FORM OF SUBSCRIPTION AGREEMENT
AGREEMENT made as of this 27th day of July, 2001 (the
"Agreement"), by and among Capital Environmental Resource Inc., a corporation
incorporated under the laws of the Province of Ontario (the "Company"), and the
persons listed on Annex A hereto (each individually an "Investor" and
collectively the "Investors").
W I T N E S S E T H:
WHEREAS, the Company wishes to issue and sell to the
Investors, and the Investors wish to purchase from the Company, certain
authorized but unissued shares of the Company's common stock (the "Common
Stock"), upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the Investors and the
Company hereby agree as follows (capitalized terms used in this Agreement shall,
unless otherwise defined herein, have the meanings ascribed to them in the
Glossary attached as Annex B hereto).
SECTION 1
TERMS OF PURCHASE AND ISSUANCE
1.1 Authorization of Sale of Shares. The Company has
authorized the issuance and sale to the Investors of an aggregate of 16,500,000
shares of its Common Stock (such shares, the "Shares") for a purchase price of
US $2.00 per share (the "Per Share Purchase Price").
1.2 Sale and Purchase. At the Closing (as defined in Section
1.3 hereof) and subject to the terms and conditions herein set forth, the
Company shall issue and sell to each Investor, and each Investor shall purchase
from the Company, the number of Shares set forth opposite such Investor's name
on the Investor's signature page hereto for the purchase price (the "Purchase
Price") set forth opposite such Investor's name on the Investor's signature page
hereto.
1.3 Closing. The closing (the "Closing") of the sale and
purchase of the Shares shall take place at the offices of XxXxxxxxx, Will &
Xxxxx, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, XX 00000-0000, at 10:00 A.M., as promptly
as practicable (and in any event no later than the third business day) after the
satisfaction or waiver of all the conditions set forth in Sections 4 and 5
hereof (other than those conditions that will be satisfied at or concurrent with
the Closing), or at such other time, date or place as a Majority in Interest of
the Investors and the Company may agree (the date upon which the Closing occurs,
the "Closing Date"). At the Closing, the Company will deliver to each Investor a
stock certificate issued in such Investor's name representing the number of
Shares to be purchased by such Investor hereunder against payment of the
Purchase Price therefor in immediately available funds by or on behalf of the
Investor to the Company. In the event that this Agreement has been terminated
with respect to any Investor pursuant to Section 8.1(e) or any Investor fails to
perform its obligations at Closing (a "Terminated Investor"), Xxxxx
Xxxxxxxxxx-Xxxxx may, within ten business days from the date the Company gives
written notice of such termination to the Investor and Xxxxx Xxxxxxxxxx-Xxxxx
(the "Ten Day Cure Period"), designate a Person or Persons (each a "Substitute
Investor") to purchase the Shares allocated to such Investor, and upon such
Substitute Investor agreeing in writing to purchase such allocated Shares and be
bound by the terms hereof, such Substitute Investor shall become a party to this
Agreement as if he were an original Investor and the Company shall issue such
allocated Shares to such Substitute Investor. The parties hereto acknowledge and
agree that Annex A shall updated from time to time between the date hereof and
the Closing to replace any Terminated Investors with Substitute Investors and to
include Permitted Assignees (as defined herein) of any Investor. All
transactions occurring at the Closing shall be deemed to have occurred
simultaneously, and no one transaction shall be deemed to be complete until all
transactions are complete.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Investor, as of
the date hereof and as of the Closing Date, as follows:
2.1 Organization and Qualification. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the Province of Ontario and has the requisite corporate power and
authority to carry on its business as it is now being conducted.
2.2 Capitalization.
(a) The authorized capital stock of the Company
consists of (i) an unlimited number of shares of Common Stock and (ii) an
unlimited number of shares of preferred stock (the "Preferred Stock"). Of such
authorized capital stock, (i) 7,196,627 shares of Common Stock are issued and
outstanding, all of which are validly issued and are fully paid, nonassessable
and free of preemptive rights, (ii) no shares of Preferred Stock are issued and
outstanding and (iii) 2,104,340 shares of Common Stock are reserved for issuance
pursuant to the exercise of outstanding options and warrants to purchase Common
Stock. Assuming the exercise of all outstanding options and warrants to purchase
Common Stock and the issuance of the Shares pursuant to this Agreement, there
would be 25,800,967 shares of Common Stock issued and outstanding as of the date
hereof.
(b) Other than as set forth in subsection 2.2(a)
above, certain rights issued pursuant to the Rights Agreement between the
Company and American Stock Transfer & Trust Company (the "Rights Agreement") and
certain entitlements of each independent director to receive options under the
terms of the Company's 1999 Stock Option Plan on January 1 of each year, there
are no outstanding options, warrants, subscriptions, calls, convertible
securities or other rights, agreements, arrangements or commitments (contingent
or otherwise) (including any right of conversion or exchange under any
outstanding security, instrument or other agreement) obligating the Company or
any of its direct or indirect subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, any shares of their capital stock or obligating
them to grant, extend or enter into any such agreement or commitment. There are
no outstanding contractual obligations of the Company or any of its direct or
indirect subsidiaries to repurchase, redeem or otherwise acquire any shares of
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their capital stock or make any investment (in the form of a loan, capital
contribution or otherwise) in any other Person other than a subsidiary of the
Company.
Upon consummation of the Closing as contemplated hereby,
including receipt by the Company of the Purchase Price payable pursuant to
Section 1.2 hereof, the Shares owned by each Investor will be validly issued,
fully paid and nonassessable.
2.3 Power and Authority; Non-contravention; Government
Approvals.
(a) Power and Authority. The Company has all
requisite corporate power and authority to enter into this Agreement and the
Ancillary Documents and, subject to approval of this Agreement by the Company's
stockholders as contemplated by Section 6.4 hereof, to consummate the
transactions contemplated hereby and thereby. This Agreement, the Ancillary
Documents and the transactions contemplated hereby and thereby have been duly
approved by the Board of Directors of the Company. Subject to approval of this
Agreement by the Company's stockholders as contemplated by Section 6.4 hereof,
no other corporate proceedings on the part of the Company are necessary to
authorize the execution and delivery of this Agreement and the Ancillary
Documents or the consummation by the Company of the transactions contemplated
hereby and thereby. This Agreement has been, and when executed and delivered in
accordance with the terms hereof the Ancillary Documents will have been, duly
executed and delivered by the Company. This Agreement constitutes, and when
executed and delivered in accordance with the terms hereof the Ancillary
Documents will constitute, valid and binding obligations of the Company,
enforceable against it in accordance with their respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to enforcement of creditors' rights generally and by
general equitable principles. Neither the Company nor any of its subsidiaries is
in violation of any of the provisions of their respective articles, bylaws or
equivalent organizational documents in any material respect.
(b) Non-contravention. The execution, delivery and
performance of this Agreement and the Ancillary Documents by the Company: (i)
will not violate or conflict with any provisions of the articles or bylaws of
the Company or any of its subsidiaries, (ii) will not conflict with or
constitute a violation of any applicable law, order, injunction, regulation or
ruling of any governmental authority applicable to the Company or any of its
subsidiaries or by which the Company or any of its subsidiaries or any of their
respective properties or assets are bound, and (iii) will not, either alone or
with the giving of notice or the passage of time, or both, modify, violate,
conflict with or accelerate the performance required by any agreement, note,
license, franchise, permit or other instrument and will not result in the
creation or imposition of (or the obligation to create or impose) any Lien on
any of the Company's or any of its subsidiaries' assets other than as set out in
Section 2.3(b) of the Disclosure Schedule.
(c) Approvals. Except for (i) compliance with any
applicable requirements of the HSR Act and the Canadian Competition Act, (ii)
compliance with any applicable requirements of the Securities Act, Exchange Act
and the rules and regulations of Nasdaq, (iii) such filings as may be required
under any applicable state, blue sky or Canadian provincial securities laws and
(iv) compliance with the applicable requirements of the Investment Canada Act
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(the filings and approvals referred to in clauses (i) through (iv) being herein
referred to collectively as the "Company Required Statutory Approvals"), and
except for any required approvals under the Credit Facility (as defined in
Section 2.9 hereof), no declaration, filing or registration with, or notice to,
or authorization, consent, approval, order or permit of, any governmental or
regulatory body or authority or any other Person is necessary for the execution
and delivery of this Agreement and the Ancillary Documents by the Company or the
consummation by the Company of the transactions contemplated hereby and thereby
except to the extent that the failure to obtain any such authorization, consent,
approval or order or to make any such registration, declaration, filing or
notice, would not have a Company Material Adverse Effect or a material adverse
effect on the validity, binding effect or enforceability of this Agreement or
the Ancillary Documents or the ability of the Company to perform its obligations
hereunder or thereunder and except as set out in Section 2.3(c) of the
Disclosure Schedule. None of the declarations, filings, registrations or notices
listed in Section 2.3(c) of the Disclosure Schedule are required to be made
prior to consummation of the transactions contemplated hereby.
2.4 SEC Reports; Financial Statements.
(a) Since May 3, 1999, the Company has filed with the
SEC all forms, statements, reports and documents (including all exhibits,
post-effective amendments and supplements thereto) required to be filed by it
under each of the Securities Act and the Exchange Act (collectively, the "Filed
Company SEC Reports"), all of which complied when filed in all material respects
with all applicable requirements of the appropriate act and the rules and
regulations thereunder. The Form 6-K to be filed by the Company with the SEC
with respect to the Company's results for the six-month period ended June 30,
2001 in the form previously delivered to the Investors (the "Form 6-K") complies
as to form in all material respects with all applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations thereunder. As
of their respective dates, the Filed Company SEC Reports and the Form 6-K
(collectively, the "Company SEC Reports") did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements
included in the Company SEC Reports, together with the related notes and
schedules (collectively, the "Company Financial Statements"), has been prepared
in accordance with GAAP applied on a consistent basis, and fairly presents the
consolidated financial position of the Company and its subsidiaries as of the
respective dates thereof and the results of their operations and cash flow for
the periods then ended, subject, in the case of unaudited interim financial
statements, to normal year-end adjustments (none of which the Company reasonably
believes are or will be material in amount) and the omission of footnotes.
2.5 Absence of Undisclosed Liabilities. Except as disclosed in
the Company SEC Reports or as set out in Section 2.5 of the Disclosure Schedule,
neither the Company nor any of its subsidiaries had, at December 31, 2000 or has
incurred since that date, any Liabilities, except for (a) Liabilities which are
reflected, accrued or reserved against in the Company Financial Statements
contained in the Company SEC Reports filed prior to the date hereof or reflected
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in the notes thereto, (b) current Liabilities which were incurred after December
31, 2000 in the ordinary course of business and consistent with past practice,
(c) Liabilities which are of a nature not required to be reflected in the
Company Financial Statements in accordance with GAAP consistently applied and
which were incurred in the ordinary course of business and (d) other Liabilities
in an aggregate amount not exceeding US $500,000.
2.6 Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Reports or as set out in Section 2.6 of the Disclosure
Schedule, since December 31, 2000, the business of the Company and its
subsidiaries has been conducted in the ordinary course consistent with past
practice and there has not been any event, occurrence or development that has
had, or could reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect.
2.7 Litigation. There are no claims, suits, actions or
proceedings pending or, to the knowledge of the Company, threatened against,
relating to or affecting the Company, before any court, governmental department,
commission, agency, instrumentality or authority, or any arbitrator that seek a
remedy (at law or in equity) as a result of or otherwise in connection with this
Agreement and the transactions contemplated hereby. Neither the Company nor any
of its subsidiaries nor any of their respective properties or assets is subject
to any judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or authority or arbitrator which
prohibits or restricts the consummation of the transactions contemplated hereby.
2.8 Environmental Matters. Except as set out in Section 2.8 of
the Disclosure Schedule, the Company and its subsidiaries conduct and have
conducted their businesses in material compliance with all applicable
Environmental Laws, including, without limitation, having all material permits,
licenses and other approvals and authorizations necessary for the operation of
their businesses. Except as set out in Section 2.8 of the Disclosure Schedule,
none of the properties currently or formerly owned or operated by the Company or
any of its subsidiaries contain any Hazardous Substance, and no Hazardous
Substance has been disposed of at or released from any such properties, as a
result of any activity of the Company or any of its subsidiaries other than in
material compliance with applicable Environmental Laws and, to the knowledge of
the Company, no such condition exists on or with respect to any of such
properties as a result of any activity by any other Person. Except as reflected,
accrued or reserved against in the Company Financial Statements, neither the
Company, nor its subsidiaries, nor any of their respective properties or assets
are subject to any Liabilities relating to any suit, settlement, court order,
administrative order, regulatory requirement, judgment or claim asserted or
arising under any Environmental Law. To the knowledge of the Company, except as
set out in Section 2.8 of the Disclosure Schedule, there are no and have not
been any investigations or proceedings in which it is alleged that the Company,
its subsidiaries, or any of their predecessors, are potentially responsible for
a clean-up or remediation of lands contaminated with a Hazardous Substance or
for any other remedial or corrective action under an Environmental Law. There
are no proceedings pending or, to the Company's knowledge, threatened to revoke,
change or limit any permits, licenses, approvals or other authorizations
required under any Environmental Law for the operation of the Company and its
subsidiaries.
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2.9 Title to and Condition of Assets. Except as set out in
Section 2.9 of the Disclosure Schedule, each of the Company and its subsidiaries
has good and marketable title to, or, in the case of leased properties and
assets, has good and valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in, or
which are necessary to conduct, the business of the Company and its subsidiaries
as currently conducted, free and clear of all Liens, except for Liens arising
under the Company's Second Amended and Restated Credit Agreement and Term Loan
Agreement dated as of November 26, 1999, as amended (the "Credit Facility") and
other liens arising in the ordinary course of business, none of which are with
respect to obligations that are material in amount.
2.10 Insurance. The Company and each of its subsidiaries has
in effect insurance coverage, including directors and officers' liability
insurance, with reputable insurers which, in respect of amounts, premiums, types
and risks insured, constitutes reasonably adequate coverage against all risks
customarily insured against by companies comparable in size and operations to
the Company and its subsidiaries. Neither the Company nor any of its
subsidiaries has received any notice of cancellation of any insurance policy or
binder currently in effect.
2.11 No Violation of Law; Licenses; Permits and Registration.
Neither the Company nor any of its subsidiaries is in material violation of, or
has been given notice or been charged with, or is being investigated with
respect to, any violation of, any law, statute, order, rule, regulation,
ordinance or judgment of any governmental or regulatory body or authority or
arbitration panel. Each of the Company and its subsidiaries has all material
permits, licenses, approvals, authorizations of and registrations under all
Federal, state, local, provincial and foreign laws applicable to it, and from
all applicable governmental authorities as are required by the Company and its
subsidiaries to carry on their respective businesses as currently conducted.
2.12 Proxy Statement. The proxy statement (the "Proxy
Statement") to be distributed in connection with the Company's meeting of
stockholders to vote upon the issuance of the Shares (the "Stockholders'
Meeting") will, at the time of mailing of the Proxy Statement and any amendments
or supplements thereto, and at the time of such meeting of stockholders, (i)
state the nature of the issuance of the Shares in sufficient detail to permit
the stockholders to form a reasoned judgment thereon and (ii) comply as to form
and content with all applicable laws, except that no representation is made by
the Company with respect to information supplied by the Investors for inclusion
therein.
2.13 Non-competition Agreements. Except as disclosed in the
Company SEC Reports or as set out in Section 2.13 of the Disclosure Schedule,
neither the Company nor any subsidiary of the Company is a party to any
agreement which purports to restrict or prohibit in any material respect any of
them or any corporation affiliated with any of them from, directly or
indirectly, engaging in any business involving the collection, interim storage,
transfer, recovery, processing, recycling, marketing or disposal of rubbish,
garbage, paper, textile wastes, liquid and other wastes or any other material
business currently engaged in by the Company or any of its subsidiaries. None of
the Company's officers, directors or key employees is a party to any agreement
which, by virtue of such person's relationship with the Company, restricts in
any material respect the Company or any subsidiary of the Company from, directly
or indirectly, engaging in any of the businesses described above.
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2.14 Brokers and Finders. Except for the fees and expenses
payable to Xxxxxx Brothers, Inc. ("Xxxxxx Brothers") and Xxxxxxx Xxxxxx Xxxxxx,
Inc. which fees are reflected in the engagement letters with the Company, copies
of which have been delivered to the Investors, the Company is not a party to or
bound by any contract, arrangement or understanding with, or subject to any
claim by, any person or firm which may result in an obligation of the Company to
pay any finder's fees, brokerage or agent commissions or other like payments in
connection with the transactions contemplated hereby.
2.15 Material Contracts. Except as set out in Section 2.15 of
the Disclosure Schedule, neither the Company nor any of its subsidiaries is in
material breach or violation of or in default in the performance or observance
of any terms or provisions of, and no event has occurred which, with notice,
lapse of time or action by a third party, could result in a default under any
contract, agreement, lease or deed that is material to the business or operation
of the Company and its subsidiaries taken as a whole (a "Material Contract"). To
the knowledge of the Company, no other party to any Material Contract is in
material breach thereof or default thereunder.
2.16 Securities Law Compliance. Assuming the representations
and warranties of the Investors set forth in Section 3 hereof are true and
correct in all material respects, the issuance and sale of the Shares pursuant
to this Agreement will be exempt from the registration requirements of
applicable Federal, state, and provincial securities laws.
2.17 Disclosure. No representation or warranty by the Company
in this Agreement and no statement contained in the schedules or exhibits or in
any certificate to be delivered pursuant to this Agreement, contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. There is no
material fact known to the Company and not disclosed in this Agreement, the
Disclosure Schedule or the Company SEC Reports that could be reasonably likely
to have a Company Material Adverse Effect or a material adverse effect on the
validity, binding effect or enforceability of this Agreement or the Ancillary
Documents or the ability of the Company to perform its obligations hereunder or
thereunder.
2.18 Company Stockholders' Approval. The vote of stockholders
of the Company required for approval of the Share Issuance (as defined in
Section 4.2 hereof) is the affirmative vote of a majority of the votes cast on
the proposal at the stockholders' meeting.
2.19 Opinion of Financial Advisor. The Company's financial
advisor, Xxxxxx Brothers, has rendered an opinion to the Board of Directors of
the Company to the effect that, as of July 20, 2001, from a financial point of
view, the consideration to be received by the Company in the proposed
transaction is fair to the Company; it being understood and acknowledged by the
Investors that such opinion has been rendered for the benefit of the Board of
Directors of the Company and is not intended to, and may not, be relied upon by
the Investors.
2.20 Rights Agreement. The Company, including its Board of
Directors, has irrevocably taken all actions necessary to (i) render the Rights
Agreement inapplicable to the transactions contemplated by this Agreement and
(ii) ensure that (x) none of the Investors or the Investors as a group are an
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Acquiring Person (as defined in the Rights Agreement) pursuant to the Rights
Agreement as a result of the execution of this Agreement and the consummation of
the transactions contemplated hereby and (y) a Distribution Date, a Triggering
Event or a Share Acquisition Date (as such terms are defined in the Rights
Agreement) does not occur by reason of the approval, execution or delivery of
this Agreement, the announcement thereof or the consummation of the transactions
contemplated hereby.
2.21 Transactions with Affiliates. Except for ongoing, regular
employment relationships with the Company, as disclosed in the Company SEC
Reports and as set out in Section 2.21 of the Disclosure Schedule, there are no
agreements, loans, leases or other transactions or continuing transactions
(including but not limited to (i) any transactions involving any payment or
commitment to pay any commission, fee or other amount, or (ii) the transactions
contemplated by this Agreement or related thereto) between the Company and any
present or former director, officer or employee of the Company, or any
stockholder or affiliated group of stockholders beneficially owning greater than
5% of the outstanding Common Stock of the Company, or any member of such
officer's, director's, employee's or stockholder's immediate family, or any
person controlled by such officer, director, employee or stockholder or his or
her immediate family.
SECTION 3
INVESTOR REPRESENTATIONS
3.1 Representations. Each Investor, severally and not jointly,
hereby represents and warrants to the Company with respect to such Investor's
purchase of Shares hereunder that:
(a) The Investor is resident in the jurisdiction set
forth opposite such Investor's name on such Investor's signature page hereto.
(b) The execution of this Agreement and each of the
Ancillary Documents to which the Investor is a party has been duly authorized by
all necessary action on the part of the Investor, has been duly executed and
delivered by the Investor, and constitutes a valid, binding agreement of the
Investor, enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to enforcement of creditors' rights generally and by general equitable
principles.
(c) Neither the execution and delivery of this
Agreement or the Ancillary Documents to which the Investor is a party, or any
other document or instrument to be executed in connection with the transactions
contemplated thereby, by the Investor, nor the consummation of the transactions
contemplated thereby, nor the performance by the Investor of its covenants and
agreements thereunder, (i) violates any law, statute, ordinance, regulation,
order, judgment or decree of any court or other governmental authority
applicable to the Investor, or (ii) violates or will violate, or conflicts with
or will conflict with, or results in or will result in any breach of any of the
terms of, or constitutes or will constitute a default under, any contract or
agreement to which the Investor is a party or by which the Investor or any of
its assets is subject to or bound.
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(d) No broker, finder, agent or similar intermediary
has acted on behalf of the Investor in connection with this Agreement or the
transactions contemplated hereby and except as set forth in Section 2.14 hereof,
there are no brokerage commissions, finder's fees or similar fees or commissions
payable in connection therewith.
3.2 Representations by US Investors. Each Investor resident in
the United States, severally and not jointly, hereby represents to the Company
with respect to such Investor's purchase of Shares hereunder that:
(a) The Investor is acquiring the Shares for its own
account, for investment, and not with a view to any "resale" or "distribution"
thereof within the meaning of the Securities Act.
(b) The Investor understands that because the Shares
have not been registered under the Securities Act, it cannot dispose of any or
all of the Shares unless such securities are subsequently registered under the
Securities Act or exemptions from such registration are available. The Investor
understands that each certificate representing the Shares will bear the
following legend or one substantially similar thereto:
The securities represented by this
certificate have not been registered under
the Securities Act of 1933. These securities
have been acquired for investment and not
with a view to distribution or resale, and
may not be sold or otherwise transferred
without an effective registration statement
for such securities under the Securities Act
of 1933 or the availability of an exemption
from such registration requirements. The
Company may request an opinion of counsel as
to the availability of such exemption.
(c) The Investor is sufficiently knowledgeable and
experienced in the making of investments so as to be able to evaluate the risks
and merits of its investment in the Company, and is able to bear the economic
risk of loss of its investment in the Company.
(d) The Investor believes it has received all the
information it considers necessary or appropriate for deciding whether to
purchase the Shares. The Investor has had an opportunity to ask questions and
receive answers from the Company regarding the terms and conditions of the
offering of the Shares and the business, properties and financial condition of
the Company. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 or the right to the
Investor to rely thereon.
(e) The Investor is an "accredited investor" within
the meaning of SEC Rule 501 of Regulation D of the Securities Act, as presently
in effect.
(f) The Investor has been advised that none of the
Shares have been registered under the Securities Act or under the "blue sky"
laws of any jurisdiction and that the Company, in issuing the Shares is relying
upon, among other things, the representations and warranties of the Investor
contained in this Section 3.
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3.3 Representations by Ontario Investors. Each Investor
resident in Ontario, severally and not jointly, hereby represents and warrants
to the Company with respect to such Investor's purchase of Shares hereunder
that:
(a) The Investor has not received any offering
memorandum (as such term is used in Ontario Securities Commission Rule 45-501)
and the sale of the Shares was not accompanied by any advertisement in printed
media of general or regular public circulation, radio or television.
(b) The Investor acknowledges that the Company will
be issuing the Shares under an exemption from the prospectus filing requirements
of the Securities Act (Ontario) and that the resale or other disposition of all
or any part of the Shares will, accordingly, be restricted by such laws.
(c) The Investor acknowledges that the Shares may
only be resold in compliance with applicable securities laws.
(d) The Investor agrees to comply with any relevant
securities legislation, order or policy applicable to the Investor concerning
the purchase of and holding of the Shares by the Investor and concerning any
resale of all or any part of the Shares by the Investor. Each Investor
acknowledges that all certificates representing the Shares may be endorsed with
a legend setting out resale restrictions under the applicable securities
legislation. Each Investor further acknowledges that it has been advised to
consult its own legal advisers with respect to applicable resale restrictions
and that it will be fully responsible for the compliance with such restrictions.
(e) Each Investor is purchasing the Shares as
principal for its own account for investment, not for the benefit of any other
person and not with a view to the sale or distribution of all or any part of the
Shares, and the Shares have an aggregate purchase price to the Investor of not
less than CDN $150,000.
(f) The Investor has not been created or is not being
used primarily to permit the purchase of the Shares without a prospectus in
reliance on an exemption from the prospectus requirements of applicable
securities legislation.
(g) The Investor will execute and deliver within the
applicable time periods all documentation as may be required to be executed by
the Investor by applicable securities laws to permit the purchase of the Shares
by the Investor on the terms herein set forth.
(h) The Investor is capable of assessing the proposed
investment as a result of the Investor's financial or investment experience or
as a result of advice received from a registered person other than the Company
or an affiliate thereof, and is able to bear the economic risk of loss of its
investment.
3.4 Representations by Quebec Investors. Each Investor
resident in Quebec, severally and not jointly, hereby represents and warrants to
the Company with respect to such Investor's purchase of Shares hereunder that:
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(a) The purchase of the Shares was not made pursuant
any advertisement in printed media of general or regular public circulation,
radio or television
(b) The Investor acknowledges that the Company will
be issuing the Shares under an exemption from the prospectus filing requirements
of the Securities Act (Quebec) and that the resale or other disposition of all
or any part of the Shares will, accordingly, be restricted by such laws.
(c) The Investor acknowledges that the Shares may
only be resold in compliance with applicable securities laws.
(d) The Investor agrees to comply with any relevant
securities legislation, order or policy applicable to the Investor concerning
the purchase of and holding of the Shares by the Investor and concerning any
resale of all or any part of the Shares by the Investor. Each Investor
acknowledges that all certificates representing the Shares may be endorsed with
a legend setting out resale restrictions under the applicable securities
legislation. Each Investor further acknowledges that it has been advised to
consult its own legal advisers with respect to applicable resale restrictions
and that it will be fully responsible for the compliance with such restrictions.
(e) Each Investor is purchasing the Shares as
principal for its own account for investment, not for the benefit of any other
person, and the Shares have an aggregate purchase price to the Investor of not
less than CDN $150,000.
(f) The Investor, if it is a corporation, has not
been established solely to permit the purchase of the Shares without a
prospectus in reliance on an exemption from the prospectus requirements of
applicable securities legislation.
(g) The Investor will execute and deliver within the
applicable time periods all documentation as may be required to be executed by
the Investor by applicable securities laws to permit the purchase of the Shares
by the Investor on the terms herein set forth.
(h) The Investor is capable of assessing the proposed
investment as a result of the Investor's financial or investment experience or
as a result of advice received from a registered person other than the Company
or an affiliate thereof, and is able to bear the economic risk of loss of its
investment.
SECTION 4
MUTUAL CLOSING CONDITIONS
Each Investor's obligation to purchase and pay for its Shares,
and the Company's obligation to issue the Shares to the Investors and perform
its other obligations hereunder, shall be subject to the fulfillment to such
party's satisfaction (or waived in writing by the Company and such Investor on
or before the Closing Date) of the following conditions:
4.1 Amendment to Credit Facility. Amendments to the Credit
Facility, substantially in the form of Annex C attached hereto shall have become
effective.
11
4.2 Stockholder Approval. The issuance of the Shares to the
Investors pursuant to this Agreement (the "Share Issuance") shall have been
approved and adopted by the requisite vote of the stockholders of the Company
under applicable law and applicable listing requirements.
4.3 Waiting Periods. All applicable waiting periods, if any,
under the HSR Act, the Canadian Competition Act and the Investment Canada Act
shall have expired or been terminated.
4.4 No Order. No preliminary or permanent injunction or other
order or decree by any court or administrative or regulatory body which prevents
the consummation of the transactions contemplated hereby shall have been issued
and remain in effect (the Company and the Investors agreeing to use their
reasonable best efforts to have any such injunction, order or decree lifted).
4.5 Consents. All governmental waivers, consents, orders and
approvals required, if any, under the Canadian Competition Act and the
Investment Canada Act for the consummation of the transactions contemplated
hereby shall have been obtained and be in effect. All other governmental
waivers, consents, orders and approvals legally required, if any, for the
consummation of the transactions contemplated hereby shall have been obtained
and be in effect, except where the failure to obtain the same would not be
reasonably likely, individually or in the aggregate, to have a Company Material
Adverse Effect following the Closing.
4.6 No Conflicting Laws. No statute, rule or regulation shall
have been enacted by any state, provincial or Federal government or governmental
agency which would prevent the consummation of the transactions contemplated
hereby.
SECTION 5
SEPARATE CLOSING CONDITIONS
5.1 Investor's Conditions. Each Investor's obligation to
purchase and pay for its Shares shall be subject to the fulfillment to such
Investor's satisfaction on or before the Closing Date (or waived in writing by
such Investor) of the following conditions:
(a) Satisfaction of Conditions. The representations
and warranties of the Company contained in this Agreement shall be, if
specifically qualified by materiality or Company Material Adverse Effect, true
in all respects, and, if not so qualified, shall be true in all material
respects, in each case as of the date hereof and as of the Closing Date, and the
covenants and agreements contained in this Agreement to be complied with by the
Company on or before the Closing shall have been complied with in all material
respects. The Company shall have delivered to the Investors a certificate dated
the Closing Date to the foregoing effect.
(b) Opinion of Counsel. The Investors shall have
received an opinion of counsel to the Company, dated the Closing Date, in form
satisfactory to counsel to the Investors, with respect to the matters set forth
in Annex D attached hereto.
12
(c) Delivery of Documents. The Company shall have
executed and delivered to the Investors (or shall have caused to be executed and
delivered to the Investors by the appropriate persons) the following:
(i) A stock certificate issued to each
Investor evidencing the Shares purchased by such Investor hereunder; and
(ii) A certificate of status from the
Ministry of Consumer and Commercial Relations of Ontario certifying that the
Company is in good standing.
(d) Registration Rights Agreement. The Company shall
have duly authorized, executed and delivered to the Investors a Registration
Rights Agreement, substantially in the form of Annex E attached hereto (the
"Registration Rights Agreement").
(e) Employment Agreement. The Company shall have
authorized, executed and delivered an employment agreement with Xxxxx
Xxxxxxxxxx-Xxxxx in form reasonably satisfactory to him containing the terms set
forth in of Annex F hereto.
(f) Board of Directors. The existing Board of
Directors shall have approved the nomination of Xxxxx Xxxxxxxxxx-Xxxxx, Xxxx
XxXxxxxx, Xxx X. Xxxxxxx and two individuals designated by Xxxxx
Xxxxxxxxxx-Xxxxx and unanimously approved by Xxx X. Xxxxxxx and Xxxx XxXxxxxx as
directors of the Company, each of Xxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx and Xxxxx
Xxxxxxxxxx shall have resigned from the Board of Directors and the nominated
directors shall have been approved by the Company's stockholders at the
Stockholders' Meeting.
(g) Listing of Shares. The Shares shall have been
approved for quotation on the Nasdaq SmallCap Market, subject to official notice
of issuance.
(h) Consents. The Company shall have obtained all
consents required in order to prevent a breach of or a default under or a
termination of not less than three of the agreements referred to in Section
2.3(b) of the Disclosure Schedule and marked with an asterisk.
(i) Payment of Withholding Tax. Prior to the Closing,
the Company shall have (i) paid in full all withholding taxes, interest and
penalties related to the Company's "tower" structure as referenced in Section
2.5 of the Disclosure Schedule, and (ii) made all required fillings with
governmental authorities related to such withholding taxes.
5.2 Company's Conditions. The Company's obligations to issue
Shares to any Investor and perform its other obligations hereunder with respect
to such Investor shall be subject to the fulfillment to the Company's
satisfaction at or before the Closing Date (or waived in writing by the Company)
of the following conditions:
(a) Satisfaction of Conditions. The representations
and warranties of the Investor contained in this Agreement shall be, if
specifically qualified by materiality, true in all material respects, and, if
not so qualified, shall be true in all material respects, in each case as of the
date hereof and as of the Closing Date, and the covenants and agreements
contained in this Agreement to be complied with by the Investor on or before the
Closing shall have been complied with in all material respects. The Investor
13
shall have delivered to the Company a certificate dated the Closing Date to the
foregoing effect.
(b) Employment Agreement. Xxxxx Xxxxxxxxxx-Xxxxx
shall have executed and delivered to the Company an employment agreement in form
reasonably satisfactory to the Company containing the terms set forth in Annex F
hereto.
(c) Purchase of Shares. The Investors, (which shall
include any Permitted Assignees and Substitute Investors as from time to time
reflected on Annex A hereto) shall have purchased the Shares pursuant to the
terms of this Agreement.
(d) Lock-Up Agreement Each of the Persons listed on
Annex G hereto shall have executed a Lock-Up Agreement substantially in the form
of Annex H hereto (the "Lock-Up Agreement").
SECTION 6
COVENANTS
6.1 Expenses.
(a) If the Closing occurs, the Company will pay the
fees and expenses incurred by the Investors in connection with the negotiation,
execution, delivery and performance of this Agreement, the Ancillary Documents
and the transactions contemplated hereby and thereby (including the reasonable
fees and expenses of counsel, accountants and other representatives engaged by
the Investors in connection with such transactions) to a maximum of US $500,000
(collectively, the "Investor Transaction Expenses").
(b) If this Agreement is terminated pursuant to
Sections 8.1(g), (h), or (j) then the Company shall, not later than the time of
such termination, (i) reimburse the Investors for their Investor Transaction
Expenses incurred through the date of termination and (ii) pay to the Investors
an additional fee of US $1,000,000 in cash (the "Breakup Fee").
(c) If (i) on or after the date hereof but before the
Stockholders' Meeting (A) any Person or group shall have informed the Company
that such Person or group or any member or Affiliate thereof proposes, intends
to propose, is considering proposing, or will or may, if the Share Issuance is
delayed, abandoned or not approved by the Company's stockholders, propose a
Superior Proposal or (B) any such Person or group or the Company publicly
announces (including any filing with any Federal or state office or agency) that
such Person or group or any member or Affiliate thereof has proposed, intends to
propose, is considering proposing, or will or may, if the Share Issuance is
delayed, abandoned or not approved by the Company's stockholders, propose a
Superior Proposal and (ii) either the Company or a Majority in Interest of the
Investors terminates this Agreement pursuant to Section 8.1(i), and, not later
than six months after such termination, the Company shall enter into a
definitive purchase agreement with respect to a Competing Transaction with such
Person or group or a member or Affiliate thereof that constitutes a Superior
Proposal (the "Alternative Definitive Agreement"), the Company shall pay to the
Investors the Breakup Fee, as well as reimburse the Investors for their Investor
Transaction Expenses, as and when (whether or not within the six month period
14
referred to above) the Company shall consummate the transactions contemplated by
the Alternative Definitive Agreement.
(d) If this Agreement is terminated by a Majority in
Interest of the Investors pursuant to Section 8.1(d) hereof, then the Company
shall, within five (5) business days after receiving documentation thereof,
reimburse the Investors for their Investor Transaction Expenses incurred through
the date of termination.
(e) To the extent that the Breakup Fee is payable
pursuant to subsections (b), (c) or (d) above, each Investor will be entitled to
the pro-rata portion of the Breakup Fee equal to the percentage of the Shares
purchasable by such Investor, as set forth on such Investor's signature page
hereto, and such portion shall be paid by the Company to each Investor in
immediately available funds. To the extent that the Investor Transaction
Expenses are payable pursuant to subsections (a), (b), (c) or (d) above, the
fees and expenses of counsel, accountants and other representatives engaged by
the Investors shall be paid by the Company directly to such counsel, accountants
and other representatives and the other Investor Transaction Expenses shall be
paid by the Company directly to the Investor incurring such expenses, in each
case in immediately available funds.
(f) Notwithstanding anything to the contrary
contained herein, the Company will pay the fees and expenses incurred by the
Company or any of its subsidiaries in connection with the negotiation, execution
and delivery of this Agreement and the Ancillary Documents and the consummation
of the transactions contemplated hereby and thereby (including the fees and
expenses of counsel, accountants and other representatives engaged by the
Company or any of its subsidiaries in connection with such transactions).
6.2 Conduct of Business by the Company Pending the Closing.
The Company covenants and agrees that, prior to the Closing Date or earlier
termination of this Agreement as provided herein, unless a Majority in Interest
of the Investors shall otherwise agree in writing and except as contemplated by
this Agreement, the Company shall, and shall cause its subsidiaries to, act and
carry on their respective businesses in the ordinary course of business
consistent with past practice and use its and their respective reasonable best
efforts to preserve intact their current material business organizations, keep
available the services of their current officers and employees (except for
terminations of employees in the ordinary course of business) and preserve their
material relationships with others having business dealings with them.
6.3 Public Announcements. The initial press release relating
to this Agreement shall be a joint press release the text of which has been
agreed to by each of the Company and Xxxxx Xxxxxxxxxx-Xxxxx. Thereafter, prior
to the Closing, each of the Company and Xxxxx Xxxxxxxxxx-Xxxxx shall consult
with the other before issuing any press release with respect to this Agreement
or any of the transactions contemplated hereby.
6.4 Company Stockholders' Meeting. The Company shall use its
best efforts to take all actions necessary or advisable and permitted by
applicable law to (i) hold the Stockholders' Meeting as promptly as practicable
for the purpose of voting upon the approval of the Share Issuance, (ii)
recommend that the stockholders of the Company vote to approve the Share
Issuance, and (iii) secure the requisite vote or consent of stockholders for the
Share Issuance and in connection therewith shall solicit proxies and provide
15
proxy statements to the stockholders of the Company in accordance with
applicable securities laws.
6.5 No Solicitation of Transactions.
(a) The Company will not, directly or indirectly, and
will cause its subsidiaries and affiliates, and its and their respective
officers, directors, employees, investment bankers, attorneys, accountants and
other advisers or representatives (collectively, the "Representatives") not to,
directly or indirectly, solicit, initiate or encourage (including by means of
furnishing non-public information), or take any other action to facilitate, any
inquiries or the making of any proposal or offer that constitutes, or may
reasonably be expected to lead to, any Competing Transaction, or enter into or
maintain or continue discussions or negotiate with any Person in furtherance of
such inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize or permit any of its subsidiaries or any
Representative retained by it to take any such action.
(b) Notwithstanding the foregoing, (i) the Company
may, in response to an unsolicited bona fide written offer or proposal with
respect to a proposed Superior Proposal, pursuant to a confidentiality agreement
containing customary terms and conditions, furnish confidential or non-public
information to a financially capable Person (a "Potential Acquirer") and
negotiate with such Potential Acquirer if the Board of Directors of the Company,
after consulting with its outside legal counsel, determines in good faith that
the failure to provide such confidential or non-public information to or
negotiate with such Potential Acquirer would be reasonably likely to constitute
a breach of its fiduciary duty to the Company's stockholders, and (ii) the
Company's Board of Directors may recommend to the Company's stockholders that
they accept such Superior Proposal or otherwise take and disclose to the
Company's stockholders a position contemplated by Rule 14e-2 under the Exchange
Act. It is understood and agreed that negotiations and other activities
conducted in accordance with this Section 6.5(b) shall not constitute a
violation of Section 6.5(a).
(c) The Company shall promptly, but in any event
within one day after receiving notice thereof, advise the Investors in writing
of any Competing Transaction or any inquiry regarding the making of a Competing
Transaction, including any request for information, the material terms and
conditions of such request, Competing Transaction or inquiry and the identity of
the Person making such request, Competing Transaction or inquiry. The Company
shall keep the Investors reasonably informed of the status and details,
including any amendments or proposed amendments, of any such request, Competing
Transaction or inquiry.
6.6 All Reasonable Efforts; Agreement to Cooperate.
(a) Subject to the terms and conditions herein
provided, each of the parties hereto shall use its reasonable best efforts to
take, or cause to be taken, all action and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable consistent with applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement;
provided, however, that nothing in this Section 6.6 shall require any Investor
or the Company to agree to any modification of this Agreement or any of the
Ancillary Documents or any Investor to make an investment in the Company that is
16
greater than the amount set forth opposite the Investor's name on the Investor's
signature page hereto.
(b) Without limiting the generality of the foregoing,
and notwithstanding anything in this Agreement to the contrary, the Company
shall use its reasonable best efforts to take or cause to be taken all
reasonable action and to do, or cause to be done, and to assist and cooperate
with the other parties hereto in doing, all things necessary, proper or
advisable to obtain all governmental waivers, consents, authorizations, orders
and approvals, all consents, amendments to or waivers from other parties under
the terms of all Material Contracts and all other material permits, concessions,
franchises or licenses applicable to the Company or its subsidiaries required as
a result of the transactions contemplated by this Agreement.
6.7 Nasdaq Listing. The Company shall use its reasonable best
efforts to maintain the Company's quotation on Nasdaq for a period of two years
following the Closing unless the Board of Directors of the Company determines in
good faith that any action required to maintain such listing is not in the best
interest of the Company and its stockholders.
SECTION 7
ACCESS
7.1 Access; Notification of Certain Matters.
(a) Upon reasonable notice, the Company shall afford
the Investors and their representatives reasonable access during normal business
hours to the offices, properties, books, records and personnel of the Company
and its subsidiaries and such additional information concerning the business and
properties of the Company and its subsidiaries as the Investors and their
representatives may reasonably request. The Company shall instruct its and its
subsidiaries' employees, counsel and financial advisors to cooperate with the
Investors in their investigation of the business of the Company and its
subsidiaries.
(b) Between the date hereof and the Closing, the
Company shall, promptly (and in any event within five (5) business days after
obtaining knowledge thereof), notify the Investors of any action or event which
could reasonably be expected to have a Company Material Adverse Effect.
7.2 Confidential Information. The Company and each Investor
for themselves, their respective directors, officers, employees, Affiliates,
agents and representatives covenant with each other that they each will use all
information provided by or relating to the other parties acquired by them
pursuant to the provisions of this Agreement or in the course of negotiations
with, or examinations of, the other parties (the "Confidential Information")
only in connection with the transactions contemplated hereby and not in any way
detrimental to the other parties and shall cause the Confidential Information
obtained by them pursuant to this Agreement and such negotiations and
examinations to be treated as confidential, except as may otherwise be required
by law or the rules or regulations of Nasdaq or as may be necessary or
appropriate in connection with the enforcement of this Agreement or any
instrument or document referred to herein or contemplated hereby, and provided
that to the extent that any such party or any Affiliate thereof may become
17
legally compelled to disclose any Confidential Information, such party shall
give notice to and consult with the party providing such information prior to
disclosing such information. Notwithstanding the foregoing no recipient of
Confidential Information (each, a "Recipient") shall be required to maintain the
confidentiality of Confidential Information that (i) is or becomes generally
available to the public other than as a result of disclosure by the Recipient or
any party to whom the Recipient has disclosed such information; (ii) is obtained
by the Recipient, on a non-confidential basis, from a third party entitled to
disclose such information or (iii) is already known by the Recipient at the time
such information is received by the Recipient. In the event of termination of
this Agreement, each Recipient will cause to be delivered to the party providing
such information all documents, work papers and other material containing
Confidential Information obtained by it from such party, whether so obtained
before or after the execution of this Agreement.
SECTION 8
TERMINATION
8.1 Termination. This Agreement may be terminated and the
other transactions contemplated by this Agreement may be abandoned at any time
prior to the Closing Date, notwithstanding any requisite approval and adoption
of this Agreement and the transactions contemplated by this Agreement, pursuant
to a written notice of such termination, as follows:
(a) by mutual written consent of the Company and a
Majority in Interest of the Investors;
(b) by either the Company or a Majority in Interest
of the Investors if the Closing shall not have occurred on or before September
30, 2001; provided, however, that the right to terminate this Agreement under
this Section 8.1(b) shall not be available to any party whose breach has caused
the failure of the Closing to occur on or before such date;
(c) by either the Company or a Majority in Interest
of the Investors if there shall be any restraining order, injunction or other
order issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the Closing or any of the other transactions contemplated
hereby which is final and nonappealable;
(d) by a Majority in Interest of the Investors upon a
breach of any representation, warranty, covenant or agreement on the part of the
Company set forth in this Agreement, or if any representation or warranty of the
Company shall have become untrue, such that the conditions set forth in Section
5.1(a) would not be satisfied ("Terminating Company Breach"); provided, however,
that if such Terminating Company Breach is curable by the Company through the
exercise of its reasonable best efforts and for as long as the Company continues
to exercise such efforts, but not beyond the date specified in paragraph (b)
above, the Investors may not terminate this Agreement under this Section 8.1(d);
(e) by the Company with respect to a particular
Investor upon a breach of any representation, warranty, covenant or agreement on
the part of such Investor set forth in this Agreement, or if any representation
18
or warranty of such Investor shall have become untrue, such that the conditions
set forth in Section 5.2(a) would not be satisfied ("Terminating Investor
Breach"); provided, however, that if such Terminating Investor Breach is curable
by such Investor or its Permitted Assignee through the exercise of its
reasonable best efforts and for as long as such Investor or its Permitted
Assignee continues to exercise such efforts, but not beyond the date specified
in paragraph (b) above, the Company may not terminate this Agreement with
respect to such Investor under this Section 8.1(e);
(f) by the Company at any time that, after the
expiration of all applicable Ten Day Cure Periods, the Investors (which shall
include any Permitted Assignees and Substitute Investors as from time to time
reflected on Annex A hereto) are not collectively obligated as parties to this
Agreement to purchase all of the Shares.
(g) by the Company if the Company receives a Superior
Proposal and resolves to accept such Superior Proposal; provided, however, that
prior to such termination (x) the Company shall have given the Investors two
days' prior written notice of its intention to terminate pursuant to this
provision and (y) the Company shall have paid to the Investors (or their
counsel, accountants or other representatives, as the case may be) in
immediately available funds the amounts referred to in Section 6.1(b);
(h) by the Company if (A) a tender or exchange offer
is commenced by a Potential Acquirer for all outstanding shares of Common Stock,
and (B) the Company's Board of Directors determines, in good faith and after
consultation with an independent financial advisor, that such offer constitutes
a Superior Proposal and resolves to accept such Superior Proposal or recommend
to the stockholders that they tender their shares in such tender or exchange
offer; provided, however, that prior to such termination (x) the Company shall
have given the Investors two days' prior written notice of its intention to
terminate pursuant to this provision and (y) the Company shall have paid to the
Investors (or their counsel, accountants or other representatives, as the case
may be) in immediately available funds the amounts referred to in Section
6.1(b);
(i) by either the Company or a Majority in Interest
of the Investors if the stockholders of the Company fail to approve the Share
Issuance at the Stockholders' Meeting; or
(j) by a Majority in Interest of the Investors if (i)
the Board of Directors of the Company has withdrawn, modified or changed its
approval or recommendation of this Agreement, or approved or recommended a
Superior Proposal, (ii) the Company enters into any agreement with a Person with
respect to a transaction the proposal of which qualifies as a Superior Proposal,
(iii) (A) a third party commences a tender offer or exchange offer for all of
the outstanding shares of the Common Stock and (B) the Board of Directors of the
Company has recommended that the shareholders of the Company tender their shares
in such tender or exchange offer, or (iv) the Board of Directors of the Company
shall have resolved to do any of the foregoing. The Investors shall give two
days prior written notice to the Company of their intention to terminate this
Agreement pursuant to this Section 8.1(j) along with documentation of their
Investor Transaction Expenses, and the Company shall pay to the Investors (or
their counsel, accountants or other representatives, as the case may be), on or
19
before the termination date, in immediately available funds, the amounts
referred to in Section 6.1(b).
8.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 8.1, this Agreement shall forthwith become void,
there shall be no liability under this Agreement on the part of the Investors
(including any Permitted Assignees or Substitute Investors) or the Company, and
all rights and obligations of each party hereto shall cease, other than the
obligations set forth in Sections 6.1(b), 6.1(c), 6.1(d) and 6.1(f); provided,
however, that nothing herein shall relieve any party from liability for any
willful or intentional breach of any covenant or agreement of such party
contained in this Agreement.
SECTION 9
GENERAL
9.1 Amendments, Waivers and Consents. No covenant or other
provision hereof may be waived otherwise than by a written instrument signed by
the party so waiving such covenant or other provision. The waiver or failure to
insist upon strict compliance with any condition or provision hereof shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
waiver or failure. This Agreement may not be amended or modified except by an
instrument in writing signed by each party hereto.
9.2 Survival of Representations, Warranties and Covenants,
Assignability of Rights. All representations and warranties made herein and in
the certificates, exhibits or schedules delivered or furnished by or on behalf
of a party to the other party in connection herewith shall terminate as of the
Closing. Except as otherwise provided in this Agreement, all covenants,
agreements, representations and warranties shall inure to the benefit of the
successors and assigns of the parties.
9.3 Governing Law. This Agreement shall be deemed to be a
contract made under, and shall be construed in accordance with, the laws of the
State of Delaware (without giving effect to principles of conflicts of law the
effect of which would cause the application of domestic substantive laws of any
other jurisdiction).
9.4 Counterparts. This Agreement may be executed
simultaneously in any number of counterparts (including by facsimile), each of
which when so executed and delivered shall be taken to be an original; but such
counterparts shall together constitute but one and the same document.
9.5 Notices and Demands. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
mailed by registered or certified mail (return receipt requested) or sent via
confirmed facsimile to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) If to any Investor, to the address set
forth on the Investor's signature page
hereto, with copies to each of:
20
Xxxxx Xxxxxxxxxx-Xxxxx
c/o H20 Technologies
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx X0X 0X0
Facsimile: (000) 000-0000
and
(ii) Xxxxx X. Xxxxx, Esq.
XxXxxxxxx, Will & Xxxxx
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
(iii) Capital Environmental Resource Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxx Xxxxx
Facsimile: (000) 000-0000
with a copy to:
Torys
Suite 3000
Maritime Life Tower, Toronto-Dominion Centre
00 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
9.6 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement.
9.7 Integration. This Agreement, including the exhibits,
documents and instruments referred to herein or therein, constitute all of the
agreements and supersede all other prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
9.8 No Assignment. This Agreement may not be assigned,
pledged, hypothecated or otherwise transferred by the Company without the
consent of each of the parties hereto. Notwithstanding anything in this
Agreement to the contrary, (i) each Investor other than Xxxxx Xxxxxxxxxx-Xxxxx
may assign its right and obligation to purchase Shares under this Agreement, in
whole or in part, to any Person without the consent of the Company or the other
Investors and (ii) Xxxxx Xxxxxxxxxx-Xxxxx may assign his right and obligation to
purchase Shares under this Agreement, in whole or in part, to any family member,
21
estate planning vehicle or any of his Affiliates without the consent of the
Company or any other Investor (any such assignee pursuant to clauses (i) or (ii)
above is referred to as a "Permitted Assignee"), in each case, provided that
such Permitted Assignee agrees to be bound by the terms and conditions of this
Agreement as if an original party hereto and provided that such assignment shall
not relieve the Investor of any of its obligations to the Company hereunder.
9.9 Investor Obligations Several Not Joint. All obligations of
the Investors hereunder are several and not joint.
9.10 Third-Party Beneficiary. Nothing expressed or implied in
this Agreement is intended or shall be construed to confer upon or give any
Person other than the parties hereto any rights or remedies under or by reason
of this Agreement or any transaction contemplated hereby.
[Signature pages follow]
22
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
CAPITAL ENVIRONMENTAL RESOURCE, INC.
By:
---------------------------------
Name:
Title:
INVESTORS
Name:
Number of Shares:
-------------------
Purchase Price:
---------------------
Jurisdiction of Residence:__________
Address:
23
Annex B
GLOSSARY
--------
As used herein, the following terms shall have the following
meanings:
"Affiliate" means, with respect to any Person, any other
Person, directly or indirectly, controlling, controlled by, or under common
control with, such Person. For purposes of this definition, the term "control"
(including the correlative terms "controlling", "controlled by" and "under
common control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Ancillary Documents" means the Registration Rights Agreement,
the Employment Agreement between the Company and Xxxxx Xxxxxxxxxx-Xxxxx, the
amendments to the Credit Facility referred to in Section 4.1, the Lock-Up
Agreement, the Warrant Agreement referred to in Annex F attached hereto and any
other document referred to herein that is required to be executed by the Company
or the Investors as a condition to closing.
"Canadian Competition Act" means the Competition Act (Canada),
R.S. 1985 c. C-34, as amended.
"Company Material Adverse Effect" shall mean any material
adverse effect on the business, operations, assets, condition (financial or
other) or results of operations of the Company and its subsidiaries, taken as a
whole.
"Competing Transaction" means the occurrence of a transaction
resulting in any of the following: (i) any Person or group of Persons (within
the meaning of the Exchange Act) other than a trustee or other fiduciary holding
securities of the Company under a Company benefit plan or any of the Company's
subsidiaries or any stockholder (and such stockholder's Affiliates) as of the
date hereof and direct transferees thereof, becoming, after the date hereof, the
"beneficial owner" (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing, or convertible into, 20%
or more of the outstanding Common Stock; (ii) the merger or consolidation of the
Company with any other corporation; or (iii) the sale or transfer (in one
transaction or a series of related transactions) of all or any substantial part
of the assets of the Company and its subsidiaries, taken as a whole (including,
without limitation, a sale of stock of a subsidiary of the Company (whether by
sale or direct issuance), representing a substantial part of the assets of the
Company and its subsidiaries, taken as a whole) other than to a subsidiary of
the Company.
"Disclosure Schedule" means the disclosure statement delivered
at or prior to the execution of this Agreement by the Company to the Investor
setting out certain information relating to the Company.
"Environmental Law" means any Federal, state, provincial,
local or foreign law, statute, ordinance, rule, regulation, code, standard,
guideline, policy, license, permit, authorization, approval, consent, legal
doctrine, order, judgment, decree, injunction, requirement or agreement with any
governmental entity relating to (x) the protection, preservation or restoration
of the environment (including, without limitation, air, surface water,
groundwater, surface land, subsurface land or plant and animal life) or to human
health or safety or (y) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Substances, in each case as amended
and as in effect on the Closing Date.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Federal" shall mean of or relating to the federal government
of each of the United States and Canada.
"GAAP" means generally accepted accounting principles as in
effect in the United States of America from time to time.
"Hazardous Substance" means any substance presently listed,
defined, designated or classified as hazardous, toxic, radioactive, or
dangerous, or otherwise regulated, under any Environmental Law and any substance
that may harm, impair or cause an adverse effect to the environment (including,
without limitation, air, surface water, groundwater, surface land, subsurface
land or plant and animal life) or to human health or safety and property.
Hazardous Substance includes any substance to which exposure is regulated by any
government authority or any Environmental Law including, without limitation, any
toxic waste, pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, special waste, industrial substance or petroleum or any
derivative or by-product thereof, radon, radioactive material, asbestos, or
asbestos containing material, urea formaldehyde foam insulation, lead or
polychlorinated biphenyls.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Investment Canada Act", means the Investment Canada Act, R.S.
1985, c. 28 (1st Supp.), as amended.
"Liability" means any liability or obligation (whether known
or unknown, asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated and whether due or become due).
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien, claim or charge of any kind (including, but not limited to,
any conditional sale or other title retention agreement, any lease in the nature
thereof, and the filing of or agreement to give any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction in connection
with such mortgage, pledge, security interest, encumbrance, lien or charge).
"Majority in Interest of the Investors" means Investors
holding, or committed to purchase hereunder, a majority of the Shares.
2
"Nasdaq" shall mean The Nasdaq Stock Market, including the
Nasdaq National Market and the Nasdaq SmallCap Market.
"Person" means an individual, corporation, limited liability
company, partnership, association, trust or any other entity or organization.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Superior Proposal" means an offer made by a third party to
consummate a Competing Transaction that the Board determines, in its reasonable
judgment (after consultation with a nationally recognized independent financial
advisor), to be more favorable to the Company's stockholders than the terms of
the transactions contemplated by this Agreement.
As used herein, the following terms shall have the meanings
ascribed to them in the Section of this Agreement opposite each such term:
Term Section
---- -------
Agreement Preamble
Alternative Definitive Agreement 6.1(c)
Breakup Fee 6.1(b)
Closing 1.3
Closing Date 1.3
Company Preamble
Common Stock Preamble
Company Financial Statements 2.4(b)
Company Required Statutory 2.3(c)
Approvals
Company SEC Reports 2.4(a)
"control" Annex B ("Affiliate"
definition)
Confidential Information 7.2
Credit Facility 2.9
Filed Company SEC Reports 2.4(a)
Form 6-K 2.4(a)
Investor Transaction Expenses 6.1(a)
Investors Preamble
Xxxxxx Brothers 2.14
Lock-Up Agreement 5.2(d)
Material Contracts 2.15
Per Share Purchase Price 1.1
Permitted Assignee 9.8
Potential Acquirer 6.5(b)
Preferred Stock 2.2
Proxy Statement 2.12
3
Purchase Price 1.2
Recipient 7.2
Registration Rights Agreement 5.1(d)
Representatives 6.5(a)
Rights Agreement 2.2(b)
Share Issuance 4.2
Shares 1.1
Stockholders' Meeting 2.12
Substitute Investor 1.3
Ten Day Cure Period 1.3
Terminated Investor 1.3
Terminating Company Breach 8.1(d)
Terminating Investor Breach 8.1(e)
4
