EXHIBIT 10.18
MAAX HOLDINGS, INC.
$170,689,000 AGGREGATE PRINCIPAL AMOUNT AT MATURITY
11 1/4% SENIOR DISCOUNT NOTES DUE 2012
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PURCHASE AGREEMENT
December 3, 2004
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
World Financial Center - North Tower
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
MAAX Holdings, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to Xxxxxxx Xxxxx & Co. and Xxxxxxx Xxxxx Xxxxxx, Xxxxxx &
Xxxxx Incorporated (collectively, the "Purchaser") $170,689,000 aggregate
principal amount at maturity of 11 1/4% Senior Discount Notes due 2012 of the
Company (the "Securities").
1. The Company represents and warrants to, and agrees with, the
Purchaser that:
(a) An offering memorandum, to be dated as of the date hereof (the
"Offering Memorandum"), including the Canadian supplement thereto, will be
prepared in connection with the offering of the Securities. The Offering
Memorandum and any amendments or supplements thereto will not, as of its
date or as of the Time of Delivery (as defined below), 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 the Purchaser expressly for use therein. Any
representation and warranty by the Company that relates to the Offering
Memorandum is made only as of the time of delivery thereof to the Purchaser
for distribution to investors and as of the Time of Delivery and shall be
deemed to be a reference to the Offering Memorandum as delivered to the
Purchaser for distribution to investors, it being understood that the
Offering Memorandum has not been completed prior to the effectiveness of
this Agreement;
(b) Neither the Company nor any of its subsidiaries has sustained
since February 29, 2004 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
Memorandum; and, since the respective dates as of which information is
given in the Offering Memorandum, there has not been any change in the
capital stock, total debt or long-term debt of the Company 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 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 Company and its
subsidiaries, taken as a whole, otherwise than as set forth or contemplated
in the Offering Memorandum;
(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
Memorandum 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
a corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Offering Memorandum; and the
Company 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, other than any failures to so qualify or be in
good standing in such jurisdictions that, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect, and the
Company 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 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 other than any failures to be in good standing that,
individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect, and the entities set forth on Schedule I are the
only direct or indirect subsidiaries of the Company;
(e) At the Time of Delivery, the Company will have an authorized
capitalization as set forth in the Offering Memorandum, and all of the
issued shares of capital stock of the Company will be duly and validly
authorized and issued and will be
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fully paid and non-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, dated
as of June 4, 2004 among the Company, the guarantors party thereto, Xxxxxxx
Xxxxx Credit Partners L.P., Royal Bank of Canada and Xxxxxxx Xxxxx Capital
Corporation and the lenders party thereto (as amended on or prior to the
date hereof, the "Credit Agreement"));
(f) This Agreement has been duly authorized, executed and delivered by
the Company;
(g) The Securities have been duly authorized by the Company and, when
executed, issued and delivered by the Company 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 the Company and will constitute valid and legally binding
obligations of the Company, entitled to the benefits provided by the
indenture to be dated as of December 10, 2004 (the "Indenture") between the
Company and the Trustee, under which they are to be issued, enforceable
against the Company 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;
(h) The Indenture has been duly authorized by the Company and, when
executed and delivered by the Company, will have been duly executed and
delivered by the Company and (assuming due authorization, execution,
delivery and performance by the Trustee) will constitute a valid and
legally binding obligation of the Company enforceable against the Company
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
December 10, 2004 between the Company and the Purchaser (the "Registration
Rights Agreement") has been duly authorized by the Company and, when
executed and delivered by the Company, will have been duly executed and
delivered by the Company and will constitute a valid and legally binding
obligation of the Company, enforceable against the Company 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
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offer contemplated by the Registrations Rights Agreement (the "Exchange
Securities") have been duly authorized for issuance by the Company and,
when executed, issued and delivered by the Company and authenticated by the
Trustee pursuant to this Agreement and the Indenture, will have been duly
executed, issued and delivered by the Company and will constitute valid and
legally binding obligations of the Company, 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) None of the transactions contemplated by this Agreement and to be
performed by the Company (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;
(l) The issue and sale of the Securities by the Company and the
execution and delivery of and the compliance by the Company and its
subsidiaries with all of the provisions of the Securities, the Indenture,
the Registration Rights Agreement, the Amendment (as defined below) and
this 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 the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject (after giving effect to the
Amendment), (ii) result in any violation of the provisions of the
organizational documents of the Company 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 the Company 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 Company and its 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 Company of the transactions
contemplated by the Transaction Documents, except for (x) the filing of a
registration statement by the Company with the Commission pursuant to the
United States Securities Act of 1933, as amended (the "Act") pursuant to
the Registration Rights Agreement and (y) such Governmental Authorizations
as may be required under state securities or Blue Sky laws or the private
placement or equivalent provisions of the
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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 Purchaser;
(m) Neither the Company nor any of its 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;
(n) The statements set forth in the Offering Memorandum 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;
(o) Other than as set forth in the Offering Memorandum, there are no
legal or governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property or assets of the
Company or any of its subsidiaries is the subject which, if determined
adversely to the Company 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 the Company's knowledge, no such proceedings are
threatened or contemplated by Governmental Authorities or threatened by
others;
(p) The Company and its 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 Memorandum;
(q) Neither the Company 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 the Company
in connection with the offering of the Securities;
(r) 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;
(s) The Company is not, and immediately after giving effect to the
offering and sale of the Securities, will not be, an "investment company,"
or an entity "controlled by an investment company," as such terms are
defined in the United States Investment
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Company Act of 1940, as amended (the "Investment Company Act") and the
rules and regulations thereunder;
(t) Neither the Company nor any person acting on its behalf (other
than the Purchaser as to whom the Company makes 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
Company, any affiliate of the Company and any person acting on its behalf
has complied with and will implement the "offering restriction" within the
meaning of such Rule 902;
(u) Within the preceding six months, neither the Company nor any other
person acting on its behalf 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 Purchaser
hereunder. The Company 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 the Company, within six months
subsequent to the date on which the distribution of the Securities has been
completed (as notified to the Company by the Purchaser), 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;
(v) KPMG LLP and Xxxxx Xxxxxx and Company LLC, each of which has
certified certain financial statements included in the Offering Memorandum
as set forth in its report included therein, is each an independent public
accounting firm as required by the Act and the rules and regulations of the
Commission thereunder;
(w) Except as described in the Offering Memorandum and except such
matters as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect,
(i) neither the Company 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,
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transport or handling of Hazardous Materials (collectively,
"Environmental Laws"),
(ii) the Company and its 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 Company,
threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental
Law against the Company or any of its subsidiaries;
(iv) neither the Company 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, the Company or any of its subsidiaries relating to
Hazardous Materials or Environmental Laws;
(x) The Company and its 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 Memorandum, 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 Company has no knowledge of any
reason to believe that the conduct of the businesses of the Company and its
subsidiaries will conflict with, and, except as disclosed in the Offering
Memorandum, 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;
(y) The financial statements, including the notes thereto, included in
the Offering Memorandum 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 (except that the most
recent audited balance sheet of the Company is as of a date which is more
than 135 days prior to the date of the Offering Memorandum), 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 and the related
notes thereto included in the Offering Memorandum present fairly the
information shown
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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; 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 Memorandum, set forth under
the captions "Summary--Summary Historical and Pro Forma Consolidated
Financial Data" and "Selected Historical Financial Data" included in the
Offering Memorandum fairly present the information set forth therein on a
basis consistent with that of the audited financial statements included in
the Offering Memorandum; and the other statistical and market and
industry-related data included in the Offering Memorandum present fairly
the information included therein, and are based upon or derived from
sources that the Company believes to be reliable and accurate;
(z) The Company has not, and as a result of consummation of the
transactions herein contemplated will not have, incurred debts beyond its
ability to pay as they mature; the present fair saleable value of the
assets of the Company 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; the Company has not, and as a result
of consummation of the transactions herein contemplated will not have,
unreasonably small capital for it to carry on its business as proposed to
be conducted; the Company is not 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;
(aa) No labor disturbance by the employees of the Company or any of
its subsidiaries exists or, to the best of the Company'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 Memorandum, neither the Company nor any of its subsidiaries is
party to a collective bargaining agreement; and there are no unfair labor
practice complaints pending against the Company or any of its subsidiaries
or, to the best of the Company's knowledge, threatened against them which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect;
(bb) 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) 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 the Company or any subsidiary
of the Company under Section 4001 of ERISA or
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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 neither the Company 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 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; neither the
Company 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 the Company 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 the Company's
knowledge, nothing has occurred, whether by action or by failure to act,
which could cause the loss of such qualification;
(cc) Each of the Company 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;
(dd) In connection with the sale and distribution of the Securities 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 Memorandum used in Canada (being the Offering Memorandum, 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 Securities from the
Purchaser or its 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 Securities to the Purchaser or its affiliates and the
initial resales or first trades of the Securities by the Purchaser 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 Purchaser to the
Company);
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and to pay all filing or other fees (other than fees relating to the filing
of a prospectus) applicable in connection therewith; and
(ee) The Transaction Documents conform in all material respects to the
descriptions thereof in the Offering Memorandum.
2. Subject to the terms herein set forth, the Company agrees to issue
and sell to the Purchaser, and, subject to the terms and conditions herein set
forth, the Purchaser agrees to purchase from the Company, all of the Securities
at $634.78 per $1,000 principal amount at maturity thereof, plus the increase in
Accreted Value (as defined in the Indenture), if any, from December 10, 2004 to
the Time of Delivery hereunder.
3. Upon the authorization by you of the release of the Securities
(which the Company hereby does), the Purchaser proposes to offer the Securities
for sale upon the terms and conditions set forth in this Agreement and the
Offering Memorandum and the Purchaser hereby represents and warrants to, and
agrees with the Company 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. The Purchaser represents that it has
offered and sold the Securities, and will offer and sell the Securities (i)
as part of its 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, the 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. The 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:
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"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.
Notwithstanding the foregoing, Securities in registered form may be
offered, sold and delivered by the Purchaser 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) The 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) The 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 and (B) in Canada, by way of
private placement or other exemptions from the prospectus requirements. The
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.
4. (a) The Securities to be purchased by the 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 the Purchaser for the account of the Purchaser, against payment by
or on behalf of the Purchaser of the purchase price therefor by wire transfer,
payable to the order of the Company in Federal (same day) funds, by causing DTC
-11-
to credit the Securities to the account of the Purchaser at DTC. The Company
will cause the certificates representing the Securities to be made available to
the Purchaser 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 December 10, 2004 or such other time and
date as the Purchaser and the Company may agree upon in writing. Such time and
date are herein called the "Time of Delivery."
(b) 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
Purchaser pursuant to Section 7 hereof, will be delivered at such time and date
at the offices of Xxxxxx Xxxxxx & Xxxxxxx LLP, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (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 Company agrees with the Purchaser:
(a) To prepare the Offering Memorandum, including the Canadian
supplement thereto, in a form reasonably approved by you; to make no
amendment or any supplement to the Offering Memorandum 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, the Company shall not 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 Purchaser with three copies of the Offering
Memorandum and each amendment or supplement thereto signed by an authorized
officer of the Company with the independent accountants' report(s) in the
Offering Memorandum, and
-12-
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. If, at any time prior to the
completion of the resale by the Purchaser of the Securities, any event
shall have occurred as a result of which the Offering Memorandum 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 Memorandum is delivered, not misleading, or, if for
any other reason it shall be necessary or desirable during such same period
to amend or supplement the Offering Memorandum, to notify you and upon your
request to prepare and furnish without charge to the 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 Memorandum or a
supplement to the Offering Memorandum which will correct such statement or
omission or effect such compliance;
(d) For a period of 180 days from the date of the Offering Memorandum,
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 Purchaser;
(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
Memorandum, 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
-13-
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 or any of its subsidiaries is listed and (ii)
such additional information concerning the business and financial condition
of the Company 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 Company 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;
(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 Memorandum under the caption "Use of Proceeds."
6. The Company covenants and agrees with the Purchaser that it will
pay or cause to be paid the following:
(a) the fees, disbursements and expenses of the Company's 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
Offering Memorandum (including the Canadian supplement thereto) and any
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Purchaser and dealers;
(b) the cost of printing or producing 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;
(c) 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 Purchaser in connection with such
qualification and in connection with the Blue Sky and legal investment
surveys;
(d) any fees charged by securities rating services for rating the
Securities and the Exchange Securities;
(e) the cost of preparing the Securities;
(f) 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;
-14-
(g) any cost incurred in connection with the designation of the
Securities for trading in PORTAL; and
(h) all other costs and expenses incident to the performance of their
obligations hereunder which are not otherwise specifically provided for in
this Section. It is understood, however, that, except as provided in this
Section, and Sections 8 and 10 hereof, the Purchaser will pay all of its
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 it may make.
7. The obligations of the Purchaser hereunder shall be subject to the
condition that all representations and warranties and other statements of the
Company herein are, at and as of the Time of Delivery, true and correct, the
condition that the Company shall have performed all of its obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) Xxxxxx Xxxxxx & Xxxxxxx LLP, counsel for the Purchaser, 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 Purchaser shall have received written opinions, dated the Time
of Delivery, in form and substance satisfactory to you, from:
(i) Xxxx Xxxxxxx LLP, as special counsel for the Company, in the
form of Annex I hereto; and
(ii) Fasken Xxxxxxxxx XxXxxxxx LLP, Canadian counsel for the
Company, in the form of Xxxxx XX hereto;
(c) On the date of delivery of the Offering Memorandum to the
Purchaser for distribution to investors and also at the Time of Delivery,
KPMG LLP shall have furnished to you a letter or letters, dated the date of
the Offering Memorandum and as of the Time of Delivery, respectively, in
form and substance satisfactory to you, to the effect set forth in Annex
III hereto;
(d) (i) Neither the Company nor any of its subsidiaries shall have
sustained since February 29, 2004 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 Memorandum, and (ii) since the respective dates as of which
information is given in the Offering Memorandum there shall not have been
any change in the capital stock, total debt or long-term debt of the
Company 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
-15-
results of operations of the Company and its subsidiaries, otherwise than
as set forth or contemplated in the Offering Memorandum, the effect of
which, in any such case described in clause (i) or (ii), is in the judgment
of the Purchaser 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 Memorandum;
(e) On or after the date hereof (i) no downgrading shall have occurred
in the rating accorded any debt or preferred stock of the Company 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,
excluding a downgrade of MAAX Corporation's (x) senior implied rating to B2
by Xxxxx'x Investors Service ("Moody's") and to B by Standard & Poor's
Rating Group ("S&P") and (y) senior subordinated notes to Caa by Moody's
and CCC+ by S&P, and any announcements by Moody's or S&P relating to the
foregoing;
(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; (ii) a general
moratorium on commercial banking activities in New York is declared by the
relevant authorities, or a material disruption in commercial banking or
securities settlement or clearance services in the United States; (iii) the
outbreak or escalation of hostilities involving the United States, or the
declaration by the United States of a national emergency or war; or (iv)
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 or elsewhere, if the effect of any such event specified
in clause (iii) or (iv) in the judgment of the Purchaser 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 Memorandum;
(g) The Securities have been designated for trading on PORTAL;
(h) The Company shall have furnished or caused to be furnished to you
at the Time of Delivery a certificate of officers of the Company
satisfactory to you that the representations and warranties of the Company
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 Company has performed or
complied in all material respects (to the extent not otherwise qualified by
materiality or Material Adverse Effect) with all of its 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) All conditions to the effectiveness of Amendment No. 2, dated
December 3, 2004, to the Credit Agreement (the "Amendment") shall be
satisfied except for the
-16-
payment of the consent fee to the lenders thereunder, which shall be funded
by the proceeds of the offering of the Securities;
(j) The Company shall have delivered executed copies of the
Securities, the Indenture and the Registration Rights Agreement to the
Purchaser; and
(k) The Company shall have furnished to you promptly after the date
hereof, but in no event later than 3 New York Business Days prior to the
Time of Delivery, an Offering Memorandum to be dated as of the date hereof
in form and substance reasonably satisfactory to you that complies with
Section 5(a) and the first sentence of Section 5(c) and that reflects no
changes in the general affairs, senior management, financial position or
results of operations of the Company and its subsidiaries from the draft of
the Offering Memorandum distributed at 12:41 am on December 3, 2004, that
the Purchaser reasonably determines to be material and adverse to the
Purchaser's investment decision; it being understood that changes to
reflect the pricing determined pursuant to Section 2 hereof shall not be
deemed to be material and adverse; provided that the section of the
Offering Memorandum entitled "Description of Notes" shall be in the form
attached as Annex IV hereto.
8. (a) The Company will indemnify and hold harmless the Purchaser
against any losses, claims, damages or liabilities, joint or several, to which
the 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 the Offering Memorandum, 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 the Purchaser for any legal or other
expenses reasonably incurred by the Purchaser in connection with investigating
or defending any such action or claim as such expenses are incurred; provided,
however, that the Company 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 the Offering Memorandum or any such amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of the Purchaser expressly for use therein.
(b) The Purchaser will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company 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 the
Offering Memorandum, 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 the Offering Memorandum or
any such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Purchaser expressly
for use therein; and will reimburse the Company for any legal or other expenses
reasonably
-17-
incurred by the Company in connection with investigating or defending any such
action or claim as such expenses are incurred.
(c) 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 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.
(d) 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 Company on the one hand and the Purchaser 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 Company on the one hand and the Purchaser 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
Company on the one hand and the Purchaser 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 Company bear to the total underwriting
discounts and commissions received by the Purchaser. 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
-18-
to state a material fact relates to information supplied by the Company on the
one hand or the Purchaser on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Purchaser agree that it would not be
just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation 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), the Purchaser shall not 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 the Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Purchaser within the meaning of the Act; and the obligations of the Purchaser
under this Section 8 shall be in addition to any liability which the Purchaser
may otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company within the meaning of the Act.
9. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the Purchaser, 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 the Purchaser or any controlling person of the Purchaser, the Company or any
officer or director or controlling person of the Company and shall survive
delivery of and payment for the Securities.
10. If for any reason the Securities are not delivered by or on behalf
of the Company as provided herein, the Company will reimburse the Purchaser,
upon written request, for all out-of-pocket expenses, including fees and
disbursements of counsel, reasonably incurred by the Purchaser in making
preparations for the purchase, sale and delivery of the Securities but the
Company shall not then be under further liability to the Purchaser except as
provided in Sections 6 and 8 hereof.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchaser shall be delivered or sent by mail or facsimile
transmission to you as the Purchaser at World Financial Center - North Tower,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, xxxxxxxxx of High Yield Capital
Markets, Xxxx Xxxxxxxxx, with a copy to Xxxxxx Xxxxxx & Xxxxxxx LLP, 00 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, xxxxxxxxx of Xxxxxxx X. Xxx, Esq; and if to
the Company shall be delivered or sent by mail or facsimile transmission to the
address of the Company set forth in the Offering Memorandum, Attention:
Secretary with a copy to Xxxx
-19-
Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000 attention of Xxxxxxx X.
Xxxxx, Esq. Any such statements, requests, notices or agreements shall take
effect upon receipt thereof.
11. This Agreement shall be binding upon, and inure solely to the
benefit of, the Purchaser, the Company and, to the extent provided in Sections 8
and 9 hereof, the officers and directors of the Company and each person who
controls the Company, and its 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(dd). No purchaser of any of the Securities from the
Purchaser shall be deemed a successor or assign by reason merely of such
purchase.
12. Time shall be of the essence of this Agreement.
13. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
14. 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.
15. The Company is 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 Purchaser imposing any
limitation of any kind.
-20-
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, this letter and such acceptance hereof shall constitute a binding agreement
between the Purchaser and the Company.
Very truly yours,
MAAX HOLDINGS, INC.
By: /s/ Xxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxx
Title: Executive Vice President and
CFO
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, XXXXXX, XXXXXX & XXXXX
INCORPORATED
By: /s/ Xxxxxxx Xxxxxxxxx
---------------------------------
Authorized Signatory
-21-
SCHEDULE I
SUBSIDIARIES
SUBSIDIARY JURISDICTION OF ORGANIZATION STOCKHOLDER
---------- ---------------------------- -----------
Beauceland Corporation Nova Scotia MAAX Holdings, Inc.
MAAX Corporation Nova Scotia Beauceland Corporation
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.
Xxxx Plastics Company Inc. Indiana MAAX Holding Co.
MAAX (2004) LLC Delaware MAAX Hungary Services
Limited Liability Company;
MAAX Canada Inc. holds
non-voting shares
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.
SUBSIDIARY JURISDICTION OF ORGANIZATION STOCKHOLDER
---------- ---------------------------- -----------
MAAX Hungary Services Limited Hungary MAAX Luxembourg
Liability Company S.A.R.L.
MAAX Canada Inc.
MAAX LLC Delaware MAAX Canada Inc.
-2-
ANNEX I
We have acted as special counsel to MAAX Holdings, Inc., a Delaware
corporation (the "Company"), in connection with the Purchase Agreement (the
"Purchase Agreement") dated as of December 3, 2004 by and between the Company
and Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx Incorporated
(collectively, the "Purchaser").
This opinion is given pursuant to Section 7(b)(i) of the Purchase
Agreement. Capitalized terms used in this opinion without definition have the
meanings given to them in the Purchase Agreement.
As to various questions of fact material to our opinions in the
numbered paragraphs below, we have relied upon, and assumed without independent
investigation the accuracy of, the representations made by the Company in
Section 1 of the Purchase Agreement. We have also examined (i) the Indenture
(the "Indenture"), dated as of December 10, 2004, by and between the Company and
U.S. Bank Trust, N.A., as Trustee, (ii) the Exchange and Registration Rights
Agreement (the "Registration Rights Agreement"), dated as of December 10, 2004,
by and between the Company and the Purchaser, (iii) the Securities, (iv) the
Amendment, (v) the organizational documents of the Company, (vi) the agreements
listed on Schedule B hereof, and (vii) such certificates, documents and records
and have made such investigation as we have deemed necessary in connection with
the opinions set forth below.
When an opinion or other statement set forth herein is given "to our
knowledge" or with reference or qualification to our awareness, such opinion or
statement is limited to the actual knowledge or awareness of the individual
lawyers currently in this firm who have substantive attention to the Company and
its subsidiaries.
In expressing the opinions set forth below, we have assumed the
genuineness of all signatures and the capacity of the persons so signing, the
authenticity of all documents submitted to us as originals, the conformity to
the originals of all documents submitted to us as certified, conformed,
photostatic or facsimile copies and the authenticity of the originals of such
copies.
We have assumed that the Purchase Agreement, the Registration Rights
Agreement, the Indenture, the Securities and the Amendment (collectively, the
"Transaction Documents") have been duly authorized, executed and delivered by
each of the parties thereto other than the Company, and that each such party has
all requisite power and authority to effect the transactions contemplated by the
Transaction Documents.
Based on the foregoing and on the qualifications, limitations and
assumptions set forth herein, we are of the opinion that:
1. The Company is existing as a corporation in good standing under
the laws of the State of Delaware, with corporate power and authority to own its
properties and conduct its business as described in the Offering Memorandum and
to enter into and carry out its obligations under the Transaction Documents.
2. The Company has an authorized capitalization as set forth in the
Offering Memorandum, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid and
non assessable.
3. The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
4. When authenticated by the Trustee in the manner provided in the
Indenture, and issued and delivered against payment of the purchase price
therefor by the Purchaser in accordance with the provisions of the Indenture,
the Securities will constitute valid and binding obligations of the Company,
entitled to the benefits provided by the Indenture and enforceable against the
Company in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws relating
to or affecting the rights and remedies of creditors and by general principles
of equity (regardless of whether considered in a proceeding at law or in
equity). The Securities, the Indenture and the Registration Rights Agreement
conform in all material respects to the descriptions thereof in the Offering
Memorandum.
5. The Indenture has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding instrument, enforceable against
the Company in accordance with its terms, except as rights to indemnification
and contribution thereunder may be limited by applicable law or against public
policy and subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors and by general principles of equity (regardless
of whether considered in a proceeding at law or in equity).
6. The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding
agreement, enforceable against the Company in accordance with its terms, except
as rights to indemnification and contribution thereunder may be limited by
applicable law or against public policy and subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws relating
to or affecting the rights and remedies of creditors and by general principles
of equity (regardless of whether considered in a proceeding at law or in
equity).
7. When executed and delivered by the Company and authenticated by
the Trustee in the manner provided in the Indenture, and issued and delivered in
accordance with the provisions of the Indenture and the Registration Rights
Agreement, the Exchange Securities will constitute valid and binding obligations
of the Company, entitled to the benefits provided by the Indenture and
enforceable against the Company in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws relating to or affecting the rights and remedies of creditors
and by general principles of equity (regardless of whether considered in a
proceeding at law or in equity).
8. The issue and sale of the Securities and the execution and
delivery of and consummation by the Company of the transactions contemplated by
the Transaction Documents will not result in any violation of the provisions of
(a) the Delaware General Corporation Law, the federal laws of the United States
or the laws of the State of New York (other than
performance by the Company of its obligations under the indemnification and
contribution sections of the Purchase Agreement, the Registration Rights
Agreement and the Indenture, as applicable, as to which we render no opinion)
(collectively the "Applicable Laws"), or (b) conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, the Transaction Documents or any agreement or instrument listed on
Schedule B hereto (after giving effect to the Amendment).
9. No consent, approval, authorization, order, registration or
qualification under any Applicable Law is required for the issue and sale of the
Securities or the consummation of the transactions contemplated by the
Transaction Documents.
10. The statements set forth in the Offering Memorandum 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," "Certain
Relationships and Related Party Transactions," "Description of Other
Indebtedness" and "Management -- Employment Agreements, -- Gestion Camada
Agreement and -- Consulting Agreements" insofar as they purport to describe the
provisions of the laws, regulations and documents referred to therein, are
accurate in all material respects.
11. Assuming the accuracy of and compliance with the
representations, warranties and covenants of the Company contained in Sections
1(r), (t) and (u) of the Purchase Agreement and the Purchaser contained in
Section 3 of the Purchase Agreement, it is not necessary in connection with the
offer, sale and delivery of the Securities to the Purchaser and with the initial
resale of such Securities by the Purchaser in the manner contemplated by the
Purchase Agreement and the Offering Memorandum to register the Securities under
the Act or to qualify the Indenture under the United States Trust Indenture Act
of 1939, it being understood that no opinion is expressed as to any subsequent
resale of any Security.
12. The Company is not, nor after giving effect to the issuance of
the Securities and the application of the proceeds therefrom as set forth in the
Offering Memorandum under the caption "Use of Proceeds" will be, required to
register as an "investment company," as such term is defined in the Investment
Company Act.
13. To our knowledge, other than as described in the Offering
Memorandum, there are no pending or threatened legal or governmental proceedings
to which the Company or its subsidiaries is a party that would be required to be
described by Item 103 of Regulation S-K under the Securities Act if the issuance
of the Securities were being registered under the Securities Act.
14. [Based solely on certificates of public officials as of the
dates thereof, the Company was duly qualified as a foreign corporation to
transact business and was in good standing in Minnesota.](1)
----------
(1) This paragraph will not be required to the extent the Company is not able
to qualify in Minnesota at the Time of Delivery.
We have acted as special counsel to the Company in connection with
the preparation of the Offering Memorandum. In connection with the preparation
of the Offering Memorandum, we have participated in conferences with officers
and representatives of the Company and the Purchaser, counsel for the Purchaser
and the independent public accountants of the Company, at which the contents of
the Offering Memorandum were discussed. We have not undertaken to determine
independently and we are not passing upon, guaranteeing and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Offering Memorandum and have made no independent verification
or check thereof, except as set forth in the last sentence of paragraph 4 and
paragraph 10 above. However, subject to the foregoing, on the basis of our
participation in the conferences referred to above and our examination of the
documents referred to herein, we advise you that no facts have come to our
attention which cause us to believe that the Offering Memorandum, as of the date
thereof or as of the date hereof, contained or contains any untrue statement of
a material fact or omitted or omits to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading (except that we express no such view with respect
to any financial statements, accounting information or financial or statistical
data, including, in each case, the notes and schedules thereto, that is included
in the Offering Memorandum or any amendments or supplements thereto).
The opinions expressed above are subject to the following
qualifications, assumptions and exceptions:
(a) We express no opinion with respect to limitations imposed by law
and court decisions upon the availability of the remedy of specific
performance, injunctive relief and other equitable remedies, whether
sought in legal or equitable proceedings.
(b) We express no opinion with respect to the enforceability under
certain circumstances, (i) of provisions that expressly or by implication
waive broadly or vaguely stated rights, unknown future rights, defenses to
obligations or rights granted by law, where such waivers are against
public policy or prohibited by law; or (ii) of provisions stating that
rights or remedies are not exclusive, that every right or remedy is
cumulative and may be exercised in addition to or with any other right or
remedy or that the election of some particular remedy or remedies does not
preclude recourse to one or more others or that failure to exercise or
delay in exercising rights or remedies will not operate as a waiver of any
such right or remedy.
(c) We express no opinion with respect to the effect of legal or
equitable principles which provide, essentially, that a court may not
enforce (or may limit the application of) a contract or portions thereof,
which the court finds as a matter of law to have been unconscionable at
the time the contract was made.
(d) The foregoing opinions are limited to the specific issues
addressed and to laws existing on the date hereof. By rendering our
opinion, we do not undertake to advise you with respect to any matter or,
of any change in, such laws or in the interpretations thereof which may
occur after the date hereof.
(e) The laws covered by the opinions expressed herein are limited to
the federal laws of the United States of America, the laws of the State of
New York, and the General Corporation Law of the State of Delaware and we
express no opinion as to the laws of any other jurisdiction and we assume
no responsibility for the applicability or effect of the law of any other
jurisdiction.
(f) Our opinions as they relate to the laws of the State of New York
and federal laws of the United States of America are based upon a review
of those laws as in effect on the date hereof which a lawyer exercising
customary professional diligence would reasonably recognize as being
applicable with respect to the transactions contemplated by the
Transaction Documents.
(g) We express no opinion with respect to any documents written in a
language other than English.
(h) With respect to our opinion in paragraphs 8 and 9, we express no
opinion as to the Securities Act, the Exchange Act, the Trust Indenture
Act, state securities or "blue sky" laws or foreign securities laws, or
the effect thereof. With respect to our opinion in paragraph 11, we
express no opinion as to when or under what circumstances any Securities
initially resold by the Purchaser may be reoffered or resold.
This opinion is being delivered solely for your benefit and may not
be relied upon by any other individual or entity without our prior written
consent.
Very truly yours,
ANNEX II
We have acted as special Canadian counsel to MAAX Holdings, Inc., a
Delaware corporation (the "COMPANY") in connection with the issue and sale by
the Company of the Notes pursuant to a purchase agreement (the "PURCHASE
AGREEMENT") entered into on December 3, 2004 between the Company, Xxxxxxx Xxxxx
& Co. and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated (hereinafter
collectively referred to as the "PURCHASERS").
Our opinions are being delivered to you pursuant to article 7(b)(ii)
of the Purchase Agreement.
In giving our opinions, we have examined, inter alia, originals or
copies certified or authenticated to our satisfaction of the following
documents:
(a) the Purchase Agreement;
(b) the exchange and registration rights agreement entered into on
December 10, 2004 between the Company and the Purchasers (the
"REGISTRATION RIGHTS AGREEMENT");
(c) the indenture entered into on December 10, 2004 between the
Company and U.S. Bank Trust, N.A., as trustee (the "INDENTURE") and the
Notes issued thereunder;
(d) the US offering memorandum dated December 3, 2004 (the "US
OFFERING MEMORANDUM"); and
(e) the Canadian offering memorandum dated December 3, 2004 (the
"CANADIAN OFFERING MEMORANDUM").
The Purchase Agreement, the Registration Rights Agreement, the
Indenture and the Notes are hereinafter collectively referred to as the
"OFFERING DOCUMENTS".
In our examination of such documents, we have assumed, for purposes
of our opinions expressed in paragraph 1, without independent investigation or
verification, their validity and conformity to applicable laws.
We are qualified to practice law in the Provinces of Quebec,
Ontario, Alberta and British Columbia only (the "PROVINCES") and, therefore,
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 addressees hereof of any change in law
subsequent to this date that does or may affect the opinions we express herein.
Our opinions expressed in paragraph 1 are limited to the laws of the
Provinces of Quebec, Ontario, Alberta and British Columbia and the federal laws
of Canada applicable therein. Our opinions expressed in paragraph 2 are limited
to the federal laws of Canada.
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. The execution and delivery of the Offering Documents to which the
Company is a party and the consummation of the transactions
contemplated in the Offering Documents (including the issue and the
sale of the Notes by the Company) do not conflict with or result in
a breach or violation of any of the terms or provisions of the
agreements listed in Schedule 2 hereto.
2. The statements set forth in the Canadian Offering Memorandum under
the heading "Canadian Federal Income Tax Considerations for Canadian
Holders", insofar as they purport to describe the provisions of the
law and legal matters referred to therein, are accurate in all
material respects.
Our opinions expressed herein can only be relied upon by the parties
to whom they are addressed. They may not be quoted from or referred to in
another document without our prior written consent.
Yours truly,
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ANNEX III
Xxxxxxx Xxxxx & Co.
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx Incorporated
(the "initial purchasers")
The Board of Directors of MAAX Holdings, Inc.
December 3, 2004
Ladies and Gentlemen:
RE: MAAX HOLDINGS, INC. -- OFFERING CIRCULAR DATED
DECEMBER 3, 2004(THE "OFFERING CIRCULAR")
We have audited the consolidated balance sheets of MAAX Inc. (the "Predecessor")
as of February 28, 2003 and February 29, 2004 and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the years
in the three-year period ended February 29, 2004 (the "2004 Consolidated
Financial Statements") which are included in the Offering Circular of MAAX
Holdings, Inc. for the placement of 11-1/4% Senior Discount Notes due 2012 (the
"Notes"). Our report with respect to the 2004 Consolidated Financial Statements
is dated April 9, 2004, except for note 21 (g) which is dated June 4, 2004.
We have also audited the balance sheet of MAAX Holdings, Inc. (the "Company") as
of May 31, 2004 (the "Opening Balance Sheet") which is included in the Offering
Circular of the Company for the placement of 11-1/4% Senior Discount Notes due
2012. Our report with respect to the opening balance sheet is dated November 29,
2004, except for note 2 which is dated December 3, 2004.
This letter is being furnished in reliance upon your representation to us that:
(a) You are knowledgeable with respect to the due diligence review
process that would be performed if this placement of securities were
being registered pursuant to the United States Securities Act of
1933, as amended (the "Act").
(b) In connection with the offering of the Notes, the review process you
have performed is substantially consistent with the due diligence
review process that you would have performed if this placement of
securities were being registered pursuant to the Act.
In connection with this Offering Circular:
1. We are the auditors of the Predecessor and of the Company and are
independent (i) within the meaning of the Rules of Professional
Conduct of the various Canadian Institutes/Ordre of Chartered
Accountants and (ii) within the meaning of the Act and the
applicable published rules and regulations thereunder.
2. In our opinion, the 2004 Consolidated Financial Statements of the
Predecessor audited by us and included in the Offering Circular
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules
and regulations.
3. In our opinion, the Opening Balance Sheet of the Company audited by
us and included in the Offering Circular complies as to form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations.
4. We have not audited any financial statements of the Predecessor as
of any date or for any period subsequent to February 29, 2004.
Although we have conducted an audit for the year ended February 29,
2004, the purpose (and therefore the scope) of this audit was to
enable us to express our opinion on the consolidated financial
statements as at February 29, 2004, and for the year then ended, but
not on the consolidated financial statements for any interim period
within that year. Therefore, we are unable to and do not express any
opinion on the financial position, results of operations or cash
flows as of any date or for any period subsequent to February 29,
2004.
5. We have not audited any financial statements of the Company as of
any date or for any period subsequent to May 31, 2004. Although we
have conducted an audit of the Opening Balance Sheet as at May 31,
2004, the purpose (and therefore the scope) of this audit was to
enable us to express our opinion on the Opening Balance Sheet as at
May 31, 2004. Therefore, we are unable to and do not express any
opinion on the financial position, results of operations or cash
flows as of any date or for any period subsequent to May 31, 2004.
6. For the purposes of this letter, we have read the 2004 minutes of
meetings of the board of directors of the Company and its
subsidiaries as set forth in the minute books to December 2, 2004,
officials of the Company having advised us that the minutes of all
such meetings through that date were set forth therein (the latest
of which being dated November 29, 2004). We have carried out other
procedures to December 2, 2004 as follows:
(A) (i) With respect to the period from March 1, 2004 to June 3,
2004 and the period from March 1, 2003 to August 31,
2003 of the Predecessor we have: performed a review in
accordance with the procedures specified by the American
Institute of Certified Public Accountants for a review
of interim financial information as described in SAS No.
100, Interim Financial Information, on the unaudited
interim consolidated balance sheets as of June 3, 2004
and August 31, 2003 and on the unaudited interim
consolidated statement of income, shareholders' equity
and cash flows for the 95-day period ended June 3, 2004
and the six-month period ended August 31, 2003 of the
Predecessor included in the Offering Circular. Such a
review of interim information consists principally of
-2-
applying analytical procedures to financial data, and
making enquiries of, and having discussions with,
persons responsible for financial and accounting
matters. A review of interim information is
substantially less in scope than an audit, whose
objective is the expression of an opinion regarding the
financial statements; accordingly, we do not express
such an opinion. A review of interim information does
not provide assurance that we would become aware of any
or all significant matters that might be identified in
an audit; and
(ii) inquired of certain officials of the Predecessor (who
are also officers of the Company) who have
responsibility for financial and accounting matters
concerning whether the unaudited interim Consolidated
Financial Statements referred to in 6 (A) (i) comply as
to form in all material respects with the applicable
accounting requirements of the Act and the related
published rules and regulations.
(B) With respect to the period from June 4, 2004 to August 31,
2004 of the Company we have:
(i) Performed a review in accordance with the procedures
specified by the American Institute of Certified Public
Accountants for a review of interim financial
information as described in SAS No. 100, Interim
Financial Information, on the unaudited interim
consolidated balance sheet as of August 31, 2004 and on
the unaudited interim consolidated statement of income,
shareholders' equity and cash flows for the 89-day
period ended August 31, 2004 of the Company included in
the Offering Circular. Such a review of interim
information consists principally of applying analytical
procedures to financial data, and making enquiries of,
and having discussions with, persons responsible for
financial and accounting matters. A review of interim
information is substantially less in scope than an
audit, whose objective is the expression of an opinion
regarding the financial statements; accordingly, we do
not express such an opinion. A review of interim
information does not provide assurance that we would
become aware of any or all significant matters that
might be identified in an audit; and
(ii) inquired of certain officials of the Company who have
responsibility for financial and accounting matters
concerning whether the unaudited interim Consolidated
Financial Statements referred to in 6 (B) (i) comply as
to form in all material respects with the applicable
accounting requirements of the Act and the related
published rules and regulations.
-3-
(C) With respect to the period from September 1, 2004 to September
30, 2004 we have:
(i) read the unaudited monthly consolidated financial
statements of the Company for September 2004 (the
"unaudited Monthly Consolidated Financial Statements")
provided to us by the Company, officials of the Company
having advised us that no such financial statements as
at any date or for any period subsequent to September
30, 2004 were available; and
(ii) inquired of certain officials of the Company who have
responsibility for financial and accounting matters
whether the unaudited Monthly Consolidated Financial
Statements referred to in 6 (C) (i) are stated, in all
material respects, on a basis substantially consistent
with that of the audited and unaudited consolidated
financial statements of the Company and of the
Predecessor, included in the Offering Circular.
The foregoing procedures do not constitute an audit conducted in
accordance with generally accepted auditing standards in Canada nor
with the standards of the Public Company Accounting Oversight Board
(United States). Also, they would not necessarily reveal matters of
significance with respect to the comments in the following
paragraph. Accordingly, we make no representations regarding the
sufficiency of the foregoing procedures for your purposes.
7. Based on the results of the foregoing procedures, nothing came to
our attention which caused us to believe that:
(A) (i) Any material modification should be made to the
unaudited interim consolidated financial statements of
the Company and its Predecessor described in 6(A)(i) and
6(B)(i), included in the Offering Circular, for them to
be in conformity with generally accepted accounting
principles in the United States.
(ii) The unaudited interim consolidated financial statements
described in 6(A)(i) and 6(B)(i) do not comply as to
form in all material respects with the applicable
accounting requirements of the Act and the related
published rules and regulations.
(B) (i) At September 30, 2004, there were any changes in the
share capital or increase in the long-term debt other
than an increase of $4.0 million caused by an exchange
rate fluctuation, or decrease in consolidated net
current assets or consolidated shareholders' equity of
the Company as compared with the amounts shown in the
August 31, 2004 unaudited consolidated balance sheet of
the Company included in the Offering Circular, except in
all instances for changes,
-4-
increases, or decreases that the Offering Circular
discloses have occurred or may occur; and
(ii) For the period from September 1, 2004, to September 30,
2004, we did not find any decrease, except in all
instances for decrease that the Offering Circular
discloses have occurred or may occur, as compared to the
corresponding period in the preceding year of the
Predecessor, in consolidated net sales and net income,
except for a decrease in net income mainly related to
additional interest expense of $2.2 million on new
indebtedness incurred by the Company since June 2004.
8. As mentioned in item 6(C)(i), officials of the Company have advised
us that no consolidated interim financial statements as at any date
or for any period subsequent to September 30, 2004 are available;
accordingly, the procedures carried out by us with respect to
changes in financial statement items after September 30, 2004, have,
of necessity, been even more limited than those with respect to the
periods referred to in item 6. We have made enquiries of certain
officials of the Company who have responsibility for financial and
accounting matters as to whether:
(A) at December 2, 2004, there was any change in consolidated
capital stock, increase in consolidated long-term debt of the
Company or any decrease in consolidated net assets or
shareholders' equity as compared with amounts shown in the
August 31, 2004 unaudited interim consolidated balance sheet
included in the Offering Circular; or
(B) for the period from October 1, 2004 to December 2, 2004 there
were any decreases, as compared with the corresponding period
in the preceding year of the Predecessor, in consolidated net
sales or of net income of the Company.
On the basis of these enquiries and reading the minutes as described
in item 6, nothing came to our attention that caused us to believe
that there was any such change, increase or decrease, except in all
instances for changes, increases or decreases that the Offering
Circular discloses have occurred or may occur.
9. At your request, we also performed the following procedures:
(A) Read the unaudited pro forma consolidated statements of income
for the year ended February 29, 2004 and for the six-month
period ended August 31, 2004 of MAAX Holdings, Inc. included
in the Offering Circular.
(B) Inquired of certain officials of the Company who have
responsibility for financial and accounting matters as to
whether all significant assumptions regarding the business
acquisition had been reflected in the pro forma adjustments
and whether the unaudited pro forma consolidated financial
statements referred to in 9(A) comply as to form in all
material respect
-5-
with the applicable accounting requirements of rule 11-02 of
Regulation S-X.
Those officials referred to above, stated in response to our
inquiries, that all significant assumptions regarding the
business acquisition had been reflected in the pro forma
adjustments and that the unaudited pro forma consolidated
financial statements referred to in 9(A) comply as to form in
all material respects with the applicable accounting
requirements of rule 11-02 of Regulation S-X.
(C) Compared the historical financial information included in the
pro forma column under MAAX Inc. to the historical financial
information for MAAX Inc. in the Consolidated Financial
Statements of MAAX Inc. for the year ended February 29, 2004
and to the unaudited interim consolidated financial statements
of the Predecessor and of the Company for the six-month period
ended August 31, 2004 included in the Offering Circular.
(D) Proved the arithmetic accuracy of the application of the pro
forma adjustments to the historical amounts in the unaudited
pro forma consolidated financial statements.
The foregoing procedures are less in scope than an
examination, the objective of which is the expression of an
opinion on management's assumptions, the pro forma adjustments
and the application of those adjustments to historical
financial information. Accordingly, we do not express such an
opinion. We make no representation about the sufficiency of
the foregoing procedures for your purposes. Had we performed
additional procedures or had we made an examination of the pro
forma financial information, other matters might have come to
our attention that would have been reported to you.
10. For purposes of this letter, we have also read the items identified
by you on the attached copy of the Offering Circular (Appendix A),
and have performed the following procedures, which were applied as
indicated with respect to the symbols explained below. With respect
to the disclosure by the Company of any non-GAAP financial measures
as defined in Regulation G, we make no comment as to whether such
measures or the resulting disclosures comply with the requirements
of Regulation G or Item 10 of Regulation S-K.
Symbol Procedures and Findings
A Compared the amount with the corresponding amount in
the 2004 Consolidated Financial Statements of the
Predecessor included in the Offering Circular and
found them to be in agreement, except for rounding.
-6-
B Compared the amount with the corresponding amount in
the audited Opening Balance Sheet of the Company
included in the Offering Circular and found them to
be in agreement.
C Compared the amount with the corresponding amount in
the unaudited interim consolidated financial
statements as at June 3, 2004 and for the 95-day
period ended as at that date or for the six-month
period ended August 31, 2003 of the Predecessor, or
in the unaudited interim consolidated financial
statements as at August 31, 2004 and for the 89-day
period ended as at that date of the Company included
in the Offering Circular and found them to be in
agreement, except for rounding.
D Recalculated the amount and found the amount to be in
agreement, except for rounding. The amounts used in
the calculations were agreed to the 2004 Consolidated
Financial Statements of the Predecessor.
E Compared the amount with the corresponding amount in
the unaudited pro-forma financial data of the Company
included in the Offering Circular and found them to
be in agreement, except for rounding.
F Recalculated the amount and found the amount to be in
agreement, except for rounding. The amounts used in
the calculations were agreed to the 2004 Consolidated
Financial Statements of the Predecessor included in
the Offering Circular. Calculated amounts were
calculated based on the definition of such term or
ratio, as described in the Offering Circular. We make
no representation as to the acceptability or not of
such definition under the rules or regulations
promulgated under the Act.
G Recalculated the amount and found the amount to be in
agreement, except for rounding. The amounts used in
the calculations were agreed to the unaudited interim
consolidated financial statements of the Predecessor
or of the Company included in the Offering Circular.
Calculated amounts were calculated based on the
definition of such term or ratio, as described in the
Offering Circular. We make no representation as to
the acceptability or not of such definition under the
rules or regulations promulgated under the Act.
H Recalculated the amount and found the amount to be in
agreement, except for rounding. The amounts used in
the calculations were agreed to the unaudited
pro-forma financial data of the Company included in
the Offering Circular. Calculated amounts were
calculated based on the definition of such term or
ratio, as described in the Offering Circular. We make
no representation as to the accept-
-7-
ability or not of such definition under the rules or
regulations promulgated under the Act.
I Compared the amount with the corresponding amount in
a schedule prepared by the Company or the Predecessor
from the accounting records and found the amount to
be in agreement, except for rounding.
J Recalculated the amount and found the amount to be in
agreement, except for rounding. The amounts used in
the calculations were agreed to a schedule prepared
by the Company or the Predecessor from the accounting
records.
K Compared the amount with a calculated amount based on
the audited consolidated financial statements of the
Predecessor prepared under Canadian GAAP, for which a
reconciliation to US GAAP has been prepared, which
statements are not included in the Offering Circular
and found them to be in agreement, except for
rounding.
L Recalculated the amount and found the amount to be in
agreement, except for rounding. The amounts used in
the calculations were calculated from audited
consolidated financial statements of the Predecessor
prepared under Canada GAAP, for which a
reconciliation to US GAAP has been prepared, which
statements are not included in the Offering Circular.
M Compared the amount with a corresponding amount in a
schedule prepared by the Company or the Predecessor
and found the amount to be in agreement, except for
rounding.
N Recalculated the amount and found the amount to be in
agreement, except for rounding. The amounts used in
the calculations were agreed to a schedule prepared
by the Company or the Predecessor.
O We recalculated the amounts or percentages from data
in the Offering Circular and found them to be in
agreement.
(cent) Recalculated the amount and found the amount to be in
agreement, except for rounding.
11. Our audits of the 2004 Consolidated Financial Statements of the
Predecessor for the periods referred to in the introductory
paragraph of this letter and of the Opening Balance Sheet of the
Company as at May 31, 2004 comprised audit tests and procedures
deemed necessary for the purpose of expressing an opinion on such
financial statements taken as a whole. For none of the periods
referred to therein, or any other period, did we perform audit tests
for the purpose of expressing an
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opinion on individual balances of accounts or summaries of selected
transactions such as those enumerated above, and, accordingly, we
express no opinion thereon.
12. It should be noted that we make no representations regarding
questions of legal interpretation or regarding the sufficiency for
your purposes of the procedures enumerated in the preceding
paragraphs; also, such procedures would not necessarily reveal any
material misstatement of the amounts or percentages listed above.
Further, we have addressed ourselves solely to the foregoing data
included in the Offering Circular and make no representations
regarding the adequacy of disclosures or regarding whether any
material facts have been omitted.
13. This letter is solely for the information of the addressees and to
assist the initial purchasers in conducting and documenting their
investigation of the affairs of the Company in connection with the
offering of the Notes covered by the Offering Circular, and it is
not to be used, circulated, quoted, or otherwise referred to within
or without the initial purchasers for any other purposes, including
but not limited to the registration, purchase or sale of securities,
nor is it to be filed with or referred to, in whole or in part, in
the Offering Circular or any other document, except that reference
may be made to it in the purchase agreement or in any list of
closing documents pertaining to the offering of the securities
covered by the Offering Circular.
Yours very truly,
Chartered Accountants
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