Exhibit 3.1
XXXXXXX POWER SYSTEMS INC.
7,700,000 Common Shares
UNDERWRITING AGREEMENT
December 11, 2002
December 11, 2002
Xxxxxxx Power Systems Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Dear Sirs/Mesdames:
RBC Dominion Securities Inc. ("RBC DS"), CIBC World Markets Inc., BMO
Xxxxxxx Xxxxx Inc., National Bank Financial Inc., TD Securities Inc. and UBS
Xxxxxxx Warburg Inc. (collectively, the "Underwriters") understand that Xxxxxxx
Power Systems Inc., a corporation incorporated under the laws of Canada
("Xxxxxxx" or the "Company"), proposes to issue and sell a total of 7,700,000
Common Shares of the Company (the "Offered Shares"). The Underwriters also
understand that the Company proposes to grant to the Underwriters the option to
purchase up to an additional 1,900,000 Common Shares (the "Additional Shares")
on the terms and conditions described in Section 2 hereof. The Offered Shares
and the Additional Shares are hereinafter collectively referred to as the
"Shares." The Common Shares of the Company to be outstanding after giving effect
to the sales contemplated hereby are herein referred to as the "Common Shares."
The Underwriters are prepared to purchase the Offered Shares from the
Company, subject to the terms and conditions described herein. The obligation of
the Underwriters to purchase any Shares shall, in addition to being subject to
the other terms and conditions described herein, be conditional on the following
steps having been taken within the time frames described below:
(a) Xxxxxxx shall file a preliminary short form prospectus (the
"Canadian Preliminary Prospectus") qualifying the distribution
of the Offered Shares and the Additional Shares with the
British Columbia Securities Commission (the "Reviewing
Authority") and the securities regulatory authorities in each
of the other provinces of Canada (together with British
Columbia, the "Qualifying Provinces"), and shall obtain a
Mutual Reliance Review System (the "MRRS") decision document
issued by the Reviewing Authority in its capacity as principal
regulator, pursuant to the MRRS evidencing that a receipt has
been issued for the Canadian Preliminary Prospectus by the
securities regulatory authorities in each of Qualifying
Provinces (collectively, the "Canadian Securities
Commissions") by no later than 4:00 p.m. (Vancouver time) on
December 11, 2002;
(b) Xxxxxxx shall file with the United States Securities and
Exchange Commission (the "Commission"), in accordance with the
provisions of the United States Securities Act of 1933, as
amended and the rules and regulations thereunder
(collectively, the "Securities Act"), a registration statement
(the "Registration Statement") on Form F-10 which includes the
Canadian Preliminary Prospectus (with such addition and
deletions as are permitted or required by Form F-10 and the
applicable rules and regulations of the Commission) (the "U.S.
Preliminary Prospectus") by no later than 1:00 p.m. (Vancouver
time) on December 11, 2002, or as soon as possible thereafter;
(c) Xxxxxxx shall file with the Commission an appointment for
agent for service of process upon the Company on Form F-X in
conjunction with the filing of the Registration Statement (the
"Form F-X");
(d) Xxxxxxx shall use its reasonable efforts to resolve all
comments on the Canadian Preliminary Prospectus that are
received from the Canadian Securities Commissions as soon as
possible after receipt of such comments and on a basis
satisfactory to the Underwriters, acting reasonably;
(e) Xxxxxxx shall file a final short form prospectus (the
"Canadian Final Prospectus") qualifying the distribution of
the Offered Shares and the Additional Shares with the
Reviewing Authority and the other Canadian Securities
Commissions, and shall obtain an MRRS decision document issued
by the Reviewing Authority in its capacity as principal
regulator, pursuant to the MRRS evidencing that a receipt has
been issued for the Canadian Final Prospectus by each of the
Canadian Securities Commissions by no later than 4:00 p.m.
(Vancouver time) on December 18, 2002; and
(f) Xxxxxxx shall file with the Commission, in accordance with the
provisions of the Securities Act, an amendment to the U.S.
Preliminary Prospectus which includes the Canadian Final
Prospectus (with such additions and deletions as are permitted
or required by Form F-10 and the applicable rules and
regulations of the Commission) (the "U.S. Final Prospectus")
by no later than 4:00 p.m. (Vancouver time) on December 18,
2002.
For greater certainty, the parties agree that if Xxxxxxx fails to meet the
deadlines specified above for any reason whatsoever (including, without
limitation, being unable resolve any comments on the Canadian Preliminary
Prospectus from the Canadian Securities Commissions on a basis satisfactory to
the Underwriters, acting reasonably, within the time frames described above),
the Underwriters shall be entitled to exercise the termination rights provided
for in Section 9(a) hereof.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to and agrees with each of the Underwriters that:
(a) The Company meets the general eligibility requirements for use
of Form F-10 under the Securities Act and is eligible to file
short form prospectuses under National Instrument 44-101 of
the Canadian Securities Administrators.
(b) None of the Canadian Securities Commissions, any stock
exchange in Canada or the United States or any other
regulatory authority or court has issued an order preventing
or suspending the use of any preliminary prospectus, the
Canadian Prospectus or the U.S. Prospectus relating to the
proposed offering of the Shares or preventing the distribution
of the Shares or instituted proceedings for that purpose.
(c) The Canadian Preliminary Prospectus (except with respect to
the rules with respect to acquisition accounting) and the
Canadian Final Prospectus (together, the "Canadian
Prospectus") will be prepared and filed in compliance in all
material respects with all applicable securities laws in each
of the Qualifying Provinces and the respective rules and
regulations under such laws, together with applicable
published policy statements, blanket orders and applicable
notices of securities regulatory authorities in such provinces
(the "Canadian Securities Laws") and, at the time of delivery
of the Offered
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Shares to the Underwriters, the Canadian Final Prospectus will
comply in all material respects with all Canadian Securities
Laws and the Company shall fulfill and comply with all
necessary requirements of Canadian Securities Laws in order to
enable the Shares to be lawfully distributed in the Qualifying
Provinces through the Underwriters or any other investment
dealers or brokers registered as such in the Canadian
provinces and acting in accordance with the terms of their
registrations and the Canadian Securities Laws. Such
requirements shall be fulfilled in the Province of British
Columbia and in all of the other Qualifying Provinces not
later than 4:00 p.m. (Vancouver time) on December 18, 2002, or
such later date or dates as may be agreed to in writing by the
Underwriters.
(d) The Canadian Preliminary Prospectus and the Canadian Final
Prospectus shall, as of their respective dates of filing and,
except as amended prior to the Closing Date (as defined in
Section 4 below) in accordance with Canadian Securities Laws,
as of the Closing Date, constitute full, true and plain
disclosure of all material facts relating to the Company, its
subsidiaries and the Shares, shall contain no
misrepresentation, as defined under Canadian Securities Laws
and no information shall be omitted therefrom which is
necessary to make the statements contained therein not
misleading.
(e) The U.S. Preliminary Prospectus and the U.S. Final Prospectus
(together, the "U.S. Prospectus") will conform to the Canadian
Preliminary Prospectus and Canadian Final Prospectus,
respectively, except for such deletions therefrom and
additions thereto as are permitted or required by Form F-10
and the applicable rules and regulations of the Commission. In
addition, as of their respective dates, the Registration
Statement, the Form F-X, the U.S. Preliminary Prospectus and
the U.S. Final Prospectus, as amended or supplemented, if
applicable, will comply in all material respects with the
Securities Act.
(f) As of the date they are declared effective and except as
amended prior to the Closing Date, as of the Closing Date,
neither the U.S. Preliminary Prospectus nor the U.S. Final
Prospectus will contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
provided, however, that the representations and warranties contained in
clauses (c), (d), (e) and (f) above shall not apply to statements or
omissions in the Canadian Prospectus or the U.S. Final Prospectus that
are based upon information relating to any Underwriter furnished in
writing to the Company by such Underwriter expressly for use in such
documents.
(g) There are:
(i) no reports or information that in accordance with the
requirements of the Canadian Securities Laws must be
made publicly available in connection with the
offering of the Shares that have not been made
publicly available as required. There are no
documents required to be filed with the Canadian
Securities Commissions in connection with the
Canadian Prospectus that have not been filed (or that
will not be filed prior to the Closing Date in
accordance with Canadian Securities Laws) as required
pursuant to Canadian Securities Laws and delivered to
the Underwriters; and
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(ii) no contracts, documents or other materials required
to be described or referred to in the Canadian
Prospectus or the U.S. Prospectus or to be filed as
exhibits to the Registration Statement that will not
be described, referred to or filed as required and,
in the case of those documents filed, delivered to
the Underwriters.
(h) The consolidated audited and unaudited financial statements of
the Company that are included or incorporated by reference in
the Registration Statement, the Canadian Prospectus and the
U.S. Prospectus will present fairly in all material respects
the consolidated financial position of the Company and its
subsidiaries as of the dates indicated and the consolidated
results of operation and the consolidated changes in financial
position of the Company and its subsidiaries for the periods
specified (subject, in the case of interim financial
information, to year-end adjustments); and such financial
statements have been (or will be) prepared in conformity with
generally accepted accounting principles in Canada,
consistently applied throughout the periods involved, and have
been reconciled to generally accepted accounting principles in
the United States in accordance with Item 18 of Form 20-F. The
summary selected financial data included or incorporated by
reference in the Registration Statement, the Canadian
Prospectus and the U.S. Prospectus present fairly the
information shown therein and have been compiled on a basis
consistent with that of the audited consolidated financial
information included or incorporated by reference in the
Registration Statement, the Canadian Prospectus and the U.S.
Prospectus.
(i) KPMG LLP who have reported upon the audited financial
statements of the Company included or incorporated by
reference in the Registration Statement, the Canadian
Prospectus and the U.S. Prospectus, are, and during the
periods covered by its reports were, independent with respect
to the Company within the meaning of the Canada Business
Corporations Act and applicable Canadian Securities Laws, and
are independent as required by the Securities Act.
(j) The Company has been duly incorporated, is validly existing as
a corporation in good standing under the Canada Business
Corporations Act, has the corporate power and authority to own
its property and to conduct its business as described in the
Registration Statement, the Canadian Prospectus and the U.S.
Prospectus and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires
such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries,
taken as a whole.
(k) Each of EBARA XXXXXXX Corporation and ALSTOM XXXXXXX GmbH
(collectively, the "Associated Companies") and each
significant subsidiary as defined in Rule 1-02 of Regulation
S-X under the Securities Act (a "Significant Subsidiary") of
the Company has been duly incorporated, is validly existing as
a corporation or company under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in
the Canadian Prospectus and the U.S. Prospectus and is duly
qualified to transact business in each jurisdiction in which
the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent
that the failure to be so qualified would not have a material
adverse effect on the Company and its subsidiaries, taken as a
whole; other than Xxxxxxx Capital Inc. (because it is late in
filing its annual return) each of the
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Significant Subsidiaries is in good standing (where such
concept exists) under the laws of the jurisdiction of its
incorporation or formation and is in good standing in each
jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification,
except to the extent that such failure to be so qualified or
be in good standing would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole; all of
the issued shares of capital stock of each Significant
Subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and,
except for those of Xxxxxxx Power Systems AG ("BPS AG"), are
owned directly by the Company, free and clear of all liens,
encumbrances, equities or claims; the ownership of the
outstanding shares in the capital of Xxxxxxx Generation
Systems Inc. and BPS AG and each of the Associated Companies
is consistent with the description thereof in the Registration
Statement, the Canadian Prospectus and the U.S. Prospectus;
the subsidiaries set forth on Schedule I hereto are the only
Significant Subsidiaries of the Company. The Company covenants
to immediately file the annual return for Xxxxxxx Capital Inc.
(l) This Agreement has been duly authorized, executed and
delivered by the Company.
(m) The authorized capital of the Company conforms in all material
respects to the description thereof contained in the Canadian
Prospectus and the U.S. Prospectus.
(n) The Common Shares outstanding prior to the issuance of the
Shares have been duly authorized and are validly issued, fully
paid and non-assessable; there are no outstanding securities
convertible into or exchangeable for, or warrants, rights or
options to purchase from the Company, or obligations of the
Company to issue, Common Shares or any other class of shares
of the Company, except as disclosed in the Canadian Prospectus
and the U.S. Prospectus or except pursuant to existing share
compensation arrangements.
(o) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will
be validly allotted and issued as fully paid and
non-assessable shares, and the issuance of such Shares will
not be subject to any preemptive or similar rights, except as
disclosed in the Canadian Prospectus or the U.S. Prospectus.
(p) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this
Agreement will not contravene:
(i) any provision of law binding on the Company or any of
its subsidiaries;
(ii) the articles of incorporation or by-laws of the
Company;
(iii) any agreement or other instrument binding upon the
Company or any of its Significant Subsidiaries; or
(iv) any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the
Company or any subsidiary,
other than, in the case of clauses (i), (iii) and (iv), any
contravention that would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole, and that
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would not have a material adverse effect on the ability of the
Company to perform its obligations under this Agreement.
(q) No approval, consent, authorization, order or license of, or
qualification with any government, governmental body or agency
or court of (i) any province of Canada; (ii) the federal
government of Canada; (iii) the federal government of the
United States; or (iv) the various states of the United States
in which the Shares are to be offered for sale or sold, or of
any political subdivision of any thereof, is required for the
performance by the Company of its obligations under this
Agreement, except such as have already been received and may
be required by the Toronto Stock Exchange, the NASDAQ National
Market, the securities or "Blue Sky" laws of the various
states of the United States and the Canadian Securities Laws
in connection with the offer and sale of the Shares.
(r) There has not occurred any material adverse change, or any
development involving a prospective material adverse change,
in the condition, financial or otherwise, or in the ownership
of the Company or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, from that
set forth in the Canadian Prospectus and the U.S. Prospectus
(exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement).
(s) There are no legal or governmental proceedings pending or, to
the knowledge of the Company, threatened to which the Company
or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration
Statement, the Canadian Prospectus or the U.S. Prospectus and
are not so described.
(t) The Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds
thereof as described in the Canadian Prospectus and the U.S.
Prospectus, will not be required to register as an "investment
company" as such term is defined in the Investment Company Act
of 1940, as amended.
(u) The Company and each of its subsidiaries:
(i) are in compliance with any and all applicable
foreign, federal, provincial, state and local laws
and regulations relating to the protection of human
health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or
contaminants ("Environmental Laws");
(ii) have received all permits, licenses or other
approvals required of them under applicable
Environmental Laws to conduct their respective
businesses; and
(iii) are in compliance with all terms and conditions of
any such permit, license or approval,
except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in
the aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
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(v) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital
or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on
operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries,
taken as a whole.
(w) There are no contracts, agreements or understandings between
the Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act or a prospectus under the Canadian Securities
Laws with respect to any securities of the Company or to
require the Company to include such securities with the Shares
registered pursuant to the Registration Statement.
(x) The Company and its subsidiaries own, possess or have obtained
all material governmental licenses, permits, certificates,
consents, orders, approvals and other authorizations necessary
to own or lease, as the case may be, and to operate their
properties and to carry on their businesses as presently
conducted except, in each case, where the failure to do so
would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole; and neither the Company
nor any of its subsidiaries has received any notice of
proceedings relating to revocation or modification of any such
licenses, permits, certificates, consents, orders, approvals
or authorizations except for any proceedings which would not
have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(y) The Company and its subsidiaries own or possess adequate
patents, patent licenses, trademarks, service marks and trade
names necessary to carry on their businesses as presently
conducted except where such failure to own or possess such
patents, patent licenses, trademarks, service marks and trade
names would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole; and neither the
Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others
with respect to any patents, patent licenses, trademarks,
service marks or trade names that in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would
have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(z) After due and reasonable inquiry and to the best of the
Company's knowledge:
(i) the business of the Company and its subsidiaries,
including processes used by, products made or sold
by, and research and development conducted by the
Company and its subsidiaries, does not conflict with,
infringe upon, misappropriate or otherwise violate
the intellectual property rights of any third party;
and
(ii) the Company is not aware of any fact or circumstance
which would render any technology or intellectual
property license granted to the Company or its
subsidiaries by a third party invalid, unenforceable
or liable to cancellation or termination, except
where such conflict, infringement, misappropriation,
violation, invalidity, unenforceability, cancellation
or termination would not
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have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(aa) Neither the Company nor any of its subsidiaries is involved in
any labor dispute nor, to the knowledge of the Company, is any
such dispute threatened, which would have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(bb) The Company and its subsidiaries have good title to the items
of real and personal property which are referred to in the
Registration Statement, the Canadian Prospectus and the U.S.
Prospectus as being owned by them, and have valid and
enforceable leasehold interests in the items of real and
personal property referred to in the Registration Statement,
the Canadian Prospectus and the U.S. Prospectus as being
leased by them, in each case free and clear of all liens,
encumbrances, claims, security interests and defects, other
than those which do not interfere with the use made or
intended to be made of such property by the Company or do not
and will not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(cc) None of the Company or any of its subsidiaries is in default
in the observance or performance of any term or obligation to
be performed by it under any agreement, lease, contract,
mortgage, loan agreement, note, indenture or other instrument
or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries
or any of their respective properties is bound and which
breach or default, individually or in the aggregate, if not
cured or otherwise corrected within the respective period
specified for such cure or correction, would have a material
adverse effect on the Company and its subsidiaries, taken as a
whole.
(dd) Computershare Trust Company of Canada, at its principal
offices in the cities of Vancouver and Toronto, has been duly
appointed as the registrar and transfer agent in respect of
the Common Shares.
(ee) The Company has not taken and will not take, directly or
indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or
manipulation of the price of the Shares.
(ff) The Company is a reporting issuer under the Canadian
Securities Laws and is in compliance with its obligations
under Section 85 of the Securities Act (British Columbia) and
under Sections 144, 145 and 149 of the Rules thereunder and
under similar provisions in the Canadian Securities Laws of
the other Qualifying Provinces.
(gg) Prior to the filing of the Canadian Final Prospectus and the
U.S. Final Prospectus, the Shares will have been conditionally
approved for listing on the Toronto Stock Exchange and the
NASDAQ National Market.
(hh) The Company has no reason to believe that the Associated
Companies do not own, possess or have not obtained all
material governmental licenses, permits, certificates,
consents, orders, approvals and other authorizations necessary
to own or lease, as the case may be, and to operate their
properties and to carry on their businesses as presently
conducted except, in each case, where the failure to do so
would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole; and the Company
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is not aware of the receipt by any of the Associated Companies
of any notice of proceedings relating to revocation or
modification of any such licenses, permits, certificates,
consents, orders, approvals or authorizations except for any
proceedings which would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
(ii) The Company has no reason to believe that the Associated
Companies do not own or possess adequate patents, patent
licenses, trademarks, service marks and trade names necessary
to carry on their businesses as presently conducted except
where such failure to own or possess such patents, patent
licenses, trademarks, service marks and trade names would not
have a material adverse effect on the Company and its
subsidiaries, taken as a whole; and the Company is not aware
of the receipt by any of the Associated Companies of any
notice of infringement of or conflict with asserted rights of
others with respect to any patents, patent licenses,
trademarks, service marks or trade names that in the
aggregate, if the subject of an unfavorable decision, ruling
or finding, would have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to sell to
the Underwriters, and the Underwriters hereby agree to purchase the Offered
Shares from the Company at a purchase price of Cdn.$20.25 per Offered Share in
the case of Offered Shares initially sold by the Underwriters in Canadian
dollars and U.S.$13.016 per Offered Share in the case of Offered Shares sold by
the Underwriters in U.S. dollars, all on the terms and conditions described
herein.
In addition, the Company hereby grants the Underwriters the option to
purchase the Additional Shares. This option may be exercised, in whole or in
part, at any time beginning on the date hereof and ending immediately prior to
filing of the Canadian Final Prospectus, by delivery of a notice in writing from
RBC DS (on behalf of the Underwriters) to the Company. The purchase price for
the Additional Shares shall also be Cdn$20.25 per Additional Share in the case
of Additional Shares initially sold by the Underwriters in Canadian dollars and
U.S.$13.016 per Additional Share in the case of Additional Shares initially sold
by the Underwriters in U.S. dollars.
The Company hereby agrees that it will not, without the prior written
consent of RBC DS, on behalf of the Underwriters (such consent not to be
unreasonably withheld), during the period ending 90 days after the Closing Date
(as defined below):
(a) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any
Common Shares or any securities convertible into or
exercisable or exchangeable for Common Shares; or
(b) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences
of ownership of the Common Shares or such other securities,
whether any such transaction described in clause (a) or (b) above is to be
settled by delivery of Common Shares or such other securities, in cash or
otherwise. The foregoing provisions shall not apply to:
(c) the Shares to be sold hereunder;
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(d) Common Shares issued pursuant to the Company's existing share
incentive or bonus plans;
(e) the issuance by the Company of Common Shares upon the exercise
of outstanding warrants or the conversion or exchange of
convertible or exchangeable securities outstanding on the date
of the Canadian Final Prospectus and the U.S. Final
Prospectus; and
(f) as otherwise described in the Canadian Final Prospectus under
the headings "Capitalization", "Summary Description of the
Business of Xxxxxxx - Stationary Power Alliance" and "Summary
Description of the Business of Xxxxxxx - Termination
Agreements".
3. TERMS OF PUBLIC OFFERING. The Company has been advised that the
Underwriters propose to begin soliciting offers to purchase the Shares as soon
as possible after the Registration Statement has been filed and the Reviewing
Authority has issued an MRRS decision document in respect of the Canadian
Preliminary Prospectus. The Company is further advised by the Underwriters that
the Shares are to be offered to the public in Canada, the United States and
other jurisdictions (provided any offers in jurisdictions other than Canada and
the United States will be made on a basis which is exempt from registration and
prospectus requirements under applicable laws), either directly through the
Underwriters or through members of a selling syndicate to be established by the
Underwriters. The Underwriters will comply with all applicable laws in
connection with the offer and sale of the Shares. The Underwriters agree that
any sales or purchases of Shares in the United States will be conducted through
a duly registered affiliate of one or more of the Underwriters in accordance
with applicable laws and the National Association Of Securities Dealers Conduct
Rules 2730, 2740, 2420 and 2750 (commonly referred to as the "Papilsky Rules").
4. PAYMENT AND DELIVERY. Payment for the Offered Shares and any Additional
Shares which the Underwriters have elected to purchase in accordance with
Section 2, shall be made by either certified cheque or bank draft as follows:
(a) one certified cheque or bank draft in Canadian funds
representing the purchase price for all Shares sold by the
Underwriters in Canadian dollars; and
(b) one certified cheque or bank draft in U.S. funds representing
the purchase price for all Shares sold by the Underwriters in
U.S. dollars.
In each case, the delivery of the certified cheques or bank drafts and shall
made against delivery of the Offered Shares and Additional Shares, if any, being
purchased by the Underwriters, at 6:00 a.m. (Vancouver time), on December 30,
2002, or at such other time on the same or such other date (not later than 42
days after the date of the MRRS decision document issued by the Reviewing
Authority in respect of the Canadian Final Prospectus) as shall be agreed to in
writing between the Company and the Underwriters. The time and date of such
payment are referred to herein as the "Closing Date".
Certificates for the Offered Shares and Additional Shares, if any,
shall be in definitive form and registered in such names and in such
denominations as the Underwriters shall request in writing not later than the
business day prior to the Closing Date. The certificates evidencing the Offered
Shares and Additional Shares, if any, shall be delivered to, or to the direction
of, RBC DS on the Closing Date for the respective accounts of the Underwriters,
with any transfer taxes payable in connection with the
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transfer of the Offered Shares and the Additional Shares, if any, to the
Underwriters duly paid, against payment of the purchase price therefore.
Concurrently with the payment by the Underwriters of the purchase price
for the Shares being purchased by the Underwriters, the Company shall pay to the
Underwriters, by delivery of certified cheques or bank drafts, the underwriting
fee of Cdn.$0.81 per Share sold by the Underwriters in Canadian dollars, and
U.S.$0.52064 per Share sold by the Underwriters in U.S. dollars.
RBC Dominion Securities shall give prompt written notice, on behalf of
the Underwriters, to the Company when, in the opinion of the Underwriters, they
have ceased distribution to the public of the Shares. Such notice will also
specify the total proceeds realized in each of the provinces of Canada from such
distribution.
5. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Company to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Offered Shares on the Closing Date
are, in addition to the conditions described elsewhere in this Agreement,
subject to the following further conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued under the Securities Act and
no proceedings for that purpose shall have been instituted or
shall be pending or, to the knowledge of the Underwriters or
the knowledge of the Company, shall be contemplated by the
Commission. In addition, no order having the effect of ceasing
or suspending the distribution of the Shares or the trading in
the Common Shares or any other securities of the Company shall
have been issued by any securities commission, securities
regulatory authority or stock exchange in Canada or the United
States and no proceedings for that purpose shall have been
instituted or pending or, to the knowledge of the Company,
shall be contemplated by any securities commission, securities
regulatory authority or stock exchange in Canada or the United
States; and any request on the part of any Canadian Securities
Commission or the Commission for additional information shall
have been complied with.
(b) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date there shall not have occurred any
change, or any development involving a prospective change, in
the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries,
taken as a whole, from that set forth in the Canadian
Prospectus and the U.S. Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of
this Agreement) that, in the judgment of the Underwriters:
(i) is material and adverse and;
(ii) that makes it, in the judgment of the Underwriters,
impracticable to market the Shares on the terms and
in the manner contemplated in the Canadian Prospectus
or the U.S. Prospectus.
(c) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive
officer of the Company, in his or her capacity as such, to the
effect set forth in clause 5(b) above (without reference to
the Underwriters' judgment) and to the effect that the
representations and warranties of the Company
11
contained in this Agreement are true and correct as of the
Closing Date and that the Company has complied with all of the
agreements and satisfied all of the conditions on its part to
be performed or satisfied hereunder on or before the Closing
Date. The officer signing and delivering such certificate may
rely upon the best of his or her knowledge as to proceedings
threatened.
(d) The Underwriters shall have received on the Closing Date an
opinion of Quebec counsel to the Company, dated the Closing
Date, to the effect that the French language versions of each
of the Canadian Preliminary Prospectus and the Canadian Final
Prospectus (including all documents incorporated by reference
therein), other than certain financial information (the
"Financial Information") contained or incorporated by
reference therein, are in all material respects complete and
proper translations of the English language versions of each
of the Canadian Preliminary Prospectus and the Canadian Final
Prospectus (including all documents incorporated by reference
therein).
(e) The Underwriters shall have received on the Closing Date an
opinion of KPMG LLP dated on the Closing Date, to the effect
that the French language version of the Financial Information
is, in all material respects, a complete and proper
translation of the English language version thereof.
(f) The Underwriters shall have received on the Closing Date an
opinion Quebec counsel to the Company, dated the Closing Date,
to the effect that the laws of the Province of Quebec relating
to the use of the French language (other than verbal
communications) will have been complied with in connection
with the sale of Common Shares of the Company to purchasers in
the Province of Quebec if such purchasers have received a copy
of the Canadian Prospectus and forms of order and confirmation
in the French language (on the assumption that the Canadian
Prospectus together with the forms of order and confirmation
constitute the entire contract for the purchase of such Common
Shares), provided that the Canadian Prospectus and forms of
order and confirmation in the English language may be
delivered without delivery of the French language versions
thereof to purchasers in the Province of Quebec who have
expressly requested, in writing, that such English language
documents be delivered to them.
(g) The Underwriters shall have received on the Closing Date an
opinion of, and a side letter from, Lang Xxxxxxxx, dated the
Closing Date, substantially in the form of Schedule II hereto.
In giving such opinion, such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the
laws of the Provinces of British Columbia and Ontario and the
federal laws of Canada applicable therein, upon opinions of
local counsel, who shall be counsel satisfactory to counsel
for the Underwriters, in which case the opinion shall state
that they believe that they and the Underwriters are justified
in relying upon such opinion. Such counsel may also state
that, insofar as such opinion involves factual matters, they
have relied, to the extent they deem proper, upon certificates
of officers of the Company and certificates of public
officials, provided that such certificates have been delivered
to the Underwriters. Such opinion shall not state that it is
to be governed or qualified by, or that is otherwise subject
to, any treatise, written policy or other document relating to
legal opinions. The opinion letter referred to in this
subparagraph (g) shall be rendered to the Underwriters at the
request of the Company and shall so state therein.
12
(h) The Underwriters shall have received on the Closing Date an
opinion of, and a letter from, Cravath, Swaine & Xxxxx,
special United States counsel for the Company, dated the
Closing Date, substantially in the form attached as Schedule
III hereto. The opinion letter referred to in this
subparagraph (h) shall be rendered to the Underwriters at the
request of the Company and shall so state therein.
(i) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, of Linklaters with respect
to, among other things, the incorporation, authorized and
issued capital and qualification to carry on business in
respect of Xxxxxxx Power Systems AG, all in form and substance
satisfactory to the Underwriters.
(j) The Underwriters shall have received on the Closing Date an
opinion of Delaware counsel to the Company, dated the Closing
Date, in form and substance satisfactory to the Underwriters,
to the effect that:
(i) each Significant Subsidiary incorporated in Delaware
and listed in Schedule I hereto has been duly
incorporated and is validly existing as a corporation
in good standing under the General Corporation Law of
the State of Delaware;
(ii) all of the shares of capital stock of each
Significant Subsidiary incorporated under the laws of
Delaware and listed in Schedule I hereto have been
duly authorized and validly issued, are fully paid
and non-assessable under the General Corporation Law
of the State of Delaware; and
(iii) based solely on the stock ledgers of each Significant
Subsidiary incorporated under the laws of Delaware
and listed in Schedule I hereto, Xxxxxxx Power
Corporation is the sole holder of record of shares of
capital stock of each Significant Subsidiary
incorporated under the laws of Delaware and listed in
Schedule I hereto.
(k) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, of Xxxxxx Xxxxxx Gervais LLP,
Canadian counsel for the Underwriters, dated the Closing Date,
in form and substance satisfactory to the Underwriters.
(l) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, of Xxxxxxxx & Xxxxxxxx,
United States counsel for the Underwriters, dated the Closing
Date, in form and substance satisfactory to the Underwriters.
(m) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, of each of XxXxxxxxx, Held &
Xxxxxx, Ltd. and Seed Intellectual Property Law Group PLLC,
patent counsel of the Company, dated the Closing Date, in form
and substance satisfactory to the Underwriters.
(n) The Underwriters shall have received, on each of the date of
the Canadian Final Prospectus and the Closing Date, a letter
dated the date of the Canadian Final Prospectus or the Closing
Date, as the case may be, in form and substance satisfactory
to the Underwriters, from KPMG LLP, independent chartered
accountants, containing statements and information of the type
ordinarily included in accountants' "comfort
13
letters" to underwriters with respect to the financial
statements and certain financial and statistical information
contained in the Registration Statement, the Canadian
Prospectus and the U.S. Prospectus; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not
earlier than two days prior to the Closing Date.
(o) The Shares shall have been approved for inclusion in the
Nasdaq National Market, subject only to official notice of
issuance thereof, and shall have been approved for listing by
the Toronto Stock Exchange, subject only to official notice of
issuance thereof and customary post-closing filing
requirements.
(p) The Company shall have entered into legally binding
agreements, on terms satisfactory to the Underwriters, with
DaimlerChrysler AG ("DCA") and Ford Motor Company ("FMC")
under which:
(i) the Company waives the obligation of DCM and FMC to
subscribe for equity concurrently with the offering
of Shares (the "Financing") as contemplated herein;
and
(ii) DCM and FMC waive their right to participate in the
Financing,
in each case as would otherwise be required under the terms of
the Third Alliance Agreement dated December 2, 2001.
(q) On or before the date of the Canadian Final Prospectus and the
U.S. Final Prospectus, the Company and Underwriters shall have
received all necessary approvals from NASD, Inc. in connection
with the offering of the Shares as contemplated herein.
(r) On or before the Closing Date, the Underwriters and counsel
for the Underwriters shall have received from the Company such
further certificates, documents, opinions and other
information as they may have reasonably requested.
6. COVENANTS OF THE COMPANY. In further consideration of the agreements of
the Underwriters herein contained, the Company covenants with each Underwriter
as follows:
(a) To notify the Underwriters promptly, and confirm the notice in
writing:
(i) when any post-effective amendment to the Registration
Statement shall have been filed with the Commission
or shall have become effective, and when any
supplement to the U.S. Prospectus or Canadian
Prospectus or any amended U.S. Prospectus or Canadian
Prospectus shall have been filed;
(ii) of the receipt of any comments from the Canadian
Securities Commissions or the Commission;
(iii) of any request by any of the Canadian Securities
Commissions to amend the Canadian Prospectus or for
additional information or of any request by the
Commission to amend the Registration Statement or to
amend or supplement the U.S. Prospectus or for
additional information;
14
(iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration
Statement or of any order preventing or suspending
the use of any prospectus, or of the suspension of
the qualification of the Shares for offering and sale
in any jurisdiction, or of the institution or, to the
knowledge of the Company, threatening of any
proceedings for any of such purposes; and
(v) of the issuance by any of the Canadian Securities
Commissions or any stock exchange of any order having
the effect of ceasing or suspending the distribution
of the Shares or the trading in the Common Shares, or
of the institution or, to the knowledge of the
Company, threatening of any proceedings for any such
purpose.
The Company will use every reasonable commercial effort to
prevent the issuance of any stop order, any order preventing
or suspending the use of any prospectus or any order ceasing
or suspending the distribution of the Shares or the trading in
the Common Shares and, if any such order is issued, to obtain
the lifting thereof at the earliest possible time.
(b) Not to file or to make at any time any amendment to the
Registration Statement, any amendment or supplement to the
Canadian Final Prospectus or the U.S. Final Prospectus, of
which the Underwriters shall not have previously been advised
and furnished a copy or to which the Underwriters shall have
reasonably objected promptly after reasonable notice thereof;
provided, however, that this provision shall not prohibit the
Company from complying in a timely manner with its timely
disclosure and other obligations under applicable securities
legislation and the requirements of any relevant stock
exchange arising out of any material change or change in
material information.
(c) To furnish to the Underwriters, without charge:
(i) three signed copies of the Registration Statement
(including all exhibits thereto, documents filed
therewith (including photocopies of the Company Form
F-X) and amendments thereof) and an additional
conformed of the Registration Statement (without
exhibits thereto) for delivery to each Underwriter;
(ii) at the time of signing thereof, the Canadian
Prospectus (and any supplements or amendments
thereto) printed in the English language signed on
behalf of the Company and its directors in the manner
required by the Canadian Securities Laws, together
with any documentation supplemental thereto required
to be filed under the applicable laws of any of the
Canadian provinces;
(iii) at the time of filing thereof with the Quebec
Securities Commission, the Canadian Prospectus (and
any supplements or amendments thereto) printed in the
French language signed on behalf of the Company and
its directors in the manner required by the laws of
the Province of Quebec, together with any
documentation supplemental thereto required to be
filed under the applicable laws of any of the
Canadian provinces; and
(iv) at any time beginning on the date hereof and ending
at the end of the period described in sub-section (d)
below, at the place of places which the Underwriters
15
may reasonably request, the Underwriters' reasonable
requirements of the commercial copies of the signed
Canadian Prospectus and the U.S. Prospectus. Such
deliveries shall be made as soon as possible after
the filing of such documents and, in any event,
within one business day of such filing.
(d) If, at any time in the period after the first date of the
public offering of the Shares during which, in the opinion of
counsel for the Underwriters, the U.S. Prospectus or the
Canadian Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event
shall occur or condition exist as a result of which it is
necessary to amend or supplement the U.S. Prospectus or the
Canadian Prospectus in order to make the statements therein,
in the light of the circumstances when the U.S. Prospectus or
the Canadian Prospectus is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the
Canadian Prospectus or the U.S. Prospectus to comply with the
Canadian Securities Laws, the Securities Act or the applicable
rules and regulations thereunder, forthwith to prepare, file
with the Commission or any Canadian Securities Commission and
furnish to the Underwriters and to the dealers (whose names
and addresses the Underwriters will furnish to the Company) to
which Shares may have been sold by the Underwriters, on behalf
of the Underwriters and to any other dealers upon request,
either amendments or supplements to the U.S. Prospectus or the
Canadian Prospectus (to be effected, if necessary, by the
filing with the Commission of a post-effective amendment to
the Registration Statement) so that the statements in the U.S.
Prospectus or the Canadian Prospectus as so amended or
supplemented will not, in the light of the circumstances when
the U.S. Prospectus or Canadian Prospectus is delivered to a
purchaser, be misleading or so that the U.S. Prospectus or the
Canadian Prospectus, as amended or supplemented, will comply
with applicable law. The expense of complying with this
Section 6(d) shall be borne by the Company in respect of any
amendment or supplement required during the nine month period
after the effectiveness of the Registration Statement or the
Canadian Prospectus, as the case may be, and by the
Underwriters thereafter.
(e) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such United States
jurisdictions as the Underwriters shall reasonably request.
(f) For a period of three years after the Closing Date, to furnish
to the Underwriters and, upon request, to each Underwriter,
copies of all reports filed with the Commission on Forms 40-F,
20-F and 6-K, or such other similar forms as may be designated
by the Commission, annual information forms and such other
documents, reports and information as shall be furnished by
the Company to its shareholders or security holders generally.
(g) During the period when the U.S. Prospectus is required to be
delivered under the Securities Act:
(i) to file promptly all documents required to be filed
by the Company with the Commission pursuant to
Section 13 or 15(d) of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act")
subsequent to the time the Registration Statement
becomes effective; and
16
(ii) in the event that any document is filed with any
Canadian Securities Commission subsequent to the time
the Registration Statement becomes effective that is
deemed to be incorporated by reference in the
Canadian Prospectus, if required by the Securities
Act, to file such document as an exhibit to the
Registration Statement by post-effective amendment or
otherwise in accordance with the Securities Act or
the Exchange Act.
(h) To make generally available to the Company's security holders
and to the Underwriters as soon as practicable an earnings
statement covering the twelve-month period ending December 31,
2002 that satisfies the provisions of Section 11(a) of the
Securities Act.
(i) To comply to the best of its ability with the Securities Act
and the Exchange Act and the Canadian Securities Laws so to
permit the completion of the distribution of the Shares as
contemplated in this Agreement and in the Canadian Prospectus
and in the U.S. Prospectus.
(j) Not to issue any press release or other public announcement
between the date hereof and the Closing Date without first
consulting with RBC DS, on behalf of the Underwriters.
7. EXPENSES. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company agrees to
pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including:
(a) the fees, disbursements and expenses of the Company's
Canadian, United States and other counsel and the Company's
accountants in connection with the registration and delivery
of the Shares under the Securities Act and under the Canadian
Securities Laws and all other fees or expenses in connection
with the preparation and filing of the Registration Statement,
the related Form F-X, the Canadian Prospectus, the U.S.
Prospectus and any amendments thereto (the "Supplementary
Material"), including all printing costs associated therewith,
and the mailing and delivering of copies thereof to the
Underwriters and dealers;
(b) all costs and expenses related to the transfer and delivery of
the Shares to the Underwriters, including any transfer or
other taxes payable thereon;
(c) the cost of printing or producing any Blue Sky or legal
investment memorandum in connection with the offer and sale of
the Shares under state securities laws and all expenses in
connection with the qualification of the Shares for offer and
sale under state securities laws as provided in Section 6(e)
hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection
with such qualification and in connection with the Blue Sky or
Legal Investment memorandum;
(d) all filing fees and disbursements of counsel to the
Underwriters incurred in connection with the review and
qualification of the offering of the Shares by the National
Association of Securities Dealers, Inc.;
17
(e) all fees and expenses in connection with the preparation and
filing of the Registration Statement and all costs and
expenses incident to listing the Shares on the NASDAQ National
Market and the Toronto Stock Exchange;
(f) the cost of printing certificates representing the Shares;
(g) the costs and charges of any transfer agent, registrar or
depositary;
(h) the costs and expenses of the Company in connection with the
marketing of the offering of the Shares;
(i) all other costs and expenses incident to the performance of
the obligations of the Company hereunder for which provision
is not otherwise made in this Section; and
(j) in the event that the offering of Shares contemplated hereby
is terminated as a result of a default by Xxxxxxx or for any
other reason within the control of Xxxxxxx, all costs and
expenses of the Underwriters, including fees and disbursements
of their counsel.
8. INDEMNITY AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act and all directors, officers,
employees and agents of any Underwriter, from and against any
and all losses (except loss of profits), claims, damages and
liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment
thereof, any preliminary prospectus, the Canadian Prospectus,
the U.S. Prospectus or any Supplementary Material (as amended
or supplemented if the Company shall have furnished any
amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the
Company in writing by any Underwriter through RBC DS expressly
for use therein.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the directors of the
Company, the officers of the Company who sign the Registration
Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to such Underwriter, but
only with reference to information relating to any Underwriter
furnished to the Company in writing by such Underwriter
through RBC DS expressly for use in the Registration
Statement, any preliminary prospectus, the Canadian
Prospectus, the U.S. Prospectus or any Supplementary Material
or any amendments or supplements thereto.
18
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in
respect of which indemnity may be sought pursuant to paragraph
(a) or (b) of this Section 8, such person (the "indemnified
party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding
and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless: (i) the
indemnifying party and the indemnified party shall have
mutually agreed in writing to the retention of such counsel;
or (ii) the named parties to any such proceeding include both
the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified
party in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for the fees and expenses
of more than one separate firm (in addition to any local
counsel) for all such indemnified parties and that all such
fees and expenses shall be reimbursed as they are incurred.
Such firm shall be designated in writing by RBC DS in the case
of parties indemnified pursuant to Section 8(a), and by the
Company, in the case of parties indemnified pursuant to
Section 8(b). The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party from and against any
loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of
this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without
its written consent if: (i) such settlement is entered into
more than 45 days after receipt by such indemnifying party of
the aforesaid request; (ii) such indemnifying party shall have
received notice of the terms of such settlement at least 30
days prior to such settlement being entered into; and (iii)
such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party
and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all
liability on claims that are the subject matter of such
proceeding. Notwithstanding the second preceding sentence, if
at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees
and expenses of counsel, an indemnifying party shall not be
liable for any settlement effected without its consent if such
indemnifying party: (i) reimburses such indemnified party in
accordance with such request to the extent it considers such
request to be reasonable; and (ii) provides written notice to
the indemnified party substantiating the unpaid balance as
unreasonable, in each case prior to the date of such
settlement.
19
(d) To the extent the indemnification provided for in paragraph
(a) or (b) of this Section 8 is unavailable to an indemnified
party or insufficient in respect of any losses, claims,
damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or
liabilities: (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other hand from the
offering of the Shares; or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and of the Underwriters
on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other hand in
connection with the offering of the Shares shall be deemed to
be in the same respective proportions as the net proceeds from
the offering of the Shares (before deducting expenses)
received by the Company and the total underwriting discounts
and commissions received by the Underwriters, in each case as
set forth in the table on the cover of the Canadian Prospectus
and U.S. Prospectus, bear to the aggregate Purchase Price of
the Shares. The relative fault of the Company on the one hand
and the Underwriters on the other hand 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 by the Underwriters and
the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or
omission. The Underwriters' respective obligations to
contribute pursuant to this Section 8 are several in
proportion to the respective number of Shares they have
purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be
just or equitable if contribution pursuant to this Section 8
were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or
by any other method of allocation that does not take account
of the equitable considerations referred to in paragraph (d)
of this Section 8. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages
and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no
Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the
Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or
alleged omission. 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. The remedies provided for in this Section 8
are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at
law or in equity.
20
(f) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other
statements of the Company contained in this Agreement shall
remain operative and in full force and effect regardless of:
(i) any termination of this Agreement; (ii) any investigation
made by or on behalf of any Underwriter or any person
controlling any Underwriter, or the Company, its officers or
directors or any person controlling the Company; and (iii)
acceptance of and payment for any of the Shares.
21
9. TERMINATION.
(a) If the Company does not comply in all material respects with
the conditions hereof, and such non-compliance does or, in the
opinion of any of the Underwriters, would reasonably be
expected to prevent, restrict or otherwise adversely affect
the distribution of the Shares in accordance with the terms
hereof or, in the opinion of any of the Underwriters, would
reasonably be expected to impact adversely on the investment
quality or marketability of the Shares in any of the
jurisdictions in which the Shares may be sold under the terms
hereof, any Underwriter may terminate its obligations
hereunder by written notice to that effect given to the
Company on or prior to the time of closing on the Closing Date
(the "Closing Time") and in such event such Underwriter's
obligations shall be at an end. It is understood that the
Underwriters may waive in whole or in part non-compliance with
any of the conditions contained herein or extend the time for
compliance therewith without prejudice to such rights in
respect of any other condition or conditions or any other or
subsequent breach or non-compliance, provided that any such
waiver or extension shall be binding upon the Underwriters
only if the same is in writing.
(b) If, after the date hereof and prior to the Closing Time, there
shall occur any material adverse change (actual, anticipated,
contemplated or threatened, financial or otherwise) in the
business, affairs, operations, assets, liabilities (contingent
or otherwise), capital or control of the Company taken as a
whole (the "Condition of the Company") or the Underwriters
become aware of any undisclosed material adverse information
relating to Xxxxxxx, or other adverse material development
which, in the opinion of any of the Underwriters, acting
reasonably, would:
(i) have a material adverse effect on the value or market
price of the Shares or the investment quality or
marketability of the Shares or any other securities
of the Company, or
(ii) result in the purchasers of a material amount of the
Shares exercising their right under applicable
legislation to withdraw from their purchase of
Shares,
then each of the Underwriters shall be entitled, at its
option, to terminate its obligations under this Agreement by
written notice to that effect given to the Company at or prior
to the Closing Time.
(c) If at any time during the period commencing on the date hereof
and ending at the Closing Time there should develop, occur or
come into effect or existence any event, action, state,
condition or occurrence of national or international
consequence, including any act of terrorism, war or like
event, or any law or regulation, which in the opinion of any
of the Underwriters, acting reasonably, seriously adversely
affects, or involves, or would seriously adversely affect, or
involve, the Canadian, United States or international
financial markets or the Condition of the Company, each of the
Underwriters shall be entitled, at its option, to terminate
its obligations under this Agreement by written notice to that
effect given to the Company at or prior to the Closing Time.
(d) If after the date hereof and prior to the Closing Time, there
shall occur any change in any applicable securities laws,
rules, regulations or policies, or if any enquiry, action,
suit, investigation or other proceeding, whether formal or
informal, in relation to the Company
22
or the distribution of the Shares should be announced,
instituted or threatened or any order under or pursuant to any
laws or regulations of Canada or of any of the Qualifying
Provinces or of the United States or of any of the states
thereof or by any relevant stock exchanges or any other
regulatory or governmental authority should be made or issued
(except for any such order based upon the activities or the
alleged activities of the Underwriters and not of the Company)
which, in the reasonable opinion of any of the Underwriters,
operates to prevent or restrict the trading or the
distribution of the Shares or seriously adversely affects or
will seriously adversely affect the value or market price of
the Shares or the investment quality or marketability of the
Shares, each of the Underwriters shall be entitled, at its
option, to terminate its obligations under this Agreement by
written notice to that effect given to the Company at or prior
to the Closing Time.
(e) Any termination by any of the Underwriters pursuant to the
provisions hereof shall be effected by notice in writing
delivered or telecopied to Xxxxxxx at its address as herein
set forth. The rights of termination contained in Sections
(a), (b), (c) or (d) above are in addition to any other rights
or remedies the Underwriters may have in respect of any
default, misrepresentation, act or failure to act of the
Company in respect of any matters contemplated by this
Agreement. In the event of any such termination, there shall
be no further liability on the part of the Company or the
Underwriters except for any liability provided for in Sections
7 and 8 hereof.
10. UNDERWRITERS' OBLIGATIONS. The Underwriters' obligations to purchase
the Shares in accordance with this Agreement shall be several and not joint in
that each of the Underwriters shall severally be obligated to purchase only the
percentage of the aggregate number of Shares set opposite its name as follows:
RBC Dominion Securities Inc. 30%
CIBC World Markets Inc. 30%
BMO Xxxxxxx Xxxxx Inc. 10%
National Bank Financial Inc. 10%
TD Securities Inc. 10%
UBS Xxxxxxx Warburg Inc. 10%
If an Underwriter (a "Refusing Underwriter") does not complete the purchase and
sale of the Shares which that Underwriter has agreed to purchase under this
Agreement (other than in accordance with Section 9) (the "Defaulted Shares"),
RBC DS may delay the Closing Date for not more than five days and the remaining
Underwriters (the "Continuing Underwriters") will be entitled, at their option,
to purchase all but not less than all of the Defaulted Shares pro rata according
to the number of Shares to have been acquired by the Continuing Underwriters
under this Agreement or in any proportion agreed upon, in writing, by the
Continuing Underwriters. If no such arrangement has been made and the number of
Defaulted Shares to be purchased by the Refusing Underwriter(s) does not exceed
10% of the Shares, the Continuing Underwriters will be obligated to purchase the
Defaulted Shares on the terms set out in this Agreement in proportion to their
obligations under this Agreement. If the number of Defaulted Shares to be
purchased by Refusing Underwriters exceeds 10% of the Shares, the Continuing
Underwriters will not be obliged to purchase the Defaulted Shares and, if the
Continuing Underwriters do not elect to purchase the Defaulted Shares:
(a) the Continuing Underwriters will not be obliged to purchase
any of the Shares;
23
(b) the Company will not be obliged to sell less than all of the
Shares; and
(c) the Company will be entitled to terminate its obligations
under this Agreement arising from its acceptance of this offer
to purchase the Shares, in which event there will be no
further liability on the part of the Company or the Continuing
Underwriters, except pursuant to the provisions of Sections 7
and 8.
Nothing in this Agreement obliges the Company to sell under this
Agreement less than all the Offered Shares and any Additional Shares in respect
of which the Underwriters have exercised their option under Section 2 hereof, or
will relieve from responsibility to the Company under this Agreement any
Underwriter that has defaulted in its obligation to purchase its applicable
percentage of the aggregate number of such Shares to be sold hereunder.
11. COUNTERPARTS. This Agreement may be signed in two or more counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Province of
British Columbia and federal laws of
Canada applicable therein. All parties hereby attorn to the exclusive
jurisdiction of the courts of the Province of
British Columbia to settle all
disputes which may arise hereunder or in connection herewith.
13. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
14. NOTICES. All notices and other communications shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices shall, in the case of notice to Ballard, be
addressed and sent to 0000 Xxxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0,
Attention: Corporate Secretary (with a copy to Lang Xxxxxxxx, Suite 1500, 1055
West Georgia Street, Vancouver,
British Columbia, V6E 4N7, Attention: Xxxxxxx
Xxxxxxx) and, in the case of notice to the Underwriters, shall be addressed and
sent to RBC Dominion Securities Inc., 0000 - 000 Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, X0X 0X0, Attention: Xxxxxx X. Xxxxxxx (with a copy to Xxxxxx
Xxxxxx Gervais LLP, 1200 - 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X
0X0, Attention: Xxxxxxx X. Xxxxxx). Xxxxxxx and the Underwriters may change
their respective addresses for notices by notice given in the manner aforesaid.
15. REPRESENTATIVE OF UNDERWRITERS. The Underwriters agree that any
agreement, waiver, order, notice (other than a notice pursuant to Section 9),
direction, receipt or other action to be made, given or taken by the
Underwriters hereunder may be made or given by RBC DS on behalf of each of the
Underwriters.
16. TIME OF ESSENCE. Time shall be of the essence in this Agreement.
17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS SURVIVE CLOSING. The
representations, warranties and agreements herein contained shall survive the
purchase by the Underwriters of the Shares and shall continue in full force and
effect unaffected by any subsequent disposition of the Shares.
24
If the foregoing is in accordance with your understanding, will you
please confirm your acceptance by signing below in the place indicated.
Yours truly,
RBC DOMINION SECURITIES INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
Authorized Signatory
CIBC WORLD MARKETS INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------------
Authorized Signatory
BMO XXXXXXX XXXXX INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------------
Authorized Signatory
NATIONAL BANK FINANCIAL INC.
By: /s/ Xxxxx Xxxxxxxx
--------------------------------------------
Authorized Signatory
TD SECURITIES INC.
By: /s/ Xxxx X. Leversage
--------------------------------------------
Authorized Signatory
UBS XXXXXXX WARBURG INC.
By: /s/ Xxxxx X. Xxxx
--------------------------------------------
Authorized Signatory
25
XXXXXXX POWER SYSTEMS INC.
By: /s/ Xxxxx Xxxxx
-----------------------------------
Authorized Signatory
By: /s/ Xxxxxxx Xxxxx
-----------------------------------
Authorized Signatory
26
SCHEDULE I
LIST OF SIGNIFICANT SUBSIDIARIES
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION
------------------ -----------------------------
Xxxxxxx Generation Systems Inc. Canada
Xxxxxxx Power Systems AG Germany
Xxxxxxx Power Systems Corporation Delaware
Ballard Material Products Inc. Delaware
Xxxxxxx Capital Inc. Alberta
OPINION
SCHEDULE II
OPINION OF LANG XXXXXXXX AND SIDE LETTER
December o , 2002
RBC Dominion Securities Inc. Xxxxxx Xxxxxx Gervais LLP
CIBC World Markets Inc. 1200 - 000 Xxxxxxx Xxxxxx
BMO Xxxxxxx Xxxxx Inc. Vancouver, B.C.
National Bank Financial Inc. V7X 1T2
TD Securities Inc.
UBS Xxxxxxx Warburg Inc.
Dear Sirs:
XXXXXXX POWER SYSTEMS INC.
ISSUE OF o COMMON SHARES
We have acted as Canadian counsel to Xxxxxxx Power Systems Inc. (the
"Corporation") in connection with the issue by the Corporation and the purchase
by RBC Dominion Securities Inc., CIBC World Markets Inc., BMO Xxxxxxx Xxxxx
Inc., National Bank Financial Inc., TD Securities Inc. and UBS Xxxxxxx Warburg
Inc. (collectively, the "Underwriters") of o Common Shares (the "Shares")
pursuant to an
underwriting agreement (the "
Underwriting Agreement") dated
December o, 2002 among the Underwriters and the Corporation. This opinion is
delivered to you pursuant to Section 5(g) of the
Underwriting Agreement. All
capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the
Underwriting Agreement.
As such counsel, we have participated in the preparation of the following
documents and agreements:
(a) the executed
Underwriting Agreement; and
(b) the preliminary short form prospectus of the Corporation dated
December o, 2002 and the final short form prospectus of the
Corporation dated December o, 2002 (the "Canadian Final
Prospectus") as filed by the Corporation with the
British
Columbia Securities Commission (the "Reviewing Authority") and
the Canadian securities regulatory authorities (the
"Qualifying Authorities") of each of the other provinces of
Canada (together with
British Columbia, the "Qualifying
Provinces") relating to the offering of the Shares (the
"Canadian Final Prospectus and, together with the Canadian
Preliminary Prospectus are referred to herein as the "Canadian
Prospectus").
We have made such investigations and examined originals or copies, certified or
otherwise identified to our satisfaction, of public and corporate records,
documents and certificates of governmental authorities and officers of the
Corporation and of others as we have considered necessary or appropriate to
enable us to express the opinions hereinafter set forth, including:
(a) [LIST ALL CERTIFICATES OF PUBLIC OFFICIALS WHICH HAVE BEEN
EXAMINED - DEFINE BGS AND BCI];
2
(b) certificates of officers of the Corporation as to certain
factual matters (the "Officers' Certificates");
(c) (1) the registration statement on Form F-10 (Registration No.
333-o ) filed by the Corporation under the United States
Securities Act of 1933, as amended (the "Securities Act"),
with the United States Securities and Exchange Commission (the
"Commission") on December o, 2002; (2) Amendment No. 1 thereto
filed by the Corporation under the Securities Act with the
Commission on December o, 2002; and (3) copies of the related
prospectuses contained therein (the final prospectus dated
December o, 2002, including the documents incorporated by
reference therein, in the form in which it was filed by the
Corporation with the Commission under the Securities Act, is
hereinafter referred to as the "U.S. Prospectus");
(d) the conditional approval letter of the Toronto Stock Exchange
(the "Exchange") dated December o, 2002 (the "Approval
Letter"), pursuant to which the Exchange has accepted notice
of the distribution of the Shares and has approved the listing
of the Shares on the satisfaction of certain conditions (the
"Listing Conditions") specified in the Approval Letter;
(e) a specimen form of the certificate (the "Specimen
Certificate") for the common shares of the Corporation (the
"Common Shares");
(f) a global share certificate (the "Share Certificate")
representing the Shares; and
(g) a certificate of the registrar and transfer agent of the
Corporation (the "Transfer Agent's Certificate");
copies of which have been provided to you. In such examinations, we have
assumed, with your concurrence, the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
authentic, original documents of all documents submitted to us as copies and the
authority of all corporate and governmental signatories (other than officers and
directors of the Corporation). We have also considered such questions of law as
we have deemed relevant to enable us to express the opinions hereinafter set
forth.
In expressing the opinion set forth in paragraph 6 below, with respect to the
issued and outstanding share capital of the Corporation, we have, with your
concurrence, relied on the Transfer Agent's Certificate.
In expressing the opinion set forth in paragraph 7 below, we have, with your
concurrence, relied on copies of share registers and copies of share
certificates registered in the name of the Corporation.
In expressing the opinion set forth in paragraph 8, we have, with your
concurrence, relied on a certificate under section 77(3) of the Securities Act
(British Columbia) in respect of the Corporation [INSERT ONTARIO LANGUAGE].
Insofar as the opinions expressed in paragraphs 8, 14, 20 and 21, below, relate
to matters governed by laws other than the laws of British Columbia, Ontario or
the federal laws of Canada applicable therein, we have relied, with your
concurrence, solely upon opinions of local counsel in each applicable
jurisdiction as to the laws of such jurisdiction, copies of which opinions are
attached hereto. We have not independently considered the matters covered by the
opinions of local counsel on which we have relied to the extent necessary to
enable us to express the conclusions stated in such opinions and, accordingly,
we do not express any opinion on the matters contained in such opinions. We have
assumed
3
that all appropriate investigations and inquiries, whether or not referred to
expressly in such opinions, were made and conducted and that no matters were
disclosed as a result of such investigations and inquiries which might have
required a qualification to any such opinions. Subject to this qualification, we
believe that both you and we are entitled to rely on such opinions.
To the extent that any of the opinions of local counsel upon which we have
relied are based upon any assumption, are given in reliance on any certificate
or other document or are made subject to any limitation, qualification or
exception, our opinions given in reliance thereon are based on the same
assumptions, are given in reliance on the same certificate or document and are
subject to the same limitations, qualifications or exceptions. Except insofar as
we have relied on the opinions of local counsel and except insofar as our
opinions in paragraphs 8, 14, 20 and 21 extend to matters of Ontario law, the
opinions hereinafter expressed are based on the laws of British Columbia and the
federal laws of Canada applicable therein, in each case as in effect on the date
hereof.
In expressing the opinion in paragraph 14 and 16 we have, with your concurrence,
for the purposes of determining how the Reviewing Authority interprets and
applies such law, rules and regulations, reviewed only the written policies,
blanket orders and rulings of the Reviewing Authority and matters raised by the
staff of the Reviewing Authority in connection with the filing of the Canadian
Final Prospectus.
With respect to our opinion in paragraph 17 regarding the non-contravention of
the agreements and instruments listed in Appendix A hereto, such opinion is
based on the assumption that the governing law of each such agreement and
instrument, if other than British Columbia law, is, or would be interpreted as
being, the same as the laws of British Columbia.
The knowledge referred to in paragraphs 13, 15 and 17 below is derived solely
from the Officers' Certificates, and from a review of our own records maintained
in our Vancouver office and inquiries of our lawyers who we have determined, in
the ordinary course of their respective practices, to have knowledge of the
matters covered by those opinions. We have made no independent investigation to
verify the accuracy or completeness of our knowledge, and in particular, we have
not conducted searches in the public records of any court or any federal,
provincial or other governmental department, commission, board, agency or
instrumentality.
Based upon and subject to the foregoing and to the qualifications set forth
herein, we are of the opinion that:
1. The Corporation has been duly amalgamated under the laws of Canada, is
validly existing, has been neither discontinued nor dissolved, and has
sent to the Director appointed under the Canada Business Corporations
Act the annual returns and financial statements required to be sent to
the Director.
2. The Corporation has been duly registered as an extra-provincial company
under the Company Act (British Columbia).
3. (a) BGS has been duly incorporated under the laws of Canada,
is validly existing, has been neither discontinued nor
dissolved, and has sent to the Director appointed under the
Canada Business Corporations Act the annual returns and
financial statements required to be sent to the Director; and
(b) BCI has been duly incorporated under the laws of Alberta, is
validly existing, has been neither discontinued nor dissolved,
and has sent to the Director appointed under the
4
Alberta Business Corporations Act the annual returns and
financial statements required to be sent to the Director
4. Each of BGS and BCI has been duly registered as an extra-provincial
company under the Company Act (British Columbia).
5. Each of the Corporation, BGS and BCI is duly qualified to carry on
business and own property under the Company Act (British Columbia), and
each of the Corporation, BGC and BCI is duly qualified to carry on
business and own property under the laws of its jurisdiction of
incorporation. Each of the Corporation, BGS and BCI has the corporate
power and capacity to own or lease and operate its properties and
assets and carry on its business as described in the Canadian
Prospectus.
6. The Corporation has an authorized capitalization as set forth in the
Canadian Prospectus, and as of December o, 2002, there were issued and
outstanding o Common Shares, one Class A Share, and one Class B Share
of the Corporation.
7. The Corporation is the registered holder of o Class A Voting Common
Shares of BGS representing o% of the issued and outstanding Class A
Voting Common Shares, o% of the issued and outstanding voting common
shares and o% of all issued and outstanding shares of BGS.
[NOTE: ADD SAME OPINION FOR BCI]
8. The Corporation is a reporting issuer in the Province of British
Columbia and those of the Qualifying Provinces where the concept of a
reporting issuer exists and is not on the list of defaulting issuers
maintained by the Reviewing Authority or the relevant Qualifying
Authorities. [ADJUST TO ACTUAL LANGUAGE IN CERTIFICATES]
9. The Shares have been duly authorized and allotted for issuance and,
when issued and delivered in accordance with the terms of the
Underwriting Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be subject to
any pre-emptive or similar rights except as disclosed in the Canadian
Prospectus and the U.S. Prospectus.
10. Subject to the limitations and qualifications set out therein, the
summary under "Certain Income Tax Considerations - Certain Canadian
Federal Income Tax Information for United States Residents" in the
Canadian Prospectus and the U.S. Prospectus and the statements in the
Canadian Prospectus and the U.S. Prospectus under the heading
"Description of Share Capital", to the extent they constitute matters
of law or legal conclusions, have been reviewed by us and fairly
present the information disclosed therein in all material respects.
11. The Corporation has all necessary corporate power and capacity to issue
the Shares, to enter into the
Underwriting Agreement and to carry out
its obligations thereunder and the
Underwriting Agreement has been duly
authorized, executed and delivered by the Corporation and constitutes a
valid and binding agreement which is enforceable against the
Corporation in accordance with its terms except as rights to indemnity
and waiver of contribution thereunder may be limited under applicable
law, and subject to bankruptcy, insolvency and other similar laws of
general application affecting the enforcement of creditors' rights and
to the availability of equitable remedies being in the discretion of a
court of competent jurisdiction.
12. The Specimen Certificate has been duly approved by the directors of the
Corporation and is in compliance with all legal requirements related
thereto, including the requirements of the Canada
5
Business Corporations Act, the rules of the Exchange and the articles
and by-laws of the Corporation, and the Share Certificates have been
duly executed, issued and delivered by the Corporation and
countersigned by Computershare Trust Company of Canada.
13. To our knowledge, no order ceasing or suspending the distribution of
the Shares has been issued by any Canadian securities regulatory
authority and no proceeding for that purpose has been initiated or
threatened by any Canadian securities regulatory authority.
14. All necessary documents have been filed, all requisite proceedings have
been taken and all approvals, permits, consents and authorizations of
the appropriate regulatory authorities have been obtained by the
Corporation under the securities laws of the Province of British
Columbia and each of the Qualifying Provinces to qualify the Shares for
distribution to the public in the Province of British Columbia and each
of the Qualifying Provinces through persons or companies who are
registered in an appropriate category of registration under the
securities laws of the Province of British Columbia and each of the
Qualifying Provinces and who have complied with the relevant provisions
of such applicable laws.
15. To our knowledge, there are no legal or governmental proceedings
pending or threatened to which the Corporation or any of its
Significant Subsidiaries is a party or to which any of the properties
of the Corporation or any of its Significant Subsidiaries is subject
that are required to be described in the Canadian Prospectus and are
not so described.
16. There are no reports or other information that in accordance with the
requirements of the Reviewing Authority must be made publicly available
in connection with the offering of the Shares that have not been made
publicly available as required.
17. The execution and delivery by the Corporation of, and the performance
by the Corporation of its obligations under, the
Underwriting Agreement
will not contravene any provision of the Canada Business Corporations
Act or of applicable laws of British Columbia or the federal laws of
Canada applicable therein or conflict with or result in a breach or
default under the articles of amalgamation or by-laws of the
Corporation or any agreement or other instrument listed in Appendix A
or, to the best of our knowledge, any judgment, order or decree of any
Canadian federal body or British Columbia governmental agency or court
having jurisdiction over the Corporation and no consent, approval,
authorization or order of, or qualification with, any Canadian federal
or British Columbia governmental body or agency is required for the
performance by the Corporation of its obligations under the
Underwriting Agreement, except such as may be required by the Exchange.
18. The Shares have been conditionally approved for listing on the Exchange
and, subject to the satisfaction of the Listing Conditions, no filing,
proceeding, approval, consent or authorization is required to be made,
taken or obtained from the Exchange in connection with the issuance or
sale of the Shares.
19. The Shares, when issued and delivered to the Underwriters against
payment therefore as provided by the Underwriting Agreement, are, at
the date of such delivery, investments which are qualified investments
under the Income Tax Act (Canada) for trusts governed by registered
retirement savings plans, registered retirement income funds and
deferred profit sharing plans. In addition, the Shares will not be
"foreign property" within the meaning of the Income Tax Act (Canada).
6
20. Subject to compliance with the prudent investment standards and general
investment provisions of the statutes referred to below, (and, where
applicable the regulations thereunder) and, in certain cases, subject
to the satisfaction of additional requirements relating to investment
or lending policies, procedures or goals, the Shares are, at the date
hereof, not precluded as investments under the following statutes:
(a) Insurance Companies Act (Canada);
(b) Trust and Loan Companies Act (Canada);
(c) Pension Benefits Standards Act, 1985 (Canada);
(d) Financial Institutions Act (British Columbia);
(e) Pension Benefits Standards Act (British Columbia)
(f) Loan and Trust Corporations Act (Alberta);
(g) Employment Pension Plans Act (Alberta);
(h) Insurance Act (Alberta);
(i) The Pension Benefits Act, 1992 (Saskatchewan)
(j) The Pension Benefits Act (Manitoba);
(k) The Insurance Act (Manitoba);
(l) Loan and Trust Corporations Act (Ontario);
(m) Pension Benefits Act (Ontario);
(n) The Trustee Act (Ontario); and
(o) Pension Benefits Act (Nova Scotia).
21. The Shares are, at the date hereof, investments in which:
(a) the provisions of an Act Respecting Trust Companies and
Savings Companies (Quebec) would not preclude investment, at
the date of original issue, by a trust or savings company, in
each case as defined under such Act (other than a trust
company with respect to funds (except deposits) which it
administers for other persons), subject to compliance with
the prudent investment standards contained in such Act and
subject to the specific provisions of Division VI of Chapter
15 of such Act applicable to a Quebec company, including the
adoption of and adherence to an investment policy approved by
its board of directors;
(b) the provisions of An Act Respecting Insurance (Quebec) would
not preclude investment, at the date of original issue, by an
insurer, as defined in such Act, incorporated under the laws
of the Province of Quebec, other than a guarantee fund
corporation, subject to the prudent investment criteria found
in such Act; and
7
(c) the provisions of the Supplemental Pension Plans Act (Quebec)
and the regulations thereunder would not preclude the assets
of a pension plan registered thereunder from being invested,
provided that such investment complies with the prudent
investment standards of such Act and provided that where a
written investment policy as prescribed by such Act has been
established and adopted by the pension committee for such
pension plan, the investment in the shares of the
Corporation, if selected by such pension committee or
delegate thereof, must, in addition, be made in conformity
with the aforesaid investment policy at the date of original
issue,
subject, in each case, to the general investment provisions and
restrictions found in such legislation including, without limitation,
applicable quantitative limitations.
22. Computershare Trust Company of Canada has been duly appointed as
transfer agent and registrar for the Common Shares, to carry out such
functions at its principal transfer offices in Vancouver and Toronto.
This opinion is delivered to the addressees pursuant to the Corporation's
request in connection with the closing of the above referenced transaction and
may be relied upon by the addressees in connection therewith but not by any
other person or entity or by anyone for any other purpose, nor it may be copied
or quoted by persons other than the addressees, or distributed to persons other
than addresses without our prior written consent. Notwithstanding the foregoing,
Xxxxxx Xxxxxx Xxxxxxx LLP may rely on this opinion for purposes of giving its
opinions to the Underwriters in accordance with the requirements of the
Underwriting Agreement.
Yours very truly,
8
APPENDIX A
Alstom Xxxxxxx GmbH ABG
Alstom Canada Inc. ACI
Alstom France SA AF
Alstom GmbH AG
Alstom Energietechnik GmbH AEG
Alstom Holdings XX
Xxxxxxx Power Corporation BPC
Xxxxxxx Power Systems Inc. BPS
Ballard Generation Systems Inc. BGS
Xxxxxxx Powermate Inc. Xxxxxxx
Daimler Chrysler AG DCX
Daimler Chrysler North America Holding Corporation DCX NA
DBF Pref Share Holdings Inc. DBF
DCX Holdco Inc. DCX Holdco
Ebara Xxxxxxx Corporation EBC
Ebara Corporation Ebara
Ecostar Electric Drive Company, L.L.C. ECO
Ford Electric Drive Holdings Company Ford Electric
Ford Global Technologies Inc. Ford Global
Ford Motor Company Ford
Graftech Inc. Graftech
GPU International, Inc. GPUI
GPU Diversified Holdings LLC GPUDH
Honda R&D Co. Ltd. Honda
Idatech LLC Idatech
Xxxxxxx Xxxxxxx Public Limited Company Xxxxxxx Matthey
Microcoating Technologies Inc. MTC
Questair Technologies Inc. QT
Tokyo Gas Co., Ltd. Tokyo Gas
UCAR Carbon Company Ltd. UCAR
Victrex PLC VTX
Xcellsis AG Xcellsis
APPENDIX A
AGREEMENTS & INSTRUMENTS
AGREEMENTS & INSTRUMENTS
1.0 VEHICULAR ALLIANCE AGREEMENTS
1.1 Acquisition and Plan of Merger Agreement made October 2, 2001 among
BPS, BPC, DCX, DCX NA, DCX Holdco, Xxxx, Xxxx Global, Ford Electric and
DBF.
1.2 Third Alliance Agreement made November 30, 2001 among BPS, DCX, Ford
and DBF.
1.3 DBF Share Purchase Agreement made November 30, 2001 among BPS, DCX,
Ford and DBF.
1.4 Third Settlement Agreement made November 30, 2001 among BPS, DCX, DCX
NA, Xxxx, Xxxx Global and DBF.
1.5 Forward Exchange Agreement made November 30, 2001 between DCX and BPS.
2.0 STATIONARY ALLIANCE AGREEMENTS
2.1 BGS Shareholders' Agreement made December 1, 1998 among BPS, GPUI, ACI,
Ebara and BGS with GPUDH, through a reorganization, assuming the
obligations of GPUI thereunder
2.2 Alstom BGS Shareholders' Agreement made May 29, 1998 between AG and BGS
2.3 Registration Rights Agreement made December 1, 1998 among BPS, GPUI,
ACI, Ebara and BGS with GPUDH, through a reorganization, assuming the
obligations of GPUI thereunder
2.4 Second Master License Agreement made May 29, 1998 among BPS, BGS, ACI,
AEG, ABG and GEC ALSTHOM N.V. with AH subsequently, through a series of
reorganizations, assuming the obligations of GEC ALSTHOM N.V.
thereunder
2.5 Alliance Agreement made December 1, 1998 among BPS, BGS, AF, ACI, AG,
AEG, ABG, Ebara and EBC with AH, subsequently, through a series of
reorganization, assuming the obligations of AF thereunder
2.6 EBC Shareholders' Agreement made December 1, 1998 among BGS, Ebara and
EBC
2.7 Third Master License Agreement made December 1, 1998 among BPS, BGS,
Ebara and EBC
2.8 Consolidated Amending Agreement made December 12, 2001 among BPS, BGS,
Ebara and EBC
3.0 OTHER AGREEMENTS
3.1 Supply Agreement made October 26, 1998 between Xxxxxxx Matthey and BPS
3.2 Second Generation Umbrella Collaboration Agreement made March 12, 1997
between Xxxxxxx Xxxxxxx and BPS
3.3 Collaboration Agreement made January 7, 2000 between BPS and Xxxxxxx
10
APPENDIX A
AGREEMENTS & INSTRUMENTS
3.4 Amending Agreement to Shareholders Agreement dated September 22, 2000
between QT, BPS, Adwest Limited Partnership, Environtech Investment
Fund 1 Limited Partnership, Energy Capital Innovation Limited
Partnership, Bank of Montreal Capital Corporation, Ventures West VI
Limited Partnership, Working Opportunity Fund (EVCC) Ltd. and BOC
Canada Limited and certain other persons, as further amended by an
Amending Agreement dated March 20, 2001.
3.5 Alliance Agreement made January 19, 2001 between BPS and VTX
3.6 Joint Development and Collaboration Agreement made June 5, 2001 among
BPS, Graftech and UCAR
3.7 Amended and Restated Joint Development Agreement made July 9, 2002
between BPS and QT
3.8 Supply Agreement made [December 2, 2002] between BPS and Honda
11
SIDE LETTER
December o , 2002
RBC Dominion Securities Inc.
CIBC World Markets Inc.
BMO Xxxxxxx Xxxxx Inc.
National Bank Financial Inc.
TD Securities Inc.
UBS Xxxxxxx Warburg Inc.
Dear Sirs:
XXXXXXX POWER SYSTEMS INC.
ISSUE OF o COMMON SHARES
We have acted as Canadian counsel to Xxxxxxx Power Systems Inc. (the
"Corporation") in connection with the issue by the Corporation and the purchase
by RBC Dominion Securities Inc., CIBC World Markets Inc., BMO Xxxxxxx Xxxxx
Inc., National Bank Financial Inc., TD Securities Inc. and UBS Xxxxxxx Warburg
Inc. (collectively, the "Underwriters") of o Common Shares (the "Shares") of the
Corporation pursuant to an underwriting agreement (the "Underwriting Agreement")
dated December o, 2002 among the Underwriters and the Corporation. This report
is delivered to you pursuant to Section 5(g) of the Underwriting Agreement.
As such counsel, we have participated in the preparation of the preliminary
short form prospectus of the Corporation dated December o, 2002 and the final
short form prospectus of the Corporation dated December o, 2002 (the "Canadian
Prospectus") as filed by the Corporation with the British Columbia Securities
Commission and the Canadian securities regulatory authorities of each of the
other provinces of Canada relating to the offering of the Shares.
We attended meetings (in person and by telephone) with officers and other
representatives of the Corporation, representatives of the Corporation's
auditors, representatives of the Underwriters, and with counsel for and other
advisors to the foregoing parties, at which meetings the contents of the
Canadian Prospectus were discussed.
We are not passing upon and shall not be responsible or liable in any way for
the accuracy, completeness or fairness of any information contained or
incorporated by reference in the Canadian Prospectus except as set forth in
paragraph 10 of our opinion dated December o, 2002.
Any reference herein to our knowledge is to the knowledge of our lawyers who
have been engaged in our representation of the Corporation. We have not
conducted any independent investigation or verification or undertaken any other
action to confirm the accuracy, completeness or fairness of the information
contained or incorporated by reference in the Canadian Prospectus. In the course
of our activities, we have relied upon statements made and documents and other
materials furnished by officers and other representatives of the Corporation. It
is further understood that we have not been requested to and do not make any
comment with respect to the financial statements (and the notes and schedules
thereto and reports thereon), supplementary information relating thereto, or any
other financial data or financial information included or incorporated by
reference in the Canadian Prospectus. References herein to
"material fact" and "misrepresentation" are to those terms as defined in Section
1(1) of the Securities Act (British Columbia). Determining materiality and
whether or not a fact is a material fact or there has been a misrepresentation
is a factual matter, not a legal matter, requiring expertise on the effect
information would have on the market price or value of the Shares and an
investor's decision to purchase Shares. We do not have such expertise. Our
expression of belief set out herein with respect to the materiality of facts
which have come to our attention is based upon our experience in practising
British Columbia securities law and should not be interpreted as an expert
comment with respect to statistical, technical or financial facts or the impact
of any facts on market prices or values of securities.
We are not qualified to and shall not be taken to be passing on the compliance
of the Canadian Prospectus with, or any other matter relating to, the securities
laws or other laws of the United States or any state thereof.
We wish to advise you that we do not act as counsel to the Corporation with
respect to environmental or intellectual property matters.
Based on and subject to the foregoing, we confirm that: (i) no facts have come
to our attention in the course of our review as counsel for the Corporation
which lead us to believe that the Canadian Prospectus on the date thereof or the
date hereof contained or contains an untrue statement of a material fact, or
omitted or omits to state a material fact necessary in order to make the
statements therein not misleading, in light of the circumstances under which
they were made; and (ii) we have no reason to believe that the Canadian
Prospectus is not appropriately responsive in all material respects to the form
requirements of the securities laws, rules and regulations of the Province of
British Columbia.
Yours very truly,
13
SCHEDULE III
CRAVATH, SWAINE & XXXXX OPINION
December o , 2002
Xxxxxxx Power Systems Inc.
Shares of Common Stock
Ladies and Gentlemen:
We have acted as special United States counsel for Xxxxxxx Power
Systems Inc., a corporation organized under the Canada Business Corporations Act
(the "Company"), in connection with the purchase by RBC Dominion Securities
Inc., CIBC World Markets Inc., BMO Xxxxxxx Xxxxx Inc., National Bank Financial
Inc., TD Securities Inc. and UBS Xxxxxxx Warburg Inc. (collectively, the
"Underwriters"), from the Company of o shares (the "Shares") of common stock, no
par value (the "Common Stock"), of the Company, pursuant to an underwriting
agreement (the "Underwriting Agreement"), dated December o, 2002, among the
Company and the Underwriters.
In that connection, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of such documents, corporate records
and other instruments as we have deemed necessary or appropriate for the
purposes of this opinion, including: (a) the Registration Statement on Form F-10
(Registration No. 333-o) filed with the Securities and Exchange Commission (the
"Commission") on December o , 2002, and Amendment No. 1 thereto filed with the
Commission on December o, 2002, with respect to the registration of the Shares
under the Securities Act of 1933 (the "Securities Act") (such Registration
Statement, as amended by such Amendment, including the final U.S. Prospectus
dated December o, 2002, forming a part thereof (the "U.S. Prospectus"), being
hereinafter referred to as the "Registration Statement"); (b) the U.S.
Prospectus; (c) an appointment of agent for service of process on the Company on
Form F-X in conjunction with the filing of the Registration Statement; and (d)
the Underwriting Agreement.
Based on the foregoing, we are of opinion as follows:
1. The Registration Statement has become effective under the
Securities Act and the Form F-X was filed with the Commission prior to
the effectiveness of the Registration Statement; and, to our knowledge,
no stop order suspending the effectiveness of the Registration
Statement has been issued and, to our knowledge, no proceedings for
that purpose have been instituted or are pending or are contemplated
under the Securities Act.
2. The statements made in the U.S. Prospectus under the
headings "Certain Income Tax Considerations-Certain United States
Federal Income Tax Information for United States Residents" and
"Underwriting", to the extent that the foregoing statements constitute
matters of law or legal conclusions have been reviewed by us and fairly
present the information disclosed therein in all material respects.
3. The execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Underwriting
Agreement will not contravene any
provision of applicable United States Federal or New York State law or,
to the best of our knowledge, any judgment, order or decree of any
United States Federal or New York State governmental body, agency or
court having jurisdiction over the Company, and no consent, approval,
authorization or order of, or qualification with, any United States
Federal or New York State governmental body or agency is required for
the issue and sale of the Shares or for the performance by the Company
of its obligations under the Underwriting Agreement, except such as may
be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares.
We are admitted to practice in the State of New York, and we express no
opinion as to any matters governed by any law other than the law of the State of
New York and the Federal law of the United States of America. We do not purport
to pass on any matter governed by the laws of Canada or any province thereof.
At the request of the Company, we are furnishing this opinion on to
you, as Representatives, solely for your benefit and the benefit of the several
Underwriters. This opinion may not be relied upon by any other person or for any
other purpose or used, circulated, quoted or otherwise referred to for any other
purpose.
Very truly yours,
RBC Dominion Securities Inc.
CIBC World Markets Inc.
BMO Xxxxxxx Xxxxx Inc.
National Bank Financial Inc.
TD Securities Inc.
UBS Xxxxxxx Warburg Inc.
In care of RBC Dominion Securities Inc.
3100 - 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
XXXXXX
2
December o , 2002
Xxxxxxx Power Systems Inc.
Shares of Common Stock
Ladies and Gentlemen:
We have acted as special United States counsel for Xxxxxxx Power
Systems Inc., a corporation organized under the Canada Business Corporations Act
(the "Company"), in connection with the purchase by RBC Dominion Securities
Inc., CIBC World Markets Inc., BMO Xxxxxxx Xxxxx Inc., National Bank Financial
Inc., TD Securities Inc. and UBS Xxxxxxx Warburg Inc. (collectively, the
"Underwriters"), from the Company of o shares (the "Shares") of common stock, no
par value (the "Common Stock"), of the Company, pursuant to an underwriting
agreement (the "Underwriting Agreement"), dated December o, 2002, among the
Company and the Underwriters.
In that capacity, we participated in conferences with certain officers,
of, and with the accountants and Canadian counsel for, the Company and with
representatives and counsel of the Underwriters concerning the preparation of
(a) the Registration Statement on Form F-10 (Registration No. 333-o) filed with
the Securities and Exchange Commission (the "Commission") on December o, 2002,
and Amendment No. 1 thereto filed with the Commission on December o, 2002, with
respect to the registration of the Shares under the Securities Act of 1933 (the
"Securities Act") (such Registration Statement, as amended by such Amendment,
including the final U.S. Prospectus dated December o , 2002, forming a part
thereof (the "U.S. Prospectus"), being hereinafter referred to as the
"Registration Statement"); and (b) the U.S. Prospectus. The documents
incorporated by reference in the Registration Statement and the U.S. Prospectus
were prepared and filed by the Company without our participation.
Although we have made certain inquiries and investigations in
connection with the preparation of the Registration Statement and the U.S.
Prospectus, the limitations inherent in the role of outside counsel are such
that we cannot and do not assume responsibility for the accuracy or completeness
of the statements made in the Registration Statement and U.S. Prospectus, except
insofar as such statements relate to us and except to the extent set forth in
paragraph 2 of our opinion to you dated the date hereof. Subject to the
foregoing, we confirm to you, on the basis of the information gained in the
course of the performance of the services rendered above, that the Registration
Statement, at the time the Registration Statement became effective, and the U.S.
Prospectus, as of the date hereof (in each case except for the financial
statements and related schedules and other information of an accounting or
financial nature included therein or omitted therefrom, as to which we do not
express any view), appeared or appears on its face to be appropriately
responsive in all material respects to the requirements of the Securities Act
and the applicable rules and regulations of the Commission thereunder.
Furthermore, subject to the foregoing, we hereby advise you that our work in
connection with this matter did not disclose any information that gave us reason
to believe that the Registration Statement, at the time the Registration
Statement became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the U.S. Prospectus, at the
date hereof, includes an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading (in each case except for
the financial statements and related schedules and other information of an
accounting or financial nature included therein or omitted therefrom and matters
related to the laws of Canada or any province thereof, as to which we do not
express any view).
3
At the request of the Company, we are furnishing this letter to you, as
Representatives, solely for the benefit of the several Underwriters. This letter
may not be relied upon by any other person or for any other purpose or used,
circulated, quoted or otherwise referred to for any other purposes.
Very truly yours,
RBC Dominion Securities Inc.
CIBC World Markets Inc.
BMO Xxxxxxx Xxxxx Inc.
National Bank Financial Inc.
TD Securities Inc.
UBS Xxxxxxx Warburg Inc.
In care of RBC Dominion Securities Inc.
3100 - 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
XXXXXX
4
