UNDERWRITING AGREEMENT
Exhibit 1.1
May 18, 2011
| Attention: Xxxx Xxxxxxx, Executive Vice President, Corporate Development |
Dear Sirs:
Re: Offering of 5.75% Unsecured Subordinated Convertible Debentures of Ivanhoe Energy Inc. |
TD Securities Inc. (the “Lead Underwriter”) and Macquarie Capital Markets Canada Ltd., RBC
Dominion Securities Inc., UBS Securities Canada Inc., CIBC World Markets Inc. and Xxxxx Capital
Markets Ltd. (together with the Lead Underwriter, collectively, the “Underwriters”) understand that
Ivanhoe Energy Inc. (the “Corporation”) proposes to issue and sell $50,000,000 of unsecured
subordinated convertible debentures with a face value of $1,000 principal amount per Firm Debenture
(as defined below), with a coupon of 5.75% per annum, payable semi-annually in arrears on June 30
and December 31 of each year commencing December 31, 2011 and a maturity date of June 30, 2016 (the
“Maturity Date”), subject to redemption at the option of the Corporation in certain circumstances
subsequent to June 30, 2014, as set forth in the Prospectus (as defined below) and to be set forth
in the Debenture Indenture (as defined below) (the “Firm Debentures”). The Firm Debentures shall be
convertible into Common Shares (as defined below) at an initial conversion price of $3.36 per
Common Share at any time prior to the close of business on the earlier of (i) the Business Day (as
defined below) immediately preceding the Maturity Date or, (ii) if called for redemption, the
Business Day immediately preceding the date specified by the Corporation for redemption of the Firm
Debentures, or (iii) if subject to repurchase pursuant to a Change of Control (as such term will be
defined in the Debenture Indenture), on the Business Day immediately preceding the payment date,
subject to adjustment in certain circumstances. Upon conversion of the Firm Debentures, in lieu of
delivering Common Shares, the Corporation may elect to pay the holder cash at the option of the
Corporation (the “Cash Conversion Option”). If the Corporation elects the Cash Conversion Option,
the Corporation shall pay to the holder an amount in cash equal to the daily volume weighted
average of the Common Shares issuable upon conversion of such holder’s Firm Debentures on the TSX
(as defined herein) as measured over a period of ten consecutive trading days, commencing on the
third day following the conversion of such Firm Debentures. The Firm Debentures shall otherwise
have such attributes as are described in the Prospectus.
Upon and subject to the terms and conditions contained in this Agreement (as defined herein),
the Underwriters hereby severally, and not jointly, agree to purchase from the Corporation the Firm
Debentures at the Closing Time (as defined herein) in the respective percentages set forth in
section 20 hereof, and the Corporation hereby agrees to issue and sell to the Underwriters at the
Closing Time all, but not less than all, of the Firm Debentures at the purchase price of $1,000 per
Firm Debenture, being an aggregate purchase price of $50,000,000 (the “Purchase Price”).
The Corporation hereby grants to the Underwriters an option (the “Over-Allotment Option”) to
purchase from the Corporation, at the Underwriters’ election, up to an additional $7,500,000 of
debentures of the Corporation having the same terms and conditions as the Firm Debentures (the
“Additional Debentures”). The Underwriters may exercise the Over-Allotment Option, in whole or in
part, at any time, from time to time, prior to 5:00 p.m. (Calgary time) on the date that is 30 days after
the Closing Date for the purpose of covering over-allotments, if any, and for market stabilization
purposes, by written notice to the Corporation setting forth the number of Additional Debentures to
be purchased. In the event and to the extent that the Underwriters exercise the Over-Allotment
Option, subject to the terms and conditions hereof, the Underwriters hereby severally, and not
jointly, agree to purchase from the Corporation the number of Additional Debentures as to which the
Over-Allotment Option shall have been exercised in the respective percentages set forth in section
20 hereof, and the Corporation hereby agrees to issue and sell such number of Additional Debentures
to the Underwriters at the purchase price of $1,000 per Additional Debenture.
The Underwriters shall be entitled (but not obligated) in connection with the offering and
sale of the Offered Securities (as defined herein) to retain as sub-agents other registered
securities dealers and may receive subscriptions for Offered Securities from subscribers from other
registered dealers. The fee payable to any such sub-agent shall be for the account of the
Underwriters.
The Underwriters will offer the Offered Securities initially at the offering price specified
above. The Underwriters may subsequently reduce the price at which the Offered Securities are
offered. Any such reduction shall not reduce the proceeds to be paid to or received by the
Corporation in accordance with this Agreement.
1. Definitions
In this Agreement:
| (a) | “Additional Debentures” has the meaning attributed to such term in the third
paragraph of this Agreement; |
| (b) | “Agreement” means this agreement and not any particular article or section or
other portion except as may be specified, and words such as “hereof”, “hereto”,
“herein” and “hereby” refer to this Agreement as the context requires; |
| (c) | “AIF” means the annual report of the Corporation under the U.S. Securities Act
on Form 10-K dated March 16, 2011 for the year ended December 31, 2010; |
| (d) | “Applicable Securities Laws” means, collectively, Canadian Securities Laws and
U.S. Securities Laws; |
| (e) | “BCSC” means the British Columbia Securities Commission; |
| (f) | “Business Day” means a day which is not Saturday or Sunday or a legal holiday
in the City of Calgary, Alberta; |
| (g) | “Canadian Securities Laws” means all applicable Canadian securities laws,
rules, regulations, notices, instruments, blanket orders and policies in the Qualifying
Provinces; |
| (h) | “Closing Date” means June 9, 2011 or such other date as the Underwriters and
the Corporation may agree, but in any event not later than 42 days after the date of
the Final Passport System Decision Document; |
| (i) | “Closing Time” means 6:30 a.m. (Calgary time) or such other time, on the
Closing Date, as the Underwriters and the Corporation may agree; |
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| (j) | “Common Shares” means the common shares in the capital of the Corporation and,
where appropriate in the context, includes the Underlying Shares; |
| (k) | “Concurrent Private Placement” means the private placement of up to $25,000,000
aggregate principal amount of 5.75% unsecured subordinated convertible debentures of
the Corporation, having the same terms as the Offered Securities, to certain
purchasers, including Xxxxxx X. Xxxxxxxxx; |
| (l) | “Corporation” means Ivanhoe Energy Inc.; |
| (m) | “Corporation’s auditors” means Deloitte & Touche LLP, chartered accountants,
Calgary, Alberta; |
| (n) | “Corporation’s counsel” means Xxxxxxx Xxxxx LLP or such other legal counsel as
the Corporation, with the consent of the Underwriters, may appoint; |
| (o) | “Debenture Indenture” means the trust indenture to be dated as of the Closing
Date, to be entered into between the Corporation and the Trustee, providing for the
issue of the Offered Securities and the Private Placement Debentures; |
| (p) | “distribution” means “distribution” or “distribution to the public”, as the
case may be, as defined under the Canadian Securities Laws and “distribute” has a
corresponding meaning; |
| (q) | “Documents” means, collectively, the documents incorporated by reference in the
Prospectuses and any Supplementary Material including, without limitation: |
| (i) | the Financial Statements; |
| (ii) | the Corporation’s management’s discussion and analysis of the
financial condition and results of operations for the three months ended March
31, 2011 and March 31, 2010; |
| (iii) | the Corporation’s management’s discussion and analysis of the
financial condition and results of operations for the years ended December 31,
2010 and December 31, 2009; |
| (iv) | the Management Proxy and Information Circular of the
Corporation dated March 21, 2011 with respect to the annual general meeting of
shareholders of the Corporation held on April 27, 2011; |
| (v) | the Management Proxy and Information Circular of the
Corporation dated March 27, 2010 with respect to the annual general meeting of
the shareholders of the Corporation held on April 28, 2010; |
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| (vi) | the AIF; |
| (vii) | the material change report of the Corporation dated February
10, 2011; and |
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| (viii) | any documents of the type required by NI 44-101 to be incorporated by
reference in a short form prospectus, including any material change reports
(excluding confidential reports), comparative interim financial statements, comparative
annual financial statements and the auditor’s report thereon, management’s
discussion and analysis of financial condition and results of operations,
information circulars, annual information forms and business acquisition
reports filed by the Corporation with the Securities Commissions after the
date of this Agreement and during the period of distribution; |
| (r) | “Due Diligence Session” shall have the meaning set forth in subsection 3(d)
hereof; |
| (s) | “Environmental Laws” means applicable federal, provincial, state, municipal or
local laws, regulations, orders, government decrees or ordinances with respect to
environmental, health or safety matters; |
| (t) | “Exchanges” means together, the TSX and the NASDAQ Stock Market and “Exchange”
means either one of them; |
| (u) | “Final Passport System Decision Document” means a receipt for the Prospectus
issued in accordance with the Passport System; |
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| (v) | “Financial Statements” means, collectively: |
| (i) | the unaudited condensed consolidated financial statements of
the Corporation as at and for the three month period ended March 31, 2011 and
March 31, 2010, together with the notes thereto; and |
| (ii) | the audited consolidated financial statements of the
Corporation as at and for the years ended December 31, 2010 and December 31,
2009, together with the report of the Corporation’s auditors thereon and the
notes thereto; |
| (w) | “GLJ” means GLJ Petroleum Consultants Ltd., independent geological and
petroleum engineering consultants of Calgary, Alberta; |
| (x) | “GLJ Report” means the independent engineering evaluation of the bitumen, oil,
natural gas liquids and natural gas reserves and resources of the Corporation prepared
by GLJ dated February 11, 2011 and effective December 31, 2010; |
| (y) | “material change”, “material fact” and “misrepresentation” shall have the
meanings ascribed thereto under the Canadian Securities Laws; |
| (z) | “Material Subsidiaries” means PanAsian Energy Ltd. (Nevis), Shaman LLC
(Mongolia), Ivanhoe Energy HTL Inc. (Nevada), Ivanhoe HTL Petroleum Ltd. (Nevada),
Ivanhoe Energy Ecuador Inc. (British Columbia); |
| (aa) | “MI 11-102” means Multilateral Instrument 11-102 — Passport System of the
Canadian Securities Administrators, as amended or replaced; |
| (bb) | “NI 44-101” means National Instrument 44-101 — Short Form Prospectus
Distributions of the Canadian Securities Administrators, as amended or replaced; |
| (cc) | “NP 11-202” means National Policy 11-202 — Process for Prospectus Reviews in
Multiple Jurisdictions of the Canadian Securities Administrators, as amended or
replaced; |
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| (dd) | “Offered Securities” means, collectively, the Firm Debentures and the
Additional Debentures; |
| (ee) | “Over-Allotment Expiry Date” means the day that is thirty days following the
Closing Date; |
| (ff) | “Over-Allotment Option” has the meaning attributed to such term in the third
paragraph of this Agreement; |
| (gg) | “Over-Allotment Option Closing Date” means the date, which shall be a Business
Day, as set out in the Over-Allotment Option Notice or such other date as the
Corporation and the Underwriters may mutually agree upon in writing, in each case
subject to the terms hereof; |
| (hh) | “Over-Allotment Option Closing Time” means 6:30 a.m. (Calgary time) on the
Over-Allotment Closing Date; |
| (ii) | “Over-Allotment Option Notice” has the meaning ascribed thereto in section
14(d) hereof; |
| (jj) | “Passport System” means the system and procedures for the filing of
prospectuses and related materials in one or more Canadian jurisdictions pursuant to MI
11-102 and NP 11-202; |
| (kk) | “Preliminary Passport System Decision Document” means a receipt for the
Preliminary Prospectus issued in accordance with the Passport System; |
| (ll) | “Preliminary Prospectus” means the preliminary short form prospectus of the
Corporation to be dated May 25, 2011 and any amendments thereto, in respect of the
distribution of the Offered Securities, in the English language only, including the
documents incorporated by reference therein; |
| (mm) | “Private Placement Debentures” means the $25,000,000 aggregate principal amount
of 5.75% unsecured subordinated convertible debentures of the Corporation, having the
same terms as the Offered Securities, to be issued pursuant to the Concurrent Private
Placement; |
| (nn) | “Prospectus” means the (final) short form prospectus of the Corporation and any
amendments thereto, in respect of the distribution of the Offered Securities, in the
English language only, including the documents incorporated by reference therein; |
| (oo) | “Prospectuses” means, collectively, the Preliminary Prospectus and the
Prospectus; |
| (pp) | “Public Record” means all information filed by or on behalf of the Corporation
with the Securities Commissions, including without limitation, the Documents, the
Prospectuses, any Supplementary Material and any other information filed with any
Securities Commission in compliance, or intended compliance, with any Canadian
Securities Laws; |
| (qq) | “Purchase Price” has the meaning ascribed thereto in the second paragraph of
this Agreement; |
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| (rr) | “Qualifying Provinces” means each of the provinces of Canada, except Québec; |
| (ss) | “Responses” means the oral and written responses delivered on behalf of the
Corporation by certain officers of the Corporation prior to and/or at the Due Diligence
Session; |
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| (tt) | “SEC” means the United States Securities and Exchange Commission; |
| (uu) | “Securities Commissions” means the securities commissions or similar regulatory
authorities in the Qualifying Provinces; |
| (vv) | “Selling Dealer Group” means the dealers and brokers other than the
Underwriters who participate in the offer and sale of the Offered Securities pursuant
to this Agreement; |
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| (ww) | “Standard Listing Conditions” has the meaning ascribed thereto in section 4(d); |
| (xx) | “Subsidiary” means a subsidiary in respect of the Corporation within the
meaning of the YBCA, and includes, but is not limited to, the subsidiaries set out in
Schedule “A” hereto; |
| (yy) | “Supplementary Material” means, collectively, any amendment to the Preliminary
Prospectus or Prospectus, any amended or supplemented Preliminary Prospectus or
Prospectus or any ancillary material, information, evidence, return, report,
application, statement or document which may be filed by or on behalf of the
Corporation under Canadian Securities Laws; |
| (zz) | “Swaps” means any transaction which is a rate swap transaction, basis swap,
forward rate transaction, commodity swap, commodity option, equity or equity index
swap, equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction, currency
swap transaction, cross-currency rate swap transaction, currency option, forward sale,
exchange traded futures contract or any other similar transaction (including any option
with respect to any of these transactions or any combination of these transactions); |
| (aaa) | “Tax Act” means the Income Tax Act (Canada) and the regulations thereunder, as
amended from time to time; |
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| (bbb) | “Trustee” means CIBC Mellon Trust Company; |
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| (ccc) | “TSX” means the Toronto Stock Exchange; |
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| (ddd) | “Underlying Shares” means the Common Shares underlying the Offered Securities; |
| (eee) | “Underwriters’ counsel” means Gowling Xxxxxxx Xxxxxxxxx LLP or such other
legal counsel as the Underwriters, with the consent of the Corporation, may appoint; |
| (fff) | “United States” or “U.S.” means the United States of America, its territories
and possessions, any state of the United States and the District of Columbia; |
| (ggg) | “U.S. Exchange Act” means the United States Securities Exchange Act of 1934,
as amended; |
| (hhh) | “U.S. Securities Act” means the United States Securities Act of 1933, as
amended; |
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| (iii) | “U.S. Securities Laws” means the United States federal securities laws,
including the U.S. Securities Act and the U.S. Exchange Act, and applicable state
securities laws; and |
| (jjj) | “YBCA” means the Business Corporations Act (Yukon), as amended, including the
regulations promulgated thereunder. |
In addition, unless otherwise defined herein capitalized terms shall have the meanings
ascribed thereto in the Prospectuses.
2. Underwriting Fee
In consideration for their services hereunder, the Corporation agrees to pay to the
Underwriters:
| (a) | at the Closing Time, a fee equal to the amount of $40 (4%) per Firm Debenture
for each Firm Debenture purchased and including any purchased by the Underwriters as
principal hereunder (being an aggregate amount of $2,000,000); and |
| (b) | at the Over-Allotment Option Closing Time, a fee of $40 (4%) per Additional
Debenture for each Additional Debenture purchased and including any purchased by the
Underwriters as principal hereunder (being an aggregate amount of up to $300,000 if the
Over-Allotment Option is exercised in full). |
The foregoing fees (collectively, the “Underwriting Fee”) may, at the sole option of the
Underwriters, be deducted from the aggregate gross proceeds of the sale of the Firm Debentures and
Additional Debentures, as applicable, and withheld for the account of the Underwriters. For greater
certainty, the services provided by the Underwriters in connection herewith will not be subject to
the Goods and Services Tax (“GST”) provided for in the Excise Tax Act (Canada) and taxable supplies
provided will be incidental to the exempt financial services provided. However, in the event that
the Canada Revenue Agency determines that GST provided for in the Excise Tax Act (Canada) is
exigible on the Underwriting Fee, the Corporation agrees to pay the amount of GST forthwith upon
the request of the Underwriters. The Corporation also agrees to pay the Underwriters’ expenses as
set forth in section 11 hereof.
3. Qualification for Sale
| (a) | The Corporation represents and warrants to the Underwriters that it is eligible
to use the short form prospectus offering qualification system described in NI 44-101
for the distribution of the Firm Debentures in each of the Qualifying Provinces, and
the BCSC is the principal regulator for the Corporation under the Passport System for
purposes of the filing of the Prospectuses. |
| (b) | The Corporation shall comply in all material respects with the Passport System
and shall: |
| (i) | as soon as possible after the execution of this Agreement and
in any event not later than: |
| (A) | 5:00 p.m. (Vancouver time) on May 25, 2011,
have prepared and filed the Preliminary Prospectus (in the English
language only) and other documents required under the Canadian
Securities Laws with the Securities Commissions and designated the BCSC
as the principal regulator under the Passport System; and |
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| (B) | May 26, 2011, have obtained from the BCSC a
Preliminary Passport System Decision Document dated not later than May
25, 2011, evidencing that a receipt for the Preliminary Prospectus has
been issued in British Columbia and Ontario and has been deemed to have
been issued in each of the Qualifying Provinces other than British
Columbia and Ontario; |
| (ii) | not later than 5:00 p.m. (Vancouver time) on June 2, 2011 (or
such later date as may be agreed to in writing by the Corporation and the
Underwriters), it will have: |
| (A) | prepared and filed the Prospectus and other
documents required under the Canadian Securities Laws with the
Securities Commissions; and |
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| (B) | obtained from the BCSC a Final Passport System
Decision Document, evidencing that a receipt for the Prospectus has
been issued in British Columbia and Ontario and has been deemed to have
been issued in each of the Qualifying Provinces other than British
Columbia and Ontario or otherwise obtained a receipt for the Prospectus
from each of the Securities Commissions; |
and otherwise fulfilled all legal requirements to enable the Offered
Securities to be offered and sold to the public in each of the Qualifying
Provinces through the Underwriters or any other investment dealer or broker
registered in the applicable Qualifying Province; and
| (iii) | until the completion of the distribution of the Offered
Securities, promptly take all additional steps and proceedings that from time
to time may be required under Canadian Securities Laws in each Qualifying
Province to continue to qualify the Offered Securities for distribution or, in
the event that the Offered Securities have, for any reason, ceased to so
qualify, to again qualify the Offered Securities for distribution. |
| (c) | Prior to the filing of the Prospectuses and, during the period of distribution
of the Offered Securities, prior to the filing with any Securities Commission of any
Supplementary Material or any documents incorporated by reference therein after the
date hereof, the Corporation shall have allowed the Underwriters and the Underwriters’
counsel to participate fully in the preparation of, and to approve the form of, such
documents and to have reviewed any documents incorporated by reference therein. |
| (d) | Prior to the Closing Time and during the period from the effective date hereof
until completion of the distribution of the Offered Securities, it shall allow the
Underwriters the opportunity to conduct due diligence and in particular, the
Corporation shall allow the Underwriters and the Underwriters’ counsel to conduct all
due diligence which the Underwriters may reasonably require in order to: (i) confirm
the Public Record is accurate, current and complete in all material respects; (ii)
fulfill the Underwriters’ obligations as underwriters; and (iii) enable the
Underwriters responsibly to execute the certificate required to be executed by them in,
or in connection with, the Prospectuses, and will provide to the Underwriters and their
counsel and consultants reasonable access to the Corporation’s properties, senior
management personnel and corporate, financial and other records for the purposes of
conducting such due diligence reviews. Without |
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limiting the generality of the foregoing, the Corporation shall make available its
directors and senior officers, and shall use commercially reasonable efforts to
cause its auditors, legal counsel and petroleum reserve and/or resource engineers,
including GLJ, to answer any questions which the Underwriters may have and to
participate in one or more due diligence sessions to be held prior to the Closing
Time (collectively, the “Due Diligence Session”). The Underwriters shall distribute
a list of written questions to be answered in advance of such Due Diligence Sessions
and the Corporation shall provide written responses to such questions and shall use
its commercially reasonable efforts to have the Corporation’s auditors, legal
counsel and engineers, including GLJ, provide written responses to such questions
prior to or at the Due Diligence Session.
| (e) | The Corporation shall take or cause to be taken all such other steps and
proceedings, including fulfilling all legal, regulatory and other requirements, as
required under Canadian Securities Laws to qualify the Offered Securities for
distribution to the public in the Qualifying Provinces. |
4. Delivery of Prospectus and Related Documents
The Corporation shall deliver or cause to be delivered without charge to the Underwriters and
the Underwriters’ counsel the documents set out below at the respective times indicated:
| (a) | prior to or contemporaneously, as nearly as practicable, with the filing with
the Securities Commissions of each of the Preliminary Prospectus and the Prospectus: |
| (i) | copies of the Preliminary Prospectus and the Prospectus, each
in the English language only, signed as required by Canadian Securities Laws;
and |
| (ii) | if requested by the Underwriters, copies of any documents
incorporated by reference therein which have not previously been delivered to
the Underwriters; |
| (b) | as soon as they are available, copies of any Supplementary Material, in the
English language only, signed as required by Canadian Securities Laws and including, in
each case, copies of any documents incorporated by reference therein which have not
been previously delivered to the Underwriters; |
| (c) | prior to the filing of the Prospectus with the Securities Commissions, a
“comfort letter” from the Corporation’s auditors, dated the date of the Prospectus,
addressed to the Underwriters and reasonably satisfactory in form and substance to the
Underwriters and the Underwriters’ counsel, to the effect that they have carried out
certain procedures performed for the purposes of comparing certain specified financial
information and percentages appearing in the Prospectus and the documents incorporated
therein by reference with indicated amounts in the financial statements or accounting
records of the Corporation, and have found such information and percentages to be in
agreement, which comfort letter shall be based on the Corporation’s auditors’ review
having a cut-off date of not more than two Business Days prior to the date of the
Prospectus; and |
| (d) | prior to or contemporaneously with the filing of the Prospectus, evidence
satisfactory to the Underwriters of the approval of the listing and posting for trading
on the TSX of the Offered Securities and on the Exchanges of the Underlying Shares
issuable upon the conversion or maturity of the Offered Securities subject only to
satisfaction by the Corporation of customary post-closing conditions imposed by the Exchanges for
conditional listing approval (the “Standard Listing Conditions”). |
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Comfort letters similar to the foregoing shall be provided to the Underwriters with respect to
any Supplementary Material and any other relevant document at the time the same is presented to the
Underwriters for their signature or, if the Underwriters’ signature is not required, at the time
the same is filed. All such letters shall be in form and substance acceptable to the Underwriters
and the Underwriters’ counsel, acting reasonably.
The deliveries referred to in subsections 4(a) and (b) shall also constitute the Corporation’s
consent to the use by the Underwriters and other members of the Selling Dealer Group of the
Documents, the Prospectuses and any Supplementary Material in connection with the distribution of
the Offered Securities.
5. Commercial Copies
| (a) | The Corporation shall, as soon as possible but in any event not later than noon
(local time at the place of delivery) on the Business Day following the date of receipt
of the Preliminary Passport System Decision Document or the Final Passport System
Decision Document, as the case may be (or such other date or time as the Underwriters
and the Corporation may agree), from the Securities Commissions and no later than noon
(local time) on the first Business Day after the execution of any Supplementary
Material in connection with the Prospectuses cause to be delivered to the Underwriters,
without charge, commercial copies of the Preliminary Prospectus, the Prospectus or such
Supplementary Material (in the English language only) in such numbers and in such
cities as the Underwriters may reasonably request by oral or written instructions to
the Corporation given no later than the time when the Corporation authorizes the
printing of the commercial copies of such documents. |
| (b) | The Corporation shall cause to be provided to the Underwriters such number of
copies of any documents incorporated by reference in the Preliminary Prospectus, the
Prospectus or any Supplementary Materials as the Underwriters may reasonably request. |
6. Material Change
| (a) | During the period of distribution of the Offered Securities, the Corporation
will promptly inform the Underwriters in writing of the full particulars of: |
| (i) | any material change (actual, anticipated or threatened) in or
affecting the business, operations, revenues, capital, properties, assets,
liabilities (absolute, accrued, contingent or otherwise), condition (financial
or otherwise) or results of operations of the Corporation or any Subsidiary; |
| (ii) | any change in any material fact contained or referred to in the
Preliminary Prospectus, the Prospectus or any Supplementary Material; and |
| (iii) | the occurrence of a material fact or event which, in any such
case, is, or may reasonably be considered to be, of such a nature as to: |
| (A) | render the Preliminary Prospectus, the
Prospectus or any Supplementary Material untrue, false or misleading in
any material respect; |
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| (B) | result in a misrepresentation in the
Preliminary Prospectus, the Prospectus or any Supplementary Material;
or |
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| (C) | result in the Preliminary Prospectus, the
Prospectus or any Supplementary Material not complying in any material
respect with Applicable Securities Laws, |
provided that if the Corporation is uncertain as to whether a material change,
change, occurrence or event of the nature referred to in this section has occurred
or been discovered, the Corporation shall promptly inform the Underwriters of the
full particulars of the occurrence giving rise to the uncertainty and shall consult
with the Underwriters as to whether the occurrence is of such nature.
| (b) | The Corporation will promptly comply to the reasonable satisfaction of the
Underwriters and the Underwriters’ counsel with Applicable Securities Laws with respect
to any material change, change, occurrence or event of the nature referred to in
subsections 6(a) or section 13 and the Corporation will prepare and, if applicable,
file promptly at the Underwriters’ reasonable request any amendment to the Prospectuses
or Supplementary Material as may be required under Applicable Securities Laws; provided
that the Corporation shall have allowed the Underwriters and the Underwriters’ counsel
to participate fully in the preparation of any such amendment or Supplementary
Material, to have reviewed any other documents incorporated by reference therein and to
conduct all due diligence investigations which the Underwriters may reasonably require
in order to fulfill their obligations as underwriters and in order to enable the
Underwriters responsibly to execute the certificate required to be executed by them in,
or in connection with, any such amendment or Supplementary Material, such approval not
to be unreasonably withheld and to be provided in a timely manner. The Corporation
shall further promptly deliver to each of the Underwriters and the Underwriters’
counsel a copy of each Supplementary Material as filed with the Securities Commissions,
and of letters with respect to each such Supplementary Material substantially similar
to those referred to in section 4 above. |
| (c) | During the period of distribution of the Offered Securities, the Corporation
will promptly provide to the Underwriters, for review, on a confidential basis, by the
Underwriters and the Underwriters’ counsel, prior to filing or issuance: |
| (i) | any financial statement of the Corporation; |
| (ii) | any proposed document, including without limitation any
amendment to the AIF, new annual information form, material change report,
interim report, or information circular, which may be incorporated, or deemed
to be incorporated, by reference in the Preliminary Prospectus or the
Prospectus; |
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| (iii) | any press release of the Corporation; and |
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| (iv) | any amendment to the Preliminary Prospectus or the Prospectus. |
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7. Regulatory Approvals
| (a) | The Corporation will file or cause to be filed with the Exchanges all necessary
documents and will take or cause to be taken all steps reasonably necessary to ensure
that the Offered Securities have been approved for listing and posting for trading on the TSX
and the Underlying Shares issuable upon the conversion or maturity of the Offered
Securities have been approved for listing and posting for trading on the Exchanges,
as provided herein, prior to the filing of the Prospectus with the Securities
Commissions, subject only to satisfaction by the Corporation of the Standard Listing
Conditions. |
| (b) | The Corporation will make all necessary filings, obtain all necessary
regulatory consents and approvals (if any) and the Corporation will pay all filing fees
required to be paid in connection with the transactions contemplated in this Agreement. |
8. Representations and Warranties of the Corporation
| (a) | Each delivery of the Preliminary Prospectus, the Prospectus and any
Supplementary Material pursuant to section 4 above shall constitute a representation
and warranty to the Underwriters by the Corporation (and the Corporation hereby
acknowledges that each of the Underwriters is relying on such representations and
warranties in entering into this Agreement) that: |
| (i) | the Preliminary Prospectus, Prospectus or Supplementary
Material, including, without limitation, any documents incorporated by
reference therein, as the case may be, contains, at the date of such document,
no misrepresentation and constitutes full, true and plain disclosure of all
material facts relating to the Corporation, the Offered Securities and
Underlying Shares; |
| (ii) | no material fact has been omitted from the Preliminary
Prospectus, Prospectus or Supplementary Material, as the case may be, which is
required to be stated or which is necessary to make any statements or
information contained therein not misleading in light of the circumstances in
which they are made; |
| (iii) | the Preliminary Prospectus, Prospectus or Supplementary
Material, as the case may be, complies in all material respects with the
requirements of Canadian Securities Laws, including, without limitation, NI
44-101; and |
| (iv) | except as is disclosed in the Public Record, there has been no
intervening material change (actual, proposed or prospective, whether financial
or otherwise), from the date of the Preliminary Prospectus, the Prospectus and
any Supplementary Material to the time of delivery thereof, in the business,
operations, capital, properties, assets, liabilities (absolute, accrued,
contingent or otherwise), condition (financial or otherwise) or results of
operations, or ownership of the Corporation and the Subsidiaries (taken as a
whole). |
provided that, in each case, the Corporation makes no representation or warranty
with respect to statements contained in the Preliminary Prospectus, Prospectus or
Supplementary Material, as the case may be, relating solely to and provided in
writing by the Underwriters expressly for inclusion in such documents.
- 12 -
| (b) | In addition to the representations and warranties contained in subsection 8(a)
hereof, the Corporation represents and warrants to the Underwriters, and acknowledges
that each of the Underwriters is relying upon such representations and warranties in
entering into this Agreement, that: |
| (i) | the Corporation has been duly incorporated and organized and is
validly existing under the laws of its jurisdiction of incorporation, and has
all requisite capacity, power and authority to carry on its business, as now
conducted and as presently proposed to be conducted by it, and to own its
properties and assets; |
| (ii) | all continuous and timely disclosure documents, reports, forms,
filings and fees required to be filed, made and paid by the Corporation
pursuant to the Canadian Securities Laws have been filed, made and paid in
accordance with the Canadian Securities Laws in all material respects; |
| (iii) | other than as set forth in the Public Record, none of the
directors, officers or employees of the Corporation, any person who owns,
directly or indirectly, more than 10% of any class of securities of the
Corporation, or any associate or affiliate of any of the foregoing, had or has
any material interest, direct or indirect, in any material transaction or any
proposed material transaction with the Corporation which, as the case may be,
materially affects, is material to or will materially affect the Corporation or
its Subsidiaries; |
| (iv) | the Corporation has, or will have at the appropriate time, the
necessary corporate power and authority to execute and deliver each of the
Prospectuses and any Supplementary Material and all necessary corporate action
has been taken or will be taken, as applicable, by the Corporation to authorize
the execution and delivery by it of the Prospectuses and any Supplementary
Material and the filing thereof, as the case may be, in each of the Qualifying
Provinces under the Canadian Securities Laws; |
| (v) | the Corporation is qualified to carry on business and is
validly subsisting under the laws of each jurisdiction in which it carries on
its business; |
| (vi) | other than the entities listed in Schedule “A” hereto, the
Corporation does not have any Subsidiaries and the Corporation is not
“affiliated” with or a “holding corporation” of any other body corporate
(within the meaning of those terms in the YBCA), nor is it a partner of any
partnerships or limited partnerships; |
| (vii) | each of the Material Subsidiaries of the Corporation has been
duly incorporated or amalgamated and is valid and subsisting in good standing
under the laws of its jurisdiction of incorporation or amalgamation as the case
may be, and has all requisite corporate authority and power to carry on its
business; |
| (viii) | each of the Material Subsidiaries of the Corporation is qualified to carry on
business and is validly subsisting under the laws of each jurisdiction in which
it carries on its business; |
| (ix) | all of the issued and outstanding shares in the capital of each
of the Subsidiaries of the Corporation are fully paid and non-assessable and
legally and beneficially owned by the Corporation free and clear of all
mortgages, liens, charges, pledges, security interests, encumbrances, claims or
demands whatsoever and no person holds any securities convertible into or
exchangeable for issued or unissued shares of such Subsidiaries or has any
agreement, warrant, option, right or privilege (whether pre-emptive or
contractual) being or capable of becoming an
agreement, warrant, option or right for the acquisition of any unissued or
issued securities of such Subsidiaries other than as disclosed in the Public
Record; |
- 13 -
| (x) | the minute books and record books of the Corporation and each
of its Subsidiaries are true and correct and contain the minutes of all
meetings and all resolutions of directors (and subcommittees thereof) and
shareholders thereof (except to the extent that the absence of any such
document could not reasonably be expected to have a material adverse effect on
the business of the Corporation and its Subsidiaries (taken as a whole)); |
| (xi) | the books of account and other records of the Corporation and
each of its Material Subsidiaries, whether of a financial or accounting nature
or otherwise, have been maintained in all material respects in accordance with
prudent business practices; |
| (xii) | there has not been any reportable event (within the meaning of
section 4.11 of National Instrument 51-102 Continuous Disclosure Obligations of
the Canadian Securities Administrators) with the auditors of the Corporation; |
| (xiii) | each of the Corporation and its Subsidiaries has conducted and is conducting
its business in compliance in all material respects with all applicable laws,
rules and regulations and, in particular, all applicable licensing and
environmental legislation, regulations or by-laws or other lawful requirements
of any governmental or regulatory bodies applicable to it of each jurisdiction
in which it carries on business and holds all licenses, permits, registrations
and qualifications (collectively “Licenses”) in all jurisdictions in which it
carries on business which are necessary to carry on the respective businesses
of the Corporation and its Subsidiaries as now conducted and as presently
proposed to be conducted, and all such Licenses are valid and existing and in
good standing, except where the lack of such valid or existing License would
not have any material adverse effect on the business of the Corporation and its
Subsidiaries (taken as a whole) and none of such Licenses contains any
burdensome term, provision, condition or limitation which has or is likely to
have any material adverse effect on the business of the Corporation and its
Subsidiaries (taken as a whole), as now conducted or as proposed to be
conducted; |
| (xiv) | except to the extent that any violation or other matter
referred to in this subparagraph does not have a material adverse effect on the
Corporation and its Subsidiaries (taken as a whole): |
| (A) | neither the Corporation nor any of its
Subsidiaries is in violation of any applicable federal, provincial,
municipal, local or other laws, regulations, orders, government decrees
or ordinances with respect to environmental, health or safety matters
(collectively, “Environmental Laws”); |
| (B) | the Corporation and its Subsidiaries have
operated their respective businesses at all times and have received,
handled, used, stored, treated, shipped and disposed of all
contaminants without violation of Environmental Laws; |
- 14 -
| (C) | there have been no spills, releases, deposits
or discharges of hazardous or toxic substances, contaminants or wastes
into the earth, air or into any body of water or any municipal or other
sewer or drain water systems by the Corporation or its Subsidiaries on
their respective properties that have not been remedied or that are not
presently being remedied; |
||
| (D) | no orders, directions or notices have been
issued and remain outstanding pursuant to any Environmental Laws
relating to the business or assets of the Corporation or its
Subsidiaries; |
||
| (E) | neither the Corporation nor any of its
Subsidiaries has failed to report to the proper federal, provincial,
municipal or other political subdivision, government, department,
commission, board, bureau, agency or instrumentality, domestic or
foreign the occurrence of any event which is required to be so reported
by any Environmental Law; and |
||
| (F) | the Corporation and its Subsidiaries hold all
licenses, permits and approvals required under any Environmental Laws
in connection with the operation of their respective businesses and the
ownership and use of their respective assets, all such licenses,
permits and approvals are in full force and effect, and except for (A)
notifications and conditions of general application to assets of the
type owned by the Corporation or its Subsidiaries, and (B)
notifications relating to reclamation obligations under the
Environmental Protection and Enhancement Act (Alberta) or similar
Environmental Laws applicable in the jurisdictions in which the
Corporation or any of its Subsidiaries carry on business, neither the
Corporation nor any of its Subsidiaries has received any notification
pursuant to any Environmental Laws that any work, repairs,
constructions or capital expenditures are required to be made by it as
a condition of continued compliance with any Environmental Laws, or any
licence, permit or approval issued pursuant thereto, or that any
licence, permit or approval referred to above is about to be reviewed,
made subject to limitation or conditions, revoked, withdrawn or
terminated; |
| (xv) | each of the Corporation and its Subsidiaries has duly and on a
timely basis filed all tax returns required to be filed by it, has paid all
taxes due and payable by it and has paid all assessments and reassessments and
all other taxes, governmental charges, penalties, interest and other fines due
and payable by it and which were claimed by any governmental authority to be
due and owing and adequate provision has been made for taxes payable for any
completed fiscal period for which tax returns are not yet required and there
are no agreements, waivers, or other arrangements providing for an extension of
time with respect to the filing of any tax return or payment of any tax,
governmental charge or deficiency by the Corporation or any of its Subsidiaries
and to the best of the knowledge, information and belief of the Corporation
there are no actions, suits, proceedings, investigations or claims threatened
or pending against the Corporation or any of its Subsidiaries in respect of
taxes, governmental charges or assessments or any matters under discussion with
any governmental authority relating to taxes, governmental charges or
assessments asserted by any such authority (except to the extent that such
actions, suits, proceedings, investigations or claims could not
reasonably be expected to have a material adverse effect on the business of
the Corporation and its Subsidiaries (taken as a whole)) ; |
- 15 -
| (xvi) | any and all operations of each of the Corporation and its
Subsidiaries conducted by it and, to the best of the Corporation’s knowledge,
any operations conducted by third parties on or in respect of the assets and
properties of the Corporation and its Subsidiaries, have been conducted in
accordance with good oil and gas practices, as applicable, except where the
lack of or lesser standard of such conduct would not have a material adverse
effect on the business of the Corporation and its Subsidiaries (taken as a
whole); |
| (xvii) | the Corporation has full corporate capacity, power and authority to enter
into this Agreement and the Debenture Indenture and to perform its obligations
set out herein and therein (including, without limitation, to issue the Offered
Securities) and this Agreement has been, and the Debenture Indenture will, on
the Closing Date be, duly authorized, executed and delivered by the Corporation
and this Agreement is, and the Debenture Indenture will on the Closing Date be,
legal, valid and binding obligations of the Corporation enforceable against the
Corporation in accordance with their terms except that the validity, binding
effect and enforceability of the terms of agreements and documents are subject
to laws relating to the availability of equitable remedies and creditors’
rights generally and except as rights to indemnity and contribution may be
limited or unavailable by applicable law; |
| (xviii) | the Over-Allotment Option has been granted hereby, subject to compliance by
the Underwriters with all Applicable Securities Laws in connection thereto, and
authorized and the Offered Securities to be issued by the Corporation as
described in this Agreement and in the Prospectuses will be, at the Closing
Time or the Over-Allotment Option Closing Time, as applicable, duly created and
authorized, and, when authenticated, issued and delivered in the manner
contemplated by the Debenture Indenture, will constitute legal, valid and
binding obligations of the Corporation, enforceable against it in accordance
with their terms subject to the general qualifications that: |
| (A) | enforceability may be limited by bankruptcy,
insolvency or other laws affecting creditors’ rights generally; and |
||
| (B) | equitable remedies, including the remedies of
specific performance and injunctive relief, are available only in the
discretion of the applicable court; |
| (xix) | at the Closing Date, the Underlying Shares issuable upon
conversion, redemption or maturity of the Offered Securities in accordance with
the Debenture Indenture will be duly and validly authorized, allotted and
reserved for issuance as fully paid and non-assessable Common Shares and will
be free and clear of all liens, charges and encumbrances; |
- 16 -
| (xx) | neither the Corporation nor any of its Subsidiaries is in
default or breach of, and the execution and delivery of, and the performance of
and compliance with the terms of, this Agreement, the Debenture Indenture or
any of the transactions contemplated hereby or thereby, does not and will not
result in any breach of, or
constitute a default under, and does not and will not create a state of
facts which, after notice or lapse of time or both, would result in a breach
of or constitute a default under, any term or provision of the articles,
by-laws or resolutions of shareholders or directors of the Corporation or
any of its Subsidiaries, or any indenture, mortgage, note, contract,
agreement, instrument, lease or other document to which the Corporation or
any of its Subsidiaries is a party or by which the Corporation or any of its
Subsidiaries is bound, or any law, judgment, decree, order, statute, rule or
regulation applicable to the Corporation or any of its Subsidiaries which
default or breach might reasonably be expected to materially adversely
affect the business, operations, capital or condition (financial or
otherwise) of the Corporation and its Subsidiaries (taken as a whole); |
| (xxi) | there has not been any material change in the assets,
liabilities or obligations (absolute, accrued, contingent or otherwise), of the
Corporation from the position set forth in the Documents (other than as has
been publicly and generally disclosed), and there has not been any adverse
material change in the business, operations, capital or condition (financial or
otherwise) of the Corporation and its Subsidiaries (taken as a whole) since
December 31, 2010 (other than as has been publicly and generally disclosed) and
since that date there have been no material facts, transactions, events or
occurrences which, to the knowledge of the Corporation, could materially
adversely affect the capital, assets, liabilities (absolute, accrued,
contingent or otherwise), business, operations or condition (financial or
otherwise) or results of the operations of the Corporation and its Subsidiaries
(taken as a whole) which have not been disclosed to the public; |
| (xxii) | the Financial Statements, including the notes thereto, fairly present, in
accordance with generally accepted accounting principles in Canada,
consistently applied, except as set forth in the notes thereto, the financial
position and condition, the results of operations, cash flows and the other
information purported to be shown therein of the Corporation as at the dates
thereof and for the periods then ended and reflect all assets, liabilities and
obligations (absolute, accrued, contingent or otherwise) of the Corporation as
at the dates thereof required to be disclosed by generally accepted accounting
principles in Canada, and include all adjustments necessary for a fair
presentation; |
| (xxiii) | other than as disclosed in the Public Record, there are no actions, suits,
proceedings or inquiries in existence, or to the knowledge of the Corporation,
pending or threatened against or affecting the Corporation or its Subsidiaries
at law or in equity or before or by any federal, provincial, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
which in any way materially adversely affects, or may in any way materially
adversely affect, the business, operations, capital or condition (financial or
otherwise) of the Corporation and its Subsidiaries (taken as a whole) or their
respective properties or assets or which affects or may affect or delay the
distribution of the Offered Securities and the Corporation is not aware of any
existing ground on which such action, suit, proceeding or inquiry might be
commenced with any reasonable likelihood of success; |
- 17 -
| (xxiv) | except for this Agreement, the Debenture Indenture and, the Corporation is
not a party to or bound by any agreement of guarantee, indemnification (other
than an indemnification of directors and officers in accordance with the by-laws of
the Corporation and applicable laws) or any other like commitment of the
obligations, liabilities (contingent or otherwise) or indebtedness of any
other person; |
| (xxv) | neither the Corporation nor any of its Subsidiaries has any
loans or other indebtedness outstanding which have been made to or from any of
its shareholders, officers, directors or employees or any other person not
dealing at arm’s length with the Corporation or any of its Subsidiaries that
are currently outstanding; |
| (xxvi) | no officer, director, employee or any other person not dealing at arm’s
length with the Corporation or any of its Subsidiaries or, to the knowledge of
the Corporation, any associate or affiliate of any such person, owns, has or is
entitled to any encumbrances or claims of any nature whatsoever which are based
on assets of the Corporation or any of its Subsidiaries or any revenue or
rights attributed thereto; |
| (xxvii) | the information and statements set forth in the Documents and other parts of
the Public Record were true, correct, and complete in all material respects and
did not contain any misrepresentation, as of the date of such information or
statement, and the Corporation has not filed any confidential material change
reports still maintained on a confidential basis; |
| (xxviii) | the authorized capital of the Corporation consists of an unlimited number
of Common Shares, of which 343,970,158 Common Shares are currently issued and
outstanding, which shares are validly issued, fully paid and non-assessable and
an unlimited number of preferred shares, without par value, none of which are
currently issued and outstanding; |
| (xxix) | no person holds any securities convertible or exchangeable into shares of the
Corporation or has any agreement, warrant, option, right or privilege being or
capable of becoming an agreement, warrant, option or right (whether or not on
condition(s)) for the purchase or other acquisition of any unissued securities
of the Corporation except in respect of an aggregate of 28,314,577 Common
Shares issuable upon exercise of outstanding incentive stock options and
convertible debt obligations); |
| (xxx) | CIBC Mellon Trust Company has been duly appointed registrar
and transfer agent of the Common Shares at its principal offices in the cities
of Vancouver and Toronto and will, on the Closing Date, be the duly appointed
registrar and transfer agent of the Offered Securities and the trustee pursuant
to the Debenture Indenture; |
| (xxxi) | no Securities Commission, other securities commission or similar regulatory
authority, the TSX or other exchange in Canada or the United States has issued
any order which is currently outstanding preventing or suspending trading in
any securities of the Corporation, no such proceeding is, to the knowledge of
the Corporation, pending, contemplated or threatened and the Corporation is not
in default of any material requirement of Applicable Securities Laws; |
- 18 -
| (xxxii) | no authorization, approval or consent of any court or governmental authority
or agency is required to be obtained by the Corporation in connection with the
sale and delivery of the Offered Securities, the issuance of the Underlying
Shares in accordance with the Debenture Indenture, except such as may be
required under the Applicable Securities Laws and the rules and policies of the
Exchanges; |
| (xxxiii) | the issued and outstanding Common Shares are listed and posted for trading
on the Exchanges, the Corporation will, prior to the Closing Date, have
conditional approval to list the Offered Securities on the TSX and the
Underlying Shares on the Exchanges, the Corporation is in compliance with the
rules and regulations of the Exchanges in all material respects and the
Corporation has not taken any action which would reasonably be expected to
result in the delisting or suspension from trading of the Common Shares from
the Exchanges; |
| (xxxiv) | the definitive forms of certificate representing the Offered Securities and
the Underlying Shares are in, or will on the Closing Date be in, due and proper
form under the laws governing the Corporation and the form of certificate
representing the Underlying Shares is in compliance with the requirements of
the Exchanges; |
| (xxxv) | the Corporation is a “reporting issuer” in each of the provinces of Canada
and the Yukon Territory within the meaning of the Canadian Securities Laws in
such provinces and territory and is not in default of any material requirement
in relation thereto; |
| (xxxvi) | other than as disclosed to the Underwriters, to the knowledge of the
Corporation, no insider of the Corporation has a present intention to sell any
securities of the Corporation; |
| (xxxvii) | there was made available to GLJ, prior to the issuance of the GLJ Report,
for the purpose of preparing the GLJ Report, all information requested by GLJ,
which information did not contain any misrepresentation; the Corporation has no
knowledge of a material adverse change in any information provided to GLJ since
the date that such information was so provided; and the Corporation believes
that the GLJ Report reasonably present the quantity and pre-tax present worth
values on an aggregate basis of the reserves of the Corporation and its
Subsidiaries as at December 31, 2010, based upon information available at the
time the GLJ Report was prepared and the assumptions as to commodity prices and
costs contained therein; |
| (xxxviii) | the Responses given by the Corporation and its directors and officers in
the Due Diligence Session conducted prior to the Closing Time were true and
correct in all material respects as at the time such responses were given and
such responses taken as a whole did not omit any fact or information necessary
to make any of the responses not misleading in light of the circumstances in
which such responses were given; |
- 19 -
| (xxxix) | although it does not warrant title, the Corporation has no reason to believe
that the Corporation and its Subsidiaries do not have good and marketable title
to or the irrevocable right to produce and sell their ownership interests to
petroleum, natural gas and related hydrocarbons (the “Interests”) and does
represent and warrant that the Interests are free and clear of adverse claims
created by, through or under the Corporation or the Subsidiaries except as disclosed in the
Public Record, any governmental registry or those arising in the ordinary
course of business which are not material in the aggregate, and that, to the
best of its knowledge, information and belief, each of the Corporation and
its Subsidiaries holds its Interests under valid and subsisting leases,
licenses, permits, concessions, concession agreements, contracts, subleases,
reservations or other agreements, except where the failure to hold such
rights in the event of such adverse claims or the failure to so hold its
Interests would, in the aggregate, not have a material adverse effect on the
Corporation and its Subsidiaries (taken as a whole); |
| (xl) | although it does not warrant title, the Corporation is not
aware of any defects, failures or impairments in the title of any of the
Corporation or any of its Material Subsidiaries to the crude oil, natural gas
liquids and natural gas properties, whether or not an action, suit, proceeding
or inquiry is pending or threatened or whether or not discovered by any third
party, which in aggregate would have a material adverse effect on: (A) the
quantity and pre-tax present worth values of crude oil, natural gas liquids and
natural gas reserves of any of the Corporation or any of its Material
Subsidiaries; (B) the current production volumes of any of the Corporation or
any of its Material Subsidiaries; or (C) the current cash flow of any of the
Corporation or any of its Material Subsidiaries; |
| (xli) | the Corporation does not have any knowledge of any outstanding
rights of first refusal or other pre-emptive rights of purchase which entitle
any person to acquire any of the rights, title, interests, property or assets
of the Corporation or any of its Material Subsidiaries; |
| (xlii) | neither the Corporation nor any of its Material Subsidiaries has elected or
refused to participate in any exploration, development or other operations on
the Interests which has or may give rise to any penalties, forfeitures or
reduction of its interest by virtue of any conversion or other alteration
occurring under the title and operating documents which govern the
Corporation’s ownership and operation of its Interests; |
| (xliii) | the Corporation is not aware of any pending or threatened action, suit,
proceeding or inquiry which, in aggregate, could have a material adverse effect
on: (i) the quantity and pre-tax present value of estimated future net revenue
values of oil and natural gas reserves of the Corporation as shown in the GLJ
Report; (ii) the current production of the Corporation; or (iii) the current
cash flow of the Corporation; |
| (xliv) | the Corporation has not incurred any obligation or liability, contingent or
otherwise, for brokerage fees, finder’s fees, agents’ commission or other forms
of compensation with respect to the transactions contemplated herein for which
the Corporation will have any liability or obligation except as provided
herein; |
| (xlv) | the Corporation does not have in place a shareholder rights
protection plan; |
- 20 -
| (xlvi) | the Corporation and its Subsidiaries are the beneficial owners of their
respective properties, business and assets or the interests in such properties,
business or assets, all agreements by which the Corporation and its
Subsidiaries, hold an
interest in a property, business or assets are in good standing in all
material respects according to their terms, and the properties are in good
standing in all material respects under the applicable laws of the
jurisdictions in which they are situated; |
| (xlvii) | other than as provided in the Responses, to its knowledge, neither the
Corporation nor any of its shareholders is a party to any unanimous shareholder
agreement, pooling agreement, voting trust or other similar type of
arrangements in respect of outstanding securities of the Corporation or any of
its Subsidiaries; |
| (xlviii) | the Corporation maintains “disclosure controls and procedures” and
“internal controls over financial reporting” consistent with the meaning of
such terms under National Instrument 52-109 — Certification of Disclosure in
Issuers’ Annual and Interim Filings (“NI 52-109”) to remain, in compliance with
the continuous disclosure requirements of Canadian Securities Laws, including
without limitation, with NI 52-109 and all fraud brought to the attention of
the Corporation’s management, whether or not material, that involves management
or employees that have a significant role in the Corporation’s internal
controls have been disclosed to the Corporation’s audit committee; |
| (xlix) | other than as disclosed in the Public Record, the Corporation has not
completed any significant acquisitions, as such term is defined in Part 8 of
National Instrument 51-102 — Continuous Disclosure Obligations; |
| (l) | neither the Corporation nor any of its Subsidiaries has,
directly or indirectly: |
| (A) | made or authorized any contribution, payment or
gift of funds or property to any official, employee or agent of any
governmental agency, authority or instrumentality of any jurisdiction;
or |
| (B) | made any contribution to any candidate for
public office, in either case, where either the payment or the purpose
of such contribution, payment or gift was, is, or would be prohibited
under the Canada Corruption of Foreign Public Officials Act (Canada) or
the Proceeds of Crime (Money Laundering) and Terrorist Financing Act
(Canada) or the rules and regulations promulgated thereunder or under
any other legislation of any relevant jurisdiction covering a similar
subject matter applicable to the Corporation or its Subsidiaries and
their respective operations and have instituted and maintained policies
and procedures designed to ensure, and which are reasonably expected to
continue to ensure, continued compliance with such legislation; |
| (li) | neither the Corporation nor any of its Subsidiaries or to the
best knowledge of the Corporation, any director, officer, agent, employee,
affiliate or person acting on behalf of the Corporation or/and its Subsidiaries
has been or is currently subject to any United States sanctions administered by
the Office of Foreign Assets Control of the United States Treasury Department
(“OFAC”); and the Corporation will not directly or indirectly use any proceeds
of the distribution of the Offered Securities, or lend, contribute or otherwise
make available such proceeds to the Subsidiaries or to any affiliated entity,
joint venture partner or other person or entity, to finance any investments in,
or make any payments to,
any country or person currently subject to any of the sanctions of the
United States administered by OFAC; |
- 21 -
| (lii) | neither the Corporation nor any of its Subsidiaries or to the
best knowledge of the Corporation, any director, officer, agent, employee,
affiliate or person acting on behalf of the Corporation or any of its
Subsidiaries, is aware of or has taken any action, directly or indirectly, that
would result in a violation by such persons of: |
| (A) | the Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder (the “FCPA”),
including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an
offer, payment, promise to pay or authorization of the payment of any
money, or other property, gift, promise to give, or authorization of
the giving of anything of value to any “foreign official” (as such term
is defined in the FCPA) or any foreign political party or official
thereof or any candidate for foreign political office, in contravention
of the FCPA; or |
||
| (B) | any provision of equivalent laws of any other
jurisdiction in which the Corporation or any of its Subsidiaries
conducts its business or operations, |
and, to the best knowledge of the Corporation, its Subsidiaries and
affiliates have conducted their businesses in compliance with the FCPA and
such other equivalent laws and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to continue
to ensure, continued compliance therewith;
| (liii) | the operations of the Corporation and its Subsidiaries are and have been
conducted at all times in compliance with all applicable anti-money laundering
laws, regulations, rules and guidelines in its jurisdiction of incorporation
and in each other jurisdiction in which such entity, as the case may be,
conducts business (collectively, the “Money Laundering Laws”) and no action,
suit or proceeding by or before any court or governmental or regulatory agency,
authority or body or any arbitrator involving the Corporation or any of its
Subsidiaries with respect to any of the Money Laundering Laws is pending or, to
the best knowledge of the Corporation, threatened or contemplated; |
| (liv) | the Corporation has not taken and will not take, directly or
indirectly, any action independent of actions that may be undertaken by the
Underwriters on the Corporation’s behalf designed to, or that might reasonably
be expected to cause or result in, stabilization and manipulation of the price
of the Offered Securities; |
| (lv) | all filings made by each of the Corporation and its
Subsidiaries under which the Corporation or any of its Subsidiaries has
received or is entitled to government incentives, have been made in accordance,
in all material respects, with all applicable legislation and contain no
misrepresentations of material fact or omit to state any material fact which
could cause any amount previously paid to the Corporation or its Subsidiaries
or previously accrued on the accounts thereof to be recovered or disallowed; |
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| (lvi) | other than as set forth in the Public Record, the Corporation
has not approved, entered into any agreement in respect of, or received any
written notice with respect to, (i) the purchase of any material property or
assets or any interest therein or the sale, transfer or other disposition of
any material property or assets or any interest therein currently owned,
directly or indirectly, by the Corporation or any of its Subsidiaries whether
by asset sale, transfer of shares or otherwise; (ii) the change of control of
the Corporation or any of its Subsidiaries (whether by sale or transfer of
shares or sale of all or substantially all of the property and assets of the
Corporation or any Subsidiary or otherwise); or (iii) a proposed or planned
disposition of Common Shares by any shareholder who owns, directly or
indirectly, 10% or more of the outstanding Common Shares of the Corporation; |
| (lvii) | other than as set forth in the Public Record, neither the Corporation nor any
of its Subsidiaries is a party to any written contracts of employment which may
not be terminated on one month’s notice or which provide for payments occurring
on a change of control of the Corporation or any of its Subsidiaries; |
| (lviii) | other than as set forth in the Public Record, as at the Closing Date there
will be no material contracts or agreements to which the Corporation or any of
its Subsidiaries is a party or by which it is bound. For the purposes of this
subparagraph, any contract or agreement pursuant to which the Corporation or
any of its Subsidiaries will, or may reasonably be expected to result in, a
requirement of the Corporation or any of its Subsidiaries to expend more than
an aggregate of $10,000,000 or receive or be entitled to receive revenue of
more than $10,000,000 in either case in the next 12 months shall be considered
to be material other than a rig lease, rental, operating or other agreements
entered into in the ordinary course of business; |
| (lix) | neither the Corporation nor its Subsidiaries currently has any
Swaps outstanding; |
| (lx) | the Corporation and its Subsidiaries maintain such policies of
insurance as are appropriate to its operations, property and assets, in such
amounts and against such risks as are customarily carried and insured against
by owners of comparable businesses and assets; and all such policies of
insurance will at or prior to the Closing Time be in full force and effect and
neither the Corporation nor its Subsidiaries is in default, as to the payment
of premiums or otherwise, under the terms of any such policy, except where such
default or the failure to hold such insurance, in the aggregate, would not have
a material adverse effect on the Corporation and its Subsidiaries (taken as a
whole); and |
| (lxi) | the Corporation or one of its Subsidiaries owns, or holds
valid and enforceable licenses entitling it to use, all patents, trade marks,
trade names and other intellectual property related to the RTPTM and
HTLTM heavy oil recovery technologies described in the Public
Record, free of all encumbrances and third party claims, such intellectual
property is valid and in good standing and the rights of the Corporation and
the Subsidiaries therein are sufficient to permit the Corporation and its
Subsidiaries to employ the technologies and conduct their respective businesses
in the manner described or proposed in the Public Record, all licenses related
to such intellectual property are in good standing and have not been breached
by the Corporation or any of its Subsidiaries and no other person
owns or has been granted any interest in or right to use all or any portion
of such intellectual property. |
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9. Indemnity
| (a) | The Corporation shall indemnify and save each of the Underwriters, and each of
the Underwriters’ agents, directors, officers, shareholders and employees harmless
against and from all liabilities, claims, demands, losses (other than losses of
profit), costs (including, without limitation, legal fees and disbursements on a full
indemnity basis), damages and reasonable expenses to which the Underwriters, or any of
the Underwriters’ agents, directors, officers, shareholders or employees may be subject
or which the Underwriters, or any of the Underwriters’ agents, directors, officers,
shareholders or employees may suffer or incur, whether under the provisions of any
statute or otherwise (including, without limitation, any amounts paid in settlement),
in any way caused by, or arising directly or indirectly from or in consequence of: |
| (i) | any information or statement contained in the Preliminary
Prospectus, the Prospectus, any Supplementary Material or in any other document
or material filed or delivered by or on behalf of the Corporation pursuant
hereto (other than any information or statement relating solely to the
Underwriters and furnished in writing to the Corporation by the Underwriters
expressly for inclusion in the Preliminary Prospectus, the Prospectus, any
Supplementary Material or such other document or material) which is or is
alleged to be untrue or any omission or alleged omission to provide any
information or state any fact (other than any information or fact relating
solely to the Underwriters) the omission of which makes or is alleged to make
any such information or statement untrue or misleading in light of the
circumstances in which it was made; |
| (ii) | any misrepresentation or alleged misrepresentation (except a
misrepresentation which is based upon information relating solely to the
Underwriters and furnished in writing to the Corporation by the Underwriters
expressly for inclusion in the Preliminary Prospectus, Prospectus, any
Supplementary Material or such other document or material) contained in the
Preliminary Prospectus, the Prospectus, any Supplementary Material or in any
other document or any other part of the Public Record filed by or on behalf of
the Corporation; |
| (iii) | any prohibition or restriction of trading in the securities of
the Corporation or any prohibition or restriction affecting the distribution of
the Offered Securities or the Underlying Shares issuable upon the conversion,
redemption or maturity of the Offered Securities imposed by any competent
authority if such prohibition or restriction is based on any misrepresentation
or alleged misrepresentation of a kind referred to in subsection 9(a)(ii); |
| (iv) | any order made or any inquiry, investigation (whether formal or
informal) or other proceeding commenced or threatened by any one or more
competent authorities (not based upon the activities or the alleged activities
of the Underwriters or their banking or Selling Dealer Group members, if any)
prohibiting, restricting, relating to or materially adversely affecting the
trading or distribution of the Offered Securities or the Common Shares; or |
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| (v) | any breach of, default under or non-compliance by the
Corporation with any requirements of Applicable Securities Laws, the rules or
regulations of the Exchanges or any representation, warranty, term or condition
of this Agreement, the Debenture Indenture or in any certificate or other
document delivered by or on behalf of the Corporation hereunder or thereunder
or pursuant hereto or thereto; |
provided, however, no party who has engaged in any fraud, wilful misconduct,
fraudulent misrepresentation or gross negligence (as determined by a court of
competent jurisdiction in a final judgment) shall be entitled, to the extent that
the liabilities, claims, losses, costs, damages or expenses were caused by such
activity, to claim indemnification from any person who has not also been determined
by a court of competent jurisdiction in a final judgment to have engaged in such
fraud, wilful misconduct, fraudulent misrepresentation or gross negligence (provided
that for greater certainty, the foregoing shall not disentitle an Underwriter from
claiming indemnification hereunder to the extent that the gross negligence, if any,
relates to the Underwriter’s failure to conduct adequate due diligence).
| (b) | If any claim contemplated by subsection 9(a) shall be asserted against any of
the persons or corporations in respect of which indemnification is or might reasonably
be considered to be provided for in such subsection, such person or corporation (the
“Indemnified Person”) shall notify the Corporation (provided that failure to so notify
the Corporation of the nature of such claim in a timely fashion shall relieve the
Corporation of liability hereunder only if and to the extent that such failure
materially prejudices the Corporation’s ability to defend such claim) as soon as
possible of the nature of such claim and the Corporation shall be entitled (but not
required) to assume the defence of any suit brought to enforce such claim, provided
however, that the defence shall be through legal counsel selected by the Corporation
and acceptable to the Indemnified Person acting reasonably and that no admission of
liability or settlement may be made by the Corporation or the Indemnified Person
without the prior written consent of the other, such consent not to be unreasonably
withheld. The Indemnified Person shall have the right to retain its own counsel in any
proceeding relating to a claim contemplated by subsection 9(a) if: |
| (i) | the Indemnified Person has been advised by counsel that there
may be a reasonable legal defense available to the Indemnified Person which is
different from or additional to a defense available to the Corporation and that
representation of the Indemnified Person and the Corporation by the same
counsel would be inappropriate due to the actual or potential differing
interests between them (in which case the Corporation shall not have the right
to assume the defense of such proceedings on the Indemnified Person’s behalf); |
| (ii) | the Corporation shall not have taken the defense of such
proceedings and retained counsel within ten (10) days after notice has been
given to the Corporation of commencement of such proceedings; or |
| (iii) | the employment of such counsel has been authorized by the
Corporation in connection with the defense of such proceedings; |
and, in any such event, the reasonable fees and expenses of such Indemnified
Person’s counsel (on a solicitor and his own client basis) shall be paid by the
Corporation, provided that the Corporation shall not, in connection with any one
such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the fees
and expenses of more than one separate law firm (in addition to any local counsel)
for all such Indemnified Persons.
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| (c) | The Corporation hereby waives its rights to recover contribution from the
Underwriters with respect to any liability of the Corporation by reason of or arising
out of any misrepresentation in the Preliminary Prospectus, the Prospectus, any
Supplementary Material or any other part of the Public Record provided, however, that
such waiver shall not apply in respect of liability caused or incurred by reason of any
misrepresentation which is based upon information relating solely to the Underwriters
contained in such document and furnished in writing to the Corporation by the
Underwriters expressly for inclusion in the Preliminary Prospectus, the Prospectus, any
Supplementary Material or any other part of the Public Record. |
| (d) | If any legal proceedings shall be instituted against the Corporation in respect
of the Preliminary Prospectus, the Prospectus, any Supplementary Material or any other
part of the Public Record or the Offered Securities or if any regulatory authority or
stock exchange shall carry out an investigation of the Corporation in respect of the
Preliminary Prospectus, the Prospectus, any Supplementary Material or any other part of
the Public Record or the Offered Securities and, in either case, any Indemnified Person
is required to testify, or respond to procedures designed to discover information, in
connection with or by reason of the services performed by the Underwriters hereunder,
the Indemnified Persons may employ their own legal counsel, and, provided such
proceeding is not brought as a result of any gross negligence, fraud, or wilful
misconduct (as determined by a court of competent jurisdiction in a final judgment),
the Corporation shall pay and reimburse the Indemnified Persons for the reasonable
fees, charges and disbursements (on a full indemnity basis) of such legal counsel, the
other expenses reasonably incurred by the Indemnified Persons in connection with such
proceedings or investigation and a fee at the normal per diem rate for any director,
officer or employee of the Underwriters involved in the preparation for or attendance
at such proceedings or investigation. |
| (e) | The rights and remedies of the Indemnified Persons set forth in sections 9, 10
and 12 (in the case of the Underwriters) hereof are to the fullest extent possible in
law cumulative and not alternative and the election by any Underwriter or other
Indemnified Person to exercise any such right or remedy shall not be, and shall not be
deemed to be, a waiver of any other rights and remedies. |
| (f) | The Corporation hereby acknowledges that the Underwriters are acting as agents
for the Underwriters’ respective agents, directors, officers, shareholders and
employees under this section 9 and under section 10 with respect to all such agents,
directors, officers, shareholders and employees. |
| (g) | The Corporation waives any right it may have of first requiring an Indemnified
Person to proceed against or enforce any other right, power, remedy or security or
claim or to claim payment from any other person before claiming under this indemnity.
It is not necessary for an Indemnified Person to incur expense or make payment before
enforcing such indemnity. |
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| (h) | The rights of indemnity contained in this section 9 shall not apply if the
Corporation has complied with the provisions of sections 3, 4 and 5 (or the
Underwriters have agreed to
waive compliance therewith) and the person asserting any claim contemplated by this
section 9 was not provided with a copy of the Prospectus or Supplementary Material
or other document which corrects any misrepresentation or alleged misrepresentation
which is the basis of such claim and which was required, under Canadian Securities
Laws, to be delivered to such person by the Underwriters. |
| (i) | If the Corporation has assumed the defense of any suit brought to enforce a
claim hereunder, the Indemnified Person shall provide the Corporation copies of all
documents and information in its possession pertaining to the claim, take all
reasonable actions necessary to preserve its rights to object to or defend against the
claim, consult and reasonably cooperate with the Corporation in determining whether the
claim and any legal proceeding resulting therefrom should be resisted, compromised or
settled and reasonably cooperate and assist in any negotiations to compromise or
settle, or in any defense of, a claim undertaken by the Corporation. |
10. Contribution
In order to provide for just and equitable contribution in circumstances in which the
indemnification provided for in this Agreement is due in accordance with its terms but is, for any
reason, held by a court to be unavailable from the Corporation on grounds of policy or otherwise,
the Corporation and the party or parties seeking indemnification shall contribute to the aggregate
liabilities, claims, demands, losses (other than losses of profit), costs (including, without
limitation, reasonable legal fees and disbursements on a full indemnity basis), damages and
reasonable expenses to which they may be subject or which they may suffer or incur:
| (a) | in such proportion as is appropriate to reflect the relative benefit received
by the Corporation on the one hand, and by the Underwriter on the other hand, from the
offering of the Offered Securities; or |
| (b) | if the allocation provided by subsection 10(a) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in subsection 10(a) above but also to reflect the relative fault
of the Underwriter on the one hand, and the Corporation, on the other hand, in
connection with the statements, commissions or omissions or other matters which
resulted in such liabilities, claims, demands, losses, costs, damages or expenses, as
well as any other relevant equitable considerations. |
The relative benefits received by the Corporation, on the one hand, and the Underwriter, on
the other hand, shall be deemed to be in the same proportion that the total proceeds of the
offering received by the Corporation (net of fees but before deducting expenses) bear to the fees
received by the Underwriter. In the case of liability arising out of the Preliminary Prospectus,
the Prospectus, any Supplementary Material or any other part of the Public Record, the relative
fault of the Corporation, on the one hand, and of the Underwriter, on the other hand, shall be
determined by reference, among other things, to whether the misrepresentation or alleged
misrepresentation, order, inquiry, investigation or other matter or thing referred to in section 9
relates to information supplied or which ought to have been supplied by, or steps or actions taken
or done on behalf of or which ought to have been taken or done on behalf of, the Corporation or the
Underwriter and the parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such misrepresentation or alleged misrepresentation, order, inquiry,
investigation or other matter or thing referred to in section 9.
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The amount paid or payable by an Indemnified Person as a result of liabilities, claims,
demands, losses (other than losses of profit), costs, damages and expenses (or claims, actions,
suits or proceedings in respect thereof) referred to above shall, without limitation, include any
legal or other expenses reasonably incurred by the Indemnified Person in connection with
investigating or defending such liabilities, claims, demands, losses, costs, damages and expenses
(or claims, actions, suits or proceedings in respect thereof) whether or not resulting in any
action, suit, proceeding or claim.
Each of the Corporation and the Underwriters agree that it would not be just and equitable if
contributions pursuant to this Agreement were determined by pro rata allocation or by any other
method of allocation which does not take into account the equitable considerations referred to in
the immediately preceding sections. The rights to contribution provided in this section 10 shall be
in addition to, and without prejudice to, any other right to contribution which the Underwriters or
other Indemnified Persons may have.
Any liability of an Underwriter under this section 10 shall be limited to the amount actually
received by the Underwriter under section 2.
The obligations under the indemnity and right to contribution provided herein shall apply
whether or not the transactions contemplated by this Agreement are completed and shall survive the
completion of the transactions contemplated under this Agreement and the termination of this
Agreement.
11. Expenses
Whether or not the transactions contemplated herein shall be completed, all costs and expenses
of or incidental to the distribution of the Offered Securities shall be borne by the Corporation,
including, without limitation, all costs and expenses of or incidental to the Concurrent Private
Placement, the fees and expenses of the Corporation’s counsel, agent counsel retained by the
Corporation’s counsel, the Corporation’s auditors and the Corporation’s engineers and the
reasonable out-of-pocket expenses of the Underwriters, including, but not limited to, travel
expenses and the Underwriters’ reasonable legal fees, disbursements and expenses.
12. Termination Rights
| (a) | The obligation of the Underwriters to purchase the Firm Debentures and
Additional Debentures, as applicable, shall be subject to the accuracy as of the
Closing Time or Over-Allotment Option Closing Time, as applicable, of the material
representations and warranties of the Corporation contained herein or in any
certificate or document delivered pursuant to or contemplated by this Agreement and the
due fulfilment and compliance by the Corporation of and with its material covenants
herein. |
| (b) | All representations, warranties, terms and conditions of this Agreement, other
than those which expressly provide for an obligation of the Underwriters shall be
construed as conditions inserted for the benefit of the Underwriters. Any breach of,
default under or non-compliance with any material representation, warranty or term or
any condition by the Corporation shall entitle any of the Underwriters, without
limitation of any other remedies of the Underwriters, to terminate such Underwriter’s
obligation to purchase the Firm Debentures or Additional Debentures, as applicable, by
giving written notice to that effect to the Corporation at or prior to the Closing Time
or the Over-Allotment Option Closing Time, as applicable. The Underwriters may waive,
in whole or in part, or extend the time for compliance with, any such representation,
warranty, term or condition without prejudice to the rights of the Underwriters in
respect of any other such
representation, warranty, term or condition or any other or subsequent breach,
default or non-compliance with that or any other representation, warranty, term or
condition, provided that to be binding on an Underwriter any such waiver or
extension must be in writing and signed by such Underwriter. No act of the
Underwriters in offering the Offered Securities or in preparing or joining in the
execution of the Prospectuses or any Supplementary Material shall constitute a
waiver by, or estoppel against, the Underwriters. |
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| (c) | Any Underwriter shall be entitled, at the Underwriter’s option, to terminate
and cancel, without any liability on the Underwriter’s part, the Underwriter’s
obligations under this Agreement if, during the period from the date of this Agreement
to the Closing Time or the Over-Allotment Option Closing Time, as applicable: |
| (i) | any order to cease or suspend trading in any securities of the
Corporation or prohibiting or restricting the distribution of any of the
Offered Securities or the Underlying Shares issuable upon the conversion,
redemption or maturity of the Offered Securities is made, or proceedings are
announced, commenced or threatened for the making of any such order, by any
securities commission or similar regulatory authority, an Exchange or any other
competent authority, and has not been rescinded, revoked or withdrawn; |
| (ii) | any inquiry, action, suit, investigation or other proceeding
(whether formal or informal) in relation to the Corporation or any of its
Subsidiaries or any of the directors or senior officers of the Corporation is
announced, commenced or threatened by any securities commission or similar
regulatory authority, the Exchanges or any other competent authority or there
is a change in law, regulation or policy or the interpretation or
administration thereof, if, in the reasonable opinion of the Underwriters or
any one of them, the change, announcement, commencement or threatening thereof
adversely affects, or may adversely affect, the trading or distribution of the
Offered Securities, the Common Shares or any other securities of the
Corporation; |
| (iii) | there shall have occurred or be discovered any adverse change,
as determined by the Underwriters or any one of them in their sole discretion,
acting reasonably, in the business, operations, capital or condition (financial
or otherwise) or business prospects of the Corporation and its Subsidiaries
(taken as a whole) or the respective properties, assets, liabilities or
obligations of the Corporation or any of its Subsidiaries (absolute, accrued,
contingent or otherwise) which in the opinion of the Underwriters or any one of
them, could reasonably be expected to have a significant adverse effect on the
market price or value of the Offered Securities or the Common Shares or any
other securities of the Corporation; |
| (iv) | there should develop, occur or come into effect or existence,
or be announced, any event, action, state, condition or occurrence of national
or international consequence, or any law, action, regulation or other
occurrence of any nature whatsoever, which, in the sole opinion of the
Underwriters or any one of them, acting reasonably, seriously adversely affects
or involves, or will seriously adversely affect or involve, the financial
markets generally or the business, operations or affairs of the Corporation or
its Subsidiaries; |
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| (v) | the Underwriters shall become aware of any material information
with respect to the Corporation or any of its Subsidiaries which had not been
publicly disclosed or disclosed in writing to the Underwriters at or prior to
the date hereof and which in the sole opinion of the Underwriters or any one of
them, acting reasonably, could be expected to have a material adverse effect on
the market price or value of the Offered Securities or the Common Shares or any
other securities of the Corporation; or |
| (vi) | the Corporation shall be in breach of, default under or
non-compliance with any material representation, warranty, covenant, term or
any condition of this Agreement or the Debenture Indenture, |
by giving the Corporation written notice to that effect at or prior to the Closing
Time or the Over-Allotment Option Closing Time, as applicable.
| (d) | If any Underwriter shall elect to terminate its obligation to purchase the Firm
Debentures or Additional Debentures, as applicable, as aforesaid, whether the reason
for such termination is within or beyond the control of the Corporation, the liability
of the Corporation hereunder with respect to such Underwriter shall, subject to section
12(e), be limited to the indemnity referred to in section 9, the contribution rights
referred to in section 10 and the payment of expenses referred to in section 11, if
any. |
| (e) | The rights of termination contained in this section 12 may be exercised by any
Underwriter acting alone and are in addition to any other rights or remedies the
Underwriters or any of them may have in respect of any of the matters contemplated by
this Agreement or otherwise. Any such termination shall not discharge or otherwise
affect any obligation or liability of the Corporation provided herein or prejudice any
other rights or remedies any party may have as a result of any breach, default or
non-compliance by any other party. A notice of termination given by an Underwriter
under this section 12 shall not be binding upon any other Underwriter. In the event
that any one or more but not all of the Underwriters shall exercise its rights of
termination herein, then the provisions of section 20 shall apply. |
| (f) | The execution of any Supplementary Material (including without limitation an
amendment to the Preliminary Prospectus or the Prospectus) in respect of any material
change and the continued offering of the Firm Debentures or Additional Debentures, as
applicable, thereafter by the Underwriters shall not constitute a waiver of the
Underwriters’ rights under this section 12. |
13. Notification
| (a) | The Corporation shall advise the Lead Underwriter promptly of any request made
at any time prior to the end of the distribution of the Firm Debentures or Additional
Debentures, as applicable, by any Securities Commission or Exchange for any
Supplementary Material or for any additional information, of the issuance by any such
Securities Commission or Exchange of any cease trading or stop order relating to the
Firm Debentures or Additional Debentures, as applicable, any other securities of the
Corporation or order preventing or suspending the use of the Prospectuses relating to
the Firm Debentures or Additional Debentures, as applicable, or the qualification of
the Firm Debentures or Additional Debentures, as applicable, for offering or sale, in
any jurisdiction, or of the institution or threat (to its knowledge) of institution of
any proceedings for that purpose or of the receipt by the Corporation of any written
communication from any such Securities Commission or Exchange relating to the
Prospectuses, any Supplementary Material or the offering of the Offered Securities.
The Corporation shall use all commercially reasonable efforts to prevent the
issuance of any such cease trading or stop order or other order and, if issued, to
obtain the withdrawal or lifting thereof as soon as possible. |
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| (b) | During the period commencing on the date hereof and ending upon the completion
of the Distribution of the Firm Debentures or Additional Debentures, as applicable, the
Corporation shall provide to the Underwriters on a timely basis, for review by the
Underwriters and their counsel prior to filing, any proposed document, including
without limitation any Supplementary Material, including without limitation any annual
information form, material change report or information circular, which may be required
to be filed by any Securities Commission or Exchange. |
14. Closing and Conditions of Closing and Exercise of Over-Allotment Option
| (a) | The Closing of the purchase and sale of the Firm Debentures shall be completed
at the offices of the Corporation’s counsel, Calgary, Alberta at the Closing Time. |
| (b) | The Closing shall be conditional on the following being delivered to the
Underwriters or occurring at or before the Closing Time: |
| (i) | subject to section 14(c), by the Corporation, one or more
definitive certificates representing in the aggregate the Firm Debentures
registered in the name of “CDS & Co.”, or in such other name or names as the
Lead Underwriter shall notify the Corporation in writing not later than 7:00
a.m. (Calgary time) two Business Days immediately preceding the Closing Date; |
| (ii) | a comfort letter of the Corporation’s auditors dated the
Closing Date and addressed to the Underwriters in form and content satisfactory
to the Underwriters and their counsel, bringing the information contained in
the comfort letter referred to in section 4(c) forward to the Closing Time
provided that such comfort letter shall be based on a review by the
Corporation’s auditors having a cut-off date not prior to two Business Days
prior to the Closing Date; |
| (iii) | written confirmation from the Exchanges in customary form that
the Firm Debentures will at the Closing Time with regards to the TSX, and the
Underlying Shares on issuance thereof with regards to both Exchanges, be listed
for trading and all conditions other than completion of the Closing and
notification thereof to the Exchanges shall have been met to permit the Firm
Debentures to be posted for trading on the TSX on the Closing Date and the
Underlying Shares on the Exchanges on issuance thereof; |
| (iv) | an executed copy of the Debenture Indenture, in form and
substance satisfactory to the Underwriters, acting reasonably; |
| (v) | a lock-up agreement prohibiting the disposition of any
securities of the Corporation for a period of 90 days following the Closing
Date executed by Xxxxxx X. Xxxxxxxxx; |
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| (vi) | certificates addressed to the Underwriters dated the Closing
Date signed by two appropriate officers of the Corporation, all in a form
approved by Underwriters’ counsel, acting reasonably, certifying with respect
to the currently effective constating documents of the Corporation, the
resolutions of the board of directors of the Corporation relevant to the
Preliminary Prospectus, the Prospectus, any Supplementary Material and the
Offering and the incumbency and signatures of signing officers of the
Corporation; |
| (vii) | payment of the Underwriting Fee in respect of the Firm
Debentures to the Underwriters, by deduction from the aggregate gross proceeds
of the sale of the Firm Debentures as set forth in section 2, or by wire
transfer, certified cheque(s) or bank draft(s) in immediately available funds,
payable on a same day basis at par in the City of Calgary to TD Securities
Inc., or as the Underwriters may otherwise direct in writing not later than
7:00 a.m. (Calgary time) on the Business Day immediately preceding the Closing
Date; and |
| (viii) | the requisite legal opinions, letters and certificates as contemplated herein
and such further documentation as may be contemplated herein or as counsel to
the Underwriters may reasonably require, |
against payment of the Purchase Price by wire transfer, certified cheque(s), bank
draft(s) in immediately available funds, payable on a same day basis at par in the
City of Calgary to the Corporation, or as the Corporation may otherwise direct the
Underwriters in writing not later than 7:00 a.m. (Calgary time) on the Business Day
immediately preceding the Closing Date.
| (c) | If the Corporation determines to issue the Firm Debentures as book-entry only
securities in accordance with the rules and procedures of CDS Clearing and Depository
Services Inc. (“CDS”), then, as an alternative to the Corporation delivering to the
Underwriters definitive certificates representing the Firm Debentures in the manner and
at the times set forth in section 14(b)(i): |
| (i) | the Underwriters will provide a direction to CDS with respect
to the crediting of the Firm Debentures to the accounts of the participants of
CDS as shall be designated by the Underwriters in writing in sufficient time
prior to the Closing Date to permit such crediting; |
| (ii) | the Corporation shall cause the Trustee, as registrar and
transfer agent of the Firm Debentures, to deliver to CDS, on behalf of the
Underwriters, one or more fully registered global certificate(s) for the Firm
Debentures to be purchased hereunder, registered in the name of “CDS & Co.” as
the nominee of CDS, in each case, to be held by CDS as a book-entry only
security in accordance with the rules and procedures of CDS. |
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| (d) | The Underwriters shall not be under any obligation to purchase any of the
Additional Debentures prior to the exercise of the Over-Allotment Option. TD Securities
Inc., on behalf of the Underwriters, may exercise the Over-Allotment Option, in whole
or in part, at any time and from time to time prior to the Over-Allotment Expiry Date
by delivery of written notice to the Corporation of the number of Additional Debentures
in respect of which the Over-Allotment Option is being exercised and the date for
delivery of the Additional Debentures (an “Over-Allotment Option Notice”). The
Over-Allotment Option Closing Date shall be determined by the Lead Underwriter but shall not be
earlier than two Business Days or later than seven Business Days after delivery of
the Over-Allotment Option Notice unless the parties otherwise agree. Upon exercise
of the Over-Allotment Option as provided herein, the Corporation shall become
obligated to sell the total number of Additional Debentures in respect of which the
Underwriters are exercising the Over-Allotment Option, to the Underwriters and,
subject to the terms and conditions herein set forth, each of the Underwriters
severally and not jointly shall become obligated to purchase from the Corporation,
in the respective percentages set forth in section 20 hereof, the total number of
the Additional Debentures in respect of which the Underwriters are then exercising
the Over-Allotment Option, as adjusted by the Underwriters, if necessary, in such
manner as they deem advisable to avoid fractional Additional Debentures. The
exercise of the Over-Allotment Option by the Underwriters shall constitute a
representation and warranty by the Underwriters that the Additional Debentures to be
issued pursuant thereto are for purposes of covering the over-allocation position of
the Underwriters as at the Closing Date. |
| (e) | The closing of the purchase and sale of the Additional Debentures herein
provided for, if any, shall be completed at the offices of the Corporation’s counsel,
Calgary, Alberta at the Over-Allotment Option Closing Time. The obligation of the
Underwriters to purchase the Additional Debentures shall be conditional on the
following being delivered to the Underwriters or occurring at or before the
Over-Allotment Option Closing Time: |
| (i) | subject to section 14(c), by the Corporation, one or more
definitive certificates representing in the aggregate the Additional Debentures
registered in the name of “CDS & Co.”, or in such other name or names as the
Lead Underwriter shall notify the Corporation in writing not later than 7:00
a.m. (Calgary time) on the Business Day immediately preceding the
Over-Allotment Option Closing Date; |
| (ii) | the opinions contemplated by section 15 and the officers’
certificate contemplated by section 16; |
| (iii) | a comfort letter of the Corporation’s auditors dated the
Over-Allotment Option Closing Date and addressed to the Underwriters in form
and content satisfactory to the Underwriters and their counsel, bringing the
information contained in the comfort letter referred to in section 4(c) forward
to the Over-Allotment Option Closing Time provided that such comfort letter
shall be based on reviews by the Corporation’s auditors having a cut-off date
not prior to two Business Days prior to the Over-Allotment Option Closing Date; |
| (iv) | written confirmation from the TSX in customary form that the
Additional Debentures will at the Over-Allotment Option Closing Time be listed
for trading on the TSX and all conditions other than completion of the closing
of the sale of the Additional Debentures by the Corporation and the purchase
thereof by the Underwriters and notification thereof to the Exchanges shall
have been met to permit the Additional Debentures to be posted for trading on
the TSX on the Over-Allotment Option Closing Date; and |
- 33 -
| (v) | a certificate dated the Over-Allotment Option Closing Date
addressed to the Underwriters and signed by two appropriate officers of the
Corporation, in a form approved by counsel to the Underwriters, acting
reasonably, certifying with respect to either: |
| (A) | there being no amendments, deletions, additions
or other changes to the documents certified pursuant to section
14(b)(vi); or |
| (B) | if there has been amendments, deletions,
additions or other changes to the documents certified pursuant to
section 14(b)(vi): |
| I. | the currently effective
constating documents of the Corporation for which there has been
amendments, deletions, additions or other changes, |
| II. | the resolution of the board of
directors of the Corporation relevant to the Prospectuses and
the offering of the Additional Debentures for which there has
been amendments, deletions, additions or other changes, and |
| III. | the incumbency and signatures of
signing officers of the Corporation for which there has been
amendments, deletions, additions or other changes. |
Whether or not specifically contemplated in this Agreement, all provisions of this Agreement
shall apply in the same manner and upon the same terms and conditions in respect of any Additional
Debentures as would apply to the Firm Debentures issued and sold pursuant to this Agreement, and
any steps to be taken or conditions to be satisfied at the Over-Allotment Option Closing Time shall
be the same as those steps to be taken or conditions to be satisfied at the Closing Time.
15. Legal Opinions
| (a) | At the Closing Time and the Over-Allotment Option Closing Time, if applicable,
the Corporation shall have caused favourable legal opinions dated the Closing Date and
the Over-Allotment Option Closing Date, if applicable, to be delivered (in sufficient
copies for each of the Underwriters and their counsel) to the Underwriters by the
Corporation’s counsel (who may rely, to the extent appropriate in the circumstances, on
the opinions of local or other counsel (acceptable to them and to counsel for the
Underwriters) as to the qualification of the Firm Debentures and Additional Debentures,
as applicable, for sale to the public in, and as to other matters governed by the laws
of, jurisdictions other than the Province of Alberta and may rely, to the extent
appropriate in the circumstances and solely as to matters of fact not independently
established, on certificates or statutory declarations of officers of Corporation and
of public and stock exchange officials) with respect to such matters as the
Underwriters may reasonably request relating to the Offering of the Firm Debentures and
Additional Debentures, as applicable, the Corporation and its Subsidiaries in form and
substance acceptable to counsel to the Underwriters, acting reasonably, including
without limitation opinions substantially to the effect that: |
| (i) | each of the Corporation and its Material Subsidiaries has been
duly incorporated, amalgamated or formed, as the case may be, and is validly
subsisting under the laws of the jurisdiction of its incorporation,
amalgamation or formation, as the case may be, and has all requisite corporate
or partnership capacity, power and authority to carry on its business as now
conducted by it and to own its properties and assets; |
- 34 -
| (ii) | the Corporation has full corporate power and authority to enter
into this Agreement and the Debenture Indenture and to perform its obligations
set out herein and therein, including the issuance and sale of the Offered
Securities, and this Agreement and the Debenture Indenture and the Offered
Securities have been duly authorized, executed and delivered by the Corporation
and constitute legal, valid and binding obligations of the Corporation
enforceable against the Corporation in accordance with their respective terms
subject to laws affecting the enforceability of agreements and other
enforceability qualifications; |
| (iii) | the (x) execution and delivery of this Agreement and the
Debenture Indenture, and the fulfillment of the terms hereof and thereof by the
Corporation, and the performance of and compliance with the terms of this
Agreement and the Debenture Indenture by the Corporation, and (y) the issuance
and sale of the Offered Securities and the fulfillment of the terms thereof by
the Corporation, does not and will not result in a breach of, or constitute a
default under, and do not and will not create a state of facts which, after
notice or lapse of time or both, will result in a breach of or constitute a
default: |
| (A) | under any applicable laws of the Province of
Alberta or the federal laws of Canada applicable therein; |
| (B) | under any term or provision of the articles,
by-laws or other constating documents, as applicable, of the
Corporation or any of its Material Subsidiaries, or, of which
Corporation’s counsel is aware, any resolutions of the shareholders or
partners, as applicable, or directors (or any committee thereof) of the
Corporation or any of its Material Subsidiaries; |
| (C) | of which counsel is aware, any indenture,
mortgage, note, contract, agreement (written or oral), instrument,
lease or other document to which the Corporation or any of its
Subsidiaries is a party or by which it is bound; or |
| (D) | of which counsel is aware, any judgment, decree
or order, of any court, governmental agency or body or regulatory
authority having jurisdiction over the Corporation or any of its
Subsidiaries or their respective properties or assets; |
| (iv) | the Corporation is a “reporting issuer” not in default of any
requirement of the Securities Act (British Columbia) and the regulations
thereunder and has a similar status under the Securities Laws of each of the
other Qualifying Provinces and is eligible to participate in NI 44-101 in each
Qualifying Province; |
| (v) | the Corporation is authorized to issue an unlimited number of
Common Shares; |
| (vi) | the Corporation and the attributes and characteristics of the
Offered Securities, Common Shares, Debenture Indenture and the Over-Allotment
Option conform in all material respects with the descriptions thereof in the
Prospectus and any Supplementary Material; |
| (vii) | the Offered Securities are conditionally accepted for listing
and, upon notification to the TSX of the issuance thereof and fulfillment of
the Standard Listing Conditions of the TSX, will be listed and posted for trading on the
TSX, as provided herein; |
- 35 -
| (viii) | the Underlying Shares are conditionally accepted for listing and, upon
notification to the Exchanges of the issuance thereof and fulfillment of the
Standard Listing Conditions of the Exchanges, will be listed and posted for
trading on the Exchanges, as provided herein; |
| (ix) | CIBC Mellon Trust Company has been duly appointed as the
transfer agent and registrar for the Common Shares (including the Underlying
Shares) and has been appointed trustee and transfer agent and registrar for the
Offered Securities under the Debenture Indenture; |
| (x) | (i) the Firm Debentures have been duly and validly created and
issued as fully paid securities of the Corporation; (ii) the Additional
Debentures have been duly and validly created and will, upon exercise of the
Over-Allotment Option and payment of the purchase price for such Additional
Debentures, be validly issued as fully paid securities of the Corporation; and
(iii) the Over-Allotment Option has been duly and validly created and
authorized; |
| (xi) | the form of the definitive certificate representing the Offered
Securities has been duly approved and adopted by the Corporation and complies
in all material respects with the Debenture Indenture; |
| (xii) | the form of the definitive certificate representing the Common
Shares has been approved and adopted by the Corporation; |
| (xiii) | the Debenture Indenture and the issuance of Offered Securities thereunder are
subject to and comply with the YBCA and no registration, filing or recording of
the Debenture Indenture under the laws of the Province of British Columbia is
necessary in order to preserve or protect the validity or enforceability of the
Debenture Indenture or Offered Securities issued thereunder; |
| (xiv) | the Underlying Shares issuable upon conversion, redemption or
maturity of the Offered Securities will, upon issuance in accordance with the
terms of the Debenture Indenture and the constating documents of the
Corporation, be issued as fully paid and non-assessable Common Shares; |
| (xv) | the Corporation has the necessary corporate power and authority
to execute and deliver the Prospectuses and any Supplementary Material and all
necessary action has been taken by the Corporation to authorize the execution
and delivery by it of the Prospectuses and any Supplementary Material and the
filing thereof, as the case may be, in each of the Qualifying Provinces under
Canadian Securities Laws; |
| (xvi) | all necessary documents have been filed, all necessary
proceedings have been taken and all legal requirements have been fulfilled
under the Canadian Securities Laws of each of the Qualifying Provinces in order
to qualify the distribution of the Offered Securities in each of the Qualifying
Provinces through investment dealers or brokers registered under applicable
legislation of the Qualifying Provinces who have complied with the relevant provisions of such
legislation; |
- 36 -
| (xvii) | the issuance of the Underlying Shares by the Corporation on conversion,
redemption or maturity of the Offered Securities to holders of the Offered
Securities in accordance with the Debenture Indenture is exempt from the
prospectus and registration requirements of the Canadian Securities Laws; |
| (xviii) | the first trade in the Underlying Shares acquired upon conversion,
redemption or maturity of the Offered Securities will not be subject to the
prospectus requirements of Canadian Securities Laws and no prospectus or other
document is required to be filed, no proceedings are required to be taken and
no approvals, permits, consents or authorizations of regulatory authorities are
required to be obtained under the Canadian Securities Laws to permit the first
trade of such securities by the holder thereof through registrants or dealers
registered under the Canadian Securities Laws of such Qualifying Provinces who
have complied with such laws, or in circumstances in which there is an
exemption from the registration requirements under the Canadian Securities Laws
of such provinces, provided that: (A) the trade is not a “control distribution”
(as defined in National Instrument 45-102); and (B) the Corporation is a
reporting issuer at the time of the trade; |
| (xix) | subject to the qualifications and assumptions set out therein,
the statements in the Prospectus under the heading “Canadian Federal Income Tax
Considerations” constitute a fair summary of the principal Canadian federal
income tax consequences arising under the Tax Act to persons referred to
therein who will hold the Offered Securities; |
| (xx) | the Firm Debentures and the Additional Debentures are eligible
investments as set out under the heading “Eligibility for Investment” in the
Prospectuses. |
16. Officers’ Certificates
| (a) | The Underwriters shall have received at the Closing Time and the Over-Allotment
Option Closing Time, as applicable, a certificate dated the Closing Date and the
Over-Allotment Option Closing Date, as applicable, addressed to the Underwriters and
signed by each of the Chief Executive Officer and the Chief Financial Officer of the
Corporation, certifying for and on behalf of the Corporation, to the best of the
knowledge, information and belief of the persons signing such certificate after having
examined the Prospectus and if applicable, any Supplementary Material that: |
| (i) | the Corporation has complied with all covenants and satisfied
all terms and conditions of this Agreement and the Debenture Indenture on its
part to be complied with and satisfied at or prior to the Closing Time or the
Over-Allotment Option Closing Time, other than those that have been waived by
the Underwriters, as applicable; |
- 37 -
| (ii) | since the respective dates as of which information is given in
the Prospectus and except as may have been the subject of Supplementary
Material filed with the relevant Securities Commissions, there has been no
material change (actual, or to the best of the knowledge, information and
belief of the declarants, anticipated,
contemplated or threatened, whether financial or otherwise), and no change
of any material fact or new material fact, in the consolidated business,
financial condition, affairs, operations, assets, liabilities (contingent or
otherwise) or capital of the Corporation from the date hereof to the Closing
Date or the Over-Allotment Option Closing Date, as applicable, except as
disclosed in the Prospectus or that would require an amendment to the
Prospectus to be filed with the Securities Commissions; |
| (iii) | other than the representations of the Corporation in
subsection 8(b)(xxviii) and 8(b)(xxix), the representations and warranties of
the Corporation contained herein including those arising by delivery of
documents hereunder are true and correct as of the Closing Time or the
Over-Allotment Option Closing Time, as applicable, with the same force and
effect as if made at and as of the Closing Time or the Over-Allotment Option
Closing Time, as applicable, after giving effect to the transactions
contemplated hereby and by the Prospectus; |
| (iv) | no order, ruling or determination having the effect of ceasing,
suspending or restricting trading in, or the sale of, the Firm Debentures or
the Additional Debentures, as applicable, has been issued and no proceedings,
investigations or inquiry for such purpose are pending or, to the best of the
knowledge, information and belief of the declarants, contemplated or
threatened; and |
(v) there have been no material changes to the Responses.
17. Restrictions on Offerings
Other than the Offered Securities and the Private Placement Debentures, the Corporation agrees
that, from the date hereof and ending on the date that is 90 days following the Closing Date that
it will not offer, or announce the offering of, or make or announce any agreement to issue, sell,
or exchange Common Shares or securities or financial instruments convertible or exchangeable into
Common Shares without the prior written consent of the Lead Underwriter (on behalf of the
Underwriters), not to be unreasonably withheld, provided that notwithstanding the foregoing, the
Corporation may, without such consent: (i) grant options and restricted share units to directors,
officers, consultants or employees of the Corporation pursuant to the Corporation’s shareholder
approved stock option plan and restricted share unit plan; (ii) issue Common Shares on exercise of
outstanding options issued pursuant to the Corporation’s shareholder approved stock option plan or
on exercise of other outstanding instruments as of the date hereof; and (iii) issue Common Shares
to satisfy obligations under instruments outstanding as of the date hereof.
18. Notices
Any notice or other communication to be given hereunder shall, in the case of notice to be
given to the Corporation be addressed to Ivanhoe Energy Inc., Attention Xxxx Xxxxxxx, Executive
Vice President, Corporate Development, at the above address, Fax No. (000) 000-0000 with a copy to:
Xxxxxxx Xxxxx LLP
0000 Xxxxxxxx Xxxxx
000 — 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
0000 Xxxxxxxx Xxxxx
000 — 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxx Xxxxxx
Fax No.: (000) 000-0000
Fax No.: (000) 000-0000
- 38 -
and, in the case of notice to be given to the Underwriters, be addressed to:
TD Securities Inc.
800 Home Oil Tower
000 — 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
800 Home Oil Tower
000 — 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxx Xxxxxxxx
Fax No.: (000) 000-0000
Fax No.: (000) 000-0000
Macquarie Capital Markets Canada Ltd.
Xxxxx 0000, 000-0xx Xxxxxx XX
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxx 0000, 000-0xx Xxxxxx XX
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxx Xxxxxxxxx
Fax No.: (000) 000-0000
Fax No.: (000) 000-0000
RBC Dominion Securities Inc.
0000 Xxxxxxx Xxxx Xxxx
000-0xx Xxxxxx XX
Xxxxxxx, Xxxxxxx X0X 0X0
0000 Xxxxxxx Xxxx Xxxx
000-0xx Xxxxxx XX
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxx Xxxxxxxx
Fax No.: (000) 000-0000
Fax No.: (000) 000-0000
UBS Securities Canada Inc.
Xxxxx 000, 000-0xx Xxxxxx XX
Xxxxxxx, XX X0X 0X0
Xxxxx 000, 000-0xx Xxxxxx XX
Xxxxxxx, XX X0X 0X0
Attention: Xxxxxx Xxxxxx
Fax No.: (000) 000-0000
Fax No.: (000) 000-0000
CIBC World Markets Inc.
9th Floor Bankers Hall Xxxx
000-0xx Xxxxxx XX
Xxxxxxx, Xxxxxxx X0X 0X0
9th Floor Bankers Hall Xxxx
000-0xx Xxxxxx XX
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxx Xxxxx
Fax No.: (000) 000-0000
Fax No.: (000) 000-0000
Xxxxx Capital Markets Ltd.
0 Xxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
0 Xxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxx Xxxxxx
Fax No.: (000) 000-0000
Fax No.: (000) 000-0000
- 39 -
and a copy to:
Gowling Xxxxxxx Xxxxxxxxx LLP
0000, 000 — 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxx XxXxxxxxxx
Fax No.: (000) 000-0000
0000, 000 — 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxx XxXxxxxxxx
Fax No.: (000) 000-0000
or to such other address as the party may designate by notice given to the other. Each
communication shall be personally delivered to the addressee or sent by facsimile transmission to
the addressee, and:
| (a) | a communication which is personally delivered shall, if delivered before 4:00
p.m. (local time at the place of delivery) on a Business Day, be deemed to be given and
received on that day and, in any other case be deemed to be given and received on the
first Business Day following the day on which it is delivered; and |
| (b) | a communication which is sent by facsimile transmission shall, if sent on a
Business Day before 4:00 p.m. (local time at the place of receipt), be deemed to be
given and received on that day and, in any other case, be deemed to be given and
received on the first Business Day following the day on which it is sent. |
19. Survival of Representations and Warranties
All representations, warranties, terms and conditions herein (including, without limitation,
those contained in section 8) or contained in certificates or documents submitted pursuant to or in
connection with the transactions contemplated herein shall survive the payment by the Underwriters
for the Firm Debentures or Additional Debentures, as applicable, and the distribution of the Firm
Debentures or Additional Debentures, as applicable, pursuant to the Prospectus and shall continue
in full force and effect for the benefit of the Underwriters regardless of any investigation by or
on behalf of the Underwriters with respect thereto.
20. Several Liability of Underwriters
The Underwriters’ rights and obligations under this Agreement are several and not joint and
several including, without limitation, that:
| (a) | each of the Underwriters shall be obligated to purchase only the percentage of
the total number of Firm Debentures or Additional Debentures set forth opposite their
names set forth in this section 20; |
| (b) | if any one or more of the Underwriters shall not purchase its applicable
percentage of: |
| (i) | the Firm Debentures at the Closing Time; or |
| (ii) | the Additional Debentures, if any, to be purchased at the
Additional Closing Time; |
(collectively, the “Defaulted Securities”),
- 40 -
then the other Underwriters (the “Continuing Underwriters”) who are willing and able
to purchase their own applicable percentage of the total number of Firm Debentures
or Additional Debentures, as the case may be, at the Closing Time or at the
Over-Allotment Option Closing Time, as the case may be, shall have the right, but
shall not be obligated, to purchase all of the percentage of the Firm Debentures or
the Additional Debentures, as the case may be, which would otherwise have been
purchased by such one or more of the defaulting Underwriters; the Continuing
Underwriters exercising such right shall purchase such Firm Debentures or Additional
Debentures, as applicable, pro rata to their respective percentages aforesaid or in
such other proportions as they may otherwise agree. In the event such right is not
exercised, the Continuing Underwriters which are not in default shall be entitled by
written notice to the Corporation to terminate this Agreement without liability,
provided that in the event that the percentage of the total number of the Defaulted
Securities is not more than 6.25% of the total number of the Firm Debentures or
Additional Debentures, as applicable, the Continuing Underwriters shall have the
obligation, to purchase severally on a pro rata basis (or such other basis as the
Continuing Underwriters may agree) all, but not less than all, of the Defaulted
Securities which would otherwise have been purchased by the one or more Underwriters
which failed or refused to purchase.
The applicable percentage of the total number of Firm Debentures or Additional Debentures, as
applicable, which each of the Underwriters shall be separately obligated to purchase is as follows:
TD Securities Inc. |
50 | % | ||
Macquarie Capital Markets Canada Ltd. |
12.50 | % | ||
RBC Dominion Securities Inc. |
12.50 | % | ||
UBS Securities Canada Inc. |
12.50 | % | ||
CIBC World Markets Inc. |
6.25 | % | ||
Xxxxx Capital Markets Ltd. |
6.25 | % | ||
| 100.0 | % | |||
If the Continuing Underwriters do not elect to purchase the Defaulted Securities, nothing in
this Agreement shall obligate the Corporation to sell less than all of the Firm Debentures or
Additional Debentures, as the case may be, or shall relieve any Underwriter in default from
liability to the Corporation or any Continuing Underwriter in respect of the defaulting
Underwriters’ default hereunder and the Corporation shall be entitled to terminate its obligations
hereunder. In the event of a termination by the Corporation of its obligations under this Agreement
there shall be no further liability on the part of the Corporation to the Underwriters except in
respect of any liability which may have arisen or may thereafter arise under sections 9, 10 or 11.
21. Authority to Bind Underwriters
The Corporation shall be entitled to and shall act on any notice, waiver, extension or
communication given by or on behalf of the Underwriters by the Lead Underwriter which shall
represent the Underwriters and which shall have the authority to bind the Underwriters in respect
of all matters hereunder, except in respect of any settlement under section 9 or 10, any matter
referred to in section 12 or any agreement under section 20. While not affecting the foregoing, the
Lead Underwriter shall consult with the other Underwriters with respect to any such notice, waiver,
extension or other communication.
- 41 -
22. Underwriters Covenants
| (a) | Each of the Underwriters covenants and agrees with the Corporation that it
will: |
| (i) | conduct activities in connection with the proposed offer and
sale of the Offered Securities in compliance with all Canadian Securities Laws
and cause a similar covenant to be contained in any agreement entered into with
any Selling Dealer Group established in connection with the distribution of the
Offered Securities; |
| (ii) | not solicit subscriptions for the Offered Securities, trade in
Offered Securities or otherwise do any act in furtherance of a trade of Offered
Securities in any jurisdictions outside of the Qualifying Provinces; |
| (iii) | as soon as reasonably practicable after the Closing Date and
the Over-Allotment Option Closing Date (and in any event within 30 days
thereof) provide the Corporation with a break down of the number of Offered
Securities sold in each of the Qualifying Provinces and, upon completion of the
distribution of the Offered Securities, provide notice to that effect to the
Corporation and, if required by Canadian Securities Laws, to the Securities
Commissions; and |
| (iv) | use commercially reasonable efforts to complete the
distribution of the Offered Securities as soon as possible. |
| (b) | For the purposes of this section 22, the Underwriters shall be entitled to
assume that the Offered Securities may be lawfully offered for sale and sold in the
Qualifying Provinces if the Final Passport System Decision Document has been issued
evidencing that a receipt for the Prospectus has been issued by the Securities
Commissions, provided the Underwriters do not have actual knowledge, and have not been
notified in writing by the Corporation, of any circumstances that would legally
prohibit such distribution. |
| (c) | No Underwriter will be liable to the Corporation under this section 22 with
respect to a default by any of the other Underwriters or any member of any Selling
Dealer Group appointed by another Underwriter but will be liable to the Corporation
only for its own default. |
23. Severance
If one or more of the provisions contained herein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall be construed as if
such invalid, illegal or unenforceable provision or provisions had never been contained herein.
24. Relationship Between the Corporation and the Underwriters
The Corporation: (i) acknowledges and agrees that the Underwriters have certain statutory
obligations as registrants under Canadian Securities Laws and have duties to their clients; (ii)
acknowledge and agree that the Underwriters are neither the agents of the Corporation nor otherwise
fiduciaries of the Corporation; and (iii) consents to the Underwriters acting hereunder while
continuing to act for their clients. To the extent that the Underwriters’ statutory obligations as
registrants under Canadian Securities Laws or relationships with their clients conflict with their
obligations hereunder, the Underwriters shall be entitled to fulfil their statutory obligations as
registrants under Canadian Securities Laws and their duties to their clients. Nothing in this
Agreement shall be interpreted to prevent the Underwriters from fulfilling their statutory
obligations as registrants under Canadian Securities Laws or duties to their clients.
- 42 -
25. Stabilization
In connection with the distribution of the Offered Securities, the Underwriters may over-allot
or effect transactions which stabilize or maintain the market price of the Common Shares at levels
other than those which might otherwise prevail on the open market, but in each case only as
permitted by applicable law. Such stabilizing transactions, if any, may be discontinued at any
time.
26. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the Province
of Alberta and the laws of Canada applicable therein. Each of the Corporation and the Underwriters
hereby attorn to the non-exclusive jurisdiction of the courts of the Province of Alberta.
27. Time of the Essence
Time shall be of the essence of this Agreement.
28. Counterpart Execution
This Agreement may be executed in one or more counterparts each of which so executed shall
constitute an original and all of which together shall constitute one and the same agreement.
Delivery of counterparts may be effected by facsimile transmission or other electronic
communication.
29. Further Assurances
Each party to this Agreement covenants and agrees that from time to time, it will, at the
request of the requesting party, execute and deliver all such documents and do all such other acts
and things as any party hereto, acting reasonably, may from time to time request be executed or
done in order to better evidence or perfect or effectuate any provision of this Agreement or of any
agreement or other document executed pursuant to this Agreement or any of the respective
obligations intended to be created hereby or thereby.
30. Use of Proceeds
The Corporation hereby covenants and agrees to use the net proceeds of the sale of the Firm
Debentures hereunder in accordance with the disclosure in the Prospectus.
31. Entire Agreement
It is understood that the terms and conditions of this Agreement supersede any previous verbal
or written agreement between the Underwriters and the Corporation.
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If the foregoing is in accordance with your understanding and is agreed to by you, please confirm
your acceptance by signing the enclosed copies of this letter at the place indicated and by
returning the same to TD Securities Inc.
| TD SECURITIES INC. | RBC DOMINION SECURITIES INC. | |||||
By:
|
(signed) “Xxxx Xxxxxxxx” | By: | (signed) “Xxxx Xxxxx” | |||
| MACQUARIE CAPITAL MARKETS CANADA LTD. | UBS SECURITIES CANADA INC. | |||||
By:
|
(signed) “Xxxxxx X. Xxxxxxxxx” | By: | (signed) “Xxxxxx Xxxxxx” | |||
By:
|
(signed) “Xxxxx Xxxxxxx” | By: | (signed) “Xxx Xxxxxx” | |||
| CIBC WORLD MARKETS INC. | XXXXX CAPITAL MARKETS LTD. | |||||
By:
|
(signed) “Xxxxxx X. Xxxxx” | By: | (signed) “Xxxxxx Xxxxxx” | |||
ACCEPTED AND AGREED to as of the 18th day of May, 2011.
| IVANHOE ENERGY INC. | ||||
By:
|
(signed) “Xxxx Xxxxxxx”
|
|||
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SCHEDULE “A”
SUBSIDIARIES
SUBSIDIARIES
Ivanhoe Energy International Inc. (B.V.I.)
Ivanhoe Energy Holdings Inc. (Nevada)
Ivanhoe Energy Petroleum Projects Inc. (Nevada)
Ivanhoe Energy HTL Inc. (Nevada)
Ivanhoe HTL Petroleum Ltd. (Nevada)
Ivanhoe Energy HTL (USA) Inc. (Nevada)
Ivanhoe Energy International Ventures Inc. (BVI)
Ivanhoe Energy (Middle East) Inc. (BVI)
Ivanhoe Energy (Latin America) Inc. (BVI)
Sunwing Holding Corporation (Barbados)
Sunwing Energy Ltd. (Bermuda)
Sunwing Zitong Energy Ltd. (BVI)
Sunwing Management Limited (Hong Kong)
Pan-China Resources Ltd. (BVI)
Dagang Resources Ltd. (BVI)
Ivanhoe Energy Advisory Inc. (BVI)
Ivanhoe Energy Ecuador Inc. (BC)
Ivanhoe Energy Latin America Inc. (BC)
Ivanhoe Energy MENA Inc. (BC)
Ivanhoe Energy Canada Inc. (AB)
Ivanhoe Energy Canadian Holdings Inc. (AB)
Ivanhoe Energy Mongolia Inc. (AB)
PanAsian Energy Ltd. (Nevis)
Shaman LLC (Mongolia)
Ivanhoe Energy Colombia Inc. (Barbados)
IELA Colombia Inc. (Barbados)
Ivanhoe Energy Mexico Inc. (BC)
IELA Mexico PTE Ltd. (Singapore)
Ivanhoe Energy Mexico IELA, S.A. de C.V. (Mexico)
IELA Singapore PTE Ltd. (Singapore)
Ivanhoe Energy Services Mexico IELA, S.A. de C.V. (Mexico)
Ivanhoe Energy Holdings Inc. (Nevada)
Ivanhoe Energy Petroleum Projects Inc. (Nevada)
Ivanhoe Energy HTL Inc. (Nevada)
Ivanhoe HTL Petroleum Ltd. (Nevada)
Ivanhoe Energy HTL (USA) Inc. (Nevada)
Ivanhoe Energy International Ventures Inc. (BVI)
Ivanhoe Energy (Middle East) Inc. (BVI)
Ivanhoe Energy (Latin America) Inc. (BVI)
Sunwing Holding Corporation (Barbados)
Sunwing Energy Ltd. (Bermuda)
Sunwing Zitong Energy Ltd. (BVI)
Sunwing Management Limited (Hong Kong)
Pan-China Resources Ltd. (BVI)
Dagang Resources Ltd. (BVI)
Ivanhoe Energy Advisory Inc. (BVI)
Ivanhoe Energy Ecuador Inc. (BC)
Ivanhoe Energy Latin America Inc. (BC)
Ivanhoe Energy MENA Inc. (BC)
Ivanhoe Energy Canada Inc. (AB)
Ivanhoe Energy Canadian Holdings Inc. (AB)
Ivanhoe Energy Mongolia Inc. (AB)
PanAsian Energy Ltd. (Nevis)
Shaman LLC (Mongolia)
Ivanhoe Energy Colombia Inc. (Barbados)
IELA Colombia Inc. (Barbados)
Ivanhoe Energy Mexico Inc. (BC)
IELA Mexico PTE Ltd. (Singapore)
Ivanhoe Energy Mexico IELA, S.A. de C.V. (Mexico)
IELA Singapore PTE Ltd. (Singapore)
Ivanhoe Energy Services Mexico IELA, S.A. de C.V. (Mexico)
