U.S. UNDERWRITING AGREEMENT
May 9, 2002
Echo Bay Mines Ltd.
Suite 1210 Manulife Place
10180 - 101 Street
Edmonton, Alberta
T5J 3S4
Attention: Mr. Robert Leclerc, Chairman and Chief Executive Officer
Dear Sir:
Based upon and subject to the terms and conditions set out below, BMO
Nesbitt Burns Corp. (the "U.S. Lead Manager") and NBC International (USA),
Inc. (together with the U.S. Lead Manager, collectively the "U.S.
Underwriters" and, individually, a "U.S. Underwriter") hereby severally, in
their respective percentages set out below, offer to purchase from Echo Bay
Mines Ltd. (the "Corporation"), and by its acceptance of the offer constituted
by this letter, the Corporation agrees to issue and sell to the U.S.
Underwriters, at the Time of Closing (as hereinafter defined), 4,400,000 units
(collectively, the "Units" and individually, a "Unit") of the Corporation (the
"Offered Securities"), each Unit consisting of one (1) common share (a "Common
Share") of the Corporation and one (1) common share purchase warrant
exercisable at a price per Common Share of $0.90 until November 14, 2003 (each
whole warrant a "Warrant") at an offering price of $0.70 per Unit for
aggregate gross proceeds of $3,080,000. The offering of the Offered Securities
by the Corporation is hereinafter referred to as the "Offering".
The Corporation hereby grants to the U.S. Underwriters (in accordance
with the percentages set forth in Section 16) a one time non-assignable option
(the "U.S. Underwriters' Option") to purchase severally and not jointly up to
660,000 additional Units (the "Additional Units") upon the terms and
conditions set forth herein only for the purpose of covering over-allotments
made in connection with the sale of the Offered Securities. The U.S.
Underwriters' Option shall be exercisable, in whole or in part, by the U.S.
Lead Manager giving notice to the Corporation not later than the earlier of
(x) 30 days following the Time of Closing (as defined herein) and (y) the date
upon which the Canadian Underwriters exercise the Canadian Underwriters'
Option pursuant to the Canadian Underwriting Agreement, any such notice to
specify the number of Additional Units to be purchased and the closing date
with respect to such purchase (which closing date shall be by no later than
five full business days after the written notice of election to purchase
Additional Units under the U.S. Underwriters' Option is given). Pursuant to
such notice, the U.S. Underwriters shall purchase and the Corporation shall
issue and sell the number of Additional Units indicated in such notice, in
accordance with the provisions of Section 11 hereof. In this U.S. Underwriting
Agreement, the Offered Securities,
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and to the extent that the U.S. Underwriters' Option is exercised, the
Additional Units, are collectively called the "Securities".
The Corporation shall pay to the U.S. Lead Manager, on behalf of the U.S.
Underwriters, a fee (the "Underwriting Fee") at the Time of Closing equal to
$0.035 per Offered Security sold pursuant to the terms of this Agreement in
consideration of the services to be rendered by the U.S. Underwriters in
connection with the Offering. Such services shall include, without limitation:
(i) acting as financial advisors to the Corporation in the preparation of
documentation relating to the sale of the Securities; (ii) forming and
managing banking, selling and other groups for the sale of the Securities;
(iii) distributing the Securities to the public both directly and through
other registered dealers and brokers; (iv) assisting the Corporation in
connection with the preparation and finalization of the U.S. Shelf Preliminary
Prospectus Supplement and the U.S. Shelf Prospectus Supplement (each as
hereinafter defined); (v) performing administrative work in connection with
these matters; and (vi) all other services arising out of the agreement
resulting from the Corporation's acceptance of this offer.
To the extent the U.S. Underwriter's Option is exercised, the Corporation
shall pay to the U.S. Lead Manager, on behalf of the U.S. Underwriters, a fee
at the Over-Allotment Closing (as defined herein) equal to the Underwriting
Fee for each Additional Unit sold under this Agreement.
The U.S. Underwriters and the Corporation acknowledge that Schedules A
and B form a part of this agreement.
The U.S. Underwriters and the Corporation acknowledge that an offering of
the Units is also being concurrently conducted in Canada by the Canadian
Underwriters, who are affiliates of the U.S. Underwriters, under the terms of
the Canadian Underwriting Agreement and the terms of that the Inter -Dealer
Agreement, as well as applicable Canadian Securities Laws.
The following are the terms and conditions of the agreement between the
Corporation and the U.S. Underwriters:
Section 1 Definitions and Interpretation
(1) In this agreement:
"business day" means any day other than a Saturday, Sunday or statutory
or civic holiday in the City of Toronto, Ontario and the City of New
York, New York;
"Canadian Securities Laws" means, collectively, all applicable securities
laws of each of the Qualifying Provinces and the respective rules and
regulations under such laws together with applicable published policy
statements, notices and orders of the securities regulatory authorities
in the Qualifying Provinces;
"Canadian Underwriting Agreement" means that certain underwriting
agreement dated the date hereof between the Canadian Underwriters and the
Corporation;
"Canadian Underwriters" means BMO Nesbitt Burns Inc. and National Bank
Financial Inc. together, and "Canadian Underwriter" means any one of
them;
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"Continuous Disclosure Materials" means all documents previously
published or filed by the Corporation with the securities regulatory
authority in each Province of Canada, the SEC and the Exchanges;
"Exchanges" means The Toronto Stock Exchange ("TSX") and the American
Stock Exchange ("AMEX");
"Inter-Dealer Agreement" means that certain inter-dealer agreement, dated
the date hereof, between the Canadian Underwriters and the U.S.
Underwriters;
"Material Subsidiaries" means the entities set out in Schedule A in which
the Corporation holds the types and percentages of securities or other
ownership interests therein set forth;
"Qualifying Provinces" means the provinces of Canada in which the
Corporation has filed a Canadian preliminary short form prospectus and a
(final) short form prospectus in respect to the Securities to be sold by
the Canadian Underwriters in Canada;
"SEC" means the United States Securities and Exchange Commission;
"Stock Option Plans" means the stock option plans of the Corporation as
constituted on the date hereof;
"Time of Closing" shall have the meaning ascribed thereto in Section
10(1) hereof;
"United States" means the United States of America, its territories and
possessions, any state of the United States, the District of Columbia,
and the areas subject to the jurisdiction of the United States of
America;
"U.S. Exchange Act" means the United States Securities Exchange Act of
1934, as amended;
"U.S. Registration Statement" means the registration statement on Form
S-3 (File No. 333-35857) filed with the SEC, with respect to certain
securities of the Corporation, as amended, under the U.S. Securities Act,
including the U.S. Shelf Prospectus and the exhibits and financial
statements schedules thereto as amended as of the date hereof;
"U.S. Securities Act" means the United States Securities Act of 1933, as
amended;
"U.S. Securities Laws" means the applicable blue sky or securities
legislation in the United States, together with the U.S. Exchange Act and
the U.S. Securities Act;
"U.S. Shelf Prospectus" means the prospectus, dated February 11, 1998,
included in the U.S. Registration Statement;
"U.S. Shelf Prospectus Supplement" means the U.S. Shelf Prospectus
together with the prospectus supplement, dated the date hereof,
specifically relating to the offering of the Securities by the U.S.
Underwriters in the United States;
"U.S. Shelf Preliminary Prospectus Supplement" means the U.S. Shelf
Prospectus together with the preliminary prospectus supplement, dated
April 29, 2002, specifically relating to the offering of the Securities
by the U.S. Underwriters in the United States; and
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"Warrant Indenture" means the warrant indenture to be entered into
between the Corporation and Computershare Trust Company of Canada, as trustee,
providing for the creation and issue of the Warrants.
(2) The division of this agreement into sections, subsections, paragraphs and
other subdivisions and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of
this agreement. Unless something in the subject matter or context is
inconsistent therewith, references herein to sections, subsections,
paragraphs and other subdivisions are to sections, subsections,
paragraphs and other subdivisions of this agreement.
(3) Except as otherwise indicated, all amounts expressed herein in terms of
money refer to lawful currency of the United States and all payments to
be made hereunder shall be made in such currency.
(4) As used herein, the terms "U.S. Registration Statement", "U.S. Shelf
Prospectus", "U.S. Shelf Preliminary Prospectus Supplement" and "U.S.
Shelf Prospectus Supplement" shall include in each case all documents
incorporated, or deemed incorporated, therein by reference pursuant to
the requirements of Item 12 of Form S-3 (the "Incorporated Documents"),
and any reference to herein to the to the terms "amend", "amendment" or
"supplement" with respect to any of the foregoing documents shall be
deemed to refer to and include the filing of the Incorporated Documents.
Section 2 Compliance with Securities Laws
(1) The Corporation:
(a) filed the U.S. Registration Statement together with other
documentation supplemental thereto with the SEC under the U.S.
Securities Act (as defined herein) on February 11, 1998, and such
U.S. registration Statement has become and remains effective, and
(b) filed the U.S. Shelf Preliminary Prospectus Supplement with the SEC
pursuant to Rule 424(b) under the Securities Act on April 29, 2002.
(2) The Corporation shall, as soon as possible and in any event not later
than 5:30 p.m. (Toronto time) on May 13, 2002, file with the SEC the U.S.
Shelf Prospectus Supplement pursuant to Rule 424(b) under the U.S.
Securities Act.
Section 3 Due Diligence
Prior to the Time of Closing, including on any intervening weekends, the
Corporation shall have allowed the U.S. Underwriters to conduct all due
diligence which the U.S. Underwriters may reasonably require to conduct in
order to fulfil their obligations
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as underwriters and in order to enable the U.S. Underwriters responsibly to
execute any certificate required to be executed by them; provided, however,
that this Section 3 is not intended to operate as a condition of the offering.
Section 4 Conditions of the Offering
The U.S. Underwriters' obligations under this agreement are conditional
upon and subject to:
(1) the U.S. Underwriters receiving at the Time of Closing favourable legal
opinions to be delivered to the U.S. Underwriters by Fraser Milner
Casgrain LLP, Canadian counsel to the Corporation (who may rely, to the
extent appropriate in the circumstances, on the opinions of local counsel
acceptable to counsel to the Corporation and counsel to the Canadian
underwriters as to the qualification of the Securities for sale to the
public and as to other matters governed by the laws of the jurisdictions
in Canada other than the provinces in which they are qualified to
practice and may rely, to the extent appropriate in the circumstances, as
to matters of fact on certificates of officers, public and exchange
officials or of the auditors or transfer agent of the Corporation) and
Cravath, Swaine and Moore, the Corporations' U.S. counsel, each opinion
substantially to the effect set forth in Schedule B hereto and in a form
reasonably acceptable to the U.S. Underwriters;
(2) at the Time of Closing, there having been no actual material adverse
change in the business, affairs, operations, assets, liabilities or
financial condition of the Corporation on a consolidated basis since the
date hereof;
(3) the Canadian Underwriting Agreement having been executed by the
Corporation and the Canadian Underwriters, and none of the Canadian
Underwriters shall have relied upon any rights of termination in the
Canadian Underwriting Agreement to terminate the offering of the
Securities in Canada; and
(4) the U.S. Underwriters receiving at the Time of Closing such further
certificates, opinions of counsel and other documentation from the
Corporation as may be contemplated herein or as the U.S. Underwriters or
their counsel may reasonably require; provided, however, that the U.S.
Underwriters or their counsel shall request any such certificate or
document within a reasonable period prior to the Time of Closing that is
sufficient for the Corporation to obtain and deliver any such certificate
or document, and in any event at least 48 hours prior to the Time of
Closing.
Section 5 Covenants of the U.S. Underwriters
The U.S. Underwriters:
(a) shall offer or arrange the offer of the Securities for sale to the
public, directly and through other investment dealers and brokers
(the U.S. Underwriters, together with such other investment dealers
and brokers, are referred to herein as the "Selling Firms"), only as
permitted by and in compliance with all relevant laws and regulatory
requirements (including under the U.S. Securities Act), upon the
terms and conditions set forth in the U.S. Shelf Prospectus
Supplement and in this agreement and will require each Selling Firm
to so agree;
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(b) shall not solicit offers to purchase or sell the Securities so as to
require registration thereof or the filing of a prospectus or
similar document with respect thereto under the laws of any
jurisdiction other than the United States, and will require each
Selling Firm to agree with the U.S. Underwriters not to so solicit
or sell. In this connection, the U.S. Underwriters agree that they
will not offer or sell any of the Securities constituting a part of
their allotment within Canada except, if applicable, through the
Canadian Underwriters on the terms and conditions set forth in the
Canadian Underwriting Agreement and the Inter-Dealer Agreement and
in compliance with the Canadian Securities Laws.
(c) agree that if they offer to sell or sell any Securities in
jurisdictions other than the United States and Canada, such offers
and sales shall be effected in accordance and compliance with the
applicable laws of such jurisdictions and shall be effected in such
manner so as not to: (i) require registration of the Securities, or
the filing of a prospectus or other document with respect thereto;
or (ii) subject the Corporation to any continuous disclosure or
similar reporting requirements under the laws of any jurisdiction
outside the Provinces of Canada or the United States;
(d) shall use all reasonable efforts to complete and to cause the other
Selling Firms to complete the distribution of the Securities as soon
as practicable; and
(e) shall notify the Corporation when, in their opinion, the U.S.
Underwriters and the other Selling Firms have ceased distribution of
the Securities.
(2) Notwithstanding the foregoing, no U.S. Underwriter shall be liable to the
Corporation with respect to any other U.S. Underwriter under this section
5.
Section 6 Representations and Warranties of the Corporation
(1) The Corporation hereby represents and warrants to the U.S. Underwriters,
intending that the same may be relied upon by the U.S. Underwriters that:
(a) each of the Corporation and the Material Subsidiaries has been duly
incorporated or amalgamated and organized and is validly existing
under the laws of its jurisdiction of incorporation, has all
requisite corporate power and authority to carry out its business as
now conducted and as contemplated by the U.S. Shelf Prospectus
Supplement and the documents incorporated by reference therein, and
to own, lease and operate its properties and assets, and the
Corporation has all requisite power and authority carry out its
obligations under this agreement;
(b) The only major operating subsidiaries of the Corporation are listed
in Schedule A;
(c) the Corporation or one of its subsidiaries owns the issued and
outstanding shares of each of the Material Subsidiaries as set out
in Schedule A, in each case free and clear of any pledge, lien,
security interest, charge, claim or encumbrance, other than the
securities of Round Mountain Gold Corporation;
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(d) the Corporation meets the requirement for the use of Form S-3 Under
the U.S. Securities Act;
(e) the Corporation's Common Shares are posted and listed for trading on
the Exchanges and the Corporation is not in default of any of the
listing requirements of the Exchanges, other than has been disclosed
in the U.S. Shelf Prospectus Supplement or the Continuous Disclosure
Materials;
(f) other than has been disclosed in the U.S. Shelf Prospectus
Supplement or the Continuous Disclosure Materials, and other than
options under the Corporation's Stock Option Plans, there are no
options, agreements or other rights outstanding to acquire any
Common Shares of the Corporation;
(g) as at the date hereof, the authorized share capital of the
Corporation consists of an unlimited number of Common Shares and an
unlimited number of preferred shares, of which 502,168,375 Common
Shares and no preferred shares are issued and outstanding;
(h) the Corporation and each of its Material Subsidiaries hold all
licences and permits that are required for carrying on their
business in the manner in which such business has been, and is,
carried on, except where the failure to hold such a license or
permit could not reasonably be expected to have a material adverse
effect on the business, affairs, operations, assets, liabilities or
financial condition of the Corporation on a consolidated basis (a
"Material Adverse Effect");
(i) the Corporation and each of its Material Subsidiaries have good and
marketable title to all assets owned by them free and clear of all
liens, charges and encumbrances that materially interfere with the
use made or to be made thereof by them, save and except as specified
in Section 6(1)(c) and as disclosed in the U.S. Shelf Prospectus
Supplement and the Continuous Disclosure Materials;
(j) all interests in natural resource properties of the Corporation or
its Material Subsidiaries as set out in the U.S. Shelf Prospectus,
the U.S. Shelf Prospectus Supplement and the Continuous Disclosure
Materials that are owned or held by the Corporation or its Material
Subsidiaries as owner or lessee thereof are so owned with good and
marketable title or are so leased with good and valid title, are in
good standing, are valid and enforceable, are free and clear of any
liens, charges or encumbrances that materially interfere with the
use made or to be made by them and no royalty is payable in respect
of any of them, except as set out in the U.S. Shelf Prospectus
Supplement or the Continuous Disclosure Materials; no other property
rights are necessary for the conduct of the Corporation's or the
Material Subsidiaries' business and there are no material
restrictions on the ability of the Corporation or the Material
Subsidiaries to use, transfer or otherwise exploit any such property
rights except as set out in the U.S. Shelf Prospectus Supplement or
the Continuous Disclosure Materials or as required by applicable
laws;
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(k) (A) the Corporation and its Material Subsidiaries are in compliance
in all material respects with all terms and provisions of all
contracts, agreements, indentures, leases, instruments and licences
in connection with the conduct of its business and (B) to the best
of the Corporation's knowledge, all such contracts, agreements,
indentures, leases, policies, instruments and licences are valid and
binding in accordance with their terms and in full force and effect,
except in each case with respect to clauses (A) and (B), as could
not reasonably be expected to have a Material Adverse Effect;
(l) except as disclosed in the U.S. Shelf Prospectus Supplement or the
Continuous Disclosure Materials, to the best of the Corporation's
knowledge, the Corporation and its subsidiaries are in compliance
with all material environmental laws in the jurisdictions in which
such entities conduct their businesses;
(m) except as disclosed in the U.S. Shelf Prospectus Supplement or the
Continuous Disclosure Materials, the Corporation and each of its
Material Subsidiaries maintain insurance against loss of, or damage
to, their assets by all insurable risks on a replacement cost basis,
and all of the policies in respect of such insurance coverage are in
good standing in all respects and not in default, except in each
case as could not reasonably be expected to have a Material Adverse
Effect;
(n) the consolidated audited financial statements of the Corporation for
its fiscal years ended December 31, 2000 and December 31, 2001 and
the unaudited interim financial statements of the Corporation for
the quarter ended March 31, 2002 (collectively the "Corporation's
Financial Statements"), copies of which are incorporated by
reference in the U.S. Shelf Preliminary Prospectus Supplement and
the U.S. Shelf Prospectus Supplement , are true and correct in every
material respect and present fairly and accurately the financial
position and results of the operations of the Corporation on a
consolidated basis for the periods then ended and the Corporation's
Financial Statements have been prepared in accordance with generally
accepted accounting principles in Canada applied on a consistent
basis;
(o) this agreement has been duly authorized, executed and delivered by
the Corporation and is a legal, valid and binding obligation of, and
is enforceable against the Corporation in accordance with its terms
(subject to bankruptcy, insolvency or other laws affecting the
rights of creditors generally, the availability of equitable
remedies and the qualification that rights to indemnity and waiver
of contribution may be contrary to public policy);
(p) The U.S. Registration Statement, at the time it became effective,
and the U.S. Shelf Prospectus contained therein, at such time
complied, fully in all material respects with the requirements of
the U.S. Securities Act and the rules and regulations adopted by the
SEC thereunder; the Incorporated Documents at the time they were
filed complied in all material respects with the requirements of
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the U.S. Exchange Act and the rules and regulations adopted by the
SEC thereunder;
(q) except as disclosed in the U.S. Shelf Prospectus Supplement or the
Continuous Disclosure Materials, as of the date hereof, there has
been no actual material adverse change in the business, affairs,
operations, assets, liabilities or financial condition of the
Corporation on a consolidated basis since March 31, 2002;
(r) the directors and officers of the Corporation and their compensation
arrangements with the Corporation, whether as directors, officers or
employees of the Corporation are as disclosed in the U.S. Shelf
Prospectus Supplement or in the Continuous Disclosure Materials;
(s) all of the material contracts and agreements of the Corporation and
of its Material Subsidiaries not made in the ordinary course of
business (collectively the "Material Contracts") have been disclosed
in the Continuous Disclosure Materials;
(t) all tax returns, reports, elections, remittances and payments of the
Corporation and of its Material Subsidiaries required by law to have
been filed or made in any applicable jurisdiction, have been filed
or made (as the case may be), other than for taxes being contested
in good faith, and, to the knowledge of the Corporation, are
substantially true, complete and correct and all taxes of the
Corporation and of its Material Subsidiaries (other than for taxes
being contested in good faith) have been paid or accrued in the
Corporation's Financial Statements;
(u) except as disclosed in the U.S. Shelf Prospectus Supplement or in
the Continuous Disclosure Materials, there are no actions, suits,
judgments, investigations or proceedings outstanding, pending or, to
the best of its knowledge, threatened against or affecting the
Corporation, its subsidiaries, or their respective directors,
officers or promoters (in their capacity as such), at law or in
equity or before or by any federal, provincial, state, municipal or
other governmental department, commission, board, bureau or agency
of any kind whatsoever, except in each case as could not reasonably
be expected to have a Material Adverse Effect;
(v) all necessary corporate action has been taken or will have been
taken prior to the Time of Closing (as defined below) by the
Corporation so as to validly issue and sell the Securities to the
U.S. Underwriters and upon receipt by the Corporation of the
purchase price as consideration for the issue of the Securities,
such Securities will be validly issued and outstanding as fully paid
and non-assessable shares of the Corporation;
(w) the Corporation is not a company registered under the United States
Investment Company Act of 1940, as amended, and the Corporation is
not a company controlled by an investment company required to be so
registered;
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(x) Computershare Trust Company of Canada, at its principal office in
Toronto, has been duly appointed as the transfer agent and registrar
for the Common Shares and the Warrants;
(y) the forms of the certificates representing the Warrants have been
duly approved by the Corporation and comply with the provisions of
the laws of its jurisdiction of incorporation and the regulations of
the AMEX; and
(z) the U.S. Shelf Preliminary Prospectus Supplement and the U.S. Shelf
Prospectus Supplement, contain no untrue statement of a material
fact and does not and will not omit to state a material fact that is
required to be stated or that is necessary to make the statements
therein not misleading in light of the circumstances in which they
are made.
(2) The representations and warranties of the Corporation contained in this
U.S. Underwriting Agreement shall be true at the Time of Closing as
though they were made at the Time of Closing and they shall survive the
completion of the transactions contemplated under this U.S. Underwriting
Agreement and remain in full force and effect thereafter for the benefit
of the U.S. Underwriters for a period ending on the expiry date of the
Warrants.
Section 7 Representations and Warranties of the U.S. Underwriters
(1) The U.S. Underwriters hereby severally and not jointly represent and
warrant that:
(a) the U.S. Underwriter is, and will remain so, until the completion of
the Offering, appropriately registered under applicable U.S.
Securities Laws so as to permit it to lawfully fulfil its
obligations hereunder and the U.S. Underwriter is, and will remain
so, until the completion of the Offering, a member in good standing
of the National Association of Securities Dealers, Inc.; and
(b) the U.S. Underwriter has good and sufficient right and authority to
enter into this U.S. Underwriting Agreement and complete its
transactions contemplated under this U.S. Underwriting Agreement on
the terms and conditions set forth herein.
(2) The representations and warranties of each of the U.S. Underwriters
contained in this U.S. Underwriting Agreement shall be true at the Time
of Closing as though they were made at the Time of Closing and they shall
not survive the completion of the transactions contemplated under this
U.S. Underwriting Agreement but shall terminate on the completion of the
Offering.
Section 8 Covenants of the Corporation
(1) The Corporation covenants with the Canadian Underwriters that:
(a) During the period from the date hereof to the completion of the
distribution of the Securities, the Corporation shall promptly
notify the U.S. Underwriters in writing of any actual material
adverse change in the business, affairs, operations,
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assets, liabilities or financial condition of the Corporation or its
subsidiaries or any material change in any statement contained in
the U.S. Shelf Prospectus Supplement, as such documents exist
immediately prior to such change, which change is, or may be, of
such nature as would result in any of such documents, as they exist
immediately prior to such change, containing an untrue statement of
a material fact or an omission to state therein a material fact that
is required to be stated or that is necessary to make the statements
therein not misleading in light of the circumstances in which they
were made or which would result in any of such documents, as they
exist immediately prior to such change not complying, in any
material respect, with the U.S Securities Act. The Corporation will
promptly prepare and file with the SEC an amendment to the U.S.
Shelf Prospectus Supplement which in the opinion of the U.S.
Underwriters and the Corporation, each acting reasonably, may be
necessary or advisable to correct such untrue or misleading
statement or omission. The Corporation shall in good faith discuss
with the U.S. Underwriters any change in circumstances (actual,
anticipated, contemplated or threatened) which is of such a nature
that there may be a reasonable doubt as to whether written notice
need be given to the Canadian Underwriters under the provisions of
this clause (a).
(b) the Corporation will deliver without charge to the U.S.
Underwriters, as soon as practicable, and in any event no later than
May 15, 2002 in the case of the U.S. Shelf Prospectus Supplement,
and thereafter from time to time during the distribution of the
Securities, in such cities as the U.S. Underwriters shall notify the
Corporation, as many commercial copies of each of the U.S. Shelf
Prospectus, U.S. Shelf Preliminary Prospectus Supplement and the
U.S. Shelf Prospectus Supplement, respectively, as the U.S.
Underwriters may reasonably request for the purposes contemplated by
the relevant securities laws and such delivery shall constitute
consent by the Corporation to the use by the U.S. Underwriters and
other investment dealers and brokers of such documents in connection
with the Offering in the United States, subject to the provisions of
applicable U.S. Securities Laws. The Corporation shall similarly
cause to be delivered commercial copies of the Incorporated
Documents in such quantities as the Canadian Underwriters may
reasonably request.
(c) the Corporation shall use its reasonable best efforts to arrange
that the Securities shall be listed and posted for trading on the
TSX and the AMEX on the Closing Date, subject only to the
documentary filing requirements of such exchange, and, in the case
of the Warrants, subject also to meeting the requirements of the TSX
and the AMEX that a minimum number of holders hold such Warrants;
(d) it will not: (i) offer, pledge, sell, contract to sell any option or
contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise lend,
transfer or dispose of, directly or indirectly, any Common Shares or
securities convertible into or exercisable or exchangeable for
Common Shares; or (ii) enter into any swap or other arrangement that
transfers, in whole or in part, any of the economic consequences of
ownership of Common Shares or such other securities, whether
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any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Shares or such other securities, in
cash or otherwise (other than the Securities and other than in
connection with the grant or exercise of options, issuances under
the Corporation's existing Stock Option Plans or employee share
purchase plan or any other existing rights of conversion or
securities issued as consideration for an acquisition of assets or
shares), for a period ending 90 days after the closing of the
Offering without the prior written consent of the U.S. Lead Manager,
such consent not to be unreasonably withheld;
Section 9 Additional Documents upon Filing of U.S. Shelf Prospectus Supplement
(1) The U.S. Underwriters' obligations under this agreement are conditional
upon the receipt by the U.S. Underwriters concurrently with the filing of
the U.S. Shelf Prospectus Supplement of:
(a) a "long form" comfort letter dated the date of U.S. Shelf Prospectus
Supplement from the auditors of the Corporation, addressed to the
U.S. Underwriters, in form and substance reasonably satisfactory to
the U.S. Underwriters, relating to the verification of the financial
information and accounting data and other numerical data of a
financial nature contained in the U.S. Shelf Prospectus Supplement
and matters involving changes or developments since the respective
dates as of which specified financial information is given in the
U.S. Shelf Prospectus Supplement to a date not more than two
business days prior to the date of such letter. Such letter shall
further state that such auditors are independent public accountants
within the meaning of the U.S. Securities Act and the appropriate
rules and regulations thereof, and that
(i) in their opinion the Corporation's Financial Statements
examined by them and included in the U.S. Shelf Prospectus
Supplement comply in all material respects with the applicable
accounting requirements of the U.S. Securities Act and the
related published rules and regulations;
(ii) on the basis of a reading of the latest available financial
statements of the Corporation dated after December 31, 2001,
inquiries of officials of the Corporation who have
responsibility for the financial and accounting matters and the
other specified procedures, nothing came to their attention
that caused them to believe that:
(A) at the date of the latest available balance sheet read by
such auditors, or at a subsequent specified date not more
than two business days prior to the date of the U.S. Shelf
Prospectus Supplement, there was any material change in
the capital or any increase in short term indebtedness or
long-term debt of the Corporation and its Material
Subsidiaries consolidated or, at the date of the latest
available balance sheet read by such auditors, there was
any material decrease in consolidated net current assets
or net assets as compared with amounts shown on the latest
balance sheet included in the U.S. Shelf Prospectus
Supplement;
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(B) for the period from the date of the latest income
statement included in the U.S. Shelf Prospectus Supplement
to the date of the latest available income statement read
by such auditors or at a subsequent specified date of the
U.S. Shelf Prospectus Supplement, there were any material
decreases as compared with the corresponding period of the
previous year and with the period of corresponding length
ended the date of the latest income statement included in
the U.S. Shelf Prospectus Supplement, in the consolidated
revenue, net operating income, or total or per share
amounts of net income,
except in all cases set forth in clauses (A) and (B) above for
changes, increases or decreases which the U.S. Shelf Prospectus
Supplement discloses have occurred or which are described in such
letter; and
(b) they have compared specified United States and Canadian dollar
amounts (or percentages derived from such United States and Canadian
dollar amounts) and other financial information contained in the
U.S. Shelf Prospectus Supplement) in each case to the extent that
such dollar amounts, percentages and other financial information are
derived from the general accounting records of the Corporation and
its subsidiaries subject to the internal controls of the
Corporation's accounting system or are derived from such records by
analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such United States and
Canadian dollar amounts, percentages and other financial information
to be in agreement with such results, except as otherwise specified
in such letter.
(2) Such comfort letter shall be in addition to any comfort letters required
by the terms of the Canadian Underwriting Agreement to be addressed to
the Canadian Underwriters.
Section 10 Closing
(1) The Offering will be completed at the offices of Stikeman Elliott in
Toronto at 8:00 a.m. (Toronto time) on May 17, 2002 (the "Time of
Closing" and the "Closing Date", respectively) or at such other time
and/or on such other date as the U.S. Underwriters and the Corporation
may agree upon, but not in any event no later than June 21, 2002.
(2) At the Time of Closing, subject to the terms and conditions contained in
this agreement, the Corporation shall deliver to the U.S. Underwriters a
certificate or certificates representing the Offered Securities against
payment of the purchase price by certified cheque, bank draft or wire
transfer dated the Closing Date payable to the Corporation. The
Corporation will, at the Time of Closing and upon such payment of the
purchase price to the Corporation, make payment in full of the
Underwriting Fee.
(3) The U.S. Underwriters' obligations under this agreement are conditional
upon and subject to the Corporation delivering a certificate signed on
behalf of the Corporation by the Chief Executive Officer of the
Corporation and the Chief Financial Officer of the Corporation, addressed
to the U.S. Underwriters and dated the Closing Date, in a form
satisfactory to the U.S. Underwriters' counsel, acting reasonably,
certifying for and on behalf of the Corporation and not in their personal
capacities that to the actual knowledge of the persons signing such
certificate after having made due inquiry:
-14-
(a) the Corporation has complied in all material respects with all
covenants and satisfied all terms and conditions of this agreement
on its part to be complied with and satisfied at or prior to the
Time of Closing on the Closing Date;
(b) no order, ruling or determination having the effect of ceasing or
suspending trading in any securities of the Corporation or
prohibiting the sale of the Securities or any of the Corporation's
issued securities has been issued and no proceeding for such purpose
is pending or, to the knowledge of such officers, threatened;
(c) no order suspending the effectiveness of the U.S. Registration
Statement shall be in effect and no proceedings for such purpose
shall be pending before or, to the knowledge of such officers,
threatened by the SEC and any additional information requested on
the part of the SEC shall have been complied with to the reasonable
satisfaction of the U.S. Underwriters;
(d) all of the representations and warranties made by the Corporation in
this agreement are true and correct as of the Time of Closing with
the same force and effect as if made at and as of the Time of
Closing after giving effect to the transactions contemplated hereby.
(4) The U.S. Underwriters' obligations under this agreement are conditional
upon and subject to the Corporation causing its auditors to deliver to
the U.S. Underwriters a comfort letter, dated the Closing Date, in form
and substance satisfactory to the U.S. Underwriters, acting reasonably,
bringing forward to a date not more than two business days prior to the
Closing Date the information contained in the comfort letter referred to
in paragraph 9(1)(a).
Section 11 Closing of U.S. Underwriters' Option
(1) The purchase and sale of the Additional Units shall be completed at such
time and place as the U.S. Underwriters and the Corporation may agree,
but in no event shall such closing occur later than five full business
days after written notice of election to purchase Additional Units under
the U.S. Underwriters' Option is given in the manner contemplated by the
second paragraph of this Agreement (the "Over-Allotment Closing").
(2) At the Over-Allotment Closing, subject to the terms and conditions
contained in this agreement, the Corporation shall deliver to the U.S.
Underwriters a certificate or certificates representing the Additional
Units against payment of the purchase price by certified cheque, bank
draft or wire transfer dated the date of the Over-Allotment Closing
payable to the Corporation. The Corporation will, at the time of the
Over-
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Allotment Closing and upon such payment of the purchase price to the
Corporation, make payment in full of the Underwriting Fee in respect of
the Additional Units.
Section 12 Termination Rights
(1) All terms and conditions set out herein shall be construed as conditions
and any breach or failure by the Corporation to comply with any such
conditions in favour of the U.S. Underwriters shall entitle the U.S.
Underwriters to terminate their obligation to purchase the Securities by
written notice to that effect given to the Corporation prior to the Time
of Closing on the Closing Date. The Corporation shall use its reasonable
best efforts to cause all conditions in this agreement to be satisfied.
It is understood that the U.S. 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 subsequent
breach or non-compliance, provided that to be binding on the U.S.
Underwriters, any such waiver or extension must be in writing.
(2) In addition to any other remedies which may be available to the U.S.
Underwriters, the U.S. Underwriters shall be entitled, at their option,
to terminate and cancel, without any liability on the U.S. Underwriters'
part, their obligations under this agreement to purchase the Securities,
by giving written notice to the Corporation at any time at or prior to
the Time of Closing on the Closing Date:
(a) if there should occur any suspension or limitation of trading in
securities generally on the TSX or AMEX, or if a general moratorium
on commercial banking activities in Toronto or New York should be
declared by the relevant authorities, or if, in relation to the
Corporation, any inquiry, investigation or other proceeding (whether
formal or informal) is commenced, threatened or announced or any
order or ruling is issued by any officer of such exchange or market,
or by the SEC, or any other regulatory authority in Canada or the
United States, or if any law or regulation under or pursuant to any
statute of Canada or of any province thereof or of the United States
or any state or territory thereof is promulgated or changed which,
in the reasonable opinion of the U.S. Underwriters (or any of them)
operates to prevent or materially restrict trading the Common Shares
or the distribution of the Securities or could reasonably be
expected to have a material adverse effect on the market price of
the Common Shares or the Securities;
(b) if there shall occur any actual material adverse change or change in
the business, affairs, operations, assets, liabilities or financial
condition of the Corporation on a consolidated basis which in the
U.S. Underwriters' reasonable opinion would reasonably be expected
to have a material adverse effect on the market price or value of
any of Securities or the Common Shares; or
(c) if there should develop, occur or come into effect or existence any
event, action, state, condition or major financial occurrence of
national or international consequence, without limiting the
generality of the foregoing, any military conflict, civil
insurrection, or any terrorist action, including, without
limitation, military insurrection (whether or not in connection with
such conflict or
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insurrection), which, in the U.S. Underwriters' reasonable opinion,
materially adversely affects or involves, or will materially
adversely affect or involve, the Canadian or United States financial
markets and/or prevents or materially restricts the trading of the
Common Shares or the distribution of the Securities;
(3) The U.S. Underwriters shall make reasonable best efforts to give notice
to the Corporation (in writing or by other means) of the occurrence of
any of the events referred to in clauses 12(2)(a), (b) or (c) provided
that neither the giving nor the failure to give such notice shall in any
way affect the entitlement of the U.S. Underwriters to exercise this
right at any time prior to or at the Time of Closing.
(4) The rights of termination contained in this section may be exercised by
the U.S. Underwriters and are in addition to any other rights or remedies
the U.S. Underwriters may have in respect of any default, act or failure
to act or non-compliance by the Corporation in respect of any of the
matters contemplated by this agreement.
(5) If the obligations of the U.S. Underwriters are terminated under this
agreement pursuant to these termination rights, the Corporation's
liabilities to the U.S. Underwriters shall be limited to the
Corporation's obligations under Sections 13, 14 and 15.
Section 13 Indemnity
(1) The Corporation agrees to indemnify and hold harmless each U.S.
Underwriter, and their respective directors, officers, employees and
agents, and each person, if any, who controls any U.S. Underwriter within
the meaning of Section 15 of the U.S. Securities Act or Section 20 of the
U.S. Exchange Act against any and all losses, claims, damages and
liabilities, joint or several (including any investigation, legal and
other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
U.S. Securities Act, at common law or otherwise, insofar as such losses,
claims, damages or liabilities arise out of or are based upon (i) any
material breach of a representation or warranty of the Corporation
contained herein or the failure of the Corporation to comply with any of
its obligations hereunder, in all material respects, or (ii) any untrue
statement or alleged untrue statement of a material fact contained in the
U.S. Shelf Preliminary Prospectus Supplement, the U.S. Shelf Prospectus
Supplement or the U.S. Registration Statement, or any amendment or
supplement thereto, or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as any such untrue
statement or omission or alleged untrue statement or omission was made in
such U.S. Shelf Preliminary Prospectus Supplement, the U.S. Shelf
Prospectus Supplement or U.S. Registration Statement, or such amendment
or supplement, in reliance upon and in conformity, with information
furnished in writing to the Corporation by or on behalf of any U.S.
Underwriter or Canadian Underwriter expressly for use in the preparation
thereof; provided, however, that the foregoing indemnity against losses,
claims, damages or liabilities is subject to the condition that, insofar
as it relates to any untrue statement or alleged untrue statement,
omission or alleged omission made in the U.S. Registration Statement or
the U.S. Shelf Preliminary
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Prospectus Supplement but eliminated or remedied in the U.S. Shelf
Prospectus Supplement, such indemnity shall not inure to the benefit of
any U.S. Underwriter from whom the person asserting any loss, claim,
damage or liability purchased the Securities which are the subject
thereof (or to the benefit of any person who controls such U.S.
Underwriter) if such U.S. Underwriter failed to send or give a copy of
the U.S. Shelf Prospectus Supplement (or any amendment or supplement
thereto) to such person at or prior to the time such action is required
by the U.S. Securities Act.
(2) Each U.S. Underwriter agrees to indemnify and hold harmless the
Corporation, each person, if any, who controls the Corporation within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, each director of the Corporation and each officer of the
Corporation, to the same extent as the foregoing indemnity from the
Corporation to each Underwriter, but only insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission which was
made in the U.S. Shelf Preliminary Prospectus Supplement or the U.S.
Shelf Prospectus Supplement, or any amendment or supplement thereto, in
reliance upon and in conformity with information furnished in writing to
the Corporation by such U.S. Underwriter with respect to the U.S.
Underwriters expressly for use in the preparation thereof.
(3) Any party which proposes to assert the right to be indemnified under this
Section 13 will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim
is to be made against an indemnified party under this Section 13, notify
each such indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served, but the omission so to
notify such indemnifying party of any such action, suit or proceeding
shall not relieve it from any liability which it may have to any
indemnified party otherwise than under this Section 13. In case any such
action, suit or proceeding shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to the
extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defence thereof, with counsel
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defence thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses, other than reasonable
costs of investigation subsequently incurred by such indemnified party in
connection with the defence thereof. The indemnified party shall have the
right to employ its counsel in any such action, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless
(i) the employment of counsel by such indemnified party has been
authorized by the indemnifying parties, (ii) the indemnified party shall
have reasonably concluded that there may be a conflict of interest
between the indemnifying parties and the indemnified party in the conduct
of the defence of such action (in which case the indemnifying parties
shall not have the right to direct the defence of such action on behalf
of the indemnified party) or (iii) the indemnifying parties shall not in
fact have employed counsel to assume the defence of such action. An
indemnifying party shall not be liable for any settlement of any action
or claim effected without its consent. For the purposes of clause (ii) of
the preceding sentence only, any indemnified party or
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parties shall be represented by one counsel whom they may select with the
approval, which shall not be unreasonably withheld, of the indemnifying
parties.
Section 14 Contribution
In order to provide for just and equitable contribution in circumstances
in which the indemnification provided for in Section 13 is applicable but for
any reason, other than as specified in Section 13, is held to be unavailable
from the indemnifying party, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the aggregate losses,
claims, damages and liabilities (including any investigation, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted), in such
proportion as is appropriate to reflect the relative benefits received by the
Corporation on the one hand and the U.S. Underwriters on the other from the
offering of the Securities. If however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Corporation on the
one hand and the U.S. Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Corporation on
the one hand and the U.S. Underwriters on the other shall be deemed to be in
the same proportion as the total net proceeds from the offering of the
Securities (before deducting expenses) received by the Corporation bear to the
total underwriting discounts and commissions received by the U.S.
Underwriters, in each case as set forth in the U.S. Shelf Prospectus
Supplement. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Corporation on the one hand or the U.S.
Underwriters on the other and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Corporation and the U.S. Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 14 were
determined by pro rata allocation (even if the U.S. Underwriters were treated
as one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to above in
this Section 14. Notwithstanding the provisions of this Section 14, (i) in no
case shall any U.S. Underwriter be responsible for any amount in excess of the
sum of the Underwriting Fee applicable to the Securities purchased by such
U.S. Underwriter hereunder, and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 14, each person, if
any, who controls a U.S. Underwriter within the meaning of the U.S. Securities
Act and the U.S. Exchange Act, and each director, officer, employee and agent
of a U.S. Underwriter shall have the same rights to contribution as such U.S.
Underwriter, and each person, if any, who controls the Corporation within the
meaning of the U.S. Securities Act and the U.S. Exchange Act, and each
director of the Corporation shall have the same rights to contribution as the
Corporation, subject in each case to clauses (i) and (ii) of this Section 14.
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect
of which a claim for contribution may be made against another party or parties
under this Section 14, notify such party or parties from whom contribution may
be sought, but the
-19-
omission so to notify such party or parties from whom
contribution may he sought shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section 14. No party shall be liable
for contribution with respect to any action or claim settled without its
written consent. The U.S. Underwriters' obligations in this section to
contribute are several in proportion to their respective obligations and not
joint.
Section 15 Expenses
Whether or not the transactions provided for herein (including the
Offering) are completed, the Corporation shall pay all costs, fees and
expenses of or incidental to the performance of its obligations under this
agreement including, without limitation: (i) the costs of the Corporation's
professional advisors, (ii) the cost of printing the U.S. Shelf Preliminary
Prospectus Supplement, the U.S. Shelf Prospectus Supplement, (iii) the
preparation of any Blue Sky survey regarding the offers and sales of the
Securities in the various states, and (iv) the fees and expenses of the
Corporation's auditors, counsel and any local counsel. Except as provided in
this agreement (including clause (iii) above), the fees and disbursements of
any counsel to the U.S. Underwriters and out-of-pocket expenses of the U.S.
Underwriters shall be borne by the U.S. Underwriters; provided that in the
event that the sale and purchase of the Securities is not completed in
accordance with the terms hereof (other than as a result of a breach by the
U.S. Underwriters of any of its obligations hereunder or the exercise by the
U.S. Underwriters of the termination rights contained herein), the Corporation
shall assume and pay the out-of-pocket expenses of the U.S. Underwriters and
the reasonable fees and disbursements of counsel to the U.S. Underwriters.
Section 16 Liability of U.S. Underwriters
(1) The obligation of the U.S. Underwriters to purchase the Securities in
connection with the Offering at the Time of Closing on the Closing Date
shall be several and not joint or joint and several and shall be as to
the following percentages of the Offered Securities to be purchased at
that time:
BMO Nesbitt Burns Corp. 60%
NBC International (USA) Inc. 40%
----
100%
(2) If one of the U.S. Underwriters fails to purchase its applicable
percentage of the aggregate amount of the Offered Securities at the
Closing Time, the other U.S. Underwriter shall have the right, but shall
not be obligated, to purchase, all but not less than all, of the Offered
Securities which would otherwise have been purchased by the U.S.
Underwriter which failed to purchase. If, with respect to the Offered
Securities, any non-defaulting U.S. Underwriter elects not to exercise
such right so as to assume the entire obligation of the defaulting U.S.
Underwriter (the Offered Securities in respect of which the defaulting
Underwriter(s) fail to purchase and the non-defaulting U.S. Underwriters
does not elect to purchase being hereinafter called the "Default
Shares"), then the Corporation shall have the right to either (i) proceed
with the sale of the Offered Securities (less the Default Shares) to the
non-defaulting U.S. Underwriter or (ii) terminate its obligations
hereunder without liability to the non-defaulting U.S.
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Underwriters except under sections 13, 14 and 15. Nothing in this
paragraph shall oblige the Corporation to sell to any of the U.S.
Underwriters less than all of the Offered Securities or shall relieve any
of the U.S. Underwriters in default hereunder from liability to the
Corporation.
(3) Notwithstanding the foregoing, the U.S. Underwriters shall have the
right, but not the obligation, to sell to the Canadian Underwriters, any
Offered Securities pursuant to the Inter-Dealer Agreements, and subject
to the terms and conditions set out therein.
Section 17 Action by U.S. Underwriters
All steps which must or may be taken by the U.S. Underwriters in
connection with the agreement resulting from the Corporation's acceptance of
this offer, with the exception of the matters relating to termination
contemplated by Section 12, may be taken by the U.S. Lead Manager on behalf of
itself and the other U.S. Underwriter and the acceptance of this offer by the
Corporation shall constitute the Corporation's authority for accepting
notification of any such steps from, and for delivering the definitive
documents constituting the Securities to or to the order of the U.S. Lead
Manager.
Section 18 Governing Law; Time of Essence
This agreement shall be governed by and construed in accordance with the
laws of the State of New York and the federal laws of the United States of
America applicable therein and time shall be of the essence hereof.
Section 19 Survival of Warranties, Representations, Covenants and Agreements
All warranties, representations, covenants and agreements of the
Corporation and the U.S. Underwriters herein contained or contained in
documents submitted or required to be submitted pursuant to this agreement
shall survive the purchase by the U.S. Underwriters of the Securities and
shall continue in full force and effect, regardless of the closing of the sale
of the Securities and regardless of any investigation which may be carried on
by the U.S. Underwriters, or on their behalf, for a period of three years
following the Closing Date. Without limitation of the foregoing, the
provisions contained in this agreement in any way related to the
indemnification or the contribution obligations shall survive and continue in
full force and effect, indefinitely.
Section 20 Press Releases
The Corporation shall provide the U.S. Underwriters and their counsel
with a copy of all press releases to be issued by the Corporation concerning
the offering contemplated hereby prior to the issuance thereof, and shall give
the U.S. Underwriters and their counsel a reasonable opportunity to provide
comments on any press release.
Section 21 Notices
All notices or other communications by the terms hereof required or
permitted to be given by one party to another shall be given in writing by
personal delivery or by facsimile delivered or facsimile to such other party
as follows:
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(a) to the Corporation at:
Suite 1210 Manulife Place
10180 - 101 Street
Edmonton, Alberta
T5J 3S4
Attention: Lois Broderick
Facsimile No.: (780) 424-7378
with a copy to:
Fraser Milner Casgrain LLP
2900 Manulife Place
10180 - 101 Street
Edmonton, Alberta
T5J 3V5
Attention: Michael Gluckman
Facsimile No.: (780) 423-7276
and to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475 U.S.A.
Attention: William Whelan
Facsimile No.: (212) 474-3700
(b) to the U.S Underwriters at:
BMO Nesbitt Burns Corp.
c/o BMO Nesbitt Burns Inc.
1 First Canadian Place
Toronto, Ontario
M5X 1H3
Attention: Egizio Bianchini
Facsimile No.: (416) 359-4459
-22-
with a copy to:
Stikeman Elliott
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
M5L 1B9
Attention: Jay C. Kellerman
Facsimile No.: (416) 947-0866
Dorsey & Whitney LLP
BCE Place
161 Bay Street, Suite 4310
Toronto, Ontario
Canada M5J 2S1
Attention: Grant Vingoe
Facsimile No.: (416) 367-7371
or at such other address or facsimile number as may be given by either of
them to the other in writing from time to time and such notices or other
communications shall be deemed to have been received when delivered or, if
facsimile, on the next business day after such notice or other communication
has been facsimile (with receipt confirmed).
Section 22 Judgment Currency
In respect of any judgment or order given or made for any amount due
hereunder that is expressed and paid in a currency (the "judgment currency")
other than United States dollars, the Corporation shall indemnify each U.S.
Underwriter against any loss incurred by such U.S. Underwriter as a result of
any variation as between (i) the rate of exchange at which the United States
dollar amount is converted into the judgment currency for the purpose of such
judgment or order and (ii) the rate of exchange at which a U.S. Underwriter is
able to purchase United States dollars with the amount of the judgment
currency actually received by such U.S. Underwriter. The term "rate of
exchange" shall include any premiums and costs of exchange payable in
connection with the purchase of or conversion into United States dollars.
Section 23 Counterpart Signature
This agreement may be executed in one or more counterparts (including
counterparts by facsimile) which, together, shall constitute an original copy
hereof as of the date first noted above.
Section 24 Entire Agreement
This agreement constitutes the entire agreement between the U.S.
Underwriters and the Corporation relating to the subject matter hereof and
supersedes all prior agreements between the U.S. Underwriters and the
Corporation.
[the balance of this page was intentionally left blank]
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Section 25 Acceptance
If this offer accurately reflects the terms of the transaction which we
are to enter into and if such terms are agreed to by the Corporation, please
communicate your acceptance by executing where indicated below and returning
by facsimile one copy and returning by courier one originally executed copy to
BMO Nesbitt Burns Corp. (Attention: Egizio Bianchini).
Yours very truly,
BMO NESBITT BURNS CORP.
By: /s/ Thomas C. Wright
--------------------------------
Authorized Signing Officer
NBC INTERNATIONAL (USA), INC.
By: /s/ Michael Mackasey
--------------------------------
Authorized Signing Officer
The foregoing accurately reflects the terms of the transaction that we
are to enter into and such terms are agreed to.
ACCEPTED at as of this 9th day of May,
2002.
ECHO BAY MINES LTD.
By: /s/ Tom S.Q. Yip
--------------------------------
Authorized Signing Officer
SCHEDULE A
MATERIAL SUBSIDIARIES
Name Type of Ownership Percentage
---- ----------------- ----------
Echo Bay Inc. Shares 100%
(Delaware, United States)
Echo Bay Finance Corporation Shares 100%
(Delaware, United States)
Echo Bay Exploration Inc. Shares 100%
(Delaware, United States)
Round Mountain Gold Corporation Shares 100%
(Delaware, United States)
Corp. Air Inc. (Alberta, Canada) Shares 100%
Sunnyside Gold Corporation Shares 100%
(Delaware, United States)
Echo Bay Minerals Company Shares 100%
(Delaware, United States)
Echo Bay Resources Inc. Shares 100%
(Delaware, United States)
Echo Bay Management Corporation Shares 100%
(Delaware, United States)
-2-
SCHEDULE B
Unless the context otherwise dictates, all capitalized terms herein have the
meaning ascribed to thereto in the U.S. Underwriting Agreement to which this
Schedule B is attached
Canadian counsel's opinions:
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As set out in Section 4(1) of the Canadian Underwriting Agreement
U.S. counsel's opinions:
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1. Based solely on certificates from the Secretary of State of the State
of Delaware, the Material Subsidiaries, other than Corp. Air Inc., are
corporations subsisting and in good standing under the laws of the State of
Delaware.
2. No authorization, approval or other action by, and no notice to,
consent of, order of, or filing with, any United States Federal, New York or,
to the extent required under the General Corporation Law of the State of
Delaware, Delaware governmental authority or regulatory body is required for
the consummation of the transactions contemplated by the U.S. Underwriting
Agreement, except such as have been obtained under the U.S. Securities Act and
such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities by the U.S.
Underwriters.
3. None of the issue and sale of the Securities, the consummation of any
other of the transactions contemplated by the U.S. Underwriting Agreement and
the performance of the terms of the U.S. Underwriting Agreement (i) will
conflict with, result in a breach of, or constitute a default under any
agreement or instrument that is listed as an exhibit to the Corporation's most
recent Annual Report on Form 10-K filed with the SEC by the Corporation and to
which the Corporation or any of its Material Subsidiaries is a party or bound,
(ii) will contravene any law, rule or regulation of the United States of
America or the State of New York or the General Corporation Law of the State
of Delaware or (iii) based solely on a certificate signed by Lois-Ann L.
Brodrick, Vice President and Secretary of the Corporation, on the date hereof,
will contravene, to our knowledge, any order or decree of any court or
government agency or instrumentality of the State of New York or the Federal
government of the United States of America. In connection with the foregoing,
we point out that certain of the agreements referred to in clause (i) above
are or may be governed by laws other than the laws of the State of New York.
For purposes of the opinion expressed in this paragraph, however, we have
assumed that all such agreements are governed by and would be interpreted in
accordance with the laws of the State of New York.
4. The statements made in the U.S. Shelf Prospectus Supplement under the
caption "Plan of Distribution", insofar as they purport to summarize the
material terms of the U.S. Underwriting Agreement, and under the caption "U.S.
Federal Income Tax Considerations", insofar as they purport to describe the
material tax consequences of an investment in Securities, fairly summarize the
matters therein described.
-3-
5. Based solely on a certificate signed by Lois-Ann L. Brodrick, Vice
President and Secretary of the Corporation, on the date hereof, the
Corporation is not, and after giving effect to the offering of the Securities
and the application of the proceeds thereof as described in the U.S. Shelf
Prospectus Supplement will not be, required to register as an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
6. The U.S. Registration Statement, at the time it was last amended or
deemed to be amended, and the U.S. Shelf Prospectus, as of the date hereof (in
each case except the financial statements and other information of a
statistical, accounting or financial nature included therein, as to which we
do not express any view), appeared on their face to be appropriately
responsive in all material respects to the requirements of the U.S. Securities
Act and the applicable rules and regulations thereunder.