SUBSCRIPTION AGREEMENT MADE AND ENTERED INTO IN XXX XXXX XXX XXXXXXXX XX
XXXXXXXX, XX THE 16TH DAY OF OCTOBER, 1997
BY AND BETWEEN: COMPOSITECH LTD., a body corporate, duly
incorporated according to the laws of
the State of Delaware, having its head
office and principal place of business
in the Hamlet of Hauppauge, State of New
York,
(hereinafter referred to as
"Compositech")
PARTY OF THE FIRST PART
AND: LAMINES CTEK INC., a body politic and
corporate, duly incorporated according
to the Canadian Business Corporations
Act, having its head office and
principal place of business in the City
of Montreal, Province of Quebec,
(hereinafter referred to as the
"Corporation")
PARTY OF THE SECOND PART
SECTION 1 - PREAMBLE
1.1 WHEREAS Compositech wishes to subscribe for shares from the treasury of the
Corporation at the price set forth hereinafter, the whole on the terms and
conditions hereinafter set out in this Agreement.
1.2 WHEREAS concurrently with the execution of this Agreement, the Investors
entered into a Subscription Agreement with the Corporation (the "Investors'
Subscription Agreement") providing for the subscription by the Investors for
shares from the treasury of the Corporation.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
SECTION 2 - INTERPRETATION
2.1 Definitions. In this Agreement:
2.1.1 "Agreement" shall mean this Subscription Agreement and all instruments
supplemental hereto or in amendment or confirmation hereof; "herein",
"hereof", "hereto", "hereunder" and similar expressions mean and refer
to this Agreement and not to any particular Section, subsection or other
subdivision; "Section",
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"subsection" or other subdivision of this Agreement means and refers to
the specified Section, subsection or other subdivision of this
Agreement;
2.1.2 "Business Day" shall mean any day, other than a Saturday or Sunday or a
day on which the principal commercial banks in the Province of Quebec
are not open for business during normal banking hours;
2.1.3 "Class A Common Shares" shall have the meaning ascribed thereto in the
Articles of Incorporation of the Corporation, as amended;
2.1.4 "Class B Common Shares" shall have the meaning ascribed thereto in the
Articles of Incorporation of the Corporation, as amended;
2.1.5 "Compositech Shares" shall have the meaning ascribed thereto in
subsection 3.1;
2.1.6 "dollar", "dollars" and the sign "$" shall, unless otherwise indicated,
each mean lawful money of Canada;
2.1.7 "Governmental Body" shall mean (i) any domestic or foreign national,
federal, provincial, state, municipal or other government or body, (ii)
any multinational, multilateral or international body, (iii) any
subdivision, agent, commission, board, instrumentality or authority of
any of the foregoing governments or bodies, (iv) any quasi-governmental
or private body exercising any regulatory, expropriation or taxing
authority under or for the account of any of the foregoing governments
or bodies, or (v) any domestic, foreign, international, multilateral or
multinational judicial, quasi-judicial, arbitration or administrative
court, tribunal, commission, board or panel;
2.1.8 "Investors" shall mean Societe Innovatech du Grand Montreal, Industries
Devma Inc., Fonds de Solidarite des Travailleurs du Quebec (F.T.Q.) and
Fonds Regional de Solidarite Ile de Montreal collectively and "Investor"
shall mean any of them;
2.1.9 "Investors' Subscription Agreement" shall have the meaning ascribed
thereto in subsection 1.2;
2.1.10 "Person" shall mean an individual, partnership, joint venture, trustee,
trust, corporation, division of a corporation, unincorporated
organization or other entity, entity with judicial personality,
Governmental Body, and pronouns when they refer to a Person have a
similarly extended meaning;
2.1.11 "Prime Rate" means the interest rate quoted publicly by the
Corporation's regular bankers as the reference rate of interest for
commercial demand loans made in Canadian dollars
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and commonly known as such bank's prime rate, as adjusted from time to
time, on the basis of the Prime Rate in effect on the first day of each
month;
2.1.12 "Shareholders Agreement" shall mean the Shareholders Agreement of even
date among the parties hereto and the Investors, setting forth the terms
and conditions which will govern the relationship of Compositech and the
Investors as shareholders of the Corporation.
2.2 Gender. Any reference in this Agreement to any gender shall include both
genders and the neutral, and words used herein importing the singular number
only shall include the plural and vice versa.
2.3 Headings. The division of this Agreement into 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.
2.4 Severability. Any 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 therefrom and shall be ineffective to the
extent of such illegality, invalidity or unenforceability and shall not affect
or impair the remaining provisions hereof, which provisions shall be severed
from an illegal or unenforceable Section, subsection or other subdivision of
this Agreement or any other provisions of this Agreement.
2.5 Entire Agreement. This Agreement together with any other instruments to be
delivered pursuant hereto, constitute the entire agreement among the parties
pertaining to the subject matter hereof and supersede all prior agreements,
understandings, negotiations, and discussions, whether oral or written, among
any or all of the parties.
2.6 Amendments. No amendment of this Agreement shall be binding unless otherwise
expressly provided in an instrument duly executed by each of the parties hereto.
2.7 Waiver. Except as otherwise provided in this Agreement, no waiver of any of
the provisions of this Agreement shall be deemed to constitute a waiver of any
other provisions (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided in an instrument duly
executed by the parties.
2.8 Delays. When calculating the period of time within which or following which
any act is to be done or step taken pursuant to this Agreement, the day which is
the reference day in calculating such period shall be excluded. If the day on
which such delay expires is not a Business Day, then the delay shall be extended
to the next succeeding Business Day.
2.9 Preamble. The preamble hereof shall form an integral part of this Agreement.
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2.10 Governing Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the Province of Quebec and the laws of
Canada applicable therein.
SECTION 3 - SUBSCRIPTIONS
3.1 Compositech subscription. Compositech hereby subscribes for one million
sixty-six thousand one hundred ninety two (1,066,192) Class B Common Shares
(collectively the "Compositech Shares") of the Corporation's share capital at
the aggregate subscription price of seven million five hundred thousand dollars
($ 7,500,000). The Corporation hereby accepts the subscription of Compositech
for the Compositech Shares subject to the terms and conditions contained herein.
3.2 Payment and Issue of Compositech Shares. Compositech hereby agrees to remit
to the Corporation on the date hereof the aggregate subscription price set forth
in subsection 3.1, and the Corporation shall, upon receipt of the aggregate
subscription price set forth in subsection 3.1, issue the Compositech Shares to
Compositech and deliver share certificates representing same.
SECTION 4 - REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Compositech. Compositech hereby represents
and warrants to the Corporation and acknowledges and confirms that the
Corporation is relying upon such representations and warranties in connection
herewith and would not have entered into this Agreement without such
representations and warranties:
4.1.1 Compositech is duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation;
4.1.2 Compositech has the necessary corporate power and authority to execute
this Agreement and to perform its obligations hereunder. The execution
of this Agreement by Compositech and the performance by Compositech of
its obligations hereunder have been duly authorized by all necessary
action on its part and do not require any action or consent of, any
registration with, or notification to any Person, or any action or
consent under any laws to which Compositech is subject;
4.1.3 the execution of this Agreement, the consummation of the transactions
contemplated herein, the performance by Compositech of its obligations
hereunder and the compliance by it with this Agreement do not:
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4.1.3.1 violate, contravene or breach, or constitute a default under,
the constating documents or by-laws of Compositech;
4.1.3.2 violate, contravene or breach, or constitute a default under any
contract, agreement, indenture, instruments, or commitment to which
Compositech may be a party, or its properties may be subject, or by
which it is bound or affected; or
4.1.3.3 violate, contravene or breach any laws to which Compositech is
subject;
4.1.4 neither Compositech nor any of its respective shareholders, directors,
officers, employees or agents has employed or incurred any liability to
any broker, finder or agent for any brokerage fees, finder's fees,
commissions or other amounts with respect to this Agreement or any of
the transactions contemplated hereby.
4.2 Representations and Warranties of the Corporation. The Corporation hereby
represents and warrants as follows to Compositech and acknowledges and confirms
that Compositech is relying upon such representations and warranties in
connection herewith and would not have entered into this Agreement without such
representations and warranties:
4.2.1 the Corporation:
4.2.1.1 is duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation; and
4.2.1.2 has not carried on any business since its incorporation;
4.2.2 there are no pending or threatened proceedings, litigation or other
adverse claims affecting, or with respect to, the Corporation or its
assets;
4.2.3 the Corporation has the necessary corporate power and authority to
execute this Agreement and to perform its obligations hereunder. The
execution of this Agreement by the Corporation and the performance by
the Corporation of its obligations hereunder have been duly authorized
by all necessary action on its part and do not require any actions or
consent of, any registration with, or notification to, any Person, or
any action or consent under any laws to which the Corporation is
subject;
4.2.4 the execution of this Agreement, the consummation of the transactions
contemplated herein, the performance by the Corporation of its
obligations hereunder and the compliance by it with this Agreement do
not:
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4.2.4.1 violate, contravene or breach, or constitute a default under,
the constating documents or by-laws of the Corporation;
4.2.4.2 violate, contravene or breach, or constitute a default under any
contract, agreement, indenture, instruments, or commitment to which the
Corporation may be a party, or its properties may be subject, or by
which it is bound or affected; or
4.2.4.3 violate, contravene or breach any applicable laws to which the
Corporation is subject;
4.2.5 the authorized capital of the Corporation consists of an unlimited
number of Class A Common Shares and an unlimited number of Class B
Common Shares. After giving effect to this Agreement, the Investors'
Subscription Agreement and the repurchase of one (1) Class B Common
Share held by Compositech and one (1) Class B Common Share held by Fonds
de Solidarite des Travailleurs du Quebec (F.T.Q.), the only shares of
the Corporation which will be issued and outstanding will be the Devma
Shares, the Innovatech Shares, the FSTQ Shares and the Fonds Shares (as
such terms are defined in the Investor's Subscription Agreement) and the
Compositech Shares and upon receipt by the Corporation of payment
therefor in full, such shares will be issued and outstanding as fully
paid and non-assessable;
4.2.6 no Person has any agreement, option, right or privilege (whether
pre-emptive or contractual) capable of becoming an agreement for the
purchase from the Corporation of any securities of the Corporation,
other than as provided in the Investors' Subscription Agreement and in
the Shareholders Agreement;
4.2.7 neither the Corporation nor any of its respective directors, officers,
employees or agents has employed or incurred any liability to any
broker, finder or agent for any brokerage fees, finder's fees,
commissions or other amounts with respect to this Agreement or any of
the transactions contemplated hereby;
4.2.8 the Corporation is not a non-resident of Canada within the meaning of
the Income Tax Act (Canada).
4.3 Reliance on Representations and Warranties. Notwithstanding any
investigation conducted prior or subsequent to the date hereof, the parties
shall be entitled to rely upon the representations and warranties set forth
herein and all representations and warranties made by, and all covenants,
obligations and agreements of, the parties, under or pursuant to this Agreement
or any other document or certificate delivered in connection therewith shall
survive the date hereof.
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SECTION 5 - INDEMNIFICATION
5.1 Definitions. As used in this Section 5:
5.1.1 "Claim" means any act, omission or state of facts and any demand,
action, suit, proceeding, investigation, arbitration, trial, claim,
assessment, judgment, settlement or compromise relating thereto which
may give rise to a right to indemnification under subsection 5.2 or 5.3
hereof;
5.1.2 "Direct Claim" means any Claim by an Indemnified Party against an
Indemnifying Party which does not result from a Third Party Claim;
5.1.3 "Indemnifying Party" means any party obligated to provide
indemnification under this Agreement;
5.1.4 "Indemnified Party" means any party entitled to indemnification under
this Agreement;
5.1.5 "Indemnity Payment" means the aggregate amount of each Loss required to
be paid pursuant to subsection 5.2 or the amount of each Loss required
to be paid pursuant to subsection 5.3 hereof;
5.1.6 "Loss" means any and all loss (including diminution in value),
liability, damage (excluding punitive, exemplary, consequential,
indirect and incidental damage), cost, expense, charge, fine, penalty or
assessment (after taking into account any tax benefit actually
received), resulting from or arising out of any Claim, including the
costs and expenses of any action, suit, proceeding, demand, assessment,
judgment, settlement or compromise relating thereto and all interest,
damages, fines and penalties and reasonable attorneys', accountants' and
experts' fees and expenses incurred in connection therewith; and
5.1.7 "Third Party Claim" means any Claim asserted against an Indemnified
Party by any Person who is not a party to this Agreement.
5.2 Indemnification by the Corporation. The Corporation hereby agrees to
indemnify and save and hold harmless Compositech from and against any Loss
suffered or incurred, directly or indirectly, by Compositech as a result of,
arising out of or relating to:
5.2.1 any violation, contravention or breach of any covenant, agreement or
obligation of the Corporation under or pursuant to this Agreement or any
other document or certificate delivered to Compositech by or on behalf
of the Corporation in connection therewith, as well as any Claim by any
Person containing allegations which, if true, would constitute such an
event; and
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5.2.2 any incorrectness in, or breach of, any representation or warranty made
by the Corporation in this Agreement, or made or to be made in any other
document or certificate delivered or to be delivered to Compositech by
or on behalf of the Corporation in connection therewith, as well as any
Claim by any Person containing allegations which, if true, would
constitute such an event.
5.3 Indemnification by Compositech. Compositech hereby agrees to indemnify and
save and hold harmless the Corporation from and against any Loss suffered or
incurred, directly or indirectly, by it as a result of, arising out of or
relating to:
5.3.1 any violation, contravention or breach of any covenant, agreement or
obligation of Compositech under or pursuant to this Agreement or any
other document or certificate delivered to the Corporation by or on
behalf of Compositech in connection therewith, as well as any Claim by
any Person containing allegations which, if true, would constitute such
an event; and
5.3.2 any incorrectness in, or breach of, any representation or warranty made
by Compositech in this Agreement, or made or to be made in any other
document or certificate delivered or to be delivered to the Corporation
by or on behalf of Compositech in connection therewith, as well as any
Claim by any Person containing allegations which, if true, would
constitute such an event.
5.4 Payment and Interest. The Indemnifying Party shall reimburse, on demand, to
the Indemnified Party the amount of each Loss suffered or incurred by the
Indemnified Party, the whole as of the date that the Indemnified Party incurs
such Loss, together with interest on such amount(s) from the aforesaid date
until payment in full at a rate per annum equal to the Prime Rate, plus two (2)
percentage points. Interest shall be calculated and payable monthly on the last
day of each month during which any amount in respect of any Loss remained
unpaid, both before and after an arbitration award and/or judgment, with
interest on overdue interest calculated and payable at the same rate.
5.5 Notification. Promptly upon obtaining knowledge thereof, the Indemnified
Party shall notify the Indemnifying Party of each Claim which the Indemnified
Party has determined has given or could give rise to indemnification under this
Section 5, describing such Claim in reasonable detail. In circumstances where
the Indemnifying Party is notified of such Claim but not promptly, the
Indemnifying Party shall not be relieved from any duty to indemnify and save and
hold harmless which otherwise might exist with respect to such Claim unless (and
only to that extent) the omission to notify promptly materially prejudices the
ability of the Indemnifying Party to exercise its right to defend provided in
this Section 5.
5.6 Defense of Third Party Claims. The Indemnifying Party shall have the right,
after receipt of the Indemnified Party's notice under subsection 5.5 hereof with
respect to a Third
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Party Claim and upon giving written notice to the Indemnified Party within ten
(10) Business Days of such receipt, and subject to the rights of any insurer or
other third party having potential liability therefor, to defend the Third Party
Claim at its own cost and expense with counsel of its own selection, provided
that:
5.6.1 the Indemnified Party shall at all times have the right to fully
participate in the defense at its own expense;
5.6.2 the Third Party Claim seeks only monetary damages and does not seek any
injunctive or other relief against the Indemnified Party;
5.6.3 the Indemnifying Party unconditionally acknowledges in writing its
obligation to indemnify and save and hold the Indemnified Party harmless
with respect to the Third Party Claim, if it is found that such
obligation exists;
5.6.4 legal counsel chosen by the Indemnifying Party is satisfactory to the
Indemnified Party, acting reasonably; and
5.6.5 the Indemnifying Party delivers a letter of credit, surety bond or
similar security in form and substance satisfactory to the Indemnified
Party, acting reasonably, in an amount which the Indemnified Party,
acting reasonably, determines is sufficient to cover such Third Party
Claim as security for the payment of amounts payable by the Indemnifying
Party to the Indemnified Party pursuant hereto, inclusive of reasonably
estimated interest and costs. Amounts payable by the Indemnifying Party
pursuant to a Third Party Claim shall be paid in accordance with the
terms of the settlement or judgment, as applicable, but in any event
prior to the expiry of any delay for a judgment to become executory.
5.7 Waiver of Right to Defend Third Party Claims. If the Indemnifying Party
fails:
5.7.1 within fifteen (15) Business Days from receipt of the notice of a Third
Party Claim to give notice of its intention to defend the Third Party
Claim in accordance with subsection 5.6 hereof, or
5.7.2 to comply at any time with any of subsections 5.6.1 through 5.6.5
(inclusively) hereof,
then the Indemnifying Party shall be deemed to have waived its right to defend
the Third Party Claim and the Indemnified Party shall have the right (but not
the obligation) to undertake the defense of the Third Party Claim and compromise
and settle the Third Party Claim on behalf, for the account and at the risk and
expense of the Indemnifying Party.
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5.8 Direct Claims. If the Indemnifying Party fails to respond in writing to any
written notice of a Direct Claim given by the Indemnified Party pursuant to
subsection 5.5 hereof, and fails to make an Indemnity Payment to the Indemnified
Party within ten (10) Business Days thereof, the Indemnifying Party shall be
deemed to have rejected such Direct Claim, in which event the Indemnified Party
shall be free to pursue such rights, recourses and remedies as may be available
to it.
5.9 Right of Offset. Without in any way limiting the terms of this Section 5,
each party shall have the right to offset against all amounts payable from time
to time by it to the other party, howsoever arising, including under this
Agreement, any amount owing by such other party pursuant to the indemnification
obligations contained in this Agreement to the party intending to offset.
5.10 Cumulative Rights. The rights, recourses and remedies provided to an
Indemnified Party under this Section 5 are cumulative with any other right,
recourse and remedy such Indemnified Party may have or may hereafter acquire
under Applicable Law, and any right, recourse or remedy of such Indemnified
Party may be asserted completely against the Indemnifying Party, without regard
to the rights, recourses or remedies the Indemnified Party may have against any
other Person.
SECTION 6 - GENERAL PROVISIONS
6.1 Further documents. Each party upon the request of the other, shall do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged or
delivered all such further acts, deeds, documents, assignments, transfers,
conveyances, powers of attorney and assurances as may be reasonably necessary or
desirable to effect complete consummation of the transactions contemplated by
this Agreement.
6.2 Default Interest. Subject to the provisions of subsection 5.4 hereof, if any
party fails to pay to the other party any amounts due hereunder within ten (10)
days of the due date, the party owing such money shall pay to the party owed
such money, from the date such amount was due, interest at the Prime Rate, plus
two (2) percentage points, compounded monthly and payable on demand.
6.3 Successors and assigns. This Agreement and the provisions hereof shall enure
to the benefit of and be binding upon the parties and their respective
successors and permitted assigns.
6.4 Arbitration. All disputes or controversies between the parties in respect of
the validity, interpretation or performance of the provisions of this Agreement
shall be definitively dealt with using the rules of conciliation and arbitration
of the International Chamber of Commerce, by one or more arbitrators appointed
in accordance with said rules, and to the
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exclusion of any courts, except for injunctive relief and any provisional
remedy, including seizure before judgment, which may be obtained from any court
or tribunal having jurisdiction. Any arbitration proceeding required pursuant to
the terms hereof shall take place in Montreal, Quebec and shall be conducted in
both the English and French language. The cost of the arbitration shall be borne
in the manner provided for in the arbitration award.
6.5 Notices. All offers, acceptances, rejections, notices, requests,
authorizations, permissions directions, demands and other communications
hereunder shall be given in writing and shall be given by telecopier, or
delivered by hand, to the other party at the following addresses:
if to Compositech: COMPOSITECH LTD.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx
00000-0000, X.X.X.
Attention: the President
Telecopier: (000) 000-0000
if to the
Corporation: LAMINES CTEK INC.
000 xx xx Xxxxxxxxxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Chairman and President
Telecopier: (000) 000-0000
with a copy in
all cases to: XXXXXXX, LEISURE, XXXXXX & IRVINE
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx
00000
Attention: Xxxxxx X. Xxx, Esq.
Telecopier: (000) 000-0000
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with a copy in
all cases to: XXXXXXXX XXXXXXXXXX
0000 Xxxx-Xxxxxxxx Blvd. West
Suite 1400
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Me Xxxxx Xxxxx
Telecopier: (000) 000-0000
or at such other address as a party may have previously indicated to the other
party in writing in conformity with the foregoing. Any such notice, request,
demand or other communication shall be deemed to have been received on the date
of delivery if delivered by hand, or the next Business Day immediately following
the date of transmission if sent by telecopier. The original copy of any notice
sent by telecopier shall be forwarded to the other party by registered mail,
receipt return requested.
6.6 Time of the essence. Time shall be of the essence in this Agreement.
6.7 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same document.
6.8 Language. The parties hereto state their express wish that this Agreement as
well as all documentation contemplated hereby or pertaining hereto or to be
executed in connection herewith be drawn up in the English language; les parties
expriment leur xxxxx explicite a l'effet que cette convention de meme que tous
documents envisages par les presentes ou y ayant trait ou qui seront signes
relativement aux presentes soient rediges en anglais.
IN WITNESS WHEREOF, the parties have signed at the place and on the date
first hereinabove mentioned.
COMPOSITECH LTD. LAMINES CTEK INC.
Per: /s/Xxxxx Xxxxxx Per: /s/Xxxxx Xxxxxx
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Xxxxx Xxxxxx Xxxxx Xxxxxx