EXHIBIT 1.1
Creo Products Inc.
5,000,000 /a
-
Common (no par value) Shares
Underwriting Agreement
New York, New York
, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
RBC Dominion Securities Inc.,
as Representatives of the several Underwriters,
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Creo Products Inc., a corporation organized under the laws of Canada
(the "Company"), proposes to issue and sell to the several Underwriters named in
Schedule I hereto, for whom the Representatives are acting as representatives,
4,000,000 Common Shares, no par value ("Common Shares") of the Company, and the
persons named in Schedule II hereto ("Selling Shareholders") propose to sell to
the several Underwriters 1,000,000 Common Shares (said shares to be issued and
sold by the Company and sold by the Selling Shareholders collectively being
hereinafter called the "Underwritten Shares"). The Selling Shareholders also
propose to grant to the Underwriters an option to purchase up to 750,000
additional Common Shares to cover over-allotments (the "Option Shares" and
together with the Underwritten Shares, the "Securities").
To the extent there are no additional Underwriters listed on Schedule
I other than you, the term Representatives as used in this Underwriting
Agreement shall mean you, as Underwriters, and the terms Representatives and
Underwriters shall mean either the singular or plural as the context requires.
The use of the neuter in this Underwriting Agreement shall include the feminine
and masculine wherever appropriate. Certain terms used in this Underwriting
Agreement are defined in Section 20 hereof.
As part of the offering contemplated by this Agreement, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Inc. ("▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney") and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
_____________________
/a/ Plus an option to purchase from the Selling Shareholders up to 750,000
-
Option Shares to cover over-allotments.
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Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") have agreed to reserve out of the Securities set
forth opposite its name on the Schedule I to this Agreement, up to 250,000
Common Shares, for sale to the Company's employees, officers, and directors and
other parties associated with the Company (collectively, "Participants"), as set
forth in the Prospectuses under the heading "Underwriting" (the "Directed Share
Program"). The Shares to be sold by ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney and ▇▇▇▇▇▇▇ ▇▇▇▇▇
pursuant to the Directed Share Program (the "Directed Shares") will be sold by
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney and ▇▇▇▇▇▇▇ ▇▇▇▇▇ pursuant to this Agreement at the public
offering price. Any Directed Shares not orally confirmed for purchase by any
Participants by the end of the business day on which this Agreement is executed
will be offered to the public by ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney and ▇▇▇▇▇▇▇ ▇▇▇▇▇ as set
forth in the Prospectus.
Two forms of prospectus are to be used in connection with the offering
and sale of Securities contemplated by the foregoing, one relating to the
offering and sale of the Securities in the United States and one relating to the
offering and sale of the Securities in Canada. The forms of prospectuses will be
identical except for certain substitute pages. References herein to any
prospectus, whether in preliminary or final form, and whether as amended or
supplemented, shall include the U.S. and Canadian versions thereof.
1. Representations and Warranties.
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(i) The Company represents and warrants to, and agrees with, each
Underwriter as set forth below in this Section 1.
(a) The Company has prepared and filed with the Commission a
registration statement (file number 333-78481) on Form F-1, including
related preliminary prospectuses, for registration under the Act of the
offering and sale of the Securities. The Company may have filed one or more
amendments thereto, including the related preliminary prospectuses, each of
which has previously been furnished to you. The Company will next file with
the Commission either (1) prior to the Effective Date of such registration
statement, a further amendment to such registration statement (including
the form of final prospectuses) or (2) after the Effective Date of such
registration statement, final prospectuses in accordance with Rules 430A
and 424(b). In the case of clause (2), the Company has included in such
registration statement, as amended at the Effective Date, all information
(other than Rule 430A Information) required by the Act and the rules
thereunder to be included in such registration statement and the
Prospectuses. As filed, such amendment and form of final prospectuses, or
such final prospectuses, shall contain all Rule 430A Information, together
with all other such required information, and, except to the extent the
Representatives shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the Execution
Time or, to the extent not completed at the Execution Time, shall contain
only such specific additional information and other changes (beyond that
contained in the latest Preliminary Prospectuses) as the Company has
advised you, prior to the Execution Time, will be included or made therein.
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(b) Pursuant to orders obtained from the British Columbia and
Ontario Securities Commissions (the "Canadian Securities Regulatory
Authorities"), the Company meets the requirements under the securities
legislation of each of the provinces of British Columbia and Ontario (the
"Canadian Qualifying Jurisdictions") and the respective regulations
thereunder and the published rules, policy statements, blanket rulings,
orders and notices of the securities commission or similar regulatory
authority in each of the Canadian Qualifying Jurisdictions, including the
rules and procedures established pursuant to National Policy Statement No.
44 of the Canadian Securities Administrators for the pricing of securities
after the final prospectus is receipted (the "PREP Procedures"), with
respect to the Securities (collectively, the "Canadian Securities Laws"); a
Canadian Preliminary Prospectus and a Canadian Final PREP Prospectus have
been filed with the Canadian Securities Regulatory Authorities; a final
receipt in respect of each of the Canadian Qualifying Jurisdictions has
been obtained from each of the Canadian Securities Regulatory Authorities
with respect to such Canadian Final PREP Prospectus and any amendment
thereto in the form heretofore delivered to you for each of the other
Underwriters (together with all documents filed in connection therewith and
all documents incorporated by reference therein); no other document with
respect to such Canadian Final PREP Prospectus or amendment thereto, has
heretofore been filed or transmitted for filing with the Canadian
Securities Regulatory Authorities; no order having the effect of ceasing or
suspending the distribution of the Shares has been issued by any Canadian
Securities Regulatory Authority and no proceeding for that purpose has been
initiated or, to the best of the Company's knowledge, threatened by any
Canadian Securities Regulatory Authority.
(c) On the Effective Date, the Registration Statement did or
will, and when the Prospectuses are first filed (if required) in accordance
with Rule 424(b) and on the Closing Date (as defined in this Underwriting
Agreement) and on any date on which Option Securities are purchased, if
such date is not the Closing Date (a "settlement date"), each Prospectus
(and any amendments or supplements thereto) will comply in all material
respects with the applicable requirements of the Act and the rules
thereunder and Canadian Securities Laws, as the case may be, and will
constitute full, true and plain disclosure of all material facts relating
to the Company and its subsidiaries, considered as a whole, and the
Securities; on the Effective Date and at the Execution Time, the
Registration Statement did not or will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, each Prospectus, if not filed
pursuant to Rule 424(b), will not, and on the date of any filing pursuant
to Rule 424(b) and on the Closing Date and any settlement date, each
Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
--------
however, that the Company makes no
-------
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representations or warranties as to the information contained in or omitted
from the Registration Statement, or the Prospectuses (or any supplement
thereto) in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion in the Registration Statement or
the Prospectuses (or any supplement thereto).
(d) No stamp or other issuance or transfer taxes or duties and no
capital gains, income, withholding or other taxes are payable by or on
behalf of the Underwriters in connection with (A) the sale and delivery of
the Securities in the manner contemplated by this Underwriting Agreement or
(B) the sale and delivery by the Underwriters of the Securities as
contemplated herein.
(e) The Company is not a Passive Foreign Investment Company
("PFIC") within the meaning of Section 1296 of the United States Internal
Revenue Code of 1986, as amended, and does not expect to become a PFIC in
the future.
(f) The Company is not a "foreign personal holding company"
within the meaning of the United States Internal Revenue Code of 1986, as
amended.
(g) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or organized
with full corporate power and authority to own or lease, as the case may
be, and to operate its properties and conduct its business as described in
the Prospectuses, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction
which requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of
the Company and its subsidiaries, taken as a whole (a "Material Adverse
Effect"), whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectuses.
(h) All the outstanding shares of capital stock of each
subsidiary have been duly and validly authorized and issued and are fully
paid and nonassessable, and, except as otherwise set forth in the
Prospectuses, all outstanding shares of capital stock of the subsidiaries
[(except for qualifying director shares)] are owned by the Company either
directly or through wholly owned subsidiaries free and clear of any
perfected security interest or any other security interests, claims, liens
or encumbrances;
(i) The Company's authorized equity capitalization is as set
forth in the Prospectuses; the capital stock of the Company conforms in all
material respects to the description thereof contained in the Prospectuses;
the
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outstanding Common Shares (including the Securities being sold pursuant to
the Underwriting Agreement by the Selling Shareholders) have been duly and
validly authorized and issued and are fully paid and nonassessable; the
Securities being sold under the Underwriting Agreement by the Company have
been duly and validly authorized, and, when issued and delivered to and
paid for by the Underwriters pursuant to this Underwriting Agreement, will
be fully paid and nonassessable; the Securities being sold by the Selling
Shareholders are duly listed, and admitted and authorized for trading, on
the NASDAQ National Market ("NASDAQ") and the Securities being sold under
the Underwriting Agreement by the Company are duly listed, and admitted and
authorized for trading, subject to official notice of issuance, on NASDAQ
and the Securities have been conditionally approved for listing on The
Toronto Stock Exchange (the "TSE"), subject only to the filing of documents
and evidence of satisfactory distribution in accordance with the rules of
such exchange on or before __________, 1999; the certificates for the
Securities are in valid and sufficient form; the holders of outstanding
shares of capital stock of the Company are not entitled to preemptive or
other rights to subscribe for the Securities; and, except as set forth in
the Prospectuses under the captions "Capitalization" and "Management", no
options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or exchange
any securities for, shares of capital stock of or ownership interests in
the Company are outstanding.
(j) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectuses, or to be filed as an exhibit thereto, which is not described
or filed as required; and the statements in the Prospectuses under the
headings "Description of Share Capital," "Interests of Management and
Others in Certain Material Transactions," "Taxation" (in the case of the
U.S. Prospectus only) and "Business-Our Joint Venture with Heidelberg"
fairly summarize the matters therein described.
(k) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms.
(l) The Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof as
described in the Prospectuses, will not be an "investment company" as
defined in the Investment Company Act of 1940, as amended.
(m) No consent, approval, authorization, filing with or order of
any court or governmental agency or body is required in connection with the
transactions contemplated herein except such as have been obtained under
the Act and the Canadian Securities Laws, and such as may be required under
the blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated herein and in the Prospectuses.
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(n) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to,
(i) the charter or by-laws of the Company or any of its subsidiaries, (ii)
the terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which the Company or any of its subsidiaries is a
party or bound or to which its or their property is subject, or (iii) any
statute, law, rule, regulation, judgment, order or decree applicable to the
Company or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or any of its subsidiaries or any of
its or their properties.
(o) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement, other
than those that either have been expressly waived prior to the date hereof,
or have been satisfied in full by virtue of including such securities as
Securities herein.
(p) The financial statements of the Company included in the
Prospectuses comply as to form in all material respects with the applicable
requirements of the Act and the related rules and regulations
thereunder and Canadian Securities Laws. The financial statements of the
Company included in the Prospectuses present fairly the consolidated
financial position of the Company and its subsidiaries as of the dates
indicated and the consolidated results of operations and changes in
financial position of the Company and its subsidiaries for the periods
specified. Such financial statements have been prepared in conformity with
generally accepted accounting principles in Canada ("Canadian GAAP"),
consistently applied throughout the periods involved except as otherwise
stated therein. The summary and selected financial data included in the
Prospectuses fairly present, on a basis stated in the Prospectuses, the
information included therein and have been compiled on a basis consistent
with that of the financial statements included in the Prospectuses. The
reconciliation of net income and total shareholders' equity, as reported
under Canadian GAAP, to generally accepted accounting principles in the
United States ("U.S. GAAP") included in the Prospectuses complies with the
requirements of item 18 of Form 20-F under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(q) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property is pending or,
to the best knowledge of the Company, threatened that (i) could reasonably
be expected to have a material adverse effect on the performance of this
Agreement or the consummation of any of the transactions contemplated
hereby or (ii) could reasonably be expected to have a Material Adverse
Effect, whether or not arising
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from transactions in the ordinary course of business, except as set forth
in or contemplated in the Prospectuses (exclusive of any supplement
thereto).
(r) Each of the Company and each of its subsidiaries owns or
leases all such properties as are necessary to the conduct of its
operations as presently conducted, except where any failure to own or lease
any such property would not have a Material Adverse Effect, whether or not
arising from transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectuses.
(s) Neither the Company nor any subsidiary is in violation or
default of (i) any provision of its charter or bylaws, (ii) the terms of
any indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is
subject, or (iii) any statute, law, rule, regulation, judgment, order or
decree of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the Company or
such subsidiary or any of its properties, as applicable, except, in the
case of clauses (ii) and (iii) above, where any such violation or default
would not have a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectuses.
(t) KPMG LLP and PricewaterhouseCoopers LLP, who have certified
certain financial statements of the Company and its consolidated
subsidiaries and delivered their report with respect to the audited
consolidated financial statements and schedules included in the
Prospectuses, are independent public accountants with respect to the
Company within the meaning of the Act and the applicable published rules
and regulations thereunder and Canadian Securities Laws.
(u) The Company has filed all foreign, federal, state and local
tax returns that are required to be filed or has requested extensions
thereof, except in any case in which the failure so to file would not have
a Material Adverse Effect, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated in the
Prospectuses (exclusive of any supplement thereto) and has paid all taxes
required to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable,
except for any such assessment, fine or penalty that is currently being
contested in good faith or as would not have a Material Adverse Effect,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectuses
(exclusive of any supplement thereto).
(v) No labor problem or dispute with the employees of the Company
or any of its subsidiaries exists or is threatened or imminent, and the
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Company is not aware of any existing or imminent labor disturbance by the
employees of any of its or its subsidiaries' principal suppliers,
contractors or customers, that could have a Material Adverse Effect,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectuses
(exclusive of any supplement thereto).
(w) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses in
which they are engaged; all material policies of insurance and fidelity or
surety bonds insuring the Company or any of its subsidiaries or their
respective businesses, assets, employees, officers and directors are in
full force and effect; the Company and its subsidiaries are in compliance
with the terms of such policies and instruments in all material respects;
and there are no material claims by the Company or any of its subsidiaries
under any such policy or instrument as to which any insurance company is
denying liability or defending under a reservation of rights clause;
neither the Company nor any such subsidiary has been refused any insurance
coverage sought or applied for; and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect, whether
or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectuses (exclusive of any
supplement thereto).
(x) No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on such subsidiary's capital stock, from
repaying to the Company any loans or advances to such subsidiary from the
Company or from transferring any of such subsidiary's property or assets to
the Company or any other subsidiary of the Company, except as described in
or contemplated by the Prospectuses.
(y) The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by the appropriate
federal, state or foreign regulatory authorities reasonably necessary to
conduct their respective businesses, and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect, whether
or not arising from transactions in the ordinary course of business, except
as may be subject to restrictions under applicable corporate dividend law
or except as set forth in or contemplated in the Prospectuses (exclusive of
any supplement thereto).
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(z) The Company and each of its subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with Canadian GAAP
and to maintain asset accountability; (iii) access to assets is permitted
only in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect
to any differences.
(aa) The Company has not taken, directly or indirectly, any
action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities.
(bb) The Company and its subsidiaries are (i) in compliance with
any and all applicable foreign, federal, state, provincial, municipal 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"), (ii) have received and
are in compliance with all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses and (iii) have not received notice of any actual or potential
liability for the investigation or remediation of any disposal or release
of hazardous or toxic substances or wastes, pollutants or contaminants,
except where such non-compliance with Environmental Laws, failure to
receive required permits, licenses or other approvals, or liability would
not, individually or in the aggregate, have a Material Adverse Effect,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectuses
(exclusive of any supplement thereto). Except as set forth in the
Prospectuses, neither the Company nor any of the subsidiaries has been
named as a "potentially responsible party" under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended.
(cc) In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws, or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly or
in the aggregate, have a Material Adverse Effect, whether or not arising
from
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transactions in the ordinary course of business, except as set forth in or
contemplated in the Prospectuses (exclusive of any supplement thereto).
(dd) The Company and its subsidiaries own, possess, license or
have other rights to use, on reasonable terms, all patents, patent
applications, trade and service marks, trade and service ▇▇▇▇
registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, know-how and other intellectual property
(collectively, the "Intellectual Property") reasonably necessary for the
conduct of the Company's business as now conducted or as proposed in the
Prospectus to be conducted. Except as set forth in the Prospectuses under
the caption "Business--Intellectual Property" and "Business-Legal
Proceedings," (a) to the best knowledge of the Company, there are no rights
of third parties to any such Intellectual Property; (b) to the best
knowledge of the Company, there is no material infringement by third
parties of any such Intellectual Property; (c) there is no pending or, to
the best knowledge of the Company, threatened action, suit, proceeding or
claim by others challenging the Company's rights in or to any such
Intellectual Property, and the Company is unaware of any facts which would
form a reasonable basis for any such claim; (d) there is no pending or, to
the best knowledge of the Company, threatened action, suit, proceeding or
claim by others challenging the validity or scope of any such Intellectual
Property, and the Company is unaware of any facts which would form a
reasonable basis for any such claim; (e) there is no pending or, to the
best knowledge of the Company, threatened action, suit, proceeding or claim
by others that the Company infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of others,
and the Company is unaware of any other fact which would form a reasonable
basis for any such claim; (f) to the best knowledge of the Company, there
is no U.S. patent or published U.S. patent application which contains
claims that dominate or may dominate any Intellectual Property described in
the Prospectuses as being owned by or licensed to the Company or that
interferes with the issued or pending claims of any such Intellectual
Property; and (g) there is no prior art of which the Company is aware that
may render any U.S. patent held by the Company invalid or any U.S. patent
application held by the Company unpatentable which has not been disclosed
to the U.S. Patent and Trademark Office.
(ee) The Company and its subsidiaries have implemented a
comprehensive, detailed program to analyze and address the risk that their
computer hardware and software may be unable to recognize and properly
execute date-sensitive functions involving certain dates prior to and any
dates after December 31, 1999 (the "Year 2000 Problem") and has determined
that their computer hardware and software are and will be able to process
all date information prior to and after December 31, 1999 without any
errors, aborts, delays or other interruptions in operations associated with
the Year 2000 Problem, except for errors, aborts, delays or other
interruptions in operations associated with the Year 2000 Problem which
would not have a Material Adverse Effect, except as set forth in or
contemplated in the Prospectuses; and the Company
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believes, after due inquiry, that each material supplier, vendor, customer
or financial service organization used or serviced by the Company and its
subsidiaries has remedied or will remedy on a timely basis the Year 2000
Problem, except to the extent that a failure to remedy by any such
supplier, vendor, customer or financial service organization would not have
a Material Adverse Effect. The Company is in compliance with the
Commission's staff legal bulletin No. 5 dated January 12, 1998 related to
Year 2000 compliance, as amended to date.
(ff) Neither the Company nor any of its subsidiaries nor any of
its or their properties or assets has any immunity from the jurisdiction of
any court or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution or otherwise)
under the laws of the Province of British Columbia and the federal laws of
Canada applicable therein.
(gg) The Company has duly authorized, executed and delivered the
Agreement made as of May 4, 1998 between the Company and ▇▇▇▇▇▇▇▇▇▇▇▇
Druckmaschinen AG ("Heidelberg") (the "JV Agreement"); the JV Agreement
constitutes a legal, valid and binding obligation of the Company
enforceable against it in accordance with its terms; and except as
disclosed in the Prospectuses, neither the Company nor, to the best of the
Company's knowledge, Heidelberg is in default in the performance or
observance of any obligation, agreement, covenant or condition contained in
the JV Agreement.
(hh) Other than as described in the Prospectuses, under the
current laws and regulations of Canada, all dividends and other
distributions declared and payable on the Common Shares may be paid by the
Company to the stockholders in Canada in Canadian Dollars that may be
converted into foreign currency and freely transferred out of Canada, and
all such dividends and other distributions made to shareholders who are not
residents of Canada will not be subject to Canada income, withholding or
other taxes under the laws and regulations of Canada and are otherwise free
and clear of any other tax, duty withholding or deduction in Canada and
without the necessity of obtaining any governmental authorization in
Canada.
Furthermore, the Company represents and warrants to ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ that (i) the Registration Statement, the
Prospectuses and any preliminary prospectus comply, and any further
amendments or supplements thereto will comply, with any applicable laws or
regulations of foreign jurisdictions in which the Prospectuses or any
preliminary prospectus, as amended or supplemented, if applicable, are
distributed in connection with the Directed Share Program, and that (ii) no
authorization, approval, consent, license, order, registration or
qualification of or with any government, governmental instrumentality or
court, other than such as have been obtained, is necessary under the
securities laws and regulations of foreign jurisdictions in which the
Directed Shares are offered outside the United States.
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Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by
the Company, as to matters covered thereby, to each Underwriter.
(ii) Each Selling Shareholder, severally and not jointly, represents
and warrants to, and agrees with, each Underwriter that:
(a) Such Selling Shareholder is the lawful owner of the Common
Shares to be sold by such Selling Shareholder hereunder and upon the sale
and delivery of, and payment for, such Securities as provided herein, the
Selling Shareholder will convey to the Underwriters good and valid title to
such Common Shares, free and clear of all pledges, liens, encumbrances,
equities and clauses whatsoever.
(b) Such Selling Shareholder has not taken, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities.
(c) Certificates in negotiable form for such Selling
Shareholder's Common Shares have been placed in custody, for delivery
pursuant to the terms of this Underwriting Agreement, under a Custody
Agreement and Power of Attorney duly authorized (if applicable), executed
and delivered by such Selling Shareholder, in the form heretofore furnished
to you (the "Custody Agreement"), with ▇▇▇▇ ▇▇▇▇., Esq., American
Securities & Transfer Inc. as Custodian (the "Custodian"); the Securities
represented by the certificates so held in custody for each Selling
Shareholder are subject to the interests under this Underwriting Agreement
of the Underwriters; the arrangements for custody and delivery of such
certificates, made by such Selling Shareholder under this Underwriting
Agreement and under the Custody Agreement, are not subject to termination
by any acts of such Selling Shareholder, or by operation of law, whether by
the death or incapacity of such Selling Shareholder or the occurrence of
any other event; and if any such death, incapacity or any other such event
shall occur before the delivery of the Securities under this Underwriting
Agreement, certificates for Securities will be delivered by the Custodian
in accordance with the terms and conditions of this Underwriting Agreement
and the Custody Agreement as if such death, incapacity or other event had
not occurred, regardless of whether or not the Custodian shall have
received notice of such death, incapacity or other event.
(d) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by such
Selling Shareholder of the transactions contemplated in this Underwriting
Agreement, except such as may have been obtained under the Act and the
Canadian Securities
13
Laws and such as may be required under the blue sky laws of any
jurisdiction and the securities laws of any jurisdiction outside the United
States in connection with the purchase and distribution of the Securities
by the Underwriters and such other approvals as have been obtained.
(e) None of the execution and delivery of the Custody Agreement,
the sale of the Common Shares being sold by the Selling Shareholder or the
consummation of any other of the transactions contemplated in this
Underwriting Agreement by such Selling Shareholder or the fulfillment of
the terms hereof by such Selling Shareholder will conflict with, result in
a breach or violation of, or constitute a default under any law or the
Certificate of Incorporation or By-laws of such Selling Shareholder if such
Selling Shareholder is a corporation, the partnership agreement of such
Selling Shareholder if such Selling Shareholder is a partnership or any
comparable organizational documents if such Selling Shareholder is another
form of organization, or the terms of any indenture or other agreement or
instrument to which such Selling Shareholder is a party or bound, or any
judgment, order or decree applicable to such Selling Shareholder of any
court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over such Selling Shareholder.
(f) No stamp or other issuance or transfer taxes or duties and no
capital gains, income, withholding or other taxes are payable by or on
behalf of the Underwriters in connection with (A) the sale and delivery by
such Selling Shareholder of Common Shares to or for the respective accounts
of the Underwriters in the manner contemplated herein, and (B) the sale and
delivery by the Underwriters of such Common Shares in the manner
contemplated herein.
(g) Without having to determine independently the accuracy or
completeness of either the representations and warranties of the Company
contained herein or the information contained in the Registration
Statement, such Selling Shareholder has no reason to believe that the
representations and warranties of the Company contained in this Section 1
are not true and correct, is familiar with the Registration Statement and
has no knowledge of any material fact, condition or information not
disclosed in the Prospectuses or any supplement thereto which has adversely
affected or may adversely affect the business of the Company or any of its
subsidiaries; and the sale of Common Shares by such Selling Shareholder
pursuant hereto is not prompted by any information concerning the Company
or any of its subsidiaries which is not set forth in the Prospectuses or
any supplement thereto.
(h) In respect of any statements in or omissions from the
Registration Statement and or the Prospectuses or any supplements thereto
made in reliance upon and in conformity with information furnished in
writing to the Company by any Selling Shareholder specifically for use in
connection with the preparation thereof, such Selling Shareholder hereby
makes the same
14
representations and warranties to each Underwriter as the Company makes to
such Underwriter under paragraph (i)(c) of this Section.
(i) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectuses, except as expressly provided in the Prospectuses for the sale
of Securities by the Selling Shareholders, such Selling Shareholder shall
not exercise any registration rights relating to the Common Shares and
shall not offer, sell, contract to sell or otherwise dispose of, except as
provided hereunder, any Common Shares or securities of the Company that are
substantially similar to the Common Shares, including but not limited to
any securities that are convertible into or exchangeable for, or that
represent the right to receive, Common Shares or any such substantially
similar securities (other than pursuant to employee share options
outstanding as of, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this Agreement)
without your prior written consent.
(j) In order to document the Underwriters/'/ compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Shareholder will deliver to you prior to or at
the First Time of Delivery (as hereinafter defined) a properly
contemplated and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
Any certificate signed by any officer of any Selling Shareholder and
delivered to the Representatives or counsel for the Underwriters in
connection with the offering of the Securities shall be deemed a
representation and warranty by such Selling Shareholder, as to matters
covered thereby, to each Underwriter.
2. Purchase and Sale.
-----------------
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties in this Underwriting Agreement set forth,
the Company and the Selling Shareholders agree, severally and not jointly,
to sell to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company and the Selling Shareholders, at a
purchase price of U.S. $ per Common Share, the amount of the
Underwritten Shares set forth opposite such Underwriter's name in Schedule
I to this Underwriting Agreement.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Selling Shareholders
named in Schedule II hereto hereby grant an option to the several
Underwriters to purchase, severally and not jointly, up to an aggregate of
750,000 Option Shares at the same purchase price per share as the
Underwriters shall pay for the Underwritten
15
Shares. Said option may be exercised only to cover over-allotments in the
sale of the Underwritten Shares by the Underwriters. Said option may be
exercised in whole or in part at any time (but not more than once) on or
before the 30th day after the date of the Prospectuses upon written notice
by the Representatives to such Selling Shareholders setting forth the
number of shares of the Option Shares as to which the several Underwriters
are exercising the option and the settlement date. The maximum number of
Option Shares which each Selling Shareholder agrees to sell is set forth in
Schedule II hereto. In the event that the Underwriters exercise less than
their full over-allotment option, the number of Option Shares to be sold by
each Selling Shareholder listed on Schedule II shall be, as nearly as
practicable, in the same proportion as the maximum number of Option Shares
to be sold by each Selling Shareholder and the number of Option Shares to
be sold. The number of Option Shares to be purchased by each Underwriter
shall be the same percentage of the total number of shares of the Option
Shares to be purchased by the several Underwriters as such Underwriter is
purchasing of the Underwritten Securities, subject to such adjustments as
you in your absolute discretion shall make to eliminate any fractional
shares.
3. Delivery and Payment. Delivery of and payment for the
---------------------
Underwritten Shares and the Option Shares (if the option provided for in Section
2(b) hereof shall have been exercised on or before the third Business Day prior
to the Closing Date) shall be made at 10:00 AM, New York City time, on
, 1999, or at such time on such later date not more than three Business Days
after the foregoing date as the Representatives shall designate, which date and
time may be postponed by agreement among the Representatives, the Company and
the Selling Shareholders or as provided in Section 9 hereof (such date and time
of delivery and payment for the Securities being herein called the "Closing
Date"). Delivery of the Securities shall be made to the Representatives for the
respective accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the respective aggregate purchase
prices of the Securities being sold by the Company and each of the Selling
Shareholders to or upon the order of the Company and the Selling Shareholders by
wire transfer payable in same-day funds to the accounts specified by the Company
and the Selling Shareholders. Delivery of the Underwritten Shares and the
Option Shares shall be made through the facilities of The Depository Trust
Company unless the Representatives shall otherwise instruct.
Each Selling Shareholder will pay all applicable state transfer taxes,
if any, involved in the transfer to the several Underwriters of the Securities
to be purchased by them from such Selling Shareholder and the respective
Underwriters will pay any additional stock transfer taxes involved in further
transfers.
If the option provided for in Section 2(b) hereof is exercised after
the third Business Day prior to the Closing Date, the Selling Shareholders named
in Schedule II hereto will deliver the Option Shares (at the expense of the
Company) to the Representatives, at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
the date specified by the Representatives (which shall be within three Business
Days after exercise of said
16
option) for the respective accounts of the several Underwriters, against payment
by the several Underwriters through the Representatives of the purchase price
thereof to or upon the order of the Selling Shareholders named in Schedule II by
wire transfer payable in same-day funds to the accounts specified by the Selling
Shareholders named in Schedule II hereto. If settlement for the Option Shares
occurs after the Closing Date, such Selling Shareholders will deliver to the
Representatives on the settlement date for the Option Securities, and the
obligation of the Underwriters to purchase the Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
-------------------------
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements.
----------
(i) The Company agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of the
Registration Statement or amendment or supplement to the Prospectuses or
any Rule 462(b) Registration Statement unless the Company has furnished you
a copy for your review prior to filing and will not file any such proposed
amendment or supplement to which you reasonably object. Subject to the
foregoing sentence, (1) if the Registration Statement has become or becomes
effective pursuant to Rule 430A, or filing of the Prospectus is otherwise
required under Rule 424(b), the Company will cause the U.S. Prospectus,
properly completed, and any supplement thereto to be filed with the
Commission pursuant to the applicable paragraph of Rule 424(b) within the
time period prescribed and (2) the Company will cause to be filed the
supplemented Final PREP Prospectus (the "Canadian Supplemental PREP
Prospectus") setting forth the information that was omitted from the
Canadian Final PREP Prospectus not later than the close of business on the
second business day after the execution and delivery of this Agreement; and
the Company, in each case, will provide evidence satisfactory to the
Representatives of such timely filing. The Company will promptly advise
the Representatives (1) when the Registration Statement, if not effective
at the Execution Time, shall have become effective, (2) when the
Prospectuses, and any amendment or supplement thereto, shall have been
filed (if required) with the Commission pursuant to Rule 424(b) or with any
Canadian Securities Regulatory Authority, or when any Rule 462(b)
Registration Statement shall have been filed with the Commission, (3) when,
prior to termination of the offering of the Securities, any amendment to
the Registration Statement shall have been filed or become effective, (4)
of any request by the Commission or any Canadian
17
Securities Regulatory Authority or their staff for any amendment of the
Registration Statement, or any Rule 462(b) Registration Statement, or for
any supplement to the Prospectuses or for any additional information, (5)
of the issuance by the Commission or any Canadian Security Regulatory
Authority of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding
for that purpose and (6) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Securities for
sale in any jurisdiction or the institution or threatening of any
proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order or the suspension of any such
qualification and, if issued, to obtain as soon as possible the withdrawal
thereof.
(b) If, at any time when a prospectus relating to the Securities
is required to be delivered under the Act or the Canadian Securities Laws,
any event occurs as a result of which the Prospectus as then supplemented
would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall be
necessary to amend the Registration Statement or amend or supplement the
Prospectus to comply with the Act, the Canadian Securities Laws, or the
rules thereunder, the Company promptly will (1) notify the Representatives
of any such event, (2) prepare and file with the Commission and the
Canadian Securities Regulatory Authorities subject to the second sentence
of paragraph (i)(a) of this Section 5, an amendment or supplement which
will correct such statement or omission or effect such compliance and (3)
supply any supplemented Prospectus to you in such quantities as you may
reasonably request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an earnings
statement or statements of the Company and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under the
Act.
(d) The Company will furnish to the Representatives and counsel
for the Underwriters signed copies of the Registration Statement (including
exhibits thereto) and to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Act and the
Canadian Securities Laws, as many copies of each Preliminary Prospectus and
the Prospectuses and any supplement or amendment thereto, at such times and
at such locations as the Representatives may reasonably request.
(e) The Company will arrange, if necessary, for the qualification
of the Securities for sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in
effect so long as required for the distribution of the Securities; provided
that in no event
18
shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now 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 Securities, in any jurisdiction where it
is not now so subject.
(f) The Company will not, without the prior written consent of
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, offer, announce an offering of, sell, contract to
sell, pledge, or otherwise dispose of (or enter into any transaction which
is designed to, or might reasonably be expected to, result in the
disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Company or any
affiliate of the Company or any person in privity with the Company or any
affiliate of the Company) directly or indirectly, of any Common Shares or
any securities convertible into, or exercisable, or exchangeable for,
Common Shares, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of Common Shares, or
establish or increase a put equivalent position or liquidate or decrease a
call equivalent position within the meaning of Section 16 of the Exchange
Act, for a period of 180 days after the date of the Underwriting Agreement,
provided, however, that the Company may issue and sell Common Shares
pursuant to any stock option plan, stock ownership plan or dividend
reinvestment plan of the Company in effect at the Execution Time for the
benefit of the Company's employees, consultants and directors and the
Company may issue Common Shares issuable upon the conversion of securities
or the exercise of warrants outstanding at Execution Time.
(g) The Company will not take, directly or indirectly, any action
designed to or which has constituted or which might reasonably be expected
to cause or result, under the Exchange Act or otherwise, in stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Common Shares.
(h) The Company will furnish to its shareholders as soon as
practicable after the end of each fiscal year an annual report (including a
balance sheet and statements of income, shareholders' equity and cash flows
of the Company and its consolidated subsidiaries certified by independent
public accountants and prepared in conformity with Canadian GAAP together
with a reconciliation of net income and total shareholders' equity to U.S.
GAAP) and, as soon as practicable after the end of each of the first three
quarters of each fiscal year (beginning with the first fiscal quarter
ending after the effective date of the Registration Statement),
consolidated summary financial information of the Company and its
subsidiaries for each quarter in reasonable detail.
(i) The Company [and the Selling Shareholders (in proportion to
the number of Securities being offered by each of them, including any
Option Shares which the Underwriters shall have elected to purchase)] agree
to pay the costs and expenses relating to the following matters: (i) the
preparation, printing
19
or reproduction and filing with the Commission and Canadian Securities
Regulatory Authorities of the Registration Statement (including financial
statements and exhibits thereto), each Preliminary Prospectus, each
Prospectus, and each amendment or supplement to any of them; (ii) the
printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
Registration Statement, each Preliminary Prospectus, each Prospectus, and
all amendments or supplements to any of them, as may, in each case, be
reasonably requested for use in connection with the offering and sale of
the Securities; (iii) the preparation, printing, authentication, issuance
and delivery of certificates for the Securities, including any stamp or
transfer taxes in connection with the original issuance and sale of the
Securities; (iv) the printing (or reproduction) and delivery of this
Underwriting Agreement, any blue sky memorandum and all other agreements or
documents printed (or reproduced) and delivered in connection with the
offering of the Securities; (v) the registration of the Securities under
the Act and the listing of the Common Shares on the NASDAQ and TSE; (vii)
any registration or qualification of the Securities for offer and sale
under the securities or blue sky laws of the several states (including
filing fees and the reasonable fees and expenses of counsel for the
Underwriters relating to such registration and qualification); (viii) any
filings required to be made with the National Association of Securities
Dealers, Inc. (including filing fees and the reasonable fees and expenses
of counsel for the Underwriters relating to such filings); (ix) the
transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to prospective purchasers
of the Securities; (x) the fees and expenses of the Company's accountants,
the fees and expenses of counsel (including local and special counsel) for
the Company and the Selling Shareholders and the fees and expenses of the
transfer agent and registrar of the Common Shares; and (xi) all other costs
and expenses incident to the performance by the Company and the Selling
Shareholders of their obligations under the Underwriting Agreement.
(j) That in connection with the Directed Share Program,
the Company will ensure that the Directed Shares will be restricted to the
extent required by the National Association of Securities Dealers, Inc.
(the "NASD") or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of the
effectiveness of the Registration Statement. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇ will notify the Company as to which Participants will need to
be so restricted. The Company will direct the transfer restrictions upon
such period of time.
(k) The Company shall pay all fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Share Program
and stamp duties, similar taxes or duties or other taxes, if any, incurred
by the Underwriters in connection with the Directed Share Program.
20
Furthermore, the Company covenants with ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇ that the Company will comply with all applicable securities and
other applicable laws, rules and regulations in each foreign jurisdiction in
which the Directed Shares are offered in connection with the Directed Share
Program, as identified by ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney and/or ▇▇▇▇▇▇▇ ▇▇▇▇▇.
(ii) Each Selling Shareholder agrees with the several Underwriters
that:
(a) Such Selling Shareholder will not, without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney, offer, sell, contract to sell, pledge,
hedge, announce an offering of or otherwise dispose of (whether by actual
disposition or effective economic disposition) any Common Shares or any
securities convertible into or exercisable or exchangeable for Common
Shares, including a request to file (or participation in the filing of) a
registration statement, with the Commission in respect of Common Shares, or
establish or increase a put equivalent position or liquidate or decrease a
call equivalent position within the meaning of Section 16 of the Exchange
Act with respect to, any Common Shares for a period of 180 days after the
date of this Underwriting Agreement, other than Common Shares disposed of
as bona fide gifts approved by ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and other than
Common Shares transferred as bona fide gifts for estate planning purposes
or to trusts of which the transferor or the spouse of the transferor is an
annuitant, governed by a retirement savings plan, retirement income fund or
deferred profit sharing plan and in respect of which the Common Shares will
be qualified investments under the Income Tax Act (Canada); provided the
trustee of the trust agrees to be bound by the foregoing provisions.
(b) Such Selling Shareholder will not take any action designed
to or which has constituted or which might reasonably be expected to cause
or result, under the Exchange Act or otherwise, in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Common Shares.
(c) Such Selling Shareholder will advise you promptly, and if
requested by you, will confirm such advice in writing, so long as delivery
of a prospectus relating to the Securities by an underwriter or dealer may
be required under the Act, of (i) any material change in the Company's
condition (financial or otherwise), prospects, earnings, business or
properties, (ii) any change in information in the Registration Statement or
the Prospectuses relating to such Selling Shareholder or (iii) any new
material information relating to the Company or relating to any matter
stated in the Prospectuses which comes to the attention of such Selling
Shareholder.
(d) Selling Shareholder will comply with the agreement contained
in Section 5(i)(i).
21
6. Conditions to the Obligations of the Underwriters. The
--------------------------------------------------
obligations of the Underwriters to purchase the Underwritten Shares and the
Option Shares, as the case may be, shall be subject to the accuracy in all
material respects of the representations and warranties on the part of the
Company and the Selling Shareholders contained in this Underwriting Agreement as
of the Execution Time, the Closing Date and any settlement date pursuant to
Section 3 hereof, to the accuracy of the statements of the Company and the
Selling Shareholders made in any certificates pursuant to the provisions hereof,
to the performance in all material respects by the Company and the Selling
Shareholders of their respective obligations under this Underwriting Agreement
and to the following additional conditions:
(a) If the Registration Statement has not become effective prior
to the Execution Time, unless the Representatives agree in writing to a
later time, the Registration Statement will become effective not later than
(i) 6:00 PM New York City time on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 PM New
York City time on such date or (ii) 9:30 AM on the Business Day following
the day on which the public offering price was determined, if such
determination occurred after 3:00 PM New York City time on such date; if
filing of either of the Prospectuses, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectuses, and any such
supplement, will be filed in the manner and within the time period required
by Rule 424(b); and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened and (ii) the Canadian
Supplemental PREP Prospectus shall have been filed with the Canadian
Securities Regulatory Authorities not later than the close of business on
the second business day following the execution and delivery of this
Agreement; no stop order suspending the distribution of the Common Shares
shall have been issued or threatened by any Canadian Securities Regulatory
Authority; and all requests for additional information on the part of any
Canadian Securities Regulatory Authority shall have been complied with to
your reasonable satisfaction.
(b) The Company shall have requested and caused ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, a Professional Corporation, U.S. counsel for the
Company, to have furnished to the Representatives their opinion, dated the
Closing Date and addressed to the Representatives, in form and substance
satisfactory to you, to the effect that:
(i) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property of a
character required to be disclosed in the Registration Statement which
is not adequately disclosed in the Prospectuses, and there is no
franchise, contract or other document of a character required to be
described in the Registration Statement or the U.S. Prospectus, or to
be filed as an exhibit
22
thereto, which is not described or filed as required; the descriptions
contained in the U.S. Prospectus under the heading "Taxation - United
States Federal Income Taxes" and "Shares Eligible for Future Sale -
U.S. Resale Restrictions" constitute fair summaries of those statutes
and regulations discussed therein applicable to the offering of the
Securities and fairly summarize the matters therein described;
(ii) the Registration Statement has become effective under
the Act; any required filing of the U.S. Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); to the
knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement has been issued, no proceedings for that
purpose have been instituted or threatened and the Registration
Statement and the U.S. Prospectus (except as to financial statements,
financial and statistical data and supporting schedules contained
therein, as to which such counsel need express no opinion) complies as
to form in all material respects with the applicable requirements of
the Act and the rules thereunder;
(iii) the Company is not and, after giving effect to the
offering and sale of the Securities and the application of the
proceeds thereof as described in the Prospectuses, will not be, an
"investment company" as defined in the Investment Company Act of 1940,
as amended;
(iv) no consent, approval, authorization, filing with or
order of any court or governmental agency or body is required in
connection with the transactions contemplated in the Underwriting
Agreement except such as have been obtained under the Act, such
filings as may be required by Rule 424(b) or Rule 463 of the Act and
such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities by the
Underwriters in the manner contemplated in the Underwriting Agreement
and in the Prospectuses and such other approvals (specified in such
opinion) as have been obtained;
(v) The Company is not, and giving consideration to the
consummation of the transactions contemplated hereby and the
application of the proceeds as described in the Registration Statement
under the caption "Use of Proceeds," the Company will not thereby
become, as of the Execution Time, a PFIC within the meaning of Section
1296 of the United States Internal Revenue Code of 1986, as amended
(the "Code").
In addition, such counsel shall include a statement to the effect that
such counsel has participated in conferences with officials and other
representatives of the Company, the Representatives, underwriter's counsel
and the independent public accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectuses and related
matters were discussed,
23
and although they have not verified the accuracy or completeness of the
statements contained in the Registration Statement or the Prospectuses,
nothing has come to the attention of such counsel which cause them to
believe that, at the time the Registration Statement became effective, the
Registration Statement (except as to financial statements, financial and
statistical data and supporting schedules contained therein, as to which
such counsel need express no opinion, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or at
the Closing Date or any later Option Closing Date, as the case may be, the
Registration Statement or the Prospectuses (except as aforesaid) contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of New York or the Federal laws of the United States, to the extent they
deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters and (B) as to matters of fact,
to the extent they deem proper, on certificates of responsible officers of
the Company and public officials. Reference to the Prospectuses in this
paragraph (b) include any supplements thereto at the Closing Date.
(c) The Company shall have requested and caused ▇▇▇▇ Prince
▇▇▇▇▇, Canadian counsel for the Company, to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to the
Representatives, in form and substance satisfactory to you, to the effect
that:
(i) each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own or lease, as
the case may be, and to operate its properties and conduct its
business as described in the Prospectuses, and is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction which requires such qualification;
(ii) all the outstanding shares of capital stock of each
subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in
the Prospectuses, all outstanding shares of capital stock of the
subsidiaries are owned by the Company either directly or through
wholly owned subsidiaries free and clear of any perfected security
interest and, to the knowledge of such counsel, after due inquiry, any
other security interest, claim, lien or encumbrance;
24
(iii) the Company's authorized equity capitalization is as set
forth in the Prospectuses; the capital stock of the Company conforms
in all material respects to the description thereof contained in the
Prospectuses; the outstanding Common Shares (including the Securities
being sold pursuant to the Underwriting Agreements by the Selling
Shareholders), have been duly and validly authorized and issued and
are fully paid and nonassessable; the Securities being sold under the
Underwriting Agreement by the Company have been duly and validly
authorized, and, when issued and delivered to and paid for by the
Underwriters pursuant to this Underwriting Agreement, will be fully
paid and nonassessable; the Securities being sold by the Selling
Shareholders are duly listed, and admitted and authorized for trading,
on the NASDAQ National Market ("NASDAQ") and the Securities being sold
under the Underwriting Agreement by the Company are duly listed, and
admitted and authorized for trading, subject to official notice of
issuance, on NASDAQ and the Securities have been conditionally
approved for listing on The Toronto Stock Exchange (the "TSE"),
subject only to the filing of documents and evidence of satisfactory
distribution in accordance with the rules of such exchange on or
before __________, 1999; the certificates for the Securities are in
valid and sufficient form; the holders of outstanding shares of
capital stock of the Company are not entitled to preemptive or other
rights to subscribe for the Securities; and, except as set forth in
the Prospectuses, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital
stock of or ownership interests in the Company are outstanding;
(iv) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property of a
character required to be disclosed in the Registration Statement which
is not adequately disclosed in the Prospectuses, and there is no
franchise, contract or other document of a character required to be
described in the Registration Statement or Prospectuses, or to be
filed as an exhibit thereto, which is not described or filed as
required; the statements contained in the U.S. Prospectus under the
headings "Exchange Controls," "Shares Eligible for Future Resale -
Canadian Resale Restrictions," in each case insofar as such statements
constitute summaries of the legal matters, documents or proceedings
referred to therein, fairly present the information called for with
respect to such legal matters, documents and proceedings and fairly
summarize the matters referred to therein; and the statements in the
Prospectuses under the headings "Description of Share Capital", and
"Business - Intellectual Property," "Business - Our Joint Venture With
Heidelberg," "Risk Factors - If we are unable to protect our
intellectual property and proprietary technology, we may lose the
competitive advantage that they currently provide"
25
and "Risk Factors - If others claim that our products infringe upon
their intellectual property rights, we may be forced to seek expense
licenses, reengineer our products, engage in expensive and time-
consuming litigation or stop marketing the challenged products"
fairly summarize the matters therein described;
(v) each of the Underwriting Agreement and the JV Agreement
have been duly authorized, executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company and
is enforceable in accordance with its terms, except as enforcement 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 indemnification and contribution
provisions of Section 8 of the Underwriting Agreement;
(vi) no consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection
with the transactions contemplated in the Underwriting Agreement
except such as have been obtained under the Canadian Securities Laws
and such approvals (specified in such opinion) as have been obtained;
(vii) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions contemplated in the
Underwriting Agreement will conflict with, result in a breach or
violation of or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or its subsidiaries pursuant to,
(i) the charter or by-laws of the Company or its subsidiaries, (ii)
the terms of any indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the Company or its
subsidiaries is a party or bound or to which its or their property is
subject, or (iii) any statute, law, rule, regulation, judgment, order
or decree applicable to the Company or its subsidiaries of any court,
regulatory body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over the Company or its
subsidiaries or any of its or their properties;
(viii) no holders of securities of the Company have rights to
the registration of such securities under the Registration Statement,
other than those that either have been expressly waived prior to the
date hereof, or have been satisfied in full by virtue of including
such securities as Securities herein;
(ix) to ensure the legality, validity, enforceability or
admissibility into evidence of this Underwriting Agreement and any
other document required to be furnished hereunder or thereunder in
Canada, it is not necessary that this Underwriting Agreement or any
such other document be filed or recorded with any court or other
authority, provided
26
such documents are executed outside of, or that any stamp,
registration or similar tax be paid on or in respect of any such
document or the Shares in connection with the sale of Securities to
the Underwriters;
(x) a court of competent jurisdiction in the Province of
British Columbia (a "British Columbia Court") would give effect to the
choice of law of the State of New York ("New York law") as the proper
law governing the Underwriting Agreement, provided that such choice of
law is bona fide (in the sense that it was not made with a view to
avoiding the consequences of the laws of any other jurisdiction), is
not penal in nature and provided that such choice of law is not
contrary to public policy, as that term is applied by a British
Columbia Court; provided however, the choice of law will only be
effective with regard to substantive law, and the procedural laws of
the Province of British Columbia as the jurisdiction in which the
substantive rights are being enforced will apply to the enforcement of
the rights of the parties to the Underwriting Agreement; in such
counsel's opinion, there are no reasons under the laws of Canada or of
the Province of British Columbia or the laws of Canada applicable
therein for avoiding on public policy grounds the choice of New York
law to govern the Underwriting Agreement.
(xi) in an action on a final and conclusive judgment in personam
of any federal or state court in the State of New York (a "New York
Court") from which no appeal is pending and for which the time limits
for appeal have expired, that is not impeachable as void or voidable
under New York law, and that is for a sum certain, a British Columbia
Court would give effect to the appointment by the Company of CT
Corporation System as its agent to receive service of process in the
United States of America under the Underwriting Agreement and to the
provisions in the Underwriting Agreement whereby the Company submits
to the non-exclusive jurisdiction of a New York Court.
(xii) if the Underwriting Agreement is sought to be enforced in
the Province of British Columbia in accordance with the laws
applicable thereto as chosen by the parties, namely New York law, a
British Columbia Court would, subject to paragraph (x) above,
recognize the choice of New York law and, upon appropriate evidence as
to such law being adduced, apply such law to all issues which under
the conflicts of laws rules of the Province of British Columbia are to
be determined in accordance with the proper or governing law of a
contract, provided that none of the provisions of the Underwriting
Agreement, or of New York law, are contrary to public policy as that
term is applied by a British Columbia Court; provided however, that
(A) in matters of procedure, the laws of the Province of British
Columbia will be applied, and a British Columbia
27
Court will retain discretion to decline to hear such action if it is
contrary to public policy, as that term is applied by a British
Columbia Court, for it to do so, or if it is not the proper forum to
hear such an action, or if concurrent proceedings are being brought
elsewhere, (B) a British Columbia Court will not recognize and apply
foreign revenue, penal, expropriatory or similar laws, or laws
contrary to any order made by the Attorney General of Canada under the
Foreign Extraterritorial Measures Act (Canada) or by the Competition
Tribunal under the Competition Act (Canada), (C) interest payable on a
judgement debt may be limited by the Interest Act (Canada) and the
Judgement Interest Act (British Columbia), (D) the Currency Act
(Canada), in effect precludes a British Columbia Court from giving a
judgement in any currency other than the lawful money of Canada, and
(E) the enforceability of any claim in an action brought in a British
Columbia Court may be limited by applicable bankruptcy, insolvency or
other laws of general application limiting the enforcement of
creditors' rights generally. Except with respect to the provisions of
the Underwriting Agreement relating to indemnification and
contribution (as to which such counsel need not express my opinion),
public policy as applied by a British Columbia Court would not be
contravened by reasons solely of the provisions of the Underwriting
Agreement nor would it preclude a British Columbia Court from
exercising its power to enforce the Underwriting Agreement.
(xiii) the laws of the Province of British Columbia and the laws
of Canada applicable therein permit an action to be brought in a
British Columbia Court of competent jurisdiction on a final and
conclusive judgement in personam of a New York Court that is
subsisting and unsatisfied respecting the enforcement of the
Underwriting Agreement from which no appeal is pending and for which
the time limits for appeal have expired, that is not impeachable as
void or voidable under New York law for a sum certain if: (A) the New
York Court rendering such judgement had jurisdiction over the
judgement debtor as recognized by a British Columbia Court (and
submission by the Company to the jurisdiction of a New York Court
pursuant to the Underwriting Agreement will be sufficient for this
purpose); (B) such judgement was not obtained by fraud or in a manner
contrary to natural justice and the enforcement thereof would not be
inconsistent with public policy as such term is understood under the
laws of the Province of British Columbia; or contrary to any order
made by the Attorney General of Canada under the Foreign
Extraterritorial Measures Act (Canada) or by the Competition Tribunal
under the Competition Act (Canada); (C) the enforcement of such
judgement would not be contrary to the laws of general application
limiting the enforcement of creditors' rights including bankruptcy,
reorganization, winding up, moratorium and similar laws and does not
constitute, directly or indirectly, the enforcement of foreign
revenue, expropriatory or penal laws in the Province of British
Columbia; (D) no new admissible evidence relevant to the action is
discovered prior to the
28
rendering of judgement by a British Columbia Court; (E) interest
payable on any of the Securities is not characterized by a British
Columbia Court as interest payable at a criminal rate within the
meaning of Section 347 of the Criminal Code (Canada); and (F) the
action to enforce such judgement is commenced within applicable time
periods. Under the Currency Act (Canada), a British Columbia Court may
only give judgement in Canadian dollars. Under the laws of British
Columbia, the appropriate date for such conversion when the action is
on a foreign judgement may be other than the date of payment of the
judgement. Except with respect to the provisions of the Underwriting
Agreement relating to indemnification and contribution (as to which
such counsel may express no opinion), the enforcement of such
judgement would not, based solely upon the provisions of the
Underwriting Agreement, be inconsistent with public policy, as such
term is applied by a British Columbia Court.
(xiv) no stamp or other issuance or transfer taxes or duties and
no capital gains, income, withholding or other taxes are payable by or
on behalf of the Underwriters to Canada or to any political
subdivision or taxing authority thereof or therein in connection with
(A) the delivery of the Common Shares in the manner contemplated by
this Underwriting Agreement or (B) the sale and delivery by the
Underwriters of the Common Shares, as the case may be, as contemplated
herein;
(xv) other than as described in the Prospectuses, under the
current laws and regulations of Canada, all dividends and other
distributions declared and payable on the Common Shares may be paid by
the Company to the stockholders, in Canadian dollars that may be
converted into foreign currency and freely transferred out of Canada,
and all such dividends and other distributions made to holders of the
Common Shares who are non-residents of Canada will not be subject to
Canada income, withholding or other taxes under the laws and
regulations of Canada and are otherwise free and clear of any other
tax, duty withholding or deduction in Canada and without the necessity
of obtaining any governmental authorization in Canada;
(xvi) the Canadian Final PREP Prospectus and any further
amendments and supplements thereto made by the Company prior to the
Closing Date (other than the financial statements and other financial
information contained therein, as to which such counsel need express
no opinion) comply as to form in all material respects with the
requirements of Canadian Securities Laws and the rules and regulations
thereunder; such counsel has no reason to believe that on the
Effective Date or at the Execution Time, the Registration Statement or
any further amendment thereto made by the Company prior to the Closing
Date (other than the financial statements and other financial
information contained therein, as to which such counsel need express
no opinion) contained an untrue
29
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading (all within the meaning of the Securities Act
(British Columbia)), or that, as of the date thereof and or the
Closing Date, the Prospectuses or any further amendment of supplement
thereto made by the Company prior to the Closing Date (other than the
financial statements and other financial information contained
therein, as to which such counsel need express no opinion) contained
an untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (all within
the meaning of the Securities Act (British Columbia));
(xvii) a final receipt in respect of each of the Canadian
Securities Regulatory Authorities has been obtained in respect of the
Canadian Final PREP Prospectus and any further amendments thereto
filed with such authorities and all necessary documents have been
filed, all necessary proceedings have been taken and all necessary
authorizations, approvals, permits and consents have been obtained
under the Canadian Securities Laws to permit the Securities to be
offered, sold and delivered, as contemplated by this Agreement, to the
public in each of the Canadian Qualifying Jurisdictions through
investment dealers or brokers registered under the applicable laws of
each such jurisdiction who have complied with all relevant provisions
of such laws. No other Governmental Authorization governmental
authorization in Canada is required for the sale and delivery of the
Securities by the Company or the Selling Shareholders to or for the
respective accounts of the Underwriters or the sale and delivery of
the Securities by the Underwriters in accordance with the terms of
this Agreement, the execution and delivery of this Agreement or the
consummation by the Company of the transactions contemplated by this
Underwriting Agreement;
(xviii) the Securities are eligible investments, without
resort to the so-called "basket provisions", or their purchase is not
prohibited or restricted, in each case subject to the general
investment provisions, and in certain cases subject to prudent
investor requirements and to additional requirements relating to
investment or lending policies, standards, procedures or goals, under
or by the following statutes and, where applicable, the relevant
regulations: Insurance Companies Act (Canada); Pension Benefits
Standards Act, 1985 (Canada); Trust and Loan Companies Act (Canada);
Financial Institutions Act (British Columbia); Pension Benefits
Standards Act (British Columbia); Loan and Trust Corporations Act
(Ontario); and Pension Benefits Act (Ontario); and
30
(xix) The Underwriting Agreement has been duly executed and
delivered by the Company.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than Canada and
Province of British Columbia, to the extent they deem proper and specified
in such opinion, upon the opinion of other counsel of good standing whom
they believe to be reliable and who are satisfactory to counsel for the
Underwriters and (B) as to matters of fact, to the extent they deem proper,
on certificates of responsible officers of the Company and public
officials. Reference to the Prospectuses in this paragraph (c) include any
supplements thereto at the Closing Date.
(d) The Selling Shareholders shall have requested and caused
__________, counsel for the Selling Shareholders, to have furnished to the
Representatives their opinion dated the Closing Date and addressed to the
Representatives, in form and substance satisfactory to you, to the effect
that:
(i) the Underwriting Agreement and the Custody Agreement
have been duly authorized, executed and delivered by the Selling
Shareholders, the Custody Agreement is valid and binding on the
Selling Shareholders and each Selling Shareholder has full legal right
and authority to sell, transfer and deliver in the manner provided in
the Underwriting Agreement and the Custody Agreement the Securities
being sold by such Selling Shareholder under the Underwriting
Agreement;
(ii) the delivery by each Selling Shareholder to the several
Underwriter of certificates for the Securities being sold under the
Underwriting Agreements by such Selling Shareholder against payment
therefor as provided in the Underwriting Agreement, will pass good and
marketable title to such Securities to the several Underwriters, free
and clear of all liens, encumbrances, equities and claims whatsoever;
(iii) no consent, approval, authorization or order of any
court or governmental agency or body is required for the consummation
by any Selling Shareholder of the transactions contemplated in the
Underwriting Agreement, except such as may have been obtained under
the Act and such as may be required under the blue sky laws of any
jurisdiction outside the United States in connection with the purchase
and distribution of the Securities by the Underwriters and such other
approvals (specified in such opinion) as have been obtained;
(iv) neither the sale of the Securities representing
deposited shares being sold by any Selling Shareholder nor the
consummation of any other of the transactions contemplated in the
Underwriting Agreement by any
31
Selling Shareholder or the fulfillment of the terms hereof by any
Selling Shareholder will conflict with, result in a breach or
violation of, or constitute a default under any law or the charter or
By-laws of the Selling Shareholder or the terms of any indenture or
other agreement or instrument known to such counsel and to which any
Selling Shareholder or any of its subsidiaries is a party or bound, or
any judgment, order or decree known to such counsel to be applicable
to any Selling Shareholder of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over any Selling Shareholder;
(v) the the submission of such Selling Shareholder to the non-
exclusive jurisdiction of the New York Courts and the appointment of
CT Corporation as its designee, appointee and authorized agent for the
purpose described in Section 15 hereof are legal, valid and binding
under the laws of the State of New York; and service of process in the
manner set forth in Section 15 hereof is effective under the laws of
the State of New York to confer valid personal jurisdiction over such
Selling Shareholder; and
(vi) the choice of law provision set forth in Section 14 hereof
is legal, valid and binding under the laws of the jurisdiction of
organization or residence of the Seller Stockholder ("Home
Jurisdiction") and such counsel knows of no reason why the courts
would not give effect to the choice of New York law as the proper law
of this Underwriting Agreement; such Selling Shareholder has the legal
capacity to ▇▇▇ and be sued in its own name under the laws of the Home
Jurisdiction; such Selling Shareholder has the power to submit, and
has irrevocably submitted, to the non-exclusive jurisdiction of the
New York Courts and has validly and irrevocably appointed CT
Corporation as its designee, appointee and authorized agent for the
purpose described in Section 15 hereof under the laws of the Home
Jurisdiction; the irrevocable submission of such Selling Shareholder
to the non-exclusive jurisdiction of the New York Courts and the
waivers by such Selling Shareholder of any immunity and any objection
to the venue of the proceeding in a New York Court herein are legal,
valid and binding under the laws of the Home Jurisdiction and such
counsel knows of no reason why the courts of the Home Jurisdiction
would not give effect to the submission and waivers; service of
process in the manner set forth in Section 15 hereof, will be
effective to confer valid personal jurisdiction over such Selling
Shareholder under the laws of the Home Jurisdiction; and the courts in
the Home Jurisdiction will recognize as valid and final, and will
enforce, any final and conclusive judgment against the Company
obtained in a New York Court arising out of or in relation to the
obligations of the Company under this Underwriting Agreement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the Home
32
Jurisdiction; the State of or the Federal laws of the
United States, to the extent they deem proper and specified in such
opinion, upon the opinion of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel for the
Underwriters and the International Underwriters, and (B) as to matters of
fact, to the extent they deem proper, on certificates of responsible
officers of the Selling Shareholders and public officials.
(e) The Representatives shall have received from ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇ LLP, and Osler, ▇▇▇▇▇▇ & Harcourt, counsel for the Underwriters, such
opinion or opinions, dated the Closing Date and addressed to the
Representatives, with respect to the issuance and sale of the Securities,
the Registration Statement, the Prospectuses (together with any supplement
thereto) and other related matters as the Representatives may reasonably
require, and the Company and each Selling Shareholder shall have furnished
to such counsel such documents as they request for the purpose of enabling
them to pass upon such matters.
(f) The Company shall have requested and caused Thorsteinssons,
Canadian tax counsel for the Company, to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to the
Representatives, in form and substance satisfactory to you, to the effect
that (i) the statements contained in the U.S. Prospectus under the heading
"Taxation--Canadian Income Tax Consequences," insofar as such statements
constitute summaries of the legal matters, documents or proceedings
referred to therein, fairly present the information called for with respect
to such legal matters, documents and procedures and fairly summarize the
matters referred to therein; and (ii) the Securities are qualified
investments under the Income Tax Act (Canada) and the regulations
thereunder (the "Tax Act") for trusts governed by a registered retirement
savings plan, registered retirement income fund or deferred profit sharing
plan (collectively, "Deferred Income Plans"); and the Securities are not
foreign property under the Tax Act for Deferred Income Plans and other
persons subject to tax under Part XI of the Tax Act.
(g) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the Company,
dated the Closing Date, to the effect that the signers of such certificate
have carefully examined the Registration Statement, the Prospectuses, any
supplements to the Prospectuses and the Underwriting Agreements and that:
(i) the representations and warranties of the Company in the
Underwriting Agreement are true and correct in all material respects
on and as of the Closing Date with the same effect as if made on the
Closing Date and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to the Closing Date;
33
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued, no order, ruling or
determination having the effect of suspending the sale or ceasing the
trading of the Securities has been issued, and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectuses (exclusive of any supplement thereto),
there has been no Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, except as set forth
in or contemplated in the Prospectuses (exclusive of any supplement
thereto).
(h) Each Selling Shareholder shall have furnished to the
Representatives a certificate, signed by [the Chairman of the Board or the
President and the principal financial or accounting officer of] such
Selling Shareholder, dated the Closing Date, to the effect that the
signer[s] of such certificate have carefully examined the Registration
Statement, the Prospectuses, any supplement to either of the Prospectuses
and this Underwriting Agreement and that the representations and warranties
of such Selling Shareholder in this Underwriting Agreement are true and
correct in all material respects on and as of the Closing Date to the same
effect as if made on the Closing Date.
(i) The Company shall have requested and caused KPMG LLP to
have furnished to the Representatives letters, dated respectively as of the
Execution Time and as of the Closing Date, in form and substance
satisfactory to the Representatives, confirming that they are independent
accountants within the meaning of the Act and the applicable rules and
regulations adopted by the Commission thereunder and Canadian Securities
Laws and that they have performed a review of the unaudited interim
financial information of the Company for the six-month period ended March
31, 1999 and as at March 31, 1999 , in accordance with Canadian GAAP and
Statement on Auditing Standards No. 71, and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration Statement
and the Prospectuses and reported on by them comply as to form in all
material respects with Canadian GAAP and the regulations issued by the
Canadian Securities Regulatory Authorities and the applicable
accounting requirements of the Act and the related rules and
regulations adopted by the Commission; and all necessary adjustments
to net income and shareholders' equity for the periods presented that
would be required if U.S. generally accepted accounting principles had
been applied have been made;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
subsidiaries; their
34
limited review, in accordance with generally accepted auditing
standards applicable in Canada and standards established under
Statement on Auditing Standards No. 71, of the unaudited interim
financial information for the six- month period ended March 31, 1999,
and as at March 31, 1999, carrying out certain specified procedures
(but not an examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of significance
with respect to the comments set forth in such letter; a reading of
the minutes of the meetings of the stockholders, directors and the
audit, compensation and committees of the Company and the
Subsidiaries; and inquiries of certain officials of the Company who
have responsibility for financial and accounting matters of the
Company and its subsidiaries as to transactions and events subsequent
to September 30, 1998, nothing came to their attention which caused
them to believe that:
(1) any unaudited financial statements included in the
Registration Statement and the Prospectuses do not comply as to
form in all material respects with Canada's generally accepted
accounting principles and the regulations issued by the Canadian
Securities Regulatory Authorities and applicable accounting
requirements of the Act and with the related rules and
regulations adopted by the Commission with respect to
registration statements on Form F-1; and said unaudited financial
statements are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent
with that of the audited financial statements included in the
Registration Statement and the Prospectuses; and all necessary
adjustments to net income and shareholders' equity for such
interim period that would be required if U.S. generally accepted
accounting principles had been applied have been made;
(2) With respect to the period subsequent to March 31,
1999, there were any changes, at a specified date not more than
five days prior to the date of the letter, in the long-term debt
of the Company and its subsidiaries or capital stock of the
Company or decreases in the stockholders' equity of the Company
as compared with the amounts shown on the March 31, 1999,
consolidated balance sheet included in the Registration Statement
and the Prospectuses, or for the period from April 1, 1999 to
such specified date there were any decreases, as compared with
the corresponding period in the preceding year and the
corresponding period in the preceding quarter in net revenues or
income before income taxes or in total or per share amounts of
net income of the Company and its subsidiaries, except in all
instances for changes or decreases set forth in such letter, in
which case the letter shall be accompanied by an explanation by
the Company as to the significance thereof
35
unless said explanation is not deemed necessary by the
Representatives;
(3) the information included in the Registration Statement
and Prospectuses in response to Form 20-F, Item 8 (Selected
Financial Data) and Item 11 (Compensation of Directors and
Officers) is not in conformity with the applicable disclosure
requirements of Form 20-F; and
(iii) they have performed certain other specified procedures as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Registration Statement and the Prospectuses, including
the information set forth under the captions "Selected Consolidated
Financial Data", "Capitalization", Management's Discussion and
Analysis of Financial Condition and Results of Operation", "Business",
and "Management" in the Prospectuses, agrees with the accounting
records of the Company and its subsidiaries, excluding any questions
of legal interpretation;
References to the Prospectuses in this paragraph (i) include any supplement
thereto at the date of the letter.
(j) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement (exclusive
of any amendment thereof) and the Prospectuses (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified in
the letter or letters referred to in paragraph (i) of this Section 6 or
(ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), earnings, business or
properties of the Company and its subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectuses (exclusive of any
supplement thereto) the effect of which, in any case referred to in clause
(i) or (ii) above, is, in the sole judgment of the Representatives, so
material and adverse as to make it impractical or inadvisable to proceed
with the offering or delivery of the Securities as contemplated by the
Registration Statement (exclusive of any amendment thereof) and the
Prospectuses (exclusive of any supplement thereto).
(k) Prior to the Closing Date, the Company and the Selling
Shareholders shall have furnished to the Representatives such further
information, certificates and documents as the Representatives may
reasonably request.
36
(l) The Securities shall have been listed and admitted and
authorized for trading on the NASDAQ and the TSE, and satisfactory evidence
of such actions shall have been provided to the Representatives.
(m) At the Execution Time, the Company shall have furnished to
the Representatives a letter substantially in the form of Exhibit A hereto
from each officer and director of the Company and the persons listed on
Schedule III hereto addressed to the Representatives.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Underwriting Agreement, or if any of the opinions and certificates
mentioned above or elsewhere in this Underwriting Agreement shall not be in
all material respects reasonably satisfactory in form and substance to the
Representatives and counsel for the Underwriters, this Underwriting
Agreement and all obligations of the Underwriters under this Underwriting
Agreement may be canceled at, or at any time prior to, the Closing Date by
the Representatives. Notice of such cancelation shall be given to the
Company and each Selling Shareholder in writing or by telephone or
facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of , counsel for the
Underwriters, at , on the Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
----------------------------------------
Securities provided for in this Underwriting Agreement is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 6 hereof is not satisfied, because of any termination pursuant to
Section 10 hereof or because of any refusal, inability or failure on the part of
the Company or any Selling Shareholders to perform any agreement in this
Underwriting Agreement or comply with any provision hereof other than by reason
of a default by any of the Underwriters, the Company will reimburse the
Underwriters severally through ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ on demand for all out-of-
pocket expenses (including reasonable fees and disbursements of counsel) that
shall have been approved by ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney and that shall have been
incurred by them in connection with the proposed purchase and sale of the
Securities.
8. Indemnification and Contribution.
--------------------------------
(a) The Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (referred to as the
"Designated Stockholder"), jointly and severally agree to indemnify and
hold harmless each Underwriter, the directors, officers, employees and
agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and
all losses, claims, damages or liabilities, joint or several, to which they
or any of them may become subject under the Act, the Exchange Act, the
Canadian Securities Laws, or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such
37
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement for
the registration of the Securities as originally filed or in any amendment
thereof, as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or in either of the Prospectuses, or in any
amendment thereof or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company and the Designated
-------- -------
Stockholder will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
through the Representatives specifically for inclusion therein. The Company
and the Designated Stockholder acknowledge that the statements set forth in
the last paragraph of the cover page regarding delivery of the Securities,
and, under the heading "Underwriting", (i) the list of Underwriters and
their respective participation in the sale of the Securities, (ii) the
sentences relating to offers and sales not being made by brokers and
dealers not registered under the U.S. Securities laws and Candian
Securities Laws, respectively, (iii) the sentences related to concessions
and reallowances, and (iv) the paragraph related to stabilization,
syndicate covering transactions and penalty bids in any Preliminary
Prospectus and the Prospectuses constitute the only information furnished
in writing by or on behalf of the several Underwriters for inclusion in any
Preliminary Prospectus or the Prospectuses. This indemnity agreement will
be in addition to any liability which the Company or the Selling
Shareholders may otherwise have. In addition, the indemnity agreement
contained in this paragraph (a) with respect to any Preliminary Prospectus
shall not inure to the benefit of any Underwriter from whom the person
asserting any such losses, claims, damages, liabilities or expenses
purchasing the Securities which is the subject thereof (or to the benefit
of any person controlling such Underwriter) if at or prior to the written
confirmation of the sale of such Securities, a copy of the Prospectus (or
the Prospectus as amended or supplemented) was not sent or delivered to
such person within the time required by the Act and the regulations
thereunder and the applicable Canadian Securities Laws and the untrue
statement or omission or alleged untrue statement or omission of a material
fact contained in such Preliminary Prospectus was corrected in the
Prospectus (or the Prospectus as amended or supplemented).
(b) The Company agrees to indemnify and hold harmless ▇▇▇▇▇▇▇
▇▇▇▇▇ Barney and ▇▇▇▇▇▇▇ ▇▇▇▇▇ and each person, if any, who controls
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney and ▇▇▇▇▇▇▇ ▇▇▇▇▇ within the meaning of either Section
15
38
of the Securities Act or Section 20 of the Exchange Act ("Salomon and
Merrill Entities"), from and against any and all losses, claims, damages
and liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) (i) caused by any untrue statement or alleged untrue
statement of a material fact contained in the prospectus wrapper material
prepared by or with the consent of the Company for distribution in foreign
jurisdictions in connection with the Directed Share Program attached to the
Prospectus or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statement therein, when considered in
conjunction with the Prospectus or any applicable preliminary prospectus,
not misleading; (ii) caused by the failure of any Participant to pay for
and accept delivery of the shares which immediately following the effective
of the Registration Statement, were subject to a properly confirmed
agreement to purchase; or (iii) related to, arising out of, or in
connection with the Directed Share Program, provided that, the Company
shall not be responsible under this subparagraph (iii) for any losses,
claim, damages or liabilities (or expenses relating thereto) that are
finally judicially determined to have resulted from the bad faith or gross
negligence of Salomon and Merrill.
(c) Each Selling Shareholder severally agrees to indemnify and
hold harmless the Company, each of its directors, each of its officers who
signs the Registration Statement, each Underwriter, the directors,
officers, employees and agents of each Underwriter and each person who
controls the Company or any Underwriter within the meaning of the Act,
Exchange Act or the Canadian Securities Laws and each other Selling
Shareholder, if any, to the same extent as the foregoing indemnity from
the Company to each Underwriter, but only with reference to written
information furnished to the Company by or on behalf of such Selling
Shareholder specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any Selling Shareholder may otherwise have.
(d) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement, and each person who controls
the Company within the meaning of either the Act or the Exchange Act and
each Selling Shareholder, to the same extent as the foregoing indemnity to
each Underwriter, but only with reference to written information relating
to such Underwriter furnished to the Company by or on behalf of such
Underwriter through the Representatives specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement
will be in addition to any liability which any Underwriter may otherwise
have. The Company and each Selling Shareholder acknowledge that the
statements set forth in the last paragraph of the cover page regarding
delivery of the Securities and, under the heading "Underwriting", (i) the
list of Underwriters and their respective participation in the sale of the
Securities, (ii) the sentences relating to offers and
39
sales being made by brokers and dealers not registered under
the U.S. Securities and Canadian Securities Laws, respectively, (iii) the
sentences related to concessions and reallowances, (iv) the paragraph
related to stabilization, syndicate covering transactions and penalty bids
in any Preliminary Prospectus and the Prospectuses constitute the only
information furnished in writing by or on behalf of the several
Underwriters for inclusion in any Preliminary Prospectus or the
Prospectuses.
(e) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph
(a), (b), (c) or (d) above unless and to the extent it did not otherwise
learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in
any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a), (b), (c) or (d) above. The indemnifying party shall be
entitled to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any
action for which indemnification is sought (in which case the indemnifying
party shall not thereafter be responsible for the fees and expenses of any
separate counsel retained by the indemnified party or parties except as set
forth below); provided, however, that such counsel shall be satisfactory to
-------- -------
the indemnified party. Notwithstanding the indemnifying party's election
to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the use
of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest, (ii) the
actual or potential defendants in, or targets of, any such action include
both the indemnified party and the indemnifying party and the indemnified
party shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are different from
or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party
will not, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect
to any pending or threatened claim, action, suit or proceeding in respect
of which indemnification or contribution may be sought under this
Underwriting Agreement (whether or not the indemnified parties are actual
or potential parties to such claim or action)
40
unless such settlement, compromise or consent includes an unconditional
release of each indemnified party from all liability arising out of such
claim, action, suit or proceeding. Notwithstanding anything contained
herein to the contrary, if indemnity may be sought pursuant to Section 8(b)
hereof in respect of such action or proceeding, then in addition to such
separate firm for the indemnified parties, the indemnifying party shall be
liable for the reasonable fees and expenses of not more than one separate
firm (in addition to any local counsel) for ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ for the
defense of any losses, claims, damages and liabilities arising out of the
Directed Share Program, and all persons, if any, who control ▇▇▇▇▇▇▇ ▇▇▇▇▇
Barney within the meaning of either Section 15 of the Act or Section 20 of
the Exchange Act.
(f) In the event that the indemnity provided in paragraph (a),
(b), (c) or (d) of this Section 8 is unavailable to or insufficient to hold
harmless an indemnified party for any reason, the indemnifying parties
severally agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses") to
which the indemnified parties may be subject in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying
parties from the offering of the Securities; provided, however, that in no
-------- -------
case shall any Underwriter (except as may be provided in any agreement
among underwriters relating to the offering of the Securities) be
responsible for any amount in excess of the underwriting discount or
commission applicable to the Securities purchased by such Underwriter under
this Underwriting Agreement. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the indemnifying parties
severally shall contribute in such proportion as is appropriate to reflect
not only such relative benefits but also the relative fault of the
indemnifying parties in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company and the Selling
Shareholders shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses) received by it, and benefits received
by the Underwriters shall be deemed to be equal to the total underwriting
discounts and commissions, in each case as set forth on the cover page of
the Prospectus. Relative fault shall be determined by reference to, among
other things, whether any untrue or any alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information provided by the Company or the Selling Shareholders
on the one hand or the Underwriters on the other, the intent of the parties
and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company, the
Selling Shareholders and the Underwriters agree that it would not be just
and equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (f), no person guilty of fraudulent misrepresentation (within the
41
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 8, each person who controls an Underwriter within
the meaning of either the Act or the Exchange Act and each director,
officer, employee and agent of an Underwriter shall have the same rights to
contribution as such Underwriter, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, each officer of
the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of
this paragraph (f).
(g) The liability of the Designated Shareholder under the
indemnity and contribution Agreements contained in this Section 8 shall not
exceed the lesser of (A) the aggregate net proceeds received by the
Designated Shareholder upon the sale of the Common Stock by the Designated
Shareholder to the Underwriters and (B) the proportion of the aggregate
losses, claims, damages or liabilities indemnified against or for which
contribution is made which equals the proportion which the number of shares
being sold by the Designated Shareholder bears to the total number of
shares being sold by the Company and all Selling Shareholders. The Company
and the Selling Shareholders may agree, as among themselves and without
limiting the rights of the Underwriters under this Underwriting Agreement,
as to the respective amounts of such liability for which they each shall be
responsible.
9. Default by a Underwriter. If any one or more Underwriters shall
-------------------------
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters under this Underwriting Agreement and such
failure to purchase shall constitute a default in the performance of its or
their obligations under this Underwriting Agreement, the remaining Underwriters
shall be obligated severally to take up and pay for (in the respective
proportions which the amount of Securities set forth opposite their names in
Schedule I hereto bears to the aggregate amount of Securities set forth opposite
the names of all the remaining Underwriters) the Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase; provided, however,
-------- -------
that in the event that the aggregate amount of Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate amount of Securities set forth in Schedule I hereto, the remaining
Underwriters shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Securities, and if such nondefaulting
Underwriters do not purchase all the Securities, this Underwriting Agreement
will terminate without liability to any nondefaulting Underwriter, the Selling
Shareholders or the Company. In the event of a default by any Underwriter as set
forth in this Section 9, the Closing Date shall be postponed for such period,
not exceeding five Business Days, as the Representatives shall determine in
order that the required changes in the Registration Statement, and the
Prospectuses or in any other documents or arrangements may be effected. Nothing
contained in this Underwriting Agreement shall relieve any defaulting
Underwriter of its liability, if any, to
42
the Company, the Selling Shareholders and any nondefaulting Underwriter for
damages occasioned by its default under this Underwriting Agreement.
10. Termination. This Underwriting Agreement shall be subject to
------------
termination in the absolute discretion of the Representatives, by notice given
to the Company prior to delivery of and payment for the Securities, if at any
time prior to such time (i) trading in the Company's Common Shares shall have
been suspended by the Commission or a Canadian Securities Regulatory Authority,
or the TSE or NASDAQ or trading in securities generally on the New York Stock
Exchange, the TSE or NASDAQ shall have been suspended or limited or minimum
prices shall have been established on either of such Exchanges or NASDAQ, (ii) a
banking moratorium shall have been declared by U.S. Federal, New York State or
Canadian authorities or (iii) there shall have occurred any outbreak or
escalation of hostilities, declaration by the United States or Canada of a
national emergency or war, or other calamity or crisis, the effect of which on
financial markets is such as to make it, in the sole judgment of the
Representatives, impractical or inadvisable to proceed with the offering or
delivery of the Securities as contemplated by the Prospectus (exclusive of any
supplement thereto).
11. Representations and Indemnities to Survive. The respective
------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, of each Selling Shareholder and of the Underwriters set
forth in or made pursuant to this Underwriting Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter, any Selling Shareholder or the Company or any of the officers,
directors or controlling persons referred to in Section 8 hereof, and will
survive delivery of and payment for the Securities. The provisions of Sections
7, 8 and this Section 11 hereof shall survive the termination or cancelation of
this Underwriting Agreement.
12. Notices. All communications under this Underwriting Agreement
--------
will be in writing and effective only on receipt, and, if sent to the
Representatives, will be mailed, delivered or telefaxed to the ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Inc. General Counsel (fax no.: (▇▇▇) ▇▇▇-▇▇▇▇) and confirmed to such
General Counsel at ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: General Counsel; or, if sent to the Company, will
be mailed, delivered or telefaxed to ▇▇▇ ▇▇▇▇▇▇▇▇▇ and confirmed to it ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇; or if sent to any Selling
Shareholder, will be mailed, delivered or telefaxed and confirmed to it at the
address set forth in Schedule II hereto.
13. Successors. This Underwriting Agreement will inure to the
-----------
benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation under
this Underwriting Agreement.
14. Applicable Law. This Underwriting Agreement will be governed by
---------------
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
43
15. Jurisdiction. Each of the Company and the Selling Shareholders
-------------
agrees that any suit, action or proceeding against the Company brought by any
Underwriter, the directors, officers, employees and agents of any Underwriter,
or by any person who controls any Underwriter, arising out of or based upon this
Underwriting Agreement or the transactions contemplated hereby may be instituted
in any New York Court, and waives any objection which it may now or hereafter
have to the laying of venue of any such proceeding, and irrevocably submits to
the non-exclusive jurisdiction of such courts in any suit, action or proceeding.
Each of the Company and each Selling Shareholder has appointed CT Corporation as
its authorized agent (the "Authorized Agent") upon whom process may be served in
any suit, action or proceeding arising out of or based upon this Underwriting
Agreement or the transactions contemplated herein which may be instituted in any
New York Court, by any Underwriter, the directors, officers, employees and
agents of any Underwriter, or by any person who controls any Underwriter, and
expressly accepts the non-exclusive jurisdiction of any such court in respect of
any such suit, action or proceeding. Each of the Company and the Selling
Shareholders hereby represents and warrants that the Authorized Agent has
accepted such appointment and has agreed to act as said agent for service of
process, and the Company agrees to take any and all action, including the filing
of any and all documents that may be necessary to continue such appointment in
full force and effect as aforesaid. Service of process upon the Authorized
Agent shall be deemed, in every respect, effective service of process upon the
Company and the Selling Shareholders. Notwithstanding the foregoing, any action
arising out of or based upon this Underwriting Agreement may be instituted by
any Underwriter, the directors, officers, employees and agents of any
Underwriter, or by any person who controls any Underwriter, in any court of
competent jurisdiction in Canada.
The provisions of this Section 15 shall survive any termination of
this Underwriting Agreement, in whole or in part.
16. Currency. Each reference in this Underwriting Agreement to
---------
Dollars (the "relevant currency") is of the essence. To the fullest extent
permitted by law, the obligations of each of the Company and the Selling
Shareholders in respect of any amount due under this Underwriting Agreement
will, notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
relevant currency that the party entitled to receive such payment may, in
accordance with its normal procedures, purchase with the sum paid in such other
currency (after any premium and costs of exchange) on the Business Day
immediately following the day on which such party receives such payment. If the
amount in the relevant currency that may be so purchased for any reason falls
short of the amount originally due, the Company or the Selling Shareholder
making such payment will pay such additional amounts, in the relevant currency,
as may be necessary to compensate for the shortfall. Any obligation of any of
the Company or the Selling Shareholders not discharged by such payment will, to
the fullest extent permitted by applicable law, be due as a separate and
independent obligation and, until discharged as provided herein, will continue
in full force and effect.
44
17. Waiver of Immunity. To the extent that any of the Company or the
-------------------
Selling Shareholders has or hereafter may acquire any immunity (sovereign or
otherwise) from any legal action, suit or proceeding, from jurisdiction of any
court or from set-off or any legal process (whether service or notice,
attachment in aid or otherwise) with respect to itself or any of its property,
each of the Company and the Selling Shareholders hereby irrevocably waives and
agrees not to plead or claim such immunity in respect of its obligations under
this Underwriting Agreement.
18. Counterparts. This Underwriting Agreement may be signed in one
------------
or more counterparts, each of which shall constitute an original and all of
which together shall constitute one and the same agreement.
19. Headings. The section headings used in this Underwriting
---------
Agreement are for convenience only and shall not affect the construction hereof.
20. Definitions. The terms which follow, when used in this
------------
Underwriting Agreement, shall have the meanings indicated.
"Act" shall mean the United States Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City or Toronto.
"Canadian Final PREP Prospectus" shall mean the final prospectus, as
most recently amended, if applicable, filed with the Canadian Securities
Regulatory Authorities and for which a final receipt has been obtained,
provided that, from and after the time the supplemented Canadian Final PREP
Prospectus is filed with the Canadian Securities Regulatory Authorities
pursuant to the PREP Procedures in accordance with Section 5(i)(a) hereof,
any reference to the Canadian Final PREP Prospectus herein shall be deemed
to refer to the Canadian Final PREP Prospectus as so supplemented.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission
promulgated thereunder.
"Execution Time" shall mean the date and time that this Underwriting
Agreement is executed and delivered by the parties hereto.
45
"New York Courts" shall mean the U.S. Federal or State courts located
in the State of New York, County of New York.
"Prospectuses" and "each Prospectus" shall mean the U.S. Prospectus,
the Canadian Final PREP Prospectus and the Canadian Supplemental PREP
Prospectus.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(i)(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto or any Rule 462(b) Registration
Statement becomes effective prior to the Closing Date, shall also mean such
registration statement as so amended or such Rule 462(b) Registration
Statement, as the case may be. Such term shall include any Rule 430A
Information deemed to be included therein at the Effective Date as provided
by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the
Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating
to the offering covered by the registration statement referred to in
Section 1(a)(i) hereof.
"Securities" shall mean the Underwritten Securities and the Option
Securities.
"Selling Shareholders" shall mean the persons named on Schedule II to
the Underwriting Agreement.
"Underwriter" and "Underwriters" shall mean the Underwriters.
"Underwriters" shall mean the several underwriters named in Schedule I
to the Underwriting Agreement.
"Underwriting Agreement" shall mean this agreement relating to the
sale of the Securities by the Company and the Selling Shareholders to the
Underwriters.
"United States or Canadian Person" shall mean any person who is a
national or resident of the United States or Canada, any corporation,
partnership, or other entity created or organized in or under the laws of
the United States or Canada or of any political subdivision thereof, or any
estate or trust the income of which is subject to United States or Canadian
Federal income taxation, regardless
46
of its source (other than any non-United States or non-Canadian branch of
any United States or Canadian Person), and shall include any United States
or Canadian branch of a person other than a United States or Canadian
Person. "U.S." or "United States" shall mean the United States of America
(including the states thereof and the District of Columbia), its
territories, its possessions and other areas subject to its jurisdiction.
"U.S. Preliminary Prospectus" and the "Canadian Preliminary
Prospectus," respectively, shall mean any preliminary prospectus with
respect to the offering of the Securities in the United States and Canada,
as the case may be, referred to in paragraphs 1(i)(a) and (b) above and any
preliminary prospectus with respect to the offering of such Securities, as
the case may be, included in the Registration Statement at the Effective
Date that omits Rule 430A Information; the U.S. Preliminary Prospectus and
the Canadian Preliminary Prospectus are collectively called the
"Preliminary Prospectuses."
"U.S. Prospectus" shall mean the prospectus relating to the Securities
that is first filed pursuant to Rule 424(b) after the Execution Time or, if
no filing pursuant to Rule 424(b) is required, shall mean the form of final
prospectus relating to the Securities included in the Registration
Statement at the Effective Date.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
Corporation
By:__________________________________
Name:
Title:
[Names of Selling Shareholders]
By:__________________________________
Name:
Title:
As Attorney-in-Fact acting on behalf of the
Selling Shareholders named in Schedule II to this
Agreement
47
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
RBC Dominion Securities Inc.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
By:__________________________________
Name:
Title:
For themselves and the other
several Underwriters
named in Schedule I to the foregoing
Agreement.
48
SCHEDULE I
----------
Number of Underwritten
----------------------
Securities to be
----------------
Underwriters Purchased
------------ ---------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.............................
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated....
RBC Dominion Securities Inc..........................
____________
Total.............................
49
SCHEDULE II
-----------
Number of Underwritten
Securities to be Sold Maximum Number of Option
Selling Shareholders: to be Sold Securities
--------------------- ---------------------- ------------------------
[name]
[address, fax no.]..........
[name]
[address, fax no.]..........
_____________ _____________
Total..................
============= =============
50
SCHEDULE III
------------
Persons to sign Lock-up Agreements