(I)
CORPORATE RECORDS.
THE CORPORATE
RECORDS ARE COMPLETE AND ACCURATE AND ALL CORPORATE PROCEEDINGS AND ACTIONS
REFLECTED IN THE CORPORATE RECORDS HAVE BEEN CONDUCTED OR TAKEN IN COMPLIANCE
WITH ALL LAWS AND WITH THE ARTICLES AND BY-LAWS OF EITHER OF THE CORPORATIONS,
AS THE CASE MAY BE.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING (I) THE
MINUTE BOOKS CONTAIN COMPLETE AND ACCURATE MINUTES OF ALL MEETINGS OF THE
DIRECTORS AND SHAREHOLDERS HELD SINCE INCORPORATION AND ALL SUCH MEETINGS WERE
PROPERLY CALLED AND HELD, (II) THE MINUTE BOOKS CONTAIN ALL RESOLUTIONS PASSED
BY THE DIRECTORS AND SHAREHOLDERS (AND COMMITTEES, IF ANY) AND ALL SUCH
RESOLUTIONS WERE PROPERLY PASSED, (III) THE SHARE CERTIFICATE BOOKS, REGISTER OF
SHAREHOLDERS AND REGISTER OF TRANSFERS ARE COMPLETE AND ACCURATE, ALL TRANSFERS
HAVE BEEN PROPERLY COMPLETED AND APPROVED AND ANY TAX PAYABLE IN CONNECTION WITH
THE TRANSFER OF ANY SECURITIES HAS BEEN PAID, AND (IV) THE REGISTERS OF
DIRECTORS AND OFFICERS ARE COMPLETE AND ACCURATE AND ALL FORMER AND PRESENT
DIRECTORS AND OFFICERS WERE PROPERLY ELECTED OR APPOINTED, AS THE CASE MAY BE.
NEITHER OF THE CORPORATIONS HAS BEEN SUBJECT TO, OR AFFECTED BY, ANY UNANIMOUS
SHAREHOLDERS AGREEMENT;
15
(J)
RESIDENCE OF THE VENDORS.
NONE OF THE
VENDORS IS NOT A NON-RESIDENT OF CANADA WITHIN THE MEANING OF THE INCOME TAX ACT
(CANADA).
(K)
CONDUCT OF BUSINESS IN ORDINARY COURSE.
EXCEPT AS DISCLOSED IN SCHEDULE N HERETO, SINCE DECEMBER 31, 2002, THE BUSINESS
HAS BEEN CARRIED ON IN THE ORDINARY COURSE.
WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, NEITHER OF THE CORPORATIONS HAS:
(I)
SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF ANY ASSETS, EXCEPT FOR (I) ASSETS WHICH ARE OBSOLETE AND WHICH INDIVIDUALLY
OR IN THE AGGREGATE DO NOT EXCEED $50,000, OR (II) INVENTORY SOLD IN THE
ORDINARY COURSE;
(II)
MADE ANY CAPITAL EXPENDITURE OR COMMITMENT
THEREFOR WHICH INDIVIDUALLY OR IN THE AGGREGATE EXCEEDED $50,000;
(III)
DISCHARGED ANY SECURED OR UNSECURED
OBLIGATION OR LIABILITY (WHETHER ACCRUED, ABSOLUTE, CONTINGENT OR OTHERWISE)
WHICH INDIVIDUALLY OR IN THE AGGREGATE EXCEEDED $50,000;
(IV)
INCREASED ITS INDEBTEDNESS FOR BORROWED MONEY
OR MADE ANY LOAN OR ADVANCE, OR ASSUMED, GUARANTEED OR OTHERWISE BECAME LIABLE
WITH RESPECT TO THE LIABILITIES OR OBLIGATION OF ANY PERSON;
(V)
MADE ANY BONUS OR PROFIT SHARING
DISTRIBUTION OR SIMILAR PAYMENT OF ANY KIND, EXCEPT (I) AS MAY BE REQUIRED BY
THE TERMS OF A MATERIAL CONTRACT, (II) AS PROVIDED FOR IN THE MGA GROUP
FINANCIAL STATEMENTS;
(VI)
GRANTED ANY INCREASE IN THE RATE OF WAGES,
SALARIES, BONUSES OR OTHER REMUNERATION OF ANY EMPLOYEE OF EITHER OF THE
CORPORATIONS, EXCEPT AS MAY BE REQUIRED BY THE TERMS OF A MATERIAL CONTRACT;
(VII)
TERMINATED ANY OFFICER OR OTHER SENIOR EMPLOYEE;
(VIII)
WRITTEN OFF AS UNCOLLECTIBLE ANY ACCOUNTS
RECEIVABLE WHICH, INDIVIDUALLY OR IN THE AGGREGATE, ARE MATERIAL TO EITHER OF
THE CORPORATIONS OR IS IN EXCESS OF $50,000;
(IX)
SUFFERED ANY EXTRAORDINARY LOSS, WHETHER OR
NOT COVERED BY INSURANCE;
(X)
SUFFERED ANY MATERIAL SHORTAGE OR ANY
CESSATION OR INTERRUPTION OF INVENTORY SHIPMENTS, SUPPLIES OR ORDINARY SERVICES;
16
(XI)
CANCELLED OR