Exhibit 4.12
UNDERWRITING AGREEMENT
April 2, 2004
DRAXIS HEALTH INC.
0000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
ATTENTION: XXXXXX XXXXXX, PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dear Sirs:
Desjardins Securities Inc. and CIBC World Markets Inc. (collectively,
the "UNDERWRITERS") hereby severally offer to purchase from Draxis Health Inc.
(the "COMPANY"), and the Company agrees to issue and sell to the Underwriters,
3,053,436 units of the Company ("UNITS") upon the terms described in Schedule
"A" hereto. Each Unit will consist of one common share (a "COMMON SHARE") of the
Company and one-half of one Common Share purchase warrant (a "WARRANT"). Each
whole Warrant is transferable and will entitle the holder to purchase one Common
Share ( a "WARRANT SHARE") at an exercise price of $8.50 at any time on or
before 5:00 p.m. (Toronto time) on the date which is two years from the Closing
Date (as defined herein). The Warrants shall be created and issued pursuant to a
warrant indenture (the "WARRANT INDENTURE") to be dated as of the Closing Date
between Computershare Trust Company of Canada (the "WARRANT AGENT") and the
Company.
The Underwriters shall have an option (the "OPTION"), which Option may
be exercised in the Underwriters' sole discretion and without obligation, to
purchase up to an additional 458,016 Units which, if subscribed for hereunder,
shall be deemed to form part of the Units for the purposes hereof. The Option
shall be exercisable by the Underwriters at any time up to 5:00 pm on that date
which is 30 days after the Closing Date (as hereinafter defined) by delivering
written notice to the Company 24 hours prior to expiry of the Option, after
which time the Option shall be void and of no further force and effect. ). The
Option shall be exercised by delivery of written notice to the Corporation prior
to the expiry of the Option specifying the number of additional Units (the
"ADDITIONAL UNITS") to be purchased. If the Option, or any portion thereof, is
exercised, a separate closing (the "OVER-ALLOTMENT CLOSING") shall occur on the
date specified by the Underwriters in such exercise notice and in any event, no
later than 35 days following the Closing Date, and all applicable terms and
conditions relating to the purchase of the Units on the Closing Date shall apply
to the Over-Allotment Closing, as agreed to by respective counsel for the
Underwriters and the Corporation.
The offering of the Units (which term shall include the Additional Units
to be purchased in the event of the exercise of the Option) by the Company is
hereinafter referred to as the "OFFERING". Unless the context otherwise
requires, all references to the "UNITS", "COMMON SHARES", "WARRANTS", and
"WARRANT SHARES" shall assume the exercise of the Option.
- 2 -
In consideration of the Underwriters' services to be rendered in
connection with the Offering, including assisting in preparing documentation
relating to the Units including the Preliminary Prospectus and the Final
Prospectus (in each case as hereinafter defined), distributing the Units,
directly and through other investment dealers and brokers, and performing
administrative work in connection with the Offering, the Company agrees to pay
the Underwriting Fee (as hereinafter defined) to the Underwriters.
The Company agrees that the Underwriters will be permitted to appoint,
at their sole expense, other registered dealers or other dealers duly qualified
in their respective jurisdictions, in each case acceptable to the Company,
acting reasonably, as their agents to assist in the Offering in the Qualifying
Provinces and that the Underwriters may determine the remuneration payable to
such other dealers appointed by them.
This offer is conditional upon and subject to the additional terms and
conditions set forth below.
1. INTERPRETATION
1.1 DEFINITIONS: Unless expressly provided otherwise, where used in this
Agreement or any schedule hereto, the following terms shall have the following
meanings, respectively:
"20-F" means the Form 20-F of the Company dated May 14, 2003 for the fiscal year
ended December 31, 2002 as filed with the United States Securities and Exchange
Commission;
"AGREEMENT" means the Agreement resulting from the acceptance by the Company of
the offer made by the Underwriters by this letter;
"APPLICABLE LAWS" shall have the meaning ascribed thereto in paragraph 4.1.4(d);
"APPLICABLE SECURITIES LAWS" means, collectively, the applicable securities laws
of each of the Qualifying Provinces, their respective regulations, rulings,
rules, orders and prescribed forms thereunder, the applicable policy statements
issued by the Securities Commissions thereunder and the securities legislation
of and policies issued by each other relevant jurisdiction;
"CLOSING DATE" means April 22, 2004 or such earlier or later date as the Company
and the Underwriters may agree, but in any event no later than May 6, 2004;
"COMPANY" shall have the meaning ascribed thereto in the first paragraph of this
Agreement;
"COMPANY'S INFORMATION RECORD" means all information contained in any press
release, material change report (excluding any confidential material change
report), financial statements or other document of the Company including the
20-F and the management discussion and analysis for the year ended December 31,
2003 in relation to the financial statements presented in accordance with
Canadian GAAP and US GAAP, which has been publicly filed by or on behalf of the
Company pursuant to Applicable Securities Laws or otherwise;
"ELIGIBLE ISSUER" means an issuer which meets the criteria and has complied with
the requirements of NI 44-101 so as to allow it to offer securities using a
short form prospectus;
- 3 -
"ENVIRONMENTAL LAWS" shall have the meaning ascribed thereto in paragraph
4.1.4(h);
"EXCHANGES" means collectively the Toronto Stock Exchange and the Nasdaq;
"FDA" means the United States Food and Drug Administration;
"FINAL PROSPECTUS" means the (final) short form prospectus of the Company
qualifying the distribution of the Units and the Option and the materials
incorporated therein by reference;
"INCLUDING" means including without limitation;
"INDEMNITOR" has the meaning ascribed thereto in section 9.1;
"INTELLECTUAL PROPERTY" means, collectively, all intellectual property rights of
whatsoever nature, kind or description including:
(i) all trade-marks, service marks, trade-xxxx and service xxxx
registrations, trade-xxxx and service xxxx applications, trade
names and other trade-xxxx and service xxxx rights, and domain
names;
(ii) all copyrights and applications therefor, including all computer
software and rights related thereto;
(iii) all inventions, patents, patent applications and patent rights
(including any patents issuing on such applications or rights);
(iv) all plans, designs, research data, know-how, processes and
procedures, drawings, technology, formulae, specifications,
quality control information, instructions, and manuals and other
trade secrets and confidential information;
(v) all industrial designs and registrations thereof and
applications therefor;
(vi) all renewals, modifications, developments and extensions of any
of the items listed in clauses (i) through (v) above; and
(vii) all licenses, agreements and other contracts and commitments
relating to any of the foregoing;
"MATERIAL CHANGE" means a material change for the purposes of the Applicable
Securities Laws of the applicable jurisdiction or where such term is undefined
under such Applicable Securities Laws means a change in the business, operations
or capital of the Company and the Material Subsidiaries, on a consolidated
basis, that would reasonably be expected to have a significant effect on the
market price or value of any of the Company's securities and includes a decision
to implement such a change made by the Company's board of directors or by senior
management of the Company who believe that confirmation of the decision by the
board of directors is probable;
- 4 -
"MATERIAL FACT" means a material fact for the purposes of the Applicable
Securities Laws of the applicable jurisdiction or where such term is undefined
under such Applicable Securities Laws means a fact that significantly affects,
or would reasonably be expected to have a significant effect on, the market
price or value of the Company's securities;
"MATERIAL SUBSIDIARIES" means the corporations listed on Schedule "C" hereto;
"MISREPRESENTATION" means a misrepresentation for the purposes of the Applicable
Securities Laws of the applicable jurisdiction or where such term is undefined
under such Applicable Securities Laws means (i) an untrue statement of a
material fact, or (ii) an omission to state a material fact that is required to
be stated or that is necessary to make a statement not misleading in the light
of the circumstances in which it was made;
"NI 44-101" means National Instrument 44-101- Short Form Prospectus
Distributions;
"NP 43-201" means National Policy 43-201 - Mutual Reliance Review System for
Prospectuses and Annual Information Forms;
"OFFERING" shall have the meaning ascribed thereto in the third paragraph of
this Agreement;
"OFFERING DOCUMENTS" means, collectively, the Preliminary Prospectus, the Final
Prospectus and any Supplementary Material;
"OPTION" shall have the meaning ascribed thereto in the second paragraph of this
Agreement;
"PERSON" includes any individual, corporation, limited partnership, general
partnership, joint stock company or association, joint venture association,
company, trust, bank, trust company, land trust, investment trust, society or
other entity, organization, syndicate, whether incorporated or not, trustee,
executor or other legal personal representative, and governments and agencies
and political subdivisions thereof;
"PERSONNEL" has the meaning ascribed thereto in section 9.1;
"PRELIMINARY PROSPECTUS" means the preliminary short form prospectus of the
Company prepared in connection with the qualification of the distribution of the
Units and the Option and the materials incorporated therein by reference;
"PRODUCT REGISTRATIONS" shall have the meaning ascribed thereto in paragraph
4.1.4(e);
"PURCHASERS" means, collectively, each of the purchasers of Units arranged by
the Underwriters pursuant to the Offering, including, if applicable, the
Underwriters;
"QUALIFYING PROVINCES" means, collectively, each of the provinces of Canada;
"SECURITIES COMMISSIONS" means, collectively, the securities commissions or
similar regulatory authorities in each of the Qualifying Provinces;
- 5 -
"SELLING GROUP" means, collectively, those registered dealers appointed by the
Underwriters to assist in the Offering as contemplated in the fifth paragraph of
this Agreement;
"SUBSIDIARY" shall have the meaning ascribed thereto in the SECURITIES ACT
(Ontario);
"SUPPLEMENTARY MATERIAL" means, collectively, any amendment to the Final
Prospectus, any amended or supplemental prospectus or ancillary material
required to be filed with any of the Securities Commissions in connection with
the distribution of the Units and any material incorporated therein by
reference;
"SURVIVAL LIMITATION DATE" means the later of:
(i) the second anniversary of the Closing Date; and
(ii) the latest date under the Applicable Securities Laws relevant to
a Purchaser (non-residents of Canada being deemed to be resident
in the Province of Ontario for such purposes) that a Purchaser
may be entitled to commence an action or exercise a right of
rescission, with respect to a misrepresentation contained in the
Final Prospectus or, if applicable, any Supplementary Material;
"TAXES" shall have the meaning ascribed thereto in paragraph 4.1.1(w);
"TPD" means Health Canada's Therapeutic Products Directorate;
"TIME OF CLOSING" means 8:00 a.m. (Toronto time) on the Closing Date and on any
Over-Allotment Closing, as applicable;
"UNDERWRITERS" shall have the meaning ascribed thereto in the first paragraph of
this Agreement;
"UNDERWRITING FEE" means the fee payable to the Underwriters as specified in
Schedule "A" hereto; and
"UNITED STATES" means the United States of America, its territories and
possessions, any state of the United States, and the District of Columbia.
"UNITS" shall have the meaning ascribed thereto in the first paragraph of this
Agreement and shall, if applicable, include any additional Units in respect of
which the Option may be exercised;
1.2 DIVISION AND HEADINGS: The division of this Agreement into sections,
subsections, paragraphs and other subdivisions and the insertion of headings are
for convenience of reference only and shall not affect the construction or
interpretation of this Agreement. Unless something in the subject matter or
context is inconsistent therewith, references herein to sections, subsections,
paragraphs and other subdivisions are to sections, subsections, paragraphs and
other subdivisions of this Agreement.
1.3 GOVERNING LAW: This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein.
- 6 -
1.4 CURRENCY: Except as otherwise indicated, all amounts expressed herein in
terms of money refer to lawful currency of Canada and all payments to be made
hereunder shall be made in such currency.
1.5 SCHEDULES: The following are the schedules attached to this Agreement,
which schedules are deemed to be a part hereof and are hereby incorporated by
reference herein: Schedule "A" - Details of the Offering; Schedule "B" - Opinion
of Company's Counsel; Schedule "C" - Material Subsidiaries; Schedule "D" - Terms
for Offering to U.S. Purchasers; and Schedule "E" -Outstanding Convertible
Securities.
2. NATURE OF TRANSACTION
2.1 Each Purchaser resident in a Qualifying Province shall purchase the
Units pursuant to the Final Prospectus. Except as set forth in Section 3.2, each
other Purchaser shall purchase in accordance with such procedures as the Company
and the Underwriters may mutually agree, acting reasonably, in order to fully
comply with the Applicable Securities Laws. The Company hereby agrees to secure
compliance with all applicable securities regulatory requirements of the
Qualifying Provinces on a timely basis in connection with the distribution of
the Units. Subject to being notified by the Underwriters of the requirements
thereof and upon request by the Underwriters, the Company also agrees to file
within the periods stipulated under Applicable Securities Laws outside of Canada
and at the Company's expense all private placement forms required to be filed by
the Company and the Purchasers, respectively, in connection with the Offering
and agrees to pay all filing fees required to be paid in connection therewith so
that the distribution of the Units outside of Canada may lawfully occur without
the necessity of filing a prospectus or any similar document under the
Applicable Securities Laws outside of Canada, if applicable. The Underwriters
agree to assist the Company in all reasonable respects to secure compliance with
all regulatory requirements in connection with the Offering.
3. COVENANTS AND REPRESENTATIONS OF THE UNDERWRITERS
3.1 Each Underwriter severally covenants with the Company that it will (and
will use its commercially reasonable best efforts to cause the members of the
Selling Group to):
(i) conduct activities in connection with arranging for the sale and
distribution of the Units in compliance with all Applicable
Securities Laws and the provisions of this Agreement;
(ii) not, directly or indirectly, sell or solicit offers to purchase
the Units or distribute or publish any offering circular,
prospectus, form of application, advertisement or other offering
materials in any country or jurisdiction so as to require
registration or filing of a prospectus with respect thereto or
compliance by the Company with regulatory requirements
(including any continuous disclosure obligations) under the laws
of, or subject the Company (or any of its directors, officers or
employees) to any inquiry, investigation or proceeding of any
securities regulatory authority, stock exchange or other
authority in, any jurisdiction (other than the filing of the
Preliminary Prospectus and the Final Prospectus in the
Qualifying Provinces);
- 7 -
(iii) use all reasonable efforts to complete and to cause the members
of the Selling Group to complete the distribution of the Units
as soon as practicable; and
(iv) upon the Company obtaining the necessary receipts therefor from
each of the Securities Commissions, deliver one copy of the
Final Prospectus and any Supplementary Material to each of the
Purchasers.
3.2 Desjardins Securities Inc. shall notify the Company when, in its
opinion, the Underwriters and Selling Group have ceased distribution of the
Units (and in any event such notice shall be given no later than 21 days after
the Closing Date) and, if required for regulatory compliance purposes, provide a
breakdown of the number of Units distributed and proceeds received (A) in each
of the Qualifying Provinces and (B) in any other jurisdiction.
3.3 Each Underwriter severally covenants with the Company that it will only
solicit purchasers of Units in the United States in accordance with Schedule "D"
to this Agreement.
3.4 Notwithstanding the foregoing provisions of this section, an Underwriter
will not be liable to the Company under this section with respect to a default
by the other Underwriter.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
4.1 The Company hereby represents, warrants and covenants to and with the
Underwriters that:
4.1.1 GENERAL MATTERS
(a) the Company (i) has been incorporated under the CANADA BUSINESS
CORPORATIONS ACT and is and will at the Time of Closing be
up-to-date in all material corporate filings and in good
standing under such Act; (ii) has all requisite corporate power
and authority to carry on its business as now conducted and to
own, lease and operate its properties and assets; and (iii) has
all requisite corporate power and authority to create, issue and
sell the Units, to enter into this Agreement and the Warrant
Indenture and to carry out the provisions of this Agreement and
the Warrant Indenture;
(b) the subsidiaries listed on Schedule "C" are the only
subsidiaries of the Company which are material to the Company
and, except as disclosed in the Company's Information Record,
all securities of such subsidiaries are held, directly or
indirectly, by the Company free and clear of all mortgages,
liens, charges, pledges, security interests, encumbrances,
claims and demands whatsoever;
(c) each of the Material Subsidiaries (i) has been incorporated in
its respective jurisdiction of incorporation and is and will at
the Time of Closing be up-to-date in all material corporate
filings and in good standing under the laws of such
jurisdiction, as the case may be and (ii) has all requisite
corporate power and authority to carry on its business as now
conducted and to own, lease and operate its properties and
assets;
- 8 -
(d) no proceedings have been taken, instituted or, to the knowledge
of the Company, are pending for the dissolution or liquidation
of the Company or the Material Subsidiaries;
(e) the Company and each of the Material Subsidiaries are, in all
material respects, conducting their respective businesses in
compliance with all applicable laws, rules and regulations
(including all material applicable Canadian federal, provincial,
municipal, and local environmental laws and laws relating to the
manufacture or sale of drugs, regulations and other lawful
requirements of any governmental or regulatory body, including
but not limited to policies of TPD) of each jurisdiction in
which its respective businesses are carried on and each is
licensed, registered or qualified and holds all necessary
permits or authorizations in all jurisdictions in which it owns,
leases or operates 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 and all such licences,
registrations, qualifications, permits an authorizations are
valid, subsisting and in good standing and each has not received
a notice of non-compliance, nor knows of, nor has reasonable
grounds to know of, any non-compliance with any such laws,
rules, regulations, licenses, registrations, qualifications,
permits or authorizations which could have an adverse material
effect on the Company or the Material Subsidiaries (taken
together) and will at the Time of Closing be valid, subsisting
and in good standing;
(f) all necessary corporate action has been taken or will have been
taken prior to the Time of Closing by the Company so as to
validly issue and sell the Units;
(g) the execution and delivery of this Agreement and the Warrant
Indenture, when executed, and the performance of the
transactions contemplated hereby and thereby have been
authorized by all necessary corporate action of the Company and
this Agreement has been executed and delivered by the Company
and constitutes, and at the Time of Closing, the Warrant
Indenture will have been duly executed and delivered and will
constitute a valid and binding obligation of the Company, each
enforceable against the Company in accordance with their
respective terms, provided that enforcement thereof may be
limited by laws affecting creditors' rights generally, that
specific performance and other equitable remedies may only be
granted in the discretion of a court of competent jurisdiction,
that the provisions relating to indemnity, contribution and
waiver of contribution may be unenforceable and that
enforceability is subject of the provisions of the LIMITATIONS
ACT, 2002 (Ontario);
(h) the execution and delivery of this Agreement and the Warrant
Indenture, the fulfilment of the terms hereof and thereof by the
Company and the issuance, sale and delivery of the Common Shares
and Warrants comprising the Units to be issued and sold by the
Company at the Time of Closing and the issuance of the Warrant
Shares upon the exercise of the Warrants do not and will not
require the consent, approval, authorization, registration or
qualification of or with any governmental authority, the
Exchanges, Securities Commission or other third
- 9 -
party, except such as have been obtained or such as may be
required (and shall be obtained prior to the Time of Closing)
under Applicable Securities Laws or regulations of the
Exchanges;
(i) the Units to be issued and sold as hereinbefore described have
been, or prior to the Time of Closing will be, authorized for
issuance, the Common Shares comprising the Units will have been
reserved for issuance by the Company and, upon payment of the
issue price for the Units and when certificates for the Common
Shares and Warrants comprising the Units are countersigned by
the Warrant Agent and issued, delivered and paid for, the Common
Shares and Warrants will be validly issued and, in the case of
the Common Shares, fully paid and non-assessable, and all
statements made in the Final Prospectus describing the Units
will be accurate in all material respects;
(j) the Warrant Shares issuable upon the exercise of the Warrants
have been, or prior to the Time of Closing will be, reserved for
issuance by the Company and, upon payment and delivery of the
exercise price therefor and the issuance, delivery and
countersigning of certificates for such Common Shares and
Warrant Shares by the Warrant Agent, such Warrant Shares will be
validly issued and fully paid and non-assessable;
(k) the authorized capital of the Company consists of an unlimited
number of common shares, of which, as of April 1, 2004,
37,755,245 Common Shares were outstanding as fully paid and
non-assessable shares of the Company;
(l) the Company is not aware of any legislation, or proposed
legislation published by a legislative body, which it
anticipates will materially and adversely affect the business,
affairs, operations, assets, liabilities (contingent or
otherwise) or prospects of the Company;
(m) the currently issued and outstanding common shares of the
Company are listed on the Exchanges and no order ceasing or
suspending trading in any securities of the Company or
prohibiting the sale of the Common Shares or Warrants or the
trading of any of the Company's issued securities has been
issued and no proceedings for such purpose are pending or, to
the best of the Company's knowledge, information and belief,
threatened;
(n) except as referred to in Schedule "E" hereto, or as described in
the Final Prospectus, no person now has any Agreement or option
or right or privilege (whether at law, preemptive or
contractual) capable of becoming an Agreement for the purchase,
subscription or issuance of, or conversion into, any unissued
shares, securities, warrants or convertible obligations of any
nature of the Company or any of the Material Subsidiaries;
(o) since December 31, 2003, except as disclosed in the Company's
Information Record:
- 10 -
(i) there has not been any material change in the assets,
liabilities, obligations (absolute, accrued, contingent
or otherwise), business, condition (financial or
otherwise) or results of operations of the Company and
the Material Subsidiaries, on a consolidated basis;
(ii) there has not been any material change in the capital
stock or long-term debt of the Company and the Material
Subsidiaries, on a consolidated basis; and
(iii) the Company and the Material Subsidiaries have carried
on their respective businesses in the ordinary course;
(p) the audited consolidated financial statements of the Company for
the fiscal year ended December 31, 2003 present fairly, in all
material respects, the financial condition of the Company and
the Material Subsidiaries, on a consolidated basis, for the
periods then ended;
(q) except as disclosed in the Company's Information Record, there
are no material actions, proceedings or investigations (whether
or not purportedly by or on behalf of the Company or any
subsidiary) pending or threatened against or affecting the
Company or its Material Subsidiaries at law or in equity
(whether in any court, arbitration or similar tribunal) or
before or by any federal, provincial, state, municipal or other
governmental department, commission, board or agency, domestic
or foreign;
(r) neither the Company nor any of the Material Subsidiaries is in
default or in breach in any material respect of, and the
execution and delivery of this Agreement by the Company, the
performance and compliance with the terms of this Agreement and
the sale of the Units (including the grant of the Option by the
Company and the issuance of the Warrant Shares upon exercise of
the Warrants) will not result in any material breach of, or be
in conflict with or constitute a default under, or create a
state of facts which, after notice or lapse of time, or both,
would constitute a default under any term or provision of the
constating documents, by-laws or resolutions of the Company or
any of the Material Subsidiaries or any material mortgage, note,
indenture, contract, Agreement, instrument, lease or other
document to which the Company or any of the Material
Subsidiaries is a party or by which any of them is bound or any
judgment, decree, order, statute, rule or regulation applicable
to any of them, which breach or default would have a material
adverse affect on the Company and the Material Subsidiaries on a
consolidated basis;
(s) the Company is, and will at the Time of Closing be, an Eligible
Issuer and a "reporting issuer", not included in a list of
defaulting reporting issuers maintained by the Securities
Commissions and in particular, without limiting the foregoing,
the Company has at all times complied with its obligations to
make timely disclosure of all material changes relating to it
and there is no material change relating to the Company which
has occurred and with respect to which the
- 11 -
requisite material change report has not been filed with the
Securities Commissions, except to the extent that the Offering
constitutes a material change;
(t) the information and statements set forth in the Company's
Information Record were accurate in all material respects and
did not contain any misrepresentation as of the date of such
information or statement, and the Company has not filed any
confidential material change reports with any Securities
Commission that is still maintained on a confidential basis;
(u) the auditors of the Company who audited the consolidated
financial statements of the Company most recently delivered to
the securityholders of the Company and delivered their report
with respect thereto are independent public accountants as
required by the Applicable Securities Laws;
(v) there has not been any reportable disagreement (within the
meaning of National Policy Statement No. 31 of the Canadian
Securities Administrators) with the present or any former
auditor of the Company;
(w) all taxes (including income tax, capital tax, payroll taxes,
employer health tax, workers' compensation payments, property
taxes, custom and land transfer taxes), duties, royalties,
levies, imposts, assessments, deductions, charges or
withholdings and all liabilities with respect thereto including
any penalty and interest payable with respect thereto
(collectively, "TAXES") due and payable by the Company or any of
the Material Subsidiaries have been paid except for where the
failure to pay such taxes would not constitute an adverse
material fact of the Company and of the Material Subsidiaries on
a consolidated basis or result in an adverse material change to
the Company and the Material Subsidiaries on a consolidated
basis. All tax returns, declarations, remittances and filings
required to be filed by the Company have been filed with all
appropriate governmental authorities and all such returns,
declarations, remittances and filings are complete and accurate
and no material fact or facts have been omitted therefrom which
would make any of them misleading except where the failure to
file such documents would not constitute an adverse material
fact of the Company or result in an adverse material change to
the Company on a consolidated basis. To the best of the
knowledge of the Company, no examination of any tax return of
the Company is currently in progress and there are no issues or
disputes outstanding with any governmental authority respecting
any taxes that have been paid, or may be payable, by the
Company, in any case, except where such examinations, issues or
disputes would not constitute an adverse material fact of the
Company or result in an adverse material change to the Company
on a consolidated basis;
(x) neither the Company nor any of the Material Subsidiaries, nor to
the best of the Company's knowledge, information and belief, any
other person, is in default in any material respect in the
observance or performance of any term, covenant or obligation to
be performed by the Company or any of the Material Subsidiaries
or such other person under any material contract, agreement, or
arrangement (including all joint venture agreements) to which
the Company or any of the
- 12 -
Material Subsidiaries is a party or otherwise bound and all such
contracts, agreements or arrangements (including all joint
venture agreements) are in all material respects in good
standing, and no event has occurred which with notice or lapse
of time or both would constitute such a default by the Company,
a Material Subsidiary or, to the best of the Company's
knowledge, information and belief, any other party, which
default could reasonably be expected to have a material adverse
effect on the Company and its Material Subsidiaries (taken
together);
(y) the net proceeds of the Offering will be used as described in
the Final Prospectus;
(z) the attributes of the Common Shares and the Warrants comprising
the Units will conform in all material respects with the
description thereof to be described in the Final Prospectus;
(aa) other than as contemplated by the Offering and this Agreement,
the Company will not, for a period of 90 days from the Closing
Date, issue or sell or agree to issue or sell (or announce any
intention to do so) any equity or voting shares of the Company
or financial instruments convertible or exchangeable into such
shares, other than for purposes of (i) the grant or exercise of
stock options and other similar issuances pursuant to the share
incentive plans of the Company (including as described in
Schedule "E" hereto); and (ii) outstanding warrants (including
as described in Schedule "E" hereto);
(bb) the Company will obtain the necessary regulatory consents from
the Exchanges for the sale of the Units hereunder on such
conditions as are acceptable to the Underwriters and the
Company, acting reasonably;
(cc) the Company will arrange for the listing on the Exchanges of the
Common Shares and the Warrant Shares effective as of the Closing
Date;
(dd) the Corporation will maintain its status as a "reporting issuer"
(or the equivalent thereof) not in default of the requirements
of the Securities Laws of each of the Qualifying Jurisdictions
which have such a concept to the date which is two years
following the Closing Date;
(ee) Computershare Trust Company of Canada has been appointed the
registrar and transfer agent in Canada for the common shares of
the Company at its principal transfer office in the city of
Toronto, Ontario;
(ff) the Warrant Agent, at its principal office in Toronto, Ontario,
will be appointed as the registrar and transfer agent in respect
of the Warrants by the Closing Date;
(gg) except as disclosed in the Company's Information Record, none of
the directors, officers or employees of the Company, any known
holder of more than ten per cent of any class of shares of the
Company, or any known associate or affiliate of any of the
foregoing persons or companies (as such terms are defined in the
SECURITIES ACT (Ontario)), has had any material interest, direct
or indirect, in any
- 13 -
material transaction within the previous two years or any
proposed material transaction which, as the case may be,
materially affected, is material to or will materially affect
the Company and the Material Subsidiaries on a consolidated
basis;
(hh) other than the Underwriters pursuant to this Agreement, there is
no person acting or purporting to act at the request of the
Company who is entitled to any brokerage, agency or other fiscal
advisory or similar fee in connection with the transactions
contemplated herein;
(ii) except as disclosed in the Company's Information Record, none of
the Company or the Material Subsidiaries has any material loans
or other indebtedness outstanding which has been made to any of
its shareholders, officers, directors or employees, past or
present, or any person not dealing at arm's length with them;
(jj) except as disclosed in the Company's Information Record, the
assets of the Company and the Material Subsidiaries and their
business and operations are insured against loss or damage with
responsible insurers on a basis consistent with insurance
obtained by reasonably prudent persons carrying on comparable
businesses, and such coverage is in full force and effect, and
none of the Company or any of the Material Subsidiaries has
failed to promptly give any notice, present any material claim,
or pay any premium payable thereunder; and
(ll) except as disclosed in the Company's Information Record, the
Company and the Material Subsidiaries own or possess the right
to use all material Intellectual Property described in the Final
Prospectus as being owned or licensed by them or any of them or
necessary for the conduct of their respective businesses, and
the Company is not aware of any claim to the contrary or any
challenge by any other person to the rights of the Company and
the Material Subsidiaries with respect to the foregoing.
(mm) in the event that sufficient distribution of the Warrants is
achieved to satisfy the minimum listing requirements of the TSX
in respect of warrants, the Company will use its commercially
reasonable best efforts to obtain a listing for the Warrants on
the TSX and to maintain such listing of the Warrants on the TSX
or such other recognized stock exchange or quotation system as
the Underwriters may approve, acting reasonably, until such date
as all Warrants have expired or for so long as the Corporation
meets the minimum listing requirements of the TSX or such other
exchange or quotation system.
4.1.2 PROSPECTUS MATTERS
(a) the Company will, provided the Underwriters have taken all
action required by them hereunder to permit the Company to do
so, use all reasonable efforts to file the Final Prospectus
pursuant to NP 43-201 and to obtain a final expedited review
receipt document from the Ontario Securities Commission in
respect of each Qualifying Province and if any Securities
Commission in a Qualifying Province opts out of the expedited
review system, a final receipt (or a decision document
- 14 -
equivalent thereof) from any such Securities Commission, and
shall have taken all other steps and proceedings that may be
necessary in order to qualify the Common Shares and Warrants
comprising the Units for distribution pursuant to the Final
Prospectus in each of the Qualifying Provinces before the close
of business on April 14, 2004 (or such other date as may be
agreed to in writing by the Company and the Underwriters);
(b) the Company will deliver from time to time without charge to the
Underwriters as many copies of the Preliminary Prospectus, the
Final Prospectus and any Supplementary Material as they may
reasonably request for the purposes contemplated hereunder and
contemplated by the Applicable Securities Laws in the Qualifying
Provinces and such delivery shall constitute the consent of the
Company to their use of such documents in the Qualifying
Provinces in connection with the distribution or the
distribution to the public of the Common Shares and Warrants
comprising the Units, subject to the Underwriters complying with
the provisions of the Applicable Securities Laws in the
Qualifying Provinces and the provisions of this Agreement;
(c) all the information and statements to be contained in the
Offering Documents shall, at the respective dates of delivery
thereof, constitute full, true and plain disclosure of all
material facts relating to each of the Offering, the Company and
the Material Subsidiaries on a consolidated basis, and the
Common Shares and Warrants comprising the Units (provided that
this representation and warranty is not intended to extend to
information and statements included in reliance upon and in
conformity with information furnished to the Company by or on
behalf of the Underwriters specifically for use therein);
(d) at the time of filing and qualification thereof, no Offering
Document will contain a misrepresentation (provided that this
representation and warranty is not intended to extend to
information and statements included in reliance upon and in
conformity with information furnished to the Company by or on
behalf of the Underwriters specifically for use therein);
(e) the Offering Documents shall contain the disclosure required by
and conform to all requirements of the Applicable Securities
Laws;
(f) during and prior to completion of the distribution of the Common
Shares and Warrants comprising the Units and the Option, the
Company will otherwise take or cause to be taken all steps and
proceedings (including the filing of, and obtaining the issuance
of a final receipt (or a decision document equivalent thereof)
for, the Final Prospectus) that may be required under the
Applicable Securities Laws of the Qualifying Provinces to
qualify the Common Shares and Warrants comprising the Units for
sale to the public and the Option in the Qualifying Provinces
through registrants registered under the Applicable Securities
Laws of the Qualifying Provinces who have complied with the
relevant provisions thereof; and
- 15 -
(g) at all times until the distribution of the Common Shares and
Warrants comprising the Units and the Option has been completed,
but in any event not later than 21 days following the Closing
Date, the Company will, to the reasonable satisfaction of
counsel to the Underwriters, promptly take or cause to be taken
all reasonable additional steps and proceedings that may be
required from time to time under the Applicable Securities Laws
of the Qualifying Provinces to continue to so qualify the Common
Shares and Warrants comprising the Units and the Option or, in
the event that the Common Shares and Warrants comprising the
Units and the Option have, for any reason, ceased to so qualify,
to again so qualify the Common Shares and Warrants comprising
the Units and the Option.
4.1.3 DUE DILIGENCE MATTERS
(a) prior to the filing of the Final Prospectus and any
Supplementary Material, the Company will allow the Underwriters
to participate fully in the preparation of the Preliminary
Prospectus, the Final Prospectus and any Supplementary Material
and shall allow the Underwriters to conduct all due diligence
which they may reasonably require to conduct in order to fulfil
their obligations and in order to enable them to responsibly
execute the certificates required to be executed by them at the
end of each of the Preliminary Prospectus, the Final Prospectus
and any applicable Supplementary Material;
(b) the Company will promptly notify the Underwriters in writing if,
prior to termination of the distribution of the Common Shares
and Warrants comprising the Units and the Option, there shall
occur any material change or change in a material fact (in
either case, whether actual, anticipated, contemplated or
threatened and other than a change or change in fact relating
solely to the Underwriters) or any event or development
involving a prospective material change or a change in a
material fact or any other material change in any or all of the
business, affairs, operations, assets (including information or
data relating to the estimated value or book value of assets),
liabilities (contingent or otherwise), capital, ownership,
control or management of the Company or any of the Material
Subsidiaries which would constitute a material change to, or a
change in a material fact concerning the Company and the
Material Subsidiaries on a consolidated basis or any other
change which is of such a nature as to result in, or could be
considered reasonably likely to result in, a misrepresentation
in the Final Prospectus or any Supplementary Material, as they
exist immediately prior to such change, or could render any of
the foregoing, as they exist immediately prior to such change,
not in compliance with any of the Applicable Securities Laws;
(c) the Company will promptly notify the Underwriters in writing
with full particulars of any such actual, anticipated,
contemplated, threatened or prospective change referred to in
the preceding paragraph and the Company shall, to the
satisfaction of the Underwriters, acting reasonably, provided
the Underwriters have taken all action required by them
hereunder to permit the Company to do so, file promptly and, in
any event, within all applicable time limitation periods with
the Securities Commissions a new or amended Final Prospectus or
Supplementary Material, as
- 16 -
the case may be, or material change report as may be required
under the Applicable Securities Laws and shall comply with all
other applicable filing and other requirements under the
Applicable Securities Laws including any requirements necessary
to qualify the distribution of the Units and shall deliver to
the Underwriters as soon as practicable thereafter their
reasonable requirements of conformed or commercial copies of any
such new or amended Final Prospectus or Supplementary Material.
The Company will not file any such new or amended disclosure
documentation or material change report without first obtaining
the written approval of the form and content thereof by the
Underwriters, which approval shall not be unreasonably withheld
or delayed; provided that the Company will not be required to
file a registration statement or otherwise register or qualify
the Common Shares and Warrants comprising the Units for sale or
distribution outside Canada;
(d) the Company will in good faith discuss with the Underwriters as
promptly as possible any circumstance or event which is of such
a nature that there is or ought to be consideration given as to
whether there may be a material change or change in a material
fact or other change described in the preceding two paragraphs;
and
(e) the minute books of the Company and each of the Material
Subsidiaries provided to counsel to the Underwriters contain
copies of all constating documents and all proceedings of
securityholders and directors (and committees thereof) (or
drafts pending the approval thereof) and are complete in all
material respects.
4.1.4 INTELLECTUAL PROPERTY AND ENVIRONMENTAL MATTERS
(a) no material Intellectual Property used by the Company or any of
the Material Subsidiaries in the operation of its respective
businesses have been derived, in part or in whole, from the
Intellectual Property of any other person, other than the
Intellectual Property licensed by the Company or a Material
Subsidiary from or to other parties as described in the
Company's Information Record. All employees of, and consultants
engaged by, the Company or any of the Material Subsidiaries who
are involved in the creation or development of any Intellectual
Property in the course of their employment or engagement have
entered into appropriate agreements with the Company pursuant to
which all such Intellectual Property is assigned to and belongs
solely, without any restrictions or obligations whatsoever, to
the Company or a Material Subsidiary. The Company or the
Material Subsidiaries have taken all reasonable and practical
steps (including, without limitation, entering into
confidentiality and non-disclosure agreements with all
appropriate employees of the Company or the Material
Subsidiaries or consultants, third party developers or any other
persons with access to or knowledge of the Company's or the
Material Subsidiaries' material Intellectual Property)
sufficient to safeguard and maintain the secrecy and
confidentiality of, and proprietary rights in, all of the
Company's or the Material Subsidiaries' material Intellectual
Property.
- 17 -
(b) to the Company's knowledge, none of the development,
manufacture, marketing, license, sale or use of any product by
the Company or any of the Material Subsidiaries violates or will
violate any contract with any person or infringe or will
infringe any Intellectual Property of any person. To the
knowledge of the Company, without limiting the generality of
paragraph 4.1.4(a) hereof, there are no pending or threatened
proceedings, litigation or other adverse claims (including any
claim of infringement) affecting, or with respect to, any part
of the material Intellectual Property used by the Company or any
of the Material Subsidiaries in the operation of the business of
each and, to the knowledge of the Company, no person is
infringing upon such material Intellectual Property used by the
Company or any of the Material Subsidiaries except as disclosed
in the Company's Information Record;
(c) other than as described in the Company's Information Record, no
license or sub-license has been granted or other contract
(including any assignment, right of first refusal or other
option to license or acquire) has been entered into with respect
to any of the Intellectual Property used by the Company or the
Material Subsidiaries in the operation of their respective
businesses;
(d) the research and development of products by the Company and the
Material Subsidiaries (including the manufacture, testing and
clinical trials of products by the Company or its Material
Subsidiaries, or other parties on their behalf) is conducted in
all material respects in compliance with all applicable laws
("APPLICABLE LAWS") in each jurisdiction in which the Company or
the Material Subsidiaries conduct any of such activities,
including, without limitation, any requirements of the TPD and
the FDA and applicable prescribed good manufacturing practices
and good clinical practices. Neither the Company nor any of the
Material Subsidiaries has received notice of any material
violation of any Applicable Laws, or any materially
unsatisfactory results of an inspection or audit of its
manufacturing facilities or processes conducted by the TPD, FDA
or other governmental authority;
(e) the Company and the Material Subsidiaries have obtained all
necessary licenses, permits, certificates and other
authorizations or approvals ("PRODUCT REGISTRATIONS") required
for the research, development, manufacture, storage,
distribution and sale of its products, or products of other
parties (under contract with the Company or a Material
Subsidiary) as required under Applicable Laws in each
jurisdiction in which the Company or the Material Subsidiaries
conduct any of such activities. All information contained in any
of the Product Registrations, and any applications therefor, was
true and correct in all material respects as of the date filed
with the applicable governmental authority, and such information
has been updated to maintain the accuracy thereof to the extent
required by Applicable Laws. The Company and the Material
Subsidiaries have taken all necessary steps to maintain the
Product Registrations. All research and development of products
by the Company or any of the Material Subsidiaries (including
the manufacture, testing and clinical trials of products by the
Company or its Material Subsidiaries, or other parties or on
their behalf) pursuant to Product
- 18 -
Registrations have been conducted in accordance with the
specifications and standards contained in the applicable Product
Registrations. Neither the Company nor any of the Material
Subsidiaries has received notice of any violation of a Product
Registrations from any governmental authority. The Product
Registrations are owned solely and exclusively by the Company
and/or the Material Subsidiaries;
(f) the Company and the Material Subsidiaries have complied with in
all material respects with all requirements relating to adverse
drug reactions, including any reporting obligations, in
accordance with Applicable Laws, and have maintained appropriate
records relating thereto;
(g) there are no current restrictions on the release of or any
recall of products (including any seizure order) manufactured
by, or under contract for, the Company or any Material
Subsidiary that have, or are likely to have, a material effect
on the Company and the Material Subsidiaries;
(h) the Company and the Material Subsidiaries (i) are in material
compliance with any and all applicable foreign, federal,
provincial, state and local laws and regulations relating to the
protection of human health and safety or the environment,
relating to hazardous or toxic substances or wastes, pollutants
or contaminants or nuclear or radio active substances
("ENVIRONMENTAL LAWS"), (ii) have received all material permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses, (iii)
are in material compliance with all terms and conditions of any
such permit, license or approval, (iv) there have been no past,
and there are no pending or, to the best knowledge of the
Company, threatened claims, complaints, notices or requests for
information received by the Company or the Material Subsidiaries
with respect to any alleged material violation of any
Environmental Law and (v) to the knowledge of the Company, no
conditions exist at, on or under any property now or previously
owned or leased by the Company or the Material Subsidiaries
which, with the passage of time, or the giving of notice or
both, would give rise to liability under any Environmental Law
that, individually or in the aggregate, has or may reasonably be
expected to have, a material adverse effect or the Company or
the Material Subsidiaries;
4.1.5 EMPLOYMENT MATTERS
(a) each material plan for retirement, bonus, stock purchase, profit
sharing, stock option, deferred compensation, severance or
termination pay, insurance, medical, hospital, dental, vision
care, drug, sick leave, disability, salary continuation, legal
benefits, unemployment benefits, vacation, incentive or
otherwise contributed to or required to be contributed to, by
the Company for the benefit of any current or former director,
officer, employee or consultant of the Company (the "EMPLOYEE
PLANS") has been maintained in compliance with its terms and
with the requirements prescribed by any and all statutes,
orders, rules and regulations that
- 19 -
are applicable to such Employee Plans, in each case in all
material respects and has been publicly disclosed to the extent
required by Applicable Securities Laws;
(b) all material accruals for unpaid vacation pay, premiums for
unemployment insurance, health premiums, federal or state
pension plan premiums, accrued wages, salaries and commissions
and employee benefit plan payments have been reflected in the
books and records of the Company or the Material Subsidiaries;
and
(c) there is not currently any labour disruption which is adversely
affecting or could adversely affect, in a material manner, the
carrying on of the business of the Company and the Material
Subsidiaries on a consolidated basis.
5. CONDITIONS TO PURCHASE OBLIGATION
5.1 The following are conditions of the Underwriters' obligations to close
the purchase of the Units from the Company as contemplated hereby, which
conditions the Company covenants to exercise its reasonable best efforts to have
fulfilled on or prior to the Closing Date, which conditions may be waived in
writing in whole or in part by the Underwriters:
(a) the Company will have made and/or obtained the necessary
filings, approvals, consents and acceptances to or from, as the
case may be, the Securities Commissions and the Exchanges
required to be made or obtained by the Company in connection
with the Offering, on terms which are acceptable to the Company
and the Underwriters, acting reasonably, prior to the Closing
Date;
(b) the Company shall have delivered to the Underwriters within one
business day of the issuance of the receipt for the Preliminary
Prospectus by each of the Qualifying Provinces, or such later
time as may be agreed upon by the Company and the Underwriters,
in such Canadian cities as the Underwriters may reasonably
request, the reasonable requirements of conformed commercial
copies of the Preliminary Prospectus in the English and French
languages;
(c) the Company shall have delivered to the Underwriters within one
business day of the issuance of the receipt for the Final
Prospectus by each of the Qualifying Provinces, or such later
time as may be agreed upon by the Company and the Underwriters,
in such Canadian cities as the Underwriters may reasonably
request, the reasonable requirements of conformed commercial
copies of the Final Prospectus in the English and French
languages;
(d) the Common Shares will have been accepted for listing by the
Exchanges, subject to the usual conditions, and will, at the
opening of trading on the Exchanges on the Closing Date, be
accepted for trading on the Exchanges;
(e) the Warrant Shares will have been accepted for listing by the
Exchanges, subject to the usual conditions, and will upon the
due and proper exercise of the Warrants be listed on the
Exchanges;
- 20 -
(f) the Company's board of directors will have authorized and
approved this Agreement, the Warrant Indenture, the sale and
issuance of the Units, the issuance of the Option, the issuance
of the Warrant Shares upon exercise of the Warrants, and all
matters relating to the foregoing;
(g) the Company will deliver a certificate of the Company and signed
on behalf of the Company, but without personal liability, by the
Chief Executive Officer of the Company and the Chief Financial
Officer of the Company or such other senior officers of the
Company as may be acceptable to the Underwriters, acting
reasonably, addressed to the Underwriters and their counsel and
dated the Closing Date, in form and content satisfactory to the
Underwriters, acting reasonably, certifying that:
(i) no order ceasing or suspending trading in any securities
of the Company or prohibiting the sale of the Common
Shares and Warrant comprising the Units or any of the
Company's issued securities has been issued and no
proceedings for such purpose are pending or, to the
knowledge of such officers, threatened;
(ii) to the knowledge of such officers, there has been no
adverse material change (actual, proposed or
prospective, whether financial or otherwise) in the
business, affairs, operations, assets, liabilities
(contingent or otherwise) or capital of the Company and
the Material Subsidiaries on a consolidated basis since
the date hereof which has not been generally disclosed;
(iii) since the date hereof, no material change relating to
the Company and the Material Subsidiaries on a
consolidated basis, except for the Offering, has
occurred with respect to which the requisite material
change statement or report has not been filed and no
such disclosure has been made on a confidential basis;
(iv) the representations and warranties of the Company
contained in this Agreement are true and correct in all
material respects at the Time of Closing, with the same
force and effect as if made by the Company as at the
Time of Closing after giving effect to the transactions
contemplated hereby; and
(v) the Company has complied with all the covenants and
satisfied all the terms and conditions of this Agreement
on its part to be complied with or satisfied, other than
conditions which have been waived by the Underwriters,
at or prior to the Time of Closing;
(h) the Company will have caused a favourable legal opinion to be
delivered by its Canadian counsel addressed to the Underwriters
and the Underwriters' counsel, acceptable in all reasonable
respects to the Underwriters, including in respect of those
matters identified in Schedule "B" hereto. In giving such
opinion, counsel to the Company shall be entitled to rely, to
the extent appropriate in the circumstances, upon local counsel
and shall be entitled as to matters of fact to rely
- 21 -
upon a certificate of fact from responsible persons in a
position to have knowledge of such facts and their accuracy;
(i) the Company will have caused a favourable legal opinion to be
delivered by Quebec counsel addressed to the Underwriters and
the Underwriters' counsel, in form and substance satisfactory to
the Underwriters, acting reasonably, with respect to compliance
with the laws of the Province of Quebec relating to the use of
the French language in connection with the distribution of the
Common Shares and Warrants comprising the Units in the Province
of Quebec;
(j) the Company will have caused a favourable legal opinion to be
delivered by local counsel in the jurisdiction of incorporation
of each of the Material Subsidiaries addressed to the
Underwriters, in form and substance satisfactory to the
Underwriters, acting reasonably, and with respect to the
following matters:
(A) the incorporation and existence of each Material
Subsidiary under the laws of its jurisdiction of
incorporation;
(B) as to the holder of the issued and outstanding shares of
each Material Subsidiary; and
(C) that each Material Subsidiary has all requisite
corporate power under the laws of its jurisdiction of
incorporation to carry on its business as presently
carried on and own its properties and assets;
(k) the Company shall have caused a favourable "no registration"
opinion to be delivered to the Underwriters by United States
counsel, in respect of sales of the Units in the United States
or to U.S. persons;
(l) the Company will have caused Deloitte and Touche LLP to deliver
an update of its letter referred to in paragraph 6(a) below;
(m) the Company will cause its registrar and transfer agent to
deliver a certificate as to the issued and outstanding common
shares of the Company; and
(n) the letter agreement between the Company and SGF Sante Inc
("SGF") in connection with the acquisition of SGF's 32.65%
interest in Draxis Pharma Inc., as described in the Preliminary
Prospectus has not been terminated or materially amended.
6. ADDITIONAL DOCUMENTS UPON FILING OF FINAL PROSPECTUS The Company shall
cause to be delivered to the Underwriters concurrently with the filing of the
Final Prospectus and any Supplementary Material:
(a) a comfort letter dated the date thereof from the auditors of the
Company and addressed to the Underwriters and to the directors
of the Company, in form and substance reasonably satisfactory to
the Underwriters, relating to the verification of the financial
information and accounting data and other numerical data of a
- 22 -
financial nature contained therein and matters involving changes
or developments since the respective dates as of which specified
financial information is given therein, to a date not more than
two business days prior to the date of such letter;
(b) an opinion from local Quebec counsel to the Company, in form and
substance satisfactory to the Underwriters, addressed to the
Underwriters, counsel to the Underwriters and the directors of
the Company and dated the date thereof to the effect that the
French language version thereof, except with respect to matters
referred to in subsection (c) below is, in all material
respects, a complete and proper translation of the English
language version thereof; and
(c) a letter from the auditors of the Company, in form and substance
satisfactory to the Underwriters, addressed to the Underwriters,
counsel to the Underwriters and the directors of the Company and
dated the date thereof confirming that the financial statements,
management's discussion and analysis of financial condition and
results of operations and other documents incorporated by
reference and translated by such firm contained in the French
language version thereof is, in all material respects, a
complete and proper translation of the English language version
thereof.
7. CLOSING
7.1 The Offering will be completed at the offices of the Company's counsel
in Toronto at the Time of Closing or such other place, date or time as may be
mutually agreed to; provided that if the Company has not been able to comply in
any material respect with any of the covenants or conditions set out herein
required to be complied with by the Time of Closing or such other date and time
as may be mutually agreed to or such covenant or condition has not been waived
by the Underwriters, the respective obligations of the parties will terminate
without further liability or obligation except for payment of expenses,
indemnity and contribution provided for in this Agreement.
7.2 At the Time of Closing, the Company shall deliver to the Underwriters:
(a) certificates representing the Common Shares and Warrants
comprising the Units registered as the Underwriters may direct;
(b) the requisite legal opinions and certificates as contemplated in
section 5.1; and
(c) such further documentation as may be contemplated herein or as
the Underwriters may reasonably require,
against payment of the aggregate purchase price for the Units, net of the
Underwriting Fee and expenses incurred up to the Closing Date, by wire transfer
payable to the Company. Any additional expenses of the Underwriters incurred in
connection with the Offering not included in these expenses retained by the
Underwriters shall be paid by the Company forthwith upon invoices being provided
therefor.
- 23 -
7.3 The Option may be exercised by the Underwriters at any time prior to the
date which is thirty (30) days from the Closing Date, but the Underwriters shall
be under no obligation to exercise the Option. In the event the Company shall
subdivide, consolidate or otherwise change its common shares during the period
during which the Option is exercisable, the number of Additional Units for which
the Option may be exercised shall be similarly subdivided, consolidated or
changed such that the Underwriters would be entitled to receive the same number
and type of securities that they would have otherwise been entitled to receive
had they fully exercised such Option prior to such subdivision, consolidation or
change. The Issue Price (as defined in Schedule "A" hereto) shall be adjusted
accordingly and notice shall be given to the Underwriters of such adjustment. In
the event that the Underwriters shall disagree with the foregoing adjustment,
such adjustment shall be determined conclusively by the Company's auditors at
the Company's expense. The purchase and sale of the Additional Units shall be
completed at the offices of XxXxxxxx Xxxxxxxx LLP on such date agreed to by the
Underwriters and the Company.
7.4 The conditions to purchase obligation set out in Section 5 (read as if
the Closing Date referred to the Over-Allotment Closing and as if the Offering
referred to the Option) and the provisions of Section 7.2, shall apply MUTATIS
MUTANDIS to the Over-Allotment Closing with such amendment as necessary as to
apply to the Additional Units.
7.5 All terms and conditions of this Agreement shall be construed as
conditions and any breach or failure to comply with any such terms and
conditions in any material respect shall entitle the Underwriters to terminate
their obligations to purchase the Units by written notice to that effect given
to the Company prior to the Time of Closing. It is understood that the
Underwriters may waive, in whole or in part, or extend the time for compliance
with, any of such terms and conditions without prejudice to their rights in
respect of any such terms and conditions or any other subsequent breach or
non-compliance; provided that to be binding on the Underwriters, any such waiver
or extension must be in writing.
8. TERMINATION OF PURCHASE OBLIGATION
8.1 Without limiting any of the other provisions of this Agreement, any
Underwriter will be entitled, at its option, to terminate and cancel, without
any liability on its part or on the part of the other Underwriters and the
Purchasers, its obligations under this Agreement, to purchase the Units, by
giving written notice to the Company at any time through to the Time of Closing
if:
(a) MATERIAL CHANGE - there shall be any material change in the
affairs of the Company, or there should be discovered any
previously undisclosed material fact required to be disclosed in
the Preliminary Prospectus, Final Prospectus or amendment
thereto or there should occur a change in a material fact
contained in the Offering Documents or amendment thereto, in
each case which, in the reasonable opinion of the Underwriters
(or any of them), has or would be expected to have a significant
adverse effect on the market price or value of the Common Shares
or Warrants of the Company; or
(b) DISASTER OUT - (i) any inquiry, action, suit, investigation or
other proceeding (whether formal or informal) is commenced,
announced or threatened or any order
- 24 -
made by any federal, provincial, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality including, without limitation, the Exchanges or
any securities regulatory authority or any law or regulation is
enacted or changed which in the opinion of the Underwriters (or
any of them), acting reasonably, operates to prevent or restrict
the issuance or trading of the Common Shares or Warrants of the
Company or materially and adversely affects or will materially
and adversely affect the market price or value of the Common
Shares or Warrants of the Company; or (ii) 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 reasonable opinion of the Underwriters seriously
adversely affects, or will, or could reasonably be expected to,
seriously adversely affect, the financial markets or the
business, operations or affairs of the Company and its
subsidiaries taken as a whole.
The Underwriters shall make reasonable efforts to give notice to
the Company (in writing or by other means) of the occurrence of any of the
events referred to in this section; provided that neither the giving nor the
failure to give such notice shall in any way affect the Underwriters'
entitlement to exercise this right at any time to the Time of Closing.
The Underwriters' rights of termination contained in this
section are in addition to any other rights or remedies they may have in respect
of any default, act or failure to act or noncompliance by the Company in respect
of any of the matters contemplated by this Agreement.
8.2 If the obligations of an Underwriter are terminated under this Agreement
pursuant to the termination rights provided for in section 8.1, the Company's
liabilities to such Underwriter shall be limited to the Company's obligations
under the indemnity, contribution and expense provisions of this Agreement.
9. INDEMNITY
9.1 The Company (the "INDEMNITOR") hereby agrees to indemnify and hold the
Underwriters and the directors, officers, employees and shareholders of the
Underwriters (hereinafter referred to as the "PERSONNEL") harmless from and
against any and all expenses, losses (other than loss of profits), claims,
actions, damages or liabilities, whether joint or several (including the
aggregate amount paid in reasonable settlement of any actions, suits,
proceedings or claims), and the reasonable fees and expenses of its counsel that
may be incurred in advising with respect to and/or defending any claim that may
be made against the Underwriters, to which the Underwriters and/or its Personnel
may become subject or otherwise involved in any capacity under any statute or
common law or otherwise insofar as such expenses, losses, claims, damages,
liabilities or actions arise out of or are based, directly or indirectly, upon
the performance of professional services rendered to the Indemnitor by the
Underwriters and its Personnel hereunder or otherwise in connection with the
matters referred to in the letter to which this is attached, provided, however,
that this indemnity shall not apply to the extent that a court of competent
jurisdiction in a final judgment that has become non-appealable shall determine
that:
- 25 -
(i) the Underwriters or its Personnel have been negligent or
dishonest or have committed any fraudulent act in the course of
such performance; and
(ii) the expenses, losses, claims, damages or liabilities, as to
which indemnification is claimed, were directly caused by the
negligence, dishonesty or fraud referred to in (i).
If for any reason (other than the occurrence of any of the events itemized in
(i) and (ii) above), the foregoing indemnification is unavailable to the
Underwriters or insufficient to hold it harmless, then the Indemnitor shall
contribute to the amount paid or payable by the Underwriters as a result of such
expense, loss, claim, damage or liability in such proportion as is appropriate
to reflect not only the relative benefits received by the Indemnitor on the one
hand and the Underwriters on the other hand but also the relative fault of the
Indemnitor and the Underwriters, as well as any relevant equitable
considerations; provided that the Indemnitor shall, in any event, contribute to
the amount paid or payable by the Underwriters as a result of such expense,
loss, claim, damage or liability, any excess of such amount over the amount of
the fees received by the Underwriters hereunder pursuant to the letter agreement
to which this indemnity is attached.
The Indemnitor agrees that in case any legal proceeding shall be brought against
the Indemnitor and/or the Underwriters by any governmental commission or
regulatory authority or any stock exchange or other entity having regulatory
authority, either domestic or foreign, shall investigate the Indemnitor and/or
the Underwriters and any Personnel of the Underwriters shall be required to
testify in connection therewith or shall be required to respond to procedures
designed to discover information regarding, in connection with, or by reason of
the performance of professional services rendered to the Indemnitor by the
Underwriters, the Underwriters shall have the right to employ its own counsel in
connection therewith, and the reasonable fees and expenses of such counsel as
well as the reasonable costs (including an amount to reimburse the Underwriters
for time spent by its Personnel in connection therewith) and out-of-pocket
expenses incurred by its Personnel in connection therewith shall be paid by the
Indemnitor as they occur.
Promptly after receipt of notice of the commencement of any legal proceeding
against the Underwriters or any of its Personnel or after receipt of notice of
the commencement of any investigation, which is based, directly or indirectly,
upon any matter in respect of which indemnification may be sought from the
Indemnitor, the Underwriters will notify the Indemnitor in writing of the
commencement thereof and, throughout the course thereof, will provide copies of
all relevant documentation to the Indemnitor, will keep the Indemnitor advised
of the progress thereof and will discuss with the Indemnitor all significant
actions proposed. The omission so to notify the Indemnitor shall not relieve the
Indemnitor of any liability which the Indemnitor may have to the Underwriters
except only to the extent that any such delay in giving or failure to give
notice as herein required materially prejudices the defence of such action,
suit, proceeding, claim or investigation or results in any material increase in
the liability which the Indemnitor would otherwise have under this indemnity had
the Underwriters not so delayed in giving or failed to give the notice required
hereunder.
The Indemnitor shall be entitled, at its own expense, to participate in and, to
the extent it may wish to do so, assume the defence thereof, provided such
defence is conducted by experienced and competent counsel. Upon the Indemnitor
notifying the Underwriters in writing of its election
- 26 -
to assume the defence and retaining counsel, the Indemnitor shall not be liable
to the Underwriters for any legal expenses subsequently incurred by them in
connection with such defence. If such defence is assumed by the Indemnitor, the
Indemnitor throughout the course thereof will provide copies of all relevant
documentation to the Underwriters, will keep the Underwriters advised of the
progress thereof and will discuss with the Underwriters all significant actions
proposed.
Notwithstanding the foregoing paragraph, any Underwriter shall have the right,
at the Indemnitor's expense, to employ counsel of such Underwriter's choice, in
respect of the defence of any action, suit, proceeding, claim or investigation
if: (i) the employment of such counsel has been authorized by the Indemnitor; or
(ii) the Indemnitor has not assumed the defence and employed counsel therefor
within a reasonable time after receiving notice of such action, suit,
proceeding, claim or investigation; or (iii) counsel retained by the Company or
the Underwriter(s) has advised the Indemnified Party that representation of both
parties by the same counsel would be inappropriate for any reason, including
without limitation because there may be legal defences available to the
Underwriters which are different from or in addition to those available to the
Underwriters (in which event and to that extent, the Company shall not have the
right to assume or direct the defence on the Underwriter's behalf) or that there
is a conflict of interest between the Indemnitor and the Underwriters or the
subject matter of the action, suit, proceeding, claim or investigation may not
fall within the indemnity set forth herein (in either of which events the
Underwriters shall not have the right to assume or direct the defence on the
Indemnified Party's behalf).
No admission of liability and no settlement of any action, suit, proceeding,
claim or investigation shall be made without the consent of the Underwriters
affected. No admission of liability shall be made and the Indemnitor shall not
be liable for any settlement of any action, suit, proceeding, claim or
investigation made without its consent.
The indemnity and contribution obligations of the Indemnitor shall be in
addition to any liability which the Indemnitor may otherwise have, shall extend
upon the same terms and conditions to the Personnel of the Underwriters and
shall be binding upon and enure to the benefit of any successors, assigns, heirs
and personal representatives of the Indemnitor, the Underwriters and any of the
Personnel of the Underwriters. The foregoing provisions shall survive the
completion of professional services rendered under the letter to which this is
attached or any termination of the authorization given by the letter to which
this is attached.
This indemnity agreement (i) shall not be assignable by any party hereto without
the prior written consent of each other party hereto; and (ii) shall be governed
by and construed in accordance with the law of the Province of Ontario and the
federal law of Canada applicable therein and the parties hereto hereby
irrevocably attorn to the jurisdiction of the court of the Province of Ontario.
No waiver, amendment or other modification of this indemnity agreement shall be
effective unless in writing and signed by each of the parties hereto. Any notice
or other communication required or permitted to be given under this indemnity
agreement shall be so given in accordance with this Agreement.
- 27 -
9.2 To the extent that any Indemnified Party is not a party to this
Agreement, the Underwriters shall obtain and hold the right and benefit of the
indemnity provisions of section 9.1 in trust for and on behalf of such
Underwriter or Personnel.
10. CONTRIBUTION
10.1 In the event that the indemnity provided for above is, for any reason,
illegal or unenforceable as being contrary to public policy or for any other
reason, the Underwriters and the Company shall contribute to the aggregate of
all losses, claims, costs, damages, expenses or liabilities (including any legal
or other expenses reasonably incurred by an Underwriter or Personnel in
connection with investigating or defending any action or claim which is the
subject of this section but excluding loss of profits or consequential damages)
of the nature provided for above such that the Underwriters will be responsible
for that portion represented by the percentage that the portion of the
Underwriting Fee payable by the Company to the Underwriters bears to the gross
proceeds realized from the sale of the Units, and the Company will be
responsible for the balance, provided that, in no event, will the Underwriters
be responsible for any amount in excess of the amount of the Underwriting Fee
actually received by them. In the event that the Company may be held to be
entitled to contribution from the Underwriters under the provisions of any
statute or law, the Company shall be limited to contribution in an amount not
exceeding the lesser of: (i) the portion of the full amount of losses, claims,
costs, damages, expenses and liabilities, giving rise to such contribution for
which the Underwriters are responsible, as determined above; and (ii) the amount
of the Underwriting Fee actually received by the Underwriters. Notwithstanding
the foregoing, a party guilty of fraudulent misrepresentation or material
non-compliance with the provisions of this Agreement or non-compliance with
applicable laws shall not be entitled to contribution from the other party.
Any party entitled to contribution will, promptly after receiving notice
of commencement of any claim, action, suit or proceeding against such party in
respect of which a claim for contribution may be made against the other party
under this section, notify such party from whom contribution may be sought. In
no case shall such party from whom contribution may be sought be liable under
this Agreement unless such notice has been provided, but the omission to so
notify such party shall not relieve the party from whom contribution may be
sought from any other obligation it may have otherwise than under this section,
except to the extent such party is materially prejudiced by the failure to
receive such notice. The right to contribution provided in this section shall be
in addition to, and not in derogation of, any other right to contribution which
the Underwriters or the Company may have by statute or otherwise by law.
10.2 The Company hereby waives its right to recover contribution from the
Underwriters or the Personnel with respect to any liability of the Company
solely by reason of or arising out of any misrepresentation contained in any of
the Offering Documents or the Company's Information Record, other than a
misrepresentation included in reliance upon information furnished to the Company
by or on behalf of the Underwriters specifically for use therein or relating
solely to the Underwriters.
11. EXPENSES
11.1 Whether or not the closing of the Offering occurs, all expenses incurred
from time to time of or incidental to the sale, issue, distribution and
qualification for distribution of the Common
- 28 -
Shares and Warrants comprising the Units and to all matters in connection with
the transactions herein set forth shall be borne by the Company including the
fees and disbursements of counsel to the Underwriters (up to a maximum of
$85,000 plus GST and disbursements).
12. LIABILITY OF UNDERWRITERS
12.1 The obligations of the Underwriters to purchase the Units in connection
with the Offering at the Time of Closing shall be several (and not joint or
joint and several) and shall be as to the following percentages of the Units to
be purchased at that time:
NAME OF UNDERWRITER LIABILITY
Desjardins Securities Inc. 65%
CIBC World Markets Inc. 35%
12.2 If either of the Underwriters fails to purchase its applicable
percentage of the aggregate amount of the Units at the Time of Closing, the
other Underwriter shall have the right, but shall not be obligated, to purchase
the Units which would otherwise have been purchased by the Underwriter which
fails to purchase. If, with respect to the Units, the non-defaulting
Underwriters elect not to exercise such rights to assume the entire obligations
of the defaulting Underwriter, then the Company shall have the right to
terminate its obligations hereunder without liability except in respect of its
indemnity, contribution and expense obligations in respect of the non-defaulting
Underwriter. Nothing in this paragraph shall oblige the Company to sell to the
Underwriters less than all of the aggregate amount of the Units or shall relieve
an Underwriter in default hereunder from liability to the Company.
13. ACTION BY UNDERWRITERS
13.1 All steps which must or may be taken by the Underwriters in connection
with the closing of the Offering, with the exception of the matters relating to
termination of purchase obligations, may be taken by Desjardins Securities Inc.
on behalf of itself and the other Underwriters and the execution of this
Agreement by the other Underwriters and by the Company shall constitute the
Company's authority and obligation for accepting notification of any such steps
from, and for delivering the definitive documents constituting the Common Shares
and Warrants comprising the Units to or to the order of, Desjardins Securities
Inc. Desjardins Securities Inc. shall fully consult with CIBC World Markets Inc.
with respect to all notices, waivers, extensions or other communications to or
with the Company.
14. SURVIVAL OF WARRANTIES, REPRESENTATIONS, COVENANTS AND AGREEMENTS
14.1 All warranties, representations, covenants and Agreements of the Company
herein contained or contained in documents submitted or required to be submitted
pursuant to this Agreement shall survive the purchase by the Underwriters of the
Units and shall continue in full force and effect for the benefit of the
Underwriters regardless of the closing of the sale of the Units and regardless
of any investigation which may be carried on by the Underwriters or on their
behalf until the Survival Limitation Date. For greater certainty, and without
limiting the generality of the foregoing, the provisions contained in this
Agreement in any way related to the
- 29 -
indemnification of the Underwriters by the Company or the contribution
obligations of the Underwriters or those of the Company shall survive and
continue in full force and effect, indefinitely.
15. GENERAL CONTRACT PROVISIONS
15.1 Any notice or other communication to be given hereunder shall be in
writing and shall be given by delivery or by telecopier, as follows:
if to the Company:
Draxis Health Inc.
0000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxxx Xxxxxx
Telecopier Number: (000) 000-0000
with a copy to:
XxXxxxxx Xxxxxxxx LLP
Toronto Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx Xxxxxxxxxx
Telecopier Number: (000) 000-0000
or if to the Underwriters:
Desjardins Securities Inc.
000 Xxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxx X. Xxxxxx
Telecopier Number: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx & Xxxxxxxxx LLP
2100 Scotia Plaza
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
- 30 -
Attention: Xxxx Xxxxxxx
Telecopier Number: (000) 000-0000
and if so given, shall be deemed to have been given and received upon receipt by
the addressee or a responsible officer of the addressee if delivered, or four
hours after being telecopied and receipt confirmed during normal business hours,
as the case may be. Any party may, at any time, give notice in writing to the
others in the manner provided for above of any change of address or telecopier
number.
15.2 This Agreement and the other documents herein referred to constitute the
entire Agreement between the Underwriters and the Company relating to the
subject matter hereof and supersedes all prior Agreements between the
Underwriters and the Company with respect to their respective rights and
obligations in respect of the Offering, including the offer letter between
Desjardins Securities Inc. and the Company dated March 31, 2004.
15.3 Time shall be of the essence for all provisions of this Agreement.
15.4 This Agreement may be executed by telecopier and in one or more
counterparts which, together, shall constitute an original copy hereof as of the
date first noted above.
- 31 -
If this Agreement accurately reflects the terms of the transaction which
we are to enter into and if such terms are agreed to by the Company, please
communicate your acceptance by executing where indicated below.
Yours very truly,
DESJARDINS SECURITIES INC.
Per: /s/ Xxxxxx X. Xxxxxx
Authorized Signing Officer
CIBC WORLD MARKETS INC.
Per: /s/ Xxxx Xxxxxxxxxx
Authorized Signing Officer
The foregoing accurately reflects the terms of the transaction
which we are to enter into and such terms are agreed to with effect as of the
date provided at the top of the first page of this Agreement.
DRAXIS HEALTH INC.
Per: /s/ Xxxxxx Xxxxxx
Authorized Signing Officer
Per: /s/ Xxxx Xxxxxxx
Authorized Signing Officer
SCHEDULE "A"
DETAILS OF THE OFFERING
THIS IS SCHEDULE "A" TO THE
UNDERWRITING AGREEMENT DATED AS OF APRIL 2, 2004
BETWEEN DRAXIS HEALTH INC. AND DESJARDINS SECURITIES INC., CIBC WORLD MARKETS
INC.
ISSUER: Draxis Health Inc. (the "Company")
AMOUNT: 3,053,436 units (the "Units") of the Company on a bought
deal basis
PRICE: $6.55 per Unit (the "Issue Price")
GROSS PROCEEDS: approximately $20,000,000
UNIT: Each Unit shall consist of one common share of the
Company (a "Common Share") and one-half of one Common
Share purchase warrant (a "Warrant") of the Company.
WARRANTS: Each whole Warrant will entitle the holder to purchase
one Common Share of the Company at a price of $8.50 at
any time on or before the date which is two years from
the Closing Date (as hereinafter defined).
OVERALLOTMENT OPTION: The Company will grant the Underwriters an option to
purchase up to 458,016 additional Units at the Issue
Price until that date which is 30 days after the Closing
Date.
TYPE OF TRANSACTION: Bought deal, public issue, subject to a formal
underwriting agreement, including a standard industry
"disaster out clause" and "material adverse change
clause" running up to the Closing Date.
The Company agrees to use its reasonable best efforts
to: (i) file a preliminary prospectus (in respect of
which the Underwriters shall have an opportunity to
participate and satisfy their statutory obligations
under applicable securities laws) qualifying the
issuance and distribution of the Common Shares and
Warrants comprising the Units in each of the
Jurisdictions, and (ii) obtain a receipt for the same
not more than two business days after the date that this
agreement is entered into.
JURISDICTIONS: The qualifying jurisdictions for this Offering will be
all provinces of Canada. Units will also be sold to U.S.
buyers on a private placement basis pursuant to an
exemption from the registration requirements in
Regulation D of the UNITED STATES SECURITIES ACT OF
1933, as amended.
- 2 -
LISTING: The Company shall obtain the necessary approvals to list
the Common Shares (including the Common Shares issuable
upon exercise of the Warrants) on the Toronto Stock
Exchange (the "TSX") and the NASDAQ, which listings
shall be conditionally approved prior to the Closing
Date.
ELIGIBILITY: Eligible under the usual statutes and for RRSP's, RRIF's
and DPSP's.
UNDERWRITING FEE: 5.5% payable at closing.
CLOSING DATE: April 22, 2004 (the "Closing Date")
SYNDICATE: Desjardins Securities Inc. CIBC World Markets Inc.
USE OF PROCEEDS: The Company will use the proceeds of the offering to pay
$13 million cash to Societe generale de financement du
Quebec ("SGF") to acquire its 32.7% interest in the
Company's manufacturing subsidiary, DRAXIS Pharma inc.
("DPI"). SGF and to repay approximately $6 million in
debt owed by DPI.
SCHEDULE "B"
OPINION OF THE COMPANY'S COUNSEL
THIS IS SCHEDULE "B" TO THE
UNDERWRITING AGREEMENT DATED AS OF APRIL 2, 2004
BETWEEN DRAXIS HEALTH INC. AND DESJARDINS SECURITIES INC. AND CIBC WORLD MARKETS
INC.
The opinion of the Company's counsel shall be in respect of the following
matters:
(i) the Company is a "reporting issuer", or its equivalent, in each
of the Qualifying Provinces and it is not listed as in default
of any requirement of the Applicable Securities Laws in any of
the Qualifying Provinces;
(ii) the Company is a corporation existing under the BUSINESS
CORPORATIONS ACT (Ontario) and has all requisite corporate power
to carry on its business as now conducted and to own, lease and
operate its property and assets and to execute, deliver and
perform its obligations under this Agreement and the Warrant
Indenture;
(iii) the Company is authorized to issue, among other things, an
unlimited number of common shares;
(iv) as to the issued and outstanding common shares of the Company;
(v) the Company has all necessary corporate power and capacity and
has taken all necessary corporate action: (i) to execute and
deliver this Agreement and the Warrant Indenture and perform its
obligations under this Agreement and the Warrant Indenture; (ii)
to create, issue and sell the Common Shares and Warrants
comprising the Units; (iii) to grant the Option to the
Underwriters; and (iv) to issue the Warrant Shares upon exercise
of the Warrants in accordance with the terms of the Warrant
Indenture;
(vi) all necessary corporate action has been taken by the Company to
authorize the execution and delivery of each of the Preliminary
Prospectus and the Final Prospectus both in the English and
French language and the filing thereof with the Securities
Commissions;
(vii) upon the payment therefore and the issue thereof, the Common
Shares partially comprising the Units will have been validly
issued as fully paid and non-assessable;
(viii) the Warrant Shares issuable upon the exercise of the Warrants
partially comprising the Units have been validly created and
reserved for issuance by the Company and, upon the payment of
the exercise price therefore and the issue thereof, will be
validly issued as fully paid and non-assessable;
- 2 -
(ix) all necessary corporate action has been taken by the Company to
authorize the execution and delivery of this Agreement and the
Warrant Indenture and the performance of its obligations
hereunder and thereunder and this Agreement and the Warrant
Indenture have been executed and delivered by the Company and
constitute legal, valid and binding obligations of the Company
enforceable against it in accordance with their terms, subject
to bankruptcy, insolvency and other laws affecting the rights of
creditors generally and subject to such other standard
assumptions and qualifications including the qualifications that
equitable remedies may be granted in the discretion of a court
of competent jurisdiction and that enforcement of rights to
indemnity, contribution and waiver of contribution set out in
this Agreement and the Warrant Indenture may be limited by
applicable law and that enforceability is subject to the
provisions of the LIMITATIONS ACT, 2002 (Ontario);
(x) the rights, privileges, restrictions and conditions attaching to
the Common Shares and Warrants are accurately summarized in all
material respects in the Final Prospectus;
(xi) all necessary documents have been filed, all requisite
proceedings have been taken and all approvals, permits and
consents of the appropriate regulatory authority in each
Qualifying Provinces have been obtained by the Company to
qualify the distribution or distribution to the public of the
Common Shares and Warrants comprising the Units, the Option, and
the Warrant Shares issuable upon the exercise of the Warrants in
each of the Qualifying Provinces through persons who are
registered under applicable legislation and who have complied
with the relevant provisions of such applicable legislation;
(xii) the issue by the Company of the Warrant Shares to be issued upon
exercise of the Warrants is exempt from, or is not subject to,
the prospectus and registration requirements of the laws of each
of the Qualifying Provinces and no prospectus or other documents
are required to be filed, proceedings taken, or approvals,
permits, consents or authorizations obtained by the Company
under Applicable Securities Laws in any of the Qualifying
Provinces, provided that, where applicable, no commission or
other remuneration is paid or given to others in respect of such
distribution except for administrative, ministerial or
professional services, as applicable, or for services performed
by a registered dealer or broker or by a person or company
registered for trading in securities, as applicable and subject
to the exceptions generally provided for in such opinion;
(xiii) the first trade in, or resale of, as applicable, the Warrant
Shares issued upon exercise of the Warrants is exempt from, or
is not subject to, the prospectus requirements of the Securities
Laws of each of the Qualifying Provinces and no filing,
proceeding or approval will need to be made, taken or obtained
by the Corporation under such laws in connection with
- 3 -
any such trade, subject to the exceptions generally provided for
in such opinions;
(xiv) subject only to the standard listing conditions, the Common
Shares partially comprising the Units and the Warrant Shares
issuable upon the exercise of the Warrants have been
conditionally listed on the Exchanges;
(xv) the form and terms of the definitive certificate representing
the common shares at the Company have been approved by the
directors of the Company and comply in all material respects
with the BUSINESS CORPORATIONS ACT (Ontario) and the rules and
by-laws of the Exchanges;
(xvi) the execution and delivery of this Agreement and the Warrant
Indenture, the fulfilment of the terms hereof and thereof by the
Company and the issuance, sale and delivery of the Units to be
issued and sold by the Company at the Time of Closing, the grant
of the Option to the Underwriters and the issuance of the
Warrant Shares issuable upon the exercise of the Warrants do not
and will not result in a breach of or default under, and do not
and will not create a state of facts which, after notice or
lapse of time or both, will result in a breach of or default
under, and do not and will not conflict with any of the terms,
conditions or provisions of the articles or by-laws of the
Company;
(xvii) Computershare Trust Company of Canada has been appointed the
warrant agent under the Warrant Indenture and the transfer agent
and registrar for the Common Shares;
(xviii) subject to the assumptions, limitations and restrictions set out
under the heading "Canadian Federal Income Tax Considerations"
and "Eligibility for Investment" in the Final Prospectus, and
based and relying upon the matters set out therein, on the date
hereof, the Common Shares and Warrants are, and the Warrant
Shares issuable upon the exercise of the Warrants, if issued on
the date hereof would be, qualified investments for trusts
governed by registered retirement savings plans, registered
retirement income funds, deferred profit sharing plans and
registered education savings plans under the INCOME TAX ACT
(Canada) (the "Plans"), provided that, in the case of the
Warrants, each person who is an annuitant, a beneficiary, an
employer or a subscriber under the particular Plan deals at
arm's length with the Company. In addition, on the date hereof,
the Common Shares and Warrants do not, and the Warrant Shares
issuable on the exercise of the Warrants would not, if issued on
the date hereof, constitute "foreign property" for Plans (other
than registered education savings plans), registered investments
and other tax exempt entities, including most registered pension
plans, that are subject to tax under Part XI of the INCOME TAX
ACT (Canada). Trusts governed by registered education savings
plans are not subject to the foreign property rules;
- 4 -
(xix) the statements set forth in the Final Prospectus under the
caption "Canadian Federal Income Tax Considerations" insofar as
they purport to describe the provisions of the laws referred to
therein, are fair summaries of the matters discussed therein;
(xviii) all laws in the Province of Quebec relating to the use of the
French language will be complied with in respect of the
documents to be delivered to Purchasers in the Province of
Quebec in connection with the sale of the Units to the
Purchasers in the Province of Quebec; and
(xix) the statements set forth in the Final Prospectus under the
caption "Eligibility for Investment", insofar as they purport to
describe the provisions of the laws referred to therein, are
fair summaries of the matters discussed therein.
SCHEDULE "C"
MATERIAL SUBSIDIARIES
THIS IS SCHEDULE "C" TO THE
UNDERWRITING AGREEMENT DATED AS OF APRIL 2, 2004
BETWEEN DRAXIS HEALTH INC. AND DESJARDINS SECURITIES INC. AND CIBC WORLD MARKETS
INC.
NAME JURISDICTION % OWNERSHIP
---------------------------- ------------------ -----------
DRAXIMAGE Inc. Canada (CBCA) 100
DRAXIS Pharma Inc. Canada (CBCA) 67.35
Deprenyl Animal Health, Inc. State of Louisiana 100
SCHEDULE "D"
TERMS FOR OFFERING TO U.S. PURCHASERS
THIS IS SCHEDULE "D" TO THE
UNDERWRITING AGREEMENT DATED AS OF APRIL 2, 2004
BETWEEN DRAXIS HEALTH INC. AND DESJARDINS SECURITIES INC. AND CIBC WORLD MARKETS
INC.
As used in this Schedule "D", capitalized terms used herein and not
defined herein shall have the meanings ascribed thereto in the
Underwriting
Agreement to which this Schedule "D" is annexed and the following terms shall
have the meanings indicated:
(a) "Directed Selling Efforts" means directed selling efforts as
that term is defined in Regulation S. Without limiting the
foregoing, but for greater clarity in this Schedule, it means,
subject to the exclusions from the definition of directed
selling efforts contained in Regulation S, any activity
undertaken for the purpose of, or that could reasonably be
expected to have the effect of, conditioning the market in the
United States for any of the Units and includes the placement of
any advertisement in a publication with a general circulation in
the United States that refers to the offering of the Units;
(b) "Foreign Issuer" shall have the meaning ascribed thereto in
Regulation S. Without limiting the foregoing, but for greater
clarity in this Schedule, it means any issuer which is (a) the
government of any foreign country or of any political
subdivision of a foreign country; or (b) a corporation or other
organization incorporated under the laws of any foreign country,
except an issuer meeting the following conditions: (1) more than
50 percent of the outstanding voting securities of such issuer
are held of record either directly or through voting trust
certificates or depositary receipts by residents of the United
States; and (2) any of the following: (i) the majority of the
executive officers or directors are United States citizens or
residents, (ii) more than 50 percent of the assets of the issuer
are located in the United States, or (iii) the business of the
issuer is administered principally in the United States;
(c) "General Solicitation" and "General Advertising" means "general
solicitation" and general advertising", respectively, as used
under Rule 502(c) under the U.S. Securities Act, including
advertisements, articles, notices or other communications
published in any newspaper, magazine or similar media or
broadcast over radio or television, or any seminar or meeting
whose attendees had been invited by general solicitation or
general advertising or in any other manner involving a public
offering within the meaning of Section 4(2) of the U.S.
Securities Act;
(d) "Institutional Accredited Investor" means those institutional
"accredited investors" specified in Rule 501(a)(1),(2),(3) and
(7) of Regulation D;
(e) "Regulation D" means Regulation D adopted by the SEC under the
U.S. Securities Act;
- 2 -
(f) "Regulation S" means Regulation S adopted by the SEC under the
U.S. Securities Act;
(g) "SEC" means the United States Securities and Exchange
Commission;
(h) "Substantial U.S. Market Interest" means substantial U.S. market
interest as that term is defined in Regulation S;
(i) "U.S. Exchange Act" means the United States Securities Exchange
Act of 1934, as amended;
(j) "U.S. Person" means a U.S. person as that term is defined in
Regulation S;
(k) "U.S. Securities Act" means the United States Securities Act of
1933, as amended; and
(l) "United States" means the United States of America, its
territories and possessions, any state of the United States, and
the District of Columbia.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE UNDERWRITERS
Each Underwriter acknowledges that the Units have not been and will not
be registered under the U.S. Securities Act and may be offered and sold within
the United States or to, or for the account or benefit of U.S. Persons, only in
accordance with Regulation S or pursuant to transactions exempt from or not
subject to the registration requirements of the U.S. Securities Act and state
securities laws. Accordingly, each Underwriter represents, warrants and
covenants to the Company that:
1. It has not offered and sold, and will not offer and sell, any Units
forming part of its allotment described in section 12.1 of the
Underwriting Agreement except (a) in accordance with Rule 903 of
Regulation S or (b) as provided in paragraphs 2 through 10 below.
Accordingly, neither the Underwriter nor any of its affiliates nor any
persons acting on its or their behalf, has engaged or will engage in any
Directed Selling Efforts in the United States with respect to the Units.
2. It has not entered and will not enter into any contractual arrangement
with respect to the distribution of the Units, except with its
affiliates, any selling group members or with the prior written consent
of the Company. It shall require each of its U.S. broker-dealer
affiliate to agree, for the benefit of the Company, to comply with, and
shall use its best efforts to ensure that each of its U.S. broker-dealer
affiliate complies with, the provisions of this Schedule "D" applicable
to such Underwriter as if such provisions applied to such U.S.
broker-dealer affiliate.
3. All offers and sales of Units in the United States shall be made through
the Underwriter's U.S. broker-dealer affiliate in compliance with all
applicable U.S. broker-dealer requirements. Such U.S. broker-dealer
affiliate is a duly registered broker-dealer with the SEC, and is a
member in good standing with the National Association of Securities
Dealers, Inc.
- 3 -
4. In connection with offers and sales of Units in the United States or to
U.S. Persons (i) no form of General Solicitation or General Advertising
shall be used, and (ii) such offers and sales shall not be made in any
manner involving a public offering within the meaning of Section 4(2) of
the U.S. Securities Act.
5. Any offer, sale or solicitation of an offer to buy Units that has been
made or will be made in the United States or to U.S. Persons was or will
be made only to Institutional Accredited Investors in transactions that
are exempt from registration under the U.S. Securities Act and
applicable state securities laws.
6. Prior to any sale of Units in the United States, it shall cause each
U.S. purchaser thereof to execute a Purchaser's Letter in the form
attached hereto as Appendix I.
7. Each offeree in the United States shall be provided, prior to the time
of purchase of any Units, with a copy of the U.S. private placement
offering memorandum (the "U.S. Placement Memorandum") attached to a copy
of the Final Prospectus and no other written material will be used in
connection with the offer or sale of the Units in the United States.
8. Immediately prior to transmitting the U.S. Placement Memorandum, it had
reasonable grounds to believe that each offeree was an Institutional
"Accredited Investor".
9. At least one business day prior to the Time of Delivery, the transfer
agent will be provided with a list of all purchasers of the Units in the
United States or who are U.S. Persons.
10. At closing, each U.S. broker-dealer who sold any Units together with
their Canadian affiliate will provide a certificate, substantially in
the form of Appendix II, relating to the manner of the offer and sale of
the Units in the United States and to U.S. Persons.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents, warrants, covenants and agrees that:
1. The Company is a Foreign Issuer with no Substantial U.S. Market Interest
with respect to the Units of the Company.
2. The Company is not, and as a result of the sale of the Units
contemplated hereby will not be, an "investment company" as defined in
the United States Investment Company Act of 1940, as amended.
3. Except with respect to offers and sales to Institutional Accredited
Investors in reliance upon an exemption from registration under Section
4(2) of the U.S. Securities Act, neither the Company nor any of its
affiliates, and assuming the representations, warranties and covenants
of the Underwriters are true and accurate nor any person acting on its
or their behalf, has made or will make: (A) any offer to sell, or any
solicitation of an offer to buy, any Units to a person in the United
States; or (B) any sale of Units unless, at the time the buy order was
or will have been originated, the purchaser is (i) outside the United
- 4 -
States or (ii) the Company, its affiliates, and any person acting on
their behalf reasonably believe that the purchaser is outside the United
States.
4. Neither it nor any of its affiliates nor any person acting on its or
their behalf, has made or will make any Directed Selling Efforts in the
United States with respect to the Units, or has taken or will take any
action that would cause the exemption afforded by Section 4(2) of the
U.S. Securities Act or Regulation S to be unavailable for offers and
sales of the Units pursuant to this Agreement.
5. None of the Company, any of its affiliates or any person acting on its
or their behalf have engaged or will engage in any form of General
Solicitation or General Advertising with respect to offers or sales of
the Units in the United States.
6. Except with respect to the offer and sale of the Units offered hereby,
the offer and sale of subscription receipts in October 2003 (and the
subsequent issuance of the underlying common shares), and offers and
sales of common shares of the Company pursuant to the Company's employee
benefit plans, neither the Company nor any person acting on behalf of
the Company has, within six months prior to the date hereof, sold,
offered for sale or solicited any offer to buy any of the Company's
securities of the same or similar class to that of the Units, the Common
Shares, the Warrants or the Warrant Shares.
APPENDIX I TO SCHEDULE "D"
U.S. PURCHASER'S LETTER
TO: VALEURS MOBILIERES XXXXXXXXXX INTERNATIONAL INC.
AND TO: DRAXIS HEALTH INC.
RE: PURCHASE OF UNITS OF DRAXIS HEALTH INC.
Ladies and Gentlemen:
In connection with its agreement to purchase units ("Units") of Draxis
Health Inc. (the "Company"), the undersigned represents, warrants and covenants
to you as follows:
(a) it is authorized to consummate the purchase of the Units;
(b) it understands that the Units have not been and will not be
registered under the UNITED STATES SECURITIES ACT OF 1933, as
amended (the "U.S. Securities Act"), or any applicable state
securities laws and that the offer and sale of Units to it is
being made in reliance on a private placement exemption to
Institutional Accredited Investors (as such term is defined on
Annex A hereto);
(c) it has received a copy, for its information only, of the
Canadian Final Short Form Prospectus, dated April [-] 2004,
together with a U.S. placement memorandum, relating to the
offering in the United States of the Units and it has had access
to such additional information, if any, concerning the Company
as it has considered necessary in connection with its investment
decision to acquire the Units;
(d) it has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of
its investment in the Units and is able to bear the economic
risks of such investment;
(e) it is an Institutional Accredited Investor or, if the Units are
to be purchased for one or more accounts ("investor accounts")
for which it is acting as a fiduciary or agent, each such
investor account is an Institutional Accredited Investor on a
like basis. It is acquiring the Units for its own account or for
one or more investor accounts for which it is acting as
fiduciary or agent, in each case for investment, and not with a
view to, or for offer or sale in connection with, any
distribution thereof in violation of the U.S. Securities Act or
applicable state securities laws;
(f) it is purchasing the Units having an aggregate purchase price of
at least Cdn.$100,000 for its own account or for one or more
accounts as to which it exercises sole investment discretion and
each such account is purchasing Units having such an aggregate
purchase price;
(g) it acknowledges that it has not purchased the Units as a result
of any general solicitation or general advertising (as those
terms are used in Regulation D under the U.S. Securities Act),
including advertisements, articles, notices or other
communications published in any newspaper, magazine or similar
media or
- 2 -
broadcast over radio or television, or any seminar or meeting
whose attendees have been invited by general solicitation or
general advertising;
(h) it agrees that if it decides to offer, sell or otherwise
transfer any of the Units, it will not offer, sell or otherwise
transfer any of such Units, directly or indirectly, unless:
(i) the sale is to the Company; OR
(ii) (A) the sale is to an Institutional Accredited Investor
and is of a number of Units having an aggregate market
value at the time of such sale of not less than
Cdn$100,000, (B) a purchaser's letter containing
representations, warranties and agreements substantially
similar to those contained in this purchaser's letter
(except that such purchaser's letter need not contain
the representation set forth in paragraph (c) above),
and satisfactory to the U.S. Underwriter and the
Company, is executed by the purchaser and delivered to
the U.S. Underwriter and the Company prior to the sale
and (C) all offers or solicitations in connection with
the sale are arranged and conducted solely by the U.S.
Underwriter or the Company; OR
(iii) the sale is made outside the United States in compliance
with the requirements of Rule 904 of Regulation S under
the U.S. Securities Act and in compliance with
applicable local laws and regulations; OR
(iv) the sale is made pursuant to an exemption from
registration under the U.S. Securities Act provided by
Rule 144 thereunder, if available; OR
(v) the Units are sold in a transaction that does not
require registration under the U.S. Securities Act or
any applicable United States state laws and regulations
governing the offer and sale of securities, and we have
therefore furnished to the U.S. Underwriter and the
Company an opinion of counsel of recognized standing
reasonably satisfactory to the U.S. Underwriter and the
Company.
(i) it understands and acknowledges that upon the original issuance
thereof, and until such time as the same is no longer required
under applicable requirements of the U.S. Securities Act or
applicable state securities laws, all certificates representing
the Units and all certificates issued in exchange therefor or in
substitution thereof, shall bear the following legend:
"THE SECURITIES REPRESENTED HEREBY [FOR WARRANTS INCLUDE
"AND THE SECURITIES ISSUED UPON EXERCISE OF THE
WARRANTS"] HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S.
SECURITIES ACT") OR ANY STATE SECURITIES LAWS. THE
HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR
THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY
BE
- 3 -
OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE
WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES
ACT, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION
UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER, IF APPLICABLE, OR (D) IN COMPLIANCE WITH
CERTAIN OTHER PROCEDURES SATISFACTORY TO THE
CORPORATION. DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS
ON STOCK EXCHANGES IN CANADA. A NEW CERTIFICATE, BEARING
NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE "GOOD
DELIVERY", MAY BE OBTAINED FROM COMPUTERSHARE TRUST
COMPANY OF CANADA, AS REGISTRAR AND TRANSFER AGENT OF
THE CORPORATION, UPON DELIVERY OF THIS CERTIFICATE AND A
DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY TO
COMPUTERSHARE TRUST COMPANY OF CANADA AND THE
CORPORATION, TO THE EFFECT THAT SUCH SALE IS BEING MADE
IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE
U.S. SECURITIES ACT.";
provided, that if any Units are being sold under paragraph
(h)(iii) above, and applicable Canadian laws and regulations,
any such legend may be removed (or in the case of the warrants,
replaced with another legend as set forth in the warrant
indenture governing the warrants) by providing a declaration to
Computershare Trust Company of Canada, as registrar and transfer
agent (or warrant agent, in the case of the warrants), to the
effect set forth in Annex B hereto (or as the Company may
prescribe from time to time); and provided, further, that, if
any Units are being sold under paragraph (h)(iv) above, the
legend may be removed by delivery to Computershare Trust Company
of Canada of an opinion of counsel, of recognized standing
reasonably satisfactory to the Company, to the effect that such
legend is no longer required under applicable requirements of
the U.S. Securities Act or state securities laws;
(j) it consents to the Company making a notation on its records or
giving instructions to any transfer agent, registrar or warrant
agent of the Units in order to implement the restrictions on
transfer set forth and described herein; and
(k) if required by applicable securities legislation, regulatory
policy or order or by any securities commission, stock exchange
or other regulatory authority, it will execute, deliver and file
and otherwise assist the Company in filing reports,
questionnaires, undertakings and other documents with respect to
the issue of the Units.
The undersigned acknowledges that the representations and warranties and
agreements contained herein are made by it with the intent that they may be
relied upon by you in
- 4 -
determining its eligibility (or, if applicable, the eligibility of others on
whose behalf we are contracting hereunder) to purchase the Units. By this letter
the undersigned represents and warrants that the foregoing representations and
warranties are true as at the closing time with the same force and effect as if
they had been made by it at the closing time and that they shall survive the
purchase by it of the Units and shall continue in full force and effect
notwithstanding any subsequent disposition by the undersigned of the Units or
the underlying securities.
You are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
- 5 -
The undersigned, purchaser agrees to be bound by the terms and conditions set
forth in this U.S. Purchaser's Letter including without limitation the
representations, warranties and covenants contained herein. The purchaser
further agrees, without limitation, that the Company and the underwriters may
rely upon the purchaser's representations, warranties and covenants contained in
this U.S. Purchaser's Letter.
PLEASE PRINT ALL INFORMATION (OTHER THAN SIGNATURES), AS APPLICABLE, IN THE SPACE PROVIDED BELOW
____________________________________________________________________________ Number of Units: X CDN$6.55
(Name of Purchaser) ---------------------------------
=
Account Reference (if applicable): _________________________________________
Aggregate Subscription Price: ___________________
By:
-------------------------------------------------------------------------
Authorized Signature
____________________________________________________________________________ IF THE PURCHASER IS SIGNING AS AGENT FOR A
(Official Capacity or Title - if the Purchaser is not an individual) PRINCIPAL (BENEFICIAL PURCHASER) AND IS NOT
PURCHASING AS TRUSTEE OR AGENT FOR ACCOUNTS FULLY
MANAGED BY IT, COMPLETE THE FOLLOWING:
____________________________________________________________________________ _________________________________________________
(Name of individual whose signature appears above if different than the name (Name of Principal)
of the Purchaser printed above.)
____________________________________________________________________________ _________________________________________________
(Purchaser's Address, including State) (Principal's Address)
____________________________________________________________________________ _________________________________________________
____________________________________________________________________________
(Telephone Number) (Email Address)
REGISTER THE COMMON SHARES AND WARRANTS COMPRISING THE UNITS EXACTLY AS SET DELIVER THE COMMON SHARES AND WARRANTS COMPRISING
FORTH BELOW: THE UNITS AS SET FORTH BELOW:
____________________________________________________________________________ _________________________________________________
(Name) (Name)
_________________________________________________
____________________________________________________________________________ (Account Reference, if applicable)
(Account Reference, if applicable)
_________________________________________________
(Address)
____________________________________________________________________________ _________________________________________________
(Address, including Zip Code) (Contact Name) (Telephone Number)
- 6 -
ANNEX A
DEFINITION OF INSTITUTIONAL ACCREDITED INVESTOR
Institutional "Accredited Investor" means any entity which comes within any of
the following categories:
(1) Any bank as defined in Section 3(a)(2) of the U.S. Securities Act or any
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the U.S. Securities Act whether acting in its individual or
fiduciary capacity; any broker dealer registered pursuant to Section 15 of the
Securities Exchanges Act of 1934; any insurance company as defined in Section
2(13) of the U.S. Securities Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act; any Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958; any plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan has total
assets in excess of US$5,000,000; any employee benefit plan within the meaning
of the Employee Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of such Act,
which is either a bank, savings and loan association, insurance company, or
registered investment adviser, or if the employee benefit plan has total assets
in excess of US$5,000,000, or, if a self-directed plan, with investment
decisions made solely by persons that are accredited investors;
(2) Any private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940;
(3) Any organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership, not
formed for the specific purpose of acquiring the securities offered, with total
assets in excess of US$5,000,000;
(3) Any trust with total assets in excess of US$5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is directed
by a sophisticated person as described in Rule 506(b)(2)(ii).
ANNEX B
TO SCHEDULE "D"
FORM OF DECLARATION FOR REMOVAL OF LEGEND
TO: Computershare Trust Company of Canada as registrar and transfer agent for
Common Shares and warrant agent for Warrants of Draxis Health Inc.
The undersigned
(a) acknowledges that the sale of the securities of Draxis Health Inc. (the
"Company") to which this declaration relates is being made in reliance
on Rule 904 of Regulation S under the UNITED STATES SECURITIES ACT OF
1933, as amended (the "U.S. Securities Act") and
(b) certifies that (1) the undersigned is not an "affiliate" of the Company
(as that term is defined in Rule 405 under the U.S. Securities Act), (2)
the offer of such securities was not made to a person in the United
States and either (A) at the time the buy order was originated, the
buyer was outside the United States, or the seller and any person acting
on its behalf reasonably believed that the buyer was outside the United
States, or (B) the transaction was executed in, on or through the
facilities of a "Designated Offshore Securities Market" as defined in
Rule 902 of Regulation S under the U.S. Securities Act and neither the
seller nor any person acting on its behalf knows that the transaction
has been prearranged with a buyer in the United States, (3) neither the
seller nor any affiliate of the seller nor any person acting on any of
their behalf has engaged or will engage in any directed selling efforts
in the United States in connection with the offer and sale of such
securities, (4) the sale is bona fide and not for the purpose of
"washing off" the resale restrictions imposed because the securities are
"restricted securities" (as such term is defined in Rule 144(a)(3) under
the U.S. Securities Act), and (5) the contemplated sale is not a
transaction, or part of a series of transactions which, although in
technical compliance with Regulation S, is part of a plan or scheme to
evade the registration provisions of the U.S. Securities Act. Terms used
herein have the meanings given to them by Regulation S.
Dated:
---------------------------
----------------------------------------
Name of Seller
By:
---------------------------------
Name:
----------------------------------
Title:
----------------------------------
APPENDIX II
TO SCHEDULE "D"
UNDERWRITERS' CERTIFICATE
In connection with the private placement in the United States of units (the
"Units") of Draxis Health Inc. (the "Company") pursuant to an
underwriting
agreement (the "
Underwriting Agreement") dated April 2, 2004 among the Company
and the underwriters named therein (the "Underwriters"), the undersigned does
hereby certify as follows:
(i) the U.S. broker-dealer affiliate of the undersigned Underwriter who
offered or sold Units in the United States or to U.S. Persons (as such
term is defined in Regulation S under the U.S. Securities Act of 1933,
as amended (the "U.S. Securities Act"), has executed this certificate
and is a duly registered broker or dealer with the United States
Securities and Exchange Commission and is a member of and is in good
standing with the National Association of Securities Dealers, Inc. on
the date hereof;
(ii) all offers and sales of the Units in the United States were made to a
maximum of 50 Institutional "Accredited Investors" (as defined below) by
all Underwriters and their U.S. broker-dealer affiliates;
(iii) all offers and sales of the Units in the United States have been
effected in accordance with applicable U.S. broker-dealer requirements;
(iv) each offeree was provided with a copy of the U.S. Placement Memorandum,
including the Final Prospectus relating to the offering of the Units in
the United States;
(v) immediately prior to transmitting the U.S. Placement Memorandum to such
offerees, we had reasonable grounds to believe and did believe that each
offeree was an institutional "accredited investor" as defined in Rule
501(a)(1),(2),(3) or (7) of Regulation D (an Institutional "Accredited
Investor") under the U.S. Securities Act, and, on the date hereof, we
continue to believe that each U.S. purchaser purchasing Units from us is
an Institutional Accredited Investor;
(vi) no form of general solicitation or general advertising (as those terms
are used in Regulation D under the U.S. Securities Act) was used by us,
including advertisements, articles, notices or other communications
published in any newspaper, magazine or similar media or broadcast over
radio or television, or any seminar or meeting whose attendees had been
invited by general solicitation or general advertising, in connection
with the offer or sale of the Units in the United States or to U.S.
persons;
(vii) the offering of the Units in the United States has been conducted by us
through our U.S. broker-dealer affiliates in accordance with the terms
of the Underwriting Agreement; and
(viii) prior to any sale of Units in the United States or to U.S. Persons we
caused each U.S. purchaser to execute a U.S. Purchaser's Letter in the
form of Appendix I to Schedule "D" to the Underwriting Agreement.
- 2 -
Terms used in this certificate have the meanings given to them in the
Underwriting Agreement unless otherwise defined herein.
Dated this __ day of __________, 2004.
[CANADIAN UNDERWRITER] [U.S. BROKER-DEALER AFFILIATE OF
CANADIAN UNDERWRITER]
By: By:
-------------------------------------- ----------------------------
Name: Name:
--------------------------------------- ------------------------
Title: Title:
-------------------------------------- -----------------------
- 3 -
SCHEDULE "E"
OUTSTANDING CONVERTIBLE SECURITIES
THIS IS SCHEDULE "E" TO THE UNDERWRITING AGREEMENT DATED AS OF APRIL 2, 2004
BETWEEN DRAXIS HEALTH INC. AND DESJARDINS SECURITIES INC. AND CIBC WORLD MARKETS
INC.
CONVERTIBLE SECURITIES OF DRAXIS HEALTH INC.
(1) Shareholders Rights Plan dated April 23, 2002
(2) 2,752,877 options outstanding pursuant to the Company's stock option plan,
with such options having an exercise price ranging from $1.63 to $5.41 and
having expiry dates ranging from May 20, 2004 to August 12, 2013.
