Exhibit 3.1
Xxxxxxx Bros. Auctioneers Incorporated
(amalgamated under the Canada Business Corporation Act)
2,173,913 Common Shares
UNDERWRITING AGREEMENT
Dated: November 8, 2005
TABLE OF CONTENTS
Section 1. Representations and Warranties................................... 3
(a) Representations and Warranties by the Company........................ 3
(i) Compliance with Registration Requirements.................... 3
(ii) Incorporated Documents....................................... 4
(iii) Independent Accountants...................................... 4
(iv) Financial Statements......................................... 4
(v) No Material Adverse Change in Business....................... 5
(vi) Good Standing of the Company................................. 5
(vii) Capitalization............................................... 5
(viii) Authorization of Agreement................................... 6
(ix) Description of Securities.................................... 6
(x) Absence of Defaults and Conflicts............................ 6
(xi) Absence of Labor Dispute..................................... 7
(xii) Absence of Proceedings....................................... 7
(xiii) Possession of Intellectual Property.......................... 7
(xiv) Absence of Further Requirements.............................. 8
(xv) Possession of Licenses and Permits........................... 8
(xvi) Title to Property............................................ 8
(xvii) Investment Company Act....................................... 9
(xviii) Environmental Laws........................................... 9
(xix) No Stabilization or Manipulation............................. 9
(xx) Registration Rights.......................................... 9
(xxi) Listing...................................................... 9
(xxii) Other Reports and Information................................ 10
(xxiii) Taxes........................................................ 10
(xxiv) Insurance.................................................... 10
(xxv) Compliance with Laws......................................... 10
(xxvi) No Broker.................................................... 10
(xxvii) Non-Arm's Length Transactions................................ 10
(xxviii) Internal Controls............................................ 11
(xxix) Stamp Tax.................................................... 11
(b) Representations and Warranties by Xx. Xxxxxxx and the Selling
Shareholder....................................................... 11
(i) Accurate Disclosure.......................................... 11
(ii) Authorization of Agreements.................................. 12
(iii) Options...................................................... 12
(iv) Absence of Further Requirements.............................. 12
(v) Delivery of Securities....................................... 12
(vi) Brokers...................................................... 12
(vii) Title to Securities.......................................... 13
(viii) Absence of Tax Deficiency.................................... 13
(ix) No Material Adverse Change in Business....................... 13
(x) Distribution of Documents and Absence of Price Manipulation.. 13
i
(xi) Absence of Proceedings....................................... 13
(xii) Taxes........................................................ 14
(c) Officer's Certificates............................................... 14
Section 2. Sale and Delivery to Underwriters; Closing....................... 14
(a) Initial Securities................................................... 14
(b) Option Securities.................................................... 14
(c) Payment.............................................................. 14
(d) Denominations; Registration.......................................... 15
Section 3. Covenants........................................................ 15
(a) Covenants of the Company............................................. 15
(i) Fulfillment of Conditions.................................... 15
(ii) Compliance with Securities Regulations and Commission
Requests.................................................. 15
(iii) Filing of Amendments......................................... 16
(iv) Issuance of Press Releases................................... 17
(v) Delivery of Filed Documents.................................. 17
(vi) Delivery of Prospectuses..................................... 17
(vii) Continued Compliance with Securities Laws.................... 17
(viii) Blue Sky Qualifications...................................... 18
(ix) Rule 158..................................................... 18
(x) Absence of Price Manipulation................................ 18
(xi) Restriction on Sale of Securities............................ 18
(xii) Listing...................................................... 19
(xiii) Reporting Requirements....................................... 19
(xiv) Translation Opinions......................................... 19
(xv) Translation Opinions--Financial Statements................... 19
(xvi) Lock-Up Agreements........................................... 20
(b) Covenants of Xx. Xxxxxxx and the Selling Shareholder................. 20
(i) Restriction on Sale of Securities............................ 20
(ii) Absence of Price Manipulation................................ 20
(iii) Form W-8..................................................... 20
(iv) November Dividend............................................ 20
Section 4. Payment of Expenses.............................................. 21
(a) Expenses............................................................. 21
(b) Termination of Agreement............................................. 21
Section 5. Conditions of Underwriters' Obligations.......................... 22
(a) Effectiveness of Registration Statement.............................. 22
(b) Opinion of Canadian Counsel to the Company, Xx. Xxxxxxx and the
Selling Shareholder............................................... 22
(c) Opinion of U.S. Counsel to the Company, Xx. Xxxxxxx and the Selling
Shareholder....................................................... 22
(d) Opinion of Canadian Counsel to Underwriters.......................... 22
(e) Opinion of U.S. Counsel to Underwriters.............................. 23
(f) Certificates Relating to Dutch Subsidiary............................ 23
(g) Officers' Certificate................................................ 23
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(h) Xx. Xxxxxxx'x Certificate............................................ 23
(i) Selling Shareholder's Certificate.................................... 23
(j) Accountant's Comfort Letter.......................................... 24
(k) Bring-down Comfort Letter............................................ 24
(l) No Objection......................................................... 24
(m) Lock-up Agreements................................................... 24
(n) No Trading Suspension................................................ 24
(o) Additional Documents................................................. 24
(p) Termination of Agreement............................................. 24
Section 6. Indemnification.................................................. 25
(a) Indemnification of Underwriters, Xx. Xxxxxxx and Selling Shareholder
by Company........................................................ 25
(b) Indemnification of Underwriters and Company by Xx. Xxxxxxx and the
Selling Shareholder............................................... 26
(c) Indemnification of Xx. Xxxxxxx, the Selling Shareholder and Company
by Underwriters................................................... 26
(d) Actions Against Parties; Notification................................ 27
(e) Contribution......................................................... 28
Section 7. Representations, Warranties and Agreements to Survive Delivery... 29
Section 8. Termination of Agreement......................................... 29
(a) Termination; General................................................. 29
(b) Liabilities.......................................................... 30
Section 9. Default by One or More of the Underwriters....................... 30
Section 10. Agent for Service; Submission to Jurisdiction; Waiver of
Immunities................................................... 30
Section 11. Notices......................................................... 31
Section 12. Parties......................................................... 32
Section 13. Governing Law And Time.......................................... 32
Section 14. Counterparts.................................................... 32
Section 15. Severability.................................................... 32
Section 16. Amendment or Modification....................................... 32
Section 17. Effect of Headings.............................................. 32
SCHEDULES
SCHEDULE A List of Underwriters...................................... Sch A-1
SCHEDULE B Pricing Information....................................... Sch B-1
SCHEDULE C List of Significant Subsidiaries.......................... Sch C-1
SCHEDULE D List of Persons and Entities Subject to Lock-up........... Sch D-1
EXHIBITS
EXHIBIT A Form of Opinion of Canadian Counsel to the Company and the
Selling Shareholder.......................................... A-1
EXHIBIT B Form of Opinion of U.S. Counsel to the Company and the Selling
Shareholder.................................................. B-1
EXHIBIT C Form of Lock-up Letter.......................................... C-1
iii
Xxxxxxx Bros. Auctioneers Incorporated
(amalgamated under the Canada Business Corporations Act)
2,173,913 Common Shares
UNDERWRITING AGREEMENT
November 8, 2005
Xxxxxxx Xxxxx Ltd.
BMO Xxxxxxx Xxxxx Inc.
Scotia Capital Inc.
CIBC World Markets Inc.
Sprott Securities Inc.
Blackmont Capital Inc.
c/o Raymond Xxxxx Ltd.
2300 - 000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Ladies and Gentlemen:
Each of Xxxxxxx Bros. Auctioneers Incorporated, a company amalgamated
under the Canada Business Corporations Act (the "Company"), Xxxxx X. Xxxxxxx
("Xx. Xxxxxxx") and Globo Investments Ltd., a corporation organized under the
laws of British Columbia and controlled by Xx. Xxxxxxx (the "Selling
Shareholder"), confirm their agreement with Xxxxxxx Xxxxx Ltd. ("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 9 hereof), with respect to the
sale by the Selling Shareholder and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of Common Shares, without
par value, of the Company ("Common Shares") set forth in said Schedule A,
aggregating 2,173,913 Common Shares, and with respect to the grant by the
Selling Shareholder to the Underwriters, acting severally and not jointly, of
the option described in Section 2(b) hereof to purchase all or any part of
326,087 additional Common Shares. The aforesaid 2,173,913 Common Shares (the
"Initial Securities") to be purchased by the Underwriters and all or any part of
the 326,087 Common Shares subject to the option described in Section 2(b) hereof
(the "Option Securities") are hereinafter called, collectively, the
"Securities".
2
The Company, Xx. Xxxxxxx and the Selling Shareholder understand that
the Underwriters propose to make a public offering of the Securities in the
United States and in each of the provinces of Canada upon the terms set forth in
the U.S. Prospectus (as defined below) and the Canadian Prospectus (as defined
below) as soon as the Underwriters deem advisable after this Agreement has been
executed and delivered. The Securities will be offered in the United States and
Canada through the Underwriters either directly or through their respective U.S.
or Canadian registered broker-dealer affiliates.
The Company shall, as soon as possible on November 8, 2005, prepare
and file, in accordance with the requirements of the securities laws of each of
the Qualifying Provinces (as defined herein) (collectively, the "Canadian
Securities Laws"), with the British Columbia Securities Commission (the
"Reviewing Authority") and with the equivalent securities regulatory authorities
(together with the Reviewing Authority, the "Qualifying Authorities") in each of
the other Provinces of Canada (together with the Province of British Columbia,
the "Qualifying Provinces") a preliminary short form prospectus of the Company
in both the English language and the French language qualifying the distribution
of the Securities, including the documents incorporated therein by reference
(the "Canadian Preliminary Prospectus"), and, by no later than 5:00 p.m.,
Vancouver time, on November 8, 2005, shall obtain from the Reviewing Authority a
preliminary mutual reliance review system decision document for the Canadian
Preliminary Prospectus pursuant to National Policy 43-201 - Mutual Reliance
Review System for Prospectuses and Annual Information Forms and its related
memorandum of understanding ("NP43-201").
The Company shall use its reasonable best efforts to fulfil, to the
reasonable satisfaction of the Underwriters' counsel, all legal requirements to
be fulfilled by the Company to enable the Securities to be offered for sale and
sold to the public in each of the Qualifying Provinces by or through the
Underwriters and other registrants who comply with the Canadian Securities Laws.
The Company shall use its reasonable best efforts to fulfil all legal
requirements to enable the distribution of the Securities as soon as possible in
each Qualifying Province, but in any event not later than 5:00 p.m., Vancouver
time, on November 17, 2005 or such later date and time as may be agreed upon in
writing by the Company and the Underwriters. Such fulfilment shall include,
without limiting the generality of the foregoing, compliance with the Canadian
Securities Laws, including compliance with all requirements with respect to the
preparation and filing of a final short form prospectus of the Company in both
the English language and the French language qualifying the distribution of the
Securities, including the documents incorporated therein by reference (the
"Canadian Final Prospectus" and, together with the Canadian Preliminary
Prospectus, the "Canadian Prospectuses"), in each of the Qualifying Provinces
and the obtaining of a mutual reliance review system decision document for the
Canadian Final Prospectus pursuant to NP43-201.
The Company shall, as soon as possible and not later than 1:00 p.m.,
Vancouver time, on November 8, 2005, prepare and file with the United States
Securities and Exchange Commission (the "SEC") a registration statement on Form
F-10 covering the offer and sale of the Securities under the United States
Securities Act of 1933, as amended (the "1933 Act"), including the Canadian
Preliminary Prospectus (with such deletions therefrom and additions thereto as
are permitted or required by Form F-10 and the applicable rules and regulations
of the
3
SEC) (the "U.S. Preliminary Prospectus", and together with the Canadian
Preliminary Prospectus, the "Preliminary Prospectuses").
The Company shall use its reasonable best efforts to fulfill, to the
reasonable satisfaction of the Underwriters' counsel, all legal requirements to
be fulfilled by the Company to enable the Securities to be offered for sale and
sold to the public in the United States by or through the Underwriters or their
respective U.S.-registered broker-dealer affiliates in accordance with the 1933
Act, the Securities Exchange Act of 1934, as amended ("1934 Act") and applicable
state securities laws (collectively, the "U.S. Securities Laws" and, together
with the Canadian Securities Laws, the "Securities Laws"). The Company shall use
its reasonable best efforts to fulfill all legal requirements to enable the
distribution of the Securities as soon as possible in the United States, but in
any event not later than 5:00 p.m., Vancouver time, on November 17, 2005 or such
later date and time as may be agreed upon in writing by the Company and the
Underwriters. Such fulfillment shall include, without limiting the generality of
the foregoing, compliance with the U.S. Securities Laws, including compliance
with all requirements relating to the preparation and filing of an amendment to
the registration statement, including the Canadian Final Prospectus (with such
deletions therefrom and additions thereto as are permitted or required by Form
F-10 and the applicable rules and regulations of the SEC) (the "U.S. Final
Prospectus", and together with the Canadian Final Prospectus, the "Final
Prospectuses"), and the taking of such actions as may be necessary or desirable
to cause the registration statement to become effective under the 1933 Act. Such
registration statement on Form F-10, including the exhibits thereto and the
documents incorporated by reference therein, as amended at the time it becomes
effective is herein called the "Registration Statement". The U.S. Preliminary
Prospectus and the U.S. Final Prospectus are collectively referred to herein as
the "U.S. Prospectuses".
The Company shall also prepare and file with the SEC an appointment of
agent for service of process upon the Company on Form F-X in conjunction with
the initial filing of the registration statement (the "Form F X").
At all times between the date hereof and the completion of the
distribution of the Securities, the Company shall allow the Underwriters and
their representatives to participate fully in the preparation of the Prospectus
and to conduct all due diligence enquiries, searches, investigations and
examinations which the Underwriters may reasonably require to fulfil the
Underwriters' due diligence obligations and to enable the Underwriters to
responsibly execute any certificate included in the Canadian Prospectus or
otherwise and which is required to be executed by the Underwriters in connection
with the offering of the Securities.
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 and as of the Closing
Time referred to in Section 2(c) hereof, and agrees with each Underwriter, as
follows:
(i) Compliance with Registration Requirements. The Company is
qualified to file a prospectus in the form of a short form prospectus
pursuant to the requirements of
4
National Instrument 44-101-Short Form Prospectus Distributions. The Company
meets the general eligibility requirements for use of Form F-10 under the
1933 Act.
(ii) Incorporated Documents. Each document filed or to be filed with
the Reviewing Authority and the Qualifying Authorities that will be
incorporated or deemed to be incorporated by reference in the Canadian
Prospectus complied or will comply when so filed in all material respects
with Canadian Securities Laws, and such documents did not and will not
include at the time of their filing an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were or are made,
not misleading.
The documents to be incorporated or deemed to be incorporated by
reference in the Registration Statement and the U.S. Prospectus, at the
time they were or hereafter are filed with the SEC, complied or will
comply, as applicable, in all material respects with the requirements of
the 1934 Act, and the rules and regulations of the SEC thereunder (the
"1934 Act Regulations"), and, when read together with the other information
in the U.S. Prospectus, at the time the Registration Statement becomes
effective, at the time the U.S. Prospectus is issued and at the Closing
Time will not include an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading.
(iii) Independent Accountants. The accountants who audited the
consolidated financial statements to be included or incorporated by
reference in the U.S. Prospectus and the Canadian Prospectus, are
independent public accountants as required by the 1933 Act and the 1933 Act
Regulations and the Xxxxxxxx-Xxxxx Act of 2002 and are independent with
respect to the Company within the meaning of the Canada Business
Corporations Act and applicable Canadian Securities Laws.
(iv) Financial Statements. The consolidated financial statements to be
included or incorporated by reference in the Preliminary Prospectuses and
the Final Prospectuses, together with the related schedules, if any, and
notes, will present fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the results of
operations and retained earnings and cash flows of the Company and its
consolidated subsidiaries for the periods specified; such financial
statements have been prepared in accordance with generally accepted
accounting principles in Canada ("Canadian GAAP") applied on a consistent
basis (except, in the case of interim financial statements, for normal
year-end adjustments) throughout the periods involved and have been
reconciled to generally accepted accounting principles in the United States
of America ("U.S. GAAP") in accordance with Item 18 of Form 20-F under the
1934 Act. The summary consolidated financial information to be included in
the Preliminary Prospectuses and the Final Prospectuses will present fairly
the information shown therein and will have been compiled on a basis
consistent with that of the audited consolidated financial statements
incorporated by reference into the Preliminary Prospectuses and the Final
Prospectuses.
5
(v) No Material Adverse Change in Business. Since the respective dates
as of which information will be given in the Preliminary Prospectuses and
the Final Prospectuses, except as otherwise stated therein, (A) there has
not been and will not be prior to or at the Closing Time 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 (a "Material Adverse Effect"), (B) there have
been no and will not be prior to or at the Closing Time any 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) except
for regular quarterly dividends on the Common Shares in amounts per share
that are consistent with past practice, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class
of its share capital.
(vi) Good Standing of the Company. The Company is a corporation duly
amalgamated, validly existing and in good standing under the laws of Canada
and has the corporate power and authority to own, lease and operate its
properties and to conduct its business as will be described in the U.S.
Prospectus and the Canadian Prospectus; 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 to so qualify or to be in good standing would not result
in a Material Adverse Effect. Attached hereto as Schedule C is a list of
the Company's wholly-owned or majority-owned subsidiaries which constitute
a "significant subsidiary" of the Company (as that term is defined under
Rule 1-02 of Regulation S-X under the 1934 Act) (each a "Significant
Subsidiary" and, collectively, the "Significant Subsidiaries"). Each
Significant Subsidiary is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation,
has the corporate power and authority to own, lease and operate its
properties and to conduct its business as will be described in the U.S.
Prospectus and the Canadian Prospectus; and each Significant Subsidiary 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 to so qualify or to be in
good standing would not result in a Material Adverse Effect.
(vii) Capitalization. The authorized, issued and outstanding share
capital of the Company is as will be set forth in the U.S. Prospectus and
the Canadian Prospectus under the caption "Description of Share Capital"
(except for any subsequent issuances pursuant to this Agreement or pursuant
to the exercise of convertible securities or options referred to in the
U.S. Prospectus and the Canadian Prospectus). All of the issued and
outstanding shares in the capital of the Company, including the Securities
to be purchased by the Underwriters from the Selling Shareholder, have been
duly authorized and validly issued and are fully paid and non-assessable
and have been issued in compliance with the 1933 Act and the rules and
regulations thereunder (the "1933 Act Regulations") and Canadian Securities
Laws; none of the outstanding shares in the capital of the Company,
including
6
the Securities to be purchased by the Underwriters from the Selling
Shareholder, were issued in violation of the preemptive or other similar
rights of any shareholder of the Company. Except as will be disclosed in
the U.S. Prospectus and the Canadian Prospectus and the consolidated
financial statements of the Company and related notes thereto incorporated
by reference in the U.S. Prospectus and the Canadian Prospectus, 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, other than stock options granted by
the Company in the ordinary course pursuant to its stock option plan
subsequent to September 30, 2005. The description of the Company's stock
option and other stock plans or arrangements, and the options or other
rights granted thereunder, as will be set forth in the U.S. Prospectus and
the Canadian Prospectus, accurately and fairly presents the information
required to be disclosed with respect to such plans, arrangements, options
and rights. Except as will be disclosed in the U.S. Prospectus and the
Canadian Prospectus, 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 Common Shares that will survive the sale of the Securities
pursuant to this Agreement. All of the issued and outstanding shares in the
capital of each Significant Subsidiary have been duly authorized and
validly issued and are fully paid and non-assessable and are owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity, except as
disclosed in the audited financial statements of the Company for the year
ended December 31, 2004 and for the general security granted to Royal Bank
of Canada; none of the outstanding shares in the capital of any of the
Significant Subsidiaries were issued in violation of the preemptive or
other similar rights of any shareholder of such Significant Subsidiary.
(viii) Authorization of Agreement. The Company has the corporate power
and authority to execute, deliver and perform its obligations under this
Agreement and this Agreement has been duly authorized, executed and
delivered by the Company.
(ix) Description of Securities. The Securities will conform to all
statements relating thereto contained in the U.S. Prospectus and the
Canadian 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 solely by reason of being such a holder.
(x) Absence of Defaults and Conflicts. Neither the Company nor any of
its subsidiaries is in violation of its charter or by laws 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, license or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which it or any of its subsidiaries may be bound, or to which any of the
property or assets of the Company or any of its subsidiaries is subject
(collectively, "Agreements and Instruments") except for such defaults that
would not result in a Material Adverse Effect.
7
The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein and in the U.S.
Prospectus and the Canadian Prospectus 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, Repayment Events or liens, charges or encumbrances that would not
result in a Material Adverse Effect), nor will such action result in (i)
any violation or conflict with the provisions of the charter or by laws of
the Company or any subsidiary or (ii) any violation or conflict with the
provisions of 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, except, in the
case of (ii), such violations or conflict as would not individually or in
the aggregate result in a Material Adverse Effect. 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, 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, governmental instrumentality 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 U.S. Prospectus or the Canadian Prospectus, or which 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 will not be
described in the U.S. Prospectus or the Canadian Prospectus, including
ordinary routine litigation incidental to the business of the Company,
could not reasonably be expected to result in a Material Adverse Effect.
(xiii) Possession of Intellectual Property. 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
8
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.
(xiv) 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 or sale of the
Securities hereunder or the consummation of the transactions contemplated
by this Agreement, except (A) such as have been already obtained or as may
be required under the 1933 Act or the 1933 Act Regulations or state
securities laws and (B) such as have been obtained, or as may be required,
under Canadian Securities Laws or the Canada Business Corporations Act, as
applicable.
(xv) Possession of Licenses and Permits. Except in each case as would
not individually or in the aggregate result in a Material Adverse Effect,
(A) the Company and its subsidiaries possess such permits, certificates,
licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, provincial,
state, local or foreign regulatory agencies or bodies necessary to conduct
the business now operated by them; (B) the Company and its subsidiaries are
in compliance with the terms and conditions of all such Governmental
Licenses;(C) all of the Governmental Licenses are valid and in full force
and effect; and (D) 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.
(xvi) 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) will be
described in the U.S. Prospectus and the Canadian Prospectus 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 or (C) the general
security interest of Royal Bank of Canada; 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 to be described in the U.S. Prospectus and
the Canadian Prospectus, 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
9
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.
(xvii) Investment Company Act. The Company is not 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").
(xviii) Environmental Laws. Except as will be described in the U.S.
Prospectus and the Canadian Prospectus and except as would not, singly or
in the aggregate, result in a Material Adverse Effect, to the knowledge of
the Company, after due inquiry (A) neither the Company nor any of its
subsidiaries is in violation of any federal, provincial, state, local,
municipal or foreign statute, law, rule, regulation, ordinance, code,
policy or rule of common law or civil 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, "Environmental Laws"), (B) the Company
and its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are 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 Laws against the Company or any of its
subsidiaries and (D) there are no events or circumstances 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.
(xix) No Stabilization or Manipulation. 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 to, or that might be
reasonably expected to, cause or result in stabilization or manipulation of
the price of the Common Shares.
(xx) Registration Rights. There are no persons with registration
rights or other similar rights to have any securities registered or
qualified for distribution pursuant to the Registration Statement, the
Canadian Prospectus or otherwise registered by the Company under the 1933
Act or qualified for distribution under any Canadian Securities Laws.
(xxi) Listing. The Common Shares are listed on the New York Stock
Exchange (the "NYSE") and the Toronto Stock Exchange (the "TSX").
10
(xxii) Other Reports and Information. There are no reports or
information that in accordance with the requirements of the Reviewing
Authority or the Qualifying Authorities must be made publicly available in
connection with the offering of the Securities that have not been made
publicly available as required; no material change reports or other
documents have been filed on a confidential basis with the Reviewing
Authority or the Qualifying Authorities since December 31, 2004; there are
no documents required to be filed with the Reviewing Authority or the
Qualifying Authorities in connection with the Canadian Prospectus that have
not been filed as required; there are no contracts, documents or other
materials required to be described or referred to in the Registration
Statement, the U.S. Prospectus or the Canadian Prospectus or to be filed as
exhibits to the Registration Statement that will not be described, referred
to or filed as required.
(xxiii) Taxes. The Company and its subsidiaries have filed all
material United States and Canadian federal, state, provincial, local and
foreign income, payroll, franchise and other tax returns and have paid all
material taxes shown as due thereon or otherwise due with respect to any of
their properties or any transactions to which they are a party, and there
is no tax deficiency that has been, or is reasonably likely to be, asserted
against the Company or any of its subsidiaries or any of their properties
or assets that would result in a Material Adverse Effect.
(xxiv) Insurance. Except as will be disclosed in the U.S. Prospectus
and the Canadian Prospectus, the Company and its subsidiaries are insured
by insurers of recognized financial responsibility against such losses and
risks and in such amounts as are, to the knowledge of the Company,
customary in the businesses in which they engage or propose to engage; the
Company and its subsidiaries have no reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not result in a
Material Adverse Effect.
(xxv) Compliance with Laws. The Company and its subsidiaries are in
all material respects in compliance with, and conduct their businesses in
all material respects in conformity with, all applicable U.S. and Canadian
federal, state, provincial, local and foreign laws, rules and regulations,
including the Xxxxxxxx-Xxxxx Act of 2002, and all applicable ordinances,
judgments, decrees, orders, units and injunctions of any court or
governmental agency or body or the rules and regulations of the NYSE or the
TSX. There has not been any reportable event within the meaning of Section
4.11 of National Instrument 51-102 Continuous Disclosure Obligations with
the auditors of the Company.
(xxvi) No Broker. 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.
(xxvii) Non-Arm's Length Transactions. To the knowledge of the
Company, after due inquiry, except as disclosed in writing to the
Underwriters or as will be disclosed in the U.S. Prospectus and the
Canadian Prospectus, neither the Company nor
11
any subsidiary is 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 or any subsidiary which is required to be disclosed
under the 1933 Act or Canadian Securities Laws.
(xxviii) Internal Controls. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles in Canada and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management's general, or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxix) Stamp Tax. No stamp duty, registration or documentary taxes, duties
or similar charges are payable under the federal laws of Canada or the laws
of the Province of British Columbia in connection with the sale and
delivery to the Underwriters of the Securities or the authorization,
execution, delivery and performance of this Agreement or the resale of
Securities by an Underwriter to U.S. residents.
(b) Representations and Warranties by Xx. Xxxxxxx and the Selling
Shareholder. Xx. Xxxxxxx, on behalf of himself and on behalf of the Selling
Shareholder, represents and warrants to each Underwriter as of the date hereof,
and as of the Closing Time referred to in Section 2(c) hereof, and acknowledges
that each Underwriter is relying upon such representations and warranties in
connection with its execution and delivery of this Agreement and the purchase of
the Securities, as the case may be, as follows:
(i) Accurate Disclosure. To the knowledge of Xx. Xxxxxxx and the
Selling Shareholder, the representations and warranties of the Company
contained in Section 1(a) hereof are true and correct; Xx. Xxxxxxx, on
behalf of himself and on behalf of the Selling Shareholder, will review and
will be familiar with the Registration Statement, the Canadian Prospectus,
the U.S. Prospectus and any supplement or amendment thereof and, to the
knowledge of Xx. Xxxxxxx and the Selling Shareholder, (A) neither the
Registration Statement nor any amendment or supplement thereto will, at the
time it becomes effective, contain an untrue statement of a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and (B) each of the Canadian Prospectus, and any amendment
or supplement thereto will, at the time it is first issued and at the
Closing Time, constitute full, true and plain disclosure of all material
facts relating to the Company and the Securities, and each of the U.S.
Prospectus, the Canadian Prospectus and any amendment or supplement thereto
will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading; and all
information with respect to each of Xx. Xxxxxxx and the Selling Shareholder
to be contained in the Registration Statement, Canadian Prospectus, U.S.
Prospectus or any amendment or supplement thereto will comply in all
material respects with all applicable
12
provisions of Canadian Securities Laws and the 1933 Act and 1933 Act
Regulations.
(ii) Authorization of Agreements. Xx. Xxxxxxx has the full right,
power and authority to enter into this Agreement personally and on behalf
of the Selling Shareholder and to sell, transfer and deliver the Securities
to be sold by the Selling Shareholder hereunder. The execution and delivery
of this Agreement and the sale and delivery of the Securities to be sold by
the Selling Shareholder and the consummation of the transactions
contemplated herein and compliance by Xx. Xxxxxxx and the Selling
Shareholder with their respective obligations hereunder do not and will
not, whether with or without the giving of notice or passage of time or
both, conflict with or constitute a material breach of, or default under,
or result in the creation or imposition of any tax, lien, charge or
encumbrance upon the Securities to be sold by the Selling Shareholder or
any property or assets of either Xx. Xxxxxxx or the Selling Shareholder
pursuant to, any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, license, lease or other agreement or instrument to
which either Xx. Xxxxxxx or the Selling Shareholder is a party or by which
either Xx. Xxxxxxx or the Selling Shareholder may be bound, or to which any
of the property or assets of either Xx. Xxxxxxx or the Selling Shareholder
is subject, nor will such action result in any material violation of the
provisions of any applicable treaty, law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
either Xx. Xxxxxxx or the Selling Shareholder or any of their respective
properties.
(iii) Options. Except as created hereby, there are no outstanding
rights, warrants or options to acquire any of the Securities to be sold by
the Selling Shareholder.
(iv) Absence of Further Requirements. The execution and delivery of
this Agreement by each of Xx. Xxxxxxx and the Selling Shareholder and the
performance by each of Xx. Xxxxxxx and the Selling Shareholder of the
transactions contemplated herein do not and will not require the filing
with, or consent, license, order, approval, authorization, registration or
qualification of or decree of any court or any governmental authority or
agency, stock exchange (including, for greater certainty, the NYSE and the
TSX) or other third party (domestic or foreign), except (i) such as have
been obtained, and (ii) such as may be required (and shall be obtained as
provided in this Agreement) under Canadian Securities Laws and the 1933 Act
and 1933 Act Regulations and such as may be required under U.S. state
securities, or "Blue Sky," laws.
(v) Delivery of Securities. To the knowledge of each of Xx. Xxxxxxx
and the Selling Shareholder, the Securities to be sold by the Selling
Shareholder have been validly issued as fully paid and non-assessable
shares.
(vi) Brokers. Other than as contemplated by this Agreement, there is
no person, firm or corporation which has been engaged by either Xx. Xxxxxxx
or the Selling Shareholder to act for either Xx. Xxxxxxx or the Selling
Shareholder and which is entitled to any brokerage or finder's fee in
connection with this Agreement or any of the transactions contemplated
hereunder, and in the event any such person, firm or corporation
establishes a claim for any fee from the Underwriters, Xx. Xxxxxxx and the
13
Selling Shareholder each jointly and severally covenant to indemnify and
hold harmless the Underwriters with respect thereto and with respect to all
costs reasonably incurred in the defense thereof.
(vii) Title to Securities. The Selling Shareholder now has, and will
at the Closing Time have, good and marketable title to the Initial
Securities and the Option Securities, if applicable, to be sold by the
Selling Shareholder hereunder, free and clear of any security interest,
mortgage, pledge, lien, charge, claim or encumbrance of any kind, other
than pursuant to this Agreement. Each of Xx. Xxxxxxx and the Selling
Shareholder, as applicable, has full legal right and power, and all
authorization and approvals required by law, to sell, transfer and deliver
such Securities to the Underwriters hereunder and to make the
representations, warranties and agreements made by Xx. Xxxxxxx and the
Selling Shareholder herein. Upon the delivery of such Securities and
payment of the purchase price therefor as herein contemplated, assuming
each such Underwriter has no notice of any adverse claim, each of the
Underwriters will receive good and marketable title to such Securities
purchased by it from the Selling Shareholder, free and clear of any
security interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind.
(viii) Absence of Tax Deficiency. At the Closing Time all stock
transfer or other taxes, if any (other than income taxes), which are
required to be paid in connection with the sale and transfer of the Initial
Securities and the Option Securities, if applicable, to be sold by the
Selling Shareholder to the several Underwriters hereunder will have been
fully paid or provided for by either Xx. Xxxxxxx or the Selling Shareholder
and all laws imposing such taxes will have been fully complied with by Xx.
Xxxxxxx and the Selling Shareholder.
(ix) No Material Adverse Change in Business. Neither Xx. Xxxxxxx nor
the Selling Shareholder has any knowledge of any fact or condition not to
be set forth in the Canadian Prospectus and the U.S. Prospectus which has
had a Material Adverse Effect, and the sale of the Securities proposed to
be sold by the Selling Shareholder is not prompted by any such knowledge.
(x) Distribution of Documents and Absence of Price Manipulation. Other
than as permitted by Canadian Securities Laws and the 1933 Act and 1933 Act
Regulations, neither Xx. Xxxxxxx nor the Selling Shareholder has
distributed or will distribute any preliminary prospectus, the Canadian
Prospectus, the U.S. Prospectus, the Registration Statement, or any other
offering material in connection with the offering or sale of the
Securities. Neither Xx. Xxxxxxx nor the Selling Shareholder has taken, or
will take, directly or indirectly, any action designed to or which has
constituted, or which might reasonably be expected to cause or result in,
under Canadian Securities Laws, Regulation M under the 1934 Act or
otherwise, stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities.
(xi) Absence of Proceedings. There is not pending or, to the knowledge
of each of Xx. Xxxxxxx and the Selling Shareholder, threatened against
either Xx. Xxxxxxx or
14
the Selling Shareholder any action, suit or proceeding which (A) questions
the validity of this Agreement or of any action taken or to be taken by
either Xx. Xxxxxxx or the Selling Shareholder pursuant to or in connection
with this Agreement or (B) will be required to be disclosed in the
Registration Statement, the Canadian Prospectus or the U.S. Prospectus.
(xii) Taxes. No stamp or other issuance or transfer taxes or duties or
withholding taxes are payable by or on behalf of the Underwriters under the
federal laws of Canada or the laws of the Province of British Columbia in
connection with (A) the sale and delivery by the Selling Shareholder to or
for the respective accounts of the Underwriters of the Securities to be
sold by the Selling Shareholder; or (B) the sale and delivery outside
Canada by the Underwriters of the Securities to be sold by the Selling
Shareholder to the initial purchasers thereof.
(c) Officer's Certificates. Any certificate signed by any officer of the
Company or by or on behalf of either Xx. Xxxxxxx or the Selling Shareholder
delivered to the Underwriters or to counsel for the Underwriters shall be deemed
a representation and warranty by the Company, Xx. Xxxxxxx or the Selling
Shareholder, as the case may be, 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
Selling Shareholder agrees to sell the Initial Securities to the Underwriters,
and each Underwriter, severally and not jointly, agrees to purchase from the
Selling Shareholder, at the price per share 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 9 hereof.
(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 Selling Shareholder hereby grants an option to the Underwriters,
severally and not jointly, to purchase up to an additional 326,087 Common Shares
at the price per share set forth in Schedule B on the Closing Date. The option
hereby granted may be exercised at any time up to 48 hours prior to the Closing
Date in whole or in part upon notice by Xxxxxxx Xxxxx, on behalf of the
Underwriters, to the Company and the Selling Shareholder setting forth the
number of Option Securities as to which the several Underwriters are then
exercising the option. 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 Underwriters
in their discretion shall make to eliminate any sales or purchases of fractional
shares.
(c) Payment. Payment of the purchase price for the Initial Securities and
any Option
15
Securities shall be made at the Vancouver offices of XxXxxxxx Xxxxxxxx, or at
such other place as shall be agreed upon by Xxxxxxx Xxxxx on behalf of the
Underwriters, and the Selling Shareholder, at 9:00 A.M. (Eastern time) on the
fifth business day after the Registration Statement becomes effective (unless
postponed in accordance with the provisions of Section 9, the "Closing Date"),
or such other time as shall be agreed upon by Xxxxxxx Xxxxx, on behalf of the
Underwriters, and the Selling Shareholder, but in any event not later than
December 15, 2005 (such time and date of payment and delivery being herein
called the "Closing Time").
Delivery of the Initial Securities and the Option Securities on the
Closing Date shall be made to the Underwriters through the facilities of the
Canadian Depository for Securities Limited for the respective accounts of the
various Underwriters. Payment shall be made to the Selling Shareholder by wire
transfer of immediately available (same day) funds to the bank account
designated by the Selling Shareholder not less than 24 hours prior to the
Closing Time against delivery to the Underwriters for the respective accounts of
the Underwriters of certificates for the Securities to be purchased by them. It
is understood that each Underwriter has authorized Xxxxxxx Xxxxx, 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. Payment to the Selling Shareholder shall be made in U.S.
dollars, as set forth in Schedule B hereto, or as may be agreed to by Xxxxxxx
Xxxxx, on behalf of the Underwriters, and the Selling Shareholder. 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 but such payment shall
not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, will be in such denominations and registered
in such names as the Underwriters may request in writing at least two full
business days before the Closing Time. The Initial Securities and the Option
Securities, if any, will be made available for examination by the Underwriters
at its designated custodian not later than 10:00 A.M. (Eastern time) on the
business day prior to the Closing Date.
Section 3. Covenants.
(a) Covenants of the Company. The Company covenants and agrees with each
Underwriter as follows:
(i) Fulfillment of Conditions. The Company will use its commercially
reasonable best efforts to fulfill, at or prior to the Closing Date, each
of the conditions set out in Section 5 hereof.
(ii) Compliance with Securities Regulations and Commission Requests.
At the time the Registration Statement becomes effective under the 1933 Act
and at all times subsequent thereto up to and including the Closing Time
(as defined in Section 2(c)): (A) the Canadian Prospectus will comply in
all material respects with Canadian Securities Laws; (B) the U.S.
Prospectus will conform to the Canadian Prospectus except for such
16
deletions therefrom and additions thereto as are permitted or required by
Form F-10 and the applicable rules and regulations of the SEC; (C) the
Registration Statement and any amendments or supplements thereto will
comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations; (D) neither the Registration Statement nor any
amendment or supplement thereto will 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 (E)
each of the U.S. Prospectus, the Canadian Prospectus and any amendment or
supplement thereto, will constitute full, true and plain disclosure of all
material facts relating to the Company and the Securities, and each of the
U.S. Prospectus, the Canadian Prospectus and any amendment or supplement
thereto, will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties contained in clauses (D) and
(E) above do not apply to statements or omissions made in reliance upon and
in conformity with information furnished in writing to the Company by any
Underwriter through Xxxxxxx Xxxxx expressly for use in the Registration
Statement, the U.S. Prospectus, the Canadian Prospectus.
The Company will notify the Underwriters promptly, and confirm
the notice in writing, (i) when the Preliminary Prospectuses, the Final
Prospectuses and the Registration Statement has been filed, (ii) of the
effectiveness of the Registration Statement, (iii) when any post effective
amendment to the Registration Statement shall have been filed with the SEC
or shall have become effective, and when any supplement to the U.S.
Prospectus or the Canadian Prospectus or any amended U.S. Prospectus or
Canadian Prospectus shall have been filed, (iv) of the receipt of any
comments from the Reviewing Authority, any Qualifying Authority or the SEC,
(v) of any request by the Reviewing Authority to amend or supplement the
Canadian Preliminary Prospectus or the Canadian Prospectus or for
additional information or of any request by the SEC to amend the
Registration Statement or to amend or supplement the U.S. Prospectus or for
additional information, (iv) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in
any jurisdiction, or of the institution or, to the knowledge of the
Company, threatening of any proceedings for any such purpose, and (v) of
the issuance by the Reviewing Authority, any Qualifying Authority or any
stock exchange of any order having the effect of ceasing or suspending the
distribution of the Securities or the trading in the securities of the
Company, or of the institution or, to the knowledge of the Company,
threatening of any proceedings for any such purpose. The Company will use
every reasonable effort to prevent the issuance of any such stop order or
of any order preventing or suspending such use or such order ceasing or
suspending the distribution of the Securities or the trading in the
securities of the Company and, if any such order is issued, to obtain the
lifting thereof at the earliest possible time.
(iii) Filing of Amendments. The Company will not at any time file or
make any amendment to the Registration Statement, any amendment or
supplement to the Preliminary Prospectuses, or any amendment or supplement
to the Final Prospectuses, of
17
which Xxxxxxx Xxxxx, on behalf of the Underwriters, shall not have
previously been advised and furnished a copy or to which Xxxxxxx Xxxxx, on
behalf of the Underwriters, shall have objected, acting reasonably.
(iv) Issuance of Press Releases. The Company will not, prior to the
Closing Time, issue any press release of which Xxxxxxx Xxxxx, on behalf of
the Underwriters, shall not have previously been advised and furnished a
copy or to which Xxxxxxx Xxxxx, on behalf of the Underwriters, shall have
promptly objected, acting reasonably. Immediately upon acceptance by the
SEC of the initial filing of the registration statement on Form F-10, the
Company authorizes Xxxxxxx Xxxxx Ltd. to issue a press release in the form
previously agreed to in respect of this Agreement and the offering of the
Securities.
(v) Delivery of Filed Documents. The Company will deliver to each of
the Underwriters, without charge, a copy of the Canadian Preliminary
Prospectus, the Canadian Prospectus, and any supplement thereto, approved,
signed and certified as required by Canadian Securities Laws and signed
copies of the Registration Statement 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 the Form F-X.
(vi) Delivery of Prospectuses. The Company will cause to be delivered
to each Underwriter, without charge, as many copies of each of the
Preliminary Prospectuses as such Underwriter has reasonably requested, and
the Company hereby consents to the use of such copies for the purposes
permitted by the 1933 Act and applicable Canadian Securities Laws. The
Company will deliver to each Underwriter, without charge, during the period
when the U.S. Prospectus is required to be delivered under the 1933 Act or
the 1934 Act and during the period when the Canadian Prospectus is required
to be delivered under the securities laws of the Qualifying Provinces, but
no later than the business day after the Registration Statement becomes
effective, such number of copies of the U.S. Prospectus and Canadian
Prospectus, respectively (each as supplemented or amended) as such
Underwriter may reasonably request.
(vii) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations and Canadian
Securities Laws so as to permit the completion of the distribution of the
Securities as contemplated in this Agreement and as will be contemplated in
the U.S. Prospectus and the Canadian Prospectus. If at any time when a
prospectus is required by the 1933 Act or Canadian 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, acting
reasonably, to amend the Registration Statement or amend or supplement the
U.S. Prospectus or the Canadian Prospectus in order that the U.S.
Prospectus or the Canadian Prospectus 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, in the opinion of such counsel,
18
acting reasonably, at any such time to amend the Registration Statement or
amend or supplement the U.S. Prospectus or the Canadian Prospectus in order
to comply with the requirements of the 1933 Act or the 1933 Act Regulations
or Canadian Securities Laws, the Company will promptly prepare and file
with the SEC and with the Reviewing Authority and the Qualifying
Authorities, subject to Section 3(a)(iii), such amendment or supplement as
may be necessary to correct such statement or omission or to make the
Registration Statement or the U.S. Prospectus or the Canadian Prospectus
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.
(viii) Blue Sky Qualifications. The Company will use its reasonable
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 as the Underwriters may designate and
to maintain such qualifications in effect for a period of not less than one
year from the effective date of the 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.
(ix) Rule 158. 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 (which need
not be audited but shall be in reasonable detail) for the purposes of, and
to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act and the regulations thereunder.
(x) Absence of Price Manipulation. The Company will not at anytime,
directly or indirectly, take any action intended or which might reasonably
be expected, to cause or result in, or which will constitute, stabilization
of the price of the Common Shares to facilitate the sale or resale of any
of the Securities.
(xi) Restriction on Sale of Securities. During a period of 90 days
from the date hereof, 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 purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase,
lend or otherwise transfer or dispose of any Common Shares or any
securities convertible into or exercisable or exchangeable for Common
Shares or file any registration statement under the 1933 Act 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,
whether any such swap or transaction described in clause (i) or (ii) above
is to be settled by delivery of Common Shares or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (A) any Common
Shares issued or options to purchase Common Shares granted pursuant to the
Company's stock option plan referred to in the U.S. Prospectus and the
Canadian Prospectus, or (B) any Common Shares issued by the Company upon
the exercise of an option or warrant or the conversion of a security
19
outstanding on the date hereof and referred to in the U.S. Prospectus and
the Canadian Prospectus. For clarity purpose, nothing in this paragraph
shall in any way affect or restrict the operation of the Company's Employee
Share Purchase Plan, whereby the Plan Administrator purchases Common Shares
from the markets for and on behalf of the participants under the Plan.
(xii) Listing. The Common Shares are listed for trading on the NYSE
and the TSX, and no order by the NYSE or the TSX ceasing or suspending
trading in the Common Shares or prohibiting the sale of the Securities or
the trading of any securities of the Company has been issued by the NYSE or
the TSX and is pending and no proceedings for such purpose are pending or,
to the knowledge of the Company, threatened. The Company will file all
documents and notices with the NYSE and the TSX as may be required in
connection with the offering of the Securities.
(xiii) Reporting Requirements. The Company, during the period when the
U.S. Prospectus or the Canadian Prospectus is required to be delivered
under the 1933 Act or the 1934 Act or under applicable Canadian Securities
Laws, will file all documents required to be filed by the Company with (i)
the SEC pursuant to the 1934 Act within the time periods required by the
1934 Act and the rules and regulations of the SEC thereunder, and (ii) with
the Qualifying Provinces in accordance with applicable Canadian Securities
Laws.
(xiv) Translation Opinions. The Company shall cause XxXxxxxx Xxxxxxxx
to deliver to the Underwriters opinions, dated the date of the filing of
the French language versions of each of the Canadian Preliminary Prospectus
and the Canadian Final Prospectus, to the effect that the French language
version of each such prospectus, together with each document incorporated
therein by reference (other than the financial statements and other
financial data contained therein or omitted therefrom), is in all material
respects a complete and accurate translation of the English language
versions thereof. The Company shall cause XxXxxxxx Xxxxxxxx to deliver to
the Underwriters similar opinions as to the French language translation of
any information contained in any supplement to the Canadian Prospectus, in
form and substance reasonably satisfactory to the Underwriters, prior to
the filing thereof with the Reviewing Authority.
(xv) Translation Opinions--Financial Statements. The Company shall
cause KPMG LLP to deliver to the Underwriters opinions, dated the date of
the filing of the French language versions of each of the Canadian
Preliminary Prospectus and the Canadian Final Prospectus, to the effect
that the financial statements and other financial data contained in the
French language version of each such prospectus, together with each
document incorporated therein by reference, is in all material respects a
complete and accurate translation of the English language versions thereof.
The Company shall cause KPMG LLP to deliver to the Underwriters similar
opinions as to the French language translation of any information contained
in any supplement to the Canadian Prospectus, in form and substance
reasonably satisfactory to the Underwriters, prior to the filing thereof
with the Reviewing Authority.
20
(xvi) Lock-Up Agreements. The Company will use its best efforts to
ensure that those persons listed in Schedule D hereto enter into agreements
substantially in the form of Exhibit C hereto.
(b) Covenants of Xx. Xxxxxxx and the Selling Shareholder. Xx. Xxxxxxx, on
behalf of himself and on behalf of the Selling Shareholder, covenants and agrees
with each of the Underwriters that:
(i) Restriction on Sale of Securities. During a period of 90 days from
the date hereof, neither Xx. Xxxxxxx nor the Selling Shareholder will,
without the prior written consent of Xxxxxxx Xxxxx, (i) directly or
indirectly, 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 to purchase, lend or otherwise transfer or dispose
of any Common Shares or any securities convertible into or exercisable or
exchangeable for Common Shares 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 described in clause (i) or (ii) above
is to be settled by delivery of Common Shares or such other securities, in
cash or otherwise.
(ii) Absence of Price Manipulation. Neither Xx. Xxxxxxx nor the
Selling Shareholder will at any time, directly or indirectly, take any
action intended, or which might reasonably be expected, to cause or result
in, or which will constitute, stabilization of the price of the Common
Shares to facilitate the sale or resale of any of the Securities.
(iii) Form W-8. In order to document the Underwriters' compliance with
the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to transactions herein
contemplated, the Selling Shareholder will deliver to Xxxxxxx Xxxxx, on
behalf of the Underwriters prior to or at the Closing Time a properly
completed and executed United States Treasury Department Form W-8 (or other
applicable form or statement specified by Treasury Department regulations
in lieu thereof).
(iv) November Dividend The Selling Shareholder confirms and agrees
that the sale of the Securities hereunder includes any interest in and
right to receive dividends in respect of the Securities, the record date of
which is after the date hereof and before the Closing Date. Accordingly,
Xx. Xxxxxxx and the Selling Shareholder agree that if the Closing Date
occurs after November 25, 2005, the Selling Shareholder will direct its
broker or agent or cause its broker or agent to direct the registered
shareholder of the Securities to pay any dividend that the Selling
Shareholder may receive in respect of the Securities, the record date for
which is after the date hereof and before the Closing Date, to the
Underwriters (or as they may direct) in accordance with the portion of the
Securities purchased by each of the Underwriters pursuant to this
Agreement. Xx. Xxxxxxx and the Selling Shareholder further covenant to
execute all documents necessary to give effect to the direction
contemplated above.
21
Section 4. Payment of Expenses.
(a) Expenses. The Selling Shareholder will pay all expenses incident to the
performance of the obligations of the Company, Xx. Xxxxxxx and the Selling
Shareholder under this Agreement, including (i) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits and the Form F-X) and of each amendment thereto, the Preliminary
Prospectuses, the Final Prospectuses and any amendments or supplements thereto
or French translations thereof, and the cost of furnishing copies thereof to the
Underwriters; (ii) the preparation, printing and delivery to the Underwriters of
this Agreement, any Agreement among 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 upon the sale,
issuance or delivery of the Securities to the Underwriters; (iv) the fees and
disbursements of the Company's, Xx. Xxxxxxx'x and Selling Shareholder's counsel,
accountants and other advisors; (v) the qualification of the Securities under
applicable securities laws in accordance with the provisions of Section
3(a)(viii) 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 U.S. Blue Sky Survey and any supplement
thereto; (vi) the printing and delivery to the Underwriters of commercial copies
of each of the Preliminary Prospectuses, and of the U.S. Prospectus and the
Canadian Prospectus and any amendments or supplements thereto; (vii) the
preparation, printing and delivery to the Underwriters of commercial copies of
the U.S. 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 the review by the National Association of Securities Dealers,
Inc. (the "NASD") of the terms of the sale of the Securities and (x) any fees or
expenses payable to the NYSE in connection with the transactions contemplated
pursuant to this Agreement, provided however, that the Underwriters will pay for
the lesser of Cdn$150,000 or 30% of the actual out-of-pocket costs incurred by
the Selling Shareholder, provided further that such costs shall not include (a)
any legal fees or other advisory costs of the Selling Shareholder if such
counsel or advisors are different from those of the Company or (b) any fees of
or other charges from the Company incurred by the Selling Shareholder. Except as
provided in this Section 4(a) and Section 4(b) below, the Underwriters will pay
all of their own costs and expenses, including (without limitation) the fees of
their counsel. In addition, the Underwriters will pay all costs and expenses
related to the travel (e.g., airfare and land transportation) by representatives
of the Company and the Underwriters as part of the roadshow process, if any and
as requested by the Underwriters and agreed to by the Company, in connection
with the offering of the Securities.
(b) Termination of Agreement. If this Agreement is terminated by the
Underwriters (i) in accordance with the provisions of Section 5(p) because of
any failure, refusal or inability on the part of the Company, Xx. Xxxxxxx or the
Selling Shareholder to fulfill any of the conditions of this Agreement, (ii) in
accordance with the provisions of Section 8(a)(i) hereof or (iii) in accordance
with the provisions of Section 5(p) because any condition set forth in Section
5(b), 5(c), 5(f), 5(g), 5(j), 5(k) or 5(m) is not fulfilled, Xx. Xxxxxxx, or in
his discretion the Selling Shareholder, shall reimburse the Underwriters for all
of their out of pocket expenses, including the reasonable fees and disbursements
of counsel for the Underwriters.
22
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, Xx. Xxxxxxx and the Selling
Shareholder contained in Section 1 hereof or in certificates of any officer of
the Company or any subsidiary of the Company, Xx. Xxxxxxx or the Selling
Shareholder delivered pursuant to the provisions hereof on the Closing Date, to
the performance by the Company, Xx. Xxxxxxx and the Selling Shareholder of their
covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Preliminary Prospectus and
the Final Prospectus have been timely filed with the Reviewing Authority and
with the Qualifying Authorities, a final Mutual Reliance Review System Decision
Document obtained therefor and the Registration Statement has become effective
all in accordance with the introduction to this Agreement including, for greater
certainty, the timing requirements set out therein; and at the 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 SEC, no order having the effect of ceasing or suspending the distribution
of the Securities or the trading in the securities of the Company or any other
securities of the Company shall have been issued or proceedings therefor
initiated or threatened by any securities commission, securities regulatory
authority or stock exchange in Canada or the United States, and any request on
the part of the Reviewing Authority, any Qualifying Authority or the SEC for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the Underwriters.
(b) Opinion of Canadian Counsel to the Company, Xx. Xxxxxxx and the Selling
Shareholder. At the Closing Time, the Underwriters shall have received the
opinion, dated as of the Closing Date, of XxXxxxxx Xxxxxxxx LLP, Canadian
counsel to the Company, Xx. Xxxxxxx and the Selling Shareholder, in form and
substance reasonably satisfactory the Underwriters, together with signed or
reproduced copies of such opinion for each of the Underwriters to the effect set
forth in Exhibit A hereto.
(c) Opinion of U.S. Counsel to the Company, Xx. Xxxxxxx and the Selling
Shareholder. At the Closing Time, the Underwriters shall have received the
opinion dated as of the Closing Date, of Xxxxxxx Coie LLP, United States counsel
to the Company, Xx. Xxxxxxx and the Selling Shareholder, together with signed or
reproduced copies of such opinion for each of the other Underwriters, in form
and substance reasonably satisfactory to the Underwriters to the effect set
forth in Exhibit B hereto.
(d) Opinion of Canadian Counsel to Underwriters. At the Closing Time, the
Underwriters shall have received the opinion, dated as of the Closing Date, of
Xxxxxx Xxxxxx Gervais LLP, Canadian counsel to the Underwriters, together with
signed or reproduced copies of such opinion for each of the other Underwriters,
in form and substance reasonably satisfactory to the Underwriters. In giving
such opinion such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the laws of the Provinces of British Columbia, Alberta,
Ontario and Quebec and the federal laws of Canada applicable therein upon the
opinions of counsel satisfactory to the Underwriters. 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.
23
(e) Opinion of U.S. Counsel to Underwriters. At the Closing Time, the
Underwriters shall have received the opinion, dated as of the Closing Date, of
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, United States counsel to the
Underwriters, together with signed or reproduced copies of such opinion for each
of the other Underwriters, in form and substance reasonably satisfactory to the
Underwriters. 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 New
York and the federal law of the United States, upon the opinions of counsel
satisfactory to the Underwriters. 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) Certificates Relating to Dutch Subsidiary. At the Closing Time, the
Underwriters shall have received a certificate, dated the Closing Date, from De
Brauw Blackstone Westbroek, Dutch counsel to the Company, with respect to the
subsidiary listed in Schedule C as the Dutch Subsidiary and identified therein
as a "Significant Subsidiary," in form and substance reasonably satisfactory to
the Underwriters.
(g) Officers' Certificate. At the Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the U.S. Prospectus and the Canadian Prospectus, any change resulting
in a Material Adverse Effect, and the Underwriters shall have received a
certificate of each of the Chief Executive Officer of the Company and the Chief
Financial Officer of the Company, dated as of the Closing Time, to the effect
that (i) there has been no such change resulting in a Material Adverse Effect,
(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 the
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 the
Closing Time, (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or, to the knowledge of the Company, are
contemplated by the SEC, and (v) no order having the effect of ceasing or
suspending the distribution of the Securities shall have been issued and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, are contemplated by any securities commission or
securities regulatory authority in Canada.
(h) Xx. Xxxxxxx'x Certificate. At the Closing Time, the Underwriters shall
have received a certificate of Xx. Xxxxxxx, dated as of the Closing Date, to the
effect that (i) to his knowledge, after due inquiry, he is not aware of any
change resulting in a Material Adverse Effect, (ii) the representations and
warranties in Section 1(b) hereof are true and correct with the same force and
effect as though expressly made at and as of the Closing Time, (iii) he has
complied with all agreements and satisfied all conditions and covenants on his
part to be performed or satisfied at or prior to the Closing Time, and (iv) if
applicable, he acknowledges and agrees that he has complied with Section
3(b)(iv) hereof.
(i) Selling Shareholder's Certificate. At the Closing Time, the
Underwriters shall have received a certificate of the Selling Shareholder, dated
as of the Closing Date, to the effect that (i) to its knowledge, after due
investigation, it is not aware of any change resulting in a
24
Material Adverse Effect, (ii) the representations and warranties in Section 1(b)
hereof are true and correct with the same force and effect as though expressly
made at and as of the Closing Time, (iii) it has complied with all agreements
and satisfied all conditions and covenants on its part to be performed or
satisfied at or prior to the Closing Time, and (iv) if applicable, it
acknowledges and agrees that it has complied with Section 3(b)(iv) hereof..
(j) Accountant's Comfort Letter. At the time of the execution of this
Agreement and at the time of filing the Final Prospectus, the Underwriters shall
have received from KPMG LLP, a letter dated such date, in form and substance
reasonably satisfactory to the Underwriters together with signed or reproduced
copies of such letter for each of the other Underwriters, which has been
prepared in accordance with SAS 72 and SAS 100, and contains statements and
information of the type ordinarily included in accountants' "comfort letters" to
U.S. underwriters with respect to the financial statements and certain financial
information contained in the U.S. Prospectus and the Canadian Prospectus.
(k) Bring-down Comfort Letter. At the Closing Time, the Underwriters shall
have received from KPMG LLP, a letter, dated as of the Closing Date, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (j) of this Section, except that the "specified date" referred to
shall be a date not more than three business days prior to the Closing Date.
(l) No Objection. The NASD shall have confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(m) Lock-up Agreements. At the date of this Agreement, the Underwriters
shall have received an agreement substantially in the form set forth in Exhibit
C hereto, signed by the persons listed on Schedule D hereto.
(n) No Trading Suspension. At the Closing Time, the Common Shares shall be
listed for trading on the NYSE and the TSX, and no order ceasing or suspending
trading in the Common Shares or prohibiting the sale of the Securities or the
trading of any securities of the Company shall have been issued or be pending
or, to the knowledge of the Company, threatened.
(o) Additional Documents. At the Closing Time counsel for the Underwriters
shall have been furnished with such documents, including certificates as to tax
matters, and opinions as they may reasonably require for the purpose of enabling
them to pass upon the 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, Xx. Xxxxxxx and the Selling Shareholder in connection with
the sale of the Securities as herein contemplated shall be satisfactory in form
and substance to the Underwriters and counsel for the Underwriters, acting
reasonably.
(p) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, the obligations of the several Underwriters to purchase the relevant
Securities, may be terminated by the Underwriters
25
by notice to the Company and the Selling Shareholder at any time at or prior to
the Closing Time and such termination shall be without liability of any party to
any other party except as provided in Section 4 and except that Section 6 shall
survive any such termination and remain in full force and effect.
Section 6. Indemnification.
(a) Indemnification of Underwriters, Xx. Xxxxxxx and Selling Shareholder by
Company. The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls such Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act, Xx. Xxxxxxx and the Selling
Shareholder and each person, if any, who controls the Selling Shareholder within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all losses, claims, damages or liabilities, joint or several (and
actions in respect thereof), to which such Underwriter, Xx. Xxxxxxx, such
Selling Shareholder or such controlling person may become subject, under the
1933 Act, Canadian Securities Laws or other federal, provincial or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Canadian Prospectus or the U.S. Prospectus or
any preliminary prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading and will reimburse, as incurred, such Underwriter, Xx.
Xxxxxxx, such Selling Shareholder or such controlling person for any legal or
other expenses reasonably incurred by such Underwriter, Xx. Xxxxxxx, such
Selling Shareholder or such controlling person in connection with investigating,
defending or appearing as a third party witness in connection with any such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in any of such
documents in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of such Underwriter, on behalf of Xx.
Xxxxxxx, or on behalf of the Selling Shareholder expressly for use therein, and
provided, further, that such indemnity with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) from whom the person asserting any
such loss, claim, damage, liability or action purchased Securities which are the
subject thereof to the extent that any such loss, claim, damage, liability or
action (i) results from the fact that such Underwriter failed to send or give a
copy of the Canadian Prospectus or the U.S. Prospectus (as amended or
supplemented), as applicable, to such person at or prior to the confirmation of
the sale of such Securities to such person in any case where such delivery is
required by the 1933 Act, the 1933 Act Regulations or Canadian Securities Laws
and (ii) arises out of or is based upon an untrue statement or omission of a
material fact contained in such preliminary prospectus that was corrected in the
Canadian Prospectus or the U.S. Prospectus (as amended and supplemented), as
applicable, unless such failure resulted from non-compliance by the Company with
Sections 3(a)(v) or 3(a)(vi) hereof, and provided, however, that the Company
will not be liable to Xx. Xxxxxxx or the Selling Shareholder (or any person
controlling the Selling Shareholder) to the extent that any such loss, claim,
damage, liability or action is of the type referred to in clauses (i) and (ii)
of this paragraph
26
(a). The indemnity agreement in this paragraph (a) shall be in addition to any
liability which the Company may otherwise have.
(b) Indemnification of Underwriters and Company by Xx. Xxxxxxx and the
Selling Shareholder. Xx. Xxxxxxx and the Selling Shareholder each jointly and
severally agrees to indemnify and hold harmless each Underwriter and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act and the Company, each of its
directors, each of its officers who have signed the Registration Statement or
the Canadian Prospectus and each person 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 losses, claims, damages or liabilities, joint or several (and actions in
respect thereof), to which such Underwriter, the Company or such controlling
person, director or officer may become subject, under the 1933 Act, Canadian
Securities Laws or other federal, provincial or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, the Canadian Prospectus or the U.S. Prospectus or any preliminary
prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
of alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with information furnished in writing by either Xx.
Xxxxxxx or the Selling Shareholder to the Company expressly for use therein; and
will reimburse, as incurred, such Underwriter, the Company or such controlling
person, director or officer for any legal or other expenses reasonably incurred
by such Underwriter, the Company or such controlling person, director or officer
in connection with investigating, defending or appearing as a third party
witness in connection with any such loss, claim, damage, liability or action.
The Underwriters and the Company acknowledge that the statements with respect to
Xx. Xxxxxxx and the Selling Shareholder set forth under the heading "Principal
and Selling Shareholders" in the Canadian Prospectus and the U.S. Prospectus
have been furnished in writing by Xx. Xxxxxxx and the Selling Shareholder for
inclusion in the Canadian Prospectus and the U.S. Prospectus and constitute the
only information furnished in writing by or on behalf of either Xx. Xxxxxxx or
the Selling Shareholder for inclusion in the Canadian Prospectus and the U.S.
Prospectus. The indemnity agreement contained in this subsection (b) shall be in
addition to any liability which Xx. Xxxxxxx or the Selling Shareholder may
otherwise have.
(c) Indemnification of Xx. Xxxxxxx, the Selling Shareholder and Company by
Underwriters. Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless Xx. Xxxxxxx, the Selling Shareholder and each
person, if any, who controls the Selling Shareholder within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, and the Company, each
of its directors, each of its officers who has signed the Registration Statement
or the Canadian 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 losses, claims, damages or liabilities, joint or several
(and actions in respect thereof) to which Xx. Xxxxxxx, the Selling Shareholder,
the Company or any such director, officer, or controlling person may become
subject, under the 1933 Act, Canadian Securities Laws or other federal,
provincial or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims,
27
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement or the Canadian Prospectus or the U.S. Prospectus or any
preliminary prospectus, or any amendment or supplement thereto, or arise out of
or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with information furnished
in writing by that Underwriter to the Company expressly for use therein; and
will reimburse, as incurred, all legal or other expenses reasonably incurred by
Xx. Xxxxxxx, the Selling Shareholder, the Company or any such director, officer
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action. Xx. Xxxxxxx, the Selling Shareholder
and the Company acknowledge that the statements with respect to the public
offering of the Securities set forth under the heading "Plan of Distribution" in
the U.S. Prospectus and the Canadian Prospectus have been furnished by the
Underwriters to the Company expressly for use therein and constitute the only
information furnished in writing by or on behalf of the Underwriters for
inclusion in the U.S. Prospectus or the Canadian Prospectus. The indemnity
agreement contained in this subsection (c) shall be in addition to any liability
which the Underwriters may otherwise have.
(d) Actions Against Parties; Notification. Promptly after receipt by an
indemnified party under this Section 6 of notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be made
against one or more indemnifying parties under this Section 6, notify such
indemnifying party or parties of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under subsection (a), (b) or
(c) of this Section 6 or to the extent that the indemnifying party was not
adversely affected by such omission. In case any such action is brought against
an indemnified party and it notifies an indemnifying party or parties of the
commencement thereof, the indemnifying party or parties against which a claim is
to be made will be entitled to participate therein and, to the extent that it or
they may wish, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party has reasonably concluded that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and otherwise to participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 6 for any legal or other expenses (other than the reasonable
costs of investigation) subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party has
employed such counsel in connection with the assumption of such different or
additional legal defenses in accordance with the proviso to the immediately
preceding sentence, (ii) the indemnifying party has not employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the
28
action, or (iii) the indemnifying party has authorized in writing the employment
of counsel for the indemnified party at the expense of the indemnifying party;
provided, in each case, that the indemnifying party shall not be liable for the
fees and expenses of more than one counsel for all indemnified parties and the
indemnifying party shall only be liable for reasonable fees and expenses.
(e) Contribution. If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a), (b) or (c) above in respect of any losses, claims, damages,
expenses or liabilities (or actions in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) (i) in such proportion as is
appropriate to reflect the relative benefits received by each of the
contributing parties, on the one hand, and the party to be indemnified, on the
other hand, from the offering of the Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law and in all cases
where the Company is the indemnifying party, 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 each of the contributing parities, on the
one hand, and the party to be indemnified, on the other hand in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. In any case
where Xx. Xxxxxxx or the Selling Shareholder is a contributing party and the
Underwriters are the indemnified party, the relative benefits received by Xx.
Xxxxxxx or the Selling Shareholder, as applicable, on the one hand, and the
Underwriters, on the other, shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Securities of the Selling
Shareholder (before deducting expenses) bear to the total underwriting
commission received by the Underwriters in respect of such Securities hereunder,
in each case as set forth in the table on the cover page of the U.S. Prospectus.
Relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company, Xx. Xxxxxxx or the Selling Shareholder or by the Underwriters, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this paragraph
(e) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this paragraph (e), the
Underwriters shall not be required to contribute any amount in excess of the
underwriting commission applicable to the Securities purchased by the
Underwriters hereunder. The Underwriters' obligations to contribute pursuant to
this paragraph (e) are several in proportion to their respective underwriting
obligations, and not joint. 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 paragraph (e), (i) 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, (ii) each person, if any, who controls the Selling Shareholder
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 Selling Shareholder,
29
subject to this paragraph (e), and (iii) each director of the Company, each
officer of the Company who has signed the Registration Statement or the Canadian
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, subject to this paragraph (e). Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect to which a claim
for contribution may be made against another party or parties under this
paragraph (e), notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any other
obligation: (x) it or they may have hereunder or otherwise than under this
paragraph (e), or (y) to the extent that such party or parties were not
adversely affected by such omission. The contribution agreement set forth above
shall be in addition to any liabilities which any indemnifying party may
otherwise have.
Section 7. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement and
in certificates of officers of the Company or any of its subsidiaries, Xx.
Xxxxxxx and the Selling Shareholder delivered 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, Xx. Xxxxxxx or the Selling Shareholder, and shall survive delivery
of the Securities to the Underwriters.
Section 8. Termination of Agreement.
(a) Termination; General. The Underwriters may terminate this Agreement, by
notice to the Company and the Selling Shareholder, at any time at or prior to
the 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
U.S. Prospectus (exclusive of any supplement thereto) and the Canadian
Prospectus (exclusive of any supplement thereto), any change resulting in a
Material Adverse Effect, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or Canada, or any outbreak
of hostilities or escalation thereof or other calamity or crisis or any change
or development in each case involving a prospective material adverse change in
the financial markets in the United States or Canada, in each case the effect of
which is such as to make it, in the judgment of the Underwriters impracticable
or inadvisable 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 SEC, the Reviewing Authority, any
Qualifying Authority, any other securities commission or securities regulatory
authority in Canada or the NYSE or the TSX, or if trading generally on the NYSE,
the TSX, 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 SEC, the Reviewing Authority, any Qualifying Authority, any
other securities commission or securities regulatory authority in Canada, the
National Association of Securities Dealers, Inc. or any other governmental
authority, or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States or Canada, or
(iv) if a banking moratorium has been declared by either United States federal,
New York state or Canadian federal authorities, or (v) if there
30
should develop, occur or come into effect or existence any event, action, state,
condition or major financial occurrence of national or international consequence
or any law or regulation which in the opinion of any of the Underwriters
seriously adversely affects, or will seriously adversely affect, the financial
markets or the business, operations or affairs of the Company and its
subsidiaries taken as a whole.
(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 Section 6
shall survive such termination and remain in full force and effect.
Section 9. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at the Closing Time to purchase the Securities which
it or they are obligated to purchase under this Agreement (the "Defaulted
Securities"), the Underwriters shall have the right, within 24 hours thereafter,
to make arrangements for one or more of the non defaulting Underwriters, or any
other underwriters reasonably acceptable to the Company and the Selling
Shareholder, 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 Underwriters shall not have completed such arrangements within such
24 hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the number
of Securities to be purchased hereunder, the non defaulting Underwriters shall
be obligated, each 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 shall terminate without
liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 9 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, either the Underwriters or the Selling
Shareholder shall have the right to postpone the Closing Time for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement, the U.S. Prospectus or the Canadian Prospectus or in any other
documents or arrangements. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 9.
Section 10. Agent for Service; Submission to Jurisdiction; Waiver of
Immunities. By the execution and delivery of this Agreement, the Company, Xx.
Xxxxxxx and the Selling Shareholder (i) acknowledge that they have, by separate
written instrument, irrevocably designated and appointed Xxxxxxx Bros.
Auctioneers (America) Inc., (the "Agent for Service"), as their authorized agent
upon which process may be served in any suit or proceeding arising out of or
relating to this Agreement or the Securities, that may be instituted in any
federal or state court
31
in the State of New York, or brought under U.S. federal or state securities
laws, and acknowledge that the Agent for Service has accepted such designation,
(ii) submit to the jurisdiction of any such court in any such suit or
proceeding, and (iii) agree that service of process upon the Agent for Service
(or any successor) and written notice of said service to the Company (mailed or
delivered to its Corporate Secretary at its principal office in Richmond,
British Columbia), to Xx. Xxxxxxx (at his address as set forth in Section 11
hereof), or to the Selling Shareholder (mailed or delivered to its President at
the address set forth in Section 11 hereof) shall be deemed in every respect
effective service of process upon the Company, Xx. Xxxxxxx and the Selling
Shareholder in any such suit or proceeding. The Company, Xx. Xxxxxxx and the
Selling Shareholder further agree to take any and all action, including the
execution and filing of any and all such documents and instruments, as may be
necessary to continue such designation and appointment of the Agent for Service
in full force and effect so long as any of the Securities shall be outstanding.
To the extent that the Company, Xx. Xxxxxxx and the Selling
Shareholder have or hereafter may acquire any immunity from jurisdiction of any
court or from any legal process (whether through service of notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to themselves or their respective property, they hereby irrevocably
waive such immunity in respect of their obligations under the above-referenced
documents, to the extent permitted by law.
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 Underwriters, c/o Raymond Xxxxx, 2300 -
000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx, X0X 0X0, Attention
of Xxx XxxXxx; notices to the Company shall be directed to it at 0000 Xxxxx
Xxxx, Xxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx, X0X 0X0, Attention of Corporate
Secretary; notices to Xx. Xxxxxxx shall be directed to Xxxxx Xxxxxxx, c/o
Ritchie Bros. Auctioneers Incorporated, 0000 Xxxxx Xxxx, Xxxxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxxx, X0X 0X0; and notices to the Selling Shareholder shall be
directed to Globo Investments Ltd., c/o Ritchie Bros. Auctioneers Incorporated,
0000 Xxxxx Xxxx, Xxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx, X0X 0X0.
32
Section 12. Parties. This Agreement shall inure to the benefit of and be
binding upon the Underwriters, the Company and its successors, Xx. Xxxxxxx and
his heirs and legal representatives and the Selling Shareholder and its
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, the Company and its successors, Xx. Xxxxxxx and his heirs and
legal representatives, the Selling Shareholder and its successors and the
controlling persons and officers and directors referred to in Section 6 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, the Company and its
successors, Xx. Xxxxxxx and his heirs and legal representatives, the Selling
Shareholder and its 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.
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. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
Section 15. Severability. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 16. Amendment or Modification. This Agreement may not be amended or
otherwise modified or any provision hereof waived except by an instrument in
writing signed by or on behalf of the Underwriters, the Company, Xx. Xxxxxxx and
the Selling Shareholder.
Section 17. 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
among the Underwriters, the Company, Xx. Xxxxxxx and the Selling Shareholder in
accordance with its terms.
Very truly yours,
XXXXXXX BROS. AUCTIONEERS INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: VP Finance, Chief Financial
Officer and Corporate Secretary
XXXXX X. XXXXXXX
/s/ Xxxxx X. Xxxxxxx
----------------------------------------
GLOBO INVESTMENTS LTD.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxxxxx
President
CONFIRMED AND ACCEPTED,
as of the date first above written:
By: XXXXXXX XXXXX LTD. By: BMO XXXXXXX XXXXX INC.
By: /s/ Xxx X. XxxXxx By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------- ------------------------------------
Name: Xxx X. XxxXxx Name: Xxxxxx X. Xxxxxxxxx
Title: Managing Director Title: Executive Managing Director
By: SCOTIA CAPITAL INC. By: CIBC WORLD MARKETS INC.
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxx X. Xxxxxxx
--------------------------------- ------------------------------------
Name: Xxxxx Xxxxxx Name: Xxxx X. Xxxxxxx
Title: Managing Director Title: Managing Director
By: SPROTT SECURITIES INC. By: BLACKMONT CAPITAL INC.
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------- ------------------------------------
Name: Xxxxxx X. Xxxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Director Title: Director
SCHEDULE A
List of Underwriters
NUMBER OF
NAME OF UNDERWRITER INITIAL SECURITIES
------------------- ------------------
Xxxxxxx Xxxxx Ltd. ........................................ 978,261
BMO Xxxxxxx Xxxxx Inc. .................................... 543,478
Scotia Capital Inc. ....................................... 326,087
CIBC World Markets Inc. ................................... 217,391
Sprott Securities Inc. .................................... 54,348
Blackmont Capital Inc. .................................... 54,348
---------
Total .................................................. 2,173,913
=========
Sch A-1
SCHEDULE B
Pricing Information
Xxxxxxx Bros. Auctioneers Incorporated
2,173,913 Common Shares
(without par value)
1. The public offering price per share for the Securities, determined as
provided in Section 2, shall be US$39.80 per share.
2. The purchase price per share to be paid by the several Underwriters shall
be US$38.208, being an amount equal to the public offering price set forth
above less the underwriting commission as set forth in paragraph 3 below.
3. The underwriting commission per share payable for the Securities to be paid
by the Selling Shareholder shall be US$1.592 per share.
Sch B-1
SCHEDULE C
List of Significant Subsidiaries
CANADIAN SUBSIDIARIES
Xxxxxxx Bros. Holdings Ltd.
Xxxxxxx Bros. Auctioneers (Canada) Ltd.
Xxxxxxx Bros. Properties Ltd.
Xxxxxxx Bros. Auctioneers (International) Ltd.
U.S. SUBSIDIARIES
Xxxxxxx Bros. Holdings Inc.
Xxxxxxx Bros. Holdings (America) Inc.
Xxxxxxx Bros. Auctioneers (America) Inc.
Xxxxxxx Bros. Properties Inc.
DUTCH SUBSIDIARY
Xxxxxxx Bros. Auctioneers B.V.
Sch C-1
SCHEDULE D
List of Persons and Entities Subject to Lock-up
Xxxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxx
Xxxxxxxx X. Xxxxxxx
C. Xxxxxxx Xxxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxxx
G. Xxxxxx Xxxx
Xxxx X. Xxxxxxxxx
Xxxx Xxxxx
Xxxxxxx Xxxxxxx
Xxxxxxx X. Xxxx
Xxxxxx X. Xxxxxxx
Sch D-1
EXHIBIT A
FORM OF OPINION OF CANADIAN COUNSEL
TO THE COMPANY, XX. XXXXXXX AND THE SELLING SHAREHOLDER
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
1. The Company has been duly amalgamated and is validly existing as a
corporation in good standing under the laws of Canada.
2. The Company has all necessary corporate power and capacity to own, lease
and operate its properties and to conduct its business as described in the
U.S. Prospectus and the Canadian Prospectus.
3. The Company is extra-provincially registered or otherwise qualified as an
extra-provincial or foreign corporation to transact business and is in good
standing in each jurisdiction in Canada 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.
4. The Company and the Selling Shareholder each have all necessary power and
capacity to execute, deliver and perform their respective obligations under
the Underwriting Agreement and the Underwriting Agreement has been duly
authorized and, to the extent that execution and delivery are matters
governed by the laws of the Province of British Columbia and the federal
laws of Canada applicable therein, has been duly executed and delivered by
the Company, Xx. Xxxxxxx and the Selling Shareholder.
5. The subsidiaries listed in Schedule C as Canadian Subsidiaries and
identified therein as "Significant Subsidiaries" (each a "Canadian
Subsidiary") have been duly incorporated, continued or organized and are
validly existing as corporations in good standing under the laws of the
jurisdiction of their incorporation, continuance or organization, have all
necessary corporate power and authority to own, lease and operate their
properties and to conduct their business as described in the U.S.
Prospectus and the Canadian Prospectus and are extra-provincially
registered or otherwise qualified as an extra-provincial or foreign
corporation to transact business and are in good standing in each
jurisdiction in Canada in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except for the extra provincial registration of Xxxxxxx Bros. Holdings Ltd.
in British Columbia and the extra-provincial registration of Xxxxxxx Bros.
Auctioneers (Canada) Ltd., Xxxxxxx Bros. Properties Ltd. and Xxxxxxx Bros.
Holdings Ltd. in Quebec and 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 U.S. Prospectus and the Canadian Prospectus, all
of the issued and outstanding shares in the capital of each Canadian
Subsidiary (other than Xxxxxxx Bros. Holdings Ltd., as to which such
counsel need express no opinion) has been duly authorized and validly
issued and is fully paid and non-assessable and, to the knowledge of such
counsel, all of such issued and outstanding shares are owned by the
Company, directly or through
A-1
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity and, to the knowledge of such counsel,
none of the outstanding shares in the capital of any Canadian Subsidiary
was issued in violation of the preemptive or similar rights of any
securityholder of such Canadian subsidiary.
6. The authorized, issued and outstanding share capital of the Company is as
set forth in the U.S. Prospectus and the Canadian Prospectus under the
caption "Description of Share Capital" (except for subsequent issuances, if
any, pursuant to the exercise of convertible securities or options or
warrants referred to in the U.S. Prospectus and the Canadian Prospectus).
The issued and outstanding shares in the capital or the Company have been
duly authorized and validly issued and are fully paid and non-assessable.
The attributes of the Common Shares conform in all material respects to the
description thereof contained in the Canadian Prospectus and the U.S.
Prospectus. To the knowledge of such counsel, none of the outstanding
Common Shares have been issued in violation of the pre-emptive rights of
any shareholder of the Company.
7. The form of share certificate representing the Common Shares has been duly
approved by the Company and complies with all applicable statutory
requirements, with any applicable requirements of the charter and by-laws
of the Company, with the provisions of the Canada Business Corporations Act
relating thereto and the requirements of The Toronto Stock Exchange for
share certificates.
8. To the knowledge of such counsel, there is not pending or threatened any
action, suit, proceeding, inquiry, or investigation, to which the Company
or any Canadian Subsidiary is a party, or to which the property of the
Company or any Canadian 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 affect the
properties or assets of the Company or any Canadian Subsidiary or the
consummation of the transactions contemplated in the Underwriting Agreement
or the performance by the Company of its obligations thereunder.
9. The Canadian Prospectus (excluding the financial statements and other
financial data included or incorporated therein or omitted therefrom, as to
which such counsel need not express any opinion) complies as to form in all
material respects to the requirements of Canadian Securities Laws.
10. The documents incorporated by reference in the Canadian Prospectus as
amended or supplemented (other than the financial statements and other
financial data included or incorporated or deemed to be incorporated
therein, as to which such counsel need not express any opinion), when they
were filed with the Reviewing Authority and the Qualifying Authorities,
complied as to form in all material respects to the formal requirements of
the securities laws, rules and regulations of the Province of British
Columbia as interpreted and applied by the Reviewing Authority and of the
Qualifying Provinces as interpreted and applied by the relevant Qualifying
Authority under published policy statements.
A-2
11. Assuming the Company has complied with its disclosure obligations under
Canadian Securities Laws, and that there has been no material change since
the date of filing of the Canadian Prospectus, (i) the Canadian Prospectus
(including the documents incorporated by reference therein) is the entire
disclosure document required to offer the Securities in the Qualifying
Provinces, and (ii) the exhibits to the Registration Statement include (A)
all reports or information that in accordance with the requirements of the
Reviewing Authority are required to be made publicly available in
connection with the offering of the Securities and (B) all publicly
available disclosure documents filed in connection with the offering of the
Securities with the Reviewing Authority or the Qualifying Authorities.
12. The information in the U.S. Prospectus and the Canadian Prospectus under
the captions "Income Tax Considerations for U.S. Shareholders - Canadian
Federal Income Tax Considerations" and "Description of Share Capital" and
in the Canadian Prospectus under the caption "Eligibility for Investment",
to the extent that it constitutes matters of law, or summaries of legal
matters, the Company's constating documents or legal conclusions, has been
reviewed by such counsel and is accurate in all material respects. All
other statements in the Canadian Prospectus describing Canadian statutes,
regulations, legal or governmental proceedings or contracts or other
documents to which the Company is a party, to the extent that such
statements constitute matters of law or legal conclusions, such statements
fairly present the information disclosed therein and insofar as such
statements purport to describe the provisions of laws or documents referred
to therein, such statements are accurate in all material respects. The
information in the Registration Statement under "Part II - Information Not
Required to Be Delivered to Offerees or Purchasers - Indemnification" is
accurate in all material respects.
13. To the knowledge of such counsel, there are no Canadian statutes or
regulations that are required to be described in the Canadian Prospectus
that are not described as required.
14. To the knowledge of such counsel, neither the Company nor any Canadian
Subsidiary is in violation of its constituting documents or by-laws and no
default by the Company or any Canadian Subsidiary exists in the due
performance or observance of any material obligation, agreement, covenant
or condition in any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument to which the Company or any Canadian
Subsidiary is a party, except for defaults that would not result in a
Material Adverse Effect.
15. No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental
authority or agency in Canada is necessary or required to be made or
obtained by the Company or the Selling Shareholder in connection with the
due authorization, execution and delivery of this Agreement or for the
offering, sale or delivery of the Securities, except for such filings of
insider reports as may be required to be made by Xx. Xxxxxxx or the Selling
Shareholder after the date of such opinion under applicable Canadian
Securities Laws.
16. The execution, delivery and performance of this Agreement by the Company,
Xx. Xxxxxxx and the Selling Shareholder and the consummation of the
transactions contemplated in
A-3
this Agreement and in the Registration Statement (including the sale of the
Securities) by the Company, Xx. Xxxxxxx and the Selling Shareholder and
compliance by the Company with its obligations under this Agreement do not
and will not (i) conflict with or result in any violation of the provisions
of the constating documents of the Company or any Canadian Subsidiary or of
the Selling Shareholder, or (ii) materially conflict with any applicable
law, statute, rule, regulation, judgment, order, writ or decree, known to
such counsel, of any government, government instrumentality or court in
Canada having jurisdiction over the Company or any Canadian Subsidiary or
of the Selling Shareholder or any of their respective properties, assets or
operations.
17. To the knowledge of such counsel, the sale of the Securities is not subject
to pre-emptive or other similar rights of any securityholder of the
Company.
18. To the knowledge of such counsel, after due inquiry, no order having the
effect of ceasing or suspending the distribution of the Securities or the
trading in the Common Shares has been issued by any securities regulatory
authority in the Qualifying Provinces and no proceedings for that purpose
have been instituted or are pending or contemplated.
19. The Common Shares are listed and posted for trading on the Toronto Stock
Exchange.
20. The Company is a "reporting issuer" or, where such concept does not apply,
has comparable status, under the securities legislation of each of the
Provinces of Canada and is not in default under such legislation with
respect to the filing of financial statements or the payment of prescribed
fees and charges related to those filings.
21. To the knowledge of such counsel, there are no persons with registration
rights or other similar rights to have any securities registered pursuant
to the Registration Statement or otherwise registered by the Company under
the 1933 Act or qualified for distribution under Canadian Securities Laws.
22. A court of competent jurisdiction in the Province of British Columbia (a
"British Columbia Court") would give effect to the choice of the law of the
State of New York ("New York law") as the proper law governing the
Underwriting Agreement, provided that such choice of law is: (A) bona fide
(primarily in the sense that it was not made with a view to avoiding the
consequences of the laws of any other jurisdiction); (B) legal; and (C) not
contrary to public policy, as that term is applied by a British Columbia
Court ("Public Policy"). To such counsel's knowledge, no Public Policy
would be offended by recognition of this choice of law, nor is such counsel
aware of any basis upon which such choice of law would not be bona fide and
legal.
23. In an action on a final and conclusive judgment in personam of any federal
or state court in the State of New York (a "New York Court") that is not
impeachable as void or voidable under New York law, a British Columbia
Court would give effect to the appointment by the Company of Xxxxxxx Bros.
Auctioneers (America) Inc. as its agent to receive service of process in
the United States of America under the Underwriting Agreement and to the
provisions in the Underwriting Agreement whereby the Company
A-4
submits to the non-exclusive jurisdiction of a New York Court, except that
a British Columbia Court may not consider itself bound by any provision of
the Underwriting Agreement purporting to make that submission to
jurisdiction exclusive.
24. If the Underwriting Agreement is sought to be enforced in the Province of
British Columbia in accordance with the laws applicable thereto as chosen
by the parties, namely New York law, a British Columbia Court would,
subject to paragraph 22 above, recognize the choice of New York law and,
upon such law being specifically pleaded and appropriate evidence as to
such law being adduced, apply such law to all issues that under the
conflict rules of the Province of British Columbia, are to be determined in
accordance with the proper or governing law of the contract, provided that:
(A) none of the provisions of the Underwriting Agreement, or of applicable
New York law, are contrary to Public Policy; (B) such New York law does not
constitute, directly or indirectly, revenue, expropriatory, public or penal
laws; (C) in matters of procedure, the laws of the Province of British
Columbia will be applied; (D) a British Columbia Court will retain
discretion to decline to hear such action if it is contrary to Public
Policy for it to do so, or if it is not the appropriate forum to hear such
an action, or if concurrent proceedings are being brought elsewhere; and
(E) a British Columbia Court may not enforce an obligation enforceable
under the laws of the Province of British Columbia where performance of the
obligation would be illegal under the laws of the place of performance.
25. The laws of the Province of British Columbia and the federal laws of Canada
applicable therein permit an action to be brought in a British Columbia
Court on a final and conclusive judgment in personam of a New York Court
that is subsisting and unsatisfied respecting the enforcement of the
Underwriting Agreement that is not impeachable as void or voidable under
New York law and that is for a sum certain if: (A) the New York Court that
rendered such judgment had jurisdiction over the judgment debtor, as
recognized by a British Columbia Court; (B) proper service of process in
respect of the proceeding in which such judgment was obtained was made in
accordance with New York law; (C) such judgment was not obtained by fraud
or in a manner contrary to natural justice and the enforcement thereof
would not be inconsistent with Public Policy or contrary to any order made
by the Attorney-General of Canada under the Foreign Extraterritorial
Measures Act (Canada) or the Competition Tribunal under the Competition Act
(Canada); (D) the enforcement of such judgment in the Province of British
Columbia does not constitute, directly or indirectly, the enforcement of
any laws of the State of New York or the United States of America which a
British Columbia Court would characterize as revenue, expropriatory, public
or penal laws; (E) in an action to enforce a default judgment, the judgment
does not contain a manifest error on its face; (F) the enforcement of such
judgment in the Province of British Columbia does not result in giving
foreign laws extra-territorial effect; (G) the action to enforce such
judgment is commenced within the applicable limitation period after the
date of such judgment; and (H) the judgment does not conflict with another
final and conclusive judgment in the same cause of action, except that a
British Columbia Court may stay an action to enforce a foreign judgment if
an appeal of a judgment is pending or the time for appeal has not expired,
provided further that under the Currency Act (Canada), a British Columbia
Court may only give judgment in Canadian dollars.
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26. As of the Closing Time, all laws of the Province of Quebec relating to the
use of the French language will have been complied with in connection with
the offering and sale of the Securities to purchasers in the Province of
Quebec if such purchasers receive copies of the French and English language
versions of the Canadian Prospectus and forms of order and confirmation in
the French language or a bilingual form or copies of the French language
version of the Canadian Prospectus and forms of order and confirmation in
the French language only or, in the case of individuals so requesting in
writing, copies of the English language version of the Canadian Prospectus
and forms of order and confirmation in the English language or in a
bilingual form, on the assumption that no documents other than the Canadian
Prospectus and the forms of order and confirmation constitute the contract
for purchase of the Securities.
27. The French language version of the Canadian Prospectus (except for the
financial information provided by KPMG LLP, Chartered Accountants) is in
all material respects a complete and accurate translation of the English
language version thereof.
28. No stamp or other issuance or transfer taxes or duties or withholding taxes
are payable by or on behalf of the Underwriters to the Government of Canada
or the Government of British Columbia or any political subdivision thereof
or any authority or agency thereof or therein having power to tax in
connection with (A) the sale and delivery of the Securities by the Selling
Shareholder to or for the respective accounts of the Underwriters or (B)
the sale and delivery outside Canada by the Underwriters of the Securities
in the manner contemplated in the Underwriting Agreement.
29. Such counsel have participated in the preparation of the Registration
Statement, the U.S. Prospectus and the Canadian Prospectus and in telephone
conferences with officers and other representatives of the Company,
representatives of the independent chartered accountants for the Company,
and representatives of the Underwriters, at which the contents of the
Registration Statement, the U.S. Prospectus and the Canadian Prospectus,
and related matters were discussed and, although such counsel are not
passing upon and do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement, the U.S. Prospectus and the Canadian Prospectus except as set
forth in paragraphs 6 and 12 above, on the basis of the foregoing no
information has come to such counsel's attention that causes them to
believe that, (A) the Registration Statement (except for the financial
statements and other financial data included or incorporated therein or
omitted therefrom, as to which such counsel need express no belief), at the
time the Registration Statement became effective under the 1933 Act,
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 (B) the U.S. Prospectus and the
Canadian Prospectus as amended or supplemented prior to the Closing Time
(except for the financial statements and other financial data included or
incorporated therein or omitted therefrom, as to which such counsel need
express no belief), as of the date of the U.S. Prospectus and the Canadian
Prospectus or the date hereof contained or contains 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.
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30. In rendering such opinion, such counsel may rely (A) as to all matters
governed by the laws of jurisdictions other than the laws of the Provinces
of British Columbia, Alberta, Ontario and Quebec and the federal laws of
Canada applicable therein, upon opinions of local counsel, who shall be
counsel satisfactory to counsel for the Underwriters (which opinions shall
be dated and furnished to the Underwriters on the Closing Date, shall be
satisfactory in form and substance to counsel for the Underwriters and
shall expressly state that the Underwriters may rely on such opinions as if
they were addressed to them), provided that XxXxxxxx Xxxxxxxx shall state
in their opinion that they believe that they and the Underwriters are
justified in relying upon such opinions, and (B), 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, Xx. Xxxxxxx, the
Selling Shareholder 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.
A-7
EXHIBIT B
FORM OF OPINION OF U.S. COUNSEL
TO THE COMPANY, XX. XXXXXXX AND THE SELLING SHAREHOLDER
TO BE DELIVERED PURSUANT TO
SECTION 5(c)
1. The subsidiaries listed in Schedule C as U.S. Subsidiaries and identified
therein as "Significant Subsidiaries" (each a "U.S. Subsidiary"), have been
duly incorporated and are validly existing under the laws of the
jurisdiction of their incorporation, have corporate power and authority to
own, lease and operate their properties and to conduct their business as
described in the U.S. Prospectus and are duly qualified as foreign
corporation to transact business and are in good standing in each
jurisdiction set forth in a schedule to such opinion, 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 each U.S.
Subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and, to the knowledge of such counsel, is owned by the
Company, directly or through subsidiaries, free and clear of any material
security interest, mortgage, pledge, lien, encumbrance, claim or equity; to
the knowledge of such counsel, none of the outstanding shares of capital
stock of any U.S. Subsidiary was issued in violation of the preemptive or
similar rights of any securityholder of such U.S. Subsidiary.
2. The Registration Statement is effective under the 1933 Act pursuant to Rule
467(a) and the Form F-X was filed with the SEC prior to the effectiveness
of the Registration Statement; and, to the knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or are
pending or threatened by the SEC.
3. The Registration Statement, 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 schedules and other financial and statistical data included or
incorporated therein or omitted therefrom, as to which such counsel need
express no opinion) complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
4. The Form F-X complies as to form in all material respects with the
applicable requirements of the 1933 Act and the 1933 Act Regulations.
5. The form of certificate used to evidence the Common Shares complies in all
material respects with the requirements of the NYSE.
6. The summary set forth in the U.S. Prospectus under the heading "Income Tax
Considerations for U.S. Shareholders -- United States Federal Income Tax
Considerations", to the extent that it constitutes summaries of legal
matters or legal conclusions is accurate in all material respects.
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7. To the knowledge of such counsel, none of the U.S. Subsidiaries is in
violation of its charter or by-laws.
8. No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental
authority or agency in the United States (other than under the 1933 Act and
the 1933 Act Regulations, which have been obtained, or as may be required
under the securities or blue sky laws of the various states or by the NASD,
as to which such counsel need not express any opinion) is necessary or
required in connection with the offering, sale or delivery of the
Securities.
9. To the knowledge of such counsel, there are no persons with registration
rights or other similar rights to have any securities registered pursuant
to the Registration Statement or otherwise registered by the Company under
the 1933 Act.
10. The Company is not an "investment company" or an entity "controlled" by an
"investment company", as such terms are defined in the 1940 Act.
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 executive officers of the Company and public officials and on
the Company's representations and warranties in the Underwriting Agreement. 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).
B-2
EXHIBIT C
FORM OF LOCK-UP LETTER
November 8, 2005
Xxxxxxx Xxxxx Ltd.
and the Other Underwriters (as defined below)
c/o Raymond Xxxxx Ltd.
2300 - 000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Ladies and Gentlemen:
The undersigned shareholder, director or executive officer of Xxxxxxx
Bros. Auctioneers Incorporated, a company amalgamated under the Canada Business
Corporations Act (the "Company"), understands that an Underwriting Agreement
(the "Underwriting Agreement") will be executed by the Company, Xxxxx X.
Xxxxxxx, the Selling Shareholder named therein and Xxxxxxx Xxxxx Ltd. Inc. and
the other underwriters (the "Other Underwriters") named in the Underwriting
Agreement. (collectively, the "Underwriters"), providing for the secondary
public offering (the "Offering") of 2,173,913 common shares of the Company held
by the Selling Shareholder ("Common Shares") in the United States pursuant to a
registration statement on Form F-10 and in each of the provinces of Canada
pursuant to a Canadian prospectus.
This Lock-Up Letter Agreement is being entered into in accordance with
Section 5(m) of the Underwriting Agreement at the request of the Underwriters.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the undersigned agrees with each Underwriter that,
without the prior written consent of Xxxxxxx Xxxxx Ltd., the undersigned will
not, directly or indirectly, (i) offer, pledge, sell (including any sale
pursuant to Rule 144 under the Securities Act of 1933, as amended), contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, announce any intention to sell, grant any option, right or warrant for
the sale of, or otherwise dispose of or transfer any Common Shares (including,
without limitation, Common Shares which may be deemed to be beneficially owned
by such shareholder in accordance with the rules and regulations of the
Securities and Exchange Commission or the securities legislation of any province
or territory of Canada and Common Shares that may be issued upon exercise of any
option or warrant) or any securities convertible into or exchangeable or
exercisable for Common Shares, 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 a registration statement or prospectus with
respect to any of the foregoing or (ii) enter into any swap or any
C-1
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, for a period commencing the
date of the Underwriting Agreement and ending 30 days thereafter.
Notwithstanding anything else contained in this Lock-Up Letter
Agreement, this Lock-Up Letter Agreement shall not apply to (i) the exercise of
options granted prior to the date hereof, or the subsequent sale of any
securities received upon the exercise of such previously granted options; and
(ii) the acquisition of Common Shares by or for the benefit of the undersigned
pursuant to the Company's Employee Share Purchase Plan and the sale of any
Common Shares acquired under such plan.
The undersigned understands that the Company, the Selling Shareholder
and the Underwriters will proceed with the Offering in reliance on this Lock-Up
Letter Agreement.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into this Lock-Up Letter Agreement and
that, upon request, the undersigned will execute any additional documents
necessary or desirable in connection with the enforcement hereof. Any
obligations of the undersigned shall be binding upon the successors and assigns
of the undersigned.
This Lock-Up Letter Agreement has been entered into on the date first
written above.
Very truly yours,
By:
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Name:
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Title:
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