Exhibit 10.1.2
UNDERWRITING AGREEMENT
July 18, 2003
MDC Corporation Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
- and -
Xxxxxx Xxxxxx Canada Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Dear Sirs:
We understand that MDC Corporation Inc. and Xxxxxx Xxxxxx Canada Inc.
(the "VENDORS") propose to sell to the Underwriters (as defined below), an
aggregate of 2,963,804 previously issued trust units (the "UNITS") of Custom
Direct Income Fund. Upon and subject to the terms and conditions contained in
this agreement, CIBC World Markets Inc. ("CIBC WORLD MARKETS"), TD Securities
Inc., Scotia Capital Inc., BMO Xxxxxxx Xxxxx Inc., National Bank Financial Inc.
and Xxxxxxxxx XxXxxxxx & Partners (collectively, the "UNDERWRITERS", and each,
an "UNDERWRITER") hereby severally offer to purchase from the Vendors in the
respective percentages set out in Section 18, and the Vendors hereby agree to
sell to the Underwriters, all but not less than all of 2,963,804 Units (the
"PURCHASED UNITS"), at the purchase price of $10.00 per Unit, being an
aggregate purchase price of $29,638,040.
The Underwriters propose to sell the Purchased Units to purchasers in
Canada at a price of $10.00 per Unit on a "private placement" basis on the
terms and subject to the terms of this agreement.
In consideration of the agreement of the Underwriters to purchase the
Purchased Units and to offer them for sale in accordance with the terms of this
agreement, the Vendors jointly agree to pay to the Underwriters, at the Closing
Time (as defined below), a fee equal to 5.0% of the aggregate purchase price
for the Purchased Units, or $0.50 per Purchased Unit.
All dollar amounts referenced herein are in Canadian dollars unless
otherwise indicated.
TERMS AND CONDITIONS
The following are additional terms and conditions of this agreement
among the Vendors and the Underwriters.
1. DEFINITIONS
Where used in this agreement, or in any amendment to this agreement,
the following terms will have the following meanings, respectively:
1.1 "AFFILIATE" means an affiliated entity for purposes of Section 1.2 of
Ontario Securities Commission Rule 45-501 under the Securities Act
(Ontario), as constituted at the date of this agreement;
1.2 "XXXXXX XXXXXX CANADA" means Xxxxxx Xxxxxx Canada Inc.;
1.3 "BENEFICIARIES" has the meaning given to that term in Section 11.3;
1.4 "BUSINESS DAY" means a day other than a Saturday, a Sunday or a day on
which chartered banks are not open for business in Toronto, Ontario;
1.5 "CLAIM" has the meaning given to that term in Section 11.1;
1.6 "CLOSING" means the completion of the issue and sale by the Vendors
and the purchase by the Underwriters of Purchased Units pursuant to
this agreement;
1.7 "CLOSING DATE" means July 29, 2003 or any earlier date as may be
agreed to in writing by the Fund, MDC and the Underwriters, each
acting reasonably;
1.8 "CLOSING TIME" means 10:00 a.m. (Toronto time) on the Closing Date or
such other time on the Closing Date as the Underwriters and Vendors
may agree upon;
1.9 "COMPANY" means Custom Direct, Inc., a corporation incorporated under
the laws of Delaware, as the surviving corporation resulting from the
merger of Custom Direct USA Inc. with and into Custom Direct, Inc.;
1.10 "CONTINUING UNDERWRITERS" has the meaning given to that term in
Section 18;
1.11 "CUSTOM DIRECT CANADA" means Custom Direct Canada Inc., a corporation
incorporated under the laws of Ontario;
1.12 "CUSTOM DIRECT LLC" means Custom Direct LLC, a limited liability
company formed under the laws of Delaware;
1.13 "CUSTOM DIRECT ULC" means Custom Direct ULC, a Nova Scotia unlimited
liability company;
1.14 "CUSTOM DIRECT ULC NOTES" means the 14.5% unsecured subordinated notes
of Custom Direct ULC;
1.15 "DECLARATION OF TRUST" means a declaration of trust of the Fund made
on the 18th day of March, 2003 under the laws of the Province of
Ontario, as amended and restated on May 14, 2003 and as amended from
time to time;
1.16 "DEFAULTED UNITS" has the meaning given to that term in Section 18;
1.17 "DISTRIBUTION" means distribution or distribution to the public, as
the case may be, for the purposes of the Securities Laws or any of
them;
1.18 "FINANCIAL INFORMATION" means the financial statements of the Fund and
the Company included in the Prospectus, together with the report of
BDO Dunwoody LLP, Chartered Accountants, on those financial statements
as at and for the periods included in the Prospectus and including the
notes with respect to those financial statements, as set forth on
pages 11 and 39 and F-1 to F-23 inclusive of the Prospectus;
1.19 "INDEMNIFIED PARTY" and "INDEMNIFIED PARTIES" have the meanings given
to those terms in Section 11.1;
1.20 "MATERIAL CHANGE" means a change in the business, operations or
capital of the Company, the Fund or its subsidiaries that would
reasonably be expected to have a significant effect on the market
price or value of the Purchased Units and includes a decision to
implement such a change made by the trustees of the Fund or by senior
management of the Company who believe that confirmation of the
decision by the trustees is probable;
1.21 "MATERIAL FACT" means a fact that significantly affects, or would
reasonably be expected to have a significant effect on, the market
price or value of the Purchased Units;
1.22 "MISREPRESENTATION" means: (i) an untrue statement of a material fact
or (ii) an omission to state a material fact that is required to be
stated or that is necessary to make a statement not misleading in the
light of the circumstances in which it was made;
1.23 "MDC" means MDC Corporation Inc.;
1.24 "CREDIT FACILITY" means the credit arrangements entered between Custom
Direct LLC and a group of LENDERS pursuant to which Custom Direct LLC
has been provided with a senior secured credit facility in the
aggregate amount of up to US$42.5 million comprised of a term facility
in the aggregate amount of US$37.5 million and a revolving credit
facility in the aggregate amount of up to US$5.0 million, as described
in the Prospectus under the heading "Proposed Credit Facility";
1.25 "PROSPECTUS" means the final prospectus of the Fund dated May 15, 2003
as filed with the Securities Commissions in accordance with the
Securities Laws;
1.26 "PUBLIC DOCUMENTS" means any press release, material change report,
financial statement and any other document filed by the Fund under
Securities Laws and available on SEDAR;
1.27 "QUALIFYING ISSUER" means a "qualifying issuer" as such term is
defined for the purposes of Multilateral Instrument 45-102 ("MI
45-102") of the securities regulatory authorities of a number of
provinces of Canada, including Ontario;
1.28 "REFUSING UNDERWRITER" has the meaning given to that term in Section
18;
1.29 "SECURITIES COMMISSION" means the applicable securities commission or
regulatory authority in each Province of Canada;
1.30 "SECURITIES LAWS" means, collectively, the applicable securities laws
of each of the Provinces of Canada and the respective regulations and
rules made under those securities laws together with all applicable
blanket orders and rulings of the Securities Commissions and all
discretionary orders or rulings, if any, of the Securities Commissions
made in connection with the transactions contemplated by this
agreement;
1.31 "SUBSIDIARY" means a subsidiary for purposes of Section 1.2 of Ontario
Securities Commission Rule 45-501 under the Securities Act (Ontario),
as constituted at the date of this agreement;
1.32 "TRUST COMPANY" means CIBC Mellon Trust Company;
1.33 "TSX" means the Toronto Stock Exchange;
1.34 "UNDERWRITING AGREEMENT" OR "AGREEMENT" means this agreement;
1.35 "UNITED STATES" means the United States of America, its territories
and possessions, any state of the United States and the District of
Columbia; and
1.36 "U.S. SECURITIES ACT" means the United States Securities Act of 1933,
as amended.
Capitalized terms used but not defined in this agreement have the
meanings given to them in the Prospectus.
Any reference in this agreement to a section, paragraph, subsection,
subparagraph, clause, subclause or Schedule will refer to a section, paragraph,
subsection, subparagraph, clause, subclause or Schedule of this agreement.
All words and personal pronouns relating to those words will be read
and construed as the number and gender of the party or parties referred to in
each case requires and the verb will be construed as agreeing with the required
word and/or pronoun.
2. ATTRIBUTES OF THE PURCHASED UNITS
2.1 The Purchased Units to be sold under this agreement by the Vendors
have been duly and validly created and issued by the Fund and have the
attributes set out in the Prospectus.
3. DISTRIBUTION AND CERTAIN OBLIGATIONS OF UNDERWRITERS
3.1 The Underwriters will offer and sell the Purchased Units only in those
jurisdictions where they may be lawfully offered for sale or sold on a
basis exempt from prospectus requirements of Securities Laws and
registration requirements of the U.S. Securities Act. The Underwriters
will comply with applicable Securities Laws in connection with the
offer to sell or distribution of the Purchased Units. The Underwriters
will not, directly or indirectly, solicit offers to purchase or sell
the Purchased Units so as to require registration of those Purchased
Units or filing of a prospectus with respect to those Purchased Units
under the laws of any jurisdiction. Each Underwriter will cause
similar undertakings to be contained in any agreements among the
members of the banking, selling or other groups formed for the
distribution of the Purchased Units and will require any member of the
banking, selling or other group formed for the distribution of the
Purchased Units to comply with applicable Securities Laws.
3.2 The Underwriters acknowledge that the sale of the Purchased Units by
the Vendors is a distribution of the Purchased Units which has not
been qualified by a prospectus under Securities Laws and accordingly
any resale by the Underwriters of the Purchased Units will be a
distribution.
3.3 The Underwriters will ask each person resident in Canada who purchases
any of the Purchased Units from them during the period during which
such sale is a distribution, to sign a Purchaser's Letter
substantially in the form of Schedule 3.3.
3.4 No Underwriter will be liable to the Vendors under this Section 3 with
respect to a default by any of the other Underwriters but will be
liable to the Vendors for its own default.
4. MATERIAL CHANGE
4.1 The Vendors will promptly inform the Underwriters in writing
during the period prior to the completion of the distribution
of the Purchased Units of the full particulars of:
4.1.1. any material change (whether actual, anticipated,
contemplated or proposed by, or threatened against, the
Company or the Fund) in the assets, liabilities (contingent
or otherwise), business, affairs, prospects, operations or
capital of the Company or the Fund;
4.1.2. any material fact which has arisen or has been discovered and
would have been required to have been stated in the
Prospectus had that fact arisen or been discovered on, or
prior to, the date of the Prospectus; or
4.1.3. any change in any material fact contained in the Prospectus
or whether any event or state of facts has occurred after the
date of the Prospectus, which, in any case, is of such a
nature as to render the Prospectus untrue or misleading in
any material respect or to result in any misrepresentation in
the Prospectus including as a result of the Prospectus
containing an untrue statement of a material fact or omitting
to state a material fact required to be stated therein or
necessary to make any statement therein not false or
misleading in light of the circumstances in which it was
made.
5. REGULATORY APPROVALS
5.1 The Vendors will make all necessary filings on their behalf and on
behalf of the Underwriters, obtain all necessary regulatory consents
and approvals (if any) and pay all filing fees required to be paid by
the Vendors or the Underwriters in connection with the sale of the
Purchased Units to the Underwriters and the sale of the Purchased
Units by the Underwriters; provided that the Vendors shall only be
required to file such reports as may be required under Securities Laws
if the Underwriters provide to the Vendors the names and addresses of
each person to which the Underwriters have sold Purchased Units and
the number of Purchased Units purchased by each such person.
5.2 The Vendors shall use all commercially reasonable efforts to cause the
Fund to become a Qualifying Issuer by the Time of Closing, including,
without limiting the generality of the foregoing, by causing the Fund
to file an application for a waiver or order under the Securities
Legislation resulting in the Fund becoming a Qualifying Issuer.
6. REPRESENTATIONS AND WARRANTIES OF THE VENDORS
The Vendors jointly and severally represent and warrant that:
6.1 the Fund has been created and, to the knowledge of the Vendors, is
existing as a trust under the laws of the Province of Ontario and the
trustees have been appointed as trustees of the Fund;
6.2 the Fund can carry out its affairs as described in the Prospectus in
compliance with the terms and provisions of the Declaration of Trust;
6.3 other than as set out in the Prospectus, to the knowledge of the
Vendors, there is no agreement in force or effect which in any manner
affects or will affect the voting or control of any of the securities
of the Fund or its subsidiaries;
6.4 to the knowledge of the Vendors: the Fund is the registered and
beneficial owner of all of the issued and outstanding common shares of
Custom Direct Canada and holds those securities free and clear of any
liens, charges or encumbrances other than as provided for under the
Credit Facility; Custom Direct Canada is the registered and beneficial
owner of all of the issued and outstanding Class A common shares of
the Company representing 80% of the issued and outstanding common
shares of the Company and holds those securities free and clear of any
liens, charges or encumbrances other than as provided for under the
Credit Facility; Custom Direct ULC is the registered and beneficial
owner of all of the issued and outstanding Series A preferred shares
of the Company representing 80% of the issued and outstanding
preferred shares of the Company and will hold those securities free
and clear of any liens, charges or encumbrances other than as provided
for under the Credit Facility; the Company is the registered and
beneficial owner of all of the issued and outstanding common shares of
Custom Direct ULC and holds those securities free and clear of any
liens, charges or encumbrances other than as provided for under the
Credit Facility; the Fund is the holder of US$78.2 million principal
amount of Custom Direct ULC Notes and holds those securities free and
clear of any liens, charges or encumbrances other than as provided for
under the Credit Facility; the Company is the registered and
beneficial owner of all of the issued and outstanding membership
interests of Custom Direct LLC and holds those securities free and
clear of any liens, charges or encumbrances other than as provided for
under the Credit Facility; and Custom Direct LLC is the registered and
beneficial owner of all of the issued and outstanding shares in the
capital of Unique Checks, Inc. free and clear of any liens, charges or
encumbrances other than as provided for under the Credit Facility;
6.5 to the knowledge of the Vendors, the Fund is authorized to issue an
unlimited number of Units, of which, as of the date of this agreement,
15,613,804 Units are issued and outstanding as a fully paid Units of
the Fund;
6.6 except as contemplated in the Prospectus, to the knowledge of the
Vendors, no person has any written or oral agreement, option,
understanding or commitment, or any right or privilege capable of
becoming such (i) under which the Fund is, or may become, obligated to
issue any of its securities or (ii) for the purchase of any security
(including debt) of the Fund;
6.7 the Units are listed and posted for trading on the TSX;
6.8 each of MDC and Xxxxxx Xxxxxx Canada is a corporation validly
subsisting under the laws of its jurisdiction of incorporation. Each
such entity has the power to own and operate its property, carry on
its business and to enter into and perform its obligations under this
agreement;
6.9 the Vendors are the beneficial owners of the Purchased Units as set
out in Schedule 6.9, free and clear of all encumbrances, liens,
charges or restrictions, other than such restrictions arising under
Securities Laws and under the Underwriting Agreement among the Fund,
MDC, Xxxxxx Xxxxxx Canada and the Underwriters dated May 15, 2003; and
upon completion of the transactions contemplated in this agreement,
the Underwriters will acquire the Purchased Shares free and clear of
all encumbrances, liens, charges or restrictions, other than such
restrictions arising under Securities Laws;
6.10 to the knowledge of the Vendors, MDC and Xxxxxx Xxxxxx Canada are the
beneficial owners of all of the issued and outstanding Class B common
shares of the Company representing 20% of the issued and outstanding
common shares of the Company and all of the Series B preferred shares
of the Company representing 20% of the issued and outstanding
preferred shares of the Company and such Class B common shares and
Series B preferred shares of the Company are registered in the name of
MDC or Xxxxxx Xxxxxx Canada;
6.11 except as disclosed in the Prospectus, prior to May 29, 2003 MDC
exercised its control to ensure that the Company conducted its
business in compliance in all material respects with all applicable
laws of each jurisdiction in which the Company carried on business;
6.12 the execution, delivery and performance of this agreement by each of
MDC and Xxxxxx Xxxxxx Canada:
6.12.1. has been or will at the Closing Time be duly authorized by
all necessary action or corporate action on its part;
6.12.2. does not require the consent, approval, authorization,
registration or qualification of or with any governmental
authority, stock exchange, Securities Commission or other
securities regulatory authority or other third party, except:
(i) those which have been obtained; (ii) those as may be
required (and will be obtained prior to the Closing Time)
under applicable Securities Laws; or (iii) those which have
not been obtained and would not be material to the Vendors;
6.12.3. does not (or will not with the giving of notice, the lapse of
time or the happening of any other event or condition) result
in a breach or a violation of, or conflict with or result in
a default under, or allow any other person to exercise any
rights under, any of the terms or provisions of their
constating documents or by-laws or resolutions of the board
of directors (or any committee thereof) or securityholders,
or any judgment, decree, order or award of any court,
governmental body or arbitrator having jurisdiction over any
of them, or any agreement, license or permit to which any of
them is a party or by which the Company may be affected; and
6.12.4. will not result in the violation of any law.
6.13 other than as set out in the Prospectus, to the knowledge of the
Vendors, there is no agreement in force or effect which in any manner
affects or will affect the voting or control of any of the securities
of the Fund, Custom Direct Canada, Custom Direct ULC, the Company or
Custom Direct LLC;
6.14 except as disclosed in the Prospectus, there is no material action,
suit, proceeding or investigation, at law or in equity, by any person,
nor any arbitration, administrative or other proceeding by or before
any governmental entity pending or, to the best of the knowledge of
MDC, threatened against or affecting MDC, Xxxxxx Xxxxxx Canada or, to
the knowledge of the Vendors, the Company, the Fund or any of their
respective properties, rights or assets;
6.15 the Financial Information has been prepared in accordance with
Canadian generally accepted accounting principles and presents fairly,
in all material respects, the financial condition and the results of
operations and cash flow of the Company and of the Fund as at the
dates and for the periods referred to therein;
6.16 to the knowledge of MDC, there has not been any reportable
disagreement (within the meaning of National Policy Statement No. 31
of the Canadian Securities Administrators) with the auditors of the
Fund;
6.17 the Prospectus and the Public Documents did not contain any
misrepresentation on the date they were filed, and subsequent to the
date thereof, there has not been any material change, or any
development involving a prospective material change in the condition
(financial or otherwise) or results of operation of the Company or the
Fund and its subsidiaries on a consolidated basis, other than as
disclosed in the Public Documents; and
6.18 The Vendors do not have any relationship with any of the Underwriters
or any "related issuer" (as defined in National Instrument 33-105) of
the Underwriters that may lead a reasonable prospective purchaser of
the Purchased Units to question if the Underwriters and the Vendors
are independent of each other for the sale of the Purchased Units
contemplated by this Agreement.
7. CONDITIONS OF CLOSING IN FAVOUR OF THE UNDERWRITERS
The obligation of the Underwriters to purchase the Purchased Units
will be subject to the following:
7.1 the Vendors will cause their Canadian counsel to deliver to the
Underwriters and their counsel legal opinions dated and delivered the
Closing Date, substantially in the form of Schedule 7.1;
7.2 the Underwriters will have received certificates dated the Closing
Date signed by those senior officers of MDC and Xxxxxx Xxxxxx Canada
as may be acceptable to the Underwriters, acting reasonably, in form
and content satisfactory to the Underwriters, acting reasonably, with
respect to:
7.2.1. the constating documents of each such entity;
7.2.2. the resolutions of the directors of MDC and Xxxxxx Xxxxxx
Canada, relevant to the sale of the Purchased Units and the
authorization of the transactions contemplated by this
agreement; and
7.2.3. the incumbency and signatures of signing officers of MDC and
Xxxxxx Xxxxxx Canada;
7.3 MDC and Xxxxxx Xxxxxx Canada will deliver to the Underwriters, at the
Closing Time, a certificate dated the Closing Date addressed to the
Underwriters and signed by Xxxxx Xxxxx, Executive Vice-President and
Chief Financial Officer, and Xxxxxx Xxxxxxxxx, Executive
Vice-President, certifying for and on behalf of MDC and Xxxxxx Xxxxxx
Canada, after having made due inquiries, as to those matters that the
Underwriters may reasonably request, including certification to the
effect that:
7.3.1. MDC and Xxxxxx Xxxxxx Canada have complied with all the
covenants and satisfied all the terms and conditions of this
agreement on their respective parts to be complied with and
satisfied at or prior to the Closing Time;
7.3.2. subsequent to the respective dates as at which information is
given in the Prospectus, to the knowledge of MDC and Xxxxxx
Xxxxxx Canada, there has not been any material change, or any
development involving a prospective material change in the
condition (financial or otherwise) or results of operations
of the Company or the Fund and its subsidiaries on a
consolidated basis, other than as disclosed in the Public
Documents;
7.3.3. subsequent to the respective dates as at which information is
given in the Prospectus, no transaction out of the ordinary
course of business, material to the Fund, has been entered
into by MDC, Xxxxxx Xxxxxx Canada, or, to the knowledge of
MDC and Xxxxxx Xxxxxx Canada, the Company or the Fund and its
subsidiaries or has been approved by the management of any of
them, which results in a material change in the Company or
the Fund and its subsidiaries on a consolidated basis, other
than as disclosed in the Public Documents;
7.3.4. the representations and warranties of each of MDC and Xxxxxx
Xxxxxx Canada contained in this agreement, and in any
certificates of each of MDC and Xxxxxx Xxxxxx Canada
delivered pursuant to or in connection with this agreement,
are true and correct as at the Closing Time, with the same
force and effect as if made on and as at the Closing Time,
after giving effect to the transactions contemplated by this
agreement;
7.4 the Fund will not have declared any cash distributions with a record
date prior to the Closing Date;
7.5 the Fund and the Company shall have granted to the Underwriters, their
counsel and other representative full access to members of its senior
management, corporate records minute books, contracts, financial
statements and other documents to allow the Underwriters to complete a
due diligence review update from the due diligence review conducted at
the time of preparation of the Prospectus;
7.6 at the Time of Closing, the Fund shall be a "Qualifying Issuer" or,
failing which, shall have obtained an order or other exemption from
the relevant Securities Commissions in form, content and scope
satisfactory to the Underwriters and their counsel acting reasonably,
subject to conditions customarily satisfied after the Time of Closing,
with the result that the resale of the Purchased Shares by a person
who has acquired such Purchased Units from the Underwriters shall be
subject to section 2.5(2) of MI 45-102 and, for greater certainty, the
hold period to which such Purchased Units will be subject will not
exceed 4 months from the date of purchase by such person; and
7.7 the Underwriters will have received such other certificates, opinions,
agreements, materials or documents, in form and substance satisfactory
to the Underwriters, as the Underwriters may reasonably request.
The condition in Section 7.6 above shall be waived by the Underwriters if the
Vendors and the Underwriters, acting reasonably, agree (prior to the Closing
Date) to a sale of the Purchased Units by the Vendors using a structure (the
"Alternative Structure") which will result in a resale of the Purchased Units
by a person who has acquired such Purchased Units from the Underwriters not
being subject to a hold period under Securities Laws which will exceed 4 months
from the date of acquisition by such person; provided that (i) the terms of
such Alternative Structure result in the Vendors receiving a cash purchase
price of $10.00 per Purchased Unit on or before July 29, 2003, (ii) the
Underwriters shall be paid a commission of 5% of the aggregate purchase price
for the Purchased Units, and (iii) the Underwriters shall be responsible for
all fees, expenses and disbursements incurred by the Vendors, the Fund and the
Underwriters in connection with the Alternative Structure (including fees,
expenses and disbursements of the Fund's accountants and of legal counsel for
the Vendors, the Fund and the Underwriters, and filing fees), and the
Underwriters and the Vendors will use reasonable commercial efforts to agree to
and implement an Alternative Structure.
8. CLOSING
The closing of the purchase and sale of the Purchased Units, as the
case may be, will be completed at the Closing Time, at the offices of Torys
LLP, Toronto-Dominion Centre, Suite 3000, 00 Xxxxxxxxxx Xxxxxx Xxxx, Xxxxxxx,
X0X 0X0, or at any other place determined in writing by Xxxxxx Xxxxxx Canada,
MDC and the Underwriters. At the Closing Time, Xxxxxx Xxxxxx Canada or MDC, as
the case may be, will deliver to CIBC World Markets:
8.1 for the respective accounts of the Underwriters, the Purchased Units
through the facilities of The Canadian Depository for Securities
Limited registered in the name of CDS & Co. or its nominee or as
otherwise directed by the Underwriters in accordance with the terms of
the Declaration of Trust and bearing such legends as may be requested
by the Underwriters; the Vendors will pay all fees and expenses
payable to or incurred by the Trust Company in connection with such
additional transfers required in the course of the distribution of the
Purchased Units, and all fees payable to The Canadian Depository for
Securities Limited;
8.2 one or more certified cheques or bank drafts or payment by wire
transfer payable to CIBC World Markets, on behalf of the Underwriters,
representing the fees payable by the Vendors, as the case may be, to
the Underwriters as provided in the third paragraph of this agreement;
and
8.3 all further documentation as may be contemplated in this agreement or
as counsel to the Underwriters may reasonably require;
against payment by the Underwriters to Xxxxxx Xxxxxx Canada or MDC, as directly
jointly by each of them, of the purchase price for the Purchased Units, being
sold by them under this agreement by certified cheque, bank draft or wire
transfer payable to or as directed by Xxxxxx Xxxxxx Canada or MDC, as the case
may be.
9. WAIVER OF RESTRICTIONS ON FURTHER SALES
9.1 For the purposes of section 13.2 of the Underwriting Agreement dated
May 15, 2003 among the Underwriters, the Fund and MDC, the
Underwriters hereby confirm their consent to the transactions
contemplated by this agreement.
10. [INTENTIONALLY DELETED]
11. INDEMNIFICATION
11.1 The Vendors will jointly and severally protect, hold harmless and
indemnify each of the Underwriters and their respective affiliates and
their respective directors, officers, employees, shareholders and
agents (collectively, the "INDEMNIFIED PARTIES" and individually an
"INDEMNIFIED PARTY") from and against all losses (other than losses of
profit in connection with the distribution of the Purchased Units),
claims, damages, liabilities, costs and expenses, including, without
limitation, all amounts paid to settle actions or satisfy judgments or
awards and all reasonable legal fees and expenses (collectively, a
"CLAIM") caused by or arising directly or indirectly by reason of:
11.1.1. any breach of or default under any representation, warranty,
covenant or agreement of the Vendors in this agreement or any
other document to be delivered pursuant hereto or the failure
of the Vendors to comply with any of its obligations
hereunder or thereunder;
11.1.3. any order made or any inquiry, investigation or proceeding
instituted, threatened or announced by any court, securities
regulatory authority, stock exchange or by any other
competent authority, preventing or restricting the trading in
or the sale or distribution of the Purchased Units; or
11.1.4. the Vendors not complying prior to the completion of the
distribution of the Purchased Units with any requirement of
any Securities Laws relating to the sale of the Purchased
Units,
and will reimburse the Indemnified Parties for all reasonable costs,
charges and expenses, as incurred, which any of them may pay or incur
in connection with investigating or disputing any Claim or action
related thereto, including without limitation, reimbursement on a
monthly basis for all time spent by personnel of the Underwriters at
the normal per diem rate, together with such disbursements and
reasonable out-of-pocket expenses as may be incurred, including the
reasonable fees and disbursements of counsel to such personnel of the
Underwriters. This indemnity will be in addition to any liability
which the Vendors may otherwise have.
11.2 If any Claim contemplated by this section is asserted against any of
the Indemnified Parties, or if any potential Claim contemplated by
this section comes to the knowledge of any of the Indemnified Parties,
the Indemnified Party concerned will notify in writing the Vendors, as
soon as reasonably practicable, of the nature of the Claim (provided
that any delay or failure to so notify in respect of any potential
Claim will not affect the liability of the Vendors under this section
unless that delay or failure prejudices the defence of the Claim or
increases the liability which the Vendors have under this Section 11).
The Vendors will, subject to the following, be entitled (but not
required) to assume the defence on behalf of the Indemnified Party of
any suit brought to enforce the Claim; provided that the defence will
be through legal counsel selected by the Vendors and acceptable to the
Indemnified Party, acting reasonably, and no admission of liability
will be made by the Vendors or the Indemnified Party without, in each
case, the prior written consent of all the Indemnified Parties
affected and the Vendors, in each case, which consent will not be
unreasonably withheld. An Indemnified Party will have the right to
employ separate counsel in any such suit and participate in its
defence but the fees and expenses of that counsel will be at the
expense of the Indemnified Party unless:
11.2.1. the Vendors fail to assume the defence of the suit on behalf
of the Indemnified Party within ten days of receiving notice
of the suit;
11.2.2. the employment of that counsel has been authorized by the
Vendors; or
11.2.3. the named parties to the suit (including any added or third
parties) include the Indemnified Party and the Vendors and
the Indemnified Party has been advised in writing by counsel
that there are legal defences available to the Indemnified
Party that are different or in addition to those available to
the Vendors or that representation of the Indemnified Party
by counsel for the Vendors is inappropriate as a result of
the potential or actual conflicting interests of those
represented,
(in each of the cases set out in Sections 11.2.1, 11.2.2 or 11.2.3,
the Vendors will not have the right to assume the defence of the suit
on behalf of the Indemnified Party, but the Vendors will be liable to
pay the reasonable fees and expenses of separate counsel for all
Indemnified Parties and, in addition, of local counsel in each
applicable jurisdiction). Notwithstanding the foregoing, no settlement
may be made by an Indemnified Party without the prior written consent
of the Vendors, which consent will not be unreasonably withheld.
11.3 The Vendors hereby acknowledge and agree that, with respect to
Sections 11 and 12, the Underwriters are contracting on their own
behalf and as agents for their affiliates' or directors, officers,
employees, shareholders and agents and their respective affiliates,
directors, officers, employees, shareholders and agents (collectively,
the "BENEFICIARIES"). In this regard, each of the Underwriters will
act as trustee for the Beneficiaries of the covenants of the Vendors
under Sections 11 and 12 with respect to the Beneficiaries and accepts
these trusts and will hold and enforce those covenants on behalf of
the Beneficiaries.
12. CONTRIBUTION
12.1 In order to provide for just and equitable contribution in
circumstances in which an indemnity provided in Section 11 would
otherwise be available in accordance with its terms but is, for any
reason, held to be unavailable to or unenforceable by the Indemnified
Parties or enforceable otherwise than in accordance with its terms,
the Underwriters and the Vendors, as the case may be, will contribute
to the aggregate of all claims, damages, liabilities, costs and
expenses and all losses (other than losses of profits in connection
with the distribution of the Purchased Units) of the nature
contemplated in Section 11 and suffered or incurred by the Indemnified
Parties in proportions so that the Underwriters will be responsible
for the portion represented by the percentage that the total fee paid
to the Underwriters in connection with the sale of the Purchased Units
bears to the aggregate purchase price of the Purchased Units, both as
determined pursuant to the provisions of this agreement, and the
Vendors will, subject to Section 13.2, be responsible for the balance,
whether or not they have been sued or sued separately; provided that
the Underwriters will not in any event be liable to contribute, in the
aggregate, any amount in excess of the total fee or any portion
actually received.
13. LIMITATION ON RIGHTS OF INDEMNITY AND CONTRIBUTION
13.1 No party who has engaged in any fraud, wilful default, fraudulent
misrepresentation, negligence, wilful misconduct or reckless disregard
will be entitled to claim indemnification under Section 11.1 or
contribution under Section 12.1 from any person who has not engaged in
that fraud, fraudulent misrepresentation or negligence, wilful
misconduct or reckless disregard.
13.2 For greater certainty, the Vendors will not have any obligation to
contribute pursuant to Section 12 in respect of any Claim except to
the extent the indemnity given by it in Section 11 would have been
applicable to that Claim in accordance with its terms, had that
indemnity been found to be enforceable and available to the
Indemnified Parties.
13.3 The rights to contribution provided in this section will be in
addition to and not in derogation of any other right to contribution
which the Indemnified Parties may have by statute or otherwise at law
provided that Sections 12.1 and 13.2 apply, mutatis mutandis, in
respect of that other right.
14. EXPENSES
14.1 Whether or not the purchase and sale of the Purchased Units is
completed, all expenses of or incidental to all matters in connection
with the transactions set out in this agreement will be borne by the
Vendors, (including Canadian federal goods and services tax and
provincial sales tax exigible in respect of any of the foregoing),
other than the Underwriters' expenses and disbursements and the fees,
expenses and disbursements of the Underwriters' counsel; provided that
if the sale of the Purchased Units to the Underwriters is not
completed as a result of the Underwriters exercising their rights of
termination under sections 15 or 16 of this agreement the
Underwriters' expenses and disbursements and the reasonable fees and
expenses and disbursements of Underwriters' counsel shall be borne by
the Vendors.
15. ALL TERMS TO BE CONDITIONS
15.1 The Vendors agree that the conditions contained in Sections 7 and 8
will be complied with insofar as they relate to acts to be performed
or caused to be performed by the Vendors, and that each of the Vendors
will use its respective best efforts to cause all of those conditions
to be complied with. All representations, warranties, covenants and
other terms of this agreement will be and will be deemed to be
conditions, and any breach or failure to comply with any of them or
any of the conditions set out in Sections 7 and 8 will entitle the
Underwriters to terminate their obligation to purchase the Purchased
Units, by written notice to that effect given to the Vendors at or
prior to the Closing Time. It is understood that the Underwriters may
waive, in whole or in part, or extend the time for compliance with,
any of those terms and conditions without prejudice to the rights of
the Underwriters in respect of any of those terms and conditions or
any other or subsequent breach or non-compliance, provided that to be
binding on the Underwriters any such waiver or extension must be in
writing.
16. TERMINATION BY UNDERWRITERS IN CERTAIN EVENTS
16.1 Each Underwriter will also be entitled to terminate its obligation to
purchase the Purchased Units by written notice to that effect given to
the Vendors at or prior to the Closing Time if:
16.1.1. any inquiry, investigation or other proceeding is commenced,
announced or threatened or any order is issued under or
pursuant to any relevant statute or by any stock exchange or
other regulatory authority or there is any change of law, or
interpretation or administration thereof, which, in the
reasonable opinion of that Underwriter, after consultation
with the Vendors, operates to prevent or restrict the trading
in, or which adversely impacts the distribution or the
marketability of, the Purchased Units;
16.1.2. there occurs any material change (actual, imminent or
reasonably expected) in the business, affairs, operations,
assets, liabilities (contingent or otherwise), capital or
ownership of the Company or the Fund, howsoever caused,
which, in the opinion of that Underwriter, after consultation
with the Vendors, could reasonably be expected to have a
significant adverse effect on the market price or value of
the Purchased Units or any of them; or
16.1.3. there should develop, occur or come into effect or existence
any event, action, state, condition or major financial
occurrence of national or international consequence,
including any act of terrorism, war or like event, or any
governmental action, law, regulation, inquiry or other
occurrence of any nature which, in the reasonable opinion of
such Underwriter, materially adversely affects or may
materially affect the financial markets in Canada or the
United States or the business, operations or affairs of the
Company or the Fund and its subsidiaries, taken as a whole.
16.2 If this agreement is terminated by any of the Underwriters pursuant to
Section 16.1, there will be no further liability on the part of that
Underwriter or of the Vendors to that Underwriter, except in respect
of any liability which may have arisen or may later arise under
Sections 11, 12 and 14.
16.3 The right of the Underwriters or any of them to terminate their
respective obligations under this agreement is in addition to all
other remedies as they may have in respect of any default, act or
failure to act of the Vendors in respect of any of the matters
contemplated by this agreement. A notice of termination given by one
Underwriter under this Section 16 will not be binding upon the other
Underwriters.
17. STABILIZATION
In connection with the distribution of the Purchased Units, the
Underwriters and members of their selling group (if any) may over-allot or
effect transactions which stabilize or maintain the market price of the
Purchased Units at levels above those which might otherwise prevail in the open
market, in compliance with Securities Laws. Those stabilizing transactions, if
any, may be discontinued at any time.
18. OBLIGATIONS OF THE UNDERWRITERS TO BE SEVERAL
Subject to the terms and conditions of this agreement, the obligation
of the Underwriters to purchase the Purchased Units will be several and not
joint. The percentage of the Purchased Units to be severally purchased and paid
for by each of the Underwriters will be as follows:
CIBC World Markets Inc. 32.0%
TD Securities Inc. 22.5%
Scotia Capital Inc. 18.0%
BMO Xxxxxxx Xxxxx Inc. 10.0%
National Bank Financial Inc. 10.0%
Xxxxxxxxx XxXxxxxx & Partners 7.5%
If an Underwriter (a "REFUSING UNDERWRITER") does not complete the
purchase and sale of the Purchased Units that Underwriter has agreed to
purchase under this agreement (other than in accordance with Section 16) (the
"DEFAULTED UNITS"), CIBC World Markets may delay the closing date for not more
than five (5) days and the remaining Underwriters (the "CONTINUING
UNDERWRITERS") will be entitled, at their option, to purchase all but not less
than all of the Defaulted Units pro rata according to the number of Initial
Units or the Additional Units, as the case may be, to have been acquired by the
Continuing Underwriters under this agreement or in any proportion agreed upon,
in writing, by the Continuing Underwriters. If no such arrangement has been
made and the number of Defaulted Units to be purchased by the Refusing
Underwriter(s) does not exceed 10% of the Purchased Units the Continuing
Underwriters will be obligated to purchase the Defaulted Units on the terms set
out in this agreement in proportion to their obligations under this agreement.
If the number of Defaulted Units to be purchased by Refusing Underwriters
exceeds 10% of the Purchased Units, as the case may be, the Continuing
Underwriters will not be obliged to purchase the Defaulted Units and, if the
Continuing Underwriters do not elect to purchase the Defaulted Units:
18.1 the Continuing Underwriters will not be obliged to purchase any of the
Purchased Units;
18.2 the Vendors will not be obliged to sell less than all of the Purchased
Units; and
18.3 the Vendors will be entitled to terminate their obligations under this
agreement arising from their acceptance of this offer, in which event
there will be no further liability on the part of the Vendors or the
Continuing Underwriters, except pursuant to the provisions of Sections
11, 12 and 14.
19. NOTICE
Any notice or other communication required or permitted to be given
under this agreement will be in writing and will be delivered to:
(a) in the case of MDC:
00 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxx
Facsimile No.: (000) 000-0000
(b) in the case of Xxxxxx Xxxxxx Canada:
00 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxx
Facsimile No.: (000)000-0000
with a copy to:
Torys LLP
Toronto-Dominion Centre
Maritime Life Tower
00 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxx 0000
Xxx 000, XX Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Karrin Powys-Lybbe
Facsimile No.: (000) 000-0000
(c) in the case of CIBC World Markets:
BCE Place
000 Xxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx X. XxXxxxxx
Facsimile No.: (000) 000-0000
(d) in the case of TD Securities Inc.:
00 Xxxxxxxxxx Xxxxxx Xxxx
0xx Xxxxx, TD Tower
Toronto, Ontario
M5K 1A2
Attention: Xxxxx Xxxxxxxxxx
Facsimile No.: (000) 000-0000
(e) in the case of Scotia Capital Inc.:
Scotia Plaza
00 Xxxx Xxxxxx Xxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
(f) in the case of BMO Xxxxxxx Xxxxx Inc.:
1 First Canadian Place
P.O. Box 150, 4th Floor
Toronto, Ontario
M5X 1H3
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
(g) in the case of National Bank Financial Inc.:
The Exchange Tower
000 Xxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxx X. Xxxxx
Facsimile No.: (000) 000-0000
(h) in the case of Xxxxxxxxx XxXxxxxx & Partners:
000 Xxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Lang Xxxxxxxx
BCE Place
000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxx
Facsimile No.: (000) 000-0000
The parties may change their respective addresses for notices by notice given
in the manner set out above. Any notice or other communication will be in
writing, and unless delivered personally to the addressee or to a responsible
officer of the addressee, as applicable, will be given by telecopy and will be
deemed to have been given when (i) in the case of a notice delivered personally
to a responsible officer of the addressee, when so delivered; and (ii) in the
case of a notice delivered or given by telecopy, on the first Business Day
following the day on which it is sent.
20. MISCELLANEOUS
20.1 Except with respect to Sections 11, 12 and 16, all transactions and
notices on behalf of the Underwriters under this agreement or
contemplated by this agreement may be carried out or given on behalf
of the Underwriters by CIBC World Markets and CIBC World Markets will
in good faith discuss with the other Underwriters the nature of any
of the transactions and notices prior to giving effect to them or the
delivery of them, as the case may be.
20.2 This agreement will be governed by and interpreted in accordance with
the laws of the Province of Ontario and the federal laws of Canada
applicable therein.
20.3 Time will be of the essence of this agreement and, following any
waiver or indulgence by any party, time will again be of the essence
of this agreement.
20.4 The words "agreement", "hereof", "hereunder" and similar phrases mean
and refer to the agreement formed as a result of the acceptance by the
Vendors of this offer by the Underwriters to purchase the Purchased
Units.
20.5 All representations, warranties, covenants and agreements of the
Vendors contained in this agreement or contained in documents
submitted pursuant to this agreement and in connection with the
transaction of purchase and sale contemplated by this agreement will
survive and will continue in full force and effect for a period of six
years from the Closing Date for the benefit of the Underwriters,
regardless of any subsequent disposition of the Purchased Units or any
investigation by or on behalf of the Underwriters with respect
thereto. The Underwriters will be entitled to rely on the
representations and warranties of the Vendors contained in this
agreement or delivered pursuant to this agreement notwithstanding any
investigation which the Underwriters may undertake or which may be
undertaken on the Underwriters' behalf.
20.6 Each of the parties to this agreement will be entitled to rely on
delivery of a facsimile copy of this agreement and acceptance by each
party of any such facsimile copy will be legally effective to create a
valid and binding agreement between the parties to this agreement in
accordance with the terms of this agreement.
20.7 This agreement may be executed in any number of counterparts, each of
which when so executed will be deemed to be an original and all of
which, when taken together, will constitute one and the same
agreement.
20.8 To the extent permitted by applicable law, the invalidity or
unenforceability of any particular provision of this agreement will
not affect or limit the validity or enforceability of the remaining
provisions of this agreement.
20.9 This agreement and the other documents referred to in this agreement
do not supersede the rights and obligations of the parties under
paragraph 6 ("Right of First Refusal") of the engagement letter
between MDC and CIBC World Markets, or under the Underwriting
Agreement dated May 15, 2003 among the Fund, MDC, Xxxxxx Xxxxxx Canada
and the Underwriters.
20.10 The terms and provisions of this agreement will be binding upon and
enure to the benefit of MDC, Xxxxxx Xxxxxx Canada and the Underwriters
and their respective successors and assigns; provided that, except as
otherwise provided in this agreement, this agreement will not be
assignable by any party without the written consent of the others and
any purported assignment without that consent will be invalid and of
no force and effort.
If this letter accurately reflects the terms of the transactions which
we are to enter into and are agreed to by you, please communicate your
acceptance by executing the enclosed copies of this letter where indicated and
returning them to us.
Yours very truly,
CIBC WORLD MARKETS INC.
By: __________________________________
Name: Xxxxxx X. XxXxxxxx
Title: Managing Director
TD SECURITIES INC.
By: ____________________________________
Name: Xxxxx Xxxxxxxxxx
Title: Vice-President and Director
SCOTIA CAPITAL INC.
By: ____________________________________
Name: Xxxxx Xxxx
Title: Director
BMO XXXXXXX XXXXX INC.
By: ____________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Vice-President
NATIONAL BANK FINANCIAL INC.
By: __________________________________________
Name: Xxx X. Xxxxx
Title: Managing Director, Investment Banking
XXXXXXXXX XXXXXXXX & PARTNERS
By:__________________________________
Name: Xxxxx Xxxxxxxxx
Title: Partner, Investment Banking
Accepted and agreed to by
the undersigned as of the
date of this letter first
written above.
MDC CORPORATION INC.
By: _______________________________________
Name: Xxxxxx Xxxxxxxxx
Title: Executive Vice-President
XXXXXX XXXXXX CANADA INC.
By: _______________________________________
Name: Xxxxxx Xxxxxxxx
Title: Senior Vice-President, Finance
SCHEDULE 3.3
CANADIAN PURCHASER'S LETTER
To: [INSERT NAME OF UNDERWRITER] (THE "UNDERWRITER")
Re: Purchase of Units of Custom Direct Income Fund (the "Fund")
The undersigned hereby confirms its agreement to purchase from the Underwriter
___________ Units of the Fund (the "Units") at a price of $10.00 per Unit. The
purchase price shall be payable to the Underwriters in cash in accordance with
customary settlement procedures on or about July 29, 2003 (or such other date
determined by the Underwriter) against delivery of the Units.
In connection with its agreement to purchase the number of Units indicated
above, the undersigned represents, warrants and covenants to you,
O it is aware that the sale of the Units has not been and will
not be qualified under a prospectus under applicable Canadian
securities laws (the "Securities Laws") and that the offer
and sale of Units to it are being made either in reliance on
a private placement exemption for offers and sales to
accredited investors (as such term is defined in Annex A
hereto, "Accredited Investors");
O it is an Accredited Investor and is acquiring the Units as
principal and not with a view to any resale, distribution or
other disposition of the Units in violation of Securities
Laws;
O it has had access to such additional information, if any,
concerning the Fund as it has considered necessary in
connection with its investment decision to acquire the Units;
O it has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits
and risks of its investment in the Units and is able to bear
the economic risks of such investment;
O it acknowledges that it has not purchased the Units as a
result of any general solicitation or general advertising,
including advertisements, articles, notices or other
communications published in any newspaper, magazine or
similar media, or broadcast over radio or television, or any
seminar or meeting whose attendees have been invited by
general solicitation or general advertising;
O it understands that if it decides to offer, sell or otherwise
transfer any of the Units, the Units may be offered, sold or
otherwise transferred only: (1) in a private placement or
other transaction which is exempt from the prospectus
requirements of Securities Laws or (2) after a period of 4
months has elapsed from the date of purchase of the Units and
provided that (i) the Fund has been a reporting issuer for 4
months immediately preceding the sale; (ii) such sale is not
a control contribution (as such term is defined under
Securities Laws); (iii) no unusual effort is made to prepare
the market or to create a demand for the Units; (iv) no
extraordinary commission or consideration is paid to a person
or company in respect of the sale; (v) if the selling
security holder is an insider or officer of the Fund, the
selling security holder has no reasonable grounds to believe
that the Fund is in default of Securities Laws, and (vi) the
selling security holder files, within 10 days of the sale, a
report in Form 45-501F2 under the Securities Act (Ontario);
O it understands and acknowledges that certificates
representing the Units, and all certificates issued in
exchange for or in substitution of the Units, will bear the
following legend upon the original issuance of the Units, and
until the legend is no longer required under applicable
requirements of Securities Laws:
"UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
THE SECURITIES SHALL NOT TRADE THE SECURITIES BEFORE [INSERT
THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE DISTRIBUTION
DATE];
O it consents to the Fund making a notation on its records or
giving instructions to any transfer agent of the Units in
order to implement the restrictions on transfer set out
above; and
O if required by applicable securities legislation, regulatory
policy or order by any securities commission, stock exchange
or other regulatory authority, it will execute, deliver and
file and otherwise assist the Fund in filing reports,
questionnaires, undertakings and other documents with respect
to the issue of the Units.
The undersigned acknowledges that the representations and warranties
and agreements contained herein are made by it with the intent that they may be
relied upon by you in determining its eligibility to purchase the Units. By
this letter the undersigned represents and warrants that the foregoing
representations and warranties are true and that they shall survive the
purchase by it of the Units and shall continue in full force and effect
notwithstanding any subsequent disposition by the undersigned of Units.
You are irrevocably authorized to produce this letter or a copy hereof
to any interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
Dated:
Name of Purchaser
By: ______________________
Name
Title:
ANNEX A
TO CANADIAN PURCHASER'S LETTER
DEFINITION OF ACCREDITED INVESTOR
(ONTARIO RESIDENTS)
(PLEASE TICK THE APPLICABLE CATEGORY)
"Accredited Investor" means any entity which comes within any of the
following categories:
o (a) a bank listed in Schedule I or II of the Bank Act (Canada), or
an authorized foreign bank listed in Schedule III of that Act;
o (b) the Business Development Bank incorporated under the Business
Development Bank Act (Canada);
o (c) a loan corporation or trust corporation registered under the
Loan and Trust Corporations Act or under the Trust and Loan
Companies Act (Canada), or under comparable legislation in any
other jurisdiction;
o (d) a co-operative credit society, credit union central, federation
of caisses populaires, credit union or league, or regional
caisse populaire, or an association under the Cooperative Credit
Associations Act (Canada), in each case, located in Canada;
o (e) a company licensed to do business as an insurance company in any
jurisdiction;
o (f) a subsidiary of any company referred to in paragraph (a), (b),
(c), (d) or (e), where the company owns all of the voting shares
of the subsidiary;
o (g) a person or company registered under the Securities Act
(Ontario) or securities legislation in another jurisdiction as
an adviser or dealer, other than a limited market dealer;
o (h) the government of Canada or of any jurisdiction, or any crown
corporation, instrumentality or agency of a Canadian federal,
provincial or territorial government;
o (i) any Canadian municipality or any Canadian provincial or
territorial capital city;
o (j) any national, federal, state, provincial, territorial or
municipal government of or in any foreign jurisdiction, or any
instrumentality or agency thereof;
o (k) a pension fund that is regulated by either the Office of the
Superintendent of Financial Institutions (Canada) or a
provincial pension commission or similar regulatory authority;
o (l) a registered charity under the Income Tax Act (Canada);
o (m) an individual who beneficially owns, or who together with a
spouse beneficially own, financial assets having an aggregate
realizable value that, before taxes but net of any related
liabilities, exceeds $1,000,000;
o (n) an individual whose net income before taxes exceeded $200,000 in
each of the two most recent years or whose net income before
taxes combined with that of a spouse exceeded $300,000 in each
of those years and who, in either case, has a reasonable
expectation of exceeding the same net income level in the
current year;
o (o) an individual who has been granted registration under the
Securities Act (Ontario) or securities legislation in another
jurisdiction as a representative of a person or company referred
to in paragraph (g), whether or not the individual 's
registration is still in effect;
o (p) a promoter of the issuer or an affiliated entity of a promoter
of the issuer;
o (q) a spouse, parent, grandparent or child of an officer, director
or promoter of the issuer;
o (r) a person or company that, in relation to the issuer, is an
affiliated entity or a person or company referred to in clause
(c) of the definition of distribution in subsection 1(1) of the
Act;
o (s) an issuer that is acquiring securities of its own issue;
o (t) a company, limited partnership, limited liability partnership,
trust or estate, other than a mutual fund or non-redeemable
investment fund, that had net assets of at least $5,000,000 as
reflected in its most recently prepared financial statements;
o (u) a person or company that is recognized by the Ontario Securities
Commission as an accredited investor;
o (v) a mutual fund or non-redeemable investment fund that, in
Ontario, distributes its securities only to persons or companies
that are accredited investors;
o (w) a mutual fund or non-redeemable investment fund that, in
Ontario, distributes its securities under a prospectus for which
a receipt has been granted by the Director;
o (x) a managed account if it is acquiring a security that is not a
security of a mutual fund or non-redeemable investment fund;
o (y) an account that is fully managed by a trust corporation
registered under the Loan and Trust Corporations Act;
o (z) an entity organized outside of Canada that is analogous to any
of the entities referred to in paragraphs (a) through (g) and
paragraph (k) in form and function;
o (aa) a person or company in respect of which all of the owners of
interests, direct or indirect, legal or beneficial, are persons
or companies that are accredited investors.
For the purposes hereof, the following definitions are included for
convenience:
(a) "company" means any corporation, incorporated association,
incorporated syndicate or other incorporated organization;
(b) "entity" means a company, syndicate, partnership, trust or
unincorporated organization;
(c) "financial assets" means cash, securities, or any contract of
insurance or deposit or evidence thereof that is not a
security for the purposes of the Securities Act (Ontario);
(d) "managed account" means an investment portfolio account of a
client established in writing with a portfolio adviser who
makes investment decisions for the account and has full
discretion to trade in securities of the account without
requiring the client's express consent to a transaction;
(e) "mutual fund" includes an issuer of securities that entitle
the holder to receive on demand, or within a specified period
after demand, an amount computed by reference to the value of
a proportionate interest in the whole or in a part of the net
assets, including a separate fund or trust account, of the
issuer of securities;
(f) "non-redeemable investment fund" means an issuer:
(i) whose primary purpose is to invest money provided by its
securityholders,
(i) that does not invest for the purpose of exercising
effective control, seeking to exercise effective
control, or being actively involved in the
management of the issuers in which it invests, other
than other mutual funds or non-redeemable investment
funds, and
(ii) that is not a mutual fund;
(g) "person" means an individual, partnership, unincorporated
association, unincorporated syndicate, unincorporated
organization, trust, trustee, executor, administrator or
other legal representative;
(h) "portfolio adviser" means:
(i) a portfolio manager,
(ii) a broker or investment dealer exempted from
registration as an adviser under subsection 148(1)
of the regulation made under the Securities Act
(Ontario) if that broker or investment dealer is not
exempt from the by-laws or regulations of The
Toronto Stock Exchange or the Investment Dealers'
Association of Canada referred to in that
subsection;
(i) "related liabilities" means liabilities incurred or assumed
for the purpose of financing the acquisition or ownership of
financial assets and liabilities that are secured by
financial assets; and
(j) "spouse", in relation to an individual, means another
individual to whom that individual is married, or another
individual of the opposite sex or the same sex with whom that
individual is living in a conjugal relationship outside
marriage.
In Ontario Securities Commission Rule 45-501 a person or company is considered
to be an affiliated entity of another person or company if one is a subsidiary
entity of the other, or if both are subsidiary entities of the same person or
company, or if each of them is controlled by the same person or company.
In Ontario Securities Commission Rule 45-501 a person or company is considered
to be controlled by a person or company if,
(a) in the case of a person or company,
(i) voting securities of the first-mentioned person or
company carrying more than 50 percent of the votes
for the election of directors are held, otherwise
than by way of securities only, by or for the
benefit of the other person or company; and
(ii) the votes carried by the securities are entitled, if
exercised, to elect a majority of the directors of
the first-mentioned person or company;
(b) in the case of a partnership that does not have directors,
other than a limited partnership, the second-mentioned person
or company holds more than 50 percent of the interests in the
partnership; or
(c) in the case of a limited partnership, the general partner is the
second-mentioned person or company.
In Ontario Securities Commission Rule 45-501 a person or company is considered
to be a subsidiary entity of another person or company if:
(a) it is controlled by,
(i) that other, or
(ii) that other and one or more persons or companies each
of which is controlled by that other, or
(iii) two or more persons or companies, each of which is
controlled by that, or
(b) it is a subsidiary entity of a person or company that is the
other's subsidiary entity.
Note: If the Purchaser is not a resident of Ontario, a Substituted Form should
be obtained from the Underwriters and duly completed.
SCHEDULE 6.9
NAME OF VENDOR NUMBER OF PURCHASED UNITS
MDC Corporation Inc. 2,502,424
Xxxxxx Xxxxxx Canada Inc. 461,380
---------
2,963,804
---------
SCHEDULE 7.1
SCOPE OF OPINION
FORM OF TORYS LLP OPINION
Corporate, Partnership and Trust Opinions
1. Each of Xxxxxx Xxxxxx Canada Inc. and MDC Corporation Inc.
(collectively, the "Vendors") is incorporated and existing under the
laws of its jurisdiction of incorporation.
2. The Fund has been created and is existing as a trust under the laws of
the Province of Ontario.
3. Each of the Vendors has the corporate power and capacity to execute,
deliver and perform its obligations under the Underwriting Agreement.
4. Each of the Vendors has taken all necessary corporate action to
authorize the execution, delivery and performance by it of the
Underwriting Agreement.
5. The Purchased Units have been issued as fully paid and non-assessable
units of the Fund.
6. The attributes of the Purchased Units conform in all material respects
with the description of those attributes contained in the Prospectus
under the captions "Description of the Fund - Units", "- Issuance of
Units", "- Cash Distributions", "- Redemption Right" and "- Meetings
of Unitholders".
7. Searches which we conducted under the Personal Property Security Act
(Ontario), disclosed no registration which is sufficient to perfect a
security interest in the Purchased Units.
Enforceability Opinion
8. The Underwriting Agreement constitutes a legal and valid and binding
obligation of each Vendor enforceable in accordance with its terms.
Securities Law Opinions
9. The sale of the Purchased Units to the Underwriters and the sale of
such Purchased Units by the Underwriters to the purchasers (the
"Purchasers") resident in Canada in accordance with the Purchaser's
Letter (in the form of Schedule 3.3 or other form required by
Securities Laws) will be exempt from the prospectus requirements of
Securities Laws ("Applicable Securities Laws") applicable in the
province of residence of Purchasers (subject to customary
qualifications) and no other document will need to be filed or
proceeding taken under Applicable Securities Laws in respect of the
transactions contemplated by the Underwriting Agreement, except for
the requirement that the Vendors within 10 days after the date the
trades are made file reports in prescribed form under Applicable
Securities Laws.
10. The first trade in the Purchased Units by the Purchasers will not be
subject to the prospectus requirements of Applicable Securities Laws,
subject to the customary conditions, including that a period of 4
months has elapsed from the date of purchase by the Purchaser and that
the certificate representing the Purchased Units bear legends in
prescribed form.
Pending Litigation Opinion
11. We have not been retained to represent any of the Vendors in respect
of any:
(i) court, administrative, regulatory or similar proceeding
(whether civil, quasi-criminal or criminal;
(ii) arbitration or other dispute settlement procedure, or
(iii) investigation or inquiry by any governmental, administrative,
regulatory or other similar body.
Eligibility for Investment Opinions
12. The Purchased Units are investments in which:
(i) the provisions of the Insurance Companies Act (Canada) would
not, subject to compliance with the prudent investment and
lending policies, standards and procedures required to be
established pursuant to that Act and in the case of foreign
companies (as defined in that Act) subject to any restriction
contained in the trust deed creating the trust in respect of
such assets, preclude the funds of companies (as defined in
that Act) or societies (as defined in that Act) or the assets
of foreign companies (as defined in that Act) required to be
vested in trust, from being vested;
(ii) the provisions of the Pension Benefits Standards Act, 1985
(Canada) and the Regulation thereunder would not, subject to
compliance with the prudent investment standards of that Act,
and compliance with the statement of investment policies and
procedures for such plan required to be established pursuant
to that Act, preclude the funds of a pension plan regulated
thereunder from being invested;
(iii) the provisions of the Trust and Loan Companies Act (Canada)
would not, subject to compliance with the prudent investment
and lending policies, standards and procedures required to be
established pursuant to that Act, preclude the funds of
companies regulated under that Act from being invested;
(iv) the provisions of the Cooperative Credit Associations Act
(Canada) would not, subject to compliance with the prudent
investment and lending policies, standards and procedures
required to be established pursuant to the Act, preclude the
funds of associations regulated under that Act from being
invested;
(v) the provisions of the Pension Benefits Act (Ontario) and the
Regulation thereunder would not preclude the funds of a
pension plan regulated thereunder from being invested,
provided that the investment by such plan in the Units is in
compliance with the statement of investment policies and
procedures established for such plan that meets the
requirements of sections 6, 7, 7.1 and 7.2 and Schedule III
to the Regulation under the Pension Benefits Standards Act,
1985 (Canada) as it read on December 1, 1999, as incorporated
by reference into the Regulation under the Pension Benefits
Act (Ontario), and provided further that such investment is
in compliance with the prudent investment standards of the
Pension Benefits Act (Ontario);
(vi) the provisions of the Trustee Act (Ontario) would not,
subject to compliance with the prudent investment standards,
policies and criteria established by that Act, preclude trust
property held by a trustee for investment from being
invested, subject to any restriction contained in the terms
of the trust in respect of such trust property; and
(vii) the provisions of the Loan and Trust Corporations Act
(Ontario) and the Regulation thereunder would not, subject to
compliance with the prudent investment standards of that Act,
preclude the funds received as deposits by registered
corporations (as defined in that Act) from being invested.
Tax Opinions
13. The Purchased Units will be qualified investments under the Income Tax
Act (Canada) (the "Tax Act") for trusts governed by registered
retirement savings plans, registered retirement income funds, deferred
profit sharing plans and registered education savings plans
(collectively, the "Plans") provided the Fund is a mutual fund trust
under the Tax Act at all material times.
14. The Purchased Units do not constitute "foreign property" for the
purpose of the tax imposed under Part XI of the Tax Act on the Plans
(other than registered education savings plans), registered
investments and other tax exempt entities, including most registered
pension funds or plans.
15. The statements contained in the Prospectus under the heading "Certain
Income Tax Considerations - Certain Canadian Federal Income Tax
Considerations" fairly describe as of the date hereof the principal
Canadian federal income tax considerations set out therein.
16. The statements contained in the Prospectus under the heading "Certain
Income Tax Considerations - Certain U.S. Federal Income Tax
Considerations" fairly describe as of the date hereof the principal
U.S. federal income tax considerations set out therein.
