the Swing Line Loans) after that time on such due date shall be deemed to have been paid by Company on the next succeeding Business Day. 82 (b) All payments in respect of the principal amount of any Loan (other than voluntary prepayments of Swing Line Loans and Revolving Loans) shall be accompanied by payment of accrued interest on the principal amount being repaid or prepaid. (c) Administrative Agent shall promptly distribute to each Lender at such address as such Lender shall indicate in writing, such Lender's applicable Pro Rata Share of all payments and prepayments of principal and interest due hereunder, together with all other amounts due thereto, including, without limitation, all fees payable with respect thereto, to the extent received by Administrative Agent. (d) Notwithstanding the foregoing provisions hereof, if any Conversion/Continuation Notice is withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate Loans or Prime Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans or Canadian Eurodollar Rate Loans, Administrative Agent shall give effect thereto in apportioning payments received thereafter. (e) Subject to the provisos set forth in the definition of "Interest Period", whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder or of the Revolving Commitment fees hereunder. (f) Company hereby authorizes Administrative Agent to charge Company's loan accounts with Administrative Agent in order to cause timely payment to be made to Administrative Agent of all principal, interest, fees and expenses due hereunder (subject to sufficient funds being available in its loan accounts for that purpose). (g) Administrative Agent shall deem any payment by or on behalf of Company hereunder that is not made in same day funds prior to 12:00 noon (Toronto time) to be a non-conforming payment. Any such payment shall not be deemed to have been received by Administrative Agent until the earlier of (i) the time such funds become available funds, and (ii) the applicable next Business Day. Administrative Agent shall give prompt telephonic notice to Company and each applicable Lender (confirmed in writing) if any payment is non-conforming. Any non-conforming payment may constitute or become a Default or Event of Default in accordance with the terms of Section 8.1(a). Interest shall continue to accrue on any principal as to which a non-conforming payment is made until such funds are deemed received in accordance with the second sentence of this Section 2.18(g) at the rate determined pursuant to Section 2.12 from the date such amount was due and payable until the date such amount is paid in full. (h) If an Event of Default shall have occurred and not otherwise been waived, and the maturity of the Obligations shall have been accelerated pursuant to Section 8.1, all payments or proceeds received by the Agents hereunder in respect of any of the Obligations, shall be applied in accordance with the application arrangements described in Section 2.27. 2.19. RATABLE SHARING. Lenders hereby agree among themselves that, except as otherwise provided in the Collateral Documents with respect to amounts realized from the exercise of rights with respect to Liens on the Collateral, if any of them shall, whether by 83 voluntary payment (other than a voluntary prepayment of Loans made and applied in accordance with the terms hereof), through the exercise of any right of set-off or banker's lien, by counterclaim or cross action or by the enforcement of any right under the Credit Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Laws, receive payment or reduction of a proportion of the aggregate amount of principal, interest, amounts payable in respect of Letters of Credit, fees and other amounts then due and owing to such Lender hereunder or under the other Credit Documents (collectively, the "AGGREGATE AMOUNTS DUE" to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (a) notify Administrative Agent and each other Lender of the receipt of such payment and (b) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided, if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of any Credit Party or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. Each Credit Party expressly consents to the foregoing arrangement and agrees that any holder of a participation so purchased may exercise any and all rights of banker's lien, set-off or counterclaim with respect to any and all monies owing by such Credit Party to that holder with respect thereto to the same extent as if that holder were owed the amount of the participation held by that holder. 2.20. MAKING OR MAINTAINING EURODOLLAR RATE LOANS. (a) Inability to Determine Applicable Interest Rate. In the event that Administrative Agent shall have determined (which determination shall be final and conclusive and binding upon all parties hereto), on any Interest Rate Determination Date with respect to any Eurodollar Rate Loans or Canadian Eurodollar Rate Loans, that by reason of circumstances affecting the London interbank market adequate and fair means do not exist for ascertaining the interest rate applicable to such Loans on the basis provided for in the definition of Adjusted Eurodollar Rate or Adjusted Canadian Eurodollar Rate, as applicable, Administrative Agent shall on such date give notice (by telefacsimile or by telephone confirmed in writing) to Company and each Lender of such determination, whereupon (i) no Loans may be made as, or converted to, Eurodollar Rate Loans or Canadian Eurodollar Rate Loans, as applicable, until such time as Administrative Agent notifies Company and Lenders that the circumstances giving rise to such notice no longer exist (which Administrative Agent agrees to do promptly once it has knowledge that such condition no longer exists), and (ii) any Funding Notice or Conversion/Continuation Notice given by Company with respect to the Loans in respect of which such determination was made shall be deemed to be rescinded by Company. (b) Illegality or Impracticability of Eurodollar Rate Loans. In the event that on any date any Lender shall have determined (which determination shall be final and conclusive and binding upon all parties hereto but shall be made only after consultation with Company and Administrative Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans 84 or Canadian Eurodollar Rate Loans (i) has become unlawful as a result of compliance by such Lender in good faith with any law, treaty, governmental rule, regulation, guideline or order (or would conflict with any such treaty, governmental rule, regulation, guideline or order not having the force of law even though the failure to comply therewith would not be unlawful), or (ii) has become impracticable, as a result of contingencies occurring after the date hereof which materially and adversely affect the London interbank market, then, and in any such event, such Lender shall be an "AFFECTED LENDER" and it shall on that day give notice (by telefacsimile or by telephone confirmed in writing) to Company and Administrative Agent of such determination (which notice Administrative Agent shall promptly transmit to each other Lender). Thereafter (1) the obligation of the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate Loans or Canadian Eurodollar Rate Loans, as applicable, shall be suspended until such notice shall be withdrawn by the Affected Lender, (2) to the extent such determination by the Affected Lender relates to a Eurodollar Rate Loan or Canadian Eurodollar Rate Loan, as applicable, then being requested by Company pursuant to a Funding Notice or a Conversion/Continuation Notice, the Affected Lender shall make such Loan as (or continue such Loan as or convert such Loan to, as the case may be) a Base Rate Loan, (3) the Affected Lender's obligation to maintain its outstanding Eurodollar Rate Loans or Canadian Eurodollar Rate Loans, as applicable (the "AFFECTED LOANS"), shall be terminated at the earlier to occur of the expiration of the Interest Period then in effect with respect to the Affected Loans or when required by law, and (4) the Affected Loans shall automatically convert into Base Rate Loans on the date of such termination. Notwithstanding the foregoing, to the extent a determination by an Affected Lender as described above relates to a Eurodollar Rate Loan or Canadian Eurodollar Rate Loan then being requested by Company pursuant to a Funding Notice or a Conversion/Continuation Notice, Company shall have the option, subject to the provisions of Section 2.20(c), to rescind such Funding Notice or Conversion/Continuation Notice as to all Lenders by giving notice (by telefacsimile or by telephone confirmed in writing) to Administrative Agent of such rescission on the date on which the Affected Lender gives notice of its determination as described above (which notice of rescission Administrative Agent shall promptly transmit to each other Lender). Except as provided in the immediately preceding sentence, nothing in this Section 2.20(b) shall affect the obligation of any Lender other than an Affected Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans or Canadian Eurodollar Rate Loans in accordance with the terms hereof. (c) Compensation for Breakage or Non-Commencement of Interest Periods. Company shall compensate each Lender, upon written request by such Lender (which request shall set forth the basis for requesting such amounts), for all reasonable losses, expenses and liabilities (including any interest paid by such Lender to Lenders of funds borrowed by it to make or carry its Eurodollar Rate Loans or Canadian Eurodollar Rate Loans and any loss, expense or liability sustained by such Lender in connection with the liquidation or re-employment of such funds but excluding loss of anticipated profits) which such Lender may sustain: (i) if for any reason (other than a default by such Lender) a borrowing of any Eurodollar Rate Loan or Canadian Eurodollar Rate Loan does not occur on a date specified therefor in a Funding Notice or a telephonic request for borrowing, or a conversion to or continuation of any Eurodollar Rate Loan or Canadian Eurodollar Rate Loan does not occur on a date specified therefor in a Conversion/Continuation Notice or a telephonic request for conversion or continuation; (ii) if any prepayment or other principal payment of, or any conversion of, any of its Eurodollar Rate Loans or Canadian Eurodollar Rate Loans occurs on a date prior to the last day of an Interest 85 Period applicable to that Loan; or (iii) if any prepayment of any of its Eurodollar Rate Loans or Canadian Eurodollar Rate Loans is not made on any date specified in a notice of prepayment given by Company. (d) [Intentionally Omitted] (e) Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of all amounts payable to a Lender under this Section 2.20 and under Section 2.21 shall be made as though such Lender had actually funded each of its relevant Eurodollar Rate Loans or Canadian Eurodollar Rate Loans, as applicable, through the purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant to clause (i) of the definition of Adjusted Eurodollar Rate or Adjusted Canadian Eurodollar Rate, as applicable, in an amount equal to the amount of such Eurodollar Rate Loan or Canadian Eurodollar Rate Loan and having a maturity comparable to the relevant Interest Period and through the transfer of such Eurodollar deposit from an offshore office of such Lender to a domestic office of such Lender in the United States of America; provided, however, each Lender may fund each of its Eurodollar Rate Loans or Canadian Eurodollar Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this Section 2.20 and under Section 2.21. 2.21. INCREASED COSTS; CAPITAL ADEQUACY. (a) Compensation for Increased Costs and Taxes. In the event that any Lender (which term shall include Issuing Bank and each Issuing Lender for purposes of this Section 2.21(a)) shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the date hereof, or compliance by such Lender with any guideline, request or directive issued or made after the date hereof by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) subjects such Lender (or its applicable lending office) to any additional Tax (other than any Excluded Tax) with respect to this Agreement or any of the other Credit Documents or any of its obligations hereunder or thereunder or any payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, U.S. Federal Deposit Insurance Corporation insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or other requirements with respect to Eurodollar Rate Loans or Canadian Eurodollar Rate Loans that are reflected in the definition of Adjusted Eurodollar Rate or Adjusted Canadian Eurodollar Rate); or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder or the London interbank market; and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans hereunder or to reduce any amount received or receivable by such Lender 86 (or its applicable lending office) with respect thereto; then, in any such case, Company shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder; provided, no payment shall be made under this Section 2.21 in respect of any Tax to the extent that a gross-up payment or indemnification payment in respect of such Tax is payable under Section 2.22 or to the extent specifically excluded from a gross-up or indemnification payment pursuant to clause (iv) or (v) of the definition of Eligible Assignees or pursuant to Section 2.22(e) or (f). Such Lender shall deliver to Company (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this Section 2.21(a), which statement shall be conclusive and binding upon all parties hereto absent manifest error. (b) Capital Adequacy Adjustment. In the event that any Lender (which term shall include Issuing Bank and each Issuing Lender for purposes of this Section 2.21(b)) shall have determined that a Change in Law has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender's Loans or Revolving Commitments or Letters of Credit, or participations therein or other obligations hereunder with respect to the Loans or the Letters of Credit to a level below that which such Lender or such controlling corporation could have achieved but for such Change in Law (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy), then from time to time, within five Business Days after receipt by Company from such Lender of the statement referred to in the next sentence, Company shall pay to such Lender such additional amount or amounts as will compensate such Lender or such controlling corporation on an after-tax basis for such reduction. Such Lender shall deliver to Company (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to Lender under this Section 2.21(b), which statement shall be conclusive and binding upon all parties hereto absent manifest error. (c) Survival. The provisions of this Section 2.21 shall survive the payment of the Loans, the cancellation or expiration of the Letters of Credit and the reimbursement of any amounts drawn thereunder, and the termination hereof. 2.22. TAXES; WITHHOLDING, ETC. (a) Payments to Be Free and Clear. Except as otherwise provided in this Section and in clause (iv) or (v) of the definition of Eligible Assignee, all sums payable by any Credit Party hereunder and under the other Credit Documents shall (except to the extent required by law) be paid free and clear of, and without any deduction or withholding on account of, any Tax (other than an Excluded Tax). (b) Withholding of Taxes. Except as otherwise provided in this Section or in clause (iv) or (v) of the definition of Eligible Assignee, if any Credit Party or any other Person is required by law to make any deduction or withholding on account of any Tax (other than an Excluded Tax) from any sum paid or payable by any Credit Party to Administrative Agent or any 87 Lender under any of the Credit Documents: (i) such Credit Party shall notify Administrative Agent of any such requirement or any change in any such requirement as soon as such Credit Party becomes aware of it; (ii) such Credit Party shall withhold or deduct the full amount of any such Tax and shall pay any such Tax to the relevant Governmental Authority before the date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed on any Credit Party) for its own account or (if that liability is imposed on Administrative Agent or such Lender, as the case may be) on behalf of and in the name of Administrative Agent or such Lender; (iii) the sum payable by such Credit Party in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment (including any deduction, withholding or payment on the additional amounts), Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and (iv) within thirty days after paying any sum from which it is required by law to make any deduction or withholding, and within thirty days after the due date of payment of any Tax which it is required by clause (ii) above to pay, Company shall deliver to Administrative Agent an official receipt or other evidence satisfactory to the other affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant Governmental Authority. Except as otherwise provided in this Section or clause (iv) or (v) of the definition of Eligible Assignee, if any Tax (other than an Excluded Tax) in connection with the transactions contemplated by this Agreement is directly asserted against Administrative Agent or any Lender, Company will indemnify and hold harmless Administrative Agent or Lender (as the case may be) from each such Tax (and all reasonable expenses related thereto) whether or not each such Tax was correctly or legally asserted. (c) Other Taxes. Company shall timely pay to the relevant Governmental Authority and indemnify and hold harmless Administrative Agent and each Lender from any and all Other Taxes (and all reasonable expenses related thereto) whether or not such Other Taxes were correctly or legally asserted. (d) Evidence of Exemption from U.S. Withholding Tax. To the extent that it is legally entitled to do so, each Lender that is not a United States Person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for U.S. federal income tax purposes (a "NON-U.S. LENDER") shall deliver to Administrative Agent for transmission to Company, on or prior to the Closing Date (in the case of each Lender listed on the signature pages hereof on the Closing Date) or on or prior to the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), on or prior to the date on which it designates a new lending office and at such other times as may be necessary in the determination of Company or Administrative Agent (each in the reasonable exercise of its discretion), (i) two original copies of Internal Revenue Service Form W-8BEN or W-8ECI (or any successor forms), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by Company to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Credit Documents, or (ii) if such Lender is not a "bank" or other Person described in Section 881(c)(3) of the Internal Revenue Code and cannot deliver either Internal Revenue Service Form W-8BEN or W-8ECI pursuant to clause (i) above, a Certificate re Non-Bank Status in the form of Exhibit F, properly completed and duly executed by such 88 Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by Company to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of interest payable under any of the Credit Documents. Each Lender required to deliver any forms, certificates or other evidence with respect to United States federal income tax withholding matters pursuant to this Section 2.22(d) hereby agrees, from time to time after the initial delivery by such Lender of such forms, certificates or other evidence, whenever a lapse in time or change in circumstances renders such forms, certificates or other evidence obsolete or inaccurate in any material respect, that such Lender, to the extent it is legally entitled to do so, shall promptly deliver to Administrative Agent for transmission to Company two new original copies of Internal Revenue Service Form W-8BEN or W-8ECI or a Certificate re Non-Bank Status, as the case may be, properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and reasonably requested by Company to confirm or establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to payments to such Lender under the Credit Documents, or notify Administrative Agent and Company of its inability to deliver any such forms, certificates or other evidence. (e) Notwithstanding anything to the contrary in Section 2.21 or this Section 2.22, no Lender with respect to payments in respect of the Tranche B Term Loans or the New Term Loans shall be entitled to any gross-up payments or indemnification payments in respect of any United States federal withholding taxes imposed under the law as in effect on the date such Lender becomes a Lender or designates a new lending office except (A) in the case of any Lender that is not an Original Lender under this Agreement, to the extent that such gross-up or indemnification payments do not exceed the greater of (i) the gross-up or indemnification payments to which such Lender's assignor (the "CURRENT ASSIGNOR") was entitled immediately prior to such assignment or (ii) the gross-up or indemnification payments to which the current assignor's assignor would have been entitled if the current assignor had made an assignment back to such prior assignor, (B) in the case of a Lender that designates a new lending office, to the extent such gross-up or indemnification payments do not exceed the gross-up or indemnification payments to which it was entitled immediately prior to such designation and (C) any Person that became a Lender during the continuance of an Event of Default pursuant to clause (vi) of the definition of Eligible Assignees. (f) Notwithstanding anything to the contrary in this Section 2.22, no Lender shall be entitled to any gross-up payments or indemnification payments for Canadian or United States federal withholding taxes with respect to payments in respect of the Tranche A Term Loans and the Revolving Loans to the extent such obligation to make such gross-up or indemnification payments arises solely as a result of a voluntary change in such Lender's tax status occurring after the date such Lender becomes a Lender. (g) For purposes of this Section 2.22, the term "Lender" shall include Issuing Bank and each Issuing Lender in its respective capacity as such. (h) If a Lender or Administrative Agent determines, in its reasonable discretion, that it has received a refund of any Taxes or Other Taxes (other than Excluded Taxes) with respect to which Company has paid additional amounts under this Section 2.22 it shall reimburse such portion of such refund to Company (including such portion of interest paid by the 89 relevant Governmental Authority with respect to such refund) that the Lender or Administrative Agent, as the case may be, determines in good faith will leave it, after such reimbursement, in no better or worse position than it would have been in if the payment by Company had not been required (taking into account, without limitation, any out-of-pocket expenses of such Lender or Administrative Agent and any Taxes on such refund); provided that Company, upon the request of such Lender or Administrative Agent, agrees to repay as soon as reasonably practicable such reimbursement (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to such Lender or Administrative Agent in the event such Lender or Administrative Agent is required to repay all or any portion of such refund to such Governmental Authority. This Section shall not be construed to require any Lender or Administrative Agent to make available its Tax returns (or any other information relating to its Taxes which it deems confidential) to Company or any other person. (i) The provisions of this Section 2.22 shall survive the payment of the Loans, the cancellation or expiration of the Letters of Credit and the reimbursement of any amounts drawn thereunder, and the termination hereof. 2.23. OBLIGATION TO MITIGATE. Each Lender (which term shall include Issuing Bank and each Issuing Lender for purposes of this Section 2.23) agrees that, as promptly as practicable after the officer of such Lender responsible for administering its Loans or Letters of Credit, as the case may be, becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender to become an Affected Lender or that would entitle such Lender to receive payments under Section 2.20, 2.21 or 2.22, it will, to the extent not inconsistent with the internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts to (a) make, issue, fund or maintain its Credit Extensions, including any Affected Loans, through another office of such Lender, or (b) take such other measures as such Lender may deem reasonable, if as a result thereof the circumstances which would cause such Lender to be an Affected Lender would cease to exist or the additional amounts which would otherwise be required to be paid to such Lender pursuant to Section 2.20, 2.21 or 2.22 would be materially reduced and if, as determined by such Lender in its sole discretion, the making, issuing, funding or maintaining of such Revolving Commitments, Loans or Letters of Credit through such other office or in accordance with such other measures, as the case may be, would not otherwise adversely affect such Revolving Commitments, Loans or Letters of Credit or the interests of such Lender; provided such Lender will not be obligated to take any action described in clause (a) or (b) above unless Company agrees to pay all incremental expenses incurred by such Lender. A certificate as to the amount of any such expenses payable by Company pursuant to this Section 2.23 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender to Company (with a copy to Administrative Agent) shall be conclusive absent manifest error. No Lender shall be entitled to compensation under Section 2.20, 2.21 or 2.22 for any costs incurred or reductions suffered with respect to any date that it has such costs or reductions unless it shall have notified Company that it will demand compensation from Company for such costs or reductions not more than 120 days after the later of (i) such date and (ii) the date on which it shall have become aware of such costs or reductions; provided that if any event has retroactive effect beyond such 120 days, Company shall compensate such Lender for such retroactive effect period. Notwithstanding the foregoing, it is agreed that the failure to give the notice referred to in the preceding sentence within the time period described therein shall 90 only reduce a Lender's entitlement to compensation under Section 2.22 to the extent Company was actually prejudiced by such failure to give such timely notice. 2.24. DEFAULTING LENDERS. Anything contained herein to the contrary notwithstanding, in the event that any Lender defaults (a "DEFAULTING LENDER") in its obligation to fund (a "FUNDING DEFAULT") any Revolving Loan or its portion of any unreimbursed payment under Section 2.4(e) or Section 2.5(i) (in each case, a "DEFAULTED LOAN"), then (a) during any Default Period with respect to such Defaulting Lender, such Defaulting Lender shall be deemed not to be a "Lender" for purposes of voting on any matters (including the granting of any consents or waivers) with respect to any of the Credit Documents or making elections under Section 2.17(c); (b) to the extent permitted by applicable law, until such time as the Default Excess with respect to such Defaulting Lender shall have been reduced to zero, (i) any voluntary prepayment of the Revolving Loans shall, if Company so directs at the time of making such voluntary prepayment, be applied to the Revolving Loans of other Lenders as if such Defaulting Lender had no Revolving Loans outstanding and the Revolving Exposure of such Defaulting Lender were zero, and (ii) any mandatory prepayment of the Revolving Loans shall, if Company so directs at the time of making such mandatory prepayment, be applied to the Revolving Loans of other Lenders (but not to the Revolving Loans of such Defaulting Lender) as if such Defaulting Lender had funded all Defaulted Loans of such Defaulting Lender, it being understood and agreed that Company shall be entitled to retain any portion of any mandatory prepayment of the Revolving Loans that is not paid to such Defaulting Lender solely as a result of the operation of the provisions of this clause (b); (c) such Defaulting Lender's Revolving Commitment and outstanding Revolving Loans and such Defaulting Lender's Pro Rata Share of the Letter of Credit Usage shall be excluded for purposes of calculating the Revolving Commitment fee payable to Lenders in respect of any day during any Default Period with respect to such Defaulting Lender, and such Defaulting Lender shall not be entitled to receive any Revolving Commitment fee pursuant to Section 2.13(a) with respect to such Defaulting Lender's Revolving Commitment in respect of any Default Period with respect to such Defaulting Lender; and (d) the Total Utilization of Revolving Commitments as at any date of determination shall be calculated as if such Defaulting Lender had funded all Defaulted Loans of such Defaulting Lender. No Revolving Commitment of any Lender shall be increased or otherwise affected, and, except as otherwise expressly provided in this Section 2.24, performance by Company of its obligations hereunder and the other Credit Documents shall not be excused or otherwise modified as a result of any Funding Default or the operation of this Section 2.24. The rights and remedies against a Defaulting Lender under this Section 2.24 are in addition to other rights and remedies which Company may have against such Defaulting Lender with respect to any Funding Default and which Administrative Agent or any Lender may have against such Defaulting Lender with respect to any Funding Default. 2.25. REMOVAL OR REPLACEMENT OF A LENDER. Anything contained herein to the contrary notwithstanding, in the event that: (a) (i) any Lender (an "INCREASED-COST LENDER") shall give notice to Company that such Lender is an Affected Lender or that such Lender is entitled to receive payments under Section 2.20, 2.21 or 2.22, (ii) the circumstances which have caused such Lender to be an Affected Lender or which entitle such Lender to receive such payments shall remain in effect, and (iii) such Lender shall fail to withdraw such notice within five Business Days after Company's request for such withdrawal; or (b) (i) any Lender shall become a Defaulting Lender, (ii) the Default Period for such Defaulting Lender shall remain in 91 effect, and (iii) such Defaulting Lender shall fail to cure the default as a result of which it has become a Defaulting Lender within five Business Days after Company's request that it cure such default; or (c) in connection with any proposed amendment, modification, termination, waiver or consent with respect to any of the provisions hereof as contemplated by Section 10.5(b), the consent of Requisite Lenders shall have been obtained but the consent of one or more of such other Lenders (each, a "NON-CONSENTING LENDER") whose consent is required shall not have been obtained; then, with respect to each such Increased-Cost Lender, Defaulting Lender or Non-Consenting Lender (the "TERMINATED LENDER"), Company may, by giving written notice to Administrative Agent and any Terminated Lender of its election to do so, elect to cause such Terminated Lender (and such Terminated Lender hereby irrevocably agrees) to assign its outstanding Loans and its Revolving Commitments, if any, in full to one or more Eligible Assignees (each, a "REPLACEMENT LENDER") in accordance with the provisions of Section 10.6; provided, (1) on the date of such assignment, the Replacement Lender shall pay to Terminated Lender an amount equal to the sum of (A) an amount equal to the principal of, and all accrued interest on, all outstanding Loans of the Terminated Lender, (B) an amount equal to all unreimbursed drawings that have been funded by such Terminated Lender, together with all then unpaid interest with respect thereto at such time and (C) an amount equal to all accrued, but theretofore unpaid fees owing to such Terminated Lender pursuant to Section 2.13; (2) on the date of such assignment, Company shall pay any amounts payable to such Terminated Lender pursuant to Section 2.20(c), 2.21 or 2.22 or otherwise as if it were a prepayment and (3) in the event such Terminated Lender is a Non-Consenting Lender, each Replacement Lender shall consent, at the time of such assignment, to each matter in respect of which such Terminated Lender was a Non-Consenting Lender; provided Company may not make such election with respect to any Terminated Lender that is also an Issuing Lender unless, prior to the effectiveness of such election, Company shall have caused each outstanding Letter of Credit issued by such Issuing Lender to be cancelled or collateralized in accordance with Section 2.5(n). Upon the prepayment of all amounts owing to any Terminated Lender and the termination of such Terminated Lender's Revolving Commitments, if any, such Terminated Lender shall no longer constitute a "Lender" for purposes hereof; provided any rights of such Terminated Lender to indemnification hereunder that by their terms survive termination of this Agreement shall survive as to such Terminated Lender. Notwithstanding the foregoing, Company shall not be able to cause any Non-Consenting Lender to assign its outstanding Loans and its Revolving Commitments pursuant to this paragraph unless it causes all Non-Consenting Lenders to do so. 2.26. INCREMENTAL FACILITIES. Company may by written notice to Syndication Agent and Administrative Agent elect to request the establishment of one or more new term loan commitments (the "NEW TERM LOAN COMMITMENTS"), by an amount (x) not in excess of U.S.$50.0 million in the aggregate and (y) not less than U.S.$10.0 million individually (or such lesser amount which shall be approved by Administrative Agent and Syndication Agent or such lesser amount that shall constitute the difference between U.S.$50.0 million and all such New Term Loan Commitments obtained prior to such date), and integral multiples of U.S.$5.0 million in excess of that amount. Each such notice shall specify (A) the date (each, an "INCREASED AMOUNT DATE") on which Company proposes that the New Term Loan Commitments shall be effective, which shall be a date not less than 10 Business Days after the date on which such notice is delivered to Syndication Agent and Administrative Agent and (B) the identity of each Lender or other Person that is an Eligible Assignee (each, a "NEW TERM LOAN LENDER") to whom Company proposes any portion of such New Term Loan Commitments be allocated and 92 the amounts of such allocations; provided that any Lender approached to provide all or a portion of the New Term Loan Commitments may elect or decline, in its sole discretion, to provide a New Term Loan Commitment. Such New Term Loan Commitments shall become effective as of such Increased Amount Date; provided that (1) no Default or Event of Default shall exist on such Increased Amount Date immediately before or after giving effect to such New Term Loan Commitments; (2) both before and after giving effect to the making of any Series of New Term Loans, the condition set forth in Section 3.2(a)(iii) shall be satisfied as of such Increased Amount Date; (3) Holdings and its Subsidiaries shall be in pro forma compliance with each of the covenants set forth in Section 6.8 as of the last day of the most recently ended Fiscal Quarter after giving effect to such New Term Loan Commitments; (4) the New Term Loan Commitments shall be effected pursuant to one or more Joinder Agreements executed and delivered by Company, Syndication Agent and Administrative Agent, and each of which shall be recorded in the Register and shall be subject to the requirements set forth in Section 2.22(d); and (5) Company shall deliver or cause to be delivered any legal opinions or other documents reasonably requested by Administrative Agent or Syndication Agent in connection with any such transaction. Any New Term Loans made on an Increased Amount Date shall be designated, a separate series (a "SERIES") of New Term Loans for all purposes of this Agreement. On any Increased Amount Date on which any New Term Loan Commitments of any Series are effective, subject to the satisfaction of the foregoing terms and conditions, (i) each New Term Loan Lender of any Series shall make a Loan to Company (a "NEW TERM LOAN") in an amount equal to its New Term Loan Commitment of such Series, and (ii) each New Term Loan Lender of any Series shall become a Lender hereunder with respect to the New Term Loan Commitment of such Series and the New Term Loans of such Series made pursuant thereto. Administrative Agent shall notify Lenders promptly upon receipt of Company's notice of each Increased Amount Date and in respect thereof the Series of New Term Loan Commitments and the New Term Loan Lenders of such Series. The terms and provisions of the New Term Loans and New Term Loan Commitments of any Series shall be, except as otherwise set forth herein or in the Joinder Agreement, identical to the Tranche B Term Loans. In any event (i) the weighted average life to maturity of all New Term Loans of any Series shall be no shorter than the weighted average life to maturity of the Revolving Loans, the Tranche A Term Loans and the Tranche B Term Loans, (ii) the applicable New Term Loan Maturity Date of each Series shall be no earlier than the final maturity of the Revolving Loans, the Tranche A Term Loans and the Tranche B Term Loans, (iii) the rate of interest applicable to the New Term Loans of each Series shall be determined by Company and the applicable new Lenders and shall be set forth in each applicable Joinder Agreement; provided, however, that the Applicable Margins applicable to the New Term Loans shall not be more than 50 basis points greater than the comparable Applicable Margins applicable to the Tranche B Term Loans, and the Applicable Margins applicable to the Tranche B Term Loans shall be increased to the extent necessary to achieve the foregoing, and (iv) the aggregate amount of prepayments and repayments of any Series of New Term Loans during the first five years after the borrowing of any such Series shall be limited in the same manner that prepayments and repayments of Tranche B Term Loans are limited under Section 2.16(h). Each Joinder Agreement may, without the consent of any other Lenders, effect such amendments to this 93 Agreement and the other Credit Documents as may be necessary or appropriate, in the opinion of the Syndication Agent and Administrative Agent, to effect the provision of this Section 2.26. 2.27. APPLICATION OF FUNDS. The proceeds received by Collateral Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral pursuant to the exercise by Collateral Agent of its remedies, and any other funds realized by Administrative Agent or Collateral Agent during the continuance of an Event of Default, shall be applied, subject to applicable laws, in full or in part, together with any other sums then held by Collateral Agent pursuant to this Agreement, promptly by Collateral Agent as follows: (a) First, to the payment of all reasonable costs and expenses, fees, commissions and taxes of such sale, collection or other realization including compensation to the Agents and their agents and counsel, and all expenses, liabilities and advances made or incurred by the Agents in connection therewith and all amounts for which the Agents are entitled to indemnification pursuant to the provisions of any Credit Document, together with interest on each such amount at the highest rate then in effect under this Agreement from and after the date such amount is due, owing or unpaid until paid in full; (b) Second, to the payment of all other reasonable costs and expenses of such sale, collection or other realization including compensation to the other Secured Parties and their agents and counsel and all costs, liabilities and advances made or incurred by the other Secured Parties in connection therewith, together with interest on each such amount at the highest rate then in effect under this Agreement from and after the date such amount is due, owing or unpaid until paid in full; (c) Third, without duplication of amounts applied pursuant to clauses (a) and (b) above, to the payment in full in cash, pro rata, of interest and other amounts constituting Obligations (other than principal and reimbursement obligations in respect of Letters of Credit) in each case equally and ratably in accordance with the respective amounts thereof then due and owing; (d) Fourth, to the payment in full in cash, pro rata, of principal amount of the Obligations (including reimbursement obligations in respect of Letters of Credit); and (e) Fifth, the balance, if any, to the person lawfully entitled thereto (including the applicable Credit Party or its successors or assigns) or as a court of competent jurisdiction may direct. In the event that any such proceeds are insufficient to pay in full the items described in clauses (a) through (e) of this Section 2.27, the Credit Parties shall remain liable, jointly and severally, for any deficiency. SECTION 3. CONDITIONS PRECEDENT 3.1. CLOSING DATE. The obligation of any Lender, the Issuing Bank or any Issuing Lender to make a Credit Extension on the Closing Date is subject to the satisfaction or waiver of the following conditions on or before the Closing Date: 94 (a) Credit Documents. Administrative Agent shall have received each Credit Document originally executed and delivered by each applicable Credit Party for itself, the Issuing Bank and each Lender. (b) Organizational Documents; Incumbency. Administrative Agent shall have received (i) each Organizational Document executed and delivered by each Credit Party, as applicable, and, to the extent applicable, certified as of a recent date by the appropriate governmental official, each dated the Closing Date or a recent date prior thereto; (ii) signature and incumbency certificates of the officers of each Credit Party executing the Credit Documents to which it is a party; (iii) resolutions of the Board of Directors of each Credit Party approving and authorizing the execution, delivery and performance of this Agreement and the other Credit Documents and the Related Agreements to which it is a party, certified as of the Closing Date by its secretary or an assistant secretary as being in full force and effect without modification or amendment; and (iv) subject to such exceptions as are reasonably acceptable to Administrative Agent, a good standing certificate (or the equivalent) from the applicable Governmental Authority of each Credit Party's jurisdiction of incorporation, organization or formation and in each jurisdiction in which it is qualified as a foreign corporation or other entity to do business, each dated a recent date prior to the Closing Date. (c) Organizational and Capital Structure. The organizational structure and capital structure of MAAX Holdings and its Subsidiaries, after giving effect to the Transactions, to the extent described or provided to the Agents prior to the date of the Commitment Letter, shall not be changed or amended in any material respect from those described or provided to the Agents prior to the date of the Commitment Letter, without the consent of the Agents (which consent shall not be unreasonably withheld), and otherwise shall be in form and substance reasonably satisfactory to the Agents. (d) Consummation of Transactions. (i) (1) All conditions to the Transactions set forth in Related Agreements (other than the Intercompany Debt Documents) shall have been satisfied or the fulfillment of any such conditions shall have been waived with the consent of the Agents and (2) such Transactions shall have been, or shall substantially concurrently be, consummated in accordance with the terms of the Related Agreements. (ii) The Agents shall each have received a fully executed copy of each Related Agreement and any documents executed in connection therewith, together with copies of each of the opinions of counsel delivered to the parties under the Related Agreements, addressed to the Lenders or accompanied by a letter from each such counsel, authorizing Lenders to rely upon such opinion to the same extent as though it were addressed to Lenders. Each Related Agreement shall be in full force and effect, shall include terms and provisions reasonably satisfactory to the Agents and no provision thereof shall have been modified or waived in any respect determined by the Agents to be material, in each case without the consent of the Agents. 95 (e) Existing Indebtedness and Preferred Stock. On the Closing Date, MAAX Holdings and its Subsidiaries shall have (i) consummated the Refinancing, (ii) terminated any commitments to lend or make other extensions of credit thereunder, (iii) delivered to the Agents all documents or instruments necessary to release all Liens securing Existing Indebtedness or other obligations of MAAX Holdings and its Subsidiaries thereunder being repaid on the Closing Date, (iv) made arrangements satisfactory to the Agents with respect to the cancellation of any letters of credit outstanding thereunder other than the Existing Letters of Credit and (v) redeemed all outstanding Preferred Stock other than Preferred Stock allowed by Sections 6.7(b)(i) or (d). (f) Governmental Authorizations and Consents. Each Credit Party shall have obtained all material Governmental Authorizations and all material consents of other Persons, in each case that are necessary in connection with the transactions contemplated by the Credit Documents and the Related Agreements and each of the foregoing shall be in full force and effect. All applicable waiting periods shall have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the transactions contemplated by the Credit Documents or the Related Agreements or the financing thereof and no action, request for stay, petition for review or rehearing, reconsideration, or appeal with respect to any of the foregoing shall be pending, and the time for any applicable agency to take action to set aside its consent on its own motion shall have expired. (g) Real Estate Assets. Collateral Agent shall have received from Company and each applicable Guarantor: (i) fully executed and (where required) notarized Mortgages, in proper form for recording, registration or filing in all appropriate places in all applicable jurisdictions, encumbering each Real Estate Asset listed in Schedule 3.1(g) (each, a "CLOSING DATE MORTGAGED PROPERTY"), together with such authorizations, certificates, affidavits, questionnaires or returns as shall be required in connection with the registering, recording or filing thereof to create a Mortgage Lien under applicable law, and such financing statements and any other instruments necessary to grant a Mortgage Lien or equivalent under the laws of any applicable jurisdiction, all of which shall be in form and substance reasonably satisfactory to Collateral Agent; (ii) (A) ALTA or Canadian equivalent mortgagee title insurance policies (or unconditional commitments therefor having the effect of a title insurance policy) issued by one or more title companies reasonably satisfactory to Collateral Agent with respect to each Closing Date Mortgaged Property (each, a "TITLE POLICY"), insuring each Mortgage is subject to no Liens other than the Permitted Collateral Liens in amounts not less than the full replacement value of each Closing Date Mortgaged Property set forth on Schedule 3.1(g), together with (w) a title report issued by a title company with respect thereto, dated not more than thirty days prior to the Closing Date and copies of all recorded or registered documents listed as exceptions to title or otherwise referred to therein, each in form and substance reasonably satisfactory to Collateral Agent, (x) such 96 affirmative insurance and endorsement as Collateral Agent shall reasonably request (including endorsements on matters relating to usury, first loss, last dollar, zoning (provided, to the extent such affirmative insurance and endorsement on matters relating to zoning are not available at commercially reasonable rates, Company shall order, at its sole cost and expense, zoning reports in form and substance reasonably acceptable to Collateral Agent from the Planning & Zoning Resource Corporation ("PZR") indicating that the use of the Closing Date Mortgaged Property complies with applicable zoning ordinances, and shall provide to PZR such documents and instruments as reasonably requested including, without limitation, surveys and owners' affidavits), contiguity, revolving credit, doing business, non-imputation, public road access, survey, variable rate, guarantees, restrictions, encroachments and minerals, work order, gap, environmental liens, subdivision, separate tax lot, creditors' rights amendments and so-called comprehensive coverage over covenants and restrictions), (y) an "aggregation," "tie-in" or "cluster" endorsement, if available under applicable law (i.e., policies which insure against losses regardless of location or allocated value of the insured property up to a stated maximum coverage amount) and (z) if required by Collateral Agent, such reinsurance arrangements (with provisions for direct access) as shall be reasonably acceptable to Collateral Agent and (B) evidence satisfactory to Collateral Agent that such Credit Party has paid to the title company or to the appropriate governmental authorities all expenses and premiums of the title company and all other sums required in connection with the issuance of each Title Policy and all recording and stamp taxes (including mortgage recording and intangible taxes) payable in connection with recording or registering the Mortgages for each Closing Date Mortgaged Property in the appropriate real estate records or land registry office; provided that Company or Guarantor may, instead of providing a Title Policy and complying with the preceding text of this clause (ii) with respect to those Closing Date Mortgaged Properties located in Canada, provide to Collateral Agent an opinion of counsel (which counsel shall be reasonably satisfactory to Collateral Agent) in the applicable province confirming that (a) save with respect to lot number 2 294 798 forming part of the Closing Date Mortgaged Property listed as number 9 on Schedule 3.1(g), Company or Guarantor, as applicable, has good and marketable title to the Closing Date Mortgaged Property in fee simple subject to no Liens, other than the Permitted Collateral Liens (or, in respect of each Closing Date Mortgaged Property situated in the Province of Quebec, that Company or Guarantor, as applicable, is the registered owner of the Closing Date Mortgaged Property with a good and valid title, free and clear of any registered Liens, other than Permitted Collateral Liens), (b) the applicable Mortgage has been registered, filed and recorded in all places in that province where it is necessary or desirable to do so in order to perfect the Mortgage Lien, (c) the Mortgage Lien constituted by the Mortgage is valid and enforceable against Company or Guarantor, as the case may be, and constitutes a valid Mortgage Lien having a First Priority on the Closing Date Mortgaged Property subject to no Liens other than the Permitted Collateral Liens, and (d) addressing compliance of the Closing Date Mortgaged Property with applicable law, realty tax arrears, building and zoning by-laws and 97 building codes, public road access, survey or certificates of location and such other matters as Collateral Agent may reasonably request, and otherwise in form and substance reasonably satisfactory to Collateral Agent; (iii) evidence of flood insurance with respect to each Flood Hazard Property, if any, that is located in a community that participates in the National Flood Insurance Program, in each case in compliance with any applicable regulations of the Board of Governors of the Federal Reserve System, in form and substance reasonably satisfactory to Collateral Agent; (iv) ALTA or Canadian equivalent surveys or certificates of location prepared by qualified professional land surveyors of all Closing Date Mortgaged Properties, certified to Collateral Agent and, with respect to the U.S. properties, dated not more than thirty days prior to the Closing Date, and otherwise in form and substance satisfactory to Collateral Agent; the surveys and certificates of location will disclose the location of all buildings and improvements as well as the location of all easements, servitudes and rights-of-way, and shall not disclose any encroachments from or onto the Closing Date Mortgaged Properties which have not been insured over by the Title Policies, and the surveys and non-Quebec certificates of location will disclose the location of all access points, driveways and parking areas; (v) with respect to each Closing Date Mortgaged Property, such consents, approvals, amendments, supplements, estoppels, tenant subordination agreements or other instruments as necessary to consummate the transactions contemplated hereby or as shall reasonably be deemed necessary by Collateral Agent in order for the owner of the fee constituting such Mortgaged Property to grant the Mortgage Lien contemplated by the Mortgage with respect to such Mortgaged Property; (vi) with respect to each Closing Date Mortgaged Property, such affidavits, certificates, information (including financial data) and instruments of indemnification (including a so-called "gap" indemnification) as shall be required to induce the title company to issue the Title Policy/ies and endorsements contemplated above; and (vii) with respect to each Real Estate Asset or Closing Date Mortgaged Property, copies of all leases (if any) in which any Credit Party holds the lessor's interest or other agreements relating to possessory interests, if any. (h) Personal Property Collateral. Collateral Agent shall have received: (i) evidence reasonably satisfactory to Collateral Agent of the compliance by each Credit Party with its obligations under the Security Agreements and the other Collateral Documents (including, without limitation, their obligations to execute and deliver UCC and PPSA financing statements, 98 originals of securities, instruments and chattel paper and any control agreements with respect to deposit and/or securities accounts as provided therein); (ii) A completed Perfection Certificate, dated the Closing Date and executed by an Authorized Officer of each Credit Party, together with all attachments contemplated thereby, including, as applicable, (A) the results of a recent search, by a Person reasonably satisfactory to Collateral Agent, of all effective UCC and PPSA financing statements (or equivalent filings) made with respect to any property of any Credit Party in the jurisdictions specified in the Perfection Certificate, together with copies of all such filings disclosed by such search, and (B) UCC termination statements and PPSA discharge statements (or similar documents) duly executed (as applicable) by all applicable Persons for filing in all applicable jurisdictions as may be necessary to terminate any effective UCC and PPSA financing statements (or equivalent filings) disclosed in such search (other than any such financing statements in respect of Permitted Collateral Liens); and (iii) evidence that each Credit Party shall have taken or caused to be taken any other action, executed and delivered or caused to be executed and delivered any other agreement, document and instrument (including without limitation, (i) any intercompany notes evidencing Indebtedness permitted to be incurred pursuant to Section 6.1(b) and (ii) estoppel letters or certificates from potentially conflicting registrants under the PPSA) and made or caused to be made any other filing and recording (other than as set forth herein) reasonably required by Collateral Agent. (i) Evidence of Insurance. Collateral Agent shall have received a certificate from Company's insurance broker or other evidence reasonably satisfactory to it that all insurance required to be maintained pursuant to Section 5.5 is in full force and effect and that Collateral Agent, for the benefit of Lenders has been named as additional insured and loss payee thereunder to the extent required under Section 5.5. (j) Opinions of Counsel to Credit Parties. Administrative Agent, Issuing Bank and Lenders shall have received originally executed copies of the favorable written opinions of (i) Kaye Scholer LLP, U.S. counsel for Credit Parties, (ii) Fasken Martineau DuMoulin LLP, Ontario, British Columbia, Alberta and Quebec counsel for Credit Parties, (iii) McInnes Cooper, Nova Scotia counsel for the Credit Parties, and (iv) local counsels in the States of Pennsylvania, Minnesota, Washington, Indiana, California, Georgia, West Virginia and Arizona, in the forms of Exhibit D-1 to D-11, respectively, and as to such other matters as Administrative Agent or Syndication Agent may reasonably request, dated as of the Closing Date and otherwise in form and substance reasonably satisfactory to Administrative Agent and Syndication Agent (and each Credit Party hereby instructs such counsel to deliver such opinions to the Agents and Lenders). (k) Fees. Company shall have paid the fees payable on the Closing Date referred to in Section 2.13(d). 99 (l) Solvency Certificate. On the Closing Date, Administrative Agent, Issuing Bank and Lenders shall have received a Solvency Certificate from the Credit Parties dated the Closing Date and addressed to Agents and Lenders, and in form, scope and substance satisfactory to Agents, with appropriate attachments and demonstrating that after giving effect to the consummation of the Transactions (other than those pursuant to the Intercompany Debt Documents), each Credit Party is Solvent. (m) Closing Date Certificate. Holdings and Company shall have delivered to Initial Agents an originally executed Closing Date Certificate, together with all attachments thereto. (n) No Litigation. There shall not exist any action, suit, investigation, litigation or proceeding or other legal or regulatory developments, pending or threatened in any court or before any arbitrator or Governmental Authority that, in the reasonable opinion of any Joint Lead Arranger singly or in the aggregate, adversely affects the Transactions, the financing thereof or any of the other transactions contemplated by the Credit Documents or the Related Agreements, or that has or could reasonably be expected to have a Material Adverse Effect. (o) Completion of Proceedings. All partnership, corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incidental thereto not previously found acceptable by the Joint Lead Arrangers and their counsel shall be reasonably satisfactory in form and substance to the Joint Lead Arrangers and such counsel, and the Joint Lead Arrangers and such counsel shall have received all such counterpart originals or certified copies of such documents as any Joint Lead Arranger may reasonably request. (p) Minimum EBITDA. Consolidated Adjusted EBITDA of the Acquired Business for Fiscal Year 2004, calculated based on the Historical Financial Statements, but prepared on the basis of accounting principles generally accepted in Canada, as adjusted pursuant to the Commitment Letter, shall not be less than Can$95.0 million. Each Lender, by delivering its signature page to this Agreement and funding a Loan on the Closing Date, shall be deemed to have acknowledged receipt of, and consented to and approved, each Credit Document and each other document required to be approved by any Agent, Requisite Lenders or Lenders, as applicable on the Closing Date. 3.2. CONDITIONS TO EACH CREDIT EXTENSION. (a) Conditions Precedent. The obligation of each Lender to make any Loan, or Issuing Bank or any Issuing Lender to issue any Letter of Credit, on any Credit Date, including the Closing Date, is subject to the satisfaction, or waiver in accordance with Section 10.5, of the following conditions precedent: (i) Administrative Agent shall have received a fully executed and delivered Funding Notice or Issuance Notice, as the case may be; 100 (ii) after making the Credit Extensions requested on such Credit Date, the Total Utilization of Revolving Commitments shall not exceed the Revolving Commitments then in effect; (iii) as of such Credit Date, the representations and warranties contained herein and in the other Credit Documents shall be true and correct in all material respects (and any such representations and warranties that contain a materiality or Material Adverse Effect qualification shall be true and correct in all respects) on and as of that Credit Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date; (iv) as of such Credit Date, no event shall have occurred and be continuing or would result from the consummation of the applicable Credit Extension that would constitute an Event of Default or a Default; and (v) on or before the date of issuance of any Letter of Credit, Administrative Agent shall have received all other information required by the applicable Issuance Notice, and such other documents or information as the applicable Issuing Lender may reasonably require in connection with the issuance of such Letter of Credit. Any Agent or Requisite Lenders shall be entitled, but not obligated, to request and receive, prior to the making of any Credit Extension, additional information reasonably satisfactory to the requesting party confirming the satisfaction of any of the foregoing if, in the good faith judgment of such Agent or Requisite Lenders, such request is warranted under the circumstances. (b) Notices. Any Notice shall be executed by an Authorized Officer in a writing delivered to Administrative Agent. In lieu of delivering a Notice, Company may give Administrative Agent telephonic notice by the required time of any proposed borrowing, conversion/continuation or issuance of a Letter of Credit, as the case may be; provided each such notice shall be promptly confirmed in writing by delivery of the applicable Notice to Administrative Agent on or before the applicable date of borrowing, continuation/conversion or issuance. None of Administrative Agent, Issuing Bank, any Issuing Lender or any Lender shall incur any liability to Company in acting upon any telephonic notice referred to above that Administrative Agent believes in good faith to have been given by a duly authorized officer or other person authorized on behalf of Company or for otherwise acting in good faith. SECTION 4. REPRESENTATIONS AND WARRANTIES In order to induce Lenders, Issuing Bank and each Issuing Lender to enter into this Agreement and to make each Credit Extension to be made thereby, each Credit Party represents and warrants to each Lender, Issuing Bank and each Issuing Lender, on the Closing Date and on each Credit Date, that the following statements are true and correct (it being understood and agreed that the representations and warranties made on the Closing Date are deemed to be made 101 concurrently with the consummation of the Transactions occurring on the Closing Date and the other mergers, asset transfers and amalgamations among Holdings and its Subsidiaries occurring on the Closing Date): 4.1. ORGANIZATION; REQUISITE POWER AND AUTHORITY; QUALIFICATION. Each of Holdings and its Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization as identified in Schedule 4.1, (b) has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Credit Documents to which it is a party and to carry out the transactions contemplated thereby, and (c) is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, except in jurisdictions where the failure to be so qualified or in good standing has not had, and could not be reasonably expected to have, a Material Adverse Effect. 4.2. CAPITAL STOCK AND OWNERSHIP. The Capital Stock of each of Holdings and its Subsidiaries has been duly authorized and validly issued and is fully paid and non-assessable. Except as set forth on Schedule 4.2, as of the date hereof, there is no existing option, warrant, call, right, commitment or other agreement to which Holdings or any of its Subsidiaries is a party requiring, and there is no membership interest or other Capital Stock of Holdings or any of its Subsidiaries outstanding which upon conversion or exchange would require, the issuance by Holdings or any of its Subsidiaries of any additional membership interests or other Capital Stock of Holdings or any of its Subsidiaries or other Securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase, a membership interest or other Capital Stock of Holdings or any of its Subsidiaries. Schedule 4.2 correctly sets forth the ownership interest of Holdings and each of its Subsidiaries in their respective Subsidiaries as of the Closing Date after giving effect to the Transactions (other than those pursuant to the Intercompany Debt Documents). 4.3. DUE AUTHORIZATION. The execution, delivery and performance of the Credit Documents have been duly authorized by all necessary action on the part of each Credit Party that is a party thereto. 4.4. NO CONFLICT. The execution, delivery and performance by Credit Parties of the Credit Documents to which they are parties and the consummation of the transactions contemplated by the Credit Documents do not and will not (a) violate any provision of (x) any law or any governmental rule or regulation applicable to Holdings or any of its Subsidiaries, (y) any of the Organizational Documents of Holdings or any of its Subsidiaries, or (z) any order, judgment or decree of any court or other agency of government binding on Holdings or any of its Subsidiaries, except in the case of clauses (x) and (z) as could not reasonably be expected to have a Material Adverse Effect; (b) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of Holdings or any of its Subsidiaries except to the extent such conflict, breach or default could not reasonably be expected to have a Material Adverse Effect; (c) result in or require the creation or imposition of any Lien upon any of the properties or assets of Holdings or any of its Subsidiaries (other than any Liens created under any of the Credit Documents in favor of Collateral Agent, on behalf of Secured Parties); or (d) require any approval of stockholders, members or partners of Holdings 102 or any of its Subsidiaries, except for such approvals or consents which will be obtained on or before the Closing Date. 4.5. GOVERNMENTAL CONSENTS. The execution, delivery and performance by Credit Parties of the Credit Documents to which they are parties and the consummation of the transactions contemplated by the Credit Documents do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority except as otherwise set forth in the Merger Agreement, and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Collateral Agent for filing and/or recordation, as of the Closing Date. 4.6. BINDING OBLIGATION. Each Credit Document has been duly executed and delivered by each Credit Party that is a party thereto and is the legally valid and binding obligation of such Credit Party, enforceable against such Credit Party in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability. 4.7. HISTORICAL FINANCIAL STATEMENTS. (a) The Historical Financial Statements were prepared in conformity with GAAP and fairly present, in all material respects, the financial position, on a consolidated basis, of the Acquired Business as at the respective dates thereof and the results of operations, cash flows and shareholders' equity, on a consolidated basis, for each of the periods then ended. As of the Closing Date, neither Holdings nor any of its Subsidiaries has any contingent liability (other than under the Credit Documents or the Senior Subordinated Notes Indenture) or liability for taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the Historical Financial Statements or the notes thereto and which in any such case could reasonably be expected to have a Material Adverse Effect. (b) The unaudited pro forma consolidated balance sheet of Holdings and its Subsidiaries as of February 29, 2004 and the related income statement for the Fiscal Year then ended, including the notes thereto (the "PRO FORMA FINANCIAL STATEMENTS"), provided to the Lenders present fairly the information shown therein in all material respects, and the assumptions used in the preparation thereof are reasonable and the adjustments made therein are appropriate to give effect to the transactions and circumstances referred to therein. 4.8. PROJECTIONS. On and as of the Closing Date, the projections of Holdings and its Subsidiaries for the period Fiscal Year 2005 through and including Fiscal Year 2009 (the "PROJECTIONS") are based on good faith estimates and assumptions made by the management of Holdings; provided the Projections are not to be viewed as facts and that actual results during the period or periods covered by the Projections may differ from such Projections and that the differences may be material; provided, further, as of the Closing Date, management of Holdings believed that the Projections were reasonable and attainable. 4.9. NO MATERIAL ADVERSE CHANGE. As of the Closing Date, there has not occurred any change or changes (or any condition, event, circumstance or development involving a 103 prospective change) since February 29, 2004 in the business (including a material loss of business from an important customer), operations, affairs, assets, liabilities (including any contingent liabilities that may arise through outstanding, pending or threatened litigation or otherwise), capitalization, results of operations, cash flows, condition (financial or otherwise), Licenses (as defined in Schedule 3.1 to the Merger Agreement), rights or privileges of the Acquired Business or any of its Subsidiaries which has materially and adversely changed, or could reasonably be expected to materially and adversely change, the Acquired Business and its Subsidiaries, taken as a whole, other than any such change or changes which arose out of a matter that had been publicly disclosed in writing by the Acquired Business prior to March 10, 2004 or otherwise disclosed in the Disclosure Letter (as defined in the Merger Agreement). As of each Credit Date after the Closing Date, since February 29, 2004, no event, circumstance or change has occurred that has caused or evidences, or could reasonably be expected to have, either in any case or in the aggregate, a Material Adverse Effect. 4.10. NO RESTRICTED JUNIOR PAYMENTS. Since February 29, 2004, neither Holdings nor any of its Subsidiaries has directly or indirectly declared, ordered, paid or made, or set apart any sum or property for, any Restricted Junior Payment or agreed to do so except in connection with the Transactions (as reflected in the Pro Forma Financial Statements), the dividend to Company's public shareholders paid in calendar year 2004 prior to the Closing Date or as permitted pursuant to Section 6.5 or Section 6.19. 4.11. ADVERSE PROCEEDINGS, ETC. There are no Adverse Proceedings, individually or in the aggregate, that could reasonably be expected to have a Material Adverse Effect. Neither Holdings nor any of its Subsidiaries (a) is in violation of any applicable laws that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, or (b) is subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 4.12. PAYMENT OF TAXES. Except as set forth on Schedule 4.12, all material tax returns and reports of Holdings and its Subsidiaries required to be filed by any of them have been timely filed, and all taxes shown on such tax returns to be due and payable and all other material assessments, fees and other governmental charges upon Holdings and its Subsidiaries and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable. Holdings knows of no proposed tax assessment against Holdings or any of its Subsidiaries other than assessments for a Tax or claim which (i) is being actively contested by Holdings or such Subsidiary in good faith and by appropriate proceedings and for which adequate reserves or other appropriate provisions, if any, required in conformity with GAAP have been made or provided therefor, (ii) in the case of a Tax or claim which has or may become a Lien against any of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral to satisfy such Tax or claim and (iii) could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 104 4.13. PROPERTIES. (a) Title. Each of Holdings and its Subsidiaries has (i) good, sufficient and legal title to (in the case of fee interests in real property) or good, valid and marketable title to (in the case of real property situated in the Province of Quebec), (ii) valid leasehold interests in (in the case of leasehold interests in real property situated outside of the Province of Quebec or personal property), and (iii) good title to (in the case of all other personal property), all of their respective properties and assets reflected in the Historical Financial Statements and in the most recent financial statements delivered pursuant to Section 5.1, in each case except for assets disposed of since the date of such financial statements in the ordinary course of business or as otherwise permitted under Section 6.9. As of the Closing Date, all such properties and assets are free and clear of Liens except for the Permitted Collateral Liens. After the Closing Date, all of such properties and assets are free and clear of all Liens except as permitted by this Agreement. (b) Real Estate. As of the Closing Date, Schedule 4.13 contains a true, accurate and complete list of (i) all Material Real Estate Assets and Closing Date Mortgaged Properties and (ii) all leases, subleases or assignments of leases (together with all amendments, modifications, supplements, renewals or extensions of any thereof) affecting each Material Real Estate Asset of any Credit Party, regardless of whether such Credit Party is the landlord or tenant (whether directly or as an assignee or successor in interest) under such lease, sublease or assignment. To the knowledge of the Credit Parties, each agreement listed in clause (ii) of the immediately preceding sentence is in full force and effect and no Credit Party has knowledge of any default that has occurred and is continuing thereunder that could reasonably be expected to have a Material Adverse Effect, and each such agreement constitutes the legally valid and binding obligation of each applicable Credit Party, enforceable against such Credit Party in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles. 4.14. ENVIRONMENTAL MATTERS. Neither Holdings nor any of its Subsidiaries nor any of their respective Facilities or operations are subject to any outstanding written order, consent decree or settlement or other agreement with any Person relating to any Environmental Law, any Environmental Claim or any Hazardous Materials Activity that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Neither Holdings nor any of its Subsidiaries has received any notice of potential responsibility or request for information under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. Section 9604) or any comparable Environmental Law that individually or in the aggregate could reasonably be expected to have a Material Adverse Effect. There are and, to each of Holdings' and its Subsidiaries' knowledge, have been no conditions, occurrences or Hazardous Materials Activities which could reasonably be expected to form the basis of an Environmental Claim against Holdings or any of its Subsidiaries that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. The operations and Facilities of Holdings and its Subsidiaries are in compliance with all applicable Environmental Laws, except for any non-compliance which individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect. No Lien has been recorded or registered pursuant to any Environmental Laws against any of the Facilities or other assets of Holdings of any of its Subsidiaries. Compliance with all current or reasonably foreseeable future requirements 105 pursuant to or under Environmental Laws could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. No event or condition has occurred or is occurring with respect to Holdings or any of its Subsidiaries relating to any Environmental Law, any Release of Hazardous Materials, or any Hazardous Materials Activity which individually or in the aggregate has had, or could reasonably be expected to have, a Material Adverse Effect. 4.15. NO DEFAULTS. Neither Holdings nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any of its Contractual Obligations, and no condition exists which, with the giving of notice or the lapse of time or both, could constitute such a default, except where the consequences, direct or indirect, of such default or defaults, if any, could not reasonably be expected to have a Material Adverse Effect. 4.16. MATERIAL CONTRACTS. Schedule 4.16 contains a true, correct and complete list of all the Material Contracts in effect on the Closing Date, and except as described thereon, all such Material Contracts are in full force and effect and no defaults currently exist thereunder. 4.17. GOVERNMENTAL REGULATION. Neither Holdings nor any of its Subsidiaries is subject to regulation under the U.S. Public Utility Holding Company Act of 1935, the U.S. Federal Power Act or the U.S. Investment Company Act of 1940 or under any other federal, state or provincial statute or regulation in the United States or Canada which may render all or any portion of the Obligations unenforceable. Neither Holdings nor any of its Subsidiaries is a "registered investment company" or a company "controlled" by a "registered investment company" or a "principal underwriter" of a "registered investment company" as such terms are defined in the Investment Company Act of 1940. 4.18. MARGIN STOCK. Neither Holdings nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. No part of the proceeds of any Loan or any Letter of Credit will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of, or that is inconsistent with, the provisions of the regulations of the Board of Governors of the Federal Reserve System, including Regulation T, U or X. The pledge of Collateral constituting Securities pursuant to the Collateral Documents does not violate such regulations. 4.19. EMPLOYEE MATTERS. Neither Holdings nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Effect. There is (a) no unfair labor practice or related employer complaint or application for a declaration pending against Holdings or any of its Subsidiaries, or to the best knowledge of the Credit Parties, threatened against any of them before the National Labor Relations Board, the Ontario Labour Relations Board or any similar board, tribunal or agency, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement pending against Holdings or any of its Subsidiaries or to the best knowledge of the Credit Parties, threatened against any of them, in each case, that could reasonably be expected to have a Material Adverse Effect, (b) no strike or work stoppage in existence or threatened involving Holdings or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect, and (c) to the best knowledge of the Credit Parties, no union representation question 106 existing with respect to the employees of Holdings or any of its Subsidiaries and, to the best knowledge of the Credit Parties, no union organization activity that is taking place, except, with respect to any matter specified in clause (a), (b) or (c) above, either individually or in the aggregate, such as could not reasonably be expected to have a Material Adverse Effect. 4.20. EMPLOYEE BENEFIT PLANS. Holdings, each of its Subsidiaries and each of their respective ERISA Affiliates are in material compliance with all applicable provisions and requirements of ERISA and the Internal Revenue Code and the regulations and published interpretations thereunder with respect to each U.S. Employee Benefit Plan, and have performed all material obligations under each U.S. Employee Benefit Plan. Each U.S. Employee Benefit Plan which is intended to qualify under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the U.S. Internal Revenue Service indicating that each such plan is so qualified and to the knowledge of Holdings and each of its ERISA Affiliates, nothing has occurred subsequent to the issuance of such determination letter which would cause such U.S. Employee Benefit Plan to lose its qualified status. No material liability to the PBGC (other than required premium payments), the U.S. Internal Revenue Service, any U.S. Employee Benefit Plan or any trust established under Title IV of ERISA has been or is expected to be incurred by Holdings, any of its Subsidiaries or any of their ERISA Affiliates. No ERISA Event has occurred or is reasonably expected to occur that could reasonably be expected to have a Material Adverse Effect. Except to the extent required under Section 4980B of the Internal Revenue Code or similar state laws, no U.S. Employee Benefit Plan provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates. Each Canadian Employee Benefit Plan is and has been established, registered, qualified, administered, funded and invested in all material respects in accordance with the terms of such Canadian Employee Benefit Plan, the terms of the material documents that support such Canadian Employee Benefit Plan, any applicable collective agreement and all applicable laws. To the knowledge of the Credit Parties, no event has occurred respecting any Canadian Employee Benefit Plan which could result in the revocation of the registration of such Canadian Employee Benefit Plan or entitle any person (without consent of Holdings or Company) to wind up or terminate any Canadian Employee Benefit Plan (in whole or in part) or which could otherwise reasonably be expected to adversely affect the tax status of any Canadian Employee Benefit Plan. None of the Canadian Employee Benefit Plans provide for benefit increases or the acceleration of, or an increase in, funding obligations that are contingent upon, or will be triggered by the completion of, the transactions contemplated herein. There is no proceeding, action, suit or claim (other than routine claim for payments of benefits) pending or threatened involving any Canadian Employee Benefit Plan or its assets. The present value of the aggregate benefit liabilities under each U.S. Pension Plan sponsored, maintained or contributed to by Holdings, any of its Subsidiaries or any of their ERISA Affiliates (determined as of the end of the most recent plan year on the basis of the actuarial assumptions specified for funding purposes in the most recent actuarial valuation for such U.S. Pension Plan), did not exceed the aggregate current value of the assets of such U.S. Pension Plan in an amount that could reasonably be expected to have a Material Adverse Effect. There are no material unfunded liabilities in respect of any Canadian Pension Plan as at the date hereof including going concern unfunded liabilities, solvency, deficiencies or wind-up deficiencies, where applicable, and no Canadian Pension Plan Default Event has occurred. Neither Holdings, any Subsidiary, or any ERISA Affiliate of either, has (i) incurred a complete or partial withdrawal (within the meaning of Section 4201 or 4203, respectively) from a U.S. 107 Multiemployer Plan or (ii) reasonably expects to incur a complete or partial withdrawal from a U.S. Multiemployer Plan that (in the case of (ii)) could reasonably be expected to have a Material Adverse Effect. Holdings, each of its Subsidiaries and each of their ERISA Affiliates have complied with the requirements of Section 515 of ERISA with respect to each U.S. Multiemployer Plan and are not in material "default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a U.S. Multiemployer Plan. None of the Canadian Employee Benefit Plans is a Canadian Multiemployer Plan. 4.21. CERTAIN FEES. No broker's or finder's fee or commission will be payable with respect hereto or any of the transactions contemplated hereby, except as contemplated by the Commitment Letter and the Merger Agreement. 4.22. SOLVENCY. Each Credit Party is and, immediately following the incurrence of any Obligation by such Credit Party on any date on which this representation and warranty is made, will be, Solvent. 4.23. RELATED AGREEMENTS. (a) Delivery. Holdings and Company have delivered to the Agents complete and correct copies of (i) each Related Agreement and of all exhibits and schedules thereto as of the date hereof and (ii) copies of any material amendment, restatement, supplement or other modification to or waiver of each Related Agreement entered into after the date hereof. (b) Representations and Warranties. Except to the extent otherwise expressly set forth herein or in the schedules hereto, and subject to the qualifications set forth therein, each of the representations and warranties given by any Credit Party in any Related Agreement is true and correct in all material respects (and any such representations and warranties that contain a materiality or Material Adverse Effect qualification shall be true and correct in all respects) as of the Closing Date (or as of any earlier date to which such representation and warranty specifically relates). Notwithstanding anything in the Related Agreement to the contrary, the representations and warranties of each Credit Party set forth in this Section 4.23 shall, solely for purposes hereof, survive the Closing Date for the benefit of Lenders. (c) Governmental Approvals. All material Governmental Authorizations and all other material authorizations, approvals and consents of any other Person required by the Related Agreements or to consummate the Transactions have been obtained and are in full force and effect. (d) Conditions Precedent. On the Closing Date, (i) all of the conditions to effecting or consummating the Transactions set forth in the Related Agreements (other than the Intercompany Debt Documents) have been duly satisfied or, with the consent of the Agents, waived, and (ii) such Transactions have been consummated in accordance with the Related Agreements and all material applicable laws. 4.24. COMPLIANCE WITH STATUTES, ETC. Each of Holdings and its Subsidiaries is in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities, in respect of the conduct of its business and the ownership of its property (including compliance with all applicable Environmental Laws with 108 respect to any Real Estate Asset or governing its business and the requirements of any Governmental Authorizations issued under such Environmental Laws with respect to any such Real Estate Asset or the operations of Holdings or any of its Subsidiaries), except such non-compliance that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. 4.25. DISCLOSURE. No representation or warranty of any Credit Party contained in any Credit Document or in any other documents, certificates or written statements furnished to Lenders by or on behalf of Holdings or any of its Subsidiaries for use in connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state a material fact (known to Holdings or Company, in the case of any document not furnished by either of them) necessary in order to make the statements contained herein or therein not materially misleading in the light of the circumstances in which the same were made. Any projections and pro forma financial information contained in such materials are based upon good faith estimates and assumptions believed by Holdings or Company to be reasonable at the time made, it being recognized by Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results. 4.26. INTELLECTUAL PROPERTY. (a) Ownership/No Claims. Each Credit Party owns, or is licensed to use, all patents, patent applications, trademarks, trade names, service marks, copyrights, technology, trade secrets, proprietary information, domain names, know-how and processes necessary for the conduct of its business as currently conducted (the "INTELLECTUAL PROPERTY"), except for those the failure to own or license which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. Except as set forth on Schedule 4.26, no claim has been asserted and is pending by any person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does any Credit Party know of any valid basis for any such claim. The use of such Intellectual Property by each Credit Party does not infringe the rights of any person, except for such claims and infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. (b) Registrations. Except pursuant to licenses and other user agreements entered into by each Credit Party in the ordinary course of business that are listed in Schedules 14(a) and 14(b) to the Perfection Certificate, on and as of the Closing Date (i) each Credit Party owns and possesses the right to use, and has done nothing to authorize or enable any other person to use, any copyright, patent or trademark listed in Schedules 14(a) and 14(b) to the Perfection Certificate and (ii) all registrations listed in Schedules 14(a) and 14(b) to the Perfection Certificate are valid and in full force and effect. (c) No Violations or Proceedings. To each Credit Party's knowledge, on and as of the date hereof, there is no violation by others of any right of such Credit Party with respect to any copyright, patent or trademark listed in Schedules 14(a) and 14(b) to the Perfection Certificate pledged by it under the name of such Credit Party except as could not reasonably be expected to have a Material Adverse Effect. 109 4.27. ANTI-TERRORISM LAW. (a) Compliance with Law. No Credit Party and, to the knowledge of the Credit Parties, none of its Affiliates is in violation of any laws relating to terrorism or money laundering ("ANTI-TERRORISM LAWS"), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the "EXECUTIVE ORDER"), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56. (b) Prohibited Lists. No Credit Party and to the knowledge of the Credit Parties, no Affiliate of any Credit Party acting or benefiting in any capacity in connection with the Loans is any of the following: (i) a person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a person owned or controlled by, or acting for or on behalf of, any person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (iv) a person that commits, threatens or conspires to commit or supports "terrorism" as defined in the Executive Order; or (v) a person that is named as a "specially designated national and blocked person" on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control ("OFAC") at its official website or any replacement website or other replacement official publication of such list. (c) Relationships. No Credit Party (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any person described in paragraph (b) above, (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law. 4.28. SUBORDINATION OF SENIOR SUBORDINATED NOTES. The Obligations and the Guaranteed Obligations are "Senior Debt" and "Designated Senior Debt" within the meaning of the Senior Subordinated Notes Indenture. SECTION 5. AFFIRMATIVE COVENANTS Each Credit Party covenants and agrees that so long as any Commitment is in effect and until payment in full of all Obligations (other than contingent Obligations that constitute indemnification obligations that survive termination of this Agreement) and cancellation, 110 collateralization in accordance with Section 2.5(n) or expiration of all Letters of Credit, each Credit Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 5. 5.1. FINANCIAL STATEMENTS AND OTHER REPORTS. Holdings, or Company, as applicable, will deliver to Administrative Agent and Collateral Agent (and, upon receipt thereof, Administrative Agent shall promptly furnish to the Lenders): (a) Monthly Reports. As soon as available, and in any event within 40 days after the end of each month ending after the Closing Date, the consolidated balance sheet of Holdings and its Subsidiaries as at the end of such month and the related consolidated statements of income, stockholders' equity and cash flows of Holdings and its Subsidiaries for such month and for the period from the beginning of the then current Fiscal Year to the end of such month, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year (commencing with the monthly financial statements delivered for the calendar month ending March 31, 2005) and the corresponding figures from the Financial Plan for the current Fiscal Year, to the extent prepared on a monthly basis, all in reasonable detail, together with a Financial Officer Certification; (b) Quarterly Financial Statements. As soon as available, and in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, the consolidated balance sheet of Holdings and its Subsidiaries as at the end of such Fiscal Quarter and the related consolidated statements of income, stockholders' equity and cash flows of Holdings and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year (provided that figures from periods prior to the Closing Date may be adjusted by Holdings from Canadian generally accepted accounting principles) and the corresponding figures from the Financial Plan for the current Fiscal Year, all in reasonable detail, together with a Financial Officer Certification and a Narrative Report with respect thereto; (c) Annual Financial Statements. As soon as available, and in any event within 110 days after the end of each Fiscal Year, (i) the consolidated balance sheet of Holdings and its Subsidiaries as at the end of such Fiscal Year and the related consolidated statements of income, stockholders' equity and cash flows of Holdings and its Subsidiaries for such Fiscal Year, setting forth in comparative form the corresponding figures for the previous Fiscal Year and the corresponding figures from the Financial Plan for the current Fiscal Year, in reasonable detail, together with a Financial Officer Certification and a Narrative Report with respect thereto; and (ii) with respect to such consolidated financial statements reports thereon of KPMG LLP or other independent certified public accountants of recognized national standing selected by Holdings, and reasonably satisfactory to Administrative Agent (which report shall be unqualified as to going concern and scope of audit, and shall state that such consolidated financial statements fairly present, in all material respects, the consolidated financial position of Holdings and its Subsidiaries as at the dates indicated and the results of their operations 111 and their cash flows for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise disclosed in such financial statements) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards) together with a written statement by such independent certified public accountants stating (1) that their audit examination has included a review of the terms of the Credit Documents and (2) whether, in connection therewith, any condition or event that constitutes a Default or an Event of Default has come to their attention and, if such a condition or event has come to their attention, specifying the nature and period of existence thereof, with respect to any covenants set forth in Section 6.8; (d) Compliance Certificate. Together with each delivery of financial statements pursuant to Sections 5.1(b) and 5.1(c), a duly executed and completed Compliance Certificate; (e) Statements of Reconciliation After Change in Accounting Principles. If, as a result of any change in accounting principles and policies from those used in the preparation of the Historical Financial Statements, the consolidated financial statements delivered pursuant to Section 5.1(b) or 5.1(c) will differ in any material respect from the consolidated financial statements that would have been delivered pursuant to such Sections had no such change in accounting principles and policies been made, then, together with the first delivery of such financial statements after such change, one or more statements describing such change, and, if requested by Administrative Agent, reconciliation to the prior financial statements, all in form and substance reasonably satisfactory to Administrative Agent; (f) Notice of Default. Promptly upon any Authorized Officer of any Credit Party obtaining knowledge (i) of any condition or event that constitutes a Default or an Event of Default or that notice has been given to Holdings or any of its Subsidiaries with respect thereto; (ii) that any Person has given any notice to Holdings or any of its Subsidiaries or taken any other action with respect to any event or condition set forth in Section 8.1(b); or (iii) of the occurrence of any event, condition or change that has caused or evidences, or could reasonably be expected to have, either in any case or in the aggregate, a Material Adverse Effect, a certificate of its Authorized Officers specifying the nature and period of existence of such condition, event or change, or specifying the notice given and action taken by any such Person and the nature of such claimed Event of Default, Default, default, event or condition, and what action Company has taken, is taking and proposes to take with respect thereto; (g) Notice of Litigation. Promptly upon any Authorized Officer of any Credit Party obtaining knowledge of (i) the institution of, or non-frivolous threat of, any Adverse Proceeding not previously disclosed in writing by Company to Lenders, or (ii) any material development in any Adverse Proceeding that, in the case of either (i) or (ii) if adversely determined, could be reasonably expected to have a Material Adverse Effect, or seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby, written notice thereof 112 together with such other information as may be reasonably available to the Credit Parties to enable Lenders and their counsel to evaluate such matters; (h) ERISA. (i) Promptly upon, and in any case within ten (10) Business Days after becoming aware of the occurrence of or forthcoming occurrence of any ERISA Event or a Canadian Pension Plan Default Event, a written notice specifying the nature thereof, what action Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the U.S. Internal Revenue Service, Canada Customs and Revenue Agency, the U.S. Department of Labor, the relevant provincial pension regulator, the PBGC or the PBGF with respect thereto; and (ii) with reasonable promptness, copies of (1) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) and each actuarial report filed by Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates with the U.S. Internal Revenue Service, Canada Customs and Revenue Agency or the relevant provincial pension regulator with respect to each Pension Plan; (2) all notices received by Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (3) copies of such other documents or governmental reports or filings relating to any Employee Benefit Plan as Administrative Agent shall reasonably request; (i) Financial Plan. As soon as practicable and in any event no later than thirty days after the beginning of each Fiscal Year, a consolidated plan and financial forecast for such Fiscal Year (a "FINANCIAL PLAN"), including (i) a forecasted consolidated balance sheet and forecasted consolidated statements of income and cash flows of Holdings and its Subsidiaries for such Fiscal Year and an explanation of the assumptions on which such forecasts are based and (ii) forecasted consolidated statements of income and cash flows of Holdings and its Subsidiaries for each month of the upcoming Fiscal Year; (j) Insurance Report. Not less frequently than once each Fiscal Year, a report in form and substance satisfactory to Administrative Agent outlining all material insurance coverage maintained as of the date of such report by Holdings and its Subsidiaries and all material insurance coverage planned to be maintained by Holdings and its Subsidiaries in the immediately succeeding Fiscal Year; (k) Notice Regarding Material Contracts. Promptly, and in any event within ten Business Days, after any Material Contract of Holdings or any of its Subsidiaries is terminated, expired or amended in a manner that is materially adverse to Holdings or such Subsidiary, as the case may be a written statement describing such event, with copies of such material amendments, delivered to Administrative Agent (to the extent such delivery is permitted by the terms of any such Material Contract, provided no such prohibition on delivery shall be effective if it were bargained for by Holdings or its applicable Subsidiary with the intent of avoiding compliance with this Section 5.1(k)), and an explanation of any actions being taken with respect thereto; (l) Environmental Reports and Audits. As soon as practicable following receipt thereof, copies of all environmental audits and reports (whether generated internally or by a third party, including a Governmental Authority) with respect to 113 environmental matters at any Facility or which relate to any actual or potential environmental liabilities of Holdings or its Subsidiaries which, in any such case, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect; and (m) Chief Executive Office; Change of Name; Jurisdiction of Organization. (i) The exact legal name, type of organization, jurisdiction of organization, organizational identification number (if any) and chief executive office of such Pledgor is indicated next to its name in Schedule 1 or 2(a) of the Perfection Certificate, as applicable. Such Pledgor shall not (a) change its corporate or other organizational name, (b) establish any other location where non-real property Collateral is maintained, (c) change its identity or type of organization or corporate structure, (d) change its organizational identification number (including, without limitation, by merging with or into or amalgamating with any other entity, reorganizing, dissolving, liquidating, reincorporating or incorporating in any other jurisdiction) until (A) in the case of clauses (a), (c) and (d), it shall have given Collateral Agent not less than 15 days' prior written notice of its intention so to do, clearly describing such change and providing such other information in connection therewith as Collateral Agent may reasonably request, and (B) with respect to such change, such Pledgor shall have taken all action reasonably satisfactory to Collateral Agent to maintain the perfection and priority of the security interest of Collateral Agent for the benefit of the Secured Parties in the Collateral intended to be granted hereby. Each Pledgor agrees to promptly provide Collateral Agent with certified organizational documents reflecting any of the changes described in the preceding sentence. (ii) Each Pledgor agrees to maintain, at its own cost and expense, such complete and accurate records with respect to the Collateral owned by it as is necessary to generate financial statements required hereunder, but in any event to include complete accounting records as required by this Agreement, and, at such time or times as Collateral Agent may reasonably request, promptly to prepare and deliver to Collateral Agent a duly certified schedule or schedules in form and detail reasonably satisfactory to Collateral Agent showing in summary form the identity, amount and location of any and all Collateral. In the event that any Pledgor or any of its Subsidiaries keeps in the Province of Quebec any such records, such Pledgor or Subsidiary shall, if requested by Collateral Agent, keep on computer disks or tapes a duplicate of such records at a location outside the Province of Quebec in a jurisdiction in which Collateral Agent has confirmed that it has perfected security in such records. (n) Annual Collateral Verification. Each year, at the time of delivery of annual financial statements with respect to the preceding Fiscal Year pursuant to Section 5.1(c), Company shall deliver to Collateral Agent an Officer's Certificate either confirming that there has been no change in such information since the date of the Perfection Certificate delivered on the Closing Date or the date of the most recent 114 certificate delivered pursuant to this Section and/or identifying such changes through a Perfection Certificate Supplement. (o) Other Information. (A) Promptly upon their becoming available, copies of (i) all financial statements, reports, notices and proxy statements sent or made available generally by MAAX Holdings to its security holders acting in such capacity and (ii) all regular and periodic reports and all registration statements and prospectuses, if any, filed by any Parent Company or any of its Subsidiaries with any securities exchange or with the Securities and Exchange Commission or other securities commission or any governmental or private regulatory authority, and (B) such other information and data with respect to any Parent Company or any of its Subsidiaries as from time to time may be reasonably requested by Administrative Agent, any Initial Agent or any Lender through Administrative Agent. 5.2. EXISTENCE. Except as otherwise permitted under Section 6.9, each Credit Party will, and will cause each of its Subsidiaries to, at all times preserve and keep in full force and effect its existence and all rights and franchises, licenses and permits material to its business; provided (x) no Subsidiary of Holdings (other than Company) shall be required to preserve its existence, and (y) no Credit Party or any of its Subsidiaries shall be required to preserve any such right or franchise, licenses and permits if, in any case of clause (x) or (y), such Person's Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Person, and that the loss thereof is not disadvantageous in any material respect to the Credit Parties and their Subsidiaries, taken as a whole, or to Lenders. 5.3. PAYMENT OF TAXES AND CLAIMS. Each Credit Party will, and will cause each of its Subsidiaries to, pay all material Taxes imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises before any penalty or fine accrues thereon, and all claims (including claims for labor, services, materials and supplies) for sums that have become due and payable and that by law have or may become a Lien upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided no such Tax or claim need be paid if it is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as (a) adequate reserve or other appropriate provision, as shall be required in conformity with GAAP shall have been made therefor, (b) in the case of a Tax or claim which has or may become a Lien against any of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral to satisfy such Tax or claim and (c) such Tax or claim could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 5.4. MAINTENANCE OF PROPERTIES. Each Credit Party will, and will cause each of its Subsidiaries to, maintain or cause to be maintained, all material properties used in the businesses of Holdings and its Subsidiaries in such manner as is necessary to properly conduct such businesses. 5.5. INSURANCE. Holdings will maintain or cause to be maintained, with financially sound and reputable insurers, such public liability insurance, third party property damage insurance, business interruption insurance and casualty insurance with respect to liabilities, losses or damage in respect of the assets, properties and businesses of Holdings and its 115 Subsidiaries as may customarily be carried or maintained under similar circumstances by Persons engaged in similar businesses, in each case in such amounts (giving effect to self-insurance), with such deductibles, covering such risks and otherwise on such terms and conditions as shall be customary for such Persons. Without limiting the generality of the foregoing, Holdings will maintain or cause to be maintained (a) flood insurance with respect to each Flood Hazard Property, if any, that is located in a community that participates in the National Flood Insurance Program, in each case in compliance with any applicable regulations of the Board of Governors of the Federal Reserve System, and (b) replacement value casualty insurance on the Collateral under such policies of insurance, with such insurance companies, in such amounts, with such deductibles, and covering such risks as are at all times carried or maintained under similar circumstances by Persons engaged in similar businesses. Each such policy of insurance shall (i) name Collateral Agent, on behalf of Lenders as an additional insured thereunder as its interests may appear and (ii) in the case of each casualty insurance policy, contain a loss payable clause or endorsement, reasonably satisfactory in form and substance to Collateral Agent, that names Collateral Agent, on behalf of Lenders as the loss payee thereunder and provides for at least thirty days' prior written notice to Collateral Agent of any modification or cancellation of such policy. 5.6. INSPECTIONS. Each Credit Party will, and will cause each of its Subsidiaries to, permit any authorized representatives designated by Administrative Agent, Syndication Agent or any Lender to visit and inspect any of the properties of any Credit Party and any of its respective Subsidiaries, to inspect, copy and take extracts from its and their financial and accounting records, and to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants, all upon reasonable notice and at such reasonable times during normal business hours and as often as may reasonably be requested; provided that (i) the Lenders shall be limited to one visit per property per Fiscal Year (excluding any visits during an Event of Default), (ii) all visits by Lenders shall be coordinated through Administrative Agent and, other than visits during an Event of Default, shall be at the expense of the applicable Lenders and (iii) management shall have the opportunity to be present at discussions with independent public accountants. 5.7. LENDERS MEETINGS. Holdings and Company will, upon the request of Administrative Agent or Requisite Lenders, participate in a meeting of Administrative Agent and Lenders once during each Fiscal Year to be held at Company's corporate offices (or at such other location as may be agreed to by Company and Administrative Agent) at such time as may be agreed to by Company and Administrative Agent. 5.8. COMPLIANCE WITH LAWS. Each Credit Party will comply, and shall cause each of its Subsidiaries to comply, with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority (including all Environmental Laws), noncompliance with which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. 5.9. ENVIRONMENTAL. (a) Environmental Disclosure. Each Credit Party will deliver to Administrative Agent: 116 (i) within a reasonable time after receipt thereof, copies of all environmental audits, investigations, analyses and reports of any kind or character, whether prepared by personnel of Holdings or any of its Subsidiaries or by independent consultants, Governmental Authorities or any other Persons, with respect to actually or potentially significant environmental matters related to past or current operations at any Facility or with respect to any Environmental Claims that could reasonably be expected to result in a Material Adverse Effect; (ii) within a reasonable time after the occurrence thereof, written notice describing in reasonable detail (1) any Release required to be reported to any Governmental Authority under any Environmental Law that could reasonably be expected to result in liabilities greater than U.S.$1.0 million, (2) any remedial action taken by Holdings, any of its Subsidiaries or any other Person in response to (A) any Hazardous Materials Activities the existence of which has a reasonable possibility of resulting in one or more Environmental Claims having, individually or in the aggregate, a Material Adverse Effect, or (B) any Environmental Claims that, individually or in the aggregate, have a reasonable possibility of resulting in a Material Adverse Effect, and (3) any discovery by an Authorized Officer of any Credit Party of any occurrence or condition on any real property adjoining or in the vicinity of any Facility that could reasonably be expected to cause such Facility or any part thereof to be subject to any material restrictions on the ownership, occupancy, transferability or use thereof under any Environmental Laws; (iii) within a reasonable time after the sending or receipt thereof by Holdings or any of its Subsidiaries, a copy of any and all written communications with respect to (1) any Environmental Claims that, individually or in the aggregate, have a reasonable possibility of giving rise to a Material Adverse Effect, (2) any Release required to be reported to any Governmental Authority under any Environmental Law that could reasonably be expected to result in liabilities greater than U.S.$1.0 million, and (3) any request for information from any Governmental Authority that suggests it is investigating or conducting an inspection to determine whether Holdings or any of its Subsidiaries may be potentially responsible for any Hazardous Materials Activity that could reasonably be expected to have a Material Adverse Effect; (iv) prompt written notice describing in reasonable detail (1) any proposed acquisition of stock, assets, or property by Holdings or any of its Subsidiaries that could reasonably be expected to (A) expose Holdings or any of its Subsidiaries to, or result in, Environmental Claims that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or (B) affect the ability of Holdings or any of its Subsidiaries to maintain in full force and effect all material Governmental Authorizations required under any Environmental Laws for their respective operations and (2) any proposed action to be taken by Holdings or any of its Subsidiaries to modify current operations in a manner that could reasonably be expected to subject Holdings or any of its Subsidiaries to any additional obligations or requirements under any 117 Environmental Laws that could reasonably be expected to have a Material Adverse Effect; and (v) with reasonable promptness, such other documents and information as from time to time may be reasonably requested by Administrative Agent in relation to any matters disclosed pursuant to this Section 5.9(a). (b) Hazardous Materials Activities, Etc. Each Credit Party shall promptly take, and shall cause each of its Subsidiaries promptly to take, any and all actions necessary to (i) cure any violation of Environmental Laws by such Credit Party or its Subsidiaries that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and (ii) make an appropriate response to any Environmental Claim against such Credit Party or any of its Subsidiaries and discharge any obligations it may have to any Person thereunder where failure to do so could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. (c) Failure of Environmental Compliance. If an Event of Default caused by reason of a breach of Section 4.14 or Section 5.9(a) or 5.9(b) shall have occurred and be continuing for more than 30 days without the applicable Credit Parties commencing activities reasonably likely to cure such Event of Default, Company shall, at the written request of Administrative Agent, provide to Administrative Agent as soon as practicable after such request, at the expense of the Credit Parties, an environmental assessment report regarding the matters which are the subject of such Event of Default, including, where appropriate, any soil and/or groundwater sampling, prepared by a reputable environmental consulting firm and, in the form and substance, reasonably acceptable to Administrative Agent and indicating the presence or absence of Hazardous Materials and the estimated cost of any compliance or Response to address them. 5.10. SUBSIDIARIES. (a) In the event that any Person becomes a wholly-owned Domestic Subsidiary of Holdings, Holdings shall (a) promptly cause such Domestic Subsidiary to become a Guarantor hereunder and a Pledgor under the Security Agreements by executing and delivering to Administrative Agent and Collateral Agent a Counterpart Agreement, and (b) take all such actions and execute and deliver, or cause to be executed and delivered, all such documents, instruments, agreements, and certificates as are similar to those described in Sections 3.1(b), 3.1(g), 3.1(h) and 3.1(j). In the event that any Person becomes a Foreign Subsidiary of Holdings, and the ownership interests of such Foreign Subsidiary are owned by Holdings or by any Domestic Subsidiary thereof, Holdings shall, or shall cause such Domestic Subsidiary to, deliver all such documents, instruments, agreements and certificates as are similar to those described in Section 3.1(b), and Holdings shall take, or shall cause such Domestic Subsidiary to take, all of the actions referred to in Section 3.1(h)(i) necessary to grant and to perfect a First Priority Lien in favor of Collateral Agent, for the benefit of Secured Parties, under the applicable Security Agreement in 65% of such ownership interests. With respect to each such Subsidiary, Holdings shall promptly send to Administrative Agent written notice setting forth with respect to such Person (i) the date on which such Person became a Subsidiary of Holdings, and (ii) all of the data required to be set forth in Schedules 4.1 and 4.2 with respect to all Subsidiaries of Holdings; 118 provided such written notice shall be deemed to supplement Schedules 4.1 and 4.2 for all purposes hereof. (b) Subject to this Section 5.10, with respect to any property (other than any Real Estate Asset) acquired after the Closing Date by any Credit Party that is intended to be subject to the Lien created by any of the Collateral Documents but is not so subject, promptly (and in any event within 60 days after the acquisition thereof) (i) execute and deliver to Administrative Agent and Collateral Agent such amendments or supplements to the relevant Collateral Documents or such other documents as Administrative Agent or Collateral Agent shall deem necessary or advisable to grant to Collateral Agent, for the benefit of the Secured Parties, a Lien on such property subject to no Liens other than Permitted Liens, and (ii) take all actions necessary to cause such Lien to be duly perfected to the extent required by such Security Document in accordance with all applicable requirements of law, including the filing of financing statements in such jurisdictions as may be reasonably requested by Administrative Agent. Company shall otherwise take such actions and execute and/or deliver to Collateral Agent such documents as Administrative Agent or Collateral Agent shall require to confirm the validity, perfection and priority of the Lien of the Collateral Documents against such after-acquired properties. (c) At its sole discretion, Company shall have the ability to cause any of its Subsidiaries that is not a Guarantor and that does not otherwise need to be made a Guarantor pursuant to this Section 5.10 to become a Guarantor hereunder and a Pledgor under the Security Agreements. 5.11. ADDITIONAL REAL ESTATE ASSETS. (a) In the event that (i) any Credit Party acquires a Material Real Estate Asset or (ii) any Real Estate Asset owned by any Credit Party becomes a Material Real Estate Asset, and such interest has not otherwise been made subject to the Lien of the Collateral Documents in favor of Collateral Agent, for the benefit of Secured Parties, then such Credit Party, within 30 days (or such later date as is acceptable to Administrative Agent) after the date of such acquisition or the date on which such Real Estate Asset becomes a Material Real Estate Asset, shall take all such actions and execute and deliver, or cause to be executed and delivered, all such mortgages, documents, instruments, agreements, opinions and certificates similar to those described in Sections 3.1(g) and (j) with respect to each such Material Real Estate Asset that Collateral Agent shall reasonably request to create in favor of Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording and/or registration referred to herein, perfected First Priority security interest in such Material Real Estate Assets, subject to no Liens other than the Permitted Collateral Liens; provided that (x) in no event shall any Credit Party be required to determine whether a Real Estate Asset is a Material Real Estate Asset other than at the time of acquisition thereof or at the time of delivery of an Officer's Certificate pursuant to Section 5.1(n) and (y) the use of current insurance company valuations with respect to the replacement value of a Real Estate Asset that are believed in good faith by a Credit Party to be reasonable shall be conclusive as to the fair market value of such asset. (b) At all times, Collateral Agent shall have, for the benefit of the Secured Parties, (x) a Mortgage Lien on or (y) with respect to Leasehold Properties, a Landlord Personal 119 Property Collateral Access Agreement with respect to, Real Estate Assets where at least 50% of the book value of the total consolidated inventory of Holdings and its Subsidiaries is located; provided that in no event shall Company be required to determine whether the foregoing requirement is met other than at the time of delivery of an Officer's Certificate pursuant to Section 5.1(n). In the event that the foregoing requirement is not met, the Credit Parties shall take all such actions and execute and deliver, or cause to be executed and delivered, all such mortgages, documents, instruments, agreements, opinions and certificates similar to those described in Sections 3.1(g), (h) and (j) to the extent applicable, that Collateral Agent shall reasonably request and, if such requirement is to be met by the delivery of a mortgage or similar document, necessary to create in favor of Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein, perfected First Priority Mortgage Lien on any such Real Estate Asset. 5.12. INTEREST RATE PROTECTION. No later than 60 days following the Closing Date and at all times thereafter, Company shall maintain, or caused to be maintained, in effect one or more Interest Rate Agreements for a term of not less than 3 years and otherwise in form and substance reasonably satisfactory to the Agents, which Interest Rate Agreements shall contain terms and conditions that result in at least 50% of the aggregate principal amount of Consolidated Total Debt outstanding at the Closing Date being effectively subject to a fixed or maximum interest rate acceptable to the Agents. 5.13. FURTHER ASSURANCES. At any time or from time to time upon the request of Administrative Agent, each Credit Party will, at its expense, promptly execute, acknowledge and deliver such further documents and do such other acts and things as Administrative Agent or Collateral Agent may reasonably request in order to effect fully the purposes of the Credit Documents. In furtherance and not in limitation of the foregoing, each Credit Party shall take such actions as Administrative Agent or Collateral Agent may reasonably request from time to time to ensure that the Obligations are guarantied by the Guarantors and are secured by substantially all of the assets of Holdings, its Subsidiaries and all of the outstanding Capital Stock of Company and its Subsidiaries (subject to limitations contained in the Credit Documents with respect to Foreign Subsidiaries). 5.14. LEASEHOLD PROPERTIES. (a) For sixty days after the Closing Date, the Credit Parties shall use commercially reasonable efforts to obtain Landlord Personal Property Collateral Access Agreements with respect to the Keystone Properties. (b) The Credit Parties shall use commercially reasonable efforts to obtain Landlord Personal Property Collateral Access Agreements with respect to (i) the BAL Properties at any time when any such property's lease comes up for renewal and (ii) any Leasehold Properties acquired after the Closing Date where more than Can$1.0 million of inventory is reasonably expected to be held; provided that the amount of such inventory need only be calculated at the signing of any such lease and at the date of delivery of an Officer's Certificate pursuant to Section 5.1(n). Notwithstanding the foregoing, the Credit Parties need not comply with Section 5.14(b)(ii) as long as the covenant in Section 5.11(b) would be satisfied if such covenant contained a 75% requirement instead of a 50% requirement. 120 (c) If the real property located at 640 Route Cameron, Ste-Marie, Quebec, G6E 1B2, is still owned by a Credit Party eighteen months after the Closing Date, then at such time the applicable Credit Party shall grant to Collateral Agent for the benefit of the Secured Parties a First Priority Mortgage Lien on such real property and shall take or cause actions necessary to execute and deliver to Collateral Agent items similar to those described in Section 3.1(g) or (j) to the extent applicable. 5.15. POST-CLOSING OBLIGATIONS. (a) Company shall, and shall cause Canadian Holding Company to: (i) forward to Collateral Agent and its counsel promptly upon receipt any responses which are received in respect of any off-title searches relating to the Closing Date Mortgaged Properties located in Canada (the "OFF-TITLE SEARCHES") for which responses have not been received as of the Closing Date as identified in the off-title search reports attached as a schedule to the title opinions for such properties delivered under Section 3.1(g)(ii); (ii) take such actions as Collateral Agent may reasonably require to resolve, to the satisfaction of Collateral Agent, acting reasonably, any outstanding issues that are revealed by the Off-Title Searches, including those issues, if any, identified in the off-title search reports attached as a schedule to the title opinions delivered under Section 3.1(g)(ii) for the Closing Date Mortgaged Properties located in Canada or in any response received subsequent to the Closing Date in respect of any Off-Title Searches for which a response had not been received by the Closing Date; and (iii) register a discharge of Easement KM17568 from title to the Closing Date Mortgaged Property located at 4225 Spallumcheen Drive, Armstrong, British Columbia and provide evidence thereof to Collateral Agent and its counsel as soon as possible and in any event within 30 days after the Closing Date. (b) The applicable Credit Party shall obtain and deliver to Collateral Agent, within ten (10) Business Days after the Closing Date, unless waived or extended by Collateral Agent in its sole discretion (x) a survey for the Closing Date Mortgaged Properties located at 1001 North Oak Road, Plymouth, Indiana and 2011 Mid Atlantic Parkway, Martinsburg, West Virginia and (y) such affidavits or other documents requested by the title company, each in form and substance suitable to the title company to induce it to remove the standard survey exceptions from the Title Policy and issue survey related endorsements. (c) The applicable Credit Party shall obtain, file of record with the applicable recording office and provide proof of filing to Collateral Agent, within thirty (30) days after the Closing Date, unless waived or extended by Collateral Agent in its sole discretion, a satisfaction of that certain Deed of Trust, Assignment of Rents and Security Agreement dated April 3, 1998, between Maax-Hydro Swirl Manufacturing Corp. and Maax, Inc., recorded on April 8, 1998 in the real estate records of Whatcom County Washington under document number 1980400639, 121 and UCC-3 terminations of the filings made in Lowndes County Georgia at Deed Book 1247 Page 31, Deed Book 1260 Page 360, Deed Book 1544 Page 022, Deed Book 1636 Page 336 and Deed Book 1636 Page 340. SECTION 6. NEGATIVE COVENANTS Each Credit Party covenants and agrees that, so long as any Commitment is in effect and until payment in full of all Obligations (other than contingent Obligations that constitute indemnification obligations that survive termination of this Agreement) and cancellation, collateralization in accordance with Section 2.5(n) or expiration of all Letters of Credit, such Credit Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 6. Each Parent Company (other than Holdings) covenants and agrees that, so long as any Commitment is in effect and until payment in full of all Obligations (other than contingent Obligations that constitute indemnification obligations that survive termination of this Agreement) and cancellation, collateralization in accordance with Section 2.5(n) or expiration of all Letters of Credit, such Parent Company shall comply with the terms and provisions of Section 6.12. 6.1. INDEBTEDNESS. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or indirectly liable with respect to any Indebtedness or issue any Preferred Stock, except: (a) the Obligations; (b) Indebtedness or Preferred Stock permitted by Sections 6.7(b), (d) or (h); (c) (i) the Senior Subordinated Notes issued on the Closing Date and senior subordinated guarantees thereof by the Guarantors and additional Senior Subordinated Notes issued after the Closing Date under the Senior Subordinated Notes Indenture and senior subordinated guarantees thereof by the Guarantors, (ii) Senior Subordinated Notes issued by Company and senior subordinated guarantees issued by the Guarantors in exchange for Senior Subordinated Notes issued in a private placement and guarantees referenced in clause (i) pursuant to an "A/B" exchange offer; and (iii) so long as no Event of Default is continuing, Permitted Refinancing Indebtedness in respect of Indebtedness permitted by clause (i) or (ii) above; (d) Indebtedness or Preferred Stock incurred by Company or any of its Subsidiaries consisting of guarantees, earn-outs, indemnities or obligations in respect of purchase price adjustments in connection with the disposition of assets, including, without limitation, shares of Capital Stock; provided that the maximum aggregate liability in respect of all such obligations outstanding under this clause (d) shall at no 122 time exceed the gross proceeds actually received by Company and its Subsidiaries in connection with such disposition; (e) Indebtedness in respect of workers' compensation claims, self-insurance obligations, bankers' acceptances, bids, performance, completion, appeal and surety bonds or guarantees, and similar types of obligations in the ordinary course of business; (f) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five business days; (g) guaranties by Company of Indebtedness of a Guarantor Subsidiary or guaranties by a Subsidiary of Company of Indebtedness of Company or a Guarantor Subsidiary, in each case, with respect to Indebtedness otherwise permitted to be incurred pursuant to this Section 6.1; (h) Indebtedness described in Schedule 6.1, but not any extensions, renewals or replacements of such Indebtedness except (i) renewals and extensions expressly provided for in the agreements evidencing any such Indebtedness as the same are in effect on the date of this Agreement and (ii) Permitted Refinancing Indebtedness in respect thereof; (i) Indebtedness with respect to Capital Leases, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used or useful in the business of Company or any of its Subsidiaries, and refinancings thereof, in an aggregate amount not to exceed U.S.$10.0 million at any time outstanding; (j) liabilities under factoring agreements the sales of accounts receivable pursuant to which are permitted by Section 6.9(j), to the extent required to be reflected as Indebtedness in accordance with GAAP; (k) liabilities under Hedge Agreements; (l) Holdings may issue Qualified Capital Stock; and (m) other Indebtedness or Preferred Stock of Holdings and its Subsidiaries, in an aggregate amount not to exceed U.S.$20.0 million at any time outstanding. 6.2. LIENS. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind (including any document or instrument in respect of goods or accounts receivable) of Holdings or any of its Subsidiaries, whether now owned or hereafter acquired, or any income or profits therefrom, or file or authorize the filing of, or authorize to remain in effect, any financing statement or other similar notice of any Lien with respect to any such property, asset, income or profits under the UCC of any State, the PPSA of any Province or under any similar recording or notice statute, except: 123 (a) Liens in favor of Collateral Agent for the benefit of Secured Parties granted pursuant to any Credit Document; (b) Liens for Taxes if not yet due or if obligations with respect to such Taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted (which proceedings contesting such Liens shall have the effect of staying the sale or forfeiture of any portion of the Collateral on account of such Liens), so long as reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts; (c) statutory Liens of landlords, of carriers, warehousemen, mechanics, repairmen, suppliers, workmen and materialmen, and other Liens imposed by law (other than any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or by ERISA), in each case incurred in the ordinary course of business (i) for amounts not yet overdue or (ii) for amounts that are delinquent and that (in the case of any such amounts delinquent for a period in excess of five days) are being contested in good faith by appropriate proceedings (which proceedings contesting such Liens shall have the effect of staying the sale or forfeiture of any portion of the Collateral on account of such Liens), so long as such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts; (d) Liens incurred in the ordinary course of business in connection with workers' compensation, unemployment insurance, vacation pay and other types of social security, or to secure the performance of tenders, statutory obligations, completion, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money or other Indebtedness), so long as no foreclosure, sale or similar proceedings have been commenced on account thereof (i) with respect to any Real Estate Asset or (ii) that could reasonably be expected to result in a Material Adverse Effect; (e) easements, rights-of-way, restrictions, encroachments, and other minor defects or irregularities in title, in each case which do not and will not interfere in any material respect with the ordinary conduct of the businesses of Holdings and its Subsidiaries at the property affected thereby; (f) any interest or title of a lessor or sublessor under any lease of real estate or personal property permitted hereunder entered into in the ordinary course of business; provided, however, with respect to any properties acquired by a Credit Party after the Closing Date which are mortgaged under Section 5.11, and which are encumbered by existing Lease(s) on the date of such acquisition, such Lease(s) shall be Permitted Liens and Permitted Collateral Liens so long as (i) such Lease(s) are subordinate by their terms to the Mortgage with respect to such Real Estate Asset, or (ii) the applicable Credit Party obtains a subordination, non-disturbance and attornment agreement from each tenant thereunder in form and substance reasonably satisfactory to Collateral Agent or (iii) the applicable Credit Party is unable to obtain such subordination, non-disturbance and 124 attornment agreement despite its commercially reasonable efforts to do so and the Lease is otherwise reasonably satisfactory to Collateral Agent; (g) Liens solely on any cash earnest money deposits made by Holdings or any of its Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder; (h) purported Liens evidenced by the filing of precautionary UCC or PPSA financing statements relating solely to operating leases of personal property entered into in the ordinary course of business; (i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (j) any zoning or similar law or right reserved to or vested in any governmental office or agency to control or regulate the use of any real property; (k) licenses of patents, trademarks and other intellectual property rights granted by Company or any of its Subsidiaries in the ordinary course of business and not interfering in any respect with the ordinary conduct of the business of Holdings and its Subsidiaries taken as a whole; (l) Liens described in Schedule 6.2 or on a Title Policy delivered pursuant to Section 3.1(g)(ii); (m) Liens securing Indebtedness permitted pursuant to 6.1(i); provided any such Lien shall encumber only the asset acquired with the proceeds of such Indebtedness; (n) Liens on accounts receivable subject to sales permitted pursuant to Section 6.9(j); (o) Liens deemed to exist in connection with Investments in repurchase agreements permitted under Section 6.7(a); (p) bankers' Liens, rights of set-off and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by Company or any of its Subsidiaries, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements; provided that, unless such Liens are non-consensual and arise by operation of law, in no case shall any such Liens secure (either directly or indirectly) the repayment of any Indebtedness; (q) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by Company or any of its Subsidiaries in the ordinary course of business in accordance with the past practices of such entity; 125 (r) judgment Liens not giving rise to an Event of Default; (s) consensual Liens in the Province of Quebec securing the payment of rent and other amounts customarily owed to a landlord under leases of real property in the Province of Quebec; and (t) Liens not otherwise permitted under this Section 6.2; provided that the aggregate amount of all obligations secured thereby does not exceed U.S.$5.0 million at any time outstanding. 6.3. EQUITABLE LIEN. If any Credit Party or any of its Subsidiaries shall create or assume any Lien upon any of its properties or assets, whether now owned or hereafter acquired, other than Permitted Liens, it shall make or cause to be made effective provisions whereby the Obligations will be secured by such Lien equally and ratably with any and all other Indebtedness secured thereby as long as any such Indebtedness shall be so secured; provided, notwithstanding the foregoing, this covenant shall not be construed as a consent by Requisite Lenders to the creation or assumption of any such Lien not otherwise permitted hereby. 6.4. NO FURTHER NEGATIVE PLEDGES. No Credit Party nor any of its Subsidiaries shall enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets, whether now owned or hereafter acquired, except with respect to (a) specific property encumbered to secure payment of particular Indebtedness or to be sold pursuant to an executed agreement with respect to a permitted Asset Sale, (b) restrictions by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses and similar agreements entered into in the ordinary course of business (provided that such restrictions are limited to the property or assets secured by such Liens or the property or assets subject to such leases, licenses or similar agreements, as the case may be), (c) restrictions by reason of any Permitted Lien or any document or instrument governing any Permitted Lien, provided that any such restriction contained therein relates only to the asset or assets subject to such Permitted Lien and (d) restrictions under the Credit Documents and the Senior Subordinated Notes Indenture. 6.5. RESTRICTED JUNIOR PAYMENTS. No Credit Party shall, nor shall it permit any of its Subsidiaries through any manner or means or through any other Person to, directly or indirectly, declare, order, pay, make or set apart, or agree to declare, order, pay, make or set apart, any sum for any Restricted Junior Payment, except (a) Company may make regularly scheduled payments of interest in respect of the Senior Subordinated Notes or any other Subordinated Indebtedness in accordance with the terms of, and only to the extent required by, and subject to the subordination provisions contained in, the Senior Subordinated Notes Indenture, in the case of the Senior Subordinated Notes, and the indenture or other agreement pursuant to which such Subordinated Indebtedness was issued, in the case of any other Subordinated Indebtedness; (b) dividends or distributions payable to Company or any Guarantor Subsidiary or to all holders (other than any Parent Company that is not a Guarantor) of 126 Capital Stock of a Subsidiary on a pro rata basis, taking into account the relative preferences, if any, of the various classes of equity interests in each Subsidiary; provided that any dividends or distributions to any Parent Company pursuant to this clause shall only be allowed to the extent such Parent Company immediately contributes such dividend or distribution as common equity to Company or the Subsidiary that made the dividend or distribution; (c) any dividend, payment or distribution to occur as part of the Transactions on the Closing Date in connection with the amalgamation under the Merger Agreement; (d) Company may make Restricted Junior Payments to or on behalf of any Parent Company in an amount sufficient to pay out-of-pocket legal, accounting and filing and other general corporate overhead costs of such Parent Company actually incurred by such Parent Company and franchise taxes and other fees required to maintain its existence, in any case in an aggregate amount not to exceed U.S.$2.0 million in any calendar year; (e) so long as no Default or Event of Default exists, the repurchase, redemption or other acquisition or retirement for value of any Capital Stock of Company or any Guarantor Subsidiary, or payments by Company to any Parent Company to permit, and which are used by, any Parent Company to repurchase, redeem or otherwise acquire or retire for value any Capital Stock of any Parent Company, in each case, held by any current or former officer, director, consultant or employee of Company or any Guarantor Subsidiary (or permitted transferees, assigns, estates or heirs of the foregoing); provided that the aggregate price paid for all Capital Stock repurchased, redeemed, acquired or retired pursuant to this clause (e), net of proceeds received by or contributed to Company and Guarantor Subsidiaries from sales or resales of any Capital Stock purchased pursuant to this clause (e) and net of repayment of loans related to such Capital Stock made by a Credit Party pursuant to Section 6.7(f) and repaid in connection with such repurchase, redemption, acquisition or retirement, shall not exceed U.S.$2.5 million in any calendar year, with unused amounts being carried over for availability in the following calendar year, but not in any calendar year thereafter, and with the amount expended in any calendar year first being deemed to come from the amount allocated to such calendar year before giving effect to any carryover; (f) to the extent that Company or one or more of its Subsidiaries are members of a consolidated, combined or similar income tax group of which a direct or indirect parent of Company is the common parent, Company and its Subsidiaries may make Restricted Junior Payments pursuant to a tax sharing agreement or otherwise to the extent necessary to pay, and which are used to pay, any income taxes of such tax group that are attributable to Company and/or its Subsidiaries (including, for the avoidance of doubt, any U.S. income taxes (net of applicable foreign tax credits) imposed on a direct or indirect parent of Company pursuant to Section 951 of the Internal Revenue Code, as amended (or any comparable provision of any state or local law), that is attributable to the ownership of stock of a Subsidiary by Company or any direct or indirect parent of Company ("SECTION 951 TAXES")) and are not payable directly by Company and/or its Subsidiaries; provided that the amount of any such dividends or distributions (plus any 127 such taxes payable directly by Company and/or its Subsidiaries) shall not exceed the amount of such taxes that would have been payable directly by Company and/or its Subsidiaries had Company been the U.S. common parent of a separate tax group that included only Company and its Subsidiaries and assuming that all the stock of any Subsidiary that gives rise to Section 951 Taxes was owned by Company (and not partly by any direct or indirect parent of Company); and (g) Company may prepay, defease, redeem, repurchase or otherwise acquire or retire for value any Subordinated Indebtedness with the proceeds received from any contribution to its common equity capital financed by the substantially concurrent issue and sale of Qualified Capital Stock by any Parent Company which is not required to be applied pursuant to Section 2.16(c). 6.6. RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS. Except as provided herein, in the other Credit Documents and in the Senior Subordinated Note Indenture, no Credit Party shall, nor shall it permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of Company to (a) pay dividends or make any other distributions on any of such Subsidiary's Capital Stock owned by Company or any other Subsidiary of Company, (b) repay or prepay any Indebtedness owed by such Subsidiary to Company or any other Subsidiary of Company, (c) make loans or advances to Company or any other Subsidiary of Company, or (d) transfer any of its property or assets to Company or any other Subsidiary of Company other than restrictions (i) in agreements evidencing Indebtedness permitted by Section 6.1(i) that impose restrictions on the property so acquired, (ii) by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses, joint venture agreements and similar agreements entered into in the ordinary course of business, and (iii) that are or were created by virtue of any transfer of, agreement to transfer or option or right with respect to any property, assets or Capital Stock not otherwise prohibited under this Agreement. 6.7. INVESTMENTS. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, make or own any Investment in any Person, including without limitation in any Joint Venture, except: (a) Investments in Cash and Cash Equivalents; (b) Investments owned as of the Closing Date (i) in any Subsidiary (including without limitation loans and advances made to such Subsidiary) or (ii) listed on Schedule 6.7; (c) Investments (i) in any Securities received in satisfaction or partial satisfaction thereof from financially troubled account debtors and (ii) deposits, prepayments and other credits to suppliers made in the ordinary course of business of Company and its Subsidiaries; (d) Investments (i) by Company in any Guarantor Subsidiary, (ii) by Holdings or any of its Subsidiaries in Company or any Guarantor Subsidiary, (iii) by a Guarantor Subsidiary in another Guarantor Subsidiary and (iv) by a Subsidiary that is not a 128 Guarantor Subsidiary in any other Subsidiary that is not a Guarantor Subsidiary; provided that any Investment in the form of a loan or advance (other than a loan or advance owed by an entity that is not a Credit Party) shall be evidenced by the Intercompany Note or another intercompany note with substantially similar subordination provisions that is reasonably satisfactory to Administrative Agent and, in the case of a loan or advance by a Credit Party, pledged by such Credit Party as Collateral pursuant to the Collateral Documents; (e) Consolidated Capital Expenditures permitted by Section 6.8(d); (f) so long as no Default or Event of Default is continuing at the time of making such loans or advances, loans and advances to officers, directors and employees of Company or any Guarantor Subsidiary (x) in the ordinary course of business in an aggregate amount not to exceed U.S.$1.5 million at any time outstanding and (y) to the extent the proceeds are used to acquire Capital Stock of any Parent Company, so long as any cash proceeds received by a Parent Company are contemporaneously contributed to the common equity capital of Company; (g) Investments made in connection with Permitted Acquisitions permitted pursuant to Section 6.9(h); (h) Investments by Company or any Guarantor Subsidiary in any Subsidiary of Holdings that is not a Guarantor Subsidiary in an aggregate amount not to exceed U.S.$2.5 million at any time outstanding; (i) Investments by Company or any of its Subsidiaries in any Joint Venture in an aggregate amount not to exceed U.S.$2.5 million at any time outstanding; (j) Investments consisting of guaranties permitted under Section 6.1(g); and (k) other Investments in an aggregate amount not to exceed at any time outstanding U.S.$10.0 million. 6.8. FINANCIAL COVENANTS. (a) Interest Coverage Ratio. Company shall not permit the Interest Coverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending August 31, 2004, to be less than the ratio indicated below: 129
INTEREST COVERAGE FISCAL QUARTER ENDING RATIO - ------------------------------------------------------------ ---------- On or prior to August 31, 2006 2.00:1.00 After August 31, 2006 and on or prior to August 31, 2007 2.25:1.00 After August 31, 2007 and on or prior to February 28, 2008 2.50:1:00 After February 28, 2008 2.75:1.00
(b) Fixed Charge Coverage Ratio. Company shall not permit the Fixed Charge Coverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending August 31, 2004, to be less than 1.00:1.00. (c) Leverage Ratio. Company shall not permit the Leverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending August 31, 2004, to exceed the ratio indicated below:
FISCAL QUARTER ENDING LEVERAGE RATIO - ----------------------------------------------------------- -------------- On or prior to May 31, 2005 6.00:1.00 August 31, 2005 5.75:1.00 November 30, 2005 5.75:1.00 February 28, 2006 5.50:1.00 May 31, 2006 5.25:1.00 August 31, 2006 5.25:1.00 November 30, 2006 5.25:1.00 February 28, 2007 5.00:1.00 May 31, 2007 4.75:1.00 August 31, 2007 4.75:1.00 November 30, 2007 4.50:1.00 February 29, 2008 4.25:1.00 May 31, 2008 and thereafter 3.75:1.00
(d) Maximum Consolidated Capital Expenditures. Holdings shall not, and shall not permit its Subsidiaries to, make or incur Consolidated Capital Expenditures, in any Fiscal Year indicated below, in an aggregate amount for Holdings and its Subsidiaries in excess of the corresponding amount set forth below opposite such Fiscal Year; provided that (x) if the aggregate amount of Consolidated Capital Expenditures made in any Fiscal Year shall be less than the maximum amount of Consolidated Capital Expenditures permitted under this Section 6.8(d) for such Fiscal Year (before giving effect to any carryover), then such shortfall may be added to the amount of Consolidated Capital Expenditures permitted under this Section 6.8(d) for the immediately succeeding (but not any other) Fiscal Year and (y) in determining whether any amount is available for carryover, the amount expended in any Fiscal Year shall first be 130 deemed to be from the amount allocated to such Fiscal Year (before giving effect to any carryover):
CONSOLIDATED FISCAL YEAR ENDING CAPITAL EXPENDITURES - ----------------------------------------------------- -------------------- February 2005 U.S.$22.0 million February 2006 U.S.$22.0 million February 2007 and thereafter U.S.$20.0 million
In determining compliance with this Section 6.8(d), Company shall (i) calculate the U.S. Dollar equivalent amount of Capital Expenditures for each Fiscal Quarter, using the rate of exchange used in preparing the financial statements for such Fiscal Quarter, and (ii) calculate the aggregate amount of Capital Expenditures for each Fiscal Year based on the sum of the Capital Expenditures for each Fiscal Quarter determined pursuant to clause (i). (e) Certain Calculations. With respect to any period during which a Permitted Acquisition or an Asset Sale has occurred (each, a "SUBJECT TRANSACTION"), for purposes of determining compliance with the financial covenants set forth in this Section 6.8 (but not for purposes of determining the Applicable Margin, Applicable Commitment Fee Percentage and Excess Cash Flow), Consolidated Adjusted EBITDA and the components of Consolidated Fixed Charges shall be calculated with respect to such period on a pro forma basis using the historical financial statements of any business so acquired or to be acquired or sold or to be sold and the consolidated financial statements of Holdings and its Subsidiaries, which shall be adjusted as if such Subject Transaction, and any Indebtedness incurred or repaid in connection therewith, had been consummated or incurred or repaid at the beginning of such period. In making such calculations, pro forma effect shall be given to items that are directly attributable to a specific transaction, are factually supportable and are expected to have a continuing impact on Holdings and its Subsidiaries, in each case as reasonably acceptable to or required by Administrative Agent and Syndication Agent. For purposes of determining compliance with the financial covenants set forth in this Section 6.8, if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect as of the last day of the applicable period had been the applicable rate for the entire period (taking into account any Hedge Agreement applicable to such Indebtedness if such Hedge Agreement has a remaining term as at the last day of the applicable period in excess of 12 months). 6.9. FUNDAMENTAL CHANGES; DISPOSITION OF ASSETS; ACQUISITIONS. No Credit Party shall, nor shall it permit any of its Subsidiaries to, enter into any transaction of merger, amalgamation or consolidation, or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor), exchange, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any part of its business, assets or property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, whether now owned or hereafter acquired, or acquire by purchase or otherwise (other than purchases or other acquisitions of inventory, materials and equipment and capital expenditures in the ordinary course of business) the business, property or fixed assets of, or stock 131 or other evidence of beneficial ownership of, any Person or any division or line of business or other business unit of any Person, except: (a) any Subsidiary of Company may be merged or amalgamated with or into Company or any Guarantor Subsidiary, or be liquidated, wound up or dissolved, or all or any part of its business, property or assets may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction or a series of transactions, to Company or any Guarantor Subsidiary; provided, in the case of such a merger (x) involving Company, Company shall be the continuing or surviving Person, and (y) involving a Guarantor Subsidiary and not involving Company, such Guarantor Subsidiary shall be the continuing or surviving Person; (b) Holdings may be merged or amalgamated with or into any other Parent Company or Company, or be liquidated, wound up or dissolved, or all or any part of its business, property or assets may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction or a series of transactions, to any other Parent Company or Company; provided, in the case of such a merger (x) involving Company, Company shall be the continuing or surviving Person and (y) not involving Company, Holdings shall be the continuing or surviving Person; (c) any Non-Guarantor Subsidiary may be merged or amalgamated with or into any other Non-Guarantor Subsidiary; (d) so long as no Material Adverse Effect could reasonably be expected to result therefrom, any Subsidiary may be liquidated, wound up or dissolved, or all or any part of its business, property or assets may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction or a series of transactions, to any of Holdings' Subsidiaries; provided that if such Subsidiary was a Guarantor Subsidiary, then the acquiring entity must be Company or a Guarantor Subsidiary; (e) sales or other dispositions of assets that do not constitute Asset Sales; (f) Asset Sales, the proceeds of which (valued at the principal amount thereof in the case of non-Cash proceeds consisting of notes or other debt Securities and valued at fair market value in the case of other non-Cash proceeds) (i) are less than U.S.$5.0 million with respect to any single Asset Sale or series of related Asset Sales and (ii) when aggregated with the proceeds of all other Asset Sales made within the same Fiscal Year, are less than U.S.$20.0 million; provided (1) the consideration received for such assets shall be in an amount at least equal to the fair market value thereof (determined in good faith by the Board of Directors of Company), (2) no less than 75% thereof shall be paid in Cash or Cash Equivalents, and (3) the Net Asset Sale Proceeds thereof shall be applied as required by Section 2.16(a). For purposes of this clause (f), any liabilities, as shown on Holdings' most recent consolidated balance sheet, of Company or any of its Subsidiaries (other than liabilities that are by their terms subordinated to the Obligations) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases Company or such Subsidiary from such liabilities shall be deemed to be Cash; 132 (g) disposals of damaged, obsolete, worn out or surplus property or property not otherwise used or useful in the conduct of the businesses of Holdings and its Subsidiaries; (h) Permitted Acquisitions; provided that the aggregate consideration for Permitted Acquisitions shall not exceed U.S.$50.0 million in the aggregate in any Fiscal Year (excluding any such consideration consisting of Qualified Capital Stock of any Parent Company); provided further that the aggregate consideration for acquisitions of Capital Stock of any Persons that do not thereby become Guarantor Subsidiaries shall not exceed U.S.$20.0 million in the aggregate in any Fiscal Year (excluding any such consideration consisting of Qualified Capital Stock of any Parent Company); (i) Investments made in accordance with Section 6.7; (j) sales of accounts receivable pursuant to the Sodex Factoring Agreement and factoring agreements on similar terms that are reasonably satisfactory to Administrative Agent; provided that the aggregate amount of accounts receivable subject to all factoring agreements under this clause (j) shall not exceed U.S.$15.0 million at any time outstanding (it being understood that an account shall cease to be outstanding for this purpose when it has been collected); (k) dispositions under Hedge Agreements permitted hereunder; (l) the sale of the St. Marie Facility; (m) the sale all of the Capital Stock or all or substantially all of the assets of any Foreign Subsidiaries existing on the Closing Date; (n) the sale of all, but not less than all of, the Spa Business; and (o) licenses, leases and subleases of real or personal property in the ordinary course of business. To the extent the Requisite Lenders waive the provisions of this Section 6.9 with respect to the sale of any Collateral, or any Collateral is sold as permitted by this Section 6.9, such Collateral (unless sold to Holdings or any of its Subsidiaries) shall be sold free and clear of the Liens created by the Collateral Documents, and the Agents shall take all actions they deem appropriate in order to effect the foregoing. 6.10. TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of Holdings or any of its Subsidiaries, on terms that are less favorable to such Credit Party or that Subsidiary, as the case may be, than those that might reasonably be obtained at the time from a Person who is not such an Affiliate; provided the foregoing restriction shall not apply to (a) any transaction between or among Company and/or one or more Guarantor Subsidiaries; (b) reasonable and customary fees and reimbursements paid to members of the Board of Directors of Holdings and its Subsidiaries; (c) compensation 133 arrangements for officers, consultants and employees of Holdings and its Subsidiaries entered into in the ordinary course of business; (d) the payment of the closing fee on the Closing Date and, so long as no Event of Default exists, management fees to Sponsors and their Affiliates pursuant to the Management Agreement; (e) Investments permitted by Section 6.7(d), (e), (f), (h), (i) or (j); (f) Restricted Junior Payments permitted by Sections 6.5(b), (c), (d) and (e); (g) the transactions set forth on Schedule 6.10 (and renewals and replacements thereof on terms, in each case taken as a whole, not materially more disadvantageous to the applicable Credit Party or Subsidiary, as the case may be); (h) payments to Sponsors or any of their respective Affiliates of reasonable expenses incurred in connection with services provided by such Persons to any of the Credit Parties or their Subsidiaries; and (i) transactions permitted by Section 6.1(b), 6.1(g), 6.9(a), 6.9(b), 6.9(c) or 6.9(d). 6.11. CONDUCT OF BUSINESS. From and after the Closing Date, no Credit Party shall, nor shall it permit any of its Subsidiaries to, engage in any business other than (i) the businesses engaged in by such Credit Party on the Closing Date and reasonably similar, complementary, incidental or related businesses and reasonable extensions thereof and (ii) such other lines of business as may be consented to by Requisite Lenders. 6.12. PERMITTED ACTIVITIES OF PARENT COMPANIES. Holdings shall not (a) incur, directly or indirectly, any Indebtedness or any other obligation or liability whatsoever other than (i) the Indebtedness and obligations under the Senior Subordinated Notes Indenture, the Credit Documents and the Related Agreements and (ii) guarantees of obligations of Company and its Subsidiaries under leases not prohibited by this Agreement; (b) create or suffer to exist any Lien upon any property or assets now owned or hereafter acquired by it other than the Liens created under any Credit Document or pursuant to the Intercompany Debt Transactions; (c) own any assets other than the Capital Stock of Company and the Canadian Holding Company and rights under the Intercompany Debt Documents; or (d) engage in any business or activity other than (i) performing its obligations and activities incidental thereto under the Senior Subordinated Notes Indenture, the Credit Documents and the Related Agreements, (ii) issuing Qualified Capital Stock and (iii) making Restricted Junior Payments permitted to be made by it under Section 6.5. No Parent Company (other than Holdings) shall (a) incur, directly or indirectly, any Indebtedness or any other obligation or liability whatsoever other than the Indebtedness and obligations under the Related Agreements, each as in effect on the date hereof, and the Permitted Holder Debt; (b) create or suffer to exist any Lien upon any property or assets now owned or hereafter acquired by it other than the Liens created under any Credit Document or permitted pursuant to Section 6.2; (c) own any assets other than the Capital Stock of another Parent Company; (d) engage in any business or activity other than (i) performing its obligations and activities incidental thereto under the Credit Documents and the Related Agreements, (ii) issuing Qualified Capital Stock and (iii) making dividends and distributions; (e) other than as permitted by Section 6.9, consolidate or amalgamate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person; or (f) create or acquire any Subsidiary or make or own any Investment in any Person other than another Parent Company. 6.13. AMENDMENTS OR WAIVERS OF CERTAIN RELATED AGREEMENTS. Except as set forth in Section 6.14, no Credit Party shall nor shall it permit any of its Subsidiaries to, agree to any 134 material amendment, restatement, supplement or other modification to, or waiver of, any of its material rights under any Related Agreement after the Closing Date, in each case which is adverse in any material respect to the Lenders, without in each case obtaining the prior written consent of Requisite Lenders to such amendment, restatement, supplement or other modification or waiver. 6.14. AMENDMENTS OR WAIVERS OF OR WITH RESPECT TO SUBORDINATED INDEBTEDNESS. No Credit Party shall, nor shall it permit any of its Subsidiaries to, amend or otherwise change the terms of any Subordinated Indebtedness, or make any payment consistent with an amendment thereof or change thereto, if the effect of such amendment or change is to increase the interest rate on such Subordinated Indebtedness, change (to earlier dates) any dates upon which payments of principal or interest are due thereon, change any event of default or condition to an event of default with respect thereto (other than to eliminate any such event of default or increase any grace period related thereto), change the redemption, prepayment or defeasance provisions thereof, change the subordination provisions of such Subordinated Indebtedness (or of any guaranty thereof), or if the effect of such amendment or change, together with all other amendments or changes made, is to increase materially the obligations of the obligor thereunder or to confer any additional rights on the holders of such Subordinated Indebtedness (or a trustee or other representative on their behalf) which would be adverse to any Credit Party or Lenders. 6.15. FISCAL YEAR. No Credit Party shall, nor shall it permit any of its Subsidiaries to change its Fiscal Year-end from the last day of February without the prior consent of Administrative Agent. 6.16. ANTI-TERRORISM LAW; ANTI-MONEY LAUNDERING. (a) No Credit Party shall directly or indirectly, (i) knowingly conduct any business or engage in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in Section 4.27, (ii) knowingly deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order or any other Anti-Terrorism Law, or (iii) knowingly engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law (and the Credit Parties shall deliver to the Lenders any certification or other evidence requested from time to time by any Lender in its reasonable discretion, confirming the Credit Parties' compliance with this Section 6.16). (b) No Credit Party shall directly or indirectly cause or permit any of the funds of such Credit Party that are used to repay the Loans to be derived from any unlawful activity with the result that the making of the Loans would be in violation of law. 6.17. EMBARGOED PERSON. No Credit Party shall cause or permit (a) any of the funds or properties of the Credit Parties that are used to repay the Loans to constitute property of, or be beneficially owned directly or indirectly by, any Person subject to sanctions or trade restrictions under United States law ("EMBARGOED PERSON" or "EMBARGOED PERSONS") that is identified on (1) the "List of Specially Designated Nationals and Blocked Persons" (the "SDN LIST") maintained by OFAC and/or on any other similar list ("OTHER LIST") maintained by OFAC 135 pursuant to any authorizing statute including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. Sections 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Order or regulation promulgated thereunder, with the result that the investment in the Credit Parties (whether directly or indirectly) is prohibited by law, or the Loans made by the Lenders would be in violation of law, or (2) the Executive Order, any related enabling legislation or any other similar Executive Orders, or (b) any Embargoed Person to have any direct or indirect interest, of any nature whatsoever in the Credit Parties, with the result that the investment in the Credit Parties (whether directly or indirectly) is prohibited by law or the Loans are in violation of law. 6.18. DESIGNATED SENIOR DEBT. Company shall not designate any Indebtedness other than the Obligations and the Guaranteed Obligations as "Designated Senior Debt" within the meaning of the Senior Subordinated Notes Indenture. 6.19. INTERCOMPANY DEBT TRANSACTIONS. Notwithstanding anything in this Section 6 to the contrary, the Intercompany Debt Transactions are expressly permitted by this Agreement and shall be disregarded for all purposes of Section 2.16 and this Section 6, including calculating baskets and exceptions. 6.20. ACCOUNT MAINTENANCE. No Credit Party shall have cash available for withdrawal at the end of any Business Day in excess of Can$75,000 in any Designated Account that is not either (i) with respect to accounts located in Canada, maintained with a Lender or (ii) subject to a Control Agreement (as defined in the U.S. Security Agreement with respect to accounts located in the U.S., the Canadian Security Agreement with respect to accounts located in Canada (outside Quebec) and meaning an account control agreement reasonably satisfactory to Collateral Agent with respect to accounts located in Quebec or elsewhere) and the Credit Parties shall not have cash available for withdrawal at the end of any Business Day in excess of Can$750,000 in the aggregate in all Designated Accounts not meeting the conditions described in clause (i) or (ii). SECTION 7. GUARANTY 7.1. GUARANTY OF THE OBLIGATIONS. Subject to the provisions of Section 7.2, Guarantors jointly and severally hereby irrevocably and unconditionally guaranty to Administrative Agent for the ratable benefit of the Secured Parties the due and punctual payment in full of all Obligations when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under applicable provisions of the Bankruptcy Laws) (collectively, the "GUARANTEED OBLIGATIONS"). 7.2. CONTRIBUTION BY GUARANTORS. All Guarantor Subsidiaries desire to allocate among themselves (collectively, the "CONTRIBUTING GUARANTORS"), in a fair and equitable manner, their obligations arising under this Guaranty. Accordingly, in the event any payment or distribution is made on any date by a Guarantor Subsidiary (a "FUNDING GUARANTOR") under this Guaranty such that its Aggregate Payments exceed its Fair Share as of such date, such Funding Guarantor shall be entitled to a contribution from each of the other Contributing Guarantors in an amount sufficient to cause each Contributing Guarantor's Aggregate Payments to equal its Fair 136 Share as of such date. "FAIR SHARE" means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the Fair Share Contribution Amount with respect to such Contributing Guarantor to (ii) the aggregate of the Fair Share Contribution Amounts with respect to all Contributing Guarantors multiplied by (b) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under this Guaranty in respect of the obligations Guaranteed. "FAIR SHARE CONTRIBUTION AMOUNT" means, with respect to a Contributing Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Contributing Guarantor under this Guaranty that would not render its obligations hereunder or thereunder subject to avoidance as a fraudulent transfer or conveyance under applicable provisions of the Bankruptcy Laws; provided, solely for purposes of calculating the Fair Share Contribution Amount with respect to any Contributing Guarantor for purposes of this Section 7.2, any assets or liabilities of such Contributing Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder shall not be considered as assets or liabilities of such Contributing Guarantor. "AGGREGATE PAYMENTS" means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (1) the aggregate amount of all payments and distributions made on or before such date by such Contributing Guarantor in respect of this Guaranty (including, without limitation, in respect of this Section 7.2), minus (2) the aggregate amount of all payments received on or before such date by such Contributing Guarantor from the other Contributing Guarantors as contributions under this Section 7.2. The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor. The allocation among Contributing Guarantors of their obligations as set forth in this Section 7.2 shall not be construed in any way to limit the liability of any Contributing Guarantor hereunder. Each Guarantor is a third party beneficiary to the contribution agreement set forth in this Section 7.2. 7.3. PAYMENT BY GUARANTORS. Subject to Section 7.2, Guarantors hereby jointly and severally agree, in furtherance of the foregoing and not in limitation of any other right which any Secured Party may have at law or in equity against any Guarantor by virtue hereof, that upon the failure of Company to pay any of the Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under applicable provisions of the Bankruptcy Laws), Guarantors will upon demand pay, or cause to be paid, in Cash, to Administrative Agent for the ratable benefit of Secured Parties, an amount equal to the sum of the unpaid principal amount of all Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including interest which, but for Company's becoming the subject of a case under the Bankruptcy Laws, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against Company for such interest in the related bankruptcy case) and all other Guaranteed Obligations then owed to Secured Parties as aforesaid. 7.4. LIABILITY OF GUARANTORS ABSOLUTE. Each Guarantor agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment in full of the Guaranteed Obligations. In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees as follows: 137 (a) this Guaranty is a guaranty of payment when due and not of collectability; this Guaranty is a primary obligation of each Guarantor and not merely a contract of surety; (b) Administrative Agent may enforce this Guaranty upon the occurrence of an Event of Default notwithstanding the existence of any dispute between Company and any Secured Party with respect to the existence of such Event of Default; (c) the obligations of each Guarantor hereunder are independent of the obligations of Company and the obligations of any other guarantor (including any other Guarantor) of the obligations of Company, and a separate action or actions may be brought and prosecuted against such Guarantor whether or not any action is brought against Company or any of such other guarantors and whether or not Company is joined in any such action or actions; (d) payment by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge any Guarantor's liability for any portion of the Guaranteed Obligations which has not been paid. Without limiting the generality of the foregoing, if Administrative Agent is awarded a judgment in any suit brought to enforce any Guarantor's covenant to pay a portion of the Guaranteed Obligations, such judgment shall not be deemed to release such Guarantor from its covenant to pay the portion of the Guaranteed Obligations that is not the subject of such suit, and such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect, modify or abridge any other Guarantor's liability hereunder in respect of the Guaranteed Obligations; (e) any Secured Party, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability hereof or giving rise to any reduction, limitation, impairment, discharge or termination of any Guarantor's liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guaranteed Obligations; (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guaranteed Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guaranteed Obligations and take and hold security for the payment hereof or the Guaranteed Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation of any Person (including any other Guarantor) with respect to the Guaranteed Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of such Secured Party in respect hereof or the Guaranteed Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that such Secured Party may have against any such security, in each case as such Secured Party in its discretion may determine consistent herewith or the applicable Hedge Agreement and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, 138 whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor against Company or any security for the Guaranteed Obligations; and (vi) exercise any other rights available to it under the Credit Documents or the Hedge Agreements; and (f) this Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than payment in full of the Guaranteed Obligations), including the occurrence of any of the following, whether or not any Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Credit Documents or the Hedge Agreements, at law, in equity or otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guaranteed Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) hereof, any of the other Credit Documents, any of the Hedge Agreements or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guaranteed Obligations, in each case whether or not in accordance with the terms hereof or such Credit Document, such Hedge Agreement or any agreement relating to such other guaranty or security; (iii) the Guaranteed Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received pursuant to the other Credit Documents or any of the Hedge Agreements or from the proceeds of any security for the Guaranteed Obligations, except to the extent such security also serves as collateral for indebtedness other than the Guaranteed Obligations) to the payment of indebtedness other than the Guaranteed Obligations, even though any Secured Party might have elected to apply such payment to any part or all of the Guaranteed Obligations; (v) any Secured Party's consent to the change, reorganization or termination of the corporate structure or existence of Holdings or any of its Subsidiaries and to any corresponding restructuring of the Guaranteed Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guaranteed Obligations; (vii) any defenses, set-offs or counterclaims which Company may allege or assert against any Secured Party in respect of the Guaranteed Obligations, including failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Guarantor as an obligor in respect of the Guaranteed Obligations. 7.5. WAIVERS BY GUARANTORS. Each Guarantor hereby waives, for the benefit of the Secured Parties: (a) any right to require any Secured Party, as a condition of payment or performance by such Guarantor, to (i) proceed against Company, any other guarantor (including any other Guarantor) of the Guaranteed Obligations or any other Person, (ii) proceed against or 139 exhaust any security held from Company, any such other guarantor or any other Person, (iii) proceed against or have resort to any balance of any Deposit Account or credit on the books of any Secured Party in favor of Company or any other Person, or (iv) pursue any other remedy in the power of any Secured Party whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of Company or any other Guarantor including any defense based on or arising out of the lack of validity or the unenforceability of the Guaranteed Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of Company or any other Guarantor from any cause other than payment in full of the Guaranteed Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Secured Party's errors or omissions in the administration of the Guaranteed Obligations, except behavior which amounts to bad faith; (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal or equitable discharge of such Guarantor's obligations hereunder, (ii) the benefit of any statute of limitations affecting such Guarantor's liability hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any Secured Party protect, secure, perfect or insure any security interest or lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of default hereunder, the Hedge Agreements or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto, notices of any extension of credit to Company and notices of any of the matters referred to in Section 7.4 and any right to consent to any thereof; and (g) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms hereof. 7.6. GUARANTORS' RIGHTS OF SUBROGATION, CONTRIBUTION, ETC. Until the Guaranteed Obligations shall have been paid in full and the Revolving Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled or collateralized in accordance with Section 2.5(n), each Guarantor hereby waives any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against Company or any other Guarantor or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and including without limitation (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against Company with respect to the Guaranteed Obligations, (b) any right to enforce, or to participate in, any claim, right or remedy that any Secured Party now has or may hereafter have against Company, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Secured Party. In addition, until the Guaranteed Obligations shall have been paid in full and the Revolving Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled or collateralized in accordance with Section 2.5(n), each Guarantor shall withhold exercise of any right of contribution such Guarantor may have against any other guarantor (including any other Guarantor) of the Guaranteed Obligations, including, without limitation, any such right of contribution as contemplated by Section 7.2. Each Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, 140 indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor may have against Company or against any collateral or security, and any rights of contribution such Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights any Secured Party may have against Company, to all right, title and interest any Secured Party may have in any such collateral or security, and to any right any Secured Party may have against such other guarantor. If any amount shall be paid to any Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Guaranteed Obligations shall not have been finally paid in full, such amount shall be held in trust for Administrative Agent on behalf of the Secured Parties and shall forthwith be paid over to Administrative Agent for the benefit of the Secured Parties to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof. 7.7. SUBORDINATION OF OTHER OBLIGATIONS. Any Indebtedness of Company or any Guarantor now or hereafter held by any Guarantor (the "OBLIGEE GUARANTOR") is hereby subordinated in right of payment to the Guaranteed Obligations, and any such indebtedness collected or received by the Obligee Guarantor during the existence of an Event of Default shall be held in trust for Administrative Agent on behalf of the Secured Parties and shall forthwith be paid over to Administrative Agent for the benefit of the Secured Parties to be credited and applied against the Guaranteed Obligations but without affecting, impairing or limiting in any manner the liability of the Obligee Guarantor under any other provision hereof. 7.8. CONTINUING GUARANTY. This Guaranty is a continuing guaranty and shall remain in effect until all of the Guaranteed Obligations shall have been paid in full and the Revolving Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled or collateralized in accordance with Section 2.5(n). Each Guarantor hereby irrevocably waives any right to revoke this Guaranty as to future transactions giving rise to any Guaranteed Obligations. 7.9. AUTHORITY OF GUARANTORS OR COMPANY. It is not necessary for any Secured Party to inquire into the capacity or powers of any Guarantor or Company or the officers, directors or any agents acting or purporting to act on behalf of any of them. 7.10. FINANCIAL CONDITION OF COMPANY. Any Credit Extension may be made to Company or continued from time to time, and any Hedge Agreements may be entered into from time to time, in each case without notice to or authorization from any Guarantor regardless of the financial or other condition of Company at the time of any such grant or continuation or at the time such Hedge Agreement is entered into, as the case may be. No Secured Party shall have any obligation to disclose or discuss with any Guarantor its assessment, or any Guarantor's assessment, of the financial condition of Company. Each Guarantor has adequate means to obtain information from Company on a continuing basis concerning the financial condition of Company and its ability to perform its obligations under the Credit Documents and the Hedge Agreements, and each Guarantor assumes the responsibility for being and keeping informed of the financial condition of Company and of all circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations. Each Guarantor hereby waives and relinquishes any 141 duty on the part of any Secured Party to disclose any matter, fact or thing relating to the business, operations or conditions of Company now known or hereafter known by any Secured Party. 7.11. BANKRUPTCY, ETC. (a) Each Guarantor acknowledges and agrees that any interest on any portion of the Guaranteed Obligations which accrues after the commencement of any case or proceeding referred to in clause (a) above (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by operation of law by reason of the commencement of such case or proceeding, such interest as would have accrued on such portion of the Guaranteed Obligations if such case or proceeding had not been commenced) shall be included in the Guaranteed Obligations because it is the intention of Guarantors and the Secured Parties that the Guaranteed Obligations which are guaranteed by Guarantors pursuant hereto should be determined without regard to any rule of law or order which may relieve Company of any portion of such Guaranteed Obligations. Guarantors will not object to any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person making payment to Administrative Agent, or the allowance of the claim of Administrative Agent in respect of, any such interest accruing after the date on which such case or proceeding is commenced. (b) In the event that all or any portion of the Guaranteed Obligations are paid by Company, the obligations of Guarantors hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from any Secured Party as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed Obligations for all purposes hereunder. 7.12. DISCHARGE OF GUARANTY. (a) If all or substantially all of the Capital Stock of any Guarantor Subsidiary or any of its successors in interest hereunder shall be sold or otherwise disposed of (including by merger or consolidation) in accordance with the terms and conditions hereof, the Guaranty of such Guarantor Subsidiary or such successor in interest, as the case may be, hereunder shall automatically be discharged and released without any further action by any Secured Party or any other Person effective as of the time of such Asset Sale. The Agents shall take all actions they deem appropriate in order to effect such discharge and release. (b) If Company elects to cause one of its Subsidiaries to become a Guarantor pursuant to Section 5.10(c), then, so long as such Subsidiary is not otherwise required by this Agreement to be a Guarantor, the Guaranty of such Guarantor Subsidiary shall be discharged and released at the option of Company upon notice to Administrative Agent; provided that (i) any Investments in such Subsidiary made in reliance on Section 6.7(d)(i), (ii), or (iii) shall be returned in the amount and form of Investment made or shall be permitted as an Investment at the time of such release pursuant to another clause of Section 6.7 and (ii) any Subsidiary that became a Guarantor Subsidiary in order to be excluded from the limitation set forth in the proviso of Section 6.9(h) may not be released pursuant to this Section 7.12(b). 142 SECTION 8. EVENTS OF DEFAULT 8.1. EVENTS OF DEFAULT. If any one or more of the following conditions or events shall occur (each, an "EVENT OF DEFAULT"): (a) Failure to Make Payments When Due. Failure by Company to pay (i) when due any installment of principal of any Loan, whether at stated maturity, by acceleration, by mandatory prepayment, accepted Offer to Prepay or otherwise; (ii) when due any amount payable to the Issuing Bank or an Issuing Lender in reimbursement of any drawing under a Letter of Credit; or (iii) any interest on any Loan or any fee or any other amount due hereunder within five days after the date due; or (b) Default in Other Agreements. (i) Failure of any Credit Party or any of their respective Subsidiaries to pay when due any principal of or interest on or any other amount payable in respect of one or more items of Indebtedness (other than Indebtedness referred to in Section 8.1(a)) in an individual principal amount of U.S.$10.0 million or more or with an aggregate principal amount of U.S.$10.0 million or more, in each case beyond the grace period, if any, provided therefor; or (ii) breach or default by any Credit Party with respect to any other material term of (x) one or more items of Indebtedness in the individual or aggregate principal amounts referred to in clause (i) above or (y) any loan agreement, mortgage, indenture or other agreement relating to such item(s) of Indebtedness, in each case beyond the grace period, if any, provided therefor, if the effect of such breach or default is to cause, or to permit the holder or holders of that Indebtedness (or a trustee on behalf of such holder or holders), to cause, that Indebtedness to become or be declared due and payable (or redeemable) prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be; or (c) Breach of Certain Covenants. Failure of any Credit Party to perform or comply with any term or condition contained in Section 2.7, Section 5.1(f), Section 5.2 (as to legal existence) or Section 6 or any Parent Company to perform or comply with any term or condition contained in Section 6.12; or (d) Breach of Representations, etc. Any representation, warranty, certification or other statement made or deemed made by any Credit Party in any Credit Document or in any statement or certificate at any time given by any Credit Party or any of its Subsidiaries in writing pursuant hereto or thereto or in connection herewith or therewith shall be false in any material respect (or in any respect if such statement was subject to a materiality or Material Adverse Effect qualification) as of the date made or deemed made; or (e) Other Defaults Under Credit Documents. Any Credit Party shall default in the performance of or compliance with any term contained herein or any of the other Credit Documents, other than any such term referred to in any other Section of this Section 8.1, and such default shall not have been remedied or waived within thirty days after the earlier of (i) an Authorized Officer of such Credit Party becoming aware of such default or (ii) receipt by Company of notice from Administrative Agent or any Lender of such default; or 143 (f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court of competent jurisdiction shall enter a decree or order for relief in respect of Holdings or any of its Subsidiaries in an involuntary case under any Bankruptcy Laws now or hereafter in effect, which decree or order is not stayed within sixty days; or any other similar relief shall be granted under any applicable federal, state or provincial law; or (ii) an involuntary case shall be commenced against Holdings or any of its Subsidiaries under any Bankruptcy Laws now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over Holdings or any of its Subsidiaries, or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee or other custodian of Holdings or any of its Subsidiaries for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of Holdings or any of its Subsidiaries, and any such event described in this clause (ii) shall continue for sixty days without having been dismissed, bonded or discharged; or (g) Voluntary Bankruptcy; Appointment of Receiver, etc. (i) Holdings or any of its Subsidiaries shall have an order for relief entered with respect to it or shall commence a voluntary case under any Bankruptcy Laws now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or Holdings or any of its Subsidiaries shall make any assignment for the benefit of creditors; or (ii) Holdings or any of its Subsidiaries shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due; or the Board of Directors of Holdings or any of its Subsidiaries (or any committee thereof) shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to herein or in Section 8.1(f); or (h) Judgments and Attachments. Any money judgment, writ or warrant of attachment or similar process involving individually or in the aggregate at any time an amount in excess of U.S.$10.0 million (in either case to the extent not adequately covered by insurance) shall be entered or filed against Holdings or any of its Subsidiaries or any of their respective assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of forty-five days (or in any event later than five days prior to the date of any proposed sale thereunder); or (i) Dissolution. Any order, judgment or decree shall be entered against Holdings or any of its Subsidiaries decreeing the dissolution or split up of such Person, other than a voluntary dissolution permitted by Section 6.9, and such order shall remain undischarged or unstayed for a period in excess of thirty days; or (j) Employee Benefit Plans. (i) There shall occur one or more ERISA Events or Canadian Pension Plan Default Events which individually or in the aggregate results in or would reasonably be expected to result in liability of Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates in excess of U.S.$10.0 million during the term 144 hereof; or (ii) there exists any fact or circumstance that reasonably could be expected to result in the imposition of a material Lien or security interest under Section 412(n) of the Internal Revenue Code or under Section 4068 of ERISA; or (k) Change of Control. A Change of Control shall occur; or (l) Guaranties, Collateral Documents and other Credit Documents. At any time after the execution and delivery thereof, (i) the Guaranty for any reason, other than the satisfaction in full of all Obligations, shall cease to be in full force and effect (other than in accordance with its terms) or shall be declared to be null and void or any Guarantor shall repudiate its obligations thereunder, (ii) this Agreement or any Collateral Document ceases to be in full force and effect (other than by reason of a release of Collateral in accordance with the terms hereof or thereof or the satisfaction in full of the Obligations in accordance with the terms hereof) or shall be declared null and void, or Collateral Agent shall not have or shall cease to have a valid and perfected Lien in any Collateral purported to be covered by the Collateral Documents with the priority required by the relevant Collateral Document (except as provided in this Agreement or such Collateral Document), in each case for any reason other than the failure of Collateral Agent or any Secured Party to take any action within its control, or (iii) any Credit Party shall contest the validity or enforceability of any Credit Document in writing or deny in writing that it has any further liability, including with respect to future advances by Lenders, under any Credit Document to which it is a party; or (m) Offer to Prepay. Company shall fail to make an Offer to Prepay as, when and on the terms required by Section 2.16, THEN, (1) upon the occurrence of any Event of Default described in Section 8.1(f) or 8.1(g), automatically, and (2) upon the occurrence of any other Event of Default, upon receipt of notice from Administrative Agent (which notice may be given by Administrative Agent as it may determine and must be given if the Requisite Lenders so request), (A) the Revolving Commitments of each Revolving Lender and the obligation of any Issuing Lender or Issuing Bank to issue any Letter of Credit shall immediately terminate; (B) each of the following shall immediately become due and payable, in each case without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by each Credit Party: (I) the unpaid principal amount of and accrued interest on the Loans, (II) an amount equal to the maximum amount that may at any time be drawn under all Letters of Credit then outstanding (regardless of whether any beneficiary under any such Letter of Credit shall have presented, or shall be entitled at such time to present, the drafts or other documents or certificates required to draw under such Letters of Credit), and (III) all other Obligations; provided the foregoing shall not affect in any way the obligations of Lenders under Section 2.4(d), 2.4(e) or 2.5(i); (C) Administrative Agent may cause Collateral Agent to enforce any and all Liens and security interests created pursuant to Collateral Documents; and (D) without duplication of clause (B)(II), Administrative Agent shall direct Company to pay (and Company hereby agrees upon receipt of such notice, or upon the occurrence of any Event of Default specified in Sections 8.1(f) and (g) to pay) to Administrative Agent such additional amounts of cash, to be held as security for Company's reimbursement Obligations in respect of Letters of Credit then outstanding, equal to the Letter of Credit Usage at such time. 145 SECTION 9. AGENTS 9.1. APPOINTMENT OF THE AGENTS. (a) Appointment of the Agents. GSCP is hereby appointed Syndication Agent hereunder, and each Lender hereby authorizes Syndication Agent to act as its agent in accordance with the terms hereof and the other Credit Documents. RBC is hereby appointed Administrative Agent and Collateral Agent hereunder and under the other Credit Documents and each Lender hereby authorizes Administrative Agent and Collateral Agent to act as its agent in accordance with the terms hereof and the other Credit Documents. MLPF&S is hereby appointed Documentation Agent hereunder, and each Lender hereby authorizes Documentation Agent to act as its agent in accordance with the terms hereof and the other Credit Documents. Each Agent hereby agrees to act upon the express conditions contained herein and the other Credit Documents, as applicable. The provisions of this Section 9 are solely for the benefit of the Agents and Lenders and no Credit Party shall have any rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties hereunder, each Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for Holdings or any of its Subsidiaries. Each of Syndication Agent and Documentation Agent, without consent of or notice to any party hereto, may assign any and all of its rights or obligations hereunder to any of its Affiliates. As of the Closing Date, neither GSCP, in its capacity as Syndication Agent, nor MLPF&S, in its capacity as Documentation Agent, shall have any obligations but shall be entitled to all benefits of this Section 9. (b) Appointment of Supplemental Collateral Agents. It is the purpose of this Agreement and the other Credit Documents that there shall be no violation of any law of any jurisdiction denying or restricting the right of banking corporations or associations to transact business as agent or trustee in such jurisdiction. It is recognized that in case of litigation under this Agreement or any of the other Credit Documents, and in particular in case of the enforcement of any of the Credit Documents, or in case Collateral Agent deems that by reason of any present or future law of any jurisdiction it may not exercise any of the rights, powers or remedies granted herein or in any of the other Credit Documents or take any other action which may be desirable or necessary in connection therewith, it may be necessary that Collateral Agent appoint an additional individual or institution as a separate trustee, co-trustee, collateral agent or collateral co-agent (any such additional individual or institution being referred to herein individually as a "SUPPLEMENTAL COLLATERAL AGENT" and collectively as "SUPPLEMENTAL COLLATERAL AGENTS"). In the event that Collateral Agent appoints a Supplemental Collateral Agent with respect to any Collateral, (i) each and every right, power, privilege or duty, and each obligation, expressed or intended by this Agreement or any of the other Credit Documents to be exercised by or vested in or conveyed to Collateral Agent or to which Collateral Agent is subject, with respect to such Collateral shall be exercisable by and vest in such Supplemental Collateral Agent to the extent, and only to the extent, necessary to enable such Supplemental Collateral Agent to exercise such rights, powers and privileges with respect to such Collateral as if such Supplemental Collateral Agent were Collateral Agent, and to perform such duties with respect to such Collateral, and every covenant and obligation contained in the Credit Documents and 146 necessary to the exercise or performance thereof by and against such Collateral Agent shall run to and be enforceable by and against either Collateral Agent or such Supplemental Collateral Agent, and (ii) the provisions of this Section 9 that refer to Collateral Agent shall inure to the benefit of such Supplemental Collateral Agent and all references therein to Collateral Agent shall be deemed to be references to Collateral Agent and/or such Supplemental Collateral Agent, as the context may require. The appointment of a Supplemental Collateral Agent, other than during an Event of Default, shall be subject to the approval of Company, such approval not to be unreasonably withheld. Should any instrument in writing from Company or any other Credit Party be required by any Supplemental Collateral Agent so appointed by Collateral Agent for more fully and certainly vesting in and confirming to him or it such rights, powers, privileges and duties, Company shall, or shall cause such Credit Party to, execute, acknowledge and deliver any and all such instruments promptly upon request by Collateral Agent. In case any Supplemental Collateral Agent, or a successor thereto, shall die, become incapable of acting, resign or be removed, all the rights, powers, privileges and duties of such Supplemental Collateral Agent, to the extent permitted by Applicable Law, shall vest in and be exercised by Collateral Agent until the appointment of a new Supplemental Collateral Agent. (c) Control. Each Lender and Collateral Agent hereby appoint each other Lender as agent for the purpose of perfecting Collateral Agent's security interest in assets that, in accordance with any governing legislation, can be perfected by possession or control. (d) Each Lender (acting for itself and on behalf of each of its Affiliates which are or become a Lender Counterparty from time to time) confirms the appointment and designation of Collateral Agent (or any successor thereto) as the person holding the power of attorney ("FONDE DE POUVOIR") within the meaning of Article 2692 of the Civil Code for the purposes of the hypothecary security under each deed of hypothec to be granted by Company and any one or more Guarantors under the laws of the Province of Quebec and, in such capacity, Collateral Agent shall hold the hypothecs granted under the laws of the Province of Quebec as such fonde de pouvoir in the exercise of the rights conferred thereunder. The execution by Collateral Agent as such fonde de pouvoir prior to the Closing Date of any deed creating or evidencing any such hypothec is hereby ratified and confirmed. Notwithstanding the provisions of Section 32 of the Act respecting the special powers of legal persons (Quebec), Collateral Agent may acquire and be the holder of any of the debentures secured by any such hypothec. Each future Lender that becomes a party to this Agreement, by becoming a party to this Agreement, shall be deemed to have ratified and confirmed (for itself and on behalf of each of its Affiliates that are or become a Lender Counterparty from time to time) the appointment of Collateral Agent as fonde de pouvoir. 9.2. POWERS AND DUTIES; GENERAL IMMUNITY. (a) Powers; Duties Specified. Each Lender irrevocably authorizes each Agent to take such action on such Lender's behalf and to exercise such powers, rights and remedies hereunder and under the other Credit Documents as are specifically delegated or granted to such Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. Each Agent shall have only those duties and responsibilities that 147 are expressly specified herein and the other Credit Documents together with such powers, rights and remedies as are reasonably incidental thereto. Each Agent may exercise such powers, rights and remedies and perform such duties by or through its agents or employees. No Agent shall have, by reason hereof or any of the other Credit Documents, a fiduciary relationship in respect of any Lender or any Credit Party; and nothing herein or any of the other Credit Documents, expressed or implied, is intended to or shall be so construed as to impose upon any Agent any obligations in respect hereof or any of the other Credit Documents except as expressly set forth herein or therein. (b) No Responsibility for Certain Matters. No Agent shall be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency hereof or any other Credit Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by any Agent to Lenders or by or on behalf of any Credit Party to any Agent or any Lender in connection with the Credit Documents and the transactions contemplated thereby or for the financial condition or business affairs of any Credit Party or any other Person liable for the payment of any Obligations, nor shall any Agent be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Credit Documents or as to the use of the proceeds of the Loans or the use of the Letters of Credit or as to the existence or possible existence of any Event of Default or Default or to make any disclosures with respect to the foregoing. Anything contained herein to the contrary notwithstanding, Administrative Agent shall not have any liability arising from confirmations of the amount of outstanding Loans or the Letter of Credit Usage or the component amounts thereof. Without limiting the generality of the foregoing, no Agent shall be responsible or in any manner liable to any Lender for any Agent's failure to comply with Section 33-404 of the Arizona Revised Statute in connection with any and all Mortgages from time to time encumbering real property located in Arizona (the "ARIZONA MORTGAGES") if certain disclosures required of the Agents, as beneficiaries under the Arizona Mortgages, including, among other things, the names and addresses of the Lenders who are the then owners' of the Arizona Mortgages or any beneficial interest therein or in the Loans or Notes secured thereby, are not made in accordance with said statute. Each of the Lenders acknowledges that Agents have made reasonable efforts to comply fully with Section 33-404, but may not in the future comply fully or at all with said Section 33-404, but nevertheless holds harmless and indemnifies each Agent for and against any loss or damage resulting from the invalidity, unenforceability, or ineffectiveness, now or hereafter, of any and all Arizona Mortgages; the Lenders acknowledge that the foregoing is an agreed risk and shall not be construed as negligence, gross negligence or willful misconduct or other liability whatever of any Agent (or any other Lender). (c) Exculpatory Provisions. No Agent nor any of its officers, partners, directors, employees or agents shall be liable to Lenders for any action taken or omitted by any Agent under or in connection with any of the Credit Documents except to the extent caused by such Agent's gross negligence or willful misconduct. Each Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection herewith or any of the other Credit Documents or from the exercise of any power, discretion or 148 authority vested in it hereunder or thereunder unless and until such Agent shall have received instructions in respect thereof from Requisite Lenders (or such other Lenders as may be required to give such instructions under Section 10.5) and, upon receipt of such instructions from Requisite Lenders (or such other Lenders, as the case may be), such Agent shall be entitled to act or (where so instructed) refrain from acting, or to exercise such power, discretion or authority, in accordance with such instructions. Without prejudice to the generality of the foregoing, (i) each Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and shall be entitled to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for Holdings and its Subsidiaries), accountants, experts and other professional advisors selected by it; and (ii) no Lender shall have any right of action whatsoever against any Agent as a result of such Agent acting or (where so instructed) refraining from acting hereunder or any of the other Credit Documents in accordance with the instructions of Requisite Lenders (or such other Lenders as may be required to give such instructions under Section 10.5). (d) Agents Entitled to Act as Lender. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, any Agent in its individual capacity as a Lender hereunder. With respect to its participation in the Loans and the Letters of Credit, each Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as if it were not performing the duties and functions delegated to it hereunder, and the term "Lender" shall, unless the context clearly otherwise indicates, include each Agent in its individual capacity. Any Agent and its Affiliates may accept deposits from, lend money to, own securities of, and generally engage in any kind of banking, trust, financial advisory or other business with Holdings or any of its Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from Company for services in connection herewith and otherwise without having to account for the same to Lenders. 9.3. INDEPENDENT INVESTIGATION BY LENDERS; NO RESPONSIBILITY FOR APPRAISAL OF CREDITWORTHINESS. (a) Each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of Holdings and its Subsidiaries in connection with the making of the Loans and the issuance of Letters of Credit hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of Holdings and its Subsidiaries. No Agent shall have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or issuance of any Letter of Credit or at any time or times thereafter, and no Agent shall have any responsibility with respect to the accuracy of or the completeness of any information provided to Lenders. (b) Each Lender, by delivering its signature page to this Agreement or a Joinder Agreement and funding its Tranche A Term Loan, Tranche B Term Loan and/or Revolving Loans on the Closing Date or by the funding of any New Term Loans, as the case may be, shall be deemed to have acknowledged receipt of, and consented to and approved, each 149 Credit Document and each other document required to be approved by any Agent, Requisite Lenders or Lenders, as applicable on the Closing Date or as of the date of funding of such New Term Loans. 9.4. RIGHT TO INDEMNITY. Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify each Agent and its officers, directors, employees, agents, attorneys, professional advisors and Affiliates to the extent that any such Person shall not have been reimbursed by Company, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements and fees and disbursements of any financial advisor engaged by the Agents) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against an Agent or any other such Persons in exercising the powers, rights and remedies of an Agent or performing duties of an Agent hereunder or under the other Credit Documents or otherwise in its capacity as Agent in any way relating to or arising out of this Agreement or the other Credit Documents, provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of an Agent to the extent resulting from such Agent's gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. If any indemnity furnished to an Agent or any other such Person for any purpose shall, in the opinion of such Agent, be insufficient or become impaired, such Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. 9.5. SUCCESSOR AGENT, SWING LINE LENDER AND ISSUING BANK. (a) Successor Agent. Any Agent may resign at any time by giving 30 days' prior written notice thereof to Lenders and Company. Upon any such notice of resignation, Requisite Lenders shall have the right, upon five Business Days' notice to Company, to appoint a successor Agent, which must be a Lender, subject (if no Event of Default exists) to the approval of Company (not to be unreasonably withheld). Upon the acceptance of any appointment as an Agent hereunder by a successor Agent, that successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent. Whether or not a successor is appointed, the retiring Agent shall be discharged from its duties and obligations under this Agreement upon its resignation becoming effective in accordance with its notice of resignation. After any retiring Agent's resignation hereunder as an Agent, the provisions of this Section 9.5(a) shall inure to its benefit as to any actions taken or omitted to be taken by it while it was an Agent under this Agreement. Any resignation of an Agent pursuant to this Section 9.5(a) shall also constitute the resignation of it as Swing Line Lender or Issuing Bank (if applicable), and any successor Agent appointed pursuant to this Section 9.5(a) shall, upon its acceptance of such appointment, become the successor Swing Line Lender or Issuing Bank (if applicable) for all purposes hereunder. In the event that an Agent acting as Swing Line Lender resigns, Company shall prepay any outstanding Swing Line Loans made by the retiring or removed Agent in its capacity as Swing Line Lender. 150 (b) Successor Swing Line Lender. The Swing Line Lender may resign at any time by giving 30 days' prior written notice thereof to Lenders and Company. Upon any such notice of resignation, Requisite Lenders shall have the right, upon five Business Days' notice to Company, to appoint a successor Swing Line Lender, which must be a Revolving Lender, subject (if no Event of Default exists) to the approval of Company. Upon the acceptance of any appointment as Swing Line Lender hereunder by a successor Swing Line Lender, that successor Swing Line Lender shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Swing Line Lender and the retiring Swing Line Lender shall be discharged from its duties and obligations under this Agreement. Whether or not a successor is appointed, the retiring Swing Line Lender shall be discharged from its duties and obligations under this Agreement upon its resignation becoming effective in accordance with its notice of resignation. In such event Company shall prepay any outstanding Swing Line Loans made by the retiring Swing Line Lender. After any retiring Swing Line Lender's resignation hereunder as Swing Line Lender, the provisions of this Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Swing Line Lender under this Agreement. (c) Successor Issuing Bank. Issuing Bank may resign at any time by giving 30 days' prior written notice thereof to Lenders and Company. Upon any such notice of resignation, Requisite Lenders shall have the right, upon five Business Days' notice to Company, to appoint a successor Issuing Bank, which must be a Revolving Lender, subject (if no Event of Default exists) to the approval of Company (not to be unreasonably withheld). Upon the acceptance of any appointment as Issuing Bank hereunder by a successor Issuing Bank, that successor Issuing Bank shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Issuing Bank and the retiring Issuing Bank shall be discharged from its duties and obligations under this Agreement. Whether or not a successor is appointed, the retiring Issuing Bank shall be discharged from its duties and obligations under this Agreement upon its resignation becoming effective in accordance with its notice of resignation. After any retiring Issuing Bank's resignation hereunder as Issuing Bank, the provisions of this Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Issuing Bank under this Agreement. 9.6. COLLATERAL DOCUMENTS AND GUARANTIES. Each Lender hereby further authorizes Collateral Agent, on behalf of and for the benefit of Lenders, to enter into each Collateral Document as secured party and to be the agent for and representative of Lenders under any other Credit Document other than this Agreement, and each Lender agrees to be bound by the terms of each such Credit Document, provided that Collateral Agent shall not: (i) enter into or consent to any material amendment, modification, termination or waiver of any provision contained in any such Credit Document, or (ii) release any Collateral, except in compliance with Section 10.5, and provided further that, without further written consent or authorization from Lenders, Collateral Agent may execute any documents or instruments necessary to: 151 (1) release any Lien encumbering any item of Collateral that is the subject of a sale or other disposition of assets permitted by this Agreement or to which Requisite Lenders have otherwise consented, (2) release any Guarantor Subsidiary from its Guaranty if all or substantially all of the Capital Stock of such Guarantor Subsidiary is sold or disposed of to any Person (other than an Affiliate of Company) pursuant to a sale or other disposition permitted hereunder or to which Requisite Lenders have otherwise consented, or (3) subordinate the Liens of Collateral Agent, on behalf of Lenders, to any Liens permitted by Section 6.2; so long as, in the case of a sale of such item of Collateral or Capital Stock referred to in Section 9.6(a)(ii)(1) or (2), the requirements of Section 10.5 are satisfied. Anything contained in any of the Credit Documents to the contrary notwithstanding, the Credit Parties, Collateral Agent and each Lender hereby agree that: (1) no Lender shall have any right individually to realize upon any of the Collateral under any Collateral Document or to enforce any Guaranty, it being understood and agreed that all powers, rights and remedies under the Collateral Documents and the Guaranties may be exercised solely by Collateral Agent for the benefit of Lenders in accordance with the terms thereof, and (2) in the event of a foreclosure by Collateral Agent on any of the Collateral pursuant to a public or private sale, Collateral Agent or any Lender may be the purchaser of any or all of such Collateral at any such sale and Collateral Agent, as agent for and representative of Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless Requisite Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by Collateral Agent at such sale. 9.7. ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to Company or any of its Subsidiaries, Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether Administrative Agent shall have made any demand on Company) shall be entitled and empowered, by intervention in such proceeding or otherwise: (a) to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Loans or Letters of Credit and any other Obligations 152 that are owing and unpaid and to file such other papers or documents as may be necessary or advisable in order to have the claims of Lenders and the Agents (including any claim for the reasonable compensation, expenses, disbursements and advances of Lenders and the Agents and their agents and counsel and all other amounts due Lenders and the Agents hereunder) allowed in such judicial proceeding; and (b) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to Administrative Agent and, in the event that Administrative Agent shall consent to the making of such payments directly to Lenders, to pay to Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Agents and their agents and counsel, and any other amounts due the Agents hereunder. Nothing herein contained shall be deemed to authorize Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lenders or to authorize Administrative Agent to vote in respect of the claim of any Lender in any such proceeding. SECTION 10. MISCELLANEOUS 10.1. NOTICES. Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given to a Credit Party or an Agent, Swing Line Lender, Issuing Bank, an Issuing Lender or a Lender shall be sent to such Person's address as set forth on Appendix B or otherwise advised to Administrative Agent in writing. Each notice hereunder shall be in writing and may be personally served, telexed or sent by telefacsimile or mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile or telex, or three Business Days after depositing it in the mail with postage prepaid and properly addressed; provided no notice to any Agent or the Issuing Bank shall be effective until received by such party. 10.2. EXPENSES. Company agrees to pay promptly (a) all the reasonable out-of-pocket costs and expenses of preparation of the Credit Documents and any consents, amendments, waivers or other modifications thereto; (b) the reasonable fees, expenses and disbursements of counsel to the Initial Agents and their successors in their capacity as Agents in all applicable jurisdictions in connection with the negotiation, preparation, execution and administration of the Credit Documents and any consents, amendments, waivers or other modifications thereto and any other documents or matters requested by Company; (c) all reasonable costs and expenses of creating and perfecting Liens in favor of Collateral Agent, for the benefit of Lenders pursuant hereto, including filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, title insurance premiums and reasonable fees, expenses and disbursements of counsel to each Agent in all applicable jurisdictions; (d) all the reasonable costs, fees, expenses and disbursements of any auditors, accountants, consultants or appraisers appointed with the consent of Company, such consent not to be unreasonably withheld (provided no such consent 153 shall be required for an appointment during an Event of Default); (e) all the reasonable costs and expenses (including the reasonable fees, expenses and disbursements of any appraisers, consultants, advisors and agents employed or retained by Collateral Agent and its counsel) in connection with the custody or preservation of any of the Collateral; (f) all other reasonable out-of-pocket costs and expenses incurred by each Agent in connection with the syndication of the Loans and Commitments and the negotiation, preparation and execution of the Credit Documents and any consents, amendments, waivers or other modifications thereto and the transactions contemplated thereby; and (g) all reasonable out-of-pocket costs and expenses, including reasonable attorneys' fees in all applicable jurisdictions and costs of settlement, incurred by any Agent, Issuing Bank, any Issuing Lender and Lenders in enforcing any Obligations of or in collecting any payments due from any Credit Party hereunder or under the other Credit Documents after the occurrence and during the continuance of a Default or an Event of Default, (including in connection with the sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty) or in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a "work-out" or pursuant to any insolvency or bankruptcy cases or proceedings. 10.3. INDEMNITY. (a) In addition to the payment of expenses pursuant to Section 10.2, whether or not the transactions contemplated hereby shall be consummated, each Credit Party agrees to defend (subject to Indemnitees' selection of counsel), indemnify, pay and hold harmless, each Agent and Lender and the officers, partners, directors, trustees, employees, agents and Affiliates of each Agent and each Lender (each, an "INDEMNITEE"), from and against any and all Indemnified Liabilities; provided no Credit Party shall have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise from the gross negligence, bad faith or willful misconduct of that Indemnitee or its related persons. To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Section 10.3 may be unenforceable in whole or in part because they are violative of any law or public policy, the applicable Credit Party shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them. (b) To the extent permitted by applicable law, no Credit Party shall assert, and each Credit Party hereby waives, any claim against Lenders, the Agents and their respective Affiliates, directors, employees, attorneys or agents, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, arising out of, as a result of, or in any way related to, this Agreement or any Credit Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, any Loans or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, other than such damages to the extent arising out of or as a result of the gross negligence, willful misconduct or bad faith of such Person, and each Credit Party hereby waives, releases and agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. 154 10.4. SET-OFF. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, during the existence of any Event of Default each Lender or its Affiliates is hereby authorized by each Credit Party at any time or from time to time, without notice to any Credit Party or to any other Person (other than Administrative Agent), any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts) and any other Indebtedness at any time held or owing by such Lender or its Affiliates to or for the credit or the account of any Credit Party against and on account of the obligations and liabilities of any Credit Party to such Lender hereunder, the Letters of Credit and participations therein and under the other Credit Documents, including all claims of any nature or description arising out of or connected hereto, the Letters of Credit and participations therein or with any other Credit Document, irrespective of whether or not (a) such Lender shall have made any demand hereunder or (b) the principal of or the interest on the Loans or any amounts in respect of the Letters of Credit or any other amounts due hereunder shall have become due and payable pursuant to Section 2 and although such obligations and liabilities, or any of them, may be contingent or unmatured. 10.5. AMENDMENTS AND WAIVERS. (a) Requisite Lenders' Consent. Subject to Sections 10.5(b) and 10.5(c), no amendment, modification, termination or waiver of any provision of the Credit Documents, or consent to any departure by any Credit Party therefrom, shall in any event be effective without the written concurrence of the Requisite Lenders and Company. (b) Affected Lenders' Consent. Without the written consent of each Lender (other than a Defaulting Lender) that would be affected thereby and Company, no amendment, modification, termination, or consent shall be effective if the effect thereof would: (i) extend the scheduled final maturity of any Loan or Note; (ii) waive, reduce or postpone any scheduled repayment (including any Installment but not any prepayment); (iii) extend the stated expiration date of any Letter of Credit beyond the Revolving Commitment Termination Date; (iv) reduce the rate of interest on any Loan (other than any waiver of any increase in the interest rate applicable to any Loan pursuant to Section 2.12) or any fee payable hereunder; (v) extend the time for payment of any such interest or fees; (vi) reduce the principal amount of any Loan or any reimbursement obligation in respect of any Letter of Credit, or change the currency of payment of any Obligation; 155 (vii) amend, modify, terminate or waive any provision of this Section 10.5(b) or Section 10.5(c); (viii) amend the definition of "Requisite Lenders" or "Pro Rata Share"; provided, with the consent of Requisite Lenders, additional extensions of credit pursuant hereto may be included in the determination of "Requisite Lenders" or "Pro Rata Share" on substantially the same basis as the Term Loan Commitments, the Term Loans, the Revolving Commitments and the Revolving Loans are included on the Closing Date; (ix) release all or substantially all of the Collateral or all or substantially all of the Guarantors from the Guaranty except as expressly provided in the Credit Documents; or (x) consent to the assignment or transfer by any Credit Party of any of its rights and obligations under any Credit Document. (c) Other Consents. No amendment, modification, termination or waiver of any provision of the Credit Documents, or consent to any departure by any Credit Party therefrom, shall: (i) increase any Revolving Commitment of any Lender over the amount thereof then in effect without the consent of such Lender and Company; provided no amendment, modification or waiver of any condition precedent, covenant, Default or Event of Default shall constitute an increase in any Revolving Commitment of any Lender; (ii) amend, modify, terminate or waive any provision hereof relating to (x) the Swing Line Subcommitment or the Swing Line Loans without the consent of Swing Line Lender and Company, (y) the Letter of Credit Sublimit without the consent of Issuing Bank and Company or (z) any Letter of Credit without the consent of each applicable Issuing Lender and Company; (iii) amend the definition of "Requisite Class Lenders" without the consent of Requisite Class Lenders of each Class and Company; provided, with the consent of the Requisite Lenders, additional extensions of credit pursuant hereto may be included in the determination of such "Requisite Class Lenders" on substantially the same basis as the Term Loan Commitments, the Term Loans, the Revolving Commitments and the Revolving Loans are included on the Closing Date; (iv) alter the required application of any repayments, prepayments or amounts as between Classes pursuant to Section 2.17 or 2.27 without the consent of Requisite Class Lenders of each Class which is being allocated a lesser repayment, prepayment or amount as a result thereof and Company; provided Requisite Lenders may waive, in whole or in part, any prepayment so long as the application, as between Classes, of any portion of such prepayment which is still required to be made is not altered; 156 (v) amend, modify, terminate or waive any obligation of Lenders relating to the purchase of participations in Letters of Credit as provided in Section 2.5(f) without the written consent of Administrative Agent and of Issuing Bank and Company; or (vi) amend, modify, terminate or waive any provision of Section 9 as the same applies to any Agent, or any other provision hereof as the same applies to the rights or obligations of any Agent, in each case without the consent of such Agent and Company. (d) Execution of Amendments, etc. Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 10.5 shall be binding upon each Lender at the time outstanding, each future Lender. (e) Offer to Prepay. Notwithstanding anything in this Agreement to the contrary other than Section 2.17(c), any Offer to Prepay shall be accepted by all Lenders to which such Offer to Prepay was made unless three Business Days prior to the proposed redemption date the Requisite Lenders give their consent for such Offer to Prepay to be declined, in which case it shall be declined by all Lenders. 10.6. SUCCESSORS AND ASSIGNS; PARTICIPATIONS. (a) Generally. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders. No Credit Party's rights or obligations hereunder nor any interest therein may be assigned or delegated by any Credit Party without the prior written consent of all Lenders. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, Affiliates of each of the Agents and Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Register. Company, Administrative Agent and Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the corresponding Commitments and Loans listed therein for all purposes hereof, and no assignment or transfer of any such Commitment or Loan shall be effective, in each case, unless and until an Assignment Agreement effecting the assignment or transfer thereof shall have been delivered to and accepted by Administrative Agent and recorded in the Register as provided in Section 10.6(e). Prior to such recordation, all amounts owed with respect to the applicable Commitment or Loan shall be owed to the Lender listed in the Register as the owner thereof, and any request, authority or consent of any Person who, at the time of making such request or giving such authority or 157 consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Commitments or Loans. (c) Right to Assign. (i) Each Lender shall have the right at any time to sell, assign or transfer to any Eligible Assignee all or a portion of its rights and obligations under this Agreement, including, without limitation, all or a portion of its Commitment or Loans owing to it or other Obligation (provided, however, that each such assignment shall be of a uniform, and not varying, percentage of all rights and obligations under and in respect of any Loan and any related Commitments); provided that, in the case of assignments (except in the case of assignments made by or to GSCP or any of its Affiliates) of Revolving Loans or Revolving Commitments to any such Eligible Assignee that is not a Lender, an Affiliate of a Lender or a Related Fund, such assignments must be consented to by each of Administrative Agent and, with respect to Revolving Commitments, Issuing Bank and, other than during the existence of an Event of Default, Company (such consents not to be unreasonably withheld or delayed). Each Lender may make, carry or transfer Loans at, to or for the account any of its branch offices or the office of an Affiliate of such Lender; provided that, in either case, such office is an Eligible Assignee. (ii) Each assignment pursuant to Section 10.6(c)(i) (other than in the case of assignments to a Lender, an Affiliate of a Lender or a Related Fund) shall be in an aggregate amount of not less than (A) Can$5.0 million (including the Canadian Dollar Equivalent of any amount denominated in U.S. Dollars) (or such lesser amount as may be agreed to by Company and Administrative Agent or as shall constitute the aggregate amount of the Revolving Commitments and Revolving Loans of the assigning Lender) with respect to the assignment of the Revolving Commitments and Revolving Loans, (B) Can$1.0 million (or such lesser amount as may be agreed to by Company and Administrative Agent) with respect to the assignment of Tranche A Term Loans and (C) U.S.$1.0 million (or such lesser amount as may be agreed to by Company and Administrative Agent or as shall constitute the aggregate amount of the Tranche B Term Loans or New Term Loans of a Series of the assigning Lender) with respect to the assignment of Tranche B Term Loans or New Term Loans; provided that if an assignment with respect to Revolving Commitments and Revolving Loans or Tranche A Term Loans leaves the assigning Lender with less than Can$1.0 million but greater than Can$0 of Revolving Commitments or Tranche A Term Loans, as applicable, after such assignment, such assignment shall not be permitted pursuant to this Section 10.6(c). (d) Mechanics. The assigning Lender and the assignee thereof shall execute and deliver to Administrative Agent an Assignment Agreement, together with (i) a processing and recordation fee of Can$3,500 (such fee need not be paid in connection with assignments to a Lender, an Affiliate of a Lender or a Related Fund or by or to Administrative Agent or Syndication Agent or their respective Affiliates or in connection with assignments of Tranche B 158 Term Loans) and (ii) such forms, certificates or other evidence, if any, with respect to Canadian and United States federal income tax withholding matters as the assignee under such Assignment Agreement may be required to deliver to Administrative Agent, including those pursuant to Section 2.22(d). (e) Notice of Assignment. Upon its receipt of a duly executed and completed Assignment Agreement, together with the processing and recordation fee referred to in Section 10.6(d) (and any forms, certificates or other evidence required by this Agreement in connection therewith), Administrative Agent shall record the information contained in such Assignment Agreement in the Register, shall give prompt notice thereof to Syndication Agent and Company, and shall maintain a copy of such Assignment Agreement. (f) Representations and Warranties of Assignee. Each Lender, upon execution and delivery hereof or upon executing and delivering an Assignment Agreement, as the case may be, represents and warrants as of the Closing Date or as of the applicable Effective Date (as defined in the applicable Assignment Agreement) that (i) it is an Eligible Assignee; (ii) it has experience and expertise in the making of or investing in commitments or loans such as the applicable Commitments or Loans, as the case may be; and (iii) it will make or invest in, as the case may be, its Commitments or Loans for its own account in the ordinary course of its business and without a view to distribution of such Commitments or Loans within the meaning of the Securities Act or the Exchange Act or other United States or Canadian securities laws (it being understood that, subject to the provisions of this Section 10.6, the disposition of such Commitments or Loans or any interests therein shall at all times remain within its exclusive control). (g) Effect of Assignment. Subject to the terms and conditions of this Section 10.6, as of the "Effective Date" specified in the applicable Assignment Agreement: (i) the assignee thereunder shall have the rights and obligations of a "Lender" hereunder to the extent such rights and obligations hereunder have been assigned to it pursuant to such Assignment Agreement and shall thereafter be a party hereto and a "Lender" for all purposes hereof with respect to the interests assigned; (ii) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned thereby pursuant to such Assignment Agreement, relinquish its rights (other than any rights which survive the termination hereof under Section 10.10) and be released from its obligations hereunder (and, in the case of an Assignment Agreement covering all or the remaining portion of an assigning Lender's rights and obligations hereunder, such Lender shall cease to be a party hereto; provided anything contained in any of the Credit Documents to the contrary notwithstanding, (x) an Issuing Lender shall continue to have all rights and obligations thereof with respect to such Letters of Credit until the cancellation or expiration of such Letters of Credit and the reimbursement of any amounts drawn thereunder and (y) such assigning Lender shall continue to be entitled to the benefit of all indemnities hereunder as specified herein with respect to matters arising out of the prior involvement of such assigning Lender as a Lender hereunder); (iii) the Commitments shall be modified to reflect the Commitment of such assignee and any Revolving Commitment of such assigning Lender, if any; and (iv) if any such assignment occurs after the issuance of any Note hereunder, the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes to Administrative Agent for cancellation, and thereupon Company shall issue and deliver new Notes, if so requested by the assignee and/or 159 assigning Lender, to such assignee and/or to such assigning Lender, with appropriate insertions, to reflect the new Revolving Commitments and/or outstanding Loans of the assignee and/or the assigning Lender. (h) Participations. Each Lender shall have the right at any time to sell one or more participations to any Eligible Assignee in all or any part of its Commitments, Loans or in any other Obligation. The holder of any such participation, other than an Affiliate of the Lender granting such participation, shall not be entitled to require such Lender to take or omit to take any action hereunder except with respect to any amendment, modification or waiver that would (i) extend the final scheduled maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is not extended beyond the Revolving Commitment Termination Date) in which such participant is participating, or reduce the rate of interest (other than any waiver of any increase in the interest rate applicable pursuant to Section 2.12) or any fee thereon or extend the time for payment of any such interest or fees or reduce the principal amount thereof, or increase the amount of the participant's participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory reduction in the Commitment shall not constitute a change in the terms of such participation, and that an increase in any Commitment or Loan shall be permitted without the consent of any participant if the participant's participation is not increased as a result thereof) or (ii) consent to the assignment or transfer by Company of any of its rights and obligations under this Agreement. Company agrees that each participant shall be entitled to the benefits of Sections 2.20(c), 2.21 and 2.22 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (c) of this Section; provided, a participant shall not be entitled to receive any greater payment under Section 2.21 or 2.22 than the applicable Lender would have been entitled to receive with respect to the participation sold to such participant. To the extent permitted by law, each participant also shall be entitled to the benefits of Section 10.4 as though it were a Lender, provided such Participant agrees to be subject to Section 2.19 as though it were a Lender. (i) Certain Other Assignments. Any Lender may at any time assign all or any portion of its rights under this Agreement and its Notes to a Federal Reserve Bank without notice to or consent of any Person. No such assignment shall release the transferor Lender from its obligations hereunder. In addition, any Lender may assign all or any portion of its rights under this Agreement and its Notes to any Person other than a Federal Reserve Bank, without notice to or consent of any Person, to secure obligations of such Lender; provided no Lender, as between Company and such Lender, shall be relieved of any of its obligations hereunder as a result of any such assignment and pledge, and provided, further, that in no event shall the applicable pledgee, assignee or trustee be considered to be a "Lender" and in no event shall any such pledgee, assignee or trustee be entitled to require the assigning or pledging Lender to take or omit any action hereunder. 10.7. CANADIAN DOLLAR EQUIVALENT CALCULATIONS. For purposes of this Agreement, the Canadian Dollar Equivalent of each Loan that is a U.S. Revolving Loan and the Canadian Dollar Equivalent of the stated amount of each Letter of Credit that is a Letter of Credit denominated in U.S. Dollars shall be calculated on the date when any such Loan is made, such Letter of Credit is issued, on the first Business Day of each month and at such other times as designated by Administrative Agent. Such Canadian Dollar Equivalent shall remain in effect until the same is recalculated by Administrative Agent as provided above and notice of such recalculation is 160 received by Company, it being understood that until such notice of such recalculation is received, the Canadian Dollar Equivalent shall be that Canadian Dollar Equivalent as last reported to Company by Administrative Agent. 10.8. JUDGMENT CURRENCY. (a) Company's obligation hereunder and under the other Credit Documents to make payments in the applicable Approved Currency (pursuant to such obligation, the "OBLIGATION CURRENCY") shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than the Obligation Currency, except to the extent that such tender or recovery results in the effective receipt by Administrative Agent or the respective Lender of the full amount of the Obligation Currency expressed to be payable to Administrative Agent or such Lender under this Agreement or the other Credit Documents. If, for the purpose of obtaining or enforcing judgment against Company in any court or in any jurisdiction, it becomes necessary to convert into or from any currency other than the Obligation Currency (such other currency being hereinafter referred to as the "JUDGMENT CURRENCY") an amount due in the Obligation Currency, the conversion shall be made, if relevant, at the Canadian Dollar, U.S. Dollar Equivalent and, in the case of other currencies, the rate of exchange (as quoted by Administrative Agent or if Administrative Agent does not quote a rate of exchange on such currency, by a known dealer in such currency designated by Administrative Agent) determined, in each case, as of the Business Day immediately preceding the day on which the judgment is given (such Business Day being hereinafter referred to as the "JUDGMENT CURRENCY CONVERSION DATE"). (b) If there is a change in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of the amount due, Company covenants and agrees to pay, or cause to be paid, such additional amounts, if any (but in any event not a lesser amount) as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate of exchange prevailing on the Judgment Currency Conversion Date. (c) For purposes of determining the Relevant Currency Equivalent or any other rate of exchange for this Section 10.8, such amounts shall include any premium and costs payable in connection with the purchase of the Obligation Currency. 10.9. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists. 10.10. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All representations, warranties and agreements made herein shall survive the execution and delivery hereof and the making of any Credit Extension. Notwithstanding anything herein or implied by law to the contrary, the agreements of each Credit Party set forth in Sections 2.20(c) (to the 161 extent provided therein), 2.21 (to the extent provided therein), 2.22 (to the extent provided therein), 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in Sections 2.19, 9.2(c) and 9.4 shall survive the payment of the Loans, the cancellation or expiration of the Letters of Credit and the reimbursement of any amounts drawn thereunder, and the termination hereof. 10.11. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of any Agent or any Lender in the exercise of any power, right or privilege hereunder or under any other Credit Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. The rights, powers and remedies given to each Agent and each Lender hereby are cumulative and shall be in addition to and independent of all rights, powers and remedies existing by virtue of any statute or rule of law or in any of the other Credit Documents or any of the Hedge Agreements. Any forbearance or failure to exercise, and any delay in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy. 10.12. MARSHALLING; PAYMENTS SET ASIDE. Neither any Agent nor any Lender shall be under any obligation to marshal any assets in favor of any Credit Party or any other Person or against or in payment of any or all of the Obligations. To the extent that any Credit Party makes a payment or payments to Administrative Agent or Lenders (or to Administrative Agent, on behalf of Lenders), or Administrative Agent or Lenders enforce any security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or setoff had not occurred. 10.13. SEVERABILITY. In case any provision in or obligation hereunder or any Note shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 10.14. OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS. The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitment of any other Lender hereunder. Nothing contained herein or in any other Credit Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and each Lender shall be entitled to protect and enforce its rights arising out hereof and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose. 162 10.15. HEADINGS. Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect. 10.16. APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. 10.17. CONSENT TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY CREDIT PARTY ARISING OUT OF OR RELATING HERETO OR ANY OTHER CREDIT DOCUMENT, OR ANY OF THE OBLIGATIONS, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH CREDIT PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (a) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (b) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (c) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE CREDIT PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.1; (d) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (c) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE CREDIT PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (e) AGREES AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION. 10.18. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/COMPANY RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, 163 AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 10.19. CONFIDENTIALITY. Each Lender shall hold all non-public information regarding Holdings and its Subsidiaries and their businesses in accordance with such Lender's customary procedures for handling confidential information of such nature, it being understood and agreed by Company that, in any event, a Lender may make (i) disclosures of such information to Affiliates of such Lender and to their agents and advisors to the extent such Persons have agreed to hold such information confidential, (ii) disclosures of such information reasonably required by any bona fide or potential assignee, transferee or participant in connection with the contemplated assignment, transfer or participation by such Lender of any Loans or any participations therein or by any direct or indirect contractual counterparties (or the professional advisors thereto) in Hedge Agreements (provided such counterparties and advisors are advised of and agree to be bound by the provisions of this Section 10.19), (iii) disclosure to any rating agency when required by it; provided, prior to any such disclosure in connection with a rating of a Lender or its portfolio, each rating agency shall undertake to preserve the confidentiality of such information, and (iv) disclosures required or requested by any governmental agency or representative thereof or by the NAIC or pursuant to legal or judicial process; provided, unless specifically prohibited by applicable law or court order, each Lender shall make reasonable efforts to notify Company of any request by any governmental agency or representative thereof (other than any such request in connection with any examination of the financial condition or other routine examination of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information. 10.20. USURY SAVINGS CLAUSE. Notwithstanding any other provision herein, the aggregate interest rate charged with respect to any of the Obligations, including all charges or fees in connection therewith deemed in the nature of interest under applicable law shall not exceed the Highest Lawful Rate. If the rate of interest (determined without regard to the preceding sentence) under this Agreement at any time exceeds the Highest Lawful Rate, the outstanding amount of the Loans made hereunder shall bear interest at the Highest Lawful Rate until the total amount of interest due hereunder equals the amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect. In addition, if when the Loans made hereunder are repaid in full the total interest due hereunder (taking into account the increase provided for above) is less than the total amount of interest which would have been due hereunder if the stated rates of interest set forth in this 164 Agreement had at all times been in effect, then to the extent permitted by law, Company shall pay to Administrative Agent an amount equal to the difference between the amount of interest paid and the amount of interest which would have been paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding the foregoing, it is the intention of Lenders and Company to conform strictly to any applicable usury laws. Accordingly, if any Lender contracts for, charges, or receives any consideration which constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be cancelled automatically and, if previously paid, shall at such Lender's option be applied to the outstanding amount of the Loans made hereunder or be refunded to Company. 10.21. POSTING. (a) Each Credit Party hereby agrees that it will provide to Administrative Agent all information, documents and other materials that it is obligated to furnish to Administrative Agent pursuant to this Agreement and any other Credit Document, including, without limitation, all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (A) relates to a request for a new, or a conversion of an existing, Borrowing or other extension of credit (including any election of an interest rate or interest period relating thereto), (B) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (C) provides notice of any Default or Event of Default under this Agreement or (D) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or any borrowing or other extension of credit hereunder (all such non-excluded communications, collectively, the "COMMUNICATIONS"), by transmitting the Communications in an electronic/soft medium in a format reasonably acceptable to Administrative Agent at ann.hurley@rbccm.com and adam.ahmed@rbccm.com or at such other e-mail address(es) provided to Company from time to time or in such other form, including hard copy delivery thereof, as Administrative Agent shall require. In addition, each Credit Party agrees to continue to provide the Communications to Administrative Agent in the manner specified in this Agreement or any other Credit Document or in such other form, including hard copy delivery thereof, as Administrative Agent shall require. Nothing in this Section 10.21 shall prejudice the right of the Agents, any Lender or any Credit Party to give any notice or other communication pursuant to this Agreement or any other Credit Document in any other manner specified in this Agreement or any other Credit Document or as any such Agent shall require. (b) To the extent consented to by Administrative Agent in writing from time to time, Administrative Agent agrees that receipt of the Communications by Administrative Agent at its e-mail address(es) set forth above shall constitute effective delivery of the Communications to Administrative Agent for purposes of the Credit Documents; provided that Company shall also deliver to Administrative Agent an executed original of each Compliance Certificate required to be delivered hereunder. Each Lender agrees that notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform (as defined below) shall constitute effective delivery of the Communications to such Lender for purposes of the Credit Documents; provided that any Lender may request and shall accordingly receive hard copy delivery of any Communications. Each Lender agrees (A) to notify Administrative Agent in writing from time to time of such Lender's e-mail address(es) to which 165 the foregoing notice may be sent by electronic transmission and (B) that the foregoing notice may be sent to such e-mail address(es). (c) Each Credit Party further agrees that Administrative Agent may make the Communications available to the Lenders by posting the Communications on Intralinks or a substantially similar electronic transmission system (the "PLATFORM"). The Platform is provided "as is" and "as available." The Agent Parties (as defined below) do not warrant the accuracy or completeness of the Communications, or the adequacy of the Platform and expressly disclaim liability for errors or omissions in the communications. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by any Agent Party (as defined below) in connection with the Communications or the Platform. In no event shall Administrative Agent or any of its affiliates or any of their respective officers, directors, employees, agents advisors or representatives (collectively, "AGENT PARTIES") have any liability to the Credit Parties, any Lender or any other person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Credit Party's or Administrative Agent's transmission of communications through the internet, except to the extent the liability of any Agent Party is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from such Agent Party's gross negligence or willful misconduct. 10.22. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. 10.23. EFFECTIVENESS. This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by Company and Administrative Agent of delivery of executed counterparts of all such parties. [Remainder of page intentionally left blank] 166 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. MAAX CORPORATION By: /s/ James Rhee ------------------------------------------ Name: James Rhee Title: Secretary BEAUCELAND CORPORATION By: /s/ James Rhee ------------------------------------------ Name: James Rhee Title: Secretary [SIGNATURE PAGE TO CREDIT AGREEMENT] GUARANTOR SUBSIDIARIES (U.S.): AKER PLASTICS COMPANY INC. MAAX (2004) LLC MAAX HOLDING CO. MAAX-HYDRO SWIRL MANUFACTURING CORP. MAAX-KSD CORPORATION MAAX LLC MAAX MIDWEST, INC. MAAX SPAS (ARIZONA), INC. PEARL BATHS, INC. By: /s/ Robert Martin ------------------------------------------ Name: Robert Martin Title: Vice President [SIGNATURE PAGE TO CREDIT AGREEMENT] GUARANTOR SUBSIDIARIES (CANADIAN): MAAX CANADA INC. CUISINE EXPERT-C.E. CABINETS INC. 9022-3751 QUEBEC INC. MAAX SPAS (ONTARIO) INC. MAAX SPAS (B.C.) INC. By: /s/ Denis Aubin ---------------------------------------- Name: Denis Aubin Title: Director & Officer 4200217 CANADA INC. By: /s/ James Rhee ---------------------------------------- Name: James Rhee Title: Secretary [SIGNATURE PAGE TO CREDIT AGREEMENT] With respect to Section 6.12 only, MAAX HOLDINGS, INC. By: /s/ James Rhee ---------------------------------------- Name: James Rhee Title: Secretary [SIGNATURE PAGE TO CREDIT AGREEMENT] GOLDMAN SACHS CREDIT PARTNERS L.P., as Joint Lead Arranger, Syndication Agent and a Lender By: /s/ Steve P. Hickey ---------------------------------------- Authorized Signatory GOLDMAN SACHS CANADA CREDIT PARTNERS CO., as a Lender By: /s/ Steve P. Hickey ---------------------------------------- Authorized Signatory [SIGNATURE PAGE TO CREDIT AGREEMENT] ROYAL BANK OF CANADA, as Administrative Agent and Collateral Agent By: /s/ Gail Watkin ---------------------------------------- Name: Gail Watkin Title: Manager, Agency ROYAL BANK OF CANADA, as a Lender By: /s/ John M. Crawford ---------------------------------------- Name: John M. Crawford Title: Attorney in Fact [SIGNATURE PAGE TO CREDIT AGREEMENT] ROYAL BANK OF CANADA, acting through its business group RBC Capital Markets, as Joint Lead Arranger By: /s/ John M. Crawford ---------------------------------------- Name: John M. Crawford Title: Attorney in Fact [SIGNATURE PAGE TO CREDIT AGREEMENT] MERRILL LYNCH CAPITAL CANADA INC., as a Lender By: /s/ Eric Giroux ---------------------------------------- Name: Eric Giroux Title: Vice President [SIGNATURE PAGE TO CREDIT AGREEMENT] MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as Joint Lead Arranger and Documentation Agent By: /s/ Michael E. O'Brien -------------------------------------------- Name: Michael E. O'Brien Title: Director [SIGNATURE PAGE TO CREDIT AGREEMENT] NATIONAL BANK OF CANADA, NEW YORK BRANCH, as Issuing Bank, Swing Line Lender and a Lender By: /s/ Vincent Lima ---------------------------------------- Name: Vincent Lima Title: Vice President By: /s/ Yvon Laplante ---------------------------------------- Name: Yvon Laplante Title: Vice President & Manager [SIGNATURE PAGE TO CREDIT AGREEMENT] BANK OF MONTREAL, CHICAGO BRANCH, as a Lender, By: /s/ Bruce Pietka ---------------------------------------- Name: Bruce Pietka Title: Vice President [SIGNATURE PAGE TO CREDIT AGREEMENT] LA CAISSE CENTRALE DESJARDINS DU QUEBEC, as a Lender By: /s/ Michel Voyer ---------------------------------------- Name: Michel Voyer Title: Senior Manager By: /s/ Sylvain Gascon ---------------------------------------- Name: Sylvain Gascon Title: Vice President [SIGNATURE PAGE TO CREDIT AGREEMENT] CITIBANK, N.A., CANADIAN BRANCH, as a Lender By: /s/ Isabelle F. Cote ---------------------------------------- Name: Isabelle F. Cote [SIGNATURE PAGE TO CREDIT AGREEMENT] COMERICA BANK CANADA BRANCH, as a Lender By: /s/ Robert Rosen ---------------------------------------- Name: Robert Rosen Title: Vice President [SIGNATURE PAGE TO CREDIT AGREEMENT] NATIONAL CITY BANK, CANADA BRANCH, as a Lender By: /s/ J. Andrew Riddell ---------------------------------------- Name: J. Andrew Riddell Title: Vice-President [SIGNATURE PAGE TO CREDIT AGREEMENT] GE CANADA FINANCE HOLDING COMPANY, as a Lender By: /s/ Stephen B. Smith ---------------------------------------- Name: Stephen B. Smith Title: President [SIGNATURE PAGE TO CREDIT AGREEMENT] SIGNATURE CORPORATE BOND FUND, as a Lender By: /s/ Matt Shandro ---------------------------------------- Name: Matt Shandro Title: Vice President By: /s/ Eric Bushell ---------------------------------------- Name: Eric Bushell Title: Chief Information Officer SIGNATURE HIGH INCOME FUND, as a Lender By: /s/ Matt Shandro ---------------------------------------- Name: Matt Shandro Title: Vice President By: /s/ Eric Bushell ---------------------------------------- Name: Eric Bushell Title: Chief Information Officer SIGNATURE HIGH INCOME SECTOR FUND, as a Lender By: /s/ Matt Shandro ---------------------------------------- Name: Matt Shandro Title: Vice President By: /s/ Eric Bushell ---------------------------------------- Name: Eric Bushell Title: Chief Information Officer [SIGNATURE PAGE TO CREDIT AGREEMENT] SKYLON GROWTH & INCOME TRUST, as a Lender By: /s/ Matt Shandro ---------------------------------------- Name: Matt Shandro Title: Vice President By: /s/ Eric Bushell ---------------------------------------- Name: Eric Bushell Title: Chief Information Officer [SIGNATURE PAGE TO CREDIT AGREEMENT] APPENDIX A-1 TO CREDIT AND GUARANTY AGREEMENT TRANCHE A TERM LOAN COMMITMENTS
TRANCHE A PRO LENDER TERM LOAN COMMITMENT RATA SHARE - ------------------------------------------------------------------------------------------------------------------ Royal Bank of Canada Can$19,500,000 15.00% Goldman Sachs Canada Credit Partners Co. Can$7,611,000 5.86% Merrill Lynch Capital Canada Inc. Can$7,611,000 5.86% National Bank of Canada, New York Branch Can$18,056,000 13.89% Bank of Montreal, Chicago Branch Can$18,056,000 13.89% La Caisse Centrale Desjardins du Quebec Can$14,445,000 11.11% Citibank, N.A., Canadian Branch Can$10,833,000 8.33% Comerica Bank Canada Branch Can$10,833,000 8.33% National City Bank, Canada Branch Can$10,833,000 8.33% GE Canada Finance Holding Company Can$7,222,000 5.56% Signature Corporate Bond Fund Can$1,250,000 0.96% Signature High Income Fund Can$1,250,000 0.96% Signature High Income Sector Fund Can$1,250,000 0.96% Skylon Growth & Income Trust Can$1,250,000 0.96% Total Can$130.0 million 100.00%
APPENDIX A-1-1 APPENDIX A-2 TO CREDIT AND GUARANTY AGREEMENT TRANCHE B TERM LOAN COMMITMENTS
TRANCHE B PRO LENDER TERM LOAN COMMITMENT RATA SHARE - ------------------------------------------------------------------------------------------------------------------ Goldman Sachs Credit Partners L.P. U.S.$115.0 million 100.00% Total U.S.$115.0 million 100.00%
APPENDIX A-2-1 APPENDIX A-3 TO CREDIT AND GUARANTY AGREEMENT REVOLVING COMMITMENTS
LENDER REVOLVING COMMITMENT PRO RATA SHARE - ---------------------------------------------------------------------------------------------------------------------- Royal Bank of Canada Can$7,500,000 15.00% Goldman Sachs Canada Credit Partners Co. Can$3,889,000 7.78% Merrill Lynch Capital Canada Inc. Can$3,889,000 7.78% National Bank of Canada, New York Branch Can$6,944,000 13.89% Bank of Montreal, Chicago Branch Can$6,944,000 13.89% La Caisse Centrale Desjardins du Quebec Can$5,555,000 11.11% Citibank, N.A., Canadian Branch Can$4,167,000 8.33% Comerica Bank Canada Branch Can$4,167,000 8.33% National City Bank, Canada Branch Can$4,167,000 8.33% GE Canada Finance Holding Company Can$2,778,000 5.56% Total Can$50.0 million 100.00%
APPENDIX A-3-1 APPENDIX B TO CREDIT AND GUARANTY AGREEMENT NOTICE ADDRESSES BORROWER OR ANY GUARANTOR Prior to August 1, 2004, Maax Corporation, 640 Cameron, Sainte-Marie, Quebec, Canada, G6E 1B2 Attention: Denis Aubin, Executive Vice President and Chief Financial Officer Telecopier: (418) 386-4520 August 1 and thereafter, Maax Corporation, 1010 Sherbrooke West, Montreal, Quebec, Canada, H3A 2R7 Attention: Denis Aubin, Executive Vice President and Chief Financial Officer with a copy to: J.W. CHILDS ASSOCIATES, L.P. 111 Huntington Avenue, Suite 2900 Boston, MA 02199 Telecopier: (617) 753-1101 Attention : Steven G. Segal, Partner APPENDIX B-1 GOLDMAN SACHS CREDIT PARTNERS L.P., as Joint Lead Arranger, Syndication Agent and a Lender Goldman Sachs Credit Partners L.P. 85 Broad Street New York, New York 10004 Attention: Elizabeth Fischer Telecopier: (212) 357-9110 GOLDMAN SACHS CANADA CREDIT PARTNERS CO., as a Lender Goldman Sachs Canada Credit Partners Co. 150 King Street West, Suite 1201 Toronto, Ontario M5H 1J9 Attention: Stefano Zuliani Telecopier: (416) 343-8906 with a copy to: Goldman Sachs Credit Partners L.P. 85 Broad Street New York, New York 10004 Attention: Elizabeth Fischer Telecopier: (212) 357-9110 APPENDIX B-2 ROYAL BANK OF CANADA, as Administrative Agent and Collateral Agent Royal Bank of Canada Global Banking - Agency 12th. Floor, South Tower Royal Bank Plaza 200 Bay Street Toronto, Ontario M5J 2W7 Attention: Manager, Agency Fax: (416)-842-4023 ROYAL BANK OF CANADA, as a Lender Royal Bank of Canada New York Branch One Liberty Plaza, 3rd Floor New York, New York 10006-1404 Attention: David Banning Telephone No.: (212) 428-6369 Facsimile No.: (212) 428-2372 with a copy to: Royal Bank of Canada One Liberty Plaza, 3rd Floor New York, New York 10006-1404 Attention: John Crawford Telephone No.: (212) 428-6261 Facsimile No.: (212) 428-6460 ROYAL BANK OF CANADA, acting through its business group RBC Capital Markets, as Joint Lead Arranger Royal Bank of Canada One Liberty Plaza, 3rd Floor New York, New York 10006-1404 Attention: John Crawford Telephone No.: (212) 428-6261 Facsimile No.: (212) 428-6460 APPENDIX B-3 MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED as Joint Lead Arranger and Documentation Agent Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated 4 World Financial Center, 16th Floor New York, NY 10080 Attention: Michael O'Brien Telecopier: (212) 738-1186 with a copy to: Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated 4 World Financial Center, 16th Floor New York, NY 10080 Attention: Loan Administration Telecopier: (212) 738-1719 MERRILL LYNCH CAPITAL CANADA INC., as a Lender Merrill Lynch Capital Canada Inc. 181 Bay Street Toronto, ON M5J 2V8 Attention: Mark Dickerson Telecopier: (416) 369-2106 with a copy to: Merrill Lynch Capital Canada Inc. 4 World Financial Center, 16th Floor New York, NY 10080 Attention: Loan Administration Telecopier: (212) 738-1719 APPENDIX B-4 NATIONAL BANK OF CANADA, NEW YORK BRANCH, as Issuing Bank, Swing Line Lender and a Lender National Bank of Canada 125 West 55th Street - 22nd Floor New York, NY 10019 Attention: Rick Roberts --Senior Administration Officer Telecopier: (212) 632-8509 APPENDIX B-5 BANK OF MONTREAL, CHICAGO BRANCH, as a Lender 115 South Lasalle, Chicago, IL 60603 Attention: Bruce Pietka Telecopier: (312) 750-6057 with a copy to: Corporate Finance 105, St. Jacques, 3rd Floor Montreal, Quebec H2Y 1L6 Attention: Luc Bernier Telecopier: (514) 877-7704 APPENDIX B-6 LA CAISSE CENTRALE DESJARDINS DU QUEBEC, as a Lender 1, complexe Desjardins, Suite 2822 Montreal, Quebec H5B 1BC Attention: Michel Voyer Telecopier: (514) 281-7083 APPENDIX B-7 CITIBANK, N.A., CANADIAN BRANCH, as a Lender 630 Rene Levesque Boulevard West Suite 2450 Montreal, Quebec H3B 1S6 Attention: Isabelle F. Cote Telecopier: (514) 393-7545 APPENDIX B-8 COMERICA BANK CANADA BRANCH, as a Lender Suite 2210, South Tower Royal Bank Plaza 200 Bay Street P.O. Box 61 Toronto, Ontario, M5J 2J2 Attention: Robert Rosen Telecopier: (416) 367-2460 APPENDIX B-9 NATIONAL CITY BANK, CANADA BRANCH, as a Lender 130 King Street West Suite 2140 Toronto, Ontario M5X 1E4 Attention: J. Andrew Riddell Telecopier: (416) 361-0085 APPENDIX B-10 GE CANADA FINANCE HOLDING COMPANY, as a Lender General Electric Capital Corporate Financial Services 201 Merritt 7, P.O. Box 5201 Norwalk, CT 06856-5201 Attention: Mei Nishiwaki Telecopier: (203) 956-4007 with a copy to: Bingham McCutchen LLP One State Street Hartford, CT 06103 Attention: Frank A. Appicelli Telecopier: (860) 240-2800 APPENDIX B-11 SIGNATURE CORPORATE BOND FUND, as a Lender c/o Royton & Co. - RBC Global Securities SL Level, Royal Bank Plaza 200 Bay Street, South Tower, Toronto, ON M5J 2J5 Attention: Matt Shandro Telecopier: (416) 681-3138 SIGNATURE HIGH INCOME FUND, as a Lender c/o Royton & Co. - RBC Global Securities SL Level, Royal Bank Plaza 200 Bay Street, South Tower, Toronto, ON M5J 2J5 Attention: Matt Shandro Telecopier: (416) 681-3138 SIGNATURE HIGH INCOME SECTOR FUND, as a Lender c/o Royton & Co. - RBC Global Securities SL Level, Royal Bank Plaza 200 Bay Street, South Tower, Toronto, ON M5J 2J5 Attention: Matt Shandro Telecopier: (416) 681-3138 SKYLON GROWTH & INCOME TRUST, as a Lender c/o Royton & Co. - RBC Global Securities SL Level, Royal Bank Plaza 200 Bay Street, South Tower, Toronto, ON M5J 2J5 Attention: Matt Shandro Telecopier: (416) 681-3138 APPENDIX B-12 APPENDIX C TO CREDIT AND GUARANTY AGREEMENT ELIGIBLE CATEGORIES OF INSTITUTIONS 1. U.S. branches of Canadian banks that are engaged in a trade or business within the United States for U.S. federal income tax purposes. 2. Canadian branches of banks that are U.S. persons under the Internal Revenue Code; provided that such branch is an authorized foreign bank in Canada, interest is paid to such branch in respect of its Canadian banking business and the Lender provides to Borrower appropriate representation with regard thereto (it being understood that Canadian subsidiaries of U.S. banks do not qualify). 3. Canadian branches of non-U.S. foreign banks that are exempt from Canadian federal withholding tax where treaty with U.S. provides for zero U.S. federal withholding tax and the branch is eligible(1) for such treaty benefits and gives IRS Form W-8 BEN (or successor form) establishing such exemption (it being understood that Canadian subsidiaries of non-U.S. foreign banks do not qualify); provided that the branch is an authorized foreign bank in Canada, interest is paid to the branch in respect of its Canadian banking business and the Lender provides to Borrower appropriate representation with regard thereto. 4. Canadian residents that are exempt from Canadian federal withholding tax, are not banks and are eligible for exemption from U.S. federal withholding tax under the portfolio interest exemption (within the meaning of sections 871 and 881 of the Internal Revenue Code) and give IRS Form W-8BEN (or successor form) and any other required certification of eligibility for such exemption (in accordance with sections 871 and 881 of the Internal Revenue Code). 5. Canadian pension funds that are exempt from Canadian federal withholding tax and are eligible for exemption from U.S. federal withholding tax under the U.S./Canada treaty and provide IRS Form W-8BEN (or successor form) establishing entitlement to such exemption. 6. U.S. pension funds that are exempt from U.S. federal withholding tax and are eligible for exemption from Canadian federal withholding tax under the U.S./Canada treaty and provide to Borrower appropriate representation of entitlement to such exemption. - ---------- (1) This generally will require that they both meet the definition of a resident in such country for treaty purposes and are not limited by the limitation on benefits provisions of the treaty. APPENDIX C-1 EX-10.14 59 y99327exv10w14.txt SODEX FACTORING AGREEMENT . . . EXHIBIT 10.14 MASTER AGREEMENT BETWEEN: MAAX CANADA INC., MAAX SPAS (ONTARIO) INC., MAAX KSD CORPORATION, PEARL BATHS INC., MAAX HYDRO SWIRL MFG CORP., MAAX MIDWEST INC., MAAX SPAS (ARIZONA) INC., CUISINES EXPERT C.E. CABINETS INC., 9022-3751 QUEBEC INC. (BOISERIES IMPERIAL), AKER PLASTICS CO. INC., SANINOVA B.V., corporations duly incorporated under the laws of QUEBEC, respectively having its principal place of business at 640, rue Cameron, Sainte-Marie (Quebec), G6E 1B2, represented herein by MONSIEUR DENIS AUBIN, CHEF DES SERVICES FINANCIERS, duly authorized for the purposes hereof as he hereby does declare. (here after collectively "the Seller" acting jointly) AND: SODEX, A DIVISION OF NATIONAL BANK OF CANADA, duly incorporated under the laws of CANADA, having its principal place of business at 1010, de la Gauchetiere Street West, Montreal, Canada, represented herein by JACQUES MENARD, Customer Services Manager, and ISABELLE NEVEU, International Services Development Manager, duly authorized for the purposes hereof as they hereby do declare, (hereinafter called the "Company") AND: NATEXPORT, A DIVISION OF NATIONAL BANK OF CANADA, duly incorporated under the laws of Canada, having its principal place of business at 1010, de la Gauchetiere Street West, Montreal, Canada, represented herein by JACQUES MENARD, Customer Services Manager, and ISABELLE NEVEU, International Services Development Manager, duly authorized for the purposes hereof as they hereby do declare, (hereinafter called the "Company")
WHEREAS the Seller wishes to sell certain accounts receivable to the Company at a discount; WHEREAS the company wish to buy, certain accounts receivable from the Seller at a discount. THE PARTIES HERETO AGREE AS FOLLOWS: 1 The Company may, at its sole discretion, discount, accounts receivable held by the Seller against the Buyer according to the terms and conditions of the letter or financing letters to be concluded between the parties. The Company may revoke a financing letter, at any time, upon written notice to the Seller. 2 For each account receivable which the Company agrees to discount, the Seller undertakes to execute, on its letterhead paper, two copies of a Sale, Assignment and Transfer form with the same form and content as the document shown in Appendix A. The Seller represents that each account receivable is free and clear of any liens, securities and encumbrances. 3 Without limiting the scope of any other provision hereof, the Seller acknowledges that he is responsible for the quality, durability and other characteristics of any goods sold to any Buyer and for any legal and conventional warranty and for any services provided to any Buyer and further acknowledges that the Company is in no way liable in this regard. The Seller agrees to save the Company harmless from any liability towards any person, including any Buyer, with respect to the quality, durability or any other characteristics of the goods and to any legal and conventional warranty and with respect to any services and further agrees to indemnify the Company for any damages, losses, charges, legal fees or expenses or other costs, which could result herefrom, directly or indirectly. 4 The purchased amount for each account receivable shall be equal to the amount of the account receivable minus the total of the following amounts: 4.1 An amount calculated as follows: the financing rate set out in the financing letter X amount of the account receivable X number of days of term of payment/ 360 days (for US $) or 365 days (for CAN $) 4.2 The amount of all charges specified in the financing letter. -------- -------- -------- Initials Initials Initials Page 1 of 5 5 The "number of days in payment period" indicated hereinabove shall be calculated by adding the number of days specified under the terms of sale and the additional number of days before payment is made according to the Buyer's payment habits. 6 The said additional number of days shall be established by the Company according to the statement of transactions submitted by the Seller. Should the Company consider, at its sole discretion, that the said statement is insufficient for such purpose, it shall establish, at its sole discretion without obtaining the Seller's consent, the said number of days. Notwithstanding the above, the Company may, at any time, at its sole discretion, revise the said additional number of days according to the number of days taken by the Buyer to pay its invoices to the Company. 7 Notwithstanding Section 4 hereof, the Seller shall remain liable to the Company for the total amount of each and every purchased account receivable and agrees to pay the Company the said amount upon request together with any and all accrued interest and interest to be accrued at the post-maturity rate set out in the financing letter calculated from, inclusively, the maturity date to, exclusively, payment by the Seller, under any of the following conditions: 7.1 The Seller has presented any relevant facts incorrectly to the Company, or has knowingly made any false or fraudulent statement report or claim or any concealment of any material fact relating in any way to the purchased account receivable; 7.2 The Seller has omitted to remit to the Company one or several relevant documents concerning the purchased account receivable; 7.3 A dispute exists between the Seller and the Buyer regarding an item in the sales contract; 7.4 The Seller or the Buyer has failed to obtain all the licenses, approvals or authorizations required at the shipping date of the goods for the proper performance of the sales contract; 7.5 The Seller or its agent has made an agreement with the Buyer amending the conditions of one of the payments which the Buyer must make to the Company, unless the Company has already approved such agreement in writing; 7.6 The account receivable is not paid to the Company for a reason which could have been avoided by the Seller or its agent or because of the insolvency of the Seller or its agent; 7.7 The Company cannot upon demand collect the amount of the discounted account receivable from the Buyer forthwith due to the assignment thereof to a third party; 7.8 The Seller has a direct or indirect equity interest in the Buyer, or the Buyer has any such equity interest in the Seller; or 7.9 The Seller has failed to make all reasonable and customary measures to prevent or minimize loss, including any measures, which may be required by the Company or to cooperate with the Company to effect recovery. 8 The Company may amend the list of conditions set out in Article 7 hereof upon written notice to the Seller. 9 This Agreement shall take effect upon the signing hereof by the parties hereto and shall terminate on AUGUST 31, 2005. This Agreement may be renewed for a period of one (1) year at the expiry of the term or of any renewal thereof upon written agreement between the parties. Notwithstanding the foregoing, the Company may terminate this Agreement, at any time, upon written notice to the Seller. 10 Any and all amounts owed by the Company to the Seller following any purchase shall be payable by cheque issued jointly to the Seller, and if applicable, any financial institution to which the Seller has made a general assignment of book debts or a movable hypothec covering claims, as the case may be. For the purposes hereof, the Seller represents and warrants that it has made a general assignment of book debts, or a movable hypothec or a security under the Bank Act covering claims or the goods subject to the discount, as the case may be, to the following financial institution(s) only: NATIONAL BANK OF CANADA. The Seller agrees to advise the Company promptly of any general assignment of book debts, or -------- -------- -------- Initials Initials Initials Page 2 of 5 movable hypothec covering claims, as the case may be, it may make to a financial institution as of the effective date of this Agreement. 11 The Seller hereby irrevocably authorizes the Company to debit any and all amounts owed by the Seller to the Company in respect hereof from any and all bank accounts which the Seller holds or may hold from time to time with the following financial institution(s): NATIONAL BANK OF CANADA OR ANY OTHER FINANCIAL INSTITUTION(S). Any or all employees of such financial institution(s) may debit said amounts from such account upon presentation by the Company of a letter signed by one of its representatives specifying said amounts. 12 The Seller undertakes not to reveal to the Buyer or any other person, any information received from the Company regarding the Buyer, including a refusal to discount, for the benefit of the Seller, accounts receivable deriving from one or several sales to the Buyer. The Seller acknowledges that such information is strictly confidential. 13 The Seller agrees to save the Company harmless from any liability towards the Buyer, or any other person, in the event of non-compliance with Section 12 hereof, and further agrees to indemnify the Company for any damages, losses, charges, legal fees or expenses or other costs which would result herefrom, directly or indirectly. 14 The Seller will co-operate fully with the Company to collect any account receivable sold to the Company, which remains unpaid on its maturity date. 15 For purposes of disclosure pursuant to the Interest Act (Canada), the yearly rate of interest to which any rate of interest payable under this Agreement, which is to be calculated on any basis other than a full calendar year, is equivalent may be determined by multiplying such rate by a fraction, the numerator of which is the number of days in the calendar year in which the period for which interest at such rate is payable ends and the denominator of which is the number of days comprising such other basis. 16 In this Agreement and in any financing letter: 16.1 "CANADIAN PRIME RATE" means the annual variable rate of interest announced from time to time by the National Bank of Canada and used to determine the interest rates on Canadian dollar commercial loans granted by the National Bank of Canada in Canada. 16.2 "US PRIME RATE" means the annual variable rate of interest announced from time to time by the National Bank of Canada and used to determine the interest rates on US dollar commercial loans granted by the National Bank of Canada in Canada. 17 The Company may, at any time, examine and make copies of all letters, communications, accounts or other documents in the possession or control of the Seller, and, in respect thereof, the Seller shall, at the request of the Company: 17.1 Provide the Company with all information in the possession of the Seller, and 17.2 Take all reasonable steps to obtain any information or to obtain the sight of any document in the possession of a third party. To that effect, the Seller shall, from time to time, during regular business hours as requested by the Company at least five Business Days in advance permit the Company, or its agents or representatives, to visit the offices and properties of the Seller for the purpose of examining such materials described above. 18 If the Seller receives any payment on account of any account receivable purchased by the Company pursuant hereto, the Seller shall hold such payment in trust for the benefit of the Company, and promptly pay it over immediately to the Company. 19 Any and all notices required hereunder or related hereto may be given by either party to the other party at the address which either party may indicate from time to time in writing to the other party. 20 The Seller authorizes the Company to request information regarding his financial status from banks and any other financial institutions where the Seller may have an account. 21 The parties hereto acknowledge that this Agreement, the financing letters and the Sale, Assignment and Transfer forms constitutes a full, complete and faithful representation of the -------- -------- -------- Initials Initials Initials Page 3 de 5 Agreement made between them and they therefore formally waive the right to invoke any and all discussions or negotiations preceding the signature hereof. 22 MAAX CANADA INC., MAAX SPAS (ONTARIO) INC., MAAX KSD CORPORATION, PEARL BATHS INC., MAAX HYDRO SWIRL MFG CORP., MAAX MIDWEST INC., MAAX SPAS (ARIZONA) INC., CUISINES EXPERT C.E. CABINETS INC., 9022-3751 QUEBEC INC. (BOISERIES IMPERIAL), AKER PLASTICS CO. INC., SANINOVA B.V. may each use this Master Agreement to submit accounts receivable to the Company for factoring. Notwithstanding, their obligations are joint and solidary. Furthermore it is understood that the authorization to debit any banking account as per clause 11 hereabove shall cover all amounts owing under these solidary obligations. 23 This Agreement shall be governed by the laws of the province of Quebec, and the laws of Canada applicable therein, and the courts of the province of Quebec shall have exclusive jurisdiction in ruling on any case related hereto. 24 The parties hereto have requested that this Agreement, any financing letter and any documents related thereto be drafted in the English language. Les parties aux presentes ont requis que cette Convention, toute lettre de financement et autres documents soient rediges en langue anglaise. Executed at Ste-Marie , this 29 juin , 20 04 . ---------------------- ------------------------- ------ MAAX CANADA INC. Par: /s/ Benoit Boutet Par: ---------------------------------- -------------------------------- Signature autorisee seulement Signature autorisee seulement Signe a , ce 20 . ---------------------------- ------------------------- ----- MAAX SPAS (ONTARIO) INC. Par: /s/ Benoit Boutet Par: ---------------------------------- -------------------------------- Signature autorisee seulement Signature autorisee seulement Signe a , ce 20 . ---------------------------- ------------------------- ----- MAAX KSD CORPORATION Par: /s/ Benoit Boutet Par: ---------------------------------- -------------------------------- Signature autorisee seulement Signature autorisee seulement Signe a , ce 20 . ---------------------------- ------------------------- ----- PEARL BATHS INC. Par: /s/ Benoit Boutet Par: ---------------------------------- -------------------------------- Signature autorisee seulement Signature autorisee seulement Signe a , ce 20 . ---------------------------- ------------------------- ----- MAAX HYDRO SWIRL MFG CORP. Par: /s/ Benoit Boutet Par: ---------------------------------- -------------------------------- Signature autorisee seulement Signature autorisee seulement Signe a , ce 20 . ---------------------------- ------------------------- ----- MAAX MIDWEST INC. Par: /s/ Benoit Boutet Par: ---------------------------------- -------------------------------- Signature autorisee seulement Signature autorisee seulement Signe a , ce 20 . ---------------------------- ------------------------- ----- -------- -------- -------- Initials Initials Initials Page 4 de 5 MAAX SPAS (ARIZONA) INC. Par: /s/ Benoit Boutet Par: ---------------------------------- -------------------------------- Signature autorisee seulement Signature autorisee seulement Signe a /s/ Benoit Boutet , ce 20 . ---------------------------- ------------------------- ----- CUISINES EXPERT C.E. CABINET INC. Par: /s/ Benoit Boutet Par: ---------------------------------- -------------------------------- Signature autorisee seulement Signature autorisee seulement Signe a Montreal, ce 20 . ------------------------- ----- 9022-3751 QUEBEC INC. (BOISERIES IMPERIAL) Par: /s/ Benoit Boutet Par: ---------------------------------- -------------------------------- Signature autorisee seulement Signature autorisee seulement Signe a , ce 20 . ---------------------------- ------------------------- ----- AKER PLASTICS CO INC. Par: /s/ Benoit Boutet Par: ---------------------------------- -------------------------------- Signature autorisee seulement Signature autorisee seulement Signe a , ce 20 . ---------------------------- ------------------------- ----- SANINOVA B.V Par: /s/ Benoit Boutet Par: ---------------------------------- -------------------------------- Signature autorisee seulement Signature autorisee seulement Signe a , ce 20 . ---------------------------- ------------------------- ----- Signe a Montreal, ce 22 juin 2004 SODEX, UNE DIVISION DE BANQUE NATIONALE DU CANADA Par: /s/ Jacques Menard Par: /s/ Isabelle Neveu ---------------------------------- -------------------------------- Jacques Menard Isabelle Neveu Signe a Montreal, ce 22 juin 2004 NATEXPORT, UNE DIVISION DE BANQUE NATIONALE DU CANADA Par: /s/ Jacques Menard Par: /s/ Isabelle Neveu ---------------------------------- -------------------------------- Jacques Menard Isabelle Neveu -------- -------- -------- Initials Initials Initials Page 5 de 5 EX-10.15 60 y99327exv10w15.txt FORM OF RETENTION PACKAGE EXHIBIT 10.15 [MAAX CORPORATE LOGO] MEMORANDUM FORM OF RETENTION PACKAGE DATE: September 12, 2003 CONFIDENTIAL TO: _____________ CC: MAAX Board of Directors, Corporate Governance Committee, Placide Poulin, Raymond Garneau, Richard Garneau FROM: Andre Heroux SUBJECT: Retention package - -------------------------------------------------------------------------------- Dear ______: With the announcement that MAAX is up for sale, the Board of Directors via our Corporate Governance Committee has authorised a retention package for MAAX executives. Firstly, you are entitled to a lump sum payment of ___% of your base salary as an incentive to remain in your current position with MAAX during the sale process while displaying strong leadership. You will also be protected with a clause of one (1) year total remuneration (Base salary plus annual bonus) as a result of change of control of MAAX ownership, where your services would no longer be required. I count on your strong leadership within the Bathroom Sector to pursue business as usual while optimizing MAAX results for our shareholders. Our employees are key to our ongoing success and look up to the MAAX senior management team to provide strong leadership. Best of success, Committed to our Customer's Delight /s/ Andre Heroux Andre Heroux President and CEO AH :mb HEAD OFFICE 640, Route Cameron Sainte-Marie, Quebec G6E 1B2 Canada Tel.: (418) 387-4155 Fax: (418) 386-4520 EX-10.16 61 y99327exv10w16.txt PURCHASE AGREEMENT EXHIBIT 10.16 MAAX CORPORATION US$150,000,000 9 3/4% SENIOR SUBORDINATED NOTES DUE 2012 PURCHASE AGREEMENT May 27, 2004 Goldman, Sachs & Co., Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated As representatives of the several Purchasers named in Schedule I hereto, c/o Goldman Sachs & Co. 85 Broad Street, New York, New York 10004 Ladies and Gentlemen: MAAX Corporation, a Nova Scotia unlimited company (the "Company"), proposes to issue and sell to Goldman, Sachs & Co. and Merrill Lynch & Co., Merrill Lynch Pierce, Fenner & Smith Incorporated (the "Representatives") and the other Purchasers named in Schedule I hereto (the "Purchasers"), in the respective amounts set forth in Schedule I hereto, an aggregate of US$150,000,000 principal amount of the 9 3/4% Senior Subordinated Notes due 2012 of the Company specified above (the "Notes"). The Notes will be unconditionally guaranteed (the "Guarantees") by Beauceland Corporation, a Nova Scotia unlimited company (the "Parent Guarantor"), the entities listed on Schedule II attached hereto (the "Subsidiary Guarantors" and together with the Parent Guarantor, the "Guarantors," and together with the Company, the "Issuers"). The Notes and the Guarantees are hereinafter collectively referred to in this Purchase Agreement ("Agreement") as the "Securities." 1. The Issuers represent and warrant to, and agree with, each of the Purchasers that: (a) A preliminary offering circular, dated May 17, 2004 (the "Preliminary Offering Circular") and an offering circular, dated May 27, 2004 (the "Offering Circular"), in each case including the Canadian supplement thereto, have been prepared in connection with the offering of the Securities. Any reference to the Preliminary Offering Circular or the Offering Circular shall be deemed to refer to and include any Additional Issuer Information (as defined in Section 5(f)) furnished by any Issuer prior to the completion of the distribution of the Securities. As of the date thereof, the Preliminary Offering Circular did not, and the Offering Circular and any amendments or supplements thereto did not as of the date hereof and will not, as of the Time of Delivery, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by a Purchaser through any Representative expressly for use therein; (b) None of the Issuers nor any of their subsidiaries has sustained since the date of the latest audited financial statements included in the Offering Circular any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Offering Circular; and, since the respective dates as of which information is given in the Offering Circular, there has not been any change in the capital stock, total debt or long-term debt of the Issuers or any of their subsidiaries (other than as a result of intercompany transactions, including, without limitation, capital contributions, debt repayments, restructurings, amalgamations and wind-ups) or any material adverse change, or any development involving a prospective material adverse change, in or affecting the business, management, financial position, shareholders' or members' equity or results of operations of the Issuers and their subsidiaries, taken as a whole, otherwise than as set forth or contemplated in the Offering Circular; (c) The Company and its subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except such as are described in the Offering Circular or those that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect (as defined below) and do not interfere with the use made and proposed to be made of such property by the Company and its subsidiaries; and any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries; (d) The Company has been duly incorporated and is validly existing as an unlimited company in good standing under the laws of Nova Scotia, with power and authority (corporate and other) to own its properties and conduct its business as described in the Offering Circular, and has been duly qualified as a foreign company for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction; and each subsidiary of the Company and the Parent Guarantor has been duly incorporated or organized and is validly existing as a corporation, limited liability company, unlimited company or partnership in good standing under the laws of its jurisdiction of organization; the entities set forth on -2- Schedule III are the only direct or indirect subsidiaries of the Company (the term "subsidiary" as used herein with respect to any person includes all entities which will become subsidiaries of such person upon consummation of the transaction contemplated by the Merger Agreement (as defined below)); (e) At the Time of Delivery, the Company will have an authorized capitalization as set forth in the Offering Circular, and all of the issued shares of capital stock of the Company will be duly and validly authorized and issued and will be fully paid but assessable and all of the issued shares of capital stock, membership interests or partnership interests of each subsidiary of the Company will be duly and validly authorized and issued, will be fully paid and non- assessable (except in the case of a subsidiary that is a Nova Scotia unlimited company, in which case the shares are assessable) and (except for directors' qualifying shares) will be owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims (other than the liens under the Credit Agreement (as defined below)); (f) This Agreement has been duly authorized, executed and delivered by each of the Issuers; (g) The Securities have been duly authorized by each of the Issuers and, when executed, issued and delivered by each of the Issuers and authenticated by U.S. Bank Trust, N.A., as Trustee (the "Trustee"), pursuant to this Agreement and the Indenture (as defined below), will have been duly executed, issued and delivered by each of the Issuers and will constitute valid and legally binding obligations of the Issuers, entitled to the benefits provided by the indenture to be dated as of June 4, 2004 (the "Indenture") between the Issuers and the Trustee, under which they are to be issued, enforceable against each of the Issuers in accordance with their terms, subject as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; the Securities will be in substantially the form contemplated by the Indenture; the form and issuance of the Securities to be issued under the Indenture complies with the Companies Act (Nova Scotia); and no registration, filing or recording of the Indenture under the laws of Canada or any province thereof is necessary in order to preserve or protect the validity or enforceability of the Indenture or the Securities issued thereunder; (h) The Indenture has been duly authorized by each of the Issuers and, when executed and delivered by each of the Issuers, will have been duly executed and delivered by each of the Issuers and (assuming due authorization, execution, delivery and performance by the Trustee) will constitute a valid and legally binding obligation of each of the Issuers enforceable against each of the Issuers in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; (i) The exchange and registration rights agreement to be dated June 4, 2004 among the Issuers and the Purchasers (the "Registration Rights Agreement") has been duly authorized by each of the Issuers and, when executed and delivered by each of the -3- Issuers, will have been duly executed and delivered by each of the Issuers and will constitute a valid and legally binding obligation of each of the Issuers, enforceable against each of the Issuers in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights or limiting the availability of, and public policy against, indemnification and contribution and to general equity principles; (j) The exchange securities, with terms substantially identical to those of the Securities, to be issued in exchange for the Securities in connection with the exchange offer contemplated by the Registrations Rights Agreement (the "Exchange Securities") have been duly authorized for issuance by each of the Issuers and, when executed, issued and delivered by each of the Issuers and authenticated by the Trustee pursuant to this Agreement and the Indenture, will have been duly executed, issued and delivered by each of the Issuers and will constitute valid and legally binding obligations of each of the Issuers, entitled to the benefits provided by the Indenture and enforceable in accordance with their terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; (k) The Credit Agreement, to be dated as of June 4, 2004 among the Company, the Guarantors, Goldman Sachs Credit Partners L.P., Royal Bank of Canada and Merrill Lynch Capital Corporation and the lenders party thereto, (the "Credit Agreement"), has been duly authorized by each of the Issuers, and, when executed and delivered by each of the Issuers, will have been duly executed and delivered by each of the Issuers and will constitute a valid and legally binding obligation of each of the Issuers, enforceable against each of the Issuers in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; (l) The Merger Agreement, dated as of March 10, 2004, among 3087052 Nova Scotia Company, 3087053 Nova Scotia Company, 9139-4460 Quebec Inc., 9139-7158 Quebec Inc. and MAAX Inc. (the "Merger Agreement") has been duly authorized, executed and delivered by the parties thereto and constitutes a valid and legally binding obligation of the parties thereto, enforceable against the parties thereto in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; (m) None of the transactions contemplated by this Agreement and to be performed by each of the Issuers (including, without limitation, the use of the proceeds from the sale of the Securities) will violate or result in a violation of Section 7 of the United States Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any regulation promulgated thereunder, including, without limitation, Regulations T, U, and X of the Board of Governors of the Federal Reserve System, in each case as the same may be in effect or as the same may hereafter be in effect at the Time of Delivery; -4- (n) The issue and sale of the Securities by each of the Issuers and the compliance by each of the Issuers and their subsidiaries with all of the provisions of the Securities, the Indenture, the Registration Rights Agreement, this Agreement, the Credit Agreement and the Merger Agreement (collectively, the "Transaction Documents") and the transactions herein and therein contemplated will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which any Issuer or any of its subsidiaries is a party or by which any Issuer or any of its subsidiaries is bound or to which any of the property or assets of any Issuer or any of its subsidiaries is subject, (ii) result in any violation of the provisions of the organizational documents of any Issuer or any of its subsidiaries, (iii) result in any violation of the provisions of any law or statute or any order, rule, regulation, judgment or decree of any court, central bank, stock exchange or governmental agency or body ("Governmental Agency") having jurisdiction over any Issuer or any of its subsidiaries or any of their properties or assets, except in the case of clauses (i) and (iii) for such conflicts, breaches, violations, defaults or liens that, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on and/or material adverse developments with respect to the business, management, financial position, shareholders' or members' equity or results of operations of the Issuers and their subsidiaries, taken as a whole ("Material Adverse Effect"); and no consent, approval, authorization, order, registration or qualification ("Governmental Authorizations") of or with any such Governmental Agency is required for the issue and sale of the Securities or the consummation by the Issuers of the transactions contemplated by the Transaction Documents, except for (w) the filing of a registration statement by the Issuers with the Commission pursuant to the United States Securities Act of 1933, as amended (the "Act") pursuant to the Registration Rights Agreement, (x) the filing of any document or financing statement to perfect the liens granted to the lenders under the Credit Agreement, (y) such Governmental Authorizations as may be required under state securities or Blue Sky laws or the private placement or equivalent provisions of the securities laws of any province of Canada or the laws of any other jurisdiction outside of the United States, in connection with the purchase and distribution of the Securities by the Purchasers and (z) competition law filings in Germany and Austria; (o) None of the Issuers nor any of their subsidiaries is (i) in violation of its organizational documents or (ii) in default in the performance or observance of any obligation, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound except such defaults that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect; (p) The statements set forth in the Offering Circular under the caption "Description of Notes," insofar as they purport to constitute a summary of the terms of the Securities, the Indenture and the Registration Rights Agreement, and under the captions "Income Tax Considerations" and "Underwriting," insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate and complete in all material respects; -5- (q) Other than as set forth in the Offering Circular, there are no legal or governmental proceedings pending to which any Issuer or any of its subsidiaries is a party or of which any property or assets of any Issuer or any of its subsidiaries is the subject which, if determined adversely to any Issuer or any of its subsidiaries, would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and, to the best of any Issuer's knowledge, no such proceedings are threatened or contemplated by Governmental Authorities or threatened by others; (r) No stamp or other issuance or transfer taxes or duties and no capital gains, income, withholding or other taxes are payable by or on behalf of the Purchasers to the Government of Canada or Nova Scotia or any political subdivision or taxing authority thereof or therein in connection with (A) the issuance, sale and delivery by the Issuers to or for the respective accounts of the Purchasers of the Securities or (B) the sale and delivery outside Canada by the Purchasers of the Securities to the initial purchasers thereof; (s) Each Issuer and each of their subsidiaries have all material licenses, franchises, permits, authorizations, approvals and orders and other concessions of and from all Governmental Agencies that are necessary to own or lease their properties and conduct their businesses as described in the Offering Circular; (t) No Issuer nor any of its subsidiaries has taken, directly or indirectly, any action which was designed to or which has constituted or which might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of any Issuer in connection with the offering of the Securities; (u) When the Securities are issued and delivered pursuant to this Agreement, the Securities will not be of the same class (within the meaning of Rule 144A under the Act) as securities which are listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system; (v) No Issuer is, nor immediately after giving effect to the offering and sale of the Securities, will be, an "investment company," or an entity "controlled by an investment company," as such terms are defined in the United States Investment Company Act of 1940, as amended (the "Investment Company Act") and the rules and regulations thereunder; (w) Neither any Issuer nor any person acting on its behalf (other than the Purchasers as to whom the Issuers make no representation) has offered or sold the Securities by means of any general solicitation or general advertising within the meaning of Rule 502(c) under the Act or, with respect to Securities sold outside the United States to non-U.S. persons (as defined in Rule 902 under the Act), by means of any directed selling efforts within the meaning of Rule 902 under the Act and the Issuers, any affiliate of any Issuer and any person acting on its or their behalf has complied with and will implement the "offering restriction" within the meaning of such Rule 902; -6- (x) Within the preceding six months, none of the Issuers or any other person acting on behalf of any Issuer has offered or sold to any person any Securities or any securities of the same or a similar class as the Securities other than the Securities offered or sold to the Purchasers hereunder. The Issuers will take reasonable precautions designed to insure that any offer or sale, direct or indirect, in the United States or to any U.S. person (as defined in Rule 902 under the Act) of any Securities or any substantially similar security issued by any Issuer, within six months subsequent to the date on which the distribution of the Securities has been completed (as notified to the Company by Goldman, Sachs & Co.), is made under restrictions and other circumstances reasonably designed not to affect the status of the offer and sale of the Securities in the United States and to U.S. persons contemplated by this Agreement as transactions exempt from the registration provisions of the Act; (y) KPMG LLP, which has certified certain financial statements included in the Offering Circular as set forth in its report included therein, is an independent public accounting firm as required by the Act and the rules and regulations of the Commission thereunder; (z) Except as described in the Offering Circular and except such matters as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) no Issuer nor any of its subsidiaries is in violation of any federal, state, provincial, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative order, consent, decree or judgment thereof, including any judicial or administrative order, consent, decree or judgment relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products (collectively, "Hazardous Materials") or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, "Environmental Laws"), (ii) the Issuers and their subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws and are in compliance with their requirements, (iii) there are no pending or, to the knowledge of the Issuers, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any -7- Environmental Law against any of the Issuers or any of their subsidiaries; (iv) no Issuer nor any of its subsidiaries is conducting any response or other corrective action at any location pursuant to any applicable Environmental Laws; (v) there are no events or circumstances that could reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting, or which could result in liability of, any Issuer or any of its subsidiaries relating to Hazardous Materials or Environmental Laws; (aa) The Issuers and their subsidiaries own or possess adequate rights to use all material patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights and licenses necessary for the conduct of their businesses as described in the Offering Circular, except where the failure to have such rights would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect and the Issuers have no knowledge of any reason to believe that the conduct of the businesses of the Issuers and their subsidiaries will conflict with, and, except as disclosed in the Preliminary Offering Circular and the Offering Circular, have not received any notice of any claim of conflict with, any such rights of others which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect; (bb) Subject to the lack of audited financial statements of Aker Plastics Company, Inc., the financial statements, including the notes thereto, included in the Offering Circular comply as to form in all material respects with the applicable accounting requirements of the Act, the Exchange Act, and the rules and regulations of the Commission thereunder, and present fairly in all material respects the financial position of the entities to which they relate as of the dates indicated and their results of operations, cash flows and shareholders' equity for the periods specified; said financial statements have been prepared in conformity with generally accepted accounting principles as applied in the United States, applied on a consistent basis throughout the periods involved except as noted therein; the unaudited pro forma consolidated financial statements of Parent Guarantor and its subsidiaries and the related notes thereto included in the Offering Circular present fairly the information shown therein, have been prepared in accordance with the Commission's rules and guidelines with respect to pro forma financial statements and have been properly compiled on the bases described therein; and the assumptions used in the preparation thereof are reasonable and the adjustments made therein are appropriate to give effect to the transactions and circumstances referred to therein; the information, to the extent derived from the audited financial statements included in the Offering Circular, set forth under the captions "Summary--Summary Historical and Pro Forma Consolidated Financial Data" and "Selected Historical Financial Data" included in the -8- Offering Circular fairly present the information set forth therein on a basis consistent with that of the audited financial statements included in the Offering Circular; and the other statistical and market and industry-related data included in the Offering Circular present fairly the information included therein, and are based upon or derived from sources that the Company believes to be reliable and accurate. (cc) No Issuer has, or, as a result of consummation of the transactions herein contemplated will have, incurred debts beyond its ability to pay as they mature; the present fair saleable value of the assets of each Issuer exceeds the amount required to pay the probable liability on its existing debts (whether matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent), as they become absolute and matured, and, as a result of consummation of the transactions herein contemplated, will exceed such amount; no Issuer has or, as a result of consummation of the transactions herein contemplated will have, unreasonably small capital for it to carry on its business as proposed to be conducted; no Issuer is incurring obligations or making transfers under any evidence of indebtedness with the intent to hinder, delay or defraud any entity to which it is or will become indebted; (dd) No labor disturbance by the employees of any Issuer or any of their subsidiaries exists or, to the best of each Issuer's knowledge, is imminent which individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect; except as disclosed in the Offering Circular, none of the Issuers or their subsidiaries is party to a collective bargaining agreement; and there are no unfair labor practice complaints pending against any Issuer or any of its subsidiaries or, to the best of each of the Issuers' knowledge, threatened against them which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect; (ee) No "prohibited transaction" (as defined in Section 406 of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as amended from time to time (the "Code")), or "accumulated funding deficiency" (as defined in Section 302 of ERISA) or any of the events set forth in Section 4043(c) of ERISA (other than events with respect to which the 30-day notice requirement under Section 4043 of ERISA has been waived or any event described in Section 4043(c)(9) or 4043(c)(11) that may result from the offering of the Securities or the transactions contemplated by the Merger Agreement) has occurred with respect to any "employee benefit plan," (as defined in Section 3(3) of ERISA), or any "employee benefit plan" of any entity which is considered one employer with any Issuer or any subsidiary of any Issuer under Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affiliate"); no fact or circumstance exists which could result in any pension plan being wound up (in whole or in part), being subject to an accelerated funding or special payment obligation, being less than fully funded on a going concern or solvency basis or being required to repay to the plan any expenses, amounts withdrawn from the plan or amounts applied to contribution holidays; each employee benefit plan is in compliance in all material respects with its terms and applicable law, including ERISA and the Code and has been established, administered, funded and invested in material compliance with its terms and all applicable law; and no Issuer nor any ERISA Affiliate has participated in any multiemployer plan (as defined in Section 3(37) of ERISA or the comparable provisions of the applicable legislation of any other jurisdiction) for which it would incur -9- a material liability if it were to completely or partially withdraw (within the meaning of Section 4201 or 9203 of ERISA or the comparable provisions of the applicable legislation of any other jurisdiction) from any such plan; no Issuer nor any ERISA Affiliate has incurred or expects to incur liability under Title IV of ERISA or the comparable provisions of the applicable legislation of any other jurisdiction with respect to the termination of, or withdrawal from any "pension plan" (as defined in Section 3(2) of ERISA); and each "pension plan" for which any Issuer would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and, to the best of each Issuer's knowledge, nothing has occurred, whether by action or by failure to act, which could cause the loss of such qualification; (ff) Each of the Parent Guarantor and its subsidiaries (i) makes and keeps books and records which are accurate in all material respects and (ii) maintains internal accounting controls which provide reasonable assurance that (A) transactions are executed in accordance with management's authorization, (B) transactions are recorded as necessary to permit preparation of its financial statements and to maintain accountability for its assets, (C) access to its financial assets is permitted only in accordance with management's authorization and (D) the reported accountability for its assets is compared with existing assets at reasonable intervals; (gg) In connection with the sale and distribution of the Notes in Canada, the Company acknowledges and agrees that: (i) in accordance with applicable securities laws of certain of the provinces of Canada, certain contractual rights of action for rescission and damages as set forth in the Offering Circular used in Canada (being the Offering Circular, as supplemented for use in making offers and sales in certain provinces of Canada) under the heading "Rights of Action for Damages or Rescission" will be granted by the Company to purchasers who acquire the Notes from the Purchasers or their affiliates in Canada, and (ii) such Canadian purchasers shall be entitled to exercise such contractual rights of action against the Company in accordance with their terms. The Company agrees to make all private placement or similar filings required to be made with securities regulatory authorities in Canada with respect to the offering, sale and distribution of the Notes to the Purchasers or their affiliates and the initial resales or first trades of the Notes by the Purchasers to purchasers in Canada, including, without limitation, any required reports of the trades constituting such initial resales or first trades (to the extent the necessary information is provided by the Purchasers to the Company); and to pay all filing or other fees (other than fees relating to the filing of a prospectus) applicable in connection therewith; and (hh) The Transaction Documents conform in all material respects to the descriptions thereof in the Offering Circular. 2. Subject to the terms herein set forth, the Company agrees to issue and sell to each of the Purchasers, and, subject to the terms and conditions herein set forth, each of the Purchasers agrees, severally and not jointly, to purchase from the Company, at a purchase price of 97.25% of the principal amount thereof, plus accrued interest, if any, from June 4, 2004 to the Time of Delivery hereunder, the principal amount of Securities set forth opposite the name of such Purchaser in Schedule I hereto. -10- 3. Upon the authorization by you of the release of the Securities, the several Purchasers propose to offer the Securities for sale upon the terms and conditions set forth in this Agreement and the Offering Circular and each Purchaser hereby represents and warrants to, and agrees with the Issuers that: (a) It has solicited and will solicit offers for the Securities only from and will offer and sell the Securities only (i) to persons who it reasonably believes are "qualified institutional buyers" ("QIBs") within the meaning of Rule 144A under the Act in transactions meeting the requirements of Rule 144A and (ii) through its selling agents, outside the United States, to non-U.S. persons in reliance on Regulation S under the Act; (b) It is an institutional "accredited investor" within the meaning of Rule 501 under the Act; (c) It has not solicited and will not solicit offers for, or offer or sell, the Securities by any form of general solicitation or general advertising, including but not limited to the methods described in Rule 502(c) under the Act or in any manner involving a public offering within the meaning of Section 4(2) of the Act; (d) The Securities have not been and will not be registered under the Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S under the Act or pursuant to an exemption from the registration requirements of the Act. Each Purchaser represents that it has offered and sold the Securities, and will offer and sell the Securities (i) as part of their distribution at any time and (ii) otherwise until 40 days after the later of the commencement of the offering and the Time of Delivery, only in accordance with Rule 903 of Regulation S or Rule 144A under the Act. Accordingly, each Purchaser agrees that neither it, its affiliates nor any persons acting on its or their behalf has engaged or will engage in any directed selling efforts with respect to the Securities, and it and they have complied and will comply with the offering restrictions requirement of Regulation S. Each Purchaser agrees that, at or prior to confirmation of sale of Securities (other than a sale pursuant to Rule 144A), it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Securities from it during the restricted period a confirmation or notice to substantially the following effect: "The Securities covered hereby have not been registered under the U.S. Securities Act of 1933 (the "Securities Act") and may not be offered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and the closing date, except in either case in accordance with Regulation S (or Rule 144A if available) under the Securities Act. Terms used above have the meaning given to them by Regulation S." Terms used in this paragraph have the meanings given to them by Regulation S. -11- Notwithstanding the foregoing, Securities in registered form may be offered, sold and delivered by the Purchasers in the United States and to U.S. persons pursuant to clause (a)(i) of this Section 3 without delivery of the written statement required by this clause (d); (e) Each Purchaser further represents and agrees that (i) it has not offered or sold and will not offer or sell any Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995, (b) it has complied, and will comply, with all applicable provisions of the Financial Services Act of 1986 of Great Britain with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom, and (c) it has issued or passed on and will issue or pass on in the United Kingdom any document received by it in connection with the issuance of the Securities only to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 of Great Britain or is a person to whom the document may otherwise lawfully be issued or passed on; and (f) Each Purchaser agrees that it will not offer, sell or deliver any of the Securities in any jurisdiction outside the United States except (A) under circumstances that will result in compliance with the applicable laws thereof, and except as otherwise set forth herein, that it will take at its own expense whatever action is required to permit its purchase and resale of the Securities in such jurisdictions (B) in Canada, by way of private placement or other exemptions from the prospectus requirements. Each Purchaser understands that no action has been taken to permit a public offering in any jurisdiction outside the United States where action would be required for such purpose. Each Purchaser agrees not to cause any advertisement of the Securities to be published in any newspaper or periodical or posted in any public place and not to issue any circular relating to the Securities, except in any such case with the Representatives' express written consent and then only at its own risk and expense. 4. a) The Securities to be purchased by each Purchaser hereunder will be represented by one or more definitive global Securities in book-entry form that will be deposited by or on behalf of the Company with The Depository Trust Company ("DTC") or its designated custodian. The Company will deliver the Securities to Goldman, Sachs & Co. for the account of each Purchaser, against payment by or on behalf of such Purchaser of the purchase price therefor by wire transfer, payable to the order of the Company in Federal (same day) funds, by causing DTC to credit the Securities to the account of Goldman, Sachs & Co. at DTC. The Company will cause the certificates representing the Securities to be made available to Goldman, Sachs & Co. for checking at least twenty-four hours prior to the Time of Delivery (as defined below) at the office of DTC or its designated custodian (the "Designated Office"). The time and date of such delivery and payment shall be 9:30 a.m., New York City time, on June 4, 2004 or such other time and date as Goldman, Sachs & Co. and the Company may agree upon in writing. Such time and date are herein called the "Time of Delivery." -12- (a) The documents to be delivered at the Time of Delivery by or on behalf of the parties hereto pursuant to Section 7 hereof, including the cross-receipt for the Securities and any additional documents requested by the Purchasers pursuant to Section 7(i) hereof, will be delivered at such time and date at the offices of Kaye Scholer LLP at 425 Park Avenue, New York, New York 10022-3598 (the "Closing Location"), and the Securities will be delivered at the Designated Office, all at the Time of Delivery. A meeting will be held at the Closing Location at 3:00 p.m., New York City time, on the New York Business Day next preceding the Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Section 4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close. 5. The Issuers, jointly and severally, agree with each of the Purchasers: (a) To prepare the Offering Circular, including the Canadian supplement thereto, in a form approved by you; to make no amendment or any supplement to the Offering Circular without your prior consent (which consent shall not be unreasonably withheld) promptly after reasonable notice thereof; and to furnish you with such copies thereof as you may reasonably request; (b) Promptly, from time to time, to take such action as you may reasonably request to qualify the Securities for offering and sale under the securities laws of such jurisdictions as you may reasonably request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Securities therein, provided that in connection therewith, no Issuer shall be required to (i) qualify as a foreign corporation in any jurisdiction wherein it would not otherwise be required to qualify but for the requirements of Section 3(c)(vi) of the Registration Rights Agreement, (ii) consent to general service of process in any such jurisdiction, (iii) take any other action that would subject it to general service of process or to taxation in excess of a nominal amount in respect of doing business in any jurisdiction in which it is not otherwise subject, (iv) make any changes to its organizational documents or any agreement between it and its equityholders or (v) file a prospectus in Canada; (c) To furnish the Purchasers with three copies of the Offering Circular and each amendment or supplement thereto signed by an authorized officer of the Company with the independent accountants' report(s) in the Offering Circular, and any amendment or supplement containing amendments to the financial statements covered by such report(s), signed by the accountants, and additional written and electronic copies thereof in such quantities as you may from time to time reasonably request, and if, at any time prior to the completion of the resale by the Purchasers of the Securities, any event shall have occurred as a result of which the Offering Circular as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Offering Circular is delivered, not misleading, or, if for any other reason it shall be necessary or desirable during such same -13- period to amend or supplement the Offering Circular, to notify you and upon your request to prepare and furnish without charge to each Purchaser and to any dealer in securities as many written and electronic copies as you may from time to time reasonably request of an amended Offering Circular or a supplement to the Offering Circular which will correct such statement or omission or effect such compliance; (d) For a period of 180 days from the date of the Offering Circular, not to offer, sell, contract to sell, grant any option to purchase, issue any instrument convertible into or exchangeable for, or otherwise transfer or dispose of (or enter into any transaction or device which is designated to, or could be expected to, result in the disposition in the future of), any Securities or any securities of the Company that are substantially similar to the Securities except (i) the Exchange Securities in exchange for the Securities in connection with the exchange offer contemplated by the Registrations Rights Agreement or (ii) with the prior written consent of the Representatives; (e) Not to be or become, at any time prior to the expiration of two years after the Time of Delivery or, if earlier, until such time as the Securities are no longer restricted securities (as defined in Rule 144 under the Securities Act), an open-end investment company, unit investment trust, closed-end investment company or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act; (f) To comply with the reporting and information covenant in the Indenture; (g) If requested by you, to use all commercially reasonable efforts to cause the Securities to be eligible for the PORTAL trading system of the National Association of Securities Dealers, Inc.; (h) During a period of five years from the date of the Offering Circular, so long as any of the Securities then remain outstanding, to furnish to you copies of all reports or other communications (financial or other) and to deliver to you (i) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission, applicable securities regulatory authorities in Canada or any securities exchange on which the Securities or any class of securities of the Company, Parent Guarantor or MAAX Holdings, Inc. ("Holdings") is listed; and (ii) such additional information concerning the business and financial condition of the Parent Guarantor and its subsidiaries as you may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of the Parent Guarantor and its subsidiaries are consolidated in reports furnished to its shareholders generally or to the Commission); (i) To do and perform all things required to be done and performed under the Transaction Documents prior to and after the Time of Delivery; -14- (j) To comply with all agreements set forth in the representation letters of the Company to DTC relating to the approval of the Securities by DTC for "book entry" transfer; and (k) To use the net proceeds received by them from the sale of the Securities pursuant to this Agreement in the manner specified in the Offering Circular under the caption "Use of Proceeds." 6. The Issuers, jointly and severally, covenant and agree with the several Purchasers that the Issuers will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Issuers' counsel and accountants in connection with the issue of the Securities and all other expenses in connection with the preparation, printing and filing of the Preliminary Offering Circular and the Offering Circular (in each case, including the Canadian supplement thereto) and any amendments and supplements thereto and the mailing and delivering of copies thereof to the Purchasers and dealers; (ii) the cost of printing or producing any Agreement among Purchasers, this Agreement, the Indenture, the Registration Rights Agreement, the Blue Sky and legal investment surveys, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Securities; (iii) all expenses in connection with the qualification of the Securities and the Exchange Securities for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Purchasers in connection with such qualification and in connection with the Blue Sky and legal investment surveys; (iv) any fees charged by securities rating services for rating the Securities and the Exchange Securities; (v) the cost of preparing the Securities; (vi) the fees and expenses of the Trustee and any agent of the Trustee and the fees and disbursements of counsel for the Trustee in connection with the Indenture and the Securities; (vii) any cost incurred in connection with the designation of the Securities for trading in PORTAL; and (viii) all other costs and expenses incident to the performance of their obligations hereunder which are not otherwise specifically provided for in this Section; provided that payment of "roadshow -15- expenses" shall be as set forth in the Engagement Letter dated March 10, 2004 among the Purchasers and J.W. Childs Associates, L.P., Borealis Private Equity Limited Partnership, Borealis (QLP) Private Equity Limited Partnership, Ontario Municipal Employees Retirement Board and 3087052 Nova Scotia Company. It is understood, however, that, except as provided in this Section, and Sections l(gg), 8 and 11 hereof, the Purchasers will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Securities by them, and any advertising expenses connected with any offers they may make. 7. The obligations of the Purchasers hereunder shall be subject to the condition that all representations and warranties and other statements of the Issuers herein are, at and as of the Time of Delivery, true and correct, the condition that the Issuers shall have performed all of their obligations hereunder theretofore to be performed, and the following additional conditions: (a) Cahill Gordon & Reindel llp, counsel for the Purchasers, shall have furnished to you such opinion or opinions, dated the Time of Delivery, as you may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters; (b) The Purchasers shall have received written opinions, dated the Time of Delivery, in form and substance satisfactory to you, from: (i) Kaye Scholer LLP, as U.S. counsel for the Issuers, in the form of Annex I hereto; (ii) Fasken Martineau DuMoulin LLP, Canadian counsel for the Issuers, in the form of Annex II hereto; (iii) McInnes Cooper, Nova Scotia counsel for the Issuers, in the form of Annex III hereto; (iv) Kaye Scholer LLP, as California counsel for the Issuers, in the form of Annex IV hereto; (v) Dorsey & Whitney LLP, Minnesota counsel for the Issuers, in the form of Annex V hereto; (vi) Saul Ewing LLP, Pennsylvania counsel for the Issuers, in the form of Annex VI hereto; (vii) Beers Mallers Backs & Salin, LLP, Indiana counsel for the Issuers, in the form of Annex VII hereto; and (viii) Foster Pepper & Shefelman PLLC, Washington counsel for the Issuers, in the form of Annex VIII hereto. -16- (c) On the date of the Offering Circular prior to the execution of this Agreement and also at the Time of Delivery, KPMG LLP shall have furnished to you a letter or letters, dated the respective dates of delivery thereof, in form and substance satisfactory to you, to the effect set forth in Annex IX hereto; (d) i) Neither the Issuers nor any of their subsidiaries shall have sustained since the date of the latest audited financial statements included in the Offering Circular any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Offering Circular, and (ii) since the respective dates as of which information is given in the Offering Circular there shall not have been any change in the capital stock, total debt or long-term debt of any Issuer or any of its subsidiaries (other than as a result of intercompany transactions, including without limitation, capital contributions, debt repayments, restructurings, amalgamations and wind-ups) or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Issuers and their subsidiaries, otherwise than as set forth or contemplated in the Offering Circular, the effect of which, in any such case described in clause (i) or (ii), is in the judgment of the Representatives so material and adverse as to make it impracticable or inadvisable to proceed with the offering or the delivery of the Securities on the terms and in the manner contemplated in this Agreement and in the Offering Circular; (e) On or after the date hereof (i) no downgrading shall have occurred in the rating accorded any debt or preferred stock of the Parent Guarantor or any of its subsidiaries by any "nationally recognized statistical rating organization," as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any such debt or preferred stock; (f) On or after the date hereof there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange or the Toronto Stock Exchange; (ii) a general moratorium on commercial banking activities in New York or Canada is declared by the relevant authorities, or a material disruption in commercial banking or securities settlement or clearance services in the United States or Canada; (iii) a change or development involving a prospective change in Canadian taxation affecting the Company, the Securities or the transfer thereof; (iv) the outbreak or escalation of hostilities involving the United States or Canada, or the declaration by the United States or Canada of a national emergency or war or (v) the occurrence of any other calamity or crisis or any change in financial, political or economic conditions or currency exchange rates or controls in the United States, Canada or elsewhere, if the effect of any such event specified in clause (iii), (iv) or (v) in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the offering or the delivery of the Securities on the terms and in the manner contemplated in the Offering Circular; (g) The Securities have been designated for trading on PORTAL; -17- (h) The Issuers shall have furnished or caused to be furnished to you at the Time of Delivery certificates of officers of the Issuers satisfactory to you that the representations and warranties of the Issuers herein are true and correct in all material respects (to the extent not otherwise qualified by materiality or Material Adverse Effect) as if made on and as of such Time of Delivery, that the Issuers have performed or complied in all material respects (to the extent not otherwise qualified by materiality or Material Adverse Effect) with all of their obligations hereunder to be performed at or prior to such Time of Delivery, as to the matters set forth in subsection (d) of this Section and as to such other matters as you may reasonably request; (i) Prior to or simultaneous with the Time of Delivery, the Issuers shall have entered into the Credit Agreement on terms no less favorable to the Issuers than as described in the Offering Circular, and the Purchasers shall have received counterparts, conformed as executed, of the Credit Agreement and such other documentation as they reasonably deem necessary to evidence the consummation thereof and the conditions to initial borrowing under the Credit Agreement shall be satisfied; (j) Prior to or simultaneous with the Time of Delivery, the Issuers shall have received proceeds from an equity investment (the "Equity Financing") from its sponsors, certain consultants and members of management as described in the Offering Circular, and the Purchasers shall have received counterparts, conformed as executed, of any documentation evidencing the Equity Financing and such other documentation as they reasonably deem necessary to evidence the consummation thereof; (k) Prior to or simultaneous with the Time of Delivery, each of the transactions contemplated in the Merger Agreement shall have been, or shall substantially simultaneously be, consummated without any material amendment or material waiver after the date hereof of any provision of the Merger Agreement or any related document executed in connection with the transactions contemplated in the Merger Agreement (other than any such amendment or waiver approved by the Representatives, such approval not to be unreasonably withheld), and the Initial Purchasers shall have received satisfactory evidence thereof. Notwithstanding any other provision of this Agreement, the articles of amalgamation evidencing the amalgamation contemplated by the Merger Agreement need not be filed prior to or simultaneous with the Time of Delivery; provided that the Company has entered into escrow arrangements satisfactory to the Representatives that provide for the escrow of the proceeds of the sale of the Securities and the initial borrowings under the Credit Agreement (if required by the Representatives), until the earlier of (i) the certificate of amalgamation is issued by the Enterprise Registrar acting under the Companies Act (Quebec) or (ii) such Enterprise Registrar shall have provided a certificate delivered to the Representatives confirming that a certificate attesting the amalgamation will be prepared as of June 4, 2004 in accordance with Section 123.119 of the Companies Act (Quebec) and will be provided as soon as practicable; (l) Prior to or simultaneously with the Time of Delivery, the Issuers shall have redeemed or repurchased all outstanding debt of the Issuers and their subsidiaries, except as set forth in the Offering Circular; -18- (m) Prior to or simultaneously with the Time of Delivery, the Issuers shall have redeemed all outstanding preferred stock of the Issuers and their subsidiaries, if any (other than preferred stock held by the Issuers and as permitted by Section 6.1(b) of the Credit Agreement); and (n) The Issuers shall have delivered executed copies of the Securities, the Indenture and the Registration Rights Agreement to the Purchasers. 8. b) The Issuers, jointly and severally, will indemnify and hold harmless each Purchaser against any losses, claims, damages or liabilities, joint or several, to which such Purchaser may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Offering Circular or the Offering Circular, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, and will reimburse each Purchaser for any legal or other expenses reasonably incurred by such Purchaser in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Issuers shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Offering Circular or the Offering Circular or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser through any Representative expressly for use therein. (a) Each Purchaser will indemnify and hold harmless the Issuers against any losses, claims, damages or liabilities to which the Issuers may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Offering Circular or the Offering Circular, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Offering Circular or the Offering Circular or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Purchaser through any Representative expressly for use therein; and will reimburse the Issuers for any legal or other expenses reasonably incurred by the Issuers in connection with investigating or defending any such action or claim as such expenses are incurred. (b) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the -19- indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of any indemnified party. (c) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Issuers on the one hand and the Purchasers on the other from the offering of the Securities. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Issuers on the one hand and the Purchasers on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Issuers on the one hand and the Purchasers on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Issuers bear to the total underwriting discounts and commissions received by the Purchasers. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by any Issuer on the one hand or the Purchasers on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Issuers and the Purchasers agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no -20- Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to investors were offered to investors exceeds the amount of any damages which such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The Purchasers' obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint. (d) The obligations of the Issuers under this Section 8 shall be in addition to any liability which the Issuers may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Purchaser within the meaning of the Act; and the obligations of the Purchasers under this Section 8 shall be in addition to any liability which the respective Purchasers may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of each Issuer and to each person, if any, who controls each Issuer within the meaning of the Act. 9. c) If any Purchaser shall default in its obligation to purchase the Securities which it has agreed to purchase hereunder, you may in your discretion arrange for you or another party or other parties to purchase such Securities on the terms contained herein. If within thirty-six hours after such default by any Purchaser you do not arrange for the purchase of such Securities, then the Issuers shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to you to purchase such Securities on such terms. In the event that, within the respective prescribed periods, you notify the Issuers that you have so arranged for the purchase of such Securities, or the Issuers notify you that it has so arranged for the purchase of such Securities, you or the Issuers shall have the right to postpone the Time of Delivery for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Offering Circular, or in any other documents or arrangements, and the Issuers agree to prepare promptly any amendments to the Offering Circular which in your opinion may thereby be made necessary. The term "Purchaser" as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to this Agreement with respect to such Securities. (a) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Purchaser or Purchasers by you and the Issuers as provided in subsection (a) above, the aggregate principal amount of such Securities which remains unpurchased does not exceed one-eleventh of the aggregate principal amount of all the Securities, then the Issuers shall have the right to require each non-defaulting Purchaser to purchase the principal amount of Securities which such Purchaser agreed to purchase hereunder and, in addition, to require each non-defaulting Purchaser to purchase its pro rata share (based on the principal amount of Securities which such Purchaser agreed to purchase hereunder) of the Securities of such defaulting Purchaser or Purchasers for which such arrangements have not been made; but nothing herein shall relieve a defaulting Purchaser from liability for its default. (b) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Purchaser or Purchasers by you and the Issuers as provided in subsection (a) above, the aggregate principal amount of Securities which remains unpurchased exceeds one-eleventh of the aggregate principal amount of all the Securities, or if the Issuers shall not exercise the right described in subsection (b) above to require non-defaulting -21- Purchasers to purchase Securities of a defaulting Purchaser or Purchasers, then this Agreement shall thereupon terminate, without liability on the part of any non-defaulting Purchaser or any Issuer, except for the expenses to be borne by the Issuers and the Purchasers as provided in Section 6 hereof and the indemnity and contribution agreements in Section 8 hereof; but nothing herein shall relieve a defaulting Purchaser from liability for its default. 10. The respective indemnities, agreements, representations, warranties and other statements of the Issuers and the several Purchasers, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Purchaser or any controlling person of any Purchaser, any Issuer or any officer or director or controlling person of any Issuer and shall survive delivery of and payment for the Securities. 11. If this Agreement shall be terminated pursuant to Section 9 hereof, no Issuer shall then be under any liability to any Purchaser except as provided in Section 8 hereof and, as to any non-defaulting Purchaser, in Section 6 hereof; but, if for any other reason, the Securities are not delivered by or on behalf of the Issuers as provided herein, the Issuers will, jointly and severally, reimburse the Purchasers through you for all out-of-pocket expenses approved in writing by you, including fees and disbursements of counsel, reasonably incurred by the Purchasers in making preparations for the purchase, sale and delivery of the Securities but no Issuer shall then be under further liability to any Purchaser except as provided in Sections 6 and 8 hereof. 12. In all dealings hereunder, you shall act on behalf of each of the Purchasers, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Purchaser made or given by the Representatives. All statements, requests, notices and agreements hereunder shall be in writing, and if to the Purchasers shall be delivered or sent by mail or facsimile transmission to you as the Representatives c/o Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004, Attention: Registration Department; and if to any Issuer shall be delivered or sent by mail or facsimile transmission to the address of the Company set forth in the Offering Circular, Attention: Secretary; provided, however, that any notice to a Purchaser pursuant to Section 8(c) hereof shall be delivered or sent by mail or facsimile transmission to such Purchaser at its address set forth in its Purchasers' Questionnaire, or document constituting such Questionnaire, which address will be supplied to the Company by you upon request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof. 13. This Agreement shall be binding upon, and inure solely to the benefit of, the Purchasers, the Issuers and, to the extent provided in Sections 8 and 10 hereof, the officers and directors of each Issuer and each person who controls any Issuer or any Purchaser, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement, other than as set forth in the first sentence of Section 1(gg). No purchaser of any of the Securities from any Purchaser shall be deemed a successor or assign by reason merely of such purchase. -22- 14. Each Issuer irrevocably (i) agrees that any legal suit, action or proceeding against any Issuer brought by any Purchaser or by any person who controls any Purchaser arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in any New York Court, (ii) waives, to the fullest extent it may effectively do so, any objection which it may now or hereafter have to the laying of venue of any such proceeding and (iii) submits to the non-exclusive jurisdiction of such courts in any such suit, action or proceeding. The Issuers have appointed National Registered Agents, Inc., 875 Avenue of the Americas, Suite 501, New York, New York, 10001, as their authorized agent (the "Authorized Agent") upon whom process may be served in any such action arising out of or based on this Agreement or the transactions contemplated hereby which may be instituted in any New York Court by any Purchaser or by any person who controls any Purchaser, expressly consent to the jurisdiction of any such court in respect of any such action, and waive any other requirements of or objections to personal jurisdiction with respect thereto. Such appointment shall be irrevocable. Each Issuer, jointly and severally, represents and warrants that the Authorized Agent has agreed to act as such agent for service of process and agrees to take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent and written notice of such service to any Issuer shall be deemed, in every respect, effective service of process upon the Issuer. 15. In respect of any judgment or order given or made for any amount due hereunder that is expressed and paid in a currency (the "judgment currency") other than United States dollars, each Issuer will, jointly and severally, indemnify each Purchaser against any loss incurred by such Purchaser as a result of any variation as between (i) the rate of exchange at which the United States dollar amount is converted into the judgment currency for the purpose of such judgment or order and (ii) the rate of exchange at which a Purchaser is able to purchase United States dollars with the amount of judgment currency actually received by such Purchaser. The foregoing indemnity shall constitute a separate and independent obligation of each Issuer and shall continue in full force and effect notwithstanding any such judgment or order as aforesaid. The term "rate of exchange" shall include any premiums and costs of exchange payable in connection with the purchase of or conversion into United States dollars. 16. Time shall be of the essence of this Agreement. 17. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 18. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. 19. The Issuers are authorized, subject to applicable law, to disclose any and all aspects of this potential transaction that are necessary to support any U.S. federal income tax benefits expected to be claimed with respect to such transaction, and all materials of any kind (including tax opinions and other tax analyses) related to those benefits, without the Purchasers imposing any limitation of any kind. -23- If the foregoing is in accordance with your understanding, please sign and return to us five counterparts hereof, and upon the acceptance hereof by you, on behalf of each of the Purchasers, this letter and such acceptance hereof shall constitute a binding agreement between each of the Purchasers and the Issuers. It is understood that your acceptance of this letter on behalf of each of the Purchasers is pursuant to the authority set forth in a form of Agreement among Purchasers, the form of which shall be submitted to the Issuers for examination upon request, but without warranty on your part as to the authority of the signers thereof. Very truly yours, MAAX CORPORATION By: /s/ James C. Rhee ------------------ Name: James C. Rhee Title: Secretary BEAUCELAND CORPORATION, as Parent Guarantor By: /s/ James C. Rhee ------------------ Name:James C. Rhee Title: Secretary -24- 4200217 Canada Inc., a Canada corporation By: /s/ James C. Rhee -------------------- Name: James C. Rhee Title: Secretary -25- MAAX HOLDING CO., a Delaware corporation MAAX-KSD CORPORATION, a Pennsylvania, corporation PEARL BATHS, INC. a Minnesota corporation MAAX-HYDRO SWIRL MANUFACTURING CORP., a Washington corporation MAAX MIDWEST, INC., an Indiana corporation MAAX SPAS (ARIZONA), INC., a California corporation AKER PLASTICS COMPANY INC., an Indiana corporation MAAX CANADA INC., a Canada corporation CUISINE EXPERT - C.E. CABINETS INC., a Canada corporation 9022-3751 QUEBEC INC., a Quebec company MAAX SPAS (ONTARIO) INC., a Canada corporation MAAX SPAS (B.C.) INC., a Canada corporation By: /s/ Denis Aubin ------------------ Name: Denis Aubin Title: Director & Officer -26- MAAX LLC, a Delaware limited liability company, its --------- By: /s/ Denis Aubin --------------- Name: Denis Aubin Title: Secretary -27- Accepted as of the date hereof: Goldman, Sachs & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated By: /s/ Goldman, Sachs & Co. --------------------------- (Goldman, Sachs & Co.) Merrill Lynch, Pierce, Fenner & Smith Incorporated By: /s/ Greg Margolies ---------------------------- Name: Greg Margolies Title: Managing Director On behalf of each of the Purchasers listed in Schedule I -28- SCHEDULE I
PRINCIPAL AMOUNT OF SECURITIES TO BE PURCHASER PURCHASED Goldman, Sachs & Co........................................... US$ 70,500,000.00 Merrill Lynch, Pierce, Fenner & Smith Incorporated............ 49,500,000.00 RBC Capital Markets Corporation............................... 30,000,000.00 ------------------- Total.................................... US$ 150,000,000.00 ===================
SCHEDULE II GUARANTORS
GUARANTOR JURISDICTION OF ORGANIZATION STOCKHOLDER - ------------------------------------ ---------------------------- ------------------- Beauceland Corporation Nova Scotia MAAX Holdings, Inc. MAAX Holding Co. Delaware MAAX Corporation MAAX-KSD Corporation Pennsylvania MAAX Holding Co. MAAX-HYDRO SWIRL Manufacturing Corp. Washington MAAX Holding Co. Pearl Baths, Inc. Minnesota MAAX Holding Co. MAAX Midwest, Inc. Indiana MAAX Holding Co. MAAX Spas (Arizona), Inc. California MAAX Holding Co. Aker Plastics Company Inc. Indiana MAAX Holding Co. MAAX LLC Delaware MAAX Canada Inc. 4200217 Canada Inc. Canada MAAX Canada Inc. MAAX Canada Inc. Canada MAAX Corporation Cuisine Expert - C.E. Cabinets Inc. Canada MAAX Canada Inc. 9022-3751 Quebec Inc. Quebec 4200217 Canada Inc. MAAX Spas (Ontario) Inc. Canada MAAX Canada Inc. MAAX Spas (B.C.) Inc. Canada MAAX Canada Inc.
SCHEDULE III SUBSIDIARIES
SUBSIDIARY JURISDICTION OF ORGANIZATION STOCKHOLDER - ------------------------------------ ---------------------------- ----------------------------- 4200217 Canada Inc. Canada MAAX Canada Inc. MAAX Canada Inc. Canada MAAX Corporation Cuisine Expert - C.E. Cabinets Inc. Canada MAAX Canada Inc. MAAX Spas (Ontario) Inc. Canada MAAX Canada Inc. MAAX Spas (B.C.) Inc. Canada MAAX Canada Inc. 9022-3751 Quebec Inc. Quebec 4200217 Canada Inc. MAAX Holding Co. Delaware MAAX Corporation MAAX-KSD Corporation Pennsylvania MAAX Holding Co. Pearl Baths, Inc. Minnesota MAAX Holding Co. MAAX-HYDRO SWIRL Manufacturing Corp. Washington MAAX Holding Co. MAAX Midwest, Inc. Indiana MAAX Holding Co. MAAX Spas (Arizona), Inc. California MAAX Holding Co. Aker Plastics Company Inc. Indiana MAAX Holding Co. MAAX (2004) LLC Delaware MAAX Hungary Services Limited Liability Company MAAX Canada Inc. MAAX Europe Holding B.V. Netherlands MAAX Canada Inc. Halero B.V. Netherlands MAAX Europe Holding B.V. SaniNova B.V. Netherlands Halero B.V. MAAX Luxembourg S.A.R.L. Luxembourg MAAX Canada Inc. ** MAAX LLC Delaware MAAX Canada Inc. MAAX Hungary Services Limited Hungary MAAX Luxembourg S.A.R.L. Liability Company MAAX Canada Inc. * MAAX Delaware Co. Delaware * MAAX Capital Co. Delaware * MAAX Europe LLC Delaware * 4200209 Canada Inc. Canada
SUBSIDIARY JURISDICTION OF ORGANIZATION STOCKHOLDER - ------------------------------------ ---------------------------- ----------------------------- * 3087052 Nova Scotia Company Nova Scotia * 3087053 Nova Scotia Company Nova Scotia * 9139-4460 Quebec Inc. Quebec * 9139-7158 Quebec Inc. Quebec * MAAX Finance Quebec Quebec
* These entities will be dissolved, liquidated, amalgamated or wound-up in connection with the consummation of the transactions. ANNEX I [Form of Opinion of Kaye Scholer LLP, U.S. counsel for the Issuers] ANNEX II [Form of Opinion of Fasken Martineau DuMoulin LLP, Canadian counsel for the Issuers] ANNEX III [Form of Opinion of McInnes Cooper, Nova Scotia counsel for the Issuers] ANNEX IV [Form of Opinion of Kaye Scholer LLP, California counsel for the Issuers] ANNEX V [Form of Opinion of Dorsey & Whitney LLP, Minnesota counsel for the Issuers] ANNEX VI [Form of Opinion of Saul Ewing LLP, Pennsylvania counsel for the Issuers] ANNEX VII [Form of Opinion of Beers Mallers Backs & Salin, LLP, Indiana counsel for the Issuers] ANNEX VIII [Form of Opinion of Foster Pepper & Shefelman PLLC, Washington counsel for the Issuers] ANNEX IX [Form of Comfort Letter] EX-12.1 62 y99327exv12w1.txt COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES . . . EXHIBIT 12.1 MAAX INC. RATIO OF EARNINGS TO FIXED CHARGES
Pro Forma 2000 2001 2002 2003 2004 2004 PF May 31, 2003 May 31, 2004 May 31,2004 ------------------------------------------------------------------------------------------ Net income 16,028 11,818 14,590 25,425 31,951 21,412 15,166 8,353 5,707 Provision for income taxes 7,402 5,673 8,034 15,699 14,247 9,126 7,161 1,770 485 Fixed charges 4,027 7,264 5,844 5,551 7,070 28,102 1,542 1,820 7,465 ------------------------------------------------------------------------------------------ 27,458 24,754 28,468 46,675 53,267 58,640 23,869 11,943 13,657 - ------------------------------------------------------------------------------------------------------------------------------------ Fixed charges Interest expensed or capitalized 2,725 5,552 3,876 3,547 4,380 25,412 1,041 1,148 6,793 Interest component of the rental expense 1,303 1,712 1,968 2,004 2,689 2,689 501 672 672 ------------------------------------------------------------------------------------------ 4,027 7,264 5,844 5,551 7,070 28,102 1,542 1,820 7,465 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio 6.8 3.4 4.9 8.4 7.5 2.1 15.5 6.6 1.8 ====================================================================================================================================
EX-21.1 63 y99327exv21w1.txt SUBSIDIARIES OF REGISTRANT . . . EXHIBIT 21.1 SUBSIDIARIES OF THE REGISTRANT ------------------------------
- ------------------------------------------------------------------------------------------ JURISDICTION OF INCORPORATION OR SUBSIDIARY NAME ORGANIZATION DOING BUSINESS AS - ------------------------------------------------------------------------------------------ 4200217 Canada Inc. Canada - ------------------------------------------------------------------------------------------ 9022-3751 Quebec Inc. Quebec MAAX Cookshire Imperial Woodcraft Boiseries Imperial Boiserie Imperial Woodcraft - ------------------------------------------------------------------------------------------ Aker Plastics Company, Inc. Indiana MAAX Valdosta MAAX Plymouth MAAX Martinsburg MAAX Marion Southeast Division MAAX Cedar Glas Manufacturing MAAX Industries Southeast - ------------------------------------------------------------------------------------------ Cuisine Expert - C.E. Cabinets Inc. Canada MAAX Laval Cuisine Expert Cuisine Expert LTEE Cuisine Express Cuisine Instant Novak Anjou - ------------------------------------------------------------------------------------------ Halero B.V. Netherlands - ------------------------------------------------------------------------------------------ MAAX Canada Inc. Canada MAAX Canada Inc. Division Beauce MAAX Canada Inc. Division Lachine MAAX Canada Inc. Division Manhattan MAAX Beauce MAAX Lachine MAAX Anjou MAAX Airdrie MAAX Armstrong Northeast Division Lachine Division Manhattan Valley Western Canada Division Westco Acrylica Fibre De Verre Moderne Axam - ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------ MAAX Corporate Intermax MAAX Inc. - ------------------------------------------------------------------------------------------ MAAX Holding Co. Delaware - ------------------------------------------------------------------------------------------ MAAX-Hydro Swirl Washington MAAX Bellingham Manufacturing Corp. MAAX Elk Grove Western Regions Division - ------------------------------------------------------------------------------------------ MAAX-KSD Corporation Pennsylvania MAAX West Berlin MAAX Southhampton MAAX Riviera Beach MAAX Ontario Keystone MAAX KSD Corp. - ------------------------------------------------------------------------------------------ MAAX LLC Delaware - ------------------------------------------------------------------------------------------ MAAX Europe Holding B.V. Netherlands - ------------------------------------------------------------------------------------------ MAAX Hungary Services Limited Hungary Liability Company - ------------------------------------------------------------------------------------------ MAAX Luxembourg S.A.R.L. Luxembourg - ------------------------------------------------------------------------------------------ MAAX (2004) LLC Delaware - ------------------------------------------------------------------------------------------ MAAX Midwest, Inc. Indiana MAAX Bremen Midwest Division Housing Products Industries - ------------------------------------------------------------------------------------------ MAAX Spas (Arizona), Inc. California MAAX Spas Chandler Coleman Spas - ------------------------------------------------------------------------------------------ MAAX Spas (B.C.) Inc. Canada - ------------------------------------------------------------------------------------------ MAAX Spas (Ontario) Inc. Canada MAAX Spas Beamsville - ------------------------------------------------------------------------------------------ Pearl Baths, Inc. Minnesota MAAX Minneapolis - ------------------------------------------------------------------------------------------ SaniNova B.V. Netherlands - ------------------------------------------------------------------------------------------
EX-23.1 64 y99327exv23w1.txt CONSENTS OF KPMG LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors MAAX Corporation 1010 Sherbrooke Street West, suite 1610 Montreal, Quebec, Canada H3A 2R7 We consent to the use of our auditors' report dated April 9, 2004, except as to note 20 (g) which is dated June 4, 2004 on the consolidated balance sheets of MAAX Inc. as at February 28, 2003 and February 29, 2004, and the consolidated statements of income, shareholders' equity and cash flows for each of the years in the three-year period ended February 29, 2004 included herein and to the reference to our firm under the heading "Experts" in the Prospectus. /s/ KPMG LLP Chartered Accountants Montreal, Canada September 14, 2004 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors Beauceland Corporation 1010 Sherbrooke Street West, suite 1610 Montreal, Quebec, Canada H3A 2R7 We consent to the use of our auditors' report dated June 3, 2004 on the balance sheets of Beauceland Corporation as of May 31, 2004 included herein and to the reference to our firm under the heading "Experts" in the Prospectus. /s/ KPMG LLP Montreal, Canada September 14, 2004 EX-23.2 65 y99327exv23w2.txt CONSENT OF CROWE CHIZEK AND COMPANY LLC Exhibit 23.2 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the use in this Registration Statement of MAAX Corporation on Form F-4 of our report dated May 7, 2004 on the financial statements of Aker Plastics Company, Inc. and to the reference to us under the heading "Experts" in the prospectus. /s/ Crowe Chizek and Company LLC Elkhart, Indiana September 9, 2004 EX-25.1 66 y99327exv25w1.txt STATEMENT OF ELIGIBILITY ON FORM T-1 Exhibit 25.1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2)___ ------------------------------------------------------- U.S. BANK TRUST NATIONAL ASSOCIATION (Exact name of Trustee as specified in its charter) 41-1973763 I.R.S. Employer Identification No. 300 EAST DELAWARE AVENUE, 8TH FLOOR WILMINGTON, DELAWARE 19809 (Address of principal executive offices) (Zip Code) Cheryl L. Clarke U.S. Bank Trust National Association 100 Wall Street, Suite 1600 New York, NY 10005 Telephone (212) 361-6159 (Name, address and telephone number of agent for service) MAAX CORPORATION (Exact name of obligor as specified in its charter) NOVA SCOTIA (State or other jurisdiction of (I. R. S. incorporation or organization) Employer Identification No.) 1010 SHERBROOKE STREET WEST SUITE 1610 MONTREAL, QUEBEC, CANADA H3A 2R7 (Address of principal executive offices) (Zip Code) 9.75% SENIOR SUBORDINATED NOTES DUE 2012 ================================================================================ ITEM 1. GENERAL INFORMATION. Furnish the following information as to the Trustee. a) Name and address of each examining or supervising authority to which it is subject. Comptroller of the Currency Washington, D.C. b) Whether it is authorized to exercise corporate trust powers. Yes ITEM 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the Trustee, describe each such affiliation. None USE ONE OF FOLLOWING RESPONSES ONLY ITEMS 3-15 Not applicable because, to the best of Trustee's knowledge, the Trustee is not a trustee under any other indenture under which any other securities or certificates of interest or participation in any other securities of the obligor are outstanding and there is not, nor has there been, a default with respect to securities issued under this indenture. Item 16. LIST OF EXHIBITS: List below all exhibits filed as a part of this statement of eligibility and qualification. 1. A copy of the Articles of Association of the Trustee now in effect, incorporated herein by reference to Exhibit 1 of Form T-1, Document 6 of Registration No. 333-84320. 2. A copy of the certificate of authority of the Trustee to commence business, incorporated herein by reference to Exhibit 2 of Form T-1, Document 6 of Registration No. 333-84320. 3. A copy of the certificate of authority of the Trustee to exercise corporate trust powers, incorporated herein by reference to Exhibit 3 of Form T-1, Document 6 of Registration No. 333-84320. 4. A copy of the existing bylaws of the Trustee, as now in effect, incorporated herein by reference to Exhibit 4 of Form T-1, Document 6 of Registration No. 333-113995. 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939, incorporated herein by reference to Exhibit 6 of Form T-1, Document 6 of Registration No. 333-84320. 7. A copy of the Report of Condition of the Trustee as of June 30, 2004, published pursuant to law or the requirements of its supervising or examining authority, attached as Exhibit 7. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the Trustee, U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York, State of New York on the 1st day of September, 2004. U.S. BANK TRUST NATIONAL ASSOCIATION By: /s/ Cheryl L. Clarke -------------------------------- Name: Cheryl L. Clarke Title: Assistant Vice President U.S. BANK TRUST NATIONAL ASSOCIATION STATEMENT OF FINANCIAL CONDITION AS OF JUNE 30, 2004 ($000'S) 6/30/2004 --------- ASSETS Cash and Balances Due From Depository Institutions $385,910 Fixed Assets 449 Intangible Assets 111,204 Other Assets 29,457 --------- TOTAL ASSETS $527,020 LIABILITIES Other Liabilities $15,052 --------- TOTAL LIABILITIES $15,052 EQUITY Common and Preferred Stock $1,000 Surplus 505,932 Undivided Profits 5,036 --------- TOTAL EQUITY CAPITAL $511,968 TOTAL LIABILITIES AND EQUITY CAPITAL $527,020 - -------------------------------------------------------------------------------- To the best of the undersigned's determination, as of this date the above financial information is true and correct. U.S. Bank Trust National Association By: /S/ Cheryl L. Clarke ------------------------ Name: Cheryl L. Clarke Title: Assistant Vice President Date: September 1, 2004 EX-99.1 67 y99327exv99w1.txt FORM OF LETTER OF TRANSMITTAL EXHIBIT 99.1 LETTER OF TRANSMITTAL FOR OFFER TO EXCHANGE $150.0 MILLION 9.75% SENIOR SUBORDINATED NOTES DUE 2012 FOR 9.75% SENIOR SUBORDINATED NOTES DUE 2012 OF MAAX CORPORATION PURSUANT TO THE PROSPECTUS, DATED [ ], 2004 THE EXCHANGE OFFER (AS DEFINED HEREIN) WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON [ ], 2004 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER IS EXTENDED BY MAAX CORPORATION IN ITS SOLE DISCRETION. TENDERS OF ORIGINAL NOTES (AS DEFINED HEREIN) MAY BE WITHDRAWN PRIOR TO 11:59 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. EXCHANGE AGENT: U.S. BANK TRUST NATIONAL ASSOCIATION By Hand, Overnight Delivery or Registered/Certified Mail U.S. Bank Trust National Association Corporate Trust Services EP-MN-WS-2N 60 Livingston Avenue St. Paul, Minnesota 55107 Attention: Specialized Finance Facsimile Transmissions: (Eligible Institutions Only) (651) 495-8158 To Confirm Facsimile by Telephone or for Information Call: (800) 934-6802 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. HOLDERS (AS DEFINED HEREIN) WHO WISH TO BE ELIGIBLE TO RECEIVE EXCHANGE NOTES (AS DEFINED HEREIN) FOR THEIR ORIGINAL NOTES PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR ORIGINAL NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE. By execution hereof, the undersigned acknowledges receipt of the prospectus dated [ ], 2004 (as the same may be amended or supplemented from time to time, the "Prospectus") of MAAX Corporation, a Nova Scotia unlimited company ("MAAX"), which, together with this Letter of Transmittal and the instructions hereto (this "Letter of Transmittal"), constitute MAAX's offer (the "Exchange Offer") to exchange $1,000 in principal amount of its 9.75% Senior Subordinated Notes due 2012 (the "Exchange Notes") for each $1,000 in principal amount of outstanding 9.75% Senior Subordinated Notes due 2012 (the "Original Notes" and, together with the Exchange Notes, the "Notes"), of which $150.0 million aggregate principal amount was outstanding on the date of the Prospectus. The terms of the Exchange Notes are identical in all material respects (including principal amount, interest rate and maturity) to the terms of the Original Notes for which they may be exchanged pursuant to the Exchange Offer, except that the Exchange Notes have been registered under the Securities Act of 1933, as amended (the "Securities Act"), and, therefore, do not bear legends restricting the transfer thereof. MAAX reserves the right, at any time or from time to time, to extend the Exchange Offer in its sole discretion, in which event the term "Expiration Date" shall mean the latest time and date to which the Exchange Offer is extended. MAAX will notify the Exchange Agent of any extension by written notice and will make a public announcement thereof, each prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. This Letter of Transmittal is to be used by Holders if: (i) certificates representing Original Notes along with this Letter of Transmittal are to be physically delivered to the Exchange Agent herewith by Holders prior to the Expiration Date; (ii) tender of Original Notes is to be made by book-entry transfer to the Exchange Agent's account at The Depository Trust Company ("DTC"), pursuant to the procedures set forth in the "The Exchange Offer -- Book-Entry Transfer" section of the Prospectus and such book-entry transfer must be received by the Exchange Agent prior to the Expiration Date; or (iii) tender of Original Notes is to be made according to the guaranteed delivery procedures set forth in the "The Exchange Offer -- Guaranteed Delivery Procedures" section of the Prospectus. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. If delivery of the Original Notes is to be made by book-entry transfer to the account maintained by the Exchange Agent at DTC as set forth in clause (ii) in the immediately preceding paragraph, this Letter of Transmittal need not be manually executed; provided, however, that tenders of Original Notes must be effected by sending electronic instructions to DTC through DTC's communication system in accordance with the procedures mandated by DTC's Automated Tender Offer Program ("ATOP"). To tender Original Notes through ATOP, the electronic instructions sent to DTC and transmitted by DTC to the Exchange Agent must reflect that the participant acknowledges its receipt of and agrees to be bound by this Letter of Transmittal. Unless the context requires otherwise, the term "Holder" for purposes of this Letter of Transmittal means: (i) any person in whose name Original Notes are registered on the books of MAAX or any other person who has obtained a properly completed bond power from the registered Holder; or (ii) any participant in DTC whose Original Notes are held of record by DTC who desires to deliver such Original Notes by book-entry transfer at DTC. The undersigned has completed, executed and delivered this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR ORIGINAL NOTES MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY. 2 Ladies and Gentlemen: The undersigned hereby tenders to MAAX the aggregate principal amount of Original Notes indicated in this Letter of Transmittal, upon the terms and subject to the conditions set forth in the Prospectus, receipt of which is hereby acknowledged, and in this Letter of Transmittal. Subject to, and effective upon, the acceptance for exchange of the aggregate principal amount of the Original Notes tendered herewith, the undersigned hereby sells, exchanges, assigns and transfers to, or upon the order of, MAAX all right, title and interest in and to such Original Notes that are being tendered hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as the true and lawful agent and attorney-in-fact of the undersigned (with full knowledge that said Exchange Agent also acts as the agent of MAAX and as trustee under the indenture for the Original Notes and the Exchange Notes), with full power of substitution (such power of attorney being an irrevocable power coupled with an interest) to: (a) deliver such Original Notes in registered certificated form, or transfer ownership of such Original Notes through book-entry transfer at DTC, to or upon the order of MAAX, upon receipt by the Exchange Agent, as the undersigned's agent, of the same aggregate principal amount of Exchange Notes; and (b) present such Original Notes for transfer on the books of MAAX and receive, for the account of MAAX, all benefits and otherwise exercise, for the account of MAAX, all right of beneficial ownership of the Original Notes tendered hereby in accordance with the terms of the Exchange Offer. The undersigned represents and warrants that it has full power and authority to tender, sell, exchange, assign and transfer the Original Notes tendered hereby and to acquire Exchange Notes issuable upon the exchange of such tendered Original Notes, and that, when the same are accepted for exchange, MAAX will acquire good, marketable and unencumbered title to the tendered Original Notes, free and clear of all security interests, liens, restrictions, charges, encumbrances, conditional sale agreements or other obligations to their sale or transfer, and not subject to any adverse claim. The undersigned also represents and warrants that it will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or MAAX to be necessary or desirable to complete the sale, exchange, assignment and transfer of tendered Original Notes. The Exchange Offer is subject to certain conditions as set forth in the Prospectus under the caption "Exchange Offer -- Conditions of the Exchange Offer." The undersigned recognizes that as a result of these conditions (which may be waived, in whole or in part, by MAAX) as more particularly set forth in the Prospectus, MAAX may not be required to exchange any of the Original Notes tendered hereby and, in such event, the Original Notes not exchanged will be returned to the undersigned at the address shown below the signature of the undersigned, or in the case of Original Notes tendered by book-entry transfer into the Exchange Agent's account at DTC, such nonexchanged Original Notes will be credited to an account maintained at DTC. The undersigned also acknowledges that this Exchange Offer is being made based upon MAAX's understanding of an interpretation by the staff of the Securities and Exchange Commission (the "SEC") as set forth in no-action letters issued to third parties unrelated to MAAX, including Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley & Co. Incorporated (available June 5, 1991) and Shearman & Sterling (available July 2, 1993) (the "SEC No-Action Letters"), that the Exchange Notes issued in exchange for the Original Notes pursuant to the Exchange Offer may be offered for resale, resold and otherwise transferred by a Holder (other than a broker-dealer who acquires such Exchange Notes directly from MAAX for resale pursuant to Rule 144A under the Securities Act or any other available exemption under the Securities Act or any such Holder that is an "affiliate" of MAAX or of any of the guarantors under the indenture relating to the Notes within the meaning of Rule 405 under the Securities Act), without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such Holder's business and such Holder is not engaged in, and does not intend to engage in, a distribution of such Exchange Notes and has no arrangement with any person to participate in the distribution of such Exchange Notes. The SEC has not, however, considered the Exchange Offer in the context of a no-action letter, and there can be no assurance that the staff of the SEC would make a similar determination with respect to the Exchange Offer as in the SEC No-Action Letters. 3 By tendering, the undersigned represents and warrants to MAAX that (i) any Exchange Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the person receiving such Exchange Notes, whether or not such person is such undersigned, (ii) neither the undersigned Holder of Original Notes nor any such other person has an arrangement or understanding with any person to participate in the distribution of such Exchange Notes and no such person will have any such arrangement or understanding at the time of consummation of the Exchange Offer and (iii) neither the Holder nor any such other person is an "affiliate" of MAAX or of any of the guarantors of the Notes within the meaning of Rule 405 under the Securities Act, or, if such Holder or such other person is an "affiliate," it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. The undersigned agrees to all of the terms of the Exchange Offer as described in the Prospectus and herein. If the undersigned is not a broker-dealer, it hereby represents and warrants to MAAX that it is not engaged in, and does not intend to engage in, a distribution of the Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Original Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes; provided, however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. MAAX has agreed to use all commercially reasonable efforts to keep the registration statement of which the Prospectus forms a part effective for a period beginning when Exchange Notes are first issued in the Exchange Offer and ending upon the earlier of the expiration of the 180th day after the Exchange Offer has been completed and such time as broker-dealers are no longer required to comply with the prospectus delivery requirements in connection with offers and sales of Exchange Notes. The undersigned acknowledges that if the undersigned is tendering Original Notes in the Exchange Offer with the intention of participating in any manner in a distribution of the Exchange Notes (i) the undersigned cannot rely on the position of the staff of the SEC set forth in the SEC No-Action Letters and in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction of the Exchange Notes and such secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 of Regulation S-K under the Securities Act and (ii) failure to comply with such requirements could result in the undersigned incurring liability under the Securities Act. For purposes of the Exchange Offer, MAAX shall be deemed to have accepted validly tendered Original Notes when, as and if MAAX has given oral or written notice thereof to the Exchange Agent. If any tendered Original Notes are not accepted for exchange pursuant to the Exchange Offer for any reason or if Original Notes are submitted for a greater principal amount than the Holder desires to exchange, such unaccepted or non-exchanged Original Notes will be returned without expense to the tendering Holder thereof or, in the case of Original Notes tendered by book-entry transfer into the Exchange Agent's account at DTC, such non-exchanged Original Notes will be credited to an account maintained with DTC promptly after the expiration or termination of the Exchange Offer. All authority conferred or agreed to be conferred by this Letter of Transmittal and every obligation of the undersigned hereunder shall survive the death, incapacity or dissolution of the undersigned and every obligation under this Letter of Transmittal shall be binding upon the undersigned's heirs, executors, administrators, trustees in bankruptcy, legal representatives, personal representatives, successors and assigns. The undersigned understands that tenders of Original Notes not withdrawn before the Expiration Date pursuant to the instructions hereto will constitute an agreement between the undersigned and MAAX upon the terms and subject to the conditions of the Exchange Offer. Unless otherwise indicated under "Special Issuance Instructions," please issue Exchange Notes in exchange for the Original Notes accepted for exchange and return any Original Notes not tendered or not exchanged, in the name(s) of the undersigned (or in either such event in the case of Original Notes tendered by DTC, by credit to the account at DTC). Similarly, unless otherwise indicated under "Special Delivery Instructions," please send the Exchange Notes issued in exchange for the Original Notes accepted for 4 exchange and any Original Notes not tendered or not exchanged (and accompanying documents as appropriate) to the undersigned at the address shown below the undersigned's signature, unless, in either event, tender is being made through DTC. In the event that both "Special Issuance Instructions" and "Special Delivery Instructions" are completed, please issue the Exchange Notes issued in exchange for the Original Notes accepted for exchange and return any Original Notes not tendered or not exchanged in the name(s) of, and send said Exchange Notes to, the person(s) so indicated. The undersigned recognizes that MAAX has no obligation pursuant to the "Special Issuance Instructions" and "Special Delivery Instructions" to transfer any Original Notes from the name of the registered holder(s) thereof if MAAX does not accept for exchange any of the Original Notes so tendered. The instructions included with this Letter of Transmittal must be followed. Questions and requests for assistance or for additional copies of the Prospectus, this Letter of Transmittal and the accompanying Notice of Guaranteed Delivery (the "Notice of Guaranteed Delivery") may be directed to the Exchange Agent. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. 5 THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF ORIGINAL NOTES" AND SIGNING THIS LETTER OF TRANSMITTAL AND DELIVERING SUCH ORIGINAL NOTES AND THIS LETTER OF TRANSMITTAL TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE TENDERED THE ORIGINAL NOTES AS SET FORTH IN SUCH BOX. List below the Original Notes to which this Letter of Transmittal relates. If the space provided below is inadequate, the certificate numbers, if any, and principal amounts should be listed on a separate signed schedule affixed to this Letter of Transmittal. Tenders of Original Notes will be accepted only in authorized denominations of $1,000 or integral multiples thereof.
- -------------------------------------------------------------------------------------------- DESCRIPTION OF ORIGINAL NOTES - -------------------------------------------------------------------------------------------- CERTIFICATE NUMBER(S)* NAME(S) AND ADDRESS(ES) OF HOLDER(S) (ATTACH SIGNED LIST AGGREGATE PRINCIPAL AMOUNT (PLEASE FILL IN, IF BLANK) IF NECESSARY) TENDERED (IF LESS THAN ALL)** - -------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- TOTAL PRINCIPAL AMOUNT OF ORIGINAL NOTES TENDERED - ----------------------------------------------------------------------------- * Need not be completed by Holders tendering by book-entry transfer. ** Need not be completed by Holders who wish to tender with respect to all Original Notes listed. See Instruction 2. - -----------------------------------------------------------------------------
USE OF BOOK ENTRY TRANSFER - ----------------------------------------------------------------------------- [ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING: Name of Tendering Institution: ------------------------------------------------------------------- DTC Book-Entry Account No.: ---------------------------------------------------------------------- Transaction Code No.: ---------------------------------------------------------------------- 6 USE OF GUARANTEED DELIVERY - ----------------------------------------------------------------------------- Holders who wish to tender their Original Notes and (i) whose Original Notes are not immediately available but are not lost, or (ii) who cannot deliver their Original Notes, this Letter of Transmittal or any other required documents to the Exchange Agent prior to the Expiration Date, may effect a tender of such Original Notes according to the guaranteed delivery procedures set forth in the Prospectus and in the instructions to this Letter of Transmittal and must also complete the Notice of Guaranteed Delivery. [ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name(s) of Holder(s) of Original Notes: ------------------------------------- Window Ticket No. (if any): ------------------------------------------------- Date of Execution of Notice of Guaranteed Delivery: ------------------------- ---------------------------------------- Name of Eligible Institution that Guaranteed Delivery: ------------------ ---------------------------------------- DTC Book-Entry Account No.: ------------------------------------------------- If Delivered by Book-Entry Transfer, Name of Tendering Institution: --------- - -------------------------------------------------------------------------------- Transaction Code No.: --------------------------------------------- BROKER-DEALER COPIES OF PROSPECTUS - ----------------------------------------------------------------------------- [ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ----------------------------------------------------------------------- Address: -------------------------------------------------------------------- Aggregate Principal Amount of Original Notes so held: ----------------------- 7 FOR USE BY AFFILIATES - ----------------------------------------------------------------------------- [ ] CHECK HERE IF YOU OR ANY BENEFICIAL OWNER FOR WHOM YOU ARE TENDERING ORIGINAL NOTES IS AN AFFILIATE OF MAAX. Name: ----------------------------------------------------------------------- Address: -------------------------------------------------------------------- Aggregate Principal Amount of Original Notes so held: ----------------------- PLEASE SIGN HERE (TO BE COMPLETED BY ALL TENDERING HOLDERS OF ORIGINAL NOTES REGARDLESS OF WHETHER ORIGINAL NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH) This Letter of Transmittal must be signed by the Holder(s) of Original Notes exactly as their name(s) appear(s) on certificate(s) for Original Notes or, if tendered by a participant in DTC, exactly as such participant's name appears on a security position listing as the owner of Original Notes, or by person(s) authorized to become registered Holder(s) by endorsements and documents transmitted with this Letter of Transmittal. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below under "Capacity" and submit evidence satisfactory to MAAX of such person's authority to so act. See Instruction 3 herein. If the signature appearing below is not of the registered Holder(s) of the Original Notes, then the registered Holder(s) must sign a valid proxy. X ------------------------------ Date:-------------------------- X ------------------------------ Date:-------------------------- (SIGNATURE(S) OF HOLDER(S) OR AUTHORIZED SIGNATORY)
Name(s): ---------------------------------------------------------------------- ---------------------------------------------------------------------- (PLEASE PRINT) Capacity: ----------------------------------------------------------------------- Address: ----------------------------------------------------------------------- ----------------------------------------------------------------------- (INCLUDING ZIP CODE) Area Code and Telephone No.: - --------------------------------------------------- Tax Identification or Social Security No(s).: - ----------------------------------- - ----------------------------------- 8 PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN SIGNATURE GUARANTEE (SEE INSTRUCTION 3 HEREIN) CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION - -------------------------------------------------------------------------------- (NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF FIRM) - -------------------------------------------------------------------------------- (AUTHORIZED SIGNATURE) - -------------------------------------------------------------------------------- (PRINTED NAME) - -------------------------------------------------------------------------------- (TITLE) Date: - ------------------------------, 2004 SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTIONS 3 AND 4 HEREIN) To be completed ONLY if certificates for Original Notes not exchanged and/or Exchange Notes issued pursuant to the Exchange Offer are to be issued in the name of someone other than the person or persons whose signature(s) appear(s) within this Letter of Transmittal or if Original Notes tendered by book-entry transfer that are not accepted for exchange are to be returned by credit to an account maintained at DTC other than the account indicated above. Issue Exchange Notes and/or Original Notes in the name of: Name: - -------------------------------------------------------------------------------- (PLEASE PRINT) Address: ----------------------------------------------------------------------- (PLEASE PRINT) - -------------------------------------------------------------------------------- (ZIP CODE) - -------------------------------------------------------------------------------- TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER (SEE SUBSTITUTE FORM W-9 HEREIN) Credit exchanged Original Notes delivered by book-entry transfer to the DTC account set forth below: - -------------------------------------------------------------------------------- (DTC ACCOUNT NUMBER) Name of Account Party: - -------------------------------------------------------------------------------- SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 3 AND 4 HEREIN) To be completed ONLY if certificates for Original Notes not exchanged and/or Exchange Notes issued pursuant to the Exchange Offer are to be sent to someone other than the person or persons whose signature(s) appear(s) within this Letter of Transmittal or to such person or persons at an address different from that shown in the box entitled "Description of Original Notes" within this Letter of Transmittal. Mail Exchange Notes and/or Original Notes to: Name: -------------------------------------------------------------------------- (PLEASE PRINT) Address: ----------------------------------------------------------------------- (PLEASE PRINT) - -------------------------------------------------------------------------------- (ZIP CODE) - -------------------------------------------------------------------------------- TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER (SEE SUBSTITUTE FORM W-9 HEREIN) 9 TO BE COMPLETED BY ALL TENDERING HOLDERS PAYER'S NAME: U.S. BANK TRUST NATIONAL ASSOCIATION, AS EXCHANGE AGENT - --------------------------------------------------------------------------------------------------------------------------- Name - --------------------------------------------------------------------------------------------------------------------------- Business name, if different from above - --------------------------------------------------------------------------------------------------------------------------- Check appropriate box: [ ] Individual/ [ ] Corporation [ ] Partnership [ ] Other ] --------- [ ] Sole Proprietor - --------------------------------------------------------------------------------------------------------------------------- Address (number, street, and apt. or suite no.) - --------------------------------------------------------------------------------------------------------------------------- City, State, and Zip Code Name - --------------------------------------------------------------------- Business name, if differen - ------------------------------------------------------------------------------------------ Check appropriate box: [ ] Individual/ [ ] Corporation [ ] Partnership [ ] Other ] ---Exempt from backup Sole Proprietor withholding - --------------------------------------------------------------------------------------------------------------------------- Address (number, street, a - --------------------------------------------------------------------------------------------------------------------------- City, State, and Zip Code
- ------------------------------------------------------------------------------------------------------------------ SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT --------------------------- FORM W-9 AND CERTIFY BY SIGNING AND DATING BELOW Social Security Number OR --------------------------- Employer Identification Number -------------------------------------------------------------------------------------- DEPARTMENT OF THE TREASURY PART 2 -- Certification -- Under Penalties of Perjury, I PART 3 -- INTERNAL REVENUE SERVICE certify that: Awaiting TIN [ ] PAYER'S REQUEST FOR (1) The number shown on this form is my correct Taxpayer TAXPAYER IDENTIFICATION Identification Number (or I am waiting for a number to NUMBER (TIN) be issued to me) and (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, (b) I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of failure to report all interest or dividends or (c) the IRS has notified me that I am no longer subject to backup withholding and (3) I am a U.S. person (including a U.S. resident alien). -------------------------------------------------------------------------------------- Certificate instructions -- You must cross out item (2) in Part 2 above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding, you received another notification from the IRS stating that you are no longer subject to backup withholding, do not cross out item (2). SIGNATURE ------------------------------------------ DATE --------------------
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NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING, CURRENTLY AT THE RATE OF 28%, WITH RESPECT TO ANY PAYMENTS MADE TO HOLDERS OF EXCHANGE NOTES PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED 10 THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to me, and either (a) I have mailed or delivered an application to receive a Taxpayer Identification Number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a Taxpayer Identification Number within 60 days, all reportable payments made to me thereafter will be subject to withholding, currently at the rate of 28%, until I provide a number. --------------------------------------------------------- --------------------------------------------------------- Signature Date 11 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND ORIGINAL NOTES; GUARANTEED DELIVERY PROCEDURES. The certificates for the tendered Original Notes (or a timely confirmation of the book-entry transfer of Original Notes into the Exchange Agent's account at DTC of all Original Notes delivered electronically), as well as a properly completed and duly executed copy of this Letter of Transmittal or facsimile hereof and any other documents required by this Letter of Transmittal must be received by the Exchange Agent at its address set forth herein prior to 11:59 P.M., New York City time, on the Expiration Date. Original notes may only be tendered in a principal amount of $1,000 and any integral multiple thereof. THE METHOD OF DELIVERY OF THE TENDERED ORIGINAL NOTES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT ARE AT THE ELECTION AND RISK OF THE HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT THE HOLDER USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTER OF TRANSMITTAL OR ORIGINAL NOTES SHOULD BE SENT TO MAAX. Holders who wish to tender their Original Notes and whose Original Notes are not immediately available, or who cannot deliver their Original Notes, this Letter of Transmittal or any other documents required hereby to the Exchange Agent prior to the Expiration Date, or who cannot complete the procedure for book-entry transfer on a timely basis, may tender their Original Notes pursuant to the guaranteed delivery procedures set forth in the Prospectus and the instructions to this Letter of Transmittal below. Pursuant to such procedures: (i) such tender must be made by or through an Eligible Institution (as defined below) and the Holder must sign a Notice of Guaranteed Delivery; (ii) on or prior to the Expiration Date, the Exchange Agent must have received from the Holder and the Eligible Institution a written or facsimile copy of a properly completed and duly executed Notice of Guaranteed Delivery setting forth the name and address of the Holder of the Original Notes, the certificate number or numbers of such tendered Original Notes and the principal amount of Original Notes tendered, stating that the tender is being made thereby and guaranteeing that, within five business days after the date of delivery of the Notice of Guaranteed Delivery, this Letter of Transmittal together with the certificate(s) representing the Original Notes (or timely confirmation of the book-entry transfer of Original Notes into the Exchange Agent's account at DTC) and any other required documents will be deposited by the Eligible Institution with the Exchange Agent; and (iii) such properly completed and executed Letter of Transmittal (or copy thereof), as well as all other documents required by this Letter of Transmittal and the certificate(s) representing all tendered Original Notes in proper form for transfer (or timely confirmation of the book-entry transfer of Original Notes into the Exchange Agent's account at DTC), must be received by the Exchange Agent within five business days after the Expiration Date. Any Holder of Original Notes who wishes to tender Original Notes pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery and Letter of Transmittal prior to 11:59 P.M., New York City time, on the Expiration Date. All questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of tendered Original Notes will be determined by MAAX in its sole discretion, which determination will be final and binding. MAAX reserves the absolute right to reject any and all Original Notes not properly tendered or any Original Notes MAAX's acceptance of which would, in the opinion of counsel for MAAX, be unlawful. MAAX also reserves the right to waive any defects, irregularities or conditions of tender as to particular Original Notes, but if MAAX waives any condition of the Exchange Offer, it will waive that condition for all Holders. MAAX's interpretation of the terms and conditions of the Exchange Offer (including the instructions in this Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Original Notes must be cured within such time as MAAX shall determine. Neither MAAX, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Original Notes, nor shall any of them incur any liability for failure to give such notification. Tenders of Original Notes will not be deemed to have been made until such defects or irregularities have been cured or waived and will be returned by the Exchange Agent to the tendering Holders of Original 12 Notes, unless otherwise provided in this Letter of Transmittal, promptly following the Expiration Date unless the Exchange Offer is extended. 2. PARTIAL TENDERS; WITHDRAWAL RIGHTS. Tenders of Original Notes will be accepted only in the principal amount of $1,000 and integral multiples thereof. If less than all Original Notes evidenced by a submitted certificate are tendered, the tendering Holder should fill in the aggregate principal amount of Original Notes tendered in the third column of the box entitled "Description of Original Notes." All Original Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. A reissued certificate representing the balance of nontendered Original Notes will be sent to such tendering Holder, unless otherwise provided in the appropriate box on this Letter of Transmittal, promptly after the Expiration Date. ALL OF THE ORIGINAL NOTES DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED. Holders may withdraw tenders of Original Notes at any time prior to 11:59 P.M., New York City time, on the Expiration Date. For the withdrawal to be effective, the Exchange Agent must receive a written notice of withdrawal at its address set forth herein prior to the Expiration Date. Any such notice of withdrawal must: (i) specify the name of the person who tendered the Original Notes to be withdrawn; (ii) identify the Original Notes to be withdrawn, including the certificate number or numbers and principal amount of such withdrawn Original Notes; (iii) be signed by the Holder in the same manner as the original signature on this Letter of Transmittal by which such Original Notes were tendered or as otherwise set forth in Instruction 3, including any required signature guarantees, or be accompanied by a bond power in the name of the person withdrawing the tender, in satisfactory form as determined by MAAX in MAAX's sole discretion, duly executed by the registered Holder, with the signature thereon guaranteed by an Eligible Institution together with the other documents required upon transfer by the indenture governing the Notes; and (iv) specify the name in which such Original Notes are to be registered, if different from the person who deposited the Original Notes pursuant to such documents of transfer. MAAX will determine all questions as to the validity, form and eligibility, including time of receipt, of such withdrawal notices in its sole discretion. The Original Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Original Notes which have been tendered for exchange but which are withdrawn will be returned to their Holder without cost to such Holder promptly after withdrawal. Properly withdrawn Original Notes may be retendered by following one of the procedures described in "The Exchange Offer -- Procedures for Tendering Original Notes" of the Prospectus at any time on or prior to the Expiration Date. 3. SIGNATURE ON THIS LETTER OF TRANSMITTAL; BOND POWER AND ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal (or copy hereof) is signed by the registered Holder(s) of the Original Notes tendered hereby, the signature must correspond exactly with the name(s) as written on the face of the Original Notes without alteration, enlargement or any change whatsoever. If any tendered Original Notes are owned of record by two or more joint owners, all of such owners must sign this Letter of Transmittal. If any tendered Original Notes are registered in different names on several certificates or securities positions listings, it will be necessary to complete, sign and submit as many separate copies of this Letter of Transmittal as there are different registrations. If this Letter of Transmittal is signed by a person other than the registered Holder(s) of Original Notes listed herein, such Original Notes must be endorsed or accompanied by properly completed bond powers signed by the registered Holder exactly as the name(s) of the registered Holder or Holders appears on the Original Notes with the signatures on the Original Notes or the bond powers guaranteed by an Eligible Institution. If this Letter of Transmittal or any Original Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and, unless waived by MAAX, evidence satisfactory to MAAX of their authority to so act must be submitted with this Letter of Transmittal. 13 Endorsements on Original Notes or signatures on bond powers required by this Instruction 3 must be guaranteed by an Eligible Institution. Signatures on this Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an eligible guarantor institution that is a member of or participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (an "Eligible Institution"), unless the Original Notes tendered pursuant hereto are tendered (i) by a registered Holder (including any participant in DTC whose name appears on a security position listing as the owner of Original Notes) who has not completed the box set forth herein entitled "Special Issuance Instructions" or "Special Delivery Instructions" or (ii) for the account of an Eligible Institution. If signatures on this Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, the guarantee must be by an Eligible Institution. 4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering Holders should include, in the applicable spaces, the name and address to which Exchange Notes or substitute Original Notes for any principal amount not tendered or not accepted for exchange are to be issued or sent, if different from the name and address of the person signing this Letter of Transmittal. In the case of issuance in a different name, the taxpayer identification or social security number of the person named must also be indicated. A Holder of Original Notes tendering Original Notes by book-entry transfer may request that Original Notes not exchanged be credited to such account maintained at DTC as such Holder may designate hereon. If no such instructions are given, such Original Notes not exchanged will be returned to the name or address of the person signing this Letter of Transmittal or credited to the account listed beneath the box entitled "Description of Original Notes," as the case may be. 5. TAXPAYER IDENTIFICATION NUMBER. Federal income tax law generally requires that a tendering Holder whose Original Notes are accepted for exchange must provide MAAX with such Holder's correct taxpayer identification number ("TIN") on Substitute Form W-9, which, in the case of a tendering Holder who is an individual, is his or her social security number. If MAAX is not provided with the current TIN or an adequate basis for an exemption, such tendering Holder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, delivery to such tendering Holder of Exchange Notes may be subject to backup withholding, currently at the rate of 28% (subject to future adjustment), with respect to all reportable payments made after the exchange. If withholding results in an overpayment of taxes, a refund may be obtained. Exempt Holders of Original Notes (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for additional instructions. To prevent backup withholding, each tendering Holder of Original Notes must provide its correct TIN by completing the Substitute Form W-9 included herein, certifying that the TIN provided is correct (or that such Holder is awaiting a TIN) and that (i) the Holder is exempt from backup withholding, (ii) the Holder has not been notified by the Internal Revenue Service that such Holder is subject to backup withholding as a result of a failure to report all interest or dividends or (iii) the Internal Revenue Service has notified the Holder that such Holder is no longer subject to backup withholding. If the tendering Holder of Original Notes is a nonresident alien or foreign entity not subject to backup withholding, such Holder must give MAAX a completed Form W-8BEN, Certificate of Foreign Status. These forms may be obtained from the Exchange Agent. If the Original Notes are in more than one name or are not in the name of the actual owner, such Holder should consult the W-9 Guidelines for instructions on applying for a TIN, check the box in Part 3 of the Substitute Form W-9 and write "applied for" in lieu of its TIN. Note: Checking such box and writing "applied for" on the form means that such Holder has already applied for a TIN or that such Holder intends to apply for one in the near future. If such Holder does not provide its TIN to MAAX within 60 days, backup withholding will begin and continue until such Holder furnishes its TIN to MAAX. 14 6. TRANSFER TAXES. MAAX will pay all transfer taxes, if any, applicable to the exchange of Original Notes pursuant to the Exchange Offer. If, however, a transfer tax is imposed for any reason other than the exchange of Original Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes, whether imposed on the registered Holder or any other person, will be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exemption is not submitted herewith, the amount of such transfer taxes will be billed directly to such tendering Holder. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE ORIGINAL NOTES LISTED IN THIS LETTER OF TRANSMITTAL. 7. WAIVER OF CONDITIONS. MAAX reserves the absolute right to amend, waive or modify, in whole or in part, any or all of the conditions to the Exchange Offer set forth in the Prospectus. 8. MUTILATED, LOST, STOLEN OR DESTROYED ORIGINAL NOTES. Any Holder whose Original Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated herein for further instructions. The Holder will then be instructed as to the steps that must be taken to replace the certificate(s). This Letter of Transmittal and related documents cannot be processed until the Original Notes have been replaced. 9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the procedure for tendering, as well as requests for additional copies of the Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent at the address and telephone number set forth herein. 10. DETERMINATION OF VALIDITY. All questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of tendered Original Notes will be determined by MAAX in its sole discretion, which determination will be final and binding. MAAX reserves the absolute right to reject any and all Original Notes not properly tendered or any Original Notes MAAX's acceptance of which would, in the opinion of counsel for MAAX, be unlawful. MAAX also reserves the right to waive any defects, irregularities or conditions of tender as to particular Original Notes, but if MAAX waives any condition of the Exchange Offer, it will waive that condition for all Holders. MAAX's interpretation of the terms and conditions of the Exchange Offer (including the instructions in this Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Original Notes must be cured within such time as MAAX shall determine. Neither MAAX, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Original Notes, nor shall any of them incur any liability for failure to give such notification. Tenders of Original Notes will not be deemed to have been made until such defects or irregularities have been cured or waived and will be returned by the Exchange Agent to the tendering Holders of Original Notes, unless otherwise provided in this Letter of Transmittal, promptly following the Expiration Date unless the Exchange Offer is extended. 11. NO CONDITIONAL TENDERS. No alternative, conditional, irregular or contingent tenders will be accepted. All tendering Holders of Original Notes, by execution of this Letter of Transmittal, shall waive any right to receive notice of the acceptance of their Original Notes for exchange. 12. INADEQUATE SPACE. If the space provided herein is inadequate, the aggregate principal amount of Original Notes being tendered and the certificate number or numbers (if available) should be listed on a separate schedule attached hereto and separately signed by all parties required to sign this Letter of Transmittal. IMPORTANT: TO TENDER IN THE EXCHANGE OFFER, A HOLDER MUST COMPLETE, SIGN AND DATE THIS LETTER OF TRANSMITTAL OR A COPY HEREOF (TOGETHER WITH CERTIFICATES FOR ORIGINAL NOTES AND ALL OTHER REQUIRED DOCUMENTS) AND HAVE THE SIGNATURES HEREON GUARANTEED IF REQUIRED BY THIS LETTER OF TRANSMITTAL, OR DELIVER A NOTICE OF GUARANTEED DELIVERY, TO THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE. 15 EXCHANGE AGENT: U.S. BANK TRUST NATIONAL ASSOCIATION By Hand, Overnight Delivery or Registered/Certified Mail U.S. Bank Trust National Association Corporate Trust Services EP-MN-WS-2N 60 Livingston Avenue St. Paul, Minnesota 55107 Attention: Specialized Finance Facsimile Transmissions: (Eligible Institutions Only) (651) 495-8158 To Confirm Facsimile by Telephone or for Information Call: (800) 934-6802 EX-99.2 68 y99327exv99w2.txt FORM OF NOTICE OF GUARANTEED DELIVERY EXHIBIT 99.2 NOTICE OF GUARANTEED DELIVERY FOR OFFER TO EXCHANGE $150.0 MILLION 9.75% SENIOR SUBORDINATED NOTES DUE 2012 FOR 9.75% SENIOR SUBORDINATED NOTES DUE 2012 OF MAAX CORPORATION Exchange Agent: U.S. BANK TRUST NATIONAL ASSOCIATION By Hand, Overnight Delivery or Registered/Certified Mail U.S. Bank Trust National Association Corporate Trust Services EP-MN-WS-2N 60 Livingston Avenue St. Paul, Minnesota 55107 Attention: Specialized Finance Facsimile Transmissions: (Eligible Institutions Only) (651) 495-8158 To Confirm Facsimile by Telephone or for Information Call: (800) 934-6802 All capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the prospectus, dated [ ], 2004 (as it may be supplemented or amended from time to time, the "Prospectus"), of MAAX Corporation, a Nova Scotia unlimited company ("MAAX"). As set forth in the Prospectus and in the accompanying letter of transmittal and instructions thereto (the "Letter of Transmittal"), registered Holders (as defined below) of outstanding 9.75% Senior Subordinated Notes due 2012 (the "Original Notes") of MAAX who wish to tender their Original Notes in exchange for a like principal amount of 9.75% Senior Subordinated Notes due 2012 (the "Exchange Notes") of MAAX and, in each case, whose Original Notes are not immediately available or who cannot deliver their Original Notes, the Letter of Transmittal and any other documents required by the Letter of Transmittal to U.S. Bank Trust National Association (the "Exchange Agent") prior to the Expiration Date (as hereinafter defined), or who cannot complete the procedure for book-entry transfer on a timely basis, may use this Notice of Guaranteed Delivery (this "Notice of Guaranteed Delivery") to tender their Original Notes if (i) such tender is made by or through an Eligible Institution (as defined below) and the Holder signs this Notice of Guaranteed Delivery; (ii) on or prior to the Expiration Date, the Exchange Agent has received from the Holder and the Eligible Institution a written or facsimile copy of a properly completed and duly executed Notice of Guaranteed Delivery setting forth the name and address of the Holder of the Original Notes, the certificate number or numbers of such tendered Original Notes and the principal amount of Original Notes tendered, stating that the tender is being made thereby and guaranteeing that, within five business days after the date of delivery of this Notice of Guaranteed Delivery, the Letter of Transmittal (or a copy of thereof) together with the certificate(s) representing the Original Notes (or timely confirmation of the book-entry transfer of Original Notes into the Exchange Agent's account at the Depository Trust Company ("DTC")) and any other required documents will be deposited by the Eligible Institution with the Exchange Agent; and (ii) such properly completed and executed Letter of Transmittal (or copy thereof), as well as all other documents required by the Letter of Transmittal and the certificate(s) representing all tendered Original Notes in proper form for transfer (or timely confirmation of the book-entry transfer of Original Notes into the Exchange Agent's Account at DTC), is received by the Exchange Agent within five business days after the Expiration Date. Any Holder of Original Notes who wishes to tender Original Notes pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives this Notice of Guaranteed Delivery and Letter of Transmittal prior to 11:59 P.M., New York City time, on the Expiration Date. This Notice of Guaranteed Delivery may be delivered by hand or sent by facsimile transmission (receipt confirmed by telephone and an original delivered by guaranteed overnight delivery) or mail to the Exchange Agent. See "The Exchange Offer -- Procedures for Tendering Original Notes" in the Prospectus. Unless the context requires otherwise, (i) the term "Holder" for purposes of this Notice of Guaranteed Delivery means: (A) any person in whose name Original Notes are registered on the books of MAAX or any other person who has obtained a properly completed bond power from the registered Holder; or (B) any participant in DTC whose Original Notes are held of record by DTC who desires to deliver such Original Notes by book-entry transfer at DTC, and (ii) the term "Eligible Institution" means an eligible guarantor institution that is a member of or participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended. THE EXCHANGE OFFER (AS DEFINED BELOW) WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON [ ], 2004 (THE "EXPIRATION DATE") UNLESS THE EXCHANGE OFFER IS EXTENDED BY MAAX IN ITS SOLE DISCRETION. TENDERS OF ORIGINAL NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 11:59 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. FOR ANY QUESTIONS REGARDING THIS NOTICE OF GUARANTEED DELIVERY OR FOR ANY ADDITIONAL INFORMATION, YOU MAY CONTACT THE EXCHANGE AGENT BY TELEPHONE AT (800) 934-6802 OR BY FACSIMILE AT (651) 495-8158. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on the Letter of Transmittal is required to be guaranteed by an Eligible Institution, such signature guarantee must appear in the applicable space provided in the Letter of Transmittal. 2 Ladies and Gentlemen: The undersigned hereby tender(s) to MAAX, upon the terms and subject to the conditions set forth in the Prospectus and the Letter of Transmittal, receipt of which is hereby acknowledged, the aggregate principal amount of Original Notes set forth below pursuant to the guaranteed delivery procedures set forth in the Prospectus and the instructions to the Letter of Transmittal. The undersigned understands that tenders of Original Notes will be accepted only in principal amounts equal to $1,000 or integral multiples thereof. The undersigned understands that tenders of Original Notes pursuant to MAAX's offer to exchange Exchange Notes for Original Notes pursuant to, and upon the terms and conditions described in, the Prospectus, Letter of Transmittal and instructions thereto (the "Exchange Offer") may not be withdrawn after 11:59 P.M., New York City time, on the Expiration Date. All authority herein conferred or agreed to be conferred by this Notice of Guaranteed Delivery shall survive the death or incapacity of the undersigned and every obligation of the undersigned under this Notice of Guaranteed Delivery shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives of the undersigned. 3 PLEASE COMPLETE AND SIGN - ------------------------------------------------------------------------------------------------------ Signature(s) of Registered Holder(s) or Name(s) of Registered Holder(s): Authorized Signatory: - -------------------------------------------------- -------------------------------------------------- - -------------------------------------------------- -------------------------------------------------- - -------------------------------------------------- -------------------------------------------------- - ------------------------------------------------------------------------------------------------------ Principal Amount of Original Notes Tendered: Address: - -------------------------------------------------- -------------------------------------------------- - -------------------------------------------------- -------------------------------------------------- - -------------------------------------------------- -------------------------------------------------- - ------------------------------------------------------------------------------------------------------ Certificate No(s). of Original Notes (if Area Code and Tel. No.: available): - -------------------------------------------------- -------------------------------------------------- - -------------------------------------------------- -------------------------------------------------- - -------------------------------------------------- -------------------------------------------------- - ------------------------------------------------------------------------------------------------------ Date: If Original Notes will be delivered by book-entry ------------------------------------------------- transfer at The Depository Trust Company, insert Depository Account No.: -------------------------------------------------- -------------------------------------------------- - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ This Notice of Guaranteed Delivery must be signed by the registered Holder(s) of Original Notes exactly as its (their) name(s) appears on certificate(s) for Original Notes or on a security position listing as the owner of Original Notes, or by person(s) authorized to become registered Holder(s) by endorsements and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must provide the following information: PLEASE PRINT Name(s): ----------------------------------------------------------------------------------------------------- Capacity: ----------------------------------------------------------------------------------------------------- Address(es): ----------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------
DO NOT SEND ORIGINAL NOTES WITH THIS FORM. ORIGINAL NOTES SHOULD BE SENT TO THE EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL. 4 GUARANTEE OF DELIVERY (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a member of or participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (each of the foregoing, an "Eligible Institution"), hereby (a) represents that each holder of Original Notes on whose behalf this tender is being made "own(s)" the Original Notes covered hereby within the meaning of Rule 14e-4 under the Exchange Act, (b) represents that such tender of Original Notes complies with such Rule 14e-4 and (c) guarantees that, within five business days after the date of delivery of this Notice of Guaranteed Delivery, a properly completed and duly executed Letter of Transmittal, together with certificates representing the Original Notes covered hereby in proper form for transfer (or timely confirmation of the book-entry transfer of Original Notes into the Exchange Agent's account at DTC) and any other required documents will be deposited by the undersigned with the Exchange Agent and such properly completed and executed Letter of Transmittal, as well as all other documents required by the Letter of Transmittal and the certificate(s) representing all tendered Original Notes in proper form for transfer (or timely confirmation of the book-entry transfer of Original Notes into the Exchange Agent's account at DTC) are received by the Exchange Agent within five business days after the Expiration Date. THE UNDERSIGNED ACKNOWLEDGES THAT IT MUST DELIVER THE LETTER OF TRANSMITTAL AND ORIGINAL NOTES TENDERED HEREBY TO THE EXCHANGE AGENT WITHIN THE TIME SET FORTH ABOVE AND THAT FAILURE TO DO SO COULD RESULT IN FINANCIAL LOSS TO THE UNDERSIGNED. Name of Firm: - -------------------------------------------------------------------------------- Authorized Signature: - -------------------------------------------------------------------------------- Title: - -------------------------------------------------------------------------------- Address: - -------------------------------------------------------------------------------- (ZIP CODE) AREA CODE AND TELEPHONE NO.: - ----------------------------- DATE: - ------------, 2004 DO NOT SEND ORIGINAL NOTES WITH THIS FORM. ORIGINAL NOTES SHOULD BE SENT TO THE EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL. 5 EX-99.3 69 y99327exv99w3.txt LIST OF PARTIES TO THE FORM OF AGREEMENT IN EXHIBIT 10.15 . . . EXHIBIT 99.3 RETENTION PACKAGES ------------------
NAME PERCENTAGE OF BASE SALARY SECTOR GROUP - ---- ------------------------- ------------ Benoit Boutet 10% Bathroom Patrice Henaire 20% Bathroom Jean Rochette 35% Bathroom Guy Berard 20% Bathroom Terry Rake 20% Spas Daniel Stewart 20% Bathroom (KSD)
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