EXHIBIT 3.1
UNDERWRITING AGREEMENT
4,220,466 COMMON SHARES
DRAXIS HEALTH INC.
June 14, 2002
CIBC World Markets Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
National Bank Financial Inc.
The Exchange Tower, Suite 3200
130 King Street West, P.O. Box 21
Toronto, Ontario
M5X 1J9
▇▇▇▇, ▇▇▇▇ & Co. LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇
Ladies and Gentlemen:
Elan International Services, Ltd. ("ELAN") and Novopharm
Limited ("NOVOPHARM") (Elan and Novopharm collectively referred to as the
"SELLING SHAREHOLDERS") propose, subject to the terms and conditions contained
herein, to sell to you (the "UNDERWRITERS"), in the case of Elan, 3,043,996
common shares ("COMMON SHARES") (the "ELAN SHARES") of DRAXIS Health Inc., a
company incorporated and existing under the laws of Canada (the "COMPANY"), and
in the case of Novopharm, 1,176,470 Common Shares (the "NOVOPHARM SHARES") (the
Elan Shares and Novopharm Shares being collectively referred to as the
"SHARES"). The respective amounts of the Shares to be purchased by each of the
Underwriters are set forth opposite their names on Schedule I hereto.
The public offering price per share for the Shares and the
purchase price per share for the Shares to be paid by the Underwriters shall be
U.S.$2.60. In consideration of the Underwriters' agreement to purchase the
Shares and in consideration of the services to be rendered by the Underwriters
in connection therewith, each of Elan and Novopharm agrees severally and not
jointly to pay to the Underwriters a fee of U.S.$0.143 per Share sold by them
respectively to the Underwriters (the "UNDERWRITING FEE"). The Underwriting Fee
shall be due and payable at 8:30 a.m. on the Closing Date (as defined below)
(the "CLOSING TIME") against
payment for the Shares and shall be payable by each of the Selling Shareholders
at the Closing Time as follows: (i) 6% of the total Underwriting Fee payable by
each party shall be paid directly to CIBC World Markets Inc. as a work fee; and
(ii) the remaining 94% shall be divided in the following proportions: 50% to
CIBC World Markets Inc., 35% to National Bank Financial Inc. and 15% to ▇▇▇▇,
▇▇▇▇ & Co. LLC.
1. SALE AND PURCHASE OF THE SHARES.
On the basis of the representations, warranties and
agreements contained in, and subject to the terms and conditions of, this
agreement:
(a) Elan agrees to sell to each of the Underwriters, and each
of the Underwriters agrees, severally and not jointly, to
purchase from Elan, the number of Elan Shares set forth
opposite the name of such Underwriter under the column
"Number of Elan Shares to be Purchased" on Schedule I to
this agreement, subject to adjustment in accordance with
Section 13 hereof. The purchase price for each of the Elan
Shares (the "PURCHASE PRICE") shall be U.S.$2.60.
(b) oNvopharm agrees to sell to each of the Underwriters, and
each of the Underwriters agrees, severally and not jointly,
to purchase from Novopharm, the number of Novopharm Shares
set forth opposite the name of such Underwriter under the
column "Number of Novopharm Shares to be Purchased" on
Schedule I to this agreement, subject to adjustment in
accordance with Section 13 hereof. The purchase price for
each of the Novopharm Shares shall be the Purchase Price.
(c) The Company and the Selling Shareholders understand that
the Underwriters other than ▇▇▇▇, ▇▇▇▇ & Co. LLC propose to
make a public offering of Shares in Canada and all the
Underwriters propose to make a public offering of Shares in
the U.S., in each case only as permitted by Applicable
Securities Laws (as defined below).
2. DELIVERY AND PAYMENT.
Delivery by the Selling Shareholders to the respective
accounts of the Underwriters and payment of the purchase price by certified or
official bank check or checks payable in (same day) funds or immediately
available funds by wire transfer drawn to the order of each of the Selling
Shareholders for the Shares, against delivery of the respective certificates
therefor to the Underwriters, shall take place at the offices of ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP in Toronto, or such other location as agreed to by the Selling
Shareholders and the Underwriters, at 8:30 a.m., Toronto time, on June 21, 2002,
or at such time on such other date as shall be agreed upon by the Selling
Shareholders and the Underwriters (such time and date of delivery and payment
are called the "CLOSING DATE").
Certificates evidencing the Shares shall be registered in such
names and shall be in such denominations as the Underwriters shall request at
least two full business days before the
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Closing Date and shall be made available to the Underwriters for checking and
packaging, at such place as is designated by the Underwriters, on the full
business day before the Closing Date.
3. REGISTRATION STATEMENT AND PROSPECTUS; PUBLIC OFFERING.
The Company has prepared and filed a preliminary short form
prospectus (including any documents incorporated by reference) (collectively,
the "PRELIMINARY PROSPECTUS") in the Qualifying Provinces (as defined below) and
a registration statement including the Preliminary Prospectus (the "PRELIMINARY
REGISTRATION STATEMENT") with the Securities and Exchange Commission (the "SEC")
in the United States and has obtained a MRRS decision statement issued by the
Ontario Securities Commission ("OSC") for the Preliminary Prospectus.
The Company shall, as soon as possible and in any event not
later than 11:00 a.m. (Toronto time) on June 17, 2002 use its reasonable best
efforts to prepare and file, and by 5:00 p.m. on such date, obtain pursuant to
National Policy 43-201 adopted by the Canadian Securities Regulators (as defined
below) and its related memorandum of understanding ("NP 43-201") an MRRS
decision document evidencing the issuance by the Canadian securities regulatory
authorities in all the provinces of Canada (the "QUALIFYING PROVINCES", with the
applicable regulators in the Qualifying Provinces collectively referred to as
the "CANADIAN SECURITIES REGULATORS") of receipts for the Canadian (final) short
form prospectus (in both the English and French languages unless the context
indicates otherwise), including any documents incorporated therein by reference,
prepared by the Company and relating to the distribution of the Shares and for
which an MRRS decision document has been issued by the OSC on its own behalf and
on behalf of each of the other Canadian Securities Regulators (collectively, the
"CANADIAN FINAL PROSPECTUS") and other related documents in respect of the
proposed distribution of the Shares, in accordance with National Instrument
44-101 and NP 43-201, and shall have fulfilled and complied with, to the
reasonable satisfaction of the Underwriters, all applicable securities laws in
each of the Qualifying Provinces and the respective regulations and rules under
such laws together with applicable published policy statements of the Canadian
Securities Administrators and the Canadian Securities Regulators in the
Qualifying Provinces ("CANADIAN SECURITIES LAWS") required to be fulfilled or
complied with by the Company and the Selling Shareholders to enable the Shares
to be lawfully distributed to the public in the Qualifying Provinces through the
Underwriters or any other investment dealers or brokers registered as such in
the Qualifying Provinces.
The Company shall immediately after the filing of the Canadian
Final Prospectus with the OSC on the date on which the Canadian Final Prospectus
is filed with the OSC, file in conformity with the requirements of all
applicable securities legislation in the United States, including without
limitation the U.S. SECURITIES ACT OF 1933, as amended (the "1933 ACT"), and the
U.S. SECURITIES EXCHANGE ACT OF 1934 (the "1934 ACT") and the rules and
regulations promulgated thereunder (the "RULES") (collectively the "U.S.
SECURITIES LAWS") an amendment to the Preliminary Registration Statement
including the Canadian Final Prospectus (with such deletions therefrom and
additions thereto as are permitted or required by Form F-10 under the 1933 Act
and the Rules), (the "REGISTRATION STATEMENT", with the U.S. prospectus included
therein being referred to as the "U.S. FINAL PROSPECTUS") and shall have
fulfilled and complied
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with, to the reasonable satisfaction of the Underwriters, the U.S. Securities
Laws required to be fulfilled or complied with by the Company and the
Selling Shareholders to enable the Shares to be lawfully distributed to the
public in the United States.
4. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company covenants, represents and warrants to each
Underwriter as follows:
(a) All information and statements (except information relating
solely to or furnished by the Underwriters or the Selling
Shareholders) contained in the Preliminary Prospectus, the
Canadian Final Prospectus, the Preliminary Registration
Statement, the U.S. Final Prospectus, the Registration
Statement and any amendment or supplement thereto (each a
"PROSPECTUS AMENDMENT"), are true and correct and contain no
misrepresentation (as defined in the Securities Act (Ontario))
and constitute full, true and plain disclosure of all material
facts relating to the Company and the Shares and no material
fact or information has been omitted from such disclosure,
except for facts or information relating solely to or
furnished by the Underwriters or the Selling Shareholders,
which is required to be stated in such disclosure or is
necessary to make the statements or information contained in
such disclosure not misleading in light of the circumstances
under which they were made.
(b) All the documents in (a) above comply fully with the
requirements of Canadian Securities Laws and U.S. Securities
Laws (collectively, the "APPLICABLE SECURITIES LAWS", unless
the context suggests otherwise).
(c) The Company is eligible in accordance with the provisions of
National Instrument 44-101 to file a short form prospectus
with Canadian Securities Regulators.
(d) The Company meets the general eligibility requirements for use
of Form F-10 under the 1933 Act.
(e) The financial statements of the Company (including all notes
and schedules thereto) in the Canadian Final Prospectus and
U.S. Final Prospectus (collectively, the "FINAL PROSPECTUSES")
present fairly, in all material respects, the financial
position, the results of operations, the statements of cash
flows and the statements of stockholders' equity and the other
information purported to be shown therein of the Company at
the respective dates and for the respective periods to which
they apply in conformity with Canadian and U.S. generally
accepted accounting principles and consistently applied
throughout the periods involved, except as indicated therein.
The selected financial information included in the Final
Prospectuses present fairly the information shown therein as
at the respective dates and for the respective periods
specified; and the summary and selected financial data have
been presented on a basis consistent with the consolidated
financial statements so set forth in or incorporated by
reference in the Final Prospectuses.
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(f) Deloitte & Touche LLP, whose audit report is filed with the
Canadian Securities Regulators and the SEC as a part of the
Final Prospectuses and Registration Statement, are and, during
the periods covered by their report, were independent public
auditors as required by Applicable Securities Laws.
(g) The Company and each of DRAXIS Pharma Inc., DRAXIMAGE Inc. and
Deprenyl Animal Health Inc., (collectively, the
"SUBSIDIARIES") is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation. The Company controls DAHI
LLC, DAHI Nevada Inc., DRAXIS U.S. Inc., DAHI Animal Health
(New Zealand) Pty Limited and DAHI Animal Health (U.K.)
Limited, which companies are not material to the business,
operations or financial condition of the Company. Subject to
the preceding sentence, the Company does not control directly
or indirectly any entities, other than the Subsidiaries. The
Company and each Subsidiary is duly qualified to do business
and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted by
it or location of the assets or properties owned, leased or
licensed by it requires such qualification, except for such
jurisdictions where the failure to so qualify would not have a
material adverse effect on the assets or properties, business,
results of operations, prospects or financial condition of the
Company and each of its Subsidiaries, taken as a whole (a
"MATERIAL ADVERSE EFFECT"). The Company and each of the
Subsidiaries has all requisite corporate power and authority,
and all necessary authorizations, approvals, consents, orders,
licenses, certificates and permits of and from all
governmental or regulatory bodies or any other person or
entity including without limitation all necessary Canada
Health Protection Branch, U.S. Food and Drug Administration
and Canadian and U.S. nuclear safety regulatory approvals
(collectively, the "PERMITS"), to own, lease and license its
assets and properties and conduct its business, all of which
are valid and in full force and effect, as described in the
Registration Statement and the Final Prospectuses, except
where the lack of such Permits, individually or in the
aggregate, would not have a Material Adverse Effect. The
Company and each of the Subsidiaries has fulfilled and
performed in all material respects all of its material
obligations with respect to such Permits; and no event has
occurred that could reasonably be expected to result in
revocation or termination thereof or result in any other
material impairment of the rights of the Company or any
Subsidiaries, as the case may be, thereunder. Except as may be
required under Applicable Securities Laws, no other Permits
are required on the part of the Company or any Subsidiary to
enter into, deliver and perform under this agreement.
(h) The Company and each of the Subsidiaries owns or possesses
adequate and enforceable rights to use all patents,
trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, licenses, know-how
and other similar rights and proprietary knowledge
(collectively, "INTANGIBLES") described in the Final
Prospectuses as being owned by it or necessary for the conduct
of its business. Except as expressly set forth in the Final
Prospectuses,
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neither the Company nor any of the Subsidiaries has received
any notice of, or is aware of, any infringement of or conflict
with asserted rights of others with respect to any Intangibles
except as would not have a Material Adverse Effect.
(i) The Company and each of the Subsidiaries has good and
marketable title in fee simple to all items of real property
and good and marketable title to all personal property
described in the Final Prospectuses as being owned by it
subject to defects that would not result in a Material Adverse
Effect. Any real property and buildings described in the Final
Prospectuses as being held under lease by the Company and each
of the Subsidiaries is held by it under valid, existing and
enforceable leases, free and clear of all liens, encumbrances,
claims, security interests and defects, except such as are
described in the Final Prospectuses or would not have a
Material Adverse Effect.
(j) Except as expressly set forth in the Final Prospectuses, there
are no litigation or governmental proceedings to which the
Company or the Subsidiaries is subject or which is pending or,
to the best of the Company's knowledge, threatened, against
the Company or any of its Subsidiaries, which, individually or
in the aggregate, might reasonably be expected to have a
Material Adverse Effect, adversely affect the consummation of
this agreement or which is required to be disclosed in the
Final Prospectuses that is not so disclosed.
(k) Subsequent to the respective dates as of which information is
given in the Final Prospectuses, except as described therein
(a) there has not been any material adverse change with regard
to the assets or properties, business, results of operations
or financial condition of the Company; (b) neither the Company
nor its Subsidiaries has sustained any loss or interference
with its assets, businesses or properties (whether owned or
leased) from fire, explosion, earthquake, flood or other
calamity, whether or not covered by insurance, or from any
labor dispute or any court or legislative or other
governmental action, order or decree which would have a
Material Adverse Effect; and (c) since the date of the latest
balance sheet included in the Final Prospectuses, except as
reflected therein, neither the Company nor its Subsidiaries
has (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, except
for options or shares issued in the ordinary course of
business under existing stock option or similar plans or
pursuant to the exercise of warrants to purchase common shares
of the Company since the date referred to in the Final
Prospectuses and liabilities or obligations incurred in the
ordinary course of business, (ii) entered into any material
transaction not in the ordinary course of business or (iii)
declared or paid any dividend or made any distribution on any
shares of its stock or redeemed, purchased or otherwise
acquired or agreed to redeem, purchase or otherwise acquire
any shares of its stock.
(l) There is no document, contract or other agreement of a
character required to be described in the Final Prospectuses
or to be filed as an exhibit to the Registration Statement
which is not described or filed as required by Applicable
Securities
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Laws. Each description of a contract, document or other
agreement in the Final Prospectuses accurately reflects in all
material respects the terms of the underlying document,
contract or agreement. Each agreement described in the Final
Prospectuses to which the Company or a Subsidiary is a party,
subject to customary exceptions, is in full force and effect
and is valid and enforceable by and against the Company or a
Subsidiary, as the case may be, in accordance with its terms.
Neither the Company nor any Subsidiary, if such Subsidiary is
a party, nor to the best of the Company's knowledge, any other
party is in default in the observance or performance of any
term or obligation to be performed by it under any such
agreement, and, to the best of the Company's knowledge, no
event has occurred which with notice or lapse of time or both
would constitute such a default, in any such case which
default or event, individually or in the aggregate, would have
a Material Adverse Effect. No default exists, and no event has
occurred which with notice or lapse of time or both would
constitute a default, in the due performance and observance of
any term, covenant or condition, by the Company or any
Subsidiary, if such Subsidiary is a party thereto, of any
other agreement or instrument to which the Company or such
Subsidiary is a party or by which the Company, any Subsidiary
or their respective properties or business may be bound or
affected which default or event, individually or in the
aggregate, would have a Material Adverse Effect.
(m) Neither the Company nor any of its Subsidiaries is in
violation of any term or provision of its charter or by-laws
or of any license, permit, judgment, decree, order, statute,
rule or regulation, where the consequences of such violation,
individually or in the aggregate, would have a Material
Adverse Effect.
(n) Neither the execution, delivery and performance of this
agreement by the Company nor the consummation of any of the
transactions contemplated hereby will give rise to a right to
terminate or accelerate the due date of any payment due under,
or conflict with or result in the breach of any term or
provision of, or constitute a default (or an event which with
notice or lapse of time or both would constitute a default)
under, or require any consent or waiver under, or result in
the execution or imposition of any lien, charge or encumbrance
upon any properties or assets of the Company or any Subsidiary
pursuant to the terms of, any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company or
any Subsidiary is a party or by which either the Company or
any Subsidiary or any of their respective properties or
businesses is bound, or any franchise, license, permit,
judgment, decree, order, statute, rule or regulation
applicable to the Company or any Subsidiary or violate any
provision of the charter or by-laws of the Company or any
Subsidiary, except for such consents or waivers which have
already been obtained and are in full force and effect or
which if not obtained would not have a Material Adverse
Effect.
(o) The Company has authorized and outstanding capital stock (as
of March 31, 2002) as set forth in the Final Prospectuses. The
certificates evidencing the Shares are in due and proper legal
form and have been duly authorized for issuance by the
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Company. All of the issued and outstanding Common Shares and
employee participation shares of the Company ("PARTICIPATION
SHARES") have been duly and validly issued and are fully paid
and nonassessable. There are no statutory preemptive or other
similar rights to subscribe for or to purchase or acquire any
Common Shares or Participation Shares of the Company or any
Subsidiaries or any such rights pursuant to their certificate
of incorporation, articles or by-laws or any agreement or
instrument to or by which the Company or any of its
Subsidiaries is a party or bound except as has been described
in the Final Prospectuses. The Shares are duly and validly
issued, fully paid and nonassessable. Except as disclosed in
the Final Prospectuses, there is no outstanding option,
warrant or other right calling for the issuance of, and there
is no commitment, plan or arrangement to issue, any shares of
the Company or any Subsidiaries or any security convertible
into, or exercisable or exchangeable for, such shares other
than options or shares issued in the ordinary course of
business under existing stock option or similar plans since
the date referred to in the Final Prospectuses. The Common
Shares and the Shares conform in all material respects to all
statements in relation thereto contained in the Final
Prospectuses. All outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued, and
are fully paid and nonassessable and are owned directly by the
Company or by another wholly owned subsidiary of the Company,
free and clear of any security interests, liens, encumbrances,
equities or claims, other than those described in the Final
Prospectuses.
(p) No holder of any security of the Company has the right to have
any security owned by such holder included in the Final
Prospectuses (except for the Selling Shareholders) or to
demand registration of any security owned by such holder
during the period ending 90 days after the date of this
agreement. Each director and officer of the Company specified
by the Underwriters has delivered to the Underwriters a
lock-up agreement in the form attached to this agreement (a
"LOCK-UP AGREEMENT"), except for ▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇,
each of whom has provided a verbal confirmation to the Company
of his intention to be bound by the terms of the Lock-Up
Agreement and to deliver an executed copy of such agreement to
the Company as soon as practicable after the date hereof and
in any event prior to the Closing Date.
(q) All necessary corporate action has been duly and validly taken
by the Company to authorize the execution, delivery and
performance of this agreement. This agreement has been duly
and validly authorized, executed and delivered by the Company
and constitutes and will constitute a legal, valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, except as the enforceability
thereof may be limited (i) by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, (ii) by general
equitable principles and (iii) with respect to the
indemnification and contribution rights, by Applicable
Securities Laws.
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(r) Neither the Company nor any of its Subsidiaries are involved
in any labor dispute nor, to the best of the Company's
knowledge, is any such dispute threatened, which dispute in
either case would have a Material Adverse Effect. The Company
is not aware of any existing or imminent labor disturbance by
the employees of any of its principal suppliers or contractors
which would have a Material Adverse Effect. Other than as
disclosed in the Final Prospectuses, the Company is not aware
of any threatened or pending litigation between the Company or
any of its Subsidiaries and any of its executive officers
which, if adversely determined, could have a Material Adverse
Effect and has not been informed that such officers will not
remain in the employment of the Company.
(s) No material transaction has occurred between or among the
Company and any of its officers or directors or shareholders
or any affiliate or affiliates of any such officer or director
or shareholders that is required to be described in and is not
described in the Final Prospectuses.
(t) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which would reasonably
be expected to cause or result in, or which has constituted or
which would reasonably be expected to constitute, the
stabilization or manipulation of the price of the Common
Shares to facilitate the sale or resale of any of the Shares.
(u) The Company and its Subsidiaries have filed all material
federal, state, provincial, local and foreign tax returns
which are required to be filed through the date hereof, or
have received extensions thereof, and have paid all taxes
shown on such returns and all assessments received by them to
the extent that the same are material and have become due
other than those taxes and assessments that are currently
being challenged and for which a reserve has been taken. There
are no tax audits or investigations pending, which if
adversely determined would have a Material Adverse Effect; nor
are there any material proposed additional tax assessments
against the Company or any of its Subsidiaries.
(v) The Shares are quoted on the Nasdaq National Market ("NASDAQ")
and are listed on the Toronto Stock Exchange.
(w) Computershare Trust Corporation of Canada, at its principal
office in the City of Toronto, has been duly appointed as
registrar and transfer agent for the Common Shares.
(x) The Company has prepared and filed with the SEC an appointment
of agent for service of process upon the Company on Form F-X.
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(y) The books, records and accounts of the Company and its
Subsidiaries accurately and fairly reflect, in reasonable
detail, the transactions in, and dispositions of, the assets
of, and the results of operations of, the Company and its
Subsidiaries. The Company and each of its Subsidiaries
maintains a system of internal accounting controls sufficient
to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations, and (ii) transactions are recorded as
necessary to permit preparation of financial statements in
accordance with U.S. and Canadian generally accepted
accounting principles.
(z) The Company and its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and
risks and in such amounts as are customary in the businesses
in which it or they are engaged; all policies of insurance and
fidelity or surety bonds insuring the Company or any of its
Subsidiaries or the Company's or its Subsidiaries' respective
businesses, assets, employees, officers and directors are in
full force and effect; the Company and each of its
Subsidiaries are in compliance with the terms of such policies
and instruments in all material respects; and neither the
Company nor any Subsidiary of the Company believes that it
will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse
Effect.
(aa) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory,
administrative or other governmental body necessary in
connection with the execution and delivery by the Company of
this agreement and the consummation of the transactions herein
contemplated required to be obtained or performed by the
Company (except such additional steps as may be required by
the National Association of Securities Dealers, Inc. (the
"NASD") or may be necessary to qualify the Shares for public
offering by the Underwriters under the state securities or
Blue Sky laws (the "BLUE SKY LAWS") has been obtained or made
and is in full force and effect.
(bb) To the best of the Company's knowledge, there are no
affiliations with the NASD among the Company's officers,
directors or any five percent or greater stockholder of the
Company, except as set forth in the Registration Statement or
the Final Prospectuses or otherwise disclosed in writing to
the Underwriters.
(cc) (i) Each of the Company and its Subsidiaries is in compliance
with all rules, laws and regulations relating to the use,
treatment, storage and disposal of toxic substances, including
without limitation radioactive materials, and protection of
health or the environment ("ENVIRONMENTAL LAW") which are
applicable to its business except for non-compliance that
would not have a Material Adverse Effect; (ii) neither the
Company nor any of its Subsidiaries has received any notice
from (x) any third party of an asserted claim under
Environmental Laws, which would have a Material Adverse
Effect, or (y) any governmental authority of an
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asserted claim under Environmental Laws, which would have a
Material Adverse Effect; (iii) each of the Company and its
Subsidiaries has received all permits, licenses or other
approvals required of it under applicable Environmental Laws
to conduct its business, except where the failure to obtain
such permit, license or approval would not have a Material
Adverse Effect, and is in compliance with all terms and
conditions of any such permit, license or approval; (iv) to
the best of the Company's knowledge, no facts currently exist
that will require the Company or any of its Subsidiaries to
make future material capital expenditures to comply with
Environmental Laws; and (v) no property which is or has been
owned, leased or occupied by the Company or its Subsidiaries
has been designated as a contaminated site under applicable
state, provincial or local law.
(dd) In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the
business, operations and properties of the Company and its
Subsidiaries, in the course of which the Company identifies
and evaluates associated costs and liabilities (including,
without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance
with Environmental Laws, or any permit, license or approval,
any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such
review, the Company has in good faith concluded that such
associated costs and liabilities would not, singly or in the
aggregate, have a Material Adverse Effect.
(ee) The Company is not and, after giving effect to the offering
and sale of the Shares, will not be an "investment company"
within the meaning of the INVESTMENT COMPANY ACT OF 1940, as
amended (the "INVESTMENT COMPANY ACT").
(ff) None of the Company, any of its Subsidiaries or any other
person acting on behalf of the Company or any of its
Subsidiaries, including, without limitation, to the best of
its knowledge, any director, officer, agent or employee of the
Company or any of its Subsidiaries has directly or indirectly,
while acting on behalf of the Company or any of its
Subsidiaries (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
relating to political activity; (ii) made any unlawful payment
to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns from
corporate funds; (iii) violated any provision of the U.S.
FOREIGN CORRUPT PRACTICES ACT OF 1977, as amended; or (iv)
made any other unlawful payment.
5. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
Each Selling Shareholder hereby severally covenants,
represents and warrants to each Underwriter as follows with respect solely to
that Selling Shareholder:
(a) This agreement and the lock-up agreement dated June 4, 2002
between such Selling Shareholder and the Underwriters (the
"SHAREHOLDER LOCK-UP AGREEMENT") have each been duly
authorized, executed and delivered by or on
-11-
behalf of such Selling Shareholder and, assuming due
authorization, execution and delivery by the other parties
hereto or thereto, constitutes a valid and legally binding
agreement of such Selling Shareholder, enforceable against
such Selling Shareholder in accordance with its terms, except
as the enforceability thereof may be limited (i) by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights
generally, (ii) by general equitable principles and (iii) with
respect to the indemnification and contribution rights, by
Applicable Securities Laws.
(b) The execution and delivery by such Selling Shareholder of this
agreement and its Shareholder Lock-up Agreement and the
performance by such Selling Shareholder of its obligations
under this agreement and the Lock-up Agreement (i) do not and
will not contravene any provision of applicable law, statute,
regulation or filing or any agreement or other instrument
binding upon such Selling Shareholder or any judgment, order
or decree of any governmental body, agency or court having
jurisdiction over such Selling Shareholder, assuming
compliance by the Company with all Applicable Securities Laws
and Blue Sky Laws in connection with the transactions
contemplated hereby, (ii) does not require any consent,
approval, authorization or order of or registration or filing
with any court or governmental agency or body having
jurisdiction over it, except such as may be required to be
effected by the Company under Applicable Securities Laws and
Blue Sky Laws in connection with transactions contemplated
hereby, or (iii) will not result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets
of such Selling Shareholder pursuant to the terms of any
agreement or instrument to which such Selling Shareholder is a
party or by which such Selling Shareholder may be bound or to
which any of the property or assets of such Selling
Shareholder is subject in any case in such a manner as to
impair the ability of such Selling Shareholder to perform this
agreement.
(c) Such Selling Shareholder has valid and marketable title to the
Shares to be sold by such Selling Shareholder free and clear
of any lien, claim, security interest or other encumbrance,
including, without limitation, any restriction on transfer
other than restrictions on transfer pursuant to such Selling
Shareholder's Shareholder Lock-Up Agreement.
(d) No person, firm, or corporation has any agreement (other than
the Underwriters pursuant to this agreement), or option or
right or privilege capable of becoming an agreement for the
purchase from such Selling Shareholder of any of its Shares.
(e) Such Selling Shareholder has full legal right, power and
authorization, and subject to compliance by the Company with
all Applicable Securities Laws and Blue Sky Laws required to
be fulfilled or complied with by the Company to enable the
Shares to be sold by such Selling Shareholder, any approval
required by law, to sell, assign, transfer and deliver the
Shares to be sold by such Selling Shareholder in the manner
provided by this agreement.
-12-
(f) Assuming that each Underwriter has no notice of any adverse
claim, upon delivery of and payment for the Shares to be sold
by such Selling Shareholder pursuant to this agreement, the
several Underwriters will receive valid and marketable title
to such Shares free and clear of any lien, claim, security
interest or other encumbrance other than as created or
permitted to exist by the Underwriters.
(g) All information contained in the Selling Shareholder's
Excluded Provisions (as defined below) is, and on the Closing
Date will be, true and correct and does not, and on the
Closing Date will not, contain any untrue statement of a
material fact or omit to state any material fact necessary to
make such information not misleading.
(h) The sale of Shares by such Selling Shareholder pursuant to
this agreement is not prompted by such Selling Shareholder's
knowledge of any material information concerning the Company
or any of its Subsidiaries which is required to be but is not
set forth in the Final Prospectuses.
(i) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed or that would
reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares in violation of
Applicable Securities Laws.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS.
The obligations of the Underwriters under this agreement are
several and not joint. The respective obligations of the Underwriters to
purchase the Shares on the Closing Date are subject to each of the following
terms and conditions:
(a) The obtaining of an MRRS decision document pursuant to NP
43-201 evidencing the issuance by the Canadian Securities
Regulators in the Qualifying Provinces of receipts for the
Canadian Final Prospectus and other related documents in
respect of the proposed distribution of the Shares as
contemplated by Section 3 of this agreement.
(b) Notification that the Registration Statement has become
effective shall have been received by the Underwriters and the
U.S. Final Prospectus shall have been timely filed with the
SEC in accordance with Section 3 of this agreement.
(c) No order preventing or suspending the use of the Canadian
Preliminary Prospectus, the Preliminary Registration
Statement, the Canadian Final Prospectus or the U.S. Final
Prospectus shall have been or shall be in effect and no order
suspending the effectiveness of the Registration Statement
shall be in effect and no proceedings for such purpose shall
be pending before or threatened by the OSC or the SEC, and any
requests for additional information on the part of the OSC or
the SEC (to be included in the Final Prospectuses,
Registration Statement or
-13-
otherwise) shall have been complied with to the satisfaction
of the OSC and/or the SEC.
(d) The representations and warranties of the Company and the
Selling Shareholders contained in this agreement and in the
certificates delivered pursuant to Section 6(f) and (g), if
qualified by any materiality qualifier whatsoever shall be
true and correct, and otherwise shall be true and correct in
all material respects on the Closing Date as if made on such
date. The Company and the Selling Shareholders shall have
performed all covenants and agreements and satisfied all the
conditions contained in this agreement required to be
performed or satisfied by them at or before the Closing Date.
(e) The Underwriters shall have received on the Closing Date a
certificate, addressed to the Underwriters and dated the
Closing Date, executed by the chief executive or chief
operating officer and the chief financial officer or chief
accounting officer of the Company on the Company's behalf to
the effect that (i) the signers of such certificate have
carefully examined the Registration Statement, the Canadian
Final Prospectus, the U.S. Final Prospectus and this agreement
and that the representations and warranties of the Company in
this agreement are true and correct in all material respects
on the Closing Date with the same effect as if made on the
Closing Date and the Company has performed all covenants and
agreements and satisfied all conditions contained in this
agreement required to be performed or satisfied by it at or
prior to the Closing Date, and (ii) no stop order suspending
the effectiveness of the Registration Statement or the
Canadian Final Prospectus has been issued and to the best of
their knowledge, no proceedings for that or any similar
purpose have been instituted or are pending under Applicable
Securities Laws.
(f) The Underwriters shall have received on the Closing Date a
certificate, addressed to the Underwriters and dated the
Closing Date, of each Selling Shareholder, to the effect that
the representations and warranties of such Selling Shareholder
in this agreement are true and correct in all material
respects on the Closing Date with the same effect as if made
on the Closing Date and such Selling Shareholder has performed
all covenants and agreements and satisfied all conditions
contained in this agreement required to be performed or
satisfied by it at or prior to the Closing Date.
(g) The Underwriters shall have received a "long-form" comfort
letter of Deloitte & Touche LLP, dated as of the date of the
Final Prospectuses (with the requisite procedures to be
completed by such auditors within two Business Days of the
date of the Final Prospectuses), addressed to the
Underwriters, the Selling Shareholders and the board of
directors of the Company, in form and substance satisfactory
to the Underwriters, acting reasonably, with respect to
certain financial and accounting information relating to the
Company in the Final Prospectuses, which letter shall be in
addition to the auditors' report incorporated
-14-
by reference into the Final Prospectuses and the auditors'
comfort letters addressed to the Canadian Securities
Regulators in the Qualifying Provinces.
(h) The Underwriters shall have received on the Closing Date a
letter dated the Closing Date from Deloitte & Touche LLP
addressed to the Underwriters, the Selling Shareholders and to
the board of directors of the Company, in form and substance
satisfactory to the Underwriters, acting reasonably,
confirming the continued accuracy of the comfort letter to be
delivered pursuant to Section 6(h) above, with such changes as
may be necessary to bring the information in such letter
forward to within two Business Days of the Closing Date, which
changes shall be acceptable to the Underwriters, acting
reasonably.
(i) The Underwriters shall have received on the Closing Date from
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel for the Company, an opinion,
addressed to the Underwriters and dated the Closing Date, and
stating in effect that:
(i) The Company and each of the Subsidiaries is validly
existing under the laws of its jurisdiction of
incorporation. The Company and each Subsidiary is
duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the
character or location of its assets or properties
(owned, leased or licensed) or the nature of its
businesses makes such qualification necessary, except
for such jurisdictions where the failure to so
qualify, individually or in the aggregate, would not
have a Material Adverse Effect.
(ii) The Company and each Subsidiary has all requisite
corporate power and authority to own, lease and
license its assets and properties and conduct its
business as now being conducted and as described in
the Final Prospectuses and with respect to the
Company to enter into, deliver and perform this
agreement and to issue and sell the Shares being sold
by it.
(iii) The Company has authorized capital stock as set forth
in Section 4(o) and the certificates evidencing the
Shares are in due and proper legal form The Common
Shares conform in all material respects to the
descriptions thereof contained in the Final
Prospectuses.
(iv) The issued and outstanding shares of each Subsidiary
held directly or indirectly by the Company have been
duly authorized and validly issued, are fully paid
and nonassessable and, based solely upon counsel's
review of the minute books of the Subsidiaries and a
personal property security search in the jurisdiction
of the head office of each Subsidiary and in Ontario
and Quebec, are owned by the Company or by another
wholly owned subsidiary of the Company, free and
clear of any perfected security interest or, to the
best of such counsel's knowledge, any other security
interests, liens, encumbrances or claims, other than
those described in the Final Prospectuses.
-15-
(v) All necessary corporate action has been duly and
validly taken by the Company to authorize the
execution, delivery and performance of this
agreement. This agreement has been duly and validly
authorized, executed and delivered by the Company,
and this agreement constitutes a legal, valid and
binding obligation of the Company.
(vi) To the best of such counsel's knowledge, the Company
is not in violation of any term or provision of its
articles or by-laws and is not in violation of any
terms or provisions of any judgment, decree, order,
statute, rule or regulation, where the consequences
of such violation, individually or in the aggregate,
would have a Material Adverse Effect.
(vii) No consent, approval, authorization or order of any
court or governmental agency or regulatory body is
required for the execution, delivery or performance
of this agreement by the Company or the consummation
of the transactions contemplated hereby, except such
as have been obtained under Applicable Securities
Laws in connection with the purchase and distribution
of the Shares by the several Underwriters.
(viii) To the best of such counsel's knowledge, there is no
litigation or governmental or other proceeding or
investigation, before any court or before or by any
public body or board pending or threatened against,
or involving the assets, properties or businesses of,
the Company or any of the Subsidiaries which would
have a Material Adverse Effect, except as disclosed
in the Final Prospectuses.
(ix) The Shares are eligible for investment as described
in the Canadian Final Prospectus under the caption
"Eligibility for Investment".
(x) The statements in the Final Prospectuses under the
caption "Certain United States Federal Income Tax
Considerations," insofar as such statements
constitute a summary of documents referred to therein
or matters of law, are fair summaries in all material
respects and accurately present the information
called for with respect to such documents and
matters.
(xi) All of the documents incorporated by reference in the
Canadian Final Prospectus have been filed (in English
and French, as applicable) in each of the Qualifying
Provinces.
(xii) The Preliminary Prospectus, Canadian Final Prospectus
and each Prospectus Amendment (except for the
financial statements and schedules and other
financial and statistical data included therein, as
to which such counsel need express no opinion) comply
as to form in all material respects with the
requirements of Canadian Securities Laws.
-16-
(xiii) There has been compliance with the laws of Quebec
relating to the use of the French language in
connection with the documents (including the Canadian
Final Prospectus and the certificates representing
the Shares) to be delivered to purchasers in Quebec.
(xiv) All necessary documents and proceedings have been
filed and taken and all other legal requirements have
been fulfilled under the laws of each of the
provinces of Canada to qualify the Shares to be
offered and sold to the public in each province of
Canada by or through registrants, investment dealers
or brokers registered under applicable legislation of
such provinces who have complied with the relevant
provisions of such legislation.
(xv) This agreement, other than Sections 10 and 11 as to
which no opinion will be expressed, is enforceable
against the Company in accordance with its terms
except as such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other
similar laws affecting the enforcement of creditors'
rights generally (and the possible judicial
application of foreign laws or governmental action
affecting the rights of creditors generally) and
except as enforceability is subject to the
application of general principles of equity
(regardless of whether considered in a proceeding in
equity or at law).
(xvi) The Registration Statement, the Preliminary
Registration Statement and the U.S. Final Prospectus
and each amendment or supplement thereto (except for
the financial statements and schedules and other
financial and statistical data included therein, as
to which such counsel need express no opinion) comply
as to form in all material respects with the
requirements of U.S. Securities Laws.
(xvii) The Registration Statement is effective under the
1933 Act, and no stop order suspending the
effectiveness of the Registration Statement has been
issued and to such counsel's knowledge no proceedings
for that purpose have been instituted or are
threatened, pending or contemplated. Any required
filing of the U.S. Final Prospectus and any
supplement thereto pursuant to Rule 424(b) under the
1933 Act has been made in the manner and within the
time period required by such Rule 424(b).
(xviii) The Company is not an "investment company" or an
entity controlled by an "investment company" as such
terms are defined in the INVESTMENT COMPANY ACT OF
1940.
(xix) Computershare Trust Company of Canada, at its
principal office in the City of Toronto, has been
duly appointed as the registrar and transfer agent
for the Common Shares in Canada.
-17-
(xx) The Shares are listed on the Toronto Stock Exchange.
To the extent deemed advisable by such counsel, they may rely
as to matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Underwriters (including U.S. counsel) or provide a separate opinion from such
counsel as to matters which are governed by laws other than the laws of ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and British Columbia provided that such counsel shall
state that in their opinion that the Underwriters and they are justified in
relying on such other opinions. Copies of such certificates and other opinions
shall be furnished to counsel for the Underwriters.
(j) The Underwriters shall have received on the Closing Date a
favourable legal opinion addressed to the Underwriters and
their counsel, from counsel to each Selling Shareholder, as
applicable, substantially to the effect of:
(i) such Selling Shareholder being duly incorporated and
validly existing;
(ii) no consent, approval, authorization or order of or
filing with any federal, provincial or state court or
public, governmental or regulatory agency or body
being required to be made or obtained by such Selling
Shareholder for the execution, delivery and
performance by such Selling Shareholder of (i) this
agreement, (ii) its Shareholder Lock-up Agreement or
(iii) for the consummation of the transactions
contemplated hereby, except in the case of (i) and
(iii), for such as have been made or obtained or may
be required to be made or obtained by the Company
under Applicable Securities Laws and Blue Sky Laws;
(iii) such Selling Shareholder having the corporate power
and authority and taking all necessary action to
enter into, execute, deliver and perform its
obligations under this agreement and its Shareholder
Lock-up Agreement;
(iv) the due execution and delivery by such Selling
Shareholder of this agreement and its Shareholder
Lock-Up Agreement and the legality, validity and
enforceability of this agreement and the Shareholder
Lock-Up Agreement against such Selling Shareholder
(subject to usual qualifications); and
(v) the execution, delivery and performance of this
agreement and the Shareholder Lock-Up Agreement and
the consummation of the transactions contemplated
hereby and the sale of the Shares at the Closing Time
not resulting in a breach of, and not creating a
state of facts which, after notice or lapse of time,
or both, results in a breach of, or a conflict with
or a default under (X) the articles or by-laws,
resolutions of shareholders or directors (or
committees thereof) of such Selling Shareholder, or
(Y), any applicable laws, assuming compliance by the
Company with Applicable Securities Laws and Blue Sky
Laws.
-18-
(k) All proceedings taken in connection with the sale of the
Shares as herein contemplated shall be reasonably satisfactory
in form and substance to the Underwriters, and their counsel
and the Underwriters shall have received from Torys LLP
("TORYS") a favorable opinion, addressed to the Underwriters
and dated the Closing Date, with respect to such matters as
the Underwriters may reasonably request, and the Company shall
have furnished to Torys such documents as they may reasonably
request for the purpose of enabling them to pass upon such
matters.
(l) The Underwriters shall have received copies of the Lock-up
Agreements executed by each entity or person described in
Section 4(p), including, for greater certainty, ▇▇▇▇▇▇ ▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇.
(m) The Company and the Selling Shareholders shall have furnished
or caused to be furnished to the Underwriters such further
certificates or documents as the Underwriters shall have
reasonably requested as may be necessary to complete the
purchase and sale of the Shares as contemplated herein.
(n) The Underwriters shall have received on the Closing Date a
certificate from the Company's transfer agent dated the
Closing Date and signed by an authorized officer of such
transfer agent confirming the issued and outstanding common
shares of the Company.
7. COVENANTS OF THE COMPANY.
(a) The Company shall promptly advise the Underwriters and Selling
Shareholders in writing (i) when any amendment to the
Registration Statement or Final Prospectuses shall have become
effective, (ii) of any request by the OSC or the SEC for any
amendment of the Registration Statement or the Final
Prospectuses or for any additional information, (iii) of the
prevention or suspension of the use of the Preliminary
Prospectus, Preliminary Registration Statement or the Final
Prospectuses or of the issuance by the Canadian Securities
Regulators or the SEC of any stop order suspending the
effectiveness of the Registration Statement or the Final
Prospectuses or the institution or threatening of any
proceeding known to it for that purpose and (iv) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company shall not file any
amendment of the Registration Statement or supplement or
amendment to the Final Prospectuses unless the Company has
furnished the Selling Shareholders and the Underwriters a copy
for their review prior to filing and shall not file any such
proposed amendment or supplement to which either of the
Selling Shareholders or the Underwriters reasonably object.
The Company shall use its best efforts to prevent the issuance
of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
-19-
(b) The Company shall make generally available to its security
holders and to the Underwriters as soon as practicable, but
not later than 45 days after the end of the 12-month period
beginning at the end of the fiscal quarter of the Company
during which the Effective Date occurs (or 90 days if such
12-month period coincides with the Company's fiscal year), an
earning statement (which need not be audited) of the Company,
covering such 12-month period, which shall satisfy the
provisions of Section 11(a) of the 1933 Act or Rule 158 of the
Rules.
(c) The Company shall furnish to the Underwriters and Torys and to
the Selling Shareholders and their counsel, without charge,
signed copies of the Final Prospectuses and Registration
Statement (including all exhibits thereto and amendments
thereof) and, so long as delivery of a prospectus by an
Underwriter or dealer may be required under Applicable
Securities Laws, as many copies of the Final Prospectuses and
Registration Statement and any amendments thereof and
supplements thereto as the Underwriters may reasonably
request.
(d) The Company shall cooperate with the Underwriters and their
counsel in endeavoring to qualify the Shares for offer and
sale to the extent required by law in connection with the
offering under the laws of such Canadian and U.S.
jurisdictions as the Underwriters may designate and shall
maintain such qualifications in effect so long as required for
the distribution of the Shares; provided, however, that the
Company shall not be required in connection therewith, as a
condition thereof, to qualify as a foreign corporation or to
execute a general consent to service of process in any
jurisdiction or subject itself to taxation as doing business
in any jurisdiction.
(e) Without the prior written consent of CIBC World Markets Inc.,
for a period of 180 days after the closing of the proposed
offering, neither the Company nor any of its Subsidiaries
shall, nor shall they announce any intention to, directly or
indirectly, offer or sell, or enter into an agreement to offer
or sell, any Common Shares or any other securities convertible
into, exchangeable for, or otherwise exercisable into any
securities of the Company (except in connection with the
Company's stock option plan or any other securities
compensation plan and securities issued upon the exercise of
rights thereunder, and the exercise of currently outstanding
convertible securities).
(f) On or before completion of this offering, the Company shall
make all filings required under Applicable Securities Laws and
by the Nasdaq.
(g) The Company will furnish to each of the Underwriters and each
of the Selling Shareholders prior to or as soon as possible
following the filing of the Canadian Final Prospectus:
(i) a copy of the Canadian Final Prospectus in the
English language signed and certified as required by
the Canadian Securities Laws applicable in the
Qualifying Provinces other than Quebec;
-20-
(ii) a copy of the Canadian Final Prospectus in the French
language signed and certified as required by the
Canadian Securities Laws applicable in Quebec;
(iii) a copy of any other document required to be filed by
the Company in compliance with the Canadian
Securities Laws;
(iv) opinions of Quebec counsel to the Company addressed
to the Underwriters, the Company, the Selling
Shareholders, the Selling Shareholders' counsel and
Torys in form and substance satisfactory to the
Underwriters, acting reasonably, dated, in the case
of the Canadian Final Prospectus, as of the date of
the Canadian Final Prospectus, to the effect that the
French language version of the Canadian Final
Prospectus, except for the consolidated financial
statements of the Company incorporated by reference
in the Canadian Final Prospectus, together with the
reports of Deloitte & Touche LLP on such financial
statements as at and for the periods included in the
Canadian Final Prospectus and including the notes
with respect to such financial statements and
Management's Discussion and Analysis of Financial
Condition and Results of Operations included in the
Canadian Final Prospectus (the "FINANCIAL
INFORMATION") as to which no opinion need be
expressed, is in all material respects a complete and
accurate translation of the English language version
thereof, and that such English and French language
versions are not susceptible of any materially
different interpretation with respect to any matter
contained therein; and
(v) an opinion of Deloitte & Touche LLP addressed to the
Underwriters, the Company, the Selling Shareholders,
the Selling Shareholders' counsel and Torys, dated in
the case of the Canadian Final Prospectus, as of the
date of the Canadian Final Prospectus to the effect
that the French language version of the Financial
Information is in all material respects, a complete
and proper translation of the English language
version thereof.
(h) During the period from the date of this agreement to the
completion of distribution of the Shares, the Company shall
promptly notify, whether directly or through public
announcement, the Selling Shareholders and the Underwriters in
writing of:
(i) any material change (actual, anticipated,
contemplated or threatened, financial or otherwise)
known to it in the business, affairs, operations,
assets, liabilities (contingent or otherwise) or
capital of the Company and its Subsidiaries taken as
a whole; or
(ii) any material fact which has arisen or been discovered
and would have been required to have been stated in
the Final Prospectuses had the fact arisen or been
discovered on, or prior to, the date of such
document; and
-21-
(iii) any change in any material fact (which for the
purposes of this agreement shall be deemed to include
the disclosure of any previously undisclosed material
fact) contained in the Canadian Final Prospectus or
any Canadian Prospectus Amendment, which fact or
change is, or may be, of such a nature as to render
any statements in the Final Prospectuses misleading
or untrue or which would result in a
misrepresentation (as defined in the SECURITIES ACT
(Ontario) in the Final Prospectuses or which would
result in the Final Prospectuses not complying (to
the extent that such compliance is required) with the
Canadian Securities Laws.
The Company shall promptly, and in any event within any applicable time
limitation, comply, to the reasonable satisfaction of the Underwriters, with all
applicable filings and other requirements under the Canadian Securities Laws as
a result of such fact or change. However, the Company shall not file any
Prospectus Amendment or other document without first obtaining approval from the
Selling Shareholders and the Underwriters, after consultation with the Selling
Shareholders and the Underwriters with respect to the form and content thereof,
which approval will not be unreasonably withheld or delayed. The Company shall
in good faith discuss with the Selling Shareholders and the Underwriters any
fact or change in circumstances (actual, anticipated, contemplated or
threatened, financial or otherwise) which is of such a nature that there is
reasonable doubt whether written notice need be given under this paragraph.
(i) If during the period of distribution to the public of the
Shares, there shall be any change in the Canadian Securities
Laws which, in the reasonable opinion of the Underwriters,
requires the filing of a Prospectus Amendment, the Company
shall, to the satisfaction of the Underwriters, acting
reasonably, promptly prepare and file such Prospectus
Amendment with the Canadian Securities Regulators in each of
the Qualifying Provinces where such filing is required.
(j) When the Company is required to prepare or prepares any
Prospectus Amendment, the Company shall also prepare and
deliver promptly to each of the Underwriters signed and
certified copies of any Prospectus Amendment in the English
and French language which have not been previously delivered.
The Prospectus Amendment shall be in form and substance
satisfactory to the Underwriters acting reasonably.
Concurrently with the delivery of any Prospectus Amendment,
the Company shall deliver to each of the Underwriters, with
respect to such Canadian Prospectus Amendment, documents
similar to those referred to in Sections 7(h)(iii), (iv) and
(v). The Company shall promptly furnish the Underwriters,
without charge, with commercial copies of the English and
French language versions of such Canadian Prospectus
Amendment, in such quantities and at such cities as the
Underwriters may from time to time reasonably request.
(k) The Company shall cause commercial copies of the Canadian
Final Prospectus in the English and French languages to be
delivered to the Underwriters without charge, in such numbers
and in such cities as the Underwriters may reasonably request
by oral instructions to the printer of the Canadian Final
Prospectus given forthwith after the Underwriters have been
advised that the Company has
-22-
complied with the Canadian Securities Laws with respect to the
filing thereof. Such delivery shall be effected as soon as
possible and, in any event, on or before a date one Business
Day after compliance with the Canadian Securities Laws with
respect to the filing thereof.
8. COVENANTS OF THE SELLING SHAREHOLDERS.
Each of the Selling Shareholders severally and not jointly
covenants and agrees as follows solely with respect to itself that:
During the period from the date of this agreement to the
completion of distribution of the Shares under the Final Prospectuses, each
Selling Shareholder shall promptly notify the Underwriters and the Company in
writing of:
(a) any material fact which has arisen to the knowledge of the
Selling Shareholder that would have been required to have been
stated in that Selling Shareholder's Excluded Provisions in
the Final Prospectuses or the Registration Statement had the
fact arisen or been discovered on, or prior to, the date of
such document; and
(b) to the knowledge of the Selling Shareholder, any change in
material fact (which for the purposes of this agreement shall
be deemed to include the disclosure of any previously
undisclosed material fact) contained in that Selling
Shareholder's Excluded Provisions in the Final Prospectuses or
the Registration Statement which fact or change is, or may be,
of such a nature as to render any statement in that Selling
Shareholder's Excluded Provisions in the Final Prospectuses or
the Registration Statement misleading or untrue or which would
result in a misrepresentation in that Selling Shareholder's
Excluded Provisions in the Final Prospectuses or the
Registration Statement or which would result in the Final
Prospectuses or the Registration Statement not complying (to
the extent that such compliance is required) with Applicable
Securities Laws.
9. EXPENSES.
Whether or not the transactions contemplated by this agreement
shall be completed, except as specifically provided below, the Company will be
responsible for all expenses of or incidental to the issue, sale and delivery of
the Shares and all expenses of or incidental to all other matters in connection
with the transaction set out in this agreement, including without limitation the
fees, taxes and disbursements of the Company's legal counsel, auditors, roadshow
consultants, printers and other consultants and service providers retained by
the Company, provided, however, that Novopharm will bear its share of any
additional filing fees payable in connection with the registration or
qualification of the Novopharm Shares and each of Elan and Novopharm will be
responsible for the fees, taxes and disbursements of its legal counsel. In
addition, the Company will reimburse the Underwriters upon request for all
reasonable out-of-pocket expenses incurred by CIBC World Markets Inc. in
connection with engagement hereunder, including, but not limited to, the fees,
taxes and disbursements of legal counsel to the Underwriters (subject to a
maximum of $125,000), and any advertising, printing,
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courier, telecommunications, data search, roadshow presentation, travel,
entertainment and other expenses incurred the Underwriters, together with
related Goods and Services Tax and provincial sales taxes.
10. INDEMNIFICATION.
(a) COMPANY'S INDEMNITY
The Company agrees to indemnify and save harmless the
Underwriters and their respective affiliates, directors, officers, employees and
agents from and against all liabilities, claims, losses, damages and reasonable
expenses (including without limitation any legal fees or other expenses
reasonably incurred by such Underwriters in connection with defending or
investigating any of the above but excluding any loss of profits and other
consequential damages), in any way caused by, or arising directly or indirectly
from, or in consequence of:
(i) any untrue statement or alleged untrue statement of a
material fact forming part of information or
statements in the Preliminary Prospectus, Preliminary
Registration Statement and Final Prospectuses other
than the "Selling Shareholders" (other than the
Percentage of Outstanding Common Shares) section of
the Preliminary Prospectus, Preliminary Registration
Statement or Final Prospectuses (collectively the
"SELLING SHAREHOLDERS' EXCLUDED PROVISIONS" and
insofar as such excluded provisions relate to one of
the Selling Shareholders, that "Selling Shareholder's
Excluded Provisions") (and other than any statement
relating solely to the Underwriters or furnished to
the Company by the Underwriters expressly for use
therein) contained in the Final Prospectuses or
Registration Statement or any Prospectus Amendments
thereto or supplements which, at the time and in the
light of the circumstances under which it was made,
contains or is alleged to contain a misrepresentation
(as defined in the SECURITIES ACT (Ontario);
(ii) any omissions or alleged omissions in any information
or statement (other then that forming part of the
Selling Shareholders' Excluded Provisions) in the
Final Prospectuses or Registration Statement or any
Prospectus Amendment thereto or supplements (or
except facts relating solely to the Underwriters or
furnished to the Company by the Underwriters for use
therein) that is necessary to make any statement
therein not misleading in light of the circumstances
in which it was made;
(iii) any order made or enquiry, investigation or
proceedings commenced or threatened by any securities
commission or other competent authority based upon
any untrue statement or omission or alleged untrue
statement or alleged omission or any
misrepresentation (as defined in the SECURITIES ACT
(Ontario)) or alleged misrepresentation (as defined
in the SECURITIES ACT (Ontario)) in any information
or statement (other than that forming part of the
Selling Shareholders' Excluded Provisions) (or except
-24-
a statement or omission or alleged statement or
omission regarding facts relating solely to the
Underwriters or furnished to the Company by the
Underwriters expressly for use therein) contained in
the Final Prospectuses or Registration Statement or
any Prospectus Amendment thereto or supplements, or
based upon any failure to comply with Applicable
Securities Laws (other than any failure or alleged
failure to comply by the Underwriters or the Selling
Shareholders), preventing or restricting the trading
in or the sale or distribution of the Shares in any
of the Qualifying Provinces or the United States;
(iv) the non-compliance or alleged non-compliance by the
Company with any of the Applicable Securities Laws,
including the Company's non-compliance with any
statutory requirement to make any document available
for inspection; or
(v) any breach by the Company of its representations,
warranties, covenants or obligations to be complied
with under this agreement.
In no event shall this indemnity enure to the benefit of the
Underwriters if a copy of the appropriate Final Prospectus (as then amended or
supplemented, if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of the Underwriters to a person
asserting any such losses, claims, damages or liabilities, if required by law so
to have been delivered, at or prior to the written confirmation of the sale of
the Shares to such person, and if such Final Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such losses, claims,
damages or liabilities.
(b) SELLING SHAREHOLDERS' INDEMNITY
Each of the Selling Shareholders agrees severally and not
jointly to indemnify and save harmless the Underwriters and their respective
affiliates, directors, officers, employees and agents from and against all
liabilities, claims, losses, damages and reasonable expenses (including without
limitation any legal fees or other expenses reasonably incurred by such
Underwriters in connection with defending or investigating any of the above but
excluding any loss of profits and other consequential damages), in any way
caused by, or arising directly or indirectly from, or in consequence of:
(i) any untrue statement or alleged untrue statement of a
material fact forming part of that Selling
Shareholder's Excluded Provisions contained in the
Final Prospectuses or Registration Statement or any
Prospectus Amendments thereto or supplements which,
at the time and in the light of the circumstances
under which it was made, contains or is alleged to
contain a misrepresentation (as defined in the
SECURITIES ACT (Ontario));
(ii) any omissions or alleged omissions of any material
fact in that Selling Shareholder's Excluded
Provisions in the Final Prospectuses or Registration
Statement or any Prospectus Amendment thereto or
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supplements that is necessary to make any statement
therein not misleading in light of the circumstances
in which it was made;
(iii) the non-compliance or alleged non-compliance by such
Selling Shareholder with any of the Applicable
Securities Laws, assuming compliance by the Company
with all Applicable Securities Laws and Blue Sky Laws
in connection with the transactions contemplated
hereby; or
(iv) any breach by such Selling Shareholder of its
representations, warranties, covenants or obligations
to be complied with under this agreement or its
Shareholder Lock-Up Agreement.
In no event shall this indemnity enure to the benefit of the
Underwriters if a copy of the applicable Final Prospectus (as then amended or
supplemented, if the Company shall have furnished any amendments thereto) was
not sent or given by or on behalf of the Underwriters to a person asserting any
such losses, claims, damages or liabilities, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the Shares to
such person, and if such Final Prospectus (as so amended) would have cured the
defect giving rise to such losses, claims, damages or liabilities.
The liability of Elan and Novopharm pursuant to Section 10(b)
shall be limited to the net proceeds of the sale of the Elan Shares and the
Novopharm Shares, respectively.
(c) UNDERWRITERS' INDEMNITY
Each of the Underwriters agrees severally and not jointly to
indemnify and save harmless the Company, each Selling Shareholder and their
respective affiliates, directors, officers, employees and agents from and
against all liabilities, claims, losses, damages and reasonable expenses
(including without limitation any legal fees or other expenses reasonably
incurred by them in connection with defending or investigating any of the above
but excluding any loss of profits and other consequential damages), in any way
caused by, or arising directly or indirectly from, or in consequence of any
information or statement or any untrue statement or alleged untrue statement of
a material fact forming part of the information under the headings "Price Range
and Trading Volume" and "Exchange Rate Information" which was furnished to the
Company by the Underwriters contained in the Final Prospectuses or Registration
Statement or any Prospectus Amendments thereto or supplements which, at the time
and in the light of the circumstances under which it was made, contains or is
alleged to contain a misrepresentation (as defined in the SECURITIES ACT
(Ontario)).
(d) NOTIFICATION OF CLAIMS
If any matter or thing contemplated by Section 10(a) or 10(b)
(any such matter or thing being referred to as a "CLAIM") is asserted against
any person or company in respect of which indemnification is or might reasonably
be considered to be provided, such person or company (the "INDEMNIFIED PARTY")
will notify the indemnifier hereunder (the "INDEMNIFIER") as soon as possible of
the nature of such Claim (but the omission so to notify the Indemnifier of
-26-
any potential Claim shall not relieve the Indemnifier from any liability which
it may have to any Indemnified Party and any omission so to notify the
Indemnifier of any actual claim shall affect the Indemnifier's liability only to
the extent that it is materially prejudiced by that failure). The Indemnifier
shall be entitled to participate in and, to the extent that it shall wish, to
assume the defence of any suit brought to enforce such Claim; provided, however,
that the defence shall be conducted through legal counsel acceptable to the
Indemnified Party, acting reasonably, that no settlement of any such Claim or
admission of liability may be made by the Indemnifier or the Indemnified Party
without the prior written consent of the other parties, acting reasonably, and
the Indemnifier shall not be liable for any settlement of any such Claim unless
it has consented in writing to such settlement or unless such settlement,
compromise or judgment (i) includes an unconditional release of the Indemnified
Party from all liability arising out of such Claim or (ii) does not include a
statement as to or an admission of fault, culpability or failure to act, by or
on behalf of any Indemnified Party or the Indemnifier.
(e) RETAINING COUNSEL
In any such Claim, the Indemnified Party shall have the right
to retain other counsel to act on its behalf, provided that the reasonable fees
and disbursements of such counsel shall be paid by the Indemnified Party unless
(i) the Indemnifier fails to assume the defence of such suit on behalf of the
Indemnified Party within 15 days of receiving written notice of such suit; (ii)
the Indemnifier and the Indemnified Party shall have mutually agreed to the
retention of the other counsel; or (iii) the named parties to any such Claim
(including any added third or impleaded party) include the Indemnified Party and
the Indemnifier and the Indemnified Party shall have been advised in writing by
counsel that the representation of all parties by the same counsel would be
inappropriate due to the actual or potential differing interests between them.
In no event shall the Indemnifier be liable to pay the fees and disbursements of
more than one firm of separate counsel for all Indemnified Parties and, in
addition, one firm of local counsel in each applicable jurisdiction.
(f) RIGHTS AND REMEDIES OF THE UNDERWRITERS
The Company and the Selling Shareholders acknowledge that all
information or statements in the Final Prospectuses, the Registration Statement
or any Prospectus Amendments or supplements thereto or any omission or alleged
omission in any information or statement in the Final Prospectuses, the
Registration Statement or any Prospectus Amendments or supplements thereto that
is necessary to make any statement therein not misleading in light of the
circumstances in which it was made, other than the information under the
headings "Price Range and Trading Volume" and "Exchange Rate Information" which
was furnished to the Company by the Underwriters, forms either part of the
Company's disclosure or the Selling Shareholders' Excluded Provisions and that
the rights and remedies of the Underwriters under this agreement shall in no way
be prejudiced by any dispute which may arise between the Company and a Selling
Shareholder as to whether a matter forms part of the Company's disclosure or the
Selling Shareholders' Excluded Provisions.
It is the intention of the Company to constitute the
Underwriters trustees for the Underwriters' affiliates, directors, officers,
employees and agents of the covenants of the
-27-
Company under this paragraph 10 with respect to the Underwriters' affiliates,
directors, officers, employees and agents and the Underwriters agree to accept
such trust and to hold and enforce such covenants on behalf of such persons.
11. CONTRIBUTION.
In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Sections 10(a) or
10(b) is due in accordance with its terms but for any reason is held to be
unavailable to or insufficient to hold harmless an indemnified party under
Section 10(a) or 10(b), then each indemnifying party shall contribute to the
aggregate losses, claims, damages and liabilities (including any investigation,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claims asserted,
but after deducting any contribution received by any person entitled hereunder
to contribution from any person who may be liable for contribution) to which the
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by the respective Selling Shareholder, the
Underwriters and the Company from the offering of the Shares or, if such
allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 10 hereof, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault of
the Company, the respective Selling Shareholder and the Underwriters in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the respective
Selling Shareholder and the Underwriters, where the indemnification provided for
in Section 10(b) is unavailable, shall be deemed to be in the same proportion as
(x) the total proceeds from the offering (net of Underwriting Fees but before
deducting expenses) received by the respective Selling Shareholder, as set forth
in the table on the cover page of the Final Prospectuses, bear to (y) the
Underwriting Fees received by the Underwriters, as set forth in the table on the
cover page of the Final Prospectuses and where the indemnification provided for
in Section 10(a) is unavailable, the relative benefit received by the Company on
the one hand will be deemed to be 94.5% of the total proceeds of the offering
(net of Underwriting Fees but before deducting expenses) and the relative
benefit of the Underwriters on the other hand will be deemed to be the
Underwriting Fees received by the Underwriters as set forth in the table on the
cover page of the Final Prospectuses. The relative fault of the Company, the
respective Selling Shareholder or the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact related to information supplied by the Company, the
respective Selling Shareholder or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Selling Shareholders and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 11 were determined by PRO RATA allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this Section 11, in no case
shall (i) any Underwriter be liable or responsible for any amount in excess of
the Underwriting Fee applicable to the Shares purchased by such Underwriter
hereunder; and (ii) any Selling Shareholder be liable and responsible for any
amount in excess of the aggregate net proceeds of the sale of Shares received
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by such Selling Shareholder; provided, however, that no person guilty of fraud,
fraudulent misrepresentation or negligence shall be entitled to contribution
from any person who was not guilty of such conduct. For purposes of this Section
11, each person, if any, who controls an Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the 1934 Act shall have the same
rights to contribution as such Underwriter, and each person, if any, who
controls the Company within the meaning of the Section 15 of the 1933 Act or
Section 20(a) of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement or Final Prospectuses and each director of the
Company shall have the same rights to contribution as the Company, each person,
if any who controls a Selling Shareholder within the meaning of Section 15 of
the 1933 ACT or Section 20(a) of the 1934 ACT shall have the same rights to
contribution as the Selling Shareholder subject in each case to clauses (i) and
(ii) in the immediately preceding sentence of this Section 11. Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made against another party or parties under this Section
11, notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
Section 11. No party shall be liable for contribution with respect to any
action, suit, proceeding or claim settled without its written consent. The
Underwriters' obligations to contribute pursuant to this Section 11 are several
in proportion to their respective underwriting commitments and not joint.
12. TERMINATION.
This agreement may be terminated with respect to the Shares to
be purchased on the Closing Date by the Underwriters by notifying the Company
and the Selling Shareholders at any time at or before the Closing Date:
(a) If on or prior to such date, (i) there should develop, occur
or come into effect any occurrence of national or
international consequence, or any action, law or regulation,
inquiry, or other occurrence of any nature whatsoever which,
in the Underwriters' reasonable opinion, seriously affects, or
may seriously affect, the Canadian or U.S. financial markets
or the business of the Company and its Subsidiaries taken
together; (ii) if trading in the Shares has been suspended by
the Canadian Securities Regulators, the SEC, the Toronto Stock
Exchange, the Nasdaq, or trading generally on the New York
Stock Exchange, Inc., the Nasdaq or the Toronto Stock Exchange
has been suspended or limited, or minimum or maximum ranges
for prices for securities shall have been fixed, or maximum
ranges for prices for securities have been required, by said
exchanges or by order of the SEC, the NASD, or any other
governmental or regulatory authority; or (iii) if a banking
moratorium has been declared by any state or federal authority
in Canada or the United States.
(b) If there shall occur any change as is contemplated in Section
7(i) (other than a change related solely to the Underwriters
or any Selling Shareholder) which in the
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reasonable opinion of the Underwriters could be reasonably
expected to have a significant adverse effect on the market
price or value of the Shares.
(c) If any inquiry, action, suit, investigation or other
proceeding, whether formal or informal is instituted,
threatened or announced or any order is made by any federal,
provincial, state or other governmental authority or there is
any change of law or the interpretation or administration
thereof in relation to the Company or the Selling
Shareholders, which, in the reasonable opinion of the
Underwriters, operates to prevent or restrict the distribution
or trading of the Shares.
(d) The state of the financial markets is such that the Shares
cannot, in the Underwriters' opinion, be profitably marketed.
(e) Any of the conditions specified in Section 6 shall not have
been fulfilled when and as required by this agreement.
If this agreement is terminated pursuant to any of its
provisions, neither the Company nor the Selling Shareholders shall be under any
liability to any Underwriter, and no Underwriter shall be under any liability to
the Company, except that the provisions of Sections 9, 10 and 11 shall continue
to apply.
13. SUBSTITUTION OF UNDERWRITERS.
If one or more of the Underwriters shall fail (other than for
a reason sufficient to justify the cancellation or termination of this agreement
under Section 12) to purchase on the Closing Date the Shares agreed to be
purchased on the Closing Date by such Underwriter or Underwriters, the remaining
Underwriters may find one or more substitute underwriters to purchase such
Shares or make such other arrangements as such remaining Underwriters may deem
advisable or one or more of the remaining Underwriters may agree to purchase
such Shares in such proportions as they agree upon, in each case upon the terms
set forth in this agreement. If no such arrangements have been made by the close
of business on the business day following the Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on the Closing Date shall not exceed 15% of the
Shares that all the Underwriters are obligated to purchase on
the Closing Date, then each of the nondefaulting Underwriters
shall be obligated to purchase such Shares on the terms herein
set forth in proportion to their respective obligations
hereunder; provided, that in no event shall the maximum number
of Shares that any Underwriter has agreed to purchase pursuant
to Section 1 be increased pursuant to this Section 13 by more
than 15% of the number of Shares without the written consent
of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on the Closing Date shall exceed 15% of the
Shares that all the Underwriters are obligated to purchase on
the Closing Date, then the Selling Shareholders shall be
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entitled to five additional business days within which they
may, but are not obligated to, find one or more substitute
underwriters reasonably satisfactory to the remaining
Underwriters to purchase such Shares upon the terms set forth
in this agreement.
In any such case, either the Underwriters or the Selling
Shareholders shall have the right to postpone the Closing Date for a period of
not more than five business days in Toronto in order that necessary changes and
arrangements (including any necessary amendments or supplements to the
Registration Statement or Final Prospectuses) may be effected by the
Underwriters and the Company. If the number of Shares to be purchased on the
Closing Date by such defaulting Underwriter or Underwriters shall exceed 15% of
the Shares that all the Underwriters are obligated to purchase on the Closing
Date, and none of the nondefaulting Underwriters or the Company shall make
arrangements pursuant to this Section 13 within the period stated for the
purchase of the Shares that the defaulting Underwriters agreed to purchase, this
agreement shall terminate with respect to the Shares to be purchased on the
Closing Date without liability on the part of any nondefaulting Underwriter to
the Company or the Selling Shareholders and without liability on the part of the
Company, except in both cases as provided in Sections 9, 10 and 11. The
provisions of this Section 13 shall not in any way affect the liability of any
defaulting Underwriter to the Company or the nondefaulting Underwriters arising
out of such default. A substitute underwriter hereunder shall become an
Underwriter for all purposes of this agreement.
14. COVENANTS OF UNDERWRITERS.
The Underwriters shall offer the Shares for sale to the
public, in Canada and the United States of America, through investment dealers
and brokers duly licensed under applicable laws (the Underwriters, together with
such other investment dealers and brokers, are collectively referred to herein
as the "Selling Firms"), only as permitted by Applicable Securities Laws, upon
the terms and conditions set forth in the Final Prospectuses and in this
agreement.
The Underwriters will not solicit offers to purchase or sell
the Shares so as to require registration thereof or the filing of a prospectus
with respect thereto under the laws of any jurisdiction other than Canada or the
United States and will require each Selling Firm to agree with the Underwriters
not to so solicit or sell.
The Underwriters shall use all reasonable efforts to complete
and to cause the other Selling Firms to complete the distribution of the Shares
as soon as possible after the Closing Date.
The Underwriters shall notify the Company and the Selling
Shareholders when, in their opinion, the Underwriters and the Other Selling
Firms have ceased distribution of the Shares and provide a breakdown of the
number of Shares distributed in each of the provinces of Canada where such
breakdown is required for the purpose of calculating fees payable to Canadian
Securities Regulators.
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15. MISCELLANEOUS.
The respective agreements, representations, warranties,
indemnities and other statements of the Company or its officers, of the Selling
Shareholders and of the Underwriters set forth in or made pursuant to this
agreement shall remain in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or the Company or the Selling
Shareholders or any of the officers, directors or controlling persons referred
to in Sections 10 and 11 hereof, and shall survive delivery of and payment for
the Shares. The provisions of Sections 9, 10 and 11 shall survive the
termination or cancellation of this agreement.
This agreement has been and is made for the benefit of the
Underwriters, the Company and the Selling Shareholders and their respective
successors and assigns, and, to the extent expressed herein, for the benefit of
persons controlling any of the Underwriters, or the Company, and directors and
officers of the Company, and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
agreement. The term "successors and assigns" shall not include any purchaser of
Shares from any Underwriter merely because of such purchase.
All notices and communications hereunder shall be in writing
and mailed or delivered or by telephone or telegraph if subsequently confirmed
in writing, (a) if to the Underwriters, c/o CIBC World Markets Inc., ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, with a
copy to Torys LLP, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇ and (b) if to the Company, to its agent for service
as such agent's address appears on the cover page of the Registration Statement
with a copy to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, with a copy to ▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and (c) if to the Selling Shareholders, to Elan
International Services, Ltd., ▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ 04,
Bermuda, Attention: Chief Financial Officer with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and to Novopharm Limited, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇, Attention: Chief Financial Officer, with a copy to Blake ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LLP, Suite 2800, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, Attention: ▇▇▇▇▇▇
▇▇▇▇▇▇ and to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇, ▇▇▇▇▇.
This agreement and the engagement letter between the Company
and CIBC World Markets Inc. dated June 3, 2002 (the "Engagement Letter")
constitute the entire agreement between the Company and the Underwriters and
this agreement and the Shareholder Lock-Up Agreement between that Selling
Shareholder and the Underwriters constitute the entire agreement between the
Underwriters and that Selling Shareholder pertaining to the subject matter of
this agreement. There are no warranties, conditions, or representations
(including any that may be implied by statute) and there are no agreements in
connection with such subject matter except as specifically set forth or referred
to in this agreement, the Engagement Letter or the Shareholder Lock-Up
Agreement. No reliance is placed on any warranty, representation, opinion,
advice or assertion of fact made either prior to, contemporaneous with, or after
entering into this agreement, or any amendment or supplement thereto, by any
party to this agreement or
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its directors, officers, employees or agents, to any other party to this
agreement or its directors, officers, employees or agents, except to the extent
that the same has been reduced to writing and included as a term of this
agreement, and none of the parties to this agreement has been induced to enter
into this agreement or any amendment or supplement by reason of any such
warranty, representation, opinion, advice or assertion of fact. Accordingly,
there shall be no liability, either in tort or in contract, assessed in relation
to any such warranty, representation, opinion, advice or assertion of fact,
except to the extent contemplated above.
Each of the provisions contained in this agreement is distinct
and severable and a declaration of invalidity or unenforceability of any such
provision or part thereof by a court of competent jurisdiction shall not affect
the validity or enforceability of any other provision hereof. To the extent
permitted by applicable law, the parties waive any provision of law which
renders any provision of this agreement invalid or unenforceable in any respect.
The parties shall engage in good faith negotiations to replace any provision
which is declared invalid or unenforceable with a valid and enforceable
provision, the economic effect of which comes as close as possible to that of
the invalid or unenforceable provision which it replaces.
Elan agrees that any suit, action or proceeding arising out of
or relating to this agreement against it or any of its assets may be brought in
any court in the Province of Ontario or elsewhere in Canada having jurisdiction
over the subject matter of any such suit, action or proceeding, and Elan hereby
irrevocably and unconditionally attorns and submits to the non-exclusive
jurisdiction of such courts. Elan agrees that any judgment or order in any such
suit, action or proceeding brought in such a court shall be conclusive and
binding upon it and consents to any such judgment or order being recognized and
enforced in the courts of its jurisdiction of incorporation or any other courts.
This agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario.
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This agreement may be signed by facsimile in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the
agreement among us.
Very truly yours,
DRAXIS HEALTH INC.
By: "SIGNED"
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
ELAN INTERNATIONAL SERVICES, LTD.
By: "SIGNED"
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
NOVOPHARM LIMITED
By: "SIGNED"
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
By: "SIGNED"
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President, Finance &
Chief Financial Officer
Confirmed:
By: CIBC WORLD MARKETS INC.
By: "SIGNED"
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Managing Director
By: NATIONAL BANK FINANCIAL INC.
By: "SIGNED"
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Director
By: ▇▇▇▇, ▇▇▇▇ & CO. LLC
By: "SIGNED"
------------------------------------
Name: ▇▇▇▇▇ Rock
Title: Managing Director
SCHEDULE I
SELLING SHAREHOLDERS
NAME NUMBER OF NUMBER OF NOVOPHARM
---- ELAN SHARES TO BE PURCHASED SHARES TO BE PURCHASED
--------------------------- ----------------------
CIBC World Markets Inc. 1,521,998 588,235
National Bank Financial Inc. 1,065,399 411,765
▇▇▇▇, ▇▇▇▇ & Co. LLC. 456,599 176,470
TOTAL 3,043,996 1,176,470