EXHIBIT 2.3
UNDERWRITING AGREEMENT
March 18, 2002
Sun Gro Horticulture Income Fund
c/o Sun Gro Horticulture Inc.
00000 X.X. 0xx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx
00000
ATTENTION: Xxxxx Xxxxxx
President, Sun Gro Horticulture Inc.
and
Sun Gro Horticulture, Inc.
00000 X.X. 0xx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx
00000
ATTENTION: Xxxxx Xxxxxx
President, Sun Gro Horticulture Inc.
and
Xxxxx Horticulture, Inc. as promoter of
Sun Gro Horticulture Income Fund
00000 Xxxxxxx Xxxx
Xxxxxx, XX
00000-0000
ATTENTION: Xxxxx Xxxxxxx
Chairman and Chief Executive Officer
Dear Sirs/Mesdames:
We understand that Sun Gro Horticulture Income Fund (the "FUND") is an
unincorporated open ended trust established pursuant to the laws of British
Columbia and pursuant to a trust indenture dated as of February 12, 2002, as
amended and restated as of March 18, 2002 and that the Fund will, upon
successful completion of the offering of Units contemplated in this Agreement,
qualify as a "unit trust" and a "mutual fund trust" for the purposes of the
INCOME TAX ACT (Canada). We understand that the Fund proposes to create, issue
and sell 22,023,000 Units of the Fund (the "PURCHASED UNITS") having the
material attributes described herein and in a preliminary prospectus which the
Fund has prepared and filed with the securities regulatory authorities in each
of the provinces and territories of Canada. We further understand that Xxxxx
Horticulture, Inc. ("XXXXX") is the promoter of the Fund and the parent of Xxxxx
Nurseries, Inc. ("XXXXX NURSERIES") which in turn is the parent of Sun Gro
Horticulture, Inc. ("SUN GRO U.S.") and that prior to the closing of the sale of
the Purchased Units, Sun Gro U.S. will complete a reorganization of the business
to be carried on by the Fund, as described in the Prospectus (as defined below).
Subject to the terms and conditions contained herein, BMO Xxxxxxx Xxxxx
Inc., CIBC World Markets Inc., RBC Dominion Securities Inc., Scotia Capital
Inc., National Bank Financial Inc. and TD Securities Inc. (collectively, the
"UNDERWRITERS" and individually, an "UNDERWRITER") hereby severally offer to
purchase from the Fund, in the respective percentages set forth in Section 21
hereof, and by its acceptance of the offer made by this letter the Fund hereby
agrees to sell to the Underwriters, all but not less than all of the Purchased
Units at a purchase price of $10.00 per Purchased Unit, being an aggregate
purchase price of $220,230,000.
TERMS AND CONDITIONS
--------------------
1. ATTRIBUTES OF THE PURCHASED UNITS. The Purchased Units to be issued and sold
by the Fund hereunder shall be duly and validly created and issued by the Fund
and, when issued and sold by the Fund, such Purchased Units shall have
attributes and characteristics that conform in all material respects to the
attributes and characteristics set forth in the Prospectus, subject to such
modifications or changes (if any) made prior to the Closing Date as may be
agreed to in writing by the Fund and the Underwriters.
2. UNDERWRITERS' FEE. In consideration of the agreement of the Underwriters to
purchase the Purchased Units hereunder and to offer them to the public and of
the services to be rendered by the Underwriters in connection herewith, the Fund
agrees to pay to the Underwriters, at the Time of Closing (as hereinafter
defined), a fee equal to 5.75% of the aggregate purchase price of the Purchased
Units, or $0.575 for each of such Purchased Units, being an aggregate fee of
$12,663,225.
3. USE OF PROCEEDS. The net proceeds from the offering of Purchased Units
hereunder will be used by the Fund on the Closing Date, directly or indirectly,
for the purposes described in the Prospectus under the heading "Use of
Proceeds".
4. DEFINITIONS AND INTERPRETATION. Certain defined terms used herein are defined
in various sections of this Agreement. In addition, where used in this
Agreement, the following terms shall have the following meanings, respectively:
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"AFFILIATE" means with respect to any person, any other Person directly or
indirectly controlling, controlled by or under common control with such first
Person, and a Person is deemed to control another Person if such Person
possesses directly or indirectly, the power to direct or cause the direction of
the management and policies of the other Person whether through the ownership of
voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" shall have similar meanings.
"AGREEMENT" means the agreement resulting from the acceptance by the Fund, Sun
Gro U.S. and Xxxxx of the offer made by the Underwriters by this letter, as it
may be amended from time to time;
"ACQUISITION AGREEMENT" means the acquisition agreement to be dated as of March
18, 2002 among the Fund, Sun Gro U.S., Sun Gro Canada, Xxxxx Nurseries and
Xxxxx, providing for, among other things, the purchase of the Sun Gro Common
Shares by the Fund;
"BUSINESS DAY" means a day other than a Saturday, a Sunday or a day on which
chartered banks are not open for business in Vancouver, British Columbia;
"CLOSING DATE" means March 27, 2002 or such earlier or later date as may be
agreed to in writing by the Fund and the Underwriters each acting reasonably,
but in any event not later than April 30, 2002;
"DISTRIBUTION" means distribution or distribution to the public, as the case may
be, for the purposes of the Securities Laws or any of them;
"FINANCIAL FORECAST" means the financial forecast of Sun Gro Canada for the year
ending December 31, 2002, together with the notes thereto and the report of
PricewaterhouseCoopers LLP thereon, as contained in the Prospectus;
"FINANCIAL INFORMATION" means collectively the Financial Forecast, the Fund
Balance Sheet, the Fund Pro Forma Financial Statements and the Sun Gro U.S.
Financial Statements;
"FUND BALANCE SHEET" means the audited balance sheet of the Fund as at February
12, 2002, together with the report of PricewaterhouseCoopers LLP thereon and the
notes thereto, as contained in the Prospectus;
"FUND PRO FORMA FINANCIAL STATEMENTS" means the pro forma financial statements
of the Fund, consisting of the pro forma consolidated balance sheet of the Fund
as at September 30, 2001, and the pro forma consolidated statement of operations
of the Fund for the nine-month period ended September 30, 2001 and the year
ended December 31, 2000, together with the report of PricewaterhouseCoopers LLP
thereon and the notes thereto, as contained in the Prospectus;
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"FUND SUBSIDIARIES" means SGC New, SG Holdco, SG Management, SG Distribution, SG
Processing, SG Manitoba and SG New Brunswick;
"INCOME TAX ACT" means the INCOME TAX ACT (Canada) and the regulations
thereunder, in each case as amended;
"LEAD UNDERWRITER" means BMO Xxxxxxx Xxxxx Inc.;
"MATERIAL CHANGE" has the meaning ascribed thereto in the SECURITIES ACT
(British Columbia);
"MATERIAL FACT" has the meaning ascribed thereto in the SECURITIES ACT (British
Columbia);
"MISREPRESENTATION" has the meaning ascribed thereto in the SECURITIES ACT
(British Columbia);
"MUTUAL RELIANCE PROCEDURES" means the mutual reliance review system procedures
provided for under National Policy 43-201, Mutual Reliance Review System for
Prospectuses and Annual Information Forms of the Securities Commissions;
"OFFERING DOCUMENT" has the meaning given that term in Section 7(c);
"PERSON" means a natural person, partnership, limited liability partnership,
corporation, joint stock company, trust, unincorporated association, joint
venture or other entity or governmental body;
"PRELIMINARY PROSPECTUS" means the preliminary prospectus of the Fund in the
English language dated February 12, 2002, approved, signed and certified in
accordance with the Securities Laws, and the French language version thereof,
relating to the qualification for distribution of the Purchased Units under the
Securities Laws in all the Qualifying Jurisdictions through the Underwriters;
"PROSPECTUS" means the (final) prospectus of the Fund in the English language to
be approved, signed and certified in accordance with the Securities Laws, and
the French language version thereof, relating to the qualification for
distribution of the Purchased Units under the Securities Laws in all the
Qualifying Jurisdictions through the Underwriters;
"QUALIFYING JURISDICTIONS" means collectively each of the provinces and
territories of Canada;
"REORGANIZATION" means the reorganization of the business carried on by Sun Gro
U.S. as contemplated in the Prospectus under "Funding, Acquisition and Related
Transactions - Reorganization";
"SECURITIES COMMISSION" means the applicable securities commission or regulatory
authority in each of the Qualifying Jurisdictions;
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"SECURITIES LAWS" means, collectively, the applicable securities laws of each of
the Qualifying Jurisdictions and the respective regulations and rules made
thereunder together with all applicable published policy statements, blanket
orders and rulings of the Securities Commissions and all discretionary orders or
rulings, if any, of the Securities Commissions made in connection with the
transactions contemplated hereunder;
"SGC NEW" means Sun Gro Horticulture Canada Ltd., as it will exist following its
amalgamation with SG Nova Scotia under the laws of Nova Scotia;
"SG DISTRIBUTION" means Sun Gro Horticulture Distribution Inc., a company
incorporated under the laws of Delaware and a wholly-owned subsidiary of SG
Holdco;
"SG HOLDCO" means Sun Gro Holdings Inc., a company incorporated under the laws
of Delaware and a wholly-owned subsidiary of Sun Gro Canada;
"SG MANAGEMENT" means Sun Gro Horticulture CM Ltd., a company incorporated under
the laws of Canada and a wholly-owned subsidiary of Sun Gro Canada;
"SG MANITOBA" means Sunshine Peat Xxxx Ltd., a company incorporated under the
laws of Manitoba and a wholly-owned subsidiary of Sun Gro Canada;
"SG NEW BRUNSWICK" means Sunshine Peat Xxxx Ltd., a company incorporated under
the laws of New Brunswick and a wholly-owned subsidiary of Sun Gro Canada;
"SG NOVA SCOTIA" means 3064535 Nova Scotia Company and a wholly-owned subsidiary
of Sun Gro U.S. and a predecessor of SGC New;
"SG PROCESSING" means Sun Gro Horticulture Processing Inc., a company
incoporated under the laws of Delaware and a wholly-owned subsidiary of SG
Holdco;
"SUN GRO CANADA" means Sun Gro Horticulture Canada Ltd., a company incorporated
under the laws of Canada and a wholly-owned subsidiary of Sun Gro U.S. and a
predecessor of SGC New;
"SUN GRO U.S. FINANCIAL STATEMENTS" means the audited financial statements of
Sun Gro U.S. consisting of the consolidated balance sheets as at December 26,
1999 and December 31, 2000 and the consolidated statements of operations,
shareholder's equity and cash flows for the periods ended on December 31, 1998,
December 26, 1999 and December 31, 2000, together with the report of
PricewaterhouseCoopers LLP thereon and the notes thereto, and the unaudited
financial statements of Sun Gro U.S. consisting of the consolidated balance
sheet as at September 30, 2001 and the consolidated statements of operations and
cash flows for the nine-month and three-month periods ended September 26, 2000
and the statement of shareholder's equity for the nine-month period ended
September 30, 2001, together with the notes thereto, in each case as contained
in the Prospectus;
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"SUPPLEMENTARY MATERIAL" means, collectively, any amendment to the Preliminary
Prospectus or the Prospectus, any amendment or supplemental prospectus or any
ancillary materials that may be filed by or on behalf of the Fund under the
Securities Laws relating to the distribution of the Purchased Units thereunder;
"TIME OF CLOSING" means 6:00 a.m. (Vancouver time) on the Closing Date, or such
other time on the Closing Date as may be agreed to by the Fund and the
Underwriters;
"TRANSACTION AGREEMENTS" means (i) the agreements, declaration and indenture
listed under the heading "Material Contracts" in the Prospectus (including this
Agreement), together with any agreement the form of which is contained in a
Schedule or Exhibit to any such "Material Contracts"; (ii) the agreements
relating to the Reorganization; (iii) the agreements relating to the Credit
Facility; (iv) the registrar and transfer agent agreement between the Fund and
Computershare Trust Company of Canada relating to the Purchased Units; (v)
Distribution Agreement between SGC New and SG Distribution; (vi) Contract
Manufacturing Agreement between SGC New and SG Processing; (vii) Management
Agreement between SG Distribution and SG Management; and (viii) Management
Agreement between SG Management and SGC New;
"TRANSFER PRICING STUDY" means:
(a) the transfer pricing study performed by PricewaterhouseCoopers
LLP ("PWC") and covering letter dated February 22, 2002;
(b) a memorandum from Xxxxx Xxxxxx and Xxxx Xxxxxx to Xxxx Xxxxxxx
dated March 18, 2002 regarding proposed changes in functions,
risks and asset ownership;
(c) a memorandum from Xxxxx Xxxxxx and Xxxx Xxxxxxxx to Xxxx
Xxxxxxx dated February 22, 2002 regarding the "Sun Gro
Restructure";
(d) a memorandum from Xxxxx Xxxxxx to Xxxx Xxxxxxx dated March 7,
2002 regarding "Sun Gro Group Operational Guidelines"; and
(e) all agreements as of the Closing Date between the Purchaser
and its direct and indirect subsidiaries or any of them.
"TSE" means the Toronto Stock Exchange;
Capitalized terms used but not defined herein have the meanings ascribed to them
in the Prospectus.
Any reference in this Agreement to a section, subsection, paragraph or
subparagraph shall refer to a section, subsection, paragraph or subparagraph of
this Agreement.
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All words and personal pronouns relating thereto shall be read and construed as
the number and gender of the party or parties referred to in each case require
and the verb shall be construed as agreeing with the required word and/or
pronoun.
5. PREPARATION AND FILING OF PROSPECTUS.
(a) The Fund and Xxxxx shall prepare and file the Prospectus and
all other documents required under the Securities Laws with
the Securities Commissions, and obtain a decision document
from the British Columbia Securities Commission under the
Mutual Reliance Procedures evidencing that a receipt has been
issued for the Prospectus by each of the Securities
Commissions, or otherwise fulfill all legal requirements to
enable the Purchased Units to be offered and sold to the
public in each of the Qualifying Jurisdictions through the
Underwriters or any other investment dealer or broker
registered to transact such business in the applicable
Qualifying Jurisdiction, not later than 5:00 p.m. (Vancouver
time) on March 20, 2002 (or such later date or time as may be
agreed to in writing by the Underwriters).
(b) Prior to the filing of the Preliminary Prospectus and
thereafter, and prior to the filing of the Prospectus, the
Fund shall have allowed the Underwriters to participate fully
in the preparation of such documents and shall have allowed
the Underwriters and their advisors and representatives to
conduct all due diligence investigations which they may
reasonably require in order to fulfil their obligations as
underwriters and in order to enable them to execute the
certificate required to be executed by them in the Preliminary
Prospectus and the Prospectus.
6. DISTRIBUTION AND CERTAIN OBLIGATIONS OF UNDERWRITERS.
(a) The Underwriters shall offer the Purchased Units for sale to
the public directly and through other investment dealers or
brokers (other than the Underwriters) (each, a "SELLING FIRM")
upon the terms and conditions set out in the Prospectus and
this Agreement in those jurisdictions where they may be
lawfully offered for sale or sold and shall comply with, and
shall require any Selling Firm to agree to comply with, the
Securities Laws in connection with the distribution and sale
of the Purchased Units. Any offer or sales of Purchased Units
in the United States will be made in accordance with Section
14 of this Agreement. The Underwriters shall promptly notify
the Fund when, in their opinion, the Underwriters and the
Selling Firms have ceased distribution of the Purchased Units
and provide a breakdown of the number of Purchased Units
distributed in each of the Qualifying Jurisdictions where such
breakdown is required for the purpose of calculating fees
payable to the Securities Commissions.
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(b) For the purposes of this Section 6, the Underwriters shall be
entitled to assume that the Purchased Units are qualified for
distribution in any Qualifying Jurisdiction where a receipt or
similar document for the Prospectus shall have been obtained
from the applicable Securities Commission (including a
decision document for the Prospectus issued under the Mutual
Reliance Procedures) following the filing of the Prospectus
unless otherwise notified in writing.
(c) The Underwriters shall use reasonable commercial efforts to
complete and to cause the Selling Firms to complete the
distribution of the Purchased Units as soon as possible after
the Time of Closing. The Underwriters shall also use
reasonable commercial efforts to cause a distribution of the
Purchased Units in a manner such that the Fund will satisfy
the requirements of the definition of "mutual fund trust"
under the Income Tax Act with respect to distribution of the
Purchased Units and to meet the minimum listing requirements
of the TSE respecting distribution of the Purchased Units.
(d) Notwithstanding the foregoing provisions of this Section 6, an
Underwriter will not be liable to the Fund under this Section
6 with respect to a default under this Section 6 by another
Underwriter or Selling Firm, as the case may be.
7. DELIVERIES ON FILING AND RELATED MATTERS.
(a) DELIVERY OF CERTAIN MATERIALS. The Fund shall deliver to each
of the Underwriters and the Underwriters' counsel the
documents set out below at the respective times indicated:
(i) on the date hereof or as soon as possible thereafter,
a copy of the Prospectus in each of the English and
French languages signed and certified as required by
the Securities Laws;
(ii) at the time of delivery of the French language
version of the Prospectus pursuant to this Subsection
7(a), an opinion dated the date of the Prospectus, in
form and substance satisfactory to the Underwriters,
acting reasonably, addressed to the Underwriters,
Underwriters' counsel and the Fund, from Xxxxxx
Xxxxxx Xxxxxxx LLP, to the effect that the French
language version of the Prospectus, except for the
Financial Information as to which no opinion need be
expressed by such counsel, is, in all material
respects, a complete and accurate translation of the
English language version thereof, and that the
English and French language versions are not
susceptible of any materially different
interpretation with respect to any matter contained
therein;
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(iii) at the time of delivery of the French language
version of the Prospectus pursuant to this Subsection
7(a), an opinion dated the date of the Prospectus, in
form and substance satisfactory to the Underwriters,
acting reasonably, addressed to the Underwriters,
Underwriters' counsel and the Fund, from
PricewaterhouseCoopers LLP, the auditors of the Fund
and of Sun Gro U.S., to the effect that the French
language version of the Financial Information in the
Prospectus is, in all material respects, a complete
and proper translation of the English language
version thereof;
(iv) concurrently with the filing of the Prospectus with
the Securities Commissions, a comfort letter dated
the date of the Prospectus, in form and substance
satisfactory to the Underwriters, acting reasonably,
addressed to the Underwriters from
PricewaterhouseCoopers LLP, the auditors of the Fund
and of Sun Gro U.S., with respect to the financial
and accounting information contained in the
Prospectus, which letter shall be based on a review
by the applicable auditors within a cut-off date of
not more than two business days prior to the date of
the letter, and which letter shall be in addition to
the auditors' consent letters and comfort letters
addressed to the Securities Commissions in the
Qualifying Jurisdictions;
(v) prior to the filing of the Prospectus with the
Securities Commissions, copies of correspondence
indicating that the application for the listing and
posting for trading on the TSE of the Purchased Units
has been conditionally approved subject only to
customary filings required by the TSE.
(b) SUPPLEMENTARY MATERIAL. The Fund shall also prepare and
deliver promptly to the Underwriters and Underwriters' counsel
English and (where applicable) French versions of all
Supplementary Material signed and certified as required by the
Securities Laws. Concurrently with the delivery of any
Supplementary Material, the Fund shall deliver to the
Underwriters and Underwriters' counsel, with respect to such
Supplementary Material, opinions and comfort letters
substantially similar to those referred to in Section
7(a)(ii), (iii) and (iv).
(c) REPRESENTATIONS AS TO PROSPECTUS AND SUPPLEMENTARY MATERIAL.
Delivery of the Preliminary Prospectus, the Prospectus, the
U.S. Placement Memorandum (as defined in Section 14) and any
Supplementary Material (individually an "OFFERING DOCUMENT"
and collectively the "OFFERING DOCUMENTS") by the Fund shall
constitute the representation and warranty of each of the
Fund, Xxxxx and Sun Gro U.S. to the Underwriters that:
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(i) all information and statements (except information
and statements relating solely to any of the
Underwriters) contained and incorporated by reference
in such Offering Document are true and correct and
contain no misrepresentation and that such Offering
Document constitutes full, true and plain disclosure
of all material facts relating to the Fund and the
Purchased Units;
(ii) no material fact or information has been omitted
therefrom (except facts or information relating
solely to any of the Underwriters) which is required
under the Securities Laws to be stated in such
disclosure or is necessary to make the statements or
information contained in such disclosure not
misleading in light of the circumstances under which
they were made; and
(iii) such documents comply with the requirements of the
Securities Laws.
Such deliveries shall also constitute the Fund's consent to
the Underwriters' use of such Offering Document in connection
with the distribution of the Purchased Units in compliance
with this Agreement unless otherwise advised in writing.
(d) COMMERCIAL COPIES. The Fund shall deliver or cause to be
delivered to the Underwriters, as soon as practicable and in
any event not later than 9:00 a.m. (Toronto time) on March 21,
2002, such number of commercial copies of the Prospectus, in
such cities in the Qualifying Jurisdictions, as the
Underwriters may reasonably request by instructions to the
commercial printer of the Prospectus given forthwith after the
Underwriters have been advised that the Fund has filed the
Prospectus and obtained a receipt therefor. The Fund shall, as
soon as possible following a request from the Underwriters,
deliver or cause to be delivered to the Underwriters such
additional commercial copies of the Prospectus in such numbers
and at such locations as the Underwriters may reasonably
request from time to time. The Fund shall from time to time
deliver or cause to be delivered to the Underwriters, as soon
as practicable, commercial copies of any Supplementary
Material in such numbers and at such locations as the
Underwriters may reasonably request from time to time.
(e) PRESS RELEASES. During the period commencing on the date
hereof and until completion of the distribution of the
Purchased Units, the Fund will promptly provide to the
Underwriters drafts of any press releases of the Fund and any
press releases of Xxxxx regarding the Fund or the sale of SGC
New to the Fund for review by the Underwriters and the
Underwriters' counsel prior to issuance, provided that any
such review will be completed in a timely manner.
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8. MATERIAL CHANGE.
(a) During the period from the date hereof until the Underwriters
notify the Fund of the completion of the distribution of the
Purchased Units hereunder, the Fund, Xxxxx and Sun Gro U.S.
shall promptly inform the Underwriters (and if requested by
the Underwriters, confirm such notification in writing) of the
full particulars of:
(i) any change (actual, anticipated, contemplated or
threatened) in the assets, liabilities (contingent or
otherwise), business, affairs, operations or capital
of the Fund, Sun Gro U.S. or any of the Fund
Subsidiaries; or
(ii) any change in any matter referred to in any Offering
Document (other than any matter relating solely to
any of the Underwriters); or
(iii) any other fact, event or circumstance;
which is, or may be, of such a nature as to render any of the
Offering Documents or any statement therein untrue or
misleading in any material respect or which would result in
any of the Offering Documents containing a misrepresentation
or which would result in any of the Offering Documents not
complying with any of the Securities Laws or which would
reasonably be expected to have a significant effect on the
market price or value of the Purchased Units or the value of
any of the Fund Subsidiaries or Sun Gro Canada.
(b) The Fund shall in good faith discuss with the Lead Underwriter
any fact, change, event or circumstance (actual, anticipated,
contemplated or threatened) which is of such a nature that
there is or could be reasonable doubt as to whether notice
should be given to the Underwriters under Subsection 8(a)
hereof and, in any event shall consult with the Underwriters
with respect to the form and content of any amendment or
document proposed to be filed by the Fund under Subsection
8(c), below, prior to any such filing being made.
(c) The Fund shall promptly comply with all applicable filing and
other requirements under the Securities Laws arising as a
result of any change, fact, event or circumstance referred to
in Section 8(a) and shall prepare and file under all
applicable Securities Laws, as promptly as possible, and in
any event within any time limit prescribed under applicable
Securities Laws, any Supplementary Material as may be required
under applicable Securities Laws; provided that the Fund shall
allow the Underwriters and their counsel to participate fully
in the preparation of any Supplementary Material and to
conduct all due diligence investigations which the
Underwriters may reasonably require in order to fulfil their
obligations as underwriters and in order to enable the
-11-
Underwriters to execute responsibly the certificate required
to be executed by them in any Supplementary Material and the
Underwriters shall have approved the form of any Supplementary
Material, such approval not to be unreasonably withheld and to
be provided in a timely manner.
(d) The delivery to the Underwriters of Supplementary Material
shall constitute a representation and warranty to the
Underwriters by the Fund and Xxxxx with respect to the
Prospectus as amended, modified or superseded by such
Supplementary Material and by any Supplementary Material
previously delivered to the Underwriters as aforesaid, to the
same effect as set forth in Subsection 7(c). Such delivery
shall also constitute the consent of the Fund to the use of
the Prospectus, as amended, modified or superseded by the
Supplementary Material, by the Underwriters in connection with
the distribution of the Purchased Units hereunder.
(e) During the period commencing on the date hereof and ending on
the completion of the distribution of Purchased Units
hereunder, the Fund will promptly inform the Underwriters of
the full particulars of:
(i) any request of any Securities Commission for any
amendment to the Preliminary Prospectus, the
Prospectus or any Supplementary Material or for any
additional information; or
(ii) the issuance by any Securities Commission, the TSE or
any other competent authority of any order to cease
or suspend trading of any securities of the Fund or
of the institution or threat of institution of any
proceedings for that purpose.
9. REPRESENTATIONS AND WARRANTIES OF THE FUND, SUN GRO U.S. AND XXXXX. Each of
the Fund, Sun Gro U.S. and Xxxxx jointly and severally represents and warrants
to the Underwriters that:
(a) the Fund is an unincorporated open-ended trust duly created,
organized and existing under the laws of British Columbia and
has all requisite power, capacity and authority to own its
properties and assets and to carry on its business as
presently conducted and as proposed to be conducted as
contemplated in the Prospectus, and to enter into and deliver
this Agreement and the Transaction Agreements to which it is
or will be a party and to perform its obligations hereunder
and thereunder;
(b) each of Xxxxx, Sun Gro U.S. and the Fund Subsidiaries has
been, or will at the Time of Closing be, duly created,
incorporated or amalgamated and organized and existing, under
the laws under which it has been, or will have been at the
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Time of Closing, created, incorporated or amalgamated, and
has, or will at the Time of Closing have, all requisite power,
capacity and authority to own its properties and assets and to
carry on its business as proposed to be conducted pursuant to
the Transaction Agreements and as contemplated in the
Prospectus, and to enter into and deliver the Transaction
Agreements to which it will be a party and to perform its
obligations thereunder;
(c) all necessary action has been taken by the Fund to authorize
the execution and delivery by the Fund of this Agreement and
the Transaction Agreements to which the Fund is currently a
party and the performance by the Fund of its obligations
hereunder and thereunder, and this Agreement and each of the
Transaction Agreements to which the Fund is currently a party
has been duly executed and delivered and constitutes a valid
and legally binding obligation of the Fund enforceable against
it in accordance with its terms (subject to applicable
bankruptcy, insolvency, reorganization and other laws of
general application limiting the enforcement of creditors'
rights generally and to the fact that specific performance is
an equitable remedy available only in the discretion of a
court), and each of the Transaction Agreements which is not
yet executed and delivered, but to which the Fund is to be
party at the Time of Closing, will have been duly authorized,
executed and delivered by it at the Time of Closing, and each
such Transaction Agreement will constitute at the Time of
Closing a valid and legally binding obligation of the Fund,
enforceable against it in accordance with its terms (subject
to applicable bankruptcy, insolvency, reorganization and other
laws of general application limiting the enforcement of
creditors' rights generally and to the fact that specific
performance is an equitable remedy available only in the
discretion of a court);
(d) all necessary action has been taken, or will have been taken
at the Time of Closing, by each of Xxxxx, Sun Gro U.S., Sun
Gro Canada, SG Nova Scotia and the Fund Subsidiaries to
authorize the execution and delivery by it of the Transaction
Agreements to which it is currently a party and the
performance by it of its obligations thereunder, and each of
the Transaction Agreements to which it is currently a party
has been duly executed and delivered and constitutes a valid
and legally binding obligation of it enforceable against it in
accordance with its terms (subject to applicable bankruptcy,
insolvency, reorganization and other laws of general
application limiting the enforcement of creditors' rights
generally and to the fact that specific performance is an
equitable remedy available only in the discretion of a court),
and each of the Transaction Agreements which is not yet
executed and delivered, but to which it is to be party at the
Time of Closing, will have been duly authorized, executed and
delivered by it at the Time of Closing, and each such
Transaction Agreement will constitute at the Time of Closing a
valid and legally binding obligation of it, enforceable
against it in accordance with the terms of such Transaction
Agreement (subject to applicable bankruptcy, insolvency,
reorganization and other laws of general application limiting
the enforcement of creditors' rights generally and to the fact
that specific performance is an equitable remedy available
-13-
only in the discretion of a court);
(e) the Fund has all requisite power, capacity and authority to
execute and deliver each of the Preliminary Prospectus and the
Prospectus and to file such documents with the Securities
Commissions, and all necessary action has been taken by the
Fund to authorize the execution and delivery of the
Preliminary Prospectus and the Prospectus and the filing of
each of them with the Securities Commissions;
(f) the Fund Balance Sheet:
(i) is in accordance with the books, records and accounts
of the Fund,
(ii) is true and correct and presents fairly the financial
position of the Fund as at the date indicated,
(iii) has been prepared in accordance with Canadian
generally accepted accounting principles, and
(iv) presents fairly all of the assets and liabilities of
the Fund as at the date indicated including all
contingent liabilities of the Fund as at the date
indicated;
(g) the Financial Forecast and the Fund Pro Forma Financial
Statements are complete and correct in all material respects
and have been prepared in accordance with Canadian generally
accepted accounting principles consistently applied and
applicable Securities Laws, and neither the Fund, Xxxxx or Sun
Gro U.S. is aware of any fact or circumstance presently
existing which would render the Financial Forecast or the Fund
Pro Forma Financial Statements materially incorrect;
(h) except as disclosed in the Prospectus, subsequent to the date
of the Preliminary Prospectus, there has not been any material
change (financial or otherwise) in the business, affairs,
assets or liabilities (contingent or otherwise), capital or
prospects of the Fund or any of SG Nova Scotia or the Fund
Subsidiaries;
(i) except as disclosed in the Prospectus, subsequent to December
31, 2000, there has not been any material change (financial or
otherwise) in the business, affairs, assets or liabilities
(contingent or otherwise) or capital of Sun Gro U.S. or Sun
Gro Canada and each of Sun Gro U.S. and Sun Gro Canada has
carried on its business in the ordinary course;
(j) the Fund is authorized to issue an unlimited number of Units,
of which, as at the date hereof, one Unit is issued and
outstanding as fully paid and non-assessable;
-14-
(k) SGC New is, or will be, at the Time of Closing, authorized to
issue 1,000,000,000 Sun Gro Common Shares and an unlimited
principal amount of Sun Gro Notes;
(l) Computershare Trust Company of Canada, at its principal
offices in Toronto, will have been, at the Time of Closing,
duly appointed as trustee in respect of the Sun Gro Notes;
(m) Computershare Trust Company of Canada, at its principal
offices in Vancouver and Toronto, will have been, at the Time
of Closing, duly appointed as the registrar and transfer agent
in respect of the Units of the Fund;
(n) the TSE has conditionally approved the listing of the
Purchased Units, subject to the filing of certain
documentation with the TSE and the payment of applicable
listing fees;
(o) the form and terms of the certificate for the Purchased Units
have been approved and adopted by the Trustees of the Fund and
do not conflict with the Declaration of Trust;
(p) all the Purchased Units to be issued by the Fund to the
Underwriters hereunder will at the Time of Closing have been
duly authorized for issuance and be duly and validly created
and issued and will be fully paid and non-assessable and will
conform to the description thereof contained in the
Prospectus;
(q) immediately following the Time of Closing:
(i) the Fund will be the registered and beneficial owner
of all the issued and outstanding Sun Gro Common
Shares and Sun Gro Notes;
(ii) SGC New will be the registered and beneficial owner
of all the outstanding shares of SG Holdco, SG
Management, SG Manitoba and SG New Brunswick and such
shares will have been duly and validly authorized and
issued and will be fully paid and non-assessable;
(iii) SG Holdco will be the registered and beneficial owner
of all of the outstanding shares of SG Distribution
and SG Processing and such shares will have been duly
and validly authorized and issued and will be fully
paid and non-assessable;
in each case, free and clear of all mortgages, liens, charges,
pledges, security interests, encumbrances, claims or demands
whatsoever in law or in equity and no person, firm or
corporation has any agreement or option, or right or privilege
(whether pre-emptive or contractual) capable of becoming an
agreement or option, for the purchase of any such Sun Gro
Common Shares, Sun Gro Notes or other shares;
-15-
(r) the execution and delivery by each of the Fund, Xxxxx, Sun Gro
U.S. and the Fund Subsidiaries of the Transaction Agreements
to which it is a party, the fulfilment of the terms thereof by
each of the Fund, Xxxxx, Sun Gro U.S., Sun Gro Canada and the
Fund Subsidiaries, as applicable, and the completion of the
transactions contemplated therein and the issuance, sale and
delivery of the Purchased Units to be issued by the Fund and
of the Sun Gro Common Shares and Sun Gro Notes to be issued to
the Fund do not and will not:
(i) require the consent, approval, authorization,
registration or qualification of or with any
governmental authority, stock exchange, Securities
Commission or other regulatory commission or agency
or third party except those that have been obtained
(or will be obtained prior to the Time of Closing) or
those which, if not obtained, will not, either
individually or in the aggregate, have a material
adverse effect on the results of operations,
financial condition, assets, properties, prospects or
business of the Fund, Xxxxx, Sun Gro U.S. or Sun Gro
Canada or of the Fund Subsidiaries on a consolidated
basis, or
(ii) result in a breach of or default under, and do not
and will not create a state of facts which, after
notice or lapse of time or both, will result in a
breach of or default under, and do not and will not
conflict with:
A. any of the provisions of the Declaration of
Trust or any resolutions of the trustees of
the Fund or any unitholders of the Fund or
any committee thereof or any of the
provisions of the constating documents or
by-laws of any of the Fund Subsidiaries,
Xxxxx, Sun Gro Canada or Sun Go U.S., or any
resolutions of any of the directors or
shareholders of the Fund Subsidiaries,
Xxxxx, Sun Gro Canada or Sun Gro U.S., or
any committee of any of them; or
B. any indenture, agreement, license, lease or
other instrument to which any of the Fund,
the Fund Subsidiaries, Xxxxx, Sun Gro Canada
or Sun Gro U.S. is a party or by which it or
any of them is contractually bound or to
which any of their respective assets are
subject, other than breaches or defaults
which will not either individually or in the
aggregate have a material adverse effect on
the results of operations, financial
condition, assets, properties, prospects or
business of the Fund, Xxxxx, Sun Gro U.S. or
Sun Gro Canada or of the Fund Subsidiaries
on a consolidated basis; or
-16-
C. any statute, rule, regulation or law
applicable to the Fund, any of the Fund
Subsidiaries, Xxxxx, Sun Gro Canada or Sun
Gro U.S. including, without limitation, the
Securities Laws, or any judgment, order or
decree of any governmental body, agency,
commission, tribunal or court having
jurisdiction over any of the Fund, any of
the Fund Subsidiaries, Xxxxx, Sun Gro Canada
or Sun Gro U.S.;
(s) prior to the date hereof, except for the preparation and
filing of the Preliminary Prospectus and the Prospectus and
the entering into of the Transaction Agreements to which it is
a party, the Fund has not previously carried on any business,
entered into any material contract or arrangement or incurred
any material liability, contingent or otherwise;
(t) at the Time of Closing neither the Fund nor Sun Gro Canada nor
any Fund Subsidiary will be prohibited, directly or
indirectly, from paying any dividends, from making any other
distribution on its capital stock, units or other securities,
from paying any interest or repaying any loans, advances or
other indebtedness of the Fund, Sun Gro Canada or any Fund
Subsidiary, except as otherwise described in the Prospectus or
as contemplated under the Credit Facility or except as
provided under applicable law;
(u) each of the Fund, Sun Gro Canada and the Fund Subsidiaries
holds, or will hold at the Time of Closing, all permits,
leases, by-laws, licences, waivers, exemptions, consents,
certificates, registrations, authorizations, approvals,
rights, rights of way and entitlements and the like which are
required from any governmental authority or any other person
required or necessary to conduct its business and activities
as currently conducted or as the Prospectus discloses they
will be conducted (except such permits, leases, by-laws,
licences, waivers, exemptions, consents, certificates,
registrations, authorizations, approvals, rights, rights of
way and entitlements and the like, which the failure to hold,
will not either individually or in the aggregate have a
material adverse effect on the results of operations,
financial condition, assets, properties, prospects or business
of the Fund or Sun Gro Canada or of the Fund Subsidiaries on a
consolidated basis) and all such permits, by-laws, licences,
waivers, exemptions, consents, certificates, registrations,
authorizations, approvals, rights, rights of way and
entitlements and the like are in full force and effect and in
good standing in all material respects or will be in full
force and effect and in good standing in all material respects
at the Time of Closing;
-17-
(v) each of the Fund, Sun Gro U.S., Sun Gro Canada and the Fund
Subsidiaries has conducted and is conducting its activities or
business in all material respects in compliance with all
applicable laws, rules and regulations, including without
limitation those of the country, province and municipality in
which such entity carries on business or conducts its
activities and with all agreements and leases to which it is a
party;
(w) each of the Fund, Sun Gro U.S., Sun Gro Canada and the Fund
Subsidiaries has good and marketable title to all of its
assets, free and clear of all charges, hypothecs, mortgages,
encumbrances or other liens and, following the Time of
Closing, each of the Fund and the Fund Subsidiaries will have
good and marketable title to all of its assets, including the
assets to be purchased by the Fund and the Fund Subsidiaries,
respectively, pursuant to the Transaction Agreements, free and
clear of all charges, hypothecs, mortgages, encumbrances or
other liens, other than (i) liens existing pursuant to the
agreement relating to the Credit Facility; and (ii) Permitted
Encumbrances (as defined in the Acquisition Agreement);
(x) except as described in the Prospectus, there is no claim,
action, suit, proceeding or investigation (whether or not
purportedly on behalf of the Fund or any of Sun Gro U.S., Sun
Gro Canada or the Fund Subsidiaries) pending or, to the
knowledge of the Fund, Xxxxx or Sun Gro U.S., threatened
against or affecting the Fund or any of Sun Gro U.S., Sun Gro
Canada or the Fund Subsidiaries or any of their properties, or
to which the Fund or any of Sun Gro U.S., Sun Gro Canada or
the Fund Subsidiaries is a party or to which any property of
the Fund or any of Sun Gro U.S., Sun Gro Canada or the Fund
Subsidiaries (whether currently owned or to be acquired in the
future, including without limitation as a result of the
completion of the transactions contemplated in the Prospectus)
is subject, at law or in equity, or before or by any federal,
provincial, municipal or other governmental department,
commission, board or agency, domestic or foreign, which does,
or could reasonably be expected to, individually or in
aggregate, result in a material adverse effect on any of the
Fund, Sun Gro U.S. or Sun Gro Canada or on the Fund
Subsidiaries on a consolidated basis, or which questions the
validity of any action taken or to be taken by the Fund or any
of Sun Gro U.S., Sun Gro Canada or the Fund Subsidiaries
pursuant to or in connection with this Agreement or any of the
other Transaction Agreements or as contemplated in the
Prospectus;
(y) no default exists under and no event has occurred which, after
notice or lapse of time or both, or otherwise, would
constitute a default under or breach of, by the Fund, Sun Gro
U.S., Sun Gro Canada, any of the Fund Subsidiaries or any
other person, any obligation, agreement, covenant or condition
contained in any contract, indenture, trust, deed, mortgage,
loan agreement, note, lease, licence or other agreement or
instrument (including, without limitation, any Transaction
Agreement) to which the Fund or any of Sun Gro U.S., Sun Gro
-18-
Canada or the Fund Subsidiaries is, or will, at the Time of
Closing be, a party or by which any of them or any of their
respective properties may be bound except such defaults or
breaches which will not either individually or in the
aggregate have a material adverse effect on the results of
operations, financial condition, assets, properties, prospects
or business of the Fund, Sun Gro U.S. or Sun Gro Canada or of
the Fund Subsidiaries on a consolidated basis. No order,
ruling or determination having the effect of suspending the
sale or ceasing the trading of the Purchased Units or any
other security of the Fund has been issued or made by any
Securities Commission or stock exchange or any other
regulatory authority and is continuing in effect and no
proceedings for that purpose have been instituted or are
pending or, to the knowledge of Xxxxx, Sun Gro U.S. or the
Fund, contemplated or threatened by any such authority or
under any Securities Laws;
(z) upon filing of the Prospectus and at the Time of Closing the
Fund will be a reporting issuer or the equivalent thereof in
each Qualifying Jurisdiction where such concept exists and
will not be in default under the Securities Laws of any
Qualifying Jurisdiction;
(aa) no agreement is currently in force or effect which in any
manner affects the voting or control of any of the securities
of Sun Gro U.S., Sun Gro Canada or the Fund Subsidiaries, and
at the Closing Time no such agreement other than the
Acquisition Agreement will be in force or effect;
(bb) subject to meeting the minimum distribution requirements with
respect to the purchasers of the Purchased Units and the
filing of an election under subsection 132(6.1) of the Income
Tax Act, the Fund will at the Closing Date qualify as a mutual
fund trust under the Income Tax Act from inception;
(cc) the Purchased Units are not and at the Time of Closing will
not be "foreign property" as defined in the Income Tax Act;
(dd) the Purchased Units to be issued and sold as hereinbefore
described have been, or prior to the Time of Closing will be,
duly authorized for issuance and, when a global certificate
for the Purchased Units is countersigned by the Fund's
registrar and transfer agent and issued, delivered and paid
for, the Purchased Units will be validly issued and fully paid
and all statements made in the Prospectus describing the
Purchased Units will be accurate in all material respects;
(ee) except as provided herein, there is no person, firm or
corporation acting for the Fund, Xxxxx, Sun Gro U.S., Sun Gro
Canada or any of the Fund Subsidiaries that is entitled to any
brokerage or finder's fee in connection with this Agreement or
any of the other Transaction Agreements or any of the
transactions contemplated hereunder or thereunder;
-19-
(ff) except as disclosed in the Prospectus, none of the trustees,
officers or employees of the Fund or any of the Fund
Subsidiaries, any person who owns, directly or indirectly,
more than 10% of any class of securities of the Fund or
securities of any person exchangeable for more than 10% of any
class of securities of the Fund, or any associate or affiliate
of any of the foregoing, had or has any material interest,
direct or indirect, in any material transaction or any
proposed material transaction with the Fund or its
subsidiaries which, as the case may be, materially affects, is
material to or will materially affect the Fund and the Fund
Subsidiaries, taken as a whole; and
(gg) the representations and warranties of Xxxxx and Sun Gro U.S.
contained in the Acquisition Agreement are true and correct
and will be true and correct as at the Time of Closing.
10. COVENANTS OF THE FUND, XXXXX AND SUN GRO U.S.
(a) Each of the Fund, Xxxxx and Sun Gro U.S. covenant and agree
with the Underwriters that:
(i) the Fund will advise the Underwriters, promptly after
receiving notice thereof, of the time when the
Prospectus and any Supplementary Material has been
filed and receipts therefor have been obtained and
will provide evidence reasonably satisfactory to the
Underwriters of each such filing and copies of such
receipts;
(ii) it will advise the Underwriters, promptly after
receiving notice or obtaining knowledge thereof, of:
(i) the issuance by any Securities Commission of any
order suspending or preventing the use of the
Preliminary Prospectus, the Prospectus or any
Supplementary Material; (ii) the suspension of the
qualification of the Purchased Units in any of the
Qualifying Jurisdictions; (iii) the institution,
threatening or contemplation of any proceeding for
any such purposes; or (iv) any requests made by any
Securities Commission for amending or supplementing
the Preliminary Prospectus or the Prospectus or for
additional information; and will use its commercially
reasonable efforts to prevent the issuance of any
order referred to in (i) above and, if any such order
is issued, to obtain the withdrawal thereof as
quickly as possible;
-20-
(iii) the Fund will deliver to the Underwriters, as soon as
practicable after the Prospectus and any
Supplementary Material are prepared, a private
placement memorandum incorporating the Prospectus or
Supplementary Material, as the case may be, prepared
for use in connection with the offering for sale of
the Purchased Units in the United States pursuant to
Section 14, and, promptly after preparation, any
amendment to the private placement memorandum; and
(iv) it will not amend or waive, and will cause each Fund
Subsidiary not to amend or waive, any conditions of
closing which are for the benefit of the Fund or any
Fund Subsidiary under any of the Transaction
Agreements without the prior written consent of the
Underwriters not to be unreasonably withheld, and
will fully and promptly enforce all of its rights
under the Acquisition Agreement and such agreements
and will cause the Fund Subsidiaries to fully and
promptly enforce all of their respective rights under
such agreements.
(b) Each of Xxxxx, Sun Gro U.S. and the Fund covenants and agrees
to ensure that all of the transactions and steps contemplated
in the Transfer Pricing Study to be completed on or prior to
closing of the Acquisition have been, or will have been on or
prior to the time of closing of the Acquisition, completed as
and when contemplated in the Transfer Pricing Study.
(c) The Fund covenants and agrees with the Underwriters that it
will carry on its undertaking and activities and will cause
the Fund Subsidiaries to carry on their business and
activities, at all times substantially in accordance with the
terms of the Transfer Pricing Study as updated from time to
time.
(d) The Fund will conduct its affairs so as to continue to qualify
the Fund as a mutual fund trust under the Income Tax Act,
including by limiting its activities in the manner
contemplated in the Declaration of Trust.
11. CONDITIONS OF CLOSING. The obligation of the Underwriters to purchase the
Purchased Units shall be subject to the following conditions, which are for the
exclusive benefit of the Underwriters, any of which may be waived, in whole or
in part, by the Underwriters, in their sole discretion, pursuant to Section 18
hereof:
(a) each of the Transaction Agreements shall have been executed
and delivered by the parties thereto, all such Transaction
Agreements shall be in form and substance satisfactory to the
Underwriters, none of such Transaction Agreements shall have
been amended, supplemented or modified in any way and no
condition or provision in any such Transaction Agreement shall
have been waived by any party without the prior written
consent of the Underwriters, acting reasonably, and each of
the parties thereto shall have performed such of their
-21-
obligations thereunder which are to be performed or completed
at or prior to the Time of Closing to the satisfaction of the
Underwriters, acting reasonably;
(b) the Fund shall deliver to the Underwriters, at the Time of
Closing, certificates dated the Closing Date addressed to the
Underwriters and signed by the President and Chief Executive
Officer and the Chief Financial Officer of Xxxxx, on behalf of
Xxxxx, as promoter, or such other senior officer(s) of Xxxxx
as may be acceptable to the Underwriters, certifying for and
on behalf of the Fund and Xxxxx and without personal
liability, after having made due enquiries, to the effect
that:
(i) each of the Fund and Xxxxx has complied in all
material respects with all the covenants and
satisfied all the terms and conditions of this
Agreement on its part to be complied with and
satisfied at or prior to the Time of Closing;
(ii) the representations and warranties of the Fund and
Xxxxx contained herein are true and correct in all
material respects as at the Time of Closing, with the
same force and effect as if made on and as at the
Time of Closing after giving effect to the
transactions contemplated hereby;
(iii) receipts have been issued by or on behalf of the
Securities Commissions in the Qualifying
Jurisdictions for the Prospectus and no order, ruling
or determination having the effect of ceasing the
trading or suspending the issuance or sale of the
Purchased Units of the Fund to be issued and sold by
the Fund hereunder has been issued or made and no
proceedings for such purpose have been instituted or
are pending or, to the knowledge of such officers,
contemplated or threatened; and
(iv) there has been no material change (actual,
anticipated, contemplated or threatened, whether
financial or otherwise) in the business, affairs,
assets, liabilities (contingent or otherwise),
capital or prospects of the Fund or any of Sun Gro
U.S., Sun Gro Canada or the Fund Subsidiaries or with
respect to any of the assets or liabilities or
businesses of, or to be acquired or assumed by, the
Fund or any of the Fund Subsidiaries (as contemplated
in the Prospectus) from that disclosed in the
Prospectus;
(c) the Underwriters shall have received a certificate dated the
Closing Date signed by the Chief Executive Officer of Xxxxx or
any other senior officer of Xxxxx as may be acceptable to the
Underwriters, on behalf of the Fund and Xxxxx in form and
content satisfactory to the Underwriters, acting reasonably,
certifying or certifying the form of:
-22-
(i) the Declaration of Trust;
(ii) the articles of incorporation and by-laws of the Fund
Subsidiaries;
(iii) the resolutions of the board of directors of Xxxxx
and the resolutions of the trustees of the Fund
relevant to the approval of the Prospectus and the
signing and filing thereof, the issue and sale of the
Purchased Units to be issued and sold by the Fund and
the authorization of this Agreement and the other
Transaction Agreements to which they are parties;
(iv) the resolutions of the boards of directors of each of
Sun Gro U.S. and the Fund Subsidiaries relating to
the authorization of the Transaction Agreements to
which each entity is or will be a party and the
completion of the transactions contemplated in the
Prospectus; and
(v) the incumbency and signatures of signing officers of
Xxxxx, Sun Gro U.S. and the Fund;
(d) the Underwriters, acting reasonably, shall be satisfied that
the transactions described in the Prospectus and the Transfer
Pricing Study as being transactions that will occur or be
completed on or prior to the Closing Date have been or will
concurrently be completed and that the Fund will be deemed to
be a "mutual fund trust" within the meaning of the Income Tax
Act from inception upon the filing of an election under
subsection 132(6.1) of the Income Tax Act;
(e) the Underwriters shall have received a comfort letter, in form
and substance satisfactory to the Underwriters, acting
reasonably, from the auditors of the Fund and Sun Gro U.S.,
updating the letter referred to in Section 7(a)(vii) to the
Time of Closing, provided that such letters may be based on a
review by the auditors having a cut-off date not more than two
business days prior to the Closing Date;
(f) the Fund and Xxxxx shall cause its counsel, Xxxxxx Xxxxxx
Gervais LLP, or Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, as
applicable to deliver to the Underwriters and their counsel a
legal opinion dated and delivered the Closing Date, in form
and substance satisfactory to the Underwriters and their
counsel, acting reasonably, with respect to the matters set
out in Schedule "A" hereto, which opinion may be subject to
usual and customary qualifications for opinions of the type to
be given; provided, however that in connection with such
opinions, counsel to the Fund may rely on the opinions of
local counsel acceptable to counsel to the Underwriters,
acting reasonably, as to the qualification for distribution of
the Purchased Units and as to other matters governed by the
laws of jurisdictions other than the province(s) in which they
are qualified to practise or opinions may be given directly by
such local counsel with respect to those items and counsel may
rely, to the extent appropriate in the circumstances, as to
matters of fact on certificates of officers of the Fund and
others;
-23-
(g) the Fund and Xxxxx shall cause its special counsel in the
United States, Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, to
deliver to the Underwriters and their counsel a legal opinion
dated and delivered the Closing Date, in form and substance
satisfactory to the Underwriters and their counsel, acting
reasonably, to the effect that no registration of the
Purchased Units is required under the U.S. Securities Act,
provided that, in each case, the sale is made in accordance
with Section 14;
(h) the Underwriters shall have received copies of correspondence
indicating that the Fund has obtained all necessary approvals
for the Purchased Units issuable by the Fund to be
conditionally listed on the TSE, subject only to the standard
listing conditions acceptable to the Underwriters, acting
reasonably;
(i) Bankers Trust Company (the "AGENT"), as administrative agent
for the lenders under the senior credit facility of Xxxxx,
shall have executed and delivered to the Fund, full and final
settlement and release agreements, in form and substance
satisfactory to the Underwriters, acting reasonably, releasing
and discharging all claims of each such lender and all related
indebtedness and security relating to any of the assets to be
held after the Time of Closing by the Fund or the Fund
Subsidiaries; and
(j) the Underwriters shall have received from the auditors of the
Fund such certificates, opinions or documents, in form and
substance satisfactory to the Underwriters, acting reasonably,
as to the taxation of the Fund and its subsidiaries,
inter-company cash flows and interest deductibility and the
Fund's distributable cash as the Underwriters may reasonably
request.
12. CLOSING. The closing of the purchase and sale of the Purchased Units shall
be completed at the Time of Closing at the offices of Xxxxxx Xxxxxx Gervais LLP,
Vancouver, British Columbia or at such other place as the Fund and the
Underwriters may agree in writing. At the Time of Closing, the Fund shall
deliver to the Lead Underwriter, on behalf of the Underwriters:
(a) one definitive global unit certificate, representing in the
aggregate the total number of Purchased Units, registered in
the name of CDS & Co. The Lead Underwriter shall, promptly
following the Time of Closing, deliver such global unit
certificate to the registrar and transfer agent for the
Purchased Units, which will deposit such global unit
certificate with The Canadian Depository for Securities
Limited, as custodian, as provided in the Declaration of
Trust; and
-24-
(b) the fees and expenses (to the extent known to, and requested
by, the Underwriters prior to Closing) payable by the Fund to
the Underwriters as provided in Sections 2 and 17 of this
Agreement against payment by the Underwriters to or to the
direction of the Fund of the purchase price for the Purchased
Units, in each case by certified cheque or bank draft;
provided that the Lead Underwriter may deliver a net cheque or
bank draft payable to the Fund or to its order representing
the gross proceeds of the offering of Purchased Units less the
fees payable by the Fund to the Underwriters.
13. RESTRICTIONS ON FURTHER ISSUES, SALES OR TRANSACTIONS. Without the prior
written consent of the Lead Underwriter on behalf of the Underwriters, such
consent not to be unreasonably withheld, delayed or refused, during the period
commencing on the date hereof and ending on the day which is 180 days following
the Closing Date, the Fund shall not, directly or indirectly, authorize, issue
or sell any Units or financial instruments or securities convertible into or
exercisable or exchangeable for Units, or agree to or announce any such offer,
sale or issuance.
14. OFFERING IN THE UNITED STATES. No offers or sales of the Purchased Units
have or will be made in the United States except for offers and sales of U.S.
Units (as defined in Schedule 14 hereto) that are made in accordance with the
terms and are subject to the conditions of Schedule 14.
15. INDEMNIFICATION BY THE FUND AND XXXXX.
(a) Each of the Fund and Xxxxx shall, jointly and severally, fully
indemnify and save harmless each of the Underwriters, each of
their respective subsidiaries and each of their respective
directors, officers, employees, agents, each other person, if
any, controlling each Underwriter or any of their respective
subsidiaries, and each shareholder of each Underwriter
(collectively, the "INDEMNIFIED PARTIES" and individually an
"INDEMNIFIED PARTY") from and against any and all losses
(other than loss of profit), expenses, claims (including
shareholder actions, derivative or otherwise), actions,
damages and liabilities, joint or several, including the
aggregate amount paid in reasonable settlement of any actions,
suits, proceedings, investigations or claims and the
reasonable fees and expenses of the Underwriters' counsel that
may be incurred in advising with respect to and/or defending
any action, suit, proceeding, investigation or claim that may
be made or threatened against any Indemnified Party or in
enforcing this indemnity (collectively, the "CLAIMS") to which
any Indemnified Party may become subject or otherwise
involved, in any capacity insofar as Claims relate to, are
caused by, result from, arise out of or are based upon,
directly or indirectly:
(i) any breach by either of the Fund or Xxxxx of its
representations, warranties, covenants or obligations
hereunder (provided that Xxxxx shall not be required
to indemnify an Indemnified Party in respect of a
-25-
breach by the Fund of its obligations under
Subsections 10(c) or (d) or Section 13 for the period
of time beginning immediately following the Time of
Closing);
(ii) any information or statement (except any information
or statement relating solely to any of the
Underwriters) contained in any of the Offering
Documents or any certificate of the Fund or Xxxxx
delivered pursuant to this Agreement which at the
time and in light of the circumstances in which it
was made contains or is alleged to contain a
misrepresentation;
(iii) any omission or alleged omission to state in the
Offering Documents or any certificate of the Fund or
Xxxxx delivered under this Agreement any material
fact (except facts relating solely to any of the
Underwriters) required to be stated in such document
or necessary to make any statement in such document
not misleading in light of the circumstances under
which it was made;
(iv) any order made or enquiry, investigation or
proceeding commenced or threatened by any securities
commission or other competent authority based upon
any untrue statement or omission or alleged untrue
statement or alleged omission or any
misrepresentation or alleged misrepresentation
(except a statement or omission or alleged statement
or omission or a misrepresentation or alleged
misrepresentation relating solely to any of the
Underwriters) in the Offering Documents, or based
upon any failure of the Fund or Xxxxx to comply with
applicable securities laws (other than any failure or
alleged failure to comply by any of the Underwriters)
preventing or restricting the trading in or the sale
of the Purchased Units or related activities in any
jurisdiction; or
(v) any non-compliance or alleged non-compliance by Xxxxx
or the Fund with any applicable securities laws in
connection with the transactions contemplated hereby
including non-compliance by Xxxxx or the Fund with
any statutory requirement to make any document
available for inspection;
provided that in the event and to the extent that a court of
competent jurisdiction, in a final judgement from which no
appeal can be made, shall determine that a Claim resulted from
the fraud, fraudulent misrepresentation, negligence or wilful
misconduct of the Indemnified Party, such Indemnified Party
shall not be entitled to claim indemnification for such Claim
from any person that has not engaged in such fraud, fraudulent
misrepresentation, negligence or wilful misconduct. Each of
the Fund and Xxxxx also agree to reimburse the Underwriters
for the time spent by their personnel in connection with any
Claim at their normal PER DIEM rates.
-26-
(b) Promptly after receiving notice of a Claim or receipt of
notice of the commencement of any investigation which is
based, directly or indirectly, upon any matter in respect of
which indemnification may be sought from the Fund or Xxxxx, an
Indemnified Party will notify the Fund and/or Xxxxx, as
applicable, in writing of the particulars thereof, provided
that the omission to so notify the Fund or Xxxxx shall not
relieve the Fund or Xxxxx of any liability which the Fund or
Xxxxx may have to any Indemnified Party except and only to the
extent that any such delay in or failure to give notice as
herein required prejudices the defence of such action, suit,
proceeding, claim or investigation or results in any material
increase in the liability which the Fund or Xxxxx have under
this indemnity.
(c) The Fund and Xxxxx shall, subject as hereinafter provided, be
entitled (but not required) to assume the defence on behalf of
the Indemnified Party of any suit brought to enforce such
claim; provided that the defence shall be through legal
counsel selected by the Fund or Xxxxx and acceptable to the
Indemnified Party, acting reasonably and no admission of
liability shall be made by the Fund, Xxxxx or the Indemnified
Party without, in each case, the prior written consent of all
the Indemnified Parties affected and the Fund and Xxxxx, in
each case such consent not to be unreasonably withheld. An
Indemnified Party shall have the right to employ separate
counsel in any such suit and participate in the defence
thereof but the fees and expenses of such counsel shall be at
the expense of the Indemnified Party unless:
(i) the Fund fails to assume the defence of such suit on
behalf of the Indemnified Party within 20 days of
receiving notice of such suit;
(ii) the employment of such counsel has been authorized by
the Fund or Xxxxx; or
(iii) the named parties to any such suit (including any
added or third parties) include the Indemnified Party
and the Fund or Xxxxx and the Indemnified Party shall
have been advised in writing by counsel that there is
an actual or potential conflict in the Fund's, Xxxxx'
and the Indemnified Party's respective interests or
additional defences are available to the Indemnified
Party, which makes representation by the same counsel
inappropriate;
-27-
(in each of cases (i), (ii) or (iii), the Fund and Xxxxx shall
not have the right to assume the defence of such suit on
behalf of the Indemnified Party, but the Fund and Xxxxx shall
only be liable to pay the reasonable fees and disbursements of
one firm of separate counsel in any one jurisdiction for all
Indemnified Parties).
(d) Each of the Fund and Xxxxx hereby acknowledges and agrees
that, with respect to Sections 15 and 16 hereof, the
Underwriters are contracting on their own behalf and as agents
for their affiliates, directors, officers, employees and
agents and their respective directors, officers, employees and
agents (collectively, the "BENEFICIARIES"). In this regard,
each of the Underwriters shall act as trustee for the
Beneficiaries of the covenants of the Fund and Xxxxx under
Sections 15 and 16 hereof with respect to the Beneficiaries
and accepts these trusts and shall hold and enforce such
covenants on behalf of the Beneficiaries.
(e) The rights of indemnity contained in this Section 15 shall not
enure to the benefit of the Underwriters or any other
Indemnified Party if the Fund has complied with the provisions
of Sections 7 and 8 hereof and the person asserting any Claim
contemplated by this Section was not provided with a copy of
the Prospectus or Supplementary Material which corrects any
untrue statement or information, misrepresentation or omission
which is the basis of such Claim and which is required under
the Securities Laws to be delivered to such person by the
Underwriters or members of their banking or selling group (if
any).
(f) Neither the Fund or Xxxxx nor any Underwriter will, without
each of the other's prior written consent, settle, compromise,
consent to the entry of any judgement in or otherwise seek to
terminate any action, suit, proceeding, investigation or claim
in respect of which indemnification may be sought hereunder
(whether or not any Indemnified Party is a party thereto)
unless such settlement, compromise, consent or termination
includes a release of each Indemnified Party from any
liabilities arising out such action, suit, proceeding,
investigation or claim.
16. CONTRIBUTION.
(a) In order to provide for just and equitable contribution in
circumstances in which the indemnity provided in Section 15
hereof would otherwise be available in accordance with its
terms but is, for any reason not solely attributable to any
one or more of the Indemnified Parties, held to be unavailable
to or unenforceable by the Indemnified Parties or enforceable
otherwise than in accordance with its terms, or is
insufficient to hold any Indemnified Party harmless, the Fund
and Xxxxx shall contribute to the amount paid or payable by
the Indemnified Parties as a result of such Claim in such
proportion as is appropriate to reflect not only the relative
benefits received by the Fund or Xxxxx, on the one hand, and
the Indemnified Party, on the other hand, but also the
relative fault of the Fund, Xxxxx, and the Indemnified Party
as well as any relevant equitable considerations; provided
that in no event will an Indemnified Party be liable to pay or
contribute an amount in excess of the aggregate amount of the
-28-
fees actually received by the Indemnified Party under this
Agreement, and Xxxxx and Fund shall be liable for such amount
in excess. However, no party who has engaged in any fraud,
fraudulent misrepresentation, gross negligence or wilful
misconduct shall be entitled to claim contribution from any
person who has not engaged in such fraud, fraudulent
misrepresentation, gross negligence or wilful misconduct.
(b) For greater certainty, in the event of unenforceability or
unavailability of the indemnity provided in Section 15, the
Fund and Xxxxx shall not have any obligation to contribute
pursuant to this Section 16 in respect of any Claim except to
the extent the indemnity given by it in Section 15 hereof
would have been applicable to such Claim in accordance with
its terms, had such indemnity been found to be enforceable and
available to the Indemnified Parties.
(c) The rights to contribution provided in this Section 16 shall
be in addition to and not in derogation of any other right to
contribution which the Indemnified Parties may have by statute
or otherwise at law provided that paragraphs (a) and (b) of
this Section shall apply, MUTATIS MUTANDIS, in respect of such
other right.
17. EXPENSES. Whether or not the purchase and sale of the Purchased Units shall
be completed, the Fund (or Xxxxx if the issuance and sale of the Purchased Units
does not close) will be responsible for all expenses incurred in relation to the
transactions contemplated hereunder, including all fees and disbursements of
legal counsel for the Fund and the Underwriters, all fees and disbursements of
auditors and independent experts, prospectus filing fees, all expenses related
to the road shows (including travel expenses, hotel accommodations and meals)
and printing costs; provided, however, that, if the offering of the Purchased
Units is completed, the Underwriters shall be responsible for $250,000 of fees
and disbursements of the Underwriters' legal counsel, with the Fund (or Xxxxx,
if applicable) being responsible for the amount by which the fees and
disbursements of Underwriters' legal counsel exceed $250,000.
18. ALL TERMS TO BE CONDITIONS. All terms and conditions of this Agreement shall
be construed as conditions, and any breach of or failure to comply in any
material respect with any of such terms or conditions which are for the benefit
of the Underwriters shall entitle the Underwriters to terminate their
obligations to purchase the Purchased Units by giving notice in writing to that
effect to the Fund at or prior to the Time of Closing. It is understood that the
Underwriters may waive, in whole or in part, or extend the time for compliance
with, any of such terms and conditions without prejudice to the rights of the
Underwriters in respect of any such terms and conditions or any other or
subsequent breach or non-compliance, provided that to be binding on the
Underwriters any such waiver or extension must be in writing.
-29-
19. TERMINATION BY UNDERWRITERS IN CERTAIN EVENTS.
(a) Each Underwriter shall also be entitled to terminate its
obligation to purchase the Purchased Units by written notice
to that effect given to the Fund or Xxxxx at or prior to the
Time of Closing if:
(i) there shall be any material change in the affairs of
the Fund, Sun Gro U.S., Sun Gro Canada or any of the
Fund Subsidiaries (actual or as contemplated in the
Prospectus), or there should be discovered any
previously undisclosed material fact (other than a
material fact related solely to any of the
Underwriters) required to be disclosed in the
Prospectus or there should occur a change (other than
a change related solely to any of the Underwriters)
in a material fact contained in the Prospectus, in
each case which, in the opinion of the Underwriters,
acting reasonably, has or may have a materially
adverse effect on the market price or value of the
Purchased Units;
(ii) any inquiry, action, suit, investigation or other
proceeding (whether formal or informal) is commenced,
announced or threatened or any order is made by any
federal, provincial, state, municipal or other
governmental department, commission, board, bureau,
agency or instrumentality or any third party (other
than any such inquiry, action, suit, investigation or
other proceeding or order relating solely to any of
the Underwriters) which, in the opinion of the
Underwriter, acting reasonably, operates or could
operate to prevent, suspend, hinder, delay, restrict
or otherwise materially adversely affect the
transactions contemplated by the Prospectus or the
Transaction Agreements or any of them;
(iii) any inquiry, action, suit, investigation or other
proceeding (whether formal or informal) is commenced,
announced or threatened or any order made by any
federal, provincial, state, municipal or other
governmental department, commission, board, bureau,
agency or instrumentality including, without
limitation, the TSE or any securities regulatory
authority (other than any such inquiry, action, suit,
investigation or other proceeding or order relating
solely to any of the Underwriters) or any law or
regulation is enacted or changed which, in the
opinion of the Underwriter, acting reasonably,
operates to prevent, suspend or restrict the
distribution or trading of the Purchased Units or
materially and adversely affects or will materially
and adversely affect the market price or value of the
Purchased Units;
-30-
(iv) the state of financial markets in Canada is such
that, in the reasonable opinion of the Underwriters,
the Purchased Units cannot be marketed profitably;
(v) if there should develop, occur or come into effect or
existence any event, action, state, condition or
major financial occurrence of national or
international consequence or any law or regulation
which, in the opinion of the Underwriter, acting
reasonably, materially adversely affects, or may
materially adversely affect, the financial markets in
Canada or the United States, the business, operations
or affairs of the Fund and the Fund Subsidiaries
(actual or as contemplated in the Prospectus) taken
as a whole or the marketability of the Purchased
Units; or
(vi) there is announced any change or proposed change in
the Income Tax Act or any other tax laws of Canada or
any other jurisdiction and such change could, in the
opinion of the Underwriter, acting reasonably, be
expected to have a significant adverse effect on the
market price, value or marketability of the Purchased
Units.
(b) If this Agreement is terminated by any of the Underwriters
pursuant to Subsection 19(a), there shall be no further
liability on the part of such Underwriter or of the Fund or
Xxxxx to such Underwriter, except in respect of any liability
which may have arisen or may thereafter arise under Sections
15, 16, and 17.
(c) The right of the Underwriters or any of them to terminate
their respective obligation under this Agreement is in
addition to such other remedies as they may have in respect of
any default, act or failure to act of the Fund or Xxxxx in
respect of any of the matters contemplated by this Agreement.
A notice of termination given by one Underwriter under this
Section 19 shall not be binding upon the other Underwriters.
20. STABILIZATION. In connection with the distribution of the Purchased Units,
the Underwriters and members of their selling group (if any) may over-allot or
effect transactions which stabilize or maintain the market price of the
Purchased Units at levels above those which might otherwise prevail in the open
market in compliance with Securities Laws. Such stabilizing transactions, if
any, may be discontinued at any time.
21. OBLIGATIONS OF THE UNDERWRITERS TO BE SEVERAL. Subject to the terms and
conditions hereof, the obligation of the Underwriters to purchase the Purchased
Units shall be several and not joint. The percentage of the Purchased Units to
be severally purchased and paid for by each of the Underwriters shall be as
follows:
-31-
BMO Xxxxxxx Xxxxx Inc. - 30%
CIBC World Markets Inc. - 19%
RBC Dominion Securities Inc. - 19%
Scotia Capital Inc. - 12%
National Bank Financial Inc. - 10%
TD Securities Inc. - 10%
If an Underwriter (a "REFUSING UNDERWRITER") shall not complete the purchase and
sale of the Purchased Units which such Underwriter has agreed to purchase
hereunder for any reason whatsoever, including as a result of termination by a
Refusing Underwriter pursuant to Section 19, the other Underwriters (the
"CONTINUING UNDERWRITERS") shall be entitled, at their option, to purchase all
but not less than all of the Purchased Units which would otherwise have been
purchased by such Refusing Underwriter PRO RATA according to the number of
Purchased Units to have been acquired by the Continuing Underwriters hereunder
or in such proportion as the Continuing Underwriters shall agree in writing. If
the Continuing Underwriters do not elect to purchase the balance of the
Purchased Units pursuant to the foregoing:
(a) the Continuing Underwriters shall not be obliged to purchase
any of the Purchased Units that any Refusing Underwriter is
obligated to purchase;
(b) the Fund shall not be obliged to sell less than all of the
Purchased Units; and
(c) the Fund shall be entitled to terminate its obligations under
this Agreement arising from its acceptance of this offer, in
which event there shall be no further liability on the part of
the Fund, Xxxxx or the Continuing Underwriters, except
pursuant to the provisions of Sections 15, 16 and 17.
22. NOTICES. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be delivered:
(a) in the case of the Fund, Sun Gro Horticulture Income Fund, c/o
Sun Gro Horticulture Canada Ltd., 00000 XX 0xx Xxxxxx, Xxxxx
000, Xxxxxxxx, Xxxxxxxxxx, X.X.X., 00000, Facsimile No.: (425)
450-9379, Attention: Xxxxx Xxxxxx, President; in each case
with a copy of any such notice to Borden, Ladner, Gervais LLP,
0000-000 Xxxxxxx Xx. XX Xxx 00000 Xxx Xxxxxxx Xxxxxxxxx, X.X.
X0X 0X0 Facsimile No.: (000) 000-0000, Attention: Xxx X. Xxxx
(b) in the case of Sun Gro U.S., Sun Gro Horticulture, Inc., 00000
XX 0xx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx, X.X.X., 00000,
Facsimile No.: (000) 000-0000, Attention: Xxxxx Xxxxxx,
President, and in the case of Xxxxx, Xxxxx Horticulture, Inc.,
00000 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx, 00000-0000, Facsimile
No.: (000) 000-0000, Attention: Xxxxxxx Xxxxxxxx, in each case
with a copy to Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, 000 Xxxx
Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx, 00000,
Facsimile No.: (000) 000-0000, Attention: Xxxxxxx X. Xxxxxxx;
and
-32-
(c) in the case of the Underwriters to the following addresses:
(i) BMO Xxxxxxx Xxxxx Inc., 000 Xxxx Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0, Facsimile No.: (604)
443-1408, Attention: Xxxx Xxxxxx; (ii) CIBC World Markets
Inc., 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxx, Xxxxxxx
Xxxxxxxx, X0X 0X0, Facsimile No.: (000) 000-0000, Attention:
Xxxx X. Xxxxxxx; (iii) RBC Dominion Securities Inc., Xxxxx
0000, 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X
0X0, Facsimile No.: (000) 000-0000, Attention: Xxxxxxx X.
Xxxxxxxxx; (iv) Scotia Capital Inc., Scotia Tower, 18th Floor,
000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0,
Facsimile No.: (000) 000-0000, Attention: Xxxxx Xxxxxx; (v)
National Bank Financial Inc., Suite 3300, 000 Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0, Facsimile No.: (604)
682-2132, Attention: Xxxxxxx X. Xxxxxxx; (vi) TD Securities
Inc., 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx,
X0X 0X0, Facsimile No.: (000) 000-0000, Attention: Xxxxxxxx
Xxxx; in each case with a copy of any such notice to Blake,
Xxxxxxx & Xxxxxxx LLP, Box 25, Commerce Court West, 28th
Floor, Toronto, Ontario, M5L 1A9, Facsimile No.: (416)
863-2653, Attention: Xxxxxxx X. Xxxxx.
The parties hereto may change their respective addresses for notices by notice
given in the manner aforesaid. Any such notice or other communication shall be
in writing, and unless delivered personally to the addressee or to a responsible
officer of the addressee, as applicable, shall be given by telecopy and shall be
deemed to have been given when (i) in the case of a notice delivered personally
to a responsible officer of the addressee, when so delivered; and (ii) in the
case of a notice given by telecopy, on the first business day following the day
on which it is sent.
23. MISCELLANEOUS.
(a) Except with respect to Sections 15, 16 and 21, all
transactions and notices on behalf of the Underwriters
hereunder or contemplated hereby may be carried out or given
on behalf of the Underwriters by the Lead Underwriter and the
Lead Underwriter shall use commercially reasonable efforts to
discuss with the other Underwriters the nature of any such
transactions and notices prior to giving effect thereto or the
delivery thereof, as the case may be.
(b) This Agreement shall enure to the benefit of, and shall be
binding upon, the Underwriters and the Fund, Sun Gro U.S. and
Xxxxx and their respective successors and legal
representatives.
-33-
(c) This Agreement shall be governed by and interpreted in
accordance with the laws of the Province of British Columbia
and the federal laws of Canada applicable therein.
(d) Time shall be of the essence hereof and, following any waiver
or indulgence by any party, time shall again be of the essence
hereof.
(e) The words, "hereunder", "hereof" and similar phrases mean and
refer to the Agreement formed as a result of the acceptance by
the Fund, Xxxxx and Sun Gro U.S. of this offer by the
Underwriters to purchase the Purchased Units.
(f) All representations, warranties, covenants and agreements of
the Fund, Xxxxx and Sun Gro U.S. herein contained or contained
in documents submitted pursuant to this Agreement and in
connection with the transaction of purchase and sale herein
contemplated shall survive the purchase and sale of the
Purchased Units and the termination of this Agreement and
shall continue in full force and effect for the benefit of the
Underwriters regardless of any subsequent disposition of the
Purchased Units or any investigation by or on behalf of the
Underwriters with respect thereto for a period of (i) three
years following the Closing Date in respect of
representations, warranties, covenants and agreements of Xxxxx
and Sun Gro U.S.; and (ii) five years following the Closing
Date in respect of representations, warranties, covenants and
agreements of the Fund. The Underwriters and the Fund, Sun Gro
U.S. and Xxxxx shall be entitled to rely on the
representations and warranties of the Fund, Sun Gro U.S. and
Xxxxx or the representations and warranties of the
Underwriters, as the case may be, contained herein or
delivered pursuant hereto notwithstanding any investigation
which the Underwriters or the Fund, Sun Gro U.S. and Xxxxx may
undertake or which may be undertaken on their behalf.
Notwithstanding the foregoing, each of the representations and
warranties in Section 9, to the extent that such
representation and warranty is also given in the Acquisition
Agreement, is subject to the same disclosed exceptions set out
in the disclosure schedules to the Acquisition Agreement.
(g) The parties hereto acknowledge that Sun Gro Canada is entering
into this agreement solely on behalf of the Fund and the
obligations of the Fund hereunder shall not be personally
binding upon any of the trustees of the Fund, Sun Gro Canada,
any registered or beneficial holder of trust units of the Fund
or any beneficiary under a plan of which a holder of such
trust units acts as a trustee or carrier, and that resort
shall not be had to, nor shall recourse be sought from, any of
the foregoing or the private property of any of the foregoing
in respect of any indebtedness, obligation or liability of the
Fund arising hereunder or arising in connection herewith or
from the matters to which this Agreement relates, and recourse
shall be limited to, and satisfied only out of, the Fund
Assets as defined in the Declaration of Trust made the 12th
day of February, 2002, as amended or restated from time to
time.
-34-
(h) Each of the parties hereto shall be entitled to rely on
delivery of a facsimile copy of this Agreement and acceptance
by each such party of any such facsimile copy shall be legally
effective to create a valid and binding agreement between the
parties hereto in accordance with the terms hereof.
(i) This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute
one and the same agreement.
(j) It is understood that the terms and conditions of this
Agreement supersede any previous verbal or written agreement
between the Underwriters or any of them and the Fund and Xxxxx
with respect to this offering including, without limitation,
the engagement letter between Sun Gro U.S., Sun Gro Canada and
Xxxxx, on behalf of itself and the Fund, and the Lead
Underwriter dated December 5, 2001.
-35-
If this letter accurately reflects the terms of the transactions which we are to
enter into and are agreed to by you, please communicate your acceptance by
executing the enclosed copies of this letter where indicated and returning them
to us.
Yours very truly
BMO XXXXXXX XXXXX INC.
By: /S/ "Xxxxxxx X. Xxxxxx"
CIBC WORLD MARKETS INC.
By: /S/ "Xxxx X. Xxxxxxx"
RBC DOMINION SECURITIES INC.
By: /S/ "Xxxxxxx X. Xxxxxxxxx"
SCOTIA CAPITAL INC.
By: /S/ "Xxxxx Xxxxxx"
NATIONAL BANK FINANCIAL INC.
By: /S/ "Xxxxxxx X. Xxxxxxx"
TD SECURITIES INC.
By: /S/ "Xxxxxxxx Xxxx"
-36-
Accepted and agreed to by the undersigned as of the date of this letter first
written above.
SUN GRO HORTICULTURE INCOME FUND,
BY ITS ATTORNEY
SUN GRO HORTICULTURE CANADA LTD.
By: /S/ "Xxxxxxx X. Xxxxx"
By: /S/ "Xxxxxxxx X. Xxxxxx"
XXXXX HORTICULTURE, INC.
By: /S/ "Xxxxxxx X. Xxxxxxxx"
SUN GRO HORTICULTURE, INC.
By: /S/ "Xxxxxxxx X. Xxxxxx"
-37-
SCHEDULE "A"
OPINION OF COUNSEL TO THE FUND AND XXXXX
THE FUND AND THE PURCHASED UNITS
1. the Fund has been duly created and organized and is validly existing as
an unincorporated trust under the laws of British Columbia, having W.
Xxxx Xxxxxx, Xxxx X. Xxxxxxxxx Xxxxxxxx X. Xxxxxx and T. Xxxxxxx Xxxxxx
as its trustees;
2. the Fund has the power, capacity and authority to own its properties
and assets and to carry on its business as presently conducted and as
proposed to be conducted as contemplated in the Prospectus;
3. the Fund is authorized to issue an unlimited number of Purchased Units
of which [INSERT NUMBER OF PURCHASED UNITS BEING ISSUED PURSUANT TO THE
PROSPECTUS] have been validly created and issued and are outstanding as
fully paid and non-assessable;
4. the Fund and the attributes and characteristics of the Purchased Units
conform in all material respects with the descriptions thereof in the
Prospectus;
5. the TSE has conditionally approved the listing and posting for trading
of the Purchased Units, subject to the Fund fulfilling all of the
requirements of the TSE;
6. Computershare Trust Company of Canada has been duly appointed as the
registrar and transfer agent for the Purchased Units;
7. no order having the effect of ceasing or suspending the distribution of
the Purchased Units, of which counsel is aware, has been issued by any
Securities Commission and no proceedings for that purpose, of which
counsel is aware, have been instituted or are pending or contemplated;
8. SGC New is a corporation duly amalgamated and validly existing under
the laws of Nova Scotia and is in good standing with respect to filing
of returns.
9. SGC New has all necessary corporate power, capacity and authority to
own its properties and assets and conduct its business as presently
conducted and as proposed to be conducted including as contemplated in
the Prospectus;
10. SGC New is authorized to issue [o SHARES] and an unlimited number of
Sun Gro Notes, of which [o SHARES] have been validly created and issued
and are outstanding as fully paid and non-assessable and [PRINCIPAL
AMOUNT] of Sun Gro Notes have been validly created and issued and are
outstanding;
11. the Fund is the registered holder of all issued and outstanding Sun Gro
Common Shares and Sun Gro Notes;
12. SGC New and the attributes and characteristics of the Sun Gro Common
Shares and the Sun Gro Notes conform in all material respects with the
descriptions thereof in the Prospectus;
OTHER FUND SUBSIDIARIES
13. each of SG Holdco, SG Management, SG Distribution and SG Processing is
duly incorporated [OR ORGANIZED] and validly existing under the laws of
its respective jurisdiction of incorporation and is in good standing
with respect to filing of returns and each has all necessary corporate
power, capacity and authority to own its properties and assets and
conduct its business as presently conducted and as proposed to be
conducted as contemplated in the Prospectus;
14. the authorized capital of [EACH OTHER FUND SUBSIDIARY], consists of
[DESCRIBE AUTHORIZED CAPITAL], of which [NUMBER] of [SHARES] are
currently issued and outstanding, all of which [SHARES] are validly
issued as fully paid and non-assessable, and [PARENT IN EACH CASE] is
the registered holder of all of the issued and outstanding [SHARES];
XXXXX, XXXXX NURSERIES, SUN GRO U.S.
15. each of Xxxxx, Xxxxx Nurseries and Sun Gro U.S. is duly incorporated
and organized and validly existing under the laws of its respective
jurisdiction of incorporation and is in good standing with respect to
filing of returns and each has all necessary corporate power, capacity
and authority to own its property and assets and conduct its business
as presently conducted.
TRANSACTION AGREEMENTS
16. each of the Fund, Xxxxx, Xxxxx Nurseries, Sun Gro U.S., SGC New, SG
Holdco, SG Management, SG Distribution and SG Processing, has the
requisite power, capacity and authority to enter into and deliver each
of the Transaction Agreements to which it is a party and to perform its
obligations thereunder and to carry out the transactions contemplated
thereby and by the Prospectus, and each of such Transaction Agreements
has been duly authorized, executed and delivered on behalf of the Fund,
Xxxxx, Xxxxx Nurseries, Sun Gro U.S., SGC New, SG Holdco, SG
Management, SG Distribution, and SG Processing, as the case may be, and
is a legal, valid and binding obligation of the Fund, Xxxxx, Xxxxx
Nurseries, Sun Gro U.S., SGC New, SG Holdco, SG Management, SG
Distribution, and SG Processing, as the case may be, in accordance with
its terms;
17. the execution and delivery of each of the Transaction Agreements to
which the Fund, Xxxxx, Xxxxx Nurseries, Sun Gro U.S. SGC New, SG
Holdco, SG Management, SG Distribution or SG Processing is a party, the
fulfilment of the terms thereof by the Fund, Xxxxx, Xxxxx Nurseries,
Sun Gro U.S. SGC New, SG Holdco, SG Management, SG Distribution and SG
Processing, respectively, the creation, issue, sale and delivery by the
Fund of the Purchased Units and the creation, issue, sale and delivery
by SGC New of the Sun Gro Common Shares and Sun Gro Notes do not result
in a breach of or conflict with, and such actions will not in and of
themselves, after notice or lapse of time or both, result in a breach
of or conflict with:
-2-
(a) any applicable laws in the provinces of British Columbia,
Alberta, Ontario and Quebec, and any applicable corporation
statutes in the province of Nova Scotia and the states of
Nevada, Delaware and California;
(b) any of the terms, conditions or provisions of the Declaration
of Trust, the constating documents of Xxxxx, Xxxxx Nurseries,
Sun Gro U.S. SGC New, SG Holdco, SG Management, SG
Distribution and SG Processing or any resolutions, of which
counsel is aware, of the trustees, Unitholders, directors (or
any committee thereof) or shareholders thereof;
(c) any written indenture, agreement or instrument, listed on
Schedule 4.1.12 to the Acquisition Agreement, to which the
Fund, Xxxxx, Xxxxx Nurseries, Sun Gro U.S., SGC New, SG
Holdco, SG Management, SG Distribution and SG Processing, as
the case may be, is a party or by which it is contractually
bound as of the Closing Date;
(d) any judgment, order or decree, of which counsel is aware, of
any court, governmental agency or body or regulatory authority
having jurisdiction over the Fund, Xxxxx, Xxxxx Nurseries, Sun
Gro U.S., SGC New, SG Holdco, SG Management, SG Distribution
and SG Processing, as the case may be;
18. no consent, approval, authorization or order of or filing, registration
or qualification with any court, governmental agency, commission or
body or regulatory authority is required for the execution, delivery
and performance by the Fund, Xxxxx, Xxxxx Nurseries, Sun Gro U.S., SGC
New, SG Holdco, SG Management, SG Distribution, SG Processing, as the
case may be, of the Transaction Agreements to which they are a party or
the consummation of the transactions contemplated therein, except for
such as have been made or obtained and except for such consents,
approvals, authorizations, order, filing, registration or qualification
which are not required to be obtained under applicable laws in the
provinces of British Columbia, Alberta, Ontario and Quebec, and any
applicable corporation statutes in the states of Nevada, Delaware and
California prior to closing in order to complete the transactions
contemplated in the Transaction Agreements.
TAX MATTERS
19. The section of the Preliminary Prospectus and Prospectus entitled
"Certain Canadian Federal Income Tax Considerations", subject to the
limitations, restrictions, qualifications and assumptions set out
therein, describes the principal Canadian federal income tax
considerations generally applicable under the Income Tax Act to a
holder of Trust Units who acquires Trust Units pursuant to the
Prospectus and who, for the purposes of the Income Tax Act, is resident
in Canada, holds the Trust Units as capital property and deals at arm's
length with the Fund.
-3-
20. The statements in the section "Eligibility for Investment" in the
Preliminary Prospectus and Prospectus are true and correct.
SECURITIES LAWS
21. all approvals, permits, consents, orders and authorizations under
applicable Securities Laws have been obtained, all necessary documents
have been filed and all other legal requirements have been fulfilled to
qualify the issuance or distribution and sale of the Purchased Units to
the public in each of the Qualifying Jurisdictions and to permit the
issuance, sale and delivery of the Purchased Units to the public
through dealers registered under the applicable laws of each of the
Qualifying Jurisdictions who have complied with the relevant provisions
of such laws;
-4-
SCHEDULE 14
-----------
UNITED STATES OFFERS AND SALES
------------------------------
As used in this Schedule 14, capitalized terms used herein and not
defined herein shall have the meanings ascribed thereto in the underwriting
agreement to which this Schedule is annexed and the following terms shall have
the meanings indicated:
(a) "144A Units" means the Purchased Units offered for sale only
to Qualified Institutional Buyers;
(b) "Accredited Investor" means an accredited investor as that
term is defined in Rule 501(a) of Regulation D;
(c) "Accredited Investor Units" means the Purchased Units offered
for sale to Accredited Investors who are not also Qualified
Institutional Buyers;
(d) "Directed Selling Efforts" means directed selling efforts as
that term is defined in Regulation S. Without limiting the
foregoing, but for greater clarity in this Schedule, it means,
subject to the exclusions from the definition of directed
selling efforts contained in Regulation S, any activity
undertaken for the purpose of, or that could reasonably be
expected to have the effect of, conditioning the market in the
United States for any of the U.S. Units (as defined below) and
includes the placement of any advertisement in a publication
with a general circulation in the United States that refers to
the offering of the U. S. Units;
(e) "Qualified Institutional Buyer" means a qualified
institutional buyer as that term is defined in Rule 144A;
(f) "Regulation D" means Regulation D adopted by the SEC under the
U.S. Securities Act;
(g) "Regulation S" means Regulation S adopted by the SEC under the
U.S. Securities Act;
(h) "Rule 144A" means Rule 144A adopted by the SEC under the U.S.
Securities Act;
(i) "SEC" means the United States Securities and Exchange
Commission;
(j) "Substantial U.S. Market Interest" means substantial U.S.
market interest as that term is defined in Regulation S;
(k) "U.S. Exchange Act" means the United States Securities
Exchange Act of 1934, as amended;
(l) "U.S. Person" means a U.S. person as that term is defined in
Regulation S;
(m) "U.S. Securities Act" means the United States Securities Act
of 1933, as amended;
(n) "U.S. Units" means the Accredited Investor Units and the 144A
Units; and
(o) "United States" means the United States of America, its
territories and possessions, any state of the United States,
and the District of Columbia.
All other capitalized terms used but not otherwise defined in this Schedule 14
shall have the meanings assigned to them in the Agreement to which this Schedule
14 is attached.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE UNDERWRITERS
-------------------------------------------------------------
Each Underwriter acknowledges that the U.S. Units have not been and will not be
registered under the U.S. Securities Act and may be offered and sold only in
transactions exempt from or not subject to the registration requirements of the
U.S. Securities Act. Accordingly, each Underwriter represents, warrants and
covenants to the Fund and Xxxxx that:
1. It has not offered and sold, and will not offer and sell, any U.S.
Units forming part of its allotment except (a) in an offshore
transaction in accordance with Rule 903 of Regulation S or (b) in the
United States as provided in paragraphs 2 through 12 below.
Accordingly, neither the Underwriter, its affiliates nor any persons
acting on its or their behalf, has made or will make (except as
permitted in paragraphs 2 through 12 below) (i) any offer to sell or
any solicitation of an offer to buy, any U.S. Units to any person in
the United States, (ii) any sale of U.S. Units to any purchaser unless,
at the time the buy order was or will have been originated, the
purchaser was outside the United States, or such Underwriter, affiliate
or person acting on behalf of either reasonably believed that such
purchaser was outside the United States, or (iii) any Directed Selling
Efforts in the United States with respect to the U.S. Units.
2. It has not entered and will not enter into any contractual arrangement
with respect to the distribution of the U.S. Units, except with its
affiliates, any selling group members or with the prior written consent
of the Fund. It shall require each selling group member to agree, for
the benefit of the Fund, to comply with, and shall use its best efforts
to ensure that each selling group member complies with, the same
provisions of this Schedule as apply to such Underwriter as if such
provisions applied to such selling group member.
3. All offers and sales of U.S. Units in the United States shall be made
through the Underwriter's U.S. registered broker-dealer affiliate in
compliance with all applicable U.S. broker-dealer requirements. Such
broker-dealer affiliate is a Qualified Institutional Buyer.
4. Offers and sales of U.S. Units in the United States shall not be made
by any form of general solicitation or general advertising (as those
terms are used in Regulation D) or in any manner involving a public
offering within the meaning of Section 4(2) of the U.S. Securities Act.
-2-
5. Offers to sell and solicitations of offers to buy U.S. Units shall be
made (i) in the case of 144A Units, in accordance with Rule 144A only
to persons reasonably believed to be Qualified Institutional Buyers,
(ii) in the case of Accredited Investor Units only to persons
reasonably believed to be Accredited Investors and (iii) in each case
to purchasers that are exempt, or in transactions that are exempt, from
registration under applicable state securities laws.
6. All purchasers of the 144A Units in the United States shall be informed
that the 144A Units have not been and will not be registered under the
U.S. Securities Act and are being offered and sold to such purchasers
in reliance on the exemption from the registration requirements of the
U.S. Securities Act provided by Rule 144A thereunder.
7. Each offeree of 144A Units in the United States has been or shall be
provided with a U.S. placement memorandum (the "U.S. 144A Memorandum")
including the Prospectus, and each purchaser will have received at or
prior to the time of purchase of any 144A Units the U.S. 144A
Memorandum including the Prospectus. The U.S. 144A Memorandum shall set
forth the following:
"The Units have not been and will not be registered under the
1933 Act and are being offered and sold within the United States
exclusively to persons reasonably believed by the underwriters to be
Qualified Institutional Buyers (as defined in rule 144A under the 0000
Xxx) and to a limited number of Accredited Investors (as defined in
Rule 501(a) under the 1933 Act). Each recipient of this U.S. Placement
Memorandum is hereby notified that the offer and sale of Units to it is
being made in reliance upon the exemption from the registration
requirements of the 1933 Act provided by Rule 144A thereunder.
"Each U.S. purchaser that is a Qualified Institutional Buyer
will, by its purchase of such Units, be deemed to have represented,
warranted and agreed for the benefit of the Fund, the Underwriters and
the U.S. Affiliates as follows:
(a) it is aware that the Units have not been and will not be
registered under the 1933 Act and that the offer and sale of
Units to it are being made in reliance on Rule 144A;
(b) it is a Qualified Institutional Buyer and is acquiring the
Units for its own account or for the account of a Qualified
Institutional Buyer with respect to which it exercises sole
investment discretion and not with a view to any resale,
distribution or other disposition of the Units in violation of
United States federal or state securities laws;
(c) it acknowledges that it has not purchased the Units as a
result of any general solicitation or general advertising,
including advertisements, articles, notices or other
communications published in any newspaper, magazine or similar
media, or broadcast over radio or television, or any seminar
or meeting whose attendees have been invited by general
solicitation or general advertising;
-3-
(d) it understands that if it decides to offer, sell or otherwise
transfer any of the Units, such Units may be offered, sold or
otherwise transferred only, (i) to the Fund, (ii) outside the
United States in accordance with Rule 904 of Regulation S
under the 1933 Act, or (iii) within the United States in
accordance with (A) Rule 144A to a person the seller
reasonably believes is a Qualified Institutional Buyer that is
purchasing for its own account or for the account of a
Qualified Institutional Buyer to whom notice is given that the
offer, sale or transfer is being made in reliance on Rule 144A
or (B) the exemption from registration under the 1933 Act
provided by Rule 144 thereunder, if available;
(e) it understands and acknowledges that upon the original
issuance thereof, and until such time as the same is no longer
required under applicable requirements of the 1933 Act or
applicable state securities laws, certificates representing
the Units, and all certificates issued in exchange therefor or
in substitution thereof, shall bear the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF THE FUND THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY
(A) TO THE FUND, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE
WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (C)
WITHIN THE UNITED STATES IN ACCORDANCE WITH (1) RULE 144A
UNDER THE SECURITIES ACT OR (2) RULE 144 UNDER THE SECURITIES
ACT, IF AVAILABLE. DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON
STOCK EXCHANGES IN CANADA. PROVIDED THAT THE CORPORATION IS A
"FOREIGN ISSUER" WITHIN THE MEANING OF REGULATION S AT THE
TIME OF SALE, A NEW CERTIFICATE, BEARING NO LEGEND, DELIVERY
OF WHICH WILL CONSTITUTE "GOOD DELIVERY" MAY BE OBTAINED FROM
COMPUTERSHARE TRUST COMPANY OF CANADA UPON DELIVERY OF THIS
CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM
SATISFACTORY TO COMPUTERSHARE TRUST COMPANY OF CANADA AND THE
FUND, TO THE EFFECT THAT THE SALE OF THE SECURITIES
REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904
OF REGULATION S UNDER THE SECURITIES ACT.";
-4-
PROVIDED, that if Units are being sold under paragraph (d)(ii)
above, and provided that the Fund is a "foreign issuer" within
the meaning of Regulation S at the time of sale, the legend
may be removed by providing a declaration to Computershare
Trust Company of Canada as registrar and transfer agent, as
set forth in Exhibit A hereto (or as the Corporation may
prescribe from time to time); and PROVIDED, FURTHER, that, if
any such securities are being sold under paragraph (d)(iii)(B)
above, the legend may be removed by delivery to Computershare
Trust Company of Canada of an opinion of counsel, of
recognized standing reasonably satisfactory to the Fund, that
such legend is no longer required under applicable
requirements of the 1933 Act or state securities laws; and
(f) it consents to the Fund making a notation on its records or
giving instructions to any transfer agent of the Units in
order to implement the restrictions on transfer set forth and
described herein."
The Exhibit A referred in this Section 7 is set forth as Exhibit A to
this Schedule.
8. Any offer, sale or solicitation of an offer to buy 144A Units that has
been made or will be made in the United States was or will be made only
to Qualified Institutional Buyers in transactions that are exempt from
registration under applicable state securities laws.
9. Prior to completion of any sale of Accredited Investor Units in the
United States, each U.S. purchaser thereof will be required to execute
a Purchaser's Letter in the form attached hereto as Appendix I to this
Schedule.
10. It will deliver, prior to the purchase, a copy of the U.S. private
placement offering memorandum (the "Accredited Investor U.S. Placement
Memorandum") attached to a copy of the Prospectus to each person in the
United States purchasing Accredited Investor Units from it.
11. Prior to the Time of Closing, it will provide the transfer agent with a
list of all purchasers of the U.S. Units.
12. At closing, the lead Underwriter, together with its U.S. affiliate
selling U.S. Units in the United States, will provide a certificate,
substantially in the form of Exhibit B to this Schedule relating to the
manner of the offer and sale of the U.S. Units in the United States.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE FUND AND XXXXX
---------------------------------------------------------------
The Fund and Xxxxx jointly represent, warrant, covenant and agree that:
1. (a) The Fund is a "foreign issuer" within the meaning of Regulation S
and reasonably believes that there is no Substantial U.S. Market
Interest in the U.S. Units; (b) the Fund is not now and as a result of
the sale of U.S. Units contemplated hereby will not be, an "investment
-5-
company" as defined in the United States Investment Company Act of
1940, as amended; and (c) the U.S. Units are not, and as of the Time
of Closing will not be, and no securities of the same class as the
U.S. Units are or will be, (i) listed on a national securities
exchange in the United States registered under Section 6 of the U.S.
Exchange Act, (ii) quoted in an "automated inter-dealer quotation
system", as such term is used in the U.S. Exchange Act, or (iii)
convertible or exchangeable at an effective conversion premium
(calculated as specified in paragraph (a)(6) of Rule 144A) of less
than ten percent for securities so listed or quoted.
2. During the period in which the U.S. Units are offered for sale,
neither the Fund nor any of its affiliates, nor any person acting on
its or their behalf (i) has made or will make any Directed Selling
Efforts in the United States, or (ii) has engaged in or will engage in
any form of general solicitation or general advertising (as those
terms are used in Regulation D) with respect to offers or sales of the
U.S. Units in the United States, including advertisements, articles,
notices or other communications published in any newspaper, magazine
or similar media, or broadcast over radio, or television, or any
seminar or meeting whose attendees have been invited by general
solicitation or general advertising.
3. Except with respect to the offer and sale of the U.S. Units offered
hereby, the Fund has not, for a period of six months prior to the date
hereof sold, offered for sale or solicited any offer to buy any of its
securities in the United States.
4. For so long as any of the 144A Units are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
U.S. Securities Act, and if the Corporation is not subject to and in
compliance with the reporting requirements of Section 13 or Section
15(d) of the U.S. Exchange Act or exempt from such reporting
requirements pursuant to Rule 12g3-2(b) thereunder, the Fund will
provide to any holder of such 144A Units, or to any prospective
purchaser of such 144A Units designated by such holder, upon the
request of such holder or prospective purchaser, at or prior to the
time of resale, the information required to be provided by Rule
144A(d)(4).
-6-
EXHIBIT A
FORM OF DECLARATION FOR REMOVAL OF LEGEND
TO: Computershare Trust Company of Canada
as registrar and transfer agent
for Units of
Sun Gro Horticulture Income Fund
Toronto, Ontario
The undersigned (a) acknowledges that the sale of the
securities of Sun Gro Horticulture Income Fund (the "Fund") to which this
declaration relates is being made in reliance on Rule 904 of Regulation S under
the United States Securities Act of 1933, as amended (the "1933 Act") and (b)
certifies that (1) it is not an affiliate of the Fund (as defined in Rule 405
under the 1933 Act), (2) the offer of such securities was not made to a person
in the United States and either (A) at the time the buy order was originated,
the buyer was outside the United States, or the seller and any person acting on
its behalf reasonably believe that the buyer was outside the United States, or
(B) the transaction was executed on or through the facilities of The Toronto
Stock Exchange, the Montreal Exchange, or the Canadian Venture Exchange and
neither the seller nor any person acting on its behalf knows that the
transaction has been prearranged with a buyer in the United States, (3) neither
the seller nor any affiliate of the seller nor any person acting on any of their
behalf has engaged or will engage in any directed selling efforts in the United
States in connection with the offer and sale of such securities, (4) the sale is
bona fide and not for the purpose of "washing off" the resale restrictions
imposed because the securities are "restricted securities" (as such term is
defined in Rule 144(a)(3) under the 1933 Act), (5) the seller does not intend to
replace the securities sold in reliance on Rule 904 of the 1933 Act with
fungible unrestricted securities and (6) the contemplated sale is not a
transaction, or part of a series of transactions which, although in technical
compliance with Regulation S, is part of a plan or scheme to evade the
registration provisions of the 1933 Act. Terms used herein have the meanings
given to them by Regulation S.
Dated: ____________
By: __________________________
Name:
Title:
EXHIBIT B
UNDERWRITERS' CERTIFICATE
In connection with the private placement in the United States of the
U.S. Units of Sun Gro Horticulture Income Fund (the "Fund") pursuant to the
Underwriting Agreement dated March 18, 2002 among the Fund, and the Underwriters
named therein (the "Underwriting Agreement"), each of the undersigned does
hereby certify as follows:
(i) [NAME OF U.S. BROKER-DEALER AFFILIATE] is a duly
registered broker or dealer with the United States
Securities and Exchange Commission and is a member of
and in good standing with the National Association of
Securities Dealers, Inc. on the date hereof;
(ii) each offeree of 144A Units was provided with a copy
of the U.S. 144A Placement Memorandum, including the
Canadian final prospectus dated March 18, 2002 and
the documents incorporated by reference therein for
the offering of the 144A Units in the United States;
(iii) each offeree of Accredited Investor Units was
provided with a copy of the Accredited Investor U.S.
Placement Memorandum, including the Canadian final
prospectus, for the offering of the Accredited
Investor Units in the United States
(iv) immediately prior to our transmitting such U.S. 144A
Placement Memorandum to such offerees, we had
reasonable grounds to believe and did believe that
each offeree was a Qualified Institutional Buyer and,
on the date hereof, we continue to believe that each
U.S. person purchasing 144A Units from us is a
Qualified Institutional Buyer;
(v) immediately prior to transmitting the Accredited
Investor U.S. Placement Memorandum to such offerees,
we had reasonable grounds to believe and did believe
that each offeree was an "accredited investor" as
defined in Rule 501(a) of Regulation D (an
"Accredited Investor") under the Securities Act of
1933, as amended (the "1933 Act"), and, on the date
hereof, we continue to believe that each U.S. person
purchasing Accredited Investor Units from us is an
Accredited Investor;
(vi) no form of general solicitation or general
advertising (as those terms are used in Regulation D
under the U.S. Securities Act) was used by us,
including advertisements, articles, notices or other
communications published in any newspaper, magazine
or similar media or broadcast over radio or
television, or any seminar or meeting whose attendees
had been invited by general solicitation or general
advertising, in connection with the offer or sale of
the U.S. Units in the United States;
(vii) the offering of the U.S. Units in the United States
has been conducted by us in accordance with the terms
of the Underwriting Agreement; and
(viii) prior to any sale of Accredited Investor Units in the
United States, we caused each U.S. purchaser
purchasing Accredited Investor Units to execute a
U.S. Purchaser's Letter in the form of Appendix I to
Schedule "14" to the Underwriting Agreement.
Terms used in this certificate have the meanings given to them in the
Underwriting Agreement unless otherwise defined herein.
Dated this __ day of __________, 2002.
BMO XXXXXXX XXXXX INC. [U.S. BROKER-DEALER AFFILIATE]
By: By:
----------------------------------- -----------------------
Name: Name:
Title: Title:
APPENDIX I
TO SCHEDULE "14"
U.S. PURCHASER'S LETTER
[U.S. BROKER-DEALER]
[ADDRESS]
Re: Purchase of Units
SUN GRO HORTICULTURE INCOME FUND
--------------------------------
Ladies and Gentlemen:
In connection with its agreement to purchase the number of
Units (the "Units") of Sun Gro Horticulture Income Fund (the "Fund") indicated
herein, the undersigned represents, warrants and covenants to you as follows:
(a) it understands that the Units have not been and will not be
registered under the United States Securities Act of 1933, as
amended (the "1933 Act") or any applicable state securities
laws and that the contemplated sale is being made in reliance
on a private placement exemption to accredited investors (as
such term is defined in Rule 501 of Regulation D under the
0000 Xxx);
(b) it has had access to such additional information, if any,
concerning the Fund as it has considered necessary in
connection with its investment decision to acquire the Units;
(c) it 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 Units and is able to bear the economic
risks of such investment;
(d) it has completed an Investor Questionnaire (a copy of which is
available from the Underwriters);
(e) it acknowledges that it has not purchased the Units as a
result of any general solicitation or general advertising,
including advertisements, articles, notices or other
communications published in any newspaper, magazine or similar
media or broadcast over radio or television, or any seminar or
meeting whose attendees have been invited by general
solicitation or general advertising;
(f) it is an employee of either Sun Gro Horticulture Canada Ltd.
or ________________________ [NAME OF OTHER SUBSIDIARY], both
of which are wholly owned Subsidiaries of the Fund;
(g) it agrees that if it decides to offer, sell or otherwise
transfer any of the Units, such Units may be offered, sold or
otherwise transferred only, (i) to the Fund, (ii) outside the
United States in accordance with Rule 904 of Regulation S
under the 1933 Act, or (iii) within the United States in
accordance with (A) Rule 144A to a person the seller
reasonably believes is a Qualified Institutional Buyer (as
such term is defined in Rule 144A under the 0000 Xxx) that is
purchasing for its own account or for the account of a
Qualified Institutional Buyer to whom notice is given that the
offer, sale or transfer is being made in reliance on Rule 144A
or (B) the exemption from registration under the 1933 Act
provided by Rule 144 thereunder, if available;
(h) it understands and acknowledges that upon the original
issuance thereof, and until such time as the same is no longer
required under applicable requirements of the 1933 Act or
applicable state securities laws, certificates representing
Units, and all certificates issued in exchange therefor or in
substitution thereof, shall bear the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF THE FUND THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY
(A) TO THE FUND, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE
WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (C)
WITHIN THE UNITED STATES IN ACCORDANCE WITH (1) RULE 144A
UNDER THE SECURITIES ACT OR (2) RULE 144 UNDER THE SECURITIES
ACT, IF AVAILABLE. DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON
STOCK EXCHANGES IN CANADA. PROVIDED THAT THE CORPORATION IS A
"FOREIGN ISSUER" WITHIN THE MEANING OF REGULATION S AT THE
TIME OF SALE, A NEW CERTIFICATE, BEARING NO LEGEND, DELIVERY
OF WHICH WILL CONSTITUTE "GOOD DELIVERY" MAY BE OBTAINED FROM
COMPUTERSHARE TRUST COMPANY OF CANADA UPON DELIVERY OF THIS
CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM
SATISFACTORY TO COMPUTERSHARE TRUST COMPANY OF CANADA AND THE
FUND, TO THE EFFECT THAT THE SALE OF THE SECURITIES
REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904
OF REGULATION S UNDER THE SECURITIES ACT.";
PROVIDED, that if Units are being sold under paragraph (g)(ii)
above, and PROVIDED that the Corporation is a "foreign issuer"
within the meaning of Regulation S at the time of sale, any
such legend may be removed by providing a declaration to
Computershare Trust Company of Canada, as registrar and
transfer agent, to the effect set forth in Annex A hereto (or
as the Fund may prescribe from time to time); and provided,
further, that, if any such Units are being sold under
paragraph (g)(iii) above, the legend may be removed by
delivery to Computershare Trust Company of Canada and the Fund
of an opinion of counsel, of recognized standing reasonably
satisfactory to the Fund, that such legend is no longer
required under applicable requirements of the 1933 Act or
state securities laws;
-2-
(i) it consents to the Fund making a notation on its records or
giving instructions to any transfer agent of the Units in
order to implement the restrictions on transfer set forth and
described herein; and
(j) if required by applicable securities legislation, regulatory
policy or order or by any securities commission, stock
exchange or other regulatory authority, it will execute,
deliver and file and otherwise assist the Fund in filing
reports, questionnaires, undertakings and other documents with
respect to the issue of the Units.
The undersigned acknowledges that the representations and
warranties and agreements contained herein are made by it with the intent that
they may be relied upon by you in determining its eligibility to purchase the
Units. By this letter the undersigned represents and warrants that the foregoing
representations and warranties are true and that they shall survive the purchase
by it of the Units and shall continue in full force and effect notwithstanding
any subsequent disposition by the undersigned of Units.
You are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Registration of the certificate(s) representing the Units
should be made as follows (if space is insufficient, attach a list):
NAME: __________________
----
ADDRESS: __________________
-------
__________________
__________________
Number of
Units Purchased: __________________
Total Purchase Price: __________________
A certified cheque or bank draft in the amount set forth above
accompanies this letter.
-3-
The certificate(s) representing the Units should:
* [ ] be mailed by registered mail to the registered holder(s) at
the address set forth in the prior paragraph; or
* [ ] be made available to be picked up at the principal office of
the Fund's Registrar and Transfer Agent in the City of
Vancouver, British Columbia.
* Please check one box, failing which such certificate will be
mailed by registered mail to the registered holder(s) as
described above.
Dated: __________________ ______________________
Name of Purchaser
By: ___________________
Name:
Title:
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ANNEX A
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FORM OF DECLARATION FOR REMOVAL OF LEGEND
TO: Computershare Trust Company of Canada
as registrar and transfer agent
for Units
Sun Gro Horticulture Income Fund
The undersigned (a) acknowledges that the sale of the securities of Sun Gro
Horticulture Income Fund (the "Fund") to which this declaration relates is being
made in reliance on Rule 904 of Regulation S under the United States Securities
Act of 1933, as amended (the "1933 Act") and (b) certifies that (1) the
undersigned is not an affiliate of the Fund as that term is defined in the 1933
Act, (2) the offer of such securities was not made to a person in the United
States and either (A) at the time the buy order was originated, the buyer was
outside the United States, or the seller and any person acting on its behalf
reasonably believed that the buyer was outside the United States, or (B) the
transaction was executed in, on or through the facilities of The Toronto Stock
Exchange, the Montreal Exchange, or the Canadian Venture Exchange or any other
designated offshore securities market as defined in Regulation S under the 1933
Act and neither the seller nor any person acting on its behalf knows that the
transaction has been prearranged with a buyer in the United States, (3) neither
the seller nor any affiliate of the seller nor any person acting on any of their
behalf has engaged or will engage in any directed selling efforts in the United
States in connection with the offer and sale of such securities, (4) the sale is
bona fide and not for the purpose of "washing off" the resale restrictions
imposed because the securities are "restricted securities" (as such term is
defined in Rule 144(a)(3) under the 1933 Act), (5) the seller does not intend to
replace the securities sold in reliance on Rule 904 of the 1933 Act with
fungible unrestricted securities and (6) the contemplated sale is not a
transaction, or part of a series of transactions which, although in technical
compliance with Regulation S, is part of a plan or scheme to evade the
registration provisions of the 1933 Act. Terms used herein have the meanings
given to them by Regulation S.
Dated: ____________________ ________________________
Name of Seller
By: _____________________
Name:
Title:
