Exhibit 3.1
EXECUTION COPY
UNDERWRITING AGREEMENT
December 9, 2003
Central Fund of Canada Limited
00 Xxxxx Xxxx Xxxxxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Mr. X. X. Xxxxxx Xxxxxx
President, CEO and Director
CIBC World Markets Inc., (the "Underwriter"), understands that Central
Fund of Canada Limited (the "Corporation") proposes to issue and sell to the
Underwriter 12,050,000 class A non-voting shares ("Class A Shares") in the
capital of the Corporation (the "Underwritten Shares"). We further understand
that the Corporation has prepared and filed a preliminary short form prospectus,
a registration statement and all necessary documents relating thereto and will
take all additional necessary steps to qualify or register the Underwritten
Shares for distribution in each of the Qualifying Provinces (as defined below)
and in the United States, as applicable.
Based on the foregoing, and subject to the terms and conditions
contained in this Agreement, the Underwriter offers to purchase from the
Corporation, and by its acceptance hereof, the Corporation accepts such offer
and agrees to sell to the Underwriter, the Underwritten Shares on the Closing
Date (as defined below) at a price of U.S. $4.98 per share (Cdn. $6.48 per
share) being an aggregate purchase price of U.S. $60,009,000 (Cdn. $78,083,711)
(the "Purchase Price"). For greater certainty, the exchange rate for the
Canadian dollar expressed in United States dollars that the Underwriter will
honour at Closing (as defined below) shall be as follows: 1.3012.
The Underwriter shall have an option (the "Option"), which Option may
be exercised in the Underwriter's sole discretion and without obligation, to
purchase up to an additional 3,000,000 Class A Shares of the Corporation which,
if subscribed for hereunder, shall be deemed to form part of the Underwritten
Shares for the purposes hereof. The Option shall be exercisable by the
Underwriter, at any time within 24 hours of the acceptance of this Agreement by
the Corporation, by delivering written notice to the Corporation prior to the
expiry of the Option, after which time the Option shall be void and of no
further force and effect.
In consideration of the Underwriter's agreement to purchase the
Underwritten Shares and in consideration of the services to be rendered by the
Underwriter in connection with the distribution of the Underwritten Shares in
each of the Qualifying Provinces and the United States, the Corporation will pay
to the Underwriter a fee of U.S. $0.1992 per Underwritten Share (Cdn. $0.2592
per Underwritten Share) for an aggregate of U.S. $2,400,360 (Cdn. $3,123,348)
(the "Underwriting Fee"). Such fee
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shall be due and payable at the Closing Time (as defined below) against payment
by the Underwriter for the Underwritten Shares.
All actions to be undertaken by the Underwriter in connection with the
offering or sale of the Underwritten Shares in the United States, shall be
undertaken through its U.S. Dealer.
DEFINITIONS
In this Agreement:
"AFFILIATE", "DISTRIBUTION", "MATERIAL CHANGE", "MATERIAL FACT",
"MISREPRESENTATION", and "SUBSIDIARY" when used in connection with the Canadian
Preliminary Prospectus, Canadian Final Prospectus or any Prospectus Amendment
thereto shall have the respective meanings given to them under the Canadian
Securities Laws, when used in connection with the Registration Statement, the
U.S. Preliminary Prospectus, the U.S. Final Prospectus or any Prospectus
Amendment thereto shall have the respective meaning (to the extent applicable)
under the U.S. Securities Laws including judicial and administrative
interpretations thereof, and in all other contexts shall have the respective
meanings given to them under Canadian Securities Laws;
"AGREEMENT" means the agreement resulting from the acceptance by the Corporation
of the offer made by the Underwriter by this letter;
"APPLICABLE SECURITIES LAWS" means the Canadian Securities Laws and the U.S.
Securities Laws;
"ASC" means the Alberta Securities Commission;
"BUSINESS DAY" means a day which is not a Saturday, a Sunday or a statutory or
civic holiday in Toronto or New York City and a day on which the office of the
SEC in Washington D.C. is open for business;
"CANADIAN PRELIMINARY PROSPECTUS" and "CANADIAN FINAL PROSPECTUS" mean the
Canadian preliminary short form prospectus and Canadian (final) short form
prospectus, respectively, including in each case any Documents Incorporated by
Reference, prepared by the Corporation in accordance with National Instrument
44-101 and relating to the distribution of the Underwritten Shares and prepared
and filed with the Canadian Securities Regulators in accordance with Canadian
Securities Laws;
"CANADIAN SECURITIES LAWS" means all applicable securities laws in each of the
Qualifying Provinces and the respective regulations and rules under such laws
together with applicable published policy statements of the Canadian Securities
Regulators in the Qualifying Provinces;
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"CANADIAN SECURITIES REGULATORS" means the applicable securities commission or
regulatory authority in each of the Qualifying Provinces;
"CANADIAN TRANSFER AGENT" means CIBC Mellon Trust Company, with its principal
offices in the cities of Calgary, Montreal, Toronto and Vancouver;
"CLAIM" has the meaning given to it in sub-paragraph 10(b);
"CLASS A SHARES" means Class A non-voting shares without par value in the
capital of the Corporation;
"CLOSING" means the completion of the sale by the Corporation and the purchase
by the Underwriter of the Underwritten Shares pursuant to the terms and
conditions of this Agreement;
"CLOSING DATE" means December 19, 2003, or such other date as the Corporation
and the Underwriter may agree upon in writing or as may be changed in accordance
with subparagraph 4(c) of the Agreement;
"CLOSING TIME" means 8:30 am (Toronto time) on the Closing Date;
"CORPORATION" means Central Fund of Canada Limited;
"COMMON SHARES" means common shares without par value in the capital of the
Corporation;
"DOCUMENTS INCORPORATED BY REFERENCE" means collectively:
(a) the Annual Information Form of the Corporation dated February
24, 2003;
(b) the Management Information Circular of the Corporation dated
January 10, 2003 in connection with the Corporation's annual
meeting of shareholders on February 24, 2003;
(c) the audited financial statements of the Corporation as at
October 31, 2002 and 2001 and for each of the years in the
three year period ended October 31, 2002 together with the
auditors' report thereon and consisting of the statements of
net assets as at October 31, 2002 and 2001 and the statements
of loss, shareholders' equity and changes in the net assets
for each of the years in the three year period ended October
31, 2002;
(d) management's discussion and analysis of financial condition
and results of operations for the year ended October 31, 2002
(incorporated by reference from the annual report of the
Corporation for the year ended October 31, 2002);
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(e) the unaudited interim financial statements of the Corporation
for the three and nine month periods ended July 31, 2003, with
comparative figures for the corresponding periods in the
immediately preceding year;
(f) management's discussion and analysis of financial condition
and results of operations for the three and nine month periods
ended July 31, 2003;
(g) the material change report of the Company dated January 30,
2003, disclosing the Company's private placement of 3,500,000
Class A Shares;
(h) the material change report of the Company dated February 14,
2003, disclosing the Company's private placement of 5,448,800
Class A Shares;
(i) the supplementary information dated December 8, 2003, relating
to the reconciliation with United States generally accepted
accounting priniciples in respect of the unaudited interim
financial statements of the Corporation for the three and nine
month periods ended July 31, 2003, with comparative figures
for the corresponding periods in the immediately preceding
year; and
(j) any other document prepared by the Corporation and filed with
Canadian Securities Regulators after the date of this
Agreement and before the completion of the distribution of the
Underwritten Shares that is of a type that is required to be
incorporated by reference in the Canadian Final Prospectus
pursuant to National Instrument 44-101.
"EFFECTIVE DATE" means any date as of which the Registration Statement or any
amendment thereto is declared effective under the 1933 Act;
"FINAL PROSPECTUSES" means, collectively, the Canadian Final Prospectus and the
U.S. Final Prospectus;
"FINANCIAL INFORMATION" means the Corporation's financial statements included in
the Documents Incorporated by Reference together with any auditors' report
thereon and the notes thereto;
"INDEMNIFIED PARTY" has the meaning given to it in subparagraph 10(b);
"INDEMNIFIER" has the meaning given to it in subparagraph 11(a);
"1933 ACT" means the United States Securities Act of 1933, as amended;
"1934 ACT" means the United States Securities Exchange Act of 1934, as amended;
"NASD" means the National Association of Securities Dealers, Inc.;
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"NATIONAL INSTRUMENT 44-101" means National Instrument 44-101 adopted by the
Canadian Securities Regulators;
"NATIONAL POLICY 43-201" means National Policy 43-201 adopted by the Canadian
Securities Regulators;
"NOTICE" has the meaning given to it in paragraph 19;
"OPTION" has the meaning given to it above;
"OPTION SHARES" means the Class A Shares purchased by the Underwriter upon the
exercise of the Option;
"PRELIMINARY PROSPECTUSES" means, collectively, the Canadian Preliminary
Prospectus and the U.S. Preliminary Prospectus;
"PROSPECTUS AMENDMENT" means any amendment or supplement to any of the
Preliminary Prospectuses, the Final Prospectuses or the Registration Statement;
"PURCHASE PRICE" has the meaning given to it above;
"QUALIFYING PROVINCES" means all of the provinces (other than Quebec) and
territories of Canada;
"REGISTRATION STATEMENT" means the registration statement on Form F-10 referred
to in paragraph 1(d) of this Agreement, including the U.S. Preliminary
Prospectus and the U.S. Final Prospectus, as the case may be, and the exhibits
thereto and the Documents Incorporated by Reference therein, as amended at the
Effective Date;
"RULES" has the meaning given to it in subparagraph 7(t);
"SEC" means the United States Securities and Exchange Commission;
"STOCK EXCHANGES" means the Toronto Stock Exchange and the American Stock
Exchange;
"SUBSIDIARIES" has the meaning ascribed thereto in the BUSINESS CORPORATIONS ACT
(Alberta);
"UNDERWRITER" has the meaning given to it above;
"UNDERWRITING FEE" has the meaning given to it above;
"UNDERWRITTEN SHARES" has the meaning given to it above and includes any Option
Shares purchased by the Underwriter in the event the Option is exercised;
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"U.S. DEALER" means CIBC World Markets Corp., the U.S. broker-dealer affiliate
of the Underwriter, registered as such with the SEC under Section 15 of the
Securities Exchange Act of 1934, who is a member of the NASD;
"U.S. PRELIMINARY PROSPECTUS" means the prospectus, including any supplement
thereto, included in the Registration Statement before the Effective Date
(including the Documents Incorporated by Reference therein) prepared by the
Corporation and relating to the offering of Underwritten Shares in the United
States;
"U.S. FINAL PROSPECTUS" means the prospectus included in the Registration
Statement at the Effective Date (including the Documents Incorporated by
Reference therein) prepared by the Corporation and relating to the offering of
Underwritten Shares in the United States, except that if the U.S. Final
Prospectus first furnished to the U.S. Dealer after the effectiveness of the
Registration Statement for use in connection with the offering of the
Underwritten Shares in the United States differs from the prospectus included in
the Registration Statement at the Effective Date, the term "U.S. FINAL
PROSPECTUS" shall refer to the final prospectus first furnished to the U.S.
Dealer for such use (including the Documents Incorporated by Reference therein);
"U.S. SECURITIES LAWS" means all applicable securities legislation in the United
States, including without limitation the 1933 Act and 1934 Act, and the rules
and regulations promulgated thereunder, including judicial and administrative
interpretations thereof; and
"U.S. TRANSFER AGENT" means Mellon Investor Services LLC, of New York.
Unless otherwise expressly provided in this Agreement, words importing
only the singular number include the plural and vice versa and words importing
gender include all genders. References to "paragraphs", "subparagraphs" and
"clauses" are to the appropriate paragraph, subparagraph or clause of this
Agreement.
All references to dollars or "$" are Canadian dollars unless otherwise
expressed.
TERMS AND CONDITIONS
1. COMPLIANCE WITH SECURITIES LAWS - FILING OF PROSPECTUSES
The Corporation represents and warrants to, and covenants and agrees
with, the Underwriter that:
(a) the Corporation has filed the Canadian Preliminary Prospectus
in each of the Qualifying Provinces pursuant to National
Policy 43-201 and has obtained an MRRS decision document
evidencing receipts by each of the Canadian Securities
Regulators for the Canadian Preliminary Prospectus;
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(b) the Corporation shall fulfil or cause to be fulfilled to the
reasonable satisfaction of the Underwriter's counsel all
relevant provisions of Canadian Securities Laws that are
required to be fulfilled by the Corporation to permit the
distribution of the Underwritten Shares in each of the
Qualifying Provinces, by or through the Underwriter who shall
comply with the relevant provisions of Canadian Securities
Laws;
(c) the Corporation shall, as soon as possible, fulfill all legal
requirements to enable the distribution of the Underwritten
Shares and in any event shall file the Canadian Final
Prospectus in each of the Qualifying Provinces and obtain an
MRRS decision document evidencing receipt of the Canadian
Final Prospectus by each of the Canadian Securities Regulators
on or prior to 4:30 pm (Toronto time) on December 15, 2003;
(d) the Corporation: (i) has prepared and filed with the SEC the
Registration Statement including the Canadian Preliminary
Prospectus (with such deletions therefrom and additions
thereto as are permitted or required by Form F-10 under the
1933 Act and the Rules) and a written irrevocable consent and
power of attorney of the Corporation on Form F-X (the "Form
F-X"); and (ii) as soon as practicable after the filing of the
Canadian Final Prospectus with the ASC and, in any event, on
the date on which the Canadian Final Prospectus is filed with
the ASC, will file an amendment to such Registration Statement
including the Canadian Final Prospectus (with such deletions
therefrom and additions thereto as are permitted or required
by Form F-10 under the 1933 Act and the Rules) and shall have
fulfilled and complied with, to the reasonable satisfaction of
the Underwriter, the U.S. Securities Laws required to be
fulfilled or complied with by the Corporation to enable the
Underwritten Shares to be lawfully distributed to the public
in the United States.
2. DUE DILIGENCE
Prior to the filing of the Final Prospectuses, the Corporation shall
permit the Underwriter and its counsel to review and provide comments on drafts
of each of the Final Prospectuses and shall allow the Underwriter to conduct any
due diligence investigations which it reasonably requires in order to fulfill
its obligations as an underwriter under the Applicable Securities Laws and in
order to enable the Underwriter to responsibly execute the certificate in the
Canadian Final Prospectus required to be executed by it.
3. (a) DELIVERIES ON FILING OF FINAL PROSPECTUSES
No later than the time of filing of the Final Prospectuses with the
Canadian Securities Regulators and with the SEC, unless otherwise indicated
below, the Corporation shall deliver to the Underwriter:
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(i) a copy of each of the Final Prospectuses, including
all Documents Incorporated by Reference, in the
English language, signed, filed and certified as
required by the Applicable Securities Laws;
(ii) a copy of each other document filed by the
Corporation at or prior to the time of filing the
Canadian Final Prospectus in compliance with
Applicable Securities Laws in connection with the
distribution of the Underwritten Shares; and
(iii) a "long-form" comfort letter of Ernst & Young LLP,
dated as of the date of the Final Prospectus (with
the requisite procedures to be completed by Ernst &
Young LLP within two Business Days of the date of the
Canadian Final Prospectus), addressed to the
Underwriter and the board of directors of the
Corporation, in form and substance satisfactory to
the Underwriter, acting reasonably, with respect to
certain financial and accounting information relating
to the Corporation in the Final Prospectuses
including all Documents Incorporated by Reference,
which letter shall be in addition to the auditors'
report incorporated by reference into the Final
Prospectuses.
(b) PROSPECTUS AMENDMENTS
In the event that the Corporation is required by Applicable Securities
Laws to prepare and file a Prospectus Amendment, the Corporation shall prepare
and deliver promptly to the Underwriter signed and certified copies of such
Prospectus Amendment along with all Documents Incorporated by Reference that
have not been previously delivered. Any Prospectus Amendments shall be in form
and substance satisfactory to the Underwriter acting reasonably. Concurrently
with the delivery of any Prospectus Amendment, the Corporation shall deliver to
the Underwriter with respect to such Prospectus Amendment, documents similar to
those referred to in clauses 3(a)(ii) and (iii).
(c) COMMERCIAL COPIES
The Corporation has caused commercial copies of the Preliminary
Prospectuses and shall cause commercial copies of the Final Prospectuses to be
delivered, without charge, to the Underwriter in Toronto and in such other
cities in North America and in such quantities as the Underwriter may reasonably
request by oral instructions to the printer of such documents. Such delivery of
the Final Prospectuses shall be effected as soon as possible after receipts are
issued by the Canadian Securities Regulators for the Canadian Final Prospectus
but, in any event, on or before 10:00 a.m. (Toronto time) on December 16, 2003.
Such deliveries shall constitute the consent of the Corporation to the
Underwriter's use of the Preliminary Prospectuses and Final Prospectuses in
connection with the distribution of the Underwritten Shares in the Qualifying
Provinces
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and in the United States in compliance with the provisions of this Agreement and
Applicable Securities Laws.
(d) QUALIFICATION OF SECURITIES
The Corporation will promptly from time to time take such action as
the Underwriter may reasonably request to qualify the Underwritten Shares for
offering and sale under the Applicable Securities Laws or "Blue Sky laws" of
such United States or Canadian jurisdictions as the Underwriter may request and
to comply with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for so long as may be necessary to complete the
distribution of the Underwritten Shares until 30 days after the date hereof;
provided that in connection therewith, the Corporation shall not be required to
amend its charter documents or bylaws or to qualify as a foreign corporation or
to file a general consent to service of process in any jurisdiction or subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject.
(e) DISTRIBUTION OF SHARES
The Underwriter shall (and require any selling firm to agree with such
Underwriter, for the benefit of the Corporation, to):
(i) offer the Underwritten Shares for sale to the public
only as permitted by applicable law and at a price
not exceeding U.S. $4.98 per Underwritten Share;
(ii) not solicit offers to purchase Underwritten Shares
from, or sell Underwritten Shares to, any person
resident in any jurisdiction other than the
Qualifying Provinces or the United States, except in
a manner which is exempt from registration and
prospectus requirements under applicable securities
laws and which does not require the Corporation to
register any of its securities or comply with ongoing
filing or disclosure requirements or other similar
requirements and further provided that in connection
therewith, the Corporation shall not be required to
amend its charter documents or by-laws or to qualify
as a foreign corporation or to file a general consent
to service of process in any jurisdiction or subject
itself to taxation in respect of doing business in
any jurisdiction in which it is not otherwise so
subject;
(iii) not make use of any "green sheet" or information
memorandum in respect of the Corporation or the
distribution of the Underwritten Shares in the United
States and not make use of any such "green sheet" or
information memorandum in Canada that has not first
been approved by the Corporation; and
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(iv) offer and sell the Underwritten Shares in the United
States only through the U.S. Dealer.
(f) NOTICE OF COMPLETION OF DISTRIBUTION
After the Closing Time, the Underwriter shall:
(i) use its best efforts to complete the distribution of
the Underwritten Shares as promptly as possible; and
(ii) give prompt written notice to the Corporation when,
in the opinion of the Underwriter, the Underwriter
has completed distribution of the Underwritten
Shares, including a breakdown of the gross proceeds
realized therefrom in each of the Qualifying
Provinces, in the United States and in any other
applicable jurisdiction.
4. MATERIAL CHANGES DURING DISTRIBUTION
(a) CORPORATION MATERIAL CHANGE
During the period from the date of this Agreement to the completion of
distribution of the Underwritten Shares, the Corporation shall promptly notify
the Underwriter in writing of:
(i) any material change (actual, anticipated, or
threatened, financial or otherwise) in the business,
affairs, operations, assets, liabilities (contingent
or otherwise) or capital of the Corporation that is
not otherwise referred to in the Final Prospectuses;
(ii) any material fact which has arisen or been discovered
that would have been required to have been stated in
the Final Prospectuses or the Registration Statement
had such fact arisen or been discovered on, or prior
to, the date of such document; and
(iii) any change in any material fact (which for the
purposes of this Agreement shall be deemed to include
the disclosure of any previously undisclosed material
fact) contained in the Final Prospectuses or the
Registration Statement, including all Documents
Incorporated by Reference, which fact or change is,
or may be, of such a nature as to render any
statement in the Final Prospectuses or the
Registration Statement misleading or untrue or which
would result in a misrepresentation in the Final
Prospectuses or the Registration Statement or which
would result in the Final Prospectuses or the
Registration Statement not complying (to the extent
that such compliance is required) with Applicable
Securities Laws.
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The Corporation will in good faith discuss with the Underwriter any
event described in clauses (i), (ii) or (iii) above that occurs or is discovered
during the period from the date of this Agreement to the completion of
distribution of the Underwritten Shares which is of such a nature that there may
be reasonable doubt as to whether notice need be given to the Underwriter
pursuant to this subsection 4(a). If at any time during the period from the date
of this Agreement to the completion of distribution of the Underwritten Shares,
any event described in clauses (i), (ii) or (iii) above occurs or any condition
exists as a result of which it is necessary, in the reasonable opinion of
counsel for the Corporation or the Underwriter, to amend the Registration
Statement or amend or supplement the Final Prospectuses, as the case may be, in
order that the Final Prospectuses will not include any untrue statements of a
material fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing at
the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of any such counsel, at any such time to amend the Registration
Statement or amend or supplement the Final Prospectuses, as the case may be, in
order to comply with the requirements under Applicable Securities Laws or other
applicable laws, the Corporation will promptly prepare and file such Prospectus
Amendment as may be necessary to correct such statement or omission or to make
the Registration Statement or the Final Prospectuses, as the case may be, comply
with such laws, and the Corporation will furnish to the Underwriter such number
of copies of such amendment or supplement as the Underwriter may reasonably
request.
The Corporation shall not file any Prospectus Amendment or other
document, however, without first obtaining approval from the Underwriter, after
consultation with the Underwriter with respect to the form and content thereof,
which approval shall not be unreasonably withheld or delayed.
(b) CHANGE IN APPLICABLE SECURITIES LAWS
If during the period of distribution of the Underwritten Shares, there
shall be any change in the Applicable Securities Laws which, in the opinion of
the Underwriter, acting reasonably, requires the filing of a Prospectus
Amendment, the Corporation shall, to the satisfaction of the Underwriter, acting
reasonably, promptly prepare and file such Prospectus Amendment with the
appropriate securities regulatory authority in each jurisdiction where such
filing is required.
(c) CHANGE IN CLOSING DATE
If a material change occurs or an undisclosed material fact has arisen
or been discovered prior to the Closing Date, then, subject to paragraph 9, the
Closing Date shall be, unless the Corporation and the Underwriter otherwise
agree in writing or unless otherwise required under the Applicable Securities
Laws, the later of:
(i) the third Business Day following the date on which
all applicable filings or other requirements of the
Applicable Securities Laws with
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respect to such material change or change in a
material fact have been made or complied with in all
relevant jurisdictions and any appropriate receipts
obtained for such filings and notice of such filings
from the Corporation or its counsel have been
received by the Underwriter; and
(ii) the fifth Business Day following the date upon which
the commercial copies of any Prospectus Amendment
have been delivered in accordance with subparagraph
3(b).
In no event, however, shall the Closing Date be later than January 30, 2004.
5. SERVICES PROVIDED BY UNDERWRITER AND UNDERWRITING FEE
In consideration for the Underwriter's services in assisting in the
preparation of the Preliminary Prospectuses, the Final Prospectuses, the
Registration Statement and any Prospectus Amendments, in distributing the
Underwritten Shares, both directly and to other registered dealers as brokers,
and in performing administrative work in connection with the distribution of the
Underwritten Shares, the Corporation agrees to pay to the Underwriter the
Underwriting Fee. The Underwriting Fee shall be payable as provided for in
subparagraph 6(a). The Underwriting Fee shall be payable by way of set-off of
the amount of the Underwriting Fee against, and deduction of the Underwriting
Fee from, the Purchase Price.
6. DELIVERY OF PURCHASE PRICE, UNDERWRITING FEE AND CERTIFICATE
(a) DELIVERIES
The purchase and sale of the Underwritten Shares shall be completed at
the Closing Time at the offices of Fraser Xxxxxx Casgrain LLP, 1 First Canadian
Place, 39th Floor, 000 Xxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxx, or at such other
place as the Underwriter and the Corporation may agree upon.
At the Closing Time, the Corporation shall deliver to the Underwriter
one or more definitive share certificate(s) representing the Underwritten Shares
in favour of the Underwriter or its nominee(s), against payment by the
Underwriter to the Corporation of the Purchase Price, less the Underwriting Fee,
by wire transfer, or if permitted under applicable laws, certified cheque or
bank draft (in any case, as may be directed by the Corporation) in U.S. dollars
(based on the exchange rate for the Canadian dollar expressed in United States
dollars as set forth on the first page of this Agreement) together with a
receipt signed by the Underwriter for such definitive certificate(s) and a
receipt for the Underwriting Fee.
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(b) DELIVERY OF CERTIFICATE(S) TO TRANSFER AGENT
The Corporation shall, prior to the Closing Date, make all necessary
arrangements for the exchange of the definitive certificate(s) representing the
Underwritten Shares, on the Closing Date, at the principal offices of the
Canadian Transfer Agent in the City of Toronto and the U.S. Transfer Agent in
the City of New York for certificates representing such number of Underwritten
Shares registered in such names as shall be designated by the Underwriter not
less than 48 hours (or 72 hours if the Closing Date is a Monday) prior to the
Closing Time.
The Corporation shall pay all fees and expenses payable to the Canadian
Transfer Agent and the U.S. Transfer Agent in connection with the preparation,
delivery, certification and exchange of the Underwritten Shares, contemplated by
this subparagraph 6(b) and the fees and expenses payable to the Canadian
Transfer Agent and the U.S. Transfer Agent in connection with the initial or
additional transfers as may be required in the course of the distribution of the
Underwritten Shares.
7. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation represents and warrants to the Underwriter that, and
acknowledges that the Underwriter is relying upon, such representations and
warranties in purchasing the Underwritten Shares:
(a) the Corporation is a company duly continued, organized and
validly existing under the laws of Alberta and is properly
registered under the laws of all jurisdictions in which its
business is carried on except where the failure to be so
registered would not have a material adverse effect on the
business or operations of the Corporation;
(b) the Corporation is (i) a reporting issuer not in default in
any material respect of any requirement under Canadian
Securities Laws, and (ii) not in default in any material
respect of any requirement under U.S. Securities Laws;
(c) the Corporation has the requisite corporate power, authority
and capacity to enter into this Agreement and to perform the
transactions contemplated herein and the Corporation has the
requisite corporate power, authority and capacity to own,
lease and to operate its property and assets including
licences or other similar rights and to carry on the business
customarily carried on by it and has all the requisite
corporate power and authority to carry on its business as
currently carried on or as currently proposed to be carried
on. The Corporation is conducting its business in compliance
with all applicable laws, rules and regulations of each
jurisdiction in which its business is carried on and is duly
licensed, registered or qualified in all jurisdictions in
which it owns, leases or operates its property or carries on
business to enable its business to be
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carried on as now conducted and its property and assets to be
owned, leased and operated except where such non-compliance or
failure to obtain such licence, registration or qualification
would not have a material adverse effect on the business or
operations of the Corporation and all such licences,
registrations and qualifications are valid and subsisting and
in good standing;
(d) the Corporation has authorized share capital consisting of
100,000,000 Class A Shares and 50,000 Common Shares of which
40,000 Common Shares and 44,746,320 Class A Shares and no more
are validly issued and outstanding as fully paid and
non-assessable. No person, firm or corporation has any
agreement or option, or right or privilege (whether
pre-emptive or contractual) capable of becoming an agreement
or option, for the purchase from the Corporation of any
unissued shares of the Corporation except as otherwise
referred to in the Final Prospectuses;
(e) except as disclosed in the Final Prospectuses, to the best of
the Corporation's knowledge, there is no action, proceeding or
investigation pending or threatened against the Corporation
before or by any federal, provincial, municipal or other
governmental department, commission, board or agency, domestic
or foreign, which is reasonably expected to result in any
material change in the business or in the condition (financial
or otherwise) of the Corporation or its properties or assets
(taken as a whole), or which questions the validity of any
action taken or to be taken by the Corporation pursuant to or
in connection with this Agreement or as contemplated by the
Final Prospectuses;
(f) since July 31, 2003, there have been no changes in the assets
or liabilities of the Corporation from the position thereof as
set forth therein, except changes arising from transactions in
the ordinary course of business which, in the aggregate, have
not been material to the Corporation and except for changes
that are disclosed in the Final Prospectuses;
(g) the financial statements of the Corporation, including the
notes thereto, incorporated in Final Prospectuses and the
Registration Statement have been prepared in conformity with
Canadian generally accepted accounting principles and have
been reconciled to U.S. generally accepted accounting
principles in accordance with the 1933 Act and the Rules,
including the requirements of Form F-10, in each case applied
on a consistent basis throughout the periods involved;
(h) the financial statements of the Corporation as incorporated by
reference in the Final Prospectuses present fairly in all
material respects the financial position of the Corporation as
at the dates of such statements;
-15-
(i) the Corporation is not in material violation of, and the
execution and delivery of this Agreement and the performance
by the Corporation of its obligations under this Agreement
will not result in any material breach or, violation of, or be
in material conflict with, or constitute a material default
under, or create a state of facts which after notice or lapse
of time, or both, would constitute a material default under
any term or provision of the charter documents or by-laws of
the Corporation or any resolution of the directors or
shareholders of the Corporation or any material contract,
mortgage, note, indenture, joint venture or partnership
arrangement, agreement (written or oral), instrument, lease,
judgment, decree, order, statute, rule, licence or regulation
applicable to the Corporation;
(j) no approval, authorization, consent or other order of, and no
filing, registration or recording with, any governmental
authority is required of the Corporation in connection with
the execution and delivery or with the performance by the
Corporation of this Agreement except as disclosed in the Final
Prospectuses and compliance with the Applicable Securities
Laws with regard to the distribution of the Underwritten
Shares in the Qualifying Provinces and the United States;
(k) this Agreement has been duly authorized, executed and
delivered by the Corporation and constitutes a valid and
binding obligation of the Corporation, enforceable in
accordance with its terms, except as enforcement hereof may be
limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and except as limited by the application of equitable
principles when equitable remedies are sought and subject to
the fact that rights of indemnity and contribution may be
limited by applicable law and enforceability of paragraph 12
would be determined only in the discretion of a court;
(l) to the knowledge of the Corporation, no securities commission,
stock exchange or comparable authority has issued any order
preventing or suspending the use or effectiveness of the
Preliminary Prospectuses, the Final Prospectuses, the
Registration Statement or any Prospectus Amendment or
preventing the distribution of the Underwritten Shares in any
Qualifying Province or the United States nor instituted
proceedings for that purpose and, to the knowledge of the
Corporation, no such proceedings are pending or contemplated;
(m) the Corporation is eligible in accordance with the provisions
of National Instrument 44-101 to file a short form prospectus
with Canadian Securities Regulators;
(n) the Corporation is not, and upon consummation of the
transactions contemplated hereby will not be, an "investment
company" or an entity
-16-
"controlled by an investment company" as such terms are
defined in the UNITED STATES INVESTMENT COMPANY ACT OF 1940,
as amended;
(o) CIBC Mellon Trust Company, at its principal office in the
Cities of Calgary, Montreal, Toronto and Vancouver has been
duly appointed as registrar and transfer agent for the Class A
Shares in Canada, and Mellon Investor Services LLC, at its
principal office in New York, has been duly appointed as
registrar and transfer agent for the Class A Shares in the
United States;
(p) to the knowledge of the Corporation, the Corporation is not a
"related issuer" or "connected issuer" (as such terms are
defined under the Canadian Securities Laws) of the
Underwriter;
(q) the Corporation has prepared and filed with the SEC an
appointment of agent for service of process upon the
Corporation on Form F-X;
(r) the Corporation meets the general eligibility requirements for
use of Form F-10 under the 1933 Act;
(s) as at their respective dates, the Canadian Preliminary
Prospectus does, and the Canadian Final Prospectus will,
comply in all material respects with the Canadian Securities
Laws and, at the time of delivery of the Underwritten Shares
to the Underwriter, the Canadian Final Prospectus will comply
in all material respects with the Canadian Securities Laws;
(t) (i) the U.S. Preliminary Prospectus conforms and the U.S.
Final Prospectus will conform to the Canadian Preliminary
Prospectus and Canadian Final Prospectus, respectively, except
for such deletions therefrom and additions thereto as are
permitted or required by Form F-10 and the applicable rules
and regulations of the SEC under the 1933 Act (the "Rules");
(ii) the Registration Statement as amended or supplemented,
does not and, on the Effective Date, will not contain any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading; (iii) the U.S.
Preliminary Prospectus and the Corporation's Form F-X comply,
and the U.S. Final Prospectus and the Registration Statement,
as amended or supplemented, will comply, in all material
respects with the 1933 Act and the Rules; (iv) the U.S.
Preliminary Prospectus does not, and the U.S. Final Prospectus
will not, contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; and (v) the Canadian Preliminary
Prospectus contains, and the Canadian Final Prospectus will
contain, full, true and plain disclosure of all material facts
required to be stated therein relating to the Corporation, the
operations of the Corporation, and the Underwritten Shares,
and as of the date of its
-17-
filing will contain no untrue statement of a material fact and
will not omit to state a material fact regarding the
Corporation and its business and affairs that is necessary to
make any statement therein not misleading in light of the
circumstances in which it was made; provided, however, that
this representation and warranty shall not apply to statements
or omissions made in reliance upon and in conformity with
information relating to the Underwriter furnished in writing
to the Corporation by the Underwriter expressly for use in the
Preliminary Prospectuses, the Final Prospectuses or the
Registration Statement;
(u) there are no reports or information that in accordance with
the requirements of the Canadian Securities Regulators or the
SEC must be made publicly available or filed in connection
with the offering of the Underwritten Shares that have not
been made publicly available or filed as required;
(v) the delivery by the Corporation of any signed Prospectus
Amendment or material change report required to be filed under
the Applicable Securities Laws will constitute a
representation and warranty by the Corporation to the
Underwriter that all the information and statements contained
therein (except information and statements relating to the
Underwriter) are true and correct and that no material
information has been omitted therefrom which is necessary to
make the statements contained therein not misleading;
(w) the Corporation is in material compliance with each material
license held by it and is not in violation of, or in default
in any material respect under, the applicable statutes,
ordinances, rules, regulations, orders or decrees (including,
without limitation, "Environmental Laws" as defined below) of
any governmental entities, regulatory agencies or bodies
asserting or claiming jurisdiction over it or over any part of
its operations or assets, except for such violations and
defaults which, singly or in the aggregate, would not have a
material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or
otherwise) of the Corporation;
(x) to the best of the knowledge of the Corporation, there are no
foreign, federal, provincial, state or local laws or
regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws")
which affect or otherwise have any application to the
Corporation or its business, properties and assets (taken as a
whole), or to which the Corporation is otherwise subject. The
Corporation does not require any license or other approval
under any Environmental Laws to conduct its business;
-18-
(y) there has not been any reportable disagreement (within
National Policy Instrument No. 31 of the Canadian Securities
Administrators) with the auditors of the Corporation;
(z) the Company shall use its best efforts to arrange for the
listing and posting for trading of the Underwritten Shares on
the Stock Exchanges on or before the Time of Closing; and
(aa) the Corporation is using the net proceeds of the Offering for
the purposes described in the Preliminary Prospectuses.
8. CONDITIONS
The Underwriter's obligation to purchase the Underwritten Shares at
the Closing Time is subject to the accuracy of the representations and
warranties of the Corporation contained in this Agreement, both as of the date
of this Agreement and as of the Closing Time, the performance by the
Corporation of its obligations under this Agreement and the following
additional conditions:
(a) the Underwriter shall have received at the Closing Time an
opinion addressed to the Underwriter and Xxxxxxx Xxxxx &
Xxxxxxxxx LLP, in form and substance satisfactory to the
Underwriter and its counsel, acting reasonably, dated the
Closing Date from counsel to the Corporation, Fraser Xxxxxx
Casgrain LLP, with respect to such matters related to the
transactions contemplated hereby reasonably requested by the
Underwriter, including, without limitation, a "10b-5" opinion.
In providing such opinion, counsel to the Corporation may rely
upon the opinions of local counsel where they deem such
reliance proper as to the laws other than those of Canada,
Ontario and British Columbia and as to matters of fact, on
certificates of the Corporation's registrar and transfer
agent, auditors, public and stock exchange officials and
officers of the Corporation;
(b) the Underwriter shall have received at the Closing Time an
opinion of the Corporation's U.S. counsel, Xxxxxx & Xxxxxxx
LLP, in form and substance satisfactory to the Underwriter,
acting reasonably, with respect to such matters related to the
transactions contemplated hereby reasonably requested by the
Underwriter, including, without limitation, a "10b-5" opinion;
(c) the Underwriter shall have received at the Closing Time a
legal opinion dated the Closing Date from the Underwriter's
counsel, Xxxxxxx Xxxxx & Xxxxxxxxx LLP, with respect to
matters related to the transactions contemplated hereby
reasonably requested by the Underwriter. In providing such
opinion Xxxxxxx Xxxxx & Xxxxxxxxx LLP shall be entitled to
rely on the opinions of local counsel as to matters governed
by the laws of
-19-
jurisdictions other than the laws of Canada and Ontario
respectively, and as to matters of fact, on certificates of
the Corporation's registrar and transfer agents, public and
stock exchange officials and officers of the Corporation.
Xxxxxxx Xxxxx & Xxxxxxxxx LLP shall also be entitled to rely
upon the opinion of Fraser Xxxxxx Casgrain LLP with respect to
the matters relating to the Corporation;
(d) the Underwriter shall have received at the Closing Time a
letter dated the Closing Date from Ernst & Young LLP addressed
to the Underwriter and to the board of directors of the
Corporation in form and substance satisfactory to the
Underwriter, acting reasonably, confirming the continued
accuracy of the comfort letter to be delivered to the
Underwriter pursuant to subparagraph 3(a)(iii) with such
changes as may be necessary to bring the information in such
letter forward to within two Business Days of the Closing
Date, which changes shall be acceptable to the Underwriter;
(e) the Underwriter shall have received at the Closing Time a
certificate dated the Closing Date signed by an appropriate
officer of the Corporation addressed to the Underwriter and
its counsel, with respect to the articles and by-laws of the
Corporation, all resolutions of the board of directors of the
Corporation relating to this Agreement, the Final Prospectuses
and the Registration Statement, the incumbency and specimen
signatures of signing officers and with respect to such other
matters as the Underwriter may reasonably request;
(f) the Underwriter shall have received at the Closing Time a
certificate dated the Closing Date signed on behalf of the
Corporation by the President and Chief Executive Officer of
the Corporation or such other officers of the Corporation
acceptable to the Underwriter, acting reasonably, addressed to
the Underwriter certifying for and on behalf of the
Corporation after having made due enquiry and after having
carefully examined the Final Prospectuses and the Registration
Statement, including all Documents Incorporated by Reference,
that:
(i) since the respective dates as of which information is
given in the Final Prospectuses and the Registration
Statement as amended by any Prospectus Amendments (A)
there has been no material change (actual,
anticipated, contemplated or threatened, whether
financial or otherwise) in the business, affairs,
operations, assets or liabilities (contingent or
otherwise) or capital of the Corporation, and (B) no
transaction has been entered into by the Corporation
which is material to the Corporation, other than as
disclosed in the Final Prospectuses and the
Registration Statement, or any Prospectus Amendments,
as the case may be;
-20-
(ii) no order, ruling or determination having the effect
of suspending the sale or ceasing the trading of the
Class A Shares or any other securities of the
Corporation has been issued by any regulatory
authority and is continuing in effect and no
proceedings for that purpose have been instituted or
are pending or, to the knowledge of such officers,
contemplated or threatened under any of the
Applicable Securities Laws or by any other regulatory
authority;
(iii) the Corporation has duly complied with all the terms
and conditions of this Agreement on its part to be
complied with up to the Closing Time; and
(iv) the representations and warranties of the Corporation
contained in this Agreement are true and correct as
of the Closing Time with the same force and effect as
if made at and as of the Closing Time;
(g) there are no reports or information that in accordance with
the requirements of the Canadian Securities Regulators must be
made publicly available in connection with the sale of the
Underwritten Shares that have not been made publicly available
as required; there are no documents required to be filed with
the SEC as an exhibit to the Registration Statement or with
the Canadian Securities Regulators in connection with the
Canadian Final Prospectus that have not been filed as required
and delivered to the Underwriter; there are no contracts,
documents or other materials required to be described or
referred to in the Final Prospectuses or the Registration
Statement that are not described, or referred to as required
and delivered to the Underwriter;
(h) the Underwriter shall have received at the Closing Time a
certificate from the Canadian Transfer Agent dated the Closing
Date and signed by an authorized officer of such transfer
agent, confirming the issued capital of the Corporation;
(i) the NASD has confirmed that it has not raised any objection
with respect to the fairness and reasonableness of the
underwriting terms and arrangements;
(j) the Underwriter shall have received copies of all required
approvals from the Stock Exchanges to permit the completion of
the transactions contemplated herein and the conditional
listing and posting for trading of the Underwritten Shares on
the Stock Exchanges; and
(k) the Underwriter and counsel for the Underwriter shall have
received from the Corporation such further certificates,
documents and other information as they may have reasonably
requested; provided, however, that the
-21-
Underwriter or their counsel shall request any such
certificate, document or other information within a reasonable
period prior to the Closing Time.
9. TERMINATION RIGHTS
(a) LITIGATION
If any inquiry, action, suit, investigation or other proceeding,
whether formal or informal is instituted, threatened or announced or any order
is made by any federal, provincial or other governmental authority in relation
to the Corporation, including without limitation, any Stock Exchange, Canadian
Securities Regulator or the SEC, which, in the reasonable opinion of the
Underwriter, operates to prevent or restrict the distribution or trading of the
Underwritten Shares or any other securities of the Corporation, the Underwriter
shall be entitled, at its sole option, in accordance with subparagraph 9(e), to
terminate its obligations under this Agreement by notice to that effect given to
the Corporation at any time prior to the Closing Time.
(b) DISASTER OUT
The Underwriter shall be entitled, at its sole option, in accordance
with subparagraph 9(e), to terminate this Agreement, by notice to the
Corporation, at any time at or prior to Closing Time (i) if there should
develop, occur or come into effect or existence any event, action, state,
condition or major financial occurrence of national or international
consequence, or any law or regulation, which in the opinion of the Underwriter
seriously adversely affects, or involves, or will seriously adversely affect, or
involve, the financial markets or the business, operations or affairs of the
Corporation, in each case the effect of which is such as to make it, in the
judgement of the Underwriter's opinion, impracticable to market the Underwritten
Shares or to enforce contracts for the sale of the Underwritten Shares, or (ii)
trading in any securities of the Corporation has been suspended or materially
limited by the SEC, any Canadian Securities Regulator or either of the Stock
Exchanges or if trading generally on either of the Stock Exchanges has been
suspended or materially limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of any Canadian Securities Regulator,
the SEC, the NASD or any other governmental authority, or (iii) if a banking
moratorium has been declared by Canadian, U.S. Federal or New York authorities.
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(c) MATERIAL CHANGE
If, prior to the Closing Time, there occurs any material change or a
change in any material fact or there arises or is discovered any disclosed
material fact, such as is contemplated in subparagraph 4(a), which results in or
in the Underwriter's reasonable opinion, is reasonably expected to have a
significant adverse effect on the market price or value of the Underwritten
Shares, the Underwriter shall be entitled, at its sole option, in accordance
with subparagraph 9(e), to terminate its obligations under this Agreement by
written notice to that effect given to the Corporation at any time prior to the
Closing Time.
(d) CONDITIONS
The Corporation agrees that that all terms and conditions of Section 8
shall be construed as conditions and complied with so far as they relate to acts
to be performed or caused to be performed by it, that it will use all reasonable
commercial efforts to cause such conditions to be complied with, and that any
breach or failure by the Corporation to comply with any such conditions shall
entitle the Underwriter to terminate its obligations to purchase the
Underwritten Shares by notice to that effect given to the Corporation at or
prior to the Closing Time, unless otherwise expressly provided in this
Agreement. The Underwriter may waive, in whole or in part, or extend the time
for compliance with, any terms and conditions without prejudice to its rights in
respect of any other of such terms and conditions or any other or subsequent
breach or non-compliance, provided that any such waiver or extension shall be
binding upon the Underwriter only if such waiver or extension is in writing and
signed by the Underwriter.
(e) EXERCISE OF TERMINATION RIGHTS
The rights of termination contained in subparagraphs 9(a), (b), (c)
and (d) are in addition to any other rights or remedies the Underwriter may have
in respect of any default, act or failure to act or non-compliance by the
Corporation in respect of any of the matters contemplated by this Agreement or
otherwise. In the event that the Underwriter exercises such rights of
termination, there shall be no further liability on the part of the Underwriter
to the Corporation or on the part of the Corporation to the Underwriter except
in respect of any liability that may have arisen or may later arise under
paragraphs 10, 11 and 13.
10. INDEMNITY
The Corporation will indemnify and save harmless the Underwriter and
its affiliates (which shall include, without limitation, the U.S. Dealer) and
each of their respective directors, officers, employees and agents from and
against all liabilities, claims, losses (other than loss of profits), reasonable
costs, damages and reasonable expenses (including, without limitation any legal
fees or other expenses reasonably incurred by the Underwriter in connection with
defending or investigating any such
-23-
action or claim) (a "CLAIM") in any way caused by, or arising directly or
indirectly from, or in consequence of:
(i) any information or statement (except any statement
relating solely to the Underwriter and provided by
the Underwriter for use therein) contained in this
Agreement, the Preliminary Prospectuses, the Final
Prospectuses or the Registration Statement, including
the Documents Incorporated by Reference, or any
Prospectus Amendments thereto or supplements which,
at the time and in the light of the circumstances
under which it was made, contains or is alleged to
contain a misrepresentation;
(ii) any omission or alleged omission to state in the
Preliminary Prospectuses, the Final Prospectuses or
the Registration Statement, including the Documents
Incorporated by Reference, or any Prospectus
Amendments or supplements thereto, any fact (except
facts relating solely to the Underwriter and provided
by the Underwriter expressly for use therein),
whether material or not, regarding the Corporation
and its business and affairs that is necessary to
make any statement therein not misleading (in the
case of the Preliminary Prospectuses and Final
Prospectuses) in light of the circumstances in which
it was made;
(iii) any order made or enquiry, investigation or
proceedings commenced or threatened by any securities
commission or other competent authority based upon
any untrue statement or omission or alleged untrue
statement or alleged omission or any
misrepresentation or alleged misrepresentation
(except a statement or omission or alleged statement
or omission regarding facts relating solely to the
Underwriter and provided by the Underwriter expressly
for use therein) in the Preliminary Prospectuses, the
Final Prospectuses or the Registration Statement,
including the Documents Incorporated by Reference, or
any Prospectus Amendments or supplements thereto or
based upon any failure to comply with the Applicable
Securities Laws (other than any failure or alleged
failure to comply by the Underwriter), preventing or
restricting the trading in or the sale or
distribution of the Underwritten Shares in any of the
Qualifying Provinces or the United States;
(iv) the non-compliance or alleged noncompliance by the
Corporation with any of the Applicable Securities
Laws, including, in the case of the Corporation, the
Corporation's non-compliance with any statutory
requirement to make any document available for
inspection; or
-24-
(v) any breach by the Corporation of its representations,
warranties, covenants or obligations to be complied
with under this Agreement.
In no event shall this indemnity enure to the benefit of the
Underwriter, if (i) a court of competent jurisdiction in a final judgment
determines that the Claim in respect of which indemnification is sought is a
result of or arises out of the recklessness or willful misconduct of the
Underwriter; or (ii) a copy of the Final Prospectuses (as then amended or
supplemented, if the Corporation shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of the Underwriter to
a person asserting any such losses, claims, damages or liabilities, if required
by law so to have been delivered by the Underwriter to such person, at or prior
to the written confirmation of the sale of the Underwritten Shares to such
person, and if the Final Prospectuses (as so amended or supplemented) delivered
to the Underwriter a reasonable amount of time in advance of such confirmation
would have cured the defect giving rise to such losses, claims, damages or
liabilities.
(b) NOTIFICATION OF CLAIMS
If any Claim is asserted against any person or company in respect of
which indemnification is or might reasonably be considered to be provided, such
person or company (the "Indemnified Party") will notify the Corporation as soon
as possible of the nature of such Claim (but the omission so to notify the
Corporation of any potential Claim shall not relieve the Corporation from any
liability which it may have to any Indemnified Party and any omission so to
notify the Corporation of any actual Claim shall affect the Corporation's
liability only to the extent that it is materially prejudiced by that failure).
Subject to subparagraph 10(d), the Corporation shall be entitled to participate
in and, to the extent that it shall wish, to assume the defense of any suit
brought to enforce such Claim; provided, however, that the defense shall be
conducted through legal counsel acceptable to the Indemnified Party, acting
reasonably, that no settlement of any such Claim or admission of liability may
be made by the Corporation or the Indemnified Party without the prior written
consent of the other parties, acting reasonably, and the Corporation shall not
be liable for any settlement of any such Claim unless it has consented in
writing to such settlement. The Corporation shall not settle any Claim, or
compromise a consent to any judgment unless such settlement, compromise or
judgment (i) includes an unconditional release of the Indemnified Party from
all liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by
or on behalf of any Indemnified Party.
(c) RIGHT OF INDEMNITY IN FAVOUR OF OTHERS
With respect to any Indemnified Party who is not a party to this
Agreement, the Indemnified Parties who are party to this Agreement shall obtain
and hold the rights and benefits of this paragraph in trust for and on behalf of
such Indemnified Party.
-25-
(d) RETAINING COUNSEL
In any Claim, the Indemnified Party shall have the right to retain
other counsel to act on its behalf, provided that the reasonable fees and
disbursements of such counsel shall be paid by the Indemnified Party unless (i)
the Corporation fails to assume the defense of such suit on behalf of the
Indemnified Party within 10 days of receiving written notice of such suit; (ii)
the Corporation and the Indemnified Party shall have mutually agreed to the
retention of the other counsel; or (iii) the named parties to any such Claim
(including any added third or impleaded party) include the Indemnified Party and
the Corporation and the Indemnified Party shall have been advised by counsel
that the representation of all parties by the same counsel would be
inappropriate due to the actual or potential differing interests between them.
In no event shall the Corporation be liable to pay the fees and disbursements of
more than one firm of separate counsel for all Indemnified Parties and, in
addition, one firm of local counsel in each applicable jurisdiction.
11. CONTRIBUTION
(a) CONTRIBUTION BY THE CORPORATION
In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph 10 is
unavailable, in whole or in part, for any reason to an Indemnified Party in
respect of any Claim, the Corporation (the "Indemnifier") and the Underwriter
shall contribute to the amount paid or payable (or, if such indemnity is
unavailable only in respect of a portion of the amount so paid or payable, such
portion of the amount so paid or payable) by the Corporation as a result of such
Claim in such proportion as is appropriate to reflect the relative benefits
received by the Corporation on the one hand and the Underwriter on the other
hand from the offering of the Underwritten Shares; or if this allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative fault of the
Corporation on the one hand and the Underwriter on the other hand in connection
with the information, statement, omission, misrepresentation, order, inquiry,
investigation or other matter or thing referred to in paragraph 10 which
resulted in such Claim, as well as any other relevant equitable considerations.
The relative benefits received by the Corporation on the one hand and
the Underwriter on the other hand shall be deemed to be in the same proportion
as the total proceeds (net of the fee payable to the Underwriter but before
deducting expenses (to the extent that such expenses are payable by the
Corporation pursuant to paragraph 13)) received by the Corporation from the
issue and sale of the Underwritten Shares bears to the fee received by the
Underwriter, in each case, as set out in the table on the face page of the Final
Prospectuses. The relative fault of the Corporation on the one hand and of the
Underwriter on the other shall be determined by reference to, among other
things, whether the information, statement, omission, misrepresentation, order,
inquiry, investigation or other matter or thing referred to in paragraph 10
which resulted
-26-
in such Claim relates to information supplied by or steps or actions taken or
done by or on behalf of the Corporation or to information supplied by or steps
or actions taken or done by or on behalf of the Underwriter and the relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement, omission, misrepresentation, order, inquiry, investigation or
other matter or thing referred to in paragraph 10. The amount paid or payable by
an Indemnified Party as a result of the Claim referred to above shall include
any legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such Claim, whether or not
resulting in any such action, suit, proceeding or claim. The Corporation and the
Underwriter agree that it would not be just and equitable if contribution
pursuant to this paragraph 11 were determined by any method of allocation which
does not take into account the equitable considerations referred to immediately
above.
A person who is engaged in any fraud, fraudulent misrepresentation,
recklessness or gross negligence shall not, to the extent that a court of
competent jurisdiction in a final judgment determines that the Claim was caused
by that activity, be entitled to claim contributions therefor from any person
who is not engaged in that fraud, fraudulent misrepresentation, recklessness or
gross negligence.
(b) RIGHT OF CONTRIBUTION IN ADDITION TO OTHER RIGHTS
The rights to contribution provided in this paragraph 11 shall be in
addition to and not in derogation of any other right to contribution which the
Underwriter may have by statute or otherwise at law.
(c) CALCULATION OF CONTRIBUTION
In the event that a court of competent jurisdiction in a final judgment
determines that an Indemnifier is entitled to contribution from the Underwriter
under the provisions of any statute or at law, the Indemnifier shall be limited
to contribution in an amount not exceeding the lesser of:
(i) the portion of the full amount of the loss or
liability giving rise to such contribution for which
the Underwriter is responsible, as determined in
subparagraph 11(a), and
(ii) the amount of the fee actually received by the
Underwriter from the Corporation under this
Agreement.
(d) NOTICE OF CLAIM FOR CONTRIBUTION
Notification to the Corporation of a Claim pursuant to subparagraph
10(b) shall be deemed to also constitute notice to the Corporation that a claim
for contribution by the Underwriter may arise and omission to so notify shall
have similar effect.
-27-
(e) RIGHT OF CONTRIBUTION IN FAVOUR OF OTHERS
The Corporation hereby acknowledges and agrees that, with respect to
paragraphs 10 and 11 hereof, the Underwriter is contracting on its behalf and as
agent for its affiliates and for its and its affiliates' directors, officers,
employees and agents (collectively, the "Beneficiaries"). In this regard the
Underwriter shall act as trustee for the Beneficiaries of the Corporation's
covenants under paragraphs 10 and 11 hereof with respect to the Beneficiaries
and accept these trusts and shall hold and enforce the covenants on behalf of
the Beneficiaries.
12. SEVERABILITY
If any provision of paragraph 10 or 11 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.
13. EXPENSES
Whether or not the transactions contemplated by this Agreement shall
be completed, all expenses incurred by the Corporation and the Underwriter of,
or incidental to, the issue, sale and delivery of the Underwritten Shares and
all expenses of or incidental to all other matters in connection with the
transaction set out in this Agreement shall be borne by the Corporation
including, without limitation, fees and expenses payable in connection with the
qualification of the Underwritten Shares, the reasonable fees of counsel to the
Underwriter plus disbursements and Goods and Services Tax, the filing fees
incident to, and the reasonable fees and disbursements of counsel to the
Underwriter in connection with, the review by the NASD of the terms of the sale
of the Underwritten Shares, all fees and disbursements of counsel to the
Corporation, local counsel and U.S. counsel, all fees and expenses of the
Corporation's auditors, fees and expenses relating to the marketing of the
Underwritten Shares (including, without limitation, "road shows"; marketing
meetings, marketing documentation and institutional investor meetings) and all
reasonable out-of-pocket expenses of the Underwriter (including the
Underwriter's travel expenses in connection with due diligence, marketing
meetings and "road shows") and all costs incurred in connection with the
preparation and printing of the Preliminary Prospectuses, Final Prospectuses,
Registration Statement, Prospectus Amendments and certificates representing the
Underwritten Shares. All amounts to be paid under this paragraph 13 shall be
paid forthwith upon receiving an invoice therefor.
14. RESTRICTIONS ON SALES
Unless this Agreement is terminated in accordance with its terms or
the Closing does not occur on the Closing Date, the Corporation shall not for a
period of 90 days after the Closing Date, (i) offer, pledge, sell, contract to
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to
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purchase or otherwise transfer or dispose of, directly or indirectly, Class A
Shares or Common Shares of the Corporation or any securities convertible into or
exercisable or exchangeable for Class A Shares or Common Shares, or (ii) enter
into any swap or other arrangement that transfers, in whole or in part, any of
the economic consequences of ownership of the Class A Shares or Common Shares or
such other securities, whether any such transaction described in clause (i) or
(ii) of this paragraph is to be settled by delivery of Class A Shares or Common
Shares or such other securities, in cash or otherwise, other than the
Underwritten Shares offered pursuant to the transactions contemplated by this
Agreement, without the prior consent of the Underwriter, acting reasonably. The
foregoing restrictions shall not apply with respect to issuances of securities
by the Corporation in connection with (i) the exercise of currently outstanding
employee and director compensation securities or similar liabilities; or (ii)
the satisfaction of outstanding instruments or contractual commitments that have
been publicly disclosed. For greater certainty, nothing contained in this
paragraph 14 shall be construed to in any way limit the ability of the
Corporation from issuing, transferring or otherwise dealing with any securities
of the Corporation if this Agreement is terminated in accordance with its terms
or the Closing does not occur on the Closing Date.
15. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The respective representations, warranties, obligations and agreements
of the Corporation and the Underwriter contained in this Agreement and in any
certificate delivered pursuant to this Agreement or in connection with the
purchase and sale of the Underwritten Shares shall survive the purchase of the
Underwritten Shares and shall continue in full force and effect unaffected by
any subsequent disposition of the Underwritten Shares by the Underwriter or the
termination of the Underwriter's obligations and shall not be limited or
prejudiced by any investigation made by or on behalf of the Underwriter or the
Corporation, or any officer, director or controlling person of the Corporation
in connection with the preparation of the Preliminary Prospectuses, Final
Prospectuses or Registration Statement or the distribution of the Underwritten
Shares for a period of two years from the date hereof.
16. TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
17. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable in
Ontario.
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18. SUCCESSORS
This Agreement shall enure to the benefit of, and be binding on, the
parties to this Agreement and any of their respective successors.
19. NOTICE
Unless otherwise expressly provided in this Agreement, any notice,
statement, request or other communication to be given under this Agreement (a
"notice") shall be in writing addressed to:
(i) the Corporation at:
Central Fund of Canada Limited
00 Xxxxx Xxxx Xxxxxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Mr. X. X. Xxxxxx Xxxxxx
Fax: (000) 000-0000
with a copy to:
Fraser Xxxxxx Casgrain LLP
Suite 3900
1 First Canadian Place
000 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxx X. Xxxxx, Q.C.
Fax: (000) 000-0000
(ii) the Underwriter at:
CIBC World Markets Inc.
BCE Place, X.X. Xxx 000
000 Xxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx,
X0X 0X0
Attention: Xx. Xxxxx X. Xxxxx
Fax: (000) 000-0000
and
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Attention: Xx. Xxxxxx X. Xxxxxxxxxx,
Vice President, Associate General
Counsel & Group Head,
CIBC World Markets
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx & Xxxxxxxxx LLP
Scotia Plaza, Suite 2100
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
or to such other address as any of the parties may designate by notice given to
the others.
Each notice shall be personally delivered to the addressee or sent by
facsimile transmission to the addressee and (i) a notice which is personally
delivered shall, if delivered on a Business Day, be deemed to be given and
received on that day and, in any other case, be deemed to be given and received
on the first Business Day following the day on which it is delivered; and (ii) a
notice which is sent by facsimile transmission shall be deemed to be given and
received on the first Business Day following the day on which it is sent.
20. COUNTERPARTS AND BY FACSIMILE
This Agreement may be executed by any one or more of the parties to
this Agreement in any number of counterparts, and may be delivered by facsimile,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.
21. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
with respect to the subject matter of this Agreement and supersedes any and all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties and, except as incorporated by reference above, there
are no warranties, representations or other agreements between the parties in
connection with the subject matter of this Agreement unless signed by each party
and purporting to be an amendment to this Agreement.
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If the foregoing is in accordance with your understanding and is
agreed to by you, please signify your acceptance by executing the enclosed
copies of this letter where indicated below and returning them to CIBC World
Markets Inc., facsimile number: 000-000-0000, upon which this letter as so
accepted shall constitute an Agreement among us.
Yours very truly,
CIBC WORLD MARKETS INC.
By: "XXXXX X. XXXXX"
The foregoing is accepted and agreed to as of the date first above written.
CENTRAL FUND OF CANADA LIMITED
By: "X.X. XXXXXX XXXXXX"
