EXHIBIT 99.4
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UNDERWRITING AGREEMENT
February 14, 2005
Xxxxxxx Petroleum Corporation
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
ATTENTION: Xx. Xxxxx X. Xxxxxxx, President and Chief Executive Officer
Dear Sir:
RE: OFFERING OF 7,500,000 COMMON SHARES
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Tristone Capital Inc. ("TRISTONE"), as lead managing underwriter,
together with GMP Securities Ltd., FirstEnergy Capital Corp., TD Securities
Inc., BMO Xxxxxxx Xxxxx Inc., CIBC World Markets Inc., Orion Securities Inc.,
Xxxxxxx Xxxxx Ltd., Scotia Capital Inc. and Salman Partners Inc. (collectively,
the "UNDERWRITERS") understand that Xxxxxxx Petroleum Corporation ("XXXXXXX" or
the "CORPORATION") proposes to issue and offer for sale an aggregate of
7,500,000 Common Shares (as defined herein) (the "OFFERED SHARES") at a price of
$12.00 per share upon the terms described herein and in the Prospectuses (as
defined herein). We also understand that Xxxxxxx has prepared and filed the
Preliminary Prospectus (as defined herein) and will prepare and file the Final
Prospectus (as defined herein) and all other necessary documents required under
the Mutual Reliance Procedures (as defined herein) and the Securities Laws (as
defined herein) in order to qualify the distribution to the public of the
Offered Shares in each of the Qualifying Jurisdictions (as defined herein).
Subject to the terms and conditions contained herein and on the basis
of the representations and warranties made herein, the Underwriters hereby agree
to act as, and the Corporation hereby appoints, the Underwriters as the sole and
exclusive underwriters of the Corporation to offer the Offered Shares for sale
in the Qualifying Jurisdictions and the United States of America. The
Underwriters hereby severally, but not jointly, in the respective percentages
set forth in Section 19, agree to offer to purchase from Xxxxxxx at the Closing
Time (as defined herein), and by the acceptance of the offer made by this
letter, Xxxxxxx hereby agrees to sell to the Underwriters at the Closing Time,
all, but not less than all, of the Offered Shares, at the purchase price of
$12.00 per share, being an aggregate purchase price of $90,000,000.
The Underwriters shall be entitled (but not obligated), in their sole
discretion, to engage as sub-agents other registered securities dealers and may
receive (for delivery to the Corporation at the Closing Time) subscriptions for
Offered Shares from other registered securities dealers. The fee payable to such
sub-agents shall be for the account of the Underwriters.
Notwithstanding the foregoing, any Offered Shares that are sold to
"Institutional Accredited Investors" pursuant to and as defined in Schedule A
hereto, will be sold to such persons as substituted purchasers, directly by
Xxxxxxx. The Underwriters' commitment to purchase the Offered Shares pursuant to
this Agreement will be reduced to the extent that the Offered Shares are sold to
substituted purchasers pursuant to Schedule A.
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 2 OF 40
In consideration of the agreement of the Underwriters to purchase the
Offered Shares hereunder and to offer them to the public and for the services to
be rendered by the Underwriters in connection herewith, Xxxxxxx agrees to pay to
Tristone, on behalf of the Underwriters at the Closing Time, a fee of $0.48 for
each Offered Share purchased, being an aggregate fee of $3,600,000 and the
expenses and other amounts contemplated in this Agreement. For greater
certainty, the services provided by the Underwriters in connection herewith are
not subject to the Goods and Services Tax ("GST") provided for in the EXCISE TAX
ACT (Canada) and taxable supplies provided will be incidental to the exempt
financial services provided.
This offer is conditional upon and subject to the terms and conditions
set forth below.
1. DEFINITIONS AND INTERPRETATION.
(a) Where used in this Agreement, the following terms shall have
the following meanings:
"ABCA" means the BUSINESS CORPORATIONS ACT (Alberta), R.S.A.
2000, c.B-9, as amended, including the regulations promulgated
thereunder;
"AFFILIATE" has the meaning ascribed to that term in the
SECURITIES ACT (Alberta);
"AGREEMENT" means the agreement resulting from the acceptance
by Xxxxxxx of the offer made by the Underwriters by this
letter, as it may be amended from time to time as provided
herein;
"AIF" means the annual information form of Xxxxxxx dated May
14, 2004;
"ASC" means the Alberta Securities Commission;
"AUDITORS" means Xxxxx Xxxxxxxx LLP, chartered accountants,
Calgary, Alberta;
"BENEFICIARIES" has the meaning given to it in Section 13(d);
"BUSINESS DAY" means a day other than a Saturday, a Sunday or
a day on which the principal chartered banks located in
Calgary, Alberta are not open for business;
"CLAIMS" has the meaning given to it in Section 13(a);
"CLOSING DATE" means February 18, 2005 or such earlier or
later date as may be agreed to in writing by Xxxxxxx and the
Underwriters, each acting reasonably, but in any event not
later than February 28, 2005, subject to postponement in
accordance with Section 19;
"CLOSING TIME" means 6:30 a.m. (Calgary time) on the Closing
Date, or such other time on the Closing Date as may be agreed
by Xxxxxxx and the Underwriters;
"COMMON SHARES" means the common shares in the capital of
Xxxxxxx;
"CONTRACT" has the meaning given to it in Subsection
8(q)(iii);
"XXXXXXX" means Xxxxxxx Petroleum Corporation, a corporation
incorporated pursuant to the ABCA;
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 3 OF 40
"CORPORATION'S COUNSEL" means Stikeman Elliott LLP, or such
other counsel selected by the Corporation with the consent of
the Underwriters, such consent not to be unreasonably
withheld;
"CREDIT FACILITY" means the senior credit facilities described
under the heading "Capitalization of Xxxxxxx" in the Final
Prospectus;
"DISTRIBUTION" means "DISTRIBUTION" or "DISTRIBUTION TO THE
PUBLIC", as those terms are defined in the Securities Laws and
"DISTRIBUTE" has a corresponding meaning;
"DOCUMENTS" means, collectively:
(i) the AIF;
(ii) the Management Proxy Circular of the Corporation
dated May 3, 2004 relating to the annual and special
meeting of shareholders of the Corporation held on
June 17, 2004 (excluding those portions thereof which
appear under the headings "Composition of the
Governance and Compensation Committee", "Report on
Executive Compensation", "Performance Graph" and
"Statement of Corporate Governance Practices"; and
(iii) the Financial Information;
"ENVIRONMENTAL AUTHORIZATIONS" means all material
authorizations, permits, certificates, consents, approvals,
resolutions, licences, orders, permissions, exemptions,
filings, recordings or registrations required or advisable
under Environmental Laws;
"ENVIRONMENTAL CONTAMINANT" means any substance, activity,
condition or other phenomenon the existence of which gives
rise or could reasonably be expected, if any action were taken
by any governmental agency or third party, to give rise to any
notification, control, restriction, consent or other
regulation or liability, sanction, order, notice or any
requirement or agreed course of action under or arising out of
the purported exercise by such government agency of its
powers, duties and functions under Environmental Law (but
excluding any petroleum products and related sediment and
water received, stored or produced on or transported from, and
any other consumables brought on to, the site of any property
in each case in the ordinary course of business and provided
that they are stored, received, produced, transported,
consumed and/or used in accordance with good oilfield practice
and with applicable Environmental Laws);
"ENVIRONMENTAL LAWS" means all applicable laws, treaties,
conventions, statutes, ordinances, by-laws, regulations,
orders, directives and decisions rendered by any local,
provincial or federal government, ministry, department or
administrative or regulatory agency relating to the protection
of the environment, occupational health and safety or the
processing, use, treatment, storage, disposal, discharge,
transport or handling of any pollutants, contaminants,
chemicals or industrial, toxic or hazardous wastes or
substances;
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 4 OF 40
"FINANCIAL INFORMATION" means the Financial Statements and the
following:
(i) management's discussion and analysis of the financial
condition and operations of Xxxxxxx for the years
ended December 31, 2003 and 2002, and
(ii) management's discussion and analysis of the financial
condition and operations of Xxxxxxx for the nine
months ended September 30, 2004 and 2003;
"FINAL PROSPECTUS" means the (final) short form prospectus of
Xxxxxxx in the English language and the French language
version thereof and any amendments thereto, including the
documents incorporated by reference therein (unless the
context otherwise indicates) relating to the qualification for
distribution of the Offered Shares under the Securities Laws
in all the Qualifying Jurisdictions;
"FINANCIAL STATEMENTS" means, collectively:
(i) the audited annual consolidated financial statements
of the Corporation as at and for the years ended
December 31, 2002 and 2003 together with the
auditor's report thereon and the notes thereto, and
(ii) the unaudited consolidated interim financial
statements of the Corporation as at and for the nine
month periods ending on September 30, 2003 and 2004,
together with the notes thereto;
"GAAP" means generally accepted accounting principles
determined with reference to the Handbook of the Canadian
Institute of Charted Accountants or any successor institute,
as amended from time to time;
"INDEMNIFIED PARTIES" and "INDEMNIFIED PARTY" have the
meanings given to them in Subsection 13(a);
"INTERESTS" has the meaning ascribed thereto in Subsection
8(v)(i);
"MATERIAL CHANGE" has the meaning ascribed thereto in the
Securities Laws;
"MATERIAL FACT" has the meaning ascribed thereto in the
Securities Laws;
"MISREPRESENTATION" has the meaning ascribed thereto in the
Securities Laws;
"MUTUAL RELIANCE PROCEDURES" means the mutual reliance review
system and procedures provided for under NATIONAL POLICY
43-201 - MUTUAL RELIANCE REVIEW SYSTEM FOR PROSPECTUSES AND
ANNUAL INFORMATION FORMS of the Canadian Securities
Administrators, as amended or replaced;
"NETHERLAND XXXXXX" means Netherland, Xxxxxx & Associates,
Inc., independent oil and natural gas reservoir engineers;
"NETHERLAND XXXXXX REPORT" means the engineering report dated
January 1, 2004 prepared by Netherland Xxxxxx evaluating the
crude oil, natural gas and natural gas liquids reserves
attributable to Xxxxxxx'x properties, in accordance with the
standards contained in the Canadian Oil and Gas Evaluation
Handbook and the reserves definitions
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 5 OF 40
set out by the Canadian Securities Administrators in NATIONAL
INSTRUMENT 51-101 - STANDARDS OF DISCLOSURE FOR OIL AND GAS
ACTIVITIES;
"NI 44-101" means NATIONAL INSTRUMENT 44-101 - SHORT FORM
PROSPECTUS DISTRIBUTIONS of the Canadian Securities
Administrators, as amended or replaced;
"OFFERING" means the offering by Xxxxxxx of the Offered Shares
pursuant to this Agreement;
"OFFERING DOCUMENTS" has the meaning given to it in Subsection
6(a)(ii);
"PARTNERSHIP" means Xxxxxxx Petroleum, an Alberta partnership,
of which the partners are Xxxxxxx and Hornet Energy Ltd.;
"PRE-FILING DUE DILIGENCE SESSION" means each of the oral due
diligence sessions held prior to the filing of the Final
Prospectus or any Supplementary Material, for which the
Underwriters and Underwriters' Counsel have distributed or may
distribute a list of written questions to be answered at such
due diligence session (which list may be augmented by
additional questions posed at a due diligence session) by the
Corporation's senior management, auditors, independent
engineers and other experts as requested by the Underwriters;
"PRELIMINARY PROSPECTUS" means the preliminary short form
prospectus of Xxxxxxx in the English language dated February
2, 2005, and the French language version thereof, and any
amendments thereto, including the documents incorporated by
reference therein (unless the context otherwise indicates),
relating to the qualification for distribution of the Offered
Shares under the Securities Laws in all the Qualifying
Jurisdictions;
"PROSPECTUSES" means, collectively, the Preliminary Prospectus
and the Final Prospectus;
"PUBLIC RECORD" means all information filed by or on behalf of
Xxxxxxx with the Securities Commissions relating to Xxxxxxx
and the Subsidiaries, including without limitation the
Documents, any Subsequent Disclosure Documents, the
Prospectuses, the Financial Information, any Supplementary
Material and any other information filed by or on behalf of
Xxxxxxx with any Securities Commission in compliance, or
intended compliance, with the Securities Laws and are publicly
available or accessible;
"QUALIFYING JURISDICTIONS" means, collectively, each of the
provinces of Canada;
"REGULATION D" means Regulation D adopted by the SEC under the
U.S. Securities Act;
"RULE 144A" means Rule 144A adopted by the SEC under the U.S.
Securities Act;
"SEC" means the U.S. Securities and Exchange Commission;
"SECURITIES COMMISSION" means the applicable securities
commission or regulatory authority in each of the Qualifying
Jurisdictions, and "SECURITIES COMMISSIONS" means all of them;
"SECURITIES LAWS" means, collectively, all applicable
securities laws of each of the Qualifying Jurisdictions and
the respective regulations, rules, policies, instruments and
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 6 OF 40
orders made thereunder together with all applicable published
orders and rulings of the Securities Commissions;
"SELLING FIRM" has the meaning given to it in Section 3(a);
"SENIOR NOTES" means the 9.9% Senior Notes due 2009 issued by
Xxxxxxx;
"STANDARD LISTING CONDITIONS" has the meaning ascribed thereto
in Subsection 5(a)(vi);
"SUBSEQUENT DISCLOSURE DOCUMENTS" means any financial
statements, information circulars, annual information forms,
material change reports or other documents issued by Xxxxxxx
after the date of this Agreement which are, or are deemed
under the Securities Laws to be, incorporated by reference
into the Prospectus;
"SUBSIDIARY" means each of Hornet Energy Ltd. and the
Partnership;
"SUPPLEMENTARY MATERIAL" means, collectively, the English and
French versions of any amendment to the Preliminary
Prospectus, the Final Prospectus, or any ancillary materials
that may be filed by or on behalf of Xxxxxxx under the
Securities Laws relating to the distribution of the Offered
Shares;
"TRISTONE" means Tristone Capital Inc.;
"TSX" means the Toronto Stock Exchange;
"UNDERWRITERS' COUNSEL" means Fraser Xxxxxx Casgrain LLP or
such other counsel selected by the Underwriters with the
consent of the Corporation, such consent not to be
unreasonably withheld;
"U.S. EXCHANGE ACT" means the UNITED STATES SECURITIES
EXCHANGE ACT OF 1934, as amended;
"U.S. SECURITIES ACT" means the UNITED STATES SECURITIES ACT
OF 1933, as amended;
"U.S. SECURITIES LAWS" means the U.S. SECURITIES ACT, the U.S.
EXCHANGE ACT, the rules and regulations of the SEC, and the
applicable blue sky or securities legislation in the states of
the United States; and
"U.S. WRAP" means the United States confidential offering
memorandum of the Corporation dated February 14, 2005 relating
to the distribution of the Offered Shares to purchasers in the
United States.
(b) Any reference in this Agreement to a Section, subsection,
paragraph, subparagraph or Schedule shall refer to a Section,
subsection, paragraph or subparagraph of, or Schedule to, this
Agreement.
(c) Any reference to "HERETO", "HEREIN", "HEREBY", "HEREUNDER",
"THEREOF" or similar expressions means and refers to this
Agreement and to any particular Section or other part of this
Agreement.
(d) Headings have been inserted for convenience of reference only
and shall not affect the construction or interpretation of
this Agreement.
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 7 OF 40
(e) All words and personal pronouns relating thereto shall be read
and construed as the number and gender of the party or parties
referred to in each case required and the verb shall be
construed as agreeing with the required word or pronoun.
2. PREPARATION AND FILING OF PROSPECTUS.
(a) Xxxxxxx represents and warrants to the Underwriters that it is
eligible to use the short form prospectus distribution system
and procedures described in NI 44-101 for the distribution of
the Offered Shares.
(b) Xxxxxxx shall prepare and file the Final Prospectus and all
other documents required under the Mutual Reliance Procedures
and the Securities Laws with the Securities Commissions in
accordance with the Mutual Reliance Procedures and the
Securities Laws, with the ASC designated as the principal
regulator under the Mutual Reliance Procedures and obtain a
decision document under the Mutual Reliance Procedures from or
on behalf of each of the Securities Commissions, evidencing
that a receipt has been issued for the Final Prospectus by
each of the Securities Commissions, and otherwise fulfil all
legal requirements to enable the Offered Shares to be offered
and sold to the public in each of the Qualifying Jurisdictions
through the Underwriters or any other investment dealer or
broker registered to transact such business in the applicable
Qualifying Jurisdiction, and shall obtain such a final
decision document for the Final Prospectus not later than 4:30
p.m. (Calgary time) on February 14, 2005 (or such later date
or time as may be agreed to in writing by the Underwriters).
(c) Prior to the filing of the Final Prospectus and prior to the
filing with any Securities Commission of any Supplementary
Material or any documents incorporated by reference therein
after the date hereof, Xxxxxxx shall have allowed the
Underwriters to participate fully in the preparation of such
documents (including the U.S. Wrap) and shall have allowed the
Underwriters and their advisors and representatives to conduct
all due diligence investigations which they may reasonably
require in order to fulfil their obligations as underwriters
and in order to enable them to execute the certificates
required to be executed by them in the Final Prospectus and
any Supplementary Material as may be necessary.
(d) During the period of distribution of the Offered Shares,
Xxxxxxx shall promptly take or cause to be taken all
additional steps and proceedings that from time to time may be
required under the Securities Laws to continue to qualify the
Offered Shares for distribution in the Qualifying
Jurisdictions or, in the event that the Offered Shares have,
for any reason, ceased to so qualify, to again qualify the
Offered Shares for distribution in the Qualifying
Jurisdictions.
(e) Without limiting the scope of the due diligence inquires and
investigations that may be conducted by or on behalf of
Underwriters, Xxxxxxx will use its reasonable commercial
efforts to cause its directors, senior management and audit
committee, counsel, and independent engineers and other
applicable experts, and will use its reasonable commercial
efforts to cause its auditors, to be available to answer any
questions which the Underwriters or the Underwriters' Counsel
have or may have, including the participation of such persons
in each Pre-Filing Due Diligence Session. The Underwriters
will distribute or may distribute lists of written questions
(which lists may be augmented by additional questions posed at
the Pre-Filing Due Diligence Sessions) to be answered in
advance of such Pre-Filing Due Diligence Sessions and Xxxxxxx
will
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 8 OF 40
answer such questions and will use its reasonable commercial
efforts to have its outside consultants, counsel, auditors,
independent engineers and other experts who have been asked by
the Underwriters to attend and respond to questions at such
Pre-Filing Due Diligence Sessions.
3. DISTRIBUTION AND CERTAIN OBLIGATIONS OF UNDERWRITERS.
(a) The Underwriters shall offer the Offered Shares (as
applicable) to the public directly and through other
investment dealers or brokers (other than the Underwriters)
(each, a "SELLING FIRM") upon the terms and conditions set out
in the Final Prospectus and this Agreement in the Qualifying
Jurisdictions and shall comply with, and shall require any
Selling Firm to agree to comply with, in all material
respects, the Securities Laws in connection with the
distribution and sale of the Offered Shares. The Underwriters
shall promptly notify Xxxxxxx when, in their opinion, the
Underwriters and the Selling Firms have ceased distribution of
the Offered Shares and as soon as reasonably practicable, and
in any event within 30 days, after the Closing Date shall
provide a breakdown of the number of Offered Shares
distributed in each of the Qualifying Jurisdictions where such
breakdown is required for the purpose of calculating fees
payable to the Securities Commissions.
(b) For the purposes of this Section 3, the Underwriters shall be
entitled to assume that the Offered Shares are qualified for
distribution by duly registered investment dealers and brokers
in any of the Qualifying Jurisdictions where a receipt or
similar document for the Final Prospectus has been obtained
from the applicable Securities Commission (including the final
decision document for the Final Prospectus issued under the
Mutual Reliance Procedures) following the filing of the Final
Prospectus unless otherwise notified in writing.
(c) The Underwriters shall use reasonable commercial efforts to
complete and to cause the Selling Firms to complete the
distribution of the Offered Shares as soon as possible.
(d) Notwithstanding the foregoing provisions of this Section 3, an
Underwriter will not be liable to Xxxxxxx under this Section 3
with respect to a default under this Section 3 by another
Underwriter or Selling Firm, as the case may be.
(e) Prior to the filing of the Final Prospectus, the Underwriters
shall deliver to Xxxxxxx duly completed and originally
executed certificates of authentication (SEDAR Form 6) for
each person who has executed the Final Prospectus on behalf of
the Underwriters.
4. SALES RESTRICTIONS.
(a) The Underwriters shall offer the Offered Shares for sale to
the public, directly and through Selling Firms, only as
permitted by Securities Laws and upon the terms and conditions
set forth in the Final Prospectus and in this Agreement, at an
offering price not exceeding the offering price set forth on
the cover page of the Final Prospectus.
(b) The Underwriters will not solicit offers to purchase or sell
the Offered Shares so as to require registration of the
Offered Shares or filing of a prospectus with respect to the
Offered Shares under the laws of any jurisdiction other than
the Qualifying Jurisdictions.
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 9 OF 40
(c) The Underwriters may offer the Offered Shares for sale in the
United States through U.S. broker-dealer affiliates of the
Underwriters to "Qualified Institutional Buyers" pursuant to
Rule 144A or may arrange for the sale of the Offered Shares to
"Institutional Accredited Investors" pursuant to an exemption
from registration under the U.S. Securities Act upon the terms
and conditions set forth in Schedule A.
(d) The Underwriters agree, on behalf of themselves and their
United States affiliates, for the benefit of Xxxxxxx, to
comply with the United States selling restrictions imposed by
the laws of the United States and set forth in Schedule A,
which forms part of this Agreement. They also agree to obtain
such an agreement from each Selling Firm.
(e) Notwithstanding the foregoing provisions of this Section 4, no
Underwriter shall be liable to Xxxxxxx under this Section 4 or
Schedule A as a result of the violation by another Underwriter
or Selling Firm (other than Selling Firm affiliates of such
Underwriter) under this Section 4 or Schedule A if the
Underwriter first mentioned is not itself also in violation.
5. DELIVERIES ON FILING AND RELATED MATTERS.
(a) DELIVERY OF CERTAIN MATERIALS.
Xxxxxxx shall deliver or cause to be delivered without charge
to each of the Underwriters and the Underwriters' Counsel, at
the respective times indicated, the documents set forth below:
(i) as soon as practicable after filing the Final
Prospectus with the Securities Commissions, a copy of
the Final Prospectus in each of the English and
French languages signed and certified as required by
the Securities Laws, together with any documents
incorporated by reference therein which have not
previously been delivered to the Underwriters, copies
of the certificates of authentication (SEDAR Form 6)
in respect of the Final Prospectus signed and
certified as required by the Securities Laws, and a
copy of any other document required to be filed by
Xxxxxxx in connection with the Final Prospectus under
the laws of each of the Qualifying Jurisdictions in
compliance with the Securities Laws;
(ii) at the time of delivery of the French language
version of the Final Prospectus pursuant to this
Section 5(a), an opinion dated the date of the Final
Prospectus, in form and substance satisfactory to the
Underwriters and the Underwriters' Counsel, acting
reasonably, addressed to the Underwriters and
Underwriters' Counsel from the Corporation's Counsel
to the effect that the French language version of the
Final Prospectus (not including the documents
incorporated by reference therein), and the AIF, are,
in all material respects, complete and accurate
translations of the English language versions
thereof, and that the English and French language
versions are not susceptible of any materially
different interpretation with respect to any matter
contained therein;
(iii) at the time of delivery of the French language
versions of the Final Prospectus pursuant to this
Section 5(a), opinions dated the date of the Final
Prospectus, in form and substance satisfactory to the
Underwriters and the Underwriters' Counsel, acting
reasonably, addressed to the Underwriters and
Underwriters' Counsel from the Auditors, which, to
the effect that the French language version
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 10 OF 40
of the Financial Information in, and incorporated by
reference in, the Final Prospectus is, in all
material respects, a complete and proper translation
of the English language version thereof;
(iv) a copy of the U.S. Wrap;
(v) prior to the filing of the Final Prospectus with the
Securities Commissions, a "long-form" comfort letter
dated the date of the Final Prospectus, in form and
substance satisfactory to the Underwriters, acting
reasonably, addressed to the Underwriters from the
Auditors, with respect to the financial and
accounting information and data (audited and
unaudited) contained in the Final Prospectus, (any
including any documents incorporated by reference in
such documents) each of which shall be based on a
review by the Auditors within a cut-off date of not
more than two Business Days prior to the date of the
letter, and which letters shall be in addition to the
Auditors' consent letters and comfort letters
addressed to the Securities Commissions; and
(vi) prior to the Closing Time, copies of correspondence
indicating that the application for the listing and
posting for trading on the TSX of the Offered Shares
has been approved, subject only to satisfaction by
Xxxxxxx of customary post-closing conditions imposed
by the TSX for conditional listing approval (the
"STANDARD LISTING CONDITIONS").
(b) SUPPLEMENTARY MATERIAL.
Xxxxxxx shall also prepare and deliver promptly to the
Underwriters and the Underwriters' Counsel, English and (where
applicable) French versions of all Supplementary Material
signed and certified as required by the Securities Laws.
Concurrently with the delivery of any Supplementary Material,
Xxxxxxx shall deliver to the Underwriters and the
Underwriters' Counsel, with respect to such Supplementary
Material, opinions and comfort letters substantially similar
to those referred to in Subsections 5(a)(ii), 5(a)(iii) and
5(a)(v) and dated the date of the Supplementary Material.
(c) REPRESENTATIONS AS TO FINAL PROSPECTUS, U.S. WRAP AND
SUPPLEMENTARY MATERIAL.
Delivery of the Final Prospectus, U.S. Wrap and any
Supplementary Material by Xxxxxxx shall constitute the
representation and warranty of Xxxxxxx to the Underwriters
that as at the date of such delivery:
(i) all information and statements (except information
and statements relating solely to and provided by any
of the Underwriters) contained in the Final
Prospectus, the U.S. Wrap and any Supplementary
Material, as the case may be, are as at the
respective dates true and correct and contain no
misrepresentation, and the Final Prospectus, the U.S.
Wrap, and any Supplementary Material, as the case may
be, constitute full, true and plain disclosure of all
material facts relating to Xxxxxxx and the Offered
Shares;
(ii) no material fact or information has been omitted
therefrom (except facts or information relating
solely to and provided by any of the Underwriters)
which is required under the Securities Laws to be
stated in such disclosure or is necessary
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 11 OF 40
to make the statements or information contained in
such disclosure not misleading in light of the
circumstances under which they were made;
(iii) such documents including, without limitation, the
documents incorporated by reference in the Final
Prospectus, as applicable, comply with the
requirements of the Securities Laws or the U.S.
Securities Laws, as applicable, including, without
limitation, NI 44-101 and have been filed (and a
receipt therefor obtained, if required under the
Securities Laws) in each of the Qualifying
Jurisdictions; and
(iv) except as set forth or contemplated in the Final
Prospectus or any Supplementary Material or as has
otherwise been publicly disclosed in the Public
Record, there has been no adverse material change
(actual, anticipated, contemplated, proposed or
threatened) in the business affairs, business
prospects, operations, assets, liabilities
(contingent or otherwise), condition (financial or
otherwise), results of operation or capital of the
Corporation and its Subsidiaries, taken as a whole,
from the date of delivery of the Final Prospectus and
any Supplementary Material.
Such deliveries shall also constitute the consent of Xxxxxxx
to the Underwriters' use of the Final Prospectus and any
Supplementary Material, as the case may be, in connection with
the distribution of the Offered Shares in compliance with this
Agreement unless otherwise advised in writing by Xxxxxxx.
(d) COMMERCIAL COPIES.
(i) Xxxxxxx shall deliver or cause to be delivered to the
Underwriters, without charge, such number of
commercial copies of the Final Prospectus and
Supplementary Material (and the U.S. Wrap) and in
such cities in the Qualifying Jurisdictions as the
Underwriters may reasonably request by instructions
to Xxxxxxx or to the commercial printer of the Final
Prospectus given forthwith after the Underwriters
have been advised that the Final Prospectus and
Supplementary Material has been filed and a receipt
therefor has been obtained, and in any event, not
later than 12:00 p.m. (noon) (local time at the place
of delivery) on the first Business Day after the
filing of each of the Final Prospectus, practicable
and such Supplementary Material, as applicable for
Toronto deliveries and 12:00 p.m. (noon) (local time
at the place of delivery) on the second Business Day
for other delivery points. Xxxxxxx shall, as soon as
practicable following a request from the
Underwriters, deliver or cause to be delivered to the
Underwriters such additional commercial copies of the
Final Prospectus and Supplementary Material and the
U.S. Wrap in such numbers and at such locations as
the Underwriters may reasonably request from time to
time.
(ii) Xxxxxxx shall cause to be provided to the
Underwriters such number of copies of any documents
incorporated by reference in the Final Prospectus or
any Supplementary Material as the Underwriters may
reasonably request.
(e) PRESS RELEASES.
During the period commencing on the date hereof and until
completion of the distribution of the Offered Shares, Xxxxxxx
will promptly provide to the Underwriters and Underwriters'
Counsel drafts of any press releases relating to Xxxxxxx, the
Offering or
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 12 OF 40
other transactions contemplated in the Final Prospectus for
review by the Underwriters and the Underwriters' Counsel prior
to any filing or dissemination thereof, provided that any such
review will be completed in a timely manner. Any press release
issued by the Corporation concerning the Offering shall not be
released or disseminated in the United States or distributed
to United States news services and shall include a legend
substantially the same as "NOT FOR DISTRIBUTION TO UNITED
STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED
STATES" and include in the body thereof the words: "The
securities to be offered will not be registered under the
United States Securities Act of 1933 or applicable state
securities laws and may not be offered or sold in the United
States absent registration or an applicable exemption from the
registration requirements. This press release does not
constitute an offer to sell or the solicitation of an offer to
buy any security and shall not constitute an offer,
solicitation, or sale of any securities in any jurisdiction in
which such offering, solicitation or sale of any securities in
any jurisdiction in which such offering, solicitation or sale
would be unlawful".
6. MATERIAL CHANGE.
(a) During the period of the distribution of the Offered Shares,
Xxxxxxx shall promptly inform the Underwriters (and confirm
such notification in writing) of the full particulars of:
(i) any material change (actual, or to the knowledge of
Xxxxxxx, anticipated, contemplated or threatened) in
or affecting the assets, liabilities (contingent or
otherwise), business, affairs, operations, condition
(financial or otherwise), results of operation or
capital of Xxxxxxx and its Subsidiaries, taken as a
whole;
(ii) any material fact which has arisen or has been
discovered and which would have been required to have
been stated, or incorporated by reference, in the
Final Prospectus or any Supplemental Material
(collectively, the "OFFERING DOCUMENTS"), had the
fact arisen or been discovered on, or prior to, the
date of the Offering Documents, as applicable; or
(iii) any change in any material fact referred to in the
Offering Documents,
which is, or may be, of such a nature as to render any of the
Offering Documents or any statement therein untrue or
misleading in any material respect or which would result in
any of the Offering Documents containing a misrepresentation
or which would result in any of the Offering Documents not
complying with any of the Securities Laws or which would
reasonably be expected to have a significant effect on the
market price or value of the Common Shares.
(b) Xxxxxxx shall in good faith discuss with Tristone any fact,
change, event or circumstance (actual, anticipated,
contemplated or threatened) which is of such a nature that
there is, or could be, reasonable doubt as to whether notice
should be given to the Underwriters under Section 6(a) and, in
any event, shall consult with the Underwriters with respect to
the form and content of any amendment or document proposed to
be filed by Xxxxxxx under Section 6(c), prior to any such
filing being made.
(c) Xxxxxxx shall promptly comply to the reasonable satisfaction
of the Underwriters and the Underwriters' Counsel with all
applicable filing and other requirements under the
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 13 OF 40
Securities Laws arising as a result of any change, fact, event
or circumstance referred to in Section 6(a) and shall promptly
prepare and file under the Securities Laws, within the
applicable time limits prescribed under the Securities Laws,
any Supplementary Material as may be required under the
Securities Laws; provided that Xxxxxxx shall allow the
Underwriters and the Underwriters' Counsel to participate
fully in the preparation of any Supplementary Material and to
conduct all due diligence investigations which the
Underwriters may reasonably require in order to fulfil their
obligations as underwriters and in order to enable the
Underwriters to execute responsibly the certificate required
to be executed by them in any Supplementary Material, and the
Underwriters shall have approved the form of any Supplementary
Material, such approval not to be unreasonably withheld and to
be provided in a timely manner.
(d) During the period of the distribution of the Offered Shares,
Xxxxxxx will promptly inform the Underwriters (and confirm
such notification in writing) of the full particulars of:
(i) any request of any Securities Commission or any
similar regulatory authority for any amendment to the
Prospectuses or any Supplementary Material or
amendment to any other part of the Public Record or
for any additional information;
(ii) the issuance by any Securities Commission, the TSX or
any other competent authority of any order to cease
or suspend trading of any securities of Xxxxxxx or of
the institution or threat of institution of any
proceedings for that purpose; and
(iii) the receipt of any communications from any of the
Securities Commissions, the TSX or any other
competent authority relating to the Prospectuses or
any Supplementary Material, any other part of the
Public Record or the distribution of the Offered
Shares, or the Corporation's filings under, or
compliance with U.S. Securities Laws.
(e) If during the period of the distribution of the Offered Shares
there is any change in the Securities Laws which, in the
opinion of the Underwriters and the Underwriters' Counsel,
acting reasonably, requires the filing of any Supplementary
Material, Xxxxxxx will, to the reasonable satisfaction of the
Underwriters and the Underwriters' Counsel, promptly prepare
and file such Supplementary Material with the appropriate
Securities Commissions where such filing is required; provided
that Xxxxxxx will not file any Supplementary Material or other
document without first obtaining the approval of the
Underwriters, (which shall not be unreasonably withheld),
after consulting with the Underwriters with respect to the
form and content thereof.
(f) During the period of the distribution of the Offered Shares,
Xxxxxxx will promptly provide to the Underwriters, for review
by the Underwriters and the Underwriters' Counsel, prior to
filing or issuance on a confidential basis:
(i) any financial statement of Xxxxxxx;
(ii) any proposed document, including without limitation
any amendment to the AIF, new annual information
form, material change report, business acquisition
report,
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 14 OF 40
interim report, or information circular, which may be
incorporated, or deemed to be incorporated, by
reference in the Final Prospectus;
(iii) any press release of Xxxxxxx; and
(iv) any report or other material the Corporation proposes
to file with or submit to the SEC.
7. REGULATORY APPROVALS.
(a) The Corporation will file or cause to be filed with the TSX
all necessary documents and will take or cause to be taken all
steps reasonably necessary to ensure that the Offered Shares
have been approved for listing and posting for trading on the
TSX prior to the Closing Time, subject only to satisfaction by
the Corporation of the Standard Listing Conditions.
(b) The Corporation will make all necessary filings, obtain all
necessary regulatory consents and approvals (if any) and the
Corporation will pay all filing fees required to be paid in
connection with the transactions contemplated in this
Agreement.
8. REPRESENTATIONS AND WARRANTIES OF XXXXXXX.
In addition to the representations and warranties contained elsewhere
in this Agreement, Xxxxxxx hereby represents and warrants to the
Underwriters, and acknowledges that each of the Underwriters is relying
upon such representations and warranties in entering into this
Agreement as set forth below in this Section 8.
(a) STATUS.
(i) Xxxxxxx is a corporation duly incorporated and
validly subsisting under the laws of the Province of
Alberta and has all requisite corporate power,
capacity and authority to own its properties and
assets and to carry on its business as presently
conducted and as proposed to be conducted as
contemplated in the Final Prospectus under the laws
of each jurisdiction in which it conducts a material
portion of its business, and to enter into and
deliver this Agreement and to perform its obligations
hereunder.
(ii) Each Subsidiary is a corporation or partnership duly
incorporated, organized or formed, as the case may
be, and validly subsisting under the laws of its
jurisdiction of incorporation, organization or
formation, as the case may be, and has all requisite
corporate or partnership power, capacity and
authority to own its properties and assets and to
carry on its business as presently conducted and as
proposed to be conducted as contemplated in the Final
Prospectus under the laws of each jurisdiction in
which it conducts a material portion of its business.
Neither Xxxxxxx or any Subsidiary has received a notice from
any court, governmental body or regulatory authority of any
restriction on its ability to conduct its business as now
presently conducted by it or to own, lease and operate its
properties, other than any such restriction that has been
satisfied or that would not have a material adverse effect on
the Corporation and its Subsidiaries (taken as a whole).
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 15 OF 40
(b) AUTHORITY.
All necessary corporate action has been taken by Xxxxxxx to
authorize the execution and delivery by Xxxxxxx of this
Agreement and the performance by Xxxxxxx of its obligations
hereunder and this Agreement has been duly executed and
delivered and constitutes a valid and legally binding
obligation of Xxxxxxx enforceable against it in accordance
with its terms, subject to the general qualifications that:
(i) enforceability may be limited by bankruptcy,
insolvency, reorganization or other laws affecting
creditors' rights generally;
(ii) equitable remedies, including the remedies of
specific performance and injunctive relief, are
available only in the discretion of the applicable
court;
(iii) the equitable or statutory powers of the courts in
Canada having jurisdiction to stay proceedings before
them and the execution of judgments; and
(iv) rights to indemnity, contribution and waiver
hereunder may be limited under applicable law.
(c) PROSPECTUS.
Xxxxxxx has all requisite corporate power, capacity and
authority to issue and sell the Offered Shares, execute and
deliver the Prospectuses and to file such documents with the
Securities Commissions, and all necessary corporate action has
been taken by Xxxxxxx to authorize the execution and delivery
of the Prospectuses and the filing of such documents with the
Securities Commissions.
(d) FINANCIAL STATEMENTS.
The Financial Statements:
(i) are in accordance with the books, records and
accounts of Xxxxxxx;
(ii) are true and correct in all material respects and
present fairly, in all material respects, the
consolidated results of operations, assets,
liabilities and the financial position of Xxxxxxx and
its Subsidiaries (taken as a whole) for the periods
ended on, and as at, the dates indicated; and
(iii) have been prepared in accordance with GAAP
consistently applied,
and Xxxxxxx is not aware of any fact or circumstance presently
existing which would render the Financial Statements
materially incorrect.
(e) UNDISCLOSED LIABILITIES.
Except as set forth in the Financial Statements and the Final
Prospectus, none of Xxxxxxx or the Subsidiaries (taken as a
whole) has:
(i) any material indebtedness;
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 16 OF 40
(ii) any material contingent liabilities or any material
tax liabilities except for potential abandonment and
reclamation liabilities.
(f) NO GUARANTEES.
Neither Xxxxxxx nor any Subsidiary is a party to or bound by
any agreement of guarantee, material to Xxxxxxx and its
Subsidiaries, taken as a whole.
(g) NO MATERIAL CHANGE IN XXXXXXX OR THE SUBSIDIARIES.
There has not been any material change (financial or
otherwise) or any development involving a prospective material
change (financial or otherwise) in the business operations,
condition, affairs, assets (including oil, natural gas and
natural gas liquids reserves and information or data relating
to the estimate value of such reserves) or liabilities
(absolute, accrued, contingent or otherwise), capital or
prospects of Xxxxxxx or its Subsidiaries (taken as a whole)
from the position set forth in the Financial Statements or as
otherwise disclosed in the Final Prospectus.
(h) CAPITAL.
(i) The authorized capital of the Corporation consists of
an unlimited number of Common Shares and an unlimited
number of preferred shares issuable in series of
which 117,391,966 Common Shares and no others, are
issued and outstanding as of February 10, 2005, all
of which shares are fully paid and non-assessable.
The issued and outstanding Common Shares are listed
and posted for trading on the TSX and Xxxxxxx is in
compliance with the rules and regulations of the TSX
in all material respects.
(ii) No person, firm, corporation or other entity holds
any securities convertible or exchangeable into
securities of Xxxxxxx or now has any agreement,
warrant, option, right or privilege (whether
pre-emptive or contractual) being or capable of
becoming an agreement for the purchase, subscription
or issuance of any unissued shares or other
securities (including convertible securities) of
Xxxxxxx other than pursuant to the provisions of
Xxxxxxx'x stock option plan, pursuant to which
options to acquire an aggregate of 11,748.887 Common
Shares are outstanding as of February 10, 2005, and
pursuant to Xxxxxxx'x shareholder rights plan.
(i) SUBSIDIARIES.
The Subsidiaries are the only material subsidiaries of Xxxxxxx
and all securities of the Subsidiaries, other than the
Partnership, are owned by Xxxxxxx, and all securities in the
Subsidiaries owned by Xxxxxxx are free and clear of all
mortgages, liens, charges, pledges, security interests,
encumbrances, claims or demands whatsoever in law or in
equity, other than mortgages, liens, charges, pledges,
security interests, encumbrances, claims or demands arising
pursuant to the Credit Facility.
(j) THE PARTNERSHIP.
Xxxxxxx and Hornet Energy Ltd. are the only partners of the
Partnership and no person, firm, corporation or other entity
holds any securities convertible or exchangeable into
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 17 OF 40
partnership interests of the Partnership, or has any
agreement, warrant option, right or privilege (whether
pre-emptive or contractual) being or capable of becoming an
agreement warrant, option or right for the purchase or other
acquisition of any unissued partnership interests or
securities of the Partnership.
(k) TRANSFER AGENT.
Computershare Trust Company of Canada, at its principal
offices in Calgary and Toronto, is duly appointed as the
registrar and transfer agent in respect of the Common Shares.
(l) ISSUANCE BY XXXXXXX.
All of the Common Shares to be issued by Xxxxxxx to the
Underwriters hereunder as described in the Final Prospectus
will at the Closing Time be duly and validly created and
issued and will be fully paid and non-assessable and will
conform to the description thereof contained in the Final
Prospectus, free and clear of all mortgages, liens, charges,
pledges, security interests, encumbrances, claims or demands
whatsoever in law or in equity created by Xxxxxxx or pursuant
to an agreement with Xxxxxxx.
(m) SHARE CERTIFICATES.
The form and terms of definitive certificates representing the
Common Shares have been duly approved and adopted by the
Corporation and comply with all legal requirements and the
requirements of the TSX relating thereto.
(n) INTERESTS OF INSIDERS.
(i) Except for compensation arrangements disclosed in the
Public Record, none of the directors or senior
officers of Xxxxxxx or any "associate " (within the
meaning of that term in the SECURITIES ACT (Alberta))
or affiliate of any of the foregoing persons, has or
has had any material interest, direct or indirect, in
any continuing or existing material transaction or
has any material interest, direct or indirect, in any
proposed transaction which is material to or will
materially affect Xxxxxxx and its Subsidiaries (taken
as a whole); and
(ii) Xxxxxxx has no loans or other indebtedness
outstanding which have been made to or from any of
its officers, directors or employees or any other
person not dealing at arm's length with Xxxxxxx that
are currently outstanding other than as disclosed in
the Public Record or the Financial Statements or in
respect of expenses incurred in the ordinary course
of business, which expenses are reimbursable by
Xxxxxxx.
(o) CONSENTS AND FILINGS.
The execution and delivery of this Agreement, the fulfilment
of the terms hereof by Xxxxxxx and the issuance, sale and
delivery of the Offered Shares as contemplated by this
Agreement do not and will not require the consent, approval,
authorization, order, filing, registration or qualification of
or with any governmental authority, exchange, Securities
Commission or other regulatory commission or agency or third
party, except (i) those that are required under Securities
Laws or applicable TSX regulations, all of which have been
obtained or will be obtained prior to the Closing Time, and
(ii) those
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 18 OF 40
post-closing notice filings that are required under the U.S.
Securities Laws, all of which will be made by Xxxxxxx prior to
the deadlines therefor.
(p) NO DEFAULTS.
Neither Xxxxxxx nor any of the Subsidiaries is in default or
breach of, and the execution and delivery of this Agreement,
the fulfilment of the terms hereof by Xxxxxxx and the
issuance, sale and delivery of the Offered Shares as
contemplated by this Agreement do not and will not result in a
breach of or default under, and do not and will not create a
state of facts which, after notice or lapse of time or both,
will result in a breach of or default under, and do not and
will not conflict with:
(i) any of the provisions of the constating documents or
by-laws of Xxxxxxx or any of the Subsidiaries, or any
resolutions of any of the directors or shareholders
of Xxxxxxx or any of the Subsidiaries, or any
committee of any of them;
(ii) any statute, rule, regulation or law applicable to
Xxxxxxx or the Subsidiaries, including, without
limitation, the Securities Laws, or any judgment,
order, decree or decision of any governmental or
regulatory body, agency, commission, tribunal, court
or exchange having jurisdiction over Xxxxxxx or any
of the Subsidiaries; or
(iii) any of the terms or provisions of any contract,
indenture, mortgage, hypothec, deed of trust, loan
agreement, note, lease, license, franchise agreement,
authorization, permit, certificate or other agreement
or document to which Xxxxxxx or any of the
Subsidiaries is a party or by which any of them may
be bound, or to which any of them or any of their
respective assets or businesses is subject (each, a
"CONTRACT") or give rise to any right to accelerate
the maturity or require the prepayment of any
indebtedness under, or result in the creation or
imposition of any lien, charge or encumbrances upon
any property or assets of Xxxxxxx or any of the
Subsidiaries under any Contract,
which individually or in the aggregate would (1) have or
result in a material adverse effect on the business, condition
(financial or otherwise), properties, assets, liabilities
(contingent or otherwise), results of operations or prospects
of Xxxxxxx and the Subsidiaries (taken as a whole), or impair
the sale of the Common Shares or the consummation of the
transactions contemplated hereby or by the Final Prospectus or
any Supplementary Material, or (2) materially impair Xxxxxxx'x
ability to perform the obligations contemplated in this
Agreement, the Final Prospectus or any Supplementary Material.
(q) PUBLIC RECORD.
The information and statements set forth in the Public Record
pertaining to Xxxxxxx and its Subsidiaries were true and
complete in all material respects and did not contain any
misrepresentation, as of the respective dates of such
information or statements, and were completed in accordance
with Securities Laws and no material change has occurred in
relation to Xxxxxxx or the business of Xxxxxxx which is not
disclosed in the Public Record, and Xxxxxxx has not filed any
confidential material change reports which continue to be
confidential.
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 19 OF 40
(r) NO RESTRICTIONS ON DISTRIBUTIONS.
Neither Xxxxxxx nor any Subsidiary is currently prohibited,
directly or indirectly, from paying any dividends, from making
any other distribution on its capital stock, or other
securities, or from paying any interest or repaying any loans,
advances or other indebtedness of Xxxxxxx or any Subsidiary,
except under applicable law or as otherwise described in the
Final Prospectus and as set forth in the Credit Facility and
the terms of its Senior Notes.
(s) PERMITS.
Xxxxxxx and each of the Subsidiaries hold, or will hold at the
Closing Time, all material permits, by-laws, licences,
waivers, exemptions, consents, certificates, registrations,
authorizations, approvals, rights, rights of way and
entitlements and the like which are required from any
governmental or regulatory authority or any other person
necessary to conduct its business and activities as currently
conducted or as the Final Prospectus discloses they will be
conducted and all such permits, by-laws, licences, waivers,
exemptions, consents, certificates, registrations,
authorizations, approvals, rights, rights of way and
entitlements and the like are in full force and effect and in
good standing in all material respects or will be in full
force and effect and in good standing in all material respects
at the Closing Time, and none of such licenses registrations
or qualifications contains any burdensome term, provision
condition or limitation which has or could reasonably be
expected to have any material adverse effect on the business
of the Corporation and its Subsidiaries (taken as a whole) as
now conducted or as proposed to be conducted by Xxxxxxx.
(t) COMPLIANCE WITH LAWS.
Xxxxxxx and each of the Subsidiaries has conducted and is
conducting its activities or business in all material respects
in compliance with all applicable laws, rules and regulations,
including without limitation those of the country, province,
state and municipality in which such entity carries on
business or conducts its activities. To the knowledge of
Xxxxxxx, other than with respect to implementation of the
Kyoto accord, Xxxxxxx is not aware of any proposed or pending
change in any applicable law, rule or regulation that would
have a material adverse effect on the business of Xxxxxxx and
its Subsidiaries (taken as a whole).
(u) TITLE.
Although it does not warrant title, Xxxxxxx:
(i) does not have reason to believe that Xxxxxxx or any
of its Subsidiaries does not have title to or the
right to produce and sell its petroleum, natural gas,
natural gas liquids and related hydrocarbons (for the
purposes of this clause, the foregoing are referred
to as the "INTERESTS") and does represent and warrant
that the Interests are free and clear of adverse
claims created by, through or under the Corporation,
except as disclosed in the Public Record or those
arising in the ordinary course of business, which are
not material in the aggregate, and, to the knowledge
of the Corporation, the Corporation and its
Subsidiaries hold their respective Interests under
valid and subsisting leases, licenses, permits,
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 20 OF 40
concessions, concession agreements, contracts,
subleases, reservations or other agreements; and
(ii) is not aware of any material defects, failures or
impairments in the title of Xxxxxxx or any of its
Subsidiaries to its Interests, whether or not an
action, suit, proceeding or inquiry is pending or
threatened and whether discovered by any third party,
which in aggregate could reasonably be expected to
have a material adverse effect on:
(A) the quantity and pre-tax present worth values
of the oil and gas reserves of Xxxxxxx shown
in the Netherland Xxxxxx Report;
(B) the current production of Xxxxxxx; or
(C) the current cash-flow of Xxxxxxx.
(v) OPERATIONS.
Any and all operations of Xxxxxxx and each of its Subsidiaries
and, to the knowledge of Xxxxxxx, any and all operations by
third parties, on or in respect of the assets and properties
of Xxxxxxx and its Subsidiaries, have been conducted in
accordance with good oil and gas industry practices in the
Western Canada Sedimentary Basin.
(w) INSURANCE.
Xxxxxxx maintains insurance with respect to its properties and
business of the types and in the amounts as are prudent and
customary in its business, all of which insurance is in full
force and effect in all material respects.
(x) NO CLAIMS.
Except as described in the Final Prospectus, there is no
claim, action, suit, proceeding or investigation (whether or
not purportedly on behalf of Xxxxxxx or any of the
Subsidiaries), to the knowledge of Xxxxxxx, pending or
threatened against or affecting Xxxxxxx or any of the
Subsidiaries or any of their properties, or to which Xxxxxxx
or any of the Subsidiaries is or may be a party or to which
any property of Xxxxxxx or any of the Subsidiaries is or may
be subject, at law or in equity, or before or by any federal,
provincial, state, municipal or other governmental or
regulatory department, commission, board or agency, domestic
or foreign, which in any way, or could reasonably be expected
to, materially adversely affect the business, operations or
condition (financial or otherwise) of Xxxxxxx and the
Subsidiaries (taken as a whole) or which affects or may affect
the distribution of the Offered Shares and Xxxxxxx is not
aware of any existing ground on which any such claim, action,
suit, proceeding of inquiry might be commenced with any
reasonable likelihood of success.
(y) NETHERLAND XXXXXX REPORT.
Xxxxxxx has made available to Netherland Xxxxxx, prior to the
issuance of the Netherland Xxxxxx Report, for the purpose of
preparing such report, all information requested by Netherland
Xxxxxx, which information did not contain any material
misrepresentation at the time such information was so
provided. Xxxxxxx has no
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 21 OF 40
knowledge, of a change in any reserve information provided to
Netherland Xxxxxx since the date that such information was so
provided which would result in a material adverse change to
the quantity or pre-tax present worth value of estimated
future net revenue values of Xxxxxxx as set out in the
Netherland Xxxxxx Report. Xxxxxxx believes that the Netherland
Xxxxxx Report reasonably presents the quantity and pre-tax
present worth value of estimated future net revenue values of
oil natural gas and natural gas liquids reserves of Xxxxxxx as
at the effective date thereof in respect of the reserves
information therein based upon information available in
respect of such reserves and the pricing assumptions contained
therein at the time such report was prepared.
(z) TAXES.
Xxxxxxx and each of the Subsidiaries has duly and on a timely
basis filed all tax returns required to be filed by them, have
paid all taxes due and payable by them and have paid all
assessments and re-assessments and all other taxes,
governmental charges, penalties, interest and other fines due
and payable by them and which are claimed by any governmental
authority to be due and owing, and adequate provision has been
made for taxes payable for any completed fiscal period for
which tax returns are not yet required, and there are no
agreements, waivers or other arrangements providing for an
extension of time with respect to the filing of any tax return
or payment of any tax, governmental charge or deficiency by
Xxxxxxx or any Subsidiary and, to the knowledge of Xxxxxxx,
there are no actions, suits, proceedings, investigations or
claims threatened or pending against Xxxxxxx or any Subsidiary
in respect of taxes, governmental charges or assessments or
any matters under discussion with any governmental authority
relating to taxes, governmental charges or assessments
asserted by any such authority which are not being contested
by Xxxxxxx or the Subsidiaries in good faith.
(aa) AUDITOR.
There has not been any unresolved "reportable event" (within
the meaning of National Instrument 51-102 with the Auditors.
(bb) ACCOUNTING CONTROLS.
The Corporation maintains a system of internal accounting
controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with
management's general or specific authorization; and
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity
with GAAP and to maintain accountability for assets.
(cc) ENVIRONMENTAL REPRESENTATIONS.
(i) all Environmental Authorizations necessary for
Xxxxxxx and the Subsidiaries to carry on their
business as presently conducted or as proposed to be
conducted as contemplated in the Final Prospectus
have been obtained and are in force and the business
and operations of each of Xxxxxxx and the
Subsidiaries have been carried out at all times in
all material respects within the terms of all such
Environmental Authorizations;
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 22 OF 40
(ii) all records, reports, registrations and information
necessary for Xxxxxxx and the Subsidiaries to comply
in all material respects with any Environmental
Authorization have been made or given;
(iii) no circumstances exist or have arisen out of the
operations of Xxxxxxx or any Subsidiary which could
confer a right of revocation, suspension,
modification or setting aside of any Environmental
Authorization or could prevent any Environmental
Authorization from being renewed or extended or could
result in the terms of any Environmental
Authorization being modified in a manner which may
reasonably be expected to have a material adverse
effect on Xxxxxxx and the Subsidiaries (taken as a
whole);
(iv) in respect of the properties in which Xxxxxxx and the
Subsidiaries have an interest:
(A) where Xxxxxxx or a Subsidiary is the
operator of such property, the operations in
respect of such property have been carried
out and operated at all times in compliance
in all material respects with Environmental
Laws; and
(B) where Xxxxxxx or a Subsidiary is not the
operator of such properties, to the
knowledge of Xxxxxxx, reasonable endeavours
have been used to carry out the operations
in respect of such properties at all times
in compliance in all material respects with
Environmental Laws;
(dd) REPORTING ISSUER STATUS.
(i) Xxxxxxx is a "reporting issuer" or the equivalent
within the meaning of the Securities Laws, has held
that status without interruption or suspension in at
least one of those jurisdictions since January 1,
2003, and is not in, and to the best of its knowledge
will not at the Closing Time be in, default of any
material requirements of Securities Laws; and
(ii) no order, ruling or determination having the effect
of suspending the sale or ceasing the trading of the
Offered Shares, or any other securities of Xxxxxxx or
the Subsidiaries has been issued or made by any
Securities Commission or exchange or any other
regulatory authority and is continuing in effect and,
to the best of the knowledge of Xxxxxxx, no
proceedings for that purpose have been instituted or
are pending or are contemplated or threatened by any
such authority or under any Securities Laws or the
U.S. Securities Laws.
(ee) NO LABOUR DISPUTES.
No labour dispute with the employees of Xxxxxxx or any of the
Subsidiaries exists or, to the best of the knowledge of
Xxxxxxx is imminent, and Xxxxxxx is not aware of any existing
or imminent labour disturbance by the employees of any of its
or any Subsidiary's principal suppliers, manufacturers,
customers or contractors, which, in either case, may
reasonably be expected to have or result in a material adverse
effect on the business, financial condition, properties,
assets, liabilities (contingent or otherwise), results of
operations or prospects of Xxxxxxx and its Subsidiaries (taken
as a whole) or
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 23 OF 40
impair the sale of the Offered Shares or the consummation of
the transactions contemplated hereby or by the Final
Prospectus or any Supplementary Material.
(ff) EXEMPTIONS FROM REGISTRATION.
To its knowledge, the Corporation is not in default of U.S.
Securities Laws and the Corporation is entitled to avail
itself of applicable exemptions from registration available
under applicable U.S. Securities Laws as described in Schedule
A in respect to trades of Offered Shares to purchasers
resident in the United Shares.
(gg) NO FINDER'S FEE.
Except as provided herein, there is no person, firm or
corporation acting for Xxxxxxx entitled to any brokerage or
finder's fee payable by on or behalf of in connection with
this Agreement or any of the transactions contemplated
hereunder and in the event any person, firm or corporation
acting or purporting to be acting for Xxxxxxx establishes a
claim for any commission or brokerage or finder's fee from the
Underwriters, Xxxxxxx covenants to indemnify and hold harmless
the Underwriters with respect thereto and with respect to all
costs reasonably incurred in the defence thereof.
(hh) MINUTE BOOKS.
The minute books and corporate records of Xxxxxxx and the
Subsidiaries made available to Underwriters' Counsel in
connection with their due diligence investigations of Xxxxxxx
and the Subsidiaries for the periods from their respective
dates of incorporation to the date of examination thereof, are
the original minute books and records of Xxxxxxx and the
Subsidiaries and contain copies of all proceedings (or
certified copies thereof) of the board of directors, all
committees of the board of directors, the shareholders or
partners, as applicable of each of Xxxxxxx and the
Subsidiaries and there have been no other meetings,
resolutions or proceedings of the board of directors, any
committee of the board of directors, the shareholders or
partners, as applicable, of Xxxxxxx or the Subsidiaries to the
date of review of such corporate records and minute books not
reflected in such minute books and other corporate records
other than those which have been disclosed to the Underwriters
in writing or which are not material in the context of Xxxxxxx
or the Offering.
9. ADDITIONAL COVENANTS OF XXXXXXX.
Xxxxxxx covenants and agrees with the Underwriters that:
(a) Xxxxxxx will advise the Underwriters, promptly after receiving
notice thereof, of the time when the Final Prospectus and any
Supplementary Material has been filed and receipts therefor
have been obtained and will provide evidence reasonably
satisfactory to the Underwriters of each such filing and
copies of such receipts; and
(b) Xxxxxxx will advise the Underwriters, promptly after receiving
notice or obtaining knowledge thereof, of:
(i) the issuance by any Securities Commission of any
order suspending or preventing the use of the
Prospectuses or any Supplementary Material,
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 24 OF 40
(ii) the suspension of the qualification of the Offered
Shares in any of the Qualifying Jurisdictions,
(iii) the institution, threatening or contemplation of any
proceeding for any such purposes, or
(iv) any requests made by any Securities Commission for
amending or supplementing the Prospectuses or for
additional information; and
will use its reasonable commercial efforts to prevent the
issuance of any order referred to in (i) above and, if any
such order is issued, to obtain the withdrawal thereof as
quickly as possible.
(c) The Corporation agrees to use the proceeds from the issuance
and sale of the Offered Shares for the purposes described
under the heading "Use of Proceeds" in the Final Prospectus.
10. CONDITIONS OF CLOSING OF OFFERED SHARES.
The obligations of the Underwriters to purchase the Offered Shares
shall be subject to the following conditions, which are for the
exclusive benefit of the Underwriters, any of which may be waived, in
whole or in part, by the Underwriters, in their sole discretion,
pursuant to Section 16:
(a) all representations and warranties and other statements of
Xxxxxxx shall be at and as of the Closing Time true and
correct in all material respects and Xxxxxxx shall have
performed in all material respects all of its obligations
hereunder theretofore to be performed;
(b) Xxxxxxx shall have delivered to the Underwriters, at the
Closing Time, certificates dated the Closing Date addressed to
the Underwriters and signed by two senior officers of Xxxxxxx
as may be acceptable to the Underwriters, acting reasonably,
certifying for and on behalf of Xxxxxxx and without personal
liability, after having made due enquiries, to the effect
that:
(i) Xxxxxxx has duly complied with all the covenants and
satisfied in all material respects all the terms and
conditions of this Agreement on its part to be
complied with and satisfied at or prior to the
Closing Time;
(ii) the representations and warranties of Compton
contained herein are true and correct in all material
respects as at the Closing Time, with the same force
and effect as if made at the Closing Time after
giving effect to the transactions contemplated
hereby;
(iii) receipts have been issued by the Securities
Commissions in the Qualifying Jurisdictions for the
Final Prospectus and no order, ruling or
determination having the effect of ceasing the
trading or suspending the issuance or sale of the
Common Shares to be issued and sold by Compton
hereunder has been issued or made and no proceedings
for such purpose have been instituted or are pending
or, to the knowledge of such officers, contemplated
or threatened; and
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 25 OF 40
(iv) no event of the nature referred to in Section
17(a)(ii) and (iii) has occurred or to the knowledge
of such officers is pending, contemplated or
threatened,
and each certification therein is itself a condition to
Closing, provided that delivery of such certificate(s) in the
manner contemplated above does not constitute satisfaction or
discharge of this condition if the Underwriters have knowledge
to the contrary;
(c) the Underwriters shall have received a certificate dated the
Closing Date signed by the Vice-President, General Counsel of
Compton or any other senior officer of Compton as may be
acceptable to the Underwriters, in form and content
satisfactory to the Underwriters' Counsel, acting reasonably,
with respect to:
(i) the articles of incorporation and by-laws of Compton
and each of the Subsidiaries;
(ii) the resolutions of the board of directors of Compton,
relevant to the approval of the Final Prospectus and
the signing and filing thereof, the issue and sale of
the Offered Shares to be issued and sold by Compton,
and the authorization of this Agreement and the other
agreements and transactions contemplated herein and
in the Final Prospectus;
(iii) the incumbency and signatures of the signing officers
of Compton, and
(iv) such other matters as the Underwriters may reasonably
request.
(d) the Underwriters shall have received a comfort letter, in form
and substance satisfactory to the Underwriters, from the
Auditors, updating the comfort letters referred to in Section
5(a)(v) to the Closing Time, provided that such letters may be
based on a review by the Auditors having a cut-off date not
more than two Business Days prior to the Closing Date;
(e) Compton shall have caused a favourable legal opinion to be
delivered by the Corporation's Counsel addressed to the
Underwriters and the Underwriters' Counsel, acceptable in all
reasonable respects to the Underwriters' Counsel, including in
respect of those matters identified in Schedule B hereto. In
giving such opinions, Corporation's Counsel shall be entitled
to rely, to the extent appropriate in the circumstances, upon
local counsel and shall be entitled as to matters of fact not
within their knowledge to rely upon a certificate of fact from
responsible persons in a position to have knowledge of such
facts and their accuracy;
(f) if any of the Offered Shares are sold in the United States, a
favourable legal opinion of Xxxx Xxxxx, Xxxxxxx, Xxxxxxx and
Xxxxxxxx LLP or other recognized counsel acceptable to the
Underwriters, acting reasonably, in form and substance
reasonably satisfactory to the Underwriters and the
Underwriters' Counsel, with respect sales of the Offered
Shares in the United States;
(g) the Underwriters shall have received copies of correspondence
indicating that Compton has obtained all necessary approvals
for the Offered Shares to be listed for trading on the TSX on
the Closing Date, subject only to the standard listing
conditions acceptable to the Underwriters, acting reasonably;
and
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 26 OF 40
(h) such other certificates and documents as the Underwriters, or
the Underwriters' Counsel may request, acting reasonably.
11. CLOSING.
The closing of the purchase and sale of the Offered Shares shall be
completed at the Closing Time at the offices of Corporation's Counsel
in Calgary, Alberta or at such other place as Compton and Tristone may
agree. Subject to Section 10, at the Closing Time,
(a) Compton shall deliver to Tristone, on behalf of the
Underwriters,
(i) the opinions, certificates and documents referred to
in Section 10;
(ii) definitive share certificates representing in the
aggregate the total number of Offered Shares
purchased in the Qualifying Jurisdictions, registered
in the name of Tristone;
(iii) definitive certificates representing the Offered
Shares sold to United States purchasers in accordance
with the instruction provided by such purchasers and
provided to Compton in writing not less than 24 hours
prior to the Closing Time; and
(iv) payment of the fees and expenses payable by Compton
to the Underwriters as provided in this Agreement,
against payment by Tristone, on behalf of the
Underwriters, to or to the direction of Compton of
the purchase price for the Offered Shares, by wire or
electronic funds transfer.
12. RESTRICTIONS ON FURTHER ISSUES, SALES OR TRANSACTIONS.
During the period commencing on the date hereof and ending on the day
which is 90 days after the Closing Date, Compton will not, without the
prior written consent of Tristone on behalf of the Underwriters after
consultation with the Underwriters, which consent shall not be
unreasonably withheld, directly or indirectly:
(a) offer, issue, pledge, sell, contract to sell, announce an
intention to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise lend, transfer or
dispose of, directly or indirectly, any Common Shares or
securities convertible into or exchangeable for Common Shares
(other than (A) as contemplated in this Agreement, (B) for
purposes of director, officer or employee stock options or
other share-based incentives under Xxxxxxx'x stock option plan
or other board approved incentive plans described in the
Public Record; (C) pursuant to the exercise of options or
other share-based incentives issued after the date hereof to
officers, directors and employees of Compton or its
Subsidiaries pursuant to Xxxxxxx'x stock option plan or other
board approved incentive plans described in the Final
Prospectus, (D) pursuant to Xxxxxxx'x stock savings plan, (E)
pursuant to Xxxxxxx'x shareholder rights plan or (F)
securities issued in connection with an arm's length
acquisition, merger, consolidation, amalgamation, take-over,
arrangement or similar transaction with any corporation,
companies or entity, 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 Common Shares,
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 27 OF 40
whether any such transaction described in clause (a) or (b) above is
settled by delivery of Common Shares or other securities of Compton, in
cash or otherwise.
13. INDEMNIFICATION BY COMPTON.
(a) Compton shall fully indemnify and save harmless each of the
Underwriters, each of their respective affiliates and each of
their respective directors, officers, employees, shareholders
and agents and each person who controls any Underwriter
(collectively, the "INDEMNIFIED PARTIES" and individually an
"INDEMNIFIED PARTY") from and against any and all losses
(other than loss of profit), costs, expenses, claims, demands,
actions, damages, fines, penalties, taxes, interest and
liabilities, joint or several, including the aggregate amount
paid in reasonable settlement of any actions, suits,
proceedings, investigations or claims and the fees and
expenses of the Indemnified Parties' counsel on a solicitor
and his own client basis that may be incurred in advising with
respect to or defending any action, suit, proceeding,
investigation or claim that may be made or threatened against
any Indemnified Party or in enforcing this indemnity
(collectively, the "CLAIMS") to which any Indemnified Party
may become subject or otherwise involved, in any capacity
insofar as Claims relate to, are caused by, result from, arise
out of or are based upon, directly or indirectly, the
engagement and activities of the Underwriters under this
Agreement, including without limitation:
(i) any breach, default or failure to perform by Compton
of its representations, warranties, covenants or
obligations hereunder or any other document to be
delivered pursuant hereto;
(ii) any information or statement (except any information
or statement relating solely to and provided by any
of the Underwriters) contained in any of the Offering
Documents, the U.S. Wrap or any other material filed
in compliance or intended compliance with Securities
Laws or U.S. Securities Laws or any certificate of
Compton delivered pursuant to this Agreement, which
at the time and in light of the circumstances in
which it was made contains or is alleged to contain a
misrepresentation;
(iii) any omission or alleged omission to state in the
Offering Documents, the U.S. Wrap or any other
material filed in compliance or intended compliance
with Securities Laws or U.S. Securities Laws or any
certificate of Compton delivered under this
Agreement, any fact or information (whether material
or not) (except facts relating solely to and provided
by any of the Underwriters) required to be stated in
such document or necessary to make any statement in
such document not misleading in light of the
circumstances under which it was made;
(iv) any order made or enquiry, investigation or
proceeding commenced or threatened by any Securities
Commission or other competent authority based upon
any untrue statement or omission or alleged untrue
statement or alleged omission or any
misrepresentation or alleged misrepresentation
(except a statement or omission or alleged statement
or omission or a misrepresentation or alleged
misrepresentation relating solely to and provided by
any of the Underwriters) in the Offering Documents or
any other materials filed in compliance or intended
compliance with Securities Laws or U.S. Securities
Laws, or based upon any failure of Compton to comply
with Securities Laws preventing or restricting the
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 28 OF 40
trading in or the sale of the Common Shares or
related activities in any of the Qualifying
Jurisdictions; and
(v) any non-compliance or alleged non-compliance by
Compton with any Securities Laws or U.S. Securities
Laws in connection with the transactions contemplated
hereby including non-compliance by Compton with any
statutory requirement to make any document available
for inspection,
except to the extent any claim has resulted from the fraud,
fraudulent misrepresentation, gross negligence or wilful
misconduct of an Indemnified Party.
(b) Promptly after receiving notice of a Claim or receipt of
notice of the commencement of any investigation which is
based, directly or indirectly, upon any matter in respect of
which indemnification may be sought from Compton, an
Indemnified Party will notify Compton in writing of the
particulars thereof, provided that the omission to so notify
Compton shall not relieve Compton of any liability which
Compton may have to any Indemnified Party except and only to
the extent that Compton demonstrates that any such delay in or
failure to give notice in respect of an actual Claim as herein
required materially prejudices the defence of such action,
suit, proceeding, claim or investigation or results in any
material increase in the liability which Compton have under
this indemnity.
(c) Compton shall, subject as hereinafter provided, be entitled
(but not required) at their expense to assume the defence on
behalf of the Indemnified Party of any suit brought to enforce
a Claim, provided that the defence shall be through legal
counsel selected by Compton and acceptable to the Indemnified
Party, acting reasonably. An Indemnified Party shall have the
right to employ separate counsel in any such suit and
participate in the defence thereof but the fees and expenses
of such counsel shall be at the expense of the Indemnified
Party unless:
(i) Compton fails to assume the defence of such suit on
behalf of the Indemnified Party within ten Business
Days of receiving notice of such suit;
(ii) the employment of such counsel has been authorized by
Compton; or
(iii) the named parties to any such suit (including any
added or third parties) include the Indemnified Party
and Compton, and the Indemnified Party and Compton
shall have been advised in writing by counsel that
there is an actual or potential conflict in the
interests of Compton, on the one hand, and the
interests of the Indemnified Party, on the other
hand, or additional defences are available to the
Indemnified Party, in either case which makes
representation by the same counsel inappropriate.
In each of cases (i), (ii) or (iii), Compton shall not have
the right to assume the defence of such suit on behalf of the
Indemnified Party, but Compton shall only be liable to pay the
reasonable fees and disbursements of one firm of separate
counsel, on a solicitor and his own client basis, in
connection with any one such action or separate but
substantially similar or related actions in any one
jurisdiction for all Indemnified Parties.
(d) Compton hereby acknowledges and agrees that, with respect to
Sections 13 and 14, the Underwriters are contracting on their
own behalf and as agents for their affiliates and
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 29 OF 40
their respective directors, officers, shareholders, employees
and agents and each person who controls any Underwriter
(collectively, the "BENEFICIARIES"). In this regard, each of
the Underwriters shall act as trustee for the Beneficiaries of
the covenants of Compton under Sections 13 and 14 with respect
to the Beneficiaries and accepts these trusts and shall hold
and enforce such covenants on behalf of the Beneficiaries.
(e) The rights of indemnity contained in this Section 13 shall not
enure to the benefit of the Underwriters or any other
Indemnified Party if Compton has complied with the provisions
of Sections 5 and 6 and the person asserting any Claim
contemplated by this Section 13 was not provided with a copy
of the Offering Documents which corrects any untrue statement
or information, misrepresentation or omission which is the
basis of such Claim and which is required under the Securities
Laws to be delivered to such person.
(f) Compton also agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or
otherwise) to Compton or any person asserting claims on behalf
of or in right of Compton for or in connection with the
matters provided for herein except to the extent any losses,
expenses, claims, actions, damages, fines, penalties or
liabilities incurred by Compton are determined by a court of
competent jurisdiction in a final judgment that has become
non-appealable to have resulted from the gross negligence,
wilful misconduct, fraud or fraudulent misrepresentation of
such Indemnified Party. Neither Compton nor any Indemnified
Party will, without each of the other's prior express written
consent, which consent shall not be unreasonably withheld,
make any admission of liability, settle, compromise, consent
to the entry of any judgement in or otherwise seek to
terminate any action, suit, proceeding, investigation or claim
in respect of which indemnification may be sought hereunder
(whether or not any Indemnified Party is a party thereto)
unless such settlement, compromise, consent or termination
includes a release of each Indemnified Party and Compton from
any liabilities arising out of such action, suit, proceeding,
investigation or claim.
(g) If any legal proceedings shall be instituted against Compton
or if any regulatory authority or stock exchange shall carry
out an investigation of Compton, in either case, any
Indemnified Party is required to testify, or respond to
procedures designed to discover information, in connection
with or by reason of the services performed by the
Underwriters hereunder, Compton shall pay and reimburse the
Indemnified Parties for the other expenses reasonably incurred
by the Indemnified Parties in connection with such proceedings
or investigation and a fee at the normal PER DIEM rate for any
director, officer or employee of the Underwriters involved in
the preparation for or attendance at such proceedings or
investigation.
(h) The rights and remedies of the Underwriters set forth in
Sections 13, 14 and 17 are to the fullest extent possible in
law cumulative and not alternative and the election by any
Underwriter to exercise any such right or remedy shall not be,
and shall not be deemed to be, a waiver of any other rights
and remedies.
(i) Compton waives any right it may have of first requiring an
Indemnified Party to proceed against or enforce any other
right, power, remedy or security or claim or to claim payment
from any other person before claiming under this indemnity. It
is not necessary for an Indemnified Person to incur expense or
make payment before enforcing such indemnity.
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 30 OF 40
14. CONTRIBUTION.
(a) In order to provide for just and equitable contribution in
circumstances in which the indemnity provided in Section 13
would otherwise be available in accordance with its terms but
is, for any reason, held to be unavailable to or unenforceable
by, in whole or in part, the Indemnified Parties or
enforceable otherwise than in accordance with its terms, or is
insufficient to hold any Indemnified Party harmless, Compton
shall contribute to the amount paid or payable by the
Indemnified Parties as a result of such Claim in such
proportion as is appropriate to reflect not only the relative
benefits received by Compton, on the one hand, and the
Indemnified Parties, on the other hand, but also the relative
fault of Compton and the Indemnified Parties as well as any
relevant equitable considerations; provided that Compton shall
in any event be liable to pay or contribute to the amount paid
or payable by the Indemnified Parties under the Claim any
amounts in excess of the aggregate amount of the fees actually
received by the Indemnified Parties under this Agreement.
However, no party who has engaged in any fraud, fraudulent
misrepresentation, wilful misconduct or negligence shall be
entitled to claim contribution from any person who has not
engaged in such fraud, fraudulent misrepresentation, wilful
misconduct or negligence. The relative benefits received by
Compton, on the one hand, and the Indemnified Parties, on the
other hand, shall be deemed to be in the same ratio as the
total proceeds from the offering of the Offered Shares (net of
the Underwriters' fee payable to the Underwriters pursuant to
this Agreement but before deducting expenses) received by
Compton is to the Underwriters' fee received by the
Underwriters pursuant to this Agreement. The relative fault of
Compton on one hand, and of the Indemnified Parties, on the
other hand, shall be determined by reference to, among other
things, whether the matters or things referred to in Section
13 which resulted in such Claims relate to information
supplied by or steps or actions taken or done or not taken or
done by or on behalf of Compton, or to information supplied by
or steps or actions taken or done or not taken or done by or
on behalf of the Underwriters and the relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement, omission or misrepresentation, or
other matter or thing referred to in Section 13.
(b) For greater certainty, in the event of unenforceability or
unavailability of the indemnity provided in Section 13,
Compton shall not have any obligation to contribute pursuant
to this Section 14 in respect of any Claim except to the
extent the indemnity given by it in Section 13 would have been
applicable to such Claim in accordance with its terms, had
such indemnity been found to be enforceable and available to
the Indemnified Parties.
(c) The rights to contribution provided in this Section 14 shall
be in addition to and not in derogation of any other right to
contribution which the Indemnified Parties may have by statute
or otherwise at law (provided that subsections (a) and (b) of
this Section 14 shall apply, MUTATIS MUTANDIS, in respect of
such other right) and the rights in this Section 14 shall
remain operative and in full force and effect regardless of:
(i) acceptance of any Offered Shares and payment
therefor; or
(ii) any termination of this Agreement.
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 31 OF 40
15. EXPENSES.
(a) XXXXXXX'X EXPENSES.
Whether or not the transactions contemplated herein shall be
completed, all costs and expenses (including applicable GST)
of or incidental to the transactions contemplated hereby
including, without limitation, those relating to the
distribution of the Offered Shares, shall be borne by Compton
including, without limitation, all costs and expenses of or
incidental to the preparation, filing, reproduction (including
the commercial copies thereof) of the Prospectuses, any
Supplementary Material, the U.S. Wrap, any "greensheet" and
the delivery thereof to the Underwriters, the fees and
expenses of the Corporation's Counsel, the fees and expenses
of agent counsel retained by the Corporation or the
Corporation's Counsel, the fees and expenses of the
Corporation's transfer agent and any auditors, engineers and
other outside consultants, all stock exchange listing fees.
(b) UNDERWRITERS' EXPENSES.
Compton shall pay the reasonable out-of-pocket expenses of the
Underwriters to a maximum amount of $10,000 and the reasonable
legal fees of Underwriters' Counsel to a maximum amount of
$35,000, plus reasonable disbursements and GST. All fees and
expenses incurred by the Underwriters which are reimbursable
hereunder shall be payable by Compton immediately upon
receiving a detailed invoice therefor from the Underwriters.
16. ALL TERMS TO BE CONDITIONS.
All representations, warranties, terms and conditions of this Agreement
for the benefit of the Underwriters shall be construed as conditions,
and any breach of or failure to comply in any material respect with any
of such representations, warranties, terms or conditions which are for
the benefit of the Underwriters shall entitle the Underwriters to
terminate their obligations to purchase the Offered Shares by giving
notice in writing to that effect to Compton at or prior to the Closing
Time. It is understood that the Underwriters may waive, in whole or in
part, or extend the time for compliance with, any of such terms and
conditions without prejudice to the rights of the Underwriters in
respect of any such terms and conditions or any other or subsequent
breach or non-compliance, provided that to be binding on the
Underwriters any such waiver or extension must be in writing. No act of
the Underwriters in offering the Offered Shares or in preparing or
joining in the execution of the Offering Documents shall constitute a
waiver of, or estoppel against, the Underwriters.
17. TERMINATION BY UNDERWRITERS IN CERTAIN EVENTS.
(a) Each Underwriter shall also be entitled to terminate its
obligation to purchase the Offered Shares by written notice to
that effect given to Xxxxxxx at or prior to the Closing Time,
if:
(i) any inquiry, investigation or other proceeding is
announced, commenced or threatened or any order or
ruling is issued (and has not been rescinded, revoked
or withdrawn) by any securities regulatory authority,
the TSX or any other competent authority (unless
based solely upon the activities of the
Underwriters), or there is any change of law or the
interpretation or administration thereof, which
operates to prevent or restrict or suspend or to
materially adversely affect the trading or the
distribution of the Offered Shares or any other
securities of the Corporation; or
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 32 OF 40
(ii) there occurs or is discovered any change, fact or
event as is contemplated in Subsection 6(a) (other
than a change, fact or event related solely to the
Underwriters) which in the Underwriters' sole opinion
or any one of them, acting reasonably, could
reasonably be expected to have a material adverse
effect on the business, operations, assets,
liabilities (contingent or otherwise), capital or
condition (financial or otherwise), prospects or
affairs of the Corporation or a significant adverse
effect on the market price, value or marketability of
the Common Shares; or
(iii) if there should develop, occur or come into effect or
existence any event, action, state, condition or
major financial occurrence of national or
international consequences, any acts of terrorism or
hostilities or escalation thereof or other calamity
or crises, or any law or regulation which, in the
Underwriters' opinion, or one of them, acting
reasonably, seriously adversely affects, or involves,
or would be expected to seriously adversely affect or
involve, the financial markets in Canada or the
business, operations or affairs of Xxxxxxx and the
Subsidiaries (taken as a whole); or
(iv) an order to cease or suspend trading in any
securities of Xxxxxxx is made by any Securities
Commission, stock exchange or other competent
authority by reason of the fault of Xxxxxxx or its
directors, officers and agents and such order is not
rescinded, revoked or withdrawn to the Closing Time;
or
(v) there is announced any change or proposed change in
the income tax laws of Canada or the interpretation
or administration thereof and such change would, in
or its opinion, acting reasonably, be expected to
have a significant adverse effect on the market price
or value of the Common Shares; or
(vi) the issue and sale of the Offered Shares has not
occurred by February 28, 2005 or such later date as
the Corporation and the Underwriters may agree.
(b) If an Underwriter elects to terminate its obligation pursuant
to Section 17(a) with respect to the purchase of the Offered
Shares, there shall be no further liability on the part of
such Underwriter or of Xxxxxxx to such Underwriter, except in
respect of any liability which may have arisen or may
thereafter arise under Sections 13, 14 and 15.
(c) The right of the Underwriters or any of them to terminate
their respective obligations under this Agreement is in
addition to such other remedies as they may have in respect of
any default, act or failure to act of Xxxxxxx in respect of
any of the matters contemplated by this Agreement. A notice of
termination given by one Underwriter under this Section 17
shall not be binding upon the other Underwriters.
18. MARKET STABILIZATION.
In connection with the distribution of the Offered Shares , the
Underwriters and the Selling Firms may effect transactions which
stabilize or maintain the market price of the Offered Shares at levels
above those which might otherwise prevail in the open market in
compliance with Securities Laws. Such stabilizing transactions, if any,
may be discontinued at any time.
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 33 OF 40
19. OBLIGATIONS OF THE UNDERWRITERS TO BE SEVERAL.
(a) Subject to the terms and conditions hereof, the obligation of
the Underwriters to purchase the Offered Shares shall be
several and not joint, nor joint and several. The percentage
of the Offered Shares to be severally purchased and paid for
by each of the Underwriters shall be as follows:
DEALER PERCENTAGE
------ ----------
Tristone Capital Inc........................... 25.0%
GMP Securities Ltd. ........................... 15.0%
FirstEnergy Capital Corp. ..................... 12.0%
TD Securities Inc. ............................ 12.0%
BMO Xxxxxxx Xxxxx Inc. ........................ 7.5%
CIBC World Markets Inc. ....................... 6.0%
Orion Securities Inc. ......................... 6.0%
Xxxxxxx Xxxxx Ltd. ............................ 6.0%
Scotia Capital Inc............................. 6.0%
Salman Partners Inc. .......................... 4.5%
Total 100%
(b) If one or more of the Underwriters shall fail to purchase its
applicable percentage of the total number of the Offered
Shares at the Closing Time and such failure shall constitute a
default in its obligation under this Agreement, the remaining
Underwriters shall be obligated severally to purchase such
Offered Shares which the defaulting Underwriters have failed
to purchase, in the proportions that the percentage set forth
opposite the name of each of the remaining Underwriters bears
to the aggregate of such percentages (or in such other
proportions as the remaining Underwriters may agree); provided
that, if the total number of Offered Shares which one or more
of the Underwriters has failed to purchase exceeds 8% of the
total number of Offered Shares which the Underwriters have
agreed to purchase pursuant to this Agreement:
(i) the remaining Underwriters shall have the right, but
not the obligation, to purchase severally all but not
less than all of the Offered Shares in such
proportions as may be agreed upon by the
non-defaulting Underwriters, and the non-defaulting
Underwriters shall have the right, by notice in
writing to Xxxxxxx, to postpone the Closing Date for
a period not exceeding five Business Days to effect
such purchase; and
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 34 OF 40
(ii) if the non-defaulting Underwriters elect not to
exercise such right to assume the entire obligation
of the defaulting Underwriters, such non-defaulting
Underwriters shall be entitled, by notice to Xxxxxxx,
to terminate, without liability, their obligations to
purchase their original percentage of the Offered
Shares and Xxxxxxx shall not be obligated to sell
less than all of the Offered Shares and shall have
the right to terminate its obligations hereunder
without liability on its part, except under Sections
13, 14 and 17, in respect of such non-defaulting
Underwriters.
(c) Nothing in this Section 19 shall relieve any Underwriter in
default from liability to Xxxxxxx or to any non-defaulting
Underwriter in respect of its default hereunder.
20. AUTHORITY TO BIND UNDERWRITERS.
The Corporation shall be entitled to and shall act on any notice,
waiver, extension or communication given by or on behalf of the
Underwriters by Tristone, which shall represent the Underwriters and
which shall have the authority to bind the Underwriters in respect of
all matters hereunder, except in respect of any settlement under
Section 13 or Section 14, any matter referred to in Section 17 or any
agreement under Section 19. While not affecting the foregoing
provisions of this Section 20, Tristone shall use commercially
reasonable efforts to consult with the other Underwriters with respect
to any such notice, waiver, extension or other communication.
21. RELATIONSHIP BETWEEN THE CORPORATION AND THE UNDERWRITERS.
The Corporation:
(a) acknowledges and agrees that the Underwriters have certain
statutory obligations as registrants under the Securities Laws
and have fiduciary relationships with their clients;
(b) acknowledges and agrees that the Underwriters are neither the
agents of the Corporation nor otherwise fiduciaries of the
Corporation; and
(c) consent to the Underwriters acting hereunder while continuing
to act for their clients.
To the extent that the Underwriters' statutory obligations as
registrants under the Securities Laws or fiduciary relationships with
their clients conflict with their obligations hereunder, the
Underwriters shall be entitled to fulfil their statutory obligations as
registrants under the Securities Laws and their duties to their
clients. Nothing in this Agreement shall be interpreted to prevent the
Underwriters from fulfilling their statutory obligations as registrants
under the Securities Laws or to act as a fiduciary of their clients.
22. NOTICES.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be delivered:
(a) in the case of Xxxxxxx, to the following address;
Xxxxxxx Petroleum Corporation
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 35 OF 40
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
with a copy to:
Stikeman Elliott LLP
0000 Xxxxxxx Xxxx Xxxx
000 - 0xx Xxxxxx XX
Xxxxxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention: Xxxxx X. X. Xxxxxxxx
(b) in the case of the Underwriters to the following address:
Tristone Capital Inc.
Xxxxx 0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention: R. Xxxxxxx Xxxxxxxxx
GMP Securities Ltd.
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxx
FirstEnergy Capital Corp.
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
TD Securities Inc.
0xx Xxxxx, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 36 OF 40
Attention: Xxxxx X. Xxxx
BMO Xxxxxxx Xxxxx Inc.
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
CIBC World Markets Inc.
0xx Xxxxx, Xxxxxxx Xxxx Xxxx
000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
Orion Securities Inc.
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention: Xxx X. Xxxxxxxxx
Xxxxxxx Xxxxx Ltd.
Xxxxx 0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxx
Scotia Capital Inc.
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
Salman Partners Inc.
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 37 OF 40
Fax: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxx
with a copy to:
Fraser Xxxxxx Casgrain LLP
30th Floor, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
Xxxxxxx and the Underwriters may change their respective addresses for
notices by notice given in the manner aforesaid. Any such notice or
other communication shall be in writing and, unless delivered
personally to the addressee or to a responsible officer of the
addressee, as applicable, shall be given by facsimile transmission and
shall be deemed to have been given (i) in the case of a notice
delivered personally to a responsible officer of the addressee, when so
delivered; and (ii) in the case of a notice delivered or given by
facsimile transmission, on the first Business Day following the day on
which it is sent.
23. MISCELLANEOUS.
(a) This Agreement shall enure to the benefit of, and shall be
binding upon, the Underwriters and Xxxxxxx and their
respective successors and legal representatives.
(b) This Agreement shall be governed by and interpreted in
accordance with the laws of the Province of Alberta and the
federal laws of Canada applicable therein without reference to
its conflicts of laws provisions. Each of the parties hereto
irrevocably attorns to the jurisdiction of the courts of the
Province of Alberta.
(c) If any provision of this Agreement is determined to be invalid
or unenforceable in whole or in part, such invalidity or
unenforceability shall attach only to such provision or part
thereof and the remaining part of such provision and all other
provisions hereof shall continue in full force and effect. The
invalidity or unenforceability of any provision in any
particular jurisdiction shall not affect its validity or
enforceability in any other jurisdiction where it is valid or
enforceable.
(d) Time shall be of the essence hereof and, following any waiver
or indulgence by any party, time shall again be of the essence
hereof.
(e) All representations, warranties, covenants and agreements of
Xxxxxxx and the Underwriters herein contained or contained in
documents submitted pursuant to this Agreement and in
connection with the transaction of purchase and sale herein
contemplated shall survive the purchase and sale of the
Offered Shares and the termination of this Agreement and shall
continue in full force and effect for the benefit of the
Underwriters or Xxxxxxx, as the case may be, regardless of any
subsequent disposition of the Offered Shares or any
investigation by or on behalf of the Underwriters with respect
thereto for a period of one year following the Closing Date.
The Underwriters shall be entitled to rely on the
representations and warranties of Xxxxxxx contained herein or
delivered pursuant hereto notwithstanding any investigation
which
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 38 OF 40
the Underwriters may undertake or which may be undertaken on
the Underwriters' behalf. Xxxxxxx shall be entitled to rely on
the representations and warranties of the Underwriters
contained herein notwithstanding any investigation which
Xxxxxxx may undertake or which may be undertaken on their
behalf.
(f) Each of the parties hereto shall be entitled to rely on
delivery of a facsimile copy of this Agreement and acceptance
by each such party of any such facsimile copy shall be legally
effective to create a valid and binding agreement between the
parties hereto in accordance with the terms hereof.
(g) This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute
one and the same agreement.
(h) This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and the
terms and conditions of this Agreement supersede any previous
verbal or written agreement between the Underwriters or any of
them and Xxxxxxx with respect to this offering including,
without limitation, the engagement letter between Xxxxxxx and
Tristone dated February 1, 2005 and accepted by Xxxxxxx on
February 2, 2005.
(i) Each of the parties hereto shall promptly do, make, execute or
deliver, or cause to be done, made, executed or delivered, all
such further acts, documents and things as the other party
hereto may reasonably require from time to time for the
purposes of giving effect to this Agreement and shall use
reasonable commercial efforts and take all such steps as may
be reasonably within its power to implement to their full
extent the provisions of this Agreement.
(j) Unless otherwise stated, all references to currency in this
Agreement are references to Canadian currency.
(k) Schedules A and B attached hereto are incorporated into and
form part of this Agreement.
[The remainder of this page is intentionally left blank]
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 39 OF 40
If this letter accurately reflects the terms of the transactions which we are to
enter into and are agreed to by you, please communicate your acceptance by
executing the enclosed copies of this letter where indicated and returning them
to Fraser Xxxxxx Casgrain LLP.
Yours very truly,
TRISTONE CAPITAL INC. GMP SECURITIES LTD.
By: /s/ R. Xxxxxxx Xxxxxxxxx By: /s/ Xxxxxx X. Xxxx
FIRSTENERGY CAPITAL CORP. TD SECURITIES INC.
By: /s/ Xxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxx
BMO XXXXXXX XXXXX INC. CIBC WORLD MARKETS INC.
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Art N. Korpach
ORION SECURITIES INC. XXXXXXX XXXXX LTD.
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxx Xxxxxx
SCOTIA CAPITAL INC. SALMAN PARTNERS INC.
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxxxxx X. Xxxx
UNDERWRITING AGREEMENT
XXXXXXX PETROLEUM CORPORATION, FEBRUARY 14, 2005 PAGE 40 OF 40
Accepted and agreed to by the undersigned as of the date of this letter first
written above.
XXXXXXX PETROLEUM CORPORATION
By: /s/ Xxxxx. X. Xxxxxxx
SCHEDULE A
TERMS AND CONDITIONS FOR
UNITED STATES OFFERS AND SALES
THIS IS SCHEDULE "A" TO THE UNDERWRITING AGREEMENT AMONG
XXXXXXX PETROLEUM CORPORATION, TRISTONE CAPITAL INC., GMP
SECURITIES INC., TD SECURITIES Inc., BMO XXXXXXX XXXXX INC., CIBC WORLD
MARKETS INC., ORION SECURITIES INC., XXXXXXX XXXXX LTD.,
SCOTIA CAPITAL INC. and SALMAN PARTNERS INC.
dated February 14, 2005
1. As used in this Schedule A, capitalized terms used herein and not
defined herein shall have the meanings ascribed thereto in the
Underwriting Agreement and the following terms shall have the meanings
indicated:
"AFFILIATE" means "affiliate" as defined in Rule 405 under the U.S.
Securities Act;
"DIRECTED SELLING EFFORTS" means directed selling efforts as that term
is defined in Regulations S. Without limiting the foregoing, but for
greater clarity in this Schedule A, it means, subject to the exclusions
from the definition of directed selling efforts contained in Regulation
S, any activity undertaken for the purpose of, or that could reasonably
be expected to have the effect of, conditioning the market in the
United States for any of the Offered Shares and includes the placement
of any advertisement in a publication with a general circulation in the
United States that refers to the Offering of the Offered Shares;
"DISTRIBUTION PERIOD" means the period commencing on the date of the
Underwriting Agreement and ending on the earlier of (i) the date on
which all of the Offered Shares have been sold by the Underwriters to
the public pursuant to the Prospectus and (ii) the Closing Date;
"DOCUMENTS" means the U.S. Wrap and the Final Prospectus;
"INSTITUTIONAL ACCREDITED INVESTOR" means an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under
the U.S. Securities Act;
"QUALIFIED INSTITUTIONAL BUYER" means a "qualified institutional buyer"
as that term is defined in Rule 144A;
"REGULATION D" means Regulation D adopted by the SEC under the U.S.
Securities Act;
"REGULATION S" means Regulation S adopted by the SEC under the U.S.
Securities Act;
"RULE 144A" means Rule 144A adopted by the SEC under the U.S.
Securities Act;
"SEC" means the United States Securities and Exchange Commission;
"SELLING DEALER GROUP" means the dealers and brokers, other than the
Underwriters who participate in the offer and sale of the Offered
Shares pursuant to the Underwriting Agreement;
"SELLING GROUP MEMBER" means a member of the Selling Dealer Group;
-2-
"SUBSTANTIAL U.S. MARKET INTEREST" means "substantial U.S. market
interest" as that term is defined in Regulation S;
"UNDERWRITING AGREEMENT" means the underwriting agreement among Xxxxxxx
Petroleum Corporation, Tristone Capital Inc., GMP Securities Ltd., TD
Securities Inc., BMO Xxxxxxx Xxxxx Inc., CIBC World Markets Inc., Orion
Securities Inc., Xxxxxxx Xxxxx Ltd., Scotia Capital Inc. and Salman
Partners Inc. dated February , 2005;
"UNITED STATES" means the United States of America, its territories and
possessions, any state of the United States, and the District of
Columbia.
"U.S. EXCHANGE ACT" means the UNITED STATES SECURITIES EXCHANGE ACT OF
1934, as amended;
"U.S. SECURITIES ACT" means the UNITED STATES SECURITIES ACT OF 1933,
as amended; and
"U.S. WRAP" means the confidential final U.S. placement memorandum in
form and substance satisfactory to the Corporation and the Underwriters
used in connection with offers and sales of the Offered Shares in the
United States, which will be of even date with, and accompanied by, the
Prospectus.
2. The Underwriters severally but not jointly:
(a) acknowledge that the Offered Shares have not been and will not
be registered with the SEC under the U.S. Securities Act and
that the Offered Shares are being offered and sold pursuant to
a prospectus under Canadian securities laws and in reliance
upon an exemption from registration and a "safe harbour"
provided by Regulation S (supplemented, in the case of offers
and sales by the Underwriters or by members of the Selling
Dealer Group through their respective United States affiliates
to Qualified Institutional Buyers in the United States, by the
exemption from registration provided by Rule 144A), and are
being offered by the Underwriters or by members of the Selling
Dealer Group through their respective United States
affiliates, and sold directly by the Corporation, to
Institutional Accredited Investors in the United States in
reliance upon the exemption from registration provided by Rule
506 of Regulation D; and
(b) agree that neither they, nor any member of the Selling Dealer
Group, nor any of their respective affiliates nor any person
acting on behalf of any of the foregoing:
(i) have engaged or will engage in any Directed Selling
Efforts with respect to the Offered Shares,
(ii) except to the extent permitted by Section 3 of this
Schedule A, have made or will make (A) any offer to
sell or solicitation of an offer to buy any of the
Offered Shares to any person in the United States, or
(B) any sale of the Offered Shares to any person
unless (1) it and any person acting on its behalf
reasonably believe that, at the time such person
placed the order to purchase Offered Shares, such
person was outside the United States, and (2) such
sale is otherwise in compliance with the applicable
requirements of Regulation S,
(iii) have taken or will take, directly or indirectly, any
action which would constitute a violation of
Regulation M under the U.S. Exchange Act, or
-3-
(iv) have solicited or will solicit offers for, or offers
to sell, the Offered Shares by means of any form of
general solicitation or general advertising (as those
terms are used in Regulation D) or in any manner
involving a public offering within the meaning of
Section 4(2) of the U.S. Securities Act.
3. It is understood and agreed by the Underwriters that the Offered Shares
may be offered and sold by the Underwriters and Selling Group Members
in the United States only:
(a) through their respective United States affiliates, each of
which will be on the dates of such offers and sales duly
registered as a broker-dealer pursuant to Section 15(b) of the
U.S. Exchange Act and under the securities laws of each state
in which such offers and sales were made (unless exempted from
the respective state's broker-dealer registration
requirements) and a member in good standing with the National
Association of Securities Dealers, Inc.;
(b) either (i) as principals, pursuant to the provisions of Rule
144A to persons who are or are reasonably believed by them to
be Qualified Institutional Buyers in transactions meeting the
requirements of Rule 144A or (ii) on behalf of the
Corporation, pursuant to the provisions of Rule 506 of
Regulation D to persons who are or are reasonably believed by
them to be Institutional Accredited Investors;
(c) in compliance with any applicable state securities laws of the
United States and all United States state and federal laws
governing the registration and conduct of securities brokers
and dealers;
(d) provided that prior to any sale of Offered Shares, each
purchaser shall have been provided with a copy of the
Documents (and all amendments and supplements thereto and
final forms thereof) and if the purchaser is purchasing as an
Institutional Accredited Investor, then such purchaser shall
have executed and delivered a U.S. Purchaser's Letter in the
form annexed to the U.S. Wrap as Exhibit 1; and
(e) provided that, at the Closing Date, each Underwriter together
with its U.S. affiliate(s) who offered and sold the Offered
Shares in the United States will provide a certificate,
substantially in the form of Exhibit A hereto, relating to the
manner of the offer and sale of the Offered Shares in the
United States or a written confirmation that it did not offer
or sell any Offered Shares in the United States or arrange for
any purchasers in the United States.
4. The Underwriters agree that they have caused or will promptly cause
each Selling Group Member to acknowledge in writing its awareness of
and agreement to be bound by the provisions of this Schedule A in
connection with all offers and sales of the Offered Shares.
5. The Underwriters have not entered, and will not enter, into any
contractual arrangement without the prior written consent of the
Corporation with respect to the distribution of the Offered Shares,
except:
(a) with their affiliates, or
(b) with Selling Group Members in accordance with Section 4 of
this Schedule A, except that nothing in this Schedule A shall
in any way restrict offers and sales pursuant to this Schedule
A in accordance with Rule 144A.
-4-
6. The Corporation hereby represents and warrants to the Underwriters
that:
(a) the U.S. Wrap of the Corporation at the date hereof, does not
and at the Closing Date will not (and any amendment or
supplement thereto or final form thereof, at the date thereof
and at the Closing Date, will not), contain 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;
(b) neither the Corporation, nor any of its affiliates (other than
an Underwriter, a Selling Group Member, and their respective
affiliates, in respect of which no representation is made)
has, directly or indirectly, made offers or sales of any
security, or solicited offers to buy any security, under
circumstances that would require the registration of the
Offered Shares under the U.S. Securities Act;
(c) the Offered Shares satisfy the eligibility requirements of
Rule 144A(d)(3) under the U.S. Securities Act in that they are
not part of a class listed on a national securities exchange
in the United States, quoted in an automated inter-dealer
system in the United States, or convertible or exchangeable at
an effective conversion premium or exercise premium
(calculated as specified in paragraph (a)(6) or paragraph
(a)(7) of Rule 144A under the U.S. SECURITIES ACT) of less
than 10% for securities so listed or quoted;
(d) the Corporation is not and does not own or control an open-end
investment company, unit investment trust or face amount
certificate company that is registered or required to be
registered or a closed-end investment company required to be
registered but not registered under the UNITED STATES
INVESTMENT COMPANY ACT OF 1940, as amended;
(e) the Corporation has not, in connection with the offer and sale
of the Offered Shares, paid or agreed to pay to any person any
compensation for soliciting another to purchase any securities
of the Corporation (except as contemplated by this Agreement);
(f) neither the Corporation, its affiliates nor any person acting
on its behalf (other than an Underwriter or a member of the
Selling Dealer Group, and their respective affiliates, in
respect of which no representation is made) has taken,
directly or indirectly, any action which would constitute a
violation of Regulation M under the U.S. Exchange Act in
connection with the offer and sale of the Offered Shares;
(g) neither the Corporation nor any of its predecessors or
affiliates has been subject to any order, judgement, or decree
of any court of competent jurisdiction temporarily,
preliminarily or permanently enjoining such person for failure
to comply with Rule 503 of Regulation D;
(h) the Corporation is a "foreign issuer" within the meaning of
Regulation S and reasonably believes that there is no
Substantial U.S. Market Interest in the Offered Shares or in
any Securities of the Corporation which are of the same class
as the Offered Shares;
(i) the Corporation is not now and as a result of the sale of
Offered Shares contemplated hereby will not be, required to
register as an "investment Company" pursuant to the provisions
of the UNITED STATES INVESTMENT COMPANY ACT OF 1940, as
amended;
(j) none of the Corporation, any of its affiliates, or any person
acting on its or their behalf (other than the Underwriters and
their affiliates, as to which the Corporation makes no
-5-
representation) has made any Directed Selling Efforts in the
United States, or has engaged in any form of general
solicitation or general advertising (as those terms are used
in Regulation D), including, without limitation,
advertisements, articles, notices or other communications
published in any newspaper, magazine or similar media or on
the internet or broadcast over radio, television or the
internet, or any seminar or meeting whose attendees had been
invited by general solicitation or general advertising, or
otherwise made a public offering within the meaning of Section
4(2) of the U.S. Securities Act in connection with the offer
or sale of the Offered Shares in the United States; and
(k) except for marketing activities conducted pursuant to the
offering, the Corporation has not, within the six months prior
to the date hereof, sold, offered for sale or solicited any
offer to buy any of its securities (including Common Shares)
except for offers and sales of Common Shares, pursuant to and
in accordance with the Corporation's stock option plan.
7. The Corporation covenants and agrees with the Underwriters that:
(a) If at any time prior to the end of the Distribution Period,
any event occurs as a result of which the Documents, as then
amended or 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 should be necessary to amend or supplement the Documents
to comply with applicable law, the Corporation will promptly
notify the Underwriters of the same and will prepare and
provide to the Underwriters an amendment or supplement which
will correct such statement or omission or effect such
compliance;
(b) neither the Corporation, nor any of its affiliates, nor any
person acting on its or their behalf (other than an
Underwriter, a Selling Group Member, and their respective
affiliates, in respect of which no covenant is given) will,
directly or indirectly, make offers or sales of any security,
or solicit offers to buy any security, under circumstances
that would require the registration of the Offered Shares
under the U.S. Securities Act;
(c) neither the Corporation, nor any of its affiliates, nor any
person acting on its or their behalf (other than an
Underwriter, a member of the Selling Dealer Group, and their
respective affiliates, in respect of which no covenant is
given) will engage in any form of general solicitation or
general advertising (within the meaning of Regulation D) or
otherwise make a public offering within the meaning of Section
4(2) of the U.S. Securities Act in connection with any offer
or sale of the Offered Shares in the United States;
(d) so long as any of the Offered Shares are "restricted
securities" within the meaning of Rule 144(a)(3) under the
U.S. Securities Act, the Corporation will, during any period
in which it is not subject to and in compliance with Section
13 or 15(d) of the U.S. Exchange Act and it is not exempt from
such reporting requirements pursuant to and in compliance with
Rule 12g3-2(b) under the U.S. Exchange Act, provide to each
holder of such restricted securities and to each prospective
purchaser (as designated by such holder) of such restricted
securities, upon the request of such holder or prospective
purchaser, any information required to be provided by Rule
144A(d)(4) under the U.S. Securities Act (and this covenant is
intended to be for the benefit of the holders, and the
prospective purchasers designated by such holders, from time
to time of such restricted securities);
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(e) neither the Corporation, nor any of its affiliates, nor any
person acting on its or their behalf (other than an
Underwriter, a Selling Group Member, and their respective
affiliates, in respect of which no covenant is given) will
engage in any Directed Selling Efforts with respect to the
Offered Shares;
(f) neither the Corporation, its affiliates nor any person acting
on its behalf (other than an Underwriter or a member of the
Selling Dealer Group, and their respective affiliates, in
respect of which no representation is made) will take,
directly or indirectly, any action which would constitute a
violation of Regulation M under the U.S. Exchange Act in
connection with the offer and sale of the Offered Shares;
(g) for so long as the Offered Shares are outstanding, the
Corporation will not become and will not own or control an
open-end investment company, unit investment trust or face
amount certificate company which is registered or required to
be registered or a closed-end investment company required to
be registered but not registered under the INVESTMENT COMPANY
ACT OF 1940, as amended;
(h) all offers and sales by the Corporation of the Offered Shares
in the United States will be made to Institutional Accredited
Investors. Immediately prior to transmitting the Documents (as
defined below) to such offerees, the Corporation had
reasonable grounds to believe and did believe that each
offeree was an Institutional Accredited Investor, and, on the
date hereof, the Corporation continues to believe that each
purchaser of Common Shares in the United States is an
Institutional Accredited Investor;
(i) the Corporation has not used and will not use any written
material other than the Preliminary Prospectus and the
Documents and each offeree of the Common Shares in the United
States has been sent a copy of the Documents; and
(j) prior to any sale of Common Shares in the United States, the
Corporation shall cause each purchaser in the United States to
sign a U.S. Purchaser's letter, in the form of Exhibit I to
the U.S. Wrap, containing certain representations, warranties
and agreement to the Corporation.
EXHIBIT A
UNDERWRITERS' CERTIFICATE
In connection with the offer and sale in the United states of the Common Shares
(the "SECURITIES") of Xxxxxxx Petroleum Corporation (the "CORPORATION") pursuant
to the Underwriting Agreement dated February 14, 2005 among the Corporation and
the Underwriters named therein (the "UNDERWRITING AGREEMENT"), each of the
undersigned does hereby certify as follows:
1. [NAME OF UNDERWRITER'S U.S. AFFILIATE] is a duly registered as a
broker-dealer under Section 15(b) of the U.S. Exchange Act and is a
member of and in good standing with the National Association of
Securities Dealers, Inc. on the date hereof, and all offers and sales
of the Securities in the United States will be effected by
[UNDERWRITER'S U.S. AFFILIATE] in accordance with all U.S. state and
federal laws governing the registration and conduct of brokers and
dealers;
2. each offeree that was in the United States at the time of such offer or
sale was provided with a copy of the Preliminary U.S. Wrap, including
the Preliminary Prospectus, or the U.S. Wrap, including the Final
Prospectus, each purchaser in the United States was provided with a
copy of the U.S. Wrap, including the Final Prospectus, and no other
written material has been used by us or will be used by us in
connection with the offering of the Securities;
3. (A) immediately prior to transmitting any of the documents identified
in paragraph 2 to any offeree in the United States, we had reasonable
grounds to believe and did believe that (x) if the offer was made by us
as principal, pursuant to Rule 144A, such offeree was a Qualified
Institutional Buyer, and (y) if the offer was made by us as agents on
behalf of the Corporation, pursuant to Rule 506 of Regulation D, such
offeree was an Institutional Accredited Investor, and (B) we have
reasonable grounds to believe and do believe that (x) each person in
the United States purchasing Securities from us is a Qualified
Institutional Buyer, and (y) each person in the United States that we
have arranged to purchase Securities from the Corporation is an
Institutional Accredited Investor;
4. no form of general solicitation or general advertising (as those terms
are used in Regulation D under the U.S. Securities Act) was used by us,
including, without limitation, advertisements, articles, notices or
other communications published in any newspaper, magazine or similar
media or on the internet or broadcast over radio, television or the
internet, or any seminar or meeting whose attendees had been invited by
general solicitation or general advertising, in connection with the
offer or sale of the Securities in the United States;
5. the offering of the Securities in the United States has been conducted
by us in accordance with the terms of the Underwriting Agreement;
6. prior to any sale of Securities in the United States [NAME OF
UNDERWRITER] caused the purchaser who is purchasing as an Institutional
Accredited Investor in reliance upon Rule 506 of Regulation D, a U.S.
Purchasing Letter in the form annexed as Exhibit I to the U.S. Wrap.
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Terms used in this certificate have the meanings given to them in the
Underwriting Agreement unless otherwise defined herein.
Date this ___________ day of February, 2005
[UNDERWRITER] [U.S. AFFILIATE]
By: /s/ By: /s/
---------------------------- -----------------------------
Name: Name:
Title: Title:
SCHEDULE B
1. Each of the Corporation and Hornet Energy Ltd. has been incorporated or
amalgamated, as the case may be, and is subsisting under the laws of
the jurisdiction of its incorporation and has all requisite corporate
capacity, power and authority to carry on its business as now conducted
by it and to own its properties and assets and is qualified to carry on
business under the laws of the jurisdictions where it carries on a
material portion of its business and the Partnership is a partnership
formed and existing under the laws of the Province of Alberta and has
all requisite partnership power and authority to carry on its business
as now conducted by it and to own its property and assets and is
qualified to carry on business under the laws of the jurisdictions
where it carries on a material portion of its business;
2. the Corporation has full corporate power and authority to enter into
this Agreement and to perform its obligations set out herein and this
Agreement has been duly authorized, executed and delivered by the
Corporation and this Agreement constitutes a legal, valid and binding
obligation of the Corporation enforceable against the Corporation in
accordance with its terms, subject to reasonable opinion
qualifications;
3. the execution and delivery of this Agreement and the fulfillment of the
terms hereof by the Corporation, and the performance of and compliance
with the terms of this Agreement by the Corporation does not and will
not result in a breach of, or constitute a default under, and does not
and will not create a state of facts which, after notice or lapse of
time or both, will result in a breach of or constitute a default under:
(a) any applicable securities laws of the Province of Alberta or
the federal laws of Canada applicable therein;
(b) any term or provision of the articles, by-laws or other
constating documents, as applicable, of the Corporation or any
resolutions of the shareholders or directors (or any committee
thereof) of the Corporation;
(c) to the knowledge of counsel, any indenture, mortgage, note,
contract, agreement (written or oral), instrument, lease or
other document to which the Corporation or any Subsidiary is a
party or by which it or any Subsidiary is bound on the Closing
Date; or
(d) to the knowledge of counsel, any judgment, decree or order, of
any court, governmental agency or body or regulatory authority
having jurisdiction over the Corporation or any Subsidiary or
their respective properties or assets,
which default or breach might reasonably be expected to materially
adversely affect the business, operations, capital or condition
(financial or otherwise) or assets of the Corporation and its
Subsidiaries (taken as a whole);
4. the Offered Shares have been validly issued as fully paid and
non-assessable Common Shares of the Corporation;
5. the Corporation is a "reporting issuer" not in default of any
requirement of the Securities Acts each of the Qualifying
Jurisdictions;
6. the attributes of the Offered Shares conform in all material respects
with the description thereof contained in the Final Prospectus;
7. all necessary documents have been filed, all necessary proceedings have
been taken and all legal requirements have been fulfilled as required
under the applicable securities laws of each of the Qualifying
Jurisdictions in order to qualify the Offered Shares for distribution
and sale to the public in each of such Qualifying Jurisdiction by or
through investment dealers and brokers duly registered under the
applicable securities laws of such provinces who have complied with the
relevant provisions of such applicable securities laws;
8. the Corporation has the necessary corporate power and authority to
execute and deliver the Final Prospectus and all necessary corporate
action has been taken by the Corporation to authorize the execution and
delivery by it of the Final Prospectus and the filing thereof, as the
case may be, in each of the Qualifying Jurisdictions in accordance with
applicable securities laws;
9. the Offered Shares are qualified investments as set out under the
heading "Eligibility for Investment" in the Final Prospectus; and
10. the Offered Shares have been conditionally approved for listing upon
the TSX, subject to the Standard Listing Conditions;
and additionally relating to the authorized and issued capital of the
Corporation.
