October 20, 1993
Gandalf Technologies Inc.
130 Colonnade Road South
Nepean, Ontario
K2E 7M4
Attention: Mr. Brian R. Hedges
President and
Chief Executive Officer
Dear Sirs:
We understand that Gandalf Technologies Inc. (the
"Company") intends to offer (the "Offering") to the public the
Offered Shares (as defined below). To that end , we understand
that the Company has filed the Preliminary Prospectus (as defined
below) in each of the Qualifying Jurisdictions (as defined below)
and will file the Prospectus (as defined below) as soon as
practicable in accordance with the terms of this agreement in each
of the Qualifying Jurisdictions.
OFFER TO PURCHASE
1. (1) Based upon the foregoing and subject to the terms and
conditions set out below, Wood Gundy Inc. ("WGI"), Deacon Barclays
de Zoete Wedd Limited ("DBZW"), Gordon Capital Corporation ("GCC")
and Richardson Greenshields of Canada Limited ("RGC") (collectively
the "Underwriters" and individually an "Underwriter") hereby
severally and not jointly offer to purchase from the Company, as
more particularly described in section 15, and by its acceptance
hereof the Company agrees to allot, issue and sell to the
Underwriters, at the Closing Time (as defined below), 12,000,000
Common Shares (the "Offered Shares") at a price of $4.00 for each
Offered Share, being an aggregate purchase price of $48,000,000.
(2) In this Agreement:
"business day" means a day which is not a Saturday, a
Sunday or a statutory holiday in the Province of
Ontario;
"Closing" means the completion of the issue and sale by
the Company and the purchase by the Underwriters of the
Offered Shares;
"Closing Date" means November 5, 1993 or such other date
as the Company and the Underwriters may agree in writing, provided
that in no event shall the Closing Date be later than six weeks
after the date a receipt is issued by the Ontario Securities
Commission for the Prospectus;
" Closing Time" means 8:00 a.m. (Toronto time) on the
Closing Date or such other time on the Closing Date as the Company
and the Underwriters may agree;
" Company's Auditors" means KPMG Peat Marwick Thorne,
the auditors of the Company;
" Material Subsidiaries" means the Subsidiaries
disclosed under the heading "Intercorporate Relationships" in the
Preliminary Prospectus and the Prospectus;
" misrepresentation", " material fact" and " material
change" have the respective meanings ascribed thereto in the
Securities Act (Ontario), except as otherwise expressly provided
herein;
" Preliminary Prospectus" means the preliminary
prospectus of the Company dated September 21, 1993;
" Prospectus" means the (final) prospectus of the
Company to be filed in the Qualifying Jurisdictions in order to
qualify for distribution the Offered Shares;
" Qualifying Jurisdictions" means all of the provinces of
Canada;
" Securities Laws" means, collectively, the applicable
securities laws, regulations and published policy statements of
each of the Qualifying Jurisdictions;
" Securities Regulator" means the applicable securities
commission or regulatory authority in each of the Qualifying
Jurisdictions;
" Subsidiaries" has the meaning ascribed thereto in the
Securities Act (Ontario);
" Supplementary Material" has the meaning ascribed
thereto in section 8;
" this Agreement" means the agreement resulting from
the acceptance by the Company of the offer made by the Underwriters
herein; and
" to the best of the knowledge, information and belief
of" means (unless otherwise expressly stated) a statement of the
declarant's knowledge of the facts or circumstances to which such
phrase relates after having made due inquiries and investigations
in connection with such facts and circumstances.
(3) Any reference in this Agreement to any section,
subsection, paragraph or subparagraph shall refer to a section,
subsection, paragraph or subparagraph of this Agreement.
(4) All defined terms herein denoted by initial capital
letters and not otherwise defined have the meanings attributed
thereto in the Preliminary Prospectus.
(5) Words importing the singular number only shall include
the plural and vice versa, and words importing the use of any
gender shall include all genders.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2. (1) The Company represents and warrants to each of the
Underwriters, and the Company acknowledges that the Underwriters
are relying upon such representations, warranties and agreements in
entering into this Agreement, that:
(a) Each of the Company and its Material Subsidiaries has
been duly incorporated and organized and is validly subsisting
under the laws of its jurisdiction of incorporation, has all
requisite power and authority and, except where failure to be so
qualified would not in the aggregate have a material adverse
effect on the Company and its Subsidiaries, as a whole, is duly
qualified to carry on its business as now conducted and to own,
lease or operate its properties and assets in each of the
jurisdictions in which it carries on its business or owns, leases
or operates its properties or assets.
(b) The authorized and issued capital of the Company is
as described in the Preliminary Prospectus and all of the issued
Common Shares in the capital of the Company have been duly
authorized and validly issued and are fully paid and
non-assessable.
(c) The Company directly or indirectly owns all of the
outstanding shares in the capital of each of its Subsidiaries;
provided, however, that shares of certain Subsidiaries are
pledged to banks as disclosed in note 9 on page 41 of the
Preliminary Prospectus.
(d) No person, firm or corporation has, as of the date
hereof, or will have as at the Closing Time, any agreement or
option, or right or privilege (whether preemptive, contractual or
otherwise) capable of becoming an agreement for the purchase,
subscription and issuance of any Common Shares or other
securities of the Company or its Subsidiaries which are not
disclosed in the Preliminary Prospectus.
(e) The Company does not have any Subsidiaries which are
not disclosed in the Preliminary Prospectus other than
Subsidiaries which, on an individual and aggregated basis, do not
have (i) assets, or investments or advances from the Company or
other Subsidiaries, which exceed 10% of the assets of the Company
and its Subsidiaries on a consolidated basis, or (ii) sales and
operating revenues which exceed 10% of the sales and operating
revenues of the Company and its Subsidiaries on a consolidated
basis.
(f) The R-M Trust Company has been duly appointed as
registrar and transfer agent for the Common Shares.
(g) The Company has all requisite corporate power and
authority to: (i) enter into this Agreement; (ii) offer, sell,
issue and deliver the Offered Shares in accordance with the
provisions of this Agreement; and (iii) to carry out all the
terms and provisions hereof to be carried out by it. The
execution and delivery of this Agreement and the performance of
the transactions contemplated hereby has been duly authorized by
all necessary action of the Company and, at the Closing Time,
this Agreement will have been duly executed and delivered by the
Company and will be a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency and other laws affecting the
rights of creditors generally and subject to the qualifications
that equitable remedies may be granted in the discretion of a
court of competent jurisdiction and that rights of indemnity and
waiver of contribution may be contrary to public policy.
(h) The execution and delivery of this Agreement by the
Company and the consummation of the transactions contemplated
herein, including, without limitation, the offering, issuance,
sale and delivery in the Qualifying Jurisdictions of the Offered
Shares and the compliance by the Company with the other
provisions of this Agreement: (i) do not require the consent,
approval, authorization, registration or qualification of or with
any governmental or regulatory authority, administrative
tribunal, stock exchange, Securities Regulator or other third
party applicable to the Company or its Subsidiaries, except such
as may be required (and shall be obtained as provided in this
Agreement) under applicable Securities Laws of the Qualifying
Jurisdictions or section 12 hereof; and (ii) not conflict with
nor will any of such events conflict with or constitute a default
under or breach of, or create a state of facts which after notice
or lapse of time, or both, could constitute a default under or
breach of, any of the terms, conditions and provisions of any
contract, indenture, mortgage, trust deed, loan agreement, note,
lease or other agreement or instrument to which the Company or
its Subsidiaries is a party or by which any of its properties or
assets is or may be contractually bound at the Closing Time or to
which any of the properties or assets of the Company or its
Subsidiaries is subject, or the constating documents, resolutions
or by-laws of the Company or its Subsidiaries or any statute or
regulation or any judgment, decree, order, rule or regulation of
any court or any governmental or regulatory authority,
arbitrator, administrative tribunal, stock exchange or Securities
Regulator which may, in any way, have a material adverse effect
on the condition (financial or otherwise) of the business,
affairs, properties, assets, net worth, capital, results of
operations or business prospects of the Company or its
Subsidiaries.
(i) Except that the loan agreement with The Chase
Manhattan Bank (National Association) ("Chase N.A."), as agent
requires that any proceeds from an equity offering of the Company
be used to pay down outstanding indebtedness under the loan, the
execution and delivery of this Agreement and the consummation of
the transactions contemplated herein will not result in the
creation or imposition of any lien, charge or encumbrance upon
any properties or assets of the Company or its Subsidiaries
pursuant to any contract, indenture, trust deed, mortgage, loan
agreement, note, lease or other agreement or instrument to which
the Company or its Subsidiaries is a party or by which it may be
contractually bound at the Closing Time, or to which any of the
properties or assets of the Company or its Subsidiaries is
subject.
(j) The Company is not in violation of any of its
constating documents, resolutions or by-laws or, except in
connection with loan agreements with Chase N.A., as agent and
Royal Bank of Canada, default in the performance or observance of
any material obligation, agreement, covenant or condition
contained in any contract, indenture, trust deed, mortgage, loan
agreement, note, lease or other agreement or instrument to which
the Company is a party or by which it may be contractually bound
at the Closing Time, or to which any of the properties or assets
of the Company may be subject where such default or violation may
have a material adverse effect on the Company. Except in
connection with loan agreements with Chase N.A., as agent and
Royal Bank of Canada, there exists no state of facts which, after
notice or lapse of time or both, or otherwise, would constitute
a default under or breach of a material obligation, agreement,
covenant or condition of any of such documents where such default
may have a material adverse effect on the Company. All of such
documents are now in good standing and in full force and the
Company is entitled to all of the benefits thereunder.
(k) Each of the Company and its Subsidiaries possesses
all material certificates, authorizations, permits or licenses
issued by the appropriate governmental or regulatory agencies or
bodies in each of the applicable provinces or countries in order
for it to carry on its business or own, lease or operate its
properties or assets, and none of the Company nor its
Subsidiaries have received any notice of proceedings relating to
the revocation or modification of any such certificate,
authorization, permit or licence which may, singly or in the
aggregate, materially and adversely affect the Company or its
Subsidiaries or any of their properties or assets.
(l) Except as disclosed in the Preliminary Prospectus,
there are no actions, suits, proceedings or inquiries pending or,
to the best of the knowledge, information and belief of the
Company, threatened against or affecting the Company or its
Subsidiaries or any of their properties or assets at law or in
equity or before or by any governmental or regulatory agency or
board, domestic or foreign, which may, in any way, have a
material adverse effect on the condition (financial or otherwise)
of the business, properties, assets, capital, net worth, results
of operations or business prospects of the Company or its
Subsidiaries.
(m) Except as disclosed in the Preliminary Prospectus,
the Company does not have any contingent liabilities which are
material to the Company or its Subsidiaries or their business,
operations, properties or assets.
(n) The Offered Shares have been approved for listing on
The Toronto Stock Exchange ("TSE"), subject to the satisfaction
by the Company of the conditions (the "Listing Conditions") set
out in the letter dated October 7, 1993 from the TSE to Stikeman,
Elliott, counsel to the Company, and, at the Closing Time, the
Company will have satisfied such of the Listing Conditions as
will be possible to satisfy at such time and will use its best
efforts to satisfy any conditions not satisfied at the Closing
Time as soon as practicable after the Closing Time. At the
Closing Time, the definitive form of certificate for the Offered
Shares will be in proper form under the laws of the Province of
Ontario and will comply with the requirements of the TSE.
(o) The Company has not agreed to issue or sell any
securities (as defined in the Securities Act (Ontario)) of the
Company, other than as described in the Preliminary Prospectus.
All Offered Shares to be issued as hereinbefore described have
been duly authorized and conditionally issued and, at the Closing
Time when certificates for the Offered Shares are countersigned
by the Company's transfer agent and registrar and issued,
delivered and paid for, such Offered Shares will be validly
issued as fully paid and non-assessable Common Shares in the
capital of the Company.
(p) No order, ruling or determination having the effect
of suspending or restricting the offer or sale, or ceasing the
trading, of the Offered Shares or any other securities of the
Company has been issued or made by any court or any governmental
or regulatory authority, arbitrator, administrative tribunal,
stock exchange or Securities Regulator and is continuing in
effect, and no proceedings for that purpose have been instituted
or are pending or, to the best of the knowledge, information and
belief of the Company, contemplated or threatened by any such
authority or under any Securities Laws.
(q) The audited consolidated balance sheets of the
Company as at March 31, 1993 and March 31, 1992 and the
consolidated statements of income and retained earnings and
changes in financial position for the year ended March 31, 1993,
the eight months ended March 31, 1992 and for each of the years
in the three year period ended July 31, 1991 (collectively, the
"Historical Financial Statements"), as set out in the Preliminary
Prospectus, are fairly and, in all material respects, completely
and accurately stated and have been prepared in accordance with
Canadian generally accepted accounting principles.
(r) Except as provided herein, there is no person, firm
or corporation which has been engaged by the Company to act for
the Company and which is entitled to any brokerage or finder's
fee in connection with this Agreement or any of the transactions
contemplated hereunder, and in the event any such person, firm or
corporation establishes a claim for any fee from the
Underwriters, the Company covenants to indemnify and hold
harmless the Underwriters with respect thereto and with respect
to all costs reasonably incurred in the defence thereof.
(s) To the best of the knowledge of the Company, none of
the holders of Common Shares or the directors or officers of the
Company or any associate or affiliate of any of the foregoing
had, has or intends to have any material interest, direct or
indirect, in any material transaction contemplated by this
Agreement or the Preliminary Prospectus or in any proposed
material transaction with the Company which, as the case may be,
materially affects, is material to or will materially affect the
Company or its Subsidiaries, except as and to the extent
disclosed in the Preliminary Prospectus.
(t) The Company will not take any action, directly or
indirectly, to cause or result in, or which might reasonably be
expected to constitute, the stabilization or manipulation of the
price of its securities prior to the date set forth in the notice
contemplated by Section 17 that distribution of the Common Shares
has ceased.
(u) The Company and its Subsidiaries have timely filed
all necessary tax returns and notices and have paid or made
provision for all applicable taxes of whatever nature for all tax
years to the date hereof to the extent such taxes have become due
or have been alleged to be due; the Company is not aware of any
material tax deficiencies or material interest or penalties
accrued or accruing, or alleged to be accrued or accruing,
thereon with respect to itself or its Subsidiaries which have not
otherwise been provided for by the Company.
(2) The Company represents and agrees, for the benefit of
the Underwriters, to the representations and agreements of the
Company described in Schedule "A" hereto, which is incorporated by
reference in this Agreement.
(3) Each certificate required to be provided in accordance
with the terms of this Agreement and signed by any officer of the
Company and delivered to the Underwriters or counsel for the
Underwriters shall be deemed to be a representation and warranty by
the Company to the Underwriters as to the matters covered thereby.
The Company's obligations as regards the breach of any
representation and warranty of the Company set forth in this
section 2 or in any such certificate or in section 9 or elsewhere
in this Agreement shall be limited to those obligations which are
provided for in section 13.
UNDERWRITERS' FEES
3. In consideration for the Underwriters' services in:
(a) assisting in the preparation of the Preliminary
Prospectus, the Prospectus and of any Supplementary Material;
(b) forming and managing banking, selling or other groups
for the distribution of the Offered Shares;
(c) distributing the Offered Shares both directly and
through other registered dealers and brokers in Canada; and
(d) arranging marketing information meetings; the Company
(out of its general funds) agrees to pay to the Underwriters by
certified cheque or bank draft, at the Closing Time, in the event
that the Offered Shares are purchased by the Underwriters, an
aggregate fee of $2,880,000, being a fee of $0.24 per Offered Share
so purchased.
CLOSING PROCEDURES
4. (1)The purchase of the Offered Shares shall be completed at
the Closing Time at the offices of Stikeman, Elliott, Suite 5300,
Commerce Court West, Toronto, Ontario M5L 1B9 or at such other
place in Toronto as the Underwriters and the Company may agree. At
the Closing Time, the Company shall issue the Offered Shares to, or
to the order of, WGI, on behalf of the Underwriters, and deliver to
WGI, on behalf of the Underwriters, one or more Common Share
certificate(s) in definitive form representing the Offered Shares,
such Common Share certificate(s) to be registered in the name of
WGI, on behalf of the Underwriters, or in such other name or names
as WGI, on behalf of the Underwriters, shall notify the Company in
writing not less than one (1) whole business day prior to the
Closing Date, against payment by the Underwriters to the Company of
the aggregate purchase price for the Offered Shares in lawful money
of Canada by certified cheque or bank draft at par in Toronto
together with the receipt of WGI, on behalf of the Underwriters,
for such Common Share certificate(s) against delivery of the
Company's receipt for such monies. The Company shall
contemporaneously pay to WGI, on behalf of the Underwriters, the
Underwriters' fees as described in section 3 in connection with the
issue and sale of the Offered Shares, by the Company's certified
cheque or bank draft at par in Toronto against delivery of the
Underwriters' receipt therefor.
(2)Provided notice in writing reasonably satisfactory to the
Company is provided by one or more Underwriters, it is understood
that any one of the Underwriters, individually, may (but shall not
be obliged to) make payment on behalf of any other Underwriter or
Underwriters for all, but not less than all, of the Common Shares
to be purchased by such Underwriter or Underwriters. No such
payment shall relieve such Underwriter or Underwriters from any of
its or their obligations hereunder.
(3)The Company shall make all necessary arrangements for the
exchange on the Closing Date of the Common Share certificate(s),
issued as aforesaid, at the principal offices of The R-M Trust
Company in the cities of Halifax, Montreal, Toronto, Winnipeg,
Calgary and Vancouver for Common Share certificates representing
such number of Common Shares and registered in such names as shall
be designated to The R-M Trust Company by WGI, on behalf of the
Underwriters and any members of the Underwriters' banking, selling
or other groups referred to in paragraph 3(b), not less than three
(3) business days prior to the Closing Date. All such exchanges and
other exchanges necessary to complete the distribution of the
Offered Shares shall be made without cost to the Underwriters or
the members of such Underwriters' banking, selling or other groups.
COMPLIANCE WITH SECURITIES LAWS
5. (1) The Company shall as soon as practicable fulfill all
requirements as are appropriate and obtain receipts for the
Prospectus which under the applicable Securities Laws must be
fulfilled or received in order to qualify the Offered Shares for
distribution in the Qualifying Jurisdictions by the Underwriters
and by any other investment dealers or brokers registered in the
Qualifying Jurisdictions.
(2) The Offered Shares shall be offered for sale by the
Underwriters to the public in the Qualifying Jurisdictions in
compliance with applicable laws and at the offering price per
Offered Share of $4.00 to be specified on the cover page of the
Prospectus. The Underwriters shall cause similar undertakings to be
contained in any agreements among the members of any banking,
selling or other groups formed for the distribution of the Offered
Shares.
(3) The Underwriters covenant and agree that if they offer
to sell or sell any Offered Shares in jurisdictions other than the
Qualifying Jurisdictions, such offers or sales shall be effected in
accordance and compliance with the applicable laws of such
jurisdictions. The Underwriters shall, and shall use their
reasonable best efforts to cause members of any banking, selling or
other groups (the "selling dealer group") formed for the
distribution of the Offered Shares to, only sell the Offered Shares
in any jurisdiction other than the Qualifying Jurisdictions in full
compliance with all local laws, regulations and policy statements
and in such manner so as not to require the production or
qualification of a prospectus or other offering document in respect
of such sale under the laws of any such jurisdiction or to require
the Company to become registered as an issuer of securities, or to
require the Offered Shares to become registered for distribution
under such laws, regulations and policy statements.
(4) The Underwriters agree, on behalf of themselves and
their United States affiliates, for the benefit of the Company to
comply with the selling restrictions imposed by the laws of the
United States and described in Schedule "A" hereto, which is
incorporated by reference in this Agreement. They also agree to
obtain such an agreement of each member of the selling dealer
group. Notwithstanding the provisions of this Section 5(4), no
Underwriter shall be liable to the Company pursuant to this Section
or Schedule "A" as a result of the violation by another member of
the selling dealer group of this Section 5(4) or Schedule "A" if
the Underwriter first mentioned is not itself in violation.
(5) The Underwriters shall not make use of any "green sheet"
in respect of the Offered Shares or the offering thereof without
the prior approval of the Company, and will comply with the notice
dated July 7, 1989 issued by the Ontario Securities Commission with
respect to the use of "green sheets" and other marketing material
during the waiting period under the Securities Act (Ontario).
DELIVERY OF PROSPECTUS
6. (1) The Company shall deliver to the Underwriters, without
charge, in Toronto, Ontario, contemporaneously with or prior to the
filing of the Prospectus with the Ontario Securities Commission:
(a) a copy of the Prospectus in each of the English and
French language (which French language copy need not be delivered
until the French language version of the Prospectus has been filed
with the Quebec Securities Commission), signed as required by the
Securities Laws;
(b) a copy of any other document required to be filed by
the Company under the Securities Laws in connection with the
distribution of the Offered Shares in each of the Qualifying
Jurisdictions;
(c) evidence reasonably satisfactory to the Underwriters
that application to list the Offered Shares on the TSE has been
accepted by the TSE, subject to the satisfaction by the Company of
the Listing Conditions;
(d) a comfort letter dated the date of the Prospectus and
addressed by the Company's Auditors to the Underwriters, their
counsel and the directors of the Company, in form and substance
satisfactory to the Underwriters, acting reasonably;
(e) an opinion of the Company's Quebec counsel addressed to
the Underwriters and their counsel in form and substance
satisfactory to the Underwriters, acting reasonably, substantially
to the effect that, except for the financial information appearing
in the Prospectus in the English language under the heading
"Prospectus Summary-Selected Consolidated Financial Information",
the information appearing under the headings "Management's
Discussion and Analysis" and "Auditors' Report" (including the
financial statements referred to therein), the Prospectus printed
in the French language is in all material respects a complete and
proper translation of the Prospectus printed in the English
language and the said English and French language versions of the
Prospectus are not susceptible of any materially different
interpretation with respect to any material matter contained
therein;
(f) an opinion of the Company's Auditors addressed to the
Underwriters and their counsel in form and substance satisfactory
to the Underwriters, acting reasonably, substantially to the effect
that the information under the headings "Prospectus
Summary-Selected Consolidated Financial Information", the
information appearing under the headings "Management's Discussion
and Analysis" and "Auditors' Report" (including the financial
statements referred to therein), in the French version of the
Prospectus are, in all material respects, a complete and proper
translation of the English language version; and
(g) an opinion of the Company's Quebec counsel addressed to
the Underwriters and their counsel, in form and substance
satisfactory to the Underwriters, acting reasonably, with respect
to compliance with the laws of Quebec relating to the use of the
French language in connection with the distribution of the Offered
Shares in Quebec.
(2) The Company shall co-operate in all respects with the
Underwriters to allow and assist the Underwriters to participate
fully in the preparation of the Prospectus and shall allow the
Underwriters to conduct all "due diligence" investigations which
the Underwriters may reasonably require to fulfil the Underwriters'
obligations as underwriters and to enable the Underwriters
responsibly to execute any certificate required to be executed by
the Underwriters in such documentation.
(3) The Company shall cause to be delivered to the
Underwriters, without charge, as soon as possible following the
time of issuance of a receipt in the Province of Ontario for the
Prospectus and in any event not later than 9:00 a.m. (Toronto time)
on November 1, 1993, in the cities of Toronto and Montreal, such
numbers of commercial copies of the Prospectus, in both the English
and French languages, as the Underwriters shall reasonably request
(and in respect of which they have provided the Company with
reasonable advance written notice). The Company shall similarly
cause to be delivered to the Underwriters commercial copies of any
Supplementary Material required to be delivered to the Underwriters
or to be delivered to purchasers or prospective purchasers of the
Offered Shares in the Qualifying Jurisdictions.
NOTICE OF MATERIAL CHANGE
7. During the period of distribution (which shall be deemed to
have terminated with the giving of notice under section 17(ii) of
this Agreement) of the Offered Shares, the Company shall promptly
notify the Underwriters in writing of:
(a) any material change (actual, anticipated, proposed or
threatened) in any or all of the business, affairs, properties,
assets, capital, net worth, liabilities (contingent or otherwise),
results of operations or business prospects of the Company or its
Subsidiaries;
(b) any change (actual, anticipated, proposed or
threatened) in a material fact contained in the Preliminary
Prospectus, the Prospectus or any Supplementary Material;
(c) any change in applicable laws materially affecting or
which
may materially affect the business, affairs, properties, assets,
capital, net worth, liabilities (contingent or otherwise), results
of operations or business prospects of the Company or its
Subsidiaries or the Offered Shares or the distribution thereof,
which change is or may be of such a nature as to render any
statement in the Preliminary Prospectus, the Prospectus or any
Supplementary Material misleading or untrue or result in a
misrepresentation therein or which would otherwise require an
amendment to the Preliminary Prospectus, the Prospectus or the
Supplementary Material under the Securities Laws; and
(d) any material fact which becomes known which, pursuant
to the Securities Laws, would have been required to be stated in
the Preliminary Prospectus, the Prospectus or any Supplementary
Material had it been known by the Company at or prior to the
respective date hereof.
In any such case, the Company shall promptly and, in any event
within applicable time limitations under the Securities Laws,
comply with all legal requirements necessary to comply with the
Securities Laws applicable to continued distribution of the Offered
Shares in the Qualifying Jurisdictions as contemplated in section
5. The Company shall in good faith discuss with the Underwriters
any change in circumstances (actual, anticipated, proposed or
threatened) which is of such a nature that there is reasonable
doubt whether notice need be given to the Underwriters pursuant to
this section 7.
SUPPLEMENTARY MATERIAL
8. The Company shall also deliver to the Underwriters and their
counsel duly signed copies of any amendments or supplements to the
Preliminary Prospectus or the Prospectus or other documents
required to be filed by the Company under the Securities Laws
(collectively, the "Supplementary Material"), together with copies
of any other documents required to be filed with the Supplementary
Material. The Company shall cooperate in all respects with the
Underwriters to allow and assist the Underwriters to participate
fully in the preparation of any Supplementary Material and shall
allow the Underwriters to conduct all "due diligence"
investigations which the Underwriters may request to fulfill the
Underwriters' obligations as underwriters and to enable the
Underwriters to responsibly execute any certificate required to be
executed by the Underwriters in the Supplementary Material. The
provisions of section 6 shall apply, with any changes required by
the context, to any Supplementary Material of which copies are,
under the applicable Securities Laws, required to be delivered to
any purchaser or prospective purchaser of the Offered Shares.
REPRESENTATIONS AND WARRANTIES REGARDING PROSPECTUS
9. The delivery to the Underwriters of the Preliminary
Prospectus, the Prospectus or any Supplementary Material shall
constitute the representation and warranty of the Company to the
Underwriters that, at the time of such delivery, the information
and statements contained therein (except information and statements
relating solely to, or provided by, the Underwriters):
(a) are true and correct in all material respects;
(b) constitute full, true and plain disclosure of all
material facts relating to the Company and the Offered Shares;
(c) contain no misrepresentation; and
(d) comply in all material respects with the Securities
Laws.
Such delivery shall constitute the Company's consent to the use of
the Preliminary Prospectus, the Prospectus and the Supplementary
Material by the Underwriters for the purpose of offering and
selling the Offered Shares in the Qualifying Jurisdictions in
accordance with the Securities Laws as contemplated in this
Agreement.
COVENANTS OF THE COMPANY
10. The Company covenants and agrees with each of the Underwriters
that the Company:
(a) will advise the Underwriters, promptly after receiving
notice thereof, of the time when the Prospectus or any
Supplementary Material has been filed and receipts therefor have
been obtained and will provide evidence satisfactory to the
Underwriters of each such filing and issuance of receipts;
(b) will advise the Underwriters, promptly after receiving
notice or obtaining knowledge thereof, of: (i) the issuance by any
court or by any governmental or regulatory authority, arbitrator,
administrative tribunal, stock exchange or Securities Regulator of
any judgment, decree, order, rule or regulation suspending or
preventing the use of the Preliminary Prospectus, the Prospectus or
any Supplementary Material; (ii) the suspension of the
qualification of the Offered Shares for offering or sale in any of
the Qualifying Jurisdictions; (iii) the institution, proposal,
threat or contemplation of any proceeding in connection with the
matters referred to in (i) or (ii) above; or (iv) any request made
by any Securities Regulator for an amendment or supplement to the
Preliminary Prospectus, the Prospectus or for additional
information. The Company will use its reasonable best efforts to
prevent the issuance of any such judgment, decree, order, rule or
regulation and, if any such judgment, decree, order, rule or
regulation is issued, to obtain the withdrawal thereof as quickly
as possible;
(c) will apply the net proceeds from the sale of the
Offered Shares as set forth under the headings "Prospectus Summary
- - Use of Proceeds" and "Use of Proceeds" in the Prospectus;
(d) will not, directly or indirectly, without the prior
written consent of the Underwriters, issue, offer, sell, grant any
option to purchase or otherwise dispose of (or agree to or publicly
announce any issue, offer, sale, grant of any option to purchase or
other disposition) any Common Shares or any securities convertible
into, or exchangeable or exercisable for, Common Shares for a
period of 120 days after the Closing Date, except for the sale of
the Offered Shares pursuant to this Agreement, the granting of
options to purchase Common Shares pursuant to the Company's stock
option plans or the issue of Common Shares pursuant to the
Company's employee share purchase plan to an aggregate maximum of
500,000 Common Shares, or the issue of Common Shares pursuant to
the exercise of existing rights, options, warrants or debentures
disclosed in the Prospectus; and
(e) will, prior to filing the Prospectus in the Qualifying
Jurisdictions, deliver to the Underwriters a certificate, dated the
date the Prospectus is filed with the Ontario Securities
Commission, of the Chief Executive Officer and the Chief Financial
Officer on behalf of the Company, and not in their personal
capacities, to the effect that the representations and warranties
of the Company in the Agreement are true and correct as if made on
and as of the date of the certificate except that, in place of any
exceptions currently in section 2 of the Agreement in connection
with the Company being in breach of financial covenants in any loan
agreements, the certificate will provide a representation and
warranty that the Company is not in breach of any covenants of the
loan agreements or will have obtained a waiver from the applicable
banking institution.
EXPENSES
11. The Company agrees to pay all of its costs, fees, and expenses
incidental to the performance of its obligations under this
Agreement, whether or not the transactions contemplated herein are
consummated or this Agreement is terminated pursuant to section 16,
including, without limitation, all costs, fees and expenses
incidental to: (i) the printing or other production of documents
with respect to the transactions contemplated by this Agreement,
including all costs of printing the Preliminary Prospectus, the
Prospectus and any Supplementary Material; (ii) all reasonable
arrangements relating to the delivery to the Underwriters of copies
of the foregoing documents; (iii) the organizing and holding of the
information meetings, including the food, travel and accommodation
expenses of the Underwriters; (iv) the fees and disbursements of
the counsel, the accountants and any other experts or advisors
retained by the Company; (v) the preparation, issuance and delivery
to the Underwriters of any certificates evidencing the Offered
Shares, including all transfer agent's, sub-transfer agent's,
registrar's and sub-registrar's fees; (vi) the qualification of the
Offered Shares under the Securities Laws of the Qualifying
Jurisdictions, including the payment of any filing fees to the
Securities Regulators; and (vii) the listing fees for the Offered
Shares on the TSE. In addition, if the Agreement resulting from
the acceptance of this offer is terminated prior to the Closing
Time by the Company for any reason other than default of the
Underwriters, the Company shall assume and be responsible for the
reasonable fees and disbursements of the Underwriters' counsel and
the reasonable out-of-pocket expenses incurred by the Underwriters
in connection with the offering of the Offered Shares.
CONDITIONS OF CLOSING
12. The obligations of the Underwriters to purchase and pay for
the Offered Shares shall be subject, in the Underwriters'
reasonable discretion, to the accuracy of the representations and
warranties of the Company contained herein as of the date hereof
and as of the Closing Date as if made on and as of the Closing
Date, to the accuracy of the statements of the officers of the
Company and others made pursuant to the provisions of this section
12, to the performance by the Company of its covenants and
agreements hereunder and to the following additional conditions:
(a) The Underwriters shall have received favourable legal
opinions, dated the Closing Date, from the Company's counsel,
Stikeman, Elliott, substantially in the form of Schedule "B" hereto
and the Underwriters' counsel, Fasken Campbell Godfrey, in form and
substance reasonably satisfactory to them and as to such matters as
may be reasonably required by them; it being understood that such
counsel may rely: (i) to the extent appropriate in the
circumstances, as to matters of fact, on certificates of the
Company executed on its behalf under corporate seal by any two
officers of the Company acceptable to the Underwriters, acting
reasonably, and on certificates of public officials; (ii) on the
opinions of local counsel (signed copies of which shall be
addressed to and delivered to the Underwriters and their counsel)
reasonably acceptable to the Underwriters' counsel as to the
qualification of the Offered Shares for offering and sale, as to
other matters in the Qualifying Jurisdictions applicable to the
offering and sale of the Offered Shares and as to matters in
paragraphs 1 and 2 of the draft opinion in Schedule "B"; and (iii)
as to matters of fact not independently established, on
certificates of the Company's Auditors and certificates of the
Company's registrar and transfer agent; and that the Underwriters'
counsel may rely on the opinion of the Company's counsel as to
matters which relate specifically to the Company. The Company
agrees to use its reasonable best efforts to cause Stikeman,
Elliott, and the Underwriters agree to use their reasonable best
efforts to cause Fasken Campbell Godfrey, to provide the respective
opinion hereinbefore provided for.
(b) the Underwriters shall have received at the Closing
Time a favourable legal opinion, dated the Closing Date from the
Company's U.S. counsel, in form and substance satisfactory to the
Underwriters' counsel, acting reasonably, with respect to the sale
of the Offered Shares by the Underwriters in the United States.
(c) an opinion of Quebec counsel to the Company, addressed
to the Company and the Underwriters, in form and substance
satisfactory to the Underwriters, acting reasonably, with respect
to compliance with the laws of Quebec relating to the use of the
official language in connection with the sale of the Offered Shares
and that the French language version of the certificate for the
Common Shares is in all material respects a complete and accurate
translation of the English language version thereof, and that such
versions are not susceptible of any materially different
interpretation with respect to any material matter contained
therein.
(d) Each of the Underwriters and counsel to the
Underwriters shall have received from the Company's Auditors a
letter dated the Closing Date in form and substance satisfactory to
the Underwriters, acting reasonably, to the effect that, in all
material respects, as of the date of such letter (or, with respect
to matters involving changes or developments since the respective
dates as of which specified Financial Information (as defined
below) is given in the Prospectus, as of a date not more than two
(2) business days prior to the date of the Closing Date), the
conclusions and findings of the Company's Auditors with respect to
the financial information disclosed in the Prospectus,
including the financial statements of the Company and such other
financial information as the Underwriters shall reasonably
identify, (collectively, the "Financial Information") shall be
confirmed. References to the Prospectus in this paragraph (d) shall
include any Supplementary Material at the date of such letter.
(e) Incumbency certificates, dated the Closing Date,
including specimen signatures of the Chief Executive Officer, the
Chief Financial Officer and any other relevant signing officer of
the Company.
(f) The Underwriters shall have received a certificate,
dated the Closing Date, of the Chief Executive Officer and the
Chief Financial Officer on behalf of the Company, and not in their
personal capacities, to the effect that, to the best of their
knowledge, information and belief:
(i) (A) the representations and warranties of the
Company in this Agreement are true and correct as if made on and
as of the Closing Time; (B) the Prospectus, as amended or
supplemented as of the Closing Time, does not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; and
(C) the Company has performed all covenants and agreements and
satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Time;
(ii) receipts have been issued by the appropriate
Securities Regulators for the Prospectus and no judgment, decree,
order, rule or regulation suspending or preventing the use of the
Prospectus or any Supplementary Material has been issued, and no
proceedings for that purpose have been instituted, proposed,
threatened or contemplated, by any court or by any governmental
or regulatory authority, arbitrator, administrative tribunal,
stock exchange or Securities Regulator;
(iii) the constating documents and by-laws of the
Company attached to the certificate are full, true, correct and
complete copies of all constating documents and by-laws of the
Company in effect on the date of such certificate, unamended;
(iv) the minutes or other records of various
proceedings and actions of the Company's board of directors
attached to the certificate relating to the Offered Shares and
the Prospectus, including the Historical Financial Statements
included therein, are full, true and correct copies thereof and
have not been modified or rescinded as of the date thereof;
(v) subsequent to the respective dates as of which
information is given in the Prospectus, neither the Company nor
any of its Subsidiaries has sustained any material loss or
interference with its businesses, properties or assets, whether
or not covered by insurance, or from any labour dispute or any
judicial, governmental or regulatory proceeding, and there has
not been any development which may, in any way, have a material
adverse effect on the condition (financial or otherwise) of the
business, properties, assets, capital, net worth, results of
operations or business prospects of the Company or its
Subsidiaries; and
(vi) subsequent to the respective dates as of which
information is given in the Prospectus, no transaction out of the
ordinary course of business of a nature material to the Company
or its Subsidiaries has been entered into by the Company or its
Subsidiaries or has been approved by the management or board of
directors of the Company or its Subsidiaries, as the case may be;
(g) The Offered Shares shall have been, subject to the
satisfaction by the Company of the Listing Conditions, approved for
listing and posting for trading on the TSE at the end of the
business day immediately preceding the Closing Date, subject only
to the official notices of issuance of the Offered Shares.
(h) The Underwriters shall have received such other
certificates, statutory declarations, opinions, agreements or
materials in form and substance satisfactory to the Underwriters as
the Underwriters may reasonably request.
INDEMNIFICATION AND CONTRIBUTION
13. (1) The Company shall indemnify and save harmless each of the
Underwriters, and each of the directors, officers, employees and
agents of the Underwriters (with respect to an Underwriter, the
"Underwriter's Personnel" and with respect to all Underwriters, the
"Underwriters' Personnel") against any losses (other than loss of
profits), claims, costs, damages, expenses or liabilities to which
the Underwriters or the Underwriters' Personnel may become subject,
including counsel fees, caused by or out of, based on or resulting
from:
(a) any untrue statement or alleged untrue statement made
by the Company in sections 2 or 9 or in any certificate delivered
to the Underwriters pursuant to this Agreement;
(b) any untrue statement or alleged untrue statement of any
material fact (except information or a statement relating solely to
the Underwriters or any of them and except any order, enquiry,
investigation or proceeding based solely or primarily on activities
or alleged activities of the Underwriters or any of them and/or
members of the banking, selling or other groups formed by them)
contained in: (i) the Preliminary Prospectus, the Prospectus or any
Supplementary Material, or any amendment or supplement thereto; or
(ii) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any
Qualifying Jurisdiction in order to qualify the Offered Shares
under the Securities Laws thereof or filed with any securities
exchange (each, an "Application");
(c) the omission or alleged omission to state in the
Preliminary Prospectus, Prospectus or Supplementary Material, or
any amendment or supplement thereto, or any Application, a material
fact required to be stated therein or necessary to make the
statements therein not misleading;
(d) the Company not complying with any requirement of the
applicable Securities Laws; or
(e) any order, ruling or determination having the effect of
suspending or restricting the offer or sale, or ceasing the
trading, of the Offered Shares or any other securities of the
Company has been issued or made by any court or any governmental or
regulatory authority, arbitrator, administrative tribunal, stock
exchange or Securities Regulator, or proceedings for that purpose
have been instituted or are pending by any such court or authority
or under any Securities Laws.
As used herein, "Indemnified Parties" collectively means the
Underwriters and the Underwriters' Personnel, and "Indemnified
Party" means any of them.
(2)Neither the Company nor any Indemnified Party shall settle
or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect
of which indemnification may be sought hereunder (whether or not
the Underwriters or any Underwriters' Personnel is a party to such
claim, action, suit or proceeding) unless the other has consented
in writing thereto, such consent not to be unreasonably withheld,
or such settlement, compromise or consent includes an unconditional
release of the other from all liability arising out of such claim,
action, suit or proceeding.
(3) Promptly after receipt by an Indemnified Party of notice
of the commencement of any claim, action, suit or proceeding in
respect of which it may be entitled to indemnity by the Company,
such Indemnified Party will, if a claim, action, suit or proceeding
in respect thereof may be made against the Company, notify the
Company of the commencement thereof, but the omission so to notify
the Company will not relieve the Company from any liability which
it may have to any Indemnified Party otherwise than under this
section 13 provided that such omission to so notify the Company
does not materially adversely affect any defences the Company may
have to such claim, action, suit or proceeding. In case any such
claim, action, suit or proceeding is brought against any
Indemnified Party, and such Indemnified Party notifies the Company
of the commencement thereof, the Company will be entitled (but not
required) to participate therein and assume the defence thereof,
provided, however, that such defence shall be through legal counsel
satisfactory to such Indemnified Party, acting reasonably. If the
Company elects to participate in or assume the defence of such
claim, action, suit or proceeding, the Indemnified Party shall have
the right to participate in the defence of such claim, action, suit
or proceeding and have separate counsel at its own expense;
provided however, that if the defendants in any such claim, action,
suit or proceeding include both the Indemnified Party and the
Company and the Indemnified Party shall have been advised by such
Indemnified Party's counsel that representation of both parties by
the same counsel would be inappropriate due to actual or potential
differing interests between them, the Company shall not have the
right to direct the defence of such action on behalf of such
Indemnified Party and such Indemnified Party shall have the right
to select separate counsel to defend such claim, action, suit or
proceeding on behalf of such Indemnified Party or Indemnified
Parties and, in such case, the Company shall bear the reasonable
fees, costs and expenses of such separate counsel, provided that
the Company shall not be obliged under this paragraph (3) to pay
the fees, costs and expenses of more than one legal counsel in any
one jurisdiction acting as counsel on behalf of one or more
Indemnified Parties. If the Company does not elect to participate
in or assume the defence of such claim, action, suit or proceeding,
the Indemnified Party shall have the right to retain counsel and
the Company shall bear the reasonable fees, costs and expenses of
such counsel.
(4)If the indemnity provided for in the preceding paragraphs
of this section 13 is unavailable or insufficient to hold harmless
the Indemnified Parties in respect of any losses, claims, costs,
damages, expenses or liabilities flowing out of or related to a
claim, action, suit or proceeding, then, in order to provide for
just and equitable contribution, the Company shall contribute to
the amount paid or payable by such Indemnified Party as a result of
such losses, claims, costs, damages, expenses or liabilities in
such proportion as is appropriate to reflect: (i) the relative
benefits received by the Indemnified Party on the one hand and the
Company on the other from the offering of the Offered Shares; or
(ii) if the allocation provided by the foregoing (i) is not
permitted by applicable law, not only such relative benefits but
also the relative fault of the Indemnified Party on the one hand
and the Company on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such
losses, claims, costs, damages, expenses or liabilities. The
relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same
proportion as the total proceeds from the offering of the Offered
Shares (after deducting the fees payable to the Underwriters but
before deducting issue expenses) received by the Company bear to
the total fees received by the Underwriters in connection
therewith. The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied
by the Company or the Underwriters, the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances. Notwithstanding
any other provision of this subsection (4), the Indemnified Party
shall not be obligated to make contributions hereunder that in the
aggregate exceed the fees paid to the Underwriters under this
Agreement, less the aggregate amount of any losses, claims, costs,
damages, expenses or liabilities that the Indemnified Party has
otherwise been required to pay in respect of the same or any
substantially similar claim, action, suit or proceeding and no
person who committed a fraudulent misrepresentation shall be
entitled to contribution from any person who did not commit a
fraudulent misrepresentation. For purposes of this subsection (4),
each of the Underwriters' Personnel shall have the same rights to
contribution as the Underwriters, and each director of the Company
and each officer of the Company who signed the Prospectus shall
have the same rights to contribution as the Company. The rights to
contribution provided in this subsection (4) shall be in addition
to and not in derogation of any right to contribution which the
Underwriters may have by statute or otherwise at law.
(5)The rights of indemnity contained in this section 13 shall
not enure to the benefit of an Underwriter or any of such
Underwriter's Personnel if the Company has complied with the
provisions of section 8 and the person asserting any claim, action,
suit or proceeding contemplated by this section 13 was not sent a
copy of the Preliminary Prospectus, the Prospectus or any
Supplementary Material which corrects any untrue statement or
information, misrepresentation or omission which is the basis of
such claim, action, suit or proceeding and which is required under
the Securities Laws to be sent to such person by such Underwriter.
(6)If the Underwriters have reason to believe that a claim for
contribution may arise, they shall give the Company notice thereof
in writing as soon as reasonably possible, but failure to notify
the Company shall not relieve the Company of any obligation it may
have to the Underwriters under this section 13.
(7)The Company hereby waives its right to recover contribution
from the Underwriters or any of their respective directors,
officers, employees or agents with respect to any liability of the
Company by reason of or arising out of any misrepresentation
contained in the Preliminary Prospectus, the Prospectus or any
Supplementary Material; provided, however, that such waiver shall
not apply in respect of liability caused or incurred by reason of
or arising out of (i) any misrepresentation which is based upon or
results from information relating solely to the Underwriters
contained in such document; (ii) any information provided in
writing to the Company by the Underwriters; or (iii) any failure by
the Underwriters or members of their banking, selling or other
groups, if any, to send to prospective purchasers of the Offered
Shares any document which the Company is required to provide to
such prospective purchasers and which it has provided to the
Underwriters to send to such prospective purchasers.
(8)To the extent that any Indemnified Party is not a party to
this Agreement, the Underwriters shall obtain and hold the rights
and benefits of this section 13 in trust for and on behalf of such
Indemnified Party.
SURVIVAL
14. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its
officers and the Underwriters set forth in this Agreement shall
survive the Closing Date and remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the
Company, the Underwriters or any of their respective directors,
officers, agents or advisors; (ii) delivery of and payment for the
Offered Shares; and (iii) any subsequent disposition by the
Underwriters of the Offered Shares.
OBLIGATIONS OF THE UNDERWRITERS
15. (1) Subject to the terms hereof, the obligations of the
Underwriters to purchase the Offered Shares at the Closing Time
shall be several and not joint and their respective obligations and
rights in this regard shall be in the following percentages:
WGI 35%
DBZW 30%
GCC 20%
RGC 15%
100%
If one or more of the Underwriters should default in its or their
obligation to purchase its or their respective percentage of the
Offered Shares, the other Underwriter or Underwriters shall have
the right, subject to compliance with applicable law, but not the
obligation, at its or their option, to severally purchase, on a pro
rata basis between themselves or in such other proportions as they
may agree upon, all but not less than all of the Offered Shares,
which the defaulting Underwriter(s) failed or refused to purchase.
If the non-defaulting Underwriter(s) elect(s) not to exercise such
right, the Company shall have the right, subject to compliance with
applicable law, but not the obligation, at its option, to arrange
for one or more substitute Underwriter(s) to purchase that portion
of the defaulting Underwriter(s)' Offered Shares which it or they
have failed to or refused to purchase. If the Company does not
arrange for a substitute Underwriter(s), the non-defaulting
Underwriter(s) shall be entitled by notice to the Company to
terminate this Agreement without liability on the part of the
non-defaulting Underwriter(s) or the Company (on submission of
reasonable evidence of its or their own ability to purchase its or
their own percentage of the Offered Shares, unless the termination
is in accordance with any other termination provision in this
Agreement). Nothing in this section 15 shall require the Company
to sell less than all of the Offered Shares to relieve any
defaulting Underwriter from liability in respect of its default
hereunder to the Company or to any non-defaulting Underwriter.
(2) Unless WGI is a defaulting Underwriter under this
section 15, the Company shall be entitled to act, and shall act, on
any notice, waiver, extension or communication given by or on
behalf of the Underwriters by WGI which shall represent the
Underwriters and which shall have the authority to bind the
Underwriters in respect of all matters hereunder, except in respect
of any settlement under section 13, any agreement referred to under
section 15 or any matter referred to under sections 16 or 19. WGI
agrees to use its reasonable best efforts to consult fully with the
other Underwriters with respect to any such notice, waiver,
extension or other communication.
TERMINATION
16. (1) In addition to any other remedies which may be available
to the Underwriters, any Underwriter shall be entitled, at such
Underwriter's sole discretion, to terminate and cancel, without any
liability on such Underwriter's part, such Underwriter's
obligations under this Agreement, by notice to the Company given at
any time during the period of this Agreement and up to and
including the Closing Time, in the event that if, at or prior to
the Closing Time:
(a) any inquiry, investigation or other proceeding should
be undertaken, threatened or announced or any order, ruling or
determination should be issued by any court or any governmental or
regulatory authority, arbitrator, administrative tribunal, stock
exchange or Securities Regulator (except for any such inquiry,
investigation, other proceeding or order, ruling or determination
based upon the activities or the alleged activities of the
Underwriters or their banking, selling or other group members, if
any, and not of the Company) which, in the sole opinion of the
Underwriters (or any of them), acting reasonably, prevents or
operates to prevent or materially and adversely restrict trading in
the Offered Shares, or which materially and adversely affects the
marketability of the Offered Shares;
(b) there shall occur any material change or change in a
material fact such as is contemplated in section 7 which, in the
sole opinion of the Underwriters (or any of them), acting
reasonably, would be expected to have a material adverse effect on
the market price or value of the Offered Shares;
(c) there should develop, occur or come into effect or
existence any event, action, state, condition or major financial
occurrence of national or international consequence or any action,
government regulation, inquiry or other occurrence of any nature
whatsoever which, in the reasonable opinion of the Underwriters (or
any of them), materially and adversely affects or will materially
and adversely affect the financial markets or the business,
operations or affairs of the Company or the marketability of the
Offered Shares;
(d) the state of financial markets is such that, in the
reasonable opinion of the Underwriters (or any or them), the
Offered Shares cannot be marketed profitably; or
(e) the Company or its Subsidiaries shall have sustained
any material loss or interference with its businesses or properties
or there shall have been any material adverse change, or any
development involving a prospective material adverse change
including, without limitation, a change in the management or
control of the Company or the condition (financial or otherwise) of
the business, affairs, properties, assets, net worth, capital,
results of operations or business prospects of the Company except,
in each case, as described in the Preliminary Prospectus or, once
filed with a Securities Regulator, the Prospectus.
(2) The rights of termination contained in this section 16
may be exercised by any one or more of the Underwriters and are in
addition to any other rights or remedies the Underwriters or any of
them may have in respect of any default, act or failure to act or
non-compliance by the Company in respect of any of the matters
contemplated by this Agreement or otherwise. In the event of any
such termination pursuant to paragraph (1)(a), (b), (c), (d) or (e)
of this section 16, there shall be no further liability on the part
of the Company to such Underwriter except in respect of any
liability which may have arisen or may thereafter arise under
sections 5, 9, 11 or 13. A notice of termination given by an
Underwriter under this section 16 shall not be binding upon any
other Underwriter.
(3) In the event that one or more but not all of the
Underwriters shall exercise the right of termination herein, the
others shall have the right, but shall not be obligated, to
purchase all of the Offered Shares which would otherwise have been
purchased by the Underwriter which has so terminated. Nothing in
this section 16 shall oblige the Company to sell to the
Underwriters less than all of the Offered Shares.
POST CLOSING COVENANTS OF THE UNDERWRITERS
17. The Underwriters shall after the Closing Time: (i) use their
best efforts to terminate, and to cause the members of the
Underwriters' banking, selling or other groups to terminate,
distribution of the Offered Shares as promptly as possible; (ii)
give prompt written notice to the Company when, in the opinion of
the Underwriters, they and the members of such Underwriters'
banking, selling or other groups have ceased distribution of the
Offered Shares and of the total proceeds realized from such
distribution in the respective Qualifying Jurisdictions in which
much information is or may be required by the appropriate
Securities Regulators; and (iii) as soon as is practicable in the
circumstances give to the Company a statement as to the
distribution of the Offered Shares for the purpose of assisting in
the listing of the Offered Shares on the TSE.
NOTICES
18. Unless herein otherwise expressly provided, any notice,
request, direction, consent, waiver, extension, agreement or other
communication required or permitted to the given hereunder shall be
in writing and shall be delivered by personal delivery to an
officer of the party to whom notice is given or shall be sent by
commercial courier or by facsimile to the attention of the
individuals noted below, in each case at the following address or
facsimile number, as the case may be:
(a) Gandalf Technologies Inc.
130 Colonnade Road South
Nepean, Ontario
K2E 7M4
Attention: Brian R. Hedges
Facsimile: (613) 727-0617
with a copy to:
(b) Stikeman, Elliott
Barristers & Solicitors
Suite 5300
Commerce Court West
Toronto, Ontario
M5L 1B9
Attention: Mihkel E. Voore
Facsimile: (416) 947-0866
and in the case of notice to the Underwriters:
(c) Wood Gundy Inc.
BCE Place
161 Bay Street, 6th Floor
Toronto, Ontario
M5J 2S8
Attention: Douglas G. Cunningham
Facsimile: (416) 594-7470
(d) Deacon Barclays de Zoete Wedd Limited
304 Bay Street
Toronto, Ontario
M5H 2P2
Attention: Peter A. Mackenzie
Facsimile: (416) 350-3375
(e) Gordon Capital Corporation
Box 67, Suite 5300
Toronto Dominion Bank Tower
Toronto-Dominion Centre
Toronto, Ontario
M5K 1E7
Attention: Robert Cross
Facsimile: (416) 369-9498
(f) Richardson Greenshields of
Canada Limited
313 Second Avenue
Ottawa, Ontario
K1S 2J1
Attention: Graham C. MacMillan
Facsimile: (613) 565-4800
with a copy to:
(g) Fasken Campbell Godfrey
Barristers and Solicitors
P.O. Box 20
Toronto Dominion Bank Tower
Toronto-Dominion Centre
Toronto, Ontario
M5K 1N6
Attention: Cathy Singer
Facsimile: (416) 362-2381
The Company and the Underwriters may change their respective
addresses for notice, by notice given in the manner aforesaid, with
any such notification to take effect at the time of receipt.
TERMS AND CONDITIONS
19. All terms and conditions of this Agreement shall be construed
as conditions and any breach or failure by the Company to comply
with any of such terms and conditions shall entitle the
Underwriters to terminate their obligations to purchase the Offered
Shares by written notice to that effect given to the Company prior
to the Closing Time. It is understood that the Underwriters may
waive, in whole or in part, or extend the time for compliance with,
any of such terms and conditions without prejudice to their rights
in respect of any other of such terms and conditions or any other
or subsequent breach or non-compliance, provided that to be binding
on the Underwriters any such waiver or extension must be in writing
and signed by the Underwriters.
SUCCESSORS
20. This Agreement shall enure to the benefit of, and shall be
binding upon, the Underwriters, the Company, and their respective
successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to
give any other person any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof
being intended to be and being for the sole and exclusive benefit
of such persons and for the benefit of no other person except that
the indemnities of the Company contained in section 13 shall also
be for the benefit of all officers, directors, employees and agents
of the Underwriters.
APPLICABLE LAW
21. The validity and interpretation of this Agreement, and the
terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the Province of Ontario
and the federal laws of Canada applicable therein.
COUNTERPARTS
22. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
TIME OF ESSENCE
23. Time shall be of the essence of this Agreement.
If the foregoing is in accordance with your
understanding and agreed to by you, please signify your acceptance
by signing in the space provided therefor below and return this
letter to us whereupon this letter as so accepted shall constitute
a binding agreement among us in accordance with the foregoing.
Yours very truly,
WOOD GUNDY Inc. DEACON BARCLAYS DE ZOETE
WEDD Limited
By: s/DOUGLAS G. CUNNINGHAM By: s/PETER A. MACKENZIE
GORDON CAPITAL CORPORATION Richardson Greenshields
of Canada Limited
By: s/ROBERT CROSS By: s/GRAHAM C. MACMILLAN
Accepted this 20th day of October, 1993.
GANDALF TECHNOLOGIES INC.
By: s/B.R. HEDGES
s/W.MACDONALD
SCHEDULE A
United States Selling Restrictions
1. (a)For the purposes of this Schedule, the following
terms shall have the meanings indicated:
(i) "Directed Selling Efforts" means "Directed Selling
Efforts" as that term is defined in Regulation S. Without limiting
the foregoing, but for greater clarity in this Agreement, it means,
subject to the exclusions from the definition of "directed selling
efforts" in Regulation S, any activity undertaken for the purpose
of, or that could reasonably be expected to have the effect of,
conditioning the market in the United States for any of the Offered
Shares and includes the placement of any advertisement in a
publication with a general circulation in the United States that
refers to the offering of any of the Offered Shares;
(ii) "Regulation S" means Regulation S adopted by the SEC
under the U.S. Securities Act;
(iii) "SEC" means the United States Securities and Exchange
Commission;
(iv) "Selling Dealer Group" means the dealers and brokers
other than the Underwriters who participate in the offer and sale
of the Offered Shares pursuant to the Underwriting Agreement;
(v) "Substantial U.S. Market Interest" means "substantial
U.S. market interest" as defined in Regulation S;
(vi) "United States" means the United States of America, its
territories and possessions, any state of the United States, and
the District of Columbia;
(vii) "U.S. Exchange Act" means the United States Securities
Exchange Act of 1934, as amended; and
(viii) "U.S. Securities Act" means the United States
Securities Act of 1933, as amended.
2. Each Underwriter acknowledges that the Offered Shares
have not and will not be registered under the U.S. Securities Act
and that any sale of the Offered Shares by the Underwriters will be
made in one or more private placements under the U.S. Securities
Act or pursuant to Regulation S.
3. Each Underwriter shall cause each purchaser in the
United States (a "Purchaser") to execute a subscription agreement
in the form attached as Exhibit I hereto.
4. Each Underwriter agrees that neither it nor any of its
affiliates nor any person acting on its behalf or on behalf of its
affiliates will:
(a) except to the extent permitted by Section 3 of
this Schedule, (i) offer to sell, or make any solicitation of an
offer to buy, any Offered Shares to any person in the United
States, or (ii) make any sale of Offered Shares to any purchaser
unless, at the time the buy order was originated, the purchaser was
outside the United States, or the seller and any person acting on
its behalf reasonably believe that such purchaser was outside the
United States;
(b) make any Directed Selling Efforts in the United
States with respect to the Offered Shares;
(c) offer or sell, or solicit any offer to buy, by any
form of general solicitation or general advertising (as those terms
are used in Regulation D under the 1933 Act), including
advertisements, articles, notices or other communications published
in any newspaper, magazine or similar media or broadcast over radio
or television, or any seminar or meeting whose attendees have been
invited by general solicitation or general advertising, or in any
manner involving a public offering within the meaning of Section
4(2) of the 1933 Act, any of the Offered Shares.
5. The Underwriters have not entered, and will not enter,
into any contractual arrangement without the prior written consent
of the Company with respect to the distribution of the Offered
Shares, except (i) with their affiliates or (ii) with members of
the Selling Dealer Group in accordance with this Schedule "A".
6. The Company:
(i) represents that it is a "foreign issuer" within the
meaning of Regulation S and reasonably believes that there is no
Substantial U.S. Market Interest in the Common Shares of the
Company;
(ii) represents that it is not, and agrees to use its best
efforts not to become at any time prior to the expiration of three
years after the Closing, an "investment company" as defined in the
United States Investment Company Act of 1940, as amended;
(iii) represents and agrees that neither it nor any of its
affiliates has taken or will take any action which would cause the
exemptions afforded by Regulation S to be unavailable for the offer
and sale of the Offered Shares pursuant to the Underwriting
Agreement or which would constitute a violation of Rule 10b-6 or
Rule 10b-7 of the SEC under the U.S. Exchange Act;
(iv) represents and agrees that none of the Company, its
affiliates or any person acting on its or their behalf has offered
or will offer to sell the Offered Shares by means of any form of
general solicitation or general advertising (as those terms are
used in Regulation D under the U.S. Securities Act) or in any
manner involving a public offering within the meaning of Section
4(2) of the U.S. Securities Act; and
(v) represents and agrees that none of the Company, its
affiliates or any person acting on its or their behalf has engaged
or will engage in any Directed Selling Efforts in the United States
with respect to the Offered Shares within the meaning of Regulation
S.
EXHIBIT I
FORM OF U.S.PURCHASER'S LETTER
_________________________________, 1993
Gandalf Technologies Inc.
130 colonnade Road South
Nepean, Ontario
CANADA K2E 7M4
Gandalf Technologies Inc.
-------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of common
shares (THE "COMMON SHARES") of Gandalf Technologies Inc. (the
"Corporation"), we confirm and agree as follows:
(1) We are authorized to consummate the purchase of
Common Shares.
(2) We understand that the Common Shares have not been
and will not be registered under the U.S. Securities Act of 1933,
as amended (the "U.S. Securities Act") and that the sale
contemplated hereby is being made in reliance on a private
placement exemption to institutional accredited investors.
(3) We have received a copy, for our information only,
of the Canadian Prospectus dated _____________, 1993 and a U.S.
covering memorandum (the "Canadian Prospectus") relating to the
offering in Canada of the Common Shares and have had access to
such additional information, if any, concerning the Corporation
as we have considered necessary in connection with our investment
decision to acquire the Common Shares.
(4) We have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits
and risks of our investment in Common Shares and we are able to
bear the economic risks of such investment.
(5) We are an institutional "accredited investor" as
defined in Rule 501(a)(1), (2), (3) or (7) under the U.S.
Securities Act and we are acquiring Common Shares for our own
account or for the account of an institutional "accredited
investor" as to which we exercise sole investment discretion, and
not with a view to any resale, distribution or other disposition
of Common Shares in violation of the United States securities
laws.
(6) We are purchasing Common Shares for our own
account having an aggregate purchase price of at least
U.S. $250,000 or for one or more accounts as to which we exercise
sole investment discretion and each such account is purchasing
Common Shares having such an aggregate purchase price.
(7) We acknowledge that we have not purchased Common
Shares as a result of any general solicitation or general
advertising, including advertisements, articles, notices or other
communication published in any newspaper, magazine or similar
media or broadcast over radio or television, or any seminar or
meeting whose attendees have been invited by general solicitation
or general advertising.
(8) We agree that if we decide to offer, sell or
otherwise transfer any Common Shares, we will not offer, sell or
otherwise transfer any of such Common Shares (other than pursuant
to an effective registration statement under the U.S. Securities
Act), directly or indirectly, unless:
(a) the sale is to the Corporation; or
--
(b) (i) the sale is to an "accredited investor"
within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the U.S. Securities Act and
is of a number of Common Shares having an
aggregate market value at the time of such
sale of not less than U.S. $250,000, (ii) a
purchaser's letter containing
representations, warranties and agreements
substantially similar to those contained in
this purchaser's letter (except that such
purchaser's letter need not contain the
representation set forth in paragraph (3)
above), and satisfactory to the U.S.
placement agent and the Corporation, is
executed by the purchaser and delivered to
the U.S. placement agent and the Corporation
prior to the sale and (iii) all offers or
solicitations in connection with the sale are
arranged and conducted solely by the U.S.
placement agent or the Corporation; or
--
(c) the sale is made outside the United States in
compliance with the requirements of Rule 904
of Regulation S under the U.S. Securities Act
and in compliance with applicable local laws
and regulations; or
--
(d) the sale is made pursuant to an exemption
from registration under the U.S. Securities
Act provided by Rule 144 thereunder, if
applicable; or
--
(e) the Common Shares are sold in a transaction
that does not require registration under the
U.S. Securities Act or any applicable United
States state laws and regulations governing
the offer and sale of securities, and we have
therefore furnished to the U.S. placement
agent and the Corporation an opinion of
counsel of recognized standing reasonably
satisfactory to the U.S. placement agent and
the Corporation.
(9) We understand and acknowledge that upon the
original issuance thereof, and until such time as the same is no
longer required under applicable requirements of the U.S.
Securities Act or applicable state laws, the certificates issued in
exchange therefor or in substitution thereof, shall bear the
following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED(THE "SECURITIES ACT"). THE
HOLDER HEREOF, BY PURCHASING SUCH SECURITIES,
AGREES FOR THE BENEFIT OF THE CORPORATION THAT
SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY. (A) TO THE CORPORATION,
(B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH
RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,
(C) PURSUANT TO THE EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER, IF APPLICABLE, OR (D) IN COMPLIANCE
WITH CERTAIN OTHER PROCEDURES SATISFACTORY TO THE
CORPORATION. DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF
TRANSACTIONS ON STOCK EXCHANGES IN CANADA. A NEW
CERTIFICATE, BEARING NO LEGEND, DELIVERY OF WHICH
WILL CONSTITUTE "GOOD DELIVERY", MAY BE OBTAINED
FROM THE R-M TRUST COMPANY OR MELLON SECURITIES
TRUST COMPANY UPON DELIVERY OF THIS CERTIFICATE
AND A DULY EXECUTED DECLARATION, IN A FORM
SATISFACTORY TO SUCH TRANSFER AGENT AND THE
CORPORATION, TO THE EFFECT THAT THE SALE OF THE
SECURITIES REPRESENTED HEREBY IS BEING MADE IN
COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT;
provided, that if Common Shares are being sold under paragraph
(8)(c) above, the legend may be removed by providing a
declaration to The R-M Trust Company or Mellon Securities Trust
Company, as registrar and transfer agent, to the following effect
(or as the Corporation may prescribe from time to time):
"The undersigned (A) acknowledges that the sale of
the securities to which this declaration relates
is being made in reliance on Rule 904 of
Regulation S under the United States Securities
Act of 1933 and (B) certifies that (1) the offer
of such securities was not made to a person in the
United States and either (a) at the time the buy
order was originated, the buyer was outside the
United States, or the seller and any person acting
on its behalf reasonably believe that the buyer
was outside the united States or (b) the
transaction was executed on or through the
facilities of The Toronto Stock Exchange and
neither the seller nor any person acting on its
behalf knows that the transaction has been
prearranged with a buyer in the United Stats and
(2) none of the seller, any affiliate of the
seller or any person acting on their behalf
engaged in any directed selling efforts in
connection with the offer and sale of such
securities. Terms used herein have the meanings
given to them by Regulation S."
(10) We consent to the Corporation making a notation
on its records or giving instructions to any transfer agent of
Commons Shares in order to implement the restrictions on transfer
set forth and described herein.
We acknowledge that the representations and warranties
and agreements contained herein are made by us with the intent
that they may be relied upon by you and by the U.S. placement
agent, in determining our eligibility or (if applicable ) the
eligibility of others on whose behalf we are contracting
hereunder to purchase Common Shares. We further agree that by
accepting Common Shares we shall be representing and warranting
that the foregoing representations and warranties are true as at
the closing time with the same force and effect as if they had
been made by us at the closing time and that they shall survive
the purchase by us of Common Shares and shall continue in full
force and effect notwithstanding any subsequent disposition by us
of such Common Shares.
You and the U.S. placement agent are irrevocably
authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
---------------------------
Name of Purchaser
Dated:
By: ----------------------
Name:
Title:
_________________, 1993
The R-M Trust Company
Mellon Securities Trust Company
Re: Transfer of Common Shares of Gandalf
Technologies Inc. bearing a U.S. Securities
Act Legend
Dear Sires:
Enclosed herewith as Schedule A, you will find the
Instructions for the Transfer of Common Shares bearing a U.S.
Securities Act Legend as set forth herein (the "Instructions") to
be followed by you, as co-transfer agent and co-registrar of the
Common Shares of Gandalf Technologies Inc., in connection with
transfers of Common Shares bearing such U.S. Securities Act
legends.
Kindly complete the attached acknowledgement in
duplicate and return same to each of Gandalf Technologies Inc.
and the undersigned to confirm that you will observe the
Instructions in connection with transfers of Common Shares
bearing such U.S. Securities Act legends.
Yours very truly,
WOOD GUNDY INC.
By:
____________________________
Encls.
SCHEDULE B
[Opinion of Stikeman, Elliott]
________________, 1993
Wood Gundy Inc. Deacon Barclays de Zoete
BCE Place Wedd Limited
161 Bay Street, 6th Floor 304 Bay Street
Toronto, Ontario Toronto, Ontario
M5J 2S8 M5H 2P2
Gordon Capital Corporation Richardson Greenshields of
Box 67, Suite 5300 Canada Limited
Toronto Dominion Bank Tower 313 Second Avenue
Toronto-Dominion Centre Ottawa, Ontario
Toronto, Ontario K1S 2J1
M5K 1E7
Fasken Campbell Godfrey
Barristers and Solicitors
P.O. Box 20
Toronto Dominion Bank Tower
Toronto-Dominion Centre
Toronto, Ontario
M5K 1N6
Gandalf Technologies Inc.
We have acted as counsel to Gandalf Technologies Inc. (the
"Corporation") in connection with the issuance and sale by the
Corporation and the purchase by Wood Gundy Inc., Deacon Barclays de
Zoete Wedd Limited, Gordon Capital Corporation and Richardson
Greenshields of Canada Limited (collectively, the "Underwriters")
of 12,000,000 Common Shares of the Corporation (the "Offered
Shares"), pursuant to the terms and subject to the conditions of an
agreement (the "Underwriting Agreement") dated October 20, 1993
between the Underwriters and the Corporation. All capitalized terms
used herein and not otherwise defined herein shall have the
meanings ascribed thereto in the Underwriting Agreement.
As counsel for the Corporation and jointly with Fasken
Campbell Godfrey, counsel for the Underwriters, we participated in
the preparation of the English language versions of the preliminary
prospectus of the Corporation dated September 21, 1993 and the
(final) prospectus (the "Prospectus") of the Corporation dated
_____________, 1993 prepared in connection with the offering of
the Offered Shares to the public in all of the provinces of Canada.
As such counsel, we also settled the Underwriting Agreement with
Fasken Campbell Godfrey.
We have examined such statutes, public and corporate records
of the Corporation and such documents and certificates of officers
of the Corporation and others and considered such questions of law
as we have considered relevant and necessary as a basis for the
opinions expressed herein. In particular, we have relied, as to
certain matters of fact, upon certificates of officers of the
Corporation, of the The R-M Trust Company (the "Trust Company"), of
public officials, a letter dated ____________________, 1993 from
The Toronto Stock Exchange and of the auditors of the Corporation,
KPMG Peat Marwick Thorne, copies of which have been delivered to
you. In all such examinations we have assumed the genuineness of
all signatures and the authenticity of all documents submitted to
us as originals, the conformity to authentic original documents of
all documents submitted to us as certified or photostatic copies or
facsimiles and the authenticity of the originals of such documents
and facsimiles. In rendering our opinion in paragraph 5 below, we
have relied, insofar as such opinion relates to the Trust Company,
solely upon certificates of the Trust Company, copies of which have
been delivered to you. In rendering the opinion set forth in
paragraph 6 below, insofar as such opinion relates to the
Underwriting Agreement constituting valid and binding obligations
of the Corporation, we have assumed that such agreement constitutes
a valid and binding obligation of the parties thereto other than
the Corporation, enforceable in accordance with its terms, subject
to the exceptions set out in paragraph 7 below.
We are qualified to practise law in the Province of Ontario
and to express legal opinions only with respect to the laws of the
Province of Ontario and the federal laws of Canada applicable
therein. The opinions expressed below are to be construed in
accordance with such laws in effect on the date hereof. We have
not made an examination of the laws of any jurisdiction other than
Canada and the Province of Ontario and we do not express or imply
any opinion with respect to the laws of any foreign jurisdiction.
Insofar as our opinions relate to matters governed by laws other
than the laws of the Province of Ontario or the federal laws of
Canada applicable therein, we have relied upon the opinions of
local counsel in each applicable jurisdiction as to the laws of
each such jurisdiction, copies of which have been delivered to you.
Such opinions are in form satisfactory to us and we are of the
opinion that both you and we are entitled to rely thereon.
To the extent that any of the opinions of local counsel
referred to above upon which we are relying is based upon any
assumption or is made subject to any limitation or qualification,
our opinions given in reliance thereon are also based upon such
assumptions and are subject to such limitations or qualifications.
Based and relying upon and subject to the foregoing, we are of
the opinion that:
1. Each of the Corporation and its subsidiaries which are
incorporated in Canada, the United States and the United Kingdom
(the "Subsidiaries") is validly subsisting under the laws of its
jurisdiction of incorporation.
2. Each of the Corporation and its Subsidiaries has all requisite
corporate power and authority to carry on its business as now
conducted and to own or lease its properties. No general
registration, license, consent or other authorization is required
by any of the Corporation or its Subsidiaries to carry on its
business in the jurisdictions in which it carries on business.
3. The authorized capital of the Corporation consists of an
unlimited number of Common Shares, of which _________________
Common Shares are issued and outstanding as fully paid and
non-assessable.
4. The Corporation has all requisite corporate power and
authority to authorize, execute and deliver, and to carry out its
obligations under, the Underwriting Agreement.
5. All necessary corporate action has been taken by the
Corporation validly to issue the Offered Shares to the Underwriters
and the Offered Shares have been duly and validly issued as fully
paid and non-assessable. A single definitive share certificate
representing the Offered Shares has been duly certified by the
Trust Company and registered in the name of and delivered to Wood
Gundy Inc., on behalf of the Underwriters.
6. All necessary corporate action has been taken by the
Corporation to authorize the execution and delivery by the
Corporation of, and the performance by the Corporation of its
obligations under the Underwriting Agreement, and the Underwriting
Agreement has been duly executed and delivered by the Corporation
and constitutes a legal, valid and binding obligation of the
Corporation, enforceable in accordance with its terms, except:
(a) that enforcement thereof may be limited by bankruptcy,
insolvency and other laws affecting the enforcement of creditors'
rights generally;
(b) that specific performance, injunction and other
equitable remedies may only be granted in the discretion of a court
of competent jurisdiction; and
(c) that rights to indemnity, contribution and waiver of
contribution under the Underwriting Agreement may be limited under
applicable law.
7. The execution and delivery of the Underwriting Agreement, the
fulfilment of the terms thereof and the issuance and sale of the
Offered Shares by the Corporation pursuant to the Underwriting
Agreement do not and will not contravene any applicable law of
Canada or of the Province of Ontario and do not and will not result
in a breach of, and do not and will not create a state of facts
which, after notice or lapse of time or both, will result in a
breach of, and do not and will not conflict with, any of the terms,
conditions or provisions of the constating documents or by-laws of
the Corporation or any resolutions of the directors or shareholders
of the Corporation or any of the trust indenture dated
______________________, 1993 between the Company and The R-M Trust
Company and a loan agreement, as amended, between the Company and
The Royal Bank of Canada.
8. No consent, approval, authorization or order of any court or
governmental agency or body or regulatory authority is required for
the consummation by the Corporation of the transactions
contemplated by the Underwriting Agreement, other than those that
have been obtained on or prior to the date hereof.
9. To our knowledge, other than as described in Appendix A
hereto, there is no action, proceeding, litigation or investigation
pending or threatened against or affecting the Corporation, at law
or in equity or before or by any federal, provincial, state,
municipal or other governmental department, commission, board or
agency, domestic or foreign, which in any way would have a material
adverse effect upon the Corporation or the consummation of the
transactions described in the Underwriting Agreement.
10. The form and terms of the share certificate representing the
Common Shares have been duly approved and adopted by the directors
of the Corporation and comply with all legal requirements relating
thereto.
11. The attributes of the Common Shares are consistent with the
description thereof in the Prospectus under the heading
"Description of Share Capital".
12. The Toronto Stock Exchange has conditionally approved the
listing and posting for trading of the Common Shares subject to the
Corporation fulfilling all of the requirements of such exchange on
or before ___________________, 1993.
13. The Trust Company at its principal offices in
_________________________ has been duly appointed transfer agent
and registrar of the Common Shares.
14. All necessary documents have been filed, all requisite
proceedings have been taken and all other legal requirements have
been fulfilled under the laws of the Qualifying Jurisdictions to
qualify the issuance and sale of the Offered Shares to the public
in each of the Qualifying Jurisdictions through registrants
registered under applicable legislation and who have complied with
the relevant provisions of such applicable legislation.
15. The provisions of the Pension Benefits Act (Ontario) and the
Regulation thereunder would not, subject to compliance with the
prudent investment criteria contained therein and the general
investment provisions thereof, preclude the funds of a pension plan
registered thereunder from being invested in the Common Shares at
the date hereof, provided that the Common Shares are within a
category of investment specifically permitted and for which
guidelines are established in the statement of investment policies
and goals for such plan filed under the Act and provided further
that such investment complies with such guidelines.
16. The provisions of the Loan and Trust Corporations Act
(Ontario) and the Regulation thereunder would not, subject to
compliance with the prudent investment standards and the general
investment provisions thereof, preclude the funds received as
deposits under section 155 of such Act by loan corporations and
trust corporations registered under such Act from being invested in
the Common Shares at the date hereof without resorting to the
provisions of subsection 166(1) of such Act.
17. The provisions of an Act respecting insurance (Quebec) do not,
subject to compliance with the prudent investment standards and the
general investment provisions of such Act, preclude an investment
in the Common Shares at the date hereof by an insurer governed by
such Act, other than a mutual association or professional
corporation.
18. The provisions of the Supplemental Pension Plans Act (Quebec)
do not, subject to compliance with the general investment
provisions of such Act, preclude the assets of a pension plan
registered pursuant thereto from being invested in the Common
Shares at the date hereof; provided, however, that where an
investment policy has been established and adopted for such pension
plan in accordance with such Act, an investment in Common Shares is
also made in accordance with such investment policy.
19. The provisions of the Trust and Loan Companies Act (Canada)
would not, subject to compliance with the prudent investment and
lending policies, standards and procedures required to be
established pursuant to that Act, preclude the funds of companies
regulated under such Act from being invested.
20. The provisions of the Insurance Companies Act (Canada) would
not, subject to the prudent investment and lending policies,
standards and procedures required to be established pursuant to
that Act and in the case of foreign companies (as defined in that
Act) subject to any restriction contained in the trust deed
creating the trust in respect of such assets, preclude the funds of
companies (as defined in that Act) or the assets or foreign
companies (as defined in the Act) required to be vested in trust,
from being invested.
21. The provisions of An Act respecting trust companies and
savings companies (Quebec) would not preclude an investment at the
date hereof in the Common Shares by a Quebec company as defined
under such Act (other than a trust company as defined under such
Act with respect to funds (except deposits) such trust company
administers for other persons unless otherwise provided in the
instrument creating the administration), subject to compliance with
the general investment provisions of such Act and subject to the
specific provisions of Division VI of Chapter 15 of such Act
applicable to a Quebec company.
22. The Common Shares are, as of the date hereof, qualified
investments under the Income Tax Act (Canada) for a trust governed
by a registered retirement savings plan, registered retirement
income fund or deferred profit sharing plan (as such terms are
defined in such Act) registered under such Act.
Yours truly,