EXHIBIT 1.1
724 SOLUTIONS INC.
COMMON SHARES
UNDERWRITING AGREEMENT
January , 2000
CREDIT SUISSE FIRST BOSTON CORPORATION,
As Representative of the Several U.S. Underwriters,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. INTRODUCTORY. 724 SOLUTIONS INC., a company incorporated under the
laws of the Province of Ontario, Canada ("COMPANY"), proposes to issue and
sell to the several U.S. Underwriters named in Schedule A hereto ("U.S.
UNDERWRITERS") for whom Credit Suisse First Boston Corporation ("CSFBC") is
acting as U.S. representative ("U.S. REPRESENTATIVE"), [number of common
shares] ("U.S. FIRM SECURITIES") of its common shares ("SECURITIES").
It is understood that the Company is concurrently entering into an
Underwriting Agreement, dated the date hereof ("CANADIAN UNDERWRITING
AGREEMENT"), whereby the Company proposes to issue and sell to the several
Canadian underwriters named in Schedule B hereto ("CANADIAN UNDERWRITERS"),
for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc. is acting as representative ("CANADIAN
REPRESENTATIVE"), Securities ("CANADIAN FIRM SECURITIES") in Canada. The
U.S. Underwriters and the Canadian Underwriters are hereinafter called the
"UNDERWRITERS".
In addition, as set forth below, the Company proposes to issue and sell
(i) to the U.S. Underwriters, at the option of the U.S. Underwriters, an
aggregate of not more than additional Securities ("U.S. OPTIONAL
SECURITIES") and (ii) to the Canadian Underwriters, at the option of the
Canadian Underwriters, an aggregate of not more than additional Securities
("CANADIAN OPTIONAL SECURITIES"). The U.S. Firm Securities and the U.S.
Optional Securities are hereinafter called the "U.S. SECURITIES"; the
Canadian Firm Securities and the Canadian Optional Securities are hereinafter
called the "CANADIAN SECURITIES"; the U.S. Firm Securities and the Canadian
Firm Securities are hereinafter called the "FIRM SECURITIES"; the U.S.
Optional Securities and the Canadian Optional Securities are hereinafter
called the "OPTIONAL SECURITIES"; and the U.S. Securities and the Canadian
Securities are collectively referred to as the "OFFERED SECURITIES". To
provide for the coordination of their activities, the U.S. Underwriters and
the Canadian Underwriters have entered into an Inter-syndicate Agreement
which permits them, among other things, to sell the Offered Securities to
each other for purposes of resale.
The Company hereby agrees with the several U.S. Underwriters as follows:
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the several U.S. Underwriters
that:
(a) A registration statement (No. 333-90143) relating to the
Offered Securities, including a form of prospectus relating to the U.S.
securities and a form of prospectus relating to the Canadian
Securities, has been filed with the Securities and Exchange Commission
("COMMISSION") and either (i) has been declared effective under the
Securities Act of 1933 ("ACT") and is not proposed to be amended or (ii)
is proposed to be amended by amendment or post-effective amendment. If
such registration statement ("INITIAL REGISTRATION STATEMENT") has been
declared effective, either (i) an additional registration statement
("ADDITIONAL REGISTRATION STATEMENT") relating to the Offered Securities
may have been filed with the Commission pursuant to Rule 462(b) ("RULE
462(b)") under the Act and, if so filed, has become effective upon
filing pursuant to such Rule and the Offered Securities all have been
duly registered under the Act pursuant to the initial registration
statement and, if applicable, the additional registration statement or
(ii) such an additional registration statement is proposed to be filed
with the Commission pursuant to Rule 462(b) and will become effective
upon filing pursuant to such Rule and, upon such filing, the Offered
Securities will all have been duly registered under the Act pursuant to
the initial registration statement and such additional registration
statement. If the Company does not propose to amend the initial
registration statement or if an additional registration statement has
been filed and the Company does not propose to amend it, and if any
post-effective amendment to either such registration statement has been
filed with the Commission prior to the execution and delivery of this
Agreement, the most recent amendment (if any) to each such registration
statement has been declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c) ("RULE 462(c)") under the
Act or, in the case of the additional registration statement, Rule
462(b). For purposes of this Agreement, "EFFECTIVE TIME" with respect to
the initial registration statement or, if filed prior to the execution
and delivery of this Agreement, the additional registration statement
means (i) if the Company has advised the U.S. Representative that it
does not propose to amend such registration statement, the date and time
as of which such registration statement, or the most recent
post-effective amendment thereto (if any) filed prior to the execution
and delivery of this Agreement, was declared effective by the Commission
or has become effective upon filing pursuant to Rule 462(c), or (ii) if
the Company has advised the U.S. Representative that it proposes to file
an amendment or post-effective amendment to such registration statement,
the date and time as of which such registration statement, as amended by
such amendment or post-effective amendment, as the case may be, is
declared effective by the Commission. If an additional registration
statement has not been filed prior to the execution and delivery of this
Agreement but the Company has advised the U.S. Representative that it
proposes to file one, "EFFECTIVE TIME" with respect to such additional
registration statement means the date and time as of which such
registration statement is filed and becomes effective pursuant to Rule
462(b). "EFFECTIVE DATE" with respect to the initial registration
statement or the additional registration statement (if any) means the
date of the Effective Time thereof. The initial registration statement,
as amended at its Effective Time, including all information contained in
the additional registration statement (if any) and deemed to be a part
of the initial registration statement as of the Effective Time of the
additional registration statement pursuant to the General Instructions
of the Form on which it is filed and including all information (if any)
deemed to be a part of the initial registration statement as of its
Effective Time pursuant to Rule 430A(b) ("RULE 430A(b)") under the Act,
is hereinafter referred to as the "INITIAL REGISTRATION STATEMENT". The
additional registration statement, as amended at its Effective Time,
including the contents of the initial registration statement
incorporated by reference therein and including all information (if any)
deemed to be a part of the additional registration statement as of its
Effective Time pursuant to Rule 430A(b), is hereinafter referred to as
the "ADDITIONAL REGISTRATION STATEMENT". The Initial Registration
Statement and the Additional Registration Statement are herein referred
to collectively as the "REGISTRATION STATEMENTS" and individually as a
"REGISTRATION STATEMENT". The form of prospectus relating to the U.S.
Securities and the form of prospectus relating to the Canadian
Securities, each as first filed with the Commission pursuant to and in
accordance with Rule 424(b) ("RULE 424(b)") under the Act or (if no such
filing is required) as included in a Registration Statement, is
hereinafter referred to as the "U.S. PROSPECTUS". The Company also has
prepared and filed with the Canadian securities regulatory authorities
of all of the provinces of Canada a prospectus relating to the Canadian
Securities ("CANADIAN PROSPECTUS"). The Canadian Prospectus is
substantially the same as the form of U.S. Prospectus, except as
described in the Registration Statement; the U.S. Prospectus and the
Canadian Prospectus in their respective forms first used to confirm
sales of the Offered Securities are hereinafter collectively referred to
as the "PROSPECTUSES". No document has been or will be prepared or
distributed in reliance on Rule 434 under the Act.
(b) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (i) on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder ("RULES AND REGULATIONS") and did not include any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, (ii) on the Effective Date of the Additional Registration
Statement (if any), each Registration Statement conformed, or will
conform, in all material respects to the requirements of the Act and the
Rules and Regulations and did not include, or will not include, any
untrue statement of a material fact and did not omit, or will not omit,
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading and (iii) on the date of this
Agreement, the Initial Registration Statement and, if the Effective Time
of the Additional Registration Statement is prior to the execution and
delivery of this Agreement, the Additional Registration Statement each
conforms, and at the time of filing of each of the Prospectuses pursuant
to Rule 424(b) or (if no such filing is required) at the Effective Date
of the Additional Registration Statement in which the Prospectuses are
included, each Registration Statement and each of the Prospectuses will
conform, in all material respects to the requirements of the Act and the
Rules and Regulations, and neither of such documents includes, or will
include, any untrue statement of a material fact or omits, or will omit,
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading. If the Effective Time of the
Initial Registration Statement is subsequent to the execution and
delivery of this Agreement: on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and each of
the Prospectuses will conform in all material respects to the
requirements of the Act and the Rules and Regulations, neither of such
documents will include any untrue statement of a material fact or will
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and no
Additional Registration Statement has been or will be filed. The two
preceding sentences do not apply to statements in or omissions from a
Registration Statement or either of the Prospectuses based upon written
information furnished to the Company by any Underwriter through the U.S.
Representative specifically for use therein, it being understood and
agreed that the only such information is that described as such in
Section 7(b) hereof.
(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the Province of Ontario,
Canada, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectuses;
and the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified would
not have a material adverse effect on the condition (financial or
other), business or results of operations of the Company and its
subsidiaries taken as a whole ("Material Adverse Effect").
(d) Each subsidiary of the Company has been duly incorporated and
is an existing corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority (corporate
and other) to own its properties and conduct its business; and each
subsidiary of the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified would
not have a Material Adverse Effect; all of the issued and outstanding
capital stock of each subsidiary of the Company has been duly authorized
and validly issued and is fully paid and nonassessable; and the capital
stock of each subsidiary owned by the Company, directly or through
subsidiaries, is owned free from liens, encumbrances and defects.
(e) The Offered Securities and all other outstanding shares of
capital stock of the Company have been duly authorized; all outstanding
shares of capital stock of the Company are, and, when the Offered
Securities have been delivered and paid for in accordance with this
Agreement and the Canadian Underwriting Agreement on each Closing Date
(as defined below), such Offered Securities will have been, validly
issued, fully paid and nonassessable and will conform in all material
respects to the description thereof contained in the Prospectuses; and
the stockholders of the Company have no preemptive rights with respect
to the Securities.
(f) Except as disclosed in the Prospectuses and except for the
agreement between the Company and Coxswain Row Capital Corporation dated
August 18, 1999, there are no contracts, agreements or understandings
between the Company and any person that would give rise to a valid claim
against the Company or any U.S. Underwriter or Canadian Underwriter for
a brokerage commission, finder's fee or other like payment in connection
with this offering.
(g) Except as disclosed in the Prospectuses, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered pursuant
to a Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company under
the Act.
(h) The Offered Securities have been approved for listing on the
Nasdaq Stock Market's National Market and the Toronto Stock Exchange
subject to notice of issuance.
(i) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement or the
Canadian Underwriting Agreement in connection with the issuance and sale
of the Offered Securities by the Company, except such as have been
obtained and made under the Act and under the Securities Act of 1934, as
amended, the approval of the National Association of Securities Dealers,
Inc. with respect to its review of the fairness of the underwriting
arrangements relating to this Agreement, and such as may be required
under state or provincial securities laws and except for such consents,
approvals, authorizations, orders or filings the failure of which to
obtain would not have a Material Adverse Effect.
(j) Except as disclosed in the Prospectuses, under current laws
and regulations of Canada and any political subdivision thereof, all
dividends and other distributions declared and payable on the Offered
Securities may be paid by the Company to the holder thereof in United
States dollars or Canadian dollars that may be converted into foreign
currency and freely transferred out of Canada and all such payments made
to holders thereof or therein who are non-residents of Canada will not
be subject to income, withholding or other taxes under laws and
regulations of Canada or any political subdivision or taxing authority
thereof or therein and will otherwise be free and clear of any other
tax, duty, withholding or deduction in Canada or any political
subdivision or taxing authority thereof or therein and without the
necessity of obtaining any governmental authorization in Canada or any
political subdivision or taxing authority thereof or therein.
(k) The execution, delivery and performance of this Agreement and
the Canadian Underwriting Agreement, and the issuance and sale of the
Offered Securities will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any statute,
any rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company or any
subsidiary of the Company or any of their properties, or any material
agreement or instrument to which the Company or any such subsidiary is a
party or by which the Company or any such subsidiary is bound or to
which any of the properties of the Company or any such subsidiary is
subject (with such exceptions as would not have a Material Adverse
Effect), nor will such action result in any violation of the articles
or by-laws of the Company or any such subsidiary. The Company has full
power and authority to authorize, issue and sell the Offered Securities
as contemplated by this Agreement and the Canadian Underwriting
Agreement, respectively.
(l) This Agreement and the Canadian Underwriting Agreement have
been duly authorized, executed and delivered by the Company.
(m) Except as disclosed in the Prospectuses, the Company and its
subsidiaries have good and marketable title to all real properties and
all other properties and assets owned by them, in each case free from
liens, encumbrances and defects of title that would materially affect
the value thereof or materially interfere with the use made or to be
made thereof by them; and except as disclosed in the Prospectuses, the
Company and its subsidiaries hold any leased real or personal property
under valid and enforceable leases with no exceptions that would
materially interfere with the use made or to be made thereof by them.
(n) The Company and its subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by
them, except for such certificates, authorities or permits the failure
of which to possess would not have a Material Adverse Effect, and have
not received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.
(o) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a Material Adverse Effect.
(p) Except as disclosed in the Prospectuses, to the Company's
knowledge, the Company and its subsidiaries own, possess or can acquire
on reasonable terms, adequate trademarks, trade names and other rights
to inventions, know-how, patents, copyrights, confidential information
and other intellectual property (collectively, "INTELLECTUAL PROPERTY
RIGHTS") necessary to conduct the business now operated by them, or
presently employed by them, and have not received any notice of
infringement of or conflict with asserted rights of others with respect
to any intellectual property rights that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect. The discoveries, inventions,
products or processes of the Company referred to in the Prospectuses do
not, to the Company's knowledge, infringe or conflict with any
intellectual property right of any third party, where such infringement
or conflict could have a Material Adverse Effect.
(q) Except as disclosed in the Prospectuses, there are no pending
actions, suits or proceedings against or, to the Company's knowledge,
affecting the Company, any of its subsidiaries or any of their
respective properties that, if determined adversely to the Company or
any of its subsidiaries, would individually or in the aggregate have a
Material Adverse Effect, or would materially and adversely affect the
ability of the Company to perform its obligations under this Agreement
or the Canadian Underwriting Agreement, or which are otherwise material
in the context of the sale of the Offered Securities; and no such
actions, suits or proceedings are threatened or, to the Company's
knowledge, contemplated.
(r) The financial statements included in each Registration
Statement and the Prospectuses present fairly the financial position of
the Company and its consolidated subsidiaries as of the dates shown and
their results of operations and cash flows for the periods shown, and
except as otherwise disclosed in the Prospectuses such financial
statements have been prepared in conformity with the generally accepted
accounting principles in Canada, applied on a consistent basis; the
supporting schedules included in each Registration Statement present
fairly the information stated therein; and the assumptions used in
preparing the pro forma financial statements included in each
Registration Statement and the Prospectuses provide a reasonable basis
for presenting the significant effects directly attributable to the
transactions or events described therein, the related pro forma
adjustments give appropriate effect to those assumptions, and the pro
forma columns therein reflect the proper application of those
adjustments to the corresponding historical financial statement amounts.
(s) Except as disclosed in the Prospectuses, since the date of the
latest audited financial statements included in the Prospectuses there
has been no material adverse change, nor, to the Company's knowledge,
any development or event involving a prospective material adverse
change, in the condition (financial or other), business, properties or
results of operations of the Company and its subsidiaries taken as a
whole, and, except as disclosed in or contemplated by the Prospectuses,
there has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.
(t) The Company is not and, after giving effect to the offering
and sale of the Offered Securities and the application of the proceeds
thereof as described in the Prospectuses, will not be an "investment
company" as defined in the Investment Company Act of 1940.
(u) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Section 517.075, Florida Statutes and the
Company agrees to comply with such Section if prior to the completion of
the distribution of the Offered Securities it commences doing such
business.
(v) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorization; and (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets.
(w) The Company has reviewed its operations and that of its
subsidiaries to evaluate the extent to which the business or operations
of the Company or any of its subsidiaries will be affected by the year
2000 problem (that is, any significant risk that computer hardware or
software applications used by the Company and its subsidiaries will not,
in the case of dates or time periods occurring after December 31, 1999,
function at least as effectively as in the case of dates or time periods
occurring prior to January 1, 2000); as a result of such review, the
Company has no reason to believe, and does not believe, that there are
any issues related to the Company's preparedness to address the year
2000 problem that are of a character required to be described or
referred to in the Registration Statement or Prospectuses which have not
been accurately described in the Registration Statement or Prospectuses;
and the Company has implemented year 2000 awareness procedures with its
employees, customers and licensors.
(x) The Company and each of its subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as is adequate for
the conduct of their respective businesses and the value of their
respective properties.
3. PURCHASE, SALE AND DELIVERY OF OFFERED SECURITIES. On the basis of
the representations, warranties and agreements herein contained, but subject
to the terms and conditions herein set forth, the Company agrees to sell to
the U.S. Underwriters, and the U.S. Underwriters agree, severally and not
jointly, to purchase from the Company, at a purchase price of U.S.$ per
share, the respective numbers of shares of U.S. Firm Securities set forth
opposite the names of the U.S. Underwriters in Schedule A hereto.
The Company will deliver the U.S. Firm Securities to the U.S.
Representative for the accounts of the U.S. Underwriters, against payment of
the purchase price in Federal (same day) funds by wire transfer to an account
at a bank acceptable to CSFBC drawn to the order of the Company at the office
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, at 10:00 A.M., New York time, on
___________________________, or at such other time not later than seven full
business days thereafter as CSFBC and the Company determine, such time being
herein referred to as the "FIRST CLOSING DATE". For purposes of Rule 15c6-1
under the Securities Exchange Act of 1934, the First Closing Date (if later
than the otherwise applicable settlement date) shall be the settlement date
for payment of funds and delivery of securities for all the Offered
Securities sold pursuant to the U.S. Offering and the Canadian Offering. The
certificates for the U.S. Firm Securities so to be delivered will be in
definitive form, in such denominations and registered in such names as CSFBC
requests and will be made available for checking and packaging by the U.S.
Representative at least 24 hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company from
time to time not more than 30 days subsequent to the date of the
Prospectuses, the U.S. Underwriters may purchase all or less than all of the
U.S. Optional Securities at the purchase price per Security to be paid for
the U.S. Firm Securities. The U.S. Optional Securities to be purchased by
the U.S. Underwriters on any Optional Closing Date (as defined herein) shall
be in the same proportion to all the Optional Securities to be purchased by
the Underwriters on such Optional Closing Date as the U.S. Firm Securities
bear to all the Firm Securities. The Company agrees to sell to the U.S.
Underwriters such U.S. Optional Securities and the U.S. Underwriters agree,
severally and not jointly, to purchase such U.S. Optional Securities. Such
U.S. Optional Securities shall be purchased for the account of each U.S.
Underwriter in the same proportion as the number of shares of U.S. Firm
Securities set forth opposite such U.S. Underwriter's name bears to the total
amount of U.S. Firm Securities set forth opposite such U.S. Underwriter's
name bears to the total number of shares of U.S. Firm Securities (subject to
adjustment by CSFBC to eliminate fractions) and may be purchased by the
U.S. Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the U.S. Firm Securities. No Optional Securities
shall be sold or delivered unless the U.S. Firm Securities and the Canadian
Firm Securities previously have been, or simultaneously are, sold and
delivered. The right to purchase the U.S. Optional Securities or any portion
thereof may be exercised from time to time and to the extent not previously
exercised may be surrendered and terminated at any time upon notice by CSFBC
on behalf of the U.S. Underwriters to the Company. It is understood that
CSFBC is authorized to make payment for and accept delivery of such Optional
Securities on behalf of the U.S. Underwriters pursuant to the terms of
CSFBC's instructions to the Company.
Each time for the delivery of and payment for the U.S. Optional
Securities, being herein referred to as an "OPTIONAL CLOSING DATE", which may
be the First Closing Date (the First Closing Date and each Optional Closing
Date, if any, being sometimes referred to as a "CLOSING DATE"), shall be
determined by CSFBC but shall be not later than five full business days after
written notice of election to purchase U.S. Optional Securities is given. The
Company will deliver the U.S. Optional Securities being purchased on each
Optional Closing Date to the U.S. Representative for the accounts of the
several U.S. Underwriters, against payment of the purchase price therefor in
Federal (same day) funds by official bank check or checks or wire transfer to
an account drawn to the order of the Company, at the office of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇. The certificates for the U.S. Optional Securities will
be in definitive form, in such denominations and registered in such names as
CSFBC requests upon reasonable notice prior to such Optional Closing Date and
will be made available for checking and packaging by the U.S. Representative
not later than 10:00 am on the last business day prior to such Optional
Closing Date.
4. OFFERING BY UNDERWRITERS. It is understood that the several U.S.
Underwriters propose to offer the Offered Securities for sale to the public
as set forth in the U.S. Prospectus.
5. CERTAIN AGREEMENTS OF THE COMPANY. The Company agrees with the
several U.S. Underwriters that:
(a) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement,
the Company will file each of the Prospectuses with the Commission
pursuant to and in accordance with subparagraph (1) (or, if
applicable and if consented to by CSFBC, subparagraph (4)) of Rule
424(b) not later than the earlier of (A) the second business day
following the execution and delivery of this Agreement or (B) the
fifteenth business day after the Effective Date of the Initial
Registration Statement.
The Company will advise CSFBC promptly of any such filing
pursuant to Rule 424(b). If the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of
this Agreement and an additional registration statement is
necessary to register a portion of the Offered Securities under the
Act but the Effective Time thereof has not occurred as of such
execution and delivery, the Company will file the additional
registration statement or, if filed, will file a post-effective
amendment thereto with the Commission pursuant to and in accordance
with Rule 462(b) on or prior to 10:00 P.M., New York time, on the
date of this Agreement or, if earlier, on or prior to the time
either Prospectus is printed and distributed to any U.S.
Underwriter or Canadian Underwriter, or will make such filing at
such later date as shall have been consented to by CSFBC.
(b) The Company will advise CSFBC promptly of any proposal to
amend or supplement the initial or any additional registration
statement as filed or either of the related prospectuses or the
Initial Registration Statement, the Additional Registration
Statement (if any) or either of the Prospectuses and will not
effect any such amendment or supplementation to which CSFBC
reasonably objects without CSFBC's prior consent; and the Company
will also advise CSFBC promptly of the effectiveness of each
Registration Statement (if its Effective Time is subsequent to the
execution and delivery of this Agreement) and of any amendment or
supplementation of a Registration Statement or either of the
Prospectuses and of the institution by the Commission of any stop
order proceedings in respect of a Registration Statement and will
use its reasonable efforts to prevent the issuance of any such stop
order and to obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection
with sales by any U.S. Underwriter, Canadian Underwriter or dealer,
any event occurs as a result of which either or both of the
Prospectuses as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it
is necessary at any time to amend either or both of the
Prospectuses to comply with the Act, the Company will promptly
notify CSFBC of such event and will promptly prepare and file with
the Commission, at its own expense, an amendment or supplement
which will correct such statement or omission or an amendment which
will effect such compliance. Neither CSFBC's consent to, nor the
U.S. Underwriters' delivery of, any such amendment or supplement
shall constitute a waiver of any of the conditions set forth in
Section 6.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make
generally available to its securityholders an earnings statement
covering a period of at least 12 months beginning after the
Effective Date of the Initial Registration Statement (or, if later,
the Effective Date of the Additional Registration Statement) which
will satisfy the provisions of Section 11(a) of the Act. For the
purpose of the preceding sentence, "AVAILABILITY DATE" means the
45th day after the end of the fourth fiscal quarter following the
fiscal quarter that includes such Effective Date, except that, if
such fourth fiscal quarter is the last quarter of the Company's
fiscal year, "AVAILABILITY DATE" means the 90th day after the end
of such fourth fiscal quarter.
(e) The Company will furnish to the U.S. Representative
copies of the Registration Statement which will contain manual
signatures and will include all exhibits, each related preliminary
prospectus relating to the U.S. Securities, and, so long as a
prospectus relating to the Offered Securities is required to be
delivered under the Act in connection with sales by any U.S.
Underwriter or dealer, the U.S. Prospectus and all amendments and
supplements to such documents, in each case in such quantities as
CSFBC requests. The U.S. Prospectus shall be so furnished on the
business day following the later of the execution and delivery of
this Agreement or the Effective Time of the Initial Registration
Statement. All other such documents shall be so furnished as soon
as available. The Company will pay the expenses of printing and
distributing to the U.S. Underwriters all such documents.
(f) The Company will arrange for the qualification of the
Offered Securities for sale under the laws of such jurisdictions as
CSFBC reasonably requests and will continue such qualifications in
effect so long as required for the distribution.
(g) During the period of five years from the Effective Date
of the Initial Registration Statement, the Company will furnish to
the U.S. Representative and, upon request, to each of the other
U.S. Underwriters, as soon as practicable after the end of each
fiscal year, a copy of its annual report to stockholders for such
year.
(h) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, for any filing
fees and other expenses (not including fees and disbursements of
the Underwriters' counsel) incurred in connection with
qualification of the Offered Securities for sale under the laws of
such jurisdictions in the United States as CSFBC reasonably
requests and the printing of memoranda relating thereto, for the
filing fee incident to, and the reasonable fees and disbursements
of counsel to the U.S. Underwriters in connection with, the review
by the National Association of Securities Dealers, Inc. of the
Offered Securities, and any other expenses of the Company in
connection with attending or hosting meetings with prospective
purchasers of the Offered Securities and for expenses incurred in
distributing preliminary prospectuses and the Prospectuses
(including any amendments and supplements thereto) to the U.S.
Underwriters.
(i) The Company will indemnify and hold harmless the U.S.
Underwriters against any documentary, stamp or similar issuance
tax, including any interest and penalties, on the creation,
issuance and sale of the Offered Securities and on the execution
and delivery of this Agreement. All payments to be made by the
Company hereunder shall be made without withholding or deduction
for or on account of any present or future taxes, duties or
governmental charges whatsoever unless the
Company is compelled by law to deduct or withhold such taxes,
duties or charges. In that event, the Company shall pay such
additional amounts as may be necessary in order that the net
amounts received after such withholding or deduction shall equal
the amounts that would have been received if no withholding or
deduction had been made.
(j) For a period of 180 days after the date of the initial
public offering of the Offered Securities, the Company will not
offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, or file with the Commission a registration
statement under the Act relating to, any additional shares of its
Securities or securities convertible into or exchangeable or
exercisable for any shares of its Securities, or publicly disclose
the intention to make any such offer, sale, pledge, disposition or
filing, in each case without the prior written consent of CSFBC,
except issuances of Securities pursuant to the conversion or
exchange of convertible or exchangeable securities or the exercise
of warrants or options, in each case outstanding on the date
hereof, grants of employee stock options pursuant to the terms of a
plan in effect on the date hereof, and issuances of Securities
pursuant to the exercise of such options. Notwithstanding the
foregoing, the Company may file a registration statement on Form
S-8 (or any successor form) to register its Common Shares that are
reserved for issuance under its share option plans, and may issue
shares of its capital stock in any bona fide acquisition
transaction involving the purchase of any company, business or
technologies.
6. CONDITIONS OF THE OBLIGATIONS OF THE U.S. UNDERWRITERS. The
obligations of the several U.S. Underwriters to purchase and pay for the U.S.
Firm Securities on the First Closing Date and the U.S. Optional Securities
to be purchased on each Optional Closing Date will be subject to the accuracy
of the representations and warranties on the part of the Company herein, to
the accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions precedent:
(a) The U.S. Representative shall have received a letter,
dated the date of delivery thereof (which, if the Effective Time of
the Initial Registration Statement is prior to the execution and
delivery of this Agreement, shall be on or prior to the date of
this Agreement or, if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery
of this Agreement, shall be prior to the filing of the amendment or
post-effective amendment to the registration statement to be filed
shortly prior to such Effective Time), of KPMG LLP, confirming
that they are independent public accountants within the meaning of
the Act and the applicable published Rules and Regulations
thereunder and stating to the effect that:
(i) in their opinion the financial statements and schedules
examined by them and included in the Registration Statements comply
as to form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations;
(ii) on the basis of a reading of the latest available interim
financial statements of the Company, inquiries of officials of the
Company who have responsibility for financial and accounting
matters and other specified procedures, nothing came to their
attention that caused them to believe that:
(A) at the date of the latest available balance sheet
read by such accountants, or at a subsequent specified date
not more than three business days prior to the date of such
letter, there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt of the
Company and its consolidated subsidiaries or, at the date of
the latest available balance sheet read by such accountants,
there was any decrease in consolidated net assets, as compared
with amounts shown on the latest balance sheet included in the
Prospectuses;
(B) for the period from the closing date of the latest
income statement included in the Prospectuses to the closing
date of the latest available income statement read by such
accountants there were any decreases, as compared with the
corresponding period of the previous year and with the period
of corresponding length ended the date of the latest income
statement included in the Prospectuses, in consolidated
revenue, gross profit, or in total or per share amounts of
consolidated
net income (loss), except in all cases set forth in clause (A)
above for changes, increases or decreases which the
Prospectuses disclose have occurred or may occur or which are
described in such letter;
(C) at the date of the latest available balance sheet
read by such accountants, or at a subsequent specified date
not more than three business days prior to the date of such
letter, there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt of the
Company and its consolidated subsidiaries or, at the date of
the latest available balance sheet read by such accountants,
there was any decrease in consolidated net assets, as compared
with amounts shown on the latest balance sheet included in the
Prospectuses; or
(D) for the period from the closing date of the latest
income statement included in the Prospectuses to the closing
date of the latest available income statement read by such
accountants there were any decreases, as compared with the
corresponding period of the previous year and with the period
of corresponding length ended the date of the latest income
statement included in the Prospectuses, in consolidated
revenue, gross profit, or in total or per share amounts of
consolidated net income (loss), except in all cases set forth
in clauses (A), (B) and (C) above for changes, increases or
decreases which the Registration Statement and the
Prospectuses disclose have occurred or may occur or which are
described in such letter; and
(iii) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Registration Statements (in each case
to the extent that such dollar amounts, percentages and other
financial information are derived from the general accounting
records of the Company and its subsidiaries subject to the internal
controls of the Company's accounting system or are derived directly
from such records by analysis or computation) with the results
obtained from inquiries, a reading of such general accounting
records and other procedures specified in such letter and have
found such dollar amounts, percentages and other financial
information to be in agreement with such results, except as
otherwise specified in such letter; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Registration Statements (in each case
to the extent that such dollar amounts, percentages and other
financial information are derived from the general accounting
records of the Company and its subsidiaries subject to the internal
controls of the Company's accounting system or are derived directly
from such records by analysis or computation) with the results
obtained from inquiries, a reading of such general amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statement is subsequent to the execution and
delivery of this Agreement, "REGISTRATION STATEMENTS" shall mean
the initial registration statement as proposed to be amended by the
amendment or post-effective amendment to be filed shortly prior to
its Effective Time, (ii) if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of
this Agreement but the Effective Time of the Additional
Registration is subsequent to such execution and delivery,
"REGISTRATION STATEMENTS" shall mean the Initial Registration
Statement and the additional registration statement as proposed to
be filed or as proposed to be amended by the post-effective
amendment to be filed shortly prior to its Effective Time, and
(iii) "PROSPECTUSES" shall mean the prospectuses included in the
Registration Statements.
(b) If the Effective Time of the Initial Registration
Statement is not prior to the execution and delivery of this
Agreement, such Effective Time shall have occurred not later than
10:00 P.M., New York time, on the date of this Agreement or such
later time and date as shall have been consented to by CSFBC. If
the Effective Time of the Additional Registration Statement (if
any) is not prior to the execution and delivery of this Agreement,
such Effective Time shall have occurred not later than 10:00 P.M.,
New York time, on the date of this Agreement or, if earlier, the
time either Prospectus is printed and distributed to any U.S.
Underwriter or Canadian Underwriter, or shall have occurred at such
later date as shall have been consented to by CSFBC. If the
Effective Time of the Initial Registration Statement is prior to
the execution
and delivery of this Agreement, each of the Prospectuses shall have
been filed with the Commission in accordance with the Rules and
Regulations and Section 5(a) of this Agreement. Prior to such
Closing Date, no stop order suspending the effectiveness of a
Registration Statement shall have been issued and no proceedings
for that purpose shall have been instituted or, to the knowledge of
the Company or the U.S. Representative, shall be contemplated by
the Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any
development or event involving a prospective change, in the
condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as one
enterprise which, in the judgment of a majority in interest of the
U.S. Underwriters including the U.S. Representative, is material
and adverse and makes it impractical or inadvisable to proceed with
completion of the public offering or the sale of and payment for
the U.S. Securities; (ii) any material suspension or material
limitation of trading in securities generally on the New York Stock
Exchange, the NASDAQ National Market or The Toronto Stock Exchange,
or any setting of minimum prices for trading on such exchange, or
any suspension of trading of any securities of the Company on any
exchange or in the over-the-counter market; (iii) any banking
moratorium declared by U.S. Federal, New York or Canadian federal
or provincial authorities; or (iv) any outbreak or escalation of
major hostilities in which the United States or Canada is involved,
any declaration of war by Congress, the Canadian Prime Minister
and/or Parliament or any other substantial national or
international calamity or emergency if, in the judgment of a
majority in interest of the U.S. Underwriters including the U.S.
Representative, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the public offering or
the sale of and payment for the U.S. Securities.
(d) The U.S. Representative shall have received an opinion,
dated such Closing Date, of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, United States
counsel for the Company, to the effect that:
(i) Except as set forth in the Registration
Statement and the Prospectuses, no holders of the Company's
common shares or other securities have registration rights
with respect to securities of the Company and, except as set
forth in the Registration Statement and the Prospectuses, all
holders of securities of the Company having rights to
registration of such common shares or other securities because
of the filing of the Registration Statement by the Company
have, with respect to the offering contemplated thereby,
waived such rights or such rights have expired by reason of
lapse of time following notification of the Company's intent
to file the Registration Statement;
(ii) The Company is not, and will not become, as a
result of the consummation of the transactions contemplated by
the Underwriting Agreements, and the application of the net
proceeds therefrom as described in the Prospectuses, an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended;
(iii) No authorization, approval, consent or order
of, or filing with, any governmental authority or agency or
any court is required in connection with the transactions
contemplated by this Agreement, except such as have been
obtained and made under the Act and such as may be required
under state securities laws or blue sky laws in connection
with the purchase and distribution of the Offered Securities
by the several Underwriters;
(iv) The execution and delivery of the Underwriting
Agreements and the performance by the Company of their terms
do not violate or result in a violation of any judgment, order
or decree of any court or arbiter, to which the Company is a
party, and to our knowledge after reasonably investigation,
will not constitute a material breach of the terms, conditions
or provisions of or constitute a default under any contract,
undertaking, indenture or other agreement by which the Company
is now bound or to which it is now a party that is described
in the certificate of an officer of the Company, a copy of
which is attached to such opinion;
(v) The Registration Statement has become effective
under the Act, and no stop order suspending the effectiveness
of the Registration Statement or any part thereof has been
issued or any proceedings for that purpose have been
instituted or are pending or contemplated under the Act;
(vi) This Agreement and the Canadian Underwriting
Agreement have been duly executed and delivered by the Company;
(vii) 724 Solutions Corp. (the "U.S. Subsidiary") is
a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full
corporate power and authority to conduct its business. The
U.S Subsidiary is duly qualified to transact business as a
foreign corporation in the State of California; all of the
issued and outstanding capital stock of the U.S Subsidiary is
owned by the Company, and to the best of such counsel's
knowledge, free and clear of any security interest, claim,
lien, encumbrance and or adverse interest;
(viii) The execution and delivery by the Company of,
and the performance by the Company of its obligations under,
this Agreement will not contravene any provision of applicable
federal law of the United States or the laws of the State of
New York;
(ix) The information in the Prospectuses under the
captions "Certain Transactions," "Shares Eligible for Future
Sale - U.S. Resale Restrictions," and "Consequences - U.S.
Federal Income Tax Considerations," to the extent that such
information constitutes matters of law or legal conclusions is
a fair summary in all material respects of such matters and
conclusions;
(x) To such counsel's knowledge, there are no
material pending or threatened action, suit or proceeding
before any court or governmental agency, authority or body or
any arbitrator involving the Company, other than such actions,
suits or proceedings as are described in the Prospectuses.
There is no contract or other document known to such counsel
of a character required to be described in the Prospectuses or
to be filed as an exhibit to the Registration Statement that
is not described or filed as required; and
(xi) such counsel shall state that it has
participated in conferences with the Underwriters'
representatives and with representatives of the Company and
its accountants concerning the Registration Statement and the
Prospectuses and have considered the matters required to be
stated therein and the statements contained therein, although
it has not independently verified the accuracy, completeness
or fairness of such statements, and that, based upon and
subject to the foregoing, nothing has come to such counsel's
attention that leads such counsel to believe that the
Registration Statement, at the time it became effective,
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or
that the Prospectuses, at the time they were filed with the
Commission pursuant to Rule 424 (b) under the Act or as of the
date of such opinion, contained an untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading (it being understood that such counsel shall not be
required to make any comment with respect to the financial
statements, supporting schedules, footnotes, and other
financial information contained in the Registration Statement
or the Prospectuses).
In rendering such opinion, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP may rely as
to all matters governed by Canadian law upon the opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇.
(e) The U.S. Representative shall have received an opinion,
dated such Closing Date, of each of Osler, ▇▇▇▇▇▇ & Harcourt,
Canadian counsel to the Underwriters, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
Vineberg, Canadian counsel for the Company, to the effect that:
(i) The Company has been duly incorporated and is
an existing corporation under the laws of the Province of
Ontario, Canada, with corporate power and authority to own its
properties and conduct its business as described in the
Prospectuses; and the Company is duly qualified to do business
as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification;
(ii) The Offered Securities delivered on such
Closing Date and all other outstanding common shares of the
Company have been duly authorized and validly issued, are
fully paid and nonassessable and conform to the description
thereof contained in the Prospectuses; and the shareholders of
the Company have no preemptive or similar rights arising under
(A) any Canadian or Province of Ontario statute, rule or
regulation with respect to the Securities or (B) the articles,
by-laws or agreement of the Company once shares have been
issued pursuant to a final prospectus for which a receipt is
issued by a securities commission or similar regulatory body
in Canada and/or pursuant to an effective registration
statement filed with the Commission;
(iii) The statements (A) in the Prospectuses under
the captions and Prospectus in "Risk Factors - Our product
contains encryption technology whose export is restricted by
U.S. and Canadian Law," "Certain Transactions," "Shares
Eligible for Future Sale - Canadian Resale Restrictions and
Escrowed Securities," "Income Tax Consequences - Canadian
Federal Income Tax Considerations" and (B) in the Registration
Statement in Item 15 are accurate in all material respects;
(iv) The Company holds all material licenses,
certificates and permits from federal governmental authorities
in Canada and provincial authorities in the Province of
Ontario which are necessary to the conduct of its business;
(v) No consent, approval, authorization or order
of, or filing with, any governmental agency or body or any
court of Canada or the Province of Ontario is required for the
consummation of the transactions contemplated by this
Agreement in connection with the issuance or sale of the U.S.
Offered Securities by the Company;
(vi) The execution, delivery and performance of this
Agreement and the Canadian Underwriting Agreement and the
issuance and sale of the Offered Securities will not result in
a breach or violation of any of the terms and provisions of,
or constitute a default under (A) any Canadian or Province of
Ontario statute, rule, regulation or order of any governmental
agency or body or any court of Canada or the Province of
Ontario having jurisdiction over the Company or any subsidiary
of the Company formed under the laws of Canada or the Province
of Ontario or any of their properties or (B) the articles or
by-laws of the Company or any such subsidiary, and the Company
has full corporate power and authority to own its properties
and conduct its business as described in the Prospectus and to
authorize, issue and sell the Offered Securities as
contemplated by this Agreement and the Canadian Underwriting
Agreement;
(vii) Each subsidiary of the Company which is
incorporated under the laws of Canada or the Province of
Ontario has been duly incorporated and is an existing
corporation under such laws of Canada or the Province of
Ontario, as the case may be, with corporate power and
authority to own its properties and conduct its business as
described in the Prospectus;
(viii) Except as disclosed in the Prospectuses, under
current Canadian federal or Ontario provincial laws and
regulations, all dividends and other distributions declared
and payable on the Offered Securities may be paid by the
Company to the holder thereof in United States dollars or
Canadian Dollars that may be converted into foreign currency
and freely transferred out of Canada and all such payments
made to holders thereof or therein who are non-residents of
Canada will not be subject to income, withholding or other
taxes under Canadian federal or
Ontario provincial laws and regulations thereof or therein and
will otherwise be free and clear of any other tax, duty,
withholding or deduction in Canada and without the necessity
of obtaining any Canadian federal or Ontario provincial
governmental authorization;
(ix) to the best of such counsel's knowledge, there
are no legal or governmental proceedings in Canada pending or
threatened to which the Company or any of its subsidiaries is
a party or to which any of the properties of the Company or
any of its subsidiaries is subject that are required to be
described in the Prospectuses and are not so described or of
any statutes, regulations, contracts or other documents that
are required to be described in the Prospectuses;
(x) This Agreement and the Canadian Underwriting
Agreement has been duly authorized, executed and delivered by
the Company;
(xi) A court of competent jurisdiction in the
Province of Ontario (a "CANADIAN COURT") would give effect to
the choice of the laws of New York State ("NEW YORK STATE
LAW") as the proper law governing the enforcement of this
Agreement, provided that such choice of law is bona fide (in
the sense that it was not made with a view to avoiding the
consequences of the laws of any other jurisdiction) and
provided that such choice of law is not contrary to public
policy as that term is understood under the laws of the
Province of Ontario and the federal laws of Canada applicable
therein by Canadian courts. To the best of such counsel's
knowledge, the choice of New York State Law as the proper law
governing the enforcement of this Agreement is not contrary to
public policy, as such term is understood under the laws of
the Province of Ontario and the federal laws of Canada
applicable therein;
(xii) If this Agreement is sought to be enforced in
the Province of Ontario in accordance with the laws applicable
thereto as chosen by the parties, namely New York State Law, a
Canadian Court would recognize the choice of New York State
Law and, upon appropriate evidence as to such law being
specifically pleaded and proved, apply such law, subject to
the following qualifications:
(a) the qualifications in the paragraph above
regarding the validity of the choice of New York State
Law as the governing law;
(b) in the matters of procedures, the laws of
the Province of Ontario will be applied; and
(c) a Canadian Court has an inherent power to
decline to hear such an action if it is contrary to
public policy, as such term is understood under the laws
of the Province of Ontario and the federal laws of Canada
applicable therein, for it to do so, or if it is not the
proper forum to hear such action, or if concurrent
proceedings are being brought elsewhere.
To the best of such counsel's knowledge, none of the
provisions of this Agreement are contrary to public policy,
as such term is understood under the laws of the Province of
Ontario and the federal laws of Canada applicable therein,
except that rights of indemnity and contribution under this
Agreement may be contrary to public policy;
(xiii) A Canadian Court would enforce a final and
conclusive judgment IN PERSONAM of a federal or state court
sitting in the Borough of Manhattan, the City of New York, New
York (a "NEW YORK COURT") that is subsisting and unsatisfied
respecting the enforcement of this Agreement which is not
impeachable as void or voidable under New York State Law, for
a sum certain if:
(a) the court rendering such judgment has
jurisdiction over the judgment debtor, as recognized
by Canadian Courts (and submission by the Company to
the jurisdiction of New York pursuant to this
Agreement will be sufficient for this purpose);
(b) such judgment was not obtained by
fraud or in a manner contrary to natural justice and
the enforcement thereof would not be inconsistent
with public policy, as such term is understood under
the laws of the Province of Ontario and the federal
laws of Canada applicable therein;
(c) the enforcement of such judgment does
not constitute, directly or directly, the
enforcement of foreign revenue or penal laws; and
(d) there has been compliance with the
LIMITATIONS ACT (Ontario), which provides that any
action to enforce a foreign judgment must be
commenced within six years of the date of the
foreign judgment;
except that a Canadian Court may avoid the enforcement of
judgments relating to the rights of indemnity and
contribution under this Agreement as being contrary to
public policy. In such counsel's opinion, there is some
doubt as to the enforceability in Canada, against the
Company or against any of the respective directors,
officers and experts who are not residents of the United
States, by a court in original actions or in actions to
enforce judgments of United States courts, of civil
liabilities predicated solely upon United States federal
securities laws; and
(xiv) In an action on a final and conclusive
judgment IN PERSONAM of a New York Court that is not
impeachable as void or voidable under New York State Law, a
Canadian Court would not refuse to give effect to the
appointment by the Company of CT Corporation System, New
York, New York, as its agent for service in the United
States under this Agreement and to the provision in this
Agreement whereby the Company has submitted to the
non-exclusive jurisdiction of a New York Court.
(f) The U.S. Representative shall have received from
Shearman & Sterling, United States counsel for the
Underwriters, such opinion or opinions, dated such Closing
Date, with respect to the incorporation of the Company, the
validity of the Offered Securities delivered on such Closing
Date, the Registration Statements, the Prospectuses and other
related matters as the U.S. Representative may reasonably
require, and the Company shall have furnished to such counsel
such documents as they shall reasonably request for the
purpose of enabling them to pass upon such matters. In
rendering such opinion, Shearman & Sterling may rely as to the
incorporation of the Company and all other matters governed by
Canadian law upon the opinion of ▇▇▇▇▇ ▇▇▇▇▇▇ and Harcourt
referred to above.
(g) The U.S. Representative shall have received a
certificate, dated such Closing Date, of the President or any
Vice President and a principal financial or accounting officer
of the Company in which such officers, to the best of their
knowledge after reasonable investigation, shall state that:
the representations and warranties of the Company in this
Agreement are true and correct as of such Closing Date; the
Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder
at or prior to such Closing Date; no stop order suspending the
effectiveness of any Registration Statement has been issued
and no proceedings for that purpose have been instituted or
are contemplated by the Commission; the Additional
Registration Statement (if any) satisfying the requirements of
Rule 462(b) was filed pursuant to Rule 462(b), including
payment of the applicable filing fee in accordance with Rule
111(a) or (b) under the Act, prior to the time either
Prospectus was printed and distributed to any U.S. Underwriter
or Canadian Undewriter; and, subsequent to the date of the
most recent financial statements in the Prospectuses, there
has been no material adverse change, nor, to the Conpany's
knowledge, any development or event involving a prospective
material adverse change, in the condition (financial or
other), business, properties or results of operations of the
Company and its subsidiaries taken as a whole except as set
forth in or contemplated by the Prospectuses.
(h) The U.S. Representative shall have received a
letter, dated such Closing Date, from KPMG LLP which meets
the requirements of subsection (a) of this Section, except
that the specified date referred to in such subsection will be
a date not more than three business days prior to such Closing
Date for the purposes of this subsection.
(i) The U.S. Representative shall have received written
agreements in the form of Schedule C hereto (collectively,
"LOCK-UP AGREEMENTS") from the holders of substantially all of
its outstanding Securities, and all securities convertible
into or exercisable or exchangeable for Securities, including
all of the Company's principal stockholders.
(j) The U.S. Representative shall have received such
other documents and certificates as are reasonably requested
by it or its counsel.
(k) On such Closing Date, the Canadian Underwriters
shall have purchased the Canadian Firm Securities or the
Canadian Optional Securities, as the case may be, pursuant to
the Canadian Underwriting Agreement.
The Company will furnish the U.S. Representative with such conformed copies
of such opinions, certificates, letters and documents as the U.S.
Representative reasonably requests. CSFBC may in its sole discretion waive
on behalf of the U.S. Underwriters compliance with any conditions to the
obligations of the U.S. Underwriters hereunder, whether in respect of an
Optional Closing Date or otherwise.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company will indemnify and hold harmless each U.S.
Underwriter, its partners, directors and officers and each person,
if any, who controls such U.S. Underwriter within the meaning of
Section 15 of the Act, against any losses, claims, damages or
liabilities, joint or several, to which such U.S. Underwriter may
become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration
Statement, either of the Prospectuses, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, and will reimburse
each U.S. Underwriter for any legal or other expenses reasonably
incurred by such U.S. Underwriter in connection with investigating
or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company
will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter through the U.S. Representative specifically for use
therein, it being understood and agreed that the only such
information furnished by any U.S. Underwriter consists of the
information described as such in subsection (b) below, and provided
further, that with respect to any untrue statement in or omission
from any preliminary prospectus the indemnity agreement contained
in this subsection (a) shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims,
damages or liabilities purchased the Offered Securities concerned,
to the extent that a prospectus relating to such Offered Securities
was required to be delivered by such Underwriter under the Act in
connection with such purchase and any such loss, claim, damages or
liability of such Underwriter results from the fact that there was
not sent or given to such person, at or prior to the written
confirmation of the sale of such Offered Securities to such person,
a copy of the U.S. Prospectus (as then amended or supplemented) if
the Company had previously furnished copies thereof to such
Underwriter.
Insofar as the foregoing indemnity agreement, or the
representations and warranties contained in Section 2(b), may
permit indemnification for liabilities under the Act of any person
who is a U.S.
Underwriter or a partner or controlling person of an Underwriter
within the meaning of Section 15 of the Act and who, at the date of
this Agreement, is a director, officer or controlling person of the
Company, the Company has been advised that in the opinion of the
Commission such provisions may contravene Federal public policy as
expressed in the Act and may therefore be unenforceable. In the
event that a claim for indemnification under such agreement or such
representations and warranties for any such liabilities (except
insofar as such agreement provides for the payment by the Company
of expenses incurred or paid by a director, officer or controlling
person in the successful defense of any action, suit or proceeding)
is asserted by such a person, the Company will submit to a court of
appropriate jurisdiction (unless in the opinion of counsel for the
Company the matter has already been settled by controlling
precedent) the question of whether or not indemnification by it for
such liabilities is against public policy as expressed in the Act
and therefore unenforceable, and the Company will be governed by
the final adjudication of such issue.
(b) Each U.S. Underwriter will severally and not jointly
indemnify and hold harmless the Company, its directors and officers
and each person, if any, who controls the Company within the
meaning of Section 15 of the Act, against any losses, claims,
damages or liabilities to which the Company may become subject,
under the Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, either of
the Prospectuses, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon
the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Company
by such Underwriter through the U.S. Representative specifically
for use therein, and will reimburse any legal or other expenses
reasonably incurred by the Company in connection with investigating
or defending any such loss, claim, damage, liability or action as
such expenses are incurred, it being understood and agreed that the
only such information furnished by the Underwriters consists of (i)
the following information in the U.S. Prospectus furnished on
behalf of each U.S. Underwriter: the legend concerning dealer
delivery obligations on the inside front cover page; (ii) the
following information in the Prospectuses furnished under the
caption "Underwriting" on behalf of each Underwriter: the
description of the intersyndicate agreement between the U.S.
Underwriters and the Canadian Underwriters, the concession and
reallowance figures appearing in the 6th paragraph, the information
contained in the ninth, 14th, 15th, 16th and 18th paragraphs; and
(iii) the information in the 17th paragraph furnished by ▇▇▇▇▇▇
▇▇▇▇▇▇ Partners LLC.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under subsection (a) or (b) above,
notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it
from any liability which it may have to any indemnified party under
paragraphs (a) or (b) if the party to whom notice was not given was
materially prejudiced by the failure to give such notice. In case
any such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party
to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of
any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party unless such
settlement (i) includes an unconditional release of such
indemnified party from all liability on any claims that are the
subject matter of such action and (ii) does
not include a statement as to, or an admission of, fault,
culpability or a failure to act by or on behalf of an indemnified
party.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified
party as a result of the losses, claims, damages or liabilities
referred to in subsection (a) or (b) above (i) in such proportion
as is appropriate to reflect the relative benefits received by the
Company on the one hand and the U.S. Underwriters on the other from
the offering of the U.S. Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the U.S. Underwriters on
the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities as well as
any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the U.S. Underwriters
on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses)
received by the Company bear to the total underwriting discounts
and commissions received by the U.S. Underwriters. The relative
fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the U.S.
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such
indemnified party in connection with investgating or defending any
action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), no U.S.
Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the U.S. Securities
underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such U.S.
Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The U.S. Underwriters' obligations in this
subsection (d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall
be in addition to any liability which the Company may otherwise
have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any U.S. Underwriter; and the
obligations of the U.S. Underwriters under this Section shall be in
addition to any liability which the respective U.S. Underwriters
may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company, to each officer of the
Company who has signed a Registration Statement and to each person,
if any, who controls the Company within the meaning of the Act.
8. DEFAULT OF U.S. UNDERWRITERS. If any U.S. Underwriter or U.S.
Underwriters default in their obligations to purchase U.S. Securities
hereunder on either the First or any Optional Closing Date and the aggregate
number of shares of U.S. Securities that such defaulting U.S. Underwriter or
U.S. Underwriters agreed but failed to purchase does not exceed 10% of the
total number of shares of U.S. Securities that the U.S. Underwriters are
obligated to purchase on such Closing Date, CSFBC may make arrangements
satisfactory to the Company for the purchase of such U.S. Securities by other
persons, including any of the Underwriters, but if no such arrangements are
made by such Closing Date, the non-defaulting U.S. Underwriters shall be
obligated severally, in proportion to their respective commitments hereunder,
to purchase the U.S. Securities that such defaulting Underwriters agreed but
failed to purchase on such Closing Date. If any U.S. Underwriter or
Underwriters so default and the aggregate number of shares of U.S. Securities
with respect to which such default or defaults occur exceeds 10% of the total
number of shares of U.S. Securities that the U.S. Underwriters are obligated
to purchase on such Closing Date and arrangements satisfactory to CSFBC and
the Company for the purchase of such U.S. Securities by other persons are not
made within 36 hours after such default, this Agreement will terminate
without liability on the part of any
non-defaulting U.S. Underwriter or the Company, except as provided in Section
9 (provided that if such default occurs with respect to U.S. Optional
Securities after the First Closing Date, this Agreement will not terminate as
to the U.S. Firm Securities or any U.S. Optional Securities purchased prior
to such termination). As used in this Agreement, the term "U.S. Underwriter"
includes any person substituted for a U.S. Underwriter under this Section.
Nothing herein will relieve a defaulting U.S. Underwriter from liability for
its default.
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers and of the several U.S.
Underwriters set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation, or statement as to
the results thereof, made by or on behalf of any U.S. Underwriter, the
Company or any of their respective representatives, officers or directors or
any controlling person, and will survive delivery of and payment for the U.S.
Securities. If this Agreement is terminated pursuant to Section 8 or if for
any reason the purchase of the U.S. Securities by the U.S. Underwriters is
not consummated, the Company shall remain responsible for the expenses to be
paid or reimbursed by it pursuant to Section 5 and the respective obligations
of the Company and the U.S. Underwriters pursuant to Section 7 shall remain
in effect, and if any U.S. Securities have been purchased hereunder the
representations and warranties in Section 2 and all obligations under Section
5 shall also remain in effect. If the purchase of the U.S. Securities by the
U.S. Underwriters is not consummated for any reason other than solely because
of the termination of this Agreement pursuant to Section 8 or the occurrence
of any event specified in clause (iii), (iv) or (v) of Section 6(c), the
Company will reimburse the U.S. Underwriters for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably incurred by them in
connection with the offering of the U.S. Securities.
10. NOTICES. All communications hereunder will be in writing and, if
sent to the U.S. Underwriters, will be mailed, delivered or telegraphed and
confirmed to the U.S. Representative, Eleven Madison Avenue, New York, N.Y.
10010-3629, Attention: Investment Banking Department Transactions Advisory
Group, or, if sent to the Company, will be mailed, delivered or telegraphed
and confirmed to it at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇ IN6,
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, with a copy to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇,
Esq., provided, however, that any notice to a U.S. Underwriter pursuant to
Section 7 will be mailed, delivered or telegraphed and confirmed to such U.S.
Underwriter.
11. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 7, and
no other person will have any right or obligation hereunder. No purchaser of
any of the Offered Securities from any Underwriter shal be deemed a successor
or assign solely by reason of such purchase.
12. REPRESENTATION OF U.S. UNDERWRITERS. The U.S. Representative will
act for the several U.S. Underwriters in connection with this financing, and
any action under this Agreement taken by the U.S. Representative shall bind
all the U.S. Underwriters.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York
in any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. The Company has appointed CT Corporation
System, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, as its authorized agent in the
Borough of Manhattan in The City of New York upon which process may be served
in any such suit or proceeding, and agrees that service of process upon such
agent, and written notice of said service to the Company by the person
serving the same to the address provided in Section 10, shall be deemed in
every respect effective service of process upon the Company in any such suit
or proceeding. The Company further agrees to take any and all action as may
be necessary to maintain such designation and appointment of such agent in
full force and effect for a period of five years from the date of this
Agreement.
The obligation of the Company in respect of any sum due to any U.S.
Underwriter shall, notwithstanding any judgment in a currency other than
United States dollars, not be discharged until the first business day,
following receipt by such U.S. Underwriter of any sum adjudged to be so due
in such other currency, on which (and only to the extent that) such U.S.
Underwriter may in accordance with normal banking procedures purchase United
States dollars with such other currency; if the United States dollars so
purchased are less than the sum originally due to such U.S. Underwriter
hereunder, the Company agrees, as a separate obligation and notwithstanding
any such judgment, to indemnify such U.S. Underwriter against such loss. If
the United States dollars so purchased are greater than the sum originally
due to such U.S. Underwriter hereunder, such U.S. Underwriter agrees to pay
to the Company an amount equal to the excess of the dollars so purchased over
the sum originally due to such U.S. Underwriter hereunder.
If the foregoing is in accordance with the U.S. Representative's
understanding of our agreement, kindly sign and return to the Company one of
the counterparts hereof, whereupon it will become a binding agreement between
the Company and the several U.S. Underwriters in accordance with its terms.
Very truly yours,
724 SOLUTIONS INC.
By
Name:
Title:
The foregoing Underwriting Agreement is hereby confirmed and accepted as of
the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
By __________________________________
Name:
Title:
Acting on behalf of itself and as the
U.S. Representative of the several U.S. Underwriters:
Credit Suisse First Boston Corporation
Banc Boston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
SCHEDULE A
NUMBER OF
UNDERWRITER U.S. FIRM SECURITIES
----------- --------------------
Credit Suisse First Boston Corporation
FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners
Total
SCHEDULE B
NUMBER OF
UNDERWRITER CANADIAN FIRM SECURITIES
----------- ------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc. .................................
RBC Dominion Securities Inc.
Credit Suisse First Boston Securities Canada Inc. ...
Total ...............................
==============
SCHEDULE C
[form of lock-up agreement]