EXHIBIT 1.1
8,000,000 SHARES
COREL CORPORATION
COMMON SHARES
UNDERWRITING AGREEMENT
__________, 2006
_____________, 2006
Xxxxxx Xxxxxxx & Co. Incorporated
X.X. Xxxxxx Securities Inc.
Deutsche Bank Securities Inc.
Xxxxx Xxxxxxx & Co.
CIBC World Markets Corp.
Canaccord Xxxxx Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
Corel Corporation, a Canadian corporation (the "COMPANY"), proposes to
issue and sell to the several Underwriters named in Schedule II hereto (the
"UNDERWRITERS"), and certain shareholders of the Company (the "SELLING
SHAREHOLDERS") named in Schedule I hereto severally propose to sell to the
several Underwriters, an aggregate of 8,000,000 common shares of the Company
(the "FIRM Shares"), of which 5,000,000 shares are to be issued and sold by the
Company and 3,000,000 shares are to be sold by the Selling Shareholders, each
Selling Shareholder selling the amount set forth opposite such Selling
Shareholder's name in Schedule I hereto.
The Company and the Selling Shareholders also propose to issue and sell to
the several Underwriters not more than an additional 1,200,000 common shares
(the "ADDITIONAL SHARES") if and to the extent that you, as managers of the
offering, shall have determined to exercise, on behalf of the Underwriters, the
right to purchase such common shares granted to the Underwriters in Section 4
hereof. The Firm Shares and the Additional Shares are hereinafter collectively
referred to as the "SHARES." The common shares to be outstanding after giving
effect to the sales contemplated hereby are hereinafter referred to as the
"COMMON SHARES." The Company and the Selling Shareholders are hereinafter
sometimes collectively referred to as the "SELLERS."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the prospectus in the form first
used to confirm sales
of Shares is hereinafter referred to as the "PROSPECTUS" (and shall, with
respect to sales of Shares in Canada, also include the Canadian Supplemental
Prospectus (as defined in Section 7(i) hereof)). If the Company has filed an
abbreviated registration statement to register additional Common Shares pursuant
to Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION STATEMENT"),
then any reference herein to the term "REGISTRATION STATEMENT" shall be deemed
to include such Rule 462 Registration Statement.
For purposes of this Agreement, "FREE WRITING PROSPECTUS" has the meaning
set forth in Rule 405 under the Securities Act, "TIME OF SALE PROSPECTUS" means
the preliminary prospectus, together with the free writing prospectuses, if any,
each identified in Schedule III hereto "BROADLY AVAILABLE ROAD SHOW" means a
"bona fide electronic road show" as defined in Rule 433(h)(5) under the
Securities Act that has been made available without restriction to any person.
1. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or to the Company's knowledge,
after due inquiry, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, not misleading,
(ii) the Canadian Final Prospectus (as defined in Section 1(d)) when it was
filed did not contain any untrue Statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the Statements
therein, in light of the circumstances in which they were made, not misleading,
(iii) the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder, (iv) the Canadian Final Prospectus complies and, as amended or
supplemented, if applicable, will comply in all material respects with Canadian
Securities Laws and the applicable rules and regulations of the Canadian
Securities Commissions thereunder, (v) the Time of Sale Prospectus does not, and
at the time of each sale of the Shares in connection with the offering when the
Prospectus is not yet available to prospective purchasers and at the Closing
Date (as defined in Section 5), the Time of Sale Prospectus, as then amended or
supplemented by the Company, if applicable, will not, contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the
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statements therein, in light of the circumstances under which they were made,
not misleading, (vi) each broadly available road show, if any, when considered
together with the Time of Sale Prospectus, does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (vii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in the Registration Statement (or any
amendment thereto), the Time of Sale Prospectus or the Prospectus (or any
supplement thereto) or the Canadian Final Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
(c) The Company is a "foreign private issuer" within the meaning of Rule
405 under the Securities Act. The Company is not an "ineligible issuer" in
connection with the offering pursuant to Rules 164, 405 and 433 under the
Securities Act. Any free writing prospectus that the Company is required to file
pursuant to Rule 433(d) under the Securities Act has been, or will be, filed
with the Commission in accordance with the requirements of the Securities Act
and the applicable rules and regulations of the Commission thereunder. Each free
writing prospectus that the Company has filed, or is required to file, pursuant
to Rule 433(d) under the Securities Act or that was prepared by or behalf of or
used or referred to by the Company complies or will comply in all material
respects with the requirements of the Securities Act and the applicable rules
and regulations of the Commission thereunder. Except for the free writing
prospectuses, if any, identified in Schedule III hereto, and electronic road
shows, if any, furnished to you before first use, the Company has not prepared,
used or referred to, and will not, without your prior consent, prepare, use or
refer to, any free writing prospectus.
(d) The Company has complied with all applicable securities laws in each
of the provinces in Canada emanating from governmental authorities, including
the respective rules and regulations made thereunder together with applicable
published national and local instruments, policy statements, notices, blanket
rulings and orders of the Canadian Securities Commissions, all discretionary
rulings and orders applicable to the Company, if any, of the Canadian Securities
Commissions ("CANADIAN SECURITIES LAWS") required to be complied with by the
Company to qualify the distribution of the Shares as contemplated hereby in each
of the provinces of Canada. The Company has prepared and filed a preliminary
base PREP prospectus relating to the Shares in the English and French languages
(the "CANADIAN PRELIMINARY PROSPECTUS")
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with the Ontario Securities Commission (the "OSC") and with the securities
commissions or other securities regulatory authorities in each of the provinces
of Canada ("CANADIAN SECURITIES COMMISSIONS") pursuant to National Policy
43-201. The Company has obtained a preliminary decision document issued by the
OSC evidencing that receipts of the Canadian Securities Commissions in each of
the provinces of Canada have been issued in respect of the Canadian Preliminary
Prospectus. The Company has also prepared and filed with the OSC and the other
Canadian Securities Commissions a final base PREP prospectus relating to the
Shares in the English and French languages in accordance with National
Instrument 44-103 for the pricing of securities after the receipt for a
prospectus has been obtained (the "CANADIAN FINAL PROSPECTUS"), and has obtained
a final decision document issued by the OSC evidencing that final receipts of
the Canadian Securities Commissions in each of the provinces of Canada have been
issued in respect of the Canadian Final Prospectus.
(e) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Time of Sale Prospectus and the
Prospectus and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not reasonably be
expected to have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(f) Each significant subsidiary of the Company (as defined in Rule 1-02(w)
of Regulation S-X, a "SIGNIFICANT SUBSIDIARY") has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the Time of Sale
Prospectus and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not reasonably be
expected to have a material adverse effect on the Company and its subsidiaries,
taken as a whole; all of the issued shares of capital stock of each subsidiary
of the Company have been duly and validly authorized and issued, are fully paid
and non-assessable and are owned directly by the Company, or in the case of
WinZip (defined below) will be owned directly by the Company as of the Closing
Date, free and clear of all liens, encumbrances, equities or claims. All
references to a "Significant Subsidiary" and "Significant Subsidiaries" of the
Company throughout this Agreement, including without limitation in the
representations and warranties in this Section 1, shall include Cayman Ltd.
Holdco ("WINZIP").
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(g) This Agreement has been duly authorized, executed and delivered by the
Company. All necessary corporate action has been taken by the Company to
authorize the execution and delivery of this Agreement and the transactions
contemplated hereby, including execution and delivery of each of the Canadian
Preliminary Prospectus and the Canadian Final Prospectus and the filing thereof
and the Canadian Supplemental Prospectus (defined in Section 8(g)) under
Canadian Securities Laws in each province of Canada.
(h) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Time of Sale Prospectus and
the Prospectus.
(i) The Common Shares (including the Shares to be sold by the Selling
Shareholders) outstanding prior to the issuance of the Shares to be sold by the
Company have been duly authorized and are validly issued, fully paid and
non-assessable.
(j) The Shares to be sold by the Company have been duly authorized and,
when issued and delivered in accordance with the terms of this Agreement, will
be validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights.
(k) The execution and delivery by the Company of, and the performance by
the Company of its obligations under, this Agreement will not contravene any
provision of applicable law or the articles of incorporation or by-laws of the
Company or any agreement or other instrument binding upon the Company or any of
its subsidiaries that is material to the Company and its subsidiaries, taken as
a whole, or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any subsidiary, where such
contravention of such judgment, order or decree would not reasonably be likely
to have a material adverse effect on the Company and its subsidiaries taken as a
whole, and no consent, approval, authorization or order of, or qualification
with, any governmental body or agency (including any Canadian court or Canadian
federal or provincial governmental authority) is required for the performance by
the Company of its obligations under this Agreement, except (i) as may be
required by the securities or Blue Sky laws of the various states or the bylaws
and rules and regulations of the National Association of Securities Dealers,
Inc. in connection with the offer and sale of the Shares, and (ii) for the
filing of the Canadian Supplemental Prospectus (as defined in Section 7(i)).
(l) There has not occurred any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Time of Sale
Prospectus.
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(m) There are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or to which any of the properties
of the Company or any of its subsidiaries is subject (i) other than proceedings
accurately described in all material respects in the Time of Sale Prospectus and
proceedings that would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or on the power or ability of the Company to
perform its obligations under this Agreement or to consummate the transactions
contemplated by the Time of Sale Prospectus or (ii) that are required to be
described in the Registration Statement or the Prospectus and are not so
described, nor to the knowledge of the Company, are any such proceedings
threatened. There are no statutes, regulations, contracts or other documents to
which the Company or any of its subsidiaries are subject or by which the Company
or any of its subsidiaries is bound that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(n) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to either Rule 424 under the Securities Act or Canadian Securities
Laws, complied when so filed in all material respects with either the Securities
Act and the applicable rules and regulations of the Commission thereunder, or
Canadian Securities Laws and the applicable rules and regulations of Canadian
Securities Commissions, as applicable.
(o) The Company is not, and after giving effect to the offering and sale
of the Shares and the application of the proceeds thereof as described in the
Prospectus will not be, required to register as an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended.
(p) The Company and its subsidiaries (i) are in compliance with any and
all applicable foreign, U.S. federal, U.S. state, provincial, territorial and
local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the aggregate, be
reasonably likely to have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
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(q) There are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on operating activities and
any potential liabilities to third parties) which would, singly or in the
aggregate, be reasonably likely to have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(r) The Company and its subsidiaries have complied and are in compliance
with all federal, state, local, provincial and foreign statutes, executive
orders, proclamations, rules, regulations, orders and similar provisions having
the force of law and all judicial and administrative orders and rulings, and
common law concerning the importation or export of products and technology in
connection with the Company's or any subsidiary's business except where the
failure to be in compliance would not be reasonably likely to have a material
adverse effect on the Company and its subsidiaries taken as a whole. Neither the
Company nor any of its subsidiaries has made any payment, offer, gift, or
authorized or otherwise participated in, assisted or facilitated any payment or
gift related to the Company's or any subsidiary's business that is prohibited by
the United States Foreign Corrupt Practices Act or the Corruption of Foreign
Public Officials Act of Canada.
(s) Other than as described in the Time of Sale Prospectus, there are no
contracts, agreements or understandings between the Company and any person
(which term shall, throughout this agreement, also refer to entities) granting
such person the right to require the Company to file a registration statement
under the Securities Act with respect to any securities of the Company at any
time prior to 180 days after the Closing Date (as such 180 day period may be
extended as described in Section 3(c)), or to require the Company to include
such securities with the Shares registered pursuant to the Registration
Statement or granting such person any preemptive right, right of first offer or
similar right with respect to any securities of the Company.
(t) Subsequent to the respective dates as of which information is given in
the Registration Statement, the Prospectus and the Time of Sale Prospectus, (i)
the Company and its subsidiaries have not incurred any material liability or
obligation, direct or contingent, nor entered into any material transaction;
(ii) the Company has not purchased any of its outstanding shares, nor declared,
paid or otherwise made any dividend or distribution of any kind on its shares
other than ordinary and customary dividends; and (iii) there has not been any
material change in the shares (including securities convertible or exercisable
into or exchangeable for shares), short-term debt or long-term debt of the
Company and its subsidiaries, except in each case as described in the Time of
Sale Prospectus.
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(u) The Company and its subsidiaries have good and marketable title to all
personal property owned by them which is material to the business of the Company
and its subsidiaries, taken as a whole, in each case free and clear of all
liens, encumbrances and defects except such as are described in the Time of Sale
Prospectus or such as do not materially affect the value of such property and do
not interfere with the use made and proposed in the Time of Sale Prospectus to
be made of such property by the Company and its subsidiaries, taken as a whole;
and any real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed in the Time of Sale Prospectus to be made of such property and
buildings by the Company and its subsidiaries, in each case except as described
in the Time of Sale Prospectus. The Company and its subsidiaries do not own any
real property.
(v) The Company and its subsidiaries own, possess or license, or can
acquire or license on reasonable terms, all material patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks and trade names currently employed by
them in connection with the business now operated by them, and neither the
Company nor any of its subsidiaries has received any notice of infringement of
asserted rights of others with respect to any of the foregoing (or any written
correspondence implying infringement by means of offer of a license) which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would be reasonably likely to have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(w) No material labor dispute with current and former employees of the
Company or any of its subsidiaries exists, except as described in the Time of
Sale Prospectus, or, to the knowledge of the Company, is imminent.
(x) The Company and each of its Significant Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; and neither the Company nor any of its subsidiaries has any reason
to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
be reasonably likely to have a material adverse effect on the Company and its
subsidiaries, taken as a whole, except as described in the Time of Sale
Prospectus.
(y) The Company and its Significant Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state,
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provincial or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would be
reasonably likely to have a material adverse effect on the Company and its
subsidiaries, taken as a whole, except as described in the Time of Sale
Prospectus.
(z) Except as described in the Time of Sale Prospectus, the Company and
each of its subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Except as described in the Time of Sale Prospectus, since the end
of the Company's most recent audited fiscal year, there has been (i) no material
weakness or significant deficiency in the Company's internal control over
financial reporting (whether or not remediated) and (ii) no change in the
Company's internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.
(aa) PricewaterhouseCoopers LLP (Canada), which has expressed its opinion
with respect to certain of the financial statements of the Company filed with
the Commission as a part of the Registration Statement and included in each of
the Time of Sale Prospectus and the Prospectus, is a registered public
accounting firm as required by the Securities Act and can express opinions under
Canadian Securities Laws. PricewaterhouseCoopers LLP (US), which has expressed
its opinion with respect to certain of the financial statements of WinZip filed
with the Commission as a part of the Registration Statement and included in the
Time of Sale Prospectus and the Prospectus, are independent public accountants
as required by the Securities Act. Ernst & Young LLP, which has expressed its
opinion with respect to certain of the financial statements of Jasc Software,
Inc. ("JASC") and supporting schedules filed with the Commission as a part of
the Registration Statement and included in the Time of Sale Prospectus and the
Prospectus, are independent public or certified public accountants as required
by the Securities Act and under Canadian Securities Laws.
(bb) The financial statements of the Company filed with the Commission as
a part of the Registration Statement and included in each of the Time of Sale
Prospectus and the Prospectus, including without limitation the
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historical financial statements of Jasc and WinZip, present fairly the
consolidated financial position of the Company and its subsidiaries as of the
dates indicated and the results of their operations and cash flows for the
periods specified. Such financial statements have been prepared in conformity
with generally accepted accounting principles as applied in the United States
applied on a consistent basis throughout the periods involved. The financial
data set forth in the Prospectus under the captions "Prospectus Summary --
Summary Consolidated Financial Data," "Selected Consolidated Financial Data" and
"Capitalization" present fairly the information set forth therein on a basis
consistent with that of the audited financial statements contained in the
Registration Statement, the Time of Sale Prospectus and the Prospectus.
(cc) The pro forma financial statements of the Company giving effect to
the Company's acquisition of WinZip present fairly the consolidated financial
position of the Company and its subsidiaries as of the dates indicated and the
results of their operations and cash flows for the periods specified, have been
prepared in accordance with the Commission's rules and guidelines with respect
to pro forma financial statements and have been properly presented on the bases
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect to
the transactions and circumstances referred to therein.
(dd) No other financial statements or schedules of the Company or any
other entity are required to be included in the Registration Statement or the
Prospectus pursuant to any requirement of the Securities Act or any rules and
regulations thereunder, including Rules 3-05 and 11 of Regulation S-X, or the
Canadian Securities Laws.
(ee) There are no transactions or loans between the Company and any holder
of 5% or more of the Common Shares, any director, any director nominee or any
executive officer, or members of such individuals' immediate families, or any
enterprise in which a substantial interest in the voting power is owned,
directly or indirectly, by any of such individuals other than those described in
the Time of Sale Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement). In particular, no such person or
entity (i) has any direct or indirect ownership interest in, or any employment
or consulting agreement with, any firm or corporation that competes with the
Company, (ii) is directly or indirectly interested in any contract with the
Company, except for compensation and standard benefits for services as a
director, officer or employee that is disclosed in the Time of Sale Prospectus
(to the extent it is required to be disclosed), (iii) has any ownership interest
in any property, real or personal, tangible or intangible, used in the Company's
business, except for the normal rights of a shareholder, or (iv) has, either
directly or indirectly, a material interest in any person which purchases from
or sells, licenses
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or furnishes to Company any goods, property, technology or intellectual or other
property rights or services (except in the case of (i) - (iv) above, with
respect to any interest of less than 5% of the outstanding voting shares of any
corporation whose stock is publicly traded.
(ff) Except as described in the Registration Statement (exclusive of any
amendments thereto subsequent to the date of this Agreement), the Company has
not sold, issued or distributed any Common Shares during the six-month period
preceding the date hereof, including any sales pursuant to Rule 144A under, or
Regulation D or S of, the Securities Act or under Canadian Securities Laws,
other than shares issued pursuant to employee benefit plans, qualified stock
option plans or other employee compensation plans or pursuant to outstanding
options, rights or warrants.
2. Representations and Warranties of the Selling Shareholders. Each
Selling Shareholder represents and warrants to and agrees with each of the
Underwriters that:
(a) This Agreement has been duly authorized, executed and delivered by or
on behalf of such Selling Shareholder.
(b) The execution and delivery by such Selling Shareholder of, and the
performance by such Selling Shareholder of its obligations under, this
Agreement, the Custody Agreement signed by such Selling Shareholder and CIBC
Mellon Trust Company, as Custodian, relating to the deposit of the Shares to be
sold by such Selling Shareholder (the "CUSTODY AGREEMENT") and the Power of
Attorney appointing certain individuals as such Selling Shareholder's
attorneys-in-fact to the extent set forth therein, relating to the transactions
contemplated hereby and by the Registration Statement (the "POWER OF ATTORNEY")
will not contravene any provision of applicable law, or the articles of
incorporation or by-laws of such Selling Shareholder (if such Selling
Shareholder is a corporation), or any agreement or other instrument binding upon
such Selling Shareholder or any judgment, order or decree of any foreign or
domestic governmental body, agency or court having jurisdiction over such
Selling Shareholder, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency (including without
limitation any Canadian court or Canadian federal or provincial governmental
authority) is required for the performance by such Selling Shareholder of its
obligations under this Agreement or the Custody Agreement or Power of Attorney
of such Selling Shareholder, except (i) as may be required by the securities or
Blue Sky laws of the various states in connection with the offer and sale of the
Shares, and (ii) for the filing of the Canadian Supplemental Prospectus.
(c) Such Selling Shareholder has, and on the Closing Date will have, valid
title to, or a valid "security entitlement" within the meaning of Section
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8-501 of the New York Uniform Commercial Code in respect of, the Shares to be
sold by such Selling Shareholder free and clear of all security interests,
claims, liens, equities or other encumbrances and the legal right and power, and
all authorization and approval required by law, to enter into this Agreement,
the Custody Agreement and the Power of Attorney and to sell, transfer and
deliver the Shares to be sold by such Selling Shareholder or a security
entitlement in respect of such Shares.
(d) The Custody Agreement and the Power of Attorney have been duly authorized,
executed and delivered by such Selling Shareholder and are valid and binding
agreements of such Selling Shareholder.
(e) [Delivery of the Shares to be sold by such Selling Shareholder and
payment therefor pursuant to this Agreement will pass valid title to such
Shares, free and clear of any adverse claim within the meaning of Section 8-102
of the New York Uniform Commercial Code, to each Underwriter who has purchased
such Shares without notice of an adverse claim. [NOTE: This version of the
representation is to be used if Shares are to be delivered by the Selling
Shareholder in certificated form endorsed to the Underwriters.]
(f) [Upon payment for the Shares to be sold by such Selling Shareholder
pursuant to this Agreement, delivery of such Shares, as directed by the
Underwriters, to Cede & Co. ("CEDE") or such other nominee as may be designated
by the Depository Trust Company ("DTC"), registration of such Shares in the name
of Cede or such other nominee and the crediting of such Shares on the books of
DTC to securities accounts of the Underwriters (assuming that neither DTC nor
any such Underwriter has notice of any adverse claim (within the meaning of
Section 8-105 of the New York Uniform Commercial Code (the "UCC")) to such
Shares), (A) DTC shall be a "protected purchaser" of such Shares within the
meaning of Section 8-303 of the UCC, (B) under Section 8-501 of the UCC, the
Underwriters will acquire a valid security entitlement in respect of such Shares
and (C) no action based on any "adverse claim", within the meaning of Section
8-102 of the UCC, to such Shares may be asserted against the Underwriters with
respect to such security entitlement; for purposes of this representation, such
Selling Shareholder may assume that when such payment, delivery and crediting
occur, (x) such Shares will have been registered in the name of Cede or another
nominee designated by DTC, in each case on the Company's share registry in
accordance with its articles of incorporation, bylaws and applicable law, (y)
DTC will be registered as a "clearing corporation" within the meaning of Section
8-102 of the UCC and (z) appropriate entries to the accounts of the several
Underwriters on the records of DTC will have been made pursuant to the UCC.]
[NOTE: This version of the representation is to be used if Shares are to be
delivered by the Selling
12
Shareholder through DTC without ever being registered directly in the name of
the Underwriters.]
(g) Such Selling Shareholder is not prompted by any information concerning
the Company or its subsidiaries which is not set forth in the Time of Sale
Prospectus to sell its Shares pursuant to this Agreement.
(h) All information furnished by or on behalf of such Selling Stockholder
for use in the Prospectus and the Canadian Final Prospectus does not, and on the
date of the Time of Sale Prospectus, the Closing Date and any Additional Closing
Date will not, contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(i) Except as disclosed by such Selling Shareholder in writing to the
Representatives, neither such Selling Shareholder nor any of his, her or its
affiliates directly, or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, or has any other
association with (within the meaning of Article 1(q) of the By-laws of the
National Association of Securities Dealers, Inc. (the "NASD")), any member firm
of the NASD.
(j) In order to document the Underwriters' compliance with the reporting
and withholding provisions of the Tax Equity and Fiscal Responsibility Act of
1982 with respect to the transactions herein contemplated, such Selling
Shareholder will deliver to the Representatives prior to or at the Closing Date
a properly completed and executed U.S. Treasury Department Form W-9 (or other
applicable form or statement specified by the U.S. Treasury Department
regulations in lieu thereof).
3. Agreements to Sell and Purchase.
(a) Each Seller, severally and not jointly, hereby agrees to sell to the
several Underwriters the number of Firm Shares set forth on Schedule I hereto
opposite the name of such Seller, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from such
Seller the number of Firm Shares set forth in Schedule II hereto opposite the
name of such Underwriter, at a price of U.S. $____ per share (or Cdn $____ per
share with respect to Firm Shares sold in Canada) (the "PURCHASE PRICE").
(b) On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Sellers, severally and
not jointly, agree to sell to the Underwriters the Additional Shares, and the
Underwriters shall have the right to purchase, severally and not jointly, up to
1,200,000 Additional Shares at the Purchase Price. You may exercise this right
13
on behalf of the Underwriters in whole or from time to time in part by giving
written notice of each election to exercise this option not later than 30 days
after the date of this Agreement. Any exercise notice shall specify the number
of Additional Shares to be purchased by the Underwriters and the date on which
such shares are to be purchased. Each purchase date must be at least two
business days after the written notice is given and may not be earlier than the
closing date for the Firm Shares nor later than ten business days after the date
of such notice. Additional Shares may be purchased as provided in Section 5
hereof solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. On each day, if any, that Additional
Shares are to be purchased (an "OPTION CLOSING DATE"), each Underwriter agrees,
severally and not jointly, to purchase the number of Additional Shares (subject
to such adjustments to eliminate fractional shares as you may determine) that
bears the same proportion to the total number of Additional Shares to be
purchased on such Option Closing Date as the number of Firm Shares set forth in
Schedule II hereto opposite the name of such Underwriter bears to the total
number of Firm Shares.
(c) The Company hereby agrees that, without the prior written consent of
Xxxxxx Xxxxxxx on behalf of the Underwriters, it will not, during the period
ending 180 days after the date of the Prospectus, (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any Common Shares or
any securities convertible into or exercisable or exchangeable for Common Shares
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Shares, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Shares or such other securities, in cash or
otherwise or (3) file any registration statement with the Commission relating to
the offering of any Common Shares or any securities convertible into or
exercisable or exchangeable for Common Shares.
The restrictions contained in the preceding paragraph shall not apply to (i) the
Shares to be sold hereunder, (ii) the issuance by the Company of common shares
upon the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof and reflected in the Time of Sale Prospectus,
(iii) the issuance of Common Shares or options to purchase shares of Common
Shares to employees, officers, directors, advisors or consultants of the Company
pursuant to employee benefit plans described in the Time of Sale Prospectus,
(iv) transactions effected in accordance with the WinZip acquisition described
in the Time of Sale Prospectus, or (v) offers, sales, contracts to sell, the
issuance of or the registration of common shares as consideration for one or
more acquisitions, provided that the aggregate fair market value of Common
Shares issued or agreed to be issued in all such acquisitions (based on the
closing price on the Nasdaq
14
National Market on the trading day immediately preceding the date of the
applicable acquisition agreement ) does not exceed $75,000,000; provided that in
the case of any issuance described above, each recipient shall execute and
deliver a "lock-up" agreement substantially in the form of Exhibit A hereto to
Xxxxxx Xxxxxxx.
Notwithstanding the foregoing, if (1) during the last 17 days of the
180-day restricted period the Company issues an earnings release or material
news or a material event relating to the Company occurs; or (2) prior to the
expiration of the 180-day restricted period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of
the 180-day period, the restrictions imposed by this paragraph shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event. The
Company shall promptly notify Xxxxxx Xxxxxxx of any earnings release, news or
event that may give rise to an extension of the initial 180-day restricted
period.
4. Terms of Public Offering. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at U.S.
$___ per share (or Cdn $____ per share in the case of Shares sold in Canada)
(the "PUBLIC OFFERING PRICE") and to certain dealers selected by you at a price
that represents a concession not in excess of U.S. $____ per share under the
Public Offering Price, and that any Underwriter may allow, and such dealers may
reallow, a concession, not in excess of U.S. $___ a share, to any Underwriter or
to certain other dealers.
5. Payment and Delivery. Payment for the Firm Shares to be sold by each
Seller shall be made to such Seller in Federal or other funds, denominated in
the currency in which the Purchase Price was received, immediately available in
New York City against delivery of such Firm Shares for the respective accounts
of the several Underwriters at 8:00 a.m., New York City time, on ____________,
2006, or at such other time on the same or such other date, not later than
_________, 2006, as shall be designated in writing by you. The time and date of
such payment are hereinafter referred to as the "CLOSING DATE."
Payment for any Additional Shares shall be made to the Sellers in Federal
or other funds immediately available in New York City against delivery of such
Additional Shares for the respective accounts of the several Underwriters at
8:00 a.m., New York City time, on the date specified in the corresponding notice
described in Section 3 or at such other time on the same or on such other date,
in any event not later than _______, 2006 as shall be designated in writing by
you.
15
The Firm Shares and Additional Shares shall be registered in such names
and in such denominations as you shall request in writing not later than one
full business day prior to the Closing Date or the applicable Option Closing
Date, as the case may be. The Firm Shares and Additional Shares shall be
delivered to you on the Closing Date or an Option Closing Date, as the case may
be, for the respective accounts of the several Underwriters, with any transfer
taxes payable in connection with the transfer of the Shares to the Underwriters
duly paid, against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations of the
Sellers to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the conditions that the Registration Statement shall have become
effective and the OSC shall have issued the decision document for the Canadian
Final Prospectus not later than __________ (New York City time) on the date
hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement and prior
to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's securities by
any "nationally recognized statistical rating organization," as such term
is defined for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Time of Sale
Prospectus that, in your judgment, is material and adverse and that makes
it, in your judgment, impracticable to market the Shares on the terms and
in the manner contemplated in the Time of Sale Prospectus.
(b) The representations and warranties of the Company, shall be true and
correct as of the Closing Date, and the Underwriters shall have received on the
Closing Date a certificate, dated the Closing Date and signed by an executive
officer of the Company, to this effect and to the effect set forth in Section
6(a)(i) above and that the Company has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or satisfied
hereunder on or before the Closing Date.
16
The officer signing and delivering such certificate may rely upon the best
of his or her knowledge as to proceedings threatened.
(c) The representations and warranties of the Selling Shareholders shall
be true and correct as of the Closing Date, and the Underwriters shall have
received on the Closing Date a certificate, dated the Closing Date and signed by
an Attorney-in-Fact for the Selling Shareholders, to this effect.
(d) The Underwriters shall have received on the Closing Date an opinion of
Torys LLP, outside counsel for the Company, dated the Closing Date, to the
effect set forth in Exhibit A.
(e) The Underwriters shall have received on the Closing Date an opinion of
Xxxxx Xxxx & Xxxxxxxx to the effect set forth in Exhibit B.
(f) The Underwriters shall have received on the Closing Date an opinion of
_________________, counsel for the Selling Shareholders, dated the Closing Date,
to the effect set forth in Exhibit C.
(g) The Underwriters shall have received on the Closing Date an opinion of
each of Fenwick & West LLP and Osler, Xxxxxx & Harcourt LLP, counsel for the
Underwriters, dated the Closing Date to the effect set forth in Exhibit D.
With respect the opinions above, Torys LLP, Xxxxx Xxxx & Xxxxxxxx, Xxxxxxx
& West LLP and Osler, Xxxxxx & Harcourt LLP may state that their opinions and
beliefs are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements thereto
and review and discussion of the contents thereof, but are without independent
check or verification, except as specified. With respect to its opinion above as
such opinion relates to international subsidiaries, Torys LLP may rely upon an
opinion or opinions of foreign counsel; provided that (A) each such counsel is
satisfactory to your counsel, (B) a copy of each opinion so relied upon is
delivered to you and is in form and substance satisfactory to your counsel, and
(C) Torys LLP shall state in its opinion that it is justified in relying on each
such other opinion. With respect to Section 6(f) above, _________ may rely upon
an opinion or opinions of counsel for any Selling Shareholders and, with respect
to factual matters and to the extent such counsel deems appropriate, upon the
representations of each Selling Shareholder contained herein and in the Custody
Agreement and Power of Attorney of such Selling Shareholder and in other
documents and instruments; provided that (A) each such counsel for the Selling
Shareholders is satisfactory to your counsel, (B) a copy of each opinion so
relied upon is delivered to you and is in form and substance satisfactory to
your counsel, (C) copies of such Custody Agreements and Powers of Attorney and
of any such other documents and instruments shall be delivered to you and shall
be in form
17
and substance satisfactory to your counsel and (D) _________ shall state in
their opinion that they are justified in relying on each such other opinion.
The opinions of Torys LLP, Xxxxx Xxxx & Xxxxxxxx and _____________
described in Sections 6(d) and 6(f) above (and any opinions of counsel for any
Selling Shareholder referred to in the immediately preceding paragraph) shall be
rendered to the Underwriters at the request of the Company or one or more of the
Selling Shareholders, as the case may be, and shall so state therein.
(h) The Underwriters shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from
PricewaterhouseCoopers LLP, independent public accountants, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements and
certain financial information (including without limitation adjusting entries
made to certain pro forma financial presentations) contained in the Registration
Statement, the Time of Sale Prospectus and the Prospectus; provided that the
letter delivered on the Closing Date shall use a "cut-off date" not earlier than
the date hereof.
(i) The Underwriters shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from
________________regarding compliance with the laws of Quebec relating to the use
of the French language in connection with the documents (including the
Prospectus and certificates representing the Shares) to be delivered to
purchasers in Quebec.
(j) The "lock-up" agreements, each substantially in the form of Exhibit E
hereto between you and each shareholder, officer and director of the Company and
certain other holders of the Company's securities relating to sales and certain
other dispositions of Common Shares or certain other securities, shall have been
delivered to you on or before the date hereof, and shall be in full force and
effect on the Closing Date.
(k) The Underwriters shall have received opinions of Osler, Xxxxxx &
Harcourt LLP, dated the date of the Canadian Preliminary Prospectus, the date of
the Canadian Final Prospectus and the date of the Canadian Supplemental
Prospectus, in form and substance satisfactory to the Underwriters, addressed to
the Underwriters, the Company and their respective counsel, to the effect that
the French language version of each of the Canadian Preliminary Prospectus, the
Canadian Final Prospectus and the Canadian Supplemental Prospectus, except for
the consolidated financial statements and notes to such statements and the
related auditors' report on such statements (collectively, the "FINANCIAL
INFORMATION"),
18
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.
(l) The Underwriters shall have received opinions of
PricewaterhouseCoopers LLP dated the date of the Canadian Preliminary
Prospectus, the date of the Canadian Final Prospectus and the date of the
Canadian Supplemental Prospectus, in form and substance satisfactory to the
Underwriters, addressed to the Underwriters, the Company and their respective
counsel, to the effect that the French language version of the Financial
Information contained in the Canadian Preliminary Prospectus, the Canadian Final
Prospectus and the Canadian Supplemental Prospectus is, in all material
respects, a complete and proper translation of the English language version
thereof.
(m) The Company shall have consummated its acquisition of WinZip on the
terms as described in the Time of Sale Prospectus in all material respects.
(n) The Company shall have (1) obtained a pay-off letter or paid off and
satisfied all remaining obligations (or received waivers with respect to such
obligations) under each of (x) the First Lien Credit Agreement, dated as of
February 16, 2005, among the Borrowers, the lenders named therein and Credit
Suisse First Boston Toronto Branch, as administrative agent, collateral agent,
syndication agent and documentation agent, (y) the Second Lien Credit Agreement,
dated as of February 16, 2005, among the Borrowers, the lenders named therein
and Credit Suisse First Boston Toronto Branch, as administrative agent,
collateral agent, syndication agent and documentation agent, and (z) the Credit
Agreement, dated as of June 29, 2005, among WinZip International LLC, as
borrower, Cayman Ltd. Holdco, as guarantor, the lenders party thereto and Xxxxx
Fargo Foothill, Inc., as arranger and Administrative Agent, and (2) entered into
the Credit Agreement, dated as of May __, 2005, among Corel Corporation and
Corel US Holdings, LLC, as Borrowers, the lenders named therein, and Xxxxxx
Xxxxxxx Senior Funding Inc., as administrative agent, collateral agent,
syndication agent and documentation agent.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares to be sold on such Option Closing Date and other matters related to the
issuance of such Additional Shares.
7. Covenants of the Company. In further consideration of the agreements of
the Underwriters herein contained, the Company covenants with each Underwriter
as follows:
19
(a) To furnish to you, without charge, seven (7) signed copies of the
Registration Statement (including exhibits thereto) and for delivery to each
other Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and to furnish to you in New York City (and in Toronto and
Montreal with respect to the Canadian Supplemental Prospectus in the English and
French languages), without charge, as soon as practicable on the business day
next succeeding the date of this Agreement and during the period mentioned in
Section 7(d) below, as many copies of the Time of Sale Prospectus, the
Prospectus and any supplements and amendments thereto or to the Registration
Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement, the Time
of Sale Prospectus or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed amendment or
supplement to which you reasonably object.
(c) To furnish to you a copy of each proposed free writing prospectus to
be prepared by or on behalf of, used by, or referred to by the Company and not
to use or refer to any proposed free writing prospectus to which you reasonably
object.
(d) Not to take any action that would result in an Underwriter or the
Company being required to file with the Commission pursuant to Rule 433(d) under
the Securities Act a free writing prospectus prepared by or on behalf of the
Underwriter that the Underwriter otherwise would not have been required to file
thereunder.
(e) If the Time of Sale Prospectus is being used to solicit offers to buy
the Shares at a time when the Prospectus is not yet available to prospective
purchasers and any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Time of Sale Prospectus in order to make
the statements therein, in the light of the circumstances, not misleading, or if
any event shall occur or condition exist as a result of which the Time of Sale
Prospectus conflicts with the information contained in the Registration
Statement then on file, or if, in the opinion of counsel for the Underwriters,
it is necessary to amend or supplement the Time of Sale Prospectus to comply
with applicable law, forthwith to prepare, file with the Commission and furnish,
at its own expense, to the Underwriters and to any dealer upon request, either
amendments or supplements to the Time of Sale Prospectus so that the statements
in the Time of Sale Prospectus as so amended or supplemented will not, in the
light of the circumstances when delivered to a prospective purchaser, be
misleading or so that the Time of Sale Prospectus, as amended or supplemented,
will no longer conflict with the Registration Statement, or so that the Time of
Sale Prospectus, as amended or supplemented, will comply with applicable law.
20
(f) If, during such period after the first date of the public offering of
the Shares as in the opinion of counsel for the Underwriters the Prospectus (or
in lieu thereof the notice referred to in Rule 173(a) under the Securities Act)
is required by law to be delivered in connection with sales by an Underwriter or
dealer, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus (or in lieu
thereof the notice referred to in Rule 173(a) under the Securities Act) is
delivered to a purchaser, not misleading, or if, in the opinion of counsel for
the Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the Commission and
furnish, at its own expense, to the Underwriters and to the dealers (whose names
and addresses you will furnish to the Company) to which Shares may have been
sold by you on behalf of the Underwriters and to any other dealers upon request,
either amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus (or in lieu thereof the notice referred to in
Rule 173(a) under the Securities Act) is delivered to a purchaser, be misleading
or so that the Prospectus, as amended or supplemented, will comply with law.
(g) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(h) To make generally available to the Company's security holders and to
you as soon as practicable an earning statement covering the twelve-month period
ending ________, 2007 that satisfies the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the Commission thereunder.
(i) To prepare and file with the OSC and the other Canadian Securities
Commissions promptly after the execution and delivery of this Agreement, a
supplemented prospectus in the English and French languages that complies with
National Instrument 44-103 (the "CANADIAN SUPPLEMENTAL PROSPECTUS"), in a form
reasonably satisfactory to the Underwriters.
8. Covenants of the Underwriters.
(a) Each Underwriter severally covenants with the Company not to take any
action that would result in the Company being required to file with the
Commission under Rule 433(d) a free writing prospectus prepared by or on behalf
of such Underwriter that otherwise would not be required to be filed by the
Company thereunder, but for the action of the Underwriter.
(b) The Underwriters will notify the Company and the Toronto Stock
Exchange when, in the Underwriters' opinion, the Underwriters and the members of
their selling group (if any) have ceased distribution of the Shares and,
promptly
21
after completion of the distribution, will provide the Company, in writing, with
a breakdown of the number of Shares distributed in each of the provinces of
Canada where that breakdown is required by the Canadian Securities Commission of
that jurisdiction for the purpose of calculating fees payable to that Canadian
Securities Commission.
9. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company agrees to
pay or cause to be paid all expenses incident to the performance of the Sellers
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel and the Company's accountants in connection
with the registration and delivery of the Shares under the Securities Act and
all other fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Time of Sale Prospectus,
the Prospectus, any free writing prospectus prepared by or on behalf of, used
by, or referred to by the Company, the Canadian Supplemental Prospectus and
amendments and supplements to any of the foregoing, including all printing and
translation costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and delivery of
the Shares to the Underwriters, including any transfer or other taxes payable
thereon (except that each Selling Shareholder agrees to pay or cause to be paid
all transfer or other taxes payable with respect to the Shares sold by such
Selling Shareholder), (iii) all expenses in connection with the qualification of
the Shares for offer and sale under state and Canadian securities laws as
provided in Sections 7(g) and 7(i) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in connection
with such qualification, (iv) all filing fees and the reasonable fees and
disbursements of counsel to the Underwriters incurred in connection with the
review and qualification of the offering of the Shares by the National
Association of Securities Dealers, Inc., (v) all fees and expenses in connection
with the preparation and filing of the registration statement on Form 8-A
relating to the Common Shares and all costs and expenses incident to listing the
Shares on the Nasdaq National Market and the Toronto Stock Exchange, (vi) the
cost of printing certificates representing the Shares, (vii) the costs and
charges of any transfer agent, registrar or depositary, (viii) the costs and
expenses of the Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the Shares
including, without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered in
connection with the road show, (ix) the document production charges and expenses
associated with printing
22
this Agreement, and (x) all other costs and expenses incident to the performance
of the obligations of the Company hereunder for which provision is not otherwise
made in this Section. The Selling Shareholders agree to pay or cause to be paid
all fees, disbursements and expenses of counsel for the Selling Shareholders. It
is understood, however, that except as provided in this Section, Section 10
entitled "Indemnity and Contribution," and the last paragraph of Section 13
below, the Underwriters will pay all of their costs and expenses, including fees
and disbursements of their counsel, stock transfer taxes payable on resale of
any of the Shares by them and any advertising expenses connected with any offers
they may make.
The provisions of this Section shall not supersede or otherwise affect any
agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
10. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter, each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and each affiliate of any Underwriter within the
meaning of Rule 405 under the Securities Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus, the Time of Sale
Prospectus, any issuer free writing prospectus as defined in Rule 433(h) under
the Securities Act, any Company information that the Company has filed, or is
required to file, pursuant to Rule 433(d) of the Securities Act or the
Prospectus or any amendment or supplement thereto, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein.
(b) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, and each person, if any, who controls the Company,
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in
23
the Registration Statement or any amendment thereof, any preliminary prospectus,
the Time of Sale Prospectus, any issuer free writing prospectus as defined in
Rule 433(h) under the Securities Act, any Company information that the Company
has filed, or is required to file, pursuant to Rule 433(d) of the Securities Act
or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only with
reference to information relating to such Selling Shareholder furnished by or on
behalf of such Selling Shareholder expressly for use therein. The liability of
each Selling Shareholder under the indemnity agreement contained in this
paragraph shall be limited to an amount equal to the aggregate net proceeds from
the Shares sold by such Selling Shareholder under this Agreement.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Sellers, the directors of the Company, the officers of the
Company who sign the Registration Statement and each person, if any, who
controls the Company or any Selling Shareholder within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to such Underwriter, but only
with reference to information relating to such Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Time of Sale Prospectus,
any issuer free-writing prospectus as defined in Rule 433(h) under the
Securities Act, or the Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto).
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 10(a), 10(b) or 10(c), such person (the "INDEMNIFIED
PARTY") shall promptly notify the person against whom such indemnity may be
sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in
24
respect of the legal expenses of any indemnified party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Underwriters and all persons, if any, who control any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act or who are affiliates of any Underwriter within
the meaning of Rule 405 under the Securities Act, (ii) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the Company,
its directors, its officers who sign the Registration Statement and each person,
if any, who controls the Company within the meaning of either such Section and
(iii) the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Selling Shareholders and all persons, if any, who control
any Selling Shareholder within the meaning of either such Section, and that all
such fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm for the Underwriters and such control persons and
affiliates of any Underwriters, such firm shall be designated in writing by
Xxxxxx Xxxxxxx. In the case of any such separate firm for the Company, and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate firm for
the Selling Shareholders and such control persons of any Selling Shareholders,
such firm shall be designated in writing by the persons named as
attorneys-in-fact for the Selling Shareholders under the Powers of Attorney. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(e) To the extent the indemnification provided for in Section 10(a), 10(b)
or 10(c) is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 10(e)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 10(e)(i)
25
above but also the relative fault of the indemnifying party or parties on the
one hand and of the indemnified party or parties on the other hand in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Sellers on the one hand and the Underwriters
on the other hand in connection with the offering of the Shares shall be deemed
to be in the same respective proportions as the net proceeds from the offering
of the Shares (before deducting expenses) received by each Seller and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. The relative fault of the Sellers
on the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Sellers or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Underwriters' respective
obligations to contribute pursuant to this Section 10 are several in proportion
to the respective number of Shares they have purchased hereunder, and not joint.
The liability of each Selling Shareholder under the contribution agreement
contained in this paragraph shall be limited to an amount equal to the aggregate
Public Offering Price of the Shares sold by such Selling Shareholder under this
Agreement.
(f) The Sellers and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 10 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 10(e). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 10, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 10 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
26
(g) The indemnity and contribution provisions contained in this Section 10
and the representations, warranties and other statements of the Company and the
Selling Shareholders contained in this Agreement shall remain operative and in
full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter, any person
controlling any Underwriter or any affiliate of any Underwriter, any Selling
Shareholder or any person controlling any Selling Shareholder, their general or
limited partners, or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Shares.
11. Termination. The Underwriters may terminate this Agreement by notice
given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the Nasdaq National Market or
the Toronto Stock Exchange, (ii) trading of any securities of the Company shall
have been suspended on any exchange or in any over-the-counter market, (iii) a
material disruption in securities settlement, payment or clearance services in
the United States or Canada shall have occurred, (iv) any moratorium on
commercial banking activities shall have been declared by Federal or New York
State or Canadian authorities or (v) there shall have occurred any outbreak or
escalation of hostilities, or any change in financial markets, currency exchange
rates or controls or any calamity or crisis (including without limitation a
terrorist attack or major weather calamity) that, in your judgment, is material
and adverse and which, singly or together with any other event specified in this
clause (v), makes it, in your judgment, impracticable or inadvisable to proceed
with the offer, sale or delivery of the Shares on the terms and in the manner
contemplated in the Time of Sale Prospectus or the Prospectus.
12. Entire Agreement. (a) This Agreement, together with any
contemporaneous written agreements and any prior written agreements (to the
extent not superseded by this Agreement) that relate to the offering of the
Shares, represents the entire agreement between the Sellers, on the one hand,
and the Underwriters, on the other, with respect to the preparation of any
preliminary prospectus, the Time of Sale Prospectus or the Prospectus, the
conduct of the offering, and the purchase and sale of the Shares.
(b) The Sellers acknowledge that in connection with the offering of the
Shares: (i) the Underwriters have acted at arms length, are not agents of, and
owe no fiduciary duties to, the Sellers or any other person, (ii) the
Underwriters owe the Sellers only those duties and obligations set forth in this
Agreement and prior written agreements (to the extent not superseded by this
Agreement), if any, and (iii) the Underwriters may have interests that differ
from those of the Sellers. The
27
Sellers waive to the full extent permitted by applicable law any claims they may
have against the Underwriters arising from an alleged breach of fiduciary duty
in connection with the offering of the Shares
13. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule II bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 13 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased on such date, and arrangements satisfactory to you, the
Company and the Selling Shareholders for the purchase of such Firm Shares are
not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter, the Company or
the Selling Shareholders. In any such case either you or the relevant Sellers
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement in the Time of Sale Prospectus and in the Prospectus or in any other
documents or arrangements may be effected. If, on an Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional Shares
and the aggregate number of Additional Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Additional Shares to be
purchased on such Option Closing Date, the non-defaulting Underwriters shall
have the option to (i) terminate their obligation hereunder to purchase the
Additional Shares to be sold on such Option Closing Date or (ii) purchase not
less than the number of Additional Shares that such non-defaulting Underwriters
would have been obligated to purchase in the absence of such default. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
28
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of any Seller to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement, the Sellers will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
14. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
15. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
16. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
17. Notices. All communications hereunder shall be in writing and
effective only upon receipt and if to the Underwriters shall be delivered,
mailed or sent to you in care of Xxxxxx Xxxxxxx at 0000 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Equity Syndicate Desk, with a copy to the Legal
Department; if to the Company shall be delivered, mailed or sent to 0000 Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxx, Xxxxxx X0X 0X0, Attention: Xxxxxxxxxxx XxXxxxxxxxx; and
if to the Selling Shareholders shall be delivered, mailed or sent to
[_________].
Very truly yours,
COREL CORPORATION
By: _____________________________________
Name:
Title:
29
The Selling Shareholders named in
Schedule I hereto, acting severally
By: _____________________________________
Attorney-in Fact
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
X.X. Xxxxxx Securities Inc.
Deutsche Bank Securities Inc.
Xxxxx Xxxxxxx & Co.
CIBC World Markets Corp.
Canaccord Xxxxx Inc.
Acting severally on behalf of themselves and
the several Underwriters named in
Schedule II hereto
By: Xxxxxx Xxxxxxx & Co. Incorporated
By: ________________________________________
Name:
Title:
30
SCHEDULE I
NAME OF SELLING SHAREHOLDER NUMBER OF FIRM SHARES TO BE SOLD
--------------------------- --------------------------------
Corel Holdings, L.P.
Vector CC Holdings, SRL
Xxxxxx Xxxx
---------
Total: 3,000,000
=========
SCHEDULE II
NUMBER OF FIRM SHARES TO BE
UNDERWRITER PURCHASED
------------------------------------------------ ---------------------------
Xxxxxx Xxxxxxx & Co. Incorporated...............
X.X. Xxxxxx Securities Inc......................
Deutsche Bank Securities Inc....................
Xxxxx Xxxxxxx & Co..............................
CIBC World Markets Corp.........................
Canaccord Xxxxx Inc.............................
---------
Total: 8,000,000
=========
II-1
SCHEDULE III
TIME OF SALE PROSPECTUS
1. Preliminary Prospectus issued ______________, 2006
2. Free Writing Prospectus: [to be identified, if any]
II-1
EXHIBIT A
FORM OF OPINION OF TORYS LLP
EXHIBIT B
FORM OF OPINION OF XXXXX XXXX AND XXXXXXXX
EXHIBIT C
FORM OF SELLING SHAREHOLDERS' COUNSEL OPINION
EXHIBIT D
FORM OF UNDERWRITERS' COUNSEL OPINION
EXHIBIT E
FORM OF LOCK-UP LETTER
