Magna International Inc. - s. 104(2)(c)

Headnote

Clause 104(2)(c) - upon completion of a statutory arrangement, certain entities will become the direct and indirect holder of securities of the issuer - upon the occurrence of certain events, shares of the direct and indirect holders of the securities of the issuer will be transferred to the issuer in exchange for securities of the issuer - issuer will wind-up certain entities that directly hold securities of the issuer - certain of these transactions may result in direct and indirect issuer bids by the issuer - after these transactions, the issuer will have the same number of shares issued and outstanding, and each shareholder will have the same number of shares and same relative ownership that they owned prior to these transactions - entities, other than the issuer, responsible for the payment of the issuer's costs in connection with these transactions - issuer to receive indemnities for certain issues relating to these transactions - no adverse economic impact on or prejudice to issuer or public shareholders - issuer exempt from requirements of sections 95, 96, 97, 98 and 100 of the Act.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., s. 104(2)(c).

IN THE MATTER OF

THE SECURITIES ACT, R.S.O 1990,

CHAPTER S. 5, AS AMENDED (the "Act")

AND

IN THE MATTER OF

MAGNA INTERNATIONAL INC.

ORDER

(Clause 104(2)(c))

UPON the application (the "Application") of Magna International Inc. ("Magna") to the Ontario Securities Commission (the "Commission") for an order pursuant to clause 104(2)(c) of the Act that the Tuck Transactions and the Principals Tuck Transactions, described below, pursuant to a proposed plan of arrangement (the "Arrangement") under section 182 of the Business Corporations Act (Ontario) (the "OBCA") are exempt from the requirements of sections 95, 96, 97, 98 and 100 of the Act;

AND UPON considering the Application and the recommendation of the staff of the Commission;

AND UPON Magna having represented to the Commission as follows:

1. Magna, Open Joint Stock Company Russian Machines ("Russian Machines"), Veleron Holding B.V. ("RM Sub"), The Stronach Trust ("Stronach Trust"), 445327 Ontario Limited ("445") and the following members of Magna's senior management: Donald J. Walker and Siegfried Wolf, co-chief executive officers; Vincent J. Galifi, Executive Vice-President and Chief Financial Officer; Peter Koob, Executive Vice-President, Corporate Development; and Jeffrey O. Palmer, Executive Vice-President (collectively, the "Principals") have entered into a transaction agreement (the "Transaction Agreement") providing for the Arrangement pursuant to which, among other things, Magna will issue from treasury 20 million Class A Subordinate Voting Shares for U.S.$76.83 per share to 2143455 Ontario Inc. ("Newco II"), a newly-formed corporation funded by RM Sub, for total proceeds of U.S.$ 1,536,600,000.

2. Magna is a corporation governed by the OBCA, is a reporting issuer or the equivalent in each of the provinces of Canada and is not on the list of reporting issuers in default maintained by the securities regulatory authority of any such jurisdiction.

3. The authorized share capital of Magna consists of an unlimited number of Class A Subordinate Voting Shares, 1,412,341 Class B Shares and 99,760,000 Preference Shares, issuable in series, all with no par value. As of September 18, 2007, a total of 109,493,168 Class A Subordinate Voting Shares and 1,092,933 Class B Shares were outstanding. No Preference Shares have been issued or are outstanding.

4. The Class A Subordinate Voting Shares and Class B Shares are listed and posted for trading on the Toronto Stock Exchange under the trading symbols "MG.A" and "MG.B", respectively. The Class A Subordinate Voting Shares are also listed and posted for trading on the New York Stock Exchange under the trading symbol "MGA".

5. The Stronach Trust is the ultimate controlling shareholder of Magna by virtue of its indirect control and direction over 726,829 Class B Shares. Mr. Frank Stronach, the founder and Chairman of Magna, and certain members of his immediate family are the trustees of the Stronach Trust and are members of the potential class of beneficiaries of the Stronach Trust.

6. 445 is a corporation existing under the OBCA. 99.9% of the outstanding voting securities of 445 are directly owned by the Stronach Trust. The 726,829 Class B Shares indirectly controlled by the Stronach Trust are held directly by 445.

7. 446 Holdings Inc. ("446") was incorporated under the OBCA on July 20, 2007. 446 is wholly-owned by 445 and was organized solely for the purpose of entering into the transactions contemplated by the Arrangement and the documents associated therewith to which it is a party.

8. Russian Machines is a company existing under the laws of Russia and a wholly-owned subsidiary of Basic Element, a privately held industrial conglomerate operating in Russia.

9. RM Sub is a company existing under the laws of The Netherlands and a wholly-owned subsidiary of Russian Machines.

10. Each of M Unicar Inc. ("Newco"), 2143453 Ontario Inc. ("Newco I.5") and Newco II was incorporated under the OBCA on July 25, 2007. Currently, Newco is a wholly-owned subsidiary of 446, Newco I.5 is a wholly-owned subsidiary of Newco, and Newco II is a wholly-owned subsidiary of Newco I.5. Upon completion of the Arrangement: Newco will be owned directly by 446 and RM Sub and indirectly by the Principals through MPMAG Holdings Inc. ("Principals Holdco"), GKP Holdings Inc. ("GKP Holdco") and SW CDN Holdings Inc. ("SW CDN Holdco"); Newco I.5 will be owned directly by Newco and indirectly by the Principals through Principals Holdco; and Newco II will be owned directly by Newco I.5 and RM Sub. Each of Newco, Newco I.5 and Newco II was organized solely for the purpose of entering into the transactions contemplated by the Arrangement and the Transaction documents to which it is a party.

11. The Arrangement effects a series of transactions pursuant to which: (A) Magna will issue from treasury 20 million Class A Subordinate Voting Shares for U.S.$76.83 per share to Newco II; (B) subject to the approval of a majority of the votes cast by the minority Class B shareholders (as determined under Ontario Securities Commission Rule 61-501 and Regulation Q-27 of the Autorité des marchés financiers du Québec) (the "Minority Class B Shareholders"), Magna will purchase for cancellation all the outstanding Class B Shares (other than the Class B Shares indirectly controlled by the Stronach Trust) for Cdn.$114.00 in cash per Class B Share and the number of votes attached to the Class B Shares will be reduced from 500 votes to 300 votes per share; (C) the Stronach Trust, 445, 446 and the Principals will effectively combine their respective holdings in Magna (in the case of the Principals, a portion of their holdings), together with the 20 million Class A Subordinate Voting Shares to be issued in the Arrangement, which will effectively allow the Stronach Trust and the Principals to share in the dividends from, and, in certain circumstances, 50% of any capital appreciation in, the 20 million Class A Subordinate Voting Shares to be issued in the Arrangement; (D) the size of Magna's board of directors (the "Board") will be increased from nine to 13 directors; (E) four additional directors will be appointed to the Board, namely, Ms. Belinda Stronach, Lady Barbara Thomas Judge, Mr. Gregory C. Wilkins and Mr. James D. Wolfensohn; and (F) Magna's by-laws will be amended to remove the right of the Chairman of the Board to cast a second or deciding vote in the event of an equality of votes at meetings of the Board.

12. Pursuant to the Transaction Agreement, 445, the Stronach Trust, Russian Machines and RM Sub have agreed to enter, and to cause Newco, Newco I.5 and Newco II to enter, into certain agreements at the effective time of the Arrangement that will govern their relationship as shareholders, including in particular the voting of the 20,605,000 Class A Subordinate Voting Shares and the 726,829 Class B Shares held directly or indirectly by Newco, Newco I.5 and Newco II (the "Governance Arrangements").

13. On the effective date of the Arrangement (the "Effective Date") Russian Machines, RM Sub, Newco, Newco I.5, Newco II and 446 will enter into an exit agreement (the "Exit Agreement"), which will provide that, at any time after the second anniversary of the Effective Date, RM Sub will have the right to withdraw its investment in Newco and Newco II and exit from its governance arrangements with the Stronach Trust by selling to Newco, or Newco's designee, its Newco shares, Newco II shares and the U.S.$ 1,459,770,000 loan RM Sub will make to Newco II on the Effective Date to fund 95% of the cost of the acquisition by Newco II of the 20 million Class A Subordinate Voting Shares issued by Magna under the Arrangement (the "Newco II Loan") in exchange for Class A Subordinate Voting Shares (or the cash proceeds of disposition of such shares). At any time after the third anniversary of the Effective Date, 446 will have the right to require RM Sub to sell its Newco shares, Newco II shares and the Newco II Loan to Newco, or Newco's designee, in exchange for Class A Subordinate Voting Shares (or the cash proceeds of disposition of such shares). RM Sub may also exit from its investment in Newco and Newco II at any time following the insolvency of 446 or the material breach by 446 of the Exit Agreement or the Governance Arrangements. In addition, 446 will have the right to require RM Sub to exit at any time following the insolvency of RM Sub or a material breach by RM Sub of the Exit Agreement or Governance Arrangements.

14. The Governance Arrangements will terminate upon any sale by RM Sub of its investment in Newco and Newco II. In certain circumstances, the Stronach Trust and the Principals will be entitled to receive 50% of any capital appreciation (after adjustment for taxes) on the 20 million Class A Subordinate Voting Shares following an RM Sub exit.

15. Pursuant to the Exit Agreement, RM Sub is permitted to pledge its Newco shares, Newco II shares and the Newco II Loan (and the 20 million Class A Subordinate Voting Shares pledged as security therefor) to its lender to secure the loan its lender will provide to RM Sub to finance the subscription for the 20 million Class A Subordinate Voting Shares to be issued under the Arrangement (the "RM Loan"). At any time following the Effective Date, in the event of a realization on the RM Loan (a "Realization Event"), RM Sub's lender will have the right to realize on the pledged Class A Subordinate Voting Shares. In that event, the Governance Arrangements will also terminate.

16. In certain circumstances in connection with an RM Sub exit, a series of transactions (the "Tuck Transactions") is contemplated whereby shares of Newco II will be transferred to Magna in exchange for 20 million newly-issued Class A Subordinate Voting Shares. Immediately thereafter, Newco II will be wound up and the 20 million Class A Subordinate Voting Shares held by Newco II will be distributed to Magna and cancelled.

17. As part of the Arrangement an exchange agreement (the "Exchange Agreement") will be entered into on the Effective Date by Magna, Russian Machines, RM Sub, 445, 446, Newco I.5, Newco II and RM Sub's lender that provides for the Tuck Transactions to be effected at the election of 446, RM Sub or RM Sub's lender pursuant to the Exit Agreement. The Tuck Transactions are intended to facilitate an efficient exit by RM Sub from its investment in Newco and Newco II. The Exchange Agreement also provides for customary representations, warranties and covenants from Magna, RM Sub and Newco I.5, and includes representations, warranties and covenants relating to the restrictions on Newco II's business activities. Russian Machines' and RM Sub's strategic investment in Magna is conditional on the Exchange Agreement being included in the Arrangement.

18. In connection with an RM Sub exit that includes the Tuck Transactions, the following steps will occur:

(a) the Newco II Loan will convert into special shares of Newco II, which will then be held by RM Sub;

(b) RM Sub will sell to Magna all of its shares of Newco II;

(c) in consideration for RM Sub's shares of Newco II, Magna will issue to RM Sub or its designee a certain number of Class A Subordinate Voting Shares;

(d) Newco I.5 will sell to Magna all of its shares of Newco II;

(e) in consideration for Newco I.5's shares of Newco II, Magna will issue to Newco I.5 or its designee a certain number of Class A Subordinate Voting Shares; and

(f) Newco II will be wound up into Magna.

19. A total of 20 million Class A Subordinate Voting Shares would be issued by Magna to RM Sub and Newco I.5 through the Tuck Transactions. In order for the Tuck Transactions to be completed, certain conditions must be satisfied or waived by the relevant party, including:

(a) an RM Sub exit or a Realization Event shall have occurred;

(b) Newco II's only assets shall be 20 million Class A Subordinate Voting Shares;

(c) required regulatory approvals shall have been obtained;

(d) Magna's satisfaction that the Tuck Transactions will not give rise to liability for taxes or other adverse tax consequences to Newco II or Magna; and

(e) RM Sub shall have received and delivered to Magna a certificate issued by the Canadian Minister of National Revenue pursuant to section 116(2) of the Income Tax Act (Canada) (a "Section 116(2) Certificate").

20. RM Sub and Newco shall bear all costs, expenses and fees that Magna incurs in connection with the Tuck Transactions. Following completion of the Tuck Transactions, Magna and Newco II will be indemnified and saved harmless (a) jointly and severally by Russian Machines and RM Sub for any liabilities suffered or incurred by Magna and/or Newco II as a result of or arising out of or in connection with any breach by RM Sub of the Exchange Agreement, (b) jointly and severally by 445 and Newco I.5 for liabilities suffered or incurred by Magna and/or Newco II as a result of or arising out of or in connection with any breach by Newco I.5 of the Exchange Agreement and (c) jointly and severally by Russian Machines, RM Sub, 445 and Newco I.5 for:

(a) any breach by Newco II of the Exchange Agreement;

(b) any breach by RM Sub or Newco I.5 of representations and warranties by RM Sub and Newco I.5 with respect to Newco II;

(c) liability of Newco II on or before, or related to, the completion of the Tuck Transactions; and

(d) any liability which would not have been incurred but for the Tuck Transactions, with certain exceptions.

21. As part of the Arrangement a principals exchange agreement (the "Principals Exchange Agreement") will be entered into on the Effective Date by Magna, 445, Newco, Newco I.5, Principals Holdco, the Principals and certain affiliates of the Principals. Pursuant to the Principals Exchange Agreement, immediately following the completion of the Tuck Transactions, the Principals, certain of the Principals' affiliates and Newco, will complete a series of transactions (the "Principals Tuck Transactions") whereby shares of Principals Holdco, GKP Holdco, SW CDN Holdco and Newco I.5, each of which is a special purpose corporation that will have no tax or other liabilities (excluding liabilities provided for to Magna's reasonable satisfaction) and own no assets other than direct or indirect ownership of Class A Subordinate Voting Shares, will be transferred to Magna by the holders thereof and in consideration for the transfer of such shares, Magna will issue to the holders of such shares that number of newly-issued Class A Subordinate Voting Shares equal to the number of Class A Subordinate Voting Shares directly or indirectly held by these corporations. For greater certainty, the number of Class A Subordinate Voting Shares held directly or indirectly by these corporations does not include the 20 million Class A Subordinate Voting Shares previously held by Newco II. Immediately after the issuance by Magna of the Class A Subordinate Voting Shares to holders of the shares of these corporations, Principals Holdco, GKP Holdco, SW CDN Holdco, Newco I.5 and certain wholly-owned subsidiaries of Newco I.5 (such subsidiaries referred to herein as the "Personal Holdcos") will be wound up and the Class A Subordinate Voting Shares they previously held will be distributed to Magna and cancelled.

22. The Principals Tuck Transactions are intended to facilitate an efficient exit by the Principals from their indirect investment in Newco and Newco I.5 following the completion of the Tuck Transactions.

23. In order for the Principals Tuck Transactions to be completed, certain conditions must be satisfied or waived by the relevant party, including:

(a) the Tuck Transactions shall have occurred;

(b) the only assets of Newco I.5, Principals Holdco, GKP Holdco, SW CDN Holdco and the Personal Holdcos (the "Acquired Corporations") shall be Class A Subordinate Voting Shares;

(c) required regulatory approvals shall have been obtained;

(d) Magna's satisfaction, as determined by a committee of independent directors, that the Principals Tuck Transactions will not give rise to liability for taxes or other adverse tax consequences to Magna or any of the Acquired Corporations; and

(e) each non-resident affiliate of any of the Principals that holds shares of an Acquired Corporation shall have received and delivered to Magna a Section 116(2) Certificate.

24. Newco and certain affiliates of the Principals shall bear all costs, expenses and fees that Magna incurs in connection with the Principals Tuck Transactions. Following completion of the Principals Tuck Transactions, Magna and the Acquired Corporations will be indemnified and saved harmless severally by Newco, each of the Principals, and certain affiliates of the Principals for (a) any liabilities suffered or incurred by Magna and/or an Acquired Corporation as a result of or arising out of or in connection with any breach by certain affiliates of the Principals or by Newco of the Principals Exchange Agreement and (b) any liabilities suffered or incurred by Magna and/or an Acquired Corporation as a result of or arising out of or in connection with

(a) any liability sustained, suffered, incurred, assumed or acquired by such affiliates of the Principals or by Newco on or before, or related to any matter occurring on or before, the consummation of the Principals Tuck Transactions; and

(b) any liability that would not have been sustained, suffered, incurred, assumed or acquired by (or which would not have been asserted, threatened or be pending against) Magna, certain affiliates of the Principals, Newco or the Acquired Corporations but for the Principals Tuck Transactions.

25. Each of the Principals, their affiliates and Newco will be responsible for any liability referred to above to the extent that such liability is referable to such Principal, affiliate or Newco or any Acquired Corporation in which such Principal, affiliate or Newco held a direct or indirect interest at the time of the Principals Tuck Transactions, with liability in proportion to his or its interest in such Acquired Corporation at that time.

26. Following the Tuck Transactions and the Principals Tuck Transactions, RM Sub, the Principals and Newco will hold directly the Class A Subordinate Voting Shares that they previously held indirectly. The Tuck Transactions and the Principals Tuck Transactions will not change the total number of issued and outstanding Class A Subordinate Voting Shares and will not result in any changes to the Class A Subordinate Voting Shares of other shareholders. Each holder of Class A Subordinate Voting Shares will beneficially own the same number of Class A Subordinate Voting Shares that such holder owned immediately prior to the Tuck Transactions and the Principals Tuck Transactions and will have the same rights and benefits in respect of such shares that such holder had indirectly immediately prior to the Tuck Transactions and the Principals Tuck Transactions.

27. The Tuck Transactions and Principals Tuck Transactions should not have any adverse economic effect on, or adverse tax consequences to, or in any way prejudice Magna or Magna's shareholders.

28. Magna will be indemnified and saved harmless from any liabilities incurred in connection with the Tuck Transactions and Principals Tuck Transactions, including with respect to all costs, expenses and fees incurred in connection with these transactions.

29. Following the unanimous recommendations of a special committee of independent Magna directors and the Board, the requisite majorities of Magna's shareholders approved the Arrangement, which includes the entering into of the Exchange Agreement and the Principals Exchange Agreement, at a special meeting of shareholders held on August 28, 2007.

30. In the course of the Tuck Transactions and Principals Tuck Transactions, Magna will become the direct owner of all of the issued and outstanding shares of Newco I.5, Principals Holdco, GKP Holdco, SW CDN Holdco and Newco II and, as a result, Magna will temporarily become the indirect owner of the Class A Subordinate Voting Shares held by Newco II, Newco I.5 and the Personal Holdcos. The indirect acquisition of such Class A Subordinate Voting Shares by Magna in the Tuck Transactions and Principals Tuck Transactions may constitute an indirect "issuer bid" pursuant to section 92 and subsection 89(1) of the Act since the acquisition may be viewed as indirectly involving "... a purchase, redemption or other acquisition of securities of the issuer by the issuer ". Such an indirect issuer bid would not be exempt from the requirements of Part XX of the Act.

31. The Tuck Transactions and the Principals Tuck Transactions also involve the wind-up of Newco II, Newco I.5, Principals Holdco, GKP Holdco, SW CDN Holdco and the Personal Holdcos and the resulting cancellation of the Class A Subordinate Voting Shares held by Newco II, Newco I.5 and the Personal Holdcos. If such windings-up and cancellation were considered a direct or indirect issuer bid, there would be no exemption available from the requirements of Part XX of the Act.

AND UPON the Commission being satisfied that to do so would no be prejudicial to the public interest;

IT IS ORDERED pursuant to clause 104(2)(c) of the Act that Tuck Transactions and the Principals Tuck Transactions are exempt from the requirements of sections 95, 96, 97, 98 and 100 of the Act.

DATED at Toronto, Ontario on this 19th day of September, 2007.