A corporation that wishes to raise capital by issuing public shares must comply with the Quebec Securities Act and its applicable regulations. Unless the corporation qualifies for an exemption, the corporation must, in compliance with the Autorité des marchés financiers (AMF), issue an offering memorandum or prospectus containing all the pertinent information so that the AMF may evaluate the proposed public offering. The corporation will have to retain the services of a broker, unless it decides to issue the public offering itself.

This agreement template sets out the judicial framework for a best efforts offering made by a broker, who does not also act as the depositary, and under which the broker undertakes to use its best efforts to find buyers for the shares the corporation is offering in its prospectus without, however, acquiring them.

The broker also undertakes to give to the depositary any negotiatiable instrument it receives for any share subscription. The depositary in turn retains custody of such instruments until authorized to release them in accordance with the provisions of the escrow agreement (see our Escrow Agreement template (D03300)).

Please note that the escrow agreement is not the same thing as a "firm commitment underwriting," in which the broker undertakes to acquire the shares of the issuing corporation at a date and price fixed by the agreement, in order to sell them to investors on the aftermarket.

It is important to pay a particular attention to the applicable legislation that could affect the interpretation of certain clauses in this agreement, such as the Civil Code of Quebec, especially its provisions concerning mandates and service agreements, and the Quebec Securities Act and its regulations, in particular its provisions concerning brokers.

We recommend using this template for a best efforts agency agreement for an initial public offering whe the broker does not wish to undertake to acquire the issuing corporation’s securities because the broker does not want to take the risk that the securities might not be purchased.

This template may be used in conjunction with two other templates from our collection, namely:

- the Transfer Agency and Registrar Agreement (template D03550): there are many similarities between the role of a best efforts underwriter and that of a transfer agency and registrar, who has the mandate to oversee the issuing, transferring and cancelling of the share certificates and to maintain the registers of the issuing corporation.

- the Escrow Agreement (template D03300): there are many similarities between the role of a best efforts underwriter and that of a depositary, who has the mandate to hold in trust the sums invested by the public in trust, until authorized to release those sums. Whereas the tasks of the depositary may be fulfilled by the best efforts underwriter or a third party, our template only applies to the case where the broker acts as a best efforts underwriter and not as a depositary. When the best efforts underwriter also acts as depositary, you should use the Escrow Agency Agreement (template D03400).

0.00 INTERPRETATION
0.01 Definitions
0.01.01 Activities
0.01.02 Additional Shares
0.01.03 Agreement
0.01.04 AMF
0.01.05 Best Efforts
0.01.06 Breach
0.01.07 Business Days
0.01.08 Closing Date for Additional Shares
0.01.09 Closing Date for Initial Shares
0.01.10 Closing Session for Additional Shares
0.01.11 Closing Session for Initial Shares
0.01.12 Commercial Paper
0.01.13 Confidential Information
0.01.14 Deadline
0.01.15 Escrow Agent
0.01.16 Escrow Agreement
0.01.17 Event of Default
0.01.18 Final Prospectus
0.01.19 Force Majeure
0.01.20 Important Information
0.01.21 Initial Shares
0.01.22 Intellectual Property
0.01.23 Law
0.01.24 Legal Representatives
0.01.25 Maximum Distribution
0.01.26 Minimum Distribution
0.01.27 Offered Shares
0.01.28 Offering
0.01.29 Offering Documents
0.01.30 Ordinary Course of Business
0.01.31 Over-Allotment Option
0.01.32 PARTY
0.01.33 Person
0.01.34 Preliminary Prospectus
0.01.35 Prime Rate
0.01.36 Prospectus
0.01.37 Qualifying Jurisdictions
0.01.38 Regulatory Authority
0.01.39 Share
0.01.40 Stock Exchange
0.01.41 Subscriber
0.01.42 Transfer Agent
0.01.43 Transfer Agency Agreement
0.02 Entire Agreement
0.03 Jurisdiction
0.04 Non-Compliance
0.04.01 Severability
0.04.02 Substitute Provision
0.05 Miscellaneous
0.05.01 Cumulative Rights
0.05.02 No Waiver
0.05.03 Time and Dates
a) Time of the Essence
b) Computation of Time
c) Delays
0.05.04 Financial References
0.05.05 Cross-References
0.05.06 Gender and Number
0.05.07 Headings
0.05.08 Presumptions
0.05.09 Knowledge
0.05.10 Approval
1.00 PURPOSE
1.01 Appointment
1.01.01 Initial Appointment
1.01.02 Removal
1.01.03 New Appointment
1.01.04 Delivery
1.01.05 Liability
1.02 Mandate
1.03 Conditions
2.00 CONSIDERATION
2.01 Commission
2.02 Fees
2.02.01 Amount
2.02.02 Indexation
2.02.01 Lump Sum Fee
2.02.02 Indexation
2.02.03 Additional Fees
2.03 Disbursements
2.03.01 Reimbursement
2.03.02 Exceptional Disbursements
3.00 TERMS OF PAYMENT
3.01 Procedure
3.02 Interest
3.03 Loss of Term
3.04 Reimbursement of Legal Costs
4.00 SECURITY
4.01 In Favour of AGENT
4.02 In Favour of ISSUER
5.00 MUTUAL REPRESENTATIONS AND WARRANTIES
5.01 Authority
5.02 Binding Agreement
6.00 REPRESENTATIONS AND WARRANTIES OF ISSUER
6.01 Status
6.02 Stock Market
6.03 Compliance
6.04 Legal Proceedings
6.05 Disclosure
6.06 Other Agreement
6.07 Offering Documents
6.07.01 Prospectus
6.07.02 Other
7.00 REPRESENTATIONS AND WARRANTIES OF AGENT
7.01 Status
7.02 Authorizations
8.00 MUTUAL DUTIES AND OBLIGATIONS
8.01 Representations
8.02 Confidential Information
8.02.01 Duration of Undertaking
8.02.02 End of Agreement
a) Request for Return
b) Destruction
8.02.03 Penalty
9.00 DUTIES AND OBLIGATIONS OF ISSUER
9.01 Compliant Offering
9.01.01 Offering Documents
9.01.02 Confirmation of Representations
9.01.03 Due Diligence
a) Authorization
b) Collaboration
9.02 Offering Period
9.03 Minimum Distribution Realized
9.03.01 Closing Session for Initial Shares
a) Closing Session
b) Initial Share Certificates
9.03.02 Over-Allotment Option
9.04 Delivery of Offering Documents
9.04.01 Signed Copy
9.04.02 Commercial Copy
9.05 Action Taken by Regulatory Authority
9.05.01 Notice
9.05.02 Best Efforts
9.05.03 Honouring Undertakings
9.06 Important Information
9.07 Indemnification of AGENT
10.00 DUTIES AND OBLIGATIONS OF AGENT
10.01 Mandate
10.02 Commercial Paper
10.02.01 Verifying
10.02.02 Transmitting
10.03 Prospectus
10.03.01 Signature
10.03.02 Transmission
10.04 Cancelling Delivery
10.05 Over-Allotment Option
10.05.01 Applicable Terms
10.05.02 Notice
10.05.03 Content of Notice
10.05.04 Place
10.06 Compliance with Law
10.07 Liability
10.07.01 Acts, Errors or Omissions
10.07.02 Non-Liability
a) Acts by PARTIES
b) Legal Counsel
10.07.03 Legal Proceedings
10.08 Resignation
11.00 SPECIAL PROVISIONS
11.01 Escrow Agreement
11.02 Transfer Agency Agreement
11.03 Assignment
11.03.01 Prohibition
11.03.02 Exception
11.04 Force Majeure
11.04.01 No Default
11.04.02 Duty
11.04.03 Rights of Other PARTY
11.05 Further Assurances
11.06 Reimbursement of Legal Costs
12.00 GENERAL PROVISIONS
12.01 Notice
12.02 Dispute Resolution
12.02.01 Good Faith Negotiations
12.02.02 Mediation
a) Process
b) Mediator
c) Settlement
d) Legal Proceedings [OR Arbitration]
12.02.03 Arbitration
a) Notice
b) Reply
c) Appointment of a Third Arbitrator
d) Subcontracts
e) Confidentiality
f) Hearing
g) Ruling
h) Costs
i) Supplementary Rules
12.03 Election
12.04 Counterparts
12.05 Amendment
12.06 No Waiver of Rights
12.07 Electronic Transmission
12.08 Language
13.00 TERMINATION
13.01 Mutual Consent
13.02 Without Notice
13.03 Prior Notice
13.03.01 With Time to Cure Event of Default
13.03.02 Without Time to Cure Event of Default
14.00 EFFECTIVE DATE
15.00 DURATION
15.01 End of Agreement
15.02 Survival
16.00 SCOPE


SCHEDULE A – EXCERPT OF A RESOLUTION OF ..........
SCHEDULE 0.01.31 – OVER-ALLOTMENT OPTION
SCHEDULE 3.00 – TERMS OF PAYMENT