EXHIBIT 1.1
DRAFT: SEPTEMBER 10, 1997
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UNDERWRITING AGREEMENT
, 1997
Salix Holdings, Ltd.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
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The undersigned, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Inc. ("▇▇▇▇▇▇▇▇"), Yorkton
Securities Inc. ("Yorkton"), Marleau, ▇▇▇▇▇▇ Securities Inc. ("Marleau") and
Midland ▇▇▇▇▇▇ Capital Inc. ("Midland") (collectively, the "Underwriters" and
each individually an "Underwriter") understand that Salix Holdings, Ltd. (the
"Corporation") proposes to issue and sell to the Underwriters 3,000,000 common
shares of the Corporation (the "Firm Shares") pursuant to this Agreement. In
addition, for the sole purpose of covering over-allotments in connection with
the sale of the Firm Shares, at the option of the Underwriters, the Corporation
shall issue and sell to the Underwriters up to an additional 450,000 common
shares of the Corporation (the "Additional Shares"). The Firm Shares and any
Additional Shares purchased by the Underwriters are referred to herein as the
"Purchased Shares".
The Corporation and the Underwriters confirm their Agreement as follows:
DEFINITIONS
In this Agreement:
"1933 ACT" means the United States Securities Act of 1933, as amended;
"1934 ACT" means the United States Securities Exchange Act of 1934, as amended,
including the rules and regulations adopted by the SEC thereunder;
"ADDITIONAL CLOSING DATE" has the meaning given to it in subparagraph 2(b);
"ADDITIONAL SHARES" has the meaning given to it above;
"AGREEMENT" means the agreement resulting from the acceptance by the Corporation
of the offer made by the Underwriters by this letter;
"BUSINESS DAY" means a day which is not a Saturday, a Sunday or a statutory or
civic holiday in Montreal, Toronto or Palo Alto;
"CANADIAN PRELIMINARY PROSPECTUS" has the meaning given to it in paragraph 1;
"CANADIAN FINAL PROSPECTUS" has the meaning given to it in paragraph 1;
"CANADIAN SECURITIES LAWS" means all applicable securities laws in each of the
Qualifying Provinces and the respective regulations under such laws together
with applicable published policy statements of the Canadian Securities
Regulatory Authorities;
"CANADIAN SECURITIES REGULATORY AUTHORITIES" means the securities regulatory
authorities in each of the Qualifying Provinces;
"CANADIAN SUPPLEMENTED PROSPECTUS" has the meaning given to it in paragraph 1;
"CLAIM" has the meaning given to it in subparagraph 10(b);
"CLOSING" means the completion of the issue and sale by the Corporation of the
Firm Shares or Additional Shares, as applicable, and the purchase by the
Underwriters of the Firm Shares or Additional Shares, as applicable, pursuant to
this Agreement;
"CLOSING DATE" means ____, 1997 or such other date as the Corporation and the
Underwriters may agree upon in writing;
"CLOSING TIME" means __.m. (______time) on the Closing Date or Additional
Closing Date or such other time on the Closing Date or Additional Closing Date
as the Corporation and the Underwriters may agree;
"COMMON SHARES" means the common shares of the Corporation;
"CORPORATION" has the meaning given to it above;
"EFFECTIVE DATE" has the meaning given to it in paragraph 1;
"FIRM SHARES" has the meaning given to it above;
"INDEMNIFIED PARTY" has the meaning given to it in subparagraph 10(1));
"INDEMNIFIER" has the meaning given to it in subparagraph 11(a);
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"MATERIAL SUBSIDIARIES" means Salix Pharmaceuticals, Inc. (a California
corporation) ("SPI") and Glycyx Pharmaceuticals, Ltd. (a Bermuda corporation)
("GPL");
"NOTICE" has the meaning given to it paragraph 20;
"NASD" means the National Association of Securities Dealers, Inc.;
"OSC" means the Ontario Securities Commission;
"PRELIMINARY PROSPECTUS" has the meaning given to it in paragraph 1;
"PREP INFORMATION" has the meaning given to it in paragraph 1;
"PREP PROCEDURES" has the meaning given to it in paragraph 1;
"PROSPECTUS" has the meaning given to it in paragraph 1;
"PROSPECTUS AMENDMENT" means any amendment to the Prospectus;
"PURCHASED SHARES" has the meaning given to it above;
"QUALIFYING PROVINCES" means all of the provinces of Canada;
"REGISTRATION STATEMENT" has the meaning given to it in paragraph 1;
"RULE 430A INFORMATION" has the meaning given to it in paragraph 1;
"RULES AND REGULATIONS" means the rules and regulations of the SEC under the
1933 Act;
"SEC" means the United States Securities and Exchange Commission;
"UNDERWRITER" and "UNDERWRITERS" have the respective meanings given to them
above;
"UNDERWRITING FEE" has the meaning given to it in paragraph 6;
"UNITED STATES" means the United States of America (including the states thereof
and the District of Columbia), and its territories, its possessions and other
areas subject to its jurisdiction;
"U.S. PERSONS" has the meaning ascribed thereto under Regulation S of the 1933
Act;
"U.S. PRELIMINARY PROSPECTUS" has the meaning given to it in paragraph 1;
"U.S. PROSPECTUS" has the meaning given to it in paragraph 1;
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"U.S. SECURITIES LAWS" means the 1933 Act, the 1934 Act and any applicable U.S.
state securities or "Blue Sky" laws; and
"U.S. SUPPLEMENTED PROSPECTUS" has the meaning given to it in paragraph 1.
Unless otherwise expressly provided in this Agreement, words importing only
the singular number include the plural and vice versa and words importing gender
include all genders. References to "paragraphs" or "subparagraphs" are to the
appropriate paragraph or subparagraph of this Agreement.
TERMS AND CONDITIONS
1. PROSPECTUS AND REGISTRATION STATEMENT
The Corporation has prepared and filed a preliminary prospectus dated
August 15, 1997 with respect to the Purchased Shares (the "Canadian Preliminary
Prospectus") under Canadian Securities Laws in the English language in each of
the Qualifying Provinces and in the French language in the Province of Quebec.
The Corporation has also prepared and filed with the SEC a registration
statement on Form S-1 (File No. 333-33781) with respect to the Purchased Shares
in conformity in all material respects with the requirements of the 1933 Act and
the Rules and Regulations and has filed with the SEC such amendments thereof as
may have been required to the date of this Agreement.
The Corporation has also elected to rely upon the rules and procedures
established pursuant to National Policy No. 44 of the Canadian Securities
Administrators for the pricing of securities after the final receipt for a
prospectus has been obtained (the "PREP Procedures") and Rule 430A under the
1933 Act and (a) has prepared and filed (i) in the English language in each of
the Qualifying Provinces and in the French language in the Province of Quebec, a
final prospectus omitting the PREP Information (as hereinafter defined) (in the
English and French languages, collectively, the "Canadian Final Prospectus") for
which a final National Policy No. 1 receipt has been obtained from the OSC and
(ii) with the SEC, an amendment to such registration statement, in which form
the Registration Statement became effective on _____, 1997 (the "Effective
Date"), and, (b) will prepare and file, promptly after the execution of this
Agreement (i) in the English language with each of the Canadian Securities
Regulatory Authorities and in the French language in the Province of Quebec, in
accordance with the PREP Procedures, the Canadian Final Prospectus supplemented
by the PREP Information (in the English and French languages, collectively, the
"Canadian Supplemented Prospectus") and (ii) with the SEC, a final prospectus in
accordance with Rule 430A and 424(b) of the Rules and Regulations (the "U.S.
Supplemented Prospectus"). The information, if any, included in the Canadian
Supplemented Prospectus that is omitted from the Canadian Final Prospectus, but
that is deemed under the PREP Procedures to be incorporated by reference into
the Canadian Final Prospectus as of the date of the Canadian Supplemented
Prospectus, is referred to herein as
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the "PREP Information". The information included in the U.S. Supplemented
Prospectus that is permitted, pursuant to Rule 430A of the Rules and
Regulations, to be omitted from the Registration Statement when it becomes
effective is referred to herein as the "Rule 430A Information".
As used in this Agreement: "Registration Statement" shall mean such
registration statement on Form S-1 filed with the SEC at the time such
registration statement became effective, including the exhibits thereto and the
documents incorporated by reference therein and, in the event any post-effective
amendment thereto becomes effective prior to the Closing Date, shall also mean
such registration statement as so amended; provided, however, that the
Registration Statement shall be deemed to include all Rule 430A Information
omitted from the prospectus filed as part of the Registration Statement and
contained in the U.S. Supplemented Prospectus; "U.S. Prospectus" shall mean the
prospectus in the form included in the Registration Statement, including the
documents incorporated by reference therein, except that from and after the time
the U.S. Supplemented Prospectus is filed with the SEC pursuant to Rule 424(b),
the term "U.S. Prospectus" shall mean such U.S. Supplemented Prospectus;
"Canadian Prospectus" shall mean the Canadian Final Prospectus for which a
receipt has been obtained from the OSC, except that from and after the time the
Canadian Supplemented Prospectus is filed with the OSC, the term "Canadian
Prospectus" shall mean such Canadian Supplemented Prospectus; "Preliminary
Prospectuses" shall mean (i) the Canadian Preliminary Prospectus and (ii) the
prospectus subject to completion in the form included in the registration
statement at the time of the initial filing of the registration statement with
the SEC, and as such prospectus shall have been amended from time to time prior
to the date of the U.S. Prospectus. The U.S. Supplemented Prospectus and the
Canadian Supplemented Prospectus are herein collectively called the
"Supplemented Prospectuses" and the U.S. Prospectus and the Canadian Prospectus
are herein collectively called the "Prospectuses".
2. (a) OFFER TO PURCHASE
Subject to the terms and conditions of this Agreement, the Underwriters
severally and not jointly offer to purchase from the Corporation, in the
proportions set forth in subparagraph 14(a), and by its acceptance of this
Agreement the Corporation agrees to issue and sell to the Underwriters the Firm
Shares, at the Closing Time on the Closing Date, at a price of Cdn. $_____ per
share, being an aggregate price of Cdn. $______. It is understood that the
agreement resulting from such offer relates to all, but not less than all, of
the Firm Shares to be purchased and sold hereto.
(b) ADDITIONAL SHARES
In addition, the Corporation hereby grants to the Underwriters, for the
sole purpose of covering over-allotments in the sale of Firm Shares by the
Underwriters, the option to purchase all or any part of the Additional Shares
for a purchase price of Cdn. $______ per share. This option may be exercised at
any time, in whole or in part, on or before the sixtieth day
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following the Closing Date, by written notice by the Underwriters to the
Corporation. Such notice shall set forth the aggregate number of Additional
Shares as to which the option is being exercised and the date and time, as
determined by the Underwriters, when the Additional Shares are to be delivered
(such date and time being herein sometimes referred to as the "Additional
Closing Date"); provided, however, that the Additional Closing Date shall not be
earlier than the Closing Date or earlier than the third Business Day after the
date on which the option shall have been exercised nor later than the fifth
Business Day after the date on which the option shall have been exercised.
Certificates for the Additional Shares shall be registered in such name or names
and in such authorized denominations as the Underwriters may request in writing
at least two full Business Days prior to the Additional Closing Date.
The portion of Additional Shares to be sold to each Underwriter shall be
the same portion of the Firm Shares being purchased by such Underwriter as set
forth opposite the name of such Underwriter in subparagraph 14(a) hereof.
(c) U.S. BROKER-DEALERS
It is understood that the Underwriters may, from time to time, sell any or
all of the Purchased Shares to NBC ▇▇▇▇▇▇▇▇ International Ltd., Yorkton Capital
Inc., Marleau ▇▇▇▇▇▇ (USA), Inc. or Midland ▇▇▇▇▇▇ Capital Corporation
(together, the "U.S. Dealers"), who are broker-dealers registered as such with
the SEC under section 15 of the 1934 Act and members of the NASD, for
distribution in certain states of the United States which have been identified
to the Corporation. Any such sales by the Underwriters to U.S. Dealers shall be
at then applicable public offering price less the selling concession that would
apply if such sales were made by the Underwriters. Each of the U.S. Dealers
will be duly licensed broker-dealers in each jurisdiction in which it offers to
sell Purchased Shares. The Underwriters will not sell or distribute any
Purchased Shares in the United States, but may offer and sell Purchased Shares
in the United States through the U.S. Dealers in accordance with this Agreement
and applicable laws. The U.S. Dealers may not sell or distribute any Purchased
Shares in Canada.
3. RESTRICTIONS ON SALE
The Underwriters agree to not distribute the Purchased Shares in such a
manner as to require registration of the Purchased Shares or the filing of a
prospectus with respect to the Purchased Shares under the laws of any
jurisdiction other than the applicable laws of the Qualifying Provinces and the
applicable federal laws of the United States, and to only distribute the
Purchased Shares in the Qualifying Provinces and the United States in accordance
with all applicable laws, including the applicable state securities laws of the
United States. Sales in the United States will be limited to institutional
"accredited investors" within the meaning of Rule 501(a)(1), (2), (3) and (7)
under the 1933 Act. Any agreements between the Underwriters and the members of
any banking or selling group will contain restrictions similar to those
contained in this paragraph.
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For purposes of this paragraph 3, the Underwriters shall be entitled to
assume that the Purchased Shares are qualified for distribution in any
Qualifying Province where a receipt or other evidence of acceptance of the
Canadian Prospectus shall have been obtained from the applicable Canadian
Securities Regulatory Authority following the filing of the Canadian Prospectus.
The Underwriters shall (i) use all reasonable efforts to complete the
distribution in Canada as soon as possible after the Closing Date or Additional
Closing Date, as applicable; and (ii) notify the Corporation when, in their
opinion, the Underwriters have ceased distribution of the Purchased Shares and
provide a breakdown of the number of Purchased Shares distributed in each of the
Qualifying Provinces where such breakdown is required for the purpose of
calculating fees payable to the applicable Canadian Securities Regulatory
Authorities.
4. COVENANTS OF THE CORPORATION
The Corporation covenants and agrees with the Underwriters that:
(a) It shall fulfil all legal requirements to be fulfilled by the
Corporation to enable the Purchased Shares to be offered for sale and
sold to the public in (i) each of the Qualifying Provinces by or
through the Underwriters and other investment dealers and brokers who
comply with the applicable securities laws of the Qualifying Provinces
and (ii) in the states of the United States by the U.S. Dealers which
have been identified by the Underwriters prior to the signing of this
Agreement. The Corporation shall file the Canadian Supplemented
Prospectus with each of the Canadian Securities Regulatory Authorities
in accordance with the PREP Procedures and the U.S. Supplementary
Prospectus with the SEC in accordance with Rule 424(b) of the Rules
and Regulations, within all applicable required time frames and in any
event no later than _____, 1997, and will advise the Underwriters
promptly and, if requested by the Underwriters, will confirm such
advice in writing, when such filings have been made.
(b) It will advise the Underwriters promptly and, if requested by the
Underwriters, will confirm such advice in writing: (i) of any request
by any of the Canadian Securities Regulatory Authorities or the SEC,
as applicable, for any amendment of or supplement to the Registration
Statement, either of the Preliminary Prospectuses or the Prospectuses
or for additional information; (ii) of the issuance by the SEC of any
stop order suspending the effectiveness of the Registration Statement
or the issuance by any Canadian Securities Regulatory Authority, The
Toronto Stock Exchange or the SEC of any order having the effect of
ceasing or suspending the distribution of the Purchased Shares or the
trading in the Common Shares or the initiation, or the threatening, of
any proceeding for such purpose; and (iii) for the period of time
referred to in subparagraph 4(n), of any material change (or of any
circumstance in which there is a reasonable possibility that there has
been
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such a change) in the Corporation's condition (financial or other),
business, prospects, properties, net worth or results of operations,
or of the happening of any event in respect of the Corporation,
including the filing of any information, documents or reports pursuant
to Canadian Securities Laws or the 1934 Act, that (A) insofar as the
1933 Act is concerned, makes any statement of a material fact made in
the Registration Statement or the U.S. Prospectus (as then amended or
supplemented) untrue or which requires the making of any additions to
or changes in the Registration Statement or the U.S. Prospectus (as
then amended or supplemented) in order to state a material fact
required by the 1933 Act or the Rules and Regulations to be stated
therein or necessary in order to make the statements therein (1) in
the case of the Registration Statement, not misleading and (2) in the
case of the U.S. Prospectus (as then amended or supplemented), in
light of the circumstances under which they were made, not misleading,
or (B) insofar as Canadian Securities Laws are concerned, is, or may
be, of such a nature as would result in the Canadian Preliminary
Prospectus or the Canadian Prospectus or any amendment or supplement
thereto, as they are immediately prior to such change, containing a
misrepresentation or which would result in any of such documents, as
they are immediately prior to such change, not complying with the laws
of any Qualifying Province or which change would be expected to have a
significant effect on the market price or value of the Common Shares,
or (C) would result in the necessity to amend or supplement the
Prospectuses (as then amended or supplemented) to comply with the 1933
Act or Canadian Securities Laws, as applicable.
(c) If at any time the SEC shall issue or propose to enter any stop order
suspending the effectiveness of the Registration Statement, or any of
the SEC, any Canadian Securities Regulatory Authority or The Toronto
Stock Exchange shall issue or propose to issue any order having the
effect of ceasing or suspending the distribution of the Purchased
Shares or the trading in the Common Shares, the Corporation will make
every commercially reasonable effort to prevent the issuance of any
such order and, if issued, to obtain the withdrawal of such order at
the earliest possible time.
(d) If, during such period after the first date of the public offering of
the Purchased Shares as in the opinion of counsel to the Underwriters
the U.S. Prospectus or the Canadian Prospectus is required by law to
be delivered in connection with sales by an Underwriter or dealer, any
event shall occur or condition exist as contemplated by subparagraph
4(b)(iii) hereto or if, in the reasonable opinion of counsel to the
Underwriters, it is necessary to amend or supplement the Canadian
Prospectus or the U.S. Prospectus to comply with Canadian Securities
Laws, the 1933 Act or the Rules and Regulations, it will forthwith
prepare, file with the SEC and the Canadian Securities Regulatory
Authorities and furnish, at its own expense, to the Underwriters and
to the
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dealers (whose names and addresses the Underwriters will furnish to
the Corporation) to which Purchased Shares may have been sold by the
Underwriters and to any other dealers upon request, either amendments
or supplements to the U.S. Prospectus or the Canadian Prospectus (to
be effected, if necessary, by the filing with the SEC of a post-
effective amendment to the Registration Statement) so that the
statements in the U.S. Prospectus or the Canadian Prospectus as so
amended or supplemented will not in the light of the circumstances
when the U.S. Prospectus or the Canadian Prospectus is delivered to a
purchaser, be misleading or so that the U.S. Prospectus or the
Canadian Prospectus, as amended or supplemented, will comply with the
Canadian Securities Laws and U.S. Securities Laws; in the event that
the Corporation and the Underwriters agree that the Prospectuses
should be amended or supplemented, the Corporation, if requested by
the Underwriters, will promptly issue a press release announcing or
disclosing the matters to be covered by the proposed amendment or
supplement.
(e) Until the distribution of the Purchased Shares shall have been
completed, it shall promptly take or cause to be taken all additional
steps and proceedings that from time to time may be required under
Canadian Securities Laws to continue to qualify the Purchased Shares
for distribution under the Canadian Prospectus, or in the event that
the Purchased Shares have, for any reason, ceased to so qualify, to
again so qualify the Purchased Shares.
(f) It will file such consents to service of process or other documents
necessary or appropriate in order to effect the registration or
qualification of the Purchased Shares in the Qualifying Provinces and
the United States; provided that in no event shall the Corporation be
obligated to qualify to do business in any jurisdiction where it is
not now otherwise required to be so qualified or to take any action
that would subject it to service of process in suits, other than those
arising out of the offering or sale of the Purchased Shares, in any
jurisdiction where it is not now so subject.
(g) It will make generally available to its security holders (within the
meaning of Rule 158 of the Rules and Regulations) an earnings
statement, which need not be audited, covering a twelve-month period
commencing after the effective date of the Registration Statement and
ending not later than 15 months thereafter, as soon as practicable
after the end of such period, which earnings statement shall satisfy
the provisions of Section 11(a) of the 1933 Act.
(h) During the period of three years hereafter, it will furnish to the
Underwriters (i) as soon as available, a copy of each report of the
Corporation mailed to shareholders or filed with the SEC or the
Canadian Security Regulatory Authorities and (ii) every material press
release and every material news item
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or article in respect of the Corporation or its affairs which was
generally released to its shareholders or prepared for general release
by the Corporation.
(i) For a period of 90 days after the Closing Date (the "Lock-Up Period"),
it will not, directly or indirectly, without the prior written consent
of ▇▇▇▇▇▇▇▇, on behalf of the Underwriters, which consent shall not be
unreasonably withheld, issue or sell any Common Shares or any right to
acquire Common Shares, except that the Corporation may (i) grant
options to purchase Common Shares pursuant to the Corporation's stock
option plans and (ii) may issue Common Shares pursuant to the exercise
of previously granted options and may issue securities of the
Corporation, including its Common Shares in connection with in-
licensing arrangements or similar acquisitions by the Corporation of
products, rights, assets or shares.
(j) It will furnish to the Underwriters, without charge:
(i) upon execution and delivery of this Agreement, a copy of the
Canadian Preliminary Prospectus and the Canadian Prospectus,
and concurrently with the filing thereof with the Canadian
Securities Regulatory Authorities, the Canadian Supplemented
Prospectus, in each case in the English language signed and
certified as required by Canadian Securities Laws and including
the documents incorporated therein by reference, if any;
(ii) upon execution and delivery of this Agreement, a copy of the
Canadian Preliminary Prospectus and the Canadian Prospectus,
and concurrently with the filing thereof with the Commission
des valuers mobilieres du Quebec, the Canadian Supplemented
Prospectus, in each case in the French language signed and
certified as required by the Canadian Securities Laws
applicable in Quebec and including the documents incorporated
therein by reference, if any;
(iii) upon execution and delivery of this Agreement, a copy of the
Registration Statement and any amendments thereto (including
exhibits) prior to effectiveness thereof, and the Registration
Statement (including exhibits), signed as required by the 1933
Act and the Rules and Regulations and such number of conformed
copies thereof, but without exhibits, as the Underwriters may
request;
(iv) upon execution and delivery of the Agreement, a copy of the
U.S. Preliminary Prospectus and the U.S. Prospectus, and
concurrently with the filing thereof with the SEC, the U.S.
Supplemented Prospectus;
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(v) during the period described in subparagraph 4(n) hereof, upon
filing thereof, a copy of any other document required to be
filed by the Corporation under the 1933 Act or the Canadian
Securities Laws;
(vi) upon execution and delivery of this Agreement, legal opinions
dated the date of the Canadian Preliminary Prospectus and the
Canadian Prospectus, and at the time of delivery to the
Underwriters pursuant to this paragraph 4 of the Canadian
Supplemented Prospectus or any amendment or supplement to the
Canadian Prospectus, a legal opinion dated the date of the
Canadian Supplemented Prospectus or such amendment or
supplement, in form and substance satisfactory to the
Underwriters, addressed to the Underwriters, the Corporation,
their respective counsel, and the Chief Financial Officer and
the directors of the Corporation from ▇▇▇▇▇▇▇▇▇▇ Rosentzveig
▇▇▇▇▇▇▇, to the effect that the French language version of each
of the Canadian Preliminary Prospectus, the Canadian
Prospectus, the Canadian Supplemented Prospectus or any such
amendment or supplement, together with all documents
incorporated therein by reference is, in all material respects
(except for any capitalization tables, financial statements,
notes to financial statements and auditors reports, selected
and summary financial and operating data and management's
discussion and analysis of financial condition and results of
operations (collectively, the "Financial Information"), a
complete and accurate translation of the English language
version thereof, and that the English and French language
versions are not susceptible of any materially different
interpretation with respect to any material matter contained
therein;
(vii) upon execution and delivery of this Agreement, opinions dated
the date of the Canadian Preliminary Prospectus and the
Canadian Prospectus, and at the time of delivery to the
Underwriters pursuant to this paragraph 4 of the Canadian
Supplemented Prospectus or any amendment or supplement to the
Canadian Prospectus, an opinion dated the date of the Canadian
Supplemented Prospectus or such amendment or supplement, in
form and substance satisfactory to the Underwriters, addressed
to the Underwriters, the Corporation, their respective counsel
and the directors of the Corporation from the Corporation's
auditors to the effect that the French language version of the
Financial Information set forth in each of the Canadian
Preliminary Prospectus, the Canadian Prospectus, the Canadian
Supplemented Prospectus or any such amendment or supplement is,
in all material respects, a complete and accurate translation
of the English language version thereof;
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(viii) at the time of delivery to the Underwriters pursuant to this
paragraph 4 of the U.S. Supplemented Prospectus and the
Canadian Supplemented Prospectus or any amendment or supplement
thereto, a "long-form" comfort letter dated the date of such
Prospectuses or such amendment or supplement, in form and
substance satisfactory to the Underwriters, addressed to the
Underwriters and the Chief Financial Officer and the directors
of the Corporation from the auditors of the Corporation, with
respect to certain financial and accounting information
relating to the Corporation in the Prospectuses or such
amendment or supplement, which letter shall be in addition to
the auditors' report contained in such documents and the
auditors' comfort letter addressed to the Canadian Securities
Regulatory Authorities; and
(ix) as soon as possible, but in no event later than the second
Business Day after the date hereof, a legal opinion dated the
date of the Canadian Supplemented Prospectus, in form and
substance satisfactory to the Underwriters, addressed to the
Underwriters from ▇▇▇▇▇▇▇▇▇▇ Rosentzveig ▇▇▇▇▇▇▇, regarding
compliance with the laws of Quebec relating to the use of the
French language in connection with the distribution of the
Purchased Shares.
(k) Concurrently with the delivery of any Prospectus Amendments pursuant
to subparagraph (d) hereto, the Corporation shall deliver to the
Underwriters, with respect to such Prospectus Amendments, documents
similar to those referred to in subparagraphs 4(k)(vi), (vii), (viii),
(ix) and (x).
(l) It will not (i) file any amendment to the Registration Statement or
make or file any amendment or supplement to the Prospectuses of which
the Underwriters shall not previously have been advised or to which
the Underwriters shall reasonably object in writing after being so
advised or (ii) so long as, in the written opinion of counsel for the
Underwriters (a copy of which shall be delivered to the Corporation) a
prospectus is required to be delivered in connection with sales by any
Underwriter or dealer, file any information, documents or reports
pursuant to Canadian Securities Laws or the 1934 Act, without
delivering a copy of such information, documents or reports to
▇▇▇▇▇▇▇▇, as representative of the Underwriters, prior to or
concurrently with such filing.
(m) As soon after the execution and delivery of this Agreement as possible
and thereafter from time to time for such period as in the written
opinion of counsel for the Underwriters a Prospectus is required by
the 1933 Act or Canadian Securities Laws, as applicable, to be
delivered in connection with sales by any Underwriter or dealer, the
Corporation will expeditiously deliver to each Underwriter and each
dealer, without charge, as many copies of the
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Canadian Prospectus, as applicable (and of any amendment or supplement
thereto) and in such cities as the Underwriters may request. The
Corporation consents to the use of the Prospectuses (and of any
amendment or supplement thereto) in accordance with the provisions of
U.S. Securities Laws and Canadian Securities Laws, both in connection
with the offering and sale of the Purchased Shares and for such period
of time thereafter as the U.S. Prospectus or the Canadian Prospectus,
as applicable, is required by the 1933 Act or Canadian Securities Laws
to be delivered in connection with sales by any Underwriter or dealer.
If during such period of time any event of the type described in
paragraph 4(b) hereof shall occur, or if it is necessary to supplement
or amend the Prospectuses to comply with the 1933 Act, Canadian
Securities Laws or any other law, the Corporation will forthwith
furnish to the Underwriters and dealers such number of copies thereof
as the Underwriters may request.
(n) Prior to the filing of the Prospectuses, and any amendments or
supplements thereto, the Corporation shall allow the Underwriters and
their counsel to participate fully in the preparation of such
documents, and shall have allowed the Underwriters and their counsel
to conduct all due diligence which the Underwriters may require to
conduct in order to fulfil their obligations as underwriters and in
order to enable the Underwriters responsibly to execute any
certificate required to be executed by the Underwriters with respect
to the Canadian Prospectus, and any amendments or supplements thereto,
which certificate the Underwriters agree to execute unless they have a
reasonable reason for not doing so.
5. REPRESENTATIONS AND WARRANTIES
The Corporation represents and warrants to, and agrees with, each
Underwriter that:
(a) The Corporation meets the general eligibility requirements for use of
Form S-1 under the 1933 Act and is eligible to file a prospectus with
the Canadian Securities Regulatory Authorities and to use the PREP
Procedures.
(b) The Corporation has prepared and filed a submission to jurisdiction
and an appointment of agent for service of process in the form
required by Canadian Securities Regulatory Authorities in conjunction
with the filing of the Canadian Prospectus.
(c) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or, to
the Corporation's knowledge, threatened by the SEC. No Canadian
Securities Regulatory Authority, nor any stock exchange in Canada or
any court has issued an order preventing or
-13-
suspending the use of the Canadian Preliminary Prospectus, the U.S.
Preliminary Prospectus, the Canadian Prospectus or the U.S. Prospectus
or preventing the distribution of the Purchased Shares or instituted
proceedings for that purpose.
(d) (i) the Corporation complies with the laws of its jurisdiction of
incorporation, except where the failure to so comply would not have a
material adverse effect; (ii) the Canadian Preliminary Prospectus and
the Canadian Final Prospectus comply and the Canadian Supplemented
Prospectus will comply in all material respects with the requirements
of all applicable Canadian Securities Laws; the Canadian Supplemented
Prospectus, together with any documents filed in connection therewith
and all documents incorporated by reference therein and the U.S.
Supplemented Prospectus will have been delivered to the Underwriters
within two business days after the date of this Agreement; (iii)
insofar as Canadian Securities Laws are concerned, the Canadian
Prospectus and any amendments thereof and supplements thereto
constitute or will constitute full, true and plain disclosure of all
material facts relating to the Corporation and its Material
Subsidiaries taken as a whole, and the Purchased Shares, and does not
or will not include an untrue statement of a material fact or an
omission to state a material fact that is required to be stated or
that is necessary in order to make a statement not misleading in the
light of the circumstances under which it is made; (iv) at the time of
the effectiveness of the Registration Statement or the effectiveness
of any post-effective amendment to the Registration Statement, and at
the Closing Date and the Additional Closing Date, if any, the
Registration Statement and the U.S. Prospectus and any amendments
thereof and supplements thereto comply or will comply in all material
respects with the applicable provisions of U.S. Securities Laws and do
not or will not contain an untrue statement of a material fact and do
not or will not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein (A) in
the case of the Registration Statement, not misleading and (B) in the
case of the U.S. Prospectus, in light of the circumstances under which
they were made, not misleading; provided, however, that this
representation and warranty shall not apply to statements contained in
the second, fourth, fifth, ninth or tenth paragraphs of the section of
the Prospectuses entitled "Plan of Distribution", the table included
in the section entitled "Underwriting" which identifies the
underwriters and the allocation of the Shares among them, or the
information in the last paragraph of the outside front cover page of
the U.S. Prospectus and the last two paragraphs of the outside front
cover page of the Canadian Prospectus.
(e) the consolidated financial statements of the Corporation (including
all notes and schedules thereto) included (or incorporated by
reference) in the Registration Statement and the Prospectuses present
fairly the financial
-14-
position, the results of operations, retained earnings, and changes in
financial position and the other information purported to be shown
therein of the Corporation on a consolidated basis at the respective
dates and for the respective periods to which they apply; and such
financial statements have been prepared in conformity with accounting
principles generally accepted in the United States, consistently
applied throughout the periods involved, and all adjustments necessary
for a fair presentation of the results for such periods have been
made. The summary financial data included in the Prospectuses present
fairly the information shown therein and have been compiled on a basis
consistent with that of the audited consolidated financial statements
of the Corporation and its Material Subsidiaries included in the
Prospectuses.
(f) Ernst & Young, LLP who are reporting upon the audited financial
statements of the Corporation included in the Registration Statement
and the Prospectuses, are, and during the periods covered by their
reports were, auditors of the Corporation and independent with respect
to the Corporation within the meaning of the laws of its jurisdiction
of incorporation and applicable Canadian Securities Laws, and are
independent auditors as required by the 1933 Act and the Rules and
Regulations.
(g) The Corporation and each of the Material Subsidiaries has been duly
organized and is validly existing as a corporation under the laws of
its respective jurisdiction of incorporation. The Corporation and
each of the Material Subsidiaries are duly registered and qualified to
transact business and are in good standing as foreign corporations in
each jurisdiction in which the character or location of their
respective assets or properties (owned, leased or licensed) or the
nature of their respective businesses makes such qualification
necessary, except where the failure to so register or qualify would
not have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition (financial or
otherwise) of the Corporation and the Material Subsidiaries, taken as
a whole. The Corporation and each of the Material Subsidiaries have
all requisite corporate power and authority, and all necessary
authorization, approvals, consents, orders, licenses, certificates and
permits of and from all governmental or regulatory bodies or any other
person or entity (collectively, "Permits"), to own, lease, operate and
license their assets and properties and to the conduct of their
businesses as now being conducted and as described in the Registration
Statement and the Prospectuses, except where the failure to have any
such Permit would not have a material adverse effect on the assets or
properties, business, results of operations, prospects or condition
(financial or otherwise) of the Corporation and the Material
Subsidiaries, taken as a whole, and no such Permit contains a
materially burdensome restriction not adequately disclosed in the
Registration Statement and the Prospectuses; and the Corporation has
all such corporate power and authority, and such Permits to enter
into, deliver and perform this
-15-
Agreement and to issue and sell the Purchased Shares (except for
requirements of The Toronto Stock Exchange and requirements under the
Canadian Securities Laws and the U.S. Securities Laws which will be
satisfied on or prior to the Closing Date or the Additional Closing
Date, as applicable).
(h) All necessary corporate action has been duly and validly taken by the
Corporation to authorize the execution, delivery and performance of
this Agreement and the issuance and sale of the Purchased Shares by
the Corporation. This Agreement has been duly and validly authorized,
executed and delivered by the Corporation and constitutes a legal,
valid and binding obligation of the Corporation and is enforceable in
accordance with its terms, except as enforcement of this Agreement may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors and except as limited
by the application of equitable principles when equitable remedies are
sought.
(i) No authorization, approval, consent or license of any government,
governmental instrumentality or court in Canada or in the United
States (other than requirements of The Toronto Stock Exchange and
requirements under the U.S. Securities Laws and Canadian Securities
Laws which will be satisfied prior to the Closing Date or the
Additional Closing Date, as applicable), is required for the
execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby including the
valid authorization, issuance, sale and delivery of the Purchased
Shares as contemplated by the Prospectuses.
(j) The Corporation and the Material Subsidiaries own or have a valid
license to use all patents, patent applications, inventions,
trademarks, trade names, registrations and applications for
registration of trademarks, service marks, service ▇▇▇▇ registrations
and applications for registration, copyrights, copyright registrations
and applications for registration, know-how, manufacturing processes,
formulae, trade secrets, licenses and rights in any of the foregoing
and any other intangible property and assets (herein called the
"Proprietary Rights") which are material to the businesses of the
Corporation and the Material Subsidiaries as now conducted and as
proposed to be conducted, in each case as described in the
Prospectuses. The description of the Proprietary Rights in the
Prospectuses is correct in all material respects and fairly and
correctly describes the Corporation's and the Material Subsidiaries'
rights with respect thereto. The Corporation does not have any
knowledge of, and the Corporation has not given or received an notice
of, any pending conflicts with or infringement of the rights of others
with respect to the Corporation's and the Material Subsidiaries' use
of any Proprietary Rights or with respect to any license of the
Corporation's and the Material Subsidiaries of Proprietary Rights.
Except as disclosed in the Prospectuses,
-16-
no action, suit, arbitration, or legal, administrative or other
proceeding, or investigation is pending or, to the best knowledge of
the Corporation, threatened, which involves any Proprietary Rights.
Except as disclosed in the Prospectuses, neither the Corporation nor
any Material Subsidiary is subject to any judgment, order, writ,
injunction or decree of any court or any federal, provincial, state,
local, foreign or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or any
arbitrator, or has entered into or is a party to any contract which
restricts or impairs the use of any such Proprietary Rights in a
manner which would have a material adverse effect on the use of any of
the Proprietary Rights. To the best knowledge of the Corporation, no
Proprietary Rights used by the Corporation or any of the Material
Subsidiaries, and no services or products sold by the Corporation or
any of the Material Subsidiaries, conflict with or infringe upon any
Proprietary Rights available to any third party. Neither the
Corporation nor any Material Subsidiary has entered into any consent,
indemnification, forbearance to ▇▇▇ or settlement agreement with
respect to Proprietary Rights other than in the ordinary course of
business. No claims have been asserted by any person with respect to
the validity of the Corporation's or any of the Material Subsidiaries'
ownership or right to use the Proprietary Rights and, to the best
knowledge of the Corporation, there is no basis for any such claim to
be successful. The Proprietary Rights are valid and enforceable and
no registration relating thereto has lapsed, expired or has been
abandoned or cancelled or is the subject of cancellation or other
adversarial proceedings, and all applications therefore are pending
and are in good standing. The Corporation and the Material
Subsidiaries have complied, in all material respects, with their
respective contractual obligations relating to the protection of the
Proprietary Rights used pursuant to licenses. To the best knowledge
of the Corporation, no person is infringing on or violating the
Proprietary Rights owned or used by the Corporation or any of the
Material Subsidiaries.
(k) The Corporation and the Material Subsidiaries have good title to each
of the items of real and personal property which are reflected in the
financial statements referred to in subparagraph 5(e) or are referred
to in the Registration Statement and the Prospectuses as being owned
by them and valid and enforceable leasehold interests in each of the
items of real and personal property which are referred to in the
Registration Statement and the Prospectuses as being leased by them,
in each case free and clear of all liens, encumbrances, claims,
security interests and defects, other than those described in the
Registration Statement and the Prospectuses or those which do not and
will not have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition (financial or
otherwise) of the Corporation and the Material Subsidiaries, taken as
a whole.
-17-
(l) Except as disclosed in the Registration Statement and the
Prospectuses, there is no litigation or governmental or other
proceeding or investigation at law or in equity before any court or
before or by any federal, provincial, state, municipal or other
governmental or public department, commission, board, agency or body,
domestic or foreign, pending or, to the Corporation's best knowledge,
threatened (and the Corporation does not know of any basis therefor)
against, or involving the assets, properties or business of, the
Corporation or any subsidiary which would materially adversely affect
the value or the operation of any such assets or properties or the
business, results of operations, prospects or condition (financial or
otherwise) of the Corporation and the Material Subsidiaries, taken as
a whole, nor are there any matters under discussion with any
government authority relating to taxes, governmental charges or
assessments asserted by any such authority.
(m) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectuses, except as described
therein, (i) there has not been any material adverse change in the
condition (financial or otherwise) or in the assets, properties,
business, results of operations or prospects of the Corporation and
the Material Subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business; (ii) the
Corporation and the Material Subsidiaries, taken as whole, have not
sustained any material loss or interference with their assets,
businesses or properties (whether owned or leased) from fire,
explosion, earthquake, flood or other calamity, whether or not covered
by insurance, or from any labour dispute or any court or legislative
or other governmental action, order or decree; and (iii) since the
date of the latest balance sheet included in or incorporated by
reference into the Registration Statement and the Prospectuses, except
as reflected therein, neither the Corporation nor any of the Material
Subsidiaries has (A) issued any shares out of treasury (other than
upon the exercise of share options issued under the Corporation's
employee share option plans or upon the exercise of previously issued
warrants which were described in the Prospectuses) or incurred any
liabilities or obligation, direct or contingent, for borrowed money,
except such liabilities or obligations incurred in the ordinary course
of business or (B) declared or paid any dividend or made any
distribution on of its shares or redeemed, purchased or otherwise
acquired or agreed to redeem, purchase or otherwise acquire any of its
shares.
(n) None of the Corporation, any of the Material Subsidiaries, or, to the
Corporation's knowledge, any other party to any agreement, lease,
contract, mortgage, loan agreement, note indenture or other instrument
or obligation to which the Corporation or any of the Material
Subsidiaries is a party or by which the Corporation or any of the
Material Subsidiaries or any of their respective properties is bound,
is in breach of or in default in the observance
-18-
or performance of any term or obligation to be performed by it under
any agreement, lease, contract, mortgage, loan agreement, note
indenture or other instrument or obligation to which the Corporation
or any of the Material Subsidiaries is a party or by which the
Corporation or any of the Material Subsidiaries or any of their
respective properties is bound and which breach or default, singularly
or in the aggregate, if not cured or otherwise corrected within the
respective period specified for such cure or correction, 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 the Material Subsidiaries, taken as a whole, and no
event as it relates to the Corporation or any of the Material
Subsidiaries, and to the Corporation's knowledge no event as it
relates to any other party, has occurred which with notice or lapse of
time or both would constitute such a breach or default, in any such
case which such breach or 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 the Material Subsidiaries, taken as a whole.
(o) Neither the Corporation nor any of the Material Subsidiaries is in
violation of (i) any term or provision of its charter or by-laws or
(ii) any franchise, license, permit, judgment, decree, order, statute,
rule or regulation, except, in the case of clause (ii) hereof, where
the consequence of such violation would not have a material adverse
effect on the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Corporation and
the Material Subsidiaries, taken as a whole.
(p) All of the outstanding shares of each Material Subsidiary have been
duly authorized and validly issued and are fully paid and
nonassessable. All of the outstanding shares of each Material
Subsidiary are beneficially owned by the Corporation, directly or
indirectly, as described in the Prospectus, free and clear of any
charge, lien, pledge, security interest, equity or encumbrance of any
kind (other than restrictions on transfer under applicable U.S.
Securities Laws).
(q) All of the outstanding shares of the Corporation have been duly
authorized and validly issued and are fully paid and non-assessable;
none of the outstanding shares is subject to, or was issued in
violation of, the preemptive rights of any shareholder of the
Corporation; the Purchased Shares, when issued, delivered and sold in
accordance with this Agreement, will be duly and validly issued and
outstanding, fully paid and non-assessable, and will not have been
issued in violation of or be subject to any preemptive rights of any
shareholder of the Corporation; no holder of securities of the
Corporation has any rights to the registration of securities of the
Corporation as a result of the filing of the Registration Statement or
the Prospectuses or otherwise in
-19-
connection with the sale of the Purchased Shares contemplated hereby;
the Corporation had, at June 30, 1997, an authorized and outstanding
capitalization as set forth in the Registration Statement and the
Prospectuses under the caption "Capitalization"; the Common Shares of
the Corporation conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectuses;
there are no outstanding options, warrants or other rights calling for
the issuance of, and there are no commitments, plans or arrangements
to issue, any Common Shares or any security convertible into or
exchangeable or exercisable for Common Shares other than as described
in the Prospectuses.
(r) The Company has filed in a timely manner each document or report
incorporated by reference in the Prospectuses under the Canadian
Securities Laws; each such document or report at the time it was filed
conformed, as applicable, to the requirements of the Canadian
Securities Laws; and none of such documents or reports contained an
untrue statement of any material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading.
(s) Neither the execution, delivery and performance of this Agreement by
the Corporation nor the consummation of any of the transactions
contemplated thereby (including, without limitation, the issuance and
sale by the Corporation of the Purchased Shares) will give rise to a
right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default under, or require any consent or
waiver under, or result in the execution or imposition of any lien,
charge or encumbrance upon any properties or assets of the Corporation
or any of the Material Subsidiaries pursuant to the terms of, any
indenture, mortgage, deed or trust or other agreement or instrument to
which the Corporation or any of the Material Subsidiaries is a party
or by which any of them or any of their respective properties or
businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the
Corporation or any of the Material Subsidiaries or violate any
provisions of the charter or by-laws of the Corporation or any of the
Material Subsidiaries.
(t) Neither the Corporation nor any of the Material Subsidiaries is
involved in any labour dispute nor, to the knowledge of the
Corporation, is any such dispute threatened, which dispute 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 the Material Subsidiaries, taken as a whole.
-20-
(u) To the best of the Corporation's knowledge in respect of shareholders
of the Corporation and their affiliates (other than the Corporation),
no transaction has occurred between (i) the Corporation and any of its
shareholders, officers or directors, or (ii) the Corporation and any
affiliate or affiliates of any such shareholder, officer or director,
that is required to be described in and is not described in the
Registration Statement and the Prospectuses.
(v) The Corporation has filed all tax returns which are required to be
filed with any government authority through the date hereof, or has
received extensions thereof, and has paid all taxes shown on such
returns and all assessments received by it to the extent that the same
are material and have become due.
(w) The Corporation has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida).
(x) The Corporation is not, and upon consummation of the transactions
contemplated hereby will not be, an "investment company" as such term
is defined in the United States Investment Company Act of 1940, as
amended.
(y) The Corporation is not a passive foreign investment company ("PFIC")
or foreign personal holding company ("FPHC") within the meaning of
Sections 1296 and 552 of the U.S. Internal Revenue Code of 1986, as
amended, and the Corporation is not aware of any contemplated action
by any shareholder or shareholders of the Corporation which would
cause the Corporation to become a PFIC and/or FPHC.
(z) Except as set forth in the Registration Statement and the
Prospectuses, the Corporation and its Material Subsidiaries are in
compliance with any and all applicable foreign, federal, provincial,
state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental
Laws"), have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singularly or in the aggregate, have a material adverse effect on the
Corporation and its Material Subsidiaries, taken as a whole.
(aa) Except as set forth in the Registration Statement and the
Prospectuses, the costs and liabilities under Environmental Laws
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of
-21-
properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities
and any potential liabilities to third parties) would not, singularly
or in the aggregate, have a material adverse effect on the Corporation
and its Material Subsidiaries, taken as a whole.
(bb) The Purchased Shares have received conditional approval for listing on
The Toronto Stock Exchange.
(cc) The Corporation has not taken and will not take, directly or
indirectly, any action designed to, or that might be expected to,
cause or result in stabilization or manipulation of the price of the
Common Shares. The Corporation has not distributed and will not
distribute any prospectus (as such term is defined in Canadian
Securities Laws and the Rules and Regulations) in connection with the
offering of the Purchased Shares other than the Preliminary
Prospectuses and the Prospectuses filed with the Canadian Securities
Regulatory Authorities and the SEC.
6. SERVICES PROVIDED BY UNDERWRITERS AND UNDERWRITING FEE
In return for the Underwriters' agreement to purchase the Firm Shares which
will result from the acceptance of this offer by the Corporation and in
consideration of the services to be rendered by the Underwriters in connection
therewith, including, without limitation, acting as financial advisors to the
Corporation, in assisting in the preparation of documentation relating to the
Firm Shares, including the Registration Statement and the Prospectuses (and any
amendments therefor supplements thereto), in advising on the final terms and
conditions of the Firm Shares, in performing and managing banking, selling or
other groups for the sale of the Firm Shares, in distributing the Firm Shares,
both directly and to other registered dealers and brokers, co-ordinating sales
in the United States through the U.S. Dealers and in performing administrative
work in connection with the distribution of the Firm Shares, the Corporation
agrees to pay the Underwriters at the Closing Time a fee of 6.5% of the
aggregate purchase price set forth in subparagraph 7(a) below (the "Underwriting
Fee") out of the general funds of the Corporation and, if any Additional Shares
are purchased by the Underwriters pursuant to paragraph 2(b) hereof, an
additional fee of 6.5% of the aggregate purchase price of the Additional Shares
out of the general funds of the Corporation (the "Additional Underwriting Fee").
Such fees shall be payable as provided for in subparagraph 7(a).
The Underwriters will be permitted to appoint other registered investment
dealers and brokers (or other investment dealers and brokers duly qualified in
their respective jurisdictions) as their agents to assist in offering the
Purchased Shares and the Underwriters may determine the remuneration payable by
the Underwriters to such other investment dealers and brokers appointed by them.
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7. (a) DELIVERY OF THE SHARES AND PAYMENT THEREFOR
Delivery to the Underwriters of and payment for the Firm Shares and payment
of the Underwriting Fee to the Underwriters by certified cheque or bank draft
shall be made at the offices of ▇▇▇▇ & Berlis, Toronto, Ontario, on the Closing
Date.
Certificates for the Firm Shares to be purchased hereunder shall be
registered in such names and in such denominations as the Underwriters shall
request by written notice prior to _____ a.m., _______ time, on the third
Business Day preceding the Closing Date. Such certificates shall be made
available to the Underwriters in Toronto, as the Underwriters may direct in such
written notice, for inspection and packaging not later than _____ a.m., _______
time, on the Business Day preceding the Closing Date. The certificates
evidencing the Firm Shares to be purchased hereunder shall be delivered to the
Underwriters on the Closing Date against payment to the Corporation, or as the
Corporation may direct to the Underwriters in writing not less than 24 hours
prior to the Closing Date, of the purchase price therefor, in the case of Firm
Shares, by certified or official bank cheque or cheques payable in same day
funds and made payable as the Underwriters may direct to the Corporation in
writing not less than 24 hours prior to the Closing Date.
In the event that the Underwriters elect to purchase any Additional Shares
pursuant to paragraph 2(b) hereof, the location of the Additional Closing, the
delivery of the certificate(s) representing the Additional Shares, the payment
by the Underwriters to the Corporation of the aggregate purchase price for the
Additional Shares and the payment of the Additional Underwriting Fee by the
Corporation to the Underwriters shall be effected in the same manner as set
forth in the preceding paragraphs in connection with the closing of the purchase
of the Firm Shares.
(b) EXPENSES OF TRANSFER AGENT
The Corporation shall pay all fees and expenses payable to Montreal Trust
Company of Canada in connection with the preparation, delivery, certification
and exchange of the Purchased Shares contemplated by this paragraph and the fees
and expenses payable to Montreal Trust Company of Canada in connection with the
initial or additional transfers as may be required in the course of the
distribution of the Firm Shares and any Additional Shares.
8. CONDITIONS
The several obligations of the Underwriters to purchase the Firm Shares on
the Closing Date, and the Additional Shares, if any, on the Additional Closing
Date, shall be subject to the accuracy of the representations and warranties in
all material respects of the Corporation contained in this Agreement as of the
date of this Agreement and as of the Closing Date or the Additional Closing
Date, as the case may be (except for representations
-23-
and warranties which are made in reference to a specific date), the performance
by the Corporation of its obligations under this Agreement and the following
additional conditions:
(a) All legal requirements to be fulfilled by the Corporation to enable
the Purchased Shares to be offered for sale and sold to the public in
each of the Qualifying Provinces by or through the Underwriters and
other investment dealers and brokers who comply with applicable
Canadian Securities Laws in the Qualifying Provinces shall have been
complied with, in all material respects, including the obtaining of a
receipt from the OSC under National Policy No.1 of the Canadian
Securities Administrators ("NP 1") and the Canadian Securities
Regulatory Authorities in such of the other Qualifying Provinces, if
any, that have opted out of the NP 1 receipt system. Not later than
the second Business Day following the date of this Agreement, the
Canadian Supplemented Prospectus shall have been filed with the
Canadian Securities Regulatory Authorities in accordance with the PREP
Procedures, and the U.S. Supplemented Prospectus shall have been filed
with the SEC in accordance with Rule 424(b) of the Rules and
Regulations; no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereof shall
have been issued and no proceeding for that purpose shall have been
instituted or, to the knowledge of the Corporation or any Underwriter,
threatened by the SEC; no order having the effect of ceasing or
suspending the distribution of the Purchased Shares shall have been
issued by any Canadian Securities Regulatory Authority or stock
exchange in Canada and no proceedings for that purpose shall have been
instituted or, to the knowledge of the Corporation or any Underwriter,
threatened by any Canadian Securities Regulatory Authority or stock
exchange in Canada; and all requests for information. on the part of
the Canadian Securities Regulatory Authorities and the SEC shall have
been complied with to the satisfaction of the Underwriters.
(b) The Underwriters shall have received at the Closing Time a legal
opinion dated the Closing Date or the Additional Closing Date, as the
case may be, in form and substance satisfactory to counsel to the
Underwriters, acting reasonably, addressed to the Underwriters from
British Virgin Islands counsel to the Corporation, ▇▇▇▇▇▇ Westwood &
Riegels, as to the laws of the British Virgin Islands, which counsel
in turn may rely as to matters of fact, on certificates of the
auditors of the Corporation, public and stock exchange officials and
officers of the Corporation, with respect to the following matters:
(i) the Corporation has been duly incorporated and is validly
subsisting under the laws of its jurisdiction of incorporation.
The Corporation is duly qualified and in good standing as a
foreign or extraprovincial corporation in each jurisdiction in
which the character or location of its properties (owned,
leased or licensed) or the nature or conduct of its
-24-
business makes such qualification necessary, except for those
failures to be so qualified or in good standing which will not
in the aggregate have a material adverse effect on the
Corporation and its Material Subsidiaries taken as a whole;
(ii) the Corporation has an authorized and outstanding share capital
as set forth in the Registration Statement and the
Prospectuses. The Purchased Shares have been duly and validly
authorized and, when delivered by the Corporation in accordance
with this Agreement, will be duly and validly issued, fully
paid and non-assessable and will not have been issued in
violation of or subject to any preemptive rights. The Common
Shares, Firm Shares and Additional Shares conform to the
descriptions thereof contained in the Registration Statement
and the Prospectuses;
(iii) the Corporation has all requisite corporate power and authority
to own, lease, operate and license its assets and properties
and conduct its business as described in the Registration
Statement and the Prospectuses; there are no restrictions in
the articles and bylaws of the Corporation that would limit its
corporate power and authority to own, operate and license its
assets and properties and conduct its business as described in
the Registration Statement and the Prospectuses; and the
Corporation has all requisite corporate power and authority to
execute, deliver and perform its obligations under this
Agreement;
(iv) this Agreement and the transactions contemplated herein have
been duly authorized by all necessary corporate action and this
Agreement has been duly executed and delivered by the
Corporation;
(v) the execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby by the
Corporation do not and will not (A) conflict with or result in
a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or
both, would constitute a default) under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Corporation or (B) violate or
conflict with any provision of, the constating documents of the
Corporation or any material agreement, indenture, lease or
other instrument to which the Corporation is a party or by
which it or any of its properties is bound that is known to
such counsel, which conflict, breach or default would have a
material adverse effect on the assets or properties, business,
results of operations, prospects or conditions (financial or
otherwise) of the Corporation and its Material Subsidiaries,
taken as a whole, or, to the
-25-
best knowledge of such counsel, any judgment, decree, order,
statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction
over the Corporation or any of its properties or assets; no
consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any
public, governmental, or regulatory agency or body having
jurisdiction over the Corporation or any of its properties or
assets is required for the execution, delivery and performance
of this Agreement or the consummation of the transactions
contemplated hereby, except for such as may be required under
Canadian Securities Laws or U.S. Securities Laws;
(vi) to the knowledge of such counsel, the Corporation is not (A) in
violation of its constating documents or (B) in default in the
performance of any material obligation, agreement or condition
contained in any bond, debenture, note or other evidence of
indebtedness, except as may be disclosed in the Prospectuses or
where any such default or defaults in the aggregate would not
have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition
(financial or otherwise) of the Corporation and the Material
Subsidiaries, taken as a whole;
(vii) to the knowledge of such counsel, except as disclosed in the
Prospectuses, there is no litigation or governmental or other
proceeding or investigation, before any court or before or by
any public body or board pending or threatened against, or
involving the assets, properties or businesses of, the
Corporation or the Material Subsidiaries which would have a
material adverse effect upon the assets or properties,
business, results of operations, prospects or condition
(financial or otherwise) of the Corporation and the Material
Subsidiaries, taken as a whole;
(viii) the form and terms of the certificates representing the
Purchased Shares meet all legal requirements under applicable
laws of the jurisdiction of incorporation of the Corporation
and have been duly approved by the Corporation; and
(ix) as to all other legal matters reasonably requested by counsel
to the Underwriters relating to the distribution of the
Purchased Shares.
(c) The Underwriters shall have received at the Closing Time a legal
opinion dated the Closing Date or the Additional Closing Date, as the
case may be, in form and substance satisfactory to counsel to the
Underwriters, acting reasonably, addressed to the Underwriters from
Bermuda counsel to the
-26-
Corporation, ., as to the laws of Bermuda, which counsel in turn may
rely as to matters of fact, on certificates of the auditors of the
Corporation, public and stock exchange officials and officers of the
Corporation, with respect to the following matters:
(i) GPL has been duly incorporated and is validly subsisting under
the laws of its jurisdiction of incorporation. GPL is duly
qualified and in good standing as a foreign or extraprovincial
corporation in each jurisdiction in which the character or
location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification
necessary, except for those failures to be so qualified or in
good standing which will not in the aggregate have a material
adverse effect on the Corporation or its Material Subsidiaries
taken as a whole;
(ii) all of the issued and outstanding capital stock of GPL has been
duly and validly issued and are fully paid and non-assessable
and was not issued in violation of preemptive rights and,
except as set forth in the Registration Statement and the
Prospectus, the Corporation is the registered owner of 100% of
the issued and outstanding capital stock of GPL;
(iii) GPL has all requisite corporate power and authority to own,
lease, operate and license its assets and properties and
conduct its business as described in the Registration Statement
and the Prospectuses; and there are no restrictions in the
articles and bylaws of GPL that would limit its corporate power
and authority to own, operate and license its assets and
properties and conduct its business as described in the
Registration Statement and the Prospectuses;
(iv) the execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby by the
Corporation do not and will not (A) conflict with or result in
a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or
both, would constitute a default) under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of GPL or (B) violate or conflict with
any provision of, the constating documents of GPL or any
material agreement, indenture, lease or other instrument to
which GPL is a party or by which it or any of its properties is
bound that is known to such counsel, which conflict, breach or
default would have a material adverse effect on the assets or
properties, business, results of operations, prospects or
conditions (financial or otherwise) of the Corporation and its
Material Subsidiaries, taken as a whole, or,
-27-
to the best knowledge of such counsel, any judgment, decree,
order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction
over GPL or any of its properties or assets; no consent,
approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any
public, governmental, or regulatory agency or body having
jurisdiction over GPL or any of its properties or assets is
required for the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated
hereby, except for such as may be required under Canadian
Securities Laws or U.S. Securities Laws;
(v) to the knowledge of such counsel, GPL is not (A) in violation
of its constating documents or (B) in default in the
performance of any material obligation, agreement or condition
contained in any bond, debenture, note or other evidence of
indebtedness, except as may be disclosed in the Prospectuses or
where any such default or defaults in the aggregate would not
have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition
(financial or otherwise) of the Corporation and the Material
Subsidiaries, taken as a whole;
(vi) to the knowledge of such counsel, except as disclosed in the
Prospectuses, there is no litigation or governmental or other
proceeding or investigation, before any court or before or by
any public body or board pending or threatened against, or
involving the assets, properties or businesses of, the
Corporation or the Material Subsidiaries which would have a
material adverse effect upon the assets or properties,
business, results of operations, prospects or condition
(financial or otherwise) of the Corporation and the Material
Subsidiaries, taken as a whole; and
(vii) as to all other legal matters reasonably requested by counsel
to the Underwriters relating to the distribution of the
Purchased Shares.
(d) The Underwriters shall have received at the Closing Time a legal
opinion dated the Closing Date or the Additional Closing Date, as the
case may be, in form and substance satisfactory to counsel to the
Underwriters, addressed to the Underwriters from Canadian counsel to
the Corporation, ▇▇▇▇ & Berlis, as to the laws of Canada and the
Qualifying Provinces, which counsel in turn may rely upon the opinions
of local counsel where they deem such reliance proper as to the laws
other than those of Canada and Ontario and as to matters of fact, on
certificates of the auditors of the Corporation, public and stock
-28-
exchange officials and officers of the Corporation, with respect to
the following matters:
(i) all necessary documents and proceedings have been filed and
taken and all other legal requirements have been fulfilled
under the laws of each of the Qualifying Provinces to qualify
the Purchased Shares to be offered and sold to the public in
each of the Qualifying Provinces by or through investment
dealers or brokers registered under applicable laws of such
provinces who have complied with the relevant provisions of
those laws, and no other authorization, approval, permit,
consent or license of any government, governmental
instrumentality or court in Canada is required for the valid
authorization, issuance, sale and delivery of the Purchased
Shares; to the knowledge of such counsel, no order having the
effect of ceasing or suspending the distribution of the
Purchased Shares has been issued by any Canadian Securities
Regulatory Authority or The Toronto Stock Exchange and no
proceedings for that purpose have been instituted or,
threatened by any Canadian Securities Regulatory Authority or
The Toronto Stock Exchange;
(ii) this Agreement constitutes a legal, valid and binding
obligation of the Corporation and is enforceable in accordance
with its terms, except as enforcement of this Agreement may be
limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally and
except as limited by the application of equitable principles
when equitable remedies are sought; provided that such counsel
may express no opinion as to the enforceability of the
indemnity provisions of paragraph 10 and the contribution
provisions of paragraph 11 of the Agreement;
(iii) subject to the qualifications set out therein, the statements
made in the Prospectuses relating to Canadian income tax laws
under "Certain Income Tax Considerations" constitute a fair
summary of certain Canadian income tax considerations
applicable to those holders of Purchased Shares referred to
therein;
(iv) the form and terms of the certificates representing the
Purchased Shares meet all legal requirements under the rules of
The Toronto Stock Exchange;
(v) The Montreal Trust Company of Canada at its principal offices
in the Cities of Toronto and Vancouver have been duly appointed
as the transfer agent and registrar for the Common Shares;
-29-
(vi) the Purchased Shares have been conditionally approved for
listing by The Toronto Stock Exchange on or before the Closing
Date;
(vii) under the laws of the Province of Ontario relating to
submission to jurisdiction, the Corporation has validly
submitted to the non-exclusive personal jurisdiction of the
courts of the Province of Ontario in any action arising out of
or relating to this Agreement and has validly appointed ▇▇▇▇ &
Berlis in paragraph 16 of this Agreement for the purposes
described therein; and service of process effected in the
manner set forth in paragraph 16 of this Agreement will be
effective to confer valid personal jurisdiction over the
Corporation in any such action; and
(viii) as to all other legal matters reasonably requested by counsel
to the Underwriters relating to the distribution of the
Purchased Shares.
(e) The Underwriters shall have received at the Closing Time a legal
opinion dated the Closing Date or the Additional Closing Date, as the
case may be, in form and substance satisfactory to counsel to the
Underwriters, addressed to the Underwriters from ▇▇▇▇▇▇▇▇▇▇
Rosentzveig ▇▇▇▇▇▇▇, regarding compliance with the laws of Quebec
relating to the use of the French language in connection with the
documents (including any Preliminary Prospectus, the Prospectus,
Prospectus Amendments and certificates representing the Purchased
Shares) to be delivered to purchasers in Quebec.
(f) The Underwriters shall have received at the Closing Time a legal
opinion dated the Closing Date or the Additional Closing Date, as the
case may be, in form and substance satisfactory to counsel to the
Underwriters, addressed to the Underwriters from United States counsel
to the Corporation, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ as to the federal
laws of the United States and the laws of the State of California,
which counsel in turn may rely as to matters of fact, on certificates
of the auditors of the Corporation, public and stock exchange
officials and officers of the Corporation, to the following effect:
(i) SPI has been duly incorporated and is validly subsisting under
the laws of its jurisdiction of incorporation. SPI is duly
qualified and in good standing as a foreign or extraprovincial
corporation in each jurisdiction in which the character or
location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification
necessary, except for those failures to be so qualified or in
good standing which will not in the aggregate have a material
adverse effect on SPI;
-30-
(ii) all of the issued and outstanding capital stock of SPI has been
duly and validly issued and is fully paid and non-assessable
and was not issued in violation of preemptive rights and,
except as set forth in the Registration Statement and the
Prospectuses, the Corporation is the registered owner of 100%
of the issued and outstanding capital stock of SPI;
(iii) SPI has all requisite corporate power and authority to own,
lease, operate and license its assets and properties and
conduct its business as described in the Registration Statement
and the Prospectuses; and there are no restrictions in the
articles and bylaws of SPI that would limit its corporate power
and authority to own, operate and license its assets and
properties and conduct its business as described in the
Registration Statement and the Prospectuses;
(iv) the execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby by the
Corporation do not and will not (A) conflict with or result in
a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or
both, would constitute a default) under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of SPI or (B) violate or conflict with
any provision of, the constating documents of SPI or any
material agreement, indenture, lease or other instrument to
which SPI is a party or by which it or any of its properties is
bound that is known to such counsel, which conflict, breach or
default would have a material adverse effect on the assets or
properties, business, results of operations, prospects or
conditions (financial or otherwise) of the Corporation and its
Material Subsidiaries, taken as a whole, or, to the best
knowledge of such counsel, any judgment, decree, order,
statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction
over SPI or any of its properties or assets; no consent,
approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any
public, governmental, or regulatory agency or body having
jurisdiction over SPI or any of its properties or assets is
required for the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated
hereby, except for such as may be required under Canadian
Securities Laws or U.S. Securities Laws;
(v) to the knowledge of such counsel, SPI is not (A) in violation
of its constating documents or (B) in default in the
performance of any material obligation, agreement or condition
contained in any bond,
-31-
debenture, note or other evidence of indebtedness, except as
may be disclosed in the Prospectuses or where any such default
or defaults in the aggregate would not have a material adverse
effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of
the Corporation and the Material Subsidiaries, taken as a
whole;
(vi) to the knowledge of such counsel, except as disclosed in the
Prospectuses, there is no litigation or governmental or other
proceeding or investigation, before any court or before or by
any public body or board pending or threatened against, or
involving the assets, properties or businesses of, the
Corporation or the Material Subsidiaries which would have a
material adverse effect upon the assets or properties,
business, results of operations, prospects or condition
(financial or otherwise) of the Corporation and the Material
Subsidiaries, taken as a whole;
(vii) to the best of such counsel's knowledge, the Corporation meets
the eligibility requirements for the use of Form S-1 under the
1933 Act and the Rules and Regulations;
(viii) the Registration Statement has become effective under the 1933
Act; any required filing of the U.S. Supplemented Prospectus or
any supplement or amendment thereto containing the Rule 430A
Information pursuant to Rule 424(b) of the Rules and
Regulations has been made in the manner and within the time
period required by said Rule 424(b); and to the knowledge of
such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or, to the best of such
counsel's knowledge, are threatened by the SEC;
(ix) the Registration Statement, as of its effective date, and the
U.S. Prospectus and each amendment or supplement thereto, and
each document incorporated by reference therein (other than the
financial statements and related notes and financial and
statistical data included or incorporated by reference therein,
as to which such counsel need not express any opinion) appear
on their face to be appropriately responsive in all material
respects with the requirements of the 1933 Act and the Rules
and Regulations applicable to registration statements on Form
S-1;
(x) no consent, approval, authorization, order, registration or
qualification of or with any court, regulatory body or
governmental agency or body is required on the part of the
Corporation under the federal laws of the
-▇▇-
▇▇▇▇▇▇ ▇▇▇▇▇▇ for the sale of the Purchased Shares by the
Corporation or the execution and delivery of this Agreement by
the Corporation and the performance by the Corporation of its
obligations under this Agreement other than as have been
obtained under the 1933 Act (and other than actions as may be
required by the rules and regulations of the NASD or state
securities or Blue Sky laws, as to which such counsel need not
express any opinion), nor, so far as is known to such counsel,
will the issue and sale of the Purchased Shares to the
Underwriters and the execution and delivery of this Agreement
and the performance of its obligations thereunder contemplated
therein conflict with or result in a violation of any existing
federal law or regulation (assuming compliance with all
applicable state securities and Blue Sky laws), or, to such
counsel's knowledge, any ruling, or judgment, order or decree
of any government, governmental instrumentality or court
located in the United States having jurisdiction over the
Corporation or any of its property or assets;
(xi) to the knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened against the
Corporation or any of the Material Subsidiaries or to which the
Corporation or any of the Material Subsidiaries or any of their
respective properties is subject, which are material to the
Corporation and the Material Subsidiaries taken as a whole,
that are required to be described in the Registration Statement
or the U.S. Prospectus that are not described as required;
(xii) the statements made in the U.S. Prospectus relating to United
States federal income tax laws and regulations under "Certain
Income Tax Considerations", to the extent that the foregoing
statements constitute matters of law or legal conclusions, have
been reviewed by such counsel and fairly present the
information disclosed therein in all material respects;
(xiii) the execution and delivery of this Agreement and the
performance by the Corporation of its obligations thereunder do
not and will not (A) conflict with or result in a breach of any
of the terms and provisions of, or constitute a default (or an
event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property
or assets of SPI or (B) violate any provision of, the
constating documents of the Corporation or SPI or any material
agreement included as an exhibit in the Registration Statement
or, to the best knowledge of such counsel, any judgment,
decree, order, statute, rule or regulation of any United States
federal or state court or public, governmental or regulatory
agency or body having jurisdiction over the Corporation or
-33-
any of its properties or assets; no consent, approval,
authorization, order, registration, filing, qualification,
license or permit of or with any court or any public,
governmental, or regulatory agency or body having jurisdiction
over the Corporation or any of its properties or assets is
required for the execution and delivery of this Agreement or
the performance by the Corporation of its obligations
thereunder, except for such as may be required under Canadian
Securities Laws or U.S. Securities Laws;
(xiv) the Corporation is not and upon consummation of the
transactions contemplated hereby, will not be an "investment
company" as such term is defined in the United States
Investment Company Act of 1940, as amended;
(xv) in an action on a final and conclusive judgment in personam of
any court in the Province of Ontario that is not impeachable as
void or voidable under Ontario law, a court of competent
jurisdiction in the State of California would give effect to
the appointment by the Corporation of ▇▇▇▇ & Berlis as its
agent to receive service of process in Canada under this
Agreement and to the provisions in this Agreement whereby the
Corporation submits to the non-exclusive jurisdiction of an
Ontario court;
(xvi) this choice of Ontario law as the law governing this Agreement
is a permissible choice of law under the laws of the State of
California and in an action properly brought before a
California state court or a Federal court sitting in the State
of California, Ontario substantive law would be applied in
determining the respective rights and obligations of the
parties thereto, provided that such court does not determine
that the application of such law would be repugnant to the
public policy of the State of California. Without having made
any special investigation, such counsel is not specifically
aware of any public policy of the State of California to which
the terms of this Agreement would be repugnant;
(xvii) under principals of international comity, a California State or
a Federal court sitting in the State of California should
recognize and enforce, against the immediate parties, a valid
judgment for the payment of money (other than a judgment for
taxes, a fine or other penalty) rendered by an Ontario court
that is conclusive and binding in Ontario (i.e., to the
----
same extent that such judgment would be recognized and enforced
by a court in Ontario), except that the enforcement thereof may
be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors'
-34-
rights generally and to general principles of equity
(regardless of whether considered in a proceeding at law or in
equity). For purposes of this opinion, a judgment is valid only
if (A) under the laws of Ontario, the Ontario court has
jurisdiction over the parties in the case, (B) reasonable
notice and a reasonable opportunity to be heard was afforded to
the person affected, (C) there was compliance with the
requirements under Ontario law for the valid exercise of power
by the court, (D) the judgment was not procured by fraud, (E)
in the case of jurisdiction based only on personal service, the
Ontario court was not a seriously inconvenient forum for the
trial of the action, (F) such judgment rendered by the court
does not conflict with another final and conclusive judgment by
any other court, (G) the proceedings in the court rendering
such judgment were not contrary to any agreement between the
parties under which the dispute in question was to be settled
otherwise than by proceedings in that court, (H) such judgment
was rendered under a system which provides for impartial
tribunals and procedures compatible with the requirements of
due process of law under United States law, and (I) the
judgment and the cause of action underlying the judgment are
not repugnant to the public policy of the State of California.
In addition, United States counsel to the Corporation shall state
that such counsel has participated in conferences with officers and
other representatives of the Corporation, representatives of the
Underwriters and representatives of the independent auditors of the
Corporation, at which conference the contents of the Registration
Statement, the Canadian Prospectus and the U.S. Prospectus and related
matters were discussed and, although such counsel have not verified
and is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus or the documents
incorporated by reference, if any, and shall include its statement of
belief that on the basis of the foregoing no facts have come to the
attention of such counsel which lead such counsel to believe that the
Registration Statement (except for financial statements and notes and
schedules intended therein and other financial and statistical data as
to which such counsel need not express any opinion), at the time it
became effective contained any untrue statement of material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto (except for
financial statements and notes and schedules included therein and
other financial and statistical data as to which such counsel need not
express any opinion), on the date of the Prospectus or on the Closing
Date or the Additional Closing Date, as the case may be, contained or
contains an untrue statement of a material fact or omitted or omits to
state a material fact
-35-
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(g) The Underwriters shall have received at the Closing Time a legal
opinion dated the Closing Date or the Additional Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters,
addressed to the Underwriters from United States patent counsel to the
Corporation and the Material Subsidiaries, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP,
with respect to matters in connection with the preparation and filing
of certain patent applications for methods of treating and preventing
colon cancer using balsalazide, metabolites of balsalazide and
oxidation products of metabolites of balsalazide (such patent
applications and one United States patent issuing from one of such
patent applications is listed in Schedule I hereto) to the following
effect that:
(i) the statements in the Registration Statement and Prospectus (A)
in the fourth and ninth sentences of the first paragraph under
the caption "Risk Factors -- Patents and Proprietary Rights;
Expiration of Patents", and (B) in the first, second, third and
fourth sentences of the second paragraph under the caption
"Colazide" under the caption "Business --Patents and
Proprietary Rights" are, to their knowledge, accurate and
complete statements or summaries of the matters referred to
therein in all material respects;
(ii) to their knowledge, there are no judicial proceedings pending
relating to patent rights of the Corporation to which the
Corporation is a party, and, to their knowledge, no such
judicial proceedings are threatened by any person and to their
knowledge, the Corporation has not received any written notice
of infringement of or conflict with any patent rights of
others;
(iii) to their knowledge, each of the patent applications listed on
Schedule I hereto has been properly prepared and filed on
behalf of the Corporation;
(iv) assignment documents listing the Corporation as the sole
assignee of each of the United States patent applications
listed on Exhibit A hereto (the "Assigned Applications") have
been filed with the United States Patent and Trademark Office
(the "PTO"), and corresponding Notices of Recordation of
Assignment Documents have been received from the PTO and to
their knowledge, the Corporation has not received any written
communications in which it is alleged that the Corporation is
not the sole assignee of the Assigned Applications;
-36-
(v) to their knowledge, each of the patent applications listed on
Schedule I hereto is being prosecuted in a manner sufficient to
avoid abandonment of the application (other than abandonment in
favour of a continuing application); and
(vii) they believe that they have complied with their obligation to
disclose information material to patentability pursuant to 37
C.F.R. 1.56 in connection with the filing of the United States
patent application listed on Schedule I.
Such counsel shall additionally state that nothing has come to their
attention that leads them to believe that the statements in the Patent
Paragraphs concerning patents and patent applications for methods of
treating and preventing colon cancer using balsalazide, metabolites of
balsalazide and oxidation products of metabolites of balsalazide, at
the time the Registration Statement became effective, contained an
untrue statement of a material fact with respect to such patents and
patent applications or omitted to state a material fact with respect
to such patents and patent applications required to be stated therein
or necessary to make the statements therein not misleading or, as of
the date of the Prospectus or as of the date hereof, contained an
untrue statement of a material fact with respect to such patents and
patent applications or omitted to state a material fact with respect
to such patents and patent applications necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(h) The Underwriters shall have received at the Closing Time a legal
opinion dated the Closing Date or the Additional Closing Date, as the
case may be, addressed to the Underwriters from counsel to the
Underwriters, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, with respect to certain of the
matters in subparagraph 9(b) and such other matters requested by the
Underwriters relating to the distribution of the Purchased Shares;
provided that counsel to the Underwriters shall be entitled to rely on
the opinions of local counsel as to matters governed by the laws of
jurisdictions other than the laws of Canada and Ontario, British
Columbia, Alberta and Quebec, and as to matters of fact, on
certificates of the auditors of the Corporation, public officials and
officers of the Corporation; and provided further that counsel to the
Underwriters shall be entitled to rely upon the opinion of counsel to
the Corporation, with respect to all matters addressed therein except
for subparagraph 8(b)(xiii) and (xiv).
(i) The Underwriters shall have received at the Closing Time a legal
opinion dated the Closing Date or Additional Closing Date, as the case
may be,
-37-
addressed to the Underwriters from U.S. counsel to the Underwriters,
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, LLP with respect to the
Registration Statement and the Prospectuses and such other related
matters as the Underwriters may request, and such counsel shall have
received such papers and information as they may request to enable
them to pass upon such matters. Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇,
LLP shall be entitled to rely upon the opinion of ▇▇▇▇ & Berlis as to
matters of Canadian law in rendering their opinion.
(j) The Underwriters shall have received at the Closing Time a letter
dated the Closing Date or the Additional Closing Date, as the case may
be, in form and substance satisfactory to the Underwriters, addressed
to the Underwriters and the Chief Financial Officer and the directors
of the Corporation from the auditors of the Corporation, Ernst &
Young, LLP confirming the continued accuracy of the comfort letter to
be delivered to the Underwriters pursuant to subparagraph 4(k)(viii)
with such changes as may be necessary to bring the information in such
letter forward to a date not more than four Business Days prior to the
Closing Date or the Additional Closing Date, as the case may be, which
changes shall be acceptable to the Underwriters.
(k) The Underwriters shall have received at the Closing Time certificates
dated the Closing Date or the Additional Closing Date, as the case may
be, addressed to the Underwriters and counsel to the Underwriters and
signed by appropriate officers of the Corporation, with respect to the
articles and by-laws of the Corporation, all resolutions of the board
of directors of the Corporation relating to this Agreement, the
incumbency and specimen signatures of signing officers of the
Corporation and with respect to all other matters as the Underwriters
may reasonably request.
(l) At the Closing Date, the Purchased Shares shall have been approved for
listing on The Toronto Stock Exchange, subject to prior notice of
issuance.
(m) The Underwriters shall have received at the Closing Time a certificate
or certificates dated the Closing Date or the Additional Closing Date,
as the case may be, addressed to the Underwriters and signed on behalf
of the Corporation by the Chief Executive Officer and the Chief
Financial Officer of the Corporation or other officers of the
Corporation acceptable to the Underwriters, certifying for and on
behalf of the Corporation after having made due enquiry and after
having carefully examined the Prospectuses and any Prospectus
Amendments, that:
(i) since the respective dates as of which information is given in
the Prospectuses as amended by any Prospectus Amendment that
(A) there has been no material change (actual, anticipated,
contemplated or
-38-
threatened, whether financial or otherwise) in the business,
affairs, operations, assets, liabilities (contingent or
otherwise) or capital of the Corporation and its Material
Subsidiaries, taken as a whole, and (B) no transaction has been
entered into by any of the Corporation and its Material
Subsidiaries which is material to the Corporation and its
Material Subsidiaries taken as a whole, other than as disclosed
in the Prospectuses or any Prospectus Amendment, as the case
may be;
(ii) no stop order suspending effectiveness of the Registration
Statement or any post-effective amendment thereof has been
issued and no proceedings therefor have been initiated or to
the knowledge of such officers, threatened by the SEC; no
order, ruling or determination having the effect of suspending
the sale or ceasing the trading of the Purchased Shares or any
other Purchased Shares of the Corporation has been issued by
any regulatory authority and is continuing in effect and no
proceedings for that purpose have been instituted or are
pending or, to the knowledge of such officers contemplated or
threatened under any Canadian Securities Laws, or by any other
regulatory authority;
(iii) the Corporation has complied in all material respects with the
terms and conditions of this Agreement on its part to be
complied with up to the Closing Time;
(iv) the representations and warranties of the Corporation contained
in this Agreement are true and correct in all material respects
as of the Closing Date or the Additional Closing Date, as the
case may be, with the same force and effect as if made at and
as of the Closing Time after giving effect to the transactions
contemplated by this Agreement; and
(v) such other matters as the Underwriters may reasonably request.
(n) The Underwriters shall have received at the Closing Time an executed
lock-up agreement from each of Biorex Laboratories Limited, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
providing that such company or person will not sell, transfer or
assign, without the prior consent of ▇▇▇▇▇▇▇▇, such consent not to be
unreasonably withheld, any Common Shares of the Corporation or any
securities convertible into or exercisable or exchangeable for Common
Shares, held or controlled, directly or indirectly by such company or
person, for a period of 90 days following the Closing Date.
(o) The Underwriters shall have received at the Closing Time such further
information, certificates and documents as the Underwriters may
reasonably request.
-39-
9. RIGHTS OF TERMINATION
(a) LITIGATION
If any inquiry, action, suit, investigation or other proceeding (whether
formal or informal) is instituted or threatened or any order is made by any
federal, state, provincial, municipal or other governmental authority,
department, commission, board, bureau, agency or instrumentality in relation to
the Corporation or any of the Material Subsidiaries or the distribution of the
Purchased Shares should be announced, instituted or threatened or any order
under or pursuant to any laws or regulations of Canada or the Qualifying
Provinces or the United States or any state in which the distribution is being
made or by The Toronto Stock Exchange or any other regulatory or governmental
authority should be made or issued (except in each case for any such proceedings
or order based upon the activities or alleged activities of the Underwriters and
not of the Corporation), which, in the opinion of any of the Underwriters,
operates to or would prevent or restrict the distribution or trading of the
Purchased Shares or the investment quality or marketability of the Purchased
Shares, any one or more of the Underwriters shall be entitled, at its option and
in accordance with subparagraph 9(e), to terminate its obligations under this
Agreement by notice to that effect given to the Corporation at any time prior to
the Closing Time on the Closing Date.
(b) MARKET OUT CLAUSE
If prior to the Closing Time:
(i) there should develop, occur or come into effect or be announced
any occurrence of national or international consequence or any
action, governmental law, regulation or enquiry, or any other
occurrence of any nature whatsoever which, in the opinion of
any of the Underwriters, adversely affects or would be likely
to adversely affect the Canadian or U.S. financial markets or
the business of the Corporation and its Material Subsidiaries,
taken as a whole, or would be likely to prejudice the success
of the proposed issue, sale and distribution of the Purchased
Shares;
(ii) use of the Registration Statement or the Canadian Prospectus
shall have been suspended or trading in securities generally on
The Toronto Stock Exchange is suspended or materially limited;
(iii) a banking moratorium is declared by any federal, provincial or
state authority in either Canada or the United States; or
(iv) the state of the Canadian or international financial markets is
such that in the opinion of any of the Underwriters, the
Purchased Shares cannot be profitably marketed,
-40-
the Underwriters shall be entitled at their option, in accordance with
subparagraph 9(e), to terminate their obligations under this Agreement by
written notice to that effect given to the Corporation prior to the Closing Time
on the Closing Date.
(c) MATERIAL CHANGE
If prior to the Closing Time, any event shall occur or condition shall
exist as contemplated by subparagraph 4(b)(iii) which is a change in a material
fact or a material change which results or, in the opinion of any of the
Underwriters, might be expected to result, in the purchasers of a material
number of Purchased Shares exercising their right under applicable legislation
to withdraw from their purchase of Purchased Shares or, in the opinion of any of
the Underwriters, might be expected to have a material adverse effect on the
market price or value or marketability of the Purchased Shares, any one or more
of the Underwriters shall be entitled, at its option, in accordance with
subparagraph 9(e), to terminate its obligations under this Agreement by written
notice to that effect given to the Corporation prior to the Closing Time.
(d) NON-COMPLIANCE WITH CONDITIONS
The Corporation agrees that all terms and conditions in paragraph 8 shall
be construed as conditions and complied with so far as they relate to acts to be
performed or caused to be performed by it, that it will use its reasonably
commercial efforts to cause such conditions to be complied with, and that any
breach or failure by the Corporation to comply with any such conditions shall
entitle any of the Underwriters to terminate its obligations to purchase the
Purchased Shares by notice to that effect given to the Corporation at or prior
to the Closing Time, unless otherwise expressly provided in this Agreement. The
Underwriters may waive, in whole or in part, or extend the time for compliance
with, any terms and conditions without prejudice to their rights in respect of
any other terms and conditions or any other or subsequent breach or non-
compliance, provided that any such waiver or extension shall be binding upon the
Underwriters only if such waiver or extension is in writing and signed by all of
the Underwriters.
(e) EXERCISE OF TERMINATION RIGHTS
The rights of termination contained in subparagraphs 9(a), (b), (c) and (d)
may be exercised by any of the Underwriters and are in addition to any other
rights or remedies any of the Underwriters 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 or otherwise; provided, however, that
in no event may any Underwriter terminate its obligations hereunder as a result
of a breach of any covenant, representation or warranty by any Underwriter or as
a result of the failure of any Underwriter to satisfy any condition to be
satisfied by the Underwriters. In the event of any such termination, there
shall be no further liability on the part of the Underwriter to the Corporation
or on the part of the Corporation to the Underwriters except in respect of any
liability which may have arisen
-41-
prior to or arise after such termination under paragraphs 10, 11 and 13. A
notice of termination given by an Underwriter under subparagraphs 9(a), (b), (c)
or (d) shall not be binding upon any other Underwriter.
10. (a) INDEMNITY
The Corporation agrees to indemnify and save harmless each of the
Underwriters and each of their directors, officers, employees and agents and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20(a) of the 1934 Act from and against all
liabilities, claims, losses (other than loss of profits), costs, damages,
expenses (including but not limited to lawyers' fees and any and all expenses
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation) in any way caused by, or arising
directly or indirectly from, or in consequence of:
(i) any information or statement, except any statement relating
solely to the Underwriters, contained in the Registration
Statement, the Preliminary Prospectuses, the Prospectuses, the
Supplemented Prospectuses or any Prospectus Amendment or post-
effective amendment to the Registration Statement or in any
certificate of the Corporation delivered pursuant to this
Agreement which at the time and in the light of the
circumstances under which it was made contains or is alleged to
contain an untrue statement of a material fact;
(ii) any omission or alleged omission to state in the Registration
Statement, the Preliminary Prospectuses, the Prospectuses, and
Supplemented Prospectuses, any Prospectus Amendment or any
certificate of the Corporation delivered pursuant to this
Agreement, any fact, except any statement relating solely to
the Underwriters, whether material or not, required to be
stated in such document or necessary to make any statement in
such document, (i) in the case of the Registration Statement,
not misleading and (ii) in the case of any Preliminary
Prospectuses, the Prospectuses, the Supplemented Prospectuses
or any Prospectus Amendment, or post-effective amendment to the
Registration Statement not misleading in light of the
circumstances under which it was made;
(iii) any order made or enquiry, investigation or proceedings
commenced or threatened by any securities commission or other
competent authority based upon any untrue statement or omission
or alleged untrue statement or alleged omission or any
misrepresentation or alleged misrepresentation (except a
statement or omission or alleged statement or omission relating
solely to the Underwriters) in the
-42-
Prospectuses or any Prospectus Amendment or based upon any
failure to comply with the Canadian Securities Laws (other than
any failure or alleged failure to comply by the Underwriters)
or U.S. Securities Laws, preventing or restricting the trading
in or the sale or distribution of the Purchased Shares in any
of the Qualifying Provinces or the United States; or
(iv) the non-compliance or alleged non-compliance by the Corporation
with any Canadian Securities Laws or U.S. Securities Laws
including the Corporation's non-compliance with any statutory
requirement to make any document available for inspection;
provided, however, that the Corporation will not be liable in any such case to
the extent but only to the extent that any such loss, liability, claim, damage
or expense arises out of or is based upon any statements contained in the
second, fourth, fifth, ninth or tenth paragraphs of the section of the
Prospectuses entitled "Plan of Distribution", the table included in the section
entitled "Underwriting" which identifies the underwriters and the allocation of
the Shares among them, or the information in the last paragraph of the outside
front cover page of the U.S. Prospectus and the last two paragraphs of the
outside front cover page of the Canadian Prospectus and provided that the
indemnification contained in this subparagraph (a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter (or to
the benefit of any person controlling such Underwriter) on account of any such
loss, claim, damage, liability or expense arising from the sale of the Purchased
Shares by such Underwriter to any person if a copy of the U.S. Prospectus or the
Canadian Prospectus, as the case may be, shall not have been delivered or sent
to such person within the time required by the 1933 Act or Canadian Securities
Laws, and the untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in such Preliminary Prospectus was
corrected in the U.S. Prospectus or the Canadian Prospectus, as the case may be,
provided that the Corporation has delivered the U.S. Prospectus or the Canadian
Prospectus, as the case may be, to the Underwriters in requisite quantity on a
timely basis to permit such delivery or sending. This indemnity agreement will
be in addition to any liability which the Corporation may otherwise have
including under this Agreement.
(b) NOTIFICATION OF CLAIMS
If any matter or thing contemplated by this paragraph (any such matter or
thing being referred to as a "Claim") is asserted against any person or company
in respect of which indemnification is or might be considered to be provided,
such person or company (the "Indemnified Part)"') will notify the Corporation,
as soon as reasonably practicable of the nature of such Claim (provided that any
failure to so notify shall relieve the Corporation of liability under this
paragraph to the extent only that such failure prejudices its ability to defend
or settle such claim) and the Corporation shall be entitled (but not required)
to assume the defence of any suit brought to enforce such Claim; provided,
however, that the defence shall be conducted through legal counsel acceptable to
the Indemnified Party, acting
-43-
reasonably, that no settlement of any such Claim may be made by the Corporation
or the Indemnified Party without the prior written consent of the other parties,
acting reasonably, and the Corporation shall not be liable for any settlement of
any such Claim unless it has consented in writing to such Settlement.
(c) RETAINING COUNSEL
In any such Claim, the Indemnified Party shall have the right to retain
other counsel to act on his or its behalf, provided that the fees and
disbursements of such counsel shall be paid by the Indemnified Party unless (i)
the Corporation and the Indemnified Party shall have mutually agreed to the
retention of the other counsel; (ii) the Corporation shall not have employed
counsel to have charge of the defence of such action within a reasonable period
and time after notice of commencement of the action or (iii) the named parties
to any such Claim (including any added third or impleaded party) include both
the Indemnified Party and the Corporation and the Indemnified Party shall
reasonably conclude that representation of both parties by the same counsel
would be inappropriate due to the actual or potential differing interests
between them.
11. (a) CONTRIBUTION
In order to provide for a just and equitable contribution in circumstances
in which the indemnity provided in paragraph 10 would otherwise be available in
accordance with its terms but is, for any reason, held to be unavailable to or
unenforceable by the Underwriters or enforceable otherwise than in accordance
with its terms, the Corporation (the "Indemnifier") and the Underwriters shall
contribute to the aggregate of all claims, expenses, costs and liabilities and
all losses (other than loss of profits) of a nature contemplated by paragraph 10
in such proportions as is appropriate to reflect the relative benefits received
by the Corporation and the Underwriters from the offering of the Purchased
Shares or, if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to above but also the relative fault of the Corporation and the Underwriters in
connection with the statements or omissions which resulted in such claims,
expenses, costs, liabilities or losses as well as any other relevant equitable
considerations. The relative benefits received by the Corporation and the
Underwriters shall be deemed to be in the same proportion as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Corporation and the underwriting discounts
and commissions received by the Underwriters, respectively, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault of
the Corporation and of the Underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Corporation or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters shall not in any event be
liable to contribute, in the aggregate, any amounts in excess of such aggregate
fee or any portion of such fee actually received. However, no party
-44-
who has engaged in any fraud, fraudulent misrepresentation or negligence shall
be entitled to claim contribution from any person who has not engaged in such
fraud, fraudulent misrepresentation or negligence.
(b) RIGHT OF CONTRIBUTION IN ADDITION TO OTHER RIGHTS
The rights to contribution provided in this paragraph shall be in addition
to and not in derogation of any other right to contribution which the
Underwriters may have by statute or otherwise at law.
(c) CALCULATION OF CONTRIBUTION
In the event that an Indemnifier may be held to be entitled to contribution
from the Underwriters under the provisions of any statute or at law, the
Indemnifier shall be limited to contribution in an amount not exceeding the
lesser of:
(i) the portion of the full amount of the loss or liability giving
rise to such contribution for which the Underwriters are
responsible, as determined in subparagraph 11(a); and
(ii) the amount of the aggregate fee actually received by the
Underwriters from the Corporation under this Agreement.
(d) NOTICE
If the Underwriters have reason to believe that a claim for contribution
may arise, they shall give the Indemnifier notice of such claim in writing, as
soon as reasonably possible, but failure to notify the Indemnifier shall not
relieve the Indemnifier of any obligation which it may have to the Underwriters
under this paragraph.
(e) RIGHT OF CONTRIBUTION IN FAVOUR OF OTHERS
With respect to this paragraph, the Indemnifier acknowledges and agrees
that the Underwriters are contracting on their own behalf and as agents for
their directors, officers, employees and agents and each person, if any, who
controls an Underwriter within the meaning of section 15 of the 1933 Act or
subsection 20(a) of the 1934 Act.
12. 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.
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13. EXPENSES
Whether or not the transactions contemplated by this Agreement shall be
completed, except as specifically provided below, all expenses of or incidental
to the creation, issue and delivery of the Purchased Shares and all expenses of
or incidental to all other matters in connection with the transaction set out in
this Agreement shall be borne by the Corporation directly including, without
limitation, all fees and expenses payable in connection with the qualification
of the Purchased Shares for distribution, the fees relating to listing the
Purchases Shares on any exchanges, fees and expenses relating to any roadshows,
including greensheets and other material used or distributed in connection with
such roadshows, all fees and expenses of the Corporation's legal counsel, up to
U.S. $15,000 of the fees and expenses of U.S. counsel to the Underwriters in
connection with any blue sky survey and any filing for review of the offering
with the NASD, all fees and expenses of the Corporation's auditors and any other
experts or advisers retained by the Corporation, all costs incurred in
connection with the preparation and printing of the Registration Statement, as
originally filed and all amendments thereof, and the preparation, translation,
printing and delivery of any Preliminary Prospectus, any Prospectus, any
Supplemented Prospectus, Prospectus Amendments and certificates representing the
Purchased Shares, all fees and expenses in connection with the listing of the
Common Shares on The Toronto Stock Exchange, and all filing fees of the SEC,
NASD and Canadian Securities Regulatory Authorities.
Except as otherwise provided herein, the fees and disbursements of the
Underwriters' counsel, the expenses of forming and managing banking and selling
groups and the Underwriters' "out-of-pocket" expenses shall be borne by the
Underwriters except that if this Agreement shall terminate or shall be
terminated pursuant to any provisions hereof or if this Agreement shall be
terminated by the Underwriters because of any failure or refusal on the part of
the Corporation to comply, in any material respect, with the terms or fulfill
any of the conditions of this Agreement other than pursuant to subparagraph 9(b)
of this Agreement or by reason of a default by the Underwriters, the Corporation
agrees to reimburse the Underwriters for all reasonable disbursements and
expenses (including fees and expenses of counsel for the Underwriters and the
expenses of forming and managing banking and selling groups) incurred by the
Underwriters in connection with this Agreement.
14. (a) OBLIGATION OF UNDERWRITERS TO PURCHASE
The Underwriters' obligations under this Agreement are several and not
joint. Accordingly:
(i) each of the Underwriters shall be obligated to purchase only
that number of Firm Shares set opposite its name below; and
(ii) if at the Closing Time any of the Underwriters fails or refuses
to purchase its applicable percentage of Firm Shares, the non-
defaulting Underwriters who are willing and able to purchase
their own
-46-
applicable percentages of Firm Shares shall be relieved of
their obligations under this Agreement, provided that
notwithstanding the provisions of this subparagraph, the
Underwriters who are willing and able to purchase their own
applicable numbers of Firm Shares may, but shall not be
obligated to, purchase the total number of Firm Shares in such
proportion as may be agreed upon by the Underwriters who are so
willing and able.
Notwithstanding anything contained in this subparagraph, the Underwriters shall
not be entitled to purchase less than all the Firm Shares.
Subject to paragraph 2(c) of this Agreement, the applicable number of Firm
Shares which each of the Underwriters shall separately be obligated to purchase
is as follows:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Inc. .
Yorkton Securities Inc. .
Marleau, ▇▇▇▇▇▇ Securities Inc. .
Midland ▇▇▇▇▇▇ Capital Inc. .
Nothing contained in this subparagraph shall relieve from responsibility to the
Corporation under this Agreement an Underwriter who shall default in its
obligation to purchase its applicable percentage of the Firm Shares.
The provisions of this paragraph 14 shall apply mutatis mutandis to the
Additional Shares.
(b) RIGHT OF CORPORATION TO TERMINATE
Nothing in this paragraph or paragraph 9 shall oblige the Corporation to
sell to the Underwriters less than all of the Firm Shares.
(c) APPLICATION TO ADDITIONAL SHARES
The provisions of this paragraph 14 shall apply mutatis mutandis to the
Additional Shares.
15. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations, warranties, obligations and agreements of the
Corporation contained in this Agreement and in any certificate delivered
pursuant to this Agreement or in connection with the purchase and sale of the
Purchased Shares shall survive the purchase of the Purchased Shares and shall
continue in full force and effect for a period of two years unaffected by any
subsequent disposition of the Purchased Shares by the Underwriters or the
termination of the Underwriters' obligations (including termination pursuant to
paragraph 9)
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and shall not be limited or prejudiced by any investigation made by or on behalf
of the Underwriters in connection with the preparation of the Prospectuses, any
Prospectus Amendments or the distribution of the Purchased Shares. The
provisions of this paragraph shall not apply if the Underwriters do not purchase
any of the Purchased Shares. In such circumstances, there shall be no further
liability of the Corporation to the Underwriters under the terms of this
Agreement except in respect of any liability which may have arisen or which may
thereafter arise under paragraphs 10 and 11.
16. AGENT FOR SERVICE
By the execution and delivery of this Agreement, the Corporation (i)
acknowledges that it has, by separate written instrument, irrevocably designated
and appointed ▇▇▇▇ & Berlis (or any successor) (together with any such
successor, the "Agent for Service"), as its authorized agent upon which process
may be served in any suit or proceeding arising out of or relating to this
Agreement or the Purchased Shares that may be instituted in any court in the
Province of Ontario or brought under Canadian Securities Laws, and acknowledges
that the Agent for Service has accepted such designation, (li) submits to the
non-exclusive jurisdiction of the courts of the Province of Ontario in any such
suit or proceeding, and, (iii) agrees that service of process upon the Agent for
and written notice of said service to the Corporation (mailed or delivered to
its Chief Financial Officer at its principal office in Palo Alto, California,
United States), shall be deemed in every respect effective service of process
upon the Corporation in any such suit or proceeding. The Corporation further
agrees to take any and all action, including the execution and filing of any and
all such documents and instruments, as may be necessary to continue such
designation and appointment of the Agent for Service in full force and effect
for six years from the date hereof.
17. TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
18. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of Ontario and the laws of Canada applicable in Ontario.
19. FUNDS
All funds referred to in this Agreement shall be in Canadian dollars unless
otherwise noted.
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20. 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:
If to the Corporation, addressed and sent to:
Salix Holdings, Ltd.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
cc. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ & Berlis
Barristers & Solicitors
BCE Place
Suite 1800, Box 754
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇▇▇, addressed and sent to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Yorkton, addressed and sent to:
Yorkton Securities Inc.
BCE Place
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Marleau, addressed and sent to:
Marleau, ▇▇▇▇▇▇ Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Midland, addressed and sent to:
Midland ▇▇▇▇▇▇ Capital Inc.
BCE Place
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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 a notice which is sent by fax
shall be deemed to be given and received on the first Business Day following the
day on which it is sent.
21. AUTHORITY OF ▇▇▇▇▇▇▇▇
All steps which must or may be taken by the Underwriters in connection with
the agreement resulting from the acceptance of this offer by the Corporation,
with the exception of any consent to a settlement pursuant to subparagraph 10(b)
(which consent shall be given by the Indemnified Party), a notice of termination
pursuant to paragraph 9 (which notice may
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be given by any of the Underwriters), or any waiver pursuant to subparagraph
9(d) (which waiver must be signed by all of the Underwriters), shall be taken by
▇▇▇▇▇▇▇▇ on the Underwriters' behalf and the execution of this Agreement by the
Underwriters shall constitute the Underwriters' irrevocable delegation to
▇▇▇▇▇▇▇▇ of such authority and the Corporation's authority for accepting
notification of any such steps from, and for delivering the certificates
representing the Firm Shares, and any Additional Shares to, or to the order of
▇▇▇▇▇▇▇▇.
22. 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.
If the foregoing is in accordance with your understanding and is agreed to
by you, please signify your acceptance by executing the enclosed copies of this
letter where indicated below and returning the same to ▇▇▇▇▇▇▇▇. upon which this
letter as so accepted shall constitute an Agreement among us.
Yours very truly,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ INC. YORKTON SECURITIES INC.
By: _____________________________ By: ______________________________
MARLEAU, ▇▇▇▇▇▇ SECURITIES INC. MIDLAND ▇▇▇▇▇▇ CAPITAL INC.
By: _____________________________ By: ______________________________
The foregoing offer is accepted and agreed to as of the date first above
written.
SALIX HOLDINGS, LTD.
By: _____________________________
By: _____________________________
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