Execution Copy
SUBSCRIPTION AGREEMENT
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TO: STAKE TECHNOLOGY LTD. (the "Company")
0000 Xxxxxxx 0
Xxxxxx, Xxxxxxx
X0X 0X0
Claridge Israel LLC (the "Purchaser"), hereby irrevocably subscribes, subject to
the terms and conditions set forth below, for 3,000,000 units ("Units") of the
capital of the Company at the price of US$2.00 per Unit for an aggregate
subscription price of US$6,000,000 (the "Offering"), each Unit consisting of one
common share of the Company (a "Common Share") and three-quarters of one Common
Share purchase warrant (a "Warrant") as set forth in the form of Warrant
attached hereto as Schedule "A" (the "Warrant Certificate") to purchase one
Common Share. Each Warrant entitles the holder thereof to purchase one Common
Share at a purchase price of US$2.40 at any time on or before 5:00pm (Toronto
time) on September 30, 2004.
Covenants of Company
--------------------
1. The Company covenants with the Purchaser and acknowledges that the
Purchaser is relying on such covenants in completing the Offering that the
Company shall:
a. make all necessary filings with, and obtain all necessary approvals
from, the Ontario Securities Commission and the National Association
of Securities Dealers in order to complete the Offering and ensure
that Common Shares are quoted for trading on the NASDAQ Smallcap
Market;
b. use its reasonable best efforts to maintain its status as a reporting
company under the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder (the "Securities Act"), and the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act" and together
with the Securities Act, the "U.S. Securities Laws"), as applicable,
and to acquire status as a "reporting issuer" under the Securities Act
(Ontario) and to continue to be in compliance with its obligations
thereunder, without default;
c. use its reasonable best efforts to maintain a quotation for the Common
Shares on the NASDAQ Smallcap Market and on such other recognized
stock exchange(s) as the Company may determine, acting reasonably;
d. ensure that at all times prior to the expiry thereof, sufficient
Common Shares are allotted and reserved or deposited for issuance upon
the due exercise of the
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Warrant; and
e. allow and assist the Purchaser and its representatives to conduct all
due diligence which it may reasonably require to be conducted.
Representations and Warranties of Company
-----------------------------------------
1. The Company represents and warrants to the Purchaser, and acknowledges that
the Purchaser is relying upon such representations and warranties in
completing the Offering, that:
(i) the Company and each of Temisca Inc., Sunrich Food Group
Inc., Northern Food & Dairy, Inc. Sunrich, Inc. and Nordic
Aseptic, Inc. (each a "Material Subsidiary" and
collectively, the "Material Subsidiaries") has been duly
organized and is validly existing under the laws of its
jurisdiction of incorporation, has all requisite power and
authority and is duly qualified to carry on its business as
now conducted and to own its properties and assets and the
Company has all requisite power and authority to carry out
its obligations under each of this Subscription Agreement
and the Warrant;
(ii) except for the Material Subsidiaries, the Company has no
subsidiaries and has no investment or proposed investment in
any person which is or would be material to the business and
affairs of the Company;
(iii) the Company is a reporting company under the U.S. Securities
Laws and is not in default of any requirement thereof, is in
compliance with its timely disclosure ___ obligations
thereunder and there are no outstanding reports filed under
the U.S. Securities Laws on a confidential basis;
(iv) the Common Shares, the Warrant and the Common Shares
issuable on the exercise of the Warrant (collectively, the
"Underlying Securities") upon full payment therefor, have
been or shall be, as the case may be, validly created,
authorized and issued as fully paid and non-assessable
securities in the capital of the Company;
(v) all consents, approvals, permits, authorizations or filings
as may be required under applicable securities laws or
otherwise necessary for the execution and delivery of, and
the performance by the Company of its obligations under this
Subscription Agreement and the transactions contemplated
hereby have been made or obtained, as applicable;
(vi) each of this Subscription Agreement, the Registration Rights
Agreement (as defined below) and the Warrant has been duly
authorized, executed
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and delivered by the Company and constitutes a valid and
binding obligation of the Company enforceable against the
Company in accordance with its terms;
(vii) none of the execution and delivery of this Subscription
Agreement, the Registration Rights Agreement and the
Warrant, the performance by the Company of its obligations
hereunder or thereunder, the issue and sale of the Units
hereunder and the consummation of the transactions
contemplated by this Subscription Agreement, the
Registration Rights Agreement and the Warrant, including the
issuance and delivery of the Underlying Securities conflict
with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, (whether
after notice or lapse of time or both), (A) any statute,
rule or regulation applicable to the Company and including,
without limitation, applicable securities laws; (B) the
constating documents, by-laws or resolutions of the
directors and shareholders of the Company which are in full
force and effect at and as of the date hereof; (C) any
mortgage, note, indenture, contract, agreement, instrument,
lease or other document to which the Company is a party or
by which it is bound; or (D) any judgement, decree or order
binding the Company or, the property or assets of the
Company in each case which default or breach might
reasonably be expected to materially adversely affect the
business, operations, capital or condition (financial or
otherwise) of the Company or its assets;
(viii) all necessary corporate action has been taken by the Company
to allot and authorize the issuance of the Underlying
Securities;
(ix) the authorized capital of the Company consists of an
unlimited number of Common Shares of which 32,923,203 Common
Shares are issued and outstanding as fully paid and
non-assessable as at the date hereof prior to giving effect
to the Offering and an unlimited number of special shares,
none of which have been issued or are outstanding. Except
for the conversion, exercise or exchange rights that attach
to the Warrant, or to warrants, options and convertible
securities listed on Section 1(ix) of the Disclosure
Schedule made a part hereof and attached hereto (the
"Disclosure Schedule"), there exist no rights to purchase or
otherwise acquire any securities of the Company;
(x) other than as specifically set forth in the Form 10-KSB for
the annual period ended December 31, 2000 (the "10-K") and
the Form 10-Q for the quarterly period ended June 30, 2001,
(the "10-Q" and together with the 10-K, the "SEC Reports")
filed by the Company, there has not occurred any material
adverse change, financial or otherwise, in the
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assets, liabilities (contingent or otherwise), business,
financial condition, capital or prospects of the Company and
its subsidiaries since the effective date such of forms
filed by the Company, and no transaction has been entered
into by the Company or any of its subsidiaries which is or
would be material to the Company on a consolidated basis;
(xi) there have not been any material adverse changes to the
assets, liabilities, financial position or business of the
Company or any of its Material Subsidiaries since the filing
of the SEC Reports;
(xii) the SEC Reports were, on the dates of their respective
filing, in compliance in all material respects with the
requirements of their respective report forms and the
Exchange Act and did not, on the date of filing, 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.
(xiii) the financial statements in the SEC Reports have been
prepared in accordance with generally accepted accounting
principles and present fairly, in all material respects, the
financial condition and results of operations of the Company
for the periods then ended;
(xiv) the Company is in good standing and entitled to all benefits
under all contracts to which it is a party and is not
dependent upon the guarantee of or any security provided by
a third party. Except as set forth on Section 1(xiv) of the
Disclosure Schedule, the Company is not knowingly in breach
or default of any material obligations under any contract,
arrangement or commitment, including agreements for the
purchase of materials, supplies or services, agreements with
the purchase or sale of any assets of the Company,
management, consulting or similar contracts and leases or
licenses, written or oral, to which the Company is a party,
or by which it is bound, and breaches or defaults which
either on their own or in the aggregate, have not had and
will not have a material adverse effect on the Company or
its successor, its business, affairs or prospects, financial
or other. There is no breach or default of or under any
agreement that has resulted or could result in the breach of
any other agreement, deed or instrument to which the Company
or any Material Subsidiary is a party or by which any of
their property is bound. There exist no state of facts
which, after notice or lapse of time, or both, would
constitute a default or breach by the Company of any
contracts or commitments to which it is a party.
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(xv) the Company is the sole registered and beneficial owner of
all issued and outstanding securities of each Material
Subsidiary (except for certain Class "H" Shares of Temisca,
Inc. pledged to its creditors) and no holder of outstanding
shares in the capital of the Company will be entitled to any
pre-emptive or any similar rights to subscribe for any of
the Common Shares or other securities of the Company and no
rights, warrants or options to acquire, or instruments
convertible into or exchangeable for any shares in the
capital of the Company or any of its Material Subsidiaries
are outstanding or are contemplated;
(xvi) the Company and each of its Material Subsidiaries has
conducted and is conducting its business in compliance in
all material respects with all applicable laws of each
jurisdiction in which such business is carried on, except
where the failure to do so would not have an adverse
material effect on the Company or any Material Subsidiary;
(xvii) Except as specifically disclosed in the SEC Reports, no
legal or governmental proceedings are pending to which the
Company or any of its Material Subsidiaries is a party or to
which the property of the Company or any of its Material
Subsidiaries is subject that would result individually or in
the aggregate in any material adverse change in the
operation, business or condition of the Company taken as a
whole and, to the best of its knowledge, information and
belief, no such proceedings have been threatened against or
are contemplated with respect to the Company or any of its
property;
(xviii) the Company and each of its Material Subsidiaries has timely
filed all necessary tax returns and notices and has paid or
made provision for all applicable taxes of whatever nature
for all tax years to the date hereof to the extent such
taxes have become due or have been alleged to be due except
where the failure to file such tax returns and notices would
not have an adverse material effect on the Company or any
Material Subsidiary and the Company is not aware of any
material tax deficiencies or material interest or penalties
accrued or accruing, or alleged to be accrued or accruing
thereon which have not otherwise been provided for by the
Company and its subsidiaries;
(xix) the Company and its Material Subsidiaries possess all
material certificates, authorizations, permits or licences
issued by the appropriate regulatory authorities necessary
to conduct the business operated by it and neither the
Company nor any Material Subsidiary has received any notice
of proceedings relating to the revocation or modification of
any such certificate, authorization, permit or licence
which, by itself or in the aggregate, if the subject of an
unfavourable decision, ruling or finding,
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would have an adverse material effect on the conduct of the
business, operations, financial condition or income of the
Company taken as a whole;
(xx) to the best of the Company's knowledge, information and
belief, none of the directors or officers of the Company or
any of its subsidiaries (or such shareholders' respective
principals) is or has ever been subject to prior regulatory,
criminal or bankruptcy proceedings in Canada or elsewhere;
(xxi) the Company or one of its subsidiaries has all proprietary
rights provided in law to all patents, trademarks,
copyrights, industrial designs, software, firmware, trade
secrets, know-how, show-how, concepts, information and other
intellectual and industrial property (collectively,
"Intellectual Property") necessary to permit it to conduct
its business, except where the failure to do so would not
have an adverse material effect on the Company;
(xxii) the Company or one of its subsidiaries is the exclusive
owner of or possesses adequate enforceable rights to use the
Intellectual Property free and clear of any encumbrances
which would have an adverse material effect on the Company,
and has no knowledge of any claim of adverse ownership in
respect thereof;
(xxiii) the Company is not aware of a claim of any infringement or
breach by the Company or any of its subsidiaries of any
industrial or intellectual property rights of any other
person, nor has the Company or any of its subsidiaries
received any notice, nor is the Company otherwise aware,
that the use of the business names, trademarks,
servicemarks, copyrights and other industrial or
intellectual property of the Company or any of its
subsidiaries infringes upon or breaches any industrial or
intellectual property rights of any other person and the
Company has no knowledge of any infringement or violation of
any of the rights of the Company in such intellectual and
industrial property and is not aware of any state of facts
that casts doubt on the validity or enforceability of any
such intellectual or industrial property rights;
(xxiv) no royalty or other fee is required to be paid by the
Company to any other Person (as defined by applicable
securities laws) in respect of the Intellectual Property and
there are no restrictions on the ability of the Company to
exploit or assign all rights in the Intellectual Property;
(xxv) there are no claims against the Company in connection with
product warranties or the production or sale of defective or
inferior products;
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(xxvi) except as specifically disclosed in the SEC Reports, there
is presently no material plan in place for retirement bonus,
pension benefits, unemployment benefits, deferred
compensation, severance or termination pay, insurance, sick
leave, disability, salary continuation, legal benefits,
vacation or other employee incentives or compensation that
is contributed to or required to be contributed to, by the
Company for the benefit of any current or former director,
senior officer, or consultant of the Company;
(xxvii) except as specifically disclosed in the SEC Reports, neither
the Company nor any of its subsidiaries owes any money to,
nor has the Company or any of its subsidiaries any present
loans to, or borrowed any monies from, is or otherwise
indebted to any officer, director, employee, shareholder or
any person not dealing at "arms length" (as such term is
defined in the Income Tax Act (Canada)) with the Company
except for usual employee reimbursements and compensation
paid in the ordinary and normal course of the business of
the Company;
(xxviii) except as specifically disclosed in the SEC Reports, neither
the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding except in the normal
course of business with any officer, director, employee,
shareholder or any other person not dealing at arm's length
with the Company;
(xxix) except as specifically disclosed in the SEC Reports, to the
best of the Company's knowledge, information and belief, no
present or former officer, director or shareholder of the
Company or any of its subsidiaries has any cause of action,
or other claim whatsoever, against, or owes any amount to,
the Company or any of its subsidiaries except for any
liabilities reflected in the SEC Reports and claims in the
ordinary and normal course of the business such as for
accrued vacation pay and accrued benefits under any employee
plans the particulars of which have been disclosed to the
Agent;
(xxx) all material accruals for unpaid vacation pay, premiums for
unemployment insurance, health premiums, pension plan
premiums, accrued wages, salaries and commissions and
employee benefit plan payments have been reflected in the
books and records of the Company;
(xxxi) there has not been and there is not currently any material
disagreement or other difficulty with any of the employees
of the Company or any of its subsidiaries which is adversely
affecting or could reasonably
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adversely affect, in a material manner, the carrying on of
the business of the Company or any of its subsidiaries;
(xxxii) to the best of the Company's knowledge, information and
belief, the Company is in compliance with the provisions of
applicable worker's compensation, applicable employee health
and safety, training or similar legislation in each
jurisdiction where it carries on business;
(xxxiii) no property or asset of the Company or any of its
subsidiaries has been taken or expropriated by any federal,
state, provincial, municipal or other authority nor has any
notice or proceeding in respect thereof been given or
commenced nor is the Company aware of any intent or proposal
to give any such notice or commence any such proceeding;
(xxxiv) with respect to each premises which is material to the
Company and which the Company or any of its subsidiaries
occupies (the "Material Premises"), the Company or one of
its subsidiaries either owns such Material Premises or has
the exclusive right to occupy and use the Material Premises;
(xxxv) each of the leases pursuant to which the Company or any of
its subsidiaries occupies any Material Premises is in good
standing and in full force and effect, and none of the
Company or any of its subsidiaries (as the case may be) or,
to the best of the knowledge, information and belief of the
Company, any other party thereto, is in breach of any
material covenants, conditions or obligations contained
therein;
(xxxvi) to the best of the Company's knowledge, information and
belief, the business of the Company and each of its
subsidiaries has been and is in compliance with all
applicable Environmental Laws except where such
non-compliance would not have an adverse material effect on
the Company or any Material Subsidiary; neither the Company
nor any of its subsidiaries has used or permitted to be
used, except in compliance with all Environmental Laws, any
of its properties or facilities or any property or facility
which it previously owned or leased, to generate,
manufacture each and every element, compound, chemical
mixture, contaminant, pollutant, material waste or other
substance which is defined, determined or identified as
hazardous or toxic under any environmental law to which the
Company or its subsidiaries is subject or release of which
is prohibited under any such environmental law ("Hazardous
Materials"), process, distribute, use, treat, store, dispose
of, transport or handle any Hazardous Materials and neither
the Company nor any of its subsidiaries has caused or
permitted, nor has there been any release, of any Hazardous
Materials on, in, around, from or in
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connection with any of its properties or assets or their
use, or any property or facility which it previously owned
or leased, or any such release on or from a facility owned
or operated by any third party but with respect to which the
Company or one of its subsidiaries is or may reasonably be
alleged to have liability. All Hazardous Materials and all
other wastes and other materials and substances used in
whole or in part by the Company and its subsidiaries have
been disposed of, treated and stored by the Company and its
subsidiaries in compliance with all environmental laws;
neither the Company nor any of its subsidiaries has received
any notice of, nor been prosecuted for, non-compliance with
any environmental laws, and neither the Company nor any of
its subsidiaries has settled any allegation of
non-compliance prior to prosecution; and there are no
notices, orders or directions relating to environmental
matters requiring, or notifying the Company or one of its
subsidiaries that it is or may be responsible for, any
containment, clean-up, remediation or corrective action, or
any work, repairs, construction or capital expenditures to
be made under environmental laws with respect to the
business or any property of the Company and its
subsidiaries; and
(xxxvii) Neither the Company nor any of its Material Subsidiaries nor
any person acting on behalf of either of them has offered or
sold any of the Underlying Securities by any form of
solicitation or general advertising.
Representations and Warranties of Purchaser
-------------------------------------------
1. The Purchaser represents and warrants to the Company, and acknowledges that
the Company is relying upon such representations and warranties in
completing the Offering;
(i) The Purchaser is a valid and subsisting limited liability
company, has the necessary capacity and authority to execute
and deliver this subscription agreement and to observe and
perform its covenants and obligations hereunder and has
taken all necessary power in respect thereof.
(ii) Each of this Subscription Agreement and the Registration
Rights Agreement has been duly executed and delivered by the
Purchaser and constitutes a legal, valid and binding
contract of the Purchaser enforceable against the Purchaser
in accordance with its terms.
(iii) The Purchaser is a resident of the United States and
executed and delivered this Subscription Agreement in the
United States.
(iv) The Purchaser is acting as principal and is acquiring the
Units to be held
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for investment only and not with a view to immediate resale
or distribution and will not resell or otherwise transfer or
dispose of the Common Shares and Warrant comprising the
Units except in accordance with provisions of applicable
securities laws.
(v) No consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having
jurisdiction over the Purchaser is required for the
execution, delivery or performance by the Purchaser of its
obligations hereunder, including without limitation the
purchase of the Underlying Securities.
(vi) Neither the acquisition of the Underlying Securities nor the
performance of the Purchaser's obligations hereunder will
violate, conflict with, result in a breach of, or constitute
a default (or an event that, with the giving of notice or
the lapse of time, or both, would constitute a default)
under (i) the operating agreement or other organizational
documents of the Purchaser, (ii) any decree, judgment,
order, law, treaty, rule, regulation or determination of any
court, governmental agency or body or arbitrator having
jurisdiction over the Purchaser or any of its assets or
properties or (iii) the terms of any material agreement to
which the Purchaser is a party or to which any of the
Purchaser's properties is subject.
(vii) The Purchaser understands that the Underlying Securities
have not been registered under the Securities Act, nor
qualified under any state securities laws, and that they are
being offered and sold pursuant to an exemption from such
registration and qualification based in part upon the
representations of the Purchaser contained herein.
(viii) The Purchaser is an "accredited investor" as such term is
defined in Rule 501(a) of the Securities Act and has such
knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of the
investment contemplated by this Subscription Agreement; the
Purchaser is able to bear the economic risk of its
investment in the Company (including a complete loss of its
investment).
(ix) The Purchaser understands that it must bear the economic
risk of this investment indefinitely unless its Underlying
Securities are registered pursuant to the Securities Act or
an exemption from such registration is available, and unless
the disposition of such securities is qualified under
applicable state securities laws or an exemption from such
qualification is available. The Purchaser further
understands that there is no assurance that any exemption
from the Securities Act will be available, or, if available,
that such exemption will allow the Purchaser to sell,
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assign, pledge, hypothecate, or otherwise dispose or
encumber any or all of the Underlying Securities, in the
amounts, or at the time the Purchaser might propose.
(x) The Purchaser is acquiring the Underlying Securities solely
for its own account for investment and not with a view
toward the resale, assignment, pledge, hypothecation, or
other disposition, encumbrance or distribution thereof
(collectively, "Transfer"), nor with any present intention
of distributing the Underlying Securities. No other person
has any right with respect to or interest in the Underlying
Securities to be purchased by the Purchaser, nor has the
Purchaser agreed to give any person any such interest or
right in the future.
(xi) The Purchaser was not provided with, has not requested, and
does not need to receive an offering memorandum or a
prospectus as defined in applicable securities laws. The
offer and sale to the Purchaser of the Units was not made
through or as a result of, and the distribution of Units is
not being accompanied by, any advertisement in printed
public media, radio or television or telecommunication,
including electronic display or any other form of
advertisement and, except for the this subscription
agreement, the only documents delivered or otherwise
furnished to the subscriber in connection with such offering
and sale were a term sheet describing the terms of this
offering, copies of news releases issued by the Company,
public available research reports, public filings with the
Securities and Exchange Commission, none of which have been
prepared for delivery to the Purchaser in order to assist it
in making an investment decision in respect of the Units.
(xii) Other than as specifically set forth in this Subscription
Agreement, the Purchaser makes no representation or
warranty. EXCEPT AS SPECIFICALLY SET FORTH IN THIS
SUBSCRIPTION AGREEMENT, ALL REPRESENTATIONS AND WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE
HEREBY EXPRESSLY DISCLAIMED.
Pre-emptive Rights
------------------
1. For so long as any members of the Claridge Group (as defined below)
collectively remain the beneficial owners of five percent (5%) or more of
the outstanding Common Shares, the Company shall give notice to the
Purchaser and/or to the members of the Claridge Group who hold Common
Shares (collectively, the "Notified Parties") of all proposed offerings of
Common Shares or securities convertible into Common Shares to any third
party for the purposes of obtaining financing for the Company, whether such
offerings be
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by way of private placement or to the public by way of prospectus or
registration statement or otherwise. Every such notice shall be made in
writing given by the Secretary of the Company to the Notified Parties by
sending the same by prepaid registered mail addressed to, or by delivering
the same personally to, the Notified Parties at their latest address as
shown in the records of the Company. Such notice shall specify the total
number of Common Shares or securities convertible into Common Shares then
being offered for allotment and issue, the issue price for each such Common
Share or securities convertible into Common Shares (or unit if being
offered in units), the method by which such offering is being made and the
number of such Common Shares or securities convertible into Common Shares
(or units if being made by units) being offered to the Notified Parties and
shall limit the time (which shall not be less than 2 days from the date on
which such notice is deemed to have been given) within which such offer, if
not accepted, will be deemed to be declined. The number of Common Shares or
securities convertible into Common Shares (or units if offered in units) to
be offered to the Notified Parties in any such notice shall be equal to the
percentage that the Common Shares owned by the Notified Parties represents
of the total number of Common Shares issued and outstanding at the time of
giving of such notice. Acceptance of such offer by the Notified Parties
shall be made (within the time limited for acceptance as aforesaid) by a
reply notice in writing given to the Company by prepaid registered mail
addressed to, or by delivering the same personally to, the Company at its
registered office. Upon the expiration of the time limited for acceptance
as aforesaid or upon receipt of written advice from the Notified Parties
that they decline to accept the Common Shares offered to it, the Company
shall have the right within one hundred and twenty (120) days to allot and
issue Common Shares or securities convertible into Common Shares offered
for allotment and issue in accordance with the foregoing provisions and not
accepted by the Notified Parties to any person or persons at such price and
upon such terms as such Common Shares or securities convertible into Common
Shares were offered for allotment and issue. Following the expiration of
such one hundred and twenty (120) days the foregoing provisions hereof
shall again apply in respect of unissued Common Shares or securities
convertible into Common Shares and so on from time to time. Any offer,
reply or notice as aforesaid, if delivered, shall be deemed to have been
given on the date on which it was delivered, or if mailed by prepaid
registered post, shall be deemed to have been given on third business day
following the day on which it was mailed. Except as aforesaid, no holder of
Common Shares or securities convertible into Common Shares should be
entitled as of right to subscribe for, purchase or receive any part of any
issue of shares or securities of the Company now or hereafter authorized.
2. If the Company proceeds with a rights offering to any or all of its
shareholders and/or securityholders and all or any part of such rights
offering is not taken up by the shareholders and/or securityholders of the
Company then the Notified Parties shall have the right to take up any or
all of the unexercised portion of such rights offering upon the same terms
and conditions and at the same price of the rights offering. Upon the
expiry of any rights offering, the Company shall send to the Notified
Parties a notice specifying the shares or securities which have not been
taken up under the rights offering. The Notified
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Parties shall, within twenty one (21) days of receipt of such notice send
the Company a notice specifying the number of shares or securities which
have not been taken up under the rights offering which the Notified Parties
wish to purchase.
3. Notwithstanding the foregoing, the Purchaser shall have no pre-emptive
right in respect of Common Shares or securities convertible into Common
Shares to be issued:
a. as consideration for the acquisition of the shares or assets of
another company or in connection with an amalgamation or merger of the
Company with another company;
b. as a share dividend;
c. pursuant to an employee stock option plan of the Company; or
d. pursuant to the exercise of conversion privileges, options or rights
previously granted by the Company.
For purposes of this Subscription Agreement, "Claridge Group" shall mean:
(i) Xxxxxxx X. Xxxxxxxx and his lineal descendants; (ii) the spouses of any
one or more of the foregoing; (iii) any trust of which any one or more of
such persons is a beneficiary; (iv) a partnership in which one or more of
the foregoing entities owns a majority equity interest; and (v)any company
directly or indirectly under the Control of one or more of the foregoing.
"Control" means, in the case of a company or corporation, the beneficial
ownership of
(a) voting securities carrying not less than 50.1% of the votes that
may be cast at a meeting of shareholders of the company (other
than meetings of a particular class); and
(b) securities carrying the right to receive not less than 50.1% of
the residual assets of a company upon liquidation or dissolution,
after provision for any shares entitled to receive property of a
fixed or determinable value upon liquidation or dissolution in
property to the right of any other class or classes of shares.
Directors
---------
1. For so long as any member of the Claridge Group remains the beneficial
owner of at least five percent (5%) of the issued and outstanding Common
Shares the Company will nominate for election, and recommend to its
shareholders, a person designated by the Purchaser to serve on the board of
directors of the Company at all meetings of shareholders of the Company
held for the purpose of electing directors. In the event that, and for so
long as, the beneficial holdings of Common Shares by the Purchaser shall be
at least fifteen percent (15%) of all Common Shares then issued and
outstanding, the Company shall nominate for election, and recommend to its
shareholders, a second
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person designated by the Purchaser to serve on the board of directors of
the Company at all meetings of shareholders of the Company held for the
purpose of electing directors.
Conditions of Closing
---------------------
1. The Company's obligation to sell the Units to the Purchaser is subject to
the condition that the Purchaser execute and return to the Company all
relevant documentation required by applicable securities laws as the sale
of the Units by the Company to the Purchaser will not be qualified by a
prospectus. The Purchaser agrees to comply with the Securities Act
(Ontario) and the U.S. Securities Laws, as applicable, and all other
relevant securities legislation and policies concerning any resale of the
Underlying Securities.
2. The following are conditions of the Purchaser's obligation to purchase the
Units hereunder, which conditions must be fulfilled at or prior to closing
and which may be waived in writing, in whole or in part by the Purchaser:
a. the board of directors of the Company shall have accepted the
Subscription Agreement and the Registration Rights Agreement and shall
have authorized the execution and delivery of this Subscription
Agreement and the Registration Rights Agreement and approved the
issuance of the Units including the Common Shares, the Warrant and the
Common Shares issuable upon exercise of the Warrant;
b. the Purchaser and the Company shall have entered into the Registration
Rights Agreement attached hereto as Schedule "B" (the "Registration
Rights Agreement");
c. the Company shall deliver to the Purchaser a certificate of the
Company under its corporate seal and signed on behalf of the Company
by the Chief Executive Officer and Chief Financial Officer of the
Company addressed to the Purchaser and dated the closing date in form
satisfactory to counsel to the Purchaser to the effect that:
i. the representations of the Company made herein are true and
correct in all material respects at and as of the Closing
Date and with the same force and effect as though made at
and as of the Closing Date, except for changes permitted or
contemplated by this Subscription Agreement and except to
the extent that any representation or warranty is made as of
a specified date, in which case such representation or
warranty shall be true and correct in all respects as of
such date;
ii. the Company has performed and complied in all respects with
all of its covenants and agreements required by this
Subscription Agreement to be performed or complied with by
it prior to or at the Closing Date;
15
d. the Purchaser shall have received a certificate of a public official
attesting to the good standing of the Company and each of its Material
Subsidiaries dated not more than two (2) days prior to the Closing
Date;
e. the Purchaser shall have received a certified copy of a resolution of
the board of directors of the Company authorizing the execution and
delivery of this Subscription Agreement, the Registration Rights
Agreement and the issuance of the Common Shares, the Warrant and
Common Shares issuable upon exercise of the Warrant; and
f. the Purchaser shall have received a legal opinion from counsel to the
Company, acceptable to Purchaser's counsel, acting reasonably and
substantially in the form attached hereto as Schedule "C."
Closing
-------
1. Delivery and payment for the Units shall be completed at the offices of the
Company at 2:00 pm (local time) on September 28, 2001 (the "Closing Date").
2. A single share certificate representing the Common Shares forming a part of
the Units and the Warrant Certificate representing the Warrant shall be
delivered to the Company for the amount of the Purchase Price at closing.
Applicable Law
--------------
1. This agreement is governed by the laws of the Province of Ontario. By
acceptance, the Purchaser irrevocably accepts the jurisdiction of the
courts of the Province of Ontario.
General
-------
1. Time shall, in all respects be of the essence hereof;
2. Unless otherwise expressly indicated, all references herein to dollar
amounts are to lawful money of the United States;
3. This agreement constitutes the only agreement between the Company and the
Purchaser with respect to the subject matter hereof and may be amended or
modified by written instrument only executed by both the parties hereto;
and
4. The terms and provisions of this agreement shall be binding upon and enure
to the benefit of the Company and the Purchaser and their respective
successors and permitted assigns.
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5. This Subscription Agreement may be executed in any number of counterparts
each of which shall be deemed an original.
Execution Copy
IN WITNESS WHEREOF, the parties hereto have executed this Subscription Agreement
as of the __ day of September, 2001.
CLARIDGE ISRAEL LLC
By: /s/ Xxx X. Xxxxxx
------------------------------
Name: Xxx X. Xxxxxx
Title:
Stake Technology Ltd. Hereby accepts the subscription on the terms and
conditions above set forth.
Dated the __ day of September, 2001.
STAKE TECHNOLOGY LTD.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman and Chief Executive
Officer on Behalf of Stake
