Exhibit 99.1
THIS TRANSACTION AGREEMENT is
made this 2nd day of April, 2019 (the “Agreement Date”)
AMONG:
FIRSTSERVICE CORPORATION, a
corporation existing under the Laws of the Province of Ontario (“FirstService”)
- and -
HENSET CAPITAL INC., a corporation
existing under the Laws of the Province of Ontario (“Henset Capital”)
- and -
JAYSET CAPITAL CORP., a corporation
existing under the Laws of the Province of Ontario (“Jayset Capital”)
- and -
FSV Shares LP, a limited partnership
existing under the Laws of the Province of Ontario (the “▇▇▇▇▇▇▇ ▇▇”), by its general partner, 2688845 Ontario
Inc., a corporation existing under the Laws of the Province of Ontario (“▇▇▇▇▇▇▇ GPco”)
- and -
JAYSET MANAGEMENT FSV INC.,
a corporation existing under the Laws of the Province of Ontario (“Jayset Mgt”)
- and -
▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual
resident in the City of Toronto, Ontario (“▇▇▇”, and together with the Sellers, Henset Capital, ▇▇▇▇▇▇▇ GPco
and Jayset Mgt, the “▇▇▇▇▇▇▇ Parties”).
WHEREAS:
| A. | on the Agreement Date: (i) Jayset Capital owns, beneficially and of record, all of the issued and
outstanding shares in the capital of each of ▇▇▇▇▇▇▇ Holdco and ▇▇▇▇▇▇▇ GPco and all of the issued and outstanding limited partnership
interests of the ▇▇▇▇▇▇▇ ▇▇; (ii) ▇▇▇▇▇▇▇ GPco owns, beneficially and of record, all of the issued and outstanding general partnership
interests of the ▇▇▇▇▇▇▇ ▇▇; and (iii) ▇▇▇▇▇▇▇ Holdco owns, beneficially and of record, all of the issued and outstanding shares
in the capital of each of Jayset Mgt and ▇▇▇▇▇▇▇ Subco; |
| B. | Henset Capital owns, beneficially and of record, 1,325,694 Multiple Voting Shares in the capital
of FirstService, being all of the issued and outstanding Multiple Voting Shares; |
| C. | FirstService, Jayset Mgt and ▇▇▇ are parties to the MSA, pursuant to which Jayset Mgt has been
providing management and other services to FirstService; |
| D. | prior to the Closing Date, the ▇▇▇▇▇▇▇ Parties will complete a series of transfers, exchanges and
other matters substantially as set out in the Reorganization Memo, following the completion of which it is expected that: (i) Jayset
Capital will own, beneficially and of record, all of the issued and outstanding common shares in the capital of ▇▇▇▇▇▇▇ Holdco;
and (ii) the ▇▇▇▇▇▇▇ ▇▇ will own, beneficially and of record, all of the issued and outstanding preferred shares in the capital
of ▇▇▇▇▇▇▇ Holdco; |
| E. | the Parties are entering into this Agreement for the purpose of, among other things, having: |
| (i) | FirstService indirectly purchase from the Sellers all of the issued and outstanding shares in the
capital of Jayset Mgt and, thereafter, terminate the MSA; and |
| (ii) | Henset Capital convert all of the Multiple Voting Shares owned by it into Subordinate Voting Shares
on a one-for-one basis without any payment therefor pursuant to the terms of the Multiple Voting Shares contained in the Constituent
Documents of FirstService; |
in each case,
upon the terms and conditions set forth in this Agreement; and
| F. | after receiving a report recommending approval of the Transactions from the Compensation Committee,
the FirstService Board has approved this Agreement as being in the best interests of FirstService, has authorized FirstService
to enter into this Agreement and to complete the Transactions and recommends to the holders of Subordinate Voting Shares that they
should vote in favor of the Transaction Resolution. |
NOW THEREFORE, in consideration
of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency
of which are acknowledged by each of the Parties, and intending to be legally bound, the Parties covenant and agree as follows:
Article 1
– DEFINITIONS AND INTERPRETATION
1.1
Definitions. As used in this Agreement:
| (a) | “Affiliate” has the meaning ascribed thereto in National Instrument 45-106 –
Prospectus Exemptions; |
| (b) | “Agreement” means
this Transaction Agreement, as amended, supplemented and/or restated from time to time; |
| (c) | “Agreement
Date” has the meaning given on the first page of this Agreement; |
| (d) | “Allocation Schedule” has the meaning given in Section 3.4; |
| (e) | “ASPE” the Canadian Accounting Standards for Private Enterprises, as in force
at a given date, as well as the policies, procedures and methodology thereunder, all as amended from time to time; |
| (f) | “Bankruptcy Event” means, in respect of the Person then being referred to, that
such Person: (i) is, has become or is deemed to be insolvent, liquidated or bankrupt within the meaning of, or has otherwise become
subject to any insolvency, liquidation or bankruptcy actions or proceedings under, such insolvency, liquidation and bankruptcy
or other like Laws as are applicable to such Person; (ii) has proposed a compromise or arrangement to such Person’s creditors
generally or has taken any proceedings (whether public or private) with respect thereto or has had any declaration, petition or
receiving order in bankruptcy or other like document filed against such Person; (iii) has taken any proceedings to have such Person
declared bankrupt or insolvent or, if such Person is other than a human being, wound-up, dissolved or liquidated; or (iv) has taken
any proceedings or given any consents to have a receiver, trustee, custodian, manager, creditors’ agent, encumbrancer or
other like official or Person appointed over all or any part of such Person’s assets or property, or has had any receiver,
trustee, custodian, manager, creditors’ agent, encumbrancer or other like official or Person take possession of all or any
part of such Person’s assets or property, or has had any execution or distress become enforceable or become levied or enforced
upon all or any part of such Person’s assets or property; |
| (g) | “Business Day”
means a day other than a Saturday, a Sunday, a day which is observed as a legal holiday in the Province of Ontario and any day
on which the Toronto Stock Exchange or the NASDAQ Global Select Market is not open for the regular conduct of business; |
| (h) | “Circular” means the management information circular of FirstService relating
to, among other things, the consideration of the matters contemplated in subsection 2.4(a), including all appendices and schedules
thereto, and any information incorporated by reference therein, to be sent to holders of Subordinate Voting Shares and Multiple
Voting Shares in connection with the Meeting; |
| (i) | “Closing” has
the meaning given in Section 8.4; |
| (j) | “Closing Cash” means the aggregate amount of cash of the Purchased Entities
as of the Closing Time; |
| (k) | “Closing Date” has the meaning given in Section 8.4; |
| (l) | “Closing Time”
means the time on the Closing Date at which the Closing
occurs, which time shall be 8:30 a.m. (Toronto, Ontario local time) or such other time on the Closing Date as the Parties
agree upon; |
| (m) | “Compensation Committee” means the executive compensation committee of the FirstService
Board empowered to evaluate, make proposals with respect to, negotiate, consider the desirability, feasibility and fairness of,
and report to the FirstService Board on a potential transaction in the nature of the Transactions, including as to whether such
a potential transaction is in the best interests of FirstService; |
| (n) | “Constituent Documents”
means, in respect of the corporation, partnership, trust or other entity then being referred to, those documents pursuant to which
it was incorporated, created, formed or established and which deal with its existence, conduct, governance, constitution and/or
management, in each case, as amended, supplemented and/or restated, and in effect; |
| (o) | “Contract” means
any agreement, contract, arrangement, commitment, instrument, debenture, note, deed of trust, indenture, lease, guarantee, understanding
or undertaking of any kind, whether written, electronic or oral; |
| (p) | “Credit Agreement” has the meaning given in subsection 8.1(c); |
| (q) | “Employee Benefit Plan” means each employee benefit plan, arrangement, agreement,
policy or commitment (including any multi-employer plan) and any employment, consulting, retention, change in control, deferred
compensation, executive compensation, bonus, incentive, pension, registered retirement saving (RRSP), individual pension (IPP),
money-purchase, defined benefit, defined contribution, profit-sharing, savings, retirement, share/security option, equity, equity-based,
share/security appreciation right, share/security purchase, severance, health, dental, medical, life insurance, survivor benefit,
life, disability or accident insurance, holiday, vacation, fringe benefit or similar plan, arrangement, agreement, policy or commitment,
which has been administered, sponsored or maintained by a Purchased Entity or by any other Person for and on behalf of a Purchased
Entity and/or its employees; |
| (r) | “Encumbrances” means liens, claims, charges, adverse claims, security interests,
hypothecations, pledges, mortgages, rights of first refusal, first offer, first negotiation and similar contingent rights, and
similar encumbrances of any kind; |
| (s) | “End Date” has the meaning given in subsection 12.1(b); |
| (t) | “Financial Statements (Annual)” means, collectively, the following unaudited
financial statements of Jayset Mgt: (i) the balance sheet as at December 31, 2018 and 2017; and (ii) the statement of earnings
for the years ended December 31, 2018 and 2017, together with any notes thereto; |
| (u) | “Financial Statements (Interim)” means, collectively, the following unaudited
financial statements of Jayset Mgt: (i) the balance sheet as at March 31, 2019; and (ii) the statement of earnings for the three-month
period ended March 31, 2019, together with any notes thereto; |
| (v) | “FirstService” has the meaning given on the first page of this Agreement; |
| (w) | “FirstService Board” means the board of directors of FirstService; |
| (x) | “FirstService Fundamental Representations” means the representations and warranties
of FirstService set forth in subsections 5.1(a) [Subsistence of FirstService]; 5.1(b) [Enforceability
of Transaction Documents on FirstService], 5.1(c) [Authority
of FirstService to Execute Transaction Documents]
and 5.1(f) [Shares of FirstService]; |
| (y) | “FirstService Indemnified Parties” has the meaning given in Section 11.1; |
| (z) | “Governmental Authorities”
means: (i) all national, federal, provincial, territorial, state and local governments and governmental and quasi-governmental
and public authorities, agencies, courts, boards, commissions, professional bodies, ministries and other similar bodies; (ii) any
subdivision or authority of any of the bodies noted in the immediately foregoing (i); and (iii) any stock exchange; |
| (aa) | “▇▇▇▇▇▇▇ Fundamental Representations” means the representations and warranties
of a Sale Party or Sale Parties set forth in subsections 4.1(a) [Authority of Sale Party to Execute Transaction Documents],
4.1(b) [Enforceability of Transaction Documents on Sale
Party], 4.1(h) [Ownership of ▇▇▇▇▇▇▇ Holdco Shares and Power
to Sell], 4.1(i) [No Rights to Purchase Purchased Shares], 4.2(a) [Purchased Entity Information],
4.2(b) [Purchased Subsidiaries and Other Ownership Interests
of Purchased Entity], 4.2(c) [Capitalization], 4.2(d) [Authority
of Jayset Mgt to Execute Transaction Documents],
and 4.2(e) [Enforceability of Transaction Documents on Jayset Mgt]; |
| (bb) | “▇▇▇▇▇▇▇ GPco” has the meaning given on the first page of this Agreement; |
| (cc) | “▇▇▇▇▇▇▇ Holdco” means 2688839 Ontario Inc., a corporation existing under the
laws of the Province of Ontario; |
| (dd) | “▇▇▇▇▇▇▇ Holdco Common Shares” means, collectively, the shares in the capital
of ▇▇▇▇▇▇▇ Holdco which are designated as “Common shares” in the Constituent Documents of ▇▇▇▇▇▇▇ Holdco; |
| (ee) | “▇▇▇▇▇▇▇ Holdco Preferred Shares” means, collectively, the shares in the capital
of ▇▇▇▇▇▇▇ Holdco which are designated as “Preferred shares” in the Constituent Documents of ▇▇▇▇▇▇▇ Holdco; |
| (ff) | “▇▇▇▇▇▇▇ Holdco Shares” means, collectively, the ▇▇▇▇▇▇▇ Holdco Common Shares
and the ▇▇▇▇▇▇▇ Holdco Preferred Shares; |
| (gg) | “▇▇▇▇▇▇▇ Indemnified Parties” has the meaning given in Section 11.2; |
| (hh) | “▇▇▇▇▇▇▇ ▇▇” has the meaning given on the first page of this Agreement; |
| (ii) | “▇▇▇▇▇▇▇ Parties” has the meaning given on the first page of this Agreement; |
| (jj) | “▇▇▇▇▇▇▇ Subco” means 2688843 Ontario Inc., a corporation existing under the
laws of the Province of Ontario; |
| (kk) | “Henset Capital” has the meaning given on the first page of this Agreement; |
| (ll) | “including” (and
variations thereof) means “including without limitation”
and shall not be construed to limit any general statement which it follows to the specific or similar items or matters immediately
following it; |
| (mm) | “Interested Subordinate Voting Shareholders” means, collectively: (i) the Sellers;
(ii) each related party (as such term is defined in MI 61-101) of the Sellers; (iii) each joint actor (as such term is described
in MI 61-101) of the Sellers and their related parties; and (iv) any other holder of Subordinate Voting Shares whose votes would
be excluded if the Transaction Resolution was subject to “minority approval” as defined in MI 61-101; |
| (nn) | “Interim Period” means the period commencing on the Agreement Date and ending
on the earlier of: (i) the Closing Time; and (ii) the day this Agreement is terminated in accordance with Article 12; |
| (oo) | “ITA” means the Income Tax Act (Canada) and the regulations thereunder; |
| (pp) | “▇▇▇” has the meaning given on the first page of this Agreement; |
| (qq) | “Jayset Capital” has the meaning given on the first page of this Agreement; |
| (rr) | “Jayset Mgt” has the meaning given on the first page of this Agreement; |
| (ss) | “Laws” means
all laws, statutes, regulations, rules, codes, by-laws, orders, ordinances, decrees, treaties, standards, directives, guidelines,
principles of law and policies of all Governmental Authorities having jurisdiction over, or application to, the matter(s) and/or
Person(s) then being referred to; |
| (tt) | “Legal Proceedings” means actions, appeals from court judgments, appeals from
decisions of Governmental Authorities, applications for review, arbitrations, mediations, assessments, re-assessments, audits,
claims, complaints, counterclaims, grievances, investigations, proceedings, demands for arbitration/mediation, lawsuits and suits
of any kind (whether in law or in equity and whether administrative, governmental, judicial, private or otherwise) in respect of
any act, conduct, omission, matter or thing (whether civil, administrative or criminal in nature); |
| (uu) | “Liabilities”
means all accounts and trade payables, charges, costs, debts, expenses, indebtedness, liabilities, Taxes payable, and payment and
other obligations of any kind, whether primary or secondary, direct or indirect, asserted or unasserted, monetary or non-monetary
or due or accruing due and whether fixed, contingent, conditional, absolute or otherwise; |
| (vv) | “Losses” means all assessments, awards, claims, costs, damages, deficiencies,
fines, interest, judgments, losses, liabilities, late payment charges, penalties and expenses (including reasonable legal fees
and disbursements and court costs) of any kind (and whether or not arising out of a judgment, the appeal of a judgment, an arbitration
award, a mediator’s decision or otherwise); |
| (ww) | “material fact” has the meaning ascribed thereto in the Securities Act (Ontario); |
| (xx) | “Meeting” has the meaning given in subsection 2.4(a); |
| (yy) | “Meeting Materials” means the notice of meeting, the Circular and the form of
proxy in respect of the Meeting which accompanies the Circular, and any amendments or supplements thereto; |
| (zz) | “MI 61-101” means Multilateral Instrument 61-101 – Protection of Minority
Security Holders in Special Transactions; |
| (aaa) | “MSA” means the restated management services agreement made effective as of
12:00:30 a.m. (Toronto, Ontario local time) on the 1st day of June, 2015 among FSV Holdco ULC (now FirstService), Jayset
Mgt and ▇▇▇, as amended by the first amending agreement made the 6th day of February, 2018 among FirstService, Jayset
Mgt and ▇▇▇; |
| (bbb) | “MSA Termination Agreement” has the meaning given in subsection 8.2(h); |
| (ccc) | “Multiple Voting Shares” means, collectively, the shares in the capital of FirstService
which are designated as “Multiple Voting Shares” in the Constituent Documents of FirstService; |
| (ddd) | “MVS Conversion Notice” has the meaning given in Section 2.1; |
| (eee) | “Net Tax Liability” means a positive number equal to: (i) an amount equal to
all unpaid Taxes of the Purchased Entities at the Closing Time (including as may result as a consequence of the Reorganization)
related to a Pre-Closing Tax Period of a Purchased Entity, minus (ii) the Closing Cash. |
| (fff) | “Options and Re-Purchase Obligations” means, as used in relation to the Person
then being referred to, all options, warrants, conversion privileges or other rights or Contracts obligating such Person for: (i)
the issuance, purchase, sale or transfer of any of the unissued or issued equity or other ownership interests of such Person; or
(ii) the repurchase, redemption, retraction, cancellation or other acquisition by any means of any of the issued equity or other
ownership interests of such Person; |
| (ggg) | “Parties” means, collectively, FirstService and the ▇▇▇▇▇▇▇ Parties; |
| (hhh) | “Person” includes
a human being, a corporation, a trust, a partnership, a body corporate, a Governmental Authority, an association and any other
form of incorporated or unincorporated organization or entity; |
| (iii) | “Post-Closing Tax Period”
means, for a Purchased Entity then being referred to, any taxable period for such Purchased Entity beginning on or after the Closing
Date; |
| (jjj) | “Pre-Closing Tax Period”
means, for a Purchased Entity then being referred to, any taxable period for such Purchased Entity that is not a Post-Closing Tax
Period or a Straddle Period; |
| (kkk) | “Purchase Price”
has the meaning given in Section 3.2; |
| (lll) | “Purchased Entities” means ▇▇▇▇▇▇▇ Holdco together with all of the Purchased
Subsidiaries; |
| (mmm) | “Purchased Shares”
has the meaning given in Section 2.2; |
| (nnn) | “Purchased Subsidiaries” means, collectively, Jayset Mgt and ▇▇▇▇▇▇▇ Subco; |
| (ooo) | “Reorganization” means the steps contemplated in the Reorganization Memo, as
such steps may be amended in accordance with Section 7.5(a); |
| (ppp) | “Reorganization Memo” means the presentation entitled “Sale of Jayset
Management FSV Inc.” prepared by counsel to the ▇▇▇▇▇▇▇ Parties, a copy of which is attached hereto as Schedule “B”; |
| (qqq) | “Sale Parties” means, collectively, ▇▇▇, the Sellers and Henset Capital; |
| (rrr) | “Sellers” means, collectively, Jayset Capital and ▇▇▇▇▇▇▇ ▇▇, and includes any
Person who acquires Purchased Shares pursuant to the Reorganization, becomes a party to this Agreement and sells, assigns and transfers
Purchased Shares to FirstService; |
| (sss) | “Straddle Period” means, for a Purchased Entity then being referred to, any
taxable period for such Purchased Entity beginning before the Closing Date and ending after the Closing Date; |
| (ttt) | “Subordinate Voting Shares” means, collectively, the shares in the capital of
FirstService which are designated as “Subordinate Voting Shares” in the Constituent Documents of FirstService; |
| (uuu) | “Subsidiary”
has the meaning ascribed thereto in National Instrument 45-106 –Prospectus Exemptions; |
| (vvv) | “Tax Return”
means any report, return, document, declaration, payee statement or other information or filing which is supplied or required to
be supplied to any Governmental Authority by a Purchased Entity relating to Taxes (including the payment of Taxes or the claiming
of a refund of Taxes) and includes all related forms and elections and schedule(s) or attachment(s) thereto and amendment(s) thereof; |
| (www) | “Taxes” or “Tax” means all taxes, assessments, levies and
other governmental charges and imposts of any kind (whether domestic or foreign; federal, provincial, territorial or municipal;
or otherwise), and including amounts payable relating to unclaimed property, abandonment or escheat, together with any interest
or penalties, any addition to tax or any additional amount imposed by any Governmental Authority thereon; |
| (xxx) | “Transaction Documents”
means this Agreement together with all Contracts, documents, certificates and other instruments executed and delivered pursuant
to the provisions of this Agreement or otherwise in connection with, or to give effect to, the transactions and other matters provided
for in this Agreement; |
| (yyy) | “Transaction Resolution” has the meaning given in subsection 2.4(a); and |
| (zzz) | “Transactions” means the transactions contemplated by this Agreement and the
other Transaction Documents and all matters ancillary thereto as provided for in this Agreement. |
1.2
Schedule. The following schedule to this Agreement
is attached to, is incorporated into, and forms an integral part of this Agreement:
| Schedule |
Description |
| A
– |
Form of Transaction Resolution |
| B
– |
Reorganization Memo |
1.3
Recitals Form Part of Agreement; Section References.
The recitals to this Agreement form an integral part of this Agreement and are incorporated herein by reference. Unless otherwise
expressly indicated in this Agreement, any reference which is made in this Agreement to an “Article”,
“Section”, “subsection”
or “paragraph” means and refers to the Article,
Section, subsection or paragraph of this Agreement so referenced.
1.4
Scope of Knowledge. The word “knowledge”
means, in relation to the Person(s) then being referred to, the actual knowledge of such Person(s), provided that: (a) the actual
knowledge of a Sale Party shall mean the actual knowledge of any one of ▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇; and (b) the actual knowledge of FirstService
shall mean the actual knowledge of any one of D. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, in each case, in respect of the matter or
thing then being referred to.
1.5
Third Party Beneficiaries. Nothing in this
Agreement or in any agreement contemplated herein or delivered pursuant hereto is intended, expressly or by implication, to, or
shall, confer on any Person other than the Parties, any rights or remedies of any kind, except for the FirstService Indemnified
Parties not already party to this Agreement, who, in each case, shall be express third party beneficiaries solely with respect
to Article 11.
1.6
Method of Making Payments. Unless otherwise indicated, all payments (whether in respect of a portion of the
Purchase Price or otherwise) required to be made herein shall be made in immediately available Canadian dollars by certified cheque,
bank draft or same day funds wire transfer.
1.7
Documents Made Available. Any document, financial statement, Contract, list or other item shall be deemed
to have been “made available” to FirstService for all purposes of this Agreement if, at least two Business Days
prior to the Agreement Date, such document, financial statement, Contract, list or other item was either: (a) sent by a ▇▇▇▇▇▇▇
Party or by legal counsel to a ▇▇▇▇▇▇▇ Party (or by any other Person at the request of, or for and on behalf of, a ▇▇▇▇▇▇▇ Party
or legal counsel to a ▇▇▇▇▇▇▇ Party) to, and received by, FirstService; or (b) published and made available to FirstService in
the electronic data room or “Drop Box Shared Folder” established for use in relation to the Transactions to which FirstService
had unfettered access.
Article 2
– TRANSACTIONS
2.1
Conversion of Multiple Voting Shares. Subject
to the terms and conditions set forth in this Agreement (including the completion of the Reorganization and the purchase and sale
of the Purchased Shares and the payment in full of the Purchase Price), at Closing, Henset Capital will irrevocably elect to convert
all 1,325,694 Multiple Voting Shares owned, beneficially and of record, by Henset Capital into Subordinate Voting Shares on a one-for-one
basis (without any payment therefor from FirstService or any other Person) pursuant to the terms of the Multiple Voting Shares
contained in the Constituent Documents of FirstService and, in furtherance thereof, at or prior to the Closing Time, Henset Capital
will deliver to the transfer agent of the Subordinate Voting Shares the share certificate representing such 1,325,694 Multiple
Voting Shares accompanied by a written notice (the “MVS Conversion Notice”) duly executed by Henset Capital,
which MVS Conversion Notice states that Henset Capital is electing to convert, at Closing, the 1,325,694 Multiple Voting Shares
represented by such share certificate on the basis of one Subordinate Voting Share for each Multiple Voting Share so converted
in accordance with the provisions of the Constituent Documents of FirstService and which MVS Conversion Notice will further state
that a share certificate or a direct registration system advice statement evidencing the 1,325,694 Subordinate Voting Shares issuable
on such conversion be issued to (and be registered in the name of) Henset Capital at the Closing Time.
2.2
Purchase and Sale of ▇▇▇▇▇▇▇ Holdco Shares.
Subject to the terms and conditions set forth in this Agreement (including Section 7.5), at Closing the Sellers will sell, assign
and transfer to FirstService, and FirstService will purchase from the Sellers all of the issued and outstanding shares in the capital
of ▇▇▇▇▇▇▇ Holdco (the “Purchased Shares”).
2.3
Final Fees under MSA. Subject to the terms
and conditions set forth in this Agreement, FirstService, Jayset Mgt and ▇▇▇ agree that:
| (a) | Jayset Mgt is entitled to receive (and FirstService shall pay) the portion of the Base Fee and
the Two Percent Fee (as such terms are defined in the MSA) payable by FirstService to Jayset Mgt under the MSA up to and including
the Closing Date (any portion of the Base Fee and/or the Two Percent Fee so entitled to be received by, and not paid to, Jayset
Mgt at the Closing Time, the “MSA Remaining 2019 Base Fee”); and |
| (b) | Jayset Mgt was entitled to receive (and acknowledges being paid in full by FirstService) the Incentive
Fee (as such term is defined in the MSA) under the MSA in respect of the fiscal year ended December 31, 2018; |
and, at the Closing
Time (but immediately prior to the completion of the acquisition of the Purchased Shares by FirstService hereunder), Jayset Mgt
assigns, transfers, grants and sets over unto Jayset Capital, for Jayset Capital’s sole benefit, all of Jayset Mgt’s
right, title and interest in and to the MSA Remaining 2019 Base Fee. Each of FirstService and ▇▇▇ consents to the assignment of
the MSA Remaining 2019 Base Fee by Jayset Mgt to Jayset Capital hereunder. The Parties acknowledge and agree that: (i) notwithstanding
the termination of the MSA in accordance with the terms of this Agreement, Jayset Capital is entitled to receive the MSA Remaining
2019 Base Fee, if any, determined in accordance with, and paid at such time and in such currency as is contemplated by, the MSA
and in accordance with the past practices of FirstService; and (ii) at the Closing Time (but immediately following the completion
of the acquisition of the Purchased Shares by FirstService hereunder), the parties to the MSA will terminate the MSA and, from
and after the Closing Time, neither Jayset Mgt nor any other Person will be entitled to receive any payments under the MSA from
FirstService other than the MSA Remaining 2019 Base Fee. The Parties agree that the manner in which the MSA Remaining 2019 Base
Fee is assigned to Jayset Capital shall be as determined by mutual agreement of ▇▇▇ and FirstService, each acting reasonably.
2.4
Shareholder Meeting and Meeting Materials.
| (a) | Following the execution of this Agreement, FirstService will, at a time to be determined by the
FirstService Board, call, hold and conduct an annual and special meeting (the “Meeting”) of holders of Subordinate
Voting Shares and Multiple Voting Shares to be held at such time and place as is determined by the FirstService Board (and in any
event on or prior to May 31, 2019) in order for, among other things: (i) the holders of Subordinate Voting Shares to consider and,
if determined advisable, to pass an ordinary resolution authorizing and approving the Transactions (the “Transaction Resolution”),
substantially in the form of Schedule “A” annexed hereto; and (ii) if the Transaction Resolution is approved as herein
provided, the holders of Subordinate Voting Shares to consider and, if determined advisable, to pass a resolution authorizing and
approving of amendments to the Constituent Documents of FirstService eliminating the Multiple Voting Shares as authorized capital
of FirstService and re-designating the Subordinate Voting Shares as common shares and amending the terms thereof such that the
rights, privileges, restrictions and conditions attached thereto are that of basic common shares. |
| (b) | FirstService shall comply, in all material respects, with applicable Laws and the Constituent Documents
of FirstService in relation to the calling, holding and conduct of the Meeting and the content, filing and sending to shareholders
of the Meeting Materials (including any disclosure required by MI 61-101). Without limiting the generality of the foregoing, FirstService
shall ensure that the Circular provides FirstService shareholders with information in sufficient detail to permit them to form
a reasoned judgment concerning the respective matters to be placed before them at the Meeting. |
| (c) | FirstService shall give the Sellers and their legal counsel a reasonable opportunity to review
and comment on drafts of the Meeting Materials, and shall give reasonable consideration to any comments made by the Sellers and
their counsel, recognizing that whether or not such comments are ultimately included will be determined by the FirstService Board,
acting reasonably. Notwithstanding the foregoing, all information relating solely to the ▇▇▇▇▇▇▇ Parties for inclusion in the Circular
must be in form and content satisfactory to the ▇▇▇▇▇▇▇ Parties. The ▇▇▇▇▇▇▇ Parties shall furnish to FirstService all such information
concerning the ▇▇▇▇▇▇▇ Parties and their respective Affiliates as may be required to be included in the Meeting Materials. The
Sale Parties hereby represent, warrant and covenant to and in favour of FirstService that no information furnished by a ▇▇▇▇▇▇▇
Party pursuant to this subsection 2.4(c) for inclusion in the Circular will contain a misrepresentation (as such term is defined
in the Securities Act (Ontario)). |
| (d) | FirstService agrees that the Circular will include a statement that the FirstService Board (with
▇▇▇ abstaining) has: (i) unanimously approved this Agreement; and (ii) determined that the Transactions are in the best interests
of FirstService, and that it recommends that the holders of Subordinate Voting Shares vote in favour of the Transaction Resolution. |
| (e) | The Parties agree that: (i) the requisite approval for the Transaction Resolution will be a simple
majority of the votes cast by holders of Subordinate Voting Shares, voting separately as a class, present in person or represented
by proxy at the Meeting, excluding the votes attached to Subordinate Voting Shares held by Interested Subordinate Voting Shareholders
or over which control or direction is exercised by Interested Subordinate Voting Shareholders; and (ii) the requisite approval
for any other resolution or matter as may considered or voted on by holders of Subordinate Voting Shares and/or Multiple Voting
Shares at the Meeting shall be such approval as is required by applicable Law (including the requirements of any applicable Governmental
Authority) and/or the Constituent Documents of FirstService. |
| (f) | Each Party shall promptly notify the other Parties if at any time before the Closing Time it becomes
aware that the Circular contains any untrue statement of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements contained therein not misleading in light of the circumstances in which they are made,
or that otherwise requires an amendment or supplement to the Circular. In any such event, the Parties shall cooperate in the preparation
of a supplement or amendment to the Circular, as required and as the case may be, and, if required, shall cause the same to be
distributed to FirstService shareholders and/or filed with applicable Governmental Authorities. |
Article 3
– PURCHASE PRICE FOR PURCHASED SHARES
3.1
Additional Definitions. As used in this Agreement:
| (a) | “Designated FirstService Options” means the 1,505,850 options to acquire Subordinate
Voting Shares under FirstService’s stock option plan which were issued and outstanding as at the close of business on February
7, 2019 (and, for avoidance of doubt, excluding any such options which were issued at any time following the close of business
on February 7, 2019, including the 438,000 options to acquire Subordinate Voting Shares issued on February 8, 2019); |
| (b) | “FirstService Outstanding Share Amount” means 37,613,197, being the sum of the
number of: (i) Multiple Voting Shares and Subordinate Voting Shares issued and outstanding at the close of business on the Reference
Date; and (ii) Designated FirstService Options; |
| (c) | “Reference Date” means March 11, 2019; and |
| (d) | “SVS Per Share Price” means $115.58, being the volume weighted average price
of the Subordinate Voting Shares traded through the Toronto Stock Exchange during the 20-trading day period ending on (and including)
the Reference Date. |
3.2
Purchase Price for Purchased Shares. The total
purchase price for the Purchased Shares is an amount equal to: (i) C$84,340,448, less (ii) the Net Tax Liability, plus,
(iii) as of the Reference Date, C$337,361,791 (the “Purchase Price”). The Parties hereto acknowledge and agree
that the Purchase Price was determined by applying the formula provided in subsection 4.2(a) of the MSA as if the event in subsection
4.1(a) thereof had occurred, with the “per share consideration” referenced therein being deemed to be the SVS
Per Share Price and “the number of Multiple Voting Shares and Subordinate Voting Shares of New FirstService issued and
outstanding at the time of the applicable sale, dividend, distribution or transaction” referenced therein being deemed
to be the FirstService Outstanding Share Amount.
3.3
Payment of Purchase Price. At the Closing Time,
the Purchase Price shall be satisfied by FirstService as follows:
| (a) | FirstService will pay to the applicable Seller(s), in accordance with the Allocation Schedule,
in cash, an amount equal to: (i) C$84,340,448, less (ii) the Net Tax Liability; and |
| (b) | FirstService will allot, issue and deliver to the Seller(s), in accordance with the Allocation
Schedule, an aggregate of 2,918,860 Subordinate Voting Shares, for which the applicable Seller(s) hereby subscribes at Closing,
with such Subordinate Voting Shares to be allotted and issued to the applicable Seller(s) as fully paid and non-assessable. |
3.4
Allocation of Purchase Price. At least five
(5) Business Days prior to the Closing Date, the ▇▇▇▇▇▇▇ Parties shall deliver to FirstService a statement setting out the allocation
of the Purchase Price (and the types of consideration payable) to each Seller (the “Allocation Schedule”). FirstService
shall have a period of three (3) Business Days following its receipt of the Allocation Schedule to provide the ▇▇▇▇▇▇▇ Parties
with any comments related to such Allocation Schedule. The Sale Parties shall consider such comments in good faith, acting reasonably.
If the Purchase Price is adjusted pursuant to any of the provisions of this Agreement, the amount of such adjustment shall, if
such amount cannot be reasonably allocated to certain Purchased Shares, be allocated on a pro rata basis amongst the common shares
of ▇▇▇▇▇▇▇ Holdco unless otherwise agreed by the ▇▇▇▇▇▇▇ Parties and FirstService. Such allocation shall be final and binding upon
the Parties for all purposes, including the filing of all Tax Returns.
3.5
Subsection 85(1) of ITA Election.
| (a) | FirstService and the Sellers covenant and agree that they shall, within the time limit and in the
form and manner prescribed therefor by the ITA, make, complete, execute and file a joint election pursuant to subsection 85(1)
of the ITA (or any analogous provincial or territorial equivalents) in respect of the transfer of the Purchased Shares by the Sellers
pursuant hereto, and FirstService and the Sellers further agree that the amount or amounts of the sale, assignment and transfer
by the Sellers to FirstService of the Purchased Shares sold by the Sellers pursuant hereto will be made at an amount or amounts
to be determined by the Sellers in their sole discretion (provided such amount(s) so determined by the Sellers are permitted by
the applicable provisions of the ITA). |
| (b) | If requested by the Sale Parties, the provisions of subsection 3.5(a) shall apply mutatis mutandis
with respect to the conversion of Multiple Voting Shares into Subordinate Voting Shares by Henset Capital as contemplated by Section
2.1. |
Article 4
– REPRESENTATIONS AND WARRANTIES – SALE PARTIES
4.1
Representations and Warranties in Respect of the Sale Parties. Each Sale Party, for and on behalf of himself
or itself, severally and not jointly and severally represents and warrants to FirstService as of the Agreement Date as follows:
| (a) | Authority of Sale Party to Execute Transaction Documents: such Sale Party: |
| (i) | (A) if an individual, has attained the full age of majority under applicable Laws, and is legally
competent; or (B) if a corporation, has the necessary corporate and/or
other power, authority and capacity as is required by all Laws applicable to it, its Constituent Documents and otherwise
to enable it, in each case, to enter into, execute and deliver all those
Transaction Documents to which such Sale Party is a party and to
observe and perform the terms, conditions and provisions thereof which are required to be observed and performed by such
Sale Party; |
| (ii) | if a corporation, has duly authorized the execution and delivery of the Transaction Documents;
and |
| (iii) | has executed and delivered each of the Transaction Documents to which it is a party; |
| (b) | Enforceability of Transaction Documents
on Sale Party: subject to limitations regarding
enforcement under Laws affecting creditors’ rights generally (including bankruptcy, insolvency, moratorium, reorganization
and other similar Laws) and to the extent that equitable remedies such as specific performance and injunction are in the discretion
of the court from which sought: (i) this Agreement constitutes legal, valid and binding obligations of such Sale Party enforceable
against such Sale Party in accordance with the terms hereof (assuming the due authorization, execution and delivery thereof by
the other Parties); and (ii) each of the other Transaction Documents to which such Sale Party is a party, once executed and delivered
by such Sale Party, shall constitute legal, valid and binding obligations of such Sale Party enforceable against such Sale Party
in accordance with the terms thereof (assuming the due authorization, execution and delivery thereof by the other Parties); |
| (c) | No Legal Proceedings or Judgments involving Sale Party: no awards, decrees, executions,
judgments, decisions or orders are outstanding against, and no Legal Proceedings are pending or, to the knowledge of such Sale
Party, threatened against or affecting such Sale Party and/or any of the assets or property of such Sale Party which could: (i)
impair, invalidate, nullify, prevent, prohibit or restrain, in whole or in part, the Transactions; (ii) affect the ability of such
Sale Party to enter into those of the Transaction Documents to which such Sale Party is a party and to observe and perform each
and all of such Sale Party’s obligations arising thereunder; or (iii) if such Sale Party is a Seller, cause any Encumbrances
to attach to, or divest or impair title to, any of the ▇▇▇▇▇▇▇ Holdco Shares owned (or to be owned at the Closing Time) by such
Sale Party; |
| (d) | No Violation of Laws or Contracts by Sale Party: the entering into, execution and delivery
by such Sale Party of those Transaction Documents to which such Sale Party is a party and the observance and performance by such
Sale Party of all of the covenants, terms and provisions thereof required to be observed and performed by such Sale Party do not:
(i) constitute a violation or breach of, or a default under (or would, with the passage of time or the giving of notice or both,
constitute a violation or breach of, or a default under) any Contract to which such Sale Party is a party (or by which such Sale
Party is bound), any Laws applicable to such Sale Party or, if applicable, the Constituent Documents of such Sale Party; (ii) require
the obtainment of any permits, licenses, consents, orders or other authorizations, or the making of any filings or the giving of
any notices, pursuant to any Contract to which such Sale Party is a party (or by which such Sale Party is bound), pursuant to any
Laws applicable to such Sale Party, from any Governmental Authority to which such Sale Party is subject or, if applicable, pursuant
to the Constituent Documents of such Sale Party other than those which have been obtained, made or given by such Sale Party prior
to the Closing Date; (iii) give rise to any termination rights under any Contract to which such Sale Party is a party (or by which
such Sale Party is bound); or (iv) if such Sale Party is a Seller, result in the imposition of any Encumbrances upon any of the
issued and outstanding ▇▇▇▇▇▇▇ Holdco Shares owned (or to be owned at the Closing Time) by such Sale Party; |
| (e) | Shareholders’/Owners’ Agreements
or Voting Trust Agreements involving Sale Party: such Sale Party is not a party to, and, if such Sale Party is
a Seller, none of the Purchased Shares being sold by such Sale Party is subject to, any shareholders’ or owners’ agreements
(or other like Contracts) or voting trust agreements (or other like Contracts) pertaining to the issuance, sale, transfer or voting
of ownership interests, or involving the governance or management, of a Purchased Entity; |
| (f) | No Bankruptcy Event by Sale Party:
such Sale Party has not committed, and such Sale Party is not subject to, a Bankruptcy Event that is continuing or outstanding
or that has not been cured; |
| (g) | Residency of Sale Party: if such Sale Party is a Seller, such Sale Party is not a non-resident
of Canada for the purposes of Section 116 of the ITA; |
| (h) | Ownership of ▇▇▇▇▇▇▇ Holdco Shares and
Power to Sell: Jayset Capital owns, beneficially and of record and free and clear of any and all Encumbrances, as of the date
hereof, a total of 1001 ▇▇▇▇▇▇▇ Holdco Common Shares and there are no ▇▇▇▇▇▇▇ Holdco Preferred Shares issued and outstanding as
of the date hereof. Immediately prior to the Closing Time, if such Sale Party is a Seller, such Sale Parties will own in the aggregate,
beneficially and of record, and free and clear of any and all Encumbrances, all of the issued and outstanding Purchased Shares,
and such Sale Parties will have the legal right to sell, transfer and assign to FirstService all of the Purchased Shares which
are being sold by such Sale Parties pursuant to Section 2.2 and, upon the completion of such sale, FirstService shall acquire legal
title to all of the Purchased Shares so sold by such Sale Parties to FirstService free and clear of any and all Encumbrances (other
than any Encumbrances granted thereon by FirstService); |
| (i) | No Rights to Purchase Purchased Shares: if such Sale Party is a Seller, except
for FirstService’s right to purchase from such Sale Party the
Purchased Shares which are being sold by such
Sale Party pursuant to Section 2.2, there do not exist any options, warrants, rights of first refusal, pre-emptive rights, subscription
rights or any other rights of any kind, actual, contingent or executory, for the purchase, sale or transfer of any of the ▇▇▇▇▇▇▇
Holdco Shares which are owned (or to be owned at the Closing Time) by such Sale Party; and |
| (j) | Relating to the Subordinate Voting Shares: such Sale Party: (i) understands that the Subordinate
Voting Shares to be issued pursuant to Section 2.1 and subsection 3.3(b) have not been and will not be registered under the United
States Securities Act of 1933, as amended, or any applicable state securities laws; (ii) has had access to such information
concerning FirstService and its Subsidiaries as it has considered necessary in connection with its decision to acquire (directly
or indirectly) the Subordinate Voting Shares to be issued pursuant to this Agreement; (iii) has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and risks of its investment in the Subordinate Voting
Shares and is able to bear the economic risks of such investment; and (iv) if a Seller, is acquiring such Subordinate Voting Shares
as provided for herein for its own account and not with a view to any resale, distribution or other disposition of the Subordinate
Voting Shares in violation of applicable Laws. |
4.2
Representations and Warranties in Respect
of the Purchased Entities. The Sale Parties jointly and
severally represent and warrant to FirstService as of the Agreement Date as follows:
| (a) | Purchased Entity Information: |
| (i) | ▇▇▇▇▇▇▇ Holdco is a corporation duly organized, validly existing and in good standing under the
Laws of the Province of Ontario, and: (A) for tax purposes, the date of its fiscal year-end is December 31; (B) ▇▇▇ ▇. ▇▇▇▇▇▇▇
is its sole director; (C) the following individuals are all of its officers, each holding the position(s) designated in parenthesis
next to such individual’s name: ▇▇▇ ▇. ▇▇▇▇▇▇▇ (Chairman and Chief Executive Officer), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Vice-President),
and ▇▇▇▇▇▇▇▇ ▇▇ (Vice-President, Finance); and (D) its authorized and issued capital as at the date hereof is as follows: an unlimited
number of ▇▇▇▇▇▇▇ Holdco Common Shares and an unlimited number of ▇▇▇▇▇▇▇ Holdco Preferred Shares authorized, with a total of 1001
▇▇▇▇▇▇▇ Holdco Common Share issued and outstanding as of the date hereof, which is owned by Jayset Capital as of the date hereof; |
| (ii) | Jayset Mgt is a corporation duly organized, validly existing and in good standing under the Laws
of the Province of Ontario, and: (A) for tax purposes, the date of its fiscal year-end is December 31; (B) the following individuals
are all of its directors: ▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇; (C) the following individuals are all of its officers, each holding
the position(s) designated in parenthesis next to such individual’s name: ▇▇▇ ▇. ▇▇▇▇▇▇▇ (President and Chief Executive Officer),
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Vice President), ▇▇▇▇▇▇▇▇ ▇▇ (Vice President, Finance), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (Vice President) and ▇▇▇▇▇ ▇▇▇▇▇▇ (Secretary);
and (D) its authorized and issued capital as at the date hereof is as follows: an unlimited number of common shares and an unlimited
number of Class A special shares authorized, with a total of 1,001 common shares and 2,675,690 Class A special shares issued and
outstanding as of the date hereof, all of which are owned by ▇▇▇▇▇▇▇ Holdco as of the date hereof; and |
| (iii) | ▇▇▇▇▇▇▇ Subco is a corporation duly organized, validly existing and in good standing under the
Laws of the Province of Ontario, and: (A) for tax purposes, the date of its fiscal year-end is December 31; (B) ▇▇▇ ▇. ▇▇▇▇▇▇▇
is its sole director; (C) the following individuals are all of its officers, each holding the position(s) designated in parenthesis
next to such individual’s name: ▇▇▇ ▇. ▇▇▇▇▇▇▇ (Chairman and Chief Executive Officer), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Vice-President),
and ▇▇▇▇▇▇▇▇ ▇▇ (Vice-President, Finance); and (D) its authorized and issued capital as at the date hereof is as follows: an unlimited
number of common shares authorized, with a total of one (1) common share issued and outstanding as of the date hereof, which is
owned by ▇▇▇▇▇▇▇ Holdco as of the date hereof; |
| (b) | Purchased Subsidiaries
and Other Ownership Interests of Purchased Entity: ▇▇▇▇▇▇▇ Holdco does not have, and has never had, any Subsidiaries other
than the Purchased Subsidiaries, and each Purchased Entity does not own any shares, partnership units, membership interests, options,
securities, warrants, conversion privileges or other rights or interests of any kind (whether actual, executory, contingent, pre-emptive
or otherwise) in the capital or ownership of any Person other than a Person which is a Purchased Subsidiary; |
| (c) | Capitalization: concerning a Purchased Entity: as of the date hereof, (i) other than the
ownership interests described in or pursuant to paragraphs 4.2(a)(i)(D), 4.2(a)(ii)(D) and 4.2(a)(iii)(D) as comprising its authorized
and issued capital, there are no ownership interests of such Purchased Entity that are issued, reserved for issuance or outstanding;
(ii) all of the issued and outstanding ownership interests of such Purchased Entity were validly issued in compliance with the
requirements of applicable Laws, are fully paid and non-assessable and are free of pre-emptive rights; (iii) it is not subject
to any Options and Re-Purchase Obligations; and (iv) it has no outstanding Contracts providing for any securities/ownership appreciation
rights, phantom equity or similar equity/ownership-based rights, agreements, arrangements or commitments based upon the book value,
income or any other attribute of such Purchased Entity; |
(d)
Authority of Jayset Mgt to
Execute Transaction Documents: Jayset Mgt has the necessary
corporate and/or other power, authority and capacity as is required by all Laws applicable to it, its Constituent Documents
and otherwise to enable it to enter into, execute and deliver all those
Transaction Documents to which it is a party and to observe and perform the terms, conditions and provisions thereof which are
required to be observed and performed by it (and Jayset Mgt has duly authorized the execution and delivery of, and has executed
and delivered, each of the Transaction Documents to which it is a party),
and such entering into, execution, delivery, observance and performance has been validly authorized by all necessary corporate
and other required action and does not:
| (i) | constitute a violation or breach of, or
a default under (or would, with the passage of time or the giving of notice or both, constitute a violation or breach of, or a
default under): (A) the Constituent Documents of Jayset Mgt; (B)
any Contract to which Jayset Mgt is a party (or by which Jayset Mgt is bound); or (C) any Laws applicable to Jayset Mgt; |
| (ii) | require the obtainment of any permits,
licenses, consents, orders or other authorizations, or the making of any filings or the giving of any notices, pursuant to any
Contract to which Jayset Mgt is a party (or by which Jayset Mgt is bound), pursuant to any Laws applicable to Jayset Mgt, from
any Governmental Authorities to which Jayset Mgt is subject or pursuant to the Constituent Documents of Jayset
Mgt, other than those which have been obtained, made or given by Jayset
Mgt prior to the Closing Date; or |
| (iii) | result in the imposition of any Encumbrances
upon any of the assets or property of Jayset Mgt or give
rise to any Liabilities on the part of Jayset Mgt; |
| (e) | Enforceability of Transaction Documents
on Jayset Mgt: subject to limitations regarding
enforcement under Laws affecting creditors’ rights generally (including bankruptcy, insolvency, moratorium, reorganization
and other similar Laws) and to the extent that equitable remedies such as specific performance and injunction are in the discretion
of the court from which sought, each of the Transaction Documents to which Jayset Mgt is a party, once executed and delivered by
it, shall constitute legal, valid and binding obligations of Jayset Mgt enforceable against Jayset Mgt in accordance with the terms
thereof (assuming the due authorization, execution and delivery thereof by the other Parties); |
| (f) | No Bankruptcy Event by Purchased
Entity: each Purchased Entity has not committed, and each such
Purchased Entity is not subject to, a Bankruptcy Event that is continuing or outstanding or that has not been cured; |
| (g) | No Legal Proceedings: no
awards, decrees, executions, judgments, decisions or orders are outstanding against, and no Legal Proceedings are pending or, to
the knowledge of the Sale Parties, threatened against or affecting a Purchased Entity or any of the assets or property of a Purchased
Entity; |
| (h) | Authority of Jayset Mgt
to Carry on Business and Other Matters: Jayset Mgt: |
| (i) | is qualified to do business, and it has all power, authority and capacity required by applicable
Laws to enable it to conduct its business and affairs, in each jurisdiction where such business and affairs are conducted and to
own, lease, occupy, use and operate all of the assets and property owned, leased, occupied, used and operated by it, and it is
licensed or qualified with respect to the conduct of its business if and to the extent required in each jurisdiction in which it
conducts business. The business and affairs presently being carried on by Jayset Mgt consists solely of providing the services
required of Jayset Mgt (through ▇▇▇) to FirstService pursuant to the terms of the MSA, and the doing of all acts and things incidental
or ancillary thereto, and Jayset Mgt does not carry on any other business activities; and |
| (ii) | has previously conducted, and is conducting, its business and affairs in compliance, in all material
respects, with Laws applicable to it in all jurisdictions to which it is subject and in each jurisdiction in which its assets or
property are located, and no notifications have been received by such Purchased Entity stating or alleging that such business and
affairs are not being so conducted. |
Since the date
of its formation, the sole use, business and function of: (A) ▇▇▇▇▇▇▇ Holdco has been the holding, directly or indirectly, of the
issued and outstanding shares of Jayset Mgt and ▇▇▇▇▇▇▇ Subco and to participate in the Reorganization. ▇▇▇▇▇▇▇ Holdco has not
been used for any other purpose, engaged in any other activities or employed any Persons; and (B) ▇▇▇▇▇▇▇ Subco has been to participate
in the Reorganization. ▇▇▇▇▇▇▇ Subco has not been used for any other purpose, engaged in any other activities or employed any Persons;
| (i) | Shareholders’/Owners’ Agreements
or Voting Trust Agreements: there are not in effect any shareholders’ or owners’ agreements (or other like
Contracts) or voting trust agreements (or other like Contracts) pertaining to the issuance, sale, transfer or voting of ownership
interests, or involving the governance or management, of a Purchased Entity; |
| (j) | Minute Books and Business Records:
the minute books (or other like books) and other corporate and business records of a Purchased Entity have been maintained in compliance,
in all material respects, with applicable Laws and, other than as may be provided for herein, there are no filings or applications
outstanding or proceedings underway in relation to a Purchased Entity which could alter its Constituent
Documents; |
| (k) | Financial Records: the books
of account and financial records of each Purchased Entity have been kept and maintained in compliance, in all material respects,
with applicable Laws; |
| (l) | Financial Statements: a true
and complete copy of each of the Financial Statements (Annual) and the Financial Statements (Interim) have been provided to
FirstService, and such financial statements: (i) are each true and correct in all material respects and have been prepared from
the books of account and financial records of Jayset Mgt; (ii) have each been prepared in accordance with ASPE and, in each case,
on a basis consistent with those of preceding fiscal periods and the requirements of applicable Governmental Authorities and applicable
Laws, and present fairly, in all material respects, the assets, liabilities and financial condition of Jayset Mgt, as at the respective
dates thereof; |
| (m) | No Owned or Leased Real Property: no Purchased Entity owns or possesses, beneficially or
of record, any real property or any ownership, leasehold or other interest of any nature or kind in any real property, and no Purchased
Entity is a party (or otherwise subject) to any Contracts, options or other rights or obligations to acquire any real property
or any ownership, leasehold or other interest of any kind in any real property; |
| (n) | Contracts Generally: other than
(i) the MSA and the Transaction Documents to which a Purchased Entity is a party and (ii) any Contracts entered into in
connection with the Reorganization, no Purchased Entity is
a party to or otherwise bound by or subject to any Contract. Other than as contemplated herein, none of the amounts owing
(or which may be contingently owing) to Jayset Mgt under the MSA have been assigned, transferred or otherwise conveyed to any Person; |
| (o) | Guarantees: a Purchased Entity
has not, by Contract or otherwise, guaranteed or given security for, or agreed to guarantee or give security for, the Liabilities
of any Person, and there are no existing obligations pursuant to which a Purchased Entity is, actually or contingently, directly
or indirectly, responsible for all or any part of the Liabilities of any Person; |
| (p) | Assets and Liabilities of Purchased
Entities: other than as contemplated herein, on Closing the Purchased Entities will not have any assets or property, and will
not be subject to any Liabilities that have not been accounted for in an adjustment to the Purchase Price; |
| (q) | No Employees, Independent Contractors
and Employee Benefit Plans: no Purchased Entity
has, or has ever had any: (i) employees or independent contractors other than ▇▇▇ ▇. ▇▇▇▇▇▇▇; or (ii) Employee Benefit Plans; |
| (r) | Intellectual Properties:
other than legal names, no Purchased Entity has, and has ever had any trademarks, service marks, trade names, business names, assumed
names, fictitious names, patents, copyrights, designs and other intellectual property and property rights; |
(s)
Payment and Collection of Taxes:
| (i) | except for those Taxes being contested in good faith (the amounts for which are reserved for in
the most recent Financial Statements (Annual) or in the most recent Financial Statements (Interim)), each Purchased Entity has
paid, within the prescribed time limits, to all Governmental Authorities all Taxes which are due and payable to such Governmental
Authorities in those jurisdictions where such Purchased Entity is subject to pay any Taxes by applicable Laws, and, in the case
of any Taxes which are not payable but which will become payable after the Closing Date in respect of a period which commenced
prior to the Closing Date (other than as may arise as consequence of the completion of the Reorganization), appropriate accruals
therefor have been made in its books and records, the most recent Financial Statements (Annual) or the most recent Financial Statements
(Interim), as applicable, for that portion of such period ending immediately prior to the Closing Date; and |
| (ii) | each Purchased Entity has duly and timely withheld and collected all Taxes required by applicable
Laws to be withheld or collected by it and has duly and timely remitted all of the Taxes so withheld and collected to the appropriate
Governmental Authority; |
| (t) | Tax Filings: each Purchased Entity has prepared and filed in compliance with all applicable
Laws within the prescribed time limits all Tax Returns required to have been filed by it at any time on or prior to the Closing
Date in respect of all of the Taxes and other items referred to in subsection 4.2(s), and there are not outstanding any Legal
Proceedings or claims relating to any such Tax or any such Tax Return and, except to the extent reserved (in conformity with ASPE
consistently applied) against in the Financial Statements (Interim) or as may arise as consequence of the completion of the Reorganization,
no further reserves are required to be established in respect of any of such Taxes and other items. No written claim has been received
by a Purchased Entity from any Governmental Authority in a jurisdiction where such Purchased Entity does not file a Tax Return
that such Purchased Entity is or may be subject to taxation by that jurisdiction; |
| (i) | each Purchased Entity: |
| (A) | has not received any notice (including any reassessments) that it is being audited by, or otherwise
is subject to an administrative or judicial proceeding commenced by, any Governmental Authority which audit or other proceeding
has not yet been completed; |
| (B) | does not have any income or gain that is required to be included in taxable income for a Post-Closing
Period and arises from events (including any change in method of accounting, closing agreement, inter-company transaction, debt
forgiveness, installment sale or receipt of a pre-paid amount) or transactions occurring in a Pre-Closing Tax Period; |
| (C) | does not have any unpaid amounts that may be required to be included in such Purchased Entity’s
taxable income for any Post-Closing Period under section 78 of the ITA, or a corresponding provincial/territorial provision; |
| (D) | has not acquired property from a Person in circumstances that would result in such Purchased Entity
becoming liable to pay any Taxes of such Person under subsection 160(1) of the ITA or a corresponding provincial/territorial provision; |
| (E) | does not have a lien for Taxes upon any of its assets or property except liens for current Taxes
not yet due and payable; |
| (F) | has not granted any presently operative waiver of any statute of limitations with respect to, or
any extension of a period for the assessment of, any Taxes; |
| (G) | has not granted to any Person a power of attorney with respect to Taxes pertaining to such Purchased
Entity, which power of attorney will be in effect as at or following the Closing Time; |
| (H) | has not availed itself of any Tax amnesty or similar relief with respect to itself in any Taxing
jurisdiction; |
| (I) | is not a party to or bound by any closing agreement, offer in compromise, Tax ruling or similar
agreement, offer or ruling with any Governmental Authority that may affect the Liability of such Purchased Entity for Taxes for
any taxable period ending after the Closing Date; |
| (J) | is not a party to any agreements relating to allocating or sharing of Taxes. No Purchased Entity
is liable for the Taxes of any other Person, and no Purchased Entity is under any contractual obligation to indemnify any Person
with respect to any amount of such Person’s Taxes and is not a party to any agreement providing for payments by such Purchased
Entity with respect to any amount of Taxes of any other Person; and |
| (K) | is compliant with the terms and conditions of any Tax exemptions, Tax holiday or other Tax reduction
agreement, approval or order of any Governmental Authority, and the consummation of the Transactions will not have any effect on
the validity and effectiveness of any such Tax exemptions, Tax holiday or other Tax reduction agreement, approval or order; |
| (ii) | there are no circumstances existing at or prior to the Closing Time which could, in themselves,
result in the application of any of Sections 80 to 80.03 of the ITA or any equivalent provincial/territorial provisions to a Purchased
Entity; no Purchased Entity has made (and will not, at or prior to the Closing Time, make) any election pursuant to Section 80.04
of the ITA or any equivalent provincial/territorial provision in which it is an eligible transferee; no Purchased Entity has filed,
nor will it file, an agreement pursuant to Section 191.3 of the ITA or any equivalent provincial/territorial provision; and no
Purchased Entity has claimed, nor will it claim, any reserve under any of Sections 40(1)(a)(iii) or 20(1)(n) of the ITA or any
equivalent provincial/territorial provision of any amount that could be included in its income for any period ending after the
Closing Date in respect of any such reserve; |
| (iii) | each Purchased Entity is not a non-resident of Canada for the purposes of Section 116 of the ITA; |
| (iv) | all deductions claimed on the Tax Returns of each Purchased Entity or in the Financial Statements
(Annual) and Financial Statement (Interim) are reasonable; |
| (v) | there has not been an acquisition of control, an amalgamation, a liquidation of or involving a
Purchased Entity prior to the Closing Date; |
| (vi) | each Purchased Entity has not paid a capital dividend which, at the time, was in excess of the
then balance in such Purchased Entity’s capital dividend account; and |
| (vii) | no excessive eligible dividend designations have been made by a Purchased Entity; and |
| (v) | Reorganization: (i) the Reorganization will be consummated in compliance with the respective
Constituent Documents of the ▇▇▇▇▇▇▇ Parties and applicable Laws; and (ii) the consummation of the Reorganization will not result
in default or non-compliance under, or in breach of, any term of a Contract to which a ▇▇▇▇▇▇▇ Party is a party or bound which
would have adverse consequences for FirstService or the Purchased Entities, and there exists no state of facts which, after notice
or lapse of time or both, or otherwise, that will constitute a default or non-compliance under, or a breach of, any of such Contract
as a result of the consummation of the Reorganization, which would have adverse consequences for FirstService or the Purchased
Entities. |
Article 5
– REPRESENTATIONS AND WARRANTIES – FirstService
5.1
Representations and Warranties of FirstService.
FirstService represents and warrants to the Sale Parties as of the Agreement Date as follows:
| (a) | Subsistence of FirstService:
FirstService is a corporation duly organized, validly existing and in good standing under the Laws of the Province of Ontario,
and is a reporting issuer in good standing in each of the provinces of Canada; |
| (b) | Enforceability of Transaction Documents
on FirstService: subject to limitations regarding
enforcement under Laws affecting creditors’ rights generally (including bankruptcy, insolvency, moratorium, reorganization
and other similar Laws) and to the extent that equitable remedies such as specific performance and injunction are in the discretion
of the court from which sought: (i) this Agreement constitutes a legal, valid and binding obligation of FirstService enforceable
against it in accordance with the terms hereof (assuming the due authorization, execution and delivery thereof by the other Parties);
and (ii) each of the other Transaction Documents to which FirstService is a party, once executed and delivered by FirstService,
shall constitute legal, valid and binding obligations of FirstService enforceable against FirstService in accordance with the terms
thereof (assuming the due authorization, execution and delivery thereof by all of the other Parties); |
| (c) | Authority of FirstService
to Execute Transaction Documents: FirstService has
all necessary corporate and other power, authority and capacity as is required by all Laws applicable to it and otherwise to enable
it to enter into, execute and deliver all those Transaction Documents to which it is a party and to observe and perform the terms,
conditions and provisions thereof which are required to be observed and performed by it (and FirstService has duly authorized
the execution and delivery of, and has executed and delivered, each of the Transaction Documents to which it is a party)
and such entering into, execution, delivery, observance and performance has been validly authorized by necessary corporate and
other required action and does not: (i) constitute a violation or breach of, or a default under (or would, with the passage of
time or the giving of notice or both, constitute a violation or breach of, or a default under), its Constituent Documents,
any Contract to which it is a party or any Laws applicable to it; or (ii) require the obtainment of any permits, licenses, consents,
orders or other authorizations, or the making of any filings or the giving of any notices, pursuant to any Contract to which it
is a party (or by which it is bound), pursuant to any Laws applicable to it, from any Governmental Authorities to which it is subject
or pursuant to its Constituent Documents other than those which have been obtained, made or given by FirstService prior
to the Closing Date; |
(d)
No Bankruptcy Event by FirstService:
FirstService has not committed, and FirstService is not subject to, a Bankruptcy Event that is continuing or outstanding or that
has not been cured;
| (e) | No Legal Proceedings: no
awards, decrees, executions, judgments, decisions or orders are outstanding against, and no Legal Proceedings are pending or, to
the knowledge of FirstService, threatened against or affecting FirstService or any of the assets or property of FirstService that
could or would reasonably be expected to: (i) impair, invalidate, nullify, prevent, prohibit or restrain, in whole or in part,
the Transactions; or (ii) affect the ability of FirstService to enter into those of the Transaction Documents to which it is a
party and to observe and perform each and all of its obligations thereunder; |
| (f) | Shares of FirstService: FirstService
has: (i) as issued and outstanding capital at the Reference Date, a total of 1,325,694 Multiple Voting Shares and 34,781,653 Subordinate
Voting Shares; and (ii) 1,505,850 Designated FirstService Options, and, as and when the Subordinate Voting Shares contemplated
by Section 2.1 and subsection 3.3(b) are issued, such Subordinate Voting Shares will be fully paid and non-assessable, will be
free and clear of any and all Encumbrances and will be approved for listing on the Toronto Stock Exchange (subject only to satisfaction
of customary listing conditions of the Toronto Stock Exchange). Prior to Closing, FirstService will provide notice of the Transactions
(including the issuance of the Subordinate Voting Shares contemplated by Section 2.1 and subsection 3.3(b)) to the NASDAQ Global
Select Market in accordance with the rules of that exchange; |
| (g) | Financial Capacity: FirstService has the financial capacity to perform all of its obligations
under this Agreement; |
| (h) | Residency: FirstService is not a non-resident of Canada for the purposes of Section 116
of the ITA; |
| (i) | the Compensation Committee, after consultation with outside legal and compensation advisors, has
unanimously recommended that the FirstService Board approve the Transactions and recommend to holders of Subordinate Voting Shares
that they vote in favour of the Transaction Resolution; and |
| (ii) | the FirstService Board, after consultation with outside legal and compensation advisors, has unanimously
(with ▇▇▇ abstaining): (A) determined that the Transactions are in the best interests of FirstService, and (B) resolved to recommend
to the holders of Subordinate Voting Shares that they vote in favour of the Transaction Resolution; and |
| (j) | Tax: FirstService is a taxable Canadian corporation within the meaning of the ITA. |
Article 6
– TAX MATTERS
6.1
Cooperation on Tax Matters. Subject to Section
6.4, each of the Parties shall provide to the others of them all such cooperation, copies and information, as and to the extent
reasonably requested, in connection with each of the following insofar as it relates to a Purchased Entity and a Party’s
interest therein pursuant to this Agreement: (a) the filing of any Tax Return, payment of Taxes or claim for refund of Taxes that
relates to any Pre-Closing Tax Period, any Straddle Period or any Post-Closing Tax Period of such Purchased Entity; (b) calculating
and determining the Liability for the payment of Taxes or a right to a refund of Taxes that relates to any Pre-Closing Tax Period,
any Straddle Period or any Post-Closing Tax Period of such Purchased Entity; and (c) conducting any audit, assessment, examination,
litigation or other proceeding with respect to Taxes attributable to any Pre-Closing Tax Period, any Straddle Period or any Post-Closing
Tax Period of such Purchased Entity. In addition, each Party agrees to cooperate, as and to the extent reasonably requested, in
preparing for and dealing with any Tax audits of, or disputes, contests or proceedings regarding Taxes of a Seller, Henset Capital,
First Service or their respective Affiliates, in each case, to the extent related to the Transactions.
6.2
Preparation of Tax Returns and Payment of Taxes.
| (a) | The Sellers shall, subject to subsection 6.2(d), duly and timely prepare and file, at the expense
of the Sellers, all Tax Returns required to be filed after the Closing Date by or with respect to a Purchased Entity for any Pre-Closing
Tax Period of such Purchased Entity, and, except to the extent otherwise required by applicable Law or herein (including as contemplated
by the Reorganization), all such Tax Returns shall be prepared in a manner consistent with past practices and, on such Tax Returns,
no position shall be taken, election made or method adopted that is inconsistent with positions taken, elections made or methods
used in preparing and filing similar Tax Returns in prior periods or as otherwise provided for herein; provided that a Seller shall
be entitled to claim the maximum of all discretionary and other available deductions, credits, losses and attributes which arose
in respect of a period (or portion thereof) ending on or prior to the Closing Date. The Parties acknowledge that, at the option
of a Seller, an election under subsection 256(9) of the ITA will be made in respect of the taxation year of a Pre-Closing Tax Period
of a Purchased Entity. |
| (b) | FirstService shall, subject to subsection 6.2(d), cause each Purchased Entity to duly and timely
prepare and file, at the expense of such Purchased Entity, all Tax Returns required to be filed by or with respect to such Purchased
Entity for any Straddle Period of such Purchased Entity and, except to the extent otherwise required by applicable Law or herein
(including as contemplated by the Reorganization), all such Tax Returns shall be prepared in a manner consistent with past practices
and, on such Tax Returns, no position shall be taken, election made or method adopted that is inconsistent with positions taken,
elections made or methods used in preparing and filing similar Tax Returns in prior periods or as otherwise provided for herein. |
| (c) | For the purposes of subsection 6.2(d), the Parties responsible to cause the preparation of a Tax
Return referred to in subsection 6.2(a) or 6.2(b) is referred to in subsection 6.2(d) as the “Preparer”
and: (i) if the Preparer is the Sellers, “Reviewer”
as used in subsection 6.2(d) means FirstService; or (ii) if the Preparer is FirstService, “Reviewer”
as used in subsection 6.2(d) means the Sellers (collectively). |
| (d) | The Preparer shall provide or cause to be provided to the Reviewer, at least 15 days (or such
other number of days as shall be mutually agreed to by the Preparer and the Reviewer in writing) prior to the applicable deadline
for the filing of each Tax Return (including extensions) which the Preparer is required to cause to be prepared in accordance with
the preceding provisions of this Section 6.2, as applicable, a copy of such Tax Return, together with all supporting documentation
and work papers, for the Reviewer’s review and comment. The Reviewer shall have the period of ten (10) days (or such other
number of days as shall be mutually agreed to by the Preparer and the Reviewer in writing) following its receipt of such Tax Return
to provide the Preparer with any comments or disputed items related to such Tax Return. The Preparer shall consider such comments
in good faith, and the Preparer and the Reviewer shall attempt in good faith to resolve such disputed items. Upon resolution of
any disputed items, the Preparer shall timely file, or cause to be timely filed, such Tax Return and the Sellers or a Purchased
Entity, as applicable, shall pay all Taxes due with respect to such Tax Return to the extent that such Taxes did not otherwise
reduce the Purchase Price, were not offset by the Closing Cash and were not otherwise paid by a Sale Party in accordance with this
Agreement, and the liability for the payment of such Taxes shall be determined pursuant to such of the provisions of Section 6.3
as are applicable to such Taxes. If the disputed items are not resolved by the Preparer and the Reviewer within 25 days (or such
other number of days as shall be mutually agreed to by the Preparer and the Reviewer in writing) following the Reviewer’s
submission of its disputed items, the then unresolved disputed items shall be submitted to the Selected Accountants (as hereinafter
defined) to resolve such then unresolved disputed items; provided, however, that: (i) if the disputed items are not resolved
by the statutory due date for filing of such Tax Return, the Preparer shall timely file (or cause to be timely filed) the Tax Return
and the Sellers or a Purchased Entity as applicable, shall pay the Taxes due (and, for the avoidance of doubt, the respective liability
of the Sellers and a Purchased Entity for the Taxes so paid shall be determined pursuant to such of the provisions of Section 6.3
as are applicable to such Taxes); (ii) the later resolution of the dispute by the Selected Accountants shall be final, conclusive
and binding on all of the Parties; and (iii) the Preparer and the Reviewer shall, if necessary, file (or cause to be filed)
an amended Tax Return reflecting the final resolution of the disputed items. For
the purposes of this subsection 6.2(d), “Selected Accountants”
means such firm of accountants as shall be mutually agreed to by the Sellers and FirstService, each acting in good
faith, or, if the Sellers and FirstService are unable to mutually agree as to the same within ten (10) Business Days of a written
request in relation to same by one of them to the others, then such firm of
accountants (at its main office in the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇) as selected by lot drawn by a Seller from amongst the names
of four public accounting firms operating the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Area (of which two names will be submitted by FirstService) and two
names will be submitted by the Sellers (collectively)), each of which firms shall be independent relative to all of the Parties
and their respective Affiliates. Any payment of Taxes pursuant to this subsection 6.2(d) shall be considered an adjustment to the
Purchase Price. FirstService acknowledges receipt of the Reorganization Memo and agrees that it shall not dispute any items in
any Tax Returns which are consistent with the tax consequences and methodologies as outlined in the Reorganization Memo (or as
a result of the Reorganization). |
6.3
Allocation and Payment of Liability for Taxes.
| (a) | The Sellers shall be liable for and pay or cause to be paid when due and payable all Taxes imposed
on a Purchased Entity related to any Pre-Closing Tax Period of such Purchased Entity and, with respect to any Straddle Period of
such Purchased Entity, that portion of such Straddle Period up to 12:00:01
a.m. (Toronto, Ontario local time) on the Closing Date (in
each case, including as a result of the Reorganization except to
the extent that such Taxes previously reduced the Purchase Price, were offset by the Closing Cash or were otherwise paid by a Sale
Party in accordance with this Agreement). |
| (b) | Each Purchased Entity shall be liable to
pay or cause to be paid when due and payable all Taxes of such Purchased Entity to
the extent allocable to any Post-Closing Tax Period of such Purchased Entity and,
with respect to any Straddle Period of such Purchased Entity, that
portion of such Straddle Period beginning on or after 12:00:01 a.m. (Toronto, Ontario local time) on
the Closing Date. |
| (c) | For the purposes of subsections 6.3(a)
and 6.3(b), whenever it is necessary to determine the liability for Taxes for a Straddle Period of a Purchased Entity,
the determination of the Taxes of such Purchased Entity for the
portion of the Straddle Period of such Purchased Entity ending on
and including the Closing Date shall be determined by assuming that the Straddle Period consisted of two taxable years or periods,
one which ended at 12:00:00 a.m. (Toronto, Ontario local time) on
the Closing Date and the other which began at 12:00:01 a.m. (Toronto, Ontario local time) on
the Closing Date, and items of income, gain, deduction, loss or credit of such Purchased Entity for
the Straddle Period of such Purchased Entity shall be allocated
between such two taxable years or periods on a “closing of the books basis” by assuming that the books of such
Purchased Entity were closed at 12:00:00 a.m. (Toronto,
Ontario local time) on the Closing Date; provided however that: (i) exemptions,
allowances or deductions that are calculated on an annual basis and depreciation deductions shall be apportioned between such two
taxable years or periods on a daily basis; (ii) the amount of any Taxes of such Purchased Entity that
are not reasonably apportioned based on an interim “closing of the books basis” but rather are applicable to
a period of time shall be apportioned to that portion of such period which is a Pre-Closing Tax Period of such Purchased
Entity by multiplying the amount of such Taxes for the entire period by
a fraction, the numerator of which is equal to the number of days in such period ending on (but excluding) the Closing Date and
the denominator of which is equal to the total number of days in the entire period, and the balance of any such Taxes shall be
apportioned to that portion of such period which is a Post-Closing Tax Period of such Purchased Entity;
and (iii) the Liability and deduction for franchise Taxes based on income or gross receipts shall be determined on the basis of
the period during which such income or gross receipts were earned and without regard to the period for which any privilege to exercise
such franchise is granted. |
6.4
Control of Pre-Closing Tax Period Audits.
| (a) | The Sellers shall control the conduct (including the granting of any extension or waiver of a statute
of limitations) of any audit, assessment or examination regarding any Taxes (a “Pre-Closing Tax Claim”) relating
to periods covered by the Tax Returns referred to in subsection 6.2(a) (whether or not a claim for indemnification has been made),
provided that, a Purchased Entity shall be permitted, at its sole
expense, to participate in any such Pre-Closing Tax Claim. FirstService shall have the right, at its sole expense, to participate
in any of the matters referred to in this subsection 6.4(a) and no final decision on any of such matters may be made by the Sellers
without the prior written consent of FirstService if the relevant matter would, or is reasonably likely to, adversely affect FirstService
or a Purchased Entity for any Post-Closing Tax Period of such Purchased Entity (and, in such case only, FirstService may withhold
its consent in its sole discretion; provided that, FirstService shall not be entitled to withhold its consent if the Sellers shall
then agree in writing to indemnify, defend and hold harmless FirstService and the Purchased Entities of and from all adverse effects
arising from (or attributable to) the decision sought to be made by the Sellers). |
| (b) | Each Purchased Entity shall control the conduct (including the granting of any extension or waiver
of a statute of limitations) of any audit, assessment or examination regarding any Taxes (a “Straddle Tax Claim”)
relating to periods covered by the Tax Returns referred to in subsection 6.2(b) (whether or not a claim for indemnification has
been made), provided that, a Seller shall be permitted, at its sole expense, to participate in any such Straddle Tax Claim and
no final decision on any of such matters may be made by such Purchased Entity without the prior written consent of a Seller if
the relevant matter would, or is reasonably likely to, adversely affect such Seller for any Pre-Closing Tax Period of such Purchased
Entity (and, in such case only, such Seller may withhold its consent in its sole discretion; provided that, a Seller shall not
be entitled to withhold their consent if FirstService shall then agree in writing to indemnify, defend and hold harmless such Seller
of and from all adverse effects arising from (or attributable to) the decision sought to be made by such Purchased Entity). |
| (c) | It is agreed that all costs and expenses (but not actual Liabilities with respect to Taxes) related
to: (i) the Pre-Closing Tax Claims and matters specified in subsection 6.4(a) (excluding, however, all costs of a Purchased Entity’s
or FirstService’s participation therein, which costs shall be paid solely by such Purchased Entity and FirstService, respectively,
without any reimbursement or indemnification therefor by the Sellers) shall be paid in full by the Sellers; and (ii) the Straddle
Tax Claims and matters specified in subsection 6.4(b) (excluding, however, all costs of the Sellers’ participation therein,
which costs shall be paid solely by the Sellers, without any reimbursement
or indemnification therefor by such Purchased Entity or FirstService) shall be paid in full by such Purchased Entity. |
| (d) | If a notice or other communication (any such notice or other communication being referred to in
this Section 6.4 as a “Tax Notice”) is received by a Party of either: (i) a proposed audit, assessment or examination
of a Purchased Entity in respect of any Pre-Closing Tax Period or Straddle Period of such Purchased Entity; or (ii) the assessment
of any Taxes against a Purchased Entity for any Pre-Closing Tax Period or any Straddle Period of such Purchased Entity, in each
case, a true and complete copy of such Tax Notice shall be promptly provided to the other Parties, as applicable, by the Person
who received it. |
6.5
Miscellaneous Tax Matters. FirstService shall
not, and shall not cause an entity to: (i) amend, refile or otherwise modify, and shall cause each Purchased Entity not to amend,
refile or otherwise modify, any Tax Return of such Purchased Entity with respect to any Pre-Closing Tax Period of such Purchased
Entity; and (ii) file any election, make any designation or take any action in respect of any taxation years or portions thereof
ending on or before the Closing, in each case, if such amendment, modification, election or designation would result in an increase
in the amount of the Taxes for which a Seller may be liable under this Agreement, in each case without the prior written consent
of the Sellers, which consent will not be unreasonably withheld or delayed. The Sellers shall not be liable for any Losses (including
Taxes) arising as a result of a breach by FirstService of this Section 6.5.
6.6
Refunds and Tax Benefits.
| (a) | As used in Sections 6.6 and 6.7, “Tax
Refund” means any refund of any Taxes (including any interest thereon)
which a Purchaser Entity becomes entitled to that is received: (i)
by way of an actual payment of monies; or (ii) by way of a credit or an off-set against other Taxes payable for which a
Purchaser Entity is liable pursuant to subsection 6.3(b), in each case,
excluding any such refund or portion thereof (including any
interest thereon) that arises as a result of a carryback of a loss
or other Tax benefit from a Tax period (or portion thereof) beginning on or after the Closing Date. |
| (b) | It is hereby agreed that if a Purchaser
Entity becomes entitled at any time to any Tax Refund in respect of: (i)
any Taxes of a Purchaser Entity attributable to any Pre-Closing
Tax of such Purchaser Entity; and (ii) with respect to any Straddle
Period of such Purchaser Entity, the portion of such Straddle Period
ending at or before 12:00:00 a.m. (Toronto, Ontario local time) on the Closing Date (determined
in a manner consistent with subsection 6.3(c)), then each such Tax Refund shall, except as provided otherwise in subsection 6.6(c),
be solely for the account of the Sellers. Regarding each such Tax Refund: (A) if such Tax Refund is made, in whole or in part,
by way of an actual payment of monies (including by way of cheque or wire transfer) to a Purchaser Entity,
such Purchaser Entity shall pay to the Sellers (or the applicable
Seller), an amount equal to the total amount so received in respect of such Tax Refund (net only of any income Taxes that,
in accordance with applicable Laws, are required to be paid by such Purchaser Entity or its Affiliates on the total amount so received
in respect of such Tax Refund and any reasonable out-of-pocket expenses
borne by such Purchaser Entity or its Affiliates in securing such
Tax Refund); or (B) if such Tax Refund is made, in whole or in part, by the giving of a credit or allowance or in any other manner
whatsoever (other than by way of an actual payment of monies) against any past or future Taxes
payable by or in respect of a Purchaser Entity, such Purchaser
Entity shall pay to the Sellers (or the applicable Seller) that amount
which is equal to the total Tax Refund amount so obtained (net only of any income Taxes that, in accordance with applicable
Laws, are required to be paid by such Purchaser Entity or its Affiliates on such Tax Refund and any reasonable out-of-pocket expenses
borne by such Purchaser Entity or its Affiliates in securing such Tax Refund). |
| (c) | To the extent any Tax Refund is paid to the Sellers
pursuant to subsection 6.6(b) and such Tax Refund (or portion thereof) is subsequently disallowed or required to be returned
to the applicable Governmental Authority, the Sellers (or the applicable
Seller) will promptly repay such Tax Refund (or portion thereof)
so received by them (or it), together with any interest, penalties or other additional amounts imposed by the applicable
Governmental Authority, to the applicable Purchased Entity. |
| (d) | Any payment made pursuant to this Section 6.6 shall be treated by the Parties as an adjustment
to the Purchase Price. |
6.7
Tax Elections.
| (a) | If it is determined that a Purchased Entity made an “excessive eligible dividend designation”,
as defined in Section 89(1) of the ITA, each Seller hereby consents to (or shall cause the recipient of the relevant dividend to
consent to) the making of an election under Section 185.1(2) of the ITA in respect of the full amount thereof, and such election
shall be made by such Purchased Entity (if requested by a Seller) in the manner and within the time prescribed by Sections 185.1(2)
and 185.1(3) of the ITA. |
| (b) | If it is determined that a Purchased Entity has made an election under Section 83(2) of the ITA
in respect of the full amount of any dividend payable by it on shares of any class of its capital stock and the full amount of
such dividend exceeded the amount of its “capital dividend account”, as defined in the ITA, immediately before the
dividend became payable, each Seller hereby consents to (or shall cause the recipient of the relevant dividend to consent to) the
making of an election under Section 184(3) of the ITA in respect of such dividend such elections shall be made by such Purchased
Entity (if requested by a Seller). |
Article 7
– INTERIM PERIOD
7.1
Interim Period Covenants – ▇▇▇▇▇▇▇ Parties. The ▇▇▇▇▇▇▇ Parties jointly and severally agree with FirstService
that, continuously throughout the Interim Period, the ▇▇▇▇▇▇▇ Parties will use their commercially reasonable efforts to ensure
that:
| (a) | Jayset Mgt carries on its business and affairs during the Interim Period in the ordinary course
of business (including continuing to pay, satisfy and discharge its Liabilities in the ordinary course of business); |
| (b) | Jayset Mgt complies, in all material respects, with all applicable Laws and the MSA; and |
| (c) | if any of the representations and warranties of the Sale Parties in this Agreement become untrue
or incorrect during the Interim Period, written notice of such untruth or incorrectness (which notice shall set forth reasonable
particulars of such untruth or incorrectness) will be promptly given to FirstService; |
and, during the Interim
Period, the ▇▇▇▇▇▇▇ Parties shall use their respective commercially reasonable efforts to diligently take, or cause to be taken,
all actions that are necessary, proper or advisable to satisfy or be able to satisfy, on or prior to the Closing Time, the conditions
of Closing on their part to be satisfied in Article 8 and otherwise to consummate and make effective, the Transactions in
accordance with the terms of this Agreement. Without the prior written approval of FirstService (which approval may be withheld
by FirstService in its sole discretion) or except as otherwise expressly contemplated by this Agreement (including in connection
with the Reorganization and Section 7.5) or as required by applicable Law, at any time during the Interim Period, the ▇▇▇▇▇▇▇ Parties
shall not, nor shall a Sale Party permit a Purchased Entity to:
| (d) | amend or otherwise change the Constituent Documents of a Purchased Entity; |
| (e) | split, combine, reclassify or otherwise amend the terms of any of the ownership interests of a
Purchased Entity or issue or authorize the issuance of any other ownership interests in respect of, in lieu of or in substitution
for the ownership interests of a Purchased Entity; |
| (f) | redeem, repurchase or otherwise acquire or offer to redeem, repurchase or acquire any of the ownership
interests of a Purchased Entity; |
| (g) | issue, sell, deliver, transfer, dispose of, create, authorize, pledge or otherwise encumber or
subject to any Encumbrance any of the ownership interests of a Purchased Entity or any securities convertible into, exchangeable
for or exercisable for any such ownership interests, or any rights, warrants or options to acquire, any of such ownership interests,
or any appreciation rights, “phantom” ownership rights, performance units, rights to receive ownership interests
of a Purchased Entity on a deferred basis or other rights linked to the value of the ownership interests of a Purchased Entity,
including pursuant to Contracts, other than as provided for by this Agreement; |
| (h) | hire any employees or independent contractors of a Purchased Entity; |
| (i) | permit a Purchased Entity to acquire or commit to acquire by amalgamation, consolidation, subscription,
acquisition of securities or assets/properties, or otherwise, securities or other ownership interests of any Person or the assets/properties
of any Person, or make any loans, advances or capital contributions to, or other investments in, any other Person, other than to
a Purchased Entity; |
| (j) | incur or assume any indebtedness or other Liability or cause a Purchased Entity to guarantee the
indebtedness or other Liability of another Person, or issue or sell any debt securities or guarantee any debt securities of another
Person; |
| (k) | place or allow the creation of any Encumbrance on any of the equity interests in a Purchased Entity
or assets or properties of a Purchased Entity; |
| (l) | amend, transfer, assign or waive any of its rights or entitlements under the MSA; |
| (m) | make any material change in any method of financial accounting principles or practices, in each
case, except for a change in ASPE or applicable Law enacted or coming into force following the Agreement Date; |
| (n) | (i) settle or compromise any Tax claim, notice, audit report or audit assessment by any Governmental
Authority; (ii) make or change any election in respect of Taxes or adopt or change any accounting method in respect of Taxes that
could adversely affect the Taxes of a Purchased Entity in a Post-Closing Tax Period of such Purchased Entity or, with respect to
any Straddle Period of such Purchased Entity, the portion of such Straddle Period beginning on or after the Closing Date; (iii)
amend any Tax Returns or file claims for Tax refunds; (iv) fail to file any Tax Return in a complete and accurate manner, in all
material respects, when due (after giving effect to any applicable extensions); or (v) enter into any closing agreement or Tax
allocation, sharing or indemnity agreement, surrender any right to claim, or forgo any claim to, a Tax refund, offset or other
reduction in Tax liability or consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment,
in each case, relating to a Purchased Entity; |
| (o) | institute, settle or compromise any Legal Proceedings pending or threatened before any Governmental
Authority made by or against a Purchased Entity or any of its officers and directors in their capacities as such, other than any
Legal Proceeding brought against FirstService arising out of a breach or alleged breach of this Agreement or the MSA by FirstService; |
| (p) | dispose of any assets or properties of a Purchased Entity except in the ordinary course of business; |
| (q) | adopt or enter into a plan of complete or partial liquidation, dissolution, restructuring, recapitalization
or other reorganization with respect to a Seller or a Purchased Entity; |
| (r) | fail to maintain in full force and effect (or renew) any insurance policies covering a Purchased
Entity or its assets or properties, directors and/or officers; or |
| (s) | agree or commit to do any of the foregoing matters in subsections 7.1(d) to 7.1(r). |
7.2
Interim Period Covenants – FirstService. FirstService agrees with the ▇▇▇▇▇▇▇ Parties that, if any representations
and warranties of FirstService in this Agreement become untrue or incorrect during the Interim Period, written notice of such untruth
or incorrectness (which notice shall set forth reasonable particulars of such untruth or incorrectness) will be promptly given
to the ▇▇▇▇▇▇▇ Parties, and, during the Interim Period, FirstService shall use its commercially reasonable efforts to diligently
take, or cause to be taken, all actions that are necessary, proper or advisable to satisfy or be able to satisfy, on or prior to
the Closing Time, the conditions of Closing on its part to be satisfied in Article 8 (including obtaining, if necessary, an
amendment to the Credit Agreement sufficient to enable FirstService, together with its cash on hand, to satisfy the cash portion
of the Purchase Price) and otherwise to consummate and make effective, the Transactions in accordance with the terms of this Agreement.
7.3
Access and Investigation. During the Interim Period, the ▇▇▇▇▇▇▇ Parties will: (a) upon reasonable notice
and during regular business hours afford FirstService and its representatives (collectively, the “FirstService Representatives”)
reasonable access to each Purchaser Entity’s Contracts, books and records and other documents and data; (b) furnish the FirstService
Representatives with copies of all such Contracts, books and records and other existing documents and data as the FirstService
Representatives may reasonably request; and (c) furnish the FirstService Representatives with such additional financial and other
data and information concerning Purchaser Entities as the FirstService Representatives may reasonably request.
7.4
Required Notices and Approvals. As promptly as practicable after the Agreement Date, each of the Parties will,
and will cause their respective Affiliates to, make all filings with, send all notices to and/or obtain all applicable consents
or approvals of Governmental Authorities and third parties (including stock exchanges) required to be made, sent or obtained by
them in order to consummate the Transactions. During the Interim Period, each Party will cooperate with others of them in seeking/giving
such filings, notices, consents and approvals as may be necessary and reasonably requested by such Party. The Parties will, to
the extent reasonably practicable, consult each other on, in each case, subject to applicable Laws relating to the exchange of
information, all the information relating to the Parties, which appears in any filing made with, or written materials submitted
to, any third party or any Governmental Authorities in connection with the Transactions. In exercising the foregoing right, each
of the Parties will act reasonably and as promptly as reasonably practicable.
7.5
▇▇▇▇▇▇▇ Parties Reorganization.
| (a) | FirstService agrees that notwithstanding any other provision of this Agreement, during the Interim
Period, the ▇▇▇▇▇▇▇ Parties and their Affiliate(s) may effect the Reorganization (and in connection therewith, may determine the
amount of any elections made pursuant to subsection 85(1) of the ITA). FirstService acknowledges and agrees that the ▇▇▇▇▇▇▇ Parties
and their Affiliate(s) may amend the steps contemplated in the Reorganization Memo provided that: (i) FirstService provides its
written consent to such amendments, which consent shall not be unreasonably withheld or delayed; and (ii) such amendments do not:
(A) materially impede, delay or prevent consummation of the Transactions, or (B) materially prejudice or have material adverse
consequences for FirstService or a Purchased Entity or their direct or indirect equity holders following Closing (taking into account
any adjustment to the Purchase Price contemplated in Section 3.3 and the Sale Parties indemnification obligations in Section 11.1(c)).
The ▇▇▇▇▇▇▇ Parties agree that each Seller who has acquired or will acquire ▇▇▇▇▇▇▇ Holdco Shares pursuant to the Reorganization,
will not be a non-resident of Canada for the purposes of Section 116 of the ITA, or in the case of a partnership will be a “Canadian
partnership” as defined in the ITA. |
| (b) | The Reorganization (to the extent carried out in compliance with this Section 7.5) shall not be
taken into account or considered in determining whether a representation, warranty or covenant of a Sale Party hereunder has been
breached or for purposes of assessing whether a condition to closing in Article 8 has been satisfied. |
| (c) | The ▇▇▇▇▇▇▇ Parties will provide written notice to FirstService of any change to the Reorganization
at least ten (10) days prior to the expected Closing Date. Each Party will, upon the satisfaction or, where not prohibited, the
waiver by it, of all conditions for its benefit in Article 8 (other than the conditions that by their nature can only be satisfied
at Closing), promptly confirm the same in writing to the other Parties, and upon each Party having so confirmed and having confirmed
that it is prepared, and able, to promptly and without further condition and delay proceed to effect the Closing, the ▇▇▇▇▇▇▇ Parties
will complete the Reorganization. FirstService shall have the opportunity to review and provide comments on the documentation giving
effect to the Reorganization, and the Reorganization shall be implemented to the satisfaction of FirstService, acting reasonably. |
| (d) | For greater certainty, FirstService acknowledges that as part of the Reorganization the total number
of Purchased Shares, and the owners thereof, may change, provided that at Closing: (i) FirstService acquires, directly or indirectly,
not less than all of the outstanding shares in the capital of Jayset Mgt for the aggregate Purchase Price, and that references
in this Agreement to the Sellers shall include, as a result and as applicable, any applicable Affiliate thereof who acquires any
shares in the capital of ▇▇▇▇▇▇▇ Holdco pursuant to the Reorganization and sells, transfers and assigns such shares to FirstService
on Closing; and (ii) any Person who acquires shares in the capital of ▇▇▇▇▇▇▇ Holdco pursuant to the Reorganization executes a
joinder agreement to this Agreement pursuant to which such Person agrees to be jointly and severally liable with the other Sellers
as a Seller under this Agreement. |
7.6
Resolution of Holder of Multiple Voting Shares. Prior to the holding of the Meeting, Henset Capital, as the
owner of all of the issued and outstanding Multiple Voting Shares, shall deliver a written resolution (which shall be conditional
on the completion of the Transactions (including the completion of the conversion of the Multiple Voting Shares into Subordinate
Voting Shares under Section 2.1)) to FirstService, as the owner of such Multiple Voting Shares, authorizing and approving of amendments
to the Constituent Documents of FirstService eliminating the Multiple Voting Shares and preferred shares of FirstService as authorized
capital of FirstService and re-designating the Subordinate Voting Shares as common shares and amending the terms thereof such that
the rights, privileges, restrictions and conditions attached thereto are that of basic common shares.
7.7
Closing Cash. At least five Business Day prior to the Closing Date, the Sale Parties shall advise FirstService
in writing of the amount of Closing Cash. The Closing Cash shall remain an asset of the applicable Purchased Entities at the Closing
Time.
Article 8
– CLOSING CONDITIONS AND DELIVERIES
8.1
Closing Conditions and Deliveries in Favour of All Parties.
The respective obligations of each Party to this Agreement to consummate the Transactions are subject to the satisfaction and/or
fulfillment of each of the following conditions at or prior to the Closing Time, any of which may be waived (to the extent permitted
by applicable Law) in writing by all Parties hereto in their sole discretion or deemed waived if all Parties hereto complete the
Transactions without a written waiver and such condition is not satisfied:
| (a) | no restraining order, preliminary or permanent injunction, cease trade order or other order issued
by any Governmental Authority or other legal or regulatory restraint or prohibition preventing the consummation of the Transactions
shall be in effect, nor shall there be any statute, rule, regulation, applicable Law or order enacted, entered, promulgated enforced
or deemed applicable to the Transactions which prohibits, restrains or makes the consummation of the Transactions illegal; |
| (b) | the Transaction Resolution shall have been approved by the requisite number of votes cast by the
holders of Subordinate Voting Shares at the Meeting as contemplated in Section 2.4; |
| (c) | an amendment to the credit agreement dated as of June 1, 2015 (as the same has been amended or
supplemented from time to time to the Agreement Date, the “Credit Agreement”) among, inter alia, FirstService,
as a Borrower (as such term is defined in the Credit Agreement), the other Borrowers, the Guarantors (as such term is defined in
the Credit Agreement), The Toronto-Dominion Bank, as administration agent, collateral agent and security trustee and the financial
institutions listed therein as lenders, shall have been entered into by FirstService increasing the Total Commitments (as such
term is defined in the Credit Agreement) available to FirstService and/or its Affiliates thereunder by an aggregate principal amount
of US$100,000,000; and |
| (d) | receipt of all approvals and consents of the following Persons which are required to be obtained,
or notices which are required to be given to the following Persons, to permit the Parties to consummate the matters provided for
in, or contemplated by, the Transaction Documents: (i) the Toronto Stock Exchange (subject only to satisfaction of customary listing
conditions); (ii) the NASDAQ Global Select Market; (iii) such lenders as are required under the Credit Agreement; and (iv) such
Persons as are required under the amended and restated note and guarantee agreement dated as of June 1, 2015, as amended, governing
the senior secured notes of FirstService. |
8.2
Closing Conditions and Deliveries in Favour of FirstService.
The obligations of FirstService to consummate the Transactions are subject to the satisfaction and/or fulfillment of each of the
following conditions at or prior to the Closing Time, any of which may be waived (to the extent permitted by applicable Law) in
writing by FirstService in its sole discretion or deemed waived if FirstService completes the Transactions without a written waiver
and such condition is not satisfied:
| (a) | in respect of the representations and warranties of the Sale Parties contained in this Agreement: |
| (i) | the ▇▇▇▇▇▇▇ Fundamental Representations shall be true, correct and complete as of the Closing Date
as though made on and as of the Closing Date; and |
| (ii) | all representations and warranties of the Sale Parties (other than the ▇▇▇▇▇▇▇ Fundamental Representations)
shall be true, correct and complete, in all material respects, as of the Closing Date (except for any such representations and
warranties that already have a materiality qualifier, which shall be true, correct and complete in all respects) as though made
on and as of the Closing Date; in each case,
other than such representations and warranties that are made as of another specified date, which representations and warranties
shall be true, correct and complete as of such other date, and FirstService shall have received from the Sale Parties a certificate
to such effect; |
| (b) | the ▇▇▇▇▇▇▇ Parties shall have performed or complied with, in all material respects, the obligations
and covenants required to be performed or complied with by them, respectively, under this Agreement at or prior to the Closing
Time, and FirstService shall have received from the ▇▇▇▇▇▇▇ Parties a certificate to such effect; |
| (c) | FirstService shall have received the certificates representing all of the Purchased Shares registered
in the name of the Sellers and marked “cancelled”, together with a share transfer power of attorney executed
by each Seller and dated the Closing Date providing for the assignment and transfer to FirstService of those of the Purchased Shares
which are being sold by such Seller to FirstService pursuant to Section 2.2; |
| (d) | FirstService shall have received certificates dated the Closing Date representing the Purchased
Shares being acquired by FirstService pursuant to Section 2.2, registered in the name of FirstService; |
| (e) | FirstService shall have received a copy of resolutions of the directors of each ▇▇▇▇▇▇▇ Party which
is an entity, certified by an officer of such ▇▇▇▇▇▇▇ Party: (i) authorizing such ▇▇▇▇▇▇▇ Party to execute and deliver this Agreement
together with all those Transaction Documents which are required to be executed and delivered by such ▇▇▇▇▇▇▇ Party in connection
with the completion of the Transactions; (ii) in the case of Jayset Mgt only, authorizing and approving the MSA Termination Agreement
(as such term is defined in subsection 8.2(h)); and (iii) authorizing and approving the Transactions; |
| (f) | FirstService shall have received each of the following dated the Closing Date: (i) a Certificate
of Status (or the equivalent) for each Purchased Entity and each Seller from its jurisdiction of incorporation or formation; (ii)
a copy of the Constituent Documents of each Purchased Entity and each Seller certified by an officer of such Person; and (iii)
a certificate of incumbency for each Purchased Entity and each Seller (together with specimen signatures of those individuals actually
signing this Agreement); |
| (g) | FirstService shall have received executed resignations and releases of all the directors and officers
of each Purchased Entity, effective at the Closing Date; and |
| (h) | FirstService shall have received all documents required to be executed and delivered by the ▇▇▇▇▇▇▇
Parties or their Affiliates, respectively, in order to give effect to the matters provided for in the Transaction Documents or
otherwise agreed to among the Parties, including: (i) a copy of the MVS Conversion Notice provided to FirstService’s transfer
agent prior to the Closing; (ii) such documents as are required or appropriate evidencing the completion and effectiveness of the
Reorganization prior to the Closing Time, together with the written notice contemplated by subsection 7.7; and (ii) a termination
agreement (the “MSA Termination Agreement”), made as at the Closing Date, among Jayset Mgt, ▇▇▇ and FirstService
(in a form mutually acceptable to the parties thereto, each acting reasonably) pursuant to which: (A) the MSA is terminated for
no consideration; (B) each party thereto is released of and from all matters under the MSA up to and including the Closing Date
(except FirstService in respect of its obligations under Section 2.3 of this Agreement); and (C) Jayset Mgt waives payment by FirstService
of any amounts under the MSA following the Closing Date (except as contemplated in Section 2.3). |
8.3
Closing Conditions and Deliveries in Favour of the ▇▇▇▇▇▇▇
Parties. The obligations of the ▇▇▇▇▇▇▇
Parties to consummate the Transactions are subject to the satisfaction and/or fulfillment of each of the following conditions
at or prior to the Closing Time, any of which may be waived (to the extent permitted by applicable Law) in writing by the ▇▇▇▇▇▇▇
Parties in their sole discretion or deemed waived if the ▇▇▇▇▇▇▇
Parties complete the Transactions without a written waiver and such condition is not satisfied:
| (a) | in respect of the representations and warranties of FirstService contained in this Agreement: |
| (i) | the FirstService Fundamental Representations shall be true, correct and complete as of the Closing
Date as though made on and as of the Closing Date; and |
| (ii) | all representations and warranties of FirstService (other than the FirstService Fundamental Representations)
shall be true, correct and complete, in all material respects, as of the Closing Date (except for any such representations and
warranties that already have a materiality qualifier, which shall be true, correct and complete in all respects) as though made
on and as of the Closing Date; |
in each case,
other than such representations and warranties that are made as of another specified date, which representations and warranties
shall be true, correct and complete as of such other date, and the ▇▇▇▇▇▇▇
Parties shall have received from FirstService a certificate to such effect;
| (b) | FirstService shall have performed or complied with, in all material respects, the obligations and
covenants required to be performed or complied with by it under this Agreement at or prior to the Closing Time, and the ▇▇▇▇▇▇▇
Parties shall have received from FirstService a certificate to such effect; |
| (c) | the ▇▇▇▇▇▇▇ Parties
shall have received a copy of resolutions of the directors of FirstService, certified by an officer of FirstService, authorizing
FirstService to execute and deliver this Agreement together with all those Transaction Documents which are required to be executed
and delivered by FirstService in connection with the completion of the Transactions and the approval of the issuance of the Subordinate
Voting Shares pursuant to Section 2.1 and subsection 3.3(b); |
| (d) | the ▇▇▇▇▇▇▇ Parties
shall have received each of the following dated the Closing Date: (i) a Certificate of Status (or the equivalent) of FirstService
from its jurisdiction of incorporation; (ii) a copy of the Constituent
Documents of FirstService certified by an officer of FirstService; and (iii) a certificate of incumbency for FirstService
(together with specimen signatures of those individuals actually signing this Agreement); |
| (e) | the ▇▇▇▇▇▇▇ Parties
shall have received all documents required to be executed and delivered by FirstService and its Affiliates, respectively, in order
to give effect to the matters provided for in the Transaction Documents, including the MSA Termination Agreement (as such term
is defined in subsection 8.2(h)); |
| (f) | payment by FirstService to Jayset Capital of that amount required to be paid at the Closing Time
to Jayset Capital in accordance with subsection 3.3(a) to an account designated in writing to FirstService by Jayset Capital;
and |
| (g) | a Seller (or an agent of a Seller) shall have received a certificate or direct registration system
advice statement as follows: (i) in the case of Henset Capital, evidencing 1,325,694 Subordinate Voting Shares issuable to Henset
Capital pursuant to Section 2.1; (ii) in the case of the Sellers, evidencing an aggregate of 2,918,860 Subordinate Voting Shares
issuable to the Sellers in accordance with the Allocation Schedule. |
8.4
Closing & Place of Closing. The completion
of the Transactions (the “Closing”) will take place on the fifth Business Day immediately following the Business
Day on which there occurred the satisfaction or waiver (to the extent permitted by applicable Law) of all conditions set forth
above in this Article 8 (other than those conditions that, by their nature, are to be satisfied by deliveries made at the
Closing, but subject to the satisfaction or, to the extent permitted hereunder, waiver of all such conditions), unless this Agreement
has been terminated pursuant to and in accordance with Article 12, or another date that is mutually agreed to in writing by
FirstService and the ▇▇▇▇▇▇▇ Parties (the date of the Closing, the “Closing Date”).
Article 9
– Public Announcements; POST-CLOSING COVENANTS
9.1
Public Announcements. The Parties shall cooperate with each other on the issuance or publication of any press
release or other public announcement or filing with respect to this Agreement or the Transactions, and no Party shall issue or
publish any such press release or other public announcement without the prior written consent of FirstService and Henset Capital
(which consent shall not be unreasonably withheld, conditioned or delayed); provided that nothing herein shall prohibit any Party
from any such issuance, publication or filing (including a filing or public disclosure of this Agreement) to the extent that such
Party reasonably determines such issuance, publication or filing is required by applicable Laws or by the regulations/rules of
any Governmental Authority or stock exchange on which any equity interests of such Party or any of its Affiliates is traded or
is proposed to be traded.
9.2
Purchased Entity Minute Books. Following Closing, the Sellers shall send (or cause to be sent) to FirstService
(or as FirstService shall direct) the corporate seal (to the extent one exists), minute books (including the corporate records
typically maintained therein), share certificates, share certificate books, share transfer books, share register books, shareholders’
register, officers’ register and directors’ register of each Purchased Entity.
9.3
Post-Closing Director Compensation of ▇▇▇. Following Closing, FirstService acknowledges and agrees that ▇▇▇
will continue to serve as a director of FirstService and as a non-executive Chair of the FirstService Board. The Parties acknowledge
and agree that, from and after the Closing Time, Jay’s compensation as a director of FirstService and chair of the FirstService
Board will be established in a manner consistent with FirstService’s director compensation policy approved by the FirstService
Board and in effect from time to time (such compensation being commensurate with that of a non-executive chair of a public company
of similar size and complexity to FirstService).
Article 10
– SURVIVAL OF REPRESENTATIONS AND COVENANTS
10.1
Survival of Representations & Warranties of Sale Parties.
The respective representations and warranties of the Sale Parties contained in this Agreement shall survive the Closing and, notwithstanding
such Closing or any investigations made by or on behalf of the Parties, shall continue in full force and effect as follows:
| (a) | with respect to all representations and warranties set forth in this Agreement pertaining to matters
involving Taxes and the specific indemnity in Section 11.1(c), for as long from and after the Closing Date as a Purchased Entity
may be assessed or reassessed or any Legal Proceedings may be brought in connection therewith, plus sixty (60) days; provided that,
if the period of assessment or reassessment otherwise applicable is extended (whether by the giving of a waiver, consent or otherwise),
such representations and warranties shall continue in full force and effect until the expiration of the period as so extended,
plus sixty (60) days; |
| (b) | with respect to the ▇▇▇▇▇▇▇ Fundamental Representations, for the period of six (6) years commencing
on the Closing Date; and |
| (c) | with respect to all representations and warranties of a Sale Party contained in Article 4
and not specified above in this Section 10.1, for the period of eighteen (18) months following the Closing Date; |
provided that, the indemnity obligations
of a Sale Party under Article 11 shall not terminate at the expiration of the periods set forth above with respect to any
matters in respect of which a Claim Notice (as such term is defined in subsection 11.4(a)) had been sent at a time which is prior
to the expiration of the time period hereinbefore specified in this Section 10.1 as applicable to such matter; and, for greater
certainty, the indemnity obligations in respect of each matter in respect of which a Claim Notice had been so sent shall survive
until the claim for indemnification made in respect of such matter has been satisfied or otherwise resolved as provided for in
Article 11.
10.2
Survival of Representations and Warranties of FirstService.
The representations and warranties of FirstService contained in this Agreement shall survive the Closing and, notwithstanding such
Closing or any investigations made by or on behalf of the Parties, shall continue in full force and effect as follows:
| (a) | with respect to the FirstService Fundamental Representations, for the period of six (6) years commencing
on the Closing Date; and |
| (b) | with respect to all representations and warranties of FirstService contained in this Agreement
and not specified above in this Section 10.2, for the period of eighteen (18) months following the Closing Date; |
provided that, the indemnity obligations
of FirstService under Article 11 shall not terminate at the expiration of the periods set forth above with respect to any
matters in respect of which a Claim Notice had been sent at a time which is prior to the expiration of the time period hereinbefore
specified in this Section 10.2 as applicable to such matter; and, for greater certainty, the indemnity obligations in respect
of each matter in respect of which a Claim Notice had been so sent shall survive until the claim for indemnification made in respect
of such matter has been satisfied or otherwise resolved as provided for in Article 11.
Article 11
– INDEMNITIES
11.1
Indemnification by Sale Parties. Following
Closing, each Sale Party jointly and severally shall, and do hereby, indemnify and save harmless FirstService and the Purchased
Entitles (collectively, the “FirstService Indemnified Parties”) from and against any and all Losses incurred,
sustained or suffered by the FirstService Indemnified Parties as a result of or in any way relating to:
| (a) | any of the representations and warranties of a Sale Party contained in this Agreement having been
untrue or inaccurate; |
| (b) | any non-compliance by a Sale Party with any of such Sale Party’s covenants and agreements
contained in this Agreement; and |
| (c) | the Reorganization and any and all Taxes of the Purchased Entities arising therefrom, and any and
all other Liabilities of a Purchased Entity in existence as at the Closing Time (in each case, other than as accounted for in an
adjustment to the Purchase Price, to the extent offset by the Closing Cash or otherwise paid by a Sale Party in accordance with
this Agreement). |
11.2
Indemnification by FirstService. Following
Closing, FirstService shall, and does hereby, indemnify and save harmless each Sale Party (collectively, the “▇▇▇▇▇▇▇
Indemnified Parties”) from and against any and all Losses incurred, sustained or suffered by the ▇▇▇▇▇▇▇ Indemnified
Parties as a result of or in any way relating to:
| (a) | any of the representations and warranties of FirstService contained in Article 5 having been
untrue or inaccurate; and |
| (b) | any non-compliance by FirstService with any of FirstService’s covenants and agreements contained
in this Agreement. |
11.3
Limitations.
| (a) | Notwithstanding any
other provisions hereof, the maximum aggregate liability of the Sale Parties for their indemnification obligations in Section 11.1
shall not exceed an amount equal to the Purchase Price. |
| (b) | Notwithstanding any
other provisions hereof, the maximum aggregate liability of FirstService for its indemnification obligations in Section 11.2 shall
not exceed an amount equal to the Purchase Price. |
11.4
Indemnification Procedure.
| (a) | If a FirstService Indemnified Party or a ▇▇▇▇▇▇▇ Indemnified Party entitled to indemnity under
either Section 11.1 or 11.2 (such party being sometimes referred to in this Article 11 as the “Indemnified
Party”) wishes to assert a claim for indemnity against a Party liable to it under this Article 11 (such liable
Party being sometimes referred to in this Article 11 as the “Indemnifier”
and such claim for indemnity being sometimes referred to as an “Indemnity Claim”), it can only do so by giving
a notice in writing (a “Claim Notice”) to the
Indemnifier as soon as is reasonably practicable after the discovery of any facts or circumstances that are reasonably likely to
give rise to an Indemnity Claim, which Claim Notice must provide reasonable particulars then known of the matters for which indemnity
is then being sought (and be accompanied with copies of any relevant documents then received or obtained by the Indemnified Party
in respect of such Indemnity Claim) and either the amount of any actual Losses suffered, sustained or incurred by the Indemnified
Party in connection with the matter in respect of which indemnity is so being sought or a good faith estimate of such amount (provided
that any estimate of such amount shall be subject to indemnification under this Article 11 only at such time as the amount
becomes an actual Loss suffered, sustained or incurred). |
| (b) | The Indemnifier shall have the period of thirty (30) days following its receipt of such Claim Notice
(such period being herein called the “Cure Period”)
in which to cure or rectify, at its sole cost, the matters for which indemnity is being sought, as specified in such Claim Notice,
and, if such matters are capable of being cured or rectified, the Indemnifier shall use its commercially reasonable efforts so
as to cause or effect such cure or rectification. |
| (c) | If the matter for which indemnity is sought: |
| (i) | has been fully cured or rectified (including the payment of any Losses which the Indemnifier is
liable to pay) to the satisfaction of the Indemnified Party, acting reasonably, on or prior to the expiration of the Cure Period,
the Indemnifier shall have no further Liability to the Indemnified Party in respect thereof; or |
| (ii) | either: (x) has not been fully cured or rectified (including the payment of any Losses which the
Indemnifier is liable to pay) to the satisfaction of the Indemnified Party, acting reasonably, prior to the expiration of the Cure
Period; or (y) in the determination of the Indemnified Party, acting reasonably, is not capable of being cured prior to the expiration
of the Cure Period, the Indemnifier shall, forthwith upon the expiration of the Cure Period, in the case of (x) above, or upon
the delivery of notice by the Indemnified Party to the Indemnifier of the determination referred to in (y) above, pay to the Indemnified
Party the amount payable in respect of that matter pursuant to this Article 11, unless the Indemnifier bona fidely
either: (A) disputes the Indemnity Claim; or (B) disputes that it has not cured or rectified the matter for which indemnity is
sought, or that the matter is not capable of being cured or rectified prior to the expiration of the Cure Period, and, in each
case, has commenced appropriate Legal Proceedings regarding such dispute within thirty (30) days following the end of the Cure
Period referable thereto (and then the Indemnifier shall pay to the Indemnified Party the amount payable in connection with such
Indemnity Claim, if any, following a determination of such dispute pursuant to such Legal Proceedings or if such Legal Proceedings
are not so commenced within such thirty (30) day period, at the expiration of such thirty (30) day period (or as otherwise agreed
upon in writing by the Indemnifier and the Indemnified Party)). |
11.5
Indemnity is Sole and Exclusive Remedy. Following
Closing, this Article 11 shall constitute the sole and exclusive remedy for each Party against any other Party for monetary
damages with respect to any and all breaches of any agreement, covenant, representation or warranty made by such other Party in
this Agreement; provided that, this Section 11.4 shall not apply to any claims based on fraud or intentional misrepresentation,
and provided further that the Parties shall have the right to seek specific performance or other equitable remedies in connection
with any breach of this Agreement or any other Transaction Document.
11.6
Insurance Proceeds. In respect of each matter
for which a claim for indemnity is made by an Indemnified Party against an Indemnifier in accordance with this Article 11,
if such Indemnified Party (or any Affiliate thereof, as the case may be (which Affiliates include a Purchased Entity if the Indemnified
Party is a FirstService Indemnified Party)) shall receive any insurance or other proceeds as compensation for (or otherwise in
respect of) such matter from an insurance company or any other Person, then the amount otherwise payable by the Indemnifier in
respect of such matter shall be reduced by the total amount of the insurance and other proceeds so received (net of any deductibles,
premium increases and “out-of-pocket” expenses reasonably incurred by the recipient thereof in connection with,
or as a result of, its collection thereof). Each Party agrees that it shall use commercially reasonable efforts to collect upon
those of its or its Affiliates insurance policies which provide coverage in respect of a matter for which indemnification is provided
under this Article 11, provided that no Indemnified Party shall be prohibited from pursuing or collecting on any claim for
indemnification in accordance with this Article 11 while it is using (or required to be using) such efforts to collect upon
such insurance policies.
11.7
Interest on Non-Payment. All amounts required
to be paid by one Party to another Party pursuant to this Article 11 shall be paid within ten (10) days following written
demand for payment and any amount which is not paid when due shall bear interest until paid in full at the rate of 8% per
annum, computed, compounded and payable monthly.
11.8
Adjustment to Purchase Price. All
indemnity payments pursuant to this Article 11 shall be considered by the Parties as an adjustment to the Purchase Price.
11.9
One Recovery. Any Indemnified Party shall not
be entitled to double recovery for any claims even though they may have resulted from the breach of more than one of the representations,
warranties, covenants and obligations of the Indemnifying Party in this Agreement. No ▇▇▇▇▇▇▇ Party has any liability or obligation
with respect to any claim for indemnification to the extent that such matter was reflected as an adjustment to the Purchase Price
under Section 3.3(a) of this Agreement.
Article 12
– TERMINATION
12.1
Termination. This Agreement may be terminated and the Transactions may be abandoned at any time prior to the
Closing:
| (a) | by the mutual written consent of the Parties; |
| (b) | by either FirstService or a ▇▇▇▇▇▇▇ Party if: (i) any Governmental Authority of competent jurisdiction
shall have issued a judgment, order, injunction, rule or decree, or taken any other action restraining, enjoining or otherwise
prohibiting the Transactions and such judgment, order, injunction, rule, decree or other action shall have become final and non-appealable;
or (ii) the Closing Time shall not have occurred by 5:00 p.m. (Toronto, Ontario local time) on June 28, 2019 (the “End
Date”); provided, however, that the right to terminate this Agreement pursuant to this paragraph 12.1(b)(ii) shall not
be available to: (A) FirstService, if a ▇▇▇▇▇▇▇ Party has the right to terminate this Agreement pursuant to subsection 12.1(c);
or (B) a ▇▇▇▇▇▇▇ Party, if FirstService has the right to terminate this Agreement pursuant to subsection 12.1(d); |
| (c) | by a ▇▇▇▇▇▇▇ Party if there has been a breach of any representation, warranty, covenant or agreement
made by FirstService in this Agreement, such that the condition set forth in subsection 8.3(a) or 8.3(b) would not be satisfied,
and such breach or failure is incapable of being cured or is not cured on or prior to the End Date; |
| (d) | by FirstService if there has been a breach of any representation, warranty, covenant or agreement
made by a ▇▇▇▇▇▇▇ Party in this Agreement, such that the condition set forth in subsection 8.2(a) or 8.2(b) would not be satisfied,
and such breach or failure is incapable of being cured or is not cured on or prior to the End Date; or |
| (e) | by any Party if the Transaction Resolution is not approved by the requisite number of votes cast
by the holders of Subordinate Voting Shares at the Meeting as contemplated in Section 2.4. |
12.2
Notice of Termination. The Party desiring to
terminate this Agreement pursuant to this Article 12 shall give written notice of such termination to the other Parties specifying
the provision or provisions of this Article 12 pursuant to which such termination is purportedly effected and including reasonable
detail of the circumstances giving rise to such termination.
12.3
Effect of Termination. If
this Agreement is validly terminated pursuant to this Article 12, this Agreement shall forthwith become
void and of no effect, without any liability on the part of any Party; provided that no such termination shall relieve any Party
from any liability for any willful breach of any provision hereof or
fraud with respect to the agreements, covenants,
representations and warranties expressly made in this Agreement.
Article 13
– GENERAL CONTRACT PROVISIONS
13.1
Notices. All notices and communications sought
or, by the terms hereof, required to be given by one Party to another Party shall be given in writing by personal delivery (which
delivery may be effected by depositing the notice or communication in question with a courier service for delivery (courier charges
fully prepaid)), by registered mail (postage fully prepaid) or by email, delivered, addressed or sent by facsimile to such other
Party as follows:
| (a) | in the case of FirstService, at: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇ (Attention: Chief Financial Officer) (Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇); with a copy (which copy shall not constitute
notice) to Fogler, ▇▇▇▇▇▇▇▇ LLP, at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇) (Email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇); and |
| (b) | in the case of a Hennick Party, at: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇ (Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇) (Email: ▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇); with a copy (which copy shall not constitute notice)
to Stikeman Elliott LLP, at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇)
(Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇); |
or at such other address or facsimile
number as may be given by a Party to the other Parties by notice in writing from time to time, and such notices or other communications
shall be deemed to have been received as follows: (i) if sent by personal delivery, upon delivery; (ii) if transmitted by email
on or prior to 5:00 p.m. (local time in the place at which the notice is to be received) on a Business Day, upon the completion
of its transmission (and if not transmitted on a Business Day or transmitted after 5:00 p.m. (local time in the place at which
the notice is to be received) on a Business Day, then on the first Business Day following the completion of the transmission);
(iii) if sent by overnight courier, on the first Business Day after the date of dispatch; or (iv) if sent by registered mail, six
Business Days following the day of the mailing thereof; provided that if any such notice or communication shall have been mailed
and if regular mail service shall be interrupted by strikes or other irregularities, such notice or communication shall be deemed
to have been received six Business Days following the resumption of normal mail service.
13.2
Further Assurances. Each Party agrees that,
forthwith upon the written request of any other Party, the Party so requested shall execute and deliver such further documents,
cause such meetings to be held, resolutions passed and Constituent Documents
enacted or amended, exercise such Party’s vote and influence, and otherwise do and perform and cause to be done and performed
any and all such further and other lawful acts and things as are within such Party’s reasonable power to do and as are reasonably
necessary or desirable in order to give full effect to each and every part of the Transaction Documents and the Transactions.
13.3
Currency. Unless otherwise stated, all dollar
amounts in this Agreement are expressed in Canadian dollars and all payments of funds contemplated by this Agreement shall be made
in Canadian funds.
13.4
Number, Gender, “this Agreement” and Headings.
In this Agreement, the use of the singular includes the plural and vice versa; words importing gender include all genders;
all verbs shall be construed as agreeing with the required word or pronoun; the word “extent” in the phrase
“to the extent” means the degree to which a thing extends, and does not mean simply “if”;
any reference to “days” means calendar days unless Business Days are expressly specified; and the words “this
Agreement”, “herein”, “hereof”,
“hereby”, “hereto”,
“hereunder” and like expressions refer to this
Agreement as a whole and not to any particular part hereof, unless the context otherwise requires. The use of headings in this
Agreement is for convenience of reference only and shall not affect the interpretation or construction of this Agreement. The parties
hereto further acknowledge and confirm that they have participated jointly in the negotiation and drafting of this Agreement and
the other Transaction Documents and that any rule of construction or interpretation otherwise requiring this Agreement or any of
the other Transaction Documents to be construed or interpreted against a party hereto by virtue of the authorship of this Agreement
or such other Transaction Documents, as the case may be, shall not apply to the construction and interpretation of this Agreement
(or any provision of this Agreement) or any of the other Transaction Documents (or any provision of such other Transaction Documents).
13.5
No Brokers. No broker, agent or other intermediary
acted for any Party in connection with the Transactions and each Party shall indemnify and save harmless the other Parties from
and against any and all claims whatsoever for any commission or other remuneration payable or alleged to be payable to any broker,
agent or other intermediary who purports to act or have acted for the Party in question.
13.6
Responsibility for Legal and Accounting Fees.
Except as otherwise expressly provided for in this Agreement, each of the Parties shall be responsible for its own legal and accounting
fees and other charges incurred in connection with the review, negotiation and preparation of this Agreement and the other Transaction
Documents and the Transactions and any post-Closing matters in connection therewith.
13.7
Recovery of Costs of Legal Proceedings. If
any Legal Proceedings are taken by any of the Parties against any of the other Parties to enforce any of the provisions of this
Agreement or as a result of the breach of any such provisions, the prevailing Party shall be entitled to recover from the non-prevailing
Party all reasonable “out-of-pocket” legal fees,
costs and expenses (including expert witness fees) incurred in connection with any such legal action.
13.8
Time of Essence. Time is of the essence of
this Agreement and of every part hereof.
13.9
Entire Agreement. This Agreement, including
the other Transaction Documents, constitutes the entire, full and complete agreement and understanding among the Parties in respect
of the subject matters hereof and thereof and supersedes all prior Contracts, letters of intent, term sheets and negotiations among
some or all of the Parties hereto with respect thereto. There are no representations, inducements, promises, statements of intention
or agreements, oral or written, among the Parties not embodied herein which are of any force or effect with reference to this Agreement,
the subject matters hereof or the Transactions. For the avoidance of doubt, the Parties acknowledge and agree that the binding
term sheet among certain of the Parties dated March 12, 2019 is hereby terminated and of no further force and effect.
13.10
No Amendment. This Agreement shall not be amended,
superseded or cancelled except by a written instrument signed by all of the Parties and any instrument purporting to amend, supersede
or cancel this Agreement or any part hereof shall not be binding and shall be of no effect unless and until it has been executed
and delivered by all of the Parties.
13.11
No Waiver. The failure of a Party at any time
or times to require performance of any provision hereof by any other Party shall in no manner affect the right of such Party to
require such performance at a later time. No act or omission of any Party, other than an express written waiver signed by such
Party, shall constitute a waiver by such Party of any representation, warranty, covenant, agreement or condition of this Agreement
or any breach thereof by another Party. No waiver by a Party hereto of any representation, warranty, covenant, agreement or condition
of this Agreement or any breach thereof by another Party, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of such or any other representation, warranty, covenant, agreement, condition or any breach.
13.12
Calculation of Time Periods. When calculating
the period of time within which or following which any act is to be done or step taken pursuant to this Agreement, the date which
is the reference date in calculating such period shall be excluded. If the last day of such period is not a Business Day, the period
in question shall end on the next Business Day. In the event that any date upon which any action is required or permitted to be
taken hereunder by any of the parties is not a Business Day, such action shall be required or permitted to be taken on the next
succeeding day which is a Business Day. Unless expressly provided otherwise, the measure of a period of one month or year for purposes
of this Agreement shall be that date of the following month or year corresponding to the starting date; provided, that if no corresponding
date exists, the measure shall be that date of the following month or year corresponding to the next day following the starting
date. For example, one month following February 18 is March 18, and one month following March 31 is May 1.
13.13
No Assignment of Agreement. No Party may assign
this Agreement or any interest in this Agreement without the prior written consent of all of the Parties. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns
and, in the case of Parties who are human beings, also upon their respective heirs, executors, administrators and other legal personal
representatives.
13.14
References to Laws and Contracts. Any references
in this Agreement to any Laws shall be construed as a reference thereto as amended or re-enacted from time to time or as a reference
to any successor thereto, in each case, to the Closing Time. Any references in this Agreement to any Contract, exhibit or schedule,
unless otherwise stated, are to such Contract, exhibit or schedule as amended, modified or supplemented from time to time in accordance
with the terms thereof as at the Agreement Date.
13.15
Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the Province of Ontario (without giving effect to principles of conflicts
of laws) and the federal laws of Canada applicable therein and this Agreement shall in all respects be treated as an Ontario contract.
Subject to the arbitration provisions of Section 13.8, the Parties
irrevocably attorn to the jurisdiction of the courts of the Province of Ontario to resolve any dispute which may arise among them
concerning this Agreement and the subject matters hereof.
13.16
Execution in Counterparts. This Agreement may
be executed in several counterparts, by original or facsimile signature or by or through such other electronic form in which a
Party may place or evidence its signature hereon (including an electronic scan of same), each of which so executed shall be deemed
to be an original and such counterparts together shall be deemed to be one and the same instrument, which shall be deemed to be
executed as of the date first above written.
13.17
Severability. Any provision of this Agreement
which is invalid, prohibited or unenforceable in any jurisdiction for any reason shall, as to such jurisdiction only, be ineffective
and severable from this Agreement to the extent of such invalidity, prohibition or unenforceability but such invalidity, prohibition
or unenforceability shall not invalidate or otherwise affect the remaining provisions of this Agreement nor shall it affect the
validity or enforceability of such provision in any other jurisdiction.
13.18
Disputes. Unless otherwise expressly provided
herein, to the fullest extent permitted by applicable Laws, if any dispute, claim or other matter should arise concerning the interpretation,
performance or breach of this Agreement or any action taken by a Party pursuant to this Agreement (such dispute, claim or other
matter being referred to as a “Dispute”), such
Dispute shall be determined by arbitration conducted by one arbitrator in the City of Toronto, Ontario in accordance with the Arbitration
Act, 1991 (Ontario) and a Party seeking arbitration of a Dispute shall so notify the other Parties by notice in writing (an
“Arbitration Notice”), which Arbitration Notice shall set out reasonable particulars of the Dispute in respect
of which arbitration is so being sought. Nothing in this Section 13.18 shall preclude a Party from instituting legal action seeking
equitable relief in order to protect its rights pending the outcome of an arbitration hereunder. Notwithstanding the preceding
provisions of this Section 13.18, the provisions of this Section 13.18 may not be invoked in connection with, or emanating out
of, any matter or procedure, the resolution of which is provided for in subsection 6.2(d) except for the purpose of enforcing the
provisions of subsection 6.2(d).
13.19
Legal Representation. Each Party represents
and warrants that: (a) such Party has consulted with independent duly qualified legal counsel of such Party’s own choosing
and has had this Agreement and all of the other Transaction Documents reviewed and negotiated on such Party’s own behalf
by such legal counsel; (b) such Party has had sufficient time in which to consider whether or not to enter into this Agreement
and the other Transaction Documents and such Party has read this Agreement and the other Transaction Documents and fully understands
all of the respective terms, conditions and provisions of this Agreement and the other Transaction Documents; and (c) such Party
is entering into, executing and delivering this Agreement and the other Transaction Documents of such Party’s own free will
and in reliance solely on such Party’s own judgment and the advice of such Party’s legal counsel.
[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the Parties
have executed this Agreement as of the Agreement Date.
| |
HENSET CAPITAL INC. |
| |
|
| |
|
| |
Per: |
“▇▇▇
▇. ▇▇▇▇▇▇▇” |
| |
|
Name: |
▇▇▇ ▇. ▇▇▇▇▇▇▇ |
| |
|
Title: |
President and CEO |
| |
Per: |
“▇▇▇▇▇
▇▇▇▇▇▇” |
| |
|
Name: |
▇▇▇▇▇ ▇▇▇▇▇▇ |
| |
|
Title: |
Secretary |
| |
JAYSET CAPITAL CORP. |
| |
|
| |
|
| |
Per: |
“▇▇▇
▇. ▇▇▇▇▇▇▇” |
| |
|
Name: |
▇▇▇ ▇. ▇▇▇▇▇▇▇ |
| |
|
Title: |
President and Secretary |
| |
FSV SHARES LP, by its general partner, 2688845 ONTARIO INC. |
| |
|
| |
|
| |
Per: |
“▇▇▇
▇. ▇▇▇▇▇▇▇” |
| |
|
Name: |
▇▇▇ ▇. ▇▇▇▇▇▇▇ |
| |
|
Title: |
Chairman and CEO |
| |
JAYSET MANAGEMENT FSV INC. |
| |
|
| |
|
| |
Per: |
“▇▇▇
▇. ▇▇▇▇▇▇▇” |
| |
|
Name: |
▇▇▇ ▇. ▇▇▇▇▇▇▇ |
| |
|
Title: |
Chairman and CEO |
| SIGNED, SEALED AND DELIVERED |
) |
|
| in the presence of: |
) |
|
| |
) |
|
|
“▇▇▇▇▇▇▇▇
▇▇” |
) |
|
| Signature of Witness |
) |
“▇▇▇
▇. ▇▇▇▇▇▇▇” |
| |
) |
▇▇▇ ▇. ▇▇▇▇▇▇▇ |
| ▇▇▇▇▇▇▇▇ ▇▇ in the presence of: |
) |
|
| Print Name of Witness |
) |
|
| |
FIRSTSERVICE CORPORATION |
| |
|
| |
|
| |
Per: |
“▇▇▇▇▇▇▇
▇▇▇▇▇” |
| |
|
Name: |
▇▇▇▇▇▇▇ ▇▇▇▇▇ |
| |
|
Title: |
Director/Chair of the Compensation Committee |
SCHEDULE “A”
Form of Transaction Resolution
BE IT RESOLVED THAT:
| 1. | the transaction (the “Transaction”)
involving FirstService Corporation (“FirstService”), as more particularly described and set forth in the Management
Information Circular of FirstService dated March 25, 2019 (as the Transaction is contemplated by, and may be, or may have been,
amended, modified or supplemented in accordance with the terms of, the transaction agreement dated April 2, 2019 among FirstService,
Henset Capital Inc., Jayset Capital Corp., FSV Shares LP, Jayset Management FSV Inc. and ▇▇▇ ▇. ▇▇▇▇▇▇▇ (the “Transaction
Agreement”)), is authorized, approved and adopted; |
| 2. | the Transaction Agreement, and all the
matters contemplated therein, together with the actions of the directors of FirstService in approving the Transaction and the actions
of the directors and officers of FirstService in executing and delivering the Transaction Agreement, together with any amendments,
modifications or supplements thereto, are hereby ratified and approved; |
| 3. | any one or more directors or officers of
FirstService are authorized, for and on behalf and in the name of FirstService, to execute, whether under the corporate seal of
FirstService or otherwise, and deliver all such agreements, forms, waivers, notices, certificates, confirmations and other documents
and instruments and to do or cause to be done all such other acts and things as such director(s) or officer(s) may determine to
be necessary, desirable or useful for the purpose of giving effect to these resolutions, the completion of the Transaction and
the Transaction Agreement, such determination to be conclusively evidenced by the execution and delivery by such director(s) or
officer(s) of any such agreement, form, waiver, notice, certificate, confirmation or other document and instrument or the doing
of any such act or thing; and |
| 4. | notwithstanding that these resolutions
have been passed (and the Transaction approved) by the holders of Subordinate Voting Shares of FirstService, the directors of FirstService
are hereby authorized and empowered, at their discretion and without further notice to, or approval of, the shareholders of FirstService:
(a) to amend, modify or supplement the Transaction Agreement to the extent permitted by the Transaction Agreement; and (b) subject
to the terms of the Transaction Agreement, not to proceed with the Transaction and/or any related transactions. |
SCHEDULE “B”
Reorganization Memo
[The Reorganization Memo has been omitted as
its disclosure would violate confidentiality provisions. The Reorganization Memo contains information on, and changes to, the
ownership of various entities directly or indirectly owned or controlled by ▇▇▇ ▇. ▇▇▇▇▇▇▇ and unrelated to FirstService Corporation
or the transaction being contemplated, and proposed tax matters related to such changes.]