Exhibit 1.1
WORLD ENERGY SOLUTIONS, INC.
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SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
__________, 2006
__________, 2006
To: Sprott Securities Inc.
Sprott Securities (USA) Limited
Canaccord Capital Corporation
CIBC World Markets, Inc.
c/o Sprott Securities Inc.
Xxxxx Xxxx Xxxxx
Xxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
Dear Sirs and Mesdames:
World Energy Solutions, Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several Underwriters named in Schedule A
hereto (the "UNDERWRITERS"), and certain shareholders of the Company (the
"SELLING SHAREHOLDERS") named in Schedule B hereto severally propose to sell to
the several Underwriters, an aggregate of __________ shares of common stock of
the Company (the "FIRM SHARES"), of which __________ shares are to be issued and
sold by the Company and __________ shares are to be sold by the Selling
Shareholders, each Selling Shareholder selling the amount set forth opposite
such Selling Shareholder's name in Schedule B hereto.
The Company also proposes to issue and sell to the several Underwriters not
more than an additional __________ shares of common stock (the "ADDITIONAL
SHARES") if and to the extent that you, as manager of the offering, shall have
determined to exercise, on behalf of the Underwriters, the right to purchase
such shares of common stock granted to the Underwriters in Section 3 hereof. The
Firm Shares and the Additional Shares are hereinafter collectively referred to
as the "SHARES." The shares of common stock to be outstanding after giving
effect to the sales contemplated hereby are hereinafter referred to as the
"COMMON STOCK." The Company and the Selling Shareholders are hereinafter
sometimes collectively referred to as the "SELLERS."
The Company has filed with the United States Securities and Exchange
Commission (the "COMMISSION") a registration statement on Form S-1, including a
prospectus, relating to the Shares. The registration statement as amended at the
time it becomes effective, including the information (if any) deemed to be part
of the registration statement at the time of effectiveness pursuant to Rule 430A
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), is
hereinafter referred to as the "REGISTRATION STATEMENT"; the prospectus in the
form first used to confirm sales of Shares is hereinafter referred to as the
"PROSPECTUS" (and
shall, with respect to sales of Shares in Canada, also include the Canadian
Supplemented Prospectus (as defined in Section 7(h) hereof)). If the Company has
filed an abbreviated registration statement to register additional Common Stock
pursuant to Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION
STATEMENT"), then any reference herein to the term "REGISTRATION STATEMENT"
shall be deemed to include such Rule 462 Registration Statement.
For purposes of this Agreement, "TIME OF SALE PROSPECTUS" means the
preliminary prospectus contained in the Registration Statement and it shall also
be deemed to include the press release dated __________, 2006 containing pricing
information filed pursuant to Rule 134 under the Securities Act attached hereto
as Exhibit A. For the purposes of this Agreement, "BROADLY AVAILABLE ROAD SHOW"
means a "bona fide electronic road show" as defined in Rule 433(h)(5) under the
Securities Act that has been made available without restriction to any person.
1. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or, to the Company's knowledge
(after telephone inquiry of the Commission), threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, not misleading,
(ii) the Canadian Final Prospectus (as defined in Section 1(c)) when it was
filed did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
(iii) the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and Canadian Securities Laws, the applicable rules and
regulations of the Commission and the Canadian Securities Commissions
thereunder, (iv) the Canadian Final Prospectus complies and, as amended or
supplemented, if applicable, will comply in all material respects with Canadian
Securities Laws, (v) the Time of Sale Prospectus does not, and at the time of
each sale of the Shares in connection with the offering when the Prospectus is
not yet available to prospective purchasers and at the Closing Date (as defined
in Section 5), the Time of Sale Prospectus, as then amended or supplemented by
the Company, if applicable, will not, contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, (vi)
each broadly available road show, if any, when considered together with the Time
of Sale Prospectus, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the
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circumstances under which they were made, not misleading, and (vii) the
Prospectus does not contain and, as amended or supplemented, if applicable, will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations and
warranties set forth in this paragraph do not apply to statements or omissions
in the Registration Statement (or any amendment thereto), the Time of Sale
Prospectus or the Prospectus (or any supplement thereto) or the Canadian Final
Prospectus based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use therein.
(c) The Company has complied with all applicable securities laws in each of
the provinces in Canada emanating from governmental authorities, including the
respective rules and regulations made thereunder together with applicable
published national and local instruments, policy statements, notices, blanket
rulings and orders of the securities commissions or other securities regulatory
authorities in each of the provinces of Canada (the "CANADIAN SECURITIES
COMMISSIONS"), all discretionary rulings and orders applicable to the Company,
if any, of the Canadian Securities Commissions required to be complied with by
the Company to qualify the distribution of the Shares as contemplated hereby in
each of the provinces of Canada ("CANADIAN SECURITIES LAWS"). The Company has
prepared and filed a preliminary base PREP prospectus relating to the Shares in
the English and French languages (the "CANADIAN PRELIMINARY PROSPECTUS") with
each of the Canadian Securities Commissions pursuant to National Policy 43-201.
The Company has obtained a preliminary decision document issued by the Ontario
Securities Commission (the "OSC") evidencing that receipts of the Canadian
Securities Commissions in each of the Provinces of Canada have been issued in
respect of the Canadian Preliminary Prospectus. The Company has also prepared
and filed with each of the Canadian Securities Commissions a final base PREP
prospectus relating to the Shares in the English and French languages in
accordance with National Instrument 44-103 for the pricing of securities after
the receipt for a prospectus has been obtained (the "CANADIAN FINAL
PROSPECTUS"), and has obtained a final decision document issued by the OSC
evidencing that final receipts of the Canadian Securities Commissions in each of
the provinces of Canada have been issued in respect of the Canadian Final
Prospectus.
(d) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Time of Sale Prospectus and the
Prospectus and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not reasonably be
expected to have a material adverse effect on the Company.
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(e) The Company has no subsidiaries and has no interest in, shares of
capital stock of or right to acquire an interest in or shares of capital stock
of, any other corporation, limited liability company, partnership or other
entity.
(f) This Agreement has been duly authorized, executed and delivered by the
Company. All necessary corporate action has been taken by the Company to
authorize the execution and delivery of this Agreement and the transactions
contemplated hereby, including execution and delivery of each of the Canadian
Preliminary Prospectus, the Canadian Final Prospectus and the Canadian
Supplemented Prospectus (defined in Section 7(h)) and the filing thereof under
Canadian Securities Laws in each province of Canada.
(g) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Time of Sale Prospectus and
the Prospectus.
(h) The Common Stock (including the Shares to be sold by the Selling
Shareholders) outstanding prior to the issuance of the Shares to be sold by the
Company have been duly authorized and are validly issued, fully paid and
non-assessable.
(i) The Shares to be sold by the Company have been duly authorized and,
when issued and delivered in accordance with the terms of this Agreement, will
be validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights.
(j) The execution and delivery by the Company of, and the performance by
the Company of its obligations under, this Agreement will not contravene any
provision of applicable law or the certificate of incorporation or bylaws of the
Company or any agreement or other instrument binding upon the Company that is
material to the Company or any judgment, order or decree naming the Company of
any governmental body, agency or court having jurisdiction over the Company,
where such contravention of such agreement, instrument or judgment, order or
decree would reasonably be expected to have a material adverse effect on the
Company, and no consent, approval, authorization or order of, or qualification
with, any governmental body or agency (including any Canadian court or Canadian
federal or provincial governmental authority) is required for the performance by
the Company of its obligations under this Agreement, except (i) as may be
required by the securities or Blue Sky laws of the various states or the bylaws
and rules and regulations of the National Association of Securities Dealers,
Inc. in connection with the offer and sale of the Shares, and (ii) for the
filing of the Canadian Supplemented Prospectus (as defined in Section 7(i)) with
the Canadian Securities Commissions.
(k) There has not occurred any material adverse change, or any development
involving a prospective material adverse change, in the condition,
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financial or otherwise, or in the earnings, business or operations of the
Company from that set forth in the Time of Sale Prospectus.
(l) There are no legal or governmental proceedings pending to which the
Company is a party or to which any of the properties of the Company is subject
other than proceedings accurately described in all material respects in the Time
of Sale Prospectus and proceedings that would not reasonably be expected to have
a material adverse effect on the Company or on the power or ability of the
Company to perform its obligations under this Agreement or to consummate the
transactions contemplated by the Time of Sale Prospectus. There are no legal or
governmental proceedings pending nor any statutes, regulations, contracts or
other documents to which the Company is subject or by which the Company is bound
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that are not
described or filed as required, and to the knowledge of the Company, no such
legal or governmental proceedings are threatened.
(m) Each preliminary prospectus filed as part of the Registration Statement
as originally filed or as part of any amendment thereto, or filed pursuant to
either Rule 424 under the Securities Act or Canadian Securities Laws, complied
when so filed in all material respects with either the Securities Act and the
applicable rules and regulations of the Commission thereunder, or Canadian
Securities Laws and the applicable rules and regulations of Canadian Securities
Commissions, as applicable.
(n) The Company is not, and after giving effect to the offering and sale of
the Shares and the application of the proceeds thereof as described in the
Prospectus will not be, required to register as an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended.
(o) The Company (i) is in compliance with any and all applicable U.S.,
Canadian and other foreign federal, state, provincial, territorial and local
laws and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) has received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
its business and (iii) is in compliance with all terms and conditions of any
such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, be reasonably
expected to have a material adverse effect on the Company.
(p) There are no costs or liabilities of the Company associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on
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operating activities and any potential liabilities to third parties) which
would, singly or in the aggregate, be reasonably expected to have a material
adverse effect on the Company.
(q) The Company has complied and is in compliance with all federal, state,
local, provincial and foreign statutes, executive orders, proclamations, rules,
regulations, orders and similar provisions having the force of law and all
judicial and administrative orders and rulings, and common law concerning the
importation or export of products and technology in connection with the
Company's business except where the failure to be in compliance would not be
reasonably expected to have a material adverse effect on the Company. The
Company has not made any payment, offer, gift, or authorized or otherwise
participated in, assisted or facilitated any payment or gift related to the
Company's business that is prohibited by the United States Foreign Corrupt
Practices Act or the Corruption of Foreign Public Officials Act of Canada.
(r) Other than as described in the Time of Sale Prospectus, there are no
contracts, agreements or understandings between the Company and any person
(which term shall, throughout this agreement, also refer to entities) granting
such person the right to require the Company to file a registration statement
under the Securities Act or a prospectus under Canadian Securities Laws with
respect to any securities of the Company at any time prior to 365 days after the
date of the Prospectus (as such 365 day period may be extended as described in
Section 3(c)), or to require the Company to include such securities with the
Shares registered pursuant to the Registration Statement or granting such person
any preemptive right, right of first offer or similar right with respect to any
securities of the Company.
(s) Subsequent to the respective dates as of which information is given in
the Registration Statement, the Prospectus and the Time of Sale Prospectus, (i)
the Company has not incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction outside of the ordinary
course of business; (ii) the Company has not purchased any of its outstanding
shares, nor declared, paid or otherwise made any dividend or distribution of any
kind on its shares other than ordinary and customary dividends; and (iii) there
has not been any material change in the shares (including securities convertible
or exercisable into or exchangeable for shares), short-term debt or long-term
debt of the Company, except in each case as described in each of the
Registration Statement, the Prospectus and the Time of Sale Prospectus,
respectively.
(t) The Company has good and marketable title to all personal property
owned by it which is material to the business of the Company, in each case free
and clear of all liens, encumbrances and defects except such as are described in
the Time of Sale Prospectus or such as do not materially affect the value of
such property and do not interfere with the use made and proposed in the Time of
Sale Prospectus to be made of such property by the Company; and any real
property and buildings held under lease by the Company is held by it under
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valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed in the Time of Sale
Prospectus to be made of such property and buildings by the Company, in each
case except as described in the Time of Sale Prospectus. The Company does not
own any real property.
(u) The Company owns, possesses or licenses, or can acquire or license on
reasonable terms, all material patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names currently employed by it in connection
with the business now operated by it, and the Company has not received any
notice of infringement of asserted rights of others with respect to any of the
foregoing (or any written correspondence implying infringement by means of offer
of a license) which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would be reasonably expected to have a
material adverse effect on the Company.
(v) No material labor dispute with current and former employees of the
Company exists, except as described in the Time of Sale Prospectus, or, to the
knowledge of the Company, is imminent.
(w) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the business in which it is engaged; and the Company does not
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not be
reasonably likely to have a material adverse effect on the Company except as
described in the Time of Sale Prospectus.
(x) The Company (i) possesses all certificates, authorizations and permits
issued by the appropriate federal, state, provincial or foreign regulatory
authorities necessary to conduct its business as conducted on the date hereof,
and (ii) has not received any notice of proceedings relating to the revocation
or modification of any such certificate, authorization or permit other than, in
the case of clauses (i) and (ii) above, any certificate, authorization or
permit, which, singly or in the aggregate, if not possessed or if the subject of
an unfavorable decision, ruling or finding, would be reasonably expected to have
a material adverse effect on the Company except as described in the Time of Sale
Prospectus.
(y) Except as described in the Time of Sale Prospectus, the Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in accordance with
U.S. generally accepted accounting principles and to maintain asset
accountability; (iii) access to
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assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as noted in the Prospectus, no deficiencies
in the Company's internal control over financial reporting have been identified
that could reasonably be expected to constitute a material weakness.
(z) UHY LLP, which has expressed its opinion with respect to certain of the
financial statements of the Company filed with the Commission as a part of the
Registration Statement and included in each of the Time of Sale Prospectus and
the Prospectus, is a registered public accounting firm as required by the
Securities Act.
(aa) The financial statements of the Company filed with the Commission as a
part of the Registration Statement and included in each of the Time of Sale
Prospectus and the Prospectus present fairly the consolidated financial position
of the Company and the former subsidiaries of the Company, as applicable, as of
the dates indicated and the results of their operations and cash flows for the
periods specified. Such financial statements have been prepared in conformity
with generally accepted accounting principles as applied in the United States
applied on a consistent basis throughout the periods involved. The financial
data set forth in the Prospectus under the captions "Prospectus Summary--Summary
Consolidated Financial Data," "Capitalization" and "Selected Consolidated
Financial Data" present fairly the information set forth therein on a basis
consistent with that of the audited financial statements contained in the
Registration Statement, the Time of Sale Prospectus and the Prospectus. The
financial data set forth in the Prospectus as of and for the six months ended
June 30, 2006 were derived from the accounting records of the Company and
present fairly the information shown thereby.
(bb) No other financial statements or schedules of the Company or any other
entity are required to be included in the Registration Statement or the
Prospectus pursuant to any requirement of the Securities Act or any rules and
regulations thereunder, including Rules 3-05 and 11 of Regulation S-X, or the
Canadian Securities Laws.
(cc) There are no transactions or loans between the Company and any holder
of 5% or more of the Common Stock, any director, any director nominee or any
executive officer, or members of such individuals' immediate families, or any
enterprise in which a substantial interest in the voting power is owned,
directly or indirectly, by any of such individuals other than those described in
the Time of Sale Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement). In particular, other than as
described in the Time of Sale Prospectus, no such person or entity (i) has any
direct or indirect ownership interest in, or any employment or consulting
agreement with, any firm or corporation that competes with the Company, (ii) is
directly or indirectly interested in any contract with the Company, except for
compensation
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and standard benefits for services as a director, officer or employee that is
disclosed in the Time of Sale Prospectus (to the extent it is required to be
disclosed), (iii) has any ownership interest in any property, real or personal,
tangible or intangible, used in the Company's business, except for the normal
rights of a shareholder, or (iv) has, either directly or indirectly, a material
interest in any person which purchases from or sells, licenses or furnishes to
the Company any goods, property, technology or intellectual or other property
rights or services (except in the case of (i) - (iv) above, with respect to any
interest of less than 5% of the outstanding voting shares of any corporation
whose stock is publicly traded).
(dd) Except as described in the Registration Statement (exclusive of any
amendments thereto subsequent to the date of this Agreement), the Company has
not sold, issued or distributed any Common Stock during the six-month period
preceding the date hereof, including any sales pursuant to Rule 144A under, or
Regulation D or S of, the Securities Act or under Canadian Securities Laws,
other than shares issued pursuant to employee benefit plans, qualified stock
option plans or other employee compensation plans or pursuant to outstanding
options, rights or warrants.
(ee) To the Company's knowledge, the information provided by and on behalf
of the Company in the Company's application for listing of the Common Stock for
trading on the Toronto Stock Exchange, as amended or supplemented, was true,
correct and complete in all material respects through the listing date.
2. Representations and Warranties of the Selling Shareholders. Each Selling
Shareholder, severally and not jointly, represents and warrants to and agrees
with each of the Underwriters that:
(a) This Agreement has been duly authorized, executed and delivered by or
on behalf of such Selling Shareholder.
(b) The execution and delivery by such Selling Shareholder of, and the
performance by such Selling Shareholder of its obligations under, this
Agreement, the Custody Agreement and the Power of Attorney signed by such
Selling Shareholder and Computershare Trust Company, Inc., as Custodian,
relating to the deposit of the Shares to be sold by such Selling Shareholder and
appointing certain individuals as such Selling Shareholder's attorneys-in-fact
to the extent set forth therein, relating to the transactions contemplated
hereby and by the Registration Statement (the "CUSTODY AGREEMENT AND POWER OF
ATTORNEY") will not contravene any provision of any law applicable to such
Selling Shareholder or the Custody Agreement and Power of Attorney, or the
certificate of incorporation or by laws of such Selling Shareholder (if such
Selling Shareholder is a corporation), or any agreement or other instrument
binding upon such Selling Shareholder, or any judgment, order or decree
applicable to such Selling Shareholder of any foreign or domestic governmental
body, agency or court having jurisdiction over such Selling Shareholder, and no
consent, approval,
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authorization or order of, or qualification with, any governmental body or
agency (including without limitation any Canadian court or Canadian federal or
provincial governmental authority) is required for the performance by such
Selling Shareholder of its obligations under this Agreement or the Custody
Agreement and Power of Attorney entered into by such Selling Shareholder, except
(i) as may be required by the securities or Blue Sky laws of the various states
in connection with the offer and sale of the Shares, and (ii) for the filing of
the Canadian Supplemented Prospectus with the Canadian Securities Commissions.
(c) Such Selling Shareholder has, and on the Closing Date (as defined in
Section 5) will have, valid title to, or a valid "security entitlement" within
the meaning of Section 8-501 of the New York Uniform Commercial Code in respect
of, the Shares to be sold by such Selling Shareholder free and clear of all
security interests, claims, liens, equities or other encumbrances (except for
such restrictions, legends, proxies or other encumbrances disclosed to the
Underwriters, and which will be released or shall terminate as of the Closing
Date (as defined in Section 5)) and the legal right and power, and all
authorization and approval required by law, to enter into this Agreement and the
Custody Agreement and Power of Attorney and to sell, transfer and deliver the
Shares to be sold by such Selling Shareholder or a security entitlement in
respect of such Shares.
(d) The Custody Agreement and Power of Attorney has been duly authorized,
executed and delivered by such Selling Shareholder and is a valid and binding
agreement of such Selling Shareholder, except as the enforcement of rights to
indemnity and contribution thereunder may be limited by federal or state
securities laws or principles of public policy and subject to the qualification
that the enforceability of obligations of such Selling Shareholder thereunder
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of auditors' rights generally and by
general equitable principles (whether applied in law or equity).
(e) Delivery of the Shares to be sold by such Selling Shareholder and
payment therefor pursuant to this Agreement will pass valid title to such
Shares, free and clear of any adverse claim within the meaning of Section 8-102
of the New York Uniform Commercial Code, to each Underwriter who has purchased
such Shares in good faith and without notice of an adverse claim.
(f) Such Selling Shareholder is not prompted by any information concerning
the Company or its subsidiaries which is not set forth in the Time of Sale
Prospectus to sell its Shares pursuant to this Agreement.
(g) All information furnished by or on behalf of such Selling Shareholder
for use in the Prospectus and the Canadian Final Prospectus does not, and on the
date of the Time of Sale Prospectus, the Closing Date and any Additional Closing
Date will not, contain any untrue statement of a material fact
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or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(h) If such Selling Shareholder was requested to complete an "NASD
Questionnaire", the written response to such document provided by such Selling
Shareholder to counsel for the Underwriters is true, correct and complete.
(i) In order to document the Underwriters' compliance with the reporting
and withholding provisions of the Tax Equity and Fiscal Responsibility Act of
1982 with respect to the transactions herein contemplated, such Selling
Shareholder will deliver to the Underwriters prior to or at the Closing Date (as
defined in Section 5)) a properly completed and executed U.S. Treasury
Department Form W-9 (or other applicable form or statement specified by the U.S.
Treasury Department regulations in lieu thereof).
3. Agreements to Sell and Purchase.
(a) Each Seller, severally and not jointly, hereby agrees to sell to the
several Underwriters the number of Firm Shares set forth on Schedule B hereto
opposite the name of such Seller, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from such
Seller the number of Firm Shares set forth in Schedule A hereto opposite the
name of such Underwriter, at a price of Cdn $__________ per share (the "PURCHASE
PRICE") with respect to the Firm Shares.
(b) On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have the
right to purchase, severally and not jointly, up to the number of Additional
Shares set forth in Schedule A hereto opposite the name of such Underwriter, at
the Purchase Price. You may exercise this right on behalf of the Underwriters in
whole or from time to time in part by giving written notice of each election to
exercise this option not later than 30 days after the date of this Agreement.
Any exercise notice shall specify the number of Additional Shares to be
purchased by the Underwriters and the date on which such shares are to be
purchased. Each purchase date must be at least two business days after the
written notice is given and may not be earlier than the closing date for the
Firm Shares nor later than ten business days after the date of such notice.
Additional Shares may be purchased as provided in Section 5 hereof solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. On each day, if any, that Additional Shares are to be purchased
(an "OPTION CLOSING DATE"), each Underwriter agrees, severally and not jointly,
to purchase the number of Additional Shares (subject to such adjustments to
eliminate fractional shares as you may determine) that bears the same proportion
to the total number of Additional Shares to be purchased on such Option Closing
Date as the number of
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Firm Shares set forth in Schedule A hereto opposite the name of such Underwriter
bears to the total number of Firm Shares.
(c) The Company hereby agrees that, without the prior written consent of
Sprott Securities (USA) Limited, on behalf of the Underwriters, it will not,
during the period ending 365 days after the date of the Prospectus, (1) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, grant a security interest in, or otherwise transfer or dispose
of, directly or indirectly, any Common Stock or any securities convertible into
or exercisable or exchangeable for Common Stock or (2) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise or (3) file any
registration statement with respect to the registration of any Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock.
The restrictions contained in the preceding paragraph shall not apply
to (i) the Shares to be sold hereunder, (ii) the issuance by the Company of
Common Stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and reflected in the Time of Sale
Prospectus, (iii) the issuance of Common Stock, or options to purchase Common
Stock, to employees, officers, directors, advisors or consultants of the Company
pursuant to employee benefit plans described in the Time of Sale Prospectus,
(iv) the filing of a registration statement on Form S-8 to register the issuance
of Common Stock upon exercise of equity awards granted under the Company's 2003
Stock Incentive Plan and 2006 Stock Incentive Plan or (v) offers, sales,
contracts to sell, the issuance of or the registration of Common Stock as
consideration for one or more acquisitions, provided that the aggregate fair
market value of the Common Stock issued or agreed to be issued in all such
acquisitions (based on the closing price on the Toronto Stock Exchange on the
trading day immediately preceding the date of the applicable acquisition
agreement) does not exceed $20,000,000; provided that in the case of any
issuance described above in connection with the acquisition of a company (or
assets thereof) whose stock is not publicly traded on a national securities
exchange or the Toronto Stock Exchange, each recipient shall execute and deliver
a "lock-up" agreement substantially in the form of Exhibit B attached hereto to
Sprott Securities (USA) Limited.
Notwithstanding the foregoing, if (1) during the last 17 days of the
356-day restricted period the Company issues an earnings release or material
news or a material event relating to the Company occurs; or (2) prior to the
expiration of the 356-day restricted period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of
the 356-day period, the restrictions imposed by this paragraph shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the
earnings
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release or the occurrence of the material news or material event. The Company
shall promptly notify Sprott Securities (USA) Limited of any earnings release,
news or event that may give rise to an extension of the initial 356-day
restricted period.
4. Terms of Public Offering. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective and a final decision document has been issued by the OSC
evidencing that final receipts of the Canadian Securities Commissions in each of
the provinces of Canada have been issued in respect of the Canadian Final
Prospectus as in your judgment is advisable. The Sellers are further advised by
you that the Shares are to be offered to the public initially at Cdn $__________
per share (the "PUBLIC OFFERING PRICE") and to certain dealers selected by you
at a price that represents a concession not in excess of Cdn $__________ per
share under the Public Offering Price.
5. Payment and Delivery. Payment for the Firm Shares to be sold shall be
made to (i) the Company with respect to the Shares sold by it, and (ii) the
Custodian, for the benefit of the Selling Shareholders with respect to the
Shares sold by such Selling Shareholders, denominated in Canadian dollars
immediately available in Toronto, Ontario against delivery of such Firm Shares
for the respective accounts of the several Underwriters at 8:00 a.m., Toronto
time, on __________, 2006, or at such other time on the same or such other date,
not later than __________, 2006, as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to as the "CLOSING DATE."
Payment for any Additional Shares shall be made to the Company denominated
in Canadian dollars immediately available in Toronto, Ontario against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 8:00 a.m., Toronto time, on the date specified in the
corresponding notice described in Section 3 or at such other time on the same or
on such other date, in any event not later than __________, 2006 as shall be
designated in writing by you.
The Firm Shares and Additional Shares shall be registered in such names and
in such denominations as you shall request in writing not later than one full
business day prior to the Closing Date or the applicable Option Closing Date, as
the case may be. The Firm Shares and Additional Shares shall be delivered to you
on the Closing Date or an Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations of the
Sellers to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the conditions that the Registration Statement shall have become
effective and the OSC shall have issued the decision document evidencing that
final receipts of
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the Canadian Securities Commissions in each of the provinces of Canada have been
issued in respect of the Canadian Final Prospectus not later than the date
hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement and prior to
the Closing Date there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise, or in
the earnings, business or operations of the Company from that set forth in the
Time of Sale Prospectus that, in your judgment, is material and adverse and that
makes it, in your judgment, impracticable to market the Shares on the terms and
in the manner contemplated in the Time of Sale Prospectus.
(b) The representations and warranties of the Company in this Agreement
shall be true and correct as of the Closing Date.
(c) The Underwriters shall have received on the Closing Date certificate
executed by each of the chief executive officer or the chief financial officer
of the Company, addressed to the Underwriters and dated the Closing Date to the
effect that: (i) the representations, warranties and agreements of the Company
in this Agreement were true and correct when made and are true and correct as of
the Closing Date; (ii) the Company has performed in all material respects all
covenants and agreements and satisfied all conditions contained herein in all
material respects; (iii) the information identified on Exhibit A to the
certificate is true and correct in all material respects and not misleading; and
(iv) no stop order suspending the effectiveness of the Registration Statement
has been issued and, to their knowledge, no proceedings for that purpose have
been instituted, are pending or are threatened under the Securities Act; and no
order having the effect of ceasing or suspending the distribution of the Shares
has been issued and no proceedings for that purpose have been instituted or are
pending or, to the knowledge of the Company, are threatened by any securities
regulatory authority in Canada.
The officer signing and delivering such certificate may rely upon the best
of his or her knowledge as to proceedings threatened.
(d) The representations and warranties of the Selling Shareholders shall be
true and correct as of the Closing Date, and the Underwriters shall have
received on the Closing Date a certificate, dated the Closing Date and signed by
an Attorney-in-Fact for the Selling Shareholders, to this effect.
(e) The Underwriters shall have received on the Closing Date an opinion of
each of Xxxxxxx Xxxxx & Xxxxxxxxx LLP ("XXXXXXX XXXXX") as to matters of
Canadian law and Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP ("XXXXXX XXXX") as to
matters of U.S. law, outside counsel for the Company,
-14-
dated the Closing Date, in a form reasonably satisfactory to the Underwriters
and Torys LLP, attached hereto as Exhibit C and Exhibit D, respectively.
(f) The Underwriters shall have received on the Closing Date an opinion of
the respective counsel for the Selling Shareholders listed on Schedule B hereto,
dated the Closing Date, in a form reasonably satisfactory to the Underwriters
and Torys LLP, attached hereto as Exhibit E.
(g) delivery of the Shares to be sold by such Selling Shareholder and
payment therefor pursuant to this Agreement will pass valid title to such
Shares, free and clear of any adverse claim within the meaning of the Uniform
Commercial Code, to each Underwriter who has purchased such Shares in good faith
and without notice of an adverse claim.
(h) The Underwriters shall have received on the Closing Date an opinion of
Torys LLP ("TORYS"), counsel for the Underwriters, dated the Closing Date, in a
form reasonably satisfactory to the Underwriters, attached hereto as Exhibit F.
With respect to Section 6(e) and (h) above, Xxxxxxx Xxxxx, Xxxxxx Xxxx and
Torys may state that their opinions and beliefs are based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification, except as
specified, and with respect to the opinion of Xxxxxxx Xxxxx, that no opinion is
being expressed as to whether the Preliminary Canadian Prospectus, Final
Canadian Prospectus or any amendment or supplement thereto, constitutes full,
true and plain disclosure of all material facts, or whether a "material change"
as defined in Canadian Securities laws has occurred since __________, 2006,
which would require the filing of an amendment to the prospectus under
applicable Securities Laws. With respect to Section 6(f) above, counsel to the
Selling Shareholder may rely with respect to factual matters and to the extent
such counsel deems appropriate, upon the representations of each Selling
Shareholder contained herein and in the Custody Agreement and Power of Attorney
entered into by such Selling Shareholder; provided that copies of such Custody
Agreements and Powers of Attorneys shall be delivered to you and shall be in
form and substance satisfactory to your counsel.
(i) The Underwriters shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from UHY
LLP, independent public accountants, containing statements and information of
the type ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained in the Registration Statement, the Time of Sale Prospectus and the
Prospectus; provided that the letter delivered on the Closing Date shall use a
"cut-off date" not earlier than the date hereof.
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(j) The Underwriters shall have received, on the date hereof and the
Closing Date, a letter dated the date hereof or the Closing Date, as the case
may be, in form and substance satisfactory to the Underwriters, from Xxxxxxxxxx
Xxxxxxxx LLP regarding compliance with the laws of Quebec relating to the use of
the French language in connection with the documents (including the Prospectus
and certificates representing the Shares) to be delivered to purchasers in
Quebec.
(k) The "lock-up" agreements, each substantially in the form of Exhibit B
hereto between you and each shareholder, each officer and director of the
Company and certain other holders of the Company's securities relating to sales
and certain other dispositions of Common Stock or certain other securities,
shall have been delivered to you on or before the date hereof, and shall be in
full force and effect on the Closing Date.
(l) The Underwriters shall have received opinions of Xxxxxxxxxx Xxxxxxxx
LLP, dated the date of the Canadian Preliminary Prospectus, the date of the
Canadian Final Prospectus and the date of the Canadian Supplemented Prospectus,
in form and substance satisfactory to the Underwriters, addressed to the
Underwriters, the Company and their respective counsel, to the effect that the
French language version of each of the Canadian Preliminary Prospectus, the
Canadian Final Prospectus and the Canadian Supplemented Prospectus, except for
the consolidated financial statements and notes to such statements and the
related auditors' report on such statements (collectively, the "Financial
Information"), as to which no opinion need be expressed by such counsel, is, in
all material respects, a complete and accurate translation of the English
language version thereof.
(m) The Underwriters shall have received opinions of RSM Xxxxxxx LLP dated
the date of the Canadian Preliminary Prospectus, the date of the Canadian Final
Prospectus and the date of the Canadian Supplemented Prospectus, in form and
substance satisfactory to the Underwriters, addressed to the Underwriters, the
Company and their respective counsel, to the effect that the French language
version of the Financial Information contained in the Canadian Preliminary
Prospectus, the Canadian Final Prospectus and the Canadian Supplemented
Prospectus is, in all material respects, a complete and proper translation of
the English language version thereof.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares to be sold on such Option Closing Date and other matters related to the
issuance of such Additional Shares.
-16-
7. Covenants of the Company. In further consideration of the agreements of
the Underwriters herein contained, the Company covenants with each Underwriter
as follows:
(a) To furnish to you, without charge, seven (7) signed copies of the
Registration Statement (including exhibits thereto) and for delivery to each
other Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and to furnish to you in Xxxxxxx, Xxxxxxx, without charge, as
soon as practicable on the business day next succeeding the date of this
Agreement and during the period mentioned in Section 7(c) below, as many copies
of the Time of Sale Prospectus, the Prospectus and any supplements and
amendments thereto or to the Registration Statement as you may reasonably
request.
(b) Before amending or supplementing the Registration Statement, the Time
of Sale Prospectus or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed amendment or
supplement to which you reasonably object, unless required under applicable
securities laws.
(c) Not to take any action that would result in an Underwriter or the
Company being required to file with the Commission pursuant to Rule 433(d) under
the Securities Act a free writing prospectus prepared by or on behalf of the
Underwriter that the Underwriter otherwise would not have been required to file
thereunder.
(d) If the Time of Sale Prospectus is being used to solicit offers to buy
the Shares at a time when the Prospectus is not yet available to prospective
purchasers and any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Time of Sale Prospectus in order to make
the statements therein, in the light of the circumstances, not misleading, or if
any event shall occur or condition exist as a result of which the Time of Sale
Prospectus conflicts with the information contained in the Registration
Statement then on file, or if, in the opinion of counsel for the Underwriters,
it is necessary to amend or supplement the Time of Sale Prospectus to comply
with applicable law, forthwith to prepare, file with the Commission and furnish,
at its own expense, to the Underwriters and to any dealer upon request, either
amendments or supplements to the Time of Sale Prospectus so that the statements
in the Time of Sale Prospectus as so amended or supplemented will not, in the
light of the circumstances when delivered to a prospective purchaser, be
misleading or so that the Time of Sale Prospectus, as amended or supplemented,
will no longer conflict with the Registration Statement, or so that the Time of
Sale Prospectus, as amended or supplemented, will comply with applicable law.
(e) If, during such period after the first date of the public offering of
the Shares as in the opinion of counsel for the Underwriters the Prospectus (or
in lieu thereof the notice referred to in Rule 173(a) under the Securities Act)
is required by law to be delivered in connection with sales by an Underwriter or
-17-
dealer, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus (or in lieu
thereof the notice referred to in Rule 173(a) under the Securities Act) is
delivered to a purchaser, not misleading, or if, in the opinion of counsel for
the Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the Commission and
the Canadian Securities Commissions, as required by law and furnish, at its own
expense, to the Underwriters and to the dealers (whose names and addresses you
will furnish to the Company) to which Shares may have been sold by you on behalf
of the Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances when the
Prospectus (or in lieu thereof the notice referred to in Rule 173(a) under the
Securities Act) is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(f) To make generally available to the Company's security holders and to
you as soon as practicable an earning statement covering the twelve-month period
ending December 31, 2006 that satisfies the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the Commission thereunder.
(g) To prepare and file with the OSC and the other Canadian Securities
Commissions promptly after the execution and delivery of this Agreement, a
supplemented prospectus in the English and French languages that complies with
National Instrument 44-103 (the "CANADIAN SUPPLEMENTED PROSPECTUS"), in a form
reasonably satisfactory to the Underwriters.
8. Covenants of the Underwriters.
(a) Each Underwriter severally covenants with the Company not to use any
free writing prospectus for which the Company is an "ineligible issuer" or
otherwise take any action that would result in the Company being required to
file with the Commission under Rule 433(d) a free writing prospectus prepared by
or on behalf of such Underwriter that otherwise would not be required to be
filed by the Company thereunder, but for the action of the Underwriter.
(b) The Underwriters will notify the Company and the Toronto Stock Exchange
when, in the Underwriters' opinion, the Underwriters and the members of their
selling group (if any) have ceased distribution of the Shares and, promptly
after completion of the distribution, will provide the Company, in writing, with
a breakdown of the number of Shares distributed in each of the provinces of
Canada where that breakdown is required by the Canadian Securities Commission of
that jurisdiction for the purpose of calculating fees payable to that Canadian
Securities Commission.
-18-
(c) Sales of Shares by the Underwriters in the United States will be made
only to entities in transactions reasonably believed by the Underwriters to be
exempt from registration and/or filing requirements under applicable state
securities laws. Prior to confirming sales of Shares to purchasers in the United
States, the Underwriters shall have obtained from each such purchaser a
representation letter substantially in the form attached hereto as Exhibit G.
9. Expenses. Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, the Company agrees to pay or
cause to be paid all expenses incident to the performance of the Sellers
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel and the Company's accountants in connection
with the registration and delivery of the Shares under the Securities Act and
Canadian Securities Laws and all other fees or expenses in connection with the
preparation and filing of the Registration Statement, the Canadian preliminary
prospectus, the Time of Sale Prospectus, the Prospectus, the Final Canadian
Prospectus any free writing prospectus prepared by or on behalf of, used by, or
referred to by the Company, the Canadian Supplemented Prospectus and amendments
and supplements to any of the foregoing, including all printing and translation
costs associated therewith, and the mailing and delivering of copies thereof to
the Underwriters and dealers, in the quantities hereinabove specified; (ii) all
costs and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon (except that
each Selling Shareholder agrees to pay or cause to be paid all transfer or other
taxes payable with respect to the Shares sold by such Selling Shareholder),
(iii) all Company expenses in connection with the qualification of the Shares
for offer and sale under Canadian provincial securities laws as provided in
Section 7(i) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection with such
qualification (which shall be included in the calculation of fees and
disbursements pursuant to subsection (xi) below), (iv) all filing fees and the
reasonable fees and disbursements of counsel to the Underwriters incurred in
connection with the review and qualification of the offering of the Shares by
the National Association of Securities Dealers, Inc. (which shall be included in
the calculation of fees and disbursements pursuant to subsection (xi) below),
(v) all costs and expenses incident to listing the Shares on the Toronto Stock
Exchange, (vi) the cost of printing certificates representing the Shares, (vii)
the costs and charges of any transfer agent, registrar or depositary, (viii) the
costs and expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the offering of the
Shares including, without limitation, expenses associated with the production of
road show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the officers of the Company and any such
consultants, provided that the cost of any Canadian firms hired for the purposes
of assisting with Canadian road shows shall be borne by the Underwriters, (ix)
the document
-19-
production charges and expenses associated with printing this Agreement, (x) all
reasonable out-of-pocket expenses incurred by the Underwriters including, but
not limited to, any advertising, printing, courier, telecommunications, data
search, travel, entertainment and other expenses, together with Goods and
Services tax and provincial sales taxes thereon, (xi) if the offering is
completed, 50% of the fees and disbursements of legal counsel to the
Underwriters, and (xii) all other costs and expenses of the Company incident to
the performance of the obligations of the Company hereunder for which provision
is not otherwise made in this Section. The Selling Shareholders listed on
Schedule B hereto agree to pay or cause to be paid all fees, disbursements and
expenses of their respective counsel. It is understood that except as provided
in this Section, Section 10 entitled "Indemnity and Contribution," and the last
paragraph of Section 13 below, the Underwriters will pay all of their costs and
expenses, including (i) the fees and disbursements of their counsel not paid by
the Company pursuant to subsection (xi) above, and (ii) stock transfer taxes
payable on resale of any of the Shares by them. Further, subject to and upon
execution of this Agreement, the provisions of this Section shall supersede the
provisions of Section 10 of that certain Engagement Letter dated June 12, 2006,
by and between the Company and Sprott Securities Inc., except that, in addition
to any obligation to reimburse Sprott Securities Inc. hereunder, if the
transactions contemplated in this Agreement are not consummated, the Company
will reimburse the underwriters for the fees, taxes and expenses of Torys, up to
a maximum of C$100,000.
The provisions of this Section shall not supersede or otherwise affect any
agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
10. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter, each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and each affiliate of any Underwriter within the meaning of Rule 405
under the Securities Act from and against any and all losses, claims, damages
and liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus, the Time of Sale Prospectus, any issuer free writing
prospectus as defined in Rule 433(h) under the Securities Act, any Company
information that the Company has filed, or is required to file, pursuant to Rule
433(d) of the Securities Act or the Prospectus or any amendment or supplement
thereto, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission
-20-
based upon information relating to any Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use therein.
(b) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter, each person, if any, who controls
any Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, each affiliate of any Underwriter within the
meaning of Rule 405 under the Securities Act, and the Company, from and against
any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary prospectus, the
Time of Sale Prospectus, any issuer free writing prospectus as defined in Rule
433(h) under the Securities Act, any Company information that the Company has
filed, or is required to file, pursuant to Rule 433(d) of the Securities Act or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but in all cases only
with reference to information relating to such Selling Shareholder furnished by
or on behalf of such Selling Shareholder in writing expressly for use therein.
The liability of each Selling Shareholder under the indemnity agreement
contained in this paragraph shall be limited to an amount equal to the product
of the Purchase Price per share multiplied by the number of Shares sold by such
Selling Shareholder under this Agreement.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Sellers, the directors of the Company, the officers of the
Company who sign the Registration Statement and each person, if any, who
controls the Company or any Selling Shareholder within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to such Underwriter in
Section 10(a) or from the Selling Shareholder to such Underwriter in Section
10(b), as the case may be, but only with reference to information relating to
such Underwriter furnished to the Company in writing by such Underwriter through
you expressly for use in the Registration Statement, any preliminary prospectus,
the Time of Sale Prospectus, any issuer free-writing prospectus as defined in
Rule 433(h) under the Securities Act, the Prospectus or any Canadian Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto).
(d) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to Section 10(a), 10(b) or 10(c), such person (the "INDEMNIFIED PARTY")
shall promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the indemnifying party, upon
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request of the indemnified party, shall retain counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding; provided, however,
that the failure to notify the indemnifying party shall not relieve it from any
liability that it may have under Section 10(a), 10(b) or 10(c) above except to
the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for (i) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all Underwriters and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act or who are affiliates of any Underwriter within the meaning of Rule 405
under the Securities Act, (ii) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Company, its directors, its
officers who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either such Section, and (iii) the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Selling Shareholders and all persons, if any, who control such
Selling Shareholders within the meaning of either such Section. In the case of
any such separate firm for the Underwriters and such control persons and
affiliates of any Underwriters, such firm shall be designated in writing by
Sprott Securities (USA) Limited. In the case of any such separate firm for the
Company, and such directors, officers and control persons of the Company, such
firm shall be designated in writing by the Company. In the case of any such
separate firm for the Selling Shareholders and such control persons of any
Selling Shareholders, such firm shall be designated in writing by the persons
named as attorneys-in-fact for the Selling Shareholders under the Custody
Agreement and Power of Attorney entered into by each Selling Shareholder. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
-22-
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(e) To the extent the indemnification provided for in Section 10(a), 10(b)
or 10(c) is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 10(e)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 10(e)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Sellers on the one hand and the Underwriters on the other hand
in connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
received by each Seller and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of the
Shares. The relative fault of the Company and/or the Selling Shareholders, on
the one hand, and the Underwriters, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Shareholders or by
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Underwriters' respective obligations to contribute pursuant to this Section
10 are several in proportion to the respective number of Shares they have
purchased hereunder, and not joint. The liability of each Selling Shareholder
under the contribution agreement contained in this paragraph shall be several
and not joint, and shall be limited to an amount equal to the product of the
Purchase Price per share multiplied by the number of Shares sold by such Selling
Shareholder under this Agreement.
(f) The Sellers and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 10 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 10(e). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to
-23-
the limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 10, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 10 are not exclusive and shall not limit any rights or remedies which
may otherwise be available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this Section 10
and the representations, warranties and other statements of the Company and the
Selling Shareholders contained in this Agreement shall remain operative and in
full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter, any person
controlling any Underwriter or any affiliate of any Underwriter, any Selling
Shareholder or any person controlling any Selling Shareholder, their general or
limited partners, or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Shares.
11. Termination. The Underwriters may terminate this Agreement by notice
given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the Nasdaq Global Select
Market or the Toronto Stock Exchange, (ii) trading of any securities of the
Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a material disruption in securities settlement, payment or
clearance services in the United States or Canada shall have occurred, (iv) any
moratorium on commercial banking activities shall have been declared by federal
or New York State or Canadian authorities or (v) there shall have occurred any
outbreak or escalation of hostilities, or any change in financial markets,
currency exchange rates or controls or any calamity or crisis (including without
limitation a terrorist attack or major weather calamity) that, in your judgment,
is material and adverse and which, singly or together with any other event
specified in this clause (v), makes it, in your judgment, impracticable or
inadvisable to proceed with the offer, sale or delivery of the Shares on the
terms and in the manner contemplated in the Time of Sale Prospectus or the
Prospectus.
12. Entire Agreement. (a) This Agreement, together with any contemporaneous
written agreements and any prior written agreements (to the extent not
superseded by this Agreement) that relate to the offering of the Shares,
-24-
represents the entire agreement between the Sellers, on the one hand, and the
Underwriters, on the other, with respect to the preparation of any preliminary
prospectus, the Time of Sale Prospectus or the Prospectus, the conduct of the
offering, and the purchase and sale of the Shares.
(b) The Sellers acknowledge that in connection with the offering of the
Shares: (i) the Underwriters have acted at arms length, are not agents of, and
owe no fiduciary duties to, the Sellers or any other person, (ii) the
Underwriters owe the Sellers only those duties and obligations set forth in this
Agreement and prior written agreements (to the extent not superseded by this
Agreement), if any, and (iii) the Underwriters may have interests that differ
from those of the Sellers.
13. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule A bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 13 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased on such date, and arrangements satisfactory to you, the
Company and the Selling Shareholders for the purchase of such Firm Shares are
not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter, the Company or
the Selling Shareholders. In any such case either you or the relevant Sellers
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement in the Time of Sale Prospectus and in the Prospectus or in any other
documents or arrangements may be effected. If, on an Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional Shares
and the aggregate number of Additional Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Additional Shares to be
purchased on such Option Closing Date, the non-defaulting Underwriters shall
have the option to (i) terminate their obligation hereunder to purchase the
Additional Shares to be sold on such Option Closing
-25-
Date or (ii) purchase not less than the number of Additional Shares that such
non-defaulting Underwriters would have been obligated to purchase in the absence
of such default. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of any Seller to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement, such defaulting Sellers will reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and disbursements
of their counsel) reasonably incurred by such Underwriters in connection with
this Agreement or the offering contemplated hereunder.
14. Jurisdiction. The parties hereto hereby irrevocably submit to the
exclusive jurisdiction of the courts of the Province of Ontario and the federal
courts of Canada located within the City of Toronto in the Province of Ontario,
in respect of the interpretation and enforcement of the provisions of this
Agreement and of the documents referred to in this Agreement, and in respect of
the transactions contemplated hereby and thereby, and hereby waive, and agree
not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or thereof, that it is not subject thereto
or that such action, suit or proceeding may not be brought or is not
maintainable in said courts or that the venue thereof may not be appropriate or
that this Agreement or any such document may not be enforced in or by such
courts, and the parties hereto irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such a Ontario or
federal court. The parties hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject matter of such
dispute and agree that mailing of process or other papers in connection with any
such action or proceeding in the manner provided in Section 19 or as otherwise
permitted under applicable law, rules and regulations, shall be valid and
sufficient service thereof. With respect to any particular action, suit or
proceeding, venue shall lie solely in the City of Toronto, Ontario.
15. Judgment Currency. If for the purposes of obtaining judgment in any
court it is necessary to convert a sum due hereunder into any currency other
than United States dollars, the parties hereto agree, to the fullest extent
permitted by law, that the rate of exchange used shall be the rate at which in
accordance with normal banking procedures the Underwriters could purchase United
States dollars with such other currency in The City of New York on the business
day preceding that on which final judgment is given.
-26-
16. Counterparts. This Agreement may be signed in two or more counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
17. Applicable 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 therein.
18. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
19. Notices. All communications hereunder shall be in writing and effective
only upon receipt and if to the Underwriters shall be delivered, mailed or sent
to you in care of Sprott Securities (USA) Limited c/o Sprott Securities Inc.,
Xxxxx Xxxx Xxxxx, Xxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx X0X 0X0, Attention:
__________; if to the Company shall be delivered, mailed or sent to __________,
Attention: __________; and if to the Selling Shareholders listed on Schedule B
shall be delivered, mailed or sent to Computershare Trust Company, Inc.
20. Third Party Beneficiaries. Any affiliate of any Underwriter which is
duly qualified and authorized to sell the Shares in Canada pursuant to the
Canadian Prospectus and offers and sells the Shares in any of the provinces of
Canada or any affiliate of any Underwriter that signs the Canadian Prospectus
shall be deemed a third party beneficiary of the representations and warranties
of the Company contained in Section 1, the representations and warranties of the
Selling Shareholders contained in Section 2, the covenants of the Company
contained in Sections 7, the indemnification and contribution obligations of the
Company and the Selling Shareholders contained in Section 10 and the officers'
certificates, legal opinions and other documents required to be delivered to the
Underwriters pursuant hereto, and each such affiliate shall have the right to
enforce such provisions of this Agreement to the same extent as if it were an
Underwriter.
* * *
-27-
Very truly yours,
WORLD ENERGY SOLUTIONS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[Underwriting Agreement]
The Selling Shareholders named in Schedule B hereto, acting severally
By:
------------------------------------
Attorney-in Fact
[Underwriting Agreement]
Accepted as of the date hereof
Sprott Securities Inc.
Sprott Securities (USA) Limited
Canaccord Capital Corporation
CIBC World Markets, Inc.
SPROTT SECURITIES INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
SPROTT SECURITIES (USA) LIMITED
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
CANACCORD CAPITAL CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
CIBC WORLD MARKETS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[Underwriting Agreement]
SCHEDULE A
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------- ---------------------
Sprott Securities Inc................
Sprott Securities (USA) Limited .....
Canaccord Capital Corporation........
CIBC World Markets, Inc..............
__________...........................
__________...........................
----------
Total:............................ __________
==========
SCHEDULE B
NUMBER OF
FIRM SHARES
NAME OF SELLING SHAREHOLDER TO BE SOLD
--------------------------- -----------
Xxxxx, Xxxxxxxxxxx X..............................................
Xxxxx, Xxxxx......................................................
Bachmann Family Trust.............................................
Xxxxxxxx, Xxxxxxx X...............................................
Xxxxx, Xxxxx Xxxxxxxxx............................................
Xxxxx, Xxxxxxx X..................................................
Xxxxx, Xxxxxx Xxxxxxxxxxx.........................................
Xxxxxx Family Trust...............................................
Xxxxxxxx, Xxxxxx..................................................
Xxxx III, Xxxxxxx X...............................................
Xxxxxxxxx, Xxxxx X................................................
Xxxxxxxx, Xxxxxxxxx X.............................................
Xxxxxxxx, Xxxxxxxx Xxxx...........................................
Xxxxxxxx, Xxxx Xxxxxx.............................................
Xxxxxxxx, Xxxxxx Xxxx.............................................
Xxxxx, Xxxxxx X...................................................
Xxxxx, Xxxxxxx....................................................
Xxxxx, Xxxxxxxx...................................................
Xxxxxxx, Xxxx.....................................................
Xxxxxxxx, Xxxx....................................................
Fromuth, August G.................................................
Xxxxxx, Xxxxx X. XxXxxxxx.........................................
Xxxxx, Xxxxxx.....................................................
Xxxxx, Xxxxx......................................................
Xxxxx, Xxxxxxx....................................................
Xxxxxxxxxxx, Xxxxxx X.............................................
Xxxxxxx, Xxxxx....................................................
Xxxxxxx, Xxxxxxxxx................................................
Xxxxxxxx, Xxxxxx and Xxxx.........................................
Xxxxx, Xxxxxxx....................................................
Xxxxx, Xxxxxx X...................................................
Xxxxxxxx, Xxxxx...................................................
Xxxxxxxxxx, Xxxxxx................................................
Xxxx X. Xxxxxxx Irrevocable Trust.................................
Xxxxxx, Xxxxxx....................................................
XxXxxxxxx, Xxxxxxx................................................
Melesiute, Vitana.................................................
Xxxxxx, Xxxxx.....................................................
Xxxxxx, Xxxx X....................................................
Xxxxxx, Xxxxx.....................................................
Xxxxxxxx & Worcester LLP..........................................
Xxxxxxxx, Xxxxxxx.................................................
Xxxxxxxx, Xxxxxx..................................................
Xxxxx, Xxxxx X. Xxxxx and Xxxxxx X................................
Seashore Family Bypass Trust......................................
Seashore, Xxxxxxx X...............................................
Xxxxxx, Xxxxxx X. Xxxxxx, Xx. and Xxxxxx..........................
Xxxxxx, Xxxxx.....................................................
Xxxxxx, Xxxxx.....................................................
Skipping Stone, Inc...............................................
SCHEDULE B
Xxxxx, Xxxxx X....................................................
Xxxxxx, Xxxxxx X..................................................
Xxxxxx, Xxxxxxx...................................................
Torr, Nina........................................................
W. Xxxxxxxxx Xxxxx, Custodian for Xxxxxx Xxxxxxx..................
Warner X. Xxxxxxxx -- XXX.........................................
Warner, Xxxxx Xxxxxxxx............................................
Warner, Xxxxxx Xxxx...............................................
Xxxxx, Xxxxxxxx...................................................
White, Max........................................................
White, Michie.....................................................
Xxxxxxx X. Xxxxxxxx, Trustee of the Xxxxxxx X. Xxxxxxxx Revocable
Trust dated December 19, 2001..................................
-----------
Total:.........................................................
===========
EXHIBIT A
PRESS RELEASE FILED PURSUANT TO RULE 134
EXHIBIT B
LOCKUP LETTER
EXHIBIT C
OPINION OF
XXXXXX XXXXXX XXXXXXXXX XXXX AND XXXX LLP
EXHIBIT D
OPINION OF
XXXXXXX XXXXX & XXXXXXXXX LLP
EXHIBIT E
OPINION RE: SELLING SHAREHOLDERS
EXHIBIT F
OPINION OF TORYS LLP
EXHIBIT G
FORM OF REPRESENTATION LETTER
