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PIVOTAL CORPORATION
(a British Columbia company)
3,500,000 Common Shares
PURCHASE AGREEMENT
Dated: o, 1999
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TABLE OF CONTENTS
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Section 1. Representations and Warranties....................................................4
(a) Representations and Warranties by the Company...................................4
(i) Compliance with Registration Requirements...............................4
(ii) Independent Accountants.................................................5
(iii) Financial Statements....................................................5
(iv) No Material Adverse Change in Business..................................6
(v) Good Standing of the Company............................................6
(vi) Good Standing of Subsidiaries...........................................6
(vii) Capitalization..........................................................7
(viii) Authorization of Agreement..............................................7
(ix) Authorization and Description of Securities.............................7
(x) Absence of Defaults and Conflicts.......................................9
(xi) Absence of Labor Dispute................................................9
(xii) Absence of Proceedings..................................................9
(xiii) Accuracy of Exhibits....................................................9
(xiv) Possession of Intellectual Property.....................................9
(xv) Absence of Further Requirements.........................................9
(xvi) Possession of Licenses and Permits......................................9
(xvii) Title to Property......................................................10
(xviii) Compliance with Cuba Act...............................................10
(xix) Investment Company Act
(xx) Environmental Laws.....................................................10
(xxi) Registration Rights....................................................11
(xxii) Compliance with Laws...................................................11
(xxiii) Taxes..................................................................11
(xxiv) No Market Stabilization Activities.....................................11
(xxv) Registrar and Transfer Agent...........................................11
(xxvi) Insurance..............................................................11
(xxvii) No Broker..............................................................12
(xxviii)Adequate Accounting....................................................12
(b) Officer's Certificates.........................................................12
Section 2. Sale and Delivery to Underwriters; Closing.......................................12
(a) Initial Securities.............................................................12
(b) Option Securities..............................................................13
(c) Payment........................................................................13
(d) Denominations; Registration....................................................14
Section 3. Covenants of the Company.........................................................14
(a) Compliance with Securities Regulations and Commission Requests.................14
(b) Filing of Amendments...........................................................14
(c) Delivery of Registration Statements............................................15
(d) Delivery of Prospectuses.......................................................15
(e) Continued Compliance with Securities Laws......................................15
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(f) Blue Sky Qualifications........................................................16
(g) Rule 158 and Continuous Disclosure.............................................16
(h) Use of Proceeds................................................................16
(i) Listing........................................................................16
(j) Restriction on Sale of Securities..............................................16
(k) Reporting Requirements.........................................................17
(l) Compliance with NASD Rules.....................................................17
(m) Compliance with Rule 463.......................................................17
(n)..Copies of Documents to Underwriters............................................17
(o)..Miscellaneous..................................................................18
(p)..Prior to the Closing Time......................................................18
(q)..Canadian Private Placement.....................................................18
Section 4. Payment of Expenses..............................................................18
(a) Expenses.......................................................................18
(b) Termination of Agreement.......................................................19
Section 5. Conditions of Underwriters' Obligations..........................................19
(a) Effectiveness of Registration Statement........................................19
(b) Opinion of U.S. Counsel for Company............................................19
(c) Opinion of Canadian Counsel for Company........................................19
(d) Opinion of U.S. Counsel for Underwriters.......................................20
(e) Opinion of Canadian Counsel for Underwriters...................................20
(f) Officers' Certificate..........................................................20
(g) Accountant's Comfort Letter....................................................20
(h) Bring-down Comfort Letter......................................................21
(i) Approval of Listing............................................................21
(j) No Objection...................................................................21
(k) Lock-up Agreements.............................................................21
(l) Conditions to Purchase of Option Securities....................................21
(i) Officers' Certificate..................................................21
(ii) Opinion of Counsel for Company.........................................21
(iii) Opinion of Counsel for Underwriters....................................21
(iv) Bring-down Comfort Letter..............................................22
(m) Additional Documents...........................................................22
(n) Termination of Agreement.......................................................22
Section 6. Indemnification..................................................................22
(a) Indemnification of Underwriters................................................22
(b) Indemnification of Company, Directors and Officers.............................24
(c) Actions against Parties; Notification..........................................24
(d) Settlement without Consent if Failure to Reimburse.............................25
(e) Indemnification for Reserved Securities........................................25
Section 7. Contribution.....................................................................25
Section 8. Representations, Warranties and Agreements to Survive Delivery...................26
Section 9. Termination of Agreement.........................................................26
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(a) Termination; General...........................................................26
(b) Liabilities....................................................................27
Section 10. Default by One or More of the Underwriters......................................27
Section 11. Notices.........................................................................28
Section 12. Parties.........................................................................28
Section 13. GOVERNING LAW AND TIME..........................................................28
Section 14. Effect of Headings..............................................................28
SCHEDULES
Schedule A - List of Underwriters...........................................Sch A-1
Schedule B - Pricing Information............................................Sch B-1
Schedule C - List of Persons subject to Lock-up.............................Sch C-1
EXHIBITS
Exhibit A- Form of Opinion of Company's Counsel............................A-1
Exhibit B- Form of Lock-up Letter..........................................B-1
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PIVOTAL CORPORATION
(a British Columbia company)
Common 3,500,000 Shares
(Without Par Value)
PURCHASE AGREEMENT
o, 1999
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Bear, Xxxxxxx & Co. Inc.
Xxxx Xxxxxxxx Xxxxxxx
(a division of Xxxx Xxxxxxxx Incorporated)
as Representatives of the several Underwriters
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Pivotal Corporation, a company incorporated under the laws of British
Columbia, Canada (the "Company"), confirms its agreement with Xxxxxxx Xxxxx &
Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") and
each of the other Underwriters named in Schedule A hereto (collectively, the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Xxxxxxx Xxxxx, Bear,
Xxxxxxx & Co. Inc. and Xxxx Xxxxxxxx Xxxxxxx (a division of Xxxx Xxxxxxxx
Incorporated) are acting as representatives (in such capacity, the
"Representatives"), with respect to the issue and sale by the Company and the
purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of Common Shares, without par value per share, of the Company
set forth in said Schedule A, and with respect to the grant by the Company to
the Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of 525,000 additional Common
Shares of the Company to cover over-allotments, if any. The aforesaid 3,500,000
Common Shares of the Company (the "Initial Securities") to be purchased by the
Underwriters and all or any part of the 525,000 Common Shares of the Company
subject to the option described in Section 2(b) hereof (the "Option Securities")
are hereinafter called, collectively, the "Securities".
The Company understands that the Underwriters propose to make a public
offering of the Securities in the United States and Xxxxxxx Xxxxx Canada Inc.
("Xxxxxxx Xxxxx Canada"), the Canadian affiliate of Xxxxxxx Xxxxx, proposes to
make a public offering of the Initial Securities in British Columbia, Canada,
all as soon as the Representatives deem advisable after this Agreement has been
executed and delivered. The Company also understands that although this
agreement to purchase is presented on behalf of the Underwriters as purchaser,
Xxxxxxx Xxxxx Canada will endeavour to arrange for substituted purchasers (the
"Substituted Purchasers") for
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the Initial Securities in certain of the provinces of Canada other than British
Columbia. It is further understood that, subject to Section 5 hereof, the
Underwriters agree to purchase or cause to be purchased the Initial Securities
being issued by the Company and that this commitment is not subject to Xxxxxxx
Xxxxx Canada being able to arrange Substituted Purchasers. Each Substituted
Purchaser shall purchase the Initial Securities at the gross price per share
before the Underwriters' commission per share as set forth in Section 1 of
Schedule B pursuant to the prospectus exemption(s) set out below opposite to the
province of Canada in which such Substitute Purchaser is resident:
PROVINCE PROSPECTUS EXEMPTIONS(S)
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Alberta Section 107(1)(d) of the Securities Act (Alberta)
Saskatchewan Section 81(1)(d) of the Securities Act (Saskatchewan)
Manitoba Section 58(1)(a) of the Securities Act (Manitoba)
Ontario Section 3.1 of Rule 45-501 of the Securities Act (Ontario)
Section 3.6 of Rule 45-501 of the Securities Act
(Ontario) Section 2.2 of Rule 45-503 of the
Securities Act (Ontario)
Quebec Section 51 of the Securities Act (Quebec)
Xxxxxxx Xxxxx Canada will notify the Company with respect to the identity of any
such Substituted Purchasers as soon as practicable and with a view to leaving
time sufficient to allow the Company to secure compliance with all relevant
regulatory requirements relating to the sale of the Initial Securities to such
Substituted Purchasers. Any reference in this Purchase Agreement hereafter to
"the purchasers" shall accordingly be taken to be a reference to the
Underwriters, as the initial committed purchasers, and to the Substituted
Purchasers, if any.
The Company and the Underwriters agree that up to 525,000 Common Shares
of the Securities to be purchased by the Underwriters (the "Reserved
Securities") shall be reserved for sale by the Underwriters to certain eligible
employees and persons having business relationships with the Company, as part of
the distribution of the Securities by the Underwriters (including without
limitation on a Substituted Purchaser basis), subject to the terms of this
Agreement, the applicable rules, regulations and interpretations of the National
Association of Securities Dealers, Inc. and all other applicable laws, rules and
regulations. To the extent that such Reserved Securities are not orally
confirmed for purchase by such eligible employees and persons having business
relationships with the Company by the end of the first business day after the
date of this Agreement, such Reserved Securities may be offered to the public as
part of the public offering contemplated hereby.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form F-1 (No. 333-o)
covering the registration of the Securities under the Securities Act of 1933, as
amended (the "1933 Act"), including the related Preeffective Prospectus or U.S.
Prospectuses (as hereinafter defined). The Company will as soon as possible and
in any event not later than 5:00 p.m. (o time) on o, 1999, either (i) prepare
and file a prospectus in accordance with the provisions of Rule 430A ("Rule
430A") of the rules and regulations of the Commission under the 1933 Act (the
"1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of the
1933 Act Regulations or (ii) if the Company has elected to rely upon Rule 434
("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
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"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). The
information included in such prospectus or in such Term Sheet, as the case may
be, that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "Preeffective Prospectus." Such registration
statement, including the exhibits thereto and schedules thereto at the time it
became effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "Registration Statement." Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is herein referred to as the "Rule 462(b) Registration Statement," and after
such filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The final prospectus in the form first furnished to the
Underwriters for use in connection with the offering of the Securities is herein
called the "U.S. Prospectus." If Rule 434 is relied on, the term "U.S.
Prospectus" shall refer to the preliminary prospectus dated _____, 1999 together
with the Term Sheet and all references in this Agreement to the date of the U.S.
Prospectus shall mean the date of the Term Sheet. For purposes of this
Agreement, all references to the Registration Statement, any Preeffective
Prospectus, the U.S. Prospectus or any Term Sheet or any amendment or supplement
to any of the foregoing shall be deemed to include the copy thereof filed with
the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("XXXXX").
The Company has prepared and filed with the British Columbia Securities
Commission (the "BCSC") a preliminary long form prospectus dated July 14, 1999
(together with any amendment or amendment and restatement thereof, the
"Preliminary Prospectus") with respect to the Initial Securities (and a receipt
therefor has been obtained from the BCSC) and has heretofore been delivered by
the Company to the Underwriters. The Company shall as soon as possible and in
any event by 5:00 p.m. (Vancouver time) on o, 1999 (or such later date as may be
agreed in writing by the Underwriters) fulfill and comply with, to the
satisfaction of the Underwriters, the BC Securities Laws (as hereinafter
defined) required to be fulfilled or complied with to enable the Initial
Securities to be lawfully distributed and sold to the public in British Columbia
through investment dealers or brokers appropriately registered in such
jurisdiction. The final prospectus relating to the Initial Securities filed with
the BCSC for which a receipt is obtained is herein called the "Final
Prospectus". For the purposes of this Agreement, all references to the
Preliminary Prospectus or the Final Prospectus (as hereinafter defined) or any
amendment or supplement to any of the foregoing shall be deemed to include the
copy thereof filed with the BCSC pursuant to the System for Electronic Document
Analysis and Retrieval ("SEDAR").
For the purposes of this Agreement, the "Prospectuses" means the U.S.
prospectus and the Final Prospectus.
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Section 1. Representations and Warranties.
(a) Representations and Warranties by the Company The Company represents
and warrants to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and
any request on the part of the Commission for additional information has
been complied with. Neither the BCSC nor any stock exchange has issued
or threatened to issue any order preventing or suspending the use of any
Preliminary Prospectus, the Amended Preliminary Prospectus or the Final
Prospectus, nor, to the knowledge of the Company, is any such order
contemplated by the BCSC, and any request on the part of the BCSC for
additional information has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any Option Securities
are purchased, at the Date of Delivery), the Registration Statement, the
Rule 462(b) Registration Statement and any amendments and supplements
thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and the U.S. Prospectus, any
Preeffective Prospectus and any supplement thereto or prospectus wrapper
prepared in connection therewith, at their respective times of issuance
and at the Closing Time, complied and will comply in all material
respects with any applicable laws or regulations of foreign
jurisdictions in which the U.S. Prospectus and such Preeffective
Prospectus, as amended or supplemented, if applicable, are distributed
in connection with the offer and sale of Reserved Securities. Neither
the U.S. Prospectus nor any amendments or supplements thereto (including
any prospectus wrapper), at the time the U.S. Prospectus or any such
amendment or supplement was issued and at the Closing Time (and, if any
Option Securities are purchased, at the Date of Delivery), included or
will include an untrue statement of a material fact or omitted or will
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. If Rule 434 is used, the Company will comply with the
requirements of Rule 434 and the U.S. Prospectus shall not be
"materially different", as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time it became
effective. Each Preeffective Prospectus and the prospectus filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations.
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As at its date, the Preliminary Prospectus complied in all
material respects with the requirements of all applicable securities
laws in the Province of British Columbia and the regulations and rules
thereunder, together with applicable published policy statements,
blanket orders and published notices of the BCSC (the "BC Securities
Laws") and upon filing the Final Prospectus with the BCSC, the issuance
of a receipt therefor by the BCSC and delivery thereof to the
Underwriters, the Final Prospectus and any amendments and supplements
thereto complied and will comply in all material respects with the
requirements of the BC Securities Laws. As at its date, neither the
Preliminary Prospectus nor any prospectus wrapper prepared in connection
therewith, included or will include an untrue statement of a material
fact or omitted or will omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading. At its date of issue and at all times
subsequent thereto up to and including the Closing Time (and, if any
Option Securities are purchased, at the Date of Delivery), the Final
Prospectus constitutes and will constitute full, true and plain
disclosure of all material facts relating to the Company and the
Securities, and none of the Final Prospectus, nor any amendment or
supplement thereto, nor any prospectus wrapper prepared in connection
therewith, included or will include any untrue statement of a material
fact or omitted or will omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
Each Preeffective Prospectus and the U.S. Prospectus delivered
to the Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T. Each Preliminary Prospectus and Final Prospectus
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the BCSC pursuant to SEDAR.
There is no franchise, lease, contract, agreement or document
required to be described in the Final Prospectus or to be filed as an
exhibit to the Registration Statement or with the BCSC which is not
described or filed therein or therewith as required; and all
descriptions of any such franchises, leases, contracts, agreements or
documents contained in the Registration Statement or the Final
Prospectus are accurate.
The representations and warranties in this subsection shall not
apply to statements in or omissions from the Registration Statement or
the Prospectuses made in reliance upon and in conformity with
information furnished to the Company in writing by any Underwriter
through Xxxxxxx Xxxxx expressly for use in the Registration Statement or
the Prospectuses.
(ii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the
Registration Statement and the Prospectuses are independent public
accountants as required by the 1933 Act and the 1933 Act Regulations.
(iii) Financial Statements. The financial statements, together
with the related schedules and notes, included in the Registration
Statement and the Prospectuses present
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fairly the financial position of the Company and its consolidated
subsidiaries at the dates indicated and the statement of operations,
cash flows and shareholders' deficit of the Company and its consolidated
subsidiaries for the periods specified; said financial statements,
related notes and schedules have been prepared in accordance with U.S.
generally accepted accounting principles and also in accordance with
Canadian generally accepted accounting principles applied on a
consistent basis throughout the periods involved, except as may be set
forth in the Prospectuses. The selected financial data and the summary
financial information included in the Prospectuses present fairly the
information shown therein and have been compiled on a basis consistent
with that of the audited financial statements included in the
Registration Statement and the Prospectuses.
(iv) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise, whether
or not arising in the ordinary course of business (a "Material Adverse
Effect"), (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise and (C) there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(v) Good Standing of the Company. The Company has been duly
organized and is validly existing and in good standing as a company
under the laws of British Columbia and has corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectuses and to enter into and perform its
obligations under this Agreement; and the Company is duly qualified as a
foreign corporation to transact business and is in good standing in each
other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(vi) Good Standing of Subsidiaries. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) and Pivotal Software Limited (each a "Subsidiary" and,
collectively, the "Subsidiaries") has been duly organized and is validly
existing and in good standing as a corporation under the laws of the
jurisdiction of its incorporation, has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectuses and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify or to be in good standing would
not result in a Material Adverse Effect; except as otherwise disclosed
in the Registration Statement and the Prospectuses, all of the issued
and outstanding share capital of each such Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is
owned by the Company,
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directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of
the outstanding shares of any Subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such Subsidiary.
The only subsidiaries of the Company are (a) the subsidiaries listed on
Exhibit 21 to the Registration Statement and (b) certain other
subsidiaries which, considered in the aggregate as a single Subsidiary,
do not constitute a "significant subsidiary" as defined in Rule 1-02 of
Regulation S-X.
(vii) Capitalization. The authorized, issued and outstanding
share capital of the Company is as set forth in the Prospectuses in the
column entitled "Actual" under the caption "Capitalization", and under
the caption "Description of Share Capital" (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectuses or
pursuant to the exercise of convertible securities or options referred
to in the Prospectuses). The issued and outstanding share capital of the
Company has been duly authorized and validly issued and is fully paid
and non-assessable and has been issued in compliance with all U.S. and
British Columbia securities laws; none of the outstanding shares of the
Company was issued in violation of the preemptive or other similar
rights of any securityholder of the Company. Except as disclosed in and
or contemplated by the Prospectuses and the financial statements of the
Company and related notes thereto included in the Prospectuses, the
Company does not have any options or warrants to purchase, or any
pre-emptive rights or other rights to subscribe for or to purchase any
securities or obligations convertible into, or any contracts or
commitments to issue or sell, any of its share capital or any such
options, rights, convertible securities or obligations except for
options granted subsequent to the date of the information provided in
the Prospectuses pursuant to the Company's employee stock option plan
disclosed in the Prospectuses. The description of the Company's stock
option and other stock plans or arrangements, and the options or other
rights granted thereunder, as set forth in the Prospectuses, accurately
and fairly presents the information required to be disclosed with
respect to such plans, arrangements, options and rights. Except as
disclosed in the Prospectuses, to the knowledge of the Company, there
are no agreements, arrangements or understandings among or between any
shareholder of the Company with respect to the Company or the voting or
disposition of the Company's capital stock that will survive the sale of
the Securities pursuant to this Agreement.
(viii) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(ix) Authorization and Description of Securities. The Securities
have been duly authorized for issuance and sale to the Underwriters
pursuant to this Agreement and, when issued and delivered by the Company
pursuant to this Agreement against payment of the consideration set
forth herein, will be duly and validly issued and fully paid and
non-assessable; the Common Shares of the Company conform to all
statements relating thereto contained in the Prospectus and such
description conforms to the rights set forth in the instruments defining
the same; no holder of the Securities will be subject to personal
liability by reason of being such a holder; and the issuance of the
Securities will
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not be subject to the preemptive or other similar rights of any
securityholder of the Company upon a final Prospectus being filed with
the BCSC and a receipt obtained therefor.
(x) Absence of Defaults and Conflicts. Neither the Company nor
any of its subsidiaries is in violation of its memorandum or articles or
in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
agreement or instrument to which the Company or any of its subsidiaries
is a party or by which it or any of them may be bound, or to which any
of the property or assets of the Company or any subsidiary is subject
(collectively, the "Agreements and Instruments") except for such
defaults that would not result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein and in the
Registration Statement and in the Prospectuses (including the issuance
and sale of the Securities and the use of the proceeds from the sale of
the Securities as described in the Prospectuses under the caption "Use
of Proceeds") and compliance by the Company with its obligations
hereunder have been duly authorized by all necessary corporate action
and do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any subsidiary pursuant to, the
Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation
of the provisions of the memorandum or articles of the Company or any
subsidiary in effect on or after the Closing Time or any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any subsidiary or any of their
assets, properties or operations. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any
subsidiary.
(xi) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge
of the Company, is imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its or
any subsidiary's principal suppliers, manufacturers, customers or
contractors, which, in either case, may reasonably be expected to result
in a Material Adverse Effect.
(xii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company or any subsidiary, which is required to be disclosed in the
Registration Statement and in the Prospectuses (other than as disclosed
therein), or which
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might reasonably be expected to result in a Material Adverse Effect, or
which might reasonably be expected to materially and adversely affect
the properties or assets thereof or the consummation of the transactions
contemplated in this Agreement or the performance by the Company of its
obligations hereunder; the aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary is a
party or of which any of their respective property or assets is the
subject which are not described in the Registration Statement and in the
Prospectuses, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material
Adverse Effect.
(xiii) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectuses or to be filed as exhibits thereto which have not been so
described and filed as required.
(xiv) Possession of Intellectual Property. Except as described
in the Prospectus, the Company and its subsidiaries own or possess, or
can acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade
names or other intellectual property (collectively, "Intellectual
Property") necessary to carry on the business now operated by them, and
neither the Company nor any of its subsidiaries has received any notice
or is otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any
facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or any of
its subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance or
sale of the Securities hereunder or the consummation of the transactions
contemplated by this Agreement, except (i) such as have been already
obtained or as may be required under the 1933 Act or the 1933 Act
Regulations or state securities laws or the BC Securities Laws and (ii)
such as have been obtained or as may be required under the laws and
regulations of jurisdictions outside the United States and British
Columbia, Canada in which the Reserved Securities are offered.
(xvi) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, provincial, local or foreign regulatory
agencies or bodies necessary to conduct the business now operated by
them; the Company and its subsidiaries are in compliance with the terms
and conditions of all such Governmental Licenses, except where the
failure so to comply would not, singly or in the aggregate, have a
Material Adverse Effect; all of the Governmental Licenses are valid and
in full force and effect, except when the invalidity of such
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Governmental Licenses or the failure of such Governmental Licenses to be
in full force and effect would not have a Material Adverse Effect; and
neither the Company nor any of its subsidiaries has received any notice
of proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xvii) Title to Property. The Company and its subsidiaries have
good and marketable title to all real property owned by the Company and
its subsidiaries and good title to all other properties owned by them,
in each case, free and clear of all mortgages, pledges, liens, security
interests, claims, restrictions or encumbrances of any kind except such
as (a) are described in the Prospectuses or (b) do not, singly or in the
aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by
the Company or any of its subsidiaries; and all of the leases and
subleases material to the business of the Company and its subsidiaries,
considered as one enterprise, and under which the Company or any of its
subsidiaries holds properties described in the Prospectuses, are in full
force and effect, and neither the Company nor any subsidiary has any
notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any subsidiary under any
of the leases or subleases mentioned above, or affecting or questioning
the rights of the Company or such subsidiary to the continued possession
of the leased or subleased premises under any such lease or sublease.
(xviii) Compliance with Cuba Act. The Company has complied with,
and is and will be in compliance with, the provisions of that certain
Florida act relating to disclosure of doing business with Cuba, codified
as Section 517.075 of the Florida statutes, and the rules and
regulations thereunder (collectively, the "Cuba Act") or is exempt
therefrom.
(xix) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xx) Environmental Laws. Except as described in the Registration
Statement and the Prospectuses and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries is in violation of any federal, state,
provincial, local or foreign statute, law, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent, decree or judgment, relating to pollution or protection of
human health, the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum
or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
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"Environmental Laws"), (B) the Company and its subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) there are no pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices
of noncompliance or violation, investigation or proceedings relating to
any Environmental Law against the Company or any of its subsidiaries and
(D) there are no events or circumstances known to the Company that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of
its subsidiaries relating to Hazardous Materials or any Environmental
Laws.
(xxi) Registration Rights. No person or entity has the right to
require registration of common shares or other securities of the Company
because of the filing or effectiveness of the Registration Statement or
the issuance of a receipt by the BCSC for the Final Prospectus of the
Company or otherwise that has not waived that right.
(xxii) Compliance with Laws. The Company and its Subsidiaries
are in all materials respects in compliance with, and conduct their
businesses in conformity with, all applicable U.S. and Canadian federal,
state, provincial, local and foreign laws, rules and regulations or any
court or governmental agency or body.
(xxiii) Taxes. The Company and its Subsidiaries have filed all
necessary U.S. and Canadian federal, state, provincial, local and
foreign income, payroll, franchise and other tax returns and have paid
all taxes shown as due thereon or with respect to any of their
properties or any transactions to which any such entity was a party, and
there is no tax deficiency that has been, or to the knowledge of the
Company is likely to be, asserted against the Company or any of its
Subsidiaries or any of their respective properties or assets that would
result in a Material Adverse Effect.
(xxiv) No Market Stabilization Activities. Neither the Company
nor, to its knowledge, any of its officers, directors or affiliates has
taken or will take, directly or indirectly, any action designed or
intended to stabilize or manipulate the price of any security of the
Company, or which caused or resulted in, or which might in the future
reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company.
(xxv) Registrar and Transfer Agent. American Stock Transfer &
Trust Company, at its principal offices in New York, New York, has been
duly appointed as a registrar and transfer agent in respect of the
Common Shares of the Company.
(xxvi) Insurance. Except as described in or contemplated by the
Prospectuses, the Company and its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and
in such amounts as are customary in the businesses in which they are
engaged or propose to engage; and neither the Company nor any subsidiary
of the Company has any 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
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coverage from similar insurers as may be necessary to continue their
business at a cost that would not result in a Material Adverse Effect.
(xxvii) No Broker. Other than as contemplated by this Agreement,
there is no broker, finder or other party that is entitled to receive
from the Company any brokerage or finder's fee or other fee or
commission as a result of any of the transactions contemplated by this
Agreement.
(xxviii) Adequate Accounting. The Company and each of its
subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurances that: (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with U.S. generally
accepted accounting principles and Canadian generally accepted
accounting principles and to maintain accountability for assets; (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 existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxix) To the knowledge of the Company, after due inquiry, none
of the directors or officers or shareholders of the Company listed under
"Principal Shareholders" in the Prospectuses is or has ever been subject
to prior criminal or bankruptcy proceedings in the United States, Canada
or elsewhere.
(xxx) To the knowledge of the Company, after due inquiry, except
as disclosed in writing to the Underwriters or in the Prospectuses
(namely, employment, option and severance agreements between the Company
and its Chairman, President, Managing Directors, Vice-Presidents and
certain Managers), the Company is not a party to any contract, agreement
or understanding with any officer, director, employee or any other
person not dealing at arm's length with the Company which is required to
be disclosed by the BC Securities Laws.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
Section 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the gross price per share less the Underwriters' commission
per share to be paid by the Company, all as set forth in Schedule B, the number
of Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof. Each Underwriter shall, to the extent
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that any Initial Securities are purchased by Substituted Purchasers, be entitled
to payment from the Company of a commission per share equal to the commission
per share set forth in Section 2 of Schedule B multiplied by the product of (i)
the aggregate number of Initial Securities purchased by Substituted Purchasers
and (ii) a fraction, the numerator of which is the number of Initial Securities
set forth opposite the name of the Underwriters in Schedule A and the
denominator of which is 3,500,000 (the aggregate amounts of such commission
payable to the Underwriters referred to as the "Agency Commission").
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase up to an additional 525,000 shares of Common Shares
of the Company at the price per share set forth in Schedule B, less an amount
per share equal to any dividends or distributions declared by the Company and
payable on the Initial Securities but not payable on the Option Securities. The
option hereby granted will expire 30 days after the date hereof and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Representatives to the
Company setting forth the number of Option Securities as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Option Securities. Any such time and date of delivery (a "Date
of Delivery") shall be determined by the Representatives, but shall not be later
than seven full business days after the exercise of said option, nor in any
event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in Schedule A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each case to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities and payment of the Agency Commission,
if any, shall be made at the offices of Xxxxx & Company, 0000 Xxxx Xxxxx, 000
Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0, or at such other
place as shall be agreed upon by the Representatives and the Company, at 7:00
A.M. (California time) on the third (fourth, if the pricing occurs after 4:30
P.M. (Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be agreed upon by the
Representatives and the Company (such time and date of payment and delivery
being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each Date of Delivery as specified in the notice from the
Representatives to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representatives for the
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respective accounts of the Underwriters of certificates for the Securities to be
purchased by them. It is understood that each Underwriter has authorized the
Representatives, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Initial Securities and the Option
Securities, if any, which it has agreed to purchase. Xxxxxxx Xxxxx, individually
and not as representative of the Underwriters, may (but shall not be obligated
to) make payment of the purchase price for the Initial Securities or the Option
Securities, if any, to be purchased by any Underwriter whose funds have not been
received by the Closing Time or the relevant Date of Delivery, as the case may
be, but such payment shall not relieve such Underwriter from its obligations
hereunder. The Underwriters shall be entitled to deduct from the payment to be
made to the Company referred to in the preceding paragraph an amount equal to
the Agency Commission, if any.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in New York, New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
Section 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
or Rule 434, as applicable, and the BC Securities Laws, and will notify the
Representatives immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement shall become effective,
or any supplement to the Prospectuses or any amended Prospectuses shall have
been filed with the Commission or the BCSC, (ii) of the receipt of any comments
from the Commission or the BCSC, (iii) when the BCSC issues to the Company a
receipt for the Final Prospectus, (iv) of any request by the Commission or the
BCSC for any amendment to the Registration Statement or any amendment or
supplement to the Prospectuses or for additional information, and (v) of the
issuance by the Commission or the BCSC of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any Preeffective Prospectus or Preliminary Prospectus, or
of the suspension of the qualification of the Securities for offering or sale in
any jurisdiction, or of the initiation or threatening of any proceedings for any
of such purposes. The Company will promptly effect the filings necessary
pursuant to Rule 424(b) and will take such steps as it deems necessary to
ascertain promptly whether the form of prospectus transmitted for filing under
Rule 424(b) was received for filing by the Commission and, in the event that it
was not, it will promptly file such prospectus. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Representatives
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), the Preliminary Prospectus,
any Term Sheet or any amendment, supplement
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or revision to either the prospectus included in the Registration Statement at
the time it became effective or to the Prospectuses and will furnish the
Representatives with copies of any such documents a reasonable amount of time
prior to such proposed filing or use, as the case may be, and will not file or
use any such document to which the Representatives or counsel for the
Underwriters shall object.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Representatives and counsel for the Underwriters, without
charge, signed copies of the Registration Statement, the Preliminary Prospectus
and the Final Prospectus as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will also deliver
to the Representatives, without charge, a conformed copy of the Registration
Statement as originally filed and of each amendment thereto (without exhibits)
for each of the Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
XXXXX, except to the extent permitted by Regulation S-T. The copies of the
Preliminary Prospectus, each Amended Preliminary Prospectus, the Final
Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the BCSC pursuant to SEDAR.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each Preeffective Prospectus,
Preliminary Prospectus and any prospectus wrappers prepared in connection with
the distribution of the Reserved Securities as such Underwriter reasonably
requested, and the Company hereby consents to the use of such copies for
purposes permitted by the 1933 Act and the BC Securities Laws. The Company will
furnish to each Underwriter, without charge, during the period when the (i) U.S.
Prospectus is required to be delivered under the 1933 Act or the Securities
Exchange Act of 1934 (the "1934 Act"), and (ii) the Final Prospectus is required
to be delivered under the BC Securities Laws, such number of copies of the U.S.
Prospectus and the Final Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The U.S. Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
XXXXX, except to the extent permitted by Regulation S-T. The Final Prospectus
and any amendments or supplements thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the BCSC
pursuant to SEDAR.
(e) Continued Compliance with Securities Laws The Company will comply
with the 1933 Act, the 1933 Act Regulations and the BC Securities Laws so as to
permit the completion of the distribution of the Securities as contemplated in
this Agreement and in the Prospectuses. If at any time when a prospectus is
required by the 1933 Act or the BC Securities Laws to be delivered in connection
with sales of the Securities, any event shall occur or condition shall exist as
a result of which it is necessary, in the opinion of counsel for the
Underwriters or for the Company, to amend the Registration Statement or amend or
supplement the Prospectuses in order that the Prospectuses will not include any
untrue statements of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary,
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in the opinion of such counsel, at any such time to amend the Registration
Statement or amend or supplement the Prospectuses in order to comply with the
requirements of the 1933 Act, the 1933 Act Regulations or the BC Securities
Laws, the Company will promptly prepare and file with the Commission or the
BCSC, as the case may be, subject to Section 3(b), such amendment or supplement
as may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectuses comply with such requirements, and
the Company will furnish to the Underwriters such number of copies of such
amendment or supplement as the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Company will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
(g) Rule 158 and Continuous Disclosure. The Company will timely file
such reports pursuant to the 1934 Act as are necessary in order to make
generally available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated by, the
last paragraph of Section 11(a) of the 1933 Act. The Company will, for a period
of 3 years after the date of the BCSC issues a receipt for the Final Prospectus,
prepare all such documents, make all such filings, and do all such things as are
required to maintain its status as a "reporting issuer" in British Columbia and
to prevent the Company from being added to the list of reporting issuers in
default maintained by the BCSC; provided that nothing in this Subsection (g)
shall be construed as preventing the Company from entering into any merger or
similar transaction which would result in the Company losing its status as a
"reporting issuer".
(h) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Prospectuses
under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect and
maintain the quotation of the Securities on the Nasdaq National Market and will
file with the Nasdaq National Market all documents and notices required by the
Nasdaq National Market of companies that have securities that are traded in the
over-the-counter market and quotations for which are reported by the Nasdaq
National Market.
(j) Restriction on Sale of Securities. During a period of 180 days from
the date of the Prospectuses, the Company will not, without the prior written
consent of Xxxxxxx Xxxxx, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to
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purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of any Common Shares of the
Company or any securities convertible into or exercisable or exchangeable for
Common Shares of the Company or file any registration statement under the 1933
Act or any prospectus under the BC Securities Laws with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Shares of the Company, whether any such
swap or transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Shares of the Company or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the Securities to be
sold hereunder, (B) any Common Shares issued by the Company upon the exercise of
an option or warrant or the conversion of a security outstanding on the date
hereof and referred to in the Prospectuses, (C) any Common Shares issued or
options to purchase Common Shares granted pursuant to existing employee benefit
plans of the Company referred to in the Prospectuses, (D) any Common Shares
issued by the Company pursuant to any non-employee director stock plan or
dividend reinvestment plan or (E) a total of not more than 800,000 Common Shares
(or securities convertible into, or exchangeable for, Common Shares) issued by
the Company in connection with the formation or furtherance of a strategic
alliance or as consideration or partial consideration for the acquisition of all
or substantially all of the assets or equity of a third party; provided, that in
connection with the issuance or issuance and sale permitted under subclause (E)
of this Section 3(j) hereof, the Company agrees (i) to obtain from each person
receiving Common Shares (or securities convertible into, or exchangeable for,
Common Shares) a letter substantially consistent with Exhibit B hereto and (ii)
not to grant any rights exercisable prior to the six month anniversary of this
Agreement with respect to the registration under the Act of any Common Shares
(or securities convertible into, or exchangeable for, Common Shares) issued in
connection with such transaction.
(k) Reporting Requirements. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act, the 1934 Act or
the BC Securities Laws, will file all documents required to be filed with the
Commission pursuant to the 1934 Act or the BCSC pursuant to the BC Securities
Laws, as the case may be, within the time periods required by (i) the 1934 Act
and the rules and regulations of the Commission thereunder and (ii) the BC
Securities Laws.
(l) Compliance with NASD Rules. The Company hereby agrees that it will
ensure that the Reserved Securities will be restricted as 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 this Agreement. The Underwriters have notified the
Company as to which persons will need to be so restricted. At the request of the
Underwriters, the Company will direct the transfer agent to place a stop
transfer restriction upon such securities for such period of time. Should the
Company release, or seek to release, from such restrictions any of the Reserved
Securities, the Company agrees to reimburse the Underwriters for any reasonable
expenses (including, without limitation, legal expenses) they incur in
connection with such release.
(m) Compliance with Rule 463. The Company will file with the Commission
such reports on Form SR as may be required pursuant to Rule 463 of the 1933 Act
Regulations.
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(n) Copies of Documents to Underwriters. The Company shall supply to the
Underwriters the following:
(i) forthwith upon receipt, copies of all correspondence to
and from, and all documents issued to and by (i) the
Commission in connection with the registration of the
Securities under the 1933 Act and (ii) the BCSC in
connection with the transactions contemplated hereby;
and
(ii) prior to the Closing Time (and, if any Option Securities
are purchased, to the Date of Delivery) as soon as they
have been prepared, copies of any unaudited interim
consolidated financial statements of the Company and its
subsidiaries required to be prepared by BC Securities
Laws for any periods subsequent to the periods covered
by the financial statements appearing in the
Registration Statement and the Prospectuses.
(o) Miscellaneous. The Company shall:
(i) maintain a transfer agent and registrar for its Common
Shares in the United States; and
(ii) prior to filing its quarterly statements on Form 10-Q
and the equivalent in British Columbia, have the
independent auditors of the Company perform a limited
quarterly review of its quarterly numbers.
(p) Press Releases and Press Conferences. Prior to the Closing Time (and
if any Option Securities are purchased, to the Date of Delivery), the Company
shall not, without the prior written consent of Xxxxxxx Xxxxx, issue a press
release or hold a press conference with respect to the Company or any of its
subsidiaries, including without limitation their financial contribution, results
of operations, business prospectus, assets, liabilities, or the offering of the
Securities.
(q) Canadian Private Placement. The Company will use its best efforts,
in cooperation with the Underwriters, to qualify the Securities for offering and
sale on a private placement basis under the applicable securities laws of such
jurisdictions in Canada as the Representatives may designate.
Section 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement and the
Prospectuses (including financial statements and exhibits including any
prospectus wrappers prepared in connection therewith) as originally filed and of
each amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any agreement among the Underwriters and such
other documents as may be required in connection with the offering, purchase,
sale, issuance or delivery of the Securities, (iii) the preparation, issuance
and delivery of the certificates for the Securities to the Underwriters,
including any stock or other transfer taxes and any stamp or other duties
payable
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upon the sale, issuance or delivery of the Securities to the Underwriters, (iv)
the fees and disbursements of the Company's counsel, accountants and other
advisors, (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees and
the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each Preliminary Prospectus, any Term Sheets and of
the Prospectuses and any amendments or supplements thereto and any prospectus
wrappers prepared in connection therewith, (vii) the preparation, printing and
delivery to the Underwriters of copies of the Blue Sky Survey and any supplement
thereto, (viii) the fees and expenses of any transfer agent or registrar for the
Securities, (ix) the filing fees incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review by
the National Association of Securities Dealers, Inc. (the "NASD") of the terms
of the sale of the Securities, (x) the fees and expenses incurred in connection
with the inclusion of the Securities in the Nasdaq National Market, and (xi) all
costs and expenses of the Underwriters, including the fees and disbursements of
counsel for the Underwriters, in connection with matters related to the Reserved
Securities which are designated by the Company for sale to employees and others
having a business relationship with the Company.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
Section 5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A prospectus containing
the Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule 434,
a Term Sheet shall have been filed with the Commission in accordance with Rule
424(b). A receipt shall have been issued to the Company by the BCSC in respect
of the Final Prospectus and at the Closing Time no stop order suspending the use
of the Final Prospectus shall have been issued under the BC Securities Laws or
proceedings therefor initiated or threatened by the BCSC, and any request on the
part of the BCSC for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters.
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(b) Opinion of U.S. Counsel for Company. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Xxxxxx & Whitney LLP, U.S. counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters to the
effect set forth in Exhibit A-1 hereto and to such further effect as counsel to
the Underwriters may reasonably request.
(c) Opinion of Canadian Counsel for Company. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Xxxxx & Company, Canadian counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters to the
effect set forth in Exhibit A-2 hereto and to such further effect as counsel to
the Underwriters may reasonably request.
(d) Opinion of U.S. Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Xxxxxxxx & Xxxxxxxx LLP, U.S. counsel for the Underwriters, together
with signed or reproduced copies of such letter for each of the other
Underwriters with respect to the matters set forth in clauses (i), (ii), (v),
(vi) (solely as to preemptive or other similar rights arising by operation of
law or under the memorandum or articles of the Company), (viii) through (x),
inclusive, (xii), (xiv) (solely as to the information in the Prospectus under
"Description of Capital Stock--Common Stock") and the penultimate paragraph of
Exhibit A-1 hereto. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State of
California, the federal law of the United States and the General Corporation Law
of the State of Delaware, upon the opinions of counsel satisfactory to the
Representatives. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and certificates of
public officials.
(e) Opinion of Canadian Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Blake, Xxxxxxx & Xxxxxxx, Canadian counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters with respect to the matters set forth in clauses (i), (ii), (v),
(vi) (solely as to preemptive or other similar rights arising by operation of
law or under the memorandum or articles of the Company), (viii) and the
penultimate paragraph of Exhibit A-2 hereto. In giving such opinion such counsel
may rely, as to all matters governed by the laws of jurisdictions other than the
law of British Columbia and Canada, upon the opinions of counsel satisfactory to
the Representatives. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and certificates of
public officials.
(f) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectuses, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of the President or a Vice
President of the Company and of the chief
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financial or chief accounting officer of the Company, dated as of Closing Time,
to the effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct with
the same force and effect as though expressly made at and as of Closing Time,
(iii) the Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied at or prior to Closing Time, and (iv)
no stop order suspending the effectiveness of the Registration Statement, or the
use of the Final Prospectus, has been issued and no proceedings for that purpose
have been instituted or are pending or are contemplated by the Commission or the
BCSC, respectively.
(g) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from Deloitte & Touche LLP a
letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectuses.
(h) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from Deloitte & Touche LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (g) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(i) Approval of Listing. At Closing Time, the Securities shall have been
approved for inclusion in the Nasdaq National Market, subject only to official
notice of issuance.
(j) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(k) Lock-up Agreements. At the date of this Agreement, the
Representatives shall have received an agreement substantially in the form of
Exhibit B hereto signed by the persons listed on Schedule C hereto.
(l) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company contained herein and the statements in any certificates furnished
by the Company or any subsidiary of the Company hereunder shall be true and
correct as of each Date of Delivery and, at the relevant Date of Delivery, the
Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company confirming
that the certificate delivered at the Closing Time pursuant to Section
5(f) hereof remains true and correct as of such Date of Delivery.
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(ii) Opinions of Counsel for Company. The favorable opinion of
Xxxxxx & Xxxxxxx LLP, U.S. counsel for the Company, together with the
favorable opinion of Xxxxx & Company, Canadian counsel for the Company,
each in form and substance satisfactory to counsel for the Underwriters,
dated such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect as
the opinion required by Sections 5(b) and (c), respectively, hereof.
(iii) Opinions of Counsel for Underwriters. The favorable
opinion of Xxxxxxxx & Xxxxxxxx LLP, U.S. counsel for the Underwriters,
together with the favorable opinion of Blake, Xxxxxxx & Xxxxxxx, special
Canadian counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by
Sections 5(d) and (e), respectively, hereof.
(iv) Bring-down Comfort Letter. A letter from Deloitte & Touche
LLP, in form and substance satisfactory to the Representatives and dated
such Date of Delivery, substantially in the same form and substance as
the letter furnished to the Representatives pursuant to Section 5(h)
hereof, except that the "specified date" in the letter furnished
pursuant to this paragraph shall be a date not more than five days prior
to such Date of Delivery.
(m) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(n) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Company at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
Section 6. Indemnification.
(a) Indemnification of Underwriters. The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material
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fact contained in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if
applicable, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged
untrue statement of a material fact included in any Preeffective
Prospectus, Preliminary Prospectus or the Prospectuses (or any amendment
or supplement thereto), or the omission or alleged omission therefrom of
a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of (A) the violation of any
applicable laws or regulations of jurisdictions other than the United
States and British Columbia where Reserved Securities have been offered
and (B) any untrue statement or alleged untrue statement of a material
fact included in the supplement or prospectus wrapper material
distributed in [_______________________] in connection with the
reservation and sale of the Reserved Securities to certain Company
directors and other persons with relationships with the Company or the
omission or alleged omission therefrom of a material fact necessary to
make the statements therein, when considered in conjunction with the
Prospectuses, Preeffective Prospectus or Preliminary Prospectus, not
misleading;
(iii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission or in connection with any
violation of the nature referred to in Section 6(a)(ii)(A) hereof;
provided that (subject to Section 6(d) below) any such settlement is
effected with the written consent of the Company; and
(iv) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Xxxxxxx
Xxxxx), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission or in connection with any violation
of the nature referred to in Section 6(a)(ii)(A) hereof, to the extent
that any such expense is not paid under (i) , (ii) or (iii) above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of
any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through Xxxxxxx Xxxxx
expressly for use in the Registration Statement (or any amendment
thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any Preeffective Prospectus, Preliminary
Prospectus or the Prospectuses (or any amendment or supplement thereto);
and provided further that this indemnity agreement shall not apply
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to any loss, liability, claim, damage or expense to the extent that the
Company shall sustain the burden of proving that any such loss,
liability, claim, damage or expense resulted from the fact that such
Underwriter, in contravention of a requirement of this Agreement or
applicable law, sold Securities to a person to whom such Underwriter
failed to send or give, at or prior to the Closing Date, a copy of
either of the Prospectuses, as then amended or supplemented if: (i) the
Company has previously furnished copies thereof (sufficiently in advance
of the Closing Date and in sufficient quantity to allow for distribution
by the Closing Date) to the Underwriters and the loss, liability, claim,
damage or expense of such Underwriter resulted from an untrue statement
or omission of a material fact contained in or omitted from the
Preeffective Prospectus or the Preliminary Prospectus which was
corrected in the U.S. Prospectus or Final Prospectus as, if applicable,
amended or supplemented prior to the Closing Date and such U.S.
Prospectus or Final Prospectus, as applicable was required by law to be
delivered at or prior to the written confirmation of sale to such person
and (ii) such failure to give or send such U.S. Prospectus or Final
Prospectus, as applicable, by the Closing Date to the party or parties
asserting such loss, liability, claim, damage or expense would have
constituted a defense to the claim asserted by such person.
(b) Indemnification of Company, Directors and Officers. Each Underwriter
severally agrees to indemnify and hold harmless the Company, its directors, each
of its officers who signed the Registration Statement or the Final Prospectus,
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any Preeffective
Prospectus, Preliminary Prospectus, Amended Preliminary Prospectus or the
Prospectuses (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through Xxxxxxx Xxxxx expressly for use in the Registration Statement (or any
amendment thereto) or such Preeffective Prospectus, Preliminary Prospectus,
Amended Preliminary Prospectus or the Prospectuses (or any amendment or
supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Xxxxxxx Xxxxx, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any
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local counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(iii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement; provided that an indemnifying party shall not be liable for any such
settlement effected without its consent if such indemnifying party, prior to the
date of such settlement, (i) reimburses such indemnified party in accordance
with such request for the amount of such fees and expenses of counsel as the
indemnifying party believes in good faith to be reasonable, and (ii) provides
written notice to the indemnified party that the indemnifying party disputes in
good faith the reasonableness of the unpaid balance of such fees and expenses.
(e) Indemnification for Reserved Securities. In connection with the
offer and sale of the Reserved Securities, the Company agrees, promptly upon a
request in writing, to indemnify and hold harmless the Underwriters from and
against any and all losses, liabilities, claims, damages and expenses incurred
by them as a result of the failure of any of the directors of the Companty or
other persons with relationships with the Company to pay for and accept delivery
of Reserved Securities which, by the end of the first business day following the
date of this Agreement, were subject to a properly confirmed agreement to
purchase.
Section 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the
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statements or omissions, or in connection with any violation of the nature
referred to in Section 6(a)(ii)(A) hereof, which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectuses, or, if Rule 434 is used, the
corresponding location on the Term Sheet, bear to the aggregate initial public
offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission or any violation of the nature referred to in Section
6(a)(ii)(A) hereof.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement or the Final Prospectus, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company.
The Underwriters' respective obligations to contribute pursuant to this Section
7 are several in proportion to the
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number of Initial Securities set forth opposite their respective names in
Schedule A hereto and not joint.
Section 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
Section 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectuses, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or Canada, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representatives, impracticable to
market the Securities or to enforce contracts for the sale of the Securities, or
(iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the Nasdaq National Market, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority, or (iv) if a banking moratorium has been
declared by either United States Federal, New York or Canadian authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
Section 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
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(a) if the number of Defaulted Securities does not exceed 10% of
the number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date, this Agreement or,
with respect to any Date of Delivery which occurs after the Closing
Time, the obligation of the Underwriters to purchase and of the Company
to sell the Option Securities to be purchased and sold on such Date of
Delivery shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the Representatives or the Company shall have the
right to postpone Closing Time or the relevant Date of Delivery, as the case may
be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or the Prospectuses or in any other
documents or arrangements. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10.
Section 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at Xxxxx Xxxxx, Xxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 and at 000 Xxxxxxxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxxxxxxx Xxxxxxxxxx 00000, attention of o; and notices to the
Company shall be directed to it at Pivotal Corporation, 000-000 Xxxx Xxxxxxxxx,
Xxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0, attention of Xxxxxx X.
Xxxxxxx.
Section 12. Parties. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
28
33
Section 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
Section 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
Pivotal CORPORATION
By:
-------------------------------
Title:
CONFIRMED AND ACCEPTED, as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
BEAR, XXXXXXX & CO. INC.
XXXX XXXXXXXX XXXXXXX
(a division of Xxxx Xxxxxxxx Incorporated)
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:
-------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
29
34
SCHEDULE A
Number of
Initial
Name of Underwriter Securities
------------------- ----------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated .............................................
Bear, Xxxxxxx & Co. Inc ................................................
Xxxx Xxxxxxxx Xxxxxxx ..................................................
Xxxxxxx Xxxxx Canada Inc ...............................................
Total................................................................... 3,500,000
=========
Sch A-1
35
SCHEDULE B
PIVOTAL SOFTWARE INC.
3,500,000 Common Shares
(Without Par Value)
1. The initial public offering price per share for the
Securities, determined as provided in said Section 2, shall be $o.
2. The gross purchase price per share for the Securities to be
paid by the several Underwriters shall be an amount equal to the initial
public offering price set forth above and the Underwriters' commission
to be paid by the Company shall be $o per share; provided that the
purchase price per share for any Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be
reduced by an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial Securities but not
payable on the Option Securities.
Sch B-1
36
Exhibit A-1
FORM OF OPINION OF COMPANY'S U.S. COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) Pivotal Corporation, a Washington corporation, (the "U. S.
Subsidiary") has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to our knowledge is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would
not result in a Material Adverse Effect; except as otherwise disclosed
in the Registration Statement, all of the issued and outstanding capital
stock of the U. S. Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and, to our knowledge, except
as described in the Prospectus is owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the outstanding
shares of capital stock of the U. S. Subsidiary was issued in violation
of the preemptive or similar rights of any securityholder of the U. S.
Subsidiary.
(ii) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act;
any required filing of the Prospectus pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b);
and, to our knowledge, no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has
been issued under the 1933 Act and no proceedings for that purpose have
been instituted or are pending or threatened by the Commission.
(iii) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable, the U.S. Prospectus and each amendment or
supplement to the Registration Statement and U.S. Prospectus as of their
respective effective or issue dates (other than the financial statements
and supporting schedules included therein or omitted therefrom, as to
which we need express no opinion) complied as to form in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations.
(iv) If Rule 434 has been relied upon, the U.S. Prospectus was
not "materially different," as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time it became
effective.
(v) The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable requirements of
the Nasdaq National Market.
(vi) To our knowledge, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which the Company
or any subsidiary is a party, or to which the property of the Company or
any subsidiary is subject, before or brought by any court or
governmental agency or body, domestic or foreign, which might reasonably
be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely
Exh. A-1-1
37
affect the properties or assets thereof or the consummation of the
transactions contemplated in the Purchase Agreement or the performance
by the Company of its obligations thereunder.
(vii) The information in the U.S. Prospectus under "Income Tax
Consequences--United States Federal Income Tax Consequences" and "Shares
Eligible for Future Sale--United States Resale Restrictions" to the
extent that it constitutes matters of law, summaries of legal matters or
legal conclusions, has been reviewed by us and is correct in all
material respects
(viii) To our knowledge, there are no United States statutes or
regulations that are required to be described in the U.S. Prospectus
that are not described as required.
(ix) All descriptions in the Registration Statement of contracts
and other documents to which the Company or its subsidiaries are a party
are accurate in all material respects; to our knowledge, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits thereto other than
those described or referred to therein or filed or incorporated by
reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.
(x) To our knowledge, the U.S. Subsidiary is not in violation of
its articles of incorporation or by-laws and no default by the Company
or any subsidiary exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument that is filed as an exhibit to the Registration
Statement.
(xi) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, of the United States or the State of
Washington, (other than under the 1933 Act and the 1933 Act Regulations,
which have been obtained, or as may be required under state securities
or blue sky laws, as to which we need express no opinion) is necessary
or required in connection with the due authorization, execution and
delivery of the Purchase Agreement or for the offering, issuance or sale
of the Securities.
(xii) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions contemplated in the
Purchase Agreement and in the Registration Statement (including the
issuance and sale of the Securities and the use of the proceeds from the
sale of the Securities as described in the U.S. Prospectus under the
caption "Use Of Proceeds") and compliance by the Company with its
obligations under the Purchase Agreement do not and will not, whether
with or without the giving of notice or lapse of time or both, conflict
with or constitute a breach of, or default or Repayment Event (as
defined in Section 1(a)(x) of the Purchase Agreement) under or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any subsidiary pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or any other agreement or instrument that is filed as an
exhibit to the Registration Statement, to which the Company or any
subsidiary is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Company
Exh. A-1-2
38
or any subsidiary is subject (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not have a
Material Adverse Effect), nor will such action result in any violation
of the provisions of the articles of incorporation or by-laws of the
U.S. Subsidiary, or any applicable law, statute, rule, regulation,
judgment, order, writ or decree, known to us, of any government,
government instrumentality or court of the United States or the State of
Washington having jurisdiction over the Company or any subsidiary or any
of their respective properties, assets or operations.
(xiii) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
the 1940 Act.
Such counsel shall also include substantially the following
statement:
Nothing has come to our attention that has caused us to believe
that the Registration Statement or any post effective amendment thereto,
including the Rule 430A Information and Rule 434 Information (if
applicable), (except for financial statements and schedules and other
financial data included therein or omitted therefrom, as to which we
need make no statement), at the time such Registration Statement or any
such post effective amendment became effective, contained an 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 or that the U.S. Prospectus or any amendment or
supplement thereto (except for financial statements and schedules and
other financial data included therein or omitted therefrom, as to which
we need make no statement), at the time the U.S. Prospectus was issued,
at the time any such amended or supplemented prospectus was issued or at
the Closing Time, included or includes an untrue statement of a material
fact or omitted or omits 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.
In rendering such opinion, such counsel may rely as to matters
of fact (but not as to legal conclusions), to the extent they deem
proper, on certificates of responsible officers of the Company and its
subsidiaries and public officials. Such opinion shall not state that it
is to be governed or qualified by, or that it is otherwise subject to,
any treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
Exh. A-1-3
39
[FORM OF LOCK-UP FROM DIRECTORS, OFFICERS OR OTHER STOCKHOLDERS PURSUANT
TO SECTION 5(I)]
Exhibit B
o, 1999
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated,
BEAR, XXXXXXX & CO. INC.
XXXX XXXXXXXX XXXXXXX
(a division of Xxxx Xxxxxxxx Incorporated)
as Representatives of the several
Underwriters to be named in the
within-mentioned Purchase Agreement
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Proposed Public Offering by Pivotal Software Inc.
Dear Sirs:
The undersigned, a stockholder [and an officer and/or director] of
Pivotal Software Inc., a corporation incorporated under the laws of British
Columbia, Canada (the "Company"), understands that Xxxxxxx Xxxxx & Co., Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") Bears, Xxxxxxx &
Co. Inc. and Xxxx Xxxxxxxx Xxxxxxx (a division of Xxxx Xxxxxxxx Incorporated)
proposes to enter into a Purchase Agreement (the "Purchase Agreement") with the
Company providing for the public offering of the Company's common shares (the
"Securities"), without par value (the "Common Shares"). In recognition of the
benefit that such an offering will confer upon the undersigned as a stockholder
[and an officer and/or director] of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with each underwriter to be named in the Purchase Agreement
that, during a period of 180 days from the date of the Purchase Agreement, the
undersigned will not, without the prior written consent of Xxxxxxx Xxxxx,
directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant for the sale of, or otherwise dispose of or
transfer any shares of the Company's Common Shares or any securities convertible
into or exchangeable or exercisable for Common Stock, whether now owned or
hereafter acquired by the undersigned or with respect to which the undersigned
has or hereafter acquires the power of disposition, or file any registration
statement under the Securities Act of 1933, as amended, with respect to any of
the foregoing
M-4
40
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Common Shares, whether any such swap or transaction is to be
settled by delivery of Common Shares or other securities, in cash or otherwise.
Very truly yours,
Signature:
-------------------------------
Print Name:
------------------------------
M-5
