UNDERWRITING AGREEMENT
Exhibit
4.16
UNDERWRITING
AGREEMENT
August
30, 2005
IMI
International Medical Innovations Inc.
0000
Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxx X0X 0X0
Attention: Xxxxx
Xxxxxx, President and Chief Executive Officer
Dear
Sirs:
We
understand that IMI International Medical Innovations Inc. (the “Company”)
proposes to offer and sell 8,210 units (the “Underwritten
Units”)
of the Company, each Underwritten Unit being comprised of a US$1,000 principal
amount Debenture (as hereinafter defined) and 157 Warrants (as hereinafter
defined). Each Warrant shall be exercisable for a period of five years following
the Closing Date (as hereinafter defined) at a price of US$2.93 per
share.
Upon
and subject to the terms and conditions hereof, Orion Securities Inc.
(“Orion”),
as lead underwriter and Loewen, Ondaatje, XxXxxxxxxx Limited (collectively
the
“Underwriters”)
hereby agree to purchase from the Company and the Company hereby agrees to
issue
and sell to the Underwriters, the Underwritten Units for an aggregate purchase
price of US$8,210,000 for sale to the public on a private placement basis and
to
solicit subscriptions therefor.
In
consideration of the agreement of the Underwriters to purchase the Underwritten
Units hereunder and of the services rendered and to be rendered by the
Underwriters in connection with the Offering (as hereinafter defined), including
(i) assisting and advising the Company with respect to the distribution and
sale of the Underwritten Units; (ii) purchasing or obtaining commitments
from substitute Purchasers (as hereinafter defined) of the Underwritten Units;
and (iii) providing such other financial advisory services relating to the
Offering as the Company and the Underwriters agree are appropriate in the
circumstances, the Company agrees to pay the Underwriters’ Fee (as hereinafter
defined) to the Underwriters at the Closing Date (as hereinafter
defined).
The
following are the additional terms and conditions of this Agreement between
the
Company and the Underwriters:
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1.
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Definitions
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1.1
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Definitions.
In addition to the terms defined elsewhere in this Agreement: (a)
capitalized terms that are not otherwise defined herein have the
meanings
given to such terms in the Debentures (as defined herein), (b) unless
otherwise provided, all references to dollars or currency in this
Agreement are to Canadian dollars; and (c) the following terms have
the
meanings indicated in this
Section 1.1:
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“1933
Act”
means the Securities Act of 1933, as amended.
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“Accredited
Investor”
means an investor that is an “accredited investor” as that term is defined in
each of (a) Rule 501(a) of Regulation D promulgated under the 1933 Act; and
(b)
Section 1.1 of OSC Rule 45-501, and includes Quebec Exempt
Purchasers.
“Action”
shall have the meaning ascribed to such term in
Section 3.1.10.
“Affiliate”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
a
Person, as such terms are used in and construed under Rule 144 under the 1933
Act.
With respect to a Purchaser, any investment fund or managed account that is
managed on a discretionary basis by the same investment manager as such
Purchaser will be deemed to be an Affiliate of such Purchaser.
“Business
Day”
means a day other than a Saturday, Sunday or a statutory holiday in the Province
of Ontario;
“Canadian
Bought Deal”
means an offering of securities by the Company to Canadian purchasers by way
of
a firmly underwritten placement or a firmly underwritten public offering by
short form prospectus.
“Canadian
Commission”
means either or both of the OSC, and the Autorité des marchés financiers
(Quebec), as the context may require.
“Canadian
Securities Laws”
means the Securities Act (Ontario), and the Securities Act (Quebec), all rules,
regulations and policies promulgated thereunder or otherwise adopted from time
to time by any Canadian Commission or other authority having jurisdiction,
and
the rules and policies of the TSX.
“Closing”
means the closing of the purchase and sale of the Securities pursuant to
Section 6.
“Closing
Date”
means August 30, 2005 or such other Trading Day when all of the Transaction
Documents have been executed and delivered by the applicable parties thereto
and
all conditions precedent hereto have been satisfied or waived.
“Closing
Price”
means the closing market price for the Common Stock on the Trading Day
immediately prior to the Notice Date.
“Common
Stock”
means the common shares of the share capital of the Company, no par value,
and
any other class of securities into which such securities may hereafter have
been
reclassified or changed into.
“Common
Stock Equivalents”
means any securities of the Company or the Subsidiaries which would entitle
the
holder thereof to acquire at any time Common Stock, including, without
limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable
for, or otherwise entitles the holder thereof to receive, Common
Stock.
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“Company
Counsel”
means Xxxx & Berlis LLP, with respect to Canadian matters, and Mintz, Levin,
Ferris, Cohn, Glovsky and Popeo, P.C., with respect to U.S. matters.
“Continuous
Disclosure Reports”
shall have the meaning ascribed to such term in Section 3.1.8 hereof.
“Conversion
Price”
shall have the meaning ascribed to such term in the Debentures.
“Debentures”
means, the 7% Convertible Debentures due, subject to the terms therein, four
years from their date of issuance, issued by the Company to the Purchasers
hereunder in the form of Schedule A.
“Disclosure
Schedules”
shall have the meaning ascribed to such term in Section 3.1.
“Exchange
Act”
means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Exempt
Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers or directors of the Company pursuant to any stock option or purchase
plan duly adopted by the Board of Directors of the Company (a majority of which
are non-employees in accordance with TSX guidelines), (b) securities upon the
exercise or exchange of or conversion of any Securities issued hereunder and/or
securities exercisable or exchangeable for or convertible into shares of Common
Stock issued and outstanding on the date of this Agreement, provided that such
securities have not been amended since the date of this Agreement to increase
the number of such securities or to decrease the exercise, exchange or
conversion price of any such securities, and (c) securities issued pursuant
to
acquisitions or strategic transactions, provided any such issuance shall only
be
to a Person which is, itself or through its subsidiaries, an operating company
in a business synergistic with the business of the Company or holding company
or
individual with proprietary ownership of rights in technology or research and
in
which the Company receives benefits in addition to the investment of funds,
but
shall not include a transaction in which the Company is issuing securities
primarily for the purpose of raising capital or to an entity whose primary
business is investing in securities.
“GAAP”
shall have the meaning ascribed to such term in Section 3.1.8.
“Intellectual
Property Rights”
shall have the meaning ascribed to such term in
Section 3.1.15.
“Legend
Removal Date”
shall have the meaning ascribed to such term in Section 4.1.3.
“Liens”
means a lien, charge, security interest, encumbrance, right of first refusal,
pre-emptive right or other restriction.
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“Market
Price”
means CDN$3.10,
subject to adjustment for reverse and forward stock splits, stock dividends,
stock combinations and other similar transactions of the Common Stock that
occur
after the date of this Agreement but
prior to the Closing Date.
“Material
Adverse Effect”
shall have the meaning assigned to such term in Section 3.1.2.
“Material
Permits”
shall have the meaning ascribed to such term in
Section 3.1.13.
“MI
45-102”
means Multilateral Instrument 45-102, Resale of Securities, adopted by the
OSC
and effective March 30, 2004, as such Instrument may be amended from time to
time, or any similar instrument, decision, rule or regulation hereafter adopted
by any Canadian Commission having substantially the same effect as such
instrument.
“MI
52-109”
means Multilateral Instrument 52-109, Certification of Disclosure in Issuer’s
Annual and Interim Filings, adopted by the OSC and effective March 30, 2004,
as
such Instrument may be amended from time to time, or any similar instrument,
rule or regulation hereafter adopted by any Canadian Commission having
substantially the same effect as such instrument.
“NI
51-102”
means National Instrument 51-102, Continuous Disclosure Obligations, adopted
by
the OSC and effective March 30, 2004, as such Instrument may be amended from
time to time, or any similar instrument, rule or regulation hereafter adopted
by
any Canadian Commission having substantially the same effect as such
instrument.
“Notice
Date”
shall mean the date upon which the Company gives notice to the TSX of the
transactions contemplated in this Agreement as required by Section 602(a) of
the
TSX Company Manual.
“Offering”
means the offering of Debentures and Warrants pursuant to this
Agreement.
“Orion”
means Orion Securities Inc.
“OSC”
means the Ontario Securities Commission.
“OSC
45-501”
means OSC Rule 00-000, Xxxxxx Distributions, adopted by the OSC effective
January 12, 2004, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the OSC having substantially the same
effect as such Rule.
“Participation
Maximum”
shall have the meaning ascribed to such term in
Section 4.11.1.
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“Person”
means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
“Pre-Notice”
shall have the meaning ascribed to such term in
Section 4.11.2.
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Purchase
Agreement”
means the securities purchase agreements to be entered into between the Company
and each Purchaser.
“Purchaser”
shall have the meaning ascribed to such term in Section 2.2
hereof.
“Quebec
Exempt Purchaser”
means a Purchaser who is resident in the Province of Quebec and the total cost
of the Debentures to it is at least CDN$150,000, acting for its own account
and,
if a company, was not established solely to acquire the Debentures; or a
Purchaser who is otherwise exempt from the prospectus requirements of the
Securities Act (Quebec).
“Regulation
S”
means Rules 901 through 905 promulgated by the SEC pursuant to the 1933 Act,
17
C.F.R. Sections 230.901-905, as such Rules may be amended from time to time,
or
any similar rules or regulations hereafter adopted by the SEC having
substantially the same effect as such Rules.
“Required
Approvals”
shall have the meaning ascribed to such term in Section 3.1.5.
“Required
Minimum”
means, as of any date, the maximum aggregate number of shares of Common Stock
then issued or potentially issuable in the future pursuant to the Transaction
Documents, including any Underlying Shares issuable upon exercise or conversion
in full of all Warrants and Debentures (including Underlying Shares issuable
as
payment of interest);
“Rule
144”
means Rule 144 promulgated by the SEC pursuant to the 1933 Act, as such Rule
may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC having substantially the same effect as such
Rule.
“SEC”
means the Securities and Exchange Commission.
“Securities”
means the Debentures, the Warrants, the Warrant Shares and the Underlying
Shares.
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“SEDAR”
means the System For Electronic Document Analysis and Retrieval developed by
the
Canadian Securities Administrators.
“Shareholder
Approval”
means such approval as may be required by the applicable rules and regulations
of the American Stock Exchange or the TSX (or any successor entity) from the
shareholders of the Company with respect to the transactions contemplated by
the
Transaction Documents, including the issuance of all of the Underlying Shares
in
excess of 19.99% of the issued and outstanding Common Stock on the Closing
Date.
“Subscription
Amount”
means,
as to each Purchaser, the aggregate amount
to be paid for Debentures and Warrants purchased hereunder as specified in
the
Purchase Agreement, in US dollars and in immediately available
funds.
“Subsequent
Financing”
shall have the meaning ascribed to such term in
Section 4.11.1.
“Subsequent
Financing Notice”
shall have the meaning ascribed to such term in
Section 4.11.2.
“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) of the
Disclosure Schedules.
“Trading
Day”
means a day on which the Common Stock is traded on a Trading Market, except
so
long as the Common Stock is traded on the TSX, in the case of
Sections 4.1.3 and 4.1.4 of this Agreement and Section 2 of the Warrants,
“Trading Day” means a day on which the Common Stock is traded on the TSX
only.
“Trading
Market”
means the following markets or exchanges on which the Common Stock is listed
or
quoted for trading on the date in question: the American Stock Exchange and
the
TSX.
“Transaction
Documents”
means this Agreement, the Purchase Agreements, the Debentures, the Warrants
and
any other documents or agreements executed in connection with the transactions
contemplated hereunder.
“TSX”
means the Toronto Stock Exchange.
“TSX
Company Manual”
means the Toronto Stock Exchange Company Manual.
“Underwriter’s
Fee”
means the fee to be paid to the Underwriters equal to 6.5% of the gross proceeds
raised pursuant to the Offering or US$65.00 per Underwritten Unit;
“Underlying
Shares”
means the shares of Common Stock issued and issuable upon conversion of the
Debentures and upon exercise of the Warrants and issued and issuable in lieu
of
the cash payment of interest on the Debentures in accordance with the terms
of
the Debentures.
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“VWAP”
means, for any Trading Day, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on the
TSX, the daily volume weighted average price of the Common Stock for such date
(or the nearest preceding date) on the TSX; (b) if the Common Stock is not
then listed or quoted on the TSX and if prices for the Common Stock are then
listed on the American Stock Exchange, the volume weighted average price of
the
Common Stock for such date (or the nearest preceding date) on the American
Stock
Exchange; (c) if the Common Stock is not then listed or quoted on a Trading
Market and if prices for the Common Stock are then quoted or listed on the
Nasdaq National Market, the Nasdaq Small-Cap Market, the New York Stock Exchange
or the OTC Bulletin Board, the volume weighted average price of the Common
Stock
for such date (or the nearest preceding date) on the market, exchange or
bulletin board; (d) if the Common Stock is not then listed or quoted on any
of
the above and if prices for the Common Stock are then reported in the “Pink
Sheets” published by the Pink Sheets, LLC (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price
per
share of the Common Stock so reported; or (e) in all other cases, the fair
market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Purchasers and reasonably acceptable
to
the Company.
“Warrants”
means collectively the Common Stock purchase warrants in the form of
Schedule B delivered to the Purchasers at the Closing in accordance with
Section 6.2 hereof, which Warrants shall be exercisable immediately and
have a term of exercise equal to five years.
“Warrant
Shares”
means the shares of Common Stock issuable upon exercise of the
Warrants.
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2.
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Nature
of Transaction
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2.1
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The
Company understands that although this offer is presented by the
Underwriters as Purchasers, the Underwriters will endeavour to arrange
for
substituted Purchasers of Underwritten Units or to resell the Underwritten
Units, as principal, to ultimate Purchasers.
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2.2
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Any
reference in this Agreement to a “Purchaser” or “Purchasers” shall be
taken to be a reference to the Underwriters and to any such substituted
and ultimate Purchaser, provided that nothing in this sentence shall
affect the obligation of the Underwriters, subject to the terms and
conditions hereof, to purchase all of the Underwritten Units not
purchased
on the Closing Date by substituted Purchasers or an ultimate
Purchaser.
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2.3
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The
offering and sale of the Underwritten Units is to be effected in
a manner
exempt from any prospectus filing or delivery requirements under
Canadian
Securities Laws, without the necessity of obtaining any order or
ruling of
any Canadian
Commission. Each substituted Purchaser shall purchase Underwritten
Units
from the Company under the prospectus exemptions more fully described
in
the Purchase Agreement (the “Exemptions”).
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2.4
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The
Underwriters will notify the Company with respect to the identity
and
jurisdiction of residence of each substituted Purchaser as soon as
practicable (and in any event not later than the Business Day prior
to the
Closing Date) with a view to affording sufficient time to allow the
Company to secure compliance with all applicable regulatory requirements
in connection with the offering and sale of the Underwritten Units
to such
Purchasers.
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2.5
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The
Underwriters shall conduct their activities in connection with the
Offering in compliance with all applicable laws and regulatory
requirements, including the Canadian Securities Laws, and, without
limiting the foregoing, the Underwriters represent, warrant and covenant
to the Company as follows, and acknowledges that the Company is relying
on
such representations, warranties and covenants in entering into this
Agreement:
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2.5.1
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all
solicitation, offering and other selling efforts carried out by it
in
connection with the Offering have been and will be made in accordance
with
the provisions of the Exemptions in a manner such that no prospectus
need
be filed or delivered by the Company in connection therewith;
and
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2.5.2
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no
advertising of the Underwritten Units has been or will be made by
it in
any media whatsoever (except as may be permitted under the Canadian
Securities Laws).
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2.6
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The
Underwriters shall obtain from each Purchaser a completed and executed
Purchase Agreement and (if applicable) other forms prescribed or
required
under Canadian Securities Laws or by the Company in connection with
the
Offering. In order to facilitate organization of the closing of the
Offering, the Underwriters will use their reasonable best efforts
to
provide copies of such documents to Company Counsel not less than
24 hours
prior to the Closing Date, provided that provision of such documents
shall
not constitute a delivery thereof for purposes of
Section 6.2.
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3.
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Representations
and Warranties
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3.1
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Representations
and Warranties of the Company.
Except as set forth under the corresponding section of the disclosure
schedules delivered to Orion concurrently herewith, on behalf of
the
Purchasers (the “Disclosure
Schedules”),
which Disclosure Schedules shall be deemed a part hereof, the Company
hereby makes the representations and warranties set forth below to
the
Underwriters and each Purchaser.
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3.1.1
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Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set
forth
on Schedule 3.1(a) to the Disclosure Schedules. Except as disclosed
on
Schedule 3.1(a) to the Disclosure Schedules, the Company owns, directly
or
indirectly, all of the capital stock or other equity interests of
each
Subsidiary free and clear of any Liens, and all the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and
are
fully paid, non-assessable and free of pre-emptive and similar rights
to
subscribe for or purchase
securities.
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3.1.2
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Organization
and Qualification.
The Company and each of the Subsidiaries is an entity duly incorporated
or
otherwise organized, validly existing and in good standing under
the laws
of the jurisdiction of its incorporation or organization (as applicable),
with the requisite power and authority to own and use its properties
and
assets and to carry on its business as currently conducted. Neither
the
Company nor any Subsidiary is in violation or default of any of the
provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the
Company
and the Subsidiaries is duly qualified to conduct business and is
in good
standing as a foreign corporation or other entity in each jurisdiction
in
which the nature of the business conducted or property owned by it
makes
such qualification necessary, except where the failure to be so qualified
or in good standing, as the case may be, could not have or reasonably
be
expected to result in (i) a material adverse effect on the legality,
validity or enforceability of any Transaction Document, (ii) a material
adverse effect on the results of operations, assets, business, prospects
or condition (financial or otherwise) of the Company and the Subsidiaries,
taken as a whole, or (iii) a material adverse effect on the Company’s
ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii),
a
“Material
Adverse Effect”)
and no Proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit or curtail such
power
and authority or qualification.
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3.1.3
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Authorization;
Enforcement.
The Company has the requisite corporate power and authority to enter
into
and to consummate the transactions contemplated by each of the Transaction
Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action
on
the part of the Company and no further action is required by the
Company,
its board of directors or its stockholders in connection therewith
other
than in connection with the Required Approvals. Each Transaction
Document
has been (or upon delivery will have been) duly executed by the Company
and, when delivered in accordance with the terms hereof and thereof,
will
constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms except (i) as limited
by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting
enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive
relief or
other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable
law.
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3.1.4
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No
Conflicts.
The execution, delivery and performance of the Transaction Documents
by
the Company and the consummation by the Company of the other transactions
contemplated hereby and thereby do not and will not: (i) conflict
with or
violate any provision of the Company’s or any Subsidiary’s certificate or
articles of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an
event
that with notice or lapse of time or both would become a default)
under,
result in the creation of any Lien upon any of the properties or
assets of
the Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility,
debt or
other instrument (evidencing a Company or Subsidiary debt or otherwise)
or
other understanding to which the Company or any Subsidiary is a party
or
by which any property or asset of the Company or any Subsidiary is
bound
or affected, or (iii) subject to the Required Approvals, conflict
with or
result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including
federal, provincial and state securities laws and regulations), or
by
which any property or asset of the Company or a Subsidiary is bound
or
affected; except in the case of each of clauses (ii) and (iii), such
as
could not have or reasonably be expected to result in a Material
Adverse
Effect.
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3.1.5
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Filings,
Consents and Approvals.
The Company is not required to obtain any consent, waiver, authorization
or order of, give any notice to, or make any filing or registration
with,
any court or other federal, state, provincial, local or other governmental
authority or other Person in connection with the execution, delivery
and
performance by the Company of the Transaction Documents, other than
(i)
filings required pursuant to Section 4.6, (ii) the notice and/or
application(s) to each applicable Trading Market for the issuance
and sale
of the Debentures and Warrants and the listing of the Underlying
Shares
for trading thereon in the time and manner required thereby, (iv)
the
filing of Form D with the SEC and such filings as are required to
be made
under applicable provincial and state securities laws and (v) Shareholder
Approval (collectively, the “Required
Approvals”).
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3.1.6
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Issuance
of the Securities.
The Securities are duly authorized and, when issued and paid for
in
accordance with the applicable Transaction Documents, will be duly
and
validly issued, fully paid and non-assessable, free and clear of
all Liens
imposed by the Company other than restrictions on transfer provided
for in
the Transaction Documents. The Underlying Shares, when issued in
accordance with the terms of the Transaction Documents, will be validly
issued, fully paid and non-assessable, free and clear of all Liens
imposed
by the Company. The Company has reserved from its duly authorized
capital
stock a sufficient number of shares of Common Stock for the issuance
of
the Underlying Shares.
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3.1.7
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Capitalization.
The capitalization of the Company is as described in the Company’s most
recent financial statements filed on SEDAR. The Company has not issued
any
capital stock that is not disclosed in such filing,
other than pursuant to the exercise of employee stock options under
the
Company’s stock option plans, the issuance of shares of Common Stock to
employees pursuant to the Company’s employee stock purchase plan and
pursuant to the conversion or exercise of outstanding Common Stock
Equivalents. No Person has any right of first refusal, pre-emptive
right,
right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. Except as
a result
of the purchase and sale of the Securities or otherwise as disclosed
in
Schedule 3.1(g), there are no outstanding options, warrants, script
rights
to subscribe to, calls or commitments of any character whatsoever
relating
to, or securities, rights or obligations convertible into or exercisable
or exchangeable for, or giving any Person any right to subscribe
for or
acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary
is
or may become bound to issue additional shares of Common Stock or
Common
Stock Equivalents. The issuance and sale of the Securities will not
obligate the Company to issue shares of Common Stock or other securities
to any Person (other than the Purchasers) and will not result in
a right
of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under such securities. All of the outstanding
shares of capital stock of the Company are validly issued, fully
paid and
non-assessable, have been issued in compliance with all applicable
federal
and state securities laws and Canadian Securities Laws, and none
of such
outstanding shares was issued in violation of any pre-emptive rights
or
similar rights to subscribe for or purchase securities. No further
approval or authorization of any stockholder, the Board of Directors
of
the Company or others is required for the issuance and sale of the
Securities. There are no stockholders agreements, voting agreements
or
other similar agreements with respect to the Company’s capital stock to
which the Company is a party or, to the knowledge of the Company,
between
or among any of the Company’s
stockholders.
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3.1.8
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Continuous
Disclosure Reports and SEC Reports; Financial
Statements.
The Company has filed all reports, schedules, forms, statements and
other
documents required to be filed by it under the Canadian Securities
Laws,
the 1933 Act and the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, for the two years preceding the date hereof
(or
such shorter period as the Company was required by law to file such
material) (the foregoing materials, including the exhibits thereto
and
documents incorporated by reference therein, being collectively referred
to herein as the “Continuous
Disclosure Reports”)
on a timely basis or has received a valid extension of such time
of filing
and has filed any such Continuous Disclosure Reports prior to the
expiration of any such extension. As of their respective dates, the
Continuous Disclosure Reports complied in all material respects with
the
requirements of the applicable securities laws, and none of the Continuous
Disclosure Reports, when filed, contained any untrue statement of
a
material fact or omitted to state a material fact required to be
stated
therein or necessary in order to make the statements therein, in
the light
of the circumstances under which they were made, not misleading.
The
financial statements of the Company included in the Continuous Disclosure
Reports comply in all material respects with applicable accounting
requirements and the applicable securities laws with respect thereto
as in
effect at the time of filing. Such financial statements have been
prepared
in accordance with Canadian generally accepted accounting principles
applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements
or the
notes thereto and except that unaudited financial statements may
not
contain all footnotes required by GAAP, and fairly present in all
material
respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations
and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit
adjustments.
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Execution
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11
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3.1.9
|
Material
Changes.
Since the date of the latest audited financial statements included
within
the Continuous Disclosure Reports, except as specifically disclosed
in the
Continuous Disclosure Reports, (i) there has been no event, occurrence
or
development that has had or that could reasonably be expected to
result in
a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables
and
accrued expenses incurred in the ordinary course of business consistent
with past practice and (B) liabilities not required to be reflected
in the
Company’s financial statements pursuant to GAAP or required to be
disclosed in filings made or required to be made pursuant to U.S.
securities laws and the Canadian Securities Laws, (iii) the Company
has
not altered its method of accounting, (iv) the Company has not declared
or
made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or
redeem any shares of its capital stock and (v) the Company has not
issued
any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option or share purchase plans.
The
Company does not have pending before any Canadian Commission or the
SEC
any request for confidential treatment of
information.
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|
3.1.10
|
Litigation.
There is no action, suit, inquiry, notice of violation, proceeding
or
investigation pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental
or
administrative agency or regulatory authority (federal, provincial,
state,
county, local or foreign) or a Trading Market (collectively, an
“Action”)
which (i) adversely affects or challenges the legality, validity
or
enforceability of any of the Transaction Documents or the Securities
or
(ii) could, if there were an unfavorable decision, have or reasonably
be
expected to result in a Material Adverse Effect. Neither the Company
nor
any Subsidiary, nor to the knowledge of the Company, any director
or
officer thereof, is or has been the subject of any Action involving
a
claim of violation of or liability under federal, provincial or state
securities laws or a claim of breach of fiduciary duty. There has
not
been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by a Canadian Commission or the SEC
involving the Company or any current or former director or officer
of the
Company. No Canadian Commission or the SEC has issued any stop order
or
other order suspending the effectiveness of any document filed by
the
Company or any Subsidiary pursuant to U.S. securities laws or any
of the
Canadian Securities Laws.
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|
3.1.11
|
Labor
Relations.
No material labor dispute exists or, to the knowledge of the Company,
is
imminent with respect to any of the employees of the Company which
could
reasonably be expected to result in a Material Adverse
Effect.
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Execution
Copy
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12
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3.1.12
|
Compliance.
Neither the Company nor any Subsidiary (i) is in default under or
in
violation of (and no event has occurred that has not been waived
that,
with notice or lapse of time or both, would result in a default by
the
Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it
is in
violation of, any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or
any of
its properties is bound (whether or not such default or violation
has been
waived), (ii) is in violation of any order of any court, arbitrator
or
governmental body, or (iii) is or has been in violation of any statute,
rule or regulation of any governmental authority, including without
limitation all foreign, federal, provincial, state and local laws
applicable to its business except in each case as could not have
a
Material Adverse Effect.
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|
3.1.13
|
Regulatory
Permits.
The Company and the Subsidiaries possess all certificates, authorizations
and permits issued by the appropriate federal, provincial, state,
local or
foreign regulatory authorities necessary to conduct their respective
businesses as described in the Continuous Disclosure Reports, except
where
the failure to possess such permits could not have or reasonably
be
expected to result in a Material Adverse Effect (“Material
Permits”),
and neither the Company nor any Subsidiary has received any notice
of
proceedings relating to the revocation or modification of any Material
Permit.
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|
3.1.14
|
Title
to Assets.
The Company and the Subsidiaries have good and marketable title in
fee
simple to all real property owned by them that is material to the
business
of the Company and the Subsidiaries and good and marketable title
in all
personal property owned by them that is material to the business
of the
Company and the Subsidiaries, in each case free and clear of all
Liens,
except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to
be made
of such property by the Company and the Subsidiaries and Liens for
the
payment of federal, provincial, state or other taxes, the payment
of which
is neither delinquent nor subject to penalties. Any real property
and
facilities held under lease by the Company and the Subsidiaries are
held
by them under valid, subsisting and enforceable leases of which the
Company and the Subsidiaries are in
compliance.
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|
3.1.15
|
Patents
and Trademarks.
The Company and the Subsidiaries have, or have rights to use, all
patents,
patent applications, trademarks, trademark applications, service
marks,
trade names, copyrights, licenses and other similar rights necessary
or
material for use in connection with their respective businesses as
described in the Continuous Disclosure Reports and which the failure
to so
have could have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”).
Neither the Company nor any Subsidiary has received a written notice
that
the Intellectual Property Rights used by the Company or any Subsidiary
violates or infringes upon the rights of any Person. To the knowledge
of
the Company, all such Intellectual Property Rights are enforceable
and
there is no existing infringement by another Person of any of the
Intellectual Property Rights of
others.
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Execution
Copy
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13
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3.1.16
|
Insurance.
The Company and the 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 the Company
and
the Subsidiaries are engaged, including, but not limited to, directors
and
officers insurance coverage with a coverage limitation of CDN$5,000,000.
To the best knowledge of the Company, such insurance contracts and
policies are accurate and complete. Neither the Company nor any Subsidiary
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 without a significant increase in
cost.
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|
3.1.17
|
Transactions
With Affiliates and Employees.
Except as set forth in the Continuous Disclosure Reports, none of
the
officers, directors or to the knowledge of the Company, none of the
employees of the Company is presently a party to any transaction
with the
Company or any Subsidiary (other than for services as employees,
officers
and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for
rental of
real or personal property to or from, or otherwise requiring payments
to
or from any officer, director or such employee or, to the knowledge
of the
Company, any entity in which any officer, director, or any such employee
has a substantial interest or is an officer, director, trustee or
partner,
in each case in excess of CDN$60,000 other than (i) for payment of
salary
or consulting fees for services rendered, (ii) reimbursement for
expenses
incurred on behalf of the Company and (iii) for other employee benefits,
including stock option agreements under any stock option plan of
the
Company.
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|
3.1.18
|
Xxxxxxxx-Xxxxx;
Internal Accounting Controls.
The Company is in material compliance with all requirements of the
Xxxxxxxx-Xxxxx Act of 2002 and the Canadian Securities Laws in each
case,
which are applicable to it as of the Closing Date.
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|
3.1.19
|
Certain
Fees.
Other than as disclosed in Schedule 3.1(s), no brokerage or finder’s fees
or commissions are or will be payable by the Company to any broker,
financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated
by the Transaction Documents. The Purchasers shall have no obligation
with
respect to any fees or with respect to any claims made by or on behalf
of
other Persons for fees of a type contemplated in this Section that
may be
due in connection with the transactions contemplated by the Transaction
Documents.
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|
3.1.20
|
Private
Placement.
Assuming the accuracy of the Purchasers’ representations and warranties
set forth herein or in the Purchaser Agreement, no registration under
the
1933 Act, and no prospectus under Canadian Securities Laws are required
for the offer and sale of the Securities by the Company to the Purchasers
as contemplated hereby. The issuance and sale of the Securities hereunder
does not contravene any U.S. federal or state securities laws or
any of
the Canadian Securities Laws or the rules and regulations of the
Trading
Market.
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Execution
Copy
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14
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3.1.21
|
Investment
Company.
The Company is not, and is not an Affiliate of, and immediately after
receipt of payment for the Securities, will not be or be an Affiliate
of,
an “investment company” within the meaning of the Investment Company Act
of 1940, as amended. The Company shall conduct its business in a
manner so
that it will not become subject to the Investment Company Act of
1940, as
amended.
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|
3.1.22
|
Registration
Rights.
Other than each of the Purchasers, no Person has any right to cause
the
Company to effect the registration under the 1933 Act of any securities
of
the Company.
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|
3.1.23
|
Listing
and Maintenance Requirements.
The Common Stock is registered pursuant to Section 12(b) of the Exchange
Act and the Common Stock is listed on the TSX and the American Stock
Exchange, and the Company has taken no action designed to, or which
to its
knowledge is likely to have the effect of, terminating the listing
of the
Common Stock on either Trading Market nor has the Company received
any
notification that any Trading Market is contemplating terminating
such
listing. The Company has not, in the 12 months preceding the date
hereof,
received notice from any Trading Market on which the Common Stock
is or
has been listed or quoted to the effect that the Company is not in
compliance with the listing or maintenance requirements of such Trading
Market. The Company is, and has no reason to believe that it will
not in
the foreseeable future continue to be, in compliance with all such
listing
and maintenance requirements.
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|
3.1.24
|
Application
of Takeover Protections.
The Company and its Board of Directors have taken all necessary action,
if
any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under
a
rights agreement) or other similar anti-takeover provision under
the
Company’s Certificate of Incorporation (or similar charter documents) or
the laws of its state of incorporation that is or could become applicable
to the Purchasers as a result of the Purchasers and the Company fulfilling
their obligations or exercising their rights under the Transaction
Documents, including without limitation as a result of the Company’s
issuance of the Securities and the Purchasers’ ownership of the
Securities.
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|
3.1.25
|
Disclosure.
The Company confirms that neither it nor any other Person acting
on its
behalf has provided any of the Purchasers or their agents or counsel
with
any information that constitutes or might constitute material, non-public
information. The Company understands and confirms that the Purchasers
will
rely on the foregoing representations and covenants in effecting
transactions in securities of the Company. All disclosure provided
to the
Purchasers regarding the Company, its business and the transactions
contemplated hereby, including the Disclosure Schedules to this Agreement,
furnished by or on behalf of the Company with respect to the
representations and warranties made herein are true and correct in
all
material respects with respect to such representations and warranties
and
do not contain any untrue statement of a material fact or omit to
state
any material fact necessary in order to make the statements made
therein,
in light of the circumstances under which they were made, not
misleading.
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Execution
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15
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3.1.26
|
No
Integrated Offering.
Assuming the accuracy of the Purchasers’ representations and warranties
set forth herein or in the Purchase Agreements, neither the Company,
nor
any of its affiliates, nor any Person acting on its or their behalf
has,
directly or indirectly, made any offers or sales of any security
or
solicited any offers to buy any security, under circumstances that
would
cause this offering of the Securities to be integrated with prior
offerings by the Company as contemplated by Rule 502(a) of Regulation
D
promulgated under the 1933 Act, or for purposes of any applicable
shareholder approval provisions, including, without limitation, under
the
rules and regulations of any Trading Market on which any of the securities
of the Company are listed or
designated.
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|
3.1.27
|
Solvency.
Based on the financial condition of the Company as of the Closing
Date
after giving effect to the receipt by the Company of the proceeds
from the
sale of the Securities hereunder, (i) the Company’s fair saleable value of
its assets exceeds the amount that will be required to be paid on
or in
respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature; (ii) the Company’s assets do
not constitute unreasonably small capital to carry on its business
for the
current fiscal year as now conducted and as proposed to be conducted
including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected
capital requirements and capital availability thereof; and (iii)
to the
knowledge of the Company, the anticipated cash flow of the Company,
together with the proceeds the Company would receive, were it to
liquidate
all of its assets, after taking into account all anticipated uses
of the
cash, would be sufficient to pay all amounts on or in respect of
its debt
when such amounts are required to be paid. The Company does not intend
to
incur debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be payable on or in
respect
of its debt). The Company has no knowledge of any facts or circumstances
which lead it to believe that it will file for reorganization or
liquidation under the bankruptcy or reorganization laws of any
jurisdiction within one year from the Closing Date. The Continuous
Disclosure Reports set forth as of the dates thereof all outstanding
secured and unsecured Indebtedness of the Company or any Subsidiary,
or
for which the Company or any Subsidiary has commitments. For the
purposes
of this Agreement, “Indebtedness”
shall mean (a) any liabilities for borrowed money or amounts owed
in
excess of CDN$50,000 (other than trade accounts payable incurred
in the
ordinary course of business), (b) all guaranties, endorsements and
other
contingent obligations in respect of Indebtedness of others, whether
or
not the same are or should be reflected in the Company’s balance sheet (or
the notes thereto), except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in
the
ordinary course of business; and (c) the present value of any lease
payments
in excess of CDN$50,000 due under leases required to be capitalized
in
accordance with GAAP. Neither
the Company nor any Subsidiary is in default with respect to any
Indebtedness.
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Execution
Copy
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16
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3.1.28
|
Tax
Status.
Except for matters that would not, individually or in the aggregate,
have
or reasonably be expected to result in a Material Adverse Effect
or as
otherwise disclosed on Schedule 3.1(bb) of the Disclosure Schedules,
the
Company and each Subsidiary has filed all necessary federal, provincial,
state and foreign income and franchise tax returns and has paid or
accrued
all taxes shown as due thereon, and the Company has no knowledge
of a tax
deficiency which has been asserted or threatened against the Company
or
any Subsidiary.
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|
3.1.29
|
No
General Solicitation.
Neither the Company nor any person acting on behalf of the Company
has
offered or sold any of the Securities by any form of general solicitation
or general advertising. The Company has offered the Securities for
sale
only to the Purchasers and certain other Accredited
Investors.
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|
3.1.30
|
Foreign
Corrupt Practices.
Neither the Company, nor to the knowledge of the Company, any agent
or
other person acting on behalf of the Company, has (i) directly or
indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or
domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose
fully
any contribution made by the Company (or made by any person acting
on its
behalf of which the Company is aware) which is in violation of law,
or
(iv) violated in any material respect any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as
amended.
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|
3.1.31
|
Accountants.
The Company’s accountants are Ernst & Young LLP. To the knowledge of
the Company, such accountants, who the Company expects will express
their
opinion with respect to the annual financial statements to be filed
on
SEDAR for the year ended December 31, 2005, are independent accountants
as
required by the Canada Business Corporations Act and the Canadian
Securities Laws.
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|
3.1.32
|
Seniority.
As of the Closing Date, no indebtedness or other equity of the Company
is
senior to the Debentures in right of payment, whether with respect
to
interest or upon liquidation or dissolution, or otherwise, other
than
indebtedness secured by purchase money security interests (which
is senior
only as to underlying assets covered thereby) and capital lease
obligations (which is senior only as to the property covered
thereby).
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|
3.1.33
|
No
Disagreements with Accountants and Lawyers.
There are no disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the accountants and
lawyers
formerly or presently employed by the Company and the Company is
current
with respect to any fees owed to its accountants and
lawyers.
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Execution
Copy
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17
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3.1.34
|
Acknowledgment
Regarding Purchasers’ Purchase of Securities.
The Company acknowledges and agrees that each of the Purchasers is
acting
solely in the capacity of an arm’s length purchaser with respect to the
Transaction Documents and the transactions contemplated hereby. The
Company further acknowledges that no Purchaser is acting as a financial
advisor or fiduciary of the Company (or in any similar capacity)
with
respect to this Agreement and the transactions contemplated hereby
and any
advice given by any Purchaser or any of their respective representatives
or agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to the Purchasers’ purchase of
the Securities. The Company further represents to each Purchaser
that the
Company’s decision to enter into this Agreement has been based solely on
the independent evaluation of the transactions contemplated hereby
by the
Company and its representatives.
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|
3.1.35
|
Manipulation
of Price.
The Company has not, and to its knowledge no one acting on its behalf
has,
(i) taken, directly or indirectly, any action designed to cause or
to
result in the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of any of the Securities,
(ii) sold, bid for, purchased, or, paid any compensation for soliciting
purchases of, any of the Securities (other than for the placement
agent’s
placement of the Securities), or (iii) paid or agreed to pay to any
person
any compensation for soliciting another to purchase any other securities
of the Company.
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|
4.
|
Other
Agreements of the
Parties
|
|
4.1
|
Transfer
Restrictions.
|
|
4.1.1
|
The
Securities may only be disposed of in compliance with the Canadian
Securities Laws and the 1933 Act or pursuant to an available exemption.
In
connection with any transfer of Securities other than (i) pursuant
to the
Canadian Securities Laws or (ii) to the Company or to an Affiliate
of a
Purchaser or in connection with a pledge as contemplated in
Section 4.1.2 of this Agreement, the Company may require the
transferor thereof to provide to the Company an opinion of counsel
selected by the transferor and reasonably acceptable to the Company,
the
form and substance of which opinion shall be reasonably satisfactory
to
the Company, to the effect that such transfer does not require
registration of such transferred Securities under the 1933 Act. As
a
condition of transfer, any such transferee shall agree in writing
to be
bound by the terms of this Agreement and shall have the rights of
a
Purchaser under this Agreement.
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|
4.1.2
|
The
Purchasers agree to the imprinting, so long as is required by this
Section 4.1.2, of a legend on any of the Securities in the following
form:
|
UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES MUST NOT
TRADE THE SECURITIES BEFORE [Insert the date that is four months and a day
after
the distribution date.]
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Execution
Copy
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18
-
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933
SECURITIES ACT”);
AND MAY BE OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED OR ASSIGNED FOR
VALUE ONLY (A) TO THE CORPORATION; (B) OUTSIDE THE UNITED STATES IN COMPLIANCE
WITH RULE 904 OF REGULATION S UNDER THE 1933 SECURITIES ACT; (C) IN COMPLIANCE
WITH RULE 144 OR RULE 144A UNDER THE 1933 SECURITIES ACT; OR (D) IN A
TRANSACTION THAT IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE ACT AND STATE
SECURITIES LAWS, PROVIDED, IN EACH CASE, THE CORPORATION SHALL HAVE RECEIVED
AN
OPINION OF COUNSEL SATISFACTORY TO IT AS TO THE AVAILABILITY OF THE EXEMPTIONS
RELIED ON.
DELIVERY
OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF
TRANSACTIONS ON STOCK EXCHANGES IN CANADA.
The
Company acknowledges and agrees that a Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution in the United States that is an “accredited investor” as defined in
Rule 501(a) under the 1933 Act and who agrees to be bound by the provisions
of
this Agreement and, if required under the terms of such arrangement, such
Purchaser may transfer pledged or secured Securities to the pledgees or secured
parties. Such a pledge or transfer would not be subject to approval of the
Company and no legal opinion of legal counsel of the pledgee, secured party
or
pledgor shall be required in connection therewith. Further, no notice shall
be
required of such pledge. At the appropriate Purchaser’s expense, the Company
will execute and deliver such reasonable documentation as a pledgee or secured
party of Securities may reasonably request in connection with a pledge or
transfer of the Securities.
|
4.1.3
|
Certificates
evidencing the Underlying Shares shall not contain any legend including
the legend in Section 4.1.2 (the “Legend”)
if they are issued more than four months and one day following the
Closing
Date. The Company shall cause its counsel to issue a legal opinion
to the
Company’s transfer agent if required by the Company’s transfer agent to
effect the removal of the Legend hereunder. If all or any portion
of a
Debenture or Warrant is converted or exercised (as applicable) at
a time
when no legend is required hereunder, then such Underlying Shares
shall be
issued free of the Legend. At such time as the Legend is no longer
required hereunder, the Company will, no later than three Trading
Days
following the delivery by a Purchaser to the Company or the Company's
transfer agent of a certificate representing Underlying Shares (including
upon conversion of the Debentures or exercise of the Warrants), as
applicable, issued with a Legend and a cover letter from such Purchaser
requesting the removal of such Legend (such third Trading Day, the
“Legend
Removal Date”),
deliver or cause to be delivered to such Purchaser a certificate
representing such shares that is free from the Legend. The Company
may not
make any notation on its records or give instructions to any transfer
agent of the Company that enlarge the restrictions on transfer set
forth
in this Section. If available, certificates for Securities subject
to
legend removal hereunder shall be transmitted by the transfer agent
of the
Company to the Purchasers by crediting the account of the Purchaser’s
prime broker with the Depository Trust Company System, or another
established clearing corporation performing similar functions. Each
Purchaser acknowledges that the Company has agreed to issue Underlying
Shares without the Legend after four months and one day in reliance
on
such Purchaser's (i) representation to the Company that such Purchaser
has
requested certificates without the Legend to enable prompt sales
of the
Underlying Shares on the Trading Market as permitted by Canadian
Securities Laws and U.S. securities laws (and each Purchaser hereby
so
represents) and (ii) acknowledgement that any such sales must be made
in compliance with the 1933 Act and the rules and regulations thereunder
(and each Purchaser hereby so
acknowledges).
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|
Execution
Copy
|
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19
-
|
4.1.4
|
In
addition to such Purchaser’s other available remedies, the Company shall
pay to a Purchaser, in cash, as partial liquidated damages and not
as a
penalty, for each $1,000 of Underlying Shares (based on the VWAP
of the
Common Stock on the date such Securities are submitted to the Company’s
transfer agent) delivered for removal of the restrictive legend and
subject to Section 4.1.3, $10 per Trading Day (increasing to $20 per
Trading Day five Trading Days after such damages have begun to accrue)
for
each Trading Day after the second Trading Day following the Legend
Removal
Date until such certificate is delivered without a legend. Nothing
herein
shall limit such Purchaser’s right to pursue actual damages for the
Company’s failure to deliver certificates representing any Securities as
required by the Transaction Documents, and such Purchaser shall have
the
right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief.
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|
4.1.5
|
Each
Purchaser, severally and not jointly with the other Purchasers, agrees
that the removal of the restrictive legend from certificates representing
Securities as set forth in this Section 4.1 is predicated upon the
Company’s reliance that the Purchaser will sell any Securities pursuant to
either the registration requirements of the 1933 Act, including any
applicable prospectus delivery requirements, an exemption therefrom
or in
accordance with the applicable Canadian Securities
laws.
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|
4.1.6
|
Until
the one year anniversary of the date hereof, the Company shall not
undertake a reverse or forward stock split or reclassification of
the
Common Stock without the prior written consent of the Purchasers
holding a
majority in principal amount outstanding of the Debentures, acting
reasonably.
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4.2
|
Acknowledgment
of Dilution.
The Company acknowledges that the issuance of the Securities may
result in
dilution of the outstanding shares of Common Stock, which dilution
may be
substantial under certain market conditions. The Company further
acknowledges that its obligations under the Transaction Documents,
including without limitation its obligation to issue the Underlying
Shares
pursuant to the Transaction Documents, are unconditional and absolute
and
not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company
may
have against any Purchaser and regardless of the dilutive effect
that such
issuance may have on the ownership of the other stockholders of the
Company.
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Execution
Copy
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20
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4.3
|
Furnishing
of Information.
As long as any Purchaser owns Securities, the Company covenants to
timely
file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the
Company
after the date hereof pursuant to the Canadian Securities Laws and
the
Exchange Act. As long as any Purchaser owns Securities, if the Company
is
not required to file reports pursuant to the Canadian Securities
Laws or
the Exchange Act, it will prepare and furnish to the Purchasers and
make
publicly available in accordance with Rule 144(c) such information
as is
required for the Purchasers to sell the Securities under Rule 144.
The
Company further covenants that it will take such further action as
any
holder of Securities may reasonably request, all to the extent required
from time to time to enable such Person to sell such Securities without
registration under the 1933 Act within the limitation of the exemptions
provided by Rule 144.
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4.4
|
Integration.
The Company shall not sell, offer for sale or solicit offers to buy
or
otherwise negotiate in respect of any security (as defined in Section
2 of
the 0000 Xxx) that would be integrated with the offer or sale of
the
Securities in a manner that would require the registration under
the 1933
Act of the sale of the Securities to the Purchasers or that would
be
integrated with the offer or sale of the Securities for purposes
of the
rules and regulations of any Trading
Market.
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4.5
|
Conversion
and Exercise Procedures.
The form of Notice of Exercise included in the Warrants and the form
of
Notice of Conversion included in the Debentures set
forth the totality of the procedures required of the Purchasers in
order
to exercise the Warrants or convert the Debentures. No additional
legal
opinion or other information or instructions shall be required of
the
Purchasers to exercise their Warrants or convert their Debentures.
The
Company shall honor exercises of the Warrants and conversions of
the
Debentures and shall deliver Underlying Shares in accordance with
the
terms, conditions and time periods set forth in the Transaction
Documents.
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4.6
|
Securities
Laws Disclosure; Publicity.
The Company shall, by 8:30 a.m. Eastern time on the Trading Day following
the date hereof, issue a press release and, within ten calendar days
after
the Closing Date, file a Material Change Report on Form 51-102F3,
in each
case, reasonably acceptable to each Purchaser disclosing the material
terms of the transactions contemplated hereby, and file the Transaction
Documents thereto. The Company and each Purchaser shall consult with
each
other in issuing any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor any Purchaser shall
issue
any such press release or otherwise make any such public statement
without
the prior consent of the Company, with respect to any press release
of any
Purchaser, or without the prior consent of each Purchaser, with respect
to
any press release of the Company, which consent shall not unreasonably
be
withheld, except if such disclosure is required by law, in which
case the
disclosing party shall promptly provide the other party with prior
notice
of such public statement or communication. Notwithstanding the foregoing,
except for the disclosure of this Agreement to the TSX and the Canadian
Commission, the Company shall not publicly disclose the name of any
Purchaser, or include the name of any Purchaser in any filing with
the SEC
or the Canadian Commission or any regulatory agency or Trading Market,
without the prior written consent of Purchaser, except to the extent
such
disclosure is required by law or Trading Market regulations, in which
case
the Company shall provide the Purchasers with prior notice of such
disclosure.
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Execution
Copy
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21
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4.7
|
Shareholder
Rights Plan.
No claim will be made or enforced by the Company or, to the knowledge
of
the Company, any other Person that any Purchaser is an “Acquiring Person”
under any shareholder rights plan or similar plan or arrangement
in effect
or hereafter adopted by the Company, or that any Purchaser could
be deemed
to trigger the provisions of any such plan or arrangement, by virtue
of
receiving Securities under the Transaction Documents or under any
other
agreement between the Company and the Purchasers. The Company shall
conduct its business in a manner so that it will not become subject
to the
Investment Company Act.
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4.8
|
Non-Public
Information.
The Company covenants and agrees that neither it nor any other Person
acting on its behalf will provide any Purchaser or its agents or
counsel
with any information that the Company believes constitutes material
non-public information, unless prior thereto such Purchaser shall
have
executed a written agreement regarding the confidentiality and use
of such
information. The Company understands and confirms that each Purchaser
shall be relying on the foregoing representations in effecting
transactions in securities of the
Company.
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4.9
|
Use
of Proceeds.
Except as set forth on Schedule 4.9 of the Disclosure Schedule, the
Company shall use the net proceeds from the sale of the Securities
hereunder for working capital purposes including to: (i) accelerate
the
development of the Company’s cancer portfolio; (ii) expand the Company’s
pipeline of technologies; and (iii) pursue strategic growth opportunities,
and not for the satisfaction of any portion of the Company’s debt (other
than payment of trade payables in the ordinary course of the Company’s
business and prior practices), to redeem any Common Stock or Common
Stock
Equivalents or to settle any outstanding
litigation.
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4.10
|
Reservation
and Listing of Securities.
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|
4.10.1
|
The
Company shall maintain a reserve from its duly authorized shares
of Common
Stock for issuance pursuant to the Transaction Documents in such
amount as
may be required to fulfill its obligations in full under the Transaction
Documents.
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4.10.2
|
The
Company shall, if applicable: (i) in the time and manner required
by the
Trading Market, prepare and file with such Trading Market an additional
shares listing application covering a number of shares of Common
Stock at
least equal to the Required Minimum on the date of such application,
(ii)
take all steps necessary to cause such shares of Common Stock to
be
approved for listing on the Trading Market as soon as possible thereafter,
(iii) provide to the Purchasers evidence of such listing, and (iv)
maintain the listing of the Common Stock representing the Underlying
Shares on such Trading Market or another Trading
Market.
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Execution
Copy
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22
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4.11
|
Right
of First Refusal for Future
Financings.
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|
4.11.1
|
From
the date hereof until the date that the Debentures are no longer
outstanding, upon any proposed financing by the Company or any of
its
Subsidiaries of Common Stock or Common Stock Equivalents (a “Subsequent
Financing”),
each Purchaser shall have the right of first refusal to participate
in up
to an amount of the Subsequent Financing equal to the lesser of (i)
the
principal amount of all Debentures then outstanding and (ii) 100%
of the
Subsequent Financing (the “Participation
Maximum”).
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4.11.2
|
At
least 5 Trading Days prior to the closing of the Subsequent Financing
(except in the case of a Canadian Bought Deal), the Company shall
deliver
to each Purchaser a written notice of its intention to effect a Subsequent
Financing (“Pre-Notice”),
which Pre-Notice shall ask such Purchaser if it wants to review the
details of such proposed financing (such additional notice, a
“Subsequent
Financing Notice”).
Upon the request of a Purchaser, and only upon a request by such
Purchaser, for a Subsequent Financing Notice, the Company shall promptly,
but no later than 1 Trading Day after such request, deliver a Subsequent
Financing Notice to such Purchaser. In the case of a Canadian Bought
Deal,
the Company shall not be required to deliver a Pre-Notice but instead
shall be required to deliver a Subsequent Financing Notice and
telephonically advise the authorized signatory of each Purchaser
as set
forth on the signature pages hereto of the terms and conditions of
the
Canadian Bought Deal. The Subsequent Financing Notice shall describe
in
reasonable detail the proposed terms of such Subsequent Financing,
the
amount of proceeds intended to be raised thereunder and, if applicable,
attached to which shall be a term sheet or similar document relating
thereto.
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4.11.3
|
Any
Purchaser desiring to participate in such Subsequent Financing must
provide written notice to the Company by not later than 5:30 p.m.
(New
York City time) on the 5th
Trading Day after all of the Purchasers have received the Pre-Notice
(or,
in the case of a Canadian Bought Deal, as to each Purchaser not less
than
two hours from the time the Company telephonically advises the authorized
signatory of such Purchaser of the terms of such Canadian Bought
Deal,
provided that if more time is available to permit such Purchaser’s
participation, such Purchaser shall not be precluded from participation))
that the Purchaser agrees, subject to documentation reasonably acceptable
to such Purchaser and the Company, to participate in the Subsequent
Financing, the amount of the Purchaser’s participation, and that the
Purchaser has such funds ready, willing, and available for investment
on
the terms set forth in the Subsequent Financing Notice. If the Company
receives no notice from a Purchaser as of such 5th
Trading Day (or as to each Purchaser such period not less than two
hours
in the case of a Canadian Bought Deal), such Purchaser shall be deemed
to
have notified the Company that it does not elect to
participate.
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Execution
Copy
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23
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4.11.4
|
If
by the time periods set out in paragraph 4.11.3 above, notifications
by the Purchasers of their agreement, subject to documentation reasonably
acceptable to such Purchaser and the Company, to participate in the
Subsequent Financing (or to cause their designees to participate)
is, in
the aggregate, less than the total amount of the Subsequent Financing,
then the Company may effect the remaining portion of such Subsequent
Financing on the terms set forth in the Subsequent Financing
Notice.
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4.11.5
|
If
by the time periods set out in paragraph 4.11.3 above, the Company
receives responses to a Subsequent Financing Notice from Purchasers
seeking to purchase more than the aggregate amount of the Participation
Maximum, each such Purchaser shall have the right to purchase the
greater
of (a) their Pro Rata Portion (as defined below) of the Participation
Maximum and (b) the difference between the Participation Maximum
and the
aggregate amount of participation by all other Purchasers. “Pro
Rata Portion”
is the ratio of (x) the Subscription Amount of Securities purchased
on the
Closing Date by a Purchaser participating under this Section 4.11 and
(y) the sum of the aggregate Subscription Amounts of Securities purchased
on the Closing Date by all Purchasers participating under this
Section 4.11.
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4.11.6
|
The
Company must provide the Purchasers with a second Subsequent Financing
Notice, and the Purchasers will again have the right of participation
set
forth above in this Section 4.11, if the Subsequent Financing subject
to the initial Subsequent Financing Notice is not consummated for
any
reason on the terms set forth in such Subsequent Financing Notice
within
60 Trading Days after the date of the initial Subsequent Financing
Notice.
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4.11.7
|
Notwithstanding
the foregoing, this Section 4.11 shall not apply in respect of an
Exempt Issuance.
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|
4.12
|
Subsequent
Equity Sales.
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|
4.12.1
|
From
the date hereof until 90 days after the Legend Removal Date, neither
the
Company nor any Subsidiary shall issue shares of Common Stock or
Common
Stock Equivalents; provided, however, the 90 day period set forth
in this
Section 4.12 shall be extended for the number of Trading Days during
such period in which trading in the Common Stock is suspended by
any
Trading Market.
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4.12.2
|
From
the date hereof until such time as no Purchaser holds any of the
Securities, the Company shall be prohibited from effecting or entering
into an agreement to effect any Subsequent Financing involving a
“Variable
Rate Transaction”. The term “Variable
Rate Transaction”
shall mean a transaction in which the Company issues or sells (i)
any debt
or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional shares
of
Common Stock either (A) at a conversion, exercise or exchange rate
or
other price that is based upon and/or varies with the trading prices
of or
quotations for the shares of Common Stock at any time after the initial
issuance of such debt or equity securities, or (B) with a conversion,
exercise or exchange price that is subject to being reset at some
future
date after the initial issuance of such debt or equity security or
upon
the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common
Stock
or (ii) enters into any agreement, including, but not limited to,
an
equity line of credit, whereby the Company may sell securities at
a future
determined price.
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Execution
Copy
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24
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4.12.3
|
Notwithstanding
the foregoing, Section 4.12.1 shall not apply in respect of the
issuance of (a) shares of Common Stock or options to employees, officers
or directors of the Company pursuant to any stock option or purchase
plan
duly adopted by the Board of Directors of the Company (a majority
of which
are non-employees in accordance with TSX guidelines), (b) securities
upon
the exercise or exchange of or conversion of any Securities issued
hereunder and/or securities exercisable or exchangeable for or convertible
into shares of Common Stock issued and outstanding on the date of
this
Agreement, provided that such securities have not been amended since
the
date of this Agreement to increase the number of such securities
or to
decrease the exercise, exchange or conversion price of any such
securities.
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4.12.4
|
Notwithstanding
the foregoing, Section 4.12.2 shall not apply in respect of an Exempt
Issuance, except that no Variable Rate Transaction shall be an Exempt
Issuance.
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4.13
|
Equal
Treatment of Purchasers.
No consideration shall be offered or paid to any person to amend
or
consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration is also offered
to all
of the parties to the Transaction Documents. Further, the Company
shall
not make any payment of principal or interest on the Debentures in
amounts
which are disproportionate to the respective principal amounts outstanding
on the Debentures at any applicable time. For clarification purposes,
this
provision constitutes a separate right granted to each Purchaser
by the
Company and negotiated separately by each Purchaser, and is intended
for
the Company to treat the Purchasers as a class and shall not in any
way be
construed as the Purchasers acting in concert or as a group with
respect
to the purchase, disposition or voting of Securities or
otherwise.
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4.14
|
Piggy-Back
Registrations.
If at any time that any of the Securities are outstanding there is
not an
effective registration statement filed with the SEC covering all
of all of
the shares of Common Stock underlying the Securities and the Company
shall
determine to prepare and file with the SEC a registration statement
relating to an offering for its own account or the account of others
under
the 1933 Act of any of its equity securities, other than on Form
S-4 (or
F-4) or Form S-8 (or F-8) (each as promulgated under the 0000 Xxx)
or
their then equivalents relating to equity securities to be issued
solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with the stock option or other
employee
benefit plans, then the Company shall send to each Purchaser a written
notice of such determination and, if within fifteen days after the
date of
such notice, any such Purchaser shall so request in writing, the
Company
shall include in such registration statement all or any part of such
Securities such Purchaser requests to be registered, subject to customary
underwriter cutbacks applicable to all holders of registration
rights.
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Execution
Copy
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25
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5.
|
Closing
Conditions
|
The
Underwriters’ obligations under this Agreement are conditional upon the
following:
|
5.1
|
the
Company shall have complied with all the covenants and shall have
satisfied all the terms and conditions of this Agreement on its part
to be
complied with and satisfied at or prior to the Closing Date other
than
those which may have been waived by the
Underwriters;
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5.2
|
the
Company shall have delivered to the Underwriters at the Closing Date
legal
opinion, of the Company Counsel dated the Closing Date and addressed
to
the Underwriters, the Purchasers and the Underwriters’ counsel, in the
form of Exhibit C attached hereto, the Company Counsel may rely, to
the extent appropriate in the circumstances, on the opinions of local
counsel acceptable to them and as to matters of fact on certificates
of
officers of the Company and others;
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5.3
|
the
Company shall have made all necessary filings with and obtained all
necessary approvals, consents and acceptances of applicable regulatory
authorities required to be made or obtained prior to the Closing
Date in
order to permit the Company to distribute the Securities to the Purchaser
on a basis exempt from the registration and prospectus requirements
under
the Canadian Securities Laws or the applicable U.S. Securities laws;
and
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5.4
|
no
order, ruling or determination having the effect of ceasing the trading
or
suspending the issuance or sale of the Common Stock or any other
securities of the Company shall have been issued by any stock exchange,
securities commission or other regulatory authority, and no proceedings
for such order, ruling or determination shall have been instituted
or
shall be contemplated or
threatened.
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6.
|
Closing
|
|
6.1
|
The
purchase and sale of the Debentures and the Warrants shall be completed
at
the Closing Date at the Toronto offices of the Company Counsel for
Canadian matters, or at such other place as the Underwriters and
the
Company may agree upon. At or prior to the Closing Date, the Company
shall, subject to the provisions of this Section 6, duly and validly
deliver to the Underwriters certificates in definitive form representing
the Debentures and the Warrants in the names of the Purchasers or
as
indicated on their respective Purchase Agreement, against payment
at the
direction of the Company of the subscription price therefor, in lawful
money of the United States by certified cheque or bank draft payable
at
par in the City of Toronto. The Underwriters and the Purchasers may
discharge their payment obligations under this Section 6 by delivery
of certified cheques or bank drafts from the Underwriters to the
Company
equal to the aggregate purchase price for the Debentures and the
Warrants
less the Underwriters’ Fee and any expenses incurred by the Underwriters
in connection with the Offering, including the fees, taxes and
disbursements of counsel to the
Underwriters.
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|
Execution
Copy
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26
-
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6.2
|
On
the Closing Date:
|
|
6.2.1
|
the
Underwriters shall deliver to the Company original or facsimile copies
of
the Purchase Agreements completed and executed by the
Purchasers;
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|
6.2.2
|
subject
to rejection or allotment by the Company acting reasonably, the Company
shall accept each Purchase Agreement properly completed and duly
executed
by the Purchasers, by the execution thereof by the Company’s duly
authorized officers and shall deliver a duly executed copy of each
Purchase Agreement to the Underwriters to be held by the Underwriters
on
behalf of the Purchasers;
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|
6.2.3
|
the
Company shall deliver or cause to be delivered to the Underwriters
to be
held by the Underwriters on behalf of the Purchasers the certificates
for
the Debentures and the Warrants sold pursuant to the Purchase Agreements
registered in the name of the Purchasers or as otherwise provided
pursuant
to the Purchase Agreements;
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|
6.2.4
|
the
Company shall deliver or cause to be delivered to the Underwriters
the
requisite certificates, opinions and other documents as contemplated
hereby; and
|
|
6.2.5
|
the
Underwriters shall deliver or cause to be delivered to the Company
a
certified cheque or bank draft made payable to the Company or to
its order
in an amount equal to the aggregate purchase price of the Units sold
pursuant to the Offering, less the Underwriters’ Fee and any expenses
incurred by the Underwriters in connection with the Offering, including
the fees, taxes and disbursements of counsel to the
Underwriters.
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7.
|
Early
Termination
|
|
7.1
|
The
obligations of the Underwriters hereunder may be terminated by written
notice to that effect given to the Company at or prior to the Closing
Date, if:
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|
7.1.1
|
there
is, in the sole and reasonable opinion of the Underwriters, a material
change or a change in any Material fact or a new Material fact pertaining
to the Company shall arise which would be expected to have an adverse
change or effect on the business, affairs, or profitability of the
Company
or on the market price or the value of the securities of the
Company;
|
|
7.1.2
|
there
should develop, occur or come into effect any event of any nature,
including without limitation, accident, governmental law or regulation
which, in the sole and reasonable opinion of the Underwriters materially
adversely affects or may materially adversely affect the financial
markets
or the business, affairs or profitability of the Company or the market
price or value of the securities of the
Company;
|
|
7.1.3
|
any
order to cease trading in securities of the Company is made or threatened
by a securities regulatory authority;
or
|
|
Execution
Copy
|
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27
-
|
7.1.4
|
the
Company is in material breach of a term, condition or covenant of
this
Agreement.
|
|
7.2
|
If
the obligations of any Underwriter are terminated pursuant to this
Section 7, there shall be no further liability on the part of such
Underwriter to the Company or of the Company to such Underwriter
except in
respect of any liability which may have arisen or may thereafter
arise
under Sections 11 and 12 of this
Agreement.
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|
7.3
|
The
right of any Underwriter to terminate its obligations under this
Agreement
is in addition to such other remedies as such Underwriter may have
in
respect of any default, act or omission of the Company in respect
of any
of the matters contemplated by this Agreement. A notice of termination
signed by one Underwriter under this Section shall not be binding
on the
other Underwriters.
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|
8.
|
Entitlement
of Underwriters
|
|
8.1
|
The
Underwriters’ rights and obligations under this Agreement are several and
not solidary in the following
percentages:
|
• Orion
Securities Inc. 90%
• Loewen,
Ondaatje, XxXxxxxxxx Limited 10%
|
9.
|
Underwriters’
Authority
|
|
9.1
|
The
Company shall be entitled to and shall act on any notice, request,
direction, consent, waiver, extension and other communication given
or
agreement entered into by or on behalf of the Underwriters by Orion
who
shall represent the Underwriters and have authority to bind the
Underwriters hereunder except in respect of a notice of termination
pursuant to Section 7 or the exercise of the indemnity rights
specified in Section 11. Each of the Underwriters covenants and
agrees that Orion has been duly authorized in such regard and shall
incur
no liability in connection therewith absent negligence or
fraud.
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|
10.
|
Contractual
Standstill
|
|
10.1
|
Xxxxx
Xxxxxx, Xxx Xxxxxxx, Xxxx Xxxxxxx and Xxx Xxxxxx shall sign on the
Closing
Date the contractual standstill in the form annexed hereto as
Schedule D.
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Execution
Copy
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28
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11.
|
Indemnity
and Contribution
|
|
11.1
|
In
consideration for the Underwriters accepting the engagement (the
“Engagement”)
pursuant to this Agreement, the Company agrees to indemnify and hold
the
Underwriters and/or any of their affiliates (collectively, the
“Underwriters”
for the purposes of this Section 11) and each of their respective
directors, officers, employees, agents, advisors, shareholders and
partners (hereinafter referred to as the “Personnel”)
harmless from and against any and all expenses, losses (other than
loss of
profits), claims, actions, damages or liabilities, whether joint
or
several (including the aggregate amount paid in reasonable settlement
of
any actions, suits, proceedings or claims), and the reasonable fees
and
expenses of its counsel that may be incurred in advising with respect
to
and/or defending any claim that may be made against the Underwriters
and/or the Personnel (including in enforcing this indemnity), to
which the
Underwriters and/or the Personnel may become subject or otherwise
involved
in any capacity under any statute or common law or otherwise
(collectively, the “Claims”)
insofar as such Claims arise out of or are based, directly or indirectly,
upon the performance of professional services rendered to the Company
by
the Underwriters and/or the Personnel hereunder or otherwise in connection
with the Engagement; provided, however, that this indemnity shall
not
apply to the extent that a court of competent jurisdiction in a final
judgment that has become non-appealable shall determine
that:
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|
11.1.1
|
the
Underwriters or the Personnel have been grossly negligent or dishonest
or
have committed any fraudulent act in the course of such performance
or
that any Underwriter or Personnel was guilty of wilful misconduct
or acted
in bad faith; or
|
|
11.1.2
|
the
Underwriters have breached any material provision of this Agreement;
and
|
|
11.1.3
|
the
Claims were caused by the gross negligence or result from the wilful
misconduct or bad faith, dishonesty or fraud referred to in 11.1.1
or the
breach of any material provision of this Agreement referred to in
11.1.2.
|
|
11.2
|
If
for any reason (other than the occurrence of any of the events itemized
in
11.1.1 to 11.1.3 above), the foregoing indemnification is unavailable
to
the Underwriters or Personnel or insufficient to hold themselves
harmless,
then the Company shall contribute to the amount paid or payable by
the
Underwriters and/or the Personnel as a result of such Claim in such
proportion as is appropriate to reflect not only the relative benefits
received by the Company on the one hand and the Underwriters on the
other
hand but also the relative fault of the Company and the Underwriters,
as
well as any relevant equitable considerations; provided that the
Company
shall in any event contribute to the amount paid or payable by the
Underwriters and/or the Personnel as a result of such Claim excess
of such
amount over the amount of the Underwriters’ Fee received by the
Underwriters hereunder.
|
|
11.3
|
The
Company agrees that in case any legal proceeding shall be brought
against
the Company and/or the Underwriters and/or the Personnel by any
governmental commission or regulatory authority or any stock exchange
or
other entity having regulatory authority, either domestic or foreign,
if
any Personnel shall be required to testify in connection therewith
or
shall be required to respond to procedures designed to discover
information regarding, in connection with, or by reason of the performance
of professional services rendered to the Company by the Underwriters,
the
Underwriters shall have the right to employ separate counsel in connection
therewith if the Underwriters, acting reasonably, determine that
a
conflict of interest exists or that it is likely that such conflict
of
interest will develop, and the reasonable fees and expenses of such
counsel as well as the reasonable costs (including an amount to reimburse
the Underwriters from time spend by the Personnel in connection therewith)
and out-of-pocket expenses incurred by the Underwriters or the Personnel
in connection therewith shall be paid by the Company as they
occur.
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11.4
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Promptly
after receipt of notice of the commencement of any legal proceeding
against the Underwriters or any of the Personnel or after 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 Company, the Underwriters will notify the Company
in
writing of the commencement thereof and, throughout the course thereof,
(the “Indemnification
Notice”).
The Company shall be entitled (but not required) to assume the defence,
on
behalf of the Underwriters or any of the Personnel, of any legal
proceeding brought to enforce a Claim; provided that the defence
shall be
through legal counsel acceptable to the Underwriters, acting reasonably,
and that the Company shall bear the reasonable fees, costs and expenses
of
such defence. The Underwriters covenant and agree that they shall
use
their best efforts to cooperate fully with the Company in the
investigation and defence of any Claim or potential Claim and use
their
best efforts to cause any other indemnified party to also
cooperate.
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11.5
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In
the event that the Company does not assume the defence of a Claim
within
30 days of receipt of the Indemnification Notice, the Underwriters
shall
have the right to retain their own legal counsel and the Company
shall
bear the reasonable fees, costs and expenses of such counsel; provided
that, throughout the course of any legal proceeding, the Underwriters
shall provide copies of all relevant documentation to the Company,
shall
keep the Company advised of the progress thereof and shall discuss
with
the Company all significant actions
proposed.
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11.6
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The
indemnity and contribution obligations of the Company shall be in
addition
to any liability which the Company may otherwise have, shall extend
upon
the same terms and conditions to the Personnel and shall be binding
upon
and enure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Underwriters and any of the Personnel.
The parties agree that the Underwriters hold all rights of the Personnel
in trust for the Personnel. The foregoing provisions shall survive
the
completion of professional services rendered under the Engagement
or any
termination of the authorization given by this
Agreement.
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12.
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Expenses
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Whether
or not the transactions herein contemplated shall be completed, the Company
shall pay all expenses of or incidental to the authorization, issue, delivery
and sale of the Underwritten Units and of or incidental to all other matters
in
connection with the Offering including, without limitation, (i) the fees
and expenses payable in connection with the qualification of the Distribution
of
the Underwritten Units, (ii) the fees, taxes and disbursements of Fraser Xxxxxx
Casgrain LLP, counsel to the Underwriters and any travel and administrative
expenses incurred by the Underwriters in connection with the Offering,
(iii) the fees, taxes and disbursements of the Company’s counsel and local
counsel, auditors, road show consultants, printers and other consultants and
service providers retained by the Company in connection with the Offering,
(iv) all costs incurred in connection with the preparation, printing and
delivery of documents relating to the Offering or of the definitive certificates
representing the Underwritten Units and (v) any stock exchange listing
fees.
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13.
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Authority
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The
Company shall be entitled to and shall act on any notice, waiver, extension
or
other communication given by Orion, on behalf of the Purchasers, which has
authority to bind the Purchasers with respect to all matters covered by this
Agreement.
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14.
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Conflict
of Interest
|
The
Company: (i) acknowledges and agrees that the Underwriters has certain
statutory obligations as registrant under the Canadian Securities Laws and
has
fiduciary relationships with its respective clients; and (ii) consents to
the Underwriters acting hereunder while continuing to act for its respective
clients. To the extent that an Underwriters’ statutory obligations as registrant
under the Canadian Securities Laws or fiduciary relationships with its
respective clients conflicts with its obligations hereunder, the Underwriters
shall be entitled to fulfill its statutory obligations as registrant under
the
Canadian Securities Laws and its fiduciary duties to its respective clients.
Nothing in this Agreement shall be interpreted to prevent the Underwriters
from
fulfilling its statutory obligations as registrant under the Canadian Securities
Laws or to satisfy its fiduciary duties to its clients.
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15.
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Survival
|
All
representations, warranties, covenants and agreements of the Company and of
the
Underwriters herein contained or contained in documents delivered pursuant
to
this Agreement shall survive the purchase and sale of the Underwritten Units
and
shall continue in full force and effect for the benefit of the Underwriters,
the
Purchasers and the Company, as the case may be, regardless of any subsequent
disposition of such securities or any investigation or due diligence conducted
by or on behalf of the Underwriters in connection with the Offering or with
respect to the Distribution of the Securities.
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16.
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Notices
|
Any
notice or other communication to be given hereunder shall be addressed as
follows:
if
to the Company:
IMI
International
Medical Innovations Inc.
0000
Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxx X0X 0X0
Attention: Xxxxx
Xxxxxx,
President
and Chief
Executive Officer
Facsimile:
(000)
000-0000
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copy
to:
Xxxx
& Berlis LLP
BCE
Place, 000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxx, X0X 0X0
Attention: Xxxxxxx
Xxxxx
Facsimile: (000)
000-0000
if
to the Underwriters:
Orion
Securities Inc.
BCE
Place, 000 Xxx Xxxxxx
Xxxxx
0000, X.X. Xxx 000
Xxxxxxx,
Xxxxxxx, X0X 0X0
Attention: Xxxxxx
X. Xxxxxx
Facsimile:
(000)
000-0000
and
to:
Loewen,
Ondaatje, XxXxxxxxxx Limited
Xxxxxxxx
Lanes, East Tower
00
Xxxxxx Xxxx
Xxxxx
0000, Xxxx Xxxxx
Xxxxxxx,
XX X0X 0X0
Attention: Xxxxxxx
Xxxxxx
Facsimile:
(000)
000-0000
copy
to:
Fraser
Xxxxxx Casgrain LLP
0
Xxxxx Xxxxx Xxxxx, 00xx
Xxxxx
Xxxxxxxx,
XX X0X 0X0
Attention: Xxxxxx
X. Xxxxxxx
Facsimile:
(000)
000-0000
Any
such notice or other communication shall be in writing, and unless delivered
personally to a responsible officer of the addressee, shall be sent by courier
or telecopy, and shall be deemed to have been received, if given by telecopy,
on
the day of sending (or the next Business Day following the sending if the
sending is after 4:00 p.m. (local time at the place of receipt of such
notice or communication) or if the day of sending is not a Business Day) and,
if
sent by courier, on the next Business Day following the sending
thereof.
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17.
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Governing
Law
|
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the Province of Ontario and the laws of Canada applicable therein.
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18.
|
Time
of Essence
|
Time
shall be of the essence hereof.
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19.
|
Severability
|
If
any provision of this Agreement is determined to be void or unenforceable in
whole or in part, it shall be deemed not to affect or impair the validity of
any
other provision of this Agreement and such void or unenforceable provision
shall
be severable from this Agreement.
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20.
|
Counterparts
|
This
Agreement may be executed by any one or more of the parties herein in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
[Balance
of page intentionally left blank]
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If
you accept the foregoing offer and agree with the above terms and conditions,
please so indicate by signing and returning this letter to us.
| Yours very truly, | ||
| Orion Securities Inc. | ||
| |
|
|
| By: |
(s)
Xxxxxx X. Xxxxxx
|
|
| Xxxxxx X. Xxxxxx | ||
| Managing Director, Healthcare & Biotechnology, Investment Banking | ||
| Loewen, Ondaatje, XxXxxxxxxx Limited | ||
| |
|
|
| By: |
(s)
Xxxxxxx Xxxxxx
|
|
| Xxxxxxx Xxxxxx | ||
| Chairman & Chief Executive Officer | ||
The
foregoing offer is hereby accepted effective as of the date and on the terms
and
conditions set forth above.
| IMI International Medical Innovations Inc. | ||
| |
|
|
| By: |
(s)
Xxxxx Xxxxxx
|
|
| Xxxxx Xxxxxx | ||
| President and Chief Executive Officer | ||
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SCHEDULE
A
DEBENTURE
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Execution
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SCHEDULE
B
WARRANT
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Execution
Copy
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SCHEDULE
C
COMPANY
COUNSEL OPINIONS
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Execution
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SCHEDULE
D
FORM
OF LOCK-UP
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Execution
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