AGENCY AGREEMENT
October 13, 1999
e-Xact Transactions Ltd.
0000 - 000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
Attention: Xxxxx Xxxxxxx, President
RE: INITIAL PUBLIC OFFERING
Dear Sirs:
We, Canaccord Capital Corporation (the "Agent"), understand that e-Xact
Transactions Ltd. (the "Company") proposes to undertake an initial public
offering to raise gross proceeds of up to US $1,725,000 (the "Offering") through
the sale of common shares of the Company (the "Shares") at a price of US $1.00
per common share (the "Offering Price"). The funds raised from the Offering will
be used for the purpose of, among other things, funding expansion of the
Company's e-commerce software development and marketing. We provide this letter
to confirm the terms and conditions upon which we are prepared to act as your
agent to offer and sell the Shares on your behalf. By signing a copy of this
letter, you are confirming that we have entered into a binding agreement (the
"Agreement") pursuant to which you will have appointed us as your sole and
exclusive agent to use our reasonable best efforts to offer and sell the Shares
on the terms and conditions contained herein.
The additional terms and conditions of this Agreement are set forth below.
1. DEFINITIONS
1.1 In this Agreement, including any schedules forming a part of this
Agreement:
(a) "Acts" means the Securities Acts or equivalent securities regulatory
legislation of the Qualifying Jurisdictions and "Act" means the
Securities Act or equivalent securities regulatory legislation of a
specified Qualifying Jurisdiction;
(b) "Administrative Fee" means an administrative fee of Can. $4,000
payable to the Agent;
(c) "Agent's Commission" means the commission payable to the Agent by the
Company upon the Closing Date for the sale of the Shares, being 7.5%
of the gross proceeds of the Offering, payable in lawful U.S.
currency;
(d) "Agent's Expenses" means the expenses of the Agent incurred on the
Company's behalf in connection with the Offering and the review,
preparation and filing of the Prospectuses, including, without
limitation, the fees and expenses of the Agent's solicitors;
(e) "Agent's Warrant" means a warrant entitling the Agent to purchase
Shares of the Company equivalent to 10% of the number of Shares sold
in the Offering,
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exercisable in whole or in part during the one year period following
the Listing Date at the Offering Price;
(f) "Agent's Warrant Shares" means the Shares which will issued by the
Company to the Agent upon exercise of the Agent's Warrant;
(g) "Applicable Securities Laws" means in respect of the Offering, the
Acts and Regulations having application and the rules, policies,
notices and orders issued by the applicable Regulatory Authorities
having application;
(h) "Closing Date" means the day 10 business days following the Offering
Day, or such other date as may be agreed upon by the Company and the
Agent for the closing of the Offering;
(i) "Commissions" means the securities regulatory bodies (other than stock
exchanges) of the Qualifying Jurisdictions and "Commission" means the
securities regulatory body of a specified Qualifying Jurisdiction;
(j) "Conditional Listing" has occurred when the Exchange advises that the
common shares of the Company have been conditionally listed;
(k) "Corporate Finance Fee" means a fee of 75,000 common shares of the
Company payable to the Agent by the Company upon the Closing Date;
(l) "Corporate Finance Fee Shares" means the 75,000 Shares of the Company
to be issued by the Company to the Agent in payment of the Corporate
Finance Fee;
(m) "distribution" or ("distribute" as derived therefrom), "material
change", "material fact", "misrepresentation" and "trade" have the
meanings given to those terms in the Securities Act (British
Columbia);
(n) "Effective Date" means the date on which a Final Receipt is issued by
the Commissions of each of the Qualifying Jurisdictions;
(o) "Exchange" means the Vancouver Stock Exchange;
(p) "Final Listing Submission" means the final submission (which will be
in the form of a submission letter and may or may not include a long
form of wrap-around listing application) filed with the Exchange to
secure the Conditional Listing and, upon the satisfaction of those
conditions, to secure the Full Listing;
(q) "Final Prospectus" means the final prospectus filed with the Exchange
and with the Commission for the purpose of qualifying the distribution
of the Qualified Securities;
(r) "Final Receipts" means the receipts issued by each of the Commissions
for the Final Prospectus and "Final Receipt" means the receipt issued
by a specified Commission;
(s) "Full Listing" has occurred when the common shares of the Company have
been listed, and when the issued common shares of the Company have
been called for trading on the Exchange, as evidenced by a notice
issued by the Exchange;
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(t) "Listing Date" means the day on which the Full Listing occurs;
(u) "Listing Submissions" means the Preliminary Listing Submission and the
Final Listing Submission;
(v) "Offering Day" means the day on which the Agent offers and sells the
Shares through the facilities of, and in accordance with the rules and
policies of the Exchange;
(w) "Preliminary Listing Submission" means the submission (which will be
in the form of a submission letter and may or may not include a long
form or wrap-around listing application) filed with the Exchange to
obtain comfort that the Conditional Listing will be secured;
(x) "Preliminary Prospectus" means the preliminary offering prospectus
filed with the Exchange and with the Commissions for the purpose of
qualifying the distribution of the Qualified Securities in the
Qualifying Jurisdictions;
(y) "Prospectuses" means the Preliminary Prospectus and the Final
Prospectus;
(z) "Purchaser" means a person who subscribes for and purchases some of
the Shares from the Offering;
(aa) "Qualified Securities" means the Shares, the Corporate Finance Fee
Shares, the Agent's Warrant and the Agent's Warrant Shares;
(bb) "Qualifying Jurisdictions" means the Provinces of British Columbia,
Alberta and such offshore jurisdictions as the Agent and the Company
may agree upon;
(cc) "Regulations" means the securities rules or regulations proclaimed
under the Acts and "Regulation" means the securities rules or
regulations proclaimed under a specified Act;
(dd) "Regulatory Authorities" means the Commissions and the Exchange; and
(ee) "Shares" means the 1,725,000 shares of the Company being sold in the
offering;
(ff) "Time of Closing" means at 10:00 a.m. (Vancouver Time) on the Closing
Date.
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2. NATURE OF THE TRANSACTION
2.1 The Company appoints the Agent as its sole and exclusive agent for the
Offering, and the Agent hereby agrees to act as the exclusive agent of the
Company to use its reasonable best efforts to offer and sell the Shares in
the Qualifying Jurisdictions to potential Purchasers resident in the
Qualifying Jurisdictions.
2.2 If in the opinion of the Agent it is necessary, the Agent will form, manage
and participate in a group of registered securities dealers (the "Selling
Group") to offer and sell the Shares as provided for hereunder. In the
event that a Selling Group is formed, the Agent will manage the Selling
Group to the extent customary in the securities industry in Canada and
require each member of the Selling Group to conduct the Offering on the
terms and conditions set forth in this Agreement. Each member of the
Selling Group shall be appropriately registered under the Applicable
Securities Laws of the Qualifying Jurisdictions in which such member of the
Selling Group offers and sells the Shares so as to permit it to lawfully
offer and sell the Shares in such jurisdiction.
2.3 The Company covenants and agrees with the Agent that it will:
(a) prepare and file with the Commissions under the Applicable Securities
Laws of the Qualifying Jurisdictions, a Preliminary Prospectus,
together with the required supporting documents, to permit the Agent
to solicit expressions of interest for the Offering;
(b) use its reasonable best efforts to address, as expeditiously as
possible, the comments made in respect of the Preliminary Prospectus
by the Commissions;
(c) prepare and file, as soon as practicable after all of the comments
referred to in subparagraph (b) above have been addressed, under the
Applicable Securities Laws of the Qualifying Jurisdictions, the Final
Prospectus, together with the required supporting documents, and use
its reasonable best efforts to obtain the Final Receipt on or before
December 31, 1999 or such other date as agreed to by the Company and
the Agents, and take all other steps and proceedings that may be
necessary in order to qualify, under the Applicable Securities Laws of
the Qualifying Jurisdictions, the distribution of the Qualified
Securities;
(d) prior to the Effective Date, apply to the Exchange for a conditional
listing of its common shares, and prepare and file with the Exchange,
using its reasonable best efforts to do so, a Preliminary Listing
Submission, together with the required supporting documents, to obtain
comfort that the Conditional Listing will be secured;
(e) use its reasonable best efforts to address, as expeditiously as
possible, the comments made in respect of the Preliminary Listing
Submission by the Exchange; and
(f) prepare and file with the Exchange, as soon as practicable after the
Final Receipt for the Final Prospectus has been issued, a Final
Listing Submission, together with the required supporting documents,
to secure, using its reasonable efforts to do so on or before January
15, 2000, the conditional listing and, subsequently, and within the
time required as disclosed in the Final Prospectus, the Full Listing.
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2.4 Following the Effective Date and after consulting with the Exchange, the
Company and the Agent will set the Offering Day.
2.5 The Offering Day will be on or before the earlier of the day which is:
(a) 90 days after the Effective Date; and
(b) 12 months after the date of issue by the Commission of the preliminary
receipt for the Prospectus.
2.6 The Offering will be made through the facilities of and in accordance with
the rules and policies of the Exchange.
2.7 After the Offering has been completed, the Company and the Agent will file
any documents required by the Exchange in order to remove the conditional
listing and to list and commence trading of the common shares of the Issuer
on the Exchange.
2.8 The Agent will advise the Company and its counsel in writing when the
distribution under the Prospectus is complete.
2.9 The Agent will purchase all of the Shares for which subscriptions have not
been received by the Offering Day. In consideration for the Agent's
guarantee to purchase unsubscribed Shares, the Company will issue the
Agent's Warrant to the Agent, or to members of the Agent's Selling Group as
directed by the Agent. The Agent's Warrant will be exercisable for a period
of one year from the Listing Date at a price equal to the Offering Price.
The form of Agent's Warrant will be provided to the Company by the Agent
and the terms and conditions contained therein will include, among other
things, provisions for the appropriate adjustment in the class, number and
price of the shares to be issued under the Agent's Warrant upon the
occurrence of certain events, including any subdivision, consolidation or
reclassification of the shares, the payment of stock dividends or the
amalgamation of the Company.
2.10 The Company will use its best efforts to assist the Agent in placing the
Shares, and in this regard will provide the Agent with a "President's List"
of all persons, whether brokerage firms, institutional investors or others
who have expressed interest in participating in any financing to be carried
out by the Company, and to direct to the Agent any and all unsolicited
inquiries regarding this Offering. It is agreed that the Agent will have
the right but not the obligation to place the President's List.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 The Company represents and warrants to the Agent, and acknowledges that the
Agent will be relying upon such representations and warranties in entering
into this Agreement, that:
(a) the Company is a valid and subsisting corporation duly incorporated
and in good standing under the laws of the jurisdictions in which it
is incorporated, continued, or amalgamated;
(b) the Company has no subsidiaries;
(c) the authorized and issued share capital of the Company is, and, except
as
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provided for herein, will be immediately prior to the Time of Closing,
as set forth on Schedule "A" to this Agreement;
(d) the issued shares of the Company (the "Issued Shares") are validly
issued and outstanding fully paid and non-assessable common shares of
the Company registered in the names of, and, to the best of its
knowledge, beneficially owned by, those individuals (the
"Shareholders") as provided for on Schedule "B" to this Agreement,
free and clear of all voting restrictions, trade restrictions, and, to
the best of its knowledge, liens, charges or encumbrances of any kind
whatsoever;
(e) to the best of its knowledge and except as may be disclosed in the
Prospectuses, there are no, nor will there be immediately prior to the
Time of Closing, options, agreements or rights of any kind whatsoever
to acquire all or any part of the Company's Issued Shares or any
interest in them from the Shareholders or any one of them;
(f) except for the Issued Shares, the securities referred to herein and
the securities and agreements described on Schedule "A" hereto, if
any, there are no, nor will there be immediately prior to the Time of
Closing, documents, instruments or other writings of any kind
whatsoever which constitute a "security" (as that term is defined in
the British Columbia Act) of the Company, or agreements of any kind
whatsoever to issue a security;
(g) upon their issuance, the Shares and the Corporate Finance Fee Shares
will be validly issued and outstanding fully paid and non-assessable
common shares of the Company registered in the names of the Purchasers
thereof or the Agent, as the case may be, free and clear of all voting
restrictions, trade restrictions and, except as may be created by the
Purchasers thereof, liens, charges or encumbrances of any kind
whatsoever;
(h) upon its issuance, the Agent's Warrant will be validly created and
issued by the Company and the certificate representing the Agent's
Warrant Shares will, upon delivery by the Company to the Agent,
constitute a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms;
(i) upon the exercise of the Agent's Warrant in accordance with its terms,
the Agent's Warrant Shares issued upon such exercise will be validly
issued and outstanding fully paid and non-assessable common shares of
the Issuer free and clear of all voting restrictions, trade
restrictions and, except as may be created by the purchasers thereof,
any liens, charges or encumbrances of any kind whatsoever;
(j) all of the material transactions of the Company have been promptly and
properly recorded or filed in or with its minute book or records and
the Company's minute book contain all records of the meetings and
proceedings of its directors, shareholders and other committees, if
any, since its incorporation;
(k) the Company holds all material licences and permits required for
carrying on its business in the manner in which such business has been
carried on and has the corporate power and capacity to own the assets
owned by it and, to the best of the Company's knowledge, to carry on
the business carried on by it and is duly qualified to carry on
business in all jurisdictions in which it carries on business;
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(l) the Company has good and marketable title to its assets free and clear
of all material liens, charges and encumbrances of any kind whatsoever
save and except as will be disclosed in the Prospectuses;
(m) the Company has no trademarks or patents save and except as will be
disclosed in the Prospectuses, such disclosure to include all material
particulars in respect of their registrations and status;
(n) the Company will ensure that any contractor performing work on its
behalf carries insurance for insurable risks and in amounts which are
reasonable with regard to the nature of the work being carried on the
Company's behalf, including but not limited to worker's compensation
insurance and reasonable insurance with respect to public liability,
and that all of the policies in respect of such insurance coverage are
in good standing in all respects and are not in default in any
respects;
(o) the financial statements of the Company which will form part of the
Preliminary Prospectus accurately reflect the financial position of
the Company as at the date of the financial statements and there have
been no adverse material changes in the financial position of the
Company since that date, except as fully and plainly disclosed in the
Prospectus, and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis;
(p) the books and records of the Company disclose all of its material
financial transactions and such transactions have been fairly and
accurately recorded;
(q) except as disclosed in its financial statements or as will be
disclosed in the Prospectuses:
(i) the Company is not indebted to any of its directors, officers or
promoters (collectively the "Principals"), other than in respect
of accrued but unpaid compensation, or to any of the
Shareholders (other than the Principals);
(ii) none of the Principals or Shareholders is indebted or under
obligation to the Company on any account whatsoever; and
(iii) the Company has not guaranteed or agreed to guarantee any debt,
liability or other obligation of any kind whatsoever of any
person, firm or corporation of any kind;
(r) there are no material liabilities of the Company, whether direct,
indirect, absolute, contingent or otherwise which are not disclosed or
reflected in its financial statements except those incurred in the
ordinary course of its business since July 31, 1999;
(s) since July 31, 1999, there has not been any adverse material change of
any kind whatsoever in the financial position or condition of the
Company, or any damage, loss or other change of any kind whatsoever in
circumstances materially affecting its business or assets or the right
or capacity to carry on its business, such business having been
carried on in the ordinary course;
(t) the directors, officers and key employees of the Company and their
compensation
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arrangements with the Company, whether as directors, officers or
employees of, or as independent contractors or consultants to, the
Company will, if material, be disclosed in the Prospectuses, and,
except as disclosed therein, there will be no pensions, profit
sharing, group insurance or similar plans or other deferred
compensation plans of any kind whatsoever affecting the Company;
(u) all of the material contracts and agreements (collectively the
"Material Contracts") of the Company will be disclosed in the
Prospectuses, such disclosure to provide all material particulars
thereof including the status of those Material Contracts;
(v) all tax returns, reports, elections, remittances and payments of the
Company required by law to have been filed or made, have been filed or
made (as the case may be) and are substantially true, complete and
correct and all taxes of the Company have been paid or they have been
accrued in the Financial Statements;
(w) the Company:
(i) has been assessed for all applicable taxes and has received all
appropriate refunds;
(ii) has made adequate provision for taxes payable for the current
period for which tax returns are not yet required to be filed;
and
(iii) is not aware of any contingent tax liability of the Company;
(x) to the best of its knowledge, the Company has not:
(i) made any election under Section 85 of the Income Tax Act
(Canada) (the "Tax Act") with respect to the acquisition or
disposition of any property except as has been disclosed by
the Company to the Agent; or
(ii) acquired any property from a non-arm's length person with whom
it was not dealing with at arm's length for proceeds greater
than the fair market value thereof, or disposed of anything to a
non-arm's length person for proceeds less than the fair market
value thereof;
(y) to the best of its knowledge, there are no actions, suits, judgments,
investigations or proceedings of any kind whatsoever outstanding,
pending or threatened against or affecting the Company or its
Principals, at law or in equity or before or by any Federal,
Provincial, Municipal or other governmental department, commission,
board, bureau or agency of any kind whatsoever and, to the best of its
knowledge, there is no basis therefor;
(z) to the best of its knowledge, the Company and its Principals are not
in breach of any law, ordinance, statute, regulation, by-law, order or
decree of any kind whatsoever;
(aa) the Company has good and sufficient right and authority to enter into
this Agreement and complete its transactions contemplated under this
Agreement on the terms and conditions set forth herein; and
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(bb) to the best of its knowledge, the execution and delivery of this
Agreement, the performance of its obligations under this Agreement and
the completion of its transactions contemplated under this Agreement
will not conflict with, or result in the breach of or the acceleration
of any indebtedness under, or constitute default under, the constating
documents of the Company or any indenture, mortgage, agreement, lease,
licence or other instrument of any kind whatsoever to which the
Company is a party or by which it is bound, or any judgment or order
of any kind whatsoever of any Court or administrative body of any kind
whatsoever by which it is bound.
3.2 The representations and warranties of the Company contained in this
Agreement shall be true at the Time of Closing as though they were made at
the Time of Closing and they shall survive the completion of the
transactions contemplated under this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE AGENT
4.1 The Agent represents and warrants to the Company, and acknowledges that the
Company will be relying upon such representations and warranties in
entering into this Agreement, that:
(a) the Agent holds all licences and permits that are required for
carrying on its business in the manner in which such business has been
carried on and the Agent has the corporate power and capacity to carry
on the business carried on by it and the Agent is duly qualified to
carry on business in the Qualifying Jurisdictions;
(b) the Agent has good and sufficient right and authority to enter into
this Agreement and complete its transactions contemplated under this
Agreement on the terms and conditions set forth herein;
(c) the Agent is, and will remain so until the completion of the
Offering, appropriately registered under Applicable Securities Laws
so as to permit it to lawfully fulfil its obligations hereunder and
the Agent is, and will remain so until the completion of the
Offering, a member in good standing of the Exchange; and
(d) the Agent will fulfil all legal requirements (including, without
limitation, compliance with Applicable Securities Laws) to be
fulfilled by it to act as the Company's agent in undertaking the
Offering in the Qualifying Jurisdictions.
4.2 The representations and warranties of the Agent contained in this
Agreement shall be true at the Time of Closing as though they were made at
the Time of Closing and they shall survive the completion of the
transactions contemplated under this Agreement.
5. ADDITIONAL COVENANTS OF THE COMPANY
5.1 The Company covenants and agrees with the Agent that it will:
(a) with respect to the filing of the Prospectuses as contemplated herein,
fulfil all legal requirements to be fulfilled by the Company in
connection therewith, in each case in form and substance satisfactory
to the Agent as evidenced by the Agent's execution of the certificates
attached thereto;
(b) prior to the filing of each of the Prospectuses, allow the Agent to
review each
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Prospectus and conduct all due diligence which the Agent may
reasonably require in order to fulfil its obligations as a statutory
underwriter and in order to enable it to execute, acting prudently and
responsibly, the certificates required to be executed by the Agent in
such documents;
(c) during the period prior to the completion of the Offering, promptly
notify the Agent in writing of any material change (actual or
proposed) in the business, affairs, operations, assets or liabilities
(contingent or otherwise) or capital of the Company, or of any change
which is of such a nature as to result in a misrepresentation in
either of the Prospectuses or any amendment thereto and:
(i) the Company will, within any applicable time limitation, comply
with all filing and other requirements under the Applicable
Securities Laws of the Qualifying Jurisdictions, and with the
rules of the Exchange, applicable to the Company as a result of
any such change; and
(ii) notwithstanding the foregoing, the Company will not file any
amendment to the Prospectuses or any other material supplementary
to the Prospectuses (all such amendments and material being the
"Supplementary Material") without first obtaining the approval of
the Agent as to the form and content thereof, which approval will
not be unreasonably withheld and which will be provided in a
timely basis;
and, in addition to the foregoing, the Company will, in good faith,
discuss with the Agent any change in circumstances (actual or
proposed) which is of such a nature that there is or ought to be
consideration given by the Company as to whether notice in writing of
such change need be given to the Agent pursuant to this subparagraph.
(d) deliver to the Agent duly executed copies of any Supplementary
Material required to be filed by the Company in accordance with
subparagraph (c) above and if any financial or accounting information
is contained in any of the Supplementary Material, an additional
Comfort Letter to that required by subparagraph (h)(i) below;
(e) from time to time and without charge to the Agent, deliver to the
Agent as many copies of each of the Prospectuses and any amendments
thereto, if any, as the Agent may reasonably request, and such
delivery will constitute the Company's consent to the Agent's use of
the documents in connection with the Offering;
(f) by the act of having delivered each of the Prospectuses and any
amendments thereto to the Agent, have represented and warranted to the
Agent that all material information and statements (except information
and statements relating solely to the Agent) contained in such
documents, at the respective dates of initial delivery thereof, comply
with the Applicable Securities Laws of the Qualifying Jurisdictions
and are true and correct in all material respects, do not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the
circumstances in which they were made, not misleading, and that such
documents, at such dates, contain no misrepresentation and together
constitute full, true and plain disclosure of all material facts
relating to the Company as required by the Applicable Securities Laws
of the Qualifying Jurisdictions;
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(g) with respect to the filing of the Listing Submissions as contemplated
herein, fulfil all of the requirements of the Exchange required to be
fulfilled by the Company in connection therewith;
(h) deliver to the Agent:
(i) at the time of execution of the Final Prospectus by the Agent, a
comfort letter (the "Comfort Letter") of the Company's auditors
addressed to the Agent and to the directors of the Company and
dated as of the date of the Final Prospectus, in form and content
acceptable to the Agent, acting reasonably, relating to the
verification of the financial information and accounting data
contained in the Final Prospectus and to such other matters as
the Agent may reasonably require, which Comfort Letter will be
based upon a review of the auditors having a cut-off date not
more than two business days prior to the date of the Final
Prospectus and shall be in addition to any comfort letter which
must be filed with the Regulatory Authorities;
(ii) at the time of the execution of the Final Prospectus by the Agent
and, if requested by the Agent, at the Time of Closing as well,
such legal opinions (the "Legal Opinions") of the Company's
various legal counsel, addressed to the Agent and its legal
counsel and dated as of the date in question, in form and content
acceptable to the Agent, acting reasonably relating to the Final
Prospectus and the Final Listing Submission, the trade and
distribution of the Qualified Securities and to such other
matters as the Agent may reasonably require;
(iii) at the time of the execution of the Final Prospectus by the
Agent and, if requested by the Agent, at the Time of Closing as
well, a certificate (the "Officers' Certificate") of the Company,
addressed to the Agent and its legal counsel and dated as of the
date in question, in form and content acceptable to the Agent,
acting reasonably, relating to the Final Prospectus and the Final
Listing Submission, the trade and distribution of the Qualified
Securities and to such other matters as the Agent may reasonably
require; and
(iv) at the time of the execution of the Final Prospectus by the Agent
and, if requested by the Agent, at the Time of Closing as well,
such other materials (the "Closing Materials") as the Agent may
reasonably require and as are customary in a transaction of this
nature, and the Closing Materials will be addressed to the Agent
and to such parties as may be reasonably directed by the Agent
and will be dated as of the date in question or such other date
as the Agent may reasonably require; and
(i) from and including the date of this Agreement through to and including
the completion of the Offering, do all such acts and things reasonably
necessary to ensure that all of the representations and warranties of
the Company contained in this Agreement or any certificates or
documents delivered by it pursuant to this Agreement remain materially
true and correct and not do any such act or thing that would render
any representation or warranty of the Company contained in this
Agreement or any certificates or documents delivered by it to this
Agreement materially untrue or incorrect.
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6. ADDITIONAL COVENANTS OF THE AGENT
6.1 The Agent covenants and agrees with the Company that it will:
(a) upon being satisfied, acting reasonably, that each of the Prospectuses
and any amendments thereto is in a form satisfactory for filing with
the Exchange and the Commissions execute each of the Prospectuses and
any amendments thereto, as the case may be, presented to the Agent for
execution, and the Agent will use its reasonable best efforts to
assist the Company in obtaining the requisite approvals of the
Regulatory Authorities in connection with the preparation and filing
of such documents;
(b) use its reasonable best efforts to complete the distribution of the
Shares as soon as reasonably practicable after the issuance of the
Final Receipts; and
(c) within five business days of the Offering Day and, in any event, prior
to the Time of Closing, provide to the Company and to the Exchange a
letter confirming that the Exchange's initial distribution
requirements have been met.
7. CONDITIONS PRECEDENT
7.1 The following are conditions to the obligations of the Agent to complete
the transactions contemplated in this Agreement:
(a) all actions required to be taken by or on behalf of the Company,
including the passing of all requisite resolutions of directors of the
Company, will have been taken so as to approve the Prospectuses and to
validly allot, issue, grant, sell and deliver, as applicable, the
Qualified Securities and, if applicable, any common shares that may be
issued on the exercise of any of the Qualified Securities, and to such
other matters as the Agent may reasonably require;
(b) if required by the Regulatory Authorities or by the Agent, certain of
the Company's shareholders (including founders, management and certain
investors) will have entered into any pooling or escrow agreements
required by the Regulatory Authorities or by the Agent in connection
with the transactions contemplated herein;
(c) the Company will have made all necessary filings with and obtained all
necessary approvals, consents and acceptances of the Regulatory
Authorities for the Prospectuses, the Listing Submissions and to
permit the Company to complete its obligations hereunder;
(d) the Conditional Listing will have been secured;
(e) the Company will have, within the required time, delivered the
required Comfort Letters, Legal Opinions, Officers' Certificates and
other Closing Materials as the Agent may reasonably require;
(f) no order ceasing or suspending trading in any securities of the
Company, or ceasing or suspending trading by the directors, officers
or promoters of the Company, or any one of them, or prohibiting the
trade or distribution of any of the securities referred to herein will
have been issued and no proceedings for
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such purpose, to the knowledge of the Company, will be pending or
threatened;
(g) the Company will have, as of the time of Closing, complied with all of
its covenants and agreements contained in this Agreement;
(h) the representations and warranties of the Company contained in this
Agreement will be true and correct as of the Time of Closing as if
such representations and warranties had been made as of the Time of
Closing; and
(i) no material adverse changes having occurred to the Company, its
principals, business or offices prior to Closing.
8. AGENT'S FEES AND EXPENSES
8.1 In consideration of the services to be rendered by the Agent to the Company
hereunder, the Company agrees to pay the Agent, at the time and in the
manner specified herein, the Agent's Commission, the Corporate Finance Fee,
the Agent's Warrant and the Administrative Fee.
8.2 The Company will pay all of the Agent's Expenses in relation to the
transactions contemplated herein including, without limitation, the
reasonable fees and expenses of the Agent's solicitors, which barring any
extraordinary circumstances, will not exceed $35,000. The Agent will
instruct its solicitors to prepare monthly cumulative statements of
expenses, and will provide them to the Company. Any potential fees and
expenses of the Agent's solicitors in excess of $35,000 will be discussed
by the Company and the Agent before such fees and expenses are incurred.
8.3 The Company will pay the Agent's Expenses and the Administrative Fee even
if the transactions contemplated herein are not completed or this Agreement
is terminated, unless the failure of completion or the termination is the
result of the breach of this Agreement by the Agent.
8.4 The Agent may, from time to time, render, or cause to be rendered, to the
Company, accounts for the Agent's Expenses and the Company will pay those
accounts on or before the dates set out therein.
8.5 The Corporate Finance Fee Shares to be issued in payment of the Corporate
Finance Fee will be validly created, issued and outstanding common shares
of the Company registered in the name of the Agent (or as the Agent may so
direct), free and clear of all voting restrictions, trade restrictions and,
except as may be created by the holders thereof, liens, charges or
encumbrances of any kind whatsoever. The Company will qualify the
distribution of the Corporate Finance Fee Shares under the Final Prospectus
to the extent permitted by the Regulatory Authorities.
8.6 The fees and expenses set out in this Part 8 of the Agreement are in
addition to the sponsorship fee of US $10,000 plus G.S.T. and related
expenses which are to be paid by the Company to the Agent pursuant to a
Sponsorship Agreement dated August 9, 1999 between the Company and the
Agent (the "Sponsorship Fee").
9. CLOSING
9.1 In this Section:
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(a) "Certificates" means the certificates representing the Shares in the
names and denominations reasonably requested by the Agent and the
certificates representing the Corporate Finance Fee Shares and the
Agent's Warrant;
(b) "Proceeds" means the gross proceeds of the Offering, less:
(i) the Agent's Commission;
(ii) the Administrative Fee;
(iii) any unpaid portion of the Agent's Expenses;
(iv) any amount which has been attached by garnishing order or other
form of attachment; and
(v) any amount already received by the Company.
9.2 The Company will, on the Closing Date, deliver through its registrar and
transfer agent, to the Agent the Certificates against payment of the
Proceeds.
9.3 If the Company has satisfied all of its obligations under this Agreement,
the Agent will, on the Closing Date, pay the Proceeds to the Company
through its registrar and transfer agent, against delivery of the
Certificates.
9.4 The obligation of the Agent to pay the Proceeds to the Company shall be
subject to the following conditions precedent:
(a) the Company shall have performed or complied with each covenant and
obligation herein provided on its part to be performed or complied
with;
(b) each of the representations and warranties of the Company herein shall
continue to be true, and the Officer's Certificate shall contain
certification to that effect;
(c) the Company shall have made, within the time limited, each of the
deliveries provided for herein; and
(d) the Company shall have, to the satisfaction of the Agent's counsel,
taken or caused to be taken all steps and proceedings which may be
required under the Act to qualify the distribution of the Shares to
the public in British Columbia through registrants who have complied
with the provision of the Act including the filing and obtaining of
receipts for the Prospectus.
9.5 The closing of the transactions contemplated under this Agreement (the
"Closing") will be completed at the offices of Xxxxxxx & Xxxxxx, Suite 2100
- 1111 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, X.X., at the Time of Closing on the
Closing Date.
9.6 The Company acknowledges that the Agent is not the agent of the Purchasers
and that by agreeing to serve as the Company's agents for the purpose of
filing the Prospectuses it in no way assumes any liability to the
Purchasers.
9.7 Nothing in this Agreement shall prevent the parties from agreeing to amend
any of the terms or conditions of this Part 9 of the Agreement should they
mutually agree in writing to do so.
-15-
10. INDEMNITY
10.1 The Company agrees to indemnify and hold harmless the Agent and each of
the Agent's directors, officers, employees, agents and advisors and its
subsidiaries and each of their respective directors, officers, employees,
agents and advisors (collectively the "Indemnified Persons") against all
losses, claims, costs, damages or liabilities (collectively the "Losses")
whether joint or several, (including the aggregate amount paid in
reasonable settlement of any such actions, suits, proceedings or claims),
and the reasonable fees and expenses of counsel that may be incurred in
advising with respect to and/or defending any claim to which any
Indemnified Person may become subject or otherwise involved in any
capacity under any statute or common law or otherwise insofar as such
Losses arise out of or are based, directly or indirectly, upon the
performance of services in connection or relating to the services provided
by the Agent hereunder, except to the extent that such Losses result from
the Agent's gross negligence or bad faith in performing such services. The
Losses include but are not limited to Losses caused by or arising directly
or indirectly by reasons of:
(a) an untrue statement (or a statement alleged to be untrue) contained
in the Prospectuses, the Listing Submissions, any amendments
thereto, or other written or oral representation made by the Company
to a Purchaser or potential Purchaser of the Shares or by reason of
the omission to state any fact necessary to make statements not
misleading (except for information and statements referring solely
to the Agent);
(b) the failure by the Company to obtain the requisite approvals,
consents and acceptances of the Regulatory Authorities for the
Prospectuses, Listing Submissions and the Offering;
(c) a material breach by the Company of any of the terms of this
Agreement;
(d) any representation or warranty made by the Company herein being
materially untrue or ceasing, in a material way, to be true prior to
the Time of Closing;
(e) any order made by any regulatory authority that trading in or
distribution of any of the Company's securities is to cease or be
suspended, or that trading by the directors, officers or promoters
of the Company, or any one of them, shall cease or be suspended,
including an order prohibiting the trade or distribution of any of
the securities referred to herein;
(f) the failure or inability of the Company to allot, issue and deliver
any or all of the certificates representing the Shares, the
Corporate Finance Fee Shares, the Agent's Warrant and the Agent's
Warrant Shares as the Agent may reasonably require for the
completion of the transactions referred to herein; and
(g) a determination made by any competent authority setting aside the
trade or distribution of any of the securities referred to herein.
10.2 If any matter contemplated by paragraph 10.1 is asserted in any action or
claim against any one or more of the Indemnified Persons in respect of
which matter indemnity may be sought against the Company pursuant to this
Agreement, or any potential action or claim comes to their knowledge, the
Indemnified Person will notify the Company as soon as possible in writing
of the nature of the action or claim and the Company will be
-16-
entitled to (but not required to) assume the defence of that action or
claim, including the employment of legal counsel (satisfactory to the
Indemnified Person, acting reasonably) and assume payment of the expenses
in relation thereto. Each Indemnified Person will have the right to employ
separate legal counsel in any action or claim and to participate in the
defence thereof, but the fees and expenses of that counsel will be at the
expense of the Indemnified Person and not of the Company unless:
(a) the employment of that legal counsel has been specifically
authorized in writing by the Company in connection with the defence
of the action or claim;
(b) the Company has not, within five business days after having received
written notice of the action or claim from the Indemnified Person,
employed legal counsel to have conduct of the defence of the action
or claim; or
(c) the named parties to any action or claim (including any added, third
or impleaded parties) include both the Indemnified Person and the
Company, and such Indemnified Person has been advised by counsel
that there may be defences available to the Indemnified Person which
are different from or additional to those available to the Company
(in which case the Company will not have the right to assume or
direct the defence of action or claim on behalf of the Indemnified
Person).
10.3 Notwithstanding the foregoing, no settlement may be made by the
Indemnified Person concerned without the prior written consent of the
Company which consent will not be unreasonably withheld.
10.4 The Company will not make any claim for, and hereby irrevocably waives any
right of statute or common law to, contribution against the Agent or any
of the Agent's directors, officers, employees, agents or solicitors in the
event of any action or claim brought against the Company as a result of
any misrepresentation or alleged misrepresentation other than a
misrepresentation or alleged misrepresentation relating solely to the
Agent.
10.5 The right to indemnity herein provided will be in addition to and not in
derogation of any other right to indemnity or contribution which any
Indemnified Person may have by statute or otherwise at law.
10.6 The indemnity provided by this Agreement will remain in full force and
effect until all possible liability of the Agent arising out of the
transactions contemplated by this Agreement is extinguished by the
operation of law and will not be limited to or affected by any other
indemnity obtained by the Agent from any other person.
-17-
11. TERMINATION OF AGREEMENT
11.1 In addition to any other remedies which may be available to the Agent,
this Agreement may be terminated by the Agent at any time up to the Time
of Closing in the event that:
(a) an adverse material change in the affairs of the Company occurs or
is announced by the Company;
(b) there should develop, occur, or come into effect any catastrophe of
national or international consequences or accident, governmental
law, or regulation or other occurrence of any nature which, in the
opinion of the Agent, seriously affect the financial markets or the
business of the Company or any subsidiary of the Company or the
ability of the Agent to perform its obligations under this
Agreement;
(c) the Shares cannot, in the opinion of the Agent, be profitably sold
due to the state of the financial markets generally;
(d) any order to cease or suspend trading in any of the securities of
the Company, including an order which would prohibit the trade or
distribution of any of the securities referred to herein, or an
order to cease or suspend trading by a director, officer or promoter
of the Company, or any one of them, is issued by any competent
regulatory authority;
(e) the Company is in material breach of any term of this Agreement;
(f) the Agent determines that any of the representations or warranties
made by the Company in this Agreement are materially false or have
become materially false;
(g) an inquiry or investigation (whether formal or informal) in relation
to the Company, or the Company's directors, officers or promoters,
is commenced or threatened by an officer or official of any
competent authority; or
(h) the Final Receipt for the Final Prospectus has not been obtained on
or before December 31, 1999, the Conditional Listing has not been
obtained on or before January 15, 2000, or the Full Listing has not
been obtained within the time required by the Regulatory Authorities
as disclosed in the Final Prospectus.
The right of the Agent to terminate this Agreement is in addition to
such other remedies a Purchaser may have in respect of any default,
misrepresentation, act or failure to act of the Company in respect
of any of the transactions contemplated by this Agreement.
11.2 Any such termination shall be effected by notice in writing to the Company
at any time prior to the Time of Closing. In the event that the Agent
terminates this Agreement after having been paid the Agent's Commission,
it will repay the Agent's Commission (but not the Agent's Expenses) to the
Company forthwith.
-18-
11.3 The Company may cancel this Agreement at any time prior to the Offering
Date upon payment to the Agent of Can. $50,000 plus payment in full of the
Administrative Fee, the Sponsorship Fee and any unpaid Agent's Expenses.
12. GENERAL
12.1 Time and each of the terms and conditions of this Agreement shall be of
the essence of this Agreement and any waiver by the parties of this
paragraph 12.1 or any failure by them to exercise any of their rights
under this Agreement shall be limited to the particular instance and shall
not extend to any other instance or matter in this Agreement or otherwise
affect any of their rights or remedies under this Agreement.
12.2 The Schedules to this Agreement incorporated by reference and the recitals
to this Agreement constitute a part of this Agreement.
12.3 This Agreement constitutes the entire Agreement between the parties hereto
in respect of the matters referred to herein and there are no
representations, warranties, covenants or agreements, expressed or
implied, collateral hereto other than as expressly set forth or referred
to herein.
12.4 The headings in this Agreement are for reference only and do not
constitute terms of the Agreement.
12.5 The provisions contained in this Agreement which, by their terms, require
performance by a party to this Agreement subsequent to the Closing Date of
this Agreement shall survive the Closing Date of this Agreement.
12.6 No alteration, amendment, modification or interpretation of this Agreement
or any provision of this Agreement shall be valid and binding upon the
parties hereto unless such alteration, amendment, modification or
interpretation is in written form executed by the parties hereto.
12.7 Whenever the singular or masculine is used in this Agreement the same
shall be deemed to include the plural or the feminine or the body
corporate as the context may require.
12.8 The parties hereto shall execute and deliver all such further documents
and instruments and do all such acts and things as any party may
reasonably require in order to carry out the full intent and meaning of
this Agreement including, without limitation, any such document and
instruments or acts and things as are required to effect the Offering.
12.9 This Agreement may not be assigned by any party hereto without the prior
written consent of all of the parties hereto.
12.10 This Agreement shall be subject to, governed by, and construed in
accordance with the laws of the Province of British Columbia and the laws
of Canada applicable therein.
-19-
12.11 This Agreement may be signed by the parties in as many counterparts as may
be deemed necessary and by facsimile transmission, each of which so signed
shall be deemed to be an original, and all such counterparts together
shall constitute one and the same instrument.
12.12 Any notice to be given hereunder will be in writing and may be given by
telecopier or by hand delivery and will, in the case of notice to the
Company, be addressed and telecopied or delivered to:
e-Xact Transactions Ltd.
0000 - 000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
ATTENTION: Xxxxx Xxxxxxx, President
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx & Xxxxxx
2100 - 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
ATTENTION: Xxxxx Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
and in the case of the Agent, be addressed and telecopied or delivered
to:
Canaccord Capital Corporation
Stock Exchange Tower
2200 - 000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
ATTENTION: Xxxxx X'Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
-20-
with a copy to:
Xxxxxxxx, Xxxxxxx
Xxxxx 0000, Xxxx Xxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
ATTENTION: Xxxxxxx XxXxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
The Company and the Agent may change their respective addresses for notice
by notice given in the manner referred to above.
If the foregoing is in accordance with your understanding and agreed to by you,
please signify your acceptance on the accompanying counterpart of this letter
and return same to the Agent whereupon this letter as so accepted will
constitute an agreement between the Company and the Agent enforceable in
accordance with its terms.
Yours truly,
CANACCORD CAPITAL CORPORATION
Per: /s/ Not Legible
-------------------------------------
Authorized Signatory
The foregoing is accepted and agreed to on the 14th day of October, 1999,
effective as of the date appearing on the first page of this Agreement.
Yours truly,
E-XACT TRANSACTIONS LTD.
Per: /s/ Xxx Xxxxxxxxx
--------------------------------------
Authorized Signatory
===============================================================================
SCHEDULE "A" TO THE AGENCY AGREEMENT
MADE BETWEEN E-XACT TRANSACTIONS LTD.
AND CANACCORD CAPITAL CORPORATION
FULLY DILUTED SHARE CAPITAL
===============================================================================
===============================================================================
SCHEDULE "B" TO THE AGENCY AGREEMENT
MADE BETWEEN E-XACT TRANSACTIONS LTD.
AND CANACCORD CAPITAL CORPORATION
SHAREHOLDERS' LIST
===============================================================================
