EXHIBIT 3.1
UNDERWRITING AGREEMENT
October 22, 2004
Central Fund of Canada Limited
Hallmark Estates, Suite 000
0000-00xx Xxxxxx X.X.
Xxxxxxx, 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 13,000,000 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. $5.66 per share (Cdn. $7.05 per share) being an
aggregate purchase price of U.S. $73,580,000 (Cdn. $91,650,000) (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: 1.2449.
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 2,000,000 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 prior to 1:00 p.m. (Toronto time) on October 22, 2004,
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. $0.2264 per Underwritten Share (Cdn. $0.282 per
Underwritten Share) for an aggregate of U.S. $2,943,200 (Cdn. $3,666,000) (the
"Underwriting Fee"). Such fee
-2-
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;
-3-
"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(a);
"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 November 3, 2004, 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 March 1, 2004;
(b) the Management Information Circular of the Corporation dated January
9, 2004 in connection with the Corporation's annual meeting of
shareholders on February 23, 2004;
(c) the audited financial statements of the Corporation as at October 31,
2003 and 2002 and for each of the years in the three year period ended
October 31, 2003 together with the auditors' report thereon and
consisting of the statements of net assets as at October 31, 2003 and
2002 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, 2003;
(d) management's discussion and analysis of financial condition and
results of operations for the year ended October 31, 2003
(incorporated by reference from the annual report of the Corporation
for the year ended October 31, 2003);
-4-
(e) the unaudited interim financial statements of the Corporation for the
three and nine month periods ended July 31, 2004, 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 nine month period ended July 31, 2004;
(g) the material change report of the Company dated December 29, 2003,
disclosing the Company's public offering of 15,050,000 Class A Shares;
(h) the material change report of the Company dated April 14, 2004,
disclosing the Company's public offering of 19,500,000 Class A Shares;
(i) supplementary information, dated October 6, 2004, relating to
reconciliation with United States generally accepted accounting
principals in respect of the unaudited interim financial statements of
the Company for the three and nine month periods ended July 31, 2004
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.;
-5-
"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;
-6-
"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;
-7-
(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 October
29, 2004;
(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:
-8-
(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 November 1, 2004.
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
-9-
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.
$5.66 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
-10-
(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.
-11-
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
-12-
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 November 30, 2004.
(d) NOTIFICATION
During the period commencing on the date hereof until the Underwriter
notifies the Corporation of the completion of the distribution of the
Underwritten Shares, the Corporation will promptly inform the Underwriter of the
full particulars of:
(i) any request of any Canadian Securities Regulator or the SEC for
any amendment to the Preliminary Prospectus, the Final
Prospectus, the Registration Statement or any Supplementary
Material or for any additional information in respect of the
offering of the Underwritten Shares;
(ii) the receipt by the Corporation of any material communication,
whether written or oral, from any Canadian Securities Regulator,
the SEC, either Stock Exchange or any other competent authority,
relating to the Final Prospectus, the Registration Statement or
the distribution of the Underwritten Shares;
(iii) any notice or other correspondence received by the Corporation
from any governmental body requesting any information, meeting or
hearing relating to the Corporation, the offering, the issue and
sale of the Underwritten Shares or any other event or state of
affairs, that the Corporation reasonably believes would have a
material adverse effect on the business, assets, financial
condition, liabilities or operations of the Corporation; or
(iv) the issuance by any Canadian Securities Regulator, the SEC,
either Stock Exchange or any other competent authority, including
any other governmental or regulatory body, of any order to cease
or suspend trading or distribution of any securities of the
Corporation or of the institution, threat of institution of any
proceedings for that purpose or any notice of investigation that
could potentially result in an order to cease or suspend trading
or distribution of any securities of the Corporation.
-13-
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.
(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
-14-
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
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 79,296,320 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,
-15-
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, 2004, 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;
(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
-16-
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
"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;
-17-
(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 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
-18-
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;
(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 of the
Underwritten Shares for the purposes described in the Preliminary
Prospectuses.
-19-
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 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
-20-
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;
(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
-21-
(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 Underwriter or their counsel shall request any such
certificate, document or other information within a reasonable period
prior to the Closing Time.
-22-
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.
(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.
-23-
(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
(a) 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 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
-24-
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
(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
-25-
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.
-26-
(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
-27-
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.
-28-
(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
-29-
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.
-30-
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
-31-
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.
-32-
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"
-------------------------------------
Authorized Signatory
The foregoing is accepted and agreed to as of the date first above written.
CENTRAL FUND OF CANADA LIMITED
By: "X.X. Xxxxxx Xxxxxx"
-------------------------------------
Authorized Signatory
