SUBSCRIPTION AND PURCHASE AGREEMENT
THIS AGREEMENT is made the 30th day of June, 1999
BETWEEN:
BOEING CAPITAL SERVICES CORPORATION, a corporation formed under and
governed by the laws of the State of Delaware
(hereinafter called the "Purchaser")
- and -
RADIANT ENERGY CORPORATION, a corporation formed under and governed by the
laws of Canada
(hereinafter called the "Corporation")
WHEREAS:
A. the Purchaser wishes to subscribe for and purchase the Securities (as
hereinafter defined) upon and subject to the terms and conditions set forth in
this Agreement; and
B. the Corporation wishes to accept the Purchaser's subscription herein
contained and to allot and issue the Securities to the Purchaser;
NOW THEREFORE, in consideration of the premises, mutual covenants and
agreements herein contained, the parties hereto covenant and agree as follows:
ARTICLE 1
INTERPRETATION
1.01 Defined Terms
The following capitalized terms used in this Agreement have the following
meanings:
"Agreement" means this subscription and purchase agreement and all
schedules and instruments in amendment or confirmation of it; "hereof",
"hereto" and "hereunder" and similar expressions mean and refer to this
Agreement and not to any particular Article, Section, Subsection or
similar subdivision; "Article", "Section", "Subsection" or other
subdivision of this Agreement followed by a number means and refers to the
specified Article, Section, Subsection or other subdivision of this
Agreement;
"Business Day" means any day except a Saturday, Sunday, statutory holiday
in Xxxxxxx, Xxxxxxx, or any day on which banks are not generally open for
business in the United States of America;
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"Closing" means the completion on the Closing Date of the transaction of
purchase and sale in respect of the Common Shares as contemplated by this
Agreement;
"Closing Date" means June 30, 1999, or such other date as agreed to by the
Corporation and the Purchaser;
"Common Shares" has the meaning specified in Section 2.01;
"Expiry Date" means the day which is the fifth anniversary of the date on
which the securities of the Corporation are listed and posted for trading
on a stock exchange or quotation system located in the United States of
America;
"Incentive Options" means options to purchase common shares granted to
directors, officers and employees of and consultants to the Corporation;
"Intellectual Property" means any patent, copyright, trade name,
trademark, trade secret, know-how, mask work, right of privacy, right of
publicity, moral right, or any other intellectual property right, whether
registered or unregistered;
"Licenses" has the meaning specified in Section 3.04(k);
"Necessary Intellectual Property" means with respect to any person, all
Intellectual Property used in or necessary for the ordinary day-to-day
conduct of its business;
"Options" has the meaning ascribed thereto in Section 2.01;
"Options Certificate" has the meaning ascribed thereto in Section 2.05;
"Patent" means patent #5,417,318 issued in the United States of America on
May 23, 1995 comprising 13 individual claims and describing two central
concepts and innovations and their applicability for aircraft de-icing;
"Patent Applications" means the reissue application in respect of the
Patent and each of the applications to patent the technology described in
the Patent in Canada, Austria, Belgium, France, Denmark, Germany, Great
Britain, Ireland, Italy, Liechtenstein, the Netherlands, Sweden,
Switzerland, China, Finland, Japan and Korea;
"Permitted Encumbrances" means
(a) the security interests granted by the Subsidiary:
(i) pursuant to a security agreement made May 23, 1997 in favour
of CIBC Mellon Trust Company, as trustee of the 6% redeemable
convertible secured debentures of the Corporation, in support
of the Subsidiary's guarantee of the obligations of the
Corporation under the trust indenture made May 23, 1997
between the Corporation, the Subsidiary and CIBC Mellon Trust
Company, and
(ii) pursuant to a security agreement made May 28, 1999 in favour
of The Trust Company of Bank of Montreal, as trustee of the 7%
redeemable convertible secured subordinated debentures of the
Corporation, in support of the Subsidiary's guarantee of the
obligations of the Corporation under the trust
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indenture made May 28, 1999 between the Corporation, the
Subsidiary and The Trust Company of Bank of Montreal; and
(b) the pledge of all of the issued and outstanding shares in the
capital stock of the Subsidiary by the Corporation to CIBC Mellon
Trust Company (the "Pledgee") pursuant to the share pledge agreement
dated as of May 22, 1997 between the Corporation and the Pledgee;
"Products" means any product that embodies any portion of the Patent or
other Intellectual Property related to the Patent, including all of the
InfraTek(R) systems.
"Purchase Price" has the meaning specified in Section 2.03;
"Restricted Equity Securities" means any shares of the Corporation,
options, warrants or rights to acquire such shares or any securities
evidencing rights substantially similar thereto and excluding therefrom
any Incentive Options and common shares issued pursuant to the exercise of
such Incentive Options;
"Securities" means the Common Shares and Options;
"Securities Laws" means the securities laws, regulations and rules, and
the blanket rulings and policies and written interpretations of, and
multi-level or national instruments adopted by, the Ontario Securities
Commission;
"Subsidiary" means the wholly-owned subsidiary of the Corporation known as
Radiant Aviation Services, Inc., a corporation incorporated under the laws
of the State of New York;
"Time of Closing" has the meaning specified in Section 4.01; and
"U.S. Securities Act" means the United States Securities Act of 1933, as
amended.
1.02 Gender and Number
Any reference in this Agreement to gender shall include all genders, and
words importing the singular number only shall include the plural and vice
versa.
1.03 Headings, etc.
The division of this Agreement into Articles, Sections, Subsections and
other subdivisions and the insertion of headings are for convenience of
reference only and shall not affect or be utilized in the construction or
interpretation of this Agreement.
1.04 Currency
All references in this Agreement to dollars, unless otherwise specifically
indicated, are expressed in currency of the United States of America.
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1.05 Severability
Any Article, Section, Subsection or other subdivision of this Agreement or
any other provision of this Agreement which is, or becomes, illegal, invalid or
unenforceable shall be severed from this Agreement and be ineffective to the
extent of such illegality, invalidity or unenforceability and shall not affect
or impair the remaining provisions of this Agreement.
1.06 Entire Agreement
This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties. There are no representations, warranties, conditions or other
agreements, express or implied, statutory or otherwise, between the parties in
connection with the subject matter of this Agreement, except as specifically set
forth in this Agreement.
1.07 Amendments
This Agreement may only be amended, modified or supplemented by a written
agreement signed by the parties.
1.08 Waiver
No waiver of any provision of this Agreement shall be effective unless
expressly provided for in a written document duly executed by the party to be
bound thereby, and no such waiver shall be deemed to constitute a waiver of any
other provision (whether or not similar), nor shall such waiver be deemed a
continuing waiver unless expressly provided for therein.
1.09 Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario and the federal laws of Canada applicable
therein.
1.10 Inclusion
Where the word "including" is used in this Agreement, it shall mean
"including without limitation".
1.11 Incorporation of Schedules
The following are the schedules attached to and incorporated in this
Agreement:
Schedule A - Rights to Purchase Common Shares
Schedule B - Option Certificate
Schedule C - Disclosure of Intellectual Property Claims
Schedule D - List of Documents provided to the Purchaser
Schedule E - Shareholder List
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ARTICLE 2
SUBSCRIPTION AND SALE
2.01 Subscription
The Purchaser hereby subscribes for and agrees to purchase from the
Corporation, at the Time of Closing on the Closing Date, 2,292,260 common shares
in the capital of the Corporation (the "Common Shares") and 653,145 options to
purchase common shares in the capital of the Corporation (the "Options").
2.02 Acceptance of Subscription
The Corporation hereby accepts the subscription of the Purchaser contained
in Section 2.01 and allots the Common Shares and grants the Options to the
Purchaser subject to issue upon payment in full of the Purchase Price.
2.03 Purchase Price
The aggregate price (the "Purchase Price") payable by the Purchaser to the
Corporation for the Common Shares and Options shall be TWO MILLION THREE HUNDRED
THIRTY THOUSAND TWO HUNDRED FORTY TWO DOLLARS AND NINETY SIX CENTS
($2,330,242.96).
2.04 Payment of Purchase Price
The Purchase Price shall be paid and satisfied by certified cheque, bank
draft or wire transfer in same day funds to or to the order of the Corporation
at the Time of Closing.
2.05 Option Terms
The Options shall be evidenced by a certificate (the "Option Certificate")
substantially in the form of Schedule B and shall have attached thereto such
terms and conditions as are imprinted thereon.
ARTICLE 3
Acknowledgements, Representations, Warranties
3.01 Acknowledgements of the Purchaser
The Purchaser hereby acknowledges that:
(a) the Securities are subject to resale restrictions under the
Securities Laws and the Purchaser will comply with all the
Securities Laws concerning any resale of the Securities and
will consult with its legal advisors or counsel to the
Corporation with respect to complying with all restrictions
applying to such resale;
(b) the offering of Securities under this Agreement will not be
registered under the U.S. Securities Act or any state
securities law on the grounds that the offering and sale of
the Securities contemplated by this Agreement are privately
made and are exempt from registration pursuant to Section 4(2)
of the U.S. Securities Act and/or similar applicable
exemptions, and that the Corporation's reliance on
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those exemptions is predicated in part on the Purchaser's
representations as set forth in this Agreement;
(c) the Purchaser has had access to such information concerning
the Corporation as it has considered necessary in connection
with its decision to acquire the Securities;
(d) no prospectus or offering memorandum within the meaning of the
Securities Laws has been delivered to the Purchaser in
connection with the transaction contemplated by this
Agreement;
(e) in purchasing the Securities the Purchaser has relied upon the
representations and warranties contained in this Agreement and
information and answers provided by authorized officers,
agents and employees of the Corporation during the course of
the performance of the Purchaser's due diligence;
(f) it is solely responsible for obtaining such legal advice as it
considers appropriate in connection with the execution,
delivery and performance by it of this Agreement and the
transactions contemplated hereunder;
(g) in entering into this Agreement, the Corporation is relying
upon the acknowledgements, representations and warranties of
the Purchaser set out herein in connection with determining
the eligibility of the Purchaser to purchase the Securities
under the Securities Laws and the U.S. Securities Act and the
Purchaser hereby agrees to notify the Corporation immediately
of any change in any representation, warranty or other
information relating to the Purchaser in this Agreement which
takes place prior to Closing;
(h) the Securities are subject to the terms, conditions and
provisions of this Agreement and the articles of the
Corporation;
(i) no person has made any written or oral representations to the
Purchaser:
(i) that any person will resell or repurchase the
Securities;
(ii) that any person will refund the Purchase Price of the
Securities;
(iii) as to the future price or value of the Securities; or
(iv) that the Securities will be listed and posted for
trading on any stock exchange or that application has
been made therefor other than as provided in Section
5.02; and
(j) the Corporation will imprint a restrictive legend in
substantially the following form on the certificates
evidencing the Securities and stop transfer orders or other
appropriate instructions to the same effect will be maintained
against the transfer of the Common Shares on the transfer
records of the Corporation or its transfer agent:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") OR THE
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SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE
SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF IN THE UNITED STATES IN THE ABSENCE OF SUCH
REGISTRATION STATEMENT OR AN EXEMPTION FROM REGISTRATION."
3.02 Representations, Warranties of the Purchaser
The Purchaser hereby represents and warrants to the Corporation, and
acknowledges that the Corporation is relying upon such representations and
warranties in issuing and selling the Securities to the Purchaser, that:
(a) the Purchaser is a corporation incorporated and existing under
the laws of the State of Delaware, and has all necessary
corporate power and authority to enter into and perform its
obligations under this Agreement;
(b) this Agreement has been duly authorized, executed and
delivered by the Purchaser and constitutes a valid and binding
obligation of the Purchaser enforceable against the Purchaser
in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting the rights
of creditors generally and except as limited by the
application of equitable principles when equitable remedies
are sought;
(c) the Purchaser is not a citizen or resident of Canada, or a
corporation, partnership or other entity created in or
organized under the laws of Canada or any province or
territory thereof (collectively a "Canadian person") and is
not purchasing the Securities for the account of any Canadian
person;
(d) the Purchaser is acquiring the Securities for the Purchaser's
own account as principal, for investment and not for the
benefit of any other person or with a view to resale or
distribution of all or any part of the Securities except in
accordance with and as provided for in this Agreement;
(e) immediately prior to the purchase contemplated by this
Agreement:
(i) the Purchaser has such knowledge and experience in
financial and business matters that the Purchaser is
capable of evaluating the risks and merits of investment
in the Securities; and
(ii) the Purchaser is able to bear the economic risk of the
investment and is able, without materially impairing its
financial condition, to hold the Securities for an
indefinite period of time;
(f) the Purchaser has been informed by the Corporation as to the
business activities of the Corporation and has been given the
opportunity to review all documents the existence and contents
of which were disclosed to the Purchaser and based on such
disclosure the Purchaser believes it has reviewed all
documents it believes are material to an investment in the
Securities;
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(g) the Purchaser has had an opportunity to ask questions of, and
receive answers from, appropriate representatives of the
Corporation, including its officers and directors, concerning
the Corporation and its business, and the terms and conditions
of the offering of the Securities, and to obtain such
additional information necessary to satisfy the Purchaser as
to the adequacy of the information obtained by the Purchaser;
(h) the Purchaser is an "accredited investor" as that term is
defined and construed pursuant to Rule 501 under the U.S.
Securities Act because the Purchaser is a corporation, not
formed for the purpose of acquiring the Securities offered
with total assets in excess of $5,000,000;
(i) the Purchaser fully understands and agrees that the Securities
have not been registered under the U.S. Securities Act, and,
therefore they cannot be sold, pledged, assigned or otherwise
disposed of in the United States of America unless they are
subsequently registered under the U.S. Securities Act or an
exemption from such registration is available;
(j) the Purchaser understands that no U.S. federal or state agency
has passed upon the offering of the Securities or made any
finding or determination as to the fairness of the offering of
the Securities;
(k) the Purchaser will execute and deliver within the applicable
time periods all documentation as may be required by the
Securities Laws to permit the purchase of the Securities on
the terms set forth in this Agreement; and
(l) if required by the Securities Laws, the Purchaser will
execute, deliver, file and otherwise assist the Corporation,
in filing such reports, undertakings and other documents with
respect to the issuance of the Securities as may be required.
3.03 Representations, Warranties of the Corporation
The Corporation represents and warrants to the Purchaser, and acknowledges
that the Purchaser is relying upon such representations and warranties in
purchasing the Common Shares, that:
(a) the Corporation has been duly amalgamated and is validly
existing, current in all its filings and in good standing
under the Canada Business Corporations Act, has all requisite
power and authority and is duly qualified to carry on its
business as now conducted and to own its properties and assets
and has all requisite power and authority to carry out its
obligations under this Agreement;
(b) the Corporation has no subsidiaries other than the Subsidiary;
(c) all consents, approvals, permits, authorizations or filings as
may be required under the Securities Laws necessary for the
execution and delivery of this Agreement have been made or
obtained, as applicable;
(d) this Agreement has been duly authorized, executed and
delivered by the Corporation and constitutes a valid and
binding obligation of the Corporation enforceable against the
Corporation in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or
affecting the rights of creditors
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generally and except as limited by the application of
equitable principles when equitable remedies are sought, and
by the fact that rights to indemnity, contribution and waiver,
and the ability to sever unenforceable terms, may be limited
by applicable law;
(e) the execution and delivery of this Agreement, the performance
by the Corporation of its obligations hereunder, the issuance
and sale of the Common Shares, the granting of the Options and
the issuance of the Common Shares upon the exercise thereof,
and the consummation of the transactions contemplated in this
Agreement, do not and will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, (whether after notice or lapse of
time or both), (i) any statute, rule or regulation applicable
to the Corporation including the Securities Laws; (ii) the
constating documents, articles, by-laws or resolutions of the
directors or shareholders of the Corporation which are in
effect at the date hereof; (iii) any mortgage, note,
indenture, contract, agreement, instrument, lease or other
document to which the Corporation is a party or by which it or
the property or assets of the Corporation are bound; or (iv)
any judgment, decree or order binding the Corporation or the
property or assets of the Corporation;
(f) except for the Securities and as disclosed on Schedule A to
this Agreement, no common shares or other securities of the
Corporation are issuable, and no other rights, warrants or
options to acquire, or instruments are convertible into or
exchangeable for, any common shares in the capital of the
Corporation;
(g) all necessary corporate action has been taken by the
Corporation to create, allot and authorize the issuance of the
Securities and, upon receipt by the Corporation of the
Purchase Price in respect of the Common Shares, the Common
Shares will be validly issued as fully paid and non-assessable
securities in the capital of the Corporation;
(h) the authorized capital of the Corporation consists of an
unlimited number of common shares, of which exactly 9,169,041
are issued and outstanding as fully paid and non-assessable;
(i) no legal or governmental proceedings are pending to which the
Corporation or the Subsidiary is a party or to which their
property is subject that would result individually or in the
aggregate in any material adverse change in the operation,
business or condition of the Corporation or the Subsidiary
and, to the knowledge of the Corporation, no such proceedings
have been threatened against or are contemplated with respect
to the Corporation or the Subsidiary or with respect to their
properties;
(j) each of the Corporation and the Subsidiary has conducted and
is conducting its business in material compliance with all
applicable laws and regulations of each jurisdiction in which
it carries on business (including all applicable Canadian and
United States federal, provincial, state, municipal and local
environmental, anti-pollution and licensing laws, regulations
and other lawful requirements of any governmental or
regulatory body) and has not received a notice of
non-compliance with any such laws or regulations which would
have a material adverse effect on the Corporation;
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(k) each of the Corporation and the Subsidiary has all licenses,
permits, authorizations and other approvals (collectively,
"Licenses"), except where the failure to do so would not have
a material adverse effect on the Corporation; each such
License is valid and subsisting and in good standing and none
of the same contains any burdensome term, provision, condition
or limitation which has or may have a material adverse effect
on the operation, or condition of either the Corporation or
the Subsidiary;
(l) each of the Corporation and the Subsidiary has good and
marketable title to all of its Necessary Intellectual
Property; in regard to the Necessary Intellectual Property of
the Corporation or the Subsidiary, any patents, trademarks and
copyrights are valid, subsisting and enforceable and all
patents, registered trademarks and registered copyrights are
duly recorded in the name of and can be recorded in the name
of the Corporation or the Subsidiary as the case may be;
except for the Permitted Encumbrances, each of the Corporation
and the Subsidiary has and after the Closing will have the
sole and exclusive ownership and right, free from any
licenses, liens, mortgages, security interests, charges or
encumbrances of any kind whatsoever to use and exploit its
Necessary Intellectual Property and the consummation of the
transactions contemplated hereby will not alter or impair any
such rights; except as disclosed in Part III of Schedule C, no
claims have been asserted by any person with respect to, or
challenging or questioning the ownership, validity,
enforceability or use of the Necessary Intellectual Property
of either the Subsidiary or the Corporation and there is no
valid basis for any such claim; the use or other exploitation
of the Necessary Intellectual Property by the Corporation or
the Subsidiary, as the case may be, does not infringe the
rights of any other person; and to the knowledge of the
Corporation and the Subsidiary no entity or person is
infringing the Necessary Intellectual Property of either one;
(m) excluding the Permitted Encumbrances, each of the Corporation
and the Subsidiary is the holder of and in good standing under
all of its Licenses and is the exclusive owner of the
Intellectual Property free and clear of any encumbrance which
would have a material adverse effect on the Corporation or the
Subsidiary, and the Corporation has no knowledge of any claim
of adverse ownership in respect thereof;
(n) except for the late filing by the Subsidiary of the 0000 Xxx
Xxxx Xxxxx xxx Xxxxxx Xxxxxx federal income tax returns (the
"Late Filing"), each of the Corporation and the Subsidiary has
timely filed all necessary federal, provincial, state, local
and foreign tax returns and notices and has paid or made
provision for all applicable taxes of whatever nature to the
extent such taxes have become due or have been alleged to be
due and the Corporation is not aware of any material tax
deficiencies or material interest or penalties accrued or
accruing, or alleged to be accrued or accruing thereon which
have not otherwise been provided for by the Corporation, and
the Late Filing will not constitute or result in any such
material deficiency or material accrual of interest or
penalty;
(o) the Corporation has not made any loans to or guaranteed the
obligations of, any person;
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(p) other than X.X. Xxxxxx and Co., Inc., there is no person
acting or purporting to act at the request or on behalf of the
Corporation that is entitled to any brokerage or finder's fee
in connection with the transactions contemplated by this
Agreement;
(q) the authorized capital of the Subsidiary consists of 200
shares of common stock of which exactly 100 shares are issued
and outstanding; the Corporation is the registered and
beneficial owner of all 100 shares of the Subsidiary (the
"Subsidiary Shares"), with a good and marketable title thereto
and, except for Permitted Encumbrances, such title is free and
clear of all mortgages, liens, charges, security interests,
adverse claims, pledges, encumbrances and demands whatsoever;
(r) the corporate records and minute books of the Corporation
contain complete and accurate minutes of all meetings of the
directors and shareholders of the Corporation held since the
amalgamation of the Corporation, all such meetings were duly
called and held and the shareholder list provided to the
Purchaser and attached as Schedule E is complete and accurate
as of the date specified therein;
(s) each of the Corporation and the Subsidiary has its property
insured against loss or damage by all insurable hazards or
risks typically insured by corporations in the same industry,
including product liability, general warranty, public
liability and other insurance, the Corporation is not in
default with respect to any of the provisions contained in any
such insurance policies and has not failed to give any notice
or present any claim under any such insurance policy in due
and timely fashion;
(t) the Patent is valid and subsisting, issued and registered in
the name of the Subsidiary, the Subsidiary is the sole named
applicant on all of the Patent Applications, and the
Subsidiary has and after Closing will have, the sole and
exclusive ownership right to the Patent and Patent
Applications, free and clear from any licenses, liens,
mortgages, security interests, charges or encumbrances and,
other than the Permitted Encumbrances, the Subsidiary has not
granted, licensed, sold or otherwise transferred any interest
in the Patent to any third party; other than the Permitted
Encumbrances, neither the Subsidiary nor the Corporation,
knows of any reason why claims included in the Patent would be
declared to be invalid and neither knows of any reason why
claims included in any Patent Applications should not be
granted; except as disclosed in Schedule C, there have not
been any claims asserted by any person with respect to, or
challenging or questioning the ownership, validity or
enforceability of the Patent or any of the Patent
Applications;
(u) excluding the forward looking statements contained therein,
each of the documents furnished by the Corporation to the
Purchaser in connection with the transaction contemplated
herein and listed in Schedule D was accurate, true and correct
as of the date thereof and no such document omits to state any
material fact necessary to make such document not misleading
as of the date thereof; and
(v) none of the foregoing representations and statements of fact
contain any untrue statement of material fact or omit to state
any material fact necessary to make any such statement or
representation not misleading to a prospective investor in the
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Securities seeking full information as to the business and
assets of the Corporation and the Subsidiary, and neither the
Corporation nor the Subsidiary has information or knowledge of
any facts relating to the business or the assets which, if
known to the Purchaser, might reasonably be expected to affect
the investment decision of the Purchaser or deter the
Purchaser from completing the transaction herein contemplated.
ARTICLE 4
CLOSING
4.01 Closing
Delivery of and payment for the Securities shall be completed and take
place at the offices of Xxxxxxxxx Xxxx Xxxxxxx Apps & Dellelce, Toronto,
Ontario, on the Closing Date at the hour of 3:00 o'clock in the afternoon
(Toronto time) (the "Time of Closing"), or at such other place, on such other
date, and at such other time as may be agreed upon in writing between the
Purchaser and the Corporation.
4.02 Closing Conditions
(1) The Purchaser's obligation to purchase the Securities from the
Corporation at the Time of Closing shall be conditional upon the
fulfillment at or before the Time of Closing of the following
conditions:
(a) since December 31, 1998, there shall have been no material
adverse change (actual, anticipated, contemplated or
threatened, whether financial or otherwise) in the business,
affairs, operations, assets, liabilities (contingent or
otherwise) or capital of the Corporation except as has been
publicly disclosed on a non-confidential basis prior to June
4, 1999;
(b) no order, ruling or determination having the effect of
suspending the sale or ceasing the trading in any securities
of the Corporation shall have been issued by any regulatory
authority and continuing in effect and no proceedings for that
purpose shall have been instituted or be pending or, to the
knowledge of the Corporation be contemplated or threatened by
any regulatory authority;
(c) the Corporation shall have duly complied with all the terms,
covenants and conditions of this Agreement on its part to be
complied with up to the Time of Closing;
(d) the representations and warranties of the Corporation
contained in this Agreement shall be true and correct as of
the Time of Closing with the same force and effect as if made
at and as of the Time of Closing after giving effect to the
transactions contemplated by this Agreement;
(e) the Purchaser shall have received a certificate, dated as of
the Closing Date, signed by two senior officers of the
Corporation as the Purchaser may agree, certifying for and on
behalf of the Corporation as to the satisfaction of each of
the conditions contemplated in sections (a) to (d) hereof;
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(f) the Purchaser shall have received at the Time of Closing
certificates dated the Closing Date, signed by appropriate
officers of the Corporation addressed to the Purchaser and its
counsel, with respect to the articles and by-laws of the
Corporation, all resolutions of the Corporation's board of
directors relating to this Agreement and the transactions
contemplated hereby, the incumbency and specimen signatures of
signing officers, and such other matters as the Purchaser may
reasonably request;
(g) the Purchaser shall have received a certificate of compliance
with respect to the Corporation issued by the appropriate
government officials of the jurisdiction of its amalgamation;
(h) the investment committee of the Purchaser shall have approved
the purchase of the Securities on the terms and conditions set
forth in this Agreement;
(i) the Purchaser shall have determined in its sole discretion
(acting reasonably) that the sale and delivery of the
Securities is exempt from the prospectus and registration
requirements of the Securities Laws and the U.S. Securities
Act;
(j) the Purchaser shall have received a legal opinion from legal
counsel for the Corporation in form and substance satisfactory
to the Purchaser's legal counsel, acting reasonably;
(k) the Corporation shall have in place, and the Purchaser shall
have received evidence of, such insurance as is deemed
necessary for the Corporation by the Purchaser in its sole
discretion;
(l) the consent of Xxxxx Securities Limited to the transaction
contemplated herein shall have been obtained; and
(m) the Purchaser shall have received a share certificate
evidencing the Common Shares and an Options Certificate
evidencing the Options.
(2) The Corporation's obligation to issue and sell the Securities to the
Purchaser at the Time of Closing shall be conditional upon the
fulfilment at or before the Time of Closing of the following
conditions:
(a) the Corporation shall have received a certified cheque; bank
draft or wire transfer in same day funds on the Closing Date
representing the Purchase Price payable by the Purchaser for
the Securities;
(b) the Corporation shall have received all documentation required
by the Securities Laws duly completed and signed by the
Purchaser;
(c) the Corporation shall have obtained all consents, approvals,
and authorizations necessary or reasonably required to
effectively carry out the intention of this Agreement;
(d) the Corporation shall have determined in its sole discretion
(acting reasonably) that the issuance, sale and delivery of
the Securities is exempt
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from the prospectus and registration requirements of the
Securities Laws and the U.S. Securities Act; and
(e) the consent of Xxxxx Securities Limited to the transaction
contemplated herein shall have been obtained.
ARTICLE 5
POST-CLOSING COVENANTS
5.01 Nominees to Board of Directors
(1) For so long as the Purchaser is the holder of not less than 10% of
the issued and outstanding common shares in the capital of the
Corporation, the Purchaser shall be entitled, from time to time, by
notice to the Corporation, to designate a Proportionate Number (as
hereinafter defined) of duly qualified nominees for election or
appointment to the board of directors of the Corporation. For the
purpose of this section, "Proportionate Number" is computed by
rounding up the result of multiplying the total number of common
shares that the Purchaser holds at the time of such election or
appointment by the number of directors that will constitute the
board of directors after such election or appointment and dividing
by the total number of common shares then issued and outstanding.
For so long as the Proportionate Number of nominees of the Purchaser
does not constitute a majority on the board of directors, the
Purchaser shall not be required to designate nominees that are
resident Canadians within the meaning of section 105(3) of the
Canada Business Corporations Act.
(2) Without in any way restricting the rights of all shareholders of the
Corporation with respect to the election of directors, the
Corporation shall act diligently and promptly to take such actions
as are necessary in order that, at any time, the board of directors
of the Corporation includes the then latest nominees designated by
the Purchaser in accordance with this Section 5.01 for election or
appointment to the board of directors of the Corporation, except for
any such nominee as is not ready, willing or able to serve as a
director of the Corporation.
(3) Subject to applicable laws governing the Corporation and provided
the Purchaser is then entitled to designate a nominee to the board
of directors of the Corporation under Subsection 5.01(1), the
Purchaser shall be entitled to designate a replacement for any
vacancy on the board of directors of the Corporation arising as a
result of a nominee of the Purchaser ceasing to be a director of the
Corporation.
-15-
5.02 U.S. Registration
The Corporation agrees to use its commercially reasonable best efforts to
cause its common shares to be registered under the Securities Exchange Act of
1934, as amended, and to have its common shares (including the Common Shares and
the common shares issuable upon the exercise of the Options) listed for trading
on a U.S. national securities exchange or on the NASD automated quotation system
in the United States within three years after the Closing Date; provided,
however, that the Corporation shall not be under any obligation to effect such
registration and listing if the board of directors of the Corporation makes a
good faith determination that it is not in the best interests of the Corporation
to do so for any reason including, if such registration or listing would have an
adverse effect on or require disclosure of any proposal or plan by the
Corporation to engage in any acquisition of securities or assets (other than in
the ordinary course of business) or any merger, consolidation, tender offer or
similar transaction.
5.03 Pre-emptive Rights and Anti-dilution
(1) The Corporation agrees that it will not issue, without the prior
written consent of the Purchaser, any Restricted Equity Securities
to any person during the 24 month period commencing on the Closing
Date in reliance on an exemption from the registration and
prospectus requirements of the Securities Laws without first having
offered such Restricted Equity Securities to the Purchaser in such
number as to permit the Purchaser to maintain its proportionate
interest in the then issued and outstanding common shares of the
Corporation, on no less favourable terms and conditions than those
offered to such person, and on such further terms and conditions as
will allow the Purchaser to purchase such Restricted Equity
Securities pursuant to an available exemption from both the
registration and prospectus requirements of the then applicable
Canadian securities laws and the registration requirements of the
then applicable securities laws of the United States.
(2) The Corporation agrees that during the 24 month period commencing on
the Closing Date it will not, without the prior written consent of
the Purchaser, in any 12 month period, reserve common shares for
issuance pursuant to the exercise of any Incentive Options in excess
of 5% of the number of common shares that were issued and
outstanding at the beginning of such 12 month period or the Closing
Date, whichever is later.
5.04 Sale or Lease of a Product
(1) If the Corporation or the Subsidiary determines to seek leasing
arrangements or financing for ("Funding") the design, development,
manufacturing, construction, sale, leasing or licensing of any
Product (a "Transaction"), it shall request such Funding from the
Purchaser by notice in writing indicating the minimum principal
amount required ("Minimum Amount"). Upon receipt of such a request
for Funding, the Purchaser shall have 20 Business Days in which to
elect whether or not to fund the Transaction, during which period
the Corporation shall provide the Purchaser with access to all
information reasonably required by the Purchaser to make such
election. In the event that the Purchaser elects to fund the
Transaction, it shall send a notice detailing the terms and
conditions on which it is willing to fund (the "Funding Proposal").
In the event that the Purchaser elects not to fund, or 20 Business
Days have elapsed from the date of the request for Funding, the
Corporation shall be entitled to seek and obtain Funding for the
Transaction in a principal amount no less than the Minimum Amount.
-16-
(2) Notwithstanding section (1), the Corporation shall not be bound by
the terms and conditions of a Funding Proposal if:
(a) the terms and conditions are commercially unreasonable; or
(b) the Corporation determines that it no longer requires or desires
Funding in respect of a Transaction.
(3) The Corporation agrees that until the Expiry Date:
(a) it will not, and it will ensure that the Subsidiary does not,
without the prior written consent of the Purchaser, sell any
Products to any person that is related to or does not deal at arm's
length with the Corporation;
(b) it will not voluntarily dispose of any shares of the Subsidiary and
the Subsidiary will remain wholly-owned; and
(c) it will not and it will ensure that the Subsidiary does not, without
the prior written consent of the Purchaser, voluntarily sell,
assign, transfer, lease, license or dispose in any way of, or of a
portion of, the Patent, the rights to the Patent Applications, or
any Intellectual Property related thereto.
5.05 No Default
The Corporation agrees to use its commercially reasonable best efforts to
ensure that neither it nor the Subsidiary defaults under the R-G Settlement
Agreement (as defined in Schedule D hereto) or any obligation, agreement or
indenture the performance of the terms of which is secured by any of the
Permitted Encumbrances.
5.06 Restrictions on Private Placements
During the period commencing on the Closing Date and ending January 1,
2000, the Corporation shall not issue any common shares of the Corporation or
securities convertible into common shares of the Corporation, other than
pursuant to the exercise of the convertible securities outlined in Schedule A,
unless prior to such issuance, the approval of the granting of the Options has
been obtained from a majority of the shareholders of the Corporation, excluding
the Purchaser.
ARTICLE 6
MISCELLANEOUS
6.01 Notices
(1) Any notice, direction or other instrument required or permitted to
be given under this Agreement shall be in writing and given by
delivering or sending it by telecopy or a reputable overnight
courier addressed:
-17-
(a) if to the Purchaser, at:
Boeing Capital Services Corporation
0000 Xxxxxxxx Xxxxxxxxx
0xx Xxxxx
Xxxx Xxxxx, XX 00000-0000
Attention: Vice President - Taxes & Associate General Counsel
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx
0000 Xxxxxxxx Xxxxx
000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxxx X. Xxxxxxx or Asi Kirmayer
Telecopier: (000) 000-0000
(b) if to the Corporation or the Subsidiary, at:
Radiant Energy Corporation
00 Xxxxxx Xxxxx
Xxxxxxx Xxxx, XX 00000
Attention: Chief Operating Officer
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxx Xxxxxxx Apps & Dellelce
0 Xxxxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxx
Telecopier: (000) 000-0000
(2) Any notice, direction or other instrument given to a person in
accordance with Subsection 6.01(1) shall be deemed to have been
given, sent and delivered to, and received by, such person on the
first Business Day after transmission.
(3) Any party may from time to time, by notice given in accordance with
Subsection 6.01(1) to the other party, change any one or more of the
address, addressee, telephone number or telecopier number.
-18-
6.02 Time of the Essence
Time shall be of the essence of this Agreement.
6.03 Expenses
All costs and expenses (including the fees and disbursements of legal
counsel, investment advisers and auditors) incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses.
6.04 Execution in Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original and all of which when taken together shall
constitute one and the same instrument.
6.05 Execution by Facsimile
This Agreement may be executed by any party by facsimile and if so
executed shall be legal, valid and binding on the party executing in such
manner.
[INTENTIONALLY LEFT BLANK]
-19-
6.06 Non-Merger
The covenants, representations and warranties of the Purchaser and the
Corporation contained in this Agreement shall not merge on and shall survive the
Closing and, notwithstanding the Closing or any investigation made by or on
behalf of the Purchaser or the Corporation, shall continue in full force and
effect.
6.07 Assignment
The terms and provisions of this Agreement shall be binding upon and enure
to the benefit of the Purchaser and the Corporation and their respective
successors and assigns; provided that this Agreement shall not be assignable by
any party without prior written consent of the other party. The benefit and
obligations of this Agreement, insofar as they apply to the Purchaser, shall
pass with any assignment or transfer of the Securities.
IN WITNESS WHEREOF this Agreement has been executed by the parties as of
the date first above written.
BOEING CAPITAL SERVICES CORPORATION
Per: "Xxxxxx X. Xxxxxxxxx"
----------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
Per: "Xxxxxx X. Xxxxxxxx
----------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President - Commercial Finance
RADIANT ENERGY CORPORATION
Per: "Xxxxxxx X. Xxxx"
----------------------
Name: Xxxxxxx X. Xxxx
Title: Vice-President, Engineering
Per: "Xxxxxx X. Xxxxx"
----------------------
Name: Xxxxxx X. Xxxxx
Title: Vice-President, Sales and Service
-1-
Schedule A
RIGHTS TO PURCHASE COMMON SHARES
Options:
Number of Exercise Price
Common Shares Under Option Per Common Share Expiry Date
-------------------------- ---------------- -----------
114,500 $1.40 June 16, 2000(1)
165,000 $2.50 February 28, 2001
252,469 $1.35 November 15, 2001
103,875 $2.00 December 22, 2002
90,114 $1.30 August 25, 2003
50,000 $2.50 August 25, 2003
25,000 $1.80 October 29, 2003
45,625 $1.30-$1.35 December 14, 2003
150,000 $1.30-$1.80 December 18, 2003
39,700 $1.30 January 21, 2004
68,100 $1.45 March 3, 2004
6,000 $1.15 April 7, 2004
75,000 $1.35 June 16, 2004
Notes:
(1) Expires as to 25% of options on each of September 16, 1999, December
16, 1999, March 16, 2000 and June 16, 2000.
6% Redeemable Convertible Secured Debenture Issued May 23, 1997:
On May 23, 1997, the Corporation issued $1,134,000 principal amount of
redeemable convertible secured debentures (the "6% Debentures"). The 6%
Debentures mature on May 22, 2002 and bear interest at an annual rate of 6%,
payable annually. The 6% Debentures are redeemable by the Corporation upon 30
days prior written notice following any period of 20 consecutive trading days,
ending not more than five trading days prior to the date on which notice of
redemption is given, during which the weighted average market price of the
Corporation's common shares equals or exceeds $3.50 (subject to adjustment in
certain events). The 6% Debentures are convertible at the holder's option into
common shares at any time prior to maturity or, if called for redemption, on or
before the last business day preceding the date specified for redemption, at a
conversion price of $1.25 per common share (subject to adjustment in certain
events), being a rate of 80 common shares for each $100 principal amount of 6%
Debentures. As at the date of this Agreement, approximately $132,000 principal
amount of the 6% Debentures remain outstanding and 105,840 common shares are
reserved for issuance upon conversion of such outstanding 6% Debentures.
-2-
7% Redeemable Convertible Secured Subordinated Debentures Issued May 28, 1999:
On May 28, 1999, the Corporation issued $1,889,200 principal amount of
redeemable convertible secured subordinated debentures (the "7% Debentures").
The 7% Debentures mature on May 28, 2004 and bear interest at an annual rate of
7%, payable semi-annually on November 30 and May 31 of each year, commencing
November 30, 1999. After May 31, 2000, the 7% Debentures are redeemable by the
Corporation upon 30 days prior written notice following any period of 20
consecutive trading days, ending not more than five trading days prior to the
date on which notice of redemption is given, during which the weighted average
market price of the Corporation's common shares equals or exceeds $2.50 (subject
to adjustment in certain events). The 7% Debentures are convertible at the
holder's option into common shares at any time prior to maturity or, if called
for redemption, on or before the last business day preceding the date specified
for redemption, at a conversion price of $1.15 per common share if converted
prior to May 31, 2000 and $1.45 per common share if converted thereafter
(subject, on both cases, to adjustment in certain events), being a rate of
approximately 86.96 common shares or 68.97 common shares, respectively, for each
$100 principal amount of 7% Debentures. As at the date of this Agreement,
approximately $1,519,500 principal amount of the 7% Debentures remain
outstanding and 1,321,358 common shares are reserved for issuance upon
conversion of such outstanding 7% Debentures.
-1-
Schedule B
OPTION CERTIFICATE
-1-
Schedule C
DISCLOSURE OF INTELLECTUAL PROPERTY CLAIMS
In April 1998, the Corporation along with two of its directors and
shareholders, Xxxx Xxxx and Xxxxxxx X. Xxxx, and Xxxxxxx-Xxxxxx, Inc. ("R-G")
settled lawsuits relating to the ownership of the Patent, the alleged use of R-G
"confidential information" and alleged tortious interference with contractual
relations. As a result of the settlement, the Subsidiary's ownership of the
Patent was confirmed and R-G agreed, for a period of five years from the date of
the settlement, not to compete with the Corporation in the business of selling
systems to de-ice aircraft before take-off as a manufacturer, supplier,
manufacturer's representative or any other capacity throughout the world. In
return, the Corporation agreed not to compete in the infrared heating industry
as a manufacturer, supplier or manufacturer's representative throughout the
world for a period of five years.
- 1 -
Schedule D
LIST OF DOCUMENTS PROVIDED TO THE PURCHASER
Radiant Energy
List of documents submitted by Radiant Energy for the Due Diligence Process.
1. Five Year P/L, B/S and C/F Projections with assumptions.
2. 1998 Annual Report
3. Copy of draft contract with Continental Airlines for the Newark Infratek
2000 system.
4. Copy of draft contract with Lufthansa Engineering and Operational Services
Gmbh.
5. Summary (3 pages) - Economics of De-Icing Using the Infratek System.
6. Confidential Private Placement Memorandum.
7. Radiant Energy Corporation - Offer of Rights to subscribe for Debentures.
8. Copy of 5/6/99 Presentation to Boeing Capital (in Scottsdale).
9. Summary Gross Margin made on the various Infratek Models.
10. Summary of Continental's savings at Newark on the Infratek 2000.
11. Suggested pricing schedule for various aircraft types using Infratek
System.
12. Summary list of Infratek advantages (provided by Xxxxxx Xxxxx during
credit interview).
13. Marketing brochure on Radiant Energy Corporation.
14. Settlement Agreement dated April 20, 1998 among Xxxxxxx-Xxxxxx Inc.,
Xxxxxxx Xxxx Xxxx, Xxxxxxx Xxxx, Radiant Aviation Services, Inc. (formerly
known as Process Technologies, Inc.) and the Corporation (the "R-G
Settlement Agreement")
Schedule E
SHAREHOLDER LIST
