EXHIBIT 3.1
SIERRA WIRELESS, INC.
UNDERWRITING AGREEMENT
TABLE OF CONTENTS
PAGE
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1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND THE SUBSIDIARIES........1
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE SELLING SHAREHOLDERS...............11
3. PURCHASE OF THE SHARES BY THE UNDERWRITERS...........................................12
4. OFFERING OF SHARES BY THE UNDERWRITERS...............................................13
5. DELIVERY OF AND PAYMENT FOR THE SHARES...............................................14
6. FURTHER AGREEMENTS OF THE COMPANY AND THE SUBSIDIARIES...............................15
7. FURTHER AGREEMENTS OF THE SELLING SHAREHOLDERS.......................................18
8. EXPENSES.............................................................................19
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS..............................................19
10. INDEMNIFICATION AND CONTRIBUTION....................................................29
11. [INTENTIONALLY OMITTED.]............................................................34
12. DEFAULTING UNDERWRITERS.............................................................34
13. TERMINATION.........................................................................36
14. REIMBURSEMENT OF UNDERWRITERS' EXPENSES.............................................36
15. NOTICES, ETC........................................................................36
16. PERSONS ENTITLED TO BENEFIT OF AGREEMENT............................................36
17. SURVIVAL............................................................................37
18. AGREEMENT BETWEEN UNDERWRITERS......................................................37
19. DEFINITION OF THE TERM "BUSINESS DAY"...............................................37
20. GOVERNING LAW.......................................................................37
21. CONSENT TO JURISDICTION.............................................................37
22. COUNTERPARTS........................................................................38
23. HEADINGS............................................................................38
24. GLOSSARY OF DEFINED TERMS...........................................................38
i
4,000,000 shares
SIERRA WIRELESS, INC.
COMMON SHARES
UNDERWRITING AGREEMENT
November 10, 2003
▇▇▇▇▇▇ BROTHERS INC.
CIBC WORLD MARKETS, INC.
c/▇ ▇▇▇▇▇▇ BROTHERS, INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
Sierra Wireless, Inc. (the "COMPANY"), a corporation
incorporated in Canada under the CANADA BUSINESS CORPORATIONS ACT and certain
shareholders of the Company named in Schedule 2 hereto (the "SELLING
SHAREHOLDERS"), propose to sell an aggregate of 4,000,000 common shares (the
"FIRM SHARES") in the capital of the Company (the "COMMON SHARES"). Of the
4,000,000 Firm Shares, 3,842,222 are being sold by the Company and 157,778 are
being sold by the Selling Shareholders. In addition, the Company proposes to
grant to the Underwriters named in Schedule 1 hereto (the "UNDERWRITERS") an
option to purchase up to an additional 600,000 Common Shares on the terms and
for the purposes set forth in Section 3 (the "OPTION SHARES"). The Firm Shares
and the Option Shares, if purchased, are hereinafter collectively called the
"SHARES." This is to confirm the agreement concerning the purchase of the Shares
from the Company and the Selling Shareholders by the Underwriters.
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND THE
SUBSIDIARIES. The Company and each of the entities listed on Schedule 3 (each, a
"SUBSIDIARY" and collectively, the "SUBSIDIARIES"), jointly and severally,
represent, warrant and agree that:
(a) The Company has prepared and filed with the British Columbia
Securities Commission in the Province of British Columbia, Canada (the
"PRINCIPAL CANADIAN REGULATOR") and with the securities regulatory
authorities (the "CANADIAN SECURITIES REGULATORY AUTHORITIES") in the
Provinces of Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia,
New Brunswick, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island and Newfoundland and Labrador, Canada
(the "CANADIAN QUALIFYING JURISDICTIONS") a preliminary short form
prospectus relating to the Shares (in the English and French languages, as
applicable, the "CANADIAN PRELIMINARY PROSPECTUS"). The Company has filed
the Canadian Preliminary Prospectus with the Principal Canadian Regulator
and the Canadian Securities Regulatory Authorities pursuant to National
Policy 43-201 - Mutual Reliance Review System for Prospectuses and Annual
Information Forms and its related memorandum of understanding, and the
Principal Canadian Regulator is acting as principal regulator. The Company
has also filed the Canadian Preliminary Prospectus with the Principal
Canadian Regulator and the Canadian Securities Regulatory Authorities
pursuant to National
2
Instrument 44-103 - Post-Receipt Pricing (the "PREP PROCEDURES"). The
Principal Canadian Regulator has issued a preliminary Mutual Reliance
Review System Decision Document for the Canadian Preliminary Prospectus.
The Company has prepared in conformity with the requirements of the United
States Securities Act of 1933, as amended (the "SECURITIES ACT"), and the
rules and regulations thereunder, and filed with the United States
Securities and Exchange Commission (the "COMMISSION") a registration
statement on Form F-10 (File No. 333-110219) covering the registration of
the Shares under the Securities Act, including the Canadian Preliminary
Prospectus (with such deletions therefrom and additions thereto as are
permitted or required by Form F-10 and the applicable rules and regulations
(the "RULES AND REGULATIONS") of the Commission) (the "U.S. PRELIMINARY
PROSPECTUS").
(b) The Company (A) has prepared and filed (1) with the Principal
Canadian Regulator and the Canadian Securities Regulatory Authorities, a
final short form prospectus relating to the Shares (in the English and
French languages, as applicable, the "CANADIAN FINAL PREP PROSPECTUS")
which omits the PREP Information (as hereinafter defined) in accordance
with the PREP Procedures and (2) with the Commission, an amendment to such
registration statement, including the Canadian Final PREP Prospectus (with
such deletions therefrom and additions thereto as are permitted or required
by Form F-10 and the Rules and Regulations), and (B) will prepare and file,
promptly and, in any event, within one business day after the execution and
delivery of this Agreement, (1) with the Principal Canadian Regulator and
the Canadian Securities Regulatory Authorities, in accordance with the PREP
Procedures, a Canadian Supplemented PREP Prospectus setting forth the PREP
Information (in the English and French languages, as applicable, the
"CANADIAN SUPPLEMENTED PREP PROSPECTUS"), and (2) with the Commission, in
accordance with General Instruction II.L. of Form F-10, the Canadian
Supplemented PREP Prospectus (with such deletions therefrom and additions
thereto as are permitted or required by Form F-10 and the Rules and
Regulations) (the "U.S. SUPPLEMENTED PROSPECTUS"). Copies of the
registration statement, the amendments thereto and the form of the U.S.
Supplemented Prospectus have been delivered by the Company to you. Copies
of the Canadian Preliminary Prospectus and the Canadian Final PREP
Prospectus and the form of the Canadian Supplemented PREP Prospectus have
been delivered by the Company to you. The information included in the
Canadian Supplemented PREP Prospectus that is omitted from the Canadian
Final PREP Prospectus and which is deemed under the PREP Procedures to be
incorporated by reference in the Canadian Final PREP Prospectus as of the
date of the Canadian Supplemented PREP Prospectus is referred to herein as
the "PREP INFORMATION." Each prospectus relating to the Shares (A) used in
the United States (1) before the time such registration statement on Form
F-10 became effective or (2) after such effectiveness and prior to the
execution and delivery of this Agreement or (B) used in Canada (1) before a
final Mutual Reliance Review System Decision Document for the Canadian
Final PREP Prospectus had been received from the Principal Canadian
Regulator on behalf of itself and the Canadian Securities Regulatory
Authorities or (2) after such final Mutual Reliance Review System Decision
Document has been received and prior to the execution and delivery of this
Agreement, in each case, including the documents incorporated by reference
therein, that omits the PREP Information, is herein called a "PRELIMINARY
PROSPECTUS." Such registration statement on Form F-10, including the
3
exhibits thereto and the documents incorporated by reference therein, as
amended at the time it became effective is herein called the "REGISTRATION
STATEMENT." The prospectus included in the Registration Statement at the
time it became effective, including the documents incorporated by reference
therein, is herein called the "U.S. PROSPECTUS", except that if a U.S.
Supplemented Prospectus containing the PREP Information is thereafter
furnished to the Underwriters after the execution of this Agreement
(whether or not such prospectus is required to be filed pursuant to the
Rules and Regulations), the term "U.S. PROSPECTUS" shall refer to such U.S.
Supplemented Prospectus, including the documents incorporated by reference
therein. The Canadian Final PREP Prospectus for which a final Mutual
Reliance Review System Decision Document has been received from the
Principal Canadian Regulator on behalf of itself and the Canadian
Securities Regulatory Authorities, including the documents incorporated by
reference therein, is herein referred to as the "CANADIAN PROSPECTUS",
except that, if, after the execution of this Agreement, a Canadian
Supplemented PREP Prospectus containing the PREP Information is thereafter
filed with the Principal Canadian Regulator and the Canadian Securities
Regulatory Authorities, the term "CANADIAN PROSPECTUS" shall refer to such
Canadian Supplemented PREP Prospectus, including the documents incorporated
by reference therein. Any amendment to the Canadian Prospectus, any amended
or supplemental prospectus or auxiliary material, information, evidence,
return, report, application, statement or document that may be filed by or
on behalf of the Company under the securities laws of the Province of
British Columbia or the Canadian Qualifying Jurisdictions (collectively,
the "CANADIAN SECURITIES LAWS") prior to the Second Delivery Date (as
hereinafter defined) or, where such-document is deemed to be incorporated
by reference into the Canadian Final PREP Prospectus, prior to the expiry
of the period of distribution of the Shares, is referred to herein
collectively as the "SUPPLEMENTARY MATERIAL." The Canadian Prospectus and
the U.S. Prospectus are referred to collectively herein as the
"PROSPECTUS."
(c) The Company is qualified to file a prospectus in the form of a
short form prospectus pursuant to the requirements of National Instrument
44-101-Short Form Prospectus Distributions. The Company meets the general
eligibility requirements for use of Form F-10 under the Securities Act. A
final Mutual Reliance Review System Decision Document has been received
from the Principal Canadian Regulator on behalf of itself and the Canadian
Securities Regulatory Authorities in respect of the Canadian Final PREP
Prospectus and no order suspending the distribution of the Shares has been
issued by the Principal Canadian Regulator or any of the Canadian
Securities Regulatory Authorities. The Registration Statement has become
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement has been issued under the
Securities Act and no proceedings for that purpose have been instituted or
are pending or, to the knowledge of the Company, are contemplated by the
Commission, and any request on the part of the Commission for additional
information has been complied with.
(d) At the time the Registration Statement and any amendments or
supplements thereto became effective under the Securities Act and at all
times subsequent thereto up to and including the Second Delivery Date (as
defined herein): (A) the Canadian Prospectus complied and will comply in
all material respects with the Canadian
4
Securities Laws; (B) the U.S. Prospectus conformed and will conform to the
Canadian Prospectus except for such deletions therefrom and additions
thereto as are permitted or required by Form F-10 and the Rules and
Regulations; (C) the Registration Statement and any amendments or
supplements thereto complied and will comply in all material respects with
the requirements of the Securities Act and the Rules and Regulations; (D)
neither the Registration Statement nor any amendment or supplement thereto
contained or will contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading; and (E) each of the Canadian
Prospectus, any Supplementary Material or any amendment or supplement
thereto, together with each document incorporated therein by reference,
constituted and will constitute full, true and plain disclosure of all
material facts relating to the Company and the Shares, and each of the U.S.
Prospectus, the Canadian Prospectus and any Supplementary Material or any
amendment or supplement thereto, together with each document incorporated
therein by reference, did not and will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except that the representations and warranties
contained in clauses (D) and (E) above do not apply to statements or
omissions made in reliance upon and in conformity with information relating
to any Underwriter furnished in writing to the Company by any Underwriter
expressly for use in the Registration Statement, the U.S. Prospectus, the
Canadian Prospectus or any Supplementary Material.
(e) Each document filed or to be filed with the Principal Canadian
Regulator and the Canadian Securities Regulatory Authorities and
incorporated or deemed to be incorporated by reference in the Canadian
Prospectus complied or will comply when so filed and at a Delivery Date (as
defined in Section 5 hereof) in all material respects with the Canadian
Securities Laws and none of such documents contained or will contain at the
time of its filing any untrue statement of a material fact or omitted or
will omit at the time of its filing 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 or are made, not misleading.
(f) The documents incorporated or deemed to be incorporated by
reference in the Registration Statement and the U.S. Prospectus, at the
time they were or hereafter are filed with the Commission, complied and
will comply in all material respects with the requirements of the United
States Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
and the Rules and Regulations, and, when read together with the other
information in the U.S. Prospectus, at the time the Registration Statement
became effective, at the time the U.S. Prospectus was issued and at a
Delivery Date did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(g) The Company and each of the Subsidiaries have been duly formed and
are validly existing and in good standing under the laws of their
respective jurisdictions of organization, are duly qualified to do business
and are in good standing as foreign entities in each jurisdiction in which
their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification except, with respect to
5
each Subsidiary, where the failure to be so qualified or in good standing
would not have a material adverse effect, and have all power and authority
necessary to own or hold their respective properties and to conduct the
businesses in which they are engaged; and Schedule 3 contains a complete
list of each subsidiary of the Company that is a "Significant Subsidiary"
of the Company (as such term is defined in Rule 1-02 of Regulation S-X
("RULE 1-02") under the Securities Act of 1933, as amended, and certain
other subsidiaries of the Company not included in Schedule 3 do not, when
considered in the aggregate as a single subsidiary, constitute a
"Significant Subsidiary" (as defined in Rule 1-02).
(h) The Company has an authorized capitalization as set forth under the
heading "DESCRIPTION OF SHARE CAPITAL" in the Prospectus, and all of the
issued shares in the capital of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and conform to the
description thereof contained in the Prospectus; and all of the issued
shares in the capital or shares of capital stock of each Subsidiary have
been duly and validly authorized and issued and are fully paid and
non-assessable and are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims, except for the
general security agreement between the Company and Royal Bank, dated as of
October 7, 1996 (the "ROYAL BANK GENERAL SECURITY AGREEMENT"). All of the
Company's options, warrants or other rights to purchase or exchange any
securities for shares of the Company's capital stock have been duly and
validly authorized and issued, were issued in compliance with federal,
provincial and state securities laws, and conform to the descriptions
thereof contained in the Prospectus.
(i) The Shares to be sold by the Company under the Registration
Statement and Prospectus have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly issued, fully paid and non-assessable and will conform to
the description thereof contained in the Prospectus. Upon payment for and
delivery of such Shares pursuant to this Agreement, the Underwriters will
acquire good and valid title to such Shares, free and clear of all liens,
encumbrances, equities, preemptive rights, subscription rights, other
rights to purchase, voting or transfer restrictions and other claims.
(j) This Agreement has been duly authorized, executed and delivered by
the Company.
(k) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will
not conflict with or result in a breach or violation of (i) any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of the Subsidiaries is a party or by which the
Company or any of the Subsidiaries is bound or to which any of the
properties or assets of the Company or any of the Subsidiaries is subject,
or (ii) the charter, by-laws or other organizational documents of the
Company or any of the Subsidiaries or (iii) any statute or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries or any of their
properties or
6
assets, in the case of (i) the effect of which would have a material
adverse effect or impair the ability of the Company to consummate the
transactions contemplated in the Registration Statement and Prospectus; and
except for the registration of the Shares under the Securities Act and such
consents, approvals, authorizations, registrations or qualifications as may
be required under the Exchange Act, the Canadian Securities Laws and
applicable state or foreign securities laws in connection with the purchase
and distribution of the Shares by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such court
or governmental agency or body is required for the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby.
(l) Except as required under the Amended and Restated Registration
Rights Agreement dated September 30, 1998 (the "Registration Rights
Agreement"), which rights have been satisfied or waived in connection with
the sale of the Shares, there are no contracts, agreements or
understandings between the Company and any person granting such person the
right (other than rights which have been waived or satisfied) to require
the Company to file a registration statement under the Securities Act or a
prospectus under the Canadian Securities Laws with respect to any
securities of the Company owned or to be owned by such person or to require
the Company to include such securities in the securities registered
pursuant to the Registration Statement or qualified for distribution
pursuant to the Canadian Prospectus or in any securities being registered
pursuant to any other registration statement filed by the Company under the
Securities Act or qualified for distribution pursuant to any other
prospectus filed by the Company under the Canadian Securities Laws.
(m) Except as described in the Prospectus, the Company has not sold or
issued any common shares during the six-month period preceding the date of
the Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act, other than shares issued
pursuant to employee benefit plans, qualified share option plans or other
employee compensation plans or pursuant to outstanding options, rights or
warrants.
(n) (i) Neither the Company nor any of the Subsidiaries has sustained,
since the date of the latest audited financial statements incorporated by
reference in the Prospectus, any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Prospectus; and, (ii) since such date, there has not been any material
change in the share capital or long-term debt of the Company or any of the
Subsidiaries or any material adverse change, or any development that in the
Company's reasonable judgment as of this date is more likely than not to
involve a prospective material adverse change, in or affecting the general
affairs, management, financial position, shareholders' equity or results of
operations of the Company and the Subsidiaries, otherwise than as set forth
or contemplated in the Prospectus.
(o) The financial statements (including the related notes and
supporting schedules and any pro forma financial statements) incorporated
by reference in the
7
Prospectus present fairly the financial condition and results of operations
of the entities purported to be shown thereby, at the dates and for the
periods indicated, and have been prepared in conformity with, in the case
of the Registration Statement and the U.S. Prospectus, United States
generally accepted accounting principles and, in the case of the Canadian
Prospectus, Canadian generally accepted accounting principles, in each case
applied on a consistent basis throughout the periods involved, except that
all historical financial statements of AirPrime, Inc. (now called Sierra
Wireless America, Inc.) were prepared solely in conformity with United
States generally accepted accounting principles, and except as otherwise
stated therein.
(p) (i) KPMG LLP, who have certified certain financial statements of
the Company, whose report is incorporated by reference in the Prospectus
and who have delivered the initial letter referred to in Section 9(h)(i)
hereof, are independent public accountants as required by the Securities
Act and the Rules and Regulations and independent chartered accountants as
required by Canadian Securities Laws; and, (ii) Deloitte & Touche LLP, who
have certified certain financial statements of AirPrime, Inc., whose report
is incorporated by reference in the Prospectus, and who have delivered the
letter referred to in Section 9(h)(ii) hereof, were, during the periods
covered by the report, independent public accountants as required by the
Securities Act and the Rules and Regulations. Except as described in the
Prospectus and as pre-approved in accordance with the requirements set
forth in Section 10A of the Exchange Act, neither KPMG LLP nor Deloitte &
Touche LLP has engaged in any "prohibited activities" (as defined in
Section 10A of the Exchange Act) on behalf of the Company or its
Subsidiaries.
(q) The Company and each of the Subsidiaries own no real property and
have good and marketable title to all personal property reflected as owned
by them, in each case free and clear of all liens, encumbrances and defects
(except under the Royal Bank General Security Agreement) except such as are
described in the Prospectus or such as do not materially affect the value
of such personal property and do not materially interfere with the use made
and proposed to be made of such personal property by the Company and the
Subsidiaries; and all real property and buildings held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases, with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and the Subsidiaries.
(r) The Company and each of the Subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar businesses
in similar industries.
(s) (i) To the best knowledge of the Company, the Company and each of
the Subsidiaries own or possess adequate rights to use all material
patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service ▇▇▇▇ registrations, copyrights and
licenses necessary for the conduct of their respective businesses and
except as previously disclosed in writing to the Underwriters and/or their
counsel, have no reason to believe that the conduct of their respective
businesses will
8
conflict with, and have not received any notice of any claim of conflict
with, any such rights of others and (ii) except as disclosed to the
Underwriters or as set forth in the Prospectus, neither the Company nor
any of its Subsidiaries has received notice that the Company or any
Subsidiary is infringing or otherwise violating any patent of others. The
representations, warranties and statements in Section 1(s)(i) are provided
with respect to intellectual property and the Company's products based on
CDPD and CDMA technologies, and expressly not with respect to intellectual
property and the Company's products based on GSM/GPRS or other 3G
technologies.
(t) There are no legal or governmental proceedings pending to which the
Company or any of the Subsidiaries is a party or of which any property or
asset of the Company or any of the Subsidiaries is the subject which, if
determined adversely to the Company or any of the Subsidiaries, might have
a material adverse effect on the consolidated financial position,
shareholders' equity, results of operations or business of the Company and
the Subsidiaries; and to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others, except as previously disclosed in writing to the
Underwriters and/or their counsel.
(u) There are no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations or by the
Canadian Securities Laws, as applicable, which have not been described in
the Prospectus or filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules and
Regulations.
(v) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, shareholders,
customers or suppliers of the Company on the other hand, which is required
to be described in the Prospectus which is not so described. The Company
has not, directly or indirectly, including through any Subsidiary, extended
or maintained credit, or arranged for the extension of credit, or renewed
any extension of credit, in the form of a personal loan to or for any of
its directors or executive officers.
(w) No labor disturbance by the employees of the Company exists or, to
the knowledge of the Company, is imminent which might be expected to have a
material adverse effect on the consolidated financial position,
shareholders' equity, results of operations, or business of the Company and
the Subsidiaries.
(x) Each of the Subsidiaries of the Company that is incorporated under
the laws of any state in the United States, whose principal place of
business is within the United States and that employs employees resident in
the United States is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA").
(y) The Company and each Subsidiary has filed all federal, state,
provincial and local income and franchise tax returns required to be filed
through the date hereof and has paid all taxes due thereon, and no tax
deficiency has been determined adversely to the Company or any of the
Subsidiaries which has had (nor does the Company or any Subsidiary have any
knowledge of any tax deficiency which, if determined adversely to
9
the Company or any of the Subsidiaries, might have) a material adverse
effect on the consolidated financial position, shareholders' equity,
results of operations or business of the Company and the Subsidiaries.
(z) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in the
Prospectus, the Company has not (i) issued or granted any securities other
than the grant of stock options previously disclosed in writing to the
Underwriters and/or their counsel, or the issuance of common shares on
exercise thereof, (ii) incurred any liability or obligation, direct or
contingent, other than liabilities and obligations which were incurred in
the ordinary course of business, (iii) entered into any transaction not in
the ordinary course of business or (iv) declared or paid any dividend on
its shares.
(aa) The Company (i) makes and keeps accurate books and records and
(ii) maintains internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance with
management's authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain
accountability for its assets, (C) access to its assets is permitted only
in accordance with management's authorization and (D) the reported
accountability for its assets is compared with existing assets at
reasonable intervals.
(bb) Neither the Company nor any of the Subsidiaries (i) is in
violation of its charter, by-laws or other organizational documents, (ii)
is in default in any material respect, and no event has occurred which,
with notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its properties or assets is subject or
(iii) is in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its properties
or assets may be subject or has failed to obtain any license, permit,
certificate, franchise or other governmental authorization or permit
material to the ownership of its properties or assets or to the conduct of
its business.
(cc) Neither the Company nor any of the Subsidiaries, nor any director,
officer, agent, employee or other person associated with or acting on
behalf of the Company or any of the Subsidiaries, has used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee
from corporate funds; violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(dd) The Common Shares are listed on the Toronto Stock Exchange (the
"TSX") and the Nasdaq National Market ("NASDAQ"). The Company has taken no
action designed to, or likely to have the effect of, delisting the Common
Shares from the TSX or Nasdaq, nor has the Company received any
notification that the TSX or Nasdaq is contemplating such delisting.
10
(ee) Computershare Trust Company of Canada has been duly appointed as
registrar and transfer agent for the Common Shares.
(ff) The Company has prepared and filed with the Commission an
appointment of agent for service of process upon the Company on Form F-X.
(gg) The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15 under the Exchange Act,
which (i) are designed to ensure that material information relating to the
Company, including its Subsidiaries, is made known to the Company's
principal executive officer and its principal financial officer by others
within those entities, particularly during the periods in which the
periodic reports required under the Exchange Act are being prepared; (ii)
have been evaluated for effectiveness as of the end of the most recent
fiscal year and (iii) are effective in all material respects to perform the
functions for which they were established.
(hh) Based on the evaluation of its internal control over financial
reporting, the Company is not aware of (i) any significant deficiency or
material weakness in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the
Company's ability to record, process, summarize and report financial
information; or (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal control over financial reporting.
(ii) There are no material off-balance sheet arrangements (as defined
in Regulation S-K Item 303(a)(4)(ii)) that may have a material current or
future effect on the Company's financial condition, changes in financial
condition, results of operations, liquidity, capital expenditures or
capital resources.
(jj) Except with respect to this Underwriting Agreement, there are no
contracts, agreements or understandings between the Company and any person
that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder's fee or the like payment in
connection with this offering.
(kk) The statistical and market-related data included in the Prospectus
and the Registration Statement are based on or derived from sources which
the Company believes to be reliable and accurate.
(ll) The Company's Board of Directors has validly appointed an audit
committee whose composition satisfies the requirements of Rule 4350(d)(2)
of the Rules of the National Association of Securities Dealers, Inc. (the
"NASD Rules") and the Board of Directors and/or the audit committee has
adopted a charter that satisfies the requirements of Rule 4350(d)(1) of the
NASD Rules. The audit committee has reviewed the adequacy of its charter
within the past twelve months.
(mm) The Company is in compliance with all applicable provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated in
connection therewith.
11
(nn) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes,
hazardous wastes or hazardous substances by the Company or any of the
Subsidiaries (or, to the knowledge of the Company, any of their
predecessors in interest) at, upon or from any of the properties now or
previously owned or leased by the Company or the Subsidiaries in violation
of any applicable law, ordinance, rule, regulation, order, judgment, decree
or permit or which would require remedial action under any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit, except for
any violation or remedial action which would not have, or could not be
reasonably likely to have, singularly or in the aggregate with all such
violations and remedial actions, a material adverse effect on the general
affairs, management, financial position, shareholders' equity or results of
operations of the Company and the Subsidiaries; there has been no material
spill, discharge, leak, emission, injection, escape, dumping or release of
any kind onto such property or into the environment surrounding such
property of any toxic wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or any of the Subsidiaries or
with respect to which the Company or any of the Subsidiaries have
knowledge, except for any such spill, discharge, leak, emission, injection,
escape, dumping or release which would not have or would not be reasonably
likely to have, singularly or in the aggregate with all such spills,
discharges, leaks, emissions, injections, escapes, dumpings and releases, a
material adverse effect on the general affairs, management, financial
position, shareholders' equity or results of operations of the Company and
the Subsidiaries; and the terms "hazardous wastes", "toxic wastes" and
"hazardous substances" shall have the meanings specified in any applicable
local, state, provincial, federal and foreign laws or regulations with
respect to environmental protection.
(oo) Neither the Company nor any Subsidiary is an "investment company"
within the meaning of such term under the Investment Company Act of 1940
and the rules and regulations of the Commission thereunder.
(pp) The Company has not taken and will not take, directly or
indirectly, any action which is designed to or which has constituted or
which might reasonably be expected to cause or result in the stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE SELLING
SHAREHOLDERS. Each Selling Shareholder severally represents, warrants and agrees
that:
(a) Immediately prior to the First Delivery Date (as defined in Section
5 hereof) the Selling Shareholder will have good and valid title to the
shares of Shares to be sold by the Selling Shareholder hereunder on such
date, free and clear of all liens, encumbrances, equities or claims; and
upon delivery of such shares and payment therefor pursuant hereto, good and
valid title to such shares, free and clear of all liens, encumbrances,
equities or claims, will pass to the several Underwriters.
(b) The Selling Shareholder has full right, power and authority to
enter into this Agreement; the execution, delivery and performance of this
Agreement by the Selling
12
Shareholder and the consummation by the Selling Shareholder of the
transactions contemplated hereby will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Selling Shareholder
is a party or by which the Selling Shareholder is bound, nor will such
actions result in any violation of any order of any court or governmental
agency or body having jurisdiction over the Selling Shareholder.
(c) The information contained in the Registration Statement and the
Prospectus and any further amendments (a copy of which has been provided to
such Selling Shareholder and such Selling Shareholder has not objected to
information relating to such Selling Shareholder contained therein within
24 hours of receipt thereof) thereto, with respect to the Selling
Shareholder, will, when they become effective or are filed with the
Commission, as the case may be, not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(d) The Selling Shareholder has not taken and will not take, directly
or indirectly, any action which is designed to or which has constituted or
which might reasonably be expected to cause or result in the stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares.
3. PURCHASE OF THE SHARES BY THE UNDERWRITERS. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 3,842,222 Firm Shares
and each Selling Shareholder hereby agrees to sell the number of Firm Shares set
opposite its, his or her name in Schedule 2 hereto, severally and not jointly,
to the several Underwriters and each of the Underwriters, severally and not
jointly, agrees to purchase the number of shares of the Firm Shares set opposite
that Underwriter's name in Schedule 1 hereto. Each Underwriter shall be
obligated to purchase from the Company, and from each Selling Shareholder, that
number of shares of the Firm Shares which represents the same proportion of the
number of shares of the Firm Shares to be sold by the Company, and by each
Selling Shareholder, as the number of shares of the Firm Shares set forth
opposite the name of such Underwriter in Schedule 1 represents of the total
number of shares of the Firm Shares to be purchased by all of the Underwriters
pursuant to this Agreement. The respective purchase obligations of the
Underwriters with respect to the Firm Shares shall be rounded between the
Underwriters to avoid fractional shares.
In addition, the Company grants to the Underwriters an option to
purchase up to 600,000 Option Shares. Such option is granted solely for the
purpose of covering over-allotments in the sale of Firm Shares and is
exercisable as provided in Section 5 hereof. Option Shares shall be purchased
severally for the account of the Underwriters in proportion to the number of
Firm Shares set opposite the name of such Underwriters in Schedule 1 hereto. The
price of both the Firm Shares and any Option Shares shall be - per share.
The Company and the Selling Shareholders shall not be obligated to
deliver any of the Shares to be delivered on the First Delivery Date or, in the
case of the Company only, the
13
Second Delivery Date (as hereinafter defined), as the case may be, except upon
payment for all the Shares to be purchased on such Delivery Date as provided
herein.
4. OFFERING OF SHARES BY THE UNDERWRITERS.
(a) The several Underwriters propose to offer the Firm Shares for sale
upon the terms and conditions set forth in the Prospectus.
(b) The Shares will be offered for sale to the public as permitted by
applicable securities laws by the Underwriters directly and through any
other investment dealer or broker which is a member of any banking, selling
or other group which the Underwriters may organize in respect of the sale
of the Shares to the public.
(c) The Underwriters will cause each member of any banking, selling or
other group, which the Underwriters may organize to distribute the Shares
to give an undertaking, in any written agreement which the Underwriters may
enter into with such members, which will be expressed to be taken in trust
for and for the benefit of the Company, to the effect that such members
shall comply with the applicable securities laws in the jurisdictions in
which they propose to sell or distribute the Shares to the public.
(d) The Underwriters severally covenant with the Company that each will
(and will use its reasonable best efforts to cause the members of any
banking, selling or other group, which the Underwriters may organize to
distribute the Shares, to):
(i) conduct its activities in connection with arranging for the
sale and distribution of the Shares in compliance with the applicable
securities laws;
(ii) not, directly or indirectly, sell or solicit offers to
purchase the Shares so as to require registration thereof of or the
filing of a prospectus with respect thereto under the laws of any
jurisdiction other than the United States or the Canadian Qualifying
Jurisdictions;
(iii) not make any representations or warranties with respect to
the Company or the Shares other than is set forth in the Registration
Statement or the Prospectus; and
(iv) after the Effective Time deliver a copy of the U.S.
Prospectus or the Canadian Prospectus, as applicable, to each purchaser
of the Shares.
(e) The Underwriters shall after the last to occur of the First
Delivery Date and the Second Delivery Date:
(i) use their respective best endeavors to terminate, and to
cause the members of any banking or selling group formed by the
Underwriters to terminate, distribution to the public of the Shares as
soon as practicable; and
14
(ii) give written notice as soon as practicable to the Company
when, in the opinion of the Underwriters, the Underwriters, and the
members of any banking or selling group formed by the Underwriters,
have ceased distribution to the public of the Shares and of the total
proceeds realized in each of the Canadian Qualifying Jurisdictions from
such distribution where such information is required for the purpose of
calculating fees payable by the Company to the regulatory authorities
of such Canadian Qualifying Jurisdictions.
5. DELIVERY OF AND PAYMENT FOR THE SHARES.
(a) Delivery of and payment for the Firm Shares shall be made at the
office of ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, at 5:30 A.M., Vancouver time, on the fourth
full business day following the date the Registration Statement became
effective under the Securities Act (the "EFFECTIVE DATE") or at such other
date or place as shall be determined by agreement between the Underwriters
and the Company, but in any event not later than December 12, 2003. This
date and time are sometimes referred to as the "FIRST DELIVERY DATE." On
the First Delivery Date, the Company and the Selling Shareholders shall
deliver or cause to be delivered certificates representing the Firm Shares
to the Underwriters for their account against payment to or upon the order
of the Company and the Selling Shareholders of the purchase price by wire
transfer of immediately available funds. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a
further condition of the obligation of each Underwriter hereunder. Upon
delivery, the Firm Shares shall be registered in such names and in such
denominations as the Underwriters shall request in writing not less than
two full business days prior to the First Delivery Date. For the purpose
of expediting the checking and packaging of the certificates for the
Shares, the Company and the Selling Shareholders shall make the
certificates representing the Firm Shares available for inspection
by the Underwriters in Vancouver, B.C., not later than 5:00 P.M., Vancouver
time on the business day prior to the First Delivery Date.
(b) At any time on or before the thirtieth day after the First Delivery
Date the option granted in Section 3 may be exercised by written notice
being given to the Company by the Underwriters. Such notice shall set forth
the aggregate number of Option Shares as to which the option is being
exercised, the names in which the Option Shares are to be registered, the
denominations in which the Option Shares are to be issued and the date and
time, as determined by the Underwriters, when the Option Shares are to be
delivered; PROVIDED, HOWEVER, that this date and time shall not be earlier
than the First Delivery Date nor earlier than the third business day after
the date on which the option shall have been exercised nor later than the
fifth business day after the date on which the option shall have been
exercised. The date and time the Option Shares are delivered are sometimes
referred to as the "SECOND DELIVERY DATE" and the First Delivery Date and
the Second Delivery Date are sometimes each referred to as a "DELIVERY
DATE."
(c) Delivery of and payment for the Option Shares shall be made at the
place specified in the first sentence of the first paragraph of this
Section 5 (or at such other place as shall be determined by agreement
between the Underwriters and the Company) at 5:30 A.M., Vancouver time, on
the Second Delivery Date. On the Second Delivery
15
Date, the Company shall deliver or cause to be delivered the certificates
representing the Option Shares to the Underwriters for their account
against payment to or upon the order of the Company of the purchase price
by wire transfer of immediately available funds. Time shall be of the
essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Option Shares shall be registered in such
names and in such denominations as the Underwriters shall request in the
aforesaid written notice. For the purpose of expediting the checking and
packaging of the certificates for the Option Shares, the Company shall make
the certificates representing the Option Shares available for inspection by
the Underwriters in Vancouver, B.C., not later than 5:00 P.M., Vancouver
time, on the business day prior to the Second Delivery Date.
6. FURTHER AGREEMENTS OF THE COMPANY AND THE SUBSIDIARIES. The Company
and each Subsidiary agrees:
(a) To make no further amendment or any supplement to the Registration
Statement or to the Prospectus except as permitted herein; to advise the
Underwriters, promptly after it receives notice thereof, of the time when
the Registration Statement, or any amendment thereto, has been filed or
becomes effective or any Supplementary Material has been filed and to
furnish the Underwriters with copies thereof; to advise the Underwriters,
promptly after it receives notice thereof, of the issuance by the
Commission or any Canadian Securities Regulatory Authority or stock
exchange of any stop order or of any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Shares for offering or sale or of trading in the
Common Shares in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission or any
Canadian Securities Regulatory Authority for the amending or supplementing
of the Registration Statement or the Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or suspending any such qualification or trading in the Common
Shares, to use promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally
filed with the Commission and a copy of the Canadian Supplemented PREP
Prospectus as originally filed with the Canadian Securities Regulatory
Authorities, and each amendment thereto or to the Canadian Prospectus filed
with the Commission or any Canadian Securities Regulatory Authority, as
applicable, including all consents and exhibits filed therewith;
(c) To deliver promptly to the Underwriters in ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and
New York City and such other places as the Underwriters may reasonably
request such number of the following documents as the Underwriters shall
reasonably request: (i) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto (in each
case excluding exhibits) and (ii) the Prospectus (not later than 7:30 A.M.
Vancouver time, of the day following execution and delivery of this
Agreement) and any amended or supplemented Prospectus (not later than 7:30
A.M. Vancouver time, of the day following the date of such amendment or
16
supplement); and, if the delivery of a prospectus is required at any time
after the Effective Time in connection with the offering or sale of the
Shares (or any other securities relating thereto) and if at such time any
event shall have occurred as a result of which the Prospectus as then
amended or supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary to amend or supplement the Prospectus in
order to comply with the Securities Act or the Canadian Securities Laws, to
notify the Underwriters and, upon its request, to prepare and furnish
without charge to each Underwriter and to any dealer in securities as many
copies as the Underwriters may from time to time reasonably request of an
amended or supplemented Prospectus which will correct such statement or
omission or effect such compliance;
(d) To file promptly with the Commission and each Canadian Securities
Regulatory Authority any amendment to the Registration Statement or the
Prospectus or any supplement to the Prospectus that may, in the judgment of
the Company or the Underwriters, be required by the Securities Act or the
Canadian Securities Laws or requested by the Commission or any Canadian
Securities Regulatory Authority;
(e) Prior to filing with the Commission or the Canadian Securities
Regulatory Authorities, as applicable, (i) any amendment to the
Registration Statement or supplement to the Prospectus or (ii) any
Prospectus pursuant to Rule 424 of the Rules and Regulations, to furnish a
copy thereof to the Underwriters and counsel for the Underwriters and
obtain the consent of the Underwriters as to the content and form of the
filing;
(f) As soon as practicable after the Effective Date of the Registration
Statement, to make generally available to the Company's security holders
and to deliver to the Underwriters an earnings statement of the Company and
the Subsidiaries (which need not be audited) complying with Section 11(a)
of the Securities Act and the Rules and Regulations (including, at the
option of the Company, Rule 158);
(g) For a period of two years following the Effective Date of the
Registration Statement, to furnish to the Underwriters copies of all
materials furnished by the Company to its shareholders and all public
reports and all reports and financial statements furnished by the Company
to the TSX and Nasdaq or to the Commission pursuant to the Exchange Act or
any rule or regulation of the Commission thereunder or to the Canadian
Securities Regulatory Authorities;
(h) Promptly from time to time to take such action as the Underwriters
may reasonably request to qualify the Shares for offering and sale under
the securities laws of such jurisdictions as the Underwriters may request
and to comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Shares provided that the Company shall not
be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction in which it is not
presently qualified;
17
(i) For a period of 90 days from the date of the Prospectus, not to,
directly or indirectly (except as disclosed in the financial statements
incorporated by reference into the Prospectus), (1) offer for sale, sell,
pledge or otherwise dispose of (or enter into any transaction or device
which is designed to, or could be expected to, result in the disposition or
purchase by any person at any time in the future) any Common Shares or
securities convertible into or exchangeable for Common Shares or
substantially similar securities, or sell or grant options, rights or
warrants with respect to any Common Shares or securities convertible into
or exchangeable for Common Shares (other than the Shares and Common Shares
issued pursuant to employee benefit plans, qualified stock option plans or
other employee compensation plans existing on the date hereof or under
currently outstanding options, warrants or rights), or (2) enter into any
swap or other derivatives transaction that transfers to another, in whole
or in part, any of the economic benefits or risks of ownership of such
Common Shares, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Shares or other securities, in
cash or otherwise, in each case without the prior written consent of the
Underwriters, which consent shall not be unreasonably withheld; and to
cause each of the persons and entities listed on Schedule 4 hereto to
furnish to the Underwriters, prior to the First Delivery Date, a letter or
letters, in form and substance satisfactory to counsel for the
Underwriters, pursuant to which each such person shall agree not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device which is designed to,
or could be expected to, result in the disposition by any person at any
time in the future of) any Common Shares or securities convertible into or
exchangeable for Common Shares or substantially similar securities, or sell
or grant options, rights or warrants with respect to any Common Shares or
securities convertible into or exchangeable for Common Shares (other than
the Shares and Common Shares issued pursuant to employee benefit plans,
stock option plans or other employee compensation plans existing on the
date hereof or under currently outstanding options, warrants or rights), or
(2) enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of
ownership of such Common Shares, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Shares or
other securities, in cash or otherwise, in each case for a period of 90
days from the date of the Prospectus, without the prior written consent of
the Underwriters, which consent shall not be unreasonably withheld;
(j) Prior to the First Delivery Date, to apply for the conditional
listing of the Common Shares to be issued and sold by the Company hereunder
on the TSX and Nasdaq and to use its best efforts to complete that listing,
subject only to official notice of issuance and the filing of all required
documentation, prior to the First Delivery Date;
(k) To apply the net proceeds from the sale of the Shares being sold by
the Company as set forth in the Prospectus;
(l) To take such steps as shall be necessary to ensure that neither the
Company nor any Subsidiary shall become an "investment company" within the
meaning of such term under the Investment Company Act of 1940 and the rules
and regulations of the Commission thereunder;
18
(m) The Company shall cause Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP to deliver to
the Underwriters opinions, dated and delivered the date of the filing of
the French language versions of each of the Canadian Preliminary
Prospectus, the Canadian Final PREP Prospectus and the Canadian
Supplemented PREP Prospectus, to the effect that, except for certain
financial information described in the letters of KPMG LLP and Deloitte &
Touche LLP (as described below), the French language versions of each such
prospectus, together with each of the documents incorporated by reference
therein, is in all material respects a complete and accurate translation of
the English versions thereof. The Company shall also cause each of KPMG LLP
and Deloitte & Touche LLP to deliver to the Underwriters letters, dated the
date of the filing of the French language versions of each of the Canadian
Preliminary Prospectus, the Canadian Final PREP Prospectus and the Canadian
Supplemented PREP Prospectus, to the effect that the financial statements
and other financial information in the French language version of each such
prospectus, together with each of the documents incorporated by reference
therein, is in all material respects a complete and proper translation of
such information contained in the English versions thereof. The Company
shall cause Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, KPMG LLP and Deloitte & Touche
LLP to deliver to the Underwriters similar opinions as to the French
language translation of any information contained in any amendment to the
Canadian Prospectus, in form and substance satisfactory to the
Underwriters, prior to the filing thereof with the Commission des valeurs
mobilieres du Quebec; and
(n) To comply, in all material respects, with all effective applicable
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations
promulgated in connection therewith.
7. FURTHER AGREEMENTS OF THE SELLING SHAREHOLDERS. Each Selling
Shareholder agrees:
(a) For a period of 90 days from the date of the Prospectus, not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device which is designed to,
or could be expected to, result in the disposition by any person at any
time in the future of) any Common Shares or securities convertible into or
exchangeable for Common Shares (other than the Shares) or (2) enter into
any swap or other derivatives transaction that transfers to another, in
whole or in part, any of the economic benefits or risks of ownership of
such Common Shares, whether any such transaction described in clause (1) or
(2) above is to be settled by delivery of Common Shares or other
securities, in cash or otherwise, in each case without the prior written
consent of the Underwriters, which consent shall not be unreasonably
withheld.
(b) That the Shares to be sold by the Selling Shareholder hereunder are
subject to the interest of the Underwriters and that the obligations of the
Selling Shareholder hereunder shall not be terminated by any act of the
Selling Shareholder, by operation of law, by the death or incapacity of any
individual Selling Shareholder or by the occurrence of any other event.
19
(c) To deliver to the Underwriters prior to the First Delivery Date a
properly completed and executed United States Treasury Department Form W-8
(if the Selling Shareholder is a non-United States person or Form W-9 (if
the Selling Shareholder is a United States person.)
8. EXPENSES. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Shares and any taxes payable
in that connection; (b) the costs incident to the preparation, printing and
filing under the Securities Act and the Canadian Securities Laws of the
Registration Statement, the Canadian Prospectus and any amendments and exhibits
thereto; (c) the costs of distributing the Registration Statement as originally
filed and each amendment thereto and any post-effective amendments thereof
(including, in each case, exhibits), any Preliminary Prospectus, the Prospectus
and any amendment or supplement to the Prospectus, all as provided in this
Agreement; (d) the costs of printing and distributing this Agreement and any
other related documents in connection with the offering, purchase, sale and
delivery of the Shares, including the costs of distributing the terms of
agreement relating to the organization of the underwriting syndicate and selling
group to the members thereof by mail, facsimile or other means of communication;
(e) the filing fees incident to securing any required review by the National
Association of Securities Dealers, Inc. of the terms of sale of the Shares; (f)
any applicable listing or other fees; (g) the fees and expenses of qualifying
the Shares under the securities laws of the several jurisdictions as provided in
Section 6(h); and (h) all other costs and expenses incident to the performance
of the obligations of the Company and the Selling Shareholders under this
Agreement, including payment of all roadshow related expenses of the Company and
the Underwriters; provided that, except as provided in this Section 8 and in
Sections 10 and 14 the Underwriters shall pay their own costs and expenses,
including the costs and expenses of their counsel, any transfer taxes on the
Shares which they may sell and the expenses of advertising any offering of the
Shares made by the Underwriters, and each Selling Shareholder shall pay any
transfer taxes payable in connection with their respective sales of Shares to
the Underwriters.
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective obligations
of the Underwriters hereunder are subject to the accuracy, when made and on each
Delivery Date, of the representations and warranties of the Company and the
Selling Shareholders contained herein, to the performance by the Company and the
Selling Shareholders of their respective obligations hereunder, and to each of
the following additional terms and conditions:
(a) The Canadian Supplemented PREP Prospectus shall have been filed
with each of the Canadian Securities Regulatory Authorities and the
Registration Statement shall have become effective, and the Underwriters
shall have received notice thereof, not later than the first full business
day next following the date of this Agreement or such later date as shall
be consented to in writing by the Underwriters; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall
have been issued, no order having the effect of ceasing or suspending the
distribution of the Shares or trading in the Common Shares shall have been
issued and no proceeding for any such purpose shall have been initiated or
threatened by the Commission, any Canadian Securities Regulatory Authority
or any stock exchange; and any request of the Commission or any Canadian
Securities Regulatory Authority for inclusion of additional
20
information in the Registration Statement or the Prospectus or otherwise
shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the Company
on or prior to such Delivery Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains any untrue
statement of material fact or omits to state any material fact which is
required to be stated therein or is necessary to make the statements
therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Shares, the
Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall
be satisfactory in all material respects to counsel for the Underwriters,
acting reasonably, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them
to pass upon such matters.
(d) Blake, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP (with respect to clauses (i) to (iv)
and (vii) to (xx) below or, where applicable, Canadian legal matters
contemplated in such clauses) and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP (with respect
to clauses (i), (ii), (iv) to (viii), (x), (xi), (xxi) and (xxii) below or,
where applicable, U.S. legal matters contemplated in such clauses) shall
have furnished to the Underwriters their written opinion, as counsel to the
Company, addressed to the Underwriters and dated such Delivery Date, in
form and substance satisfactory to the Underwriters and their counsel, to
the effect that:
(i) The Company and each of the Subsidiaries have been duly
formed and are validly existing and in good standing under the laws of
their respective jurisdictions of organization, are duly qualified to
do business and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or lease of property
or the conduct of their respective businesses requires such
qualification except where the failure to be so qualified would not
have a material adverse effect and have all power and authority
necessary to own or hold their respective properties and conduct the
businesses in which they are engaged.
(ii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of the Company (including
the Shares being delivered on such Delivery Date) have been duly and
validly authorized and issued, are fully paid and non-assessable and
conform to the description thereof contained in the Prospectus; and all
of the issued shares in the capital or shares of capital stock of each
Subsidiary of the Company have been duly and validly authorized and
issued and are fully paid, non-assessable and the Company is directly
or indirectly the registered owner of such Shares.
(iii) Other than as set forth in the Prospectus, there are no
preemptive or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any of the Common Shares
pursuant to the Company's Articles of
21
Incorporation or by-laws or any agreement or other instrument known to
such counsel.
(iv) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of the Subsidiaries is
a party which, if determined adversely to the Company or any of the
Subsidiaries, would have a material adverse effect on the consolidated
financial position, shareholders' equity, results of operations, or
business of the Company and the Subsidiaries; and, to the best of such
counsel's knowledge, no such proceedings are threatened in writing,
except as previously disclosed to the Underwriters and/or their
counsel.
(v) The Registration Statement was declared effective under the
Securities Act as of the date and time specified in such opinion and to
such counsel's knowledge no stop order suspending the effectiveness of
the Registration Statement has been issued and, to the knowledge of
such counsel, no proceeding for that purpose is pending or threatened
by the Commission.
(vi) The Registration Statement, as of the Effective Date, and
the U.S. Prospectus, as of its date, and any further amendments or
supplements thereto, as of their respective dates, made by the Company
prior to such Delivery Date (other than the financial statements and
other financial data contained therein, as to which such counsel need
express no opinion) complied as to form in all material respects with
the requirements of the Securities Act and the Rules and Regulations.
(vii) The statements contained in the U.S. Prospectus under the
caption "CERTAIN TAX CONSIDERATIONS FOR U.S. SHAREHOLDERS," insofar as
they describe federal statutes, rules and regulations and legal
conclusions with respect thereto, constitute a fair summary thereof,
subject to the qualifications contained in such statements.
(viii) To the best of such counsel's knowledge, there are no
contracts or other documents which are required to be described in the
Prospectus or filed as exhibits to the Registration Statement by the
Securities Act or by the Rules and Regulations which have not been
described or filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules and
Regulations.
(ix) This Agreement has been duly authorized, executed and, to
the extent delivery is a matter governed by the laws of Province of
British Columbia, delivered by the Company.
(x) The issuance and sale of the Shares being delivered on such
Delivery Date by the Company and the compliance by the Company with all
of the provisions of this Agreement and the consummation of the
transactions contemplated hereby will not conflict with or result in a
breach or violation of any
22
of the terms or provisions of, or constitute a default under, any
material indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument known to such counsel to which the
Company or any of the Subsidiaries is a party or by which the Company
or any of the Subsidiaries is bound or to which any of the properties
or assets of the Company or any of the Subsidiaries is subject, nor
will such actions result in any violation of the provisions of the
charter, by-laws or other organizational documents of the Company or
any of the Subsidiaries or any applicable law of Canada or the U.S.,
and, except for the registration of the Shares under the Securities
Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act, the Canadian
Securities Laws and applicable state securities laws in connection
with the purchase and distribution of the Shares by the Underwriters,
no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions contemplated
hereby.
(xi) Except as required in the Registration Rights Agreement,
which rights have been satisfied or waived in connection with the sale
of the Shares, to the best of such counsel's knowledge, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right (other than rights which have
been waived or satisfied) to require the Company to file a registration
statement under the Securities Act or a prospectus under the Canadian
Securities Laws with respect to any securities of the Company owned or
to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to the Registration
Statement or qualified for distribution pursuant to the Canadian
Prospectus or in any securities being registered pursuant to any other
registration statement filed by the Company under the Securities Act or
qualified for distribution pursuant to any other prospectus filed by
the Company under the Canadian Securities Laws.
(xii) The form of certificate used to evidence the Common Shares
has been duly approved and adopted by the Company and complies with all
applicable Canadian statutory requirements and with any applicable
requirements of the constating documents of the Company.
(xiii) The Canadian Prospectus, as of the Effective Date, and any
amendment or supplement thereto as of the date thereof made by the
Company prior to such Delivery Date (other than the financial
statements and other financial data included therein or omitted
therefrom, as to which such counsel need express no opinion) complied
as to form in all material respects with the requirements of the
Canadian Securities Laws.
(xiv) The information in the Canadian Prospectus under the
captions "Eligibility for Investment," and "Certain Tax Considerations
for U.S. Holders - Canadian Federal Income Tax Considerations for U.S.
Residents," to the extent
23
that it constitutes matters of law or legal conclusions, has been
reviewed by such counsel and fairly presents the information disclosed
therein.
(xv) All necessary documents have been filed, all necessary
proceedings have been taken and all necessary authorizations,
approvals, permits, consents and orders have been obtained under the
Canadian Securities Laws to permit the Shares to be issued, offered,
sold and delivered in the Canadian Qualifying Jurisdictions by or
through persons registered under such laws; and no other consent,
approval, authorization, license, order, registration, qualification or
decree of or with any government, governmental instrumentality,
authority or agency or court of Canada or of any Canadian Qualifying
Jurisdiction is required to be obtained by the Company or the Selling
Shareholders for such issuance, offering, sale or delivery of the
Shares or the consummation by the Company and the Selling Shareholders
of the transactions contemplated by this Agreement, except such as have
been obtained.
(xvi) A court of competent jurisdiction in the Province of
British Columbia (a "British Columbia Court") would give effect to the
choice of the law of the State of New York ("New York law") as the
proper law governing this Agreement, provided that such choice of law
is bona fide (in the sense that it was not made with a view to avoiding
the consequences of the laws of any other jurisdiction) and provided
that such choice of law is not contrary to public policy as that term
is applied by a British Columbia Court ("Public Policy"). In such
counsel's opinion, there is no reason under the laws of the Province of
British Columbia or the federal laws of Canada applicable therein for a
British Columbia Court to not give effect to the choice of New York law
to govern this Agreement, subject to the aforementioned provisos.
(xvii) 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") that is not impeachable as void or voidable under New York
law, a British Columbia Court would give effect to the appointment by
the Company of DWT Corp. as its agent to receive service of process in
the United States of America under this Agreement and to provisions in
this Agreement whereby the Company submits to the non-exclusive
jurisdiction of a New York Court.
(xviii) If this 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 clause (xvi) above, recognize the
choice of New York law and, upon appropriate evidence as to such law
being adduced, apply such law, provided that none of the provisions of
this Agreement, or of applicable New York law, are contrary to Public
Policy, provided, however, that, in matters of procedure, the laws of
the Province of British Columbia will be applied, and a British
Columbia Court will retain discretion to decline to hear such action if
it is contrary to Public Policy 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.
24
(xix) The laws of the Province of British Columbia and the
federal laws of Canada applicable therein permit an action to be
brought in a British Columbia Court on a final and conclusive judgment
in personam of a New York Court that is subsisting and unsatisfied
respecting the enforcement of this Agreement against the Company, that
is not impeachable as void or voidable under New York law and that is
for a sum certain if: (A) the New York Court that rendered such
judgment had jurisdiction over the Company, as recognized by a British
Columbia Court (and submission by the Company in this Agreement to the
jurisdiction of the New York Court will be deemed sufficient for such
purpose); (B) such judgment was not obtained by fraud or in a manner
contrary to natural justice and the enforcement thereof would not be
inconsistent with Public Policy or contrary to any order made by the
Attorney General of Canada under the Foreign Extraterritorial Measures
Act (Canada); (C) the enforcement of such judgment in British Columbia
does not constitute, directly or indirectly, the enforcement of foreign
revenue, expropriatory or penal laws; (D) in an action to enforce a
default judgment, the judgment does not contain a manifest error on its
face; (E) the enforcement of such judgment in the Province of British
Columbia does not result in giving foreign laws extraterritorial
effect; and (F) the action to enforce such judgment is commenced in
compliance with the Limitations Act (British Columbia), except that a
British Columbia Court may stay an action to enforce a foreign judgment
if an appeal is pending or the time for appeal has not expired,
provided that under the Currency Act (Canada), a British Columbia Court
may only give judgment in Canadian dollars.
(xx) All laws of the Province of Quebec relating to the use of
the French language will have been complied with in connection with the
sale of the Shares to purchasers in the Province of Quebec provided
that such purchasers receive copies of the Canadian Prospectus in the
French language alone, in the English and French languages
simultaneously or, in the case of purchasers having specifically so
requested in writing, in the English language alone and that such
purchasers receive forms of order and confirmation drawn solely in the
French language or in a bilingual format (on the assumption that no
documents other than the Canadian Prospectus and the forms of order and
confirmation constitute the contract for purchase of the Shares).
(xxi) Neither the Company nor any subsidiary is an "investment
company" as defined in the Investment Company Act
(xxii) This Agreement has been duly authorized, executed and
delivered by Sierra Wireless Data, Inc. and Sierra Wireless America,
Inc.
In rendering such opinion, such counsel, in the case of Blake,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, may (i) state that its opinion is limited to
matters governed by the laws of British Columbia, Alberta, Ontario and
Quebec and the federal laws of Canada having application there; and
(ii) rely (to the extent such counsel deems proper and specifies in its
opinion), as to matters involving the application of the laws of the
other Canadian Qualifying Jurisdictions, the State of Delaware,
25
England and Wales, and Hong Kong and upon the opinion of other counsel
of good standing, provided that such other counsel is satisfactory to
counsel for the Underwriters and furnishes a copy of its opinion to
the Underwriters and, in the case of ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, may
state that its opinion is limited to matters governed by the federal
laws of the United States of America and the laws of the State of
Delaware. Such counsel shall also have furnished to the Underwriters
a written statement, addressed to the Underwriters and dated such
Delivery Date, in form and substance satisfactory to the Underwriters,
to the effect that (x) such counsel has acted as counsel to the
Company on a regular basis (except that, with respect to intellectual
property matters, the Company is represented by other outside
counsel), and has acted as counsel to the Company in connection with
previous financing transactions and has acted as counsel to the
Company in connection with the preparation of the Registration
Statement and the Prospectus, and (y) based on the foregoing, no facts
have come to the attention of such counsel which lead it to believe
that the Registration Statement, as of the Effective Date, contained
any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading, or that the Prospectus
contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. The foregoing opinion and statement
may be qualified by a statement to the effect that such counsel does
not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or
the Prospectus including the financial statements incorporated by
reference therein except for the statements made in the U.S.
Prospectus under the captions "Description of Share Capital," and
"Certain Tax Considerations for U.S. Holders" and in the Canadian
Prospectus under the caption "Eligibility for Investment" and
"Purchasers Statutory Rights," insofar as such statements relate to
the Shares and concern legal matters.
(e) ▇▇▇▇▇▇ ▇▇▇▇ & Priest shall have furnished to the Underwriters their
written opinion, as patent counsel to the Company, addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Underwriters and their counsel, to the effect that:
(i) To the best of its knowledge, the statements contained in the
Prospectus, insofar as they constitute facts pertaining to its
representation and involve matters of US law, are accurate statements
or summaries of the matters therein set forth.
(ii) To the best of its knowledge, the issued patents described
in [Exhibits] hereto were validly and properly issued.
(iii) To the best of its knowledge, except as described in the
Prospectus and except for ex parte prosecution of patent applications
and potential interferences or re-examination proceedings initiated by
the Company between patents of the Company and
26
patents of others, there are no legal or governmental proceedings,
pending or threatened, relating to the patents or patent applications
of the Company.
(iv) To the best of its knowledge, except as described in the
Prospectus and except for potential interferences or re-examination
proceedings initiated by the Company between patents of the Company
and patents of others, there are no legal or governmental proceedings,
pending or threatened, against the Company with respect to the patents
or patent applications of others.
(v) To the best of its knowledge, it and the Company have
properly filed and have prosecuted in a timely manner, or are so
prosecuting, each of the Company's pending patent applications and
granted patents.
(vi) In prosecution of the United States patents and patent
applications listed in [Exhibits], it has complied and is continuing to
comply and, to the best of its knowledge, the Company has complied and
is continuing to comply, in each case on an ongoing basis with the
requirements of the United States Patent and Trademark Office as set
forth in 37 C.F.R. Section 1.56.
(vii) To the best of its knowledge, the Company has clear title
to or has rights in the issued patents and pending patent applications
described in [Exhibit] hereto.
(viii) None of the issued patents described in [Exhibit] hereto
has been revoked.
(ix) To its knowledge, based upon the information provided to
it by the Company, the Company is not infringing or otherwise violating
any patents of others.
(f) The respective counsel for each of the Selling Shareholders listed
in Schedule 2 (which counsel may also be counsel to the Company) shall each
have furnished to the Underwriters its written opinion, as counsel to the
Selling Shareholder for whom it is acting as counsel, addressed to the
Underwriters and dated the First Delivery Date, in form and substance
reasonably satisfactory to the Underwriters and their counsel, to the
effect that:
(i) Based solely (A) on its review of the certificate(s)
representing the Shares to be delivered by the Selling Shareholder and
(B) search results under the Personal Property Security Act (Ontario)
and Personal Property Security Act (British Columbia) and assuming (x)
that the Shares were validly issued by the Company to the Selling
Shareholder; and (y) the Underwriters do not have or are not deemed to
have any knowledge or any adverse claim (as such term is referred to in
the Canada Business Corporations Act) as it relates to the Shares:
(1) immediately prior to the First Delivery Date, such Selling
Shareholder is the registered owner of the Shares to be sold by such
Selling Shareholder under this Agreement, and such Shares are free from
any security interest perfected by
27
registration under the Personal Property Security Act (Ontario) and
Personal Property Security Act (British Columbia);
(2) each of the several Underwriters has acquired such Shares,
free from any adverse claim in accordance with Section 60(2) of the
Canada Business Corporations Act.
In rendering such opinion, such counsel may (i) state that its opinion
is limited to matters governed by the laws of British Columbia and the
federal laws of Canada and (ii) in rendering the opinion in Section 9(f)(i)
above, rely upon a certificate of such Selling Shareholder in respect of
matters of fact as to ownership of and liens, encumbrances, equities or
claims on the shares of Shares sold by such Selling Shareholder, provided
that such counsel shall furnish copies thereof to the Underwriters.
(g) The Underwriters shall have received from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, U.S. counsel for the Underwriters, such opinion or opinions,
dated such Delivery Date, with respect to the Registration Statement, the
Prospectus and other related matters of U.S. law as the Underwriters may
reasonably require, and the Company shall have furnished to such counsel
such documents as they reasonably request for the purpose of enabling them
to pass upon such matters.
(h) (i) At the time of execution of this Agreement, the Underwriters
shall have received from KPMG LLP a letter, in form and substance
satisfactory to the Underwriters, addressed to the Underwriters and dated
the date hereof (i) confirming that they are independent public accountants
within the meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date
hereof (or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is given
in the Prospectus, as of a date not more than five days prior to the date
hereof), the conclusions and findings of such firm with respect to the
financial information and other matters ordinarily covered by accountants'
"comfort letters" to underwriters in connection with registered public
offerings.
(ii) At the time of execution of this Agreement, the Underwriters
shall have received from Deloitte & Touche LLP a letter, in form and
substance satisfactory to the Underwriters, addressed to the
Underwriters and dated the date hereof (i) confirming that they were,
during the periods covered by the report specified in (ii) herein,
independent public accountants within the meaning of the Securities Act
and are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2 01 of Regulation S-X of the
Commission, (ii) stating, as of the date hereof (or, with respect to
matters involving changes or developments since the respective dates as
of which specified financial information is given in the Prospectus, as
of a date not more than five days prior to the date hereof), the
conclusions and findings of such firm with respect to certain financial
information of AirPrime, Inc.
28
(i) With respect to the letter of KPMG LLP referred to in the preceding
paragraph and delivered to the Underwriters concurrently with the execution
of this Agreement (the "INITIAL LETTER"), the Company shall have furnished
to the Underwriters a letter (the "BRING-DOWN LETTER") of such accountants,
addressed to the Underwriters and dated such Delivery Date (i) confirming
that they are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation
S-X of the Commission, (ii) stating, as of the date of the bring-down
letter (or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is given
in the Prospectus, as of a date not more than five days prior to the date
of the bring-down letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered by the
initial letter and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
(j) The Company shall have furnished to the Underwriters a certificate,
dated such Delivery Date, of its Chairman of the Board, its President or a
Vice President and its chief financial officer stating that:
(i) The representations, warranties and agreements of the Company
in Section 1 are true and correct as of such Delivery Date; the Company
has complied with all its agreements contained herein; and the
conditions set forth in Sections 9(a) and 9(l) have been fulfilled; and
(ii) They have carefully examined the Registration Statement and
the Prospectus and, in their opinion (A) the Registration Statement and
the Prospectus, as of the Effective Date, did not include any untrue
statement of a material fact and did not omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and (B) since the Effective Date of the
Registration Statement, no event has occurred which should have been
set forth in a supplement or amendment to the Registration Statement or
the Prospectus.
(k) Each Selling Shareholder shall have furnished to the Underwriters
on the First Delivery Date a certificate, dated the First Delivery Date,
signed by, or on behalf of, such Selling Shareholder stating that the
representations, warranties and agreements of such Selling Shareholder
contained herein are true and correct as of the First Delivery Date and
that such Selling Shareholder has complied with all agreements contained
herein to be performed by such Selling Shareholder at or prior to the First
Delivery Date.
(l) (i) Neither the Company nor any of the Subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Prospectus or (ii) since such date there shall not have been any material
change in the share capital, long-term debt or intellectual property of the
Company or any of the
29
Subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, shareholders' equity or results of
operations of the Company and the Subsidiaries, otherwise than as set forth
or contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is, in the judgment of the Underwriters,
so material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Shares being
delivered on such Delivery Date on the terms and in the manner contemplated
in the Prospectus.
(m) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the TSX or in the over-the-counter market, or trading in any securities of
the Company on any exchange or in the over-the-counter market, shall have
been suspended or minimum prices shall have been established on any such
exchange or such market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction, (ii) a
banking moratorium shall have been declared by Federal or state
authorities, (iii) the United States or Canada shall have become engaged in
major hostilities, there shall have been an escalation in major hostilities
involving the United States or Canada or there shall have been a
declaration of a national emergency or war by the United States or Canada
or (iv) there shall have occurred such a material adverse change in general
economic, political or financial conditions (or the effect of international
conditions on the financial markets in the United States shall be such) as
to make it, in the reasonable judgment of a majority in interest of the
several Underwriters, impracticable or inadvisable to proceed with the
public offering or delivery of the Shares being delivered on such Delivery
Date on the terms and in the manner contemplated in the Prospectus.
(n) Nasdaq and the TSX shall have conditionally approved the Shares to
be issued and sold by the Company hereunder for listing, subject only to
official notice of issuance and the filing of all required documentation.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
10. INDEMNIFICATION AND CONTRIBUTION
(a) The Company and the Subsidiaries, jointly and severally, shall
indemnify and hold harmless each Underwriter (including any Underwriter in
its role as qualified independent underwriter pursuant to the rules of the
National Association of Securities Dealers, Inc.), its officers and
employees and each person, if any, who controls any Underwriter within the
meaning of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
but not limited to, any loss, claim, damage, liability or action relating
to purchases and sales of Shares), to which that Underwriter, officer,
employee or controlling person may become subject, under the Securities
Act, the Canadian Securities Laws or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue
30
statement or alleged untrue statement of a material fact contained (A) in
any Preliminary Prospectus, the Registration Statement or the Prospectus,
or in any amendment or supplement thereto or (B) in any materials or
information provided to investors by, or on behalf of, the Company in
connection with the marketing of the offering of the Shares, including any
roadshow or investor presentation made to investors by the Company (whether
in person or electronically) ("ROADSHOW MATERIALS"), (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or supplement thereto, or
in any Roadshow Materials that has been reviewed by the Company any
material fact required to be stated therein or necessary to make the
statements therein not misleading or (iii) any act or failure to act or any
alleged act or failure to act by any Underwriter in connection with, or
relating in any manner to, the Shares or the offering contemplated hereby,
and which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon matters covered by clause
(i) or (ii) above (PROVIDED that the Company and the Subsidiaries shall not
be liable in the case of any matter covered by this clause (iii) to the
extent that it is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, liability or action resulted
directly from any such act or failure to act undertaken or omitted to be
taken by such Underwriter through its gross negligence, contravention of
law or willful misconduct), and shall reimburse each Underwriter and each
such officer, employee and controlling person promptly upon demand for any
legal or other expenses reasonably incurred by that Underwriter, officer,
employee or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred; PROVIDED, HOWEVER, that
the Company and the Subsidiaries shall not be liable in any such case to
the extent that any such loss, claim, damage, liability or action arises
out of, or is based upon, any untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any such amendment or
supplement, in reliance upon and in conformity with the written information
concerning such Underwriter furnished to the Company by any Underwriter
specifically for inclusion therein, which information consists solely of
the information specified in Section 10(f), PROVIDED, FURTHER, that the
indemnity agreement provided in this Section 10(a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter
from whom the person asserting any loss, claim, charge, liability or
litigation based upon any untrue statement or alleged untrue statement of
material fact or omission or alleged omission to state therein a material
fact purchased Shares, if a copy of the Prospectus in which such untrue
statement or alleged untrue statement or omission or alleged omission was
corrected was not sent or given within the time required by the Securities
Act and the Rules and Regulations or the Canadian Securities Laws, as
applicable, unless such failure is the result of noncompliance by the
Company with Section 6(f) hereof. The foregoing indemnity agreement is in
addition to any liability which the Company or any Subsidiary may otherwise
have to any Underwriter or to any officer, employee or controlling person
of that Underwriter.
(b) The Selling Shareholders, severally and not jointly, shall
indemnify and hold harmless each Underwriter, its officers and employees,
and each person, if any, who controls any Underwriter within the meaning of
the Securities Act, from and against any
31
loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of Shares), to which
that Underwriter, officer, employee or controlling person may become
subject, under the Securities Act, the Canadian Securities Laws or
otherwise, insofar as such loss, claim, damage, liability or action arises
out of, or is based upon, (i) any breach of the Selling Shareholder's
representations set forth in Section 2 of this Agreement or (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or in
any amendment or supplement thereto, that was provided by such Selling
Shareholder to the Company for inclusion therein; PROVIDED, FURTHER, that
the indemnity agreement provided in this Section 10(a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter
from whom the person asserting any loss, claim, charge, liability or
litigation based upon any untrue statement or alleged untrue statement of
material fact or omission or alleged omission to state therein a material
fact purchased Shares, if a copy of the Prospectus in which such untrue
statement or alleged untrue statement or omission or alleged omission was
corrected was not sent or given within the time required by the Securities
Act and the Rules and Regulations or the Canadian Securities Laws, as
applicable, unless such failure is the result of noncompliance by the
Company with Section 6(f) hereof. The foregoing indemnity agreement is in
addition to any liability which the Selling Shareholders may otherwise have
to any Underwriter or to any officer, employee or controlling person of
that Underwriter. Notwithstanding the provisions of this Section 10(b), in
no event shall any Selling Shareholder be required to make any
indemnification payment or liability obligation to the extent such amount
is in excess of the net proceeds received by such Selling Shareholder in
the offering of the Shares by such Selling Shareholder.
(c) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, its officers and employees, each of its
directors, and each person, if any, who controls the Company within the
meaning of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company or any such director, officer or controlling person may become
subject, under the Securities Act, the Canadian Securities Laws, or
otherwise, insofar as such loss, claim, damage, liability or action arises
out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or in
any amendment or supplement thereto, any material fact required to be
stated therein or necessary to make the statements therein not misleading,
but in each case only to the extent that the untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon
and in conformity with written information concerning such Underwriter
furnished to the Company through the Underwriters by or on behalf of that
Underwriter specifically for inclusion therein and described in Section
10(f), and shall reimburse the Company and any such director, officer or
controlling person for any legal or other expenses reasonably incurred by
the Company or any such director, officer or controlling person in
connection with investigating or defending or preparing to defend against
any such loss, claim, damage, liability or action as such
32
expenses are incurred. The foregoing indemnity agreement is in addition to
any liability which any Underwriter may otherwise have to the Company or
any such director, officer, employee or controlling person.
(d) Promptly after receipt by an indemnified party under this Section
10 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this Section 10, notify the
indemnifying party in writing of the claim or the commencement of that
action; PROVIDED, HOWEVER, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under this
Section 10 except to the extent it has been materially prejudiced by such
failure and, PROVIDED FURTHER, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 10. If any such claim
or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying
party shall not be liable to the indemnified party under this Section 10
for any legal or other expenses subsequently incurred by the indemnified
party in connection with the defense thereof other than reasonable costs of
investigation; PROVIDED, HOWEVER, that the Underwriters shall have the
right to employ counsel to represent jointly the Underwriters and their
respective officers, employees and controlling persons who may be subject
to liability arising out of any claim in respect of which indemnity may be
sought by the Underwriters against the Company, any Subsidiary or any
Selling Shareholder under this Section 10 if, in the reasonable judgment of
the Underwriters, it is advisable for the Underwriters to be represented by
separate counsel, and in that event the fees and expenses of such separate
counsel shall be paid by the Company, the Subsidiaries or the Selling
Shareholders. Any indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof but
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment thereof has been specifically
authorized by the indemnifying party in writing, (ii) such indemnified
party shall have been advised by such counsel that there may be one or more
legal defenses available to it which are different from or additional to
those available to the indemnifying party and in the reasonable judgment of
such counsel it is advisable for such indemnified party to employ separate
counsel or (iii) the indemnifying party has failed to assume the defense of
such action and employ counsel reasonably satisfactory to the indemnified
party, in which case, if such indemnified party notifies the indemnifying
party in writing that it elects to employ separate counsel at the expense
of the indemnifying party, the indemnifying party shall not have the right
to assume the defense of such action on behalf of such indemnified party
(but for clarification, will continue to have the right to employ counsel
to assume the defense for such action, on its own behalf), it being
understood, however, that the indemnifying party shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any
33
time for all such indemnified parties, which firm shall be designated in
writing by the Underwriters, if the indemnified parties under this Section
10 consist of any Underwriter or any of their respective officers,
employees or controlling persons, or by the Company, if the indemnified
parties under this Section 10 consist of the Company or any of the
Company's directors, officers, employees or controlling persons or any
Selling Shareholder. No indemnifying party shall (i) without the prior
written consent of the indemnified parties (which consent shall not be
unreasonably withheld), 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 hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) 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, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with the written consent of the
indemnifying party or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless
any indemnified party from and against any loss or liability by reason of
such settlement or judgment.
(e) If the indemnification provided for in this Section 10 shall for
any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 10(a) 10(b) or 10(c) in respect of any
loss, claim, damage or liability, or any action in respect thereof,
referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage
or liability, or action in respect thereof, (i) in such proportion as shall
be appropriate to reflect the relative benefits received by the Company,
the Subsidiaries and the Selling Shareholders on the one hand and the
Underwriters on the other from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company, the Subsidiaries, and the Selling Shareholders on the one hand and
the Underwriters on the other with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations.
The relative benefits received by the Company, the Subsidiaries, and the
Selling Shareholders on the one hand and the Underwriters on the other with
respect to such offering shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Shares purchased under this
Agreement (before deducting expenses) received by the Company, the
Subsidiaries, and the Selling Shareholders, on the one hand, and the total
underwriting discounts and commissions received by the Underwriters with
respect to the Shares purchased under this Agreement, on the other hand,
bear to the total gross proceeds from the offering of the Shares under this
Agreement, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to whether
the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied
by the Company, the Subsidiaries, the Selling Shareholders or the
Underwriters, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement
or
34
omission. For purposes of the preceding two sentences, the net proceeds
deemed to be received by the Company shall be deemed to be also for the
benefit of the Subsidiaries and information supplied by the Company shall
also be deemed to have been supplied by the Subsidiaries. The Company, the
Subsidiaries, the Selling Shareholders and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this Section
10(e) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 10(e) shall be
deemed to include, for purposes of this Section 10(e), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 10(e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public was
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission, and no
Selling Shareholder shall be required to contribute any amount in excess of
the net proceeds received by such Selling Shareholder in the offering of
the Shares by such Selling Shareholder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations to
contribute as provided in this Section 10(e) are several in proportion to
their respective underwriting obligations and not joint.
(f) The Underwriters severally confirm and the Company acknowledges
that the statements with respect to the public offering of the Shares by
the Underwriters set forth on the cover page of, the legend concerning
over-allotments on the inside front cover page of and the concession and
reallowance figures appearing under the caption "Underwriting" in, the
Prospectus are correct and constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and
the Prospectus.
11. [INTENTIONALLY OMITTED.]
12. DEFAULTING UNDERWRITERS
(a) If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the non-defaulting
Underwriter shall be obligated to purchase the Shares which the defaulting
Underwriter agreed but failed to purchase on such Delivery Date provided,
however, that the non-defaulting Underwriter shall not be obligated to
purchase any of the Shares on such Delivery Date if the total number of
Shares which the defaulting Underwriter agreed but failed to purchase on
such date exceeds 9.09% of the total number of Shares to be purchased on
such Delivery Date, and the non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of Shares which it
agreed to purchase on such Delivery Date pursuant to the
35
terms of Section 3. If the foregoing maximums are exceeded, the
non-defaulting Underwriter shall have the right, but shall not be
obligated, to purchase all the Shares to be purchased on such Delivery
Date. If the non-defaulting Underwriter does not elect to purchase the
Shares which the defaulting Underwriter agreed but failed to purchase on
such Delivery Date, this Agreement (or, with respect to the Second Delivery
Date, the obligation of the Underwriters to purchase, and of the Company to
sell, the Option Shares) shall terminate without liability on the part of
any non-defaulting Underwriter or the Company or the Selling Shareholders,
except that the Company will continue to be liable for the payment of
expenses to the extent set forth in Sections 8 and 14. As used in this
Agreement, the term "Underwriter" includes, for all purposes of this
Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto who, pursuant to this Section 12, purchases Firm Shares
which a defaulting Underwriter agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have to the Company and the Selling Shareholders for
damages caused by its default. If other underwriters are obligated or agree
to purchase the Shares of a defaulting or withdrawing Underwriter, either
the Underwriters or the Company may postpone the Delivery Date for up to
seven full business days in order to effect any changes that in the opinion
of counsel for the Company or counsel for the Underwriters may be necessary
in the Registration Statement, the Prospectus or in any other document or
arrangement.
13. TERMINATION. The obligations of the Underwriters hereunder may be
terminated by the Underwriters by notice given to and received by the Company
and the Selling Shareholders prior to delivery of and payment for the Firm
Shares if, prior to that time, any of the events described in Sections 9(k) or
9(l), shall have occurred or if the Underwriters shall decline to purchase the
Shares for any reason permitted under this Agreement.
14. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If (a) the Company or any
Selling Shareholder shall fail to tender the Shares for delivery to the
Underwriters for any reason permitted under this Agreement, or (b) the
Underwriters shall decline to purchase the Shares for any reason permitted under
this Agreement (including the termination of this Agreement pursuant to Section
13), the Company shall reimburse the Underwriters for the reasonable
out-of-pocket expenses (including fees and expenses of counsel) incurred by them
in connection with this Agreement and the proposed purchase of the Shares, and
upon demand the Company shall pay the full amount thereof to the Underwriters.
If this Agreement is terminated pursuant to Section 12 by reason of the default
of one of the Underwriters, neither the Company nor any Selling Shareholder
shall be obligated to reimburse any defaulting Underwriter on account of those
expenses.
15. NOTICES, ETC. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex
or facsimile transmission to (i) ▇▇▇▇▇▇ Brothers Inc., ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Fax:
▇▇▇-▇▇▇-▇▇▇▇
36
and (ii) CIBC World Markets Inc., 12th Floor, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, Attention: ▇▇▇▇▇
▇▇▇▇▇▇, Fax: ▇▇▇-▇▇▇-▇▇▇▇;
(b) if to the Company or to the Subsidiaries, shall be delivered or
sent by mail or facsimile transmission to the address of the Company set
forth in the Registration Statement, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, (Fax:
▇▇▇-▇▇▇-▇▇▇▇);
(c) if to any Selling Shareholder, shall be delivered or sent by mail,
telex or facsimile transmission to such Selling Shareholder at the address
set forth on Schedule 2 hereto.
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.
16. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Company, the
Selling Shareholders and their respective personal representatives (if
applicable) and successors. This Agreement and the terms and provisions hereof
are for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Company and the
Selling Shareholders contained in this Agreement shall also be deemed to be for
the benefit of the officers and employees of each Underwriter and the person or
persons, if any, who control any Underwriter within the meaning of Section 15 of
the Securities Act and (B) the indemnity agreement of the Underwriters contained
in Section 10(c) of this Agreement shall be deemed to be for the benefit of
directors of the Company and the Selling Shareholders, officers of the Company
who have signed the Registration Statement, officers of the Selling Shareholder
and any person controlling the Company or the Selling Shareholders within the
meaning of Section 15 of the Securities Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 16, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
17. SURVIVAL. The respective indemnities, representations, warranties
and agreements of the Company, the Subsidiaries, the Selling Shareholders and
the Underwriters contained in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Shares and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any person controlling
any of them.
18. AGREEMENT BETWEEN UNDERWRITERS. Each of the Underwriters agrees
with the other that it will be liable for its proportionate share, based on the
proportion that is the number of shares set forth opposite such Underwriter's
name in Schedule 1 to the total number of shares to be purchased by the
Underwriters hereunder, of any losses, damages, liabilities or expenses
(collectively, the "LOSSES"), joint or several, paid or incurred by any
Underwriter to any person other than an Underwriter as a result of the offering
of shares contemplated herein, whether such losses arise under applicable
securities laws or otherwise, and including, without limitation, those losses
arising out of or based upon (i) any information or statement in any Preliminary
37
Prospectus or the Prospectus or any other selling or advertising material
approved and used by the Underwriter in connection with the sale of the Shares
being a misrepresentation (as defined in the Securities Act (British Columbia)
or untrue, false or misleading; and (ii) any legal or other expenses reasonably
incurred by the Underwriter or any of them in connection with investigating or
defending any claim or action in respect of such losses.
19. DEFINITION OF THE TERM "BUSINESS DAY." For purposes of this
Agreement, "BUSINESS DAY" means any day on which the New York Stock Exchange,
Inc. is open for trading.
20. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of New York.
21. CONSENT TO JURISDICTION. Each party irrevocably agrees that any
legal suit, action or proceeding arising out of or based upon this Agreement or
the transactions contemplated hereby ("RELATED PROCEEDINGS") may be instituted
in the federal courts of the United States of America located in the City of New
York or the courts of the State of New York in each case located in the Borough
of Manhattan in the City of New York (collectively, the "SPECIFIED COURTS"), and
irrevocably submits to the non-exclusive jurisdiction of such courts in any such
suit, action or proceeding. The parties further agree that service of any
process, summons, notice or document by mail to such party's address set forth
above shall be effective service of process for any lawsuit, action or other
proceeding brought in any such court. The parties hereby irrevocably and
unconditionally waive any objection to the laying of venue of any lawsuit,
action or other proceeding in the Specified Courts, and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such lawsuit, action or other proceeding brought in any such
court has been brought in an inconvenient forum. The Company hereby irrevocably
appoints DWT Corp., which currently maintains a New York City office at ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as its agent to receive service of process
or other legal summons for purposes of any such action or proceeding that may be
instituted in any state or federal court in the City and State of New York. Each
other party not located in the United States hereby irrevocably appoints CT
Corporation System, which currently maintains a New York City office at ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America, as its agent to
receive service of process or other legal summons for purposes of any such
action or proceeding that may be instituted in any state or federal court in the
City and State of New York.
22. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
23. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
24. GLOSSARY OF DEFINED TERMS. Schedule 6 sets forth a list of many of
the defined terms used in this Agreement.
38
If the foregoing correctly sets forth the agreement among the
Company, the Subsidiaries, the Selling Shareholders and the Underwriters, please
indicate your acceptance in the space provided for that purpose below.
SIERRA WIRELESS, INC. SIERRA WIRELESS DATA, INC.
By: _______________________________ By: _______________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chairman & CEO Title: President
SIERRA WIRELESS AMERICA, INC. SIERRA WIRELESS (UK) LIMITED
By: _______________________________ By: _______________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President Title: Director
4151003 CANADA INC.
By: _______________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
_______________________________ ______________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
39
Accepted:
▇▇▇▇▇▇ BROTHERS INC.
By: _______________________________
Name: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice Chairman & Chairman of Global Technology
CIBC WORLD MARKETS INC.
By: _______________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
SCHEDULE 1
UNDERWRITERS SHARES
------------ ------
▇▇▇▇▇▇ Brothers Inc........................................ 2,000,000
CIBC World Markets Inc..................................... 2,000,000
Total ............................................ 4,000,000
SCHEDULE 2
NAME AND ADDRESS OF SELLING SHAREHOLDERS NUMBER OF FIRM SHARES
---------------------------------------- ---------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ 100,000
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ 57,778
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Total 157,778
SCHEDULE 3
Subsidiaries
1. Sierra Wireless Data, Inc., a Delaware corporation
2. Sierra Wireless America, Inc., a Delaware corporation
3. Sierra Wireless (UK) Limited, an England and Wales corporation
4. 4151003 Canada Inc., a Canadian Corporation
SCHEDULE 4
Lock-up Agreements
Sierra Wireless, Inc.
Sierra Wireless Data, Inc.
Sierra Wireless America, Inc.
Sierra Wireless (UK) Limited
4151003 Canada Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
S. ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
FORM LOCK-UP LETTER AGREEMENT
▇▇▇▇▇▇ BROTHERS INC.,
CIBC WORLD MARKETS INC.
c/▇ ▇▇▇▇▇▇ BROTHERS INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned understands that you propose to enter into an
Underwriting Agreement (the "UNDERWRITING AGREEMENT") providing for the purchase
by you (the "UNDERWRITERS") of 4,000,000 common shares (the "FIRM SHARES") in
the capital of Sierra Wireless, Inc. (the "COMPANY"). In addition, the
undersigned understands that you will be granted an option to purchase up to
600,000 common shares in the capital of the Company (the "Option Shares"). The
undersigned understands that the Underwriters propose to reoffer the Firm Shares
and the Option Shares, if any, to the public (the "OFFERING").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of ▇▇▇▇▇▇
Brothers Inc., and CIBC World Markets Inc., such consent not to be unreasonably
withheld, the undersigned will not, directly or indirectly, (1) offer for sale,
sell, pledge, or otherwise dispose of (or enter into any transaction or device
that is designed to, or could be expected to, result in the disposition by any
person at any time in the future of) any common shares in the capital of the
Company (the "Shares") (including, without limitation, Shares that may be deemed
to be beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and Shares that may be
issued upon exercise of any option or warrant) or securities convertible into or
exchangeable for Shares owned by the undersigned on the date of execution of
this Lock-Up Letter Agreement or on the date of the completion of the Offering,
or (2) enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of ownership
of such Shares, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Shares or other securities, in cash or
otherwise, for a period of ninety (90) days after the date of the final
Prospectus relating to the Offering.
In furtherance of the foregoing, the Company and its Transfer Agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
It is understood that, if the Company notifies you that it does not
intend to proceed with the Offering, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Shares, we will be released from our obligations
under this Lock-Up Letter Agreement.
The undersigned understands that the Company, the Underwriters and the
shareholders selling shares in the Offering will proceed with the Offering in
reliance on this Lock-Up Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.
Very truly yours,
Entities: _______________________________________
[Print Name of Entity]
By: ___________________________________
Name:
Title:
Individuals: _______________________________________
[Signature]
_______________________________________
[Print Name]
Dated: _______________
SCHEDULE 6
Glossary of Certain Defined Terms
Bring-down letter............................................9(i)
Canadian Final PREP Prospectus...............................1(b)
Canadian Preliminary Prospectus..............................1(a)
Canadian Prospectus..........................................1(b)
Canadian Qualifying Jurisdictions............................1(a)
Canadian Securities Laws.....................................1(b)
Canadian Securities Regulatory Authorities...................1(a)
Canadian Supplemented PREP Prospectus........................1(b)
Commission...................................................1(a)
Common Shares............................................Recitals
Company..................................................Recitals
Delivery Date................................................5(b)
Effective Time.............................................4.4(d)
Effective Date...............................................5(a)
ERISA........................................................1(x)
Exchange Act.................................................1(f)
Firm Shares..............................................Recitals
First Delivery Date..........................................5(a)
Initial letter...............................................9(i)
Losses.........................................................18
Nasdaq......................................................1(dd)
New York Court.........................................9(d)(xvii)
Offering.................................................Recitals
Option Shares............................................Recitals
Preliminary Prospectus.......................................1(b)
PREP Information.............................................1(b)
PREP Procedures..............................................1(a)
Principal Canadian Regulator.................................1(a)
Prospectus...................................................1(b)
Registration Statement.......................................1(b)
Related Proceedings............................................21
Royal Bank General Security Agreement........................1(h)
Second Delivery Date.........................................5(b)
Shares.................................................. Recitals
Supplementary Material.......................................1(b)
Underwriters.............................................Recitals
Roadshow Materials..........................................10(a)
Rules and Regulations........................................1(a)
Securities Act...............................................1(a)
Selling Shareholders.....................................Recitals
Subsidiaries....................................................1
Subsidiary......................................................1
Specified Courts...............................................21
Shares...................................................Recitals
TSX.........................................................1(dd)
U.S. Preliminary Prospectus..................................1(a)
U.S. Prospectus..............................................1(b)
U.S. Supplemented Prospectus.................................1(b)
Underwriters.............................................Recitals
Underwriting Agreement...................................Recitals