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EXHIBIT 1.1
[Draft--10/06/00]
Hydrogenics Corporation
7,000,000 Common Shares plus an option to purchase from the Company,
up to 1,050,000 additional Common Shares to cover over-allotments
Underwriting Agreement
New York, New York
, 2000
Xxxxxxx Xxxxx Xxxxxx Inc.
CIBC World Markets Inc.
BMO Xxxxxxx Xxxxx Inc.
As Representatives of the several Underwriters,
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Hydrogenics Corporation, a corporation organized under the
federal laws of Canada (the "Company"), proposes to sell to the several
underwriters named in Schedule I hereto (the "Underwriters"), for whom you (the
"Representatives") are acting as representatives, 7,000,000 common shares
("Common Shares") of the Company (said shares to be issued and sold by the
Company being hereinafter called the ("Underwritten Securities")). The Company
also proposes to grant to the Underwriters an option to purchase up to 1,050,000
additional Common Shares to cover over-allotments (the "Option Securities"; the
Option Securities, together with the Underwritten Securities, being hereinafter
called the "Securities"). To the extent there are no additional Underwriters
listed on Schedule I other than you, the term Representatives as used herein
shall mean you, as Underwriters, and the terms Representatives and Underwriters
shall mean either the singular or plural as the context requires. Certain terms
used herein are defined in Section 19 hereof.
As part of the offering contemplated by this Agreement,
Xxxxxxx Xxxxx Xxxxxx Inc. and CIBC World Markets Inc. have each agreed to
reserve out of the Securities set forth opposite its name on the Schedule II to
this Agreement, up to 350,000 shares, for sale to the Company's employees,
officers, directors and others having business relationships with the Company
(collectively, "Participants"), as set forth in the
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Prospectus under the heading "Underwriting" (the "Directed Share Program"). The
Securities to be sold by Xxxxxxx Xxxxx Barney Inc. and CIBC World Markets Inc.
pursuant to the Directed Share Program (the "Directed Shares") will be sold by
Xxxxxxx Xxxxx Xxxxxx Inc. and CIBC World Markets Inc. pursuant to this Agreement
at the public offering price. Any Directed Shares not orally confirmed for
purchase by any Participants by the end of the business day immediately
following the date on which this Agreement is executed will be offered to the
public by Xxxxxxx Xxxxx Barney Inc. and CIBC World Markets Inc. as set forth in
the Prospectus.
1. Representations and Warranties. The Company represents and warrants to, and
agrees with, each Underwriter and the Sub-Underwriter as set forth below in this
Section 1.
(a) The Company has prepared and filed with the Commission a
registration statement (file number 333-42682) on Form F-1, including a
related preliminary prospectus, for registration under the Act of the
offering and sale of the Securities. The Company may have filed one or
more amendments thereto, including a related preliminary prospectus,
each of which has previously been furnished to you. The Company will
next file with the Commission either (1) prior to the Effective Date of
such registration statement, a further amendment to such registration
statement (including the form of final prospectus) or (2) after the
Effective Date of such registration statement, a final prospectus in
accordance with Rules 430A and 424(b). In the case of clause (2), the
Company has included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A Information)
required by the Act and the rules thereunder to be included in such
registration statement and the Prospectus. As filed, such amendment and
form of final prospectus, or such final prospectus, shall contain all
Rule 430A Information, together with all other such required
information, and, except to the extent the Representatives shall agree
in writing to a modification, shall be in all substantive respects in
the form furnished to you prior to the Execution Time or, to the extent
not completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior to
the Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or will, and
when the Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date (as defined herein) and on any date
on which Option Securities are purchased, if such date is not the
Closing Date (a "settlement date"), the Prospectus (and any supplements
thereto) will, comply in all material respects with the applicable
requirements of the Act and the rules thereunder; on the Effective Date
and at the Execution Time, the Registration Statement did not or will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order
to make the
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statements therein not misleading; and, on the Effective Date, the
Prospectus, if not filed pursuant to Rule 424(b), will not, and on the
date of any filing pursuant to Rule 424(b) and on the Closing Date and
any settlement date, the Prospectus (together with any supplement
thereto) will not, include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the Company makes no
representations or warranties as to the information contained in or
omitted from the Registration Statement, or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Underwriter
through the Representatives specifically for inclusion in the
Registration Statement or the Prospectus (or any supplement thereto).
(c) The Company has prepared and filed with the applicable securities
regulatory authority in each of the Canadian Jurisdictions
(collectively, the "Reviewing Authority") in conformity in all material
respects with applicable Canadian Securities Laws, the Canadian
Preliminary Prospectus and the Amended Canadian Preliminary Prospectus
and a MRRS Decision Document for each of the Canadian Preliminary
Prospectus and Amended Canadian Preliminary Prospectus has been
obtained.
(d) The Canadian Preliminary Prospectus and the Amended Canadian
Preliminary Prospectus, as of the respective times of filing thereof,
(i) did not include a misrepresentation, (ii) constituted full, true
and plain disclosure of all material facts relating to the Securities,
and to the Company, (iii) did not include any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading; provided however, that the Company made
no representations or warranties as to the information contained in or
omitted from the Canadian Preliminary Prospectus or the Amended
Canadian Preliminary Prospectus, as applicable, in reliance upon and in
conformity with information furnished in writing to the Company by or
on behalf of any Underwriter through the Representatives specifically
for inclusion in the Canadian Preliminary Prospectus or the Amended
Canadian Preliminary Prospectus.
(e) The Company (A) has obtained the PREP Decision Document; (B) has
prepared and filed with the Reviewing Authority the Canadian Final
Prospectus omitting the PREP Information; and (C) will prepare and
file, promptly after pricing of the Underwritten Securities, with the
Reviewing Authority, a supplemented Canadian Final Prospectus setting
forth the PREP Information.
(f) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the Canada Business Corporations Act
("CBCA") and is organized with full corporate power and authority to
own or
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lease, as the case may be, and to operate its properties and conduct
its business as described in the Prospectuses, and is duly qualified to
do business as an extra-provincial corporation and is in good standing
under the laws of each jurisdiction which requires such qualification
except for such failures to be qualified and in good standing as could
not reasonably be expected to have a Material Adverse Effect on the
Company.
(g) The Company does not have any subsidiaries.
(h) The Company's authorized equity capitalization is as set forth in
the Prospectuses; the share capital of the Company conforms in all
material respects to the description thereof contained in the
Prospectuses; the outstanding Common Shares have been duly and validly
authorized and issued and are fully paid and non-assessable; the
Securities have been duly and validly authorized, and, when issued and
delivered to and paid for by the Underwriters pursuant to this
Agreement, will be fully paid and non-assessable; the Securities are
duly listed, and admitted and authorized for trading, subject to
official notice of issuance and evidence of satisfactory distribution
on the Nasdaq Stock Market and have been conditionally approved for
listing on The Toronto Stock Exchange; the certificates for the
Securities are in valid and sufficient form; the holders of outstanding
shares in the capital of the Company are not entitled to preemptive or
other rights to subscribe for the Securities, except as described in
the Prospectuses, which rights have been waived; and, except as set
forth in the Prospectuses, no options, warrants or other rights to
purchase, agreements or other obligations to issue, or rights to
convert any obligations into or exchange any securities for, any shares
in the capital of the Company or ownership interests in the Company are
outstanding.
(i) There is no franchise, contract or other document of a character
required to be described in the Registration Statement or Prospectuses,
or to be filed as an exhibit thereto, which is not described or filed
as required; and the statements in the Prospectuses under the headings,
"Risk Factors-Risk Factors Relating to this Offering- Your tax
liability may increase if we are treated as a passive foreign
investment company and United States holders of our common shares will
be responsible for determining whether we are a passive foreign
investment company", "Business-New Stock Option Plan", "Income Tax
Consequences", "Directors' and Officers' Indemnification" and "Shares
Eligible for Future Sale" insofar as such statements summarize legal
matters, agreements, documents, or proceedings discussed therein, are
accurate in all material respects and fairly summarize the matters
therein described.
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(j) The Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as
described in the Prospectuses, will not be an "investment company" as
defined in the Investment Company Act of 1940, as amended.
(k) No consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection with the
transactions contemplated herein, except such as have been obtained
under the Act, applicable Canadian Securities Laws and such as may be
required under the securities or blue sky laws of any jurisdiction in
the United States or Canada in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated herein and in the Prospectuses.
(l) Neither the issue and sale of the Securities nor the consummation
of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach
or violation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to, (i) the charter or
by-laws of the Company, (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the
Company is a party or bound or to which its property is subject, or
(iii) any statute, law, rule, regulation, judgment, order or decree
applicable to the Company of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its properties except in the
case of clauses (ii) and (iii) above, for such conflicts, breaches,
violations, liens, charges or encumbrances as could not reasonably be
expected to have a Material Adverse Effect on the Company.
(m) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement or the
Prospectuses.
(n) The historical financial statements and schedules of the Company
included in the Prospectuses and the Registration Statement present
fairly in all material respects the financial condition, results of
operations and cash flows of the Company as of the dates and for the
periods indicated, comply as to form with the applicable accounting
requirements of the Act and have been prepared in conformity with
generally accepted accounting principles in Canada applied on a
consistent basis throughout the periods involved (except as otherwise
noted therein). The selected financial data set forth under the caption
"Selected Financial Data" in the Prospectuses and Registration
Statement fairly present, on the basis stated in the Prospectuses and
the Registration Statement, the information included therein.
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(o) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or its property is pending or, to the best knowledge of the
Company, threatened that (i) could reasonably be expected to have a
material adverse effect on the performance of this Agreement or the
consummation of any of the transactions contemplated hereby or (ii)
could reasonably be expected to have a Material Adverse Effect on the
Company, except as set forth in or contemplated in the Prospectuses
(exclusive of any supplement thereto).
(p) The Company owns or leases all such properties as are necessary to
the conduct of its operations as currently conducted.
(q) The Company is not in violation or default of (i) any provision of
its charter or bylaws, (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which it is
a party or bound or to which its property is subject, or (iii) any
statute, law, rule, regulation, judgment, order or decree of any court,
regulatory body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over the Company or any of its
properties, as applicable except, in the case of clauses (ii) and (iii)
above, for such violations or defaults as could not reasonably be
expected to have a Material Adverse Effect on the Company.
(r) PricewaterhouseCoopers LLP, who have certified certain financial
statements of the Company and delivered their report with respect to
the audited financial statements included in the Prospectuses, are
independent public accountants with respect to the Company within the
meaning of the Act and the applicable published rules and regulations
thereunder and are independent with respect to the Company within the
meaning of the CBCA.
(s) No stamp tax or other issuance, goods and services or transfer
taxes or duties and no capital gains, income, withholding or other
taxes are payable by or on behalf of the Underwriters under U.S.
federal law or the laws of any state or to any authority in Canada or
any province thereof in connection with:
(A) the execution and delivery of this
Agreement, the issuance, sale and
delivery of the Securities to the
Underwriters in the manner
contemplated in this Agreement;
(B) the resale and delivery of the
Securities by the Underwriters in
the United States in the manner
contemplated in the Prospectuses; or
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(C) the payment by the Company of any
commission or fee to or for the
account of the Underwriters in
connection with their services with
respect to clauses (a) and (b)
above.
(t) The Company has filed all Canadian and U.S. federal, state,
provincial and local tax returns that are required to be filed or has
requested extensions thereof, except in any case in which the failure
so to file would not have a Material Adverse Effect on the Company,
except as set forth in or contemplated in the Prospectuses (exclusive
of any supplement thereto) and has paid all taxes required to be paid
by it and any other assessment, fine or penalty levied against it, to
the extent that any of the foregoing is due and payable, except for any
such assessment, fine or penalty that is currently being contested in
good faith or as would not have a Material Adverse Effect on the
Company, except as set forth in or contemplated in the Prospectuses
(exclusive of any supplement thereto).
(u) No labor problem or dispute with the employees of the Company
exists or is threatened or imminent, and the Company is not aware of
any existing or imminent labor disturbance by the employees of any of
its principal suppliers, contractors or customers, that could
reasonably be expected to have a Material Adverse Effect on the
Company, except as set forth in or contemplated in the Prospectuses
(exclusive of any supplement thereto).
(v) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
reasonably foreseeable for and customary in the businesses in which
they are engaged; all policies of insurance insuring the Company or its
assets, employees, officers and directors are in full force and effect;
the Company is in compliance with the terms of such policies and
instruments in all material respects; and there are no claims by the
Company or under any such policy or instrument as to which any
insurance company is denying liability or defending under a reservation
of rights clause. The Company has not been refused any insurance
coverage sought or applied for; and the Company has no reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect on the
Company, except as set forth in or contemplated in the Prospectuses
(exclusive of any supplement thereto).
(w) The Company possesses all licenses, certificates, permits and other
authorizations issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct its business, except for
such licenses, certificates, permits and other authorizations the
failure of which to obtain could not reasonably be expected to have a
Material Adverse Effect on the Company, and the Company has not
received any notice of proceedings relating to the revocation
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or modification of any such certificate, authorization or permit which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, could have a Material Adverse Effect on the Company,
except as set forth in or contemplated in the Prospectuses (exclusive
of any supplement thereto).
(x) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(y) The Company has not taken, directly or indirectly, any action that
has constituted or that was designed to or might reasonably be expected
to cause or result in, under the Exchange Act or otherwise, the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(z) Except as disclosed in the Registration Statement and the
Prospectuses, the Company is (i) in compliance with any and all
applicable federal, state, provincial and local laws and regulations of
Canada, the United States or any other jurisdiction relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) has received and is in compliance with all permits,
licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and (iii) has not received
notice of any actual or potential liability for the investigation or
remediation of any disposal or release of hazardous or toxic substances
or wastes, pollutants or contaminants, except where such non-compliance
with Environmental Laws, failure to receive required permits, licenses
or other approvals, or liability would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, except as set
forth in or contemplated in the Prospectuses (exclusive of any
supplement thereto). Except as set forth in the Prospectuses, the
Company has not been named as a "potentially responsible party" under
the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended.
(aa) In the ordinary course of its business, the Company periodically
reviews the effect of Environmental Laws on the business, operations
and properties of the Company, in the course of which it identifies and
evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental
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Laws, or any permit, license or approval, any related constraints on
operating activities and any potential liabilities to third parties).
On the basis of such review, the Company has reasonably concluded that
such associated costs and liabilities would not, singly or in the
aggregate, have a Material Adverse Effect on the Company, except as set
forth in or contemplated in the Prospectuses (exclusive of any
supplement thereto).
(bb) Except as otherwise disclosed in the Registration Statement and
prospectuses (a) The Company owns, possesses, licenses or has other
rights to use, on reasonable terms, all patents, patent applications,
trade and service marks, trade and service xxxx registrations, trade
names, copyrights, licenses, inventions, trade secrets, technology,
know-how and other intellectual property (collectively, the
"Intellectual Property") necessary for the conduct of the Company's
business as now conducted or as proposed in the Prospectuses to be
conducted; (b) to the Company's best knowledge, there are no rights of
third parties to any such Intellectual Property; (c) to the Company's
best knowledge, there is no material infringement by third parties of
any such Intellectual Property; (d) there is no pending or, to the
Company's best knowledge, threatened action, suit, proceeding or claim
by others challenging the Company's rights in or to any such
Intellectual Property, and the Company is unaware of any facts which
would form a reasonable basis for any such claim; (e) there is no
pending or to the Company's best knowledge threatened action, suit,
proceeding or claim by others challenging the validity or scope of any
such Intellectual Property, and the Company is unaware of any facts
which would form a reasonable basis for any such claim; (f) there is no
pending or, to the Company's best knowledge, threatened action, suit,
proceeding or claim by others that the Company infringes or otherwise
violates any patent, trademark, copyright, trade secret or other
proprietary rights of others, and the Company is unaware of any other
fact which would form a reasonable basis for any such claim; (g) to the
Company's best knowledge, there is no U.S. patent or published U.S.
patent application which contains claims that dominate or may dominate
any Intellectual Property described in the Prospectuses as being owned
by or licensed to the Company or that interferes with the issued or
pending claims of any such Intellectual Property; and (h) there is no
prior art of which the Company is aware that may render any U.S. patent
held by the Company invalid or any U.S. patent application held by the
Company unpatentable which has not been disclosed to the U.S. Patent
and Trademark Office.
(cc) Except as disclosed in the Registration Statement and the
Prospectuses, the Company (i) does not have any material lending or
other relationship with any bank or lending affiliate of Xxxxxxx Xxxxx
Barney Holdings Inc. and (ii) does not intend to use any of the
proceeds from the sale of the Securities hereunder to repay any
outstanding debt owed to any affiliate of Xxxxxxx Xxxxx Xxxxxx Holdings
Inc.
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(dd) The Company has not offered, or caused the Underwriters to offer,
Securities to any person pursuant to the Directed Share Program with
the specific intent to unlawfully influence (i) a customer or supplier
of the Company to alter the customer's or supplier's level or type of
business with the Company, or (ii) a trade journalist or publication to
write or publish favorable information about a Company or its products.
(ee) Furthermore, the Company represents and warrants to Xxxxxxx Xxxxx
Barney Inc. and CIBC World Markets Inc. that (i) the Registration
Statement, the Prospectus and any preliminary prospectus comply, and
any further amendments or supplements thereto will comply, with any
applicable laws or regulations of foreign jurisdictions in which the
Prospectuses or any preliminary prospectuses, as amended or
supplemented, if applicable, are distributed in connection with the
Directed Share Program, and that (ii) no authorization, approval,
consent, license, order, registration or qualification of or with any
government, governmental instrumentality or court, other than such as
have been, or will have been as of the Closing Date, obtained, is
necessary under the securities laws and regulations of foreign
jurisdictions in which the Directed Shares are offered outside the
United States.
Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters in connection
with the offering of the Securities shall be deemed a representation and
warranty by the Company, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company agrees to
sell to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company, at a purchase price of U.S.$[ ] or
Cdn$[ ] per share, the amount of the Underwritten Securities set forth opposite
such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company hereby grants
an option to the several Underwriters to purchase, severally and not jointly, up
to 1,050,000 Option Securities at the same purchase price per share as the
Underwriters shall pay for the Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole or in part
at any time (but not more than once) on or before the 30th day after the date of
the Prospectuses upon written or telegraphic notice by the Representatives to
the Company setting forth the number of shares of the Option Securities as to
which the several Underwriters are exercising the option and the settlement
date. The number of Option Securities to be purchased by each Underwriter shall
be the same percentage of the total number of shares of the Option Securities to
be
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purchased by the several Underwriters as such Underwriter is purchasing of the
Underwritten Securities, subject to such adjustments as you in your absolute
discretion shall make to eliminate any fractional shares.
(c) The Company understands that a portion of the Securities
may be offered and sold in the Canadian Jurisdictions by Xxxxxxx Xxxxx Xxxxxx
Canada Inc. (the "Sub-Underwriter"), the Canadian dealer affiliate of Xxxxxxx
Xxxxx Barney Inc., pursuant to the Canadian Prospectus. Any Securities sold by
the Sub-Underwriter will be purchased by the Sub-Underwriter from its
Underwriter affiliate at the Closing Date at a price equal to the price set
forth in Section 2(a) above or such purchase price less an amount to be mutually
agreed upon by the Sub-Underwriter and its Underwriter affiliate which amount
shall not be greater than the Underwriting commission set forth on the cover
page of the Prospectuses.
3. Delivery and Payment. Delivery of and payment for the Underwritten Securities
and the Option Securities (if the option provided for in Section 2(b) hereof
shall have been exercised on or before the third Business Day prior to the
Closing Date) shall be made at the offices of Osler, Xxxxxx & Harcourt LLP,
First Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx at 8:00 AM, Toronto time, on
, 2000 or at such place or time or on such later date not more than three
Business Days after the foregoing date as the Representatives shall designate,
which date and time may be postponed by agreement between the Representatives
and the Company or as provided in Section 9 hereof (such date and time of
delivery and payment for the Securities being herein called the "Closing Date").
Delivery of the Securities shall be made to the Representatives for the
respective accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the purchase price thereof to or
upon the order of the Company by wire transfer payable in same-day funds to an
account specified by the Company. Payment shall be made to the Company in U.S.
dollars with respect to the U.S. Securities and Canadian dollars with respect to
the Canadian Securities. Delivery of the Underwritten Securities and the Option
Securities shall be made through the facilities of The Canadian Depository for
Securities Ltd. unless the Representatives shall otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised
after the third Business Day prior to the Closing Date, the Company will deliver
the Option Securities (at the expense of the Company) to the Representatives, at
the offices of Osler, Xxxxxx & Harcourt, First Canadian Place, Suite 6600,
Toronto, Ontario, on the date specified by the Representatives (which shall be
within three Business Days after exercise of said option) for the respective
accounts of the several Underwriters, against payment by the several
Underwriters through the Representatives of the purchase price thereof to or
upon the order of the Company by wire transfer payable in same-day funds to an
account specified by the Company. Payment shall be made to the Company in U.S.
dollars with respect to the U.S. Option Securities and Canadian dollars with
respect to the Canadian Option Securities. If settlement for the Option
Securities occurs after the Closing Date, the
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Company will deliver to the Representatives on the settlement date for the
Option Securities, and the obligation of the Underwriters to purchase the Option
Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the several Underwriters
propose to offer the Securities for sale to the public upon the terms and
conditions set forth in the Prospectuses.
5. Agreements. The Company agrees with the several Underwriters and the
Sub-Underwriters that:
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(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereof, to become effective and to obtain a MRRS Decision Document for
the Canadian Final Prospectus from the Reviewing Authority not later
than 5:00 p.m. (Toronto time) on the Business Day next following the
date of this Agreement and, to file the Canadian Prospectus with the
Reviewing Authority not later than the time of filing of the Prospectus
with the Commission, and in any event, in accordance with the PREP
Procedures and the PREP Decision Document. Prior to the termination of
the offering of the Securities, the Company will not file any amendment
of the Registration Statement or supplement to the Prospectus or any
Rule 462(b) Registration Statement or an amendment or supplement to the
Canadian Final Prospectus or the Canadian Prospectus unless the Company
has furnished you a copy for your review prior to filing and will not
file any such proposed amendment or supplement to which you reasonably
object. Subject to the foregoing sentence, if the Registration
Statement has become or becomes effective pursuant to Rule 430A, or
filing of the Prospectus is otherwise required under Rule 424(b), the
Company will cause the Prospectus, properly completed, and any
supplement thereto to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b) within the time period prescribed
and will provide evidence satisfactory to the Representatives of such
timely filing. The Company will promptly advise the Representatives (1)
when the Registration Statement, if not effective at the Execution
Time, shall have become effective, (2) when the Prospectus, and any
supplement thereto, shall have been filed (if required) with the
Commission pursuant to Rule 424(b) or when any Rule 462(b) Registration
Statement shall have been filed with the Commission, (3) when the
Canadian Final Prospectus or Canadian Prospectus shall have been filed
with the Reviewing Authority, (4) when, prior to termination of the
offering of the Securities, any amendment to the Registration Statement
or the Canadian Prospectus shall have been filed or become effective,
(5) of any request by the Commission or its staff for any amendment of
the Registration Statement, or any Rule 462(b) Registration Statement,
or for any supplement to the Prospectus or for any additional
information, (6) of any request by the Reviewing Authority or any other
regulatory authority in Canada for any amendment or supplement to the
Canadian Prospectus or any additional information, (7) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement, the issuance by the Reviewing Authority or any
other regulatory authority in Canada of any cease trading order
relating to the Securities or the institution or threatening of any
proceeding for those purposes, (8) of the receipt by the Company of any
communication from the Reviewing Authority or any other regulatory
authority in Canada relating to the Canadian Prospectus, the offering
of the Securities or the listing of the Securities on The Toronto Stock
Exchange, and (9) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Securities
for sale in any jurisdiction or the institution or threatening of any
proceeding for such purpose. The
14
Company will use its best efforts to prevent the issuance of any such
stop order or the suspension of any such qualification and, if issued,
to obtain as soon as possible the withdrawal thereof;
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall
be necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act or the rules thereunder, or if it
shall be necessary to amend or supplement the Canadian Final Prospectus
or the Canadian Prospectus (each such amendment or supplement a
"Canadian Prospectus Amendment") to comply with Canadian Securities
Laws, the Company promptly will (1) notify the Representatives of any
such event, (2) prepare and file with the Commission, or the Reviewing
Authority, as applicable, subject to the second sentence of paragraph
(a) of this Section 5, an amendment or supplement which will correct
such statement or omission or effect such compliance; and (3) supply
any supplemented Prospectus or any Canadian Prospectus Amendment to you
in such quantities as you may reasonably request;
(c) As soon as practicable, the Company will make generally available
to its security holders and to the Representatives an earnings
statement or statements of the Company which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act;
(d) The Company will furnish to the Representatives and counsel for the
Underwriters signed copies of the Registration Statement (including
exhibits thereto) and to each other Underwriter a copy of the
Registration Statement (without exhibits thereto) and, so long as
delivery of a prospectus by an Underwriter, Sub-Underwriter or dealer
may be required by the Act or Canadian Securities Laws, as many copies
of each Preliminary Prospectus and the Prospectus and any supplement
thereto or the Canadian Final Prospectus, the Canadian Prospectus and
any Canadian Prospectus Amendment as the Representatives may reasonably
request;
(e) The Company will arrange, if necessary, for the qualification of
the Securities for sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in
effect so long as required for the distribution of the Securities;
provided that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not now so qualified or to
take any action that would subject it to service of process in suits,
other than those arising out of the offering or sale of the Securities,
in any jurisdiction where it is not now so subject;
15
(f) The Company will not, without the prior written consent of Xxxxxxx
Xxxxx Barney Inc., offer, sell, contract to sell, pledge, or otherwise
dispose of, (or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash
settlement or otherwise) by the Company or any affiliate of the Company
or any person in privity with the Company or any affiliate of the
Company) directly or indirectly, including the filing (or participation
in the filing) of a registration statement with the Commission (other
than on Form S-8 covering Common Shares issued under the Company's
stock option plans) in respect of, or establish or increase a put
equivalent position or liquidate or decrease a call equivalent position
within the meaning of Section 16 of the Exchange Act, any other Common
Shares or any securities convertible into, or exercisable, or
exchangeable for, Common Shares; or publicly announce an intention to
effect any such transaction, for a period of 180 days after the date of
the Underwriting Agreement, provided, however, that the Company may
issue and sell Common Shares pursuant to any employee stock option
plan, stock ownership plan or dividend reinvestment plan of the Company
in effect at the Execution Time and the Company may issue Common Shares
issuable upon the conversion of securities or the exercise of warrants
outstanding at the Execution Time;
(g) The Company will not take, directly or indirectly, any action
designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities;
(h) In connection with the Directed Share Program, the Company will
ensure that the Directed Shares will be restricted to the extent
required by the National Association of Securities Dealers, Inc. (the
"NASD") or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of the
effectiveness of the Registration Statement. Xxxxxxx Xxxxx Xxxxxx Inc.
will notify the Company as to which Participants will need to be so
restricted. The Company will direct the removal of such transfer
restrictions upon the expiration of such period of time.
(i) The Company agrees to pay the costs and expenses relating to the
following matters: (i) the preparation, printing or reproduction and
filing with the Commission of the Registration Statement (including
financial statements and exhibits thereto), each Preliminary
Prospectus, the Prospectus, and each amendment or supplement to any of
them; the preparation, printing or reproduction and filing with the
Reviewing Authority of the Canadian Prospectus and the Canadian Final
Prospectus, and each amendment or supplement to any of them; (ii) the
printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
16
Registration Statement, each Preliminary Prospectus, the Prospectus,
and all amendments or supplements to any of them, the printing (or
reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the Canadian
Prospectus and the Canadian Final Prospectus, and each amendment or
supplement to any of them as may, in each case, be reasonably requested
for use in connection with the offering and sale of the Securities;
(iii) the preparation, printing, authentication, issuance and delivery
of certificates for the Securities, including any stamp or transfer
taxes in connection with the original issuance and sale of the
Securities; (iv) the printing (or reproduction) and delivery of this
Agreement, any blue sky memorandum and all other agreements or
documents printed (or reproduced) and delivered in connection with the
offering of the Securities; (v) the registration of the Securities
under the Exchange Act and the listing of the Securities on the Nasdaq
Stock Market and The Toronto Stock Exchange; (vi) any registration or
qualification of the Securities for offer and sale under the securities
or blue sky laws of the several states (including filing fees and the
reasonable fees and expenses of counsel for the Underwriters relating
to such registration and qualification); (vii) any filings required to
be made with the NASD (including filing fees and the reasonable fees
and expenses of counsel for the Underwriters relating to such filings);
(viii) the transportation and other expenses incurred by or on behalf
of Company representatives in connection with presentations to
prospective purchasers of the Securities; (ix) the fees and expenses of
the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company; (x) all fees and
disbursements of counsel incurred by the Underwriters in connection
with the Directed Share Program and stamp duties, similar taxes or
duties or other taxes, if any, incurred by the Underwriters in
connection with the Directed Share Program; and (xi) all other costs
and expenses incidental to the performance by the Company of its
obligations hereunder.
(j) Furthermore, the Company covenants with Xxxxxxx Xxxxx Barney Inc.
and CIBC World Markets Inc. that the Company will comply with all
applicable securities and other laws, rules and regulations in each
foreign jurisdiction in which the Directed Shares are offered in
connection with the Directed Share Program.
6. Conditions to the Obligations of the Underwriters. The obligations of the
Underwriters to purchase the Underwritten Securities and the Option Securities,
as the case may be, shall be subject to the accuracy of the representations and
warranties on the part of the Company contained herein as of the Execution Time,
the Closing Date and any settlement date pursuant to Section 3 hereof, to the
accuracy of the statements of the Company made in any certificates pursuant to
the provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
17
(a) If the Registration Statement has not become effective prior to the
Execution Time, unless the Representatives agree in writing to a later
time, the Registration Statement will become effective not later than
(i) 6:00 PM New York City time on the date of determination of the
public offering price, if such determination occurred at or prior to
3:00 PM New York City time on such date or (ii) 9:30 AM on the Business
Day following the day on which the public offering price was
determined, if such determination occurred after 3:00 PM New York City
time on such date; if filing of the Prospectus, or any supplement
thereto, is required pursuant to Rule 424(b), the Prospectus, and any
such supplement, will be filed in the manner and within the time period
required by Rule 424(b); and no stop order suspending the effectiveness
of the Registration Statement shall have been issued and no proceedings
for that purpose shall have been instituted or threatened;
(b) The Canadian Final Prospectus shall have been filed with the
Reviewing Authority and a MRRS Decision Document obtained therefor and,
the Canadian Prospectus shall have been filed with the Reviewing
Authority within the applicable time period prescribed by and in
accordance with Section 5(a) hereof, and all other steps or proceedings
shall have been taken that may be necessary in order to qualify the
Securities for distribution to the public in each of the Canadian
Jurisdictions;
(c) The Company shall have requested and caused Xxxxxxx, Xxxxxxx &
Xxxxxxxx LLP, U.S. legal counsel for the Company, to have furnished to
the Representatives their opinion, dated the Closing Date and addressed
to the Representatives, substantially to the effect that:
(i) the Securities have been approved for quotation on
the Nasdaq National Market, upon issuance as contemplated by
this Agreement;
(ii) to the knowledge of such counsel, (A) there are no
legal or governmental proceedings pending or threatened
against the Company, or to which the Company or any of its
properties is subject, which are required to be described in
the Registration Statement or Prospectus (or any amendment or
supplement thereto) that are not so described and (B) there
are no agreements, contracts, indentures, leases or other
instruments that are required to be described in the
Registration Statement or the Prospectus (or any amendment or
supplement thereto) or to be filed as an exhibit to the
Registration Statement that are not so described or filed, as
the case may be;
(iii) the Registration Statement and all post-effective
amendments, if any, have become effective under the Act and,
to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration
18
Statement has been issued and no proceedings for that purpose
are pending before or contemplated by the Commission; and any
required filing of the Prospectus pursuant to Rule 424(b) has
been made in accordance with Rule 424(b); the statements set
forth under the captions "Risk Factors-Risk Factors Relating
to this Offering--Your tax liability may increase if we are
treated as a passive foreign investment company and United
States holders of our common shares will be responsible for
determining whether we are a passive foreign investment
Company", "United States Federal Income Tax Considerations"
and in the first two paragraphs under the caption "Shares
Eligible for Future Sale" in the Prospectus, insofar as such
statements constitute a summary of the legal matters,
documents or proceedings referred to therein, provide a fair
summary of such legal matters, documents and proceedings;
(iv) no consent, approval, authorization or other order
of, or registration or filing with, any court, regulatory
body, administrative agency or other governmental body,
agency, or official is required on the part of the Company
(except (A) as have been obtained under the Act and the
Exchange Act or (B) such as may be required under state
securities or blue sky laws governing the purchase and
distribution of the Securities, as to which such counsel need
not express any opinion) for the valid issuance, sale and
distribution of the Securities as contemplated by this
Agreement;
(v) neither the issue and sale of the Securities, nor
the consummation of any other of the transactions herein
contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation of or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to any statute,
law, rule, regulation, judgment, order or decree applicable to
the Company of any New York or U.S. federal court, regulatory
body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or any of
its properties;
(vi) to the knowledge of such counsel, no holders of
securities of the Company have rights to the registration of
such securities under the Registration Statement;
(vii) no stamp tax or other issuance, goods and services
or transfer taxes or duties and no capital gains, income,
withholding or other taxes are payable by or on behalf of the
Underwriters under U.S. federal law or the laws of any state
thereof in connection with:
19
(A) the execution and delivery of this Agreement, the
issuance, sale and delivery of the Securities to the
Underwriters in the manner contemplated in this
Agreement;
(B) the resale and delivery of the Securities by the
Underwriters in the United States in the manner
contemplated in the Prospectus; or
(C) the payment by the Company of any commission or fee to
or for the account of the Underwriters in connection
with their services with respect to clauses (A) and (B)
above.
(viii) as provided in Section 14 of this Agreement, the
Company has duly and irrevocably appointed CT Corporation
System as its agent for service of process in any action
against it in any federal or state court sitting in the City
of New York arising out of or in connection with the offering
of the Securities; and
(ix) service of process on the Company in the manner set
forth in Section 14 of this Agreement is effective under the
laws of the State of New York to confer valid personal
jurisdiction over the Company;
In addition, such counsel shall state that it participated in
conferences with certain officers and other representatives of the
Company, its Canadian counsel, its intellectual property counsel, its
independent public accountants, the Underwriters and the Underwriters'
counsel at which the contents of the Registration Statement, the
Prospectus and related matters were discussed, and although such
counsel will not pass upon nor assume any responsibility for, and will
not independently check or verify the accuracy, completeness or
fairness of the information contained in the Registration Statement and
the Prospectus, such counsel may state, that based upon the foregoing,
such counsel confirms that it has no reason to believe that on the
Effective Date or the date the Registration Statement was last deemed
amended (other than the financial statements, including the notes and
schedules thereto, and the other financial data included in the
Registration Statement, as to which such counsel will express no
belief), at the time the Registration Statement became effective
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and such counsel confirms that it
has no reason to believe that the Prospectus as of its date and on the
Closing Date (other than the financial statements, including the notes
and schedules thereto, and the other financial data included in the
Prospectus, as to which such counsel will express no belief), contains
any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and such
counsel confirms that the Registration Statement and the Prospectus
(other than the
20
financial statements and other financial information contained therein,
as to which such counsel need express no opinion) comply as to form in
all material respects with the applicable requirements of the Act and
the rules thereunder.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
State of New York or the Federal laws of the United States, to the
extent they deem proper and specified in such opinion, upon the opinion
of other counsel of good standing whom they believe to be reliable and
who are satisfactory to counsel for the Underwriters and (B) as to
matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. References to
the Prospectuses in this paragraph (b) include any supplements thereto
at the Closing Date.
(d) The Company shall have requested and caused Xxxx and Xxxx LLP,
special counsel for the Company to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to
the Representatives, to the effect that the Company is not, and, after
giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as described in the Prospectus,
will not be, an "investment company" as defined in the Investment
Company Act of 1940, as amended.
(e) The Company shall have requested and caused Osler, Xxxxxx &
Harcourt LLP, counsel for the Company, to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to
the Representatives, substantially to the effect that:
(i) the Company has been duly incorporated and is
validly existing as a corporation under the laws of its
jurisdiction of incorporation with full power and authority
(corporate and other) to own, lease or license its properties
and to conduct its business as now being conducted and as
described in the Canadian Prospectus and is duly qualified to
do business as an extra-provincial corporation, and is in good
standing under the laws of each jurisdiction which requires
such qualification;
(ii) the Company has an authorized and issued share
capital as set forth in the Canadian Prospectus and the share
capital of the Company conform in all material respects to the
description thereof contained in the Canadian Prospectus;
(iii) the Company has duly authorized the issuance and
sale of the Securities to be sold by it pursuant to this
Agreement; the outstanding Common Shares have been duly and
validly authorized and issued and are fully paid and
non-assessable, the Securities sold by the Company, when
21
issued by the Company and paid for in accordance with the
terms of this Agreement, will be validly issued, fully paid
and non-assessable and will conform in all material respects
to the description thereof contained in the Prospectuses, and
will not be subject to any pre-emptive, subscription or other
similar rights under the CBCA, the articles, by-laws or
resolutions of the Company;
(iv) the form of certificates representing the
Securities, where applicable, has been duly approved and
adopted by the Company and conform to the requirements of the
CBCA, the by-laws of the Company and of The Toronto Stock
Exchange;
(v) the Securities are duly listed, and admitted and
authorized for trading, subject to official notice of issuance
and evidence of satisfactory distribution, on The Toronto
Stock Exchange; and, except as set forth in the Canadian
Prospectus, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert
any obligations into or exchange any Securities for shares in
the capital of the Company, or ownership interests in the
Company, are outstanding
(vi) a MRRS Decision Document has been obtained in
respect of the Canadian Final Prospectus from the Reviewing
Authority and all necessary documents have been filed, all
necessary proceedings have been taken and all necessary
authorizations, approvals, permits and consents have been
obtained under the securities laws of each of the Canadian
Jurisdictions to permit the Securities to be offered, sold and
delivered as contemplated by this Agreement in each of the
Canadian Jurisdictions. To the knowledge of such counsel, no
cease trading order relating to the Securities has been
issued, no proceedings for that purpose have been instituted
or threatened. No other authorization, approval, permit,
consent, license, registration, filing, order, qualification,
exemption or other requirement of any government, governmental
instrumentality or court of Canada or any province thereof is
required for;
(A) the valid authorization, issuance, sale and delivery of
the Securities in Canada; and
(B) the valid execution and delivery of, and the performance
by the Company of its obligations, under this Agreement.
(vii) the Canadian Prospectus (other than the financial
statements and schedules and other financial data included or
incorporated by reference therein, as to which no opinion is
rendered) complies as to form in all material respects to the
requirements of the securities laws of the Province
22
of Ontario ("Ontario Securities Laws"); provided that in
giving that opinion no comment need be expressed as to the
content, accuracy or completeness or adequacy of any
information in the Canadian Prospectus.
(viii) no facts have come to the attention of such counsel
in the course of their review and discussions that have lead
them to believe that the Canadian Prospectus (excluding the
financial statements and related schedules and information
derived therefrom or any other financial data included therein
or omitted therefrom), as of its issue date or at the date of
the opinion, contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact,
necessary to make a statement therein not misleading in light
of the circumstances in which it was made, within the meaning
of Ontario Securities Laws;
(ix) to the knowledge of such counsel, there is no
pending or threatened action, suit or proceeding by or before
any court or governmental agency, authority or body or any
arbitrator involving the Company or its property required to
be disclosed in the Registration Statement which is not
adequately disclosed in the Prospectuses, and there is no
franchise, contract or other document required to be described
in the Registration Statement or Prospectuses, or to be filed
as an exhibit thereto, which is not described or filed as
required; the statements set forth in the Canadian Prospectus
under the headings "Income Tax Consequences - Canadian Federal
Income Tax Considerations for United States Investors" and
"Eligibility for Investment", "Directors' and Officers'
Indemnification", "Business-New Stock Option Plan" insofar as
such statements constitute statements of matters of law,
fairly summarize, in all material respects such provisions as
of the date hereof;
(x) there are no restrictions on the corporate power and
capacity of the Company to enter into this Agreement or to
carry out its obligations under this Agreement. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated in this Agreement have been duly
authorized by the Company and this Agreement has been duly
executed and delivered by the Company;
(xi) except as described in the Canadian Prospectus, no
holders of outstanding shares in the capital of the Company
are entitled to preemptive or other rights to subscribe for
the Securities;
(xii) none of the Company's execution of this Agreement,
its performance thereof, its consummation of the transactions
contemplated herein or its applications of the proceeds of the
offering in the manner set forth under the heading "Use of
Proceeds" in the Canadian Prospectus,
23
violates or conflicts or will conflict with or results or will
result in any breach or violation of any of the terms or
provisions of, or constitutes or will constitute a default (or
an event which with notice or lapse of time, or both, would
constitute a default) under, or results or will result in the
creation or imposition of any lien, charge or encumbrance upon
any properties or assets of the Company pursuant to any bond,
debenture, note or other evidence of indebtedness or any
contract, indenture, mortgage, deed of trust, loan or credit
agreement, lease, joint venture or other agreement or
instrument or any franchise, license or permit to which the
Company is a party or by which the Company, its property or
assets may be bound;
(xiii) none of the Company's execution of the Agreement,
its performance thereof, its consummation of the transactions
contemplated herein or its applications of the net proceeds of
the offering in the manner set forth under the heading "Use of
Proceeds" in the Canadian Prospectus, violates or conflicts
with:
(A) any provision of the articles of incorporation or
by-laws of the Company; or
(B) any statute, rules or regulations, judgement, decree or
order, of any court or any public, governmental or
regulatory agency or body in Canada having jurisdiction
over the Company or any of its property or assets.
(xiii) no further consents, approvals, authorizations,
filings or orders of the court, regulatory body or
administrative agency or other governmental agency or body, in
Canada or any province thereof, are required for the Company's
execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated thereby;
(xiv) to the knowledge of such counsel, no holders of
securities of the Company have any rights to the registration
of such securities under the Canadian Prospectus;
(xv) no stamp tax or other issuance, goods and services
or transfer taxes or duties and no capital gains, income,
withholding or other taxes are payable by or on behalf of the
Underwriters to any authority in Canada or any province
thereof in connection with:
(A) the execution and delivery of this Agreement, the
issuance, sale and delivery of the Securities to the
Underwriters in the manner contemplated in this
Agreement;
24
(B) the resale and delivery of the Securities by the
Underwriters in Canada in the manner contemplated in
the Canadian Prospectus; or
(C) the payment by the Company of any commission or fee
to or for the account of the Underwriters in
connection with their services with respect to
clauses (A) and (B) above.
(xvi) assuming the choice of the law of the State of New
York provided for in this Agreement is effective under such
law, the Company has the corporate power to submit to the
jurisdiction of the courts of the State of New York or the
courts of the United States of America having jurisdiction in
the State of New York in respect of any legal actions or
proceedings arising out of this Agreement.
(xvii) this Agreement is enforceable against the Company in
the Province of Ontario without further action on the part of
the Underwriters; and to ensure the legality, validity,
enforceability or admissibility in evidence of this Agreement
in the Province of Ontario it is not necessary that it be
filed or recorded with any court or other authority in the
Province of Ontario or that any stamp or similar tax be paid
or in respect of any such document or the Securities. There
are no reasons, to such counsel's knowledge, under the laws of
the provinces of Ontario and Alberta or the federal laws of
Canada applicable therein or with respect to the application
of New York law by a Canadian court, why enforcement of this
Agreement would be avoided on the ground of Public Policy,
provided that such counsel shall express no opinion in respect
of the indemnity and contribution provisions contained in
Section 8 hereof;
(xviii) subject to certain qualifications including that
enforcement in the Province of Ontario of the indemnity and
contribution provisions set forth in Section 8 of this
Agreement may be limited by the laws of the Province of
Ontario, such counsel shall have no reason to believe that the
enforcement of the choice of law provision of this Agreement
by a judgement awarding a sum of money as compensatory damages
would be contrary to public policy as that term is understood
under the laws of the Province of Ontario and the laws of
Canada applicable therein.
(xix) a court of competent jurisdiction in the Province of
Ontario (an "Ontario Court") would uphold the choice of the
law of the State of New York ("New York law") as the proper
law governing this Agreement provided that such choice of law
is bona fide (in the sense that it was not made with a view to
avoiding the consequence of the law of any other
25
jurisdiction) and is not contrary to public policy as that
term is understood under the laws of the Province of Ontario
and the laws of Canada applicable therein.
(xx) should enforcement of this Agreement against the
Company be sought in the Province of Ontario in accordance
with New York law, an Ontario Court would, subject to the
paragraph above, recognize the choice of New York law (other
than for matters of procedure or laws in force in the Province
of Ontario which are applicable by reason of their particular
object, in respect of which the laws of the Province of
Ontario will then be applied), and, upon adducing appropriate
evidence to establish such law, the New York law would be
applied by an Ontario Court, provided that:
(xxi) none of the provisions of this Agreement, which
would include the indemnification provisions of this
Agreement, or of applicable New York law, are contrary to
public policy as that term is understood under the laws of the
Province of Ontario and the laws of Canada applicable therein;
(xxii) none of the provisions of applicable New York law
are foreign revenue, expropriatory or penal laws;
(xxiii) an Ontario Court will retain discretion to decline
to hear such action if:
(A) another action between the same parties,
based on the same subject matter is properly pending
before a foreign authority or a decision thereon has
already been rendered by a foreign authority; or
(B) it considers that another jurisdiction
is the most appropriate forum; and
(C) there is compliance with the Limitations
Act (Ontario).
(xxiv) a civil judgement obtained in the State of New York
of a court of the State of New York or a federal court sitting
in the State of New York, arising out of or in relation to the
obligations of the Company under this Agreement for a sum
certain of money assessed as damages would be recognized by an
Ontario Court and would be enforceable against the Company in
the Province of Ontario unless:
(A) the New York Court where the decision
was rendered had no jurisdiction according to the
laws of the Province of Ontario
26
(however, submission by the Company under this
Agreement to the non-exclusive jurisdiction of the
New York Courts will confer jurisdiction);
(B) the decision was subject to ordinary
remedy (appeal, judicial review and any other
judicial proceeding which renders the decision not
final, conclusive or enforceable under the laws of
the applicable state) or not final, conclusive or
enforceable under New York law;
(C) the decision was obtained by fraud or in
any manner contrary to natural justice or rendered in
contravention of fundamental principles of procedure
(notice of fair hearing, inter alia, the right to be
heard or the right to independent and impartial
tribunal, i.e. rules against bias);
(D) a dispute between the same parties,
based on the same subject matter has given rise to a
decision rendered in the Province of Ontario or has
been decided in a third country and the decision
meets the necessary conditions for recognition in the
Province of Ontario;
(E) the outcome of the decision of the New
York Court was inconsistent with public policy as
such term is understood under the laws of the
Province of Ontario and the laws of Canada applicable
therein;
(F) the decision enforces obligations
arising from foreign revenue, expropriatory or penal
laws;
(G) such judgement was obtained contrary to
an order made by the Attorney General of Canada under
the Foreign Extraterritorial Measures Act (Canada);
(H) there has not been compliance with the
Limitations Act (Ontario); or
(I) a sum of money will be converted by the
Ontario Court into Canadian currency in accordance
with the Courts of Justice Act (Ontario).
(f) The Company shall have requested and caused Bereskin & Xxxx special
counsel to the Company for intellectual property matters, to furnish to
the Representatives their opinion, dated the Closing Date and addressed
to the
27
Representatives, in form and substance reasonably acceptable to the
Representatives.
(g) The Representatives shall have received from Cravath, Swaine &
Xxxxx, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date and addressed to the Representatives, with respect to
the issuance and sale of the Securities, the Registration Statement,
the Prospectus (together with any supplement thereto) and other related
matters as the Representatives may reasonably require, and the Company
shall have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters.
(h) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectuses, any supplements to the Prospectuses and this Agreement
and that:
(i) the representations and warranties of the Company in
this Agreement are true and correct on and as of the Closing
Date with the same effect as if made on the Closing Date and
the Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at
or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) no order having the effect of ceasing or suspending
the distribution of the Securities shall have been issued by
the Reviewing Authority or, to the Company's knowledge,
threatened; and
(iv) since the date of the most recent financial
statements included in the Prospectuses (exclusive of any
supplement thereto), there has been no Material Adverse Effect
on the Company, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto).
(i) The Company shall have requested and caused PricewaterhouseCoopers
LLP to have furnished to the Representatives, at the Execution Time and
at the Closing Date, letters, dated respectively as of the Execution
Time and as of the Closing Date, in form and substance satisfactory to
the Representatives, confirming that they are independent accountants
within the meaning of the Act and the applicable rules and regulations
adopted by the Commission thereunder
28
and with respect to the Company within the meaning of the CBCA and that
they have performed a review of the unaudited interim financial
information of the Company for the 3-month period ended March 31, 2000,
and the 6-month period ended June 30, 2000, and as at June 30, 2000 in
accordance with Statement on Auditing Standards No. 71 and which meets
the standards of the Canadian Institute of Chartered Accountants and
stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules included in the Registration
Statement and the Prospectuses and reported on by them comply
as to form in all material respects with the applicable
accounting requirements of the Act and the related rules and
regulations adopted by the Commission;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company; their
limited review, in accordance with standards established under
Statement on Auditing Standards No. 71 and the Canadian
Institute of Certified Public Accountants, of the unaudited
interim financial information for the 3-month period ended
March 31, 2000, and the 6-month period ended June 30, 2000,
and as at June 30, 2000 [,as indicated in their report dated ,
20 ] ; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of
significance with respect to the comments set forth in such
letter; a reading of the minutes of the meetings of the
stockholders, directors and Management Development and
Compensation Committee, the Audit Committee and the Nomination
and Corporate Governance Committee of the Company; and
inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the
Company as to transactions and events subsequent to June 30,
2000, nothing came to their attention which caused them to
believe that:
(1) any unaudited financial statements included in
the Registration Statement and the Prospectuses do
not comply as to form in all material respects with
applicable accounting requirements of the Act and
with the related rules and regulations adopted by the
Commission with respect to registration statements on
Form F-1; and said unaudited financial statements are
not in conformity with Canadian generally accepted
accounting principles applied on a basis
substantially consistent with that of the audited
financial statements included in the Registration
Statement and the Prospectuses;
29
(2) with respect to the period subsequent to June
30, 2000, there were any changes, at a specified date
not more than five days prior to the date of the
letter, in the capital stock of the Company,
decreases in the stockholders' equity of the Company
or decreases in working capital as compared with the
amounts shown on the June 30, 2000 balance sheet
included in the Registration Statement and the
Prospectuses, or for the period from July 1, 2000 to
such specified date there were any decreases, as
compared with the corresponding period in the
preceding fiscal quarter in net revenues or income
before income taxes, in total or per share amounts of
net income of the Company, except in all instances
for changes or decreases set forth in such letter, in
which case the letter shall be accompanied by an
explanation by the Company as to the significance
thereof unless said explanation is not deemed
necessary by the Representatives;
(3) the information included in the Registration
Statement and Prospectuses in response to Form 20-F,
Item 8 (Selected Financial Data) is not in conformity
with the applicable disclosure requirements of such
Form; and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth in the Registration
Statement and the Prospectuses, including the information set
forth under the captions "Summary Financial Data",
"Capitalization", "Selected Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Prospectuses, agrees with the accounting
records of the Company and its subsidiaries, excluding any
questions of legal interpretation.
References to the Prospectuses in this paragraph (h)
include any supplement thereto at the date of the letter.
The Company shall have received from PricewaterhouseCoopers
LLP (and furnished to the Representatives) a report with respect to a
review of unaudited interim financial information of the Company for
the four quarters ending December 31, 1999 in accordance with Statement
on Auditing Standards No. 71.
The Company shall have received from PricewaterhouseCoopers LLP (and furnished
to the Representatives) an examination report with respect to Management's
Discussion and
30
Analysis of Financial Condition and Results of Operations of the Company for the
fiscal years ending December 31, 1999, and a review report with respect to
Management's Discussion and Analysis of Financial Condition and Results of
Operations of the Company for the 6-month period ending June 30, 2000, and the
corresponding period for the prior fiscal year, each in accordance with
Statement on Standards for Attestation Engagements No. 8 issued by the Auditing
Standards Board of the American Institute of Certified Public Accountants, and
such examination report shall be included in the Registration Statement.
Such comfort letter shall be in addition to any other comfort letters required
to be filed with the Reviewing Authority.
(j) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of
any amendment thereof) and the Prospectuses (exclusive of any
supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraph
(i) of this Section 6 or (ii) any change, or any development involving
a prospective change, in or affecting the condition (financial or
otherwise), earnings, business or properties of the Company, whether or
not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectuses (exclusive
of any supplement thereto) the effect of which, in any case referred to
in clause (i) or (ii) above, is, in the sole judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities
as contemplated by the Registration Statement (exclusive of any
amendment thereof) and the Prospectuses (exclusive of any supplements
thereto).
(k) The Company shall have furnished to the Representatives on or prior
to the Closing Date satisfactory evidence of its due and valid
authorization of CT Corporation System as its agent to receive service
of process pursuant to Section 14 hereof, and satisfactory evidence
from CT Corporation System accepting its appointment as such agent.
(l) Prior to the Closing Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as
the Representatives may reasonably request.
(m) The Securities shall have been listed and admitted and authorized
for trading on the Nasdaq Stock Market and The Toronto Stock Exchange,
and satisfactory evidence of such actions shall have been provided to
the Representatives.
(n) At the Execution Time, the Company shall have furnished to the
Representatives a letter substantially in the form of Exhibit A hereto
from each
31
officer and director of the Company and Xxxxxx Xxxxxx, Xxxxxx
Xxxxxxxxx, Xxxx Xxxxxx, Micro-Generation Technology Fund, LLC, Working
Ventures Canadian Fund Inc., CIBC Capital Partners, Xxxxxx Xxxxxxx,
Xxxx X. Xxxxx and [ ], addressed to the Representatives.
(o) PricewaterhouseCoopers LLP shall have furnished to the
Representatives an opinion, dated the respective dates of the documents
enumerated below, that the French language versions of (i) the
information under the captions "Summary Financial Information",
"Selected Financial Data" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations", and (ii) [ ] contained
in each of the Canadian Preliminary Prospectus, the Canadian Amended
Preliminary Prospectus, the Canadian Final Prospectus and the Canadian
Prospectus, as the case may be, are in all material respects a complete
and proper translation of the English language versions thereof.
(p) The Company shall have delivered on the Closing Date satisfactory
evidence that any and all preemptive rights in respect of shares in the
capital of the Company have been waived.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall
be delivered at the office of Osler, Xxxxxx & Harcourt LLP, counsel for the
Company, at 0 Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxx, X0X 0X0, on the Closing
Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the Securities
provided for herein is not consummated because any condition to the obligations
of the Underwriters set forth in Section 6 hereof is not satisfied, because of
any termination pursuant to Section 10 hereof or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof other than by reason of a default by any of
the Underwriters, the Company will reimburse the Underwriters and the
Sub-Underwriter severally through Xxxxxxx Xxxxx Barney Inc. on demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Securities.
32
8. Indemnification and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter and Sub-Underwriter, the directors, officers,
employees and agents of each Underwriter and Sub-Underwriter and each person who
controls any Underwriter and Sub-Underwriter within the meaning of either the
Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state statutory law or
regulation, the Canadian Securities Laws, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof) (i)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement for the registration
of the Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectuses, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in light of the
circumstances under which they were made or (ii) any misrepresentation or
alleged misrepresentation contained in the Canadian Preliminary Prospectus, the
Amended Canadian Preliminary Prospectus, the Canadian Final Prospectus, any
Canadian Prospectus, or any untrue, false or misleading statement therein, or
any omission or alleged omission to state therein any material fact or
information required to be stated therein or necessary to make any of the
statements therein not misleading in light of the circumstances in which they
were made, and agrees to reimburse each such indemnified party, as incurred, for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Representatives specifically for inclusion therein; provided further, that
with respect to any untrue statement or omission of material fact made in any
Preliminary Prospectus, the indemnity agreement contained in this Section 8(a)
shall not inure to the benefit of any Underwriter from whom the person asserting
any such loss, claim, damage or liability purchased the securities concerned, to
the extent that any such loss, claim, damage or liability of such Underwriter
occurs under the circumstance where it shall have been determined by a court of
competent jurisdiction by final and nonappealable judgment that (w) the Company
had previously furnished copies of the Prospectus to the Representatives, (x)
delivery of the Prospectus was required by the Act to be made to such person,
(y) the untrue statement or omission of a material fact contained in the
Preliminary Prospectus was corrected in the Prospectus and (z) there was not
sent or given to such person, at or prior to the written confirmation of the
sale of such securities to such person, a copy of the Prospectus. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
33
(b) The Company agrees to indemnify and hold harmless Xxxxxxx
Xxxxx Xxxxxx Inc., the directors, officers, employees and agents of Xxxxxxx
Xxxxx Barney Inc. and each person, who controls Xxxxxxx Xxxxx Xxxxxx Inc. within
the meaning of either the Act or the Exchange Act ("Xxxxxxx Xxxxx Barney Inc.
Entities"), and CIBC World Markets Inc. from and against any and all losses,
claims, damages and liabilities to which they may become subject under the Act,
the Exchange Act or other Federal or state statutory law or regulation, at
common law or otherwise (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim), insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) (i) arise out or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
prospectus wrapper material prepared by or with the consent of the Company for
distribution in foreign jurisdictions in connection with the Directed Share
Program attached to the Prospectus or any Preliminary Prospectus, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
therein, when considered in conjunction with the Prospectus or any applicable
Preliminary Prospectus, not misleading; (ii) are caused by the failure of any
Participant to pay for and accept delivery of the Directed Shares; or (iii)
relate to, arise out or, or occur in connection with the Directed Share Program,
provided that, in the case of clause (i) the Company will not be liable in any
such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of Xxxxxxx
Xxxxx Xxxxxx Inc. and CIBC World Markets Inc. specifically for inclusion therein
and that in the case of clause (iii) the Company will not be liable to the
extent such loss, claim, damage or liability results from the gross negligence
or wilful misconduct of Xxxxxxx Xxxxx Xxxxxx Inc. and CIBC World Markets Inc.
(c) Each Underwriter and Sub-Underwriter severally and not
jointly agrees to indemnify and hold harmless the Company, each of its
directors, each of its officers who signs the Registration Statement or the
Canadian Prospectus, and each person who controls the Company within the meaning
of either the Act or the Exchange Act, to the same extent as the foregoing
indemnity from the Company to each Underwriter, but only with reference to
written information relating to such Underwriter or Sub-Underwriter furnished to
the Company by or on behalf of such Underwriter or Sub-Underwriter through the
Representatives specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any Underwriter or Sub-Underwriter may otherwise have. The
Company acknowledges that (A) the statements set forth in the last paragraph of
the cover page regarding delivery of the Securities and, under the heading
"Underwriting", (i) the list of Underwriters and their respective participation
in the sale of the Securities, (ii) the sentences related to concessions and
reallowances and (iii) the paragraph related to stabilization, syndicate
covering transactions and penalty bids in any Preliminary
34
Prospectus and the Prospectus constitute the only information furnished in
writing by or on behalf of the several Underwriters or Sub-Underwriter for
inclusion in any Preliminary Prospectus or the Prospectus; and (B) the
statements set forth in [ ] constitute the only information furnished in writing
by or on behalf of the several Underwriters and Sub-Underwriter for inclusion in
the Prospectuses.
(d) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (c) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (c) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(e) In the event that the indemnity provided in paragraph (a)
or (c) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any
35
reason, the Company, the Underwriters and the Sub-Underwriter severally agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and one or more of
the Underwriters and the Sub-Underwriter may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and by the Underwriters and the Sub-Underwriter on the other from the
offering of the Securities; provided, however, that in no case shall any
Underwriter and the Sub-Underwriter (except as may be provided in any agreement
among underwriters relating to the offering of the Securities) be responsible
for any amount in excess of the underwriting discount or commission applicable
to the Securities purchased by such Underwriter and the Sub-Underwriter
hereunder. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company, the Underwriters and the
Sub-Underwriter severally shall contribute in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
Company on the one hand and of the Underwriters and the Sub-Underwriter on the
other in connection with the statements or omissions which resulted in such
losses as well as any other relevant equitable considerations. Benefits received
by the Company shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses) received by it, and benefits received by
the Underwriters and the Sub-Underwriter shall be deemed to be equal to the
total underwriting discounts and commissions, in each case as set forth on the
cover page of the Prospectuses. Benefits received by the Independent Underwriter
in its capacity as "qualified independent underwriter" shall be deemed to be
equal to the compensation received by the Independent Underwriter for acting in
such capacity. Relative fault shall be determined by reference to, among other
things, whether any untrue or any alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to information
provided by the Company on the one hand or the Underwriters and the
Sub-Underwriter on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company, the Underwriters and the
Sub-Underwriter agree that it would not be just and equitable if contribution
were determined by pro rata allocation or any other method of allocation which
does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (e), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter and Sub-Underwriter within the meaning of either the Act
or the Exchange Act and each director, officer, employee and agent of an
Underwriter and Sub-Underwriter shall have the same rights to contribution as
such Underwriter and Sub Underwriter, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement or the Canadian
Prospectus and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (e).
36
(f) Without limitation of and in addition to its obligations
under the other paragraphs of this Section 8, the Company agrees to indemnify
and hold harmless the Independent Underwriter, its directors, officers,
employees and agents and each person who controls Independent Underwriter within
the meaning of either the Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject, insofar as such losses, claims, damages or liabilities (or
action in respect thereof) arise out of or are based upon Independent
Underwriter's acting as a "qualified independent underwriter" (within the
meaning of National Association of Securities Dealers, Inc. Conduct Rule 2720)
in connection with the offering contemplated by this Agreement, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability results from the gross negligence or willful
misconduct of the Independent Underwriter.
9. Default by an Underwriter. If any one or more Underwriters shall fail to
purchase and pay for any of the Securities agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
five Business Days, as the Representatives shall determine in order that the
required changes in the Registration Statement and the Prospectus and the
Canadian Prospectus or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Underwriter of
its liability, if any, to the Company and any nondefaulting Underwriter for
damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in the absolute
discretion of the Representatives, by notice given to the Company prior to
delivery of and payment for the Securities, if at any time prior to such time
(i) trading in the Company's Common Shares shall have been suspended by the
Commission or the
37
Nasdaq Stock Market or The Toronto Stock Exchange or trading in securities
generally on the Nasdaq Stock Market, The Toronto Stock Exchange or New York
Stock Exchange shall have been suspended or limited or minimum prices shall have
been established on either of such exchange or the Nasdaq National Market or The
Toronto Stock Exchange, (ii) a banking moratorium shall have been declared
either by United States, Canadian or New York State authorities or (iii) there
shall have occurred any outbreak or escalation of hostilities, declaration by
the United States of a national emergency or war, or other calamity or crisis
the effect of which on financial markets is such as to make it, in the sole
judgment of the Representatives, impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Prospectus
(exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers and of the Underwriters and the Sub-Underwriter set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter and the
Sub-Underwriter or the Company or any of the officers, directors, employees,
agents or controlling persons referred to in Section 8 hereof, and will survive
delivery of and payment for the Securities. The provisions of Sections 7 and 8
hereof shall survive the termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and effective only
on receipt, and, if sent to the Representatives or the Sub-Underwriter, will be
mailed, delivered or telefaxed to the Xxxxxxx Xxxxx Xxxxxx Inc. General Counsel
(fax no.: (000) 000-0000) and confirmed to the General Counsel, Xxxxxxx Xxxxx
Barney Inc., at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention:
General Counsel; or, if sent to the Company, will be mailed, delivered or
telefaxed to (000) 000-0000 and confirmed to it at 000 Xxxxxx Xxxxxx Xxxxxxxxxx,
Xxxxxxx, Xxxxxx X0X 0X0, attention of the President.
13. Successors. This Agreement will inure to the benefit of and be binding upon
the parties hereto and their respective successors and the officers, directors,
employees, agents and controlling persons referred to in Section 8 hereof, and
no other person will have any right or obligation hereunder.
14. Jurisdiction The Company agrees that any suit, action or proceeding against
the Company brought by any Underwriter or Sub-Underwriter, the directors,
officers, employees and agents of any Underwriter or Sub-Underwriter, or by any
person who controls any Underwriter or Sub-Underwriter, arising out of or based
upon this Agreement or the transactions contemplated hereby may be instituted in
any state or Federal court in the City of New York, New York, and waive any
objection which they may now or hereafter have to the laying of venue of any
such preceding, and irrevocably submit to the non-exclusive jurisdiction of such
courts in any such suit, action or proceeding. The Company has appointed CT
Corporation System as its authorized agent
38
(the "Authorized Agent") upon whom process may be served in any suit, action or
proceeding arising out of or based upon this Agreement or the transactions
contemplated herein which may be instituted in any state or Federal court in the
City of New York, New York, by any Underwriter or Sub-Underwriter, directors,
officers, employees and agents of any Underwriter or Sub-Underwriter, or by any
person, if any, who controls any Underwriter or Sub-Underwriter, and expressly
accept the non-exclusive jurisdiction of any such court in respect of any such
suit, action or proceeding. The Company hereby represents and warrants that the
Authorized Agent has accepted such appointment and has agreed to act as said
agent for service of process, and the Company agrees to take any and all action,
including the filing of any and all documents that may be necessary to continue
such appointment in full force and effect as aforesaid. Service of process upon
the Authorized Agent shall be deemed, in every respect, effective service of
process upon the Company. Notwithstanding the foregoing, any action arising out
of or based upon this Agreement may be instituted by any Underwriter or
Sub-Underwriter, the directors, officers, employees and agents of any
Underwriter or Sub-Underwriter, or by any person who controls any Underwriter or
Sub-Underwriter, in any court of competent jurisdiction in Canada.
15. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
16. Currency. References in this Agreement to "$s" are to U.S. dollars.
17. Counterparts. This Agreement may be signed in one or more counterparts, each
of which shall constitute an original and all of which together shall constitute
one and the same agreement.
18. Headings. The section headings used herein are for convenience only and
shall not affect the construction hereof.
19. Definitions. The terms which follow, when used in this Agreement, shall have
the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or
trust companies are authorized or obligated by law to close in New York
City.
"Canadian Jurisdictions" means, collectively, all of the
provinces of Canada.
39
"Canadian Option Securities" shall mean the Option Securities
to be offered and sold in Canada.
"Canadian Securities" shall mean the Canadian Underwritten
Securities and the Canadian Option Securities.
"Canadian Underwritten Securities" shall mean the Underwritten
Securities to be offered and sold in Canada.
"Canadian Preliminary Prospectus", "Amended Canadian
Preliminary Prospectus" and "Canadian Final Prospectus" mean,
respectively, the preliminary prospectus dated July 31, 2000, the
amendments to the Canadian Preliminary Prospectus dated September 13,
2000, September 25, 2000 and September 29, 2000 (in both the English
and French languages unless the context indicates otherwise), and the
final prospectus dated , 2000 omitting the PREP Information used in
Canada and relating to the Securities).
"Canadian Prospectus" means the supplemented Canadian Final
Prospectus, incorporating the PREP Information, to be dated , 2000 (in
both the English and French languages unless the content indicates
otherwise) used in Canada relating to the Securities.
"Canadian Securities Laws" means the applicable securities
legislation of the Canadian Jurisdictions and the respective rules,
regulations and written and published policies thereunder.
"Commission" shall mean the Securities and Exchange
Commission.
"Effective Date" shall mean each date and time that the
Registration Statement, any post-effective amendment or amendments
thereto and any Rule 462(b) Registration Statement became or become
effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
"Material Adverse Effect" in respect of the Company shall mean
any material adverse effect on the condition (financial or otherwise),
earnings, business, prospects or properties of the Company, whether or
not arising from transactions in the ordinary course of business.
40
"MRRS Decision Document" means a MRRS Decision Document
pursuant to National Policy No. 43-201.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(a) above and any preliminary prospectus
included in the Registration Statement at the Effective Date that omits
Rule 430A Information.
"PREP Decision Document" means the decision document issued
by the Reviewing Authority permitting the Company to use the PREP
Procedures in connection with the distribution of the Securities in
Canada.
"PREP Information" means the information, if any, included in
the Canadian Prospectus that is omitted from the Canadian Final
Prospectus in accordance with the PREP Procedures and the PREP Decision
Document but that is deemed under the PREP Procedures and the PREP
Decision Document to be incorporated by reference into the Canadian
Prospectus as of the date of the Canadian Prospectus.
"PREP Procedures" means the rules and procedures established
pursuant to the Canadian Securities Laws for the pricing of securities
after the final receipt for a prospectus has been obtained.
"Prospectus" shall mean the prospectus relating to the
Securities that is first filed pursuant to Rule 424(b) after the
Execution Time or, if no filing pursuant to Rule 424(b) is required,
shall mean the form of final prospectus relating to the Securities
included in the Registration Statement at the Effective Date.
"Prospectuses" means collectively, the Prospectus and the
Canadian Prospectus.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at
the Execution Time, in the form in which it shall become effective)
and, in the event any post-effective amendment thereto or any Rule
462(b) Registration Statement becomes effective prior to the Closing
Date, shall also mean such registration statement as so amended or such
Rule 462(b) Registration Statement, as the case may be. Such term shall
include any Rule 430A Information deemed to be included therein at the
Effective Date as provided by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules
under the Act.
41
"Rule 430A Information" shall mean information with respect to
the Securities and the offering thereof permitted to be omitted from
the Registration Statement when it becomes effective pursuant to Rule
430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the registration statement referred
to in Section 1(a) hereof.
"U.S. Option Securities" shall mean the Option Securities to
be offered and sold outside of Canada.
"U.S. Securities" shall mean the U.S. Underwritten Securities
and the U.S. Option Securities.
"U.S. Underwritten Securities" shall mean the Underwritten
Securities to be offered and sold outside of Canada.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company, the several Underwriters and the Sub-Underwriter.
Very truly yours,
HYDROGENICS CORPORATION
By: .......................
Name:
Title:
42
Xxxxxxx Xxxxx Xxxxxx Inc. 42
CIBC World Markets Inc.
BMO Xxxxxxx Xxxxx Inc.
By:
................................................
Name:
Title:
For itself and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
43
SCHEDULE I
NUMBER OF UNDERWRITTEN
SECURITIES TO BE
UNDERWRITERS PURCHASED
------------ ---------
Xxxxxxx Xxxxx Barney Inc. . . . . . . . 3,500,000
CIBC World Markets Inc. . . . . . . . . . . . . 2,800,800
BMO Xxxxxxx Xxxxx Inc. . . . . . . . . . . . . . . . . . . 700,000
[ ] [ ]
---------
[ ]
Total . . . . . . . . .
SUB-UNDERWRITER
Xxxxxxx Xxxxx Barney Canada Inc.
44
[LETTERHEAD OF OFFICER, DIRECTOR OR MAJOR SHAREHOLDER OF
CORPORATION]
Hydrogenics Corporation
Initial Public Offering of Common Stock
, 2000
Xxxxxxx Xxxxx Xxxxxx Inc.
As Representative of the several Underwriters,
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed Underwriting Agreement (the "Underwriting Agreement"), between
Hydrogenics Corporation, a corporation organized under the federal laws of
Canada (the "Company"), and you as representative of a group of Underwriters
named therein, relating to an underwritten public offering of common shares (the
"Common Shares"), of the Company.
In order to induce you and the other Underwriters to enter
into the Underwriting Agreement, the undersigned will not, without the prior
written consent of Xxxxxxx Xxxxx Barney Inc., offer, sell, contract to sell,
pledge or otherwise dispose of, (or enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or
otherwise) by the undersigned or any affiliate of the undersigned or any person
in privity with the undersigned or any affiliate of the undersigned), directly
or indirectly, including the filing (or participation in the filing) of a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder with respect to, any
shares of capital stock of the Company or any securities convertible into, or
exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period of 180 days
45
after the date of the Underwriting Agreement, other than Common Shares disposed
of as bona fide gifts approved by Xxxxxxx Xxxxx Xxxxxx Inc.
If for any reason the Underwriting Agreement shall be
terminated prior to the Closing Date (as defined in the Underwriting Agreement),
the agreement set forth above shall likewise be terminated.
Yours very truly,
[SIGNATURE OF OFFICER, DIRECTOR OR MAJOR
STOCKHOLDER]
[NAME AND ADDRESS OF OFFICER, DIRECTOR OR
MAJOR STOCKHOLDER]
