Exhibit 4.12
AMENDED AND RESTATED UNDERWRITING AGREEMENT
July 17, 2007
Zarlink Semiconductor Inc.
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Attention:
Dear Sirs/Mesdames:
CIBC World Markets Inc. (the "Lead Underwriter"), National Bank Financial Inc.,
RBC Dominion Securities Inc. and Scotia Capital Inc. (collectively, the
"Underwriters", and each, an "Underwriter") understand that Zarlink
Semiconductor Inc. (the "Corporation") proposes to issue and sell to the public
through the Underwriters an aggregate of 75,000 subscription receipts of the
Corporation (the "Subscription Receipts") pursuant to this Agreement. Each
Subscription Receipt will entitle the holder either:
(a) to receive $1,000 principal amount of 6.0% convertible unsecured
subordinated debentures (each a "Convertible Debenture and
collectively, the "Convertible Debentures"), without any further
action required on the part of the holder of the Subscription
Receipt and without payment of additional consideration at the close
of business on the Acquisition Closing Date (as defined below); or
(b) if the closing of the Acquisition (as defined below) does not take
place, or the other conditions to the exchange of the Subscription
Receipts are not satisfied, by 5:00 p.m. (Toronto time) on September
28, 2007, or if the Acquisition Agreement (as defined below) is
terminated at any earlier time or if the Corporation has advised the
Underwriters or announced to the public that it does not intend to
proceed with the Acquisition (in each case, a "Termination Event"
and the date on which a Termination Event occurs, the "Termination
Date"), to receive an amount equal to the aggregate of (i) the full
subscription price therefor, and (ii) an additional amount equal to
the amount of interest that would have accrued on the Convertible
Debentures if such Convertible Debentures had been issued and
outstanding from (and interest thereon had been accrued at the rate
of 6.0% per annum) the Offering Closing Date until the Termination
Date.
The proceeds from the sale of the Offered Securities (the "Escrowed Funds") will
be paid to and held by Computershare Trust Company of Canada, as escrow agent
(the "Escrow Agent"), and invested in short-term obligations of, or guaranteed
by, the Government of Canada (and/or other approved investments) pending
completion of the Acquisition or the occurrence of a Termination Event. On the
Acquisition Closing Date and following satisfaction of the other conditions to
the exchange of the Subscription Receipts, the Escrowed Funds will be released
to the Corporation and one Convertible Debenture will be issued for each
Subscription Receipt. The Corporation will use the Escrowed Funds to pay a
portion of the purchase price of the Acquisition.
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In the event of a Termination Event, if the amount of the Escrowed Funds held by
the Escrow Agent under the Subscription Receipt Agreement (as defined below) is
less than the amount owing to holders of Subscription Receipts, the shortfall
will be promptly made up by the Corporation in immediately available funds.
The Underwriters understand that the Corporation has prepared and filed:
(a) a Preliminary Prospectus to qualify the distribution of the Offered
Securities (as defined below) in each of the Qualifying Provinces
(as defined below) and has received a Preliminary MRRS Decision
Document therefor, and
(b) a Registration Statement relating to the offer and sale of the
Offered Securities in the United States.
The Underwriters also understand that the Corporation will prepare and file all
documents necessary to qualify the distribution of the Offered Securities in the
Qualifying Provinces and the United States.
Subject to the terms and conditions hereof, each of the Underwriters offers
severally, and not jointly, to purchase from the Corporation in the respective
percentages set forth opposite the respective names of the Underwriters in
paragraph 13 hereof, and by its acceptance hereof the Corporation agrees to
issue and sell to the Underwriters at the Offering Closing Time (as defined
below), 75,000 Offered Securities at a purchase price of $1,000 per Offered
Security (for an aggregate purchase price of $75,000,000).
By its acceptance hereof, the Corporation also grants to the Underwriters an
option (the "Over-Allotment Option") to purchase from the Corporation, upon the
terms and conditions set forth herein, up to an additional 11,250 Offered
Securities at the offering price to the public for the purpose of covering
over-allotments, if any, and for market stabilization purposes. The
Over-Allotment Option may be exercised in whole or in part by written notice
(the "Over-Allotment Notice") to the Corporation given by the Lead Underwriter,
on behalf of the Underwriters, following the Offering Closing Date at any time
and from time to time not later than 30 days following the Offering Closing Date
and specifying the number of Offered Securities to be purchased.
Upon the exercise of the Over-Allotment Option and subject to the terms and
conditions hereof, the Corporation agrees to issue and sell, and the
Underwriters agree severally, and not jointly, to purchase, in the respective
percentages set forth opposite the respective names of the Underwriters in
paragraph 13 hereof, and by its acceptance hereof the Corporation agrees to
issue and sell to the Underwriters at the Additional Offering Closing Time (as
defined below), that number of Offered Securities as indicated in the
Over-Allotment Notice at the Additional Offering Closing Time.
In the event the Acquisition Closing Date occurs on or prior to the Offering
Closing Date or Additional Offering Closing Date, as applicable, investors in
the Offering will receive
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Convertible Debentures on the Offering Closing Date or Additional Offering
Closing Date, as applicable, in lieu of Subscription Receipts.
In consideration for the Underwriters' agreement to purchase and offer to the
public the Offered Securities and in consideration of the services rendered and
to be rendered by the Underwriters in connection therewith, the Corporation
agrees to pay to the Underwriters a fee equal to up to 3% of the gross proceeds
from the sale of the Offered Securities, provided that:
(a) only one-half of such fee (i.e., 1.5% of such gross proceeds) shall
be due and payable (in the manner described in paragraph 7 hereof)
at the Offering Closing Time and, if the Over-Allotment Option is
exercised, one-half of such fee for such additional amount (i.e.,
1.5% of such additional gross proceeds) shall be due and payable (in
the manner described in paragraph 7 hereof) at the Additional
Offering Closing Time, and
(b) the other one-half of such fee (i.e. another 1.5% of such gross
proceeds) shall be payable (in the manner described in paragraph 7
hereof) immediately upon the Acquisition Closing Date (as defined
below); provided, however, that if the Acquisition Closing Date does
not occur, the Underwriters' fee under this Agreement shall be
limited to the 1.5% of gross proceeds paid at the Offering Closing
Time and Additional Offering Closing Time, if any, and no further
fee shall be due or payable to the Underwriters hereunder.
For greater certainty, the services provided by the Underwriters in connection
herewith will not be subject to Goods and Services Tax provided for under the
Excise Tax Act (Canada) and taxable supplies will be incidental to the exempt
financial services provided.
DEFINITIONS
In addition to the terms defined above, in this Agreement:
"Acquisition" means the acquisition by the Corporation of LHI by means of the
Merger pursuant to the Acquisition Agreement;
"Acquisition Agreement" means an agreement and plan of merger dated June 25,
2007, between Merger Sub, LHI and Navigant Capital Advisors, LLC, as
representative of LHI's stockholders, pursuant to which the Corporation will
indirectly acquire Legerity through the merger (the "Merger") of Merger Sub with
and into LHI as the surviving corporation of the Merger;
"Acquisition Closing Date" means the date of closing of the Acquisition;
"Additional Offering Closing Date" has the meaning ascribed thereto in paragraph
7.2;
"Additional Offering Closing Time" has the meaning ascribed thereto in paragraph
7.2;
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"affiliate", "distribution", "material change", "material fact",
"misrepresentation", and "subsidiary" means, an affiliate, distribution,
material change, material fact, misrepresentation and subsidiary as defined in
the Securities Act (Ontario);
"Agreement" means the agreement resulting from the acceptance by the Corporation
of the offer made by the Underwriters hereby;
"Amended and Restated Preliminary Prospectus" means the English and French
language versions (unless the context indicates otherwise) of the amended and
restated preliminary short form prospectus of the Corporation to be dated July
17, 2007 relating to the distribution of the Offered Securities and, unless the
context otherwise requires, includes all documents incorporated therein by
reference and any amendments thereto;
"Amended Preliminary MRRS Decision Document" means a decision document issued in
accordance with the Mutual Reliance Review System evidencing that a receipt for
the Amended and Restated Preliminary Prospectus has been issued for each of the
Qualifying Provinces;
"Business Day" means a day which is not a Saturday, a Sunday or a statutory or
civic holiday in Ottawa, Ontario or New York, New York;
"Common Shares" means the fully paid, non-assessable and freely tradeable common
shares of the Corporation issued upon the conversion of the Convertible
Debentures;
"Convertible Debenture Trustee" means Computershare Trust Company of Canada in
its capacity as trustee in respect of the Debentures;
"Convertible Debenture" means $1,000 principal amount of 6.0% convertible
unsecured subordinated debentures convertible into Common Shares and having the
terms and conditions described in the Preliminary Prospectus, provided however
that if the terms and conditions contained in the Trust Indenture differ from
those set forth in the Preliminary Prospectus, the terms and conditions of the
Trust Indenture shall prevail;
"Disclosure Documents" mean the Registration Statement, the Preliminary
Prospectus, the U.S. Preliminary Prospectus, the Amended and Restated
Preliminary Prospectus, the U.S. Amended and Restated Preliminary Prospectus,
the Prospectus and the U.S. Prospectus and any Prospectus Amendment and any U.S.
Prospectus Amendment thereto;
"Distribution Period" means the period commencing on the date hereof and ending
on the completion of the distribution of the Offered Securities;
"Escrow Agent" means Computershare Trust Company of Canada in its capacity as
escrow agent pursuant to the Subscription Receipt Agreement;
"Exchanges" means the TSX and the NYSE;
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"Final MRRS Decision Document" means a decision document issued in accordance
with the Mutual Reliance Review System evidencing that a receipt for the
Prospectus has been issued for each of the Qualifying Provinces;
"Financial Information" has the meaning given to it in paragraph 2.1(c)(i);
"Form F-10" means Form F-10 under the U.S. Securities Act;
"Free Writing Prospectus" means a free writing prospectus, as defined in Rule
405 of the U.S. Securities Act;
"Intellectual Property" means all patents, copyrights, trademarks, trade names
(including applications for all the foregoing and renewals, divisions,
extensions and reissues, where applicable, relating thereto), inventions,
licences, trade secrets, patterns, drawings, software, technical information,
research data, concepts, methods, procedures, designs, know-how and all other
intellectual property, both foreign and domestic, owned by or licensed to the
Corporation or its subsidiaries;
"Issuer Free Writing Prospectus" means an issuer free writing prospectus, as
defined in Rule 433 under the U.S. Securities Act; provided, however, if such
Issuer Free Writing Prospectus is made by any Underwriter or other third party,
such Underwriter or other third party has obtained the prior written consent of
the Company with regard to such issuer free writing prospectus;
"Legerity" means, collectively, LHI and Legerity Inc.;
"LHI" means Legerity Holdings, Inc.;
"Merger Sub" means ZLE Inc.;
"Mutual Reliance Review System" or "MRRS" means the mutual reliance review
system provided for under National Policy No. 43-201 of the Canadian Securities
Administrators;
"Notice" has the meaning given to it in paragraph 21;
"NYSE" means the New York Stock Exchange;
"Offered Securities" means the Subscription Receipts and/or the Convertible
Debentures, as the context provides, both of which are qualified for
distribution by the Disclosure Documents.
"Offering" means the offering of the Subscription Receipts or, if the
Acquisition Closing Date occurs before the Offering Closing Date, Convertible
Debentures to the public under the Disclosure Documents;
"Offering Closing" means the completion of the issue and sale by the Corporation
of the Subscription Receipts or, if the Acquisition Closing Date occurs before
the Offering Closing
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Date, Convertible Debentures and the purchase by the Underwriters of the
Subscription Receipts or Convertible Debentures, as applicable, pursuant to this
Agreement;
"Offering Closing Date" in respect of the Offering means July 30, 2007 or such
other date as the Corporation and the Underwriters may agree upon in writing,
but in any event not later than September 28, 2007;
"Offering Closing Time" means 8:00 a.m. (Toronto time) on the Offering Closing
Date or such other time on the Offering Closing Date as the Corporation and the
Underwriters may agree upon;
"OSC" means the Ontario Securities Commission;
"Preliminary Final MRRS Decision Document" means a decision document issued in
accordance with the Mutual Reliance Review System evidencing that a receipt for
the Prospectus has been issued for each of the Qualifying Provinces;
"Preliminary Prospectus" means the English and French language versions (unless
the context indicates otherwise) of the preliminary short form prospectus of the
Corporation dated July 16, 2007 relating to the distribution of the Offered
Securities and, unless the context otherwise requires, includes all documents
incorporated therein by reference and any amendments thereto;
"Prospectus" means the English and French language versions (unless the context
indicates otherwise) of the final short form prospectus of the Corporation
relating to the distribution of the Offered Securities and, unless the context
otherwise requires, includes all documents incorporated therein by reference;
"Prospectus Amendment" means the English and French language versions (unless
the context indicates otherwise) of any amendment to the Amended and Restated
Preliminary Prospectus, the U.S. Amended and Restated Preliminary Prospectus,
the Prospectus or the U.S. Prospectus, any amendment to any document
incorporated therein by reference, any amending or supplemental prospectus and
any other similar document;
"Public Record" means all information filed by or on behalf of the Corporation
with the Securities Commissions and SEC including, without limitation, the
Disclosure Documents and any other information filed with any Securities
Commission or the SEC in compliance, or intended compliance, with any applicable
Securities Legislation;
"Qualifying Provinces" means all of the provinces of Canada and "Qualifying
Province" means any one of them;
"Registration Statement" means, collectively, the various parts of the
registration statement of the Corporation filed on Form F-10 (File No.
333-144610), including all exhibits thereto and the documents incorporated by
reference in the prospectus contained in the registration statement at the time
such part of the registration statement became effective, each as amended at the
time such part of the registration statement became effective and including any
post effective
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amendment thereto, and including any prospectus amendment or supplement relating
to the Offered Securities and the Common Shares that is filed with the SEC and
deemed part of such registration statement;
"SEC" means the United States Securities and Exchange Commission;
"Securities Commissions" means the securities commissions or other securities
regulatory authorities in the Qualifying Provinces;
"Securities Legislation" means all securities laws, rules, regulations, notices
and policies applicable to the distribution of the Offered Securities in the
Qualifying Provinces and the United States including the Securities Act
(Ontario), the rules and regulations of the Canadian Securities Administrators
and the OSC, the U.S. Securities Act, the U.S. Exchange Act and the rules and
regulations of the SEC;
"Selling Dealer Group" means the dealers and brokers other than the Underwriters
who participate in the offer and sale of the Offered Securities pursuant to this
Agreement;
"Subscription Receipt Agreement" means the agreement to be dated the Offering
Closing Date and made among the Corporation, the Lead Underwriter, on behalf of
the Underwriters, and the Escrow Agent governing the terms and conditions of the
Subscription Receipts;
"Subscription Receipts" means subscription receipts each entitling the holder to
receive upon the satisfaction of certain conditions described therein and in the
Subscription Receipt Agreement one Convertible Debenture and having the terms
and conditions set forth in the Preliminary Prospectus, provided however that if
the terms and conditions contained in the Subscription Receipt Agreement differ
from those set forth in the Preliminary Prospectus, the terms and conditions of
the Subscription Receipt Agreement shall prevail;
"Subsequent Disclosure Documents" means any financial statements, management's
discussion and analysis, information circulars, annual information forms,
material change reports (other than confidential material change reports),
business acquisition reports or other documents issued by the Corporation after
the date of this Agreement;
"Trust Indenture" means the trust indenture to be dated the Offering Closing
Date and made between the Corporation and the Convertible Debenture Trustee
governing the terms and conditions of the Convertible Debentures;
"U.S. Amended and Restated Preliminary Prospectus" means the English language
version of the Amended and Restated Preliminary Prospectus with such deletions
therefrom and additions thereto as are permitted or required by Form F-10 and
the applicable rules and regulations of the SEC, included in the registration
statement on Form F-10 filed with the SEC;
"TSX" means the Toronto Stock Exchange;
"U.S. Exchange Act" means the United States Securities Exchange Act of 1934, as
amended;
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"U.S. Preliminary Prospectus" means the English language version of the
Preliminary Prospectus with such deletions therefrom and additions thereto as
are permitted or required by Form F-10 and the applicable rules and regulations
of the SEC, included in the registration statement on Form F-10 filed with the
SEC;
"U.S. Prospectus" means the English language version of the Prospectus included
in the Registration Statement at the time it becomes effective, including the
documents incorporated by reference therein;
"U.S. Prospectus Amendment" means the English language version of the Prospectus
Amendment with such deletions therefrom and additions thereto as are permitted
or required by Form F-10 and the applicable rules and regulations of the SEC,
included in the registration statement on Form F-10 filed with the SEC;
"U.S. Securities Act" means the United States Securities Act of 1933, as
amended; and
"United States" means the United States of America, its territories and
possessions, any State of the United States, and the District of Columbia.
TERMS AND CONDITIONS
1. Compliance with Securities Laws
1.1 As of the date of this agreement, the Corporation has prepared and
filed:
(a) the Preliminary Prospectus with the Securities Commissions
pursuant to applicable Securities Legislation, together with
the required supporting documents and has received the
Preliminary MRRS Decision Document in respect thereof, and
(b) the Registration Statement in respect of the Offered
Securities and an appointment of agent for service of process
on Form F-X (the "Form F-X") in conjunction with the filing of
the Registration Statement with the SEC;
1.2 The Corporation covenants and agrees to prepare and file:
(a) the Amended and Restated Preliminary Prospectus and the U.S.
Amended and Restated Preliminary Prospectus and the Prospectus
and the U.S. Prospectus and comply in all respects with the
MRRS within the following time limits:
(i) the Amended and Restated Preliminary Prospectus and
related documents, in form and substance satisfactory to
the Underwriters, shall have been filed with the Ontario
Securities Commission (the "OSC"), as principal
jurisdiction, no later than 12:00 p.m. (Toronto time) on
July 18, 2007 (or such other time and/or date as
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the Corporation and the Underwriters may agree) and the
Amended and Restated Preliminary MRRS Decision Document
dated as of such date shall be obtained from the OSC
evidencing that a receipt for the Amended and Restated
Preliminary Prospectus in each of the Qualifying
Provinces has been issued;
(ii) concurrent therewith, the U.S. Amended and Restated
Preliminary Prospectus with the SEC pursuant to General
Instruction II.L. of the Form F-10 and otherwise fulfill
all legal requirements to enable the Offered Securities
to be offered and sold to the public in the United
States;
(iii) the Prospectus and related documents, in form and
substance satisfactory to the Underwriters, shall be
filed no later than 12:00 p.m. (Toronto time) on July
24, 2007 (or such other time and/or date as the
Corporation and the Underwriters may agree) and the
Final MRRS Decision Document dated as of such date shall
be obtained from the OSC evidencing that a receipt for
the Prospectus in each of the Qualifying Provinces has
been issued; and
(iv) concurrent therewith, the U.S. Prospectus with the SEC
pursuant to General Instruction II.L. of Form F-10 and
otherwise fulfill all legal requirements to enable the
Offered Securities to be offered and sold to the public
in the United States.
1.3 The Corporation will promptly take all other steps and proceedings
that may be necessary in order to qualify the Offered Securities for
distribution in each of the Qualifying Provinces and the United
States by the Underwriters and the Selling Dealer Group.
1.4 Until the date on which the distribution of the Offered Securities
is completed, the Corporation will promptly take, or cause to be
taken, all additional steps and proceedings that may from time to
time be required under the Securities Legislation to continue to
qualify the distribution of the Offered Securities or, in the event
that the Offered Securities have, for any reason, ceased so to
qualify, to so qualify again the Offered Securities, for
distribution in each of the Qualifying Provinces and the United
States.
1.5 Each of the Underwriters, within the Distribution Period, will
notify the Lead Underwriter and the Lead Underwriter will notify the
Corporation, in writing, when, in its opinion, distribution of the
Offered Securities has terminated. Each of the Underwriters will
notify the Lead Underwriter and the Lead Underwriter will notify the
Corporation, in writing, of the amount of the Offered Securities
sold in each Qualifying Province and the United Sates as soon as
possible after the Offering Closing Date and Additional Offering
Closing Date, if applicable,
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where such breakdown is required for the purpose of calculating fees
payable to Securities Commissions and the SEC.
2. Delivery of Prospectus and Related Documents
2.1 The Corporation shall deliver or cause to be delivered to the
Underwriters and the Underwriters' counsel the documents set out
below at the respective times indicated:
(a) prior to or contemporaneously, as nearly as practicable, with
the filing with the Securities Commissions and SEC of each of
the Amended and Restated Preliminary Prospectus, the U.S.
Amended and Restated Preliminary Prospectus, the Prospectus
and the U.S. Prospectus:
(i) copies of the Amended and Restated Preliminary
Prospectus and the Prospectus, each in the English and
French languages, signed as required by the Securities
Legislation of the Qualifying Provinces and copies of
any documents incorporated by reference therein which
have not previously been delivered to the Underwriters;
and
(ii) copies of the Registration Statement, including the U.S.
Amended and Restated Preliminary Prospectus and U.S.
Prospectus, and each amendment thereto, as filed with
the SEC and copies of all exhibits and documents filed
therewith which have not previously been delivered to
the Underwriters;
(b) as soon as they are available, copies of the English and
French language versions, as applicable, of any Prospectus
Amendment and copies of any U.S. Prospectus Amendment required
to be filed under Securities Legislation signed as required by
the Securities Legislation of the Qualifying Provinces and
including, in each case, copies of any documents or
information incorporated by reference therein which have not
been previously delivered to the Underwriters;
(c) at the time of the delivery to the Underwriters pursuant to
this paragraph 2.1 of the French language version of the
Amended and Restated Preliminary Prospectus or the Prospectus:
(i) opinions of counsel in Quebec addressed to the
Corporation, the Underwriters and their respective
counsel and dated the date of the Amended and Restated
Preliminary Prospectus or Prospectus, as the case may
be, to the effect that the French language version
thereof and of any documents incorporated therein by
reference (except for any financial statements and
financial information which are the subject of the
opinion of the auditors referred to
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below (the "Financial Information"), as to which no
opinion need be expressed by Quebec counsel) are in all
material respects a complete and proper translation of
the English language version thereof and that such
English and French language versions are not susceptible
to any materially different interpretation with respect
to any matter contained therein; and
(ii) an opinion of the Corporation's and Legerity's auditors
addressed to the Corporation, the Underwriters and their
respective counsel and dated the date of the Amended and
Restated Preliminary Prospectus or Prospectus, as the
case may be, to the effect that the French language
version of the Financial Information set forth therein
or incorporated therein by reference is in all material
respects a complete and proper translation of the
English language version thereof and that such English
and French language versions are not susceptible to any
materially different interpretation with respect to any
matter contained therein;
(d) at the time of delivery to the Underwriters pursuant to this
paragraph 2.1 of the Prospectus, a comfort letter from the
Corporation's and Legerity's auditors, dated the date of the
Prospectus and addressed to the Underwriters and the Board of
Directors of the Corporation and reasonably satisfactory in
form and substance to the Underwriters, with respect to the
financial and accounting information in respect of the
Corporation and Legerity and other numerical data contained in
or incorporated by reference in the Prospectus, which comfort
letter shall be based on a review by the auditors having a
cut-off date not more than two business days prior to the date
of the comfort letter and shall be in addition to any comfort
letters which must be filed with Securities Commissions and
SEC pursuant to applicable Securities Legislation;
(e) at the time of the filing of the Prospectus, a letter from the
TSX advising the Corporation that conditional listing approval
for the Subscription Receipts, Convertible Debentures and
Common Shares has been granted; and
(f) at the time of the U.S. Prospectus, a letter from the NYSE
advising the Corporation that conditional listing approval for
the Common Shares has been granted.
Opinions or comfort letters similar to the foregoing shall be
provided to the Underwriters with respect to any Prospectus
Amendment filed pursuant to paragraph 5.2 and any other relevant
document that may be translated into the French language at the time
the same is presented to the Underwriters for their signature or, if
the Underwriters' signature is not required, at the time the same is
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filed. All such opinions or comfort letters shall be in form and
substance reasonably satisfactory to the Underwriters and their
counsel.
2.2 The Corporation shall, as soon as possible but in any event not
later than:
(a) 48 hours following the filing of the Amended and Restated
Preliminary Prospectus and the U.S. Amended and Restated
Preliminary Prospectus, with respect to the Amended and
Restated Preliminary Prospectus and the U.S. Amended and
Restated Preliminary Prospectus;
(b) 48 hours following the filing of the Prospectus and the U.S.
Prospectus, with respect to the Prospectus and the U.S.
Prospectus; and
(c) 48 hours following the filing of any Prospectus Amendment and
U.S. Prospectus Amendment (if applicable),
cause to be delivered to the Underwriters, without charge,
commercial copies of the Amended and Restated Preliminary
Prospectus, the U.S. Amended and Restated Preliminary Prospectus,
the Prospectus, the U.S. Prospectus and any Prospectus Amendment and
U.S. Prospectus Amendment in such numbers and in such cities, as
applicable, as the Underwriters may reasonably request by written
instructions to the printer thereof given no later than the time
when the Corporation authorizes the printing of the commercial
copies of such documents.
2.3 The Corporation shall cause to be provided to the Underwriters such
number of copies of any documents incorporated by reference in the
Amended and Restated Preliminary Prospectus, the U.S. Amended and
Restated Preliminary Prospectus, the Prospectus, the U.S. Prospectus
or any Prospectus Amendment and U.S. Prospectus Amendment as the
Underwriters may reasonably request for use in connection with
offering the Offered Securities represented thereby in the
Qualifying Provinces and the United States. The Underwriters agree
severally, not jointly, that the Underwriters will not, directly or
indirectly, use or distribute, and will require each member of the
Selling Dealer Group not to so use or distribute, the Amended and
Restated Preliminary Prospectus, the U.S. Amended and Restated
Preliminary Prospectus, the Prospectus, the U.S. Prospectus, any
Prospectus Amendment and U.S. Prospectus Amendment, nor offer, sell
or deliver any of the Offered Securities represented thereby in any
country or jurisdiction except under circumstances that will result
in compliance with the applicable laws and regulations thereof.
3. Delivery Constitutes Representation and Consent
3.1 Delivery of the Amended and Restated Preliminary Prospectus, the
U.S. Amended and Restated Preliminary Prospectus, the Prospectus,
the U.S. Prospectus and any Prospectus Amendment and U.S. Prospectus
Amendment
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shall constitute a representation and warranty by the Corporation to
the Underwriters that at the time of delivery:
(a) all information and statements (except information and
statements relating solely to the Underwriters) contained
therein are true in all material respects and contain no
misrepresentation and constitute full, true and plain
disclosure of all material facts relating to the Offered
Securities;
(b) no material fact has been omitted from such document which is
required to be stated therein or is necessary to make the
statements or information contained therein not misleading in
light of the circumstances in which they were made; and
(c) such document complies in all material respects with the
requirements of the Securities Legislation.
3.2 Such deliveries shall also constitute the consent and authorization
of the Corporation to the use by the Underwriters of the Amended and
Restated Preliminary Prospectus, the U.S. Amended and Restated
Preliminary Prospectus, the Prospectus, the U.S. Prospectus and any
Prospectus Amendment and U.S. Prospectus Amendment, as the case may
be, in connection with the distribution of the Offered Securities in
compliance with this Agreement.
4. Representations and Covenants of Underwriters
4.1 The Underwriters shall offer the Offered Securities for sale to the
public, directly and through the Selling Dealer Group only in
compliance with applicable Securities Legislation and upon the terms
and conditions set forth in the Amended and Restated Preliminary
Prospectus, the U.S. Amended and Restated Preliminary Prospectus,
the Prospectus, the U.S. Prospectus, any Prospectus Amendment and
U.S. Prospectus Amendment and this Agreement. The Underwriters shall
be entitled to assume that the Offered Securities are qualified for
distribution (i) in any Qualifying Province where a Preliminary MRRS
Decision Document, an Amended and Restated MRRS Decision Document
and Final MRRS Decision Document has been obtained from the
applicable Securities Commission; and (ii) in the United States,
unless, in each case, the Underwriters receive notice to the
contrary from the Corporation or the applicable Securities
Commission or the SEC. The Underwriters shall use all reasonable
efforts to complete and to cause the Selling Dealer Group to
complete the distribution of the Offered Securities as soon as
possible after the Offering Closing Time, subject to the termination
provisions contained herein.
4.2 Except in the Qualifying Provinces and the United States, the
Underwriters will not, directly or indirectly, solicit offers to
purchase or sell the Offered Securities or deliver the Amended and
Restated Preliminary Prospectus, the U.S. Amended and Restated
Preliminary Prospectus, the Prospectus, the U.S. Prospectus, any
-14-
Prospectus Amendment or U.S. Prospectus Amendment so as to require
registration of the Offered Securities or filing of a prospectus
with respect to the Offered Securities under the laws of any
jurisdiction, and the Underwriters will require each Selling Dealer
Group member to agree to the same.
4.3 The Underwriters shall not make any representations or warranties
with respect to the Corporation, the Offered Securities other than
as set forth in the Amended and Restated Preliminary Prospectus, the
U.S. Amended and Restated Preliminary Prospectus, the Prospectus,
the U.S. Prospectus and any Prospectus Amendment and U.S. Prospectus
Amendment.
4.4 The Underwriters will complete and will use their reasonable efforts
to cause members of the Selling Dealer Group to complete the
distribution of the Offered Securities promptly after the Offering
Closing and, with respect to the exercise of the over-allotment
option, the Additional Offering Closing Time.
4.5 No Underwriter shall be liable under this paragraph 4 with respect
to a default by any of the other Underwriters or by any member of
the Selling Dealer Group not appointed by any of the other
Underwriters.
5. Material Change During Distribution
5.1 During the Distribution Period, the Corporation shall promptly
notify the Lead Underwriter in writing of the full particulars of:
(a) any change (actual, anticipated, contemplated or threatened,
financial or otherwise) in the business, affairs, operations,
assets, prospects, liabilities (contingent or otherwise),
capital, ownership or control of the Corporation, Legerity or
any of their respective subsidiaries, that would be material
to the Corporation, Legerity and their respective subsidiaries
taken as a whole; and
(b) any change in any material fact or any misstatement or
omission of any material fact in the Disclosure Documents or
any Subsequent Disclosure Documents, or the existence of any
new material fact not disclosed in the Disclosure Documents or
any Subsequent Disclosure Documents,
which change, misstatement, omission or new material fact is, or may
be, of such a nature as to render the Disclosure Documents
misleading or untrue in any material respect or would result in a
misrepresentation therein or would result in the Disclosure
Documents not complying in any material respect with any Securities
Legislation or which change, misstatement or new material fact would
reasonably be expected to have a material effect on the market price
or value of the Offered Securities.
-15-
5.2 The Corporation 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 Securities Legislation in the Qualifying
Provinces and the United States and the rules and by-laws of the
Exchanges arising as a result of such change, misstatement or new
material fact referred to in paragraph 5.1, provided that the
Corporation shall not file any Prospectus Amendment and U.S.
Prospectus Amendment or other document relating to the Offered
Securities without first obtaining the approval of the Underwriters,
after consultation with the Underwriters with respect to the form
and content thereof which approval will not be unreasonably withheld
or delayed. The Corporation shall in good faith discuss with the
Underwriters any such fact, misstatement or new material fact
(actual, 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. The Corporation shall
allow the Underwriters to conduct all "due diligence" investigations
which, in the reasonable opinion of the Underwriters, are required
in order to responsibly execute any certificate required to be
executed by the Underwriters in any Prospectus Amendment and U.S.
Prospectus Amendment. The Corporation shall promptly deliver or
cause to be delivered to each of the Underwriters and the
Underwriters' counsel a copy of each Prospectus Amendment and U.S.
Prospectus Amendment, signed as required by applicable Securities
Legislation by all parties other than the Underwriters, as well as
opinions and letters with respect to each such Prospectus Amendment
and U.S. Prospectus Amendment to the same effect as those referred
to in paragraph 2 and dated the date of such Prospectus Amendment
and U.S. Prospectus Amendment.
5.3 The delivery to the Underwriters of a Prospectus Amendment and U.S.
Prospectus Amendment shall constitute a representation and warranty
to the Underwriters by the Corporation with respect to the
Disclosure Documents, as the case may be, as amended, modified or
superseded by such Prospectus Amendment and U.S. Prospectus
Amendment and by each Prospectus Amendment and U.S. Prospectus
Amendment previously delivered to the Underwriters as aforesaid, to
the same effect as set forth in paragraph 3. Such delivery shall
also constitute the consent and authorization of the Corporation to
the use of the relevant Disclosure Documents, as the case may be, as
so amended, by the Underwriters in connection with the distribution
of the Offered Securities in the Qualifying Provinces and the United
States.
5.4 The Corporation shall deliver or cause to be delivered to the
Underwriters, as soon as practicable, as many commercial copies of
any Prospectus Amendment and U.S. Prospectus Amendment in the cities
in the Qualifying Provinces and the United States as the
Underwriters may reasonably request.
-16-
6. Representations, Warranties and Covenants of the Corporation
6.1 Representations and Warranties of the Corporation
The Corporation represents and warrants to each of the Underwriters,
and acknowledges that the Underwriters are relying upon such
representations and warranties in entering into this Agreement and
purchasing the Offered Securities, that:
(a) the Corporation and each of its subsidiaries is a corporation
duly incorporated and organized and validly existing under the
laws of its jurisdiction of incorporation, is duly qualified
to carry on its business and is in good standing in each
jurisdiction in which the conduct of its business or the
ownership, leasing or operation of its property and assets
requires such qualification, except where such failure to
qualify would not have a material adverse effect, and has all
requisite corporate power and authority to carry on its
business, to own, lease and operate its property and assets
and, in the case of the Corporation, to execute, deliver and
perform its obligations under this Agreement;
(b) this Agreement has been duly authorized, executed and
delivered by the Corporation; the Subscription Receipt
Agreement will have been duly authorized, executed and
delivered by the Corporation at the Offering Closing Date; the
Trust Indenture will have been duly authorized, executed and
delivered by the Corporation at the Offering Closing Date; and
this Agreement, the Subscription Receipt Agreement and the
Trust Indenture when so executed shall constitute legal, valid
and binding obligations of the Corporation enforceable against
the Corporation in accordance with their terms, subject to
bankruptcy, insolvency and other laws affecting the rights of
creditors generally, the qualification that equitable remedies
may be granted only in the discretion of a court of competent
jurisdiction and that rights to indemnity and waiver of
contribution may be limited by applicable law;
(c) the authorized capital of the Corporation consists of an
unlimited number of common shares of which 127,345,682 are
issued and outstanding as fully paid and non-assessable and an
unlimited number of redeemable preferred shares, issuable in
series, of which 1,193,600 are issued and outstanding as fully
paid and non-assessable and, except in respect of the
Convertible Debentures issuable in accordance with the
Subscription Receipt Agreement and the Trust Indenture and the
Common Shares issuable upon conversion of the Convertible
Debentures and as otherwise disclosed in or contemplated by
the Disclosure Documents, as the case may be, no person or
other entity has any agreement, option, right or privilege
(whether pre-emptive or contractual) capable of becoming an
-17-
agreement for or the right to purchase any of the issued or
unissued securities of the Corporation;
(d) the execution, delivery, performance of and compliance by the
Corporation with the terms of this Agreement, the Subscription
Receipt Agreement and the Trust Indenture and the issuance,
sale and delivery of the Offered Securities as described in
and contemplated by the Disclosure Documents do not and will
not result in a breach of, and do not and will not create a
state of facts which, after notice or lapse of time or both,
will result in a breach of, and do not and will not conflict
with any of the terms, conditions or provisions of its
articles, by-laws or resolutions of its shareholders or
directors (or any committee thereof), or any indenture,
agreement or instrument to which it is a party or by which it
is contractually bound;
(e) the Corporation is not aware of any legislation which it
anticipates may materially and adversely affect (as
applicable) the business, affairs, operations, assets,
liabilities (contingent or otherwise) or prospects of the
Corporation and its subsidiaries taken as a whole;
(f) there is no action, proceeding or investigation (whether or
not purportedly on behalf of any of the Corporation or its
subsidiaries) commenced against or, to the knowledge of the
Corporation or its subsidiaries, pending or, to the knowledge
of the Corporation, threatened against or affecting any of the
Corporation or its subsidiaries, at law or in equity or before
or by any federal, provincial, municipal or other governmental
department, commission, board or agency, domestic or foreign,
which could in any way materially adversely affect any of the
Corporation or its subsidiaries taken as a whole, or the
condition (financial or otherwise) of the Corporation or its
subsidiaries, taken as a whole, or which questions the
validity of the issuance of the Offered Securities or Common
Shares or of any action taken or to be taken by the
Corporation pursuant to or in connection with this Agreement,
the Subscription Receipt Agreement, the Trust Indenture or any
agreement contemplated hereby, or which would materially
adversely affect the consummation of the transactions
contemplated by the Disclosure Documents;
(g) other than as disclosed in the Disclosure Documents, the
Corporation and its subsidiaries are in compliance with all
material covenants under, and no material default on the part
of any of such parties exists under any instrument securing or
otherwise relating to any indebtedness of the Corporation or
its subsidiaries, which in any case materially adversely
affects, or would reasonably be expected to have a material
adverse effect on, the market price or value of the Offered
Securities or Common Shares;
-18-
(h) all of the financial statements (audited and unaudited) of the
Corporation (other than the pro forma financial statements of
the Corporation) contained or incorporated by reference in the
Disclosure Documents are, as at their respective dates,
complete and correct in all material respects, were prepared,
in accordance with United States generally accepted accounting
principles consistently applied and present fairly in all
material respects the financial position, the earnings and
cash flows, including contingent liabilities, of the entities
to which such financial statements relate as at the date and
for the periods stated therein;
(i) the pro forma financial statements of the Corporation,
including the notes thereto, contained in the Disclosure
Documents have been prepared and presented in accordance with
applicable Securities Legislation and the assumptions
contained in such pro forma financial statements are suitably
supported and consistent with the financial results of the
Corporation and Legerity, and such statements provide a
reasonable basis for the compilation of the pro forma
financial statements and such pro forma financial statements
accurately reflect such assumptions. The Corporation is not
aware of any facts, information or circumstances presently
existing which could render the pro forma financial statements
of the Corporation incorrect in any material respect;
(j) the Corporation has provided the Underwriters with full access
to all due diligence materials and information provided to it
by Legerity and their agents or independently compiled by the
Corporation and its agents with respect to Legerity and the
Acquisition and is not aware of any misrepresentations in such
material or information which could upon or after completion
of the Acquisition reasonably be expected to have a material
adverse effect;
(k) the Corporation is not aware of any information relating to
Legerity and the Acquisition which could, upon or after
completion of the Acquisition, reasonably be expected to have
a material adverse effect on the Corporation;
(l) other than as disclosed in the Disclosure Documents, there are
no contingent liabilities or other obligations affecting the
Corporation or its subsidiaries which are material to the
Corporation and its subsidiaries taken as a whole;
(m) each of the Corporation and its subsidiaries has good title to
all of its material assets and undertakings, free and clear of
adverse claims, except as disclosed in the Disclosure
Documents, or those arising in the ordinary course of business
which are not material in the aggregate;
-19-
(n) each of the Corporation and its subsidiaries has conducted, is
conducting and will conduct its business in compliance in all
material respects with all applicable laws, rules and
regulations and, in particular, all applicable licensing and
environmental legislation, regulations or by-laws or other
lawful requirements of any governmental or regulatory bodies
applicable to it of each jurisdiction in which it carries on a
material portion of its business and holds all licences,
registrations and qualifications in all jurisdictions in which
it carries on a material portion of its business which are
necessary or desirable to carry on the business of the
Corporation and its subsidiaries, as the case may be, as now
conducted and as presently proposed to be conducted, all such
licences, registrations or qualifications are valid and
existing and in good standing and none of such licences,
registrations or qualifications contains any burdensome term,
provision, condition or limitation which has or is likely to
have any material adverse effect on the business of the
Corporation or its subsidiaries (taken as a whole) as now
conduction or as proposed to be conducted, and the Corporation
is not aware of any legislation, regulation, rule or lawful
requirements presently in force or proposed to be brought into
force with which the Corporation anticipates the Corporation
or its subsidiaries will be unable to comply without
materially adversely affecting the Corporation;
(o) (i) except as disclosed in the Disclosure Documents, the
Corporation and each of its subsidiaries has the right to use,
or has good and valid right, title and interest in and to, the
Intellectual Property, free and clear of all encumbrances
except as in the ordinary course of business, as is necessary
to conduct the business of the Corporation and its
subsidiaries as it is currently conducted; (ii) to the
knowledge of the Corporation, the conduct of the business of
the Corporation and its subsidiaries does not infringe upon
the Intellectual Property of any other person; (iii) the
Intellectual Property which is not owned by the Corporation or
its subsidiaries is being used by the Corporation or its
subsidiaries only with the consent of or licence from, to the
knowledge of the Corporation, the rightful owners thereof, and
all such licences are in full force and effect; (iv) the
Corporation and each of its subsidiaries has not received any
written claim of adverse ownership, invalidity or any other
opposition to or conflict with any Intellectual Property nor
any pending or, to the knowledge of the Corporation,
threatened suit, proceeding, claim, demand, action or
investigation of any nature or kind against the Corporation or
any of its subsidiaries relating to the Intellectual Property;
(v) to the knowledge of the Corporation, no person has
infringed or misappropriated, or is infringing or
misappropriating, any rights of the Corporation or its
subsidiaries in or to any Intellectual Property; and (vi)
there are no material restrictions on the ability of the
Corporation or its subsidiaries to use, exploit or authorize
others to use and exploit all rights in the
-20-
Intellectual Property, other than in the ordinary course of
business with respect to Intellectual Property licensed from
third parties. None of the rights of the Corporation or its
subsidiaries in the Intellectual Property will be impaired or
affected in any way by the transactions contemplated by the
Acquisition Agreement;
(p) except as disclosed in the Disclosure Documents, the
Corporation is not aware of a claim of any infringement or
breach by the Corporation or its subsidiaries of any
Intellectual Property rights of any other person, nor has the
Corporation or its subsidiaries received any notice nor is the
Corporation otherwise aware that the use of the Intellectual
Property of the Corporation or its subsidiaries infringes upon
or breaches any Intellectual Property rights of any other
person;
(q) the proceeds received from the Offering will be used
substantially in the manner described in the Disclosure
Documents;
(r) after giving effect to the Acquisition, the shares of Legerity
will be indirectly owned by the Corporation, to the knowledge
of the Corporation, free and clear of all liens, except for
any liens created in the ordinary course of business;
(s) Computershare Investor Services Inc., at its principal office
in the City of Toronto, Ontario is the duly appointed transfer
agent of the Common Shares, and Computershare Trust Company of
Canada, at the Offering Closing Date and at the Additional
Offering Closing Date, if applicable, will be the duly
appointed Escrow Agent and Convertible Debenture Trustee under
the Subscription Receipt Agreement and the Trust Indenture,
respectively;
(t) since March 30, 2007, other than as disclosed in the
Disclosure Documents:
(i) there has not been any material change (actual,
anticipated, proposed or prospective, whether financial
or otherwise) in the investments, affairs, assets,
prospects or liabilities (contingent or otherwise) of
the Corporation or its subsidiaries taken as a whole
that has not been publicly disclosed;
(ii) there has not been any material change in the equity
capitalization or long-term or short-term debt of the
Corporation or its subsidiaries taken as a whole that
has not been publicly disclosed;
(iii) there has not been any material change in the business,
business prospects, condition (financial or otherwise)
or results of the
-21-
operations of the Corporation or its subsidiaries taken
as a whole that has not been publicly disclosed; and
(iv) the Corporation and its subsidiaries have carried on
their businesses in the ordinary course and in the
manner described in the Disclosure Documents;
(u) the Corporation is a "reporting issuer" in each of the
Qualifying Provinces and is not in default under Securities
Legislation in such provinces, in particular, without limiting
the foregoing, the Corporation is in material compliance with
its obligations to make timely disclosure of all material
changes relating to it and since March 30, 2007 (other than in
respect of material change reports filed on a confidential
basis and thereafter made public or material change reports
filed on a confidential basis and in respect of which the
material change never came to fruition) no such disclosure has
been made on a confidential basis and there is no material
change relating to the Corporation or its subsidiaries which
has occurred and with respect to which the requisite material
change report has not been filed;
(v) the documents incorporated by reference in the Preliminary
Prospectus, the Registration Statement and the U.S.
Preliminary Prospectus, conformed in all material respects
with the applicable requirements of Securities Legislation and
did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
any further documents so filed and incorporated by reference
in the other Disclosure Documents, when such documents are
filed with the Securities Commissions or the SEC, as
applicable, will conform in all material respects with the
applicable requirements of Securities Legislation and will not
contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(w) the Corporation is not and, after giving effect to the
offering and sale of the Offered Securities and the
application of the proceeds as described in the Disclosure
Documents under the heading "Use of Proceeds," will not be an
"investment company" as defined in the United States
Investment Company Act of 1940, as amended, and the rules and
regulations of the SEC promulgated thereunder;
(x) there is no franchise, contract or other document of a
character required to be described in the Disclosure
Documents, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements in the
Disclosure Documents under the headings "Description of the
-22-
Securities Being Distributed" and "Plan of Distribution"
insofar as such statements summarize legal matters,
agreements, documents or proceedings discussed therein, are
accurate and fair summaries of such legal matters, agreements,
documents or proceedings in all material respects;
(y) the Corporation will promptly file all reports required to be
filed by it with the Securities Commissions and SEC under
applicable Securities Legislation in connection with the
Offering or sale of the Offered Securities, and during such
same period will advise the Lead Underwriter, promptly after
it receives notice thereof, of the issuance by the Securities
Commissions or the SEC of any stop order or of any order
preventing or suspending the use of any prospectus relating to
the Offered Securities and the Common Shares, of the
suspension of the qualification of such Offered Securities and
the Common Shares for offering or sale in any of the
Qualifying Provinces or the United States, of the initiation
or threat, to the knowledge of the Corporation, of any
proceeding for any such purpose, or of any request by the
Securities Commissions or the SEC for the amending or
supplementing of the Registration Statement or the Disclosure
Documents or for additional information relating to the
Offered Securities; and the Corporation will use its
commercially reasonable efforts to prevent the issuance of any
such stop order or any such order preventing or suspending the
use of any prospectus relating to the Offered Securities and
the Common Shares or the suspension of any such qualification
and, in the event of the issuance of any such stop order or of
any such order preventing or suspending the use of any
prospectus relating to the Offered Securities and the Common
Shares or suspending any such qualification, to use its
commercially reasonable efforts to obtain the withdrawal of
such order as soon as possible;
(z) as soon as practicable, the Corporation will make generally
available to its security holders an earnings statement or
statements of the Corporation and its subsidiaries which will
satisfy the provisions of Section 11(a) of the U.S. Securities
Act and Rule 158 thereunder;
(aa) unless the Corporation and the Underwriters otherwise agree in
writing, the Corporation has not made and will not make any
offer relating to the Offered Securities and the Common Shares
that would constitute an Issuer Free Writing Prospectus or
that would otherwise constitute a "free writing prospectus"
(as defined in Rule 405 under the U.S. Securities Act). Any
such free writing prospectus consented to by the Underwriters
or the Corporation is hereinafter referred to as a "Permitted
Free Writing Prospectus." The Corporation agrees that (i) it
has treated and will treat, as the case may be, each Permitted
Free Writing Prospectus as an Issuer Free Writing Prospectus
and (ii) it has complied and will comply, as the case
-23-
may be, with the requirements of Rules 164 and 433 under the
U.S. Securities Act applicable to any Permitted Free Writing
Prospectus, including in respect of timely filing with the
SEC, legending and record keeping;
(bb) the Corporation and its subsidiaries have filed all federal,
provincial, state, local and foreign tax returns that are
required to be filed or have requested extensions thereof
(except in any case in which the failure so to file would not
have a material adverse effect on the assets and properties,
business, results of operations, prospects or condition
(financial or otherwise) of such entities, taken as a whole)
and have paid all taxes required to be paid by them and any
other assessment, fine or penalty levied against them, to the
extent that any of the foregoing is due and payable, except
for any such assessment, fine or penalty that is currently
being contested in good faith;
(cc) neither the Corporation nor any of its subsidiaries is in
default in the observance or performance of any term or
obligation to be performed by it under any contract entered
into which is material to the Corporation and its subsidiaries
taken as a whole and no event has occurred which with notice
or lapse of time or both would directly or indirectly
constitute such a default, in any such case which default or
event would have a material adverse effect on the assets or
properties, business, results of operations, prospects or
condition (financial or otherwise) of the Corporation and its
subsidiaries taken as a whole;
(dd) the issued and outstanding Common Shares of the Corporation
are listed and posted for trading on the Exchanges;
(ee) the Disclosure Documents contain and will contain in all
material respects the disclosure required by all requirements
of the Securities Legislation;
(ff) to the knowledge of the Corporation, no insider of the
Corporation has a present intention to sell any securities of
the Corporation other than as disclosed to the Underwriters;
(gg) other than the Underwriters and the Selling Dealer Group,
there is no person acting or purporting to act at the request
of the Corporation who is entitled to any brokerage or agency
fee in connection with the sale of the Offered Securities;
(hh) the books and records of the Corporation made available to the
Underwriters, or their counsel, in connection with their due
diligence investigations for the periods from their respective
dates of incorporation to the date of examination thereof are
the original books and records of the Corporation and contain
copies of all proceedings (or certified copies
-24-
thereof) of the shareholders, the board of directors and all
committees of the board of directors and there have been no
other meetings, resolutions or proceedings of the
shareholders, board of directors or any committee of the board
of directors to the date of review of such records and books
not reflected in such books and other records other than those
which have been disclosed to the Underwriters;
(ii) the Subscription Receipts will, at the Offering Closing Time,
have been duly created and be duly and validly issued as fully
paid securities of the Corporation entitled to the benefits of
the Subscription Receipt Agreement, the Convertible Debentures
will be duly created under the Trust Indenture and, upon their
issuance in accordance with the terms and conditions of the
Trust Indenture and the Subscription Receipt Agreement, be
duly and validly issued as fully paid securities of the
Corporation entitled to the benefits of the Trust Indenture,
and the Common Shares issuable upon the exercise of the
conversion rights pursuant to the Convertible Debentures will,
upon their issuance in accordance with the terms of the Trust
Indenture, be duly and validly issued as fully paid and
non-assessable securities of the Corporation;
(jj) Ernst & Young LLP, the auditors of the Corporation for the
year ended March 30, 2007, are independent public accountants
as required under Securities Legislation and there has not
been any reportable event or disagreement (within the meaning
of National Instrument 51-102 of the Canadian Securities
Administrators) with such auditors;
(kk) Deloitte & Touche LLP, the current auditors of the
Corporation, are independent public accountants as required
under Securities Legislation and there has not been any
reportable event or disagreement (within the meaning of
National Instrument 51-102 of the Canadian Securities
Administrators) with such auditors;
(ll) the Corporation has no reason to believe that the
representations and warranties of Legerity in the Acquisition
Agreement are not true and correct as of the date hereof or
that Legerity is in breach of any covenants under the
Acquisition Agreement, except such as would not have a
material adverse effect on the business, operations, capital,
properties, assets, prospects, liabilities (absolute, accrued,
contingent or otherwise) or results of operations of Legerity
and its subsidiaries taken as a whole;
(mm) Merger Sub has duly authorized, executed and delivered the
Acquisition Agreement and the Acquisition Agreement
constitutes a legal, valid and binding obligation of Merger
Sub enforceable against it in accordance with its terms,
except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyances
or transfer, moratorium or similar laws affecting creditors'
rights generally
-25-
and subject to general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity
or at law). Merger Sub is an indirect wholly-owned subsidiary
of the Corporation;
(nn) the Corporation is not aware of any existing, pending or
threatened fact, event, circumstances or regulatory action
that could reasonably be expected to prevent or impede the
completion of the Acquisition in accordance with the
Acquisition Agreement;
(oo) to the knowledge of the Corporation, except as disclosed in
the Acquisition Agreement:
(i) Legerity has been duly organized and is validly existing
under the laws of the jurisdiction of its formation or
incorporation (as applicable);
(ii) Legerity has all requisite power and authority to
conduct its business as described in the Disclosure
Documents and to execute, deliver and perform its
obligations under the Acquisition Agreement; and
(iii) Navigant Capital Advisors, LLC and the other holders of
the common stock of Legerity hold good and marketable
title thereto;
(pp) the Corporation is eligible to file a short form prospectus
pursuant to NI 44-101;
(qq) the Corporation has not completed any "significant
acquisition" (as such term is used in item 10 of Form 44-101F1
of National Instrument 44-101 of the Canadian Securities
Administrators) nor is it proposing any acquisition that has
progressed to a state where a reasonable person would believe
that the likelihood of the acquisition being completed is high
(other than the Acquisition), in each case that would require
the inclusion of any additional financial statements or pro
forma financial statements in the Disclosure Documents
pursuant to Securities Legislation;
(rr) to the knowledge of the Corporation, none of the Corporation,
its officers or directors is aware of any circumstances
presently existing under which liability is or could
reasonably be expected to be incurred under Part XXIII - Civil
Liability for Secondary Market Disclosure of the Securities
Act (Ontario); and
(ss) all of the representations and warranties provided in the
Acquisition Agreement by the Corporation and Merger Sub as
qualified in the Acquisition Agreement and the representations
and warranties of Legerity in sections 2.7(a) and (c) and 2.8
of the Acquisition Agreement as
-26-
qualified in the Acquisition Agreement are incorporated herein
by reference as representations and warranties of the
Corporation to the Underwriters.
6.2 The Corporation covenants and agrees with each of the Underwriters
that:
(a) the Corporation will advise the Underwriters, promptly after
receiving notice thereof, of the time when the Amended and
Restated Preliminary Prospectus and the Prospectus have been
filed and the Amended Preliminary MRRS Decision Document, the
Final MRRS Decision Document and any other receipts have been
obtained and will provide evidence satisfactory to the
Underwriters of each filing and the issuance of the Amended
Preliminary MRRS Decision Document and the Final MRRS Decision
Document and any other receipts;
(b) the Corporation will advise the Underwriters, promptly after
receiving notice or obtaining knowledge, of (i) the issuance
by any Securities Commission or the SEC of any order
suspending or preventing the use of the Disclosure Documents,
(ii) the suspension of the qualification of the Offered
Securities for offering or sale in any of the Qualifying
Provinces and the United States, (iii) the institution,
threatening or contemplation of any proceeding for any of
those purposes, or (iv) any requests made by any Securities
Commission or the SEC to amend or supplement the Amended and
Restated Preliminary Prospectus the U.S. Amended and Restated
Preliminary Prospectus, the Prospectus or the U.S. Prospectus
or for additional information, and will use its commercially
reasonable efforts to prevent the issuance of any such order
and, if any such order is issued, to obtain the withdrawal of
the order promptly; and
(c) upon release of the Escrowed Funds to the Corporation on
closing of the Acquisition, the Corporation will apply the net
proceeds from the Offering substantially in accordance with
the disclosure in the Disclosure Documents set out under the
heading "Use of Proceeds".
7. Closing
7.1 Closing shall occur at the Offering Closing Time on the Offering
Closing Date at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ or at such other
place as the Corporation and the Underwriters may agree to in
writing. At the Offering Closing Time, the Lead Underwriter shall
deliver by wire transfer or otherwise to the Escrow Agent the
purchase price for the Offered Securities being issued and sold to
the Underwriters under this Agreement net of the Underwriters' fee
payable by the Corporation to the Underwriters as provided in (b) of
this paragraph and the amount of the Underwriters' expenses as
provided in paragraph 12 against delivery by the Corporation to the
Lead Underwriter, on behalf of the Underwriters, of:
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(a) a global certificate or certificates representing the Offered
Securities to be purchased by the Underwriters hereunder
registered in the name of the CDS Clearing and Depository
Services Inc., or its nominee;
(b) a direction to the Lead Underwriter to deduct 1.5% of the
gross proceeds from the sale of the Offered Securities and to
pay such amount to the Underwriters as one-half their fee for
the services provided under this Agreement; with the other
1.5% being payable immediately upon the closing of the
Acquisition; and
(c) such further documentation as may be contemplated herein.
7.2 Each closing of the Offered Securities to be issued under the
Over-Allotment Option, if applicable, will be completed at the
offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇.,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, or at any other place agreed in
writing by the Corporation and the Underwriters on the date (an
"Additional Offering Closing Date") and at the time (an "Additional
Closing Time") specified by the Underwriters in Over-Allotment
Notice or at such other time and date as the Underwriters and the
Corporation may agree upon in writing (provided that in no event
shall such time be earlier than two or later than ten Business Days
after the date the Over-Allotment Notice is given by the
Underwriters to the Corporation). At the Additional Offering Closing
Time the Lead Underwriter shall deliver to the Escrow Agent by wire
transfer or otherwise the purchase price for the additional Offered
Securities being issued and sold to the Underwriters pursuant to the
Over-Allotment Option net of the additional Underwriters' fee
payable by the Corporation to the Underwriters as provided in (b) of
this paragraph and the additional amount of the Underwriters'
expenses as provided in paragraph 12 against delivery by the
Corporation to the Lead Underwriter, on behalf of the Underwriters,
of:
(a) a global certificate or certificates representing the Offered
Securities to be purchased by the Underwriters hereunder
registered in the name of the CDS Clearing and Depository
Services Inc., or its nominee;
(b) a direction to the Lead Underwriter to deduct 1.5% of the
additional gross proceeds from the sale of the additional
Offered Securities and to pay such amount to the Underwriters
as one-half their fee for the services provided under this
Agreement; with the other 1.5% being payable immediately upon
the closing of the Acquisition; and
(c) such further documentation as may be contemplated herein.
8. Closing Conditions
8.1 The Underwriters' obligation to purchase the Offered Securities at
the Offering Closing Time or the Additional Closing Time, as the
case may be, shall be subject
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to the following conditions, which conditions are for the sole
benefit of the Underwriters and may be waived in writing in whole or
in part by the Underwriters in their discretion:
(a) prior to the Offering Closing Time or the Additional Closing
Time, as the case may be, the Corporation shall have made
and/or obtained the necessary filings, approvals, consents and
acceptances required to be made or obtained by the Corporation
under Securities Legislation (including the receipt of all
approvals from the Exchanges) in connection with the offering
of the Offered Securities on terms which are acceptable to the
Corporation and the Underwriters, acting reasonably;
(b) all authorizations and approvals shall have been obtained by
the Corporation for the execution, delivery and performance by
it of this Agreement and for the issuance of the Subscription
Receipts, the Convertible Debentures and the Common Shares;
(c) all authorizations and approvals shall have been obtained by
the Corporation for the execution, delivery and performance by
the Corporation of the Subscription Receipt Agreement and the
Trust Indenture;
(d) the Subscription Receipts, the Convertible Debentures and the
Common Shares shall have been approved or conditionally
approved for listing on the TSX, and the Common Shares shall
have been approved or conditionally approved for listing on
the NYSE, at the opening of trading on the Offering Closing
Date, subject to fulfillment of customary conditions;
(e) the Corporation shall deliver to the Underwriters, at the
Offering Closing Time or the Additional Offering Closing Time,
as applicable, a certificate dated the Offering Closing Date
or the Additional Offering Closing Time, as applicable,
addressed to the Underwriters and signed by two senior
officers of the Corporation, acceptable to the Underwriters,
acting reasonably, certifying for and on behalf of the
Corporation to the effect that:
(i) the Corporation has complied in all material respects
with all the material covenants and satisfied all the
material terms and conditions of this Agreement, the
Subscription Receipt Agreement and the Trust Indenture
on its part to be complied with and satisfied at or
prior to the Offering Closing Time or the Additional
Offering Closing Time, as applicable;
(ii) the representations and warranties of the Corporation
contained herein are true and correct in all material
respects as at the Offering
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Closing Time or the Additional Offering Closing Time, as
applicable, with the same force and effect as if made on
and as at the Offering Closing Time or the Additional
Offering Closing Time, as applicable;
(iii) no order, ruling or determination having the effect of
ceasing the trading of the Common Shares, the
Convertible Debentures or the Subscription Receipts, or
suspending the sale of the Subscription Receipts or
Convertible Debentures or preventing the issuance of the
Common Shares, has been issued and no proceedings for
such purpose have been instituted or are pending or, to
the knowledge of such senior officer, contemplated or
threatened;
(iv) the representations and warranties of the Corporation
arising by reason of the delivery of the Disclosure
Documents and the effectiveness of the Registration
Statement are true and correct in all material respects
on and as at the Offering Closing Time or the Additional
Offering Closing Date, as applicable as if such
documents had been dated the Offering Closing Date or
the Additional Offering Closing Time, as applicable and
delivered to the Underwriters;
(v) since the respective dates as of which information is
given in the Preliminary Prospectus, the Registration
Statement, the U.S. Preliminary Prospectus, the Amended
and Restated Preliminary Prospectus, the U.S. Amended
and Restated Preliminary Prospectus and any Prospectus
Amendment:
A. there has been no material change (actual,
anticipated, contemplated or threatened, whether
financial or otherwise) in the business, affairs,
operations, assets, prospects, liabilities
(contingent or otherwise), capital, ownership or
control of the Corporation or its subsidiaries;
and
B. no transaction out of the ordinary course of
business has been entered into or is pending by
the Corporation or its subsidiaries,
which is material to the Corporation and its
subsidiaries taken as a whole, other than the
Acquisition or as disclosed in the Disclosure Documents,
and all such matters shall in fact be true and correct
in all material respects as at the Offering Closing Time
or the Additional Offering Closing Time, as applicable;
(f) except for the completion of the Acquisition, all actions
required to be taken by the Corporation, including the passing
of all requisite resolutions
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and all requisite filings with governmental authorities, shall
have occurred at or prior to the Offering Closing Time or the
Additional Offering Closing Time, as applicable so as validly
to authorize the execution and delivery of this Agreement, the
Subscription Receipt Agreement and the Trust Indenture and the
performance of the transactions contemplated hereby;
(g) the Corporation will have delivered to the Underwriters an
executed copy of the Subscription Receipt Agreement and the
Trust Indenture, each in form and substance satisfactory to
the Underwriters and their counsel, acting reasonably;
(h) the Corporation will have caused favourable legal opinions to
be delivered by its Canadian and U.S. counsel addressed to the
Underwriters and their counsel in a form and substance
satisfactory to the Underwriters and their counsel, acting
reasonably, with respect to such matters as the Underwriters
and their counsel may reasonably request relating to the
distribution of the Offered Securities. In giving such
opinions, counsel to the Corporation shall be entitled to
rely, to the extent appropriate in the circumstances, upon
opinions of local counsel acceptable to the Underwriters and
their counsel, acting reasonably, and shall be entitled to
rely to the extent appropriate in the circumstances as to the
matters of fact upon a certificate of a senior officer of the
Corporation;
(i) the Corporation shall deliver to the Underwriters, at the
Offering Closing Time or the Additional Offering Closing Time,
as applicable, a separate certificate dated the Offering
Closing Date or the Additional Offering Closing Time, as
applicable addressed to the Underwriters and signed by a
senior officer of the Corporation, acceptable to the
Underwriters, acting reasonably, certifying for and on behalf
of the Corporation its constating documents, all resolutions
of the board of directors, as applicable, relating to the
transactions contemplated hereunder and the incumbency and
specimen signatures of signing officers;
(j) the Underwriters shall have received evidence satisfactory to
the Underwriters, acting reasonably, that the Acquisition
Agreement has been executed and delivered by the parties
thereto and that such agreement has not been terminated and
that, to the knowledge of the Corporation, no event has
occurred or condition exists that will prevent the Acquisition
from being completed prior to 5:00 p.m. (Toronto time) on
August 24, 2007 substantially and in all material respects as
contemplated in the Acquisition Agreement;
(k) the Underwriters will have received such other certificates,
opinions, agreements, materials or documents in form and
substance satisfactory to the Underwriters, as the
Underwriters may reasonably request; and
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(l) the Corporation having complied with all covenants contained
herein in all material respects and satisfied all terms and
conditions contained herein in all material respects to be
complied with and satisfied by it at or prior to the Offering
Closing Time or the Additional Offering Closing Time, as
applicable.
9. Termination
9.1 Without limiting any of the foregoing provisions and in addition to
any other remedies which may be available, the Underwriters (or any
of them) shall be entitled, at their option, to terminate, without
any liability on their part, their (or its) obligation to purchase
the Offered Securities by written notice to that effect given to the
Corporation and the Lead Underwriter at or prior to the Offering
Closing Time (or, in the event the Over-Allotment Option is
exercised, the Additional Offering Closing Time), if:
(a) any inquiry, action, suit, investigation or other proceeding
is commenced or any order is issued under or pursuant to any
law in Canada or the United States (except any such proceeding
or order based solely upon the activities of the
Underwriters), or there is any change of law or the
interpretation or administration thereof, which operates to
prevent or restrict the trading in or which adversely impacts
the distribution of the Offered Securities or the Common
Shares in any of the Qualifying Provinces or the United
States;
(b) after the date hereof and prior to the Offering Closing Time
or the Additional Offering Closing Time, as applicable, there
shall occur any material change or change in a material fact
which, in the reasonable opinion of the Underwriters (or any
one of them), would reasonably be expected to have a
significant adverse effect on the market price or value of the
Offered Securities or the Common Shares;
(c) there should develop, occur or come into effect or existence
any event, action, state, condition or major financial
occurrence of national or international consequence or any
law, regulation or other occurrence of any nature whatsoever
which, in the reasonable opinion of the Underwriters (or any
one of them), materially adversely affects, or involves, or
will materially adversely affect or involve, the state of
North American financial or capital markets or the business,
operations or affairs of the Corporation and their respective
subsidiaries taken as a whole; or
(d) the Corporation shall be in breach of, default under or
non-compliance with any material representation, warranty,
covenant, term or condition of this Agreement.
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9.2 All terms and conditions of this Agreement shall be construed as
conditions, and any material breach or failure by the Corporation to
comply with any of such terms and conditions shall entitle the
Underwriters, or any of them, to terminate their obligations to
purchase the Offered Securities by notice to that effect given to
the Corporation at or prior to the Offering Closing Time or the
Additional Offering Closing Time, as applicable. The Underwriters
may waive, in whole or in part, or extend the time for compliance
with, any of such terms and conditions without prejudice to their
rights in respect of any other of such terms and conditions or any
other or subsequent breach or non-compliance; provided, however,
that to be binding on the Underwriters any such waiver or extension
must be in writing and signed by all of the Underwriters.
9.3 The rights of termination contained in this paragraph 9 may be
exercised by any of the Underwriters and are in addition to any
other rights or remedies the Underwriters or any of them may have in
respect of any default, act or failure to act or non-compliance by
the Corporation in respect of any of the matters contemplated by
this Agreement.
9.4 In the event of any such termination, there shall be no further
liability on the part of the Underwriters to the Corporation or on
the part of the Corporation to such Underwriters, except in respect
of any liability which may have arisen or may thereafter arise under
paragraphs 10, 11 and 12. A notice of termination given by an
Underwriter under this paragraph 9 shall not be binding upon any
other Underwriter who has not also executed such notice.
10. Indemnity
10.1 The Corporation covenants and agrees to protect and indemnify each
of the Underwriters and their respective directors, officers,
employees, partners and agents (each an "Indemnified Party") against
all losses (other than a loss of profits in connection with the
distribution of the Offered Securities), claims, damages,
liabilities, costs or expenses caused or incurred by reason of:
(a) any statement or information contained in the Disclosure
Documents or any document or material that may be filed on
behalf of the Corporation under Securities Legislation or any
other document or material filed or delivered pursuant hereto
(other than any statement or information relating solely to
Underwriters) containing or being alleged to contain a
misrepresentation or being or being alleged to be untrue,
false or misleading;
(b) the omission or alleged omission to state in the Disclosure
Documents or any other document or material filed or delivered
pursuant hereto any material fact (other than a material fact
relating solely to the Underwriters and provided by the
Underwriters for inclusion in such document) required to be
stated therein or necessary to make any statement therein
-33-
not false or misleading in the light of the circumstances
under which it was made;
(c) any statement (other than a statement relating solely to the
Underwriters) contained in the Public Record which at the time
and in the light of the circumstances under which it was made,
contained or is alleged to have contained a misrepresentation
or being alleged to be untrue, false or misleading;
(d) any order made or inquiry, investigation or proceeding (formal
or informal) commenced or threatened by any officer or
official of any securities regulatory authority. stock
exchange or by any other competent authority based upon the
circumstances described in clauses 10.1(a), (b) and (c) above
which operates to prevent or restrict trading in or the sale
or distribution of the Offered Securities or the Common Shares
in any of the Qualifying Provinces or in the United States;
(e) the breach of any representations, warranties or covenants by
the Corporation contained in this Agreement, the Subscription
Receipt Agreement, the Trust Indenture or any documents
delivered pursuant hereto; or
(f) the Corporation not complying with any requirement of
Securities Legislation in connection with the transactions
contemplated by this Agreement, the Subscription Receipt
Agreement and the Trust Indenture.
10.2 If any matter or thing contemplated by this paragraph 10 shall be
asserted against any Indemnified Party in respect of which
indemnification is or might reasonably be considered to be provided,
such Indemnified Party shall notify the Corporation as soon as
possible of the nature of such claim (provided that any failure so
to notify shall relieve the Corporation of liability under this
paragraph 10 only to the extent that such failure prejudices the
ability to defend such claim) and the Corporation shall be entitled
(but not required) to assume the defence, on behalf of the
Indemnified Party, of any suit brought to enforce such claim;
provided, however, that the defence shall be through legal counsel
acceptable to the Indemnified Party, acting reasonably, and that no
settlement or admission of liability may be made by the Corporation
without the prior written consent of the other unless the settlement
is made by the Corporation and such settlement includes a release of
each indemnified party from any liabilities arising under such
claim.
10.3 With respect to any such claim, the Indemnified Party shall have the
right to retain separate counsel to act on his, her or its behalf,
provided the fees and disbursements of such separate counsel shall
be paid by the Indemnified Party, unless any of the following apply,
in which case such fees and disbursements will be paid by the
Corporation:
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(a) the Corporation fails to assume the defence of such claim on
behalf of the Indemnified Party within ten days of receiving
notice of such claim;
(b) the Corporation and the Indemnified Party shall have mutually
agreed to the retention of such counsel; or
(c) the named parties to any claim (including any added, third or
impleaded parties) include either the Corporation or the
Indemnified Party, and the Indemnified Party has been advised
by his, her or its counsel that representation of all parties
by the same counsel would be inappropriate due to actual or
potential differing interests between any of them;
Notwithstanding the foregoing, no settlement or compromise of any
claim or potential claim may be made by an Indemnified Party without
the prior written consent of the Corporation, which consent will not
be unreasonably withheld.
10.4 The rights of indemnity contained in this paragraph 10 shall: (a)
not enure to the benefit of the Underwriter or any other Indemnified
Party if the provisions of paragraph 6 have been complied with and
the person asserting any claim contemplated by this paragraph 10 was
not provided with a copy of any Disclosure Document which corrects
any untrue statement or information, misrepresentation or omission
which is the basis of such claim and which is required, under
Securities Legislation, to be delivered to such person by the
Underwriters or members of the Selling Dealer Group (if any); or (b)
cease to be available to an Indemnified Party if the claim is
determined by a court of competent jurisdiction (in a final
judgement) to have been caused by any fraud, wilful misconduct or
gross negligence by the Indemnified Party. In the event that the
rights of indemnity in this paragraph 10 shall have ceased to be
available to an Indemnified Party pursuant to the preceding clause
(b), the Indemnified Party shall promptly reimburse the Corporation
for any funds advanced to the Indemnified Party pursuant to this
indemnity in respect of such claim.
10.5 The Corporation acknowledges and agrees that the Underwriters are
contracting on their own behalf and as agents for their respective
directors, officers, employees and agents and accordingly hereby
constitute the Underwriters as trustees for any other Indemnified
Party for the covenants of the Corporation contained in this
paragraph 10 with respect to such Indemnified Parties and the
Underwriters agree to accept such trust and to hold such covenants
on behalf of such persons.
10.6 The Corporation hereby waives any right it may have of first
requiring an Indemnified Party to proceed against, enforce any other
right, power, remedy or security or claim payment from, any other
person before claiming against it under this paragraph 10.
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10.7 If the Corporation has assumed the defence of any suit brought to
enforce a claim hereunder at the expense of the Corporation, the
Indemnified Party shall provide the Corporation copies of all
documents and information in its possession pertaining to the claim,
take all reasonable actions required by the Corporation to preserve
the right to object to or defend against the claim, consult and
reasonably cooperate with the Corporation in determining whether the
claim and any legal proceeding resulting therefrom should be
resisted, compromised or settled and reasonably cooperate and assist
in any negotiations to compromise or settle, in any defense of, a
claim undertaken by the Corporation.
11. Contribution
11.1 If for any reason the indemnification provided for in paragraph 10
is unavailable, in whole or in part, to an Indemnified Party in
respect of any losses, claims, damages, liabilities, costs or
expenses (or claims, actions, suits or proceedings in respect
thereof) referred to in paragraph 10, and subject to the
restrictions and limitations referred to therein, the Corporation
shall contribute to the amount paid or payable (or, if such
indemnity is unavailable only in respect of a portion of the amount
so paid or payable, such portion of the amount so paid or payable)
by such Indemnified Party as a result of such losses, claims,
damages, liabilities, costs or expenses (or claims, actions, suits
or proceedings in respect thereof) in such proportion as is
appropriate to reflect not only the relative benefits received by
the Corporation, on the one hand, and the Underwriters, on the
other, but also the relative fault of the Corporation, on the one
hand, and the Underwriters, on the other hand, in connection with
the statement, information, misrepresentation, omission, order,
inquiry, investigation, proceeding or other matter or thing referred
to in paragraph 10 which resulted in such losses, claims, damages,
liabilities, costs or expenses (or claims, actions, suits or
proceedings in respect thereof), as well as any other relevant
equitable considerations; provided that the Underwriters shall not
in any event be liable to contribute, in the aggregate, any amount
in excess of the fee actually received by the Underwriters as
provided in this Agreement.
11.2 The relative benefits received on behalf of the Corporation, on the
one hand, and the Underwriters, on the other hand, shall be deemed
to be in the same proportion as the total proceeds from the
distribution of the Subscription Receipts (net of the fee payable to
the Underwriters but before deducting expenses) received on behalf
of the Corporation is to the fee received by the Underwriters. The
relative fault of the Corporation, on the one hand, and the
Underwriters, on the other hand, shall be determined by reference
to, among other things, whether the statement, misrepresentation,
omission, order, inquiry, investigation, proceeding or other matter
or thing referred to in paragraph 10 which resulted in such losses,
claims, damages, liabilities, costs or expenses (or claims, actions,
suits or proceedings in respect thereof), relates to information
supplied by or steps or actions taken or done by or on behalf of the
Underwriters and the relative intent, knowledge,
-36-
access to information and opportunity to correct or prevent such
statement, misrepresentation, omission, order, inquiry,
investigation, proceeding or other matter or thing referred to in
paragraph 10. The amount paid or payable by an Indemnified Party as
a result of such losses, claims, damages, liabilities, costs or
expenses (or claims, actions, suits or proceedings in respect
thereof), referred to above shall be deemed to include any legal or
other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such losses, claims,
damages, liabilities, costs or expenses (or claims, actions, suits
or proceedings in respect thereof), whether or not resulting in any
such action, suit, proceeding or claim.
12. Expenses
Whether or not the transactions herein contemplated shall be completed, all
expenses of or incidental to the authorization, creation, issue and sale of the
Offered Securities and all expenses of or incidental to all other matters in
connection with the Offering including, without limitation: listing and filing
fees, costs of the Escrow Agent appointed under the Subscription Receipt
Agreement, costs of the Convertible Debenture Trustee, expenses payable in
connection with the qualification of the Offered Securities for distribution,
the fees and expenses of counsel for the Corporation and reasonable fees and
expenses of counsel for the Underwriters, all fees and expenses of local
counsel, all fees and expenses of the auditors to the Corporation, and all costs
incurred in connection with preparing, printing, translating and providing
copies of the Disclosure Documents and certificates representing the
Subscription Receipts and Convertible Debentures and all fees and expenses of
transfer agent and any reasonable out-of-pocket expenses of the Underwriters
shall be borne by and for the account of the Corporation.
13. Obligation of Underwriters to Purchase
The obligation of the Underwriters to purchase the Offered Securities at the
Offering Closing Time and at the Additional Offering Closing Time, if
applicable, shall be several, not joint, and shall be limited to the following
percentages of the aggregated number of Offered Securities to be purchased at
that time:
CIBC World Markets Inc. 40%
National Bank Financial Inc. 20%
RBC Dominion Securities Inc. 20%
Scotia Capital Inc. 20%
---
100%
===
If any one or more of the Underwriters shall not purchase its applicable
percentage of the Offered Securities at the Offering Closing Time, and at the
Additional Offering Closing Time, if applicable, the others shall have the
right, but shall not be obligated, to purchase all of the percentage of the
Offered Securities which would otherwise have been purchased by such one or more
of the Underwriters; the Underwriters exercising such right shall purchase such
Offered Securities pro rata to their respective percentages aforesaid or in such
other proportions as they may otherwise agree. In the event such right is not
exercised, the Underwriters which are not in
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default shall be entitled by written notice to the Corporation to terminate this
Agreement without liability. If none of the other Underwriters exercises such
right, the Corporation shall be entitled to terminate its obligations under this
Agreement (except for its liabilities under paragraphs 10, 11 and 12) and such
other Underwriters shall be relieved of all of their obligations to the
Corporation hereunder. An Underwriter which stands ready to purchase its
percentage as stipulated above of the aggregate number of Offered Securities to
be purchased by the Underwriters under this Agreement will have no liability to
the Corporation if another Underwriter defaults in its obligation to purchase
its percentage of such Offered Securities. Nothing in this paragraph shall
oblige the Corporation to sell less than all of the Offered Securities or
prejudice or limit any rights which the Corporation may have against a
defaulting Underwriter or the rights any Underwriter may have against any other
Underwriter.
14. Market Stabilization
In connection with the distribution of the Offered Securities, the Underwriters
and members of their selling group (if any) may effect transactions which
stabilize or maintain the market price of the Offered Securities at levels above
those which might otherwise prevail in the open market, in compliance with
Securities Laws. Those stabilizing transactions, if any, may be discontinued at
any time.
15. Restrictions on Further Issues or Sales
During the period commencing the date of this Agreement and ending on the day
which is 90 days following the Acquisition Closing Date, the Corporation will
not, directly or indirectly, without the prior written consent of the Lead
Underwriter (which consent will not be unreasonably withheld), issue, agree to
issue, offer, sell, contract to sell, grant any option to purchase, transfer,
assign or otherwise dispose of any securities or announce any intention to
effect the foregoing, other than the Offered Securities (except for the issuance
of the Convertible Debentures upon exchange of the Subscription Receipts and
Common Shares pursuant to the terms of the Convertible Debentures).
16. Severability
If any provision of this Agreement is determined to be void or unenforceable in
whole or in part, it shall be deemed not to affect or impair the validity of any
other provision of this Agreement and such void or unenforceable provision shall
be severable from this Agreement.
17. Survival
All representations, warranties, covenants, indemnities and agreements of the
Corporation herein contained or contained in documents submitted pursuant to
this Agreement and in connection with the transactions contemplated herein shall
survive the purchase and sale of the Offered Securities and shall continue in
full force and effect for the benefit of the Underwriters, regardless of any
subsequent disposition of the Offered Securities or any investigation by or on
behalf of the Underwriters with respect thereto.
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18. Time of the Essence
Time shall be of the essence of this Agreement.
19. Governing Law
This agreement shall be governed and construed in accordance with the laws of
the Province of Ontario and the laws of Canada applicable therein and shall be
treated in all respects as an Ontario contract. Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the courts of Ontario with respect
to any matter arising hereunder or related hereto.
20. Currency
All funds referred to in this Agreement shall be in Canadian dollars.
21. Notice
Unless otherwise expressly provided in this Agreement, any notice or other
communication to be given under this Agreement (a "Notice") shall be in writing
addressed as follows:
(a) if to the Corporation:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇
Attention: President and Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
Suite 2500
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) if to the Underwriters:
CIBC World Markets Inc.
BCE Place
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Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Suite 2800, Commerce Court West
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Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any of the parties may designate by notice given to
the others.
Each notice shall be personally delivered to the addressee or sent by fax to the
addressee and (i) a notice which is personally delivered shall, if delivered on
a Business Day, be deemed to be given and received on that day and, in any other
case, be deemed to be given and received on the first Business Day following the
day on which it is delivered; and (ii) a notice which is sent by fax shall, if
sent on a Business Day and the machine on which it is sent receives the answer
back code from the party to whom it is sent before 5:00 p.m. (Toronto time), be
deemed to be given and received on that day and, in any other case, be deemed to
be given and received on the first Business Day following the day on which it is
sent.
22. Authority of Lead Underwriter
The Lead Underwriter is hereby authorized by each of the other Underwriters to
act on its behalf in connection with any matter arising hereunder or pursuant
hereto and the Corporation shall be entitled to and shall act on any notice
given hereunder or agreement entered into by or on behalf of the Underwriters by
the Lead Underwriter except in respect of any consent to a settlement pursuant
to paragraph 10.1 which consent shall be given by the Indemnified Party, a
notice of termination pursuant to paragraph 9.1 which notice may be given by any
of the Underwriters, or any waiver pursuant to paragraph 9.2 which waiver must
be signed by all of the Underwriters. The Lead Underwriter shall consult fully
with the other Underwriters concerning any matter in respect of which it acts on
its behalf hereunder.
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All steps which may be taken by the Underwriters in connection with this
Agreement, may be taken by the Lead Underwriter, on its own behalf and on behalf
of the Underwriters. The Lead Underwriter, shall consult with the Underwriters
as necessary prior to taking any action on their behalf and shall, in any event,
advise the Underwriters of steps taken on their behalf.
The obligations of the Underwriters under this Agreement shall be several and
not joint and several.
23. Counterparts
This Agreement may be executed by any one or more of the parties to this
Agreement in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
24. Successors and Assigns
This agreement shall enure to the benefit of and be binding upon the parties and
their respective successors (including any successor by reason of amalgamation
or statutory arrangement) and permitted assigns and upon the heirs, executors,
legal representatives, successors and permitted assigns of those for whom the
Underwriters are contracting pursuant to paragraph 10. No party shall assign any
of its rights or obligations hereunder without the consent of the other parties
hereto.
25. Entire Agreement
The terms, conditions and provisions of this Agreement amend, restate and
supercede in their entirety the terms, conditions and provisions of the
underwriting agreement between the parties hereto dated July 17, 2007 in respect
of the proposed offering of 55,000 Subscription Receipts.
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If the foregoing is in accordance with the Corporation's understanding and is
agreed to by the Corporation, please signify the your acceptance by executing
the enclosed copies of this letter where indicated below and returning the same
to CIBC World Markets Inc. upon which this letter as so accepted shall
constitute an Agreement among us.
Yours very truly,
CIBC WORLD MARKETS INC.
By: "▇▇▇▇▇▇ ▇▇▇▇▇▇▇"
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Director
NATIONAL BANK FINANCIAL INC.
By: "▇▇▇▇ ▇▇▇▇▇"
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Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President
RBC DOMINION SECURITIES INC.
By: "▇▇▇▇▇ ▇▇▇▇▇"
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Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Director
SCOTIA CAPITAL INC.
By: "▇▇▇▇▇ ▇▇▇▇▇▇"
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
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The foregoing accurately reflects the terms of the transaction which we
are to enter into and such terms are agreed to with effect as of the date first
above written.
ZARLINK SEMICONDUCTOR INC.
By: "▇▇▇▇▇ ▇▇▇▇▇▇▇▇"
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Senior Vice-President,
Finance and Chief Financial
Officer
By: "▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇"
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice-President,
Human Resources, General Counsel
and Corporate Secretary
July 20, 2007
Zarlink Semiconductor Inc.
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Re: Revision to the Engagement Letter and Underwriting Agreement
Dear Sirs/Mesdames:
Reference is made to the engagement letter, dated June 11, 2007 (the "Engagement
Letter"), between CIBC World Markets Inc. (the "Lead Underwriter") and Zarlink
Semiconductor Inc. (the "Company") and the amended and restated underwriting
agreement, dated July 17, 2007 (the "Underwriting Agreement"), between the
Company and the Lead Underwriter, National Bank Financial Inc., RBC Dominion
Securities Inc. and Scotia Capital Inc. (the "Underwriters").
This is to confirm the agreement between the Lead Underwriter and the Company in
respect of the Engagement Letter and the agreement between the Underwriters and
the Company in respect of the Underwriting Agreement that the reimbursement by
the Company of the expenses of the Underwriters (including, without limitation,
fees and expenses of counsel for the Underwriters and out-of-pocket expenses of
the Underwriters) provided by Paragraph 9 of the Engagement Letter and Section
12 of the Underwriting Agreement shall not exceed Cnd$1,000,000.
If you are in agreement with the foregoing, please so indicate by signing and
returning to us the enclosed copy of this letter.
CIBC WORLD MARKETS INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Director
NATIONAL BANK FINANCIAL INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President
RBC DOMINION SECURITIES INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Director, RBC
SCOTIA CAPITAL INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
Agreed and accepted as of the date first above written:
ZARLINK SEMICONDUCTOR INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President and
General Counsel