EXHIBIT 3.1
Hydrogenics Corporation
[11,000,000] Common Shares plus an option to purchase from the Company
up to [1,650,000] additional Common Shares to cover over-allotments
Underwriting Agreement
New York, New York
January [o], 2004
Citigroup Global Markets Inc.
National Bank Financial Inc.
TD Securities Inc.
As Representatives of the several Underwriters,
Citigroup Global Markets Canada Inc.
As Sub-Underwriter,
c/o Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Hydrogenics Corporation, a corporation organized under the federal laws
of Canada (the "Company"), proposes to sell to the several underwriters named in
Schedule I hereto (the "Underwriters"), for whom you (the "Representatives") are
acting as representatives, [11,000,000] common shares ("Common Shares") of the
Company (said shares to be issued and sold by the Company being hereinafter
called the "Underwritten Securities"). The Company also proposes to grant to the
Underwriters an option to purchase up to [1,650,000] additional Common Shares to
cover over-allotments (the "Option Securities"; the Option Securities, together
with the Underwritten Securities, being hereinafter called the "Securities"). To
the extent there are no additional Underwriters listed on Schedule I other than
you, the term Representatives as used herein shall mean you, as Underwriters,
and the terms Representatives and Underwriters shall mean either the singular or
plural as the context requires. Any reference herein to the Registration
Statement, a preliminary prospectus, the Final Prospectuses or the Prospectuses
shall be deemed to refer to and include the documents incorporated, or deemed to
be incorporated, by reference therein and any reference herein to the terms
"amend", "amendment" or "supplement" with respect to the Registration Statement,
any preliminary prospectus, the Final Prospectuses or the Prospectuses shall be
deemed to refer to and include the filing of any document incorporated or deemed
to be incorporated therein by reference. Certain terms used herein are defined
in Section 19 hereof.
1. Representations and Warranties. The Company represents and warrants
to, and agrees with, each Underwriter and Sub-Underwriter, as defined in Section
2(c) hereof, as set forth below in this Section 1.
(a) The Company is eligible under Canadian Securities Laws to file a
short form prospectus with the Reviewing Authority under National Instrument
44-101 - Short Form Prospectus Distributions and is eligible to use the PREP
Procedures and meets the general eligibility requirements for the use of Form
F-10 under the Act; the Company has identified the Ontario Securities Commission
(the "Reviewing Authority") as its principal regulator in respect of the
offering of the Securities pursuant to National Policy 43-201 - Mutual Reliance
Review System for Prospectuses and Annual Information Forms (the "MRRS"); the
Company has prepared and filed with the applicable securities regulatory
authority in each of the Canadian Jurisdictions (collectively, the "Canadian
Authorities") under the MRRS and in conformity in all material respects with
applicable Canadian Securities Laws, the Canadian Preliminary Prospectus and the
Canadian Final Prospectus and a MRRS Decision Document for each of the Canadian
Preliminary Prospectus and the Canadian Final Prospectus has been obtained.
(b) The Company has prepared and filed with the Commission a
registration statement (file number 333-111801) on Form F-10, including a
related preliminary prospectus (which consists of the Canadian Preliminary
Prospectus with such deletions therefrom and additions thereto as are permitted
or required by Form F-10 and the applicable rules and regulations of the
Commission) (the "U.S. Preliminary Prospectus"), covering the registration of
the Securities under the Act. The Company has filed with the Commission an
amendment to such registration statement including the final prospectus (which
shall include the Canadian Final Prospectus with such deletions therefrom and
additions thereto as are permitted or required by Form F-10 and the applicable
rules and regulations of the Commission) (the "U.S. Final Prospectus"). The
Company has included in such filing, as amended at the Effective Date, all
information required by the Act and the rules thereunder to be included in such
registration statement and the U.S. Prospectus. The Registration Statement has
become effective under the Act and no stop order suspending the effectiveness of
the Registration Statement has been issued under the Act and no proceedings for
that purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission and any request on the part of the
Commission for additional information has been complied with.
(c) The Canadian Preliminary Prospectus and the Canadian Final
Prospectus, as of the respective times of filing thereof, on the Closing Date,
and on any date on which Option Securities are purchased, if such date is not
the Closing Date (a "settlement date") did not and the Canadian Supplemented
Prospectus, at the time of filing, will not (i) include a misrepresentation, and
(ii) include any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading and the Canadian
Preliminary Prospectus and the Canadian Final Prospectus, as of the respective
times of filing thereof, constituted and the Canadian Supplemented Prospectus
will constitute, full, true and plain disclosure of all material facts relating
to the Securities and to the Company; provided however, that the Company makes
no representations or warranties as to the information contained in or omitted
from the Canadian Preliminary Prospectus, the Canadian Final Prospectus and the
Canadian Supplemented Prospectus, as applicable, in reliance upon and in
conformity with information furnished in
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writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion in the Canadian Preliminary
Prospectus, the Canadian Final Prospectus or the Canadian Supplemented
Prospectus.
(d) On the Effective Date, the Registration Statement did, and when the
U.S. Supplemented Prospectus is first filed in accordance with General
Instruction II.L of Form F-10 and on the Closing Date and on any settlement
date, the U.S. Prospectus (and any supplements thereto) will, comply in all
material respects with the applicable requirements of the Act and the Exchange
Act; on the Effective Date, the Closing Date, any settlement date and when the
U.S. Supplemented Prospectus is first filed in accordance with General
Instruction II.L of Form F-10, the U.S. Prospectus conformed and will conform to
the Canadian Prospectus except for such deletions therefrom and additions
thereto as are permitted or required by Form F-10 and the applicable rules and
regulations of the Commission; on the Effective Date and at the Execution Time,
the Registration Statement did not or will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading; and, on the
Effective Date and the date of any filing pursuant to General Instruction II.L
of Form F-10 and on the Closing Date and any settlement date, the U.S.
Prospectus (together with any supplement thereto) will not, include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the Company makes no
representations or warranties as to the information contained in or omitted from
the Registration Statement or the Prospectus (or any supplement thereto) in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion in the Registration Statement or the Prospectus (or
any supplement thereto).
(e) Each of the Company and its subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is incorporated or organized with full power and
authority (corporate or other) to own or lease, as the case may be, and to
operate its properties and conduct its business as described in the
Prospectuses, and is duly qualified to do business as an extra-provincial or
foreign corporation and is in good standing under the laws of each jurisdiction
which requires such qualification except for such failures to be qualified or in
good standing as could not reasonably be expected to have a Material Adverse
Effect on the Company.
(f) All the outstanding shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued and are fully paid
and non-assessable, and, except as otherwise set forth in the Prospectuses, all
outstanding shares of capital stock of such subsidiary are owned by the Company
either directly or through wholly owned subsidiaries free and clear of any
perfected security interest or any other security interests, claims, liens or
encumbrances.
(g) This Agreement has been duly authorized, executed and delivered by
the Company.
(h) The Company's authorized equity capitalization is as set forth in
the Prospectuses; the share capital of the Company conforms in all material
respects to the
3
description thereof contained in the Prospectuses; the outstanding Common Shares
have been duly and validly authorized and issued and are fully paid and
non-assessable; the Securities have been duly and validly authorized, and, when
issued and delivered to and paid for by the Underwriters pursuant to this
Agreement, will be fully paid and non-assessable; the Securities are duly
listed, and admitted and authorized for trading, subject to official notice of
issuance, on the Nasdaq National Market and have been conditionally approved for
listing on the Toronto Stock Exchange; the certificates for the Securities
comply with all applicable provisions of the CBCA; the Securities conform to all
statements relating thereto in the Final Prospectuses and such description
conforms to the rights set forth in the instruments defining the same; the
holders of outstanding shares in the capital of the Company are not entitled to
preemptive or other rights to subscribe for the Securities, except as described
in the Prospectuses, which rights have been waived; and, except as set forth in
the Prospectuses, no options, warrants or other rights to purchase, agreements
or other obligations to issue, or rights to convert any obligations into or
exchange any securities for, any shares in the capital of the Company or
ownership interests in the Company are outstanding.
(i) There are no reports or information that in accordance with the
requirements of the Canadian Authorities must be made publicly available in
connection with the offering of the Securities that have not been made publicly
available as required; there are no documents required to be filed as of the
date hereof with the Canadian Authorities or with any other Canadian securities
regulatory authority in connection with the Canadian Preliminary Prospectus or
the Canadian Prospectus that have not been filed as required; there is no
franchise, contract or other document of a character required to be described in
the Registration Statement or Prospectuses, or to be filed as an exhibit
thereto, which is not described or filed as required; and the statements in the
Prospectuses under the headings, "Risk Factors - Risk Factors Related To This
Offering - If at any time we qualify as a passive foreign investment company
under United States tax laws, our shareholders may be subject to adverse tax
consequences," "Risk Factors - Risk Factors Related To This Offering - U.S.
investors may not be able to enforce U.S. civil liability judgments against us
or our directors, controlling persons and officers," "Income Tax Consequences,"
and "Shares Eligible for Future Sale", the statements in the Registration
Statement under "Directors' and Officers' Indemnification" and the statements in
the Canadian Prospectus under the heading "Eligibility for Investment" insofar
as such statements summarize legal matters, agreements, documents, or
proceedings discussed therein, are accurate in all material respects and fairly
summarize the matters therein described.
(j) The Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as described
in the Prospectuses, will not be an "investment company" as defined in the
Investment Company Act of 1940, as amended.
(k) No consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection with the
transactions contemplated herein, except such as have been obtained under the
Act, applicable Canadian Securities Laws and such as may be required under the
securities or blue sky laws of any jurisdiction in the United States or Canada
in connection with the purchase and distribution of the Securities by the
Underwriters in the manner contemplated herein and in the Prospectuses.
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(l) Neither the issue and sale of the Securities nor the consummation
of any other of the transactions herein contemplated nor the fulfillment of the
terms hereof will conflict with, result in a breach or violation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, (i) the articles or by-laws of the Company
or any of its subsidiaries, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the Company or any of its
subsidiaries is a party or bound or to which its or their property is subject,
or (iii) any statute, law, rule, regulation, judgment, order or decree
applicable to the Company or any of its subsidiaries of any court, regulatory
body, administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or any of its subsidiaries or any of its or
their properties except in the case of clauses (ii) and (iii) above, for such
conflicts, breaches, violations, liens, charges or encumbrances as could not
reasonably be expected to have a Material Adverse Effect on the Company.
(m) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement or the
Prospectuses.
(n) The consolidated historical financial statements and schedules of
the Company included and incorporated by reference in the Prospectuses and the
Registration Statement present fairly in all material respects the financial
condition, results of operations and cash flows of the Company and its
subsidiaries as of the dates and for the periods indicated, comply as to form
with the applicable accounting requirements of the Act and Exchange Act and have
been prepared in conformity with generally accepted accounting principles in
Canada applied on a consistent basis throughout the periods involved (except as
otherwise noted therein). The consolidated financial statements, including the
notes thereto, included and incorporated by reference in the Registration
Statement and Prospectuses have been reconciled to United States generally
accepted accounting principles in accordance with the Act, including the
requirements of Form F-10. The selected financial data set forth under the
caption "Selected Financial Data" in the Prospectuses and Registration Statement
fairly present, on the basis stated in the Prospectuses and the Registration
Statement, the information included therein.
(o) The historical financial statements and schedules of the Greenlight
Power Technologies, Inc. ("Greenlight") included in the Prospectuses and the
Registration Statement present fairly in all material respects the financial
condition, results of operations and cash flows of Greenlight as of the dates
and for the periods indicated, and have been prepared in conformity with
generally accepted accounting principles in Canada.
(p) The unaudited pro forma loss per share information and the
unaudited pro forma combined statement of operations of the Company and the
related notes thereto included in the Prospectuses and the Registration
Statement present fairly in all material respects the pro forma combined results
of operations of the Company for the period indicated after giving effect to the
transactions and assumptions described therein and do not contain a
misrepresentation. Such unaudited pro forma combined statement of operations has
been compiled in accordance with rules and guidelines set forth under Canadian
Securities Laws with respect to the preparation of pro forma financial
statements and the assumptions used in the preparation thereof
5
are reasonable and the adjustments used therein are appropriate to give effect
to the transactions and assumptions referred to therein;
(q) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its subsidiaries or its or their property is pending or, to the best
knowledge of the Company, threatened that (i) could reasonably be expected to
have a material adverse effect on the performance of this Agreement or the
consummation of any of the transactions contemplated hereby or (ii) could
reasonably be expected to have a Material Adverse Effect on the Company, except
as set forth in or contemplated in the Prospectuses (exclusive of any supplement
thereto).
(r) Each of the Company and its subsidiaries owns or leases all such
properties as are necessary to the conduct of its operations as currently
conducted.
(s) Neither the Company nor any subsidiary is in violation or default
of (i) any provision of its articles or bylaws, (ii) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument to which it is a
party or bound or to which its property is subject, or (iii) any statute, law,
rule, regulation, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or such subsidiary or any of its properties, as
applicable except, in the case of clauses (ii) and (iii) above, for such
violations or defaults as could not reasonably be expected to have a Material
Adverse Effect on the Company.
(t) PricewaterhouseCoopers LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and delivered their
reports with respect to the audited consolidated financial statements included
and incorporated by reference in the Prospectuses, are independent public
accountants with respect to the Company within the meaning of the Act and the
applicable published rules and regulations thereunder and are independent with
respect to the Company within the meaning of the CBCA.
(u) No stamp tax or other issuance, goods and services or transfer
taxes or duties and no capital gains, income, withholding or other taxes are
payable by or on behalf of the Underwriters under U.S. federal law or the laws
of any state or to any authority in Canada or any province thereof in connection
with:
(A) the execution and delivery of this Agreement, the
issuance, sale and delivery of the Securities to the Underwriters in
the manner contemplated in this Agreement;
(B) the resale and delivery of the Securities by the
Underwriters in the United States and Canada in the manner contemplated
in the Prospectuses; or
(C) the payment by the Company of any commission or fee to or
for the account of the Underwriters in connection with their services
with respect to clauses (a) and (b) above.
6
(v) The Company and its subsidiaries have filed all Canadian, U.S.,
foreign, federal, state, provincial and local tax returns that are required to
be filed or has requested extensions thereof, except in any case in which the
failure so to file would not have a Material Adverse Effect on the Company,
except as set forth in or contemplated in the Prospectuses (exclusive of any
supplement thereto), and have paid all taxes required to be paid by any of them
and any other assessment, fine or penalty levied against any of them, to the
extent that any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good faith or
as would not have a Material Adverse Effect on the Company, except as set forth
in or contemplated in the Prospectuses (exclusive of any supplement thereto).
(w) No labor problem or dispute with the employees of the Company or
any of its subsidiaries exists or is threatened or imminent, and the Company is
not aware of any existing or imminent labor disturbance by the employees of any
of its or its subsidiaries' principal suppliers, contractors or customers, that
could reasonably be expected to have a Material Adverse Effect on the Company,
except as set forth in or contemplated in the Prospectuses (exclusive of any
supplement thereto).
(x) The Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are reasonably foreseeable for and customary in the businesses in
which they are engaged; all policies of insurance insuring the Company or any of
its subsidiaries or their respective businesses, assets, employees, officers and
directors are in full force and effect; the Company and each of its subsidiaries
are in compliance with the terms of such policies and instruments in all
material respects; and there are no claims by the Company or any of its
subsidiaries under any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation of rights clause.
Neither the Company nor any such subsidiary has been refused any insurance
coverage sought or applied for; and neither the Company nor any such subsidiary
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at a
cost that would not have a Material Adverse Effect on the Company, except as set
forth in or contemplated in the Prospectuses (exclusive of any supplement
thereto).
(y) No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary's property or assets to the Company or any other
subsidiary of the Company, except as described in or contemplated by the
Prospectuses (exclusive of any supplement thereto).
(z) The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by the appropriate
federal, provincial, state or foreign regulatory authorities necessary to
conduct their respective businesses, except for such licenses, certificates,
permits and other authorizations the failure of which to obtain could not
reasonably be expected to have a Material Adverse Effect on the Company, and
neither the Company nor any such subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
7
unfavorable decision, ruling or finding, could have a Material Adverse Effect on
the Company, except as set forth in or contemplated in the Prospectuses
(exclusive of any supplement thereto).
(aa) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with Canadian generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(bb) The Company has not taken, directly or indirectly, any action that
has constituted or that was designed to or might reasonably be expected to cause
or result in, under the Exchange Act or otherwise, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities.
(cc) The Company and its subsidiaries are (i) in compliance with any
and all applicable federal, state, provincial and local laws and regulations of
Canada, the United States or any other jurisdiction relating to the protection
of human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) have received
and are in compliance with all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective businesses
and (iii) have not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or toxic
substances or wastes, pollutants or contaminants, except where such
non-compliance with Environmental Laws, failure to receive required permits,
licenses or other approvals, or liability would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, except as set forth in
or contemplated in the Prospectuses (exclusive of any supplement thereto).
Except as set forth in the Prospectuses (exclusive of any supplement thereto),
the Company has not been named as a "potentially responsible party" under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended.
(dd) In the ordinary course of its business, the Company periodically
reviews the effect of Environmental Laws on the business, operations and
properties of the Company and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws, or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, the Company has
reasonably concluded that such associated costs and liabilities would not,
singly or in the aggregate, have a Material Adverse Effect on the Company,
except as set forth in or contemplated in the Prospectuses (exclusive of any
supplement thereto).
(ee) Except as otherwise disclosed in the Prospectuses (a) the Company
and its subsidiaries own, possess, license or have other rights to use, on
reasonable terms, all patents, patent applications, trade and service marks,
trade and service mark registrations, trade names,
8
copyrights, licenses, inventions, trade secrets, technology, know-how and other
intellectual property (collectively, the "Intellectual Property") necessary for
the conduct of the Company's and the subsidiaries' respective businesses as now
conducted or as proposed in the Prospectuses to be conducted; (b) to the
Company's best knowledge, there are no rights of third parties to any such
Intellectual Property; (c) to the Company's best knowledge, there is no material
infringement by third parties of any such Intellectual Property; (d) there is no
pending or, to the Company's best knowledge, threatened action, suit, proceeding
or claim by others challenging the Company's or any subsidiaries' rights in or
to any such Intellectual Property, and the Company is unaware of any facts which
would form a reasonable basis for any such claim; (e) there is no pending, or to
the Company's best knowledge, threatened action, suit, proceeding or claim by
others challenging the validity or scope of any such Intellectual Property, and
the Company is unaware of any facts which would form a reasonable basis for any
such claim; (f) there is no pending or, to the Company's best knowledge,
threatened action, suit, proceeding or claim by others that the Company or any
subsidiary infringes or otherwise violates any patent, trademark, copyright,
trade secret or other proprietary rights of others, and the Company is unaware
of any other fact which would form a reasonable basis for any such claim; (g) to
the Company's best knowledge, there is no U.S. or Canadian patent or published
U.S. or Canadian patent application which contains claims that dominate or may
dominate any Intellectual Property described in the Prospectuses as being owned
by or licensed to the Company or any subsidiary or that interferes with the
issued or pending claims of any such Intellectual Property; and (h) there is no
prior art of which the Company is aware that may render any U.S. or Canadian
patent held by the Company or any subsidiary invalid or any U.S. or Canadian
patent application held by the Company or any subsidiary unpatentable which has
not been disclosed to the U.S. Patent and Trademark Office or a comparable
patent office in which such patent or application has been filed or has been
issued.
(ff) The Company is not a Passive Foreign Investment Company ("PFIC")
within the meaning of Section 1297 of the United States Internal Revenue Code of
1986, as amended, for the taxable year ended December 31, 2003, and does not
expect to become a PFIC in the future.
(gg) The Company is not a "foreign personal holding company" ("FPHC")
within the meaning of the United States Internal Revenue Code of 1986, as
amended, for the taxable year ended December 31, 2003, and does not expect to
become a FPHC in the future.
(hh) Except as disclosed in the Registration Statement and the Final
Prospectuses, neither the Company nor any of its subsidiaries (i) has any
material lending or other relationship with any bank or lending affiliate of any
of the Underwriters or (ii) intends to use any of the proceeds from the sale of
the Securities hereunder to repay any outstanding debt owed to any affiliate of
any of the Underwriters.
(ii) The Company is a reporting issuer under the securities laws of
each Canadian Jurisdiction that recognizes the concept of reporting issuer and
is not on the list of defaulting reporting issuers maintained by the Canadian
Authority in each such Canadian Jurisdiction that maintains such a list.
9
(jj) The Company has prepared and filed with the Commission an
appointment of agent for service of process upon the Company on Form F-X in
conjunction with the filing of the Registration Statement.
Any certificate signed by any officer of the Company and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at a purchase price of U.S.$[o] or
Cdn. $[o] per share, the amount of the Underwritten Securities set forth
opposite such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up to
[1,650,000] Option Securities at the same purchase price per share as the
Underwriters shall pay for the Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole or in part
at any time (but not more than once) on or before the 30th day after the date of
the Prospectuses upon written or telegraphic notice by the Representatives to
the Company setting forth the number of shares of the Option Securities as to
which the several Underwriters are exercising the option and the settlement
date. The number of Option Securities to be purchased by each Underwriter shall
be the same percentage of the total number of shares of the Option Securities to
be purchased by the several Underwriters as such Underwriter is purchasing of
the Underwritten Securities, subject to such adjustments as you in your absolute
discretion shall make to eliminate any fractional shares.
(c) The Company understands that a portion of the Securities may be
offered and sold in the Canadian Jurisdictions by Citigroup Global Markets
Canada Inc. (the "Sub-Underwriter"), the Canadian dealer affiliate of Citigroup
Global Markets Inc., pursuant to the Canadian Prospectus. Any Securities sold by
the Sub-Underwriter will be purchased by the Sub-Underwriter from its
Underwriter affiliate at the Closing Date at a price equal to the price set
forth in Section 2(a) above or such purchase price less an amount to be mutually
agreed upon by the Sub-Underwriter and its Underwriter affiliate which amount
shall not be greater than the Underwriting Commission set forth on the cover
page of the Prospectuses.
3. Delivery and Payment. Delivery of and payment for the Underwritten
Securities and the Option Securities (if the option provided for in Section 2(b)
hereof shall have been exercised on or before the third Business Day prior to
the Closing Date) shall be made at the offices of Osler, Xxxxxx & Harcourt LLP,
First Canadian Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx at 8:00 AM, Toronto time, on
February [o], 2004 or at such place or time or on such later date not more than
three Business Days after the foregoing date as the Representatives shall
designate, which date and time may be postponed by agreement between the
Representatives and the Company or as provided in Section 9 hereof (such date
and time of delivery and payment for
10
the Securities being herein called the "Closing Date"). Delivery of the
Securities shall be made to the Representatives for the respective accounts of
the several Underwriters against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to an account or accounts
specified by the Company. Payment shall be made to the Company in U.S. dollars
with respect to the U.S. Securities and Canadian dollars with respect to the
Canadian Securities. Delivery of the Underwritten Securities and the Option
Securities shall be made through the facilities of The Canadian Depository for
Securities Ltd. unless the Representatives shall otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised after
the third Business Day prior to the Closing Date, the Company will deliver the
Option Securities (at the expense of the Company) to the Representatives, at the
offices of Osler, Xxxxxx & Harcourt, First Canadian Place, Xxxxx 0000, Xxxxxxx,
Xxxxxxx, on the date specified by the Representatives (which shall be within
three Business Days after exercise of said option) for the respective accounts
of the several Underwriters, against payment by the several Underwriters through
the Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to an account specified by
the Company. Payment shall be made to the Company in U.S. dollars with respect
to the U.S. Option Securities and Canadian dollars with respect to the Canadian
Option Securities. If settlement for the Option Securities occurs after the
Closing Date, the Company will deliver to the Representatives on the settlement
date for the Option Securities, and the obligation of the Underwriters to
purchase the Option Securities shall be conditioned upon receipt of,
supplemental opinions, certificates and letters confirming as of such date the
opinions, certificates and letters delivered on the Closing Date pursuant to
Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public upon the
terms and conditions set forth in the Prospectuses.
5. Agreements. The Company agrees with the several Underwriters and the
Sub-Underwriter that:
(a) The Company will comply with the PREP Procedures and General
Instruction II.L of Form F-10 under the Act. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of the
Registration Statement or supplement to the Prospectus or an amendment or
supplement to the Canadian Final Prospectus or the Canadian Prospectus unless
the Company has furnished you a copy for your review prior to filing and will
not file any such proposed amendment or supplement to which you reasonably
object. Subject to the foregoing sentence, if the filing of the U.S. Prospectus
is otherwise required under General Instruction II.L of Form F-10, the Company
will cause the U.S. Prospectus, properly completed, to be filed with the
Commission pursuant to General Instruction II.L of Form F-10 within the time
period prescribed and will provide evidence satisfactory to the Representatives
of such timely filing. The Company will promptly advise the Representatives (1)
when the U.S. Prospectus shall have been filed (if required) with the Commission
pursuant to General Instruction II.L of Form F-10, (2) when the Canadian
Supplemented Prospectus shall have been filed with the Canadian Authorities, (3)
when, prior to termination of the offering of the Securities, any amendment to
the Registration Statement or the Canadian Prospectus shall
11
have been filed or become effective or a MRRS Decision Document in respect of
any such amendment has been issued, as the case may be, (4) of any request by
the Commission or its staff for any amendment of the Registration Statement, or
for any supplement to the Prospectus or for any additional information, (5) of
any request by a Canadian Authority or any other regulatory authority in Canada
for any amendment or supplement to the Canadian Prospectus or any additional
information, (6) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement, the issuance by a Canadian
Authority or any other regulatory authority in Canada of any cease trading order
relating to the Securities or the institution or threatening of any proceeding
for those purposes, (7) of the receipt by the Company of any communication from
a Canadian Authority or any other regulatory authority in Canada relating to the
Canadian Prospectus, the offering of the Securities or the listing of the
Securities on the Toronto Stock Exchange, (8) of the receipt by the Company of
any communication relating to the listing of the Securities on the Nasdaq
National Market, and (9) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities for sale in any
jurisdiction or the institution or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of any
such stop order or the suspension of any such qualification and, if issued, to
obtain as soon as possible the withdrawal thereof.
(b) The Company will prepare and file with the Canadian Authorities,
promptly after the Execution Time, and in any event no later than 5:00 p.m.
(Toronto time) on the second Business Day following the date of this Agreement,
and in conformity in all material respects with applicable Canadian Securities
Laws, the Canadian Supplemented Prospectus setting forth the PREP Information.
(c) The Company will prepare and file with the Commission, promptly
after the Execution Time, and in any event no later than 5:00 p.m. (Toronto
time) on the second Business Day following the date of this Agreement, a
supplemented prospectus in accordance with General Instruction II.L of Form F-10
(which shall consist of the Canadian Supplemented Prospectus with such deletions
therefrom and additions thereto as are permitted or required by Form F-10 and
the applicable rules and regulations of the Commission) (the "U.S. Supplemented
Prospectus").
(d) If it shall be necessary to amend or supplement the Canadian
Prospectus (each such amendment or supplement a "Canadian Prospectus Amendment")
to comply with Canadian Securities Laws, or if, at any time when a prospectus
relating to the Securities is required to be delivered under the Act, any event
occurs or condition exists as a result of which the Canadian Prospectus or U.S.
Prospectus as then supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein
in the light of the circumstances under which they were made not misleading, or
if it shall be necessary to amend the Registration Statement or supplement the
U.S. Prospectus to comply with the Act or the Exchange Act, the Company will
promptly (1) notify the Representatives of any such event, (2) prepare and file
with the Commission, or the Canadian Authorities, as applicable, subject to the
second sentence of paragraph (a) of this Section 5, an amendment or supplement
which will correct such statement or omission or effect such compliance; and (3)
supply any supplemented Prospectus or any Canadian Prospectus Amendment to you
in such quantities as you may reasonably request.
12
(e) As soon as practicable, the Company will make generally available
to its security holders and to the Representatives an earnings statement or
statements of the Company which will satisfy the provisions of Section 11(a) of
the Act and Rule 158 under the Act.
(f) The Company will furnish to the Representatives and counsel for the
Underwriters signed copies of the Registration Statement (including exhibits
thereto) and copies of the Form F-X required to be filed with the Commission
pursuant to Form F-10 and to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and, so long as delivery of a prospectus by
an Underwriter, Sub-Underwriter or dealer may be required by the Act or Canadian
Securities Laws, but no later than the second Business Day after the date
hereof, as many copies of each U.S. Prospectus and any supplement thereto or the
Canadian Prospectus (in the English and French languages, as required) and any
Canadian Prospectus Amendment (in the English and French languages, as required)
as the Representatives may reasonably request.
(g) The Company will arrange, if necessary, for the qualification of
the Securities for sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in effect so
long as required for the distribution of the Securities; provided that in no
event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Securities, in any jurisdiction where it is not now so
subject.
(h) The Company will not, without the prior written consent of
Citigroup Global Markets Inc., offer, sell, contract to sell, pledge, or
otherwise dispose of, (or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission (other than on Form S-8 covering
Common Shares issued under the Company's stock option plans) in respect of, or
establish or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act, any
other Common Shares or any securities convertible into, or exercisable, or
exchangeable for, Common Shares; or publicly announce an intention to effect any
such transaction, for a period of 90 days after the date of the Underwriting
Agreement, provided, however, that the Company may issue and sell Common Shares
pursuant to any employee stock option plan, stock ownership plan or dividend
reinvestment plan of the Company in effect at the Execution Time and the Company
may issue Common Shares issuable upon the conversion of securities or the
exercise of warrants outstanding at the Execution Time.
(i) The Company will not take, directly or indirectly, any action
designed to or which has constituted or which might reasonably be expected to
cause or result, under the Exchange Act or otherwise, in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities.
(j) The Company agrees to pay the costs and expenses relating to the
following matters: (i) the preparation, printing or reproduction and filing with
the Commission of
13
the Registration Statement (including financial statements and exhibits
thereto), the Form F-X required to be filed with the Commission pursuant to Form
F-10, each Preliminary Prospectus, the Final Prospectus, the Prospectus, and
each amendment or supplement to any of them; the preparation, printing or
reproduction and filing with the Canadian Authorities of the Canadian
Preliminary Prospectus, the Canadian Prospectus and the Canadian Final
Prospectus, and each amendment or supplement to any of them; (ii) the printing
(or reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the Registration
Statement, each Preliminary Prospectus, the Prospectuses, and all amendments or
supplements to any of them, the printing (or reproduction) and delivery
(including postage, air freight charges and charges for counting and packaging)
of such copies of the Canadian Preliminary Prospectus, the Canadian Prospectus
and the Canadian Final Prospectus, and each amendment or supplement to any of
them as may, in each case, be reasonably requested for use in connection with
the offering and sale of the Securities; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Securities,
including any stamp or transfer taxes in connection with the original issuance
and sale of the Securities; (iv) the printing (or reproduction) and delivery of
this Agreement, any blue sky memorandum and all other agreements or documents
printed (or reproduced) and delivered in connection with the offering of the
Securities; (v) the listing of the Securities on the Nasdaq National Market and
the Toronto Stock Exchange; (vi) any registration or qualification of the
Securities for offer and sale under the securities or blue sky laws of the
several states (including filing fees and the reasonable fees and expenses of
counsel for the Underwriters relating to such registration and qualification);
(vii) any filings required to be made with the NASD (including filing fees and
the reasonable fees and expenses of counsel for the Underwriters relating to
such filings); (viii) the transportation and other expenses incurred by or on
behalf of Company representatives in connection with presentations to
prospective purchasers of the Securities; (ix) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local and
special counsel) for the Company; (x) all fees and expenses of the Company in
connection with the translation of the Canadian Preliminary Prospectus, the
Canadian Final Prospectus, the Canadian Supplemented Prospectus or any Canadian
Prospectus Amendment into the French language; and (xi) other costs and expenses
incidental to the performance by the Company of its obligations hereunder.
6. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters to purchase the Underwritten Securities and the Option
Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time, the Closing Date and any settlement date pursuant to Section
3 hereof, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) The Canadian Supplemented Prospectus shall have been filed with the
Canadian Authorities within the applicable time period prescribed by and in
accordance with Section 1(c) hereof, and all other steps or proceedings shall
have been taken that may be necessary in order to qualify the Securities for
distribution to the public in each of the Canadian Jurisdictions.
14
(b) The U.S. Supplemented Prospectus, or any supplement thereto will be
filed in the manner and within the time period thereby required by General
Instruction II.L. of Form F-10; and no stop order suspending the effectiveness
of the Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(c) The Company shall have requested and caused White & Case LLP, U.S.
legal counsel for the Company, to have furnished to the Representatives their
opinion, dated the Closing Date and addressed to the Representatives,
substantially in the form attached hereto as Exhibit B.
(d) The Company shall have requested and caused Xxxxx, Xxxxxx &
Harcourt LLP, counsel for the Company, to have furnished to the Representatives
their opinion and 10b-5 statement, dated the Closing Date and addressed to the
Representatives, substantially in the forms attached hereto as Exhibits C and D.
(e) The Company shall have requested and caused Xxxxxxxx & Xxxx,
special counsel to the Company for intellectual property matters, to furnish to
the Representatives their opinion, dated the Closing Date and addressed to the
Representatives, in form and substance reasonably acceptable to the
Representatives.
(f) The Representatives shall have received from Xxxxxx, Xxxxxxxx,
Xxxxx & Xxxxxxxx, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date and addressed to the Representatives, with respect to the
issuance and sale of the Securities, the Registration Statement, the Prospectus
(together with any supplement thereto) and other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as they request for the purpose of enabling them to
pass upon such matters.
(g) The Representatives shall have received from Xxxxxx Xxxx Xxxxxxxx &
Xxxxxxxx LLP, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date and addressed to the Representatives, with respect to the issuance
and sale of the Securities, the Canadian Prospectus (together with any
supplement thereto) and other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon such
matters.
(h) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the President
and the principal financial or accounting officer of the Company, dated the
Closing Date, to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectuses, any supplements to the
Prospectuses and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct on and as of the Closing Date with the
same effect as if made on the Closing Date and the Company has complied
with all the agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to the Closing Date;
15
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened;
(iii) no order having the effect of ceasing or suspending the
distribution of the Securities has been issued by the Reviewing
Authority or, to the Company's knowledge, threatened; and
(iv) since the date of the most recent financial statements of
the Company included or incorporated by reference in the Prospectuses
(exclusive of any supplement thereto), there has been no Material
Adverse Effect on the Company, except as set forth in or contemplated
in the Prospectus (exclusive of any supplement thereto).
(i) The Company shall have requested and caused PricewaterhouseCoopers
LLP to have furnished to the Representatives, at the Execution Time and at the
Closing Date, letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the Representatives. Such
comfort letters shall be in addition to any other comfort letters or consents
required to be filed with the Canadian Authorities.
(j) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectuses (exclusive of any supplement thereto),
there shall not have been (i) any change or decrease specified in the letter or
letters referred to in paragraph (i) of this Section 6 or (ii) any change, or
any development involving a prospective change, in or affecting the condition
(financial or otherwise), earnings, business or properties of the Company and
its subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in the
Prospectuses (exclusive of any supplement thereto) the effect of which, in any
case referred to in clause (i) or (ii) above, is, in the sole judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Registration Statement (exclusive of any amendment thereof)
and the Prospectuses (exclusive of any supplements thereto).
(k) The Company shall have furnished to the Representatives on or prior
to the Closing Date satisfactory evidence of its due and valid authorization of
CT Corporation System as its agent to receive service of process pursuant to
Section 14 hereof, and satisfactory evidence from CT Corporation System
accepting its appointment as such agent.
(l) Prior to the Closing Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives may reasonably request.
(m) The Securities shall have been listed and admitted and authorized
for trading on the Nasdaq National Market and the Toronto Stock Exchange, and
satisfactory evidence of such actions shall have been provided to the
Representatives.
16
(n) At the Execution Time, the Company shall have furnished to the
Representatives a letter substantially in the form of Exhibit A hereto from each
officer and director of the Company, addressed to the Representatives.
(o) PricewaterhouseCoopers LLP shall have furnished to the
Representatives an opinion, dated the respective dates of the documents
enumerated below, that the French language versions of the Financial Information
in each of the Canadian Preliminary Prospectus, the Canadian Final Prospectus
and the Canadian Supplemented Prospectus, as the case may be, are in all
material respects a complete and proper translation of the English language
versions thereof.
(p) Xxxxx, Xxxxxx & Harcourt LLP, counsel to the Company, shall have
furnished to the Representatives an opinion, dated the respective dates of the
documents enumerated below, that, except for the Financial Information, as to
which they express no opinion, the French language version of each of the
Canadian Preliminary Prospectus, the Canadian Final Prospectus and the Canadian
Supplemented Prospectus, as the case may be, are in all material respects a
complete and proper translations of the English language version thereof.
(q) The Company shall have delivered on the Closing Date satisfactory
evidence that any and all preemptive rights in respect of shares in the capital
of the Company have been waived; including, without limitation, a written waiver
from General Motors Corporation of its preemptive rights in respect of shares in
the capital of the Company.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of such
cancellation shall be given to the Company in writing or by telephone or
facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Osler, Xxxxxx & Harcourt LLP, counsel for the
Company, at 0 Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxx, X0X 0X0, on the Closing
Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
and the Sub-Underwriter severally through Citigroup Global Markets Inc. on
demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Securities.
17
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and Sub-Underwriter, the directors,
officers, employees and agents of each Underwriter and Sub-Underwriter and each
person who controls any Underwriter and Sub-Underwriter within the meaning of
either the Act or the Exchange Act against any and all losses, claims, damages
or liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other federal or state statutory law
or regulation, the Canadian Securities Laws, at common law or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement for the
registration of the Securities as originally filed or in any amendment thereof,
or in any Preliminary Prospectus or the Prospectuses, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in light of the
circumstances under which they were made or (ii) any misrepresentation or
alleged misrepresentation contained in the Canadian Preliminary Prospectus, the
Canadian Final Prospectus, any Canadian Prospectus, or any untrue, false or
misleading statement therein, or any omission or alleged omission to state
therein any material fact or information required to be stated therein or
necessary to make any of the statements therein not misleading in light of the
circumstances in which they were made, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through the Representatives specifically for inclusion
therein; provided further, that with respect to any untrue statement or omission
of material fact made in any Preliminary Prospectus, the indemnity agreement
contained in this Section 8(a) shall not inure to the benefit of any Underwriter
from whom the person asserting any such loss, claim, damage or liability
purchased the securities concerned, to the extent that any such loss, claim,
damage or liability of such Underwriter occurs under the circumstance where it
shall have been determined by a court of competent jurisdiction by final and
nonappealable judgment that (w) the Company had previously furnished copies of
the Prospectuses to the Representatives, (x) delivery of the U.S. Prospectus or
Canadian Prospectus was required by the Act or Canadian Securities Laws, as the
case may be, to be made to such person, (y) the untrue statement or omission of
a material fact contained in the Preliminary Prospectus was corrected in the
Prospectus and (z) there was not sent or given to such person, at or prior to
the written confirmation of the sale of such securities to such person, a copy
of the U.S. Prospectus or Canadian Prospectus, as applicable. This indemnity
agreement will be in addition to any liability that the Company may otherwise
have.
(b) Each Underwriter and Sub-Underwriter severally and not jointly
agrees to indemnify and hold harmless the Company, each of its directors, each
of its officers who signs the Registration Statement or the Canadian Prospectus,
and each person who controls the Company within the meaning of either the Act or
the Exchange Act, to the same extent as the foregoing indemnity from the Company
to each Underwriter, but only with reference to written information relating to
such Underwriter or Sub-Underwriter furnished to the Company by or on
18
behalf of such Underwriter or Sub-Underwriter through the Representatives
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Underwriter or Sub-Underwriter may otherwise have. The Company acknowledges
that the statements set forth in the U.S. Prospectus in the last paragraph of
the cover page regarding delivery of the Securities and, under the heading
"Underwriting", (i) the list of Underwriters and their respective participation
in the sale of the Securities, (ii) the sentences related to concessions and
(iii) the paragraph related to stabilization, syndicate covering transactions
and penalty bids in any Preliminary Prospectus and Prospectus constitute the
only information furnished in writing by or on behalf of the several
Underwriters or Sub-Underwriter for inclusion in any Preliminary Prospectus or
Prospectus.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable to or insufficient to hold harmless an indemnified
party for any reason,
19
the Company, the Underwriters and the Sub-Underwriter severally agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and one or more of
the Underwriters and the Sub-Underwriter may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and by the Underwriters and the Sub-Underwriter on the other from the
offering of the Securities; provided, however, that in no case shall any
Underwriter and the Sub-Underwriter (except as may be provided in any agreement
among underwriters relating to the offering of the Securities) be responsible
for any amount in excess of the underwriting discount or commission applicable
to the Securities purchased by such Underwriter and the Sub-Underwriter
hereunder. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company, the Underwriters and the
Sub-Underwriter severally shall contribute in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
Company on the one hand and of the Underwriters and the Sub-Underwriter on the
other in connection with the statements or omissions which resulted in such
losses as well as any other relevant equitable considerations. Benefits received
by the Company shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses) received by it, and benefits received by
the Underwriters and the Sub-Underwriter shall be deemed to be equal to the
total underwriting discounts and commissions, in each case as set forth on the
cover page of the Prospectuses. Relative fault shall be determined by reference
to, among other things, whether any untrue or any alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information provided by the Company on the one hand or the
Underwriters and the Sub-Underwriter on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company, the Underwriters and the
Sub-Underwriter agree that it would not be just and equitable if contribution
were determined by pro rata allocation or any other method of allocation which
does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter and Sub-Underwriter within the meaning of either the Act
or the Exchange Act and each director, officer, employee and agent of an
Underwriter and Sub-Underwriter shall have the same rights to contribution as
such Underwriter and Sub Underwriter, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement or the Canadian
Prospectus and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event
20
that the aggregate amount of Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
amount of Securities set forth in Schedule I hereto, the remaining Underwriters
shall have the right to purchase all, but shall not be under any obligation to
purchase any, of the Securities, and if such nondefaulting Underwriters do not
purchase all the Securities, this Agreement will terminate without liability to
any nondefaulting Underwriter or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Closing Date shall be postponed
for such period, not exceeding five Business Days, as the Representatives shall
determine in order that the required changes in the Registration Statement and
the Prospectus and the Canadian Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the Company and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if at any time prior to such time
(i) trading in the Company's Common Shares shall have been suspended by the
Commission or Canadian Authority, the Nasdaq National Market or the Toronto
Stock Exchange or trading in securities generally on the Nasdaq National Market,
the Toronto Stock Exchange or the New York Stock Exchange shall have been
suspended or limited or minimum prices shall have been established on either of
such exchange or the Nasdaq National Market, (ii) a banking moratorium shall
have been declared either by United States, Canadian or New York State
authorities, (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the Representatives, impractical or inadvisable
to proceed with the offering or delivery of the Securities as contemplated by
the Prospectus (exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters and the Sub-Underwriter set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
and the Sub-Underwriter or the Company or any of the officers, directors,
employees, agents or controlling persons referred to in Section 8 hereof, and
will survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives or the
Sub-Underwriter, will be mailed, delivered or telefaxed to the Citigroup Global
Markets Inc. General Counsel (fax no.: (000) 000-0000) and confirmed to the
General Counsel, Citigroup Global Markets Inc., at 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, 00000, Attention: General Counsel; or, if sent to the Company,
will be mailed, delivered or telefaxed to Xxxxxxxx Xxxxx, Vice President,
General Counsel and Corporate Secretary (fax no.: (000) 000-0000) and confirmed
to it at 0000 XxXxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxx, Xxxxxx, X0X 0X0, attention
of the General Counsel.
21
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
14. Jurisdiction. The Company agrees that any suit, action or
proceeding against the Company brought by any Underwriter or Sub-Underwriter,
the directors, officers, employees and agents of any Underwriter or
Sub-Underwriter, or by any person who controls any Underwriter or
Sub-Underwriter, arising out of or based upon this Agreement or the transactions
contemplated hereby may be instituted in any state or federal court in the City
of New York, New York, and waives any objection which it may now or hereafter
have to the laying of venue of any such preceding, and irrevocably submit to the
non-exclusive jurisdiction of such courts in any such suit, action or
proceeding. The Company has appointed CT Corporation System as its authorized
agent (the "Authorized Agent") upon whom process may be served in any suit,
action or proceeding arising out of or based upon this Agreement or the
transactions contemplated herein which may be instituted in any state or federal
court in the City of New York, New York, by any Underwriter or Sub-Underwriter,
directors, officers, employees and agents of any Underwriter or Sub-Underwriter,
or by any person, if any, who controls any Underwriter or Sub-Underwriter, and
expressly accepts the non-exclusive jurisdiction of any such court in respect of
any such suit, action or proceeding. The Company hereby represents and warrants
that the Authorized Agent has accepted such appointment and has agreed to act as
said agent for service of process, and the Company agrees to take any and all
action, including the filing of any and all documents that may be necessary to
continue such appointment in full force and effect as aforesaid. Service of
process upon the Authorized Agent shall be deemed, in every respect, effective
service of process upon the Company. Notwithstanding the foregoing, any action
arising out of or based upon this Agreement may be instituted by any Underwriter
or Sub-Underwriter, the directors, officers, employees and agents of any
Underwriter or Sub-Underwriter, or by any person who controls any Underwriter or
Sub-Underwriter, in any court of competent jurisdiction in Canada.
15. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
16. Currency. References in this Agreement to "$s" are to U.S. dollars.
17. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
18. Headings. The section headings used herein are for convenience only
and shall not affect the construction hereof.
19. Definitions. The terms that follow, when used in this Agreement,
shall have the meanings indicated.
22
"Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Authorized Agent" has the meaning set forth in Section 14
hereof.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or
trust companies are authorized or obligated by law to close in New York
City.
"Canadian Authorities" has the meaning set forth in Section
1(a) hereof.
"Canadian Final Prospectus" shall mean the final short form
base PREP prospectus dated January [-], 2004 of the Company (in both
the English and French languages unless the context indicates
otherwise) omitting the PREP Information filed with the Canadian
Authorities for which a MRRS Decision Document has been obtained from
the Reviewing Authority.
"Canadian Jurisdictions" shall mean, collectively, each of the
provinces of Canada.
"Canadian Option Securities" shall mean the Option Securities
to be offered and sold in Canada.
"Canadian Preliminary Prospectus" shall mean the preliminary
short form base PREP prospectus dated January 9, 2004 of the Company
(in both the English and French languages unless the context indicates
otherwise) filed with the Canadian Authorities.
"Canadian Prospectus" shall mean the Canadian Final
Prospectus, except that, if, after execution of this Agreement, a
Canadian Supplemented Prospectus containing the PREP Information is
thereafter filed with the Canadian Authorities the term "Canadian
Prospectus" shall refer to such Canadian Supplemented Prospectus.
"Canadian Prospectus Amendment" has the meaning set forth in
Section 5(d) hereof.
"Canadian Securities" shall mean the Canadian Underwritten
Securities and the Canadian Option Securities.
"Canadian Securities Laws" shall mean the applicable
securities legislation of the Canadian Jurisdictions and the respective
rules, regulations and written and published policies thereunder.
"Canadian Supplemented Prospectus" shall mean the short form
supplemented PREP prospectus filed with the Canadian Authorities
consisting of the Canadian Final Prospectus incorporating the PREP
Information.
"Canadian Underwritten Securities" shall mean the Underwritten
Securities to be offered and sold in Canada.
23
"CBCA" means the Canada Business Corporations Act.
"Closing Date" has the meaning set forth in Section 3 hereof.
"Commission" shall mean the Securities and Exchange
Commission.
"Common Shares" has the meaning set forth in the preamble
hereof.
"Company" has the meaning set forth in the preamble hereof.
"Effective Date" shall mean each date and time that the
Registration Statement, any post-effective amendment or amendments
thereto became or become effective.
"Environmental Laws" has the meaning set forth in Section
1(cc) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
"Final Prospectuses" shall mean the Canadian Final Prospectus
and the U.S. Final Prospectus.
"Financial Information" shall mean (a) the audited
consolidated financial statements for the year ended December 31, 2002
together with the notes thereto and the auditors' report thereon; (b)
management's discussion and analysis of financial condition and results
of operation as at December 31, 2002 and for the three years ended
December 31, 2002; (c) the unaudited consolidated financial statements
for the nine months ended September 30, 2003 and September 30 2002; (d)
management's interim discussion and analysis of financial condition and
results of operations for the third quarter ended September 30, 2003,
each incorporated by reference into the Canadian Preliminary
Prospectus, the Canadian Final Prospectus and the Canadian Supplemented
Prospectus and (e) the consolidated financial statements of the Company
as at December 31, 2002 and for the three years in the period ended
December 31, 2002; (f) the financial statements for Greenlight for the
year ended December 31, 2002; (g) the unaudited pro-forma combined
statement of operations of the Company; (h) the information under the
captions "Summary Consolidated Financial Data", "Risk Factors",
"Dilution", "Business", Capitalization", "Selected Financial Data",
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Canadian Preliminary Prospectus, the
Canadian Final Prospectus and the Canadian Supplemented Prospectus.
"Foreign Private Issuer" shall mean a foreign private issuer
as defined in the Act and the Exchange Act.
"Form F-10" shall mean Form F-10 under the Act.
24
"FPHC" has the meaning set forth in Section 1(gg) hereof.
"Greenlight" has the meaning set forth in Section 1(o) hereof.
"Intellectual Property" has the meaning set forth in Section
1(ee) hereof.
"Losses" has the meaning set forth in Section 8(d) hereof.
"Material Adverse Effect on the Company" shall mean any
material adverse effect on the condition (financial or otherwise),
earnings, business, prospects or properties of the Company and its
subsidiaries taken as a whole, whether or not arising from transactions
in the ordinary course of business.
"MRRS" has the meaning set forth in Section 1(a) hereof.
"MRRS Decision Document" means a MRRS Decision Document issued
pursuant to the MRRS.
"NASD" shall mean the National Association of Securities
Dealers.
"Option Securities" has the meaning set forth in the preamble
hereof.
"PFIC" has the meaning set forth in Section 1(ff) hereof.
"Preliminary Prospectuses" means collectively, the Canadian
Preliminary Prospectus and the U.S. Preliminary Prospectus.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(a) above.
"PREP Information" means the information, if any, included in
the Canadian Prospectus that is omitted from the Canadian Final
Prospectus in accordance with the PREP Procedures but that is deemed
under the PREP Procedures incorporated by reference into the Canadian
Final Prospectus as of the date of the Canadian Prospectus.
"PREP Procedures" means the rules and procedures established
pursuant to the Canadian Securities Laws by the Canadian Authorities in
National Instrument 44-103 - Post-Receipt Pricing for the pricing of
securities after the final receipt for a prospectus has been obtained.
"Prospectuses" means collectively, the U.S. Prospectus and the
Canadian Prospectus.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at
the Execution Time, in the form in which it shall become effective)
and, in the event any post-effective amendment thereto becomes
25
effective prior to the Closing Date, shall also mean such registration
statement as so amended, as the case may be.
"Representatives" has the meaning set forth in the preamble
hereof.
"Reviewing Authority" has the meaning set forth in Section
1(a) hereof.
"Securities" has the meaning set forth in the preamble hereof.
"settlement date" has the meaning set forth in Section 1(c)
hereof.
"Sub-Underwriter" has the meaning set forth in Section 2(c)
hereof.
"U.S. Final Prospectus" has the meaning set forth in Section
1(b) hereof.
"U.S. Option Securities" shall mean the Option Securities to
be offered and sold outside of Canada.
"U.S. Preliminary Prospectus" has the meaning set forth in
Section 1(b) hereof.
"U.S. Prospectus" shall mean the U.S. Final Prospectus, except
that, if, after execution of this Agreement, a U.S. Supplemented
Prospectus containing the PREP Information is thereafter filed with the
Commission the term "U.S. Prospectus" shall refer to such U.S.
Supplemented Prospectus.
"U.S. Securities" shall mean the U.S. Underwritten Securities
and the U.S. Option Securities.
"U.S. Supplemented Prospectus" has the meaning set forth in
Section 5(c) hereof.
"U.S. Underwritten Securities" shall mean the Underwritten
Securities to be offered and sold outside of Canada.
"Underwriters" has the meaning set forth in the preamble
hereof.
"Underwritten Securities" has the meaning set forth in the
preamble hereof.
26
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, the several Underwriters and the Sub-Underwriter.
Very truly yours,
HYDROGENICS CORPORATION
By:
--------------------------------
Name:
Title:
Citigroup Global Markets Inc.
National Bank Financial Inc.
TD Securities Inc.
By: Citigroup Global Markets Inc.
--------------------------------
Name:
Title:
For itself and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
Citigroup Global Markets Canada Inc.
By:
--------------------------------
Name:
Title:
As Sub-Underwriter
27
SCHEDULE I
Number Of Underwritten
Underwriters Securities To Be Purchased
------------ --------------------------
Citigroup Global Markets Inc......................................
National Bank Financial Inc. .....................................
NBF Securities (USA) Corp. .......................................
TD Securities Inc. ...............................................
TD Securities (U.S.A.) Inc........................................
-----------------
Total...........................................
28
SUB-UNDERWRITER
Citigroup Global Markets Canada Inc.
29
EXHIBIT A
[LETTERHEAD OF OFFICER OR DIRECTOR OF CORPORATION]
Hydrogenics Corporation
Public Offering of Common Stock
[o], 2004
Citigroup Global Markets Inc.
National Bank Financial Inc.
TD Securities Inc.
As Representatives of the several Underwriters,
c/o Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), between
Hydrogenics
Corporation, a corporation organized under the federal laws of Canada (the
"Company"), and you as representatives of a group of Underwriters named therein,
relating to an underwritten public offering of common shares (the "Common
Shares"), of the Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned will not, without the prior written
consent, of Citigroup Global Markets, Inc., offer, sell, contract to sell,
pledge or otherwise dispose of, (or enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or
otherwise) by the undersigned or any affiliate of the undersigned or any person
in privity with the undersigned or any affiliate of the undersigned), directly
or indirectly, including the filing (or participation in the filing) of a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder with respect to, any
shares of capital stock of the Company or any securities convertible into, or
exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period of 90 days after the date
of the Underwriting Agreement, other than Common Shares disposed of as bona fide
gifts approved by Citigroup Global Markets Inc.
30
If for any reason the Underwriting Agreement shall be terminated prior
to the Closing Date (as defined in the Underwriting Agreement), the agreement
set forth above shall likewise be terminated.
Yours very truly,
[SIGNATURE OF OFFICER OR DIRECTOR]
[NAME AND ADDRESS OF OFFICER OR DIRECTOR]
31
EXHIBIT B
[FORM OF WHITE & CASE OPINION]
32
EXHIBIT C
[FORM OF OSLER OPINION]
33
EXHIBIT D
[FORM OF OSLER 10B-5 STATEMENT]
34
