0000899140-01-500304.txt : 20011009
0000899140-01-500304.hdr.sgml : 20011009
ACCESSION NUMBER: 0000899140-01-500304
CONFORMED SUBMISSION TYPE: SC 13D/A
PUBLIC DOCUMENT COUNT: 4
FILED AS OF DATE: 20011002
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: STAKE TECHNOLOGY LTD
CENTRAL INDEX KEY: 0000351834
STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-FARM PRODUCT RAW MATERIALS [5150]
IRS NUMBER: 000000000
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-59617
FILM NUMBER: 1750913
BUSINESS ADDRESS:
STREET 1: 2838 HWY 7
STREET 2: NORVAL ONTARIO
CITY: L0P 1K0 CANADA
STATE: A6
ZIP: L0P 1K0
BUSINESS PHONE: 9054551990
MAIL ADDRESS:
STREET 1: 2838 HWY 7
STREET 2: NORVAL ONTARIO
CITY: CANADA L0P 1K0
ZIP: L0P 1K0
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: CLARIDGE ISRAEL LLC
CENTRAL INDEX KEY: 0001159558
STANDARD INDUSTRIAL CLASSIFICATION: []
FILING VALUES:
FORM TYPE: SC 13D/A
BUSINESS ADDRESS:
STREET 1: C/O WILLKIE FARR & GALLAHGER
STREET 2: 787 SEVENTH AVE
CITY: NEW YORK
STATE: NY
ZIP: 10019-6099
BUSINESS PHONE: 2127288964
MAIL ADDRESS:
STREET 1: C/O WILLKIE FARR & GALLAHGER
STREET 2: 787 SEVENTH AVE
CITY: NEW YORK
STATE: NY
ZIP: 10019
SC 13D/A
1
cill953268b.txt
AMENDMENT NO. 1 TO SCHEDULE 13D
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
Stake Technology Ltd.
--------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, Without Par Value
--------------------------------------------------------------------------------
(Title of Class of Securities)
85 25 59 103
--------------------------------------------------------------------------------
(CUSIP Number of Class of Securities)
Guy P. Lander
Claridge Israel LLC
c/o Davies Ward Phillips & Vineberg
625 Madison Avenue, 12th Floor
New York, New York 10022
(212) 588-5511
--------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Copies to:
Michael A. Schwartz., Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
(212) 728-8000
September 28, 2001
--------------------------------------------------------------------------------
(Date of Event which Requires
Filing of this Schedule)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box: [ ]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 240.13d-7 for other
parties to whom copies are to be sent.
SCHEDULE 13D
---------------------- -----------------
CUSIP No. 85 25 59 103 Page 2 of 9 Pages
---------------------- -----------------
----------- --------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Claridge Israel LLC
----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
----------- --------------------------------------------------------------------
3 SEC USE ONLY
----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
--------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
6,948,300
--------- ------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY --------- ------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH 6,948,300
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
6,948,300
----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.2
----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
----------- --------------------------------------------------------------------
Introductory Note
This Amendment No. 1 (as defined herein) is being filed by Claridge Israel
LLC (the "Reporting Person") to update the Initial Statement (as defined below).
Capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed to them in the Initial Statement. This amendment
amends the initial statement on Schedule 13D filed by the Reporting Person on
September 27, 2001 (the "Initial Statement," and, collectively with this
Amendment No. 1, the "Statement").
Item 2 Identity and Background.
The second sentence of Item 2(a) is hereby amended to read as follows:
Schedule I to this Statement contains the name, residence or business
address, present principal occupation and citizenship of each of the executive
officers and Managers of the Reporting Person; of the Charles Bronfman Trust
("CBT") and the Charles R. Bronfman Trust ("CRBT," and together with CBT, the
"Members"), the members of the Reporting Person collectively, each with a 50%
interest in the Reporting Person; and of the Trustees of the Members
(collectively, the "Schedule I Persons").
Item 4. Purpose of Transaction.
Item 4 is hereby amended by adding thereto the following:
The purpose of the Reporting Person in effecting the transactions reported
in this Amendment No. 1 is to continue in its effort to make a substantial, but
not controlling, equity investment in the Issuer. For a more detailed
description of the transactions reported herein, see Item 6 below.
Item 5. Interest in Securities of the Issuer.
Item 5(a) is hereby amended and restated in its entirety as follows:
(a) The Reporting Person may be deemed to beneficially own 6,948,300 shares
of Common Stock, which represents 18.2% of the Common Stock of the Issuer based
on the 32,923,203 shares of Common Stock reported by the Issuer as outstanding
as of August 7, 2001, and the 3,000,000 shares of Common Stock and warrants to
purchase 2,250,000 shares of Common Stock issued in the Private Placement (as
defined in Item 6 below). Except as disclosed in this Item 5(a), as of the date
hereof, neither the Reporting Person nor, to the best of its knowledge, any of
the Schedule I Persons beneficially owns any shares of Common Stock.
Item 5(c) is hereby amended by adding thereto the following:
(c) Except for the shares purchased on September 28, 2001, pursuant to that
certain Subscription Agreement dated as of September 28, 2001, by and between
the Reporting Person and the Issuer (the "Subscription Agreement"), which is
more fully
4
described in Item 6 below and which is attached hereto as Exhibit 1, and except
as set forth in Schedule II attached to this Amendment No. 1, since the filing
of the Initial Statement there have been no transactions in the Common Stock
effected by the Reporting Person, nor, to the best of its knowledge, any of the
Schedule I Persons. All of the purchases set forth on Schedule II hereto were
made in open market transactions effected in the NASDAQ small cap market.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to
Securities of the Issuer.
Item 6 is hereby amended by adding thereto the following:
On September 28, 2001, pursuant to the Subscription Agreement, the
Reporting Person purchased directly from the Issuer an aggregate of 3,000,000
units (the "Private Placement"), at a purchase price of US$2.00 per unit, each
unit consisting of one share of Common Stock and a warrant to purchase 0.75
shares of Common Stock. The warrants issued (collectively, the "Warrant")
represent the right to purchase an aggregate of 2,250,000 shares of Common Stock
at a price of US$2.40 per full share at any time and from time to time until
September 30, 2004. The terms and conditions of the Warrant are attached hereto
as Exhibit 2.
The Subscription Agreement entitles the Reporting Person to designate one
person to serve on the Issuer's board of directors so long as the Reporting
Person and certain related persons and entities own 5% of the issued and
outstanding Common Stock and entitles the Reporting Person to designate a second
director of the Issuer at such time as such persons own 15% of the Common Stock
then issued and outstanding. Pursuant to the provisions of the Subscription
Agreement, the Reporting Person has designated Stephen Bronfman, to the Issuer's
board of directors. Additionally, the Subscription Agreement entitles the
Reporting Person to certain preemptive rights to preserve its percentage
ownership of the Issuer in the event the Issuer offers Common Stock or
securities convertible into Common Stock to any third party for the purposes of
obtaining financing for the Issuer, whether such offerings are made by private
placement, registered public offering or otherwise.
Also in connection with the Private Placement, the Reporting Person entered
into that certain Registration Rights Agreement, dated September 28, 2001, by
and between the Reporting Person and the Issuer (the "Registration Rights
Agreement"), which is attached hereto as Exhibit 3, pursuant to which the
Reporting Person has acquired certain registration rights with respect to all
securities of the Issuer owned by it, regardless of how or when acquired.
Item 7. Material to be Filed as Exhibits.
Item 7 is amended by adding thereto the following exhibits:
5
1. Subscription Agreement, dated as of September 28, 2001, by and between
the Reporting Person and the Issuer.
2. Terms and Conditions of Warrant to Purchase 2,250,000 shares of Common
Stock.
3. Registration Rights Agreement, dated September 28, 2001, by and between
the Reporting Person and the Issuer.
6
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Dated: October 2, 2001 CLARIDGE ISRAEL LLC
By: /s/ Michel Boucher
------------------------------
Name: Michel Boucher
Title: Vice President
SCHEDULE I
TO SCHEDULE 13D
Information with Respect to
Executive Officers and Directors of the Reporting Person
and the Members of the Reporting Person
The following sets forth as to each of the members, executive officers and
Managers of the Reporting Person: his or her name; his or her business address;
and his or her present principal occupation or employment and the name,
principal business and address of any corporation or other organization in which
such employment is conducted. Unless otherwise specified, the principal employer
of each such individual is Claridge, Inc., the business address of which is 1170
Peel Street, Montreal, Canada H3B 4P2, and each such individual identified below
is a citizen of Canada. To the knowledge of the Reporting Person and the
Members, during the last five years, no such person has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors), and
no such person was a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction as a result of which he or she was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities law
or finding any violation with respect to such laws.
CLARIDGE ISRAEL LLC
-------------------
Name and Present Business Address Present Principal Citizenship
-------- ------------------------ ----------------- -----------
Position with Occupation
------------- ----------
the Reporting
-------------
Person
------
Board of
Managers:
Charles R. Bronfman 375 Park Avenue, 6th Floor, Philanthropist Canadian
New York, NY 10152
Bruce I. Judelson 157 Church St. Partner, Bergman, Horowitz United States
New Haven, CT 6510 & Reynolds
Guy P. Lander 625 Madison Ave. Resident Counsel, Davies, United States
12th Floor, New York, NY, 10022 Ward, Phillips & Vineberg
Executive Officers:
Charles R. Bronfman,
Chairman
Bruce I. Judelson,
President
Andrew J. Parsons, Senior Vice President &
Vice President CFO, Claridge, Inc.
Richard P. Doyle, Senior Vice President
Vice President Claridge, Inc.
Michel Boucher, Vice President
Vice President Claridge, Inc.
Geri F. Craig, Assistant Secretary
Secretary Claridge, Inc.
Robert M. Jamieson, Controller
Controller Claridge, Inc.
Samuel Minzberg, President & CEO
Assistant Secretary Claridge, Inc.
Members of the Reporting Person
-------------------------------
Each of the Members is a New York trust and has its principal business
address at c/o Davies Ward Phillips and Vineberg LLP, 625 Madison Avenue, 12th
Floor, New York, NY 10022.
Charles R. Bronfman Trust
-------------------------
Steven H. Levin, 625 Madison Ave. Resident Counsel, United States
Trustee 12th Floor, New York, Davies, Ward, Phillips &
NY, 10022 Vineberg
Guy P. Lander,
Trustee
Bruce I. Judelson,
Trustee
Charles Bronfman Trust
----------------------
Steven H. Levin,
Trustee
Guy P. Lander,
Trustee
Bruce I. Judelson,
Trustee
2
SCHEDULE II
TO SCHEDULE 13D
Information with Respect to Transactions in the Class of Securities Reported on
that were Effected on the NASDAQ Small Cap Market since the filing of the
Initial Statement.
Trade Date Shares Purchased Price per Share
--------------------------------------------------------------------------------
1-Oct-01 800 US$1.66
10,000 1.80
1,200 1.75
5,000 1.82
Total 17,000
1
EX-1
4
cill951400.txt
SUBSCRIPTION AGREEMENT
Execution Copy
SUBSCRIPTION AGREEMENT
----------------------
TO: STAKE TECHNOLOGY LTD. (the "Company")
2838 Highway 7
Norval, Ontario
L0P 1K0
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
2
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
3
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
4
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.
5
(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,
6
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;
7
(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
8
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
9
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
10
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,
11
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
12
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
13
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) Charles R. Bronfman 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
14
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.
16
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/ Guy P. Lander
------------------------------
Name: Guy P. Lander
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/ Jeremy N. Kendall
------------------------------
Name: Jeremy N. Kendall
Title: Chairman and Chief Executive
Officer on Behalf of Stake
EX-2
5
cill500500.txt
TERMS AND CONDITIONS OF WARRANT TO PURCHASE
TERMS AND CONDITIONS ATTACHING TO WARRANTS EXPIRING SEPTEMBER 30, 2004
----------------------------------------------------------------------
ARTICLE I - INTERPRETATION
SECTION 1.01 - DEFINITION
-------------------------
In these Terms and Conditions, unless there is something in the subject
matter or context inconsistent therewith:
(a) "Herein", "hereby" and similar expressions, refer to these Terms and
Conditions as the same may be amended or modified from time to time; and
the expressions "Article" and "Section" followed by a number refer to the
specified Article or Section of these Terms and Conditions;
(b) "Warrants" means the Warrants of the Company issued and presently
authorized as set out in Section 2.01 hereof and for the time being
outstanding;
(c) "Warrant Holders" or "Holders" means the registered holders of the
Warrants for the time being;
(d) "Company" means STAKE TECHNOLOGY LTD.;
(e) "Director" means a director of the Company for the time being and
reference, without more, to action by the directors means action by the
directors of the Company as a board, or whenever duly empowered, action by
an executive committee of the board;
(f) "Company's auditors" means an independent firm of accountants duly
appointed as auditors of the Company;
(g) "Security" means any note or share of the Company's issue or any
Warrant to purchase shares of the Company's issue or any other instrument
of whatever nature issued by the Company and commonly known as a security;
(h) "Common Shares" or "Shares" means the common shares without par value
in the capital of the Company as constituted at the 28th day of September,
2001 and any shares resulting from any increase, subdivision or
consolidation of the said shares or any conversion thereof into another
form of securities;
(i) "Person" means an individual, a corporation, a partnership, a trustee
or any unincorporated organization and words importing persons have a
similar meaning; and
(j) Words importing the singular number include the plural and vice versa
and words importing the masculine gender include the feminine and neuter
genders.
SECTION 1.02 - INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
------------------------------------------------------------
The division of these Terms and Conditions into Articles and Sections, and
the insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation thereof.
SECTION 1.03 - APPLICABLE LAW
-----------------------------
The Warrants shall be construed in accordance with the laws of the Province
of Ontario and the laws of Canada applicable thereto and shall be treated in all
respects as Ontario contracts.
ARTICLE 2 - ISSUE OF WARRANTS
SECTION 2.01 - ISSUE OF WARRANTS
--------------------------------
Warrants entitling the holders thereof to purchase an aggregate of up
2,250,000 Common Shares are authorized to be issued by the Company.
SECTION 2.02 - ADDITIONAL WARRANTS
----------------------------------
The Company may at any time and from time to time issue additional Warrants
or grant options or similar rights to purchase Securities of its issue.
SECTION 2.03 - APPLICATION AND TERMS
------------------------------------
The provisions of Articles 1 to and including 7 hereof shall apply to all
the Warrants.
SECTION 2.04 - ISSUE IN SUBSTITUTION FOR LOST WARRANTS
------------------------------------------------------
1. In case this Warrant shall become mutilated or be lost, destroyed or stolen,
the Company in its discretion may issue and deliver a new Warrant of like date
and tenor as the one mutilated, lost, destroyed or stolen in exchange for and in
place of and upon cancellation of such mutilated warrant or in lieu of, and in
substitution for such lost, destroyed or stolen warrant and the substitute
Warrant shall be entitled to the benefit hereof.
2. The applicant for the issue of a new Warrant pursuant hereto shall bear the
cost of the issue thereof and in case of loss, destruction or theft shall, as a
condition precedent to the issue thereof, furnish to the Company such evidence
of ownership and of the loss, destruction or theft of the Warrant so lost,
destroyed or stolen as shall be satisfactory to the Company in its discretion
and such applicant may also be required to furnish indemnity in amount and form
satisfactory to the Company in its discretion and shall pay the reasonable
charges of the Company in connection therewith.
SECTION 2.05 - WARRANT HOLDER NOT A SHAREHOLDER
-----------------------------------------------
The holding of a Warrant shall not constitute the holder thereof a
shareholder of the Company nor entitle him or her to any right or interest in
respect thereof except as in the Warrant expressly provided.
SECTION 2.06 - TIME OF ESSENCE
------------------------------
Time shall be strictly of the essence hereof.
ARTICLE 3 - OWNERSHIP AND TRANSFER
SECTION 3.01 - EXCHANGE OF WARRANTS
-----------------------------------
Warrant certificates shall be held intact and not subdivided or exchanged
into certificates representing a lesser number of Warrants except in the event
of the death of a Warrant Holder in which event the personal representatives of
the deceased Warrant Holder will be entitled to have Warrant Certificates held
by such Holder subdivided as required to administer the estate.
SECTION 3.02 - CHARGES FOR TRANSFER
-----------------------------------
For each Warrant transferred the Company, except as otherwise herein
provided, may charge a sum not exceeding $3.00(U.S.) for each new Warrant
certificate issued; payment of such charges and of any transfer taxes or
governmental or other charges required to be paid shall be made by the party
requesting such transfer as a condition precedent thereto.
SECTION 3.03 - OWNERSHIP AND TRANSFER OF WARRANTS
-------------------------------------------------
The Company may deem and treat the registered holder of any Warrant, as set
forth on the warrant certificate, as the absolute holder of such Warrant for all
purposes and shall not be affected by any notice or knowledge to the contrary.
The holder of any Warrant shall be entitled to the rights evidenced by such
Warrant free from all equities or rights of set off or counter-claim between the
Company and the original or any intermediate holder thereof and all persons may
act accordingly and the receipt of any such holder for the Shares purchasable
pursuant thereto shall be a good discharge to the Company for the same and the
Company shall not be bound to inquire into the title of any such holder.
Warrants shall not be negotiable nor transferable by Warrant Holders without the
prior written consent of the Company, which consent shall not be unreasonably
withheld provided that any such transfer shall be in compliance with applicable
provisions of the Securities Act (Ontario) and the Regulations thereunder and
the United States Securities Act of 1933.
SECTION 3.04 - ASSIGNMENT OF WARRANT
------------------------------------
Notwithstanding anything herein to the contrary, the Warrant Holder may
transfer and assign the Warrant, in whole or in part, to any subsidiary or
affiliate (as such term is defined in the Canada Business Corporations Act) of
the Warrant Holder.
SECTION 3.05 - NOTICE TO WARRANT HOLDERS
----------------------------------------
Any notice, communication or other document to be given by the Company to
the Warrant Holder shall be sufficiently given if delivered to the Person to
whom it is to be given or mailed by prepaid ordinary mail at his or her last
address as recorded in the books of the Company. Any notice, communication or
document so delivered shall be deemed to have been given when it is delivered
personally or at the time the same is mailed. The secretary of the Company may
change the address on the books of the Company of any Warrant Holder in
accordance with any information believed by him to be reliable.
ARTICLE 4 - EXERCISE AND REDEMPTION OF WARRANTS
SECTION 4.01 - METHOD OF EXERCISE OF WARRANTS
---------------------------------------------
The right to purchase Shares conferred by any of the Warrants may be
exercised by the holder of such Warrant surrendering it, with a duly completed
and executed subscription in the form attached hereto and cash or a certified
check payable in U.S. funds to or to the order of the Company for the
subscription price applicable at the time of the surrender in respect of the
Shares subscribed for to the office of the Company's transfer agent in the City
of New York.
SECTION 4.02 - EFFECT OF EXERCISE OF WARRANTS
---------------------------------------------
1. Upon surrender and payment as aforesaid, the Shares so subscribed for shall
be deemed to have been issued and such Person or Persons shall be deemed to have
become the holder or holders of record of such Shares on the date of such
surrender and payment, unless the register of shareholders of the Company shall
be closed on the said date of such surrender and payment, in which case the
Shares so subscribed for shall be deemed to have been issued and such Person or
Persons shall be deemed to have become the holder or holders of record of such
Shares on the date on which such register of shareholders was reopened, and such
Shares shall be issued at the subscription price in effect on the date of such
surrender and payment.
2. Within five business days after surrender and payment as aforesaid, the
Company shall cause to be delivered to the Person or Persons in whose name or
names the Shares so subscribed for are to be issued as specified in such
subscription or mailed to him or them at his or their respective addresses
specified in such subscription, a certificate or certificates for the
appropriate number of Shares which the Warrant Holder is entitled to purchase
pursuant to the Warrant surrendered.
SECTION 4.03 - SUBSCRIPTION FOR LESS THAN ENTITLEMENT
-----------------------------------------------------
The holder of any Warrant may subscribe for and purchase up to the total
number of Shares of the Company specified in the Warrant certificate
surrendered. Provided, however, that if at the time of surrender and
presentation of the Warrant certificate the same is not fully exercised, a new
Warrant certificate representing the unexercised portion thereof will be issued
upon surrender of the prior Warrant Certificate.
SECTION 4.04 - WARRANTS FOR FRACTIONS OF SHARES
-----------------------------------------------
No Warrant to purchase a fraction of a Share may be exercised.
SECTION 4.05 - EXPIRATION OF WARRANT
------------------------------------
The Warrants in respect of the right to purchase Common Shares, and in
respect of the right to use the unexercised balance thereof to purchase Common
Shares shall expire at 5:00 o'clock in the afternoon, New York time, on
September, 30, 2004 and thereafter all rights under the Warrant shall wholly
cease and terminate and the Warrant shall be void and of no effect.
SECTION 4.06 - ADJUSTMENT OF SHARES UPON EXERCISE
-------------------------------------------------
If and whenever prior to the expiration of the Warrants:
(a) the outstanding Common Shares are subdivided or are consolidated into a
greater or lesser number of Common Shares, respectively;
(b) the Common Shares are reclassified, exchanged for or converted into
other shares, securities or property;
(c) a stock dividend or other distribution or issuance has been declared
and paid or made on the Common Shares or to the existing holders of Common
Shares or other securities of the Company;
(d) there has been an amalgamation, merger, consolidation or other
reorganization affecting the Company; or
(e) there has been a transfer of all or substantially all of the
undertaking or assets of the Company to another corporation or entity,
(any of such events being referred to in this Section 4.06 as a "Change"), then
the Holder, in exercising its Warrants, whether in whole or in part, after the
effective date of the Change shall be entitled to receive and shall accept and
the Company shall deliver upon such exercise in accordance with this Warrant, in
lieu of the number of Common Shares deliverable prior to the effective date, the
aggregate number and kinds of Common Shares or other securities or amount of
property to which the Holder would have been entitled to as a result of the
Change if, on the effective date thereof, it had been the registered holder of
the number of Common Shares it would have received had it exercised the Warrants
or relevant portion thereof immediately before the effective date of the Change.
The adjustments provided for in this Section 4.06 shall be cumulative. The
necessary adjustments shall be made in the application of the provisions of this
Warrant with respect to the rights and options of the Holder after any Change to
the end that the provisions hereof shall thereafter correspondingly apply, as
nearly as may reasonably be, in relation to any Common Shares or other
securities or property to which the Holder is entitled on the exercise of the
option granted hereunder. The Company shall, as soon as practicable after
becoming aware of any Change, notify the Holder thereof and set forth in a
supplement to this Warrant approved by the board of directors of the Company the
adjustment resulting from such change. In the event that the Holder shall
disagree with an adjustment, the adjustment shall be determined conclusively by
the Company's auditors at the sole expense of the Company.
ARTICLE 5 - COVENANTS BY COMPANY
SECTION 5.01
------------
The Company will reserve and there will remain unissued out of its
authorized capital a sufficient number of Shares to satisfy the rights of
purchase provided for in the Warrants should the holders of all the Warrants
from time to time outstanding determine to exercise such rights in respect of
all Shares which they are or may be entitled to purchase pursuant thereto.
SECTION 5.02
------------
So long as any Warrants remain outstanding, the Company will not:
(a) Issue to the holders of Shares any option or right to subscribe for any
additional Shares in the capital of the Company (other than such an option
or right granted to an officer or employee of the Company and exercisable
only during the tenure of his employment by the Company or following his
death while in the Company's employ and for a period of three months
thereafter in each case);
(b) Make any repayment of capital on Shares;
(c) Subdivide or consolidate the issued and outstanding Shares or in any
other way reorganize or reclassify any of the outstanding Common Shares of
the Company;
until 20 days after it has given written notice of such event to the Warrant
Holders in the manner provided in Article 3 hereof its intention so to do and of
the particulars of such proposed action.
SECTION 5.03
------------
The Company will not close its register of shareholders or take any other
corporate action which might deprive the holder of a Warrant of the opportunity
of exercising his or her right of purchase pursuant thereto during the period of
30 days after the giving of the notice required by Section 5.02 or Section 4.05
hereof, or unduly restrict such opportunity.
ARTICLE 6 - SECURITIES QUALIFICATION
SECTION 6.01
------------
If, in the opinion of counsel to the Company, any prospectus or
registration statement is required to be filed with or any permission is
required to be obtained from any securities commission or other governmental
authority before any Share which a Warrant Holder is entitled or permitted to
acquire on the exercise of this Warrant may properly and legally be issued, the
Company covenants that it will take such action within a reasonable period of
time.
SECTION 6.02
------------
The Company will file, as soon as possible following the first anniversary
after the issuance of the Warrants, a registration statement under the United
States Securities Act of 1933, as amended, to register the shares of common
stock issuable upon the exercise of this Warrant. The Company will also pay the
costs associated with filing such registration statement and will use its best
efforts to keep the registration statement effective until the expiration date
for the Warrants or until all the Warrants have been exercised and the shares of
common stock received upon exercise of the Warrants have been sold.
M:\STAKE\private placement\Claridge\warrant terms and conditions v.3.doc
EX-3
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cill951249.txt
REGISTRATION RIGHTS AGREEMENT
Execution Copy
STAKE TECHNOLOGY LTD.
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of September 26, 2001, between
Claridge Israel LLC, a limited liability company existing under the laws of the
State of Delaware (the "Investor"), and Stake Technology Ltd., a corporation
existing under the laws of Canada (the "Company").
R E C I T A L S
WHEREAS, the Investor has purchased 3,000,000 Units (as defined below) from
the Company; and
WHEREAS, the Investor has purchased, pursuant to the terms of the
Securities Purchase Agreement, dated as of September 14, 2001, by and among the
Christopher J. Anderson, Dennis W. Anderson and the Investor 1,200,000 shares of
Common Stock (the "Anderson Shares"); and
WHEREAS, the Company has agreed, as a condition precedent to the Investor's
purchase of the Units, to grant the Investors certain registration rights; and
WHEREAS, the Company and the Investor desire to define the registration
rights of the Investor and certain other persons;
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following terms have the respective meaning
set forth below:
Affiliate: shall have the meaning set forth in Rule 144;
Commission: shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act;
Exchange Act: shall mean the Securities Exchange Act of 1934, as amended;
Holder: shall mean (x) any holder of Registrable Securities described in
clause (A) of the definition of Registrable Securities and in clause (C) thereof
to the extent such clause
(C) applies to such clause (A), regardless of the identity of such Holder, and
(y) any holder of any other Registrable Securities, provided such Holder is the
Investor or an Affiliate of the Investor;
Initiating Holder: shall mean any Holder or Holders who in the aggregate
are Holders of more than 50% of the then outstanding Registrable Securities;
Person: shall mean an individual, partnership, joint-stock company,
corporation, limited liability company, trust or unincorporated organization,
and a government or agency or political subdivision thereof;
Public Offering: shall mean a public offering of shares of Common Stock
pursuant to a registration under the Securities Act;
Register, Registered and Registration: shall mean to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act (and any post-effective amendments filed or required to be filed)
and the declaration or ordering of effectiveness of such registration statement;
Registrable Securities: shall mean (A) the Anderson Shares, any shares of
Common Stock included in the Units and any shares of Common Stock acquired
pursuant to exercise of the Unit Warrants, (B) all other Shares of Common Stock
held by the Investor or any of its Affiliates, regardless of when or the manner
in which acquired, and (C) any stock of the Company issued as a dividend or
other distribution with respect to, or in exchange for or in replacement of, the
Common Stock referred to in clauses (A) and (B) of this definition;
Registration Expenses: shall mean all expenses incurred by the
Company in compliance with Section 2(a) and (b) hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, fees and expenses of one counsel for
all the Holders, blue sky fees and expenses and the expense of any special
audits incident to or required by any such registration (but excluding the
compensation of regular employees of the Company, which shall be paid in any
event by the Company);
Rule 144: shall mean the Commission's Rule 144 under the Securities Act or
any successor rule or regulation thereto;
Security, Securities: shall have the meaning set forth in Section 2(a)(1)
of the Securities Act;
Securities Act: shall mean the Securities Act of 1933, as amended;
Selling Expenses: shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for each of the Holders other than fees and expenses of
one counsel for all the Holders;
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Unit: shall mean an equity interest in the Company consisting of one share
of Common Stock and one Unit Warrant; and
Unit Warrant: shall mean a warrant to purchase 0.75 of a share of Common
Stock.
SECTION 2. REGISTRATION RIGHTS
(a) Requested Registration.
(i) Request for Registration. If the Company shall receive from an
Initiating Holder, at any time from and after September 30, 2002, a written
request that the Company effect any registration with respect to all or a
part of the Registrable Securities, the Company will:
(1) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; provided that such notice
shall not be required to be given to any Affiliate of the Investor (if
provided to the Investor) or to any Holder (other than the Investor) that
is described in clause (y) of the definition of Holder if such Holder is
not known by the Company to be such; and
(2) as soon as practicable, use its diligent best efforts to effect
such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification
under applicable blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Securities Act) as
may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the
Registrable Securities of any Holder or Holders joining in such request as
are specified in a written request received by the Company within 10
business days after written notice from the Company is given under Section
2(a)(i)(1) above; provided that the Company shall not be obligated to
effect, or take any action to effect, any such registration pursuant to
this Section 2(a):
(A) In any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless the
Company is already subject to service in such jurisdiction and except
as may be required by the Securities Act or applicable rules or
regulations thereunder;
(B) After the Company has effected two (2) such registrations
pursuant to this Section 2(a) and such registrations have been
declared or ordered effective and the sales of such Registrable
Securities shall have closed;
The registration statement filed pursuant to the request of the Initiating
Holders may, subject to the provisions of Section 2(a)(ii) below, include other
securities of the Company which are held
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by Persons who, by virtue of agreements with the Company, are entitled to
include their securities in any such registration ("Other Stockholders"). In the
event any Holder requests a registration pursuant to this Section 2(a) in
connection with a distribution of Registrable Securities to its equity owners,
the registration shall provide for the resale by such equity owners, if
requested by such Holder.
The registration rights set forth in this Section 2 may be assigned, in whole or
in part, to any transferee of Registrable Securities (who shall be bound by all
obligations of this Agreement).
(ii) Underwriting. If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, then they shall so advise the Company as a part of their
request made pursuant to Section 2(a).
If Other Stockholders request inclusion in such registration, then the Holders
shall offer to include the securities of such Other Stockholders in the
underwriting and may condition such offer on their acceptance of the further
applicable provisions of this Section 2. The Holders whose shares are to be
included in such registration and the Company shall (together with all Other
Stockholders proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form with the representative
of the underwriter or underwriters selected for such underwriting by the
Initiating Holders and reasonably acceptable to the Company. Notwithstanding any
other provision of this Section 2(a), if the representative advises the Holders
in writing that marketing factors require a limitation on the number of shares
to be underwritten, the securities of the Company held by Other Stockholders
shall be excluded from such registration to the extent so required by such
limitation. If, after the exclusion of such shares, further reductions are still
required, the number of shares included in the registration by each Holder shall
be reduced on a pro rata basis (based on the number of shares held by such
Holder), by such minimum number of shares as is necessary to comply with such
request. No Registrable Securities or any other securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. If any Other Stockholder who has requested
inclusion in such registration as provided above disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the underwriter and the Initiating Holders. The securities so
withdrawn shall also be withdrawn from registration. If the underwriter has not
limited the number of Registrable Securities or other securities to be
underwritten, then the Company and officers and directors of the Company may
include its or their securities for its or their own account in such
registration if the representative so agrees and if the number of Registrable
Securities and other securities which would otherwise have been included in such
registration and underwriting will not thereby be limited.
(b) Company Registration.
(i) If the Company shall determine to register any of its equity
securities either for its own account or for the account of Other
Stockholders, other than a registration relating solely to employee benefit
plans, or a registration relating solely to a Commission Rule 145
transaction, or a registration on any registration form which does not
permit secondary sales or does not include substantially the same
information as
-4-
would be required to be included in a registration statement covering the
sale of Registrable Securities, the Company will:
(1) promptly give to each of the Holders (other than the Holders
referenced in the proviso to Section 2(a)(i)(1) hereof) a written notice
thereof (which notice shall include a list of the jurisdictions in which
the Company intends to attempt to qualify such securities under the
applicable blue sky or other state securities laws); and
(2) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made by the Holders within fifteen (15) days after receipt of the
written notice from the Company described in clause (i) above, except as
set forth in Section 2(b)(ii) below. Such written request may specify all
or a part of the Holders' Registrable Securities. In the event any Holder
requests inclusion in a registration pursuant to this Section 2(b) in
connection with a distribution of Registrable Securities to its equity
owners, the registration shall provide for the resale by such equity
owners, if requested by such Holder.
(ii) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise each of the Holders as a part of the written notice
given pursuant to Section 2(b)(i)(1). In such event, the right of each of
the Holders to registration pursuant to this Section 2(b) shall be
conditioned upon such Holders' participation in such underwriting and the
inclusion of such Holders' Registrable Securities in the underwriting to
the extent provided herein. The Holders whose shares are to be included in
such registration shall (together with the Company and the Other
Stockholders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the representative of
the underwriter or underwriters selected for underwriting by the Company.
Notwithstanding any other provision of this Section 2(b), if the
representative determines that marketing factors require a limitation on
the number of shares to be underwritten, the representative may (subject to
the allocation priority set forth below) limit the number of Registrable
Securities to be included in the registration and underwriting to not less
than twenty five percent (25%) of the shares included therein (based on the
number of shares). The Company shall so advise all holders of securities
requesting registration, and the number of shares of securities that are
entitled to be included in the registration and underwriting shall be
allocated in the following manner: The securities of the Company held by
officers, directors and Other Stockholders of the Company (other than
Registrable Securities and other than securities held by holders who by
contractual right demanded such registration ("Demanding Holders")) shall
be excluded from such registration and underwriting to the extent required
by such limitation, and, if a limitation on the number of shares is still
required, the number of shares that may be included in the registration and
underwriting by each of the Holders and Demanding Holders shall be reduced,
on a pro rata basis (based on the number of shares held by such Holder), by
such minimum number of shares as is necessary to comply with such
limitation. If any of the Holders or any officer, director or Other
Stockholder disapproves of the terms of any such underwriting, he may elect
to withdraw
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therefrom by written notice to the Company and the underwriter. Any
Registrable Securities or other securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
(c) Expenses of Registration. Registration Expenses and Selling Expenses
incurred in connection with any registration, qualification or compliance
pursuant to this Section 2 shall be borne by the Holders of the securities so
registered pro rata on the basis of the number of their shares so registered in
relation to the total number of shares registered. All other Registration
Expenses shall be borne by the Company and/or the Other Stockholders, as the
case may be.
(d) Registration Procedures. In the case of each registration effected by
the Company pursuant to this Section 2, the Company will keep the Holders, as
applicable, advised in writing as to the initiation of each registration and as
to the completion thereof. At its expense, the Company will:
(i) keep such registration effective for a period of one hundred
twenty (120) days or until the Holders (or in the case of a distribution to
the partners of such Holder, such partners), as applicable, have completed
the distribution described in the registration statement relating thereto,
whichever first occurs; provided, however, that (A) such 120-day period
shall be extended for a period of time equal to the period during which the
Holders or partners, as applicable, refrain from selling any securities
included in such registration as a result of notification pursuant to
Section 2(d)(iii) hereof or at any time when the registration statement is
otherwise not available for the making of sales; and (B) in the case of any
registration of Registrable Securities on Form S-3 which are intended to be
offered on a continuous or delayed basis, such 120-day period shall be
extended until all such Registrable Securities are sold, provided that Rule
415, or any successor rule under the Securities Act, permits an offering on
a continuous or delayed basis, and provided further that applicable rules
under the Securities Act governing the obligation to file a post-effective
amendment permit, in lieu of filing a post-effective amendment which (y)
includes any prospectus required by Section 10(a) of the Securities Act or
(z) reflects facts or events representing a material or fundamental change
in the information set forth in the registration statement, the
incorporation by reference of information required to be included in (y)
and (z) above to be contained in periodic reports filed pursuant to Section
12 or 15(d) of the Exchange Act in the registration statement;
(ii) furnish such number of prospectuses and other documents incident
thereto as each of the Holders, as applicable, from time to time may
reasonably request;
(iii) notify each Holder of Registrable Securities covered by such
registration at any time when a prospectus relating thereto is required to
be delivered under the Securities Act of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
then existing; and
-6-
(iv) furnish, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold
through underwriters or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to
such securities becomes effective, (1) an opinion, dated as of such date,
of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters
in an underwritten public offering and reasonably satisfactory to a
majority in interest of the Holders participating in such registration,
addressed to the underwriters, if any, and to the Holders participating in
such registration and (2) a letter, dated as of such date, from the
independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering and
reasonably satisfactory to a majority in interest of the Holders
participating in such registration, addressed to the underwriters, if any,
and if permitted by applicable accounting standards, to the Holders
participating in such registration.
(e) Indemnification.
(i) The Company will indemnify each of the Holders, as applicable,
each of its officers, directors and partners, and each person controlling
each of the Holders, with respect to each registration which has been
effected pursuant to this Section 2, and each underwriter, if any, and each
person who controls any underwriter, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other document (including
any related registration statement, notification or the like) incident to
any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein (in the case
of a prospectus, in light of the circumstances under which they were made)
not misleading, or any violation by the Company of the Securities Act or
the Exchange Act or any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and
will reimburse each of the Holders, each of its officers, directors and
equity owners, and each person controlling each of the Holders, each such
underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or
action, provided that the Company will not be liable in any such case to
the extent that any such claim, loss, damage, liability or expense arises
out of or is based on any untrue statement or omission based upon written
information furnished to the Company by the Holders or underwriter and
stated to be specifically for use therein.
(ii) Each of the Holders will, if Registrable Securities held by it
are included in the securities as to which such registration, qualification
or compliance is being effected, indemnify the Company, each of its
directors and officers and each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who
controls the Company or such underwriter, each Other Stockholder and each
of their officers, directors, and equity owners, and each person
controlling such Other
-7-
Stockholder against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document
made by such Holder, or any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statements by such Holder therein (in the case of a prospectus, in light of
the circumstances under which they were made) not misleading, and will
reimburse the Company and such Other Stockholders, directors, officers,
equity owners, persons, underwriters or control persons for any legal or
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case
to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such Holder and stated to be specifically for use therein;
provided, however, that the obligations of each of the Holders hereunder
shall be limited to an amount equal to the net proceeds to such Holder of
securities sold as contemplated herein.
(iii) Each party entitled to indemnification under this Section 2(e)
(the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom; provided
that counsel for the Indemnifying Party, who shall conduct the defense of
such claim or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not unreasonably be withheld) and
the Indemnified Party may participate in such defense at such party's
expense (unless the Indemnified Party shall have reasonably concluded that
there may be a conflict of interest between the Indemnifying Party and the
Indemnified Party in such action, in which case the fees and expenses of
counsel shall be at the expense of the Indemnifying Party), and provided
further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 2 unless the Indemnifying Party is materially prejudiced
thereby. No Indemnifying Party, in the defense of any such claim or
litigation shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in
respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be
reasonably required in connection with the defense of such claim and
litigation resulting therefrom.
(iv) If the indemnification provided for in this Section 2(e) is held
by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense
referred to herein, then the Indemnifying Party, in lieu of indemnifying
such Indemnified Party hereunder, shall contribute to the amount paid or
-8-
payable by such Indemnified Party as a result of such loss, liability,
claim, damage or expense in such proportion as is appropriate to reflect
the relative fault of the Indemnifying Party on the one hand and of the
Indemnified Party on the other in connection with the statements or
omissions which resulted in such loss, liability, claim, damage or expense,
as well as any other relevant equitable considerations. The relative fault
of the Indemnifying Party and of the Indemnified Party shall be determined
by reference to, among other things, whether the untrue (or alleged untrue)
statement of a material fact or the omission (or alleged omission) to state
a material fact relates to information supplied by the Indemnifying Party
or by the Indemnified Party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission.
(v) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with any underwritten public offering
contemplated by this Agreement are in conflict with the foregoing
provisions, the provisions in such underwriting agreement shall be
controlling.
(vi) The foregoing indemnity agreement of the Company and Holders is
subject to the condition that, insofar as they relate to any loss, claim,
liability or damage arising out of a statement made in or omitted from a
preliminary prospectus but eliminated or remedied in the amended prospectus
on file with the Commission at the time the registration statement in
question becomes effective or the amended prospectus filed with the
Commission pursuant to Commission Rule 424(b) (the "Final Prospectus"),
such indemnity or contribution agreement shall not inure to the benefit of
any underwriter or Holder if a copy of the Final Prospectus was furnished
to the underwriter or Holder, as the case may be, and was not furnished to
the person asserting the loss, liability, claim or damage at or prior to
the time such action is required by the Securities Act.
(f) Information by the Holders.
(i) Each of the Holders holding securities included in any
registration shall furnish to the Company such information regarding such
Holder and the distribution proposed by such Holder as the Company may
reasonably request in writing and as shall be reasonably required in
connection with any registration, qualification or compliance referred to
in this Section 2.
(ii) In the event that, either immediately prior to or subsequent to
the effectiveness of any registration statement, any Holder shall
distribute Registrable Securities to its equity owners, such Holder shall
so advise the Company and provide such information as shall be necessary to
permit an amendment to such registration statement to provide information
with respect to such equity owners, as selling securityholders. Promptly
following receipt of such information, the Company shall file an
appropriate amendment to such registration statement reflecting the
information so provided. Any incremental expense to the Company resulting
from such amendment shall be borne by such Holder.
-9-
(g) Rule 144 Reporting.
With a view to making available the benefits of certain rules and
regulations of the Commission which may permit the sale of restricted securities
to the public without registration, the Company agrees to:
(i) make and keep public information available as those terms are
understood and defined in Rule 144, at all times from and after ninety (90)
days following the effective date of the first registration under the
Securities Act filed by the Company for an offering of its securities to
the general public;
(ii) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act at any time after it has become subject
to such reporting requirements; and
(iii) so long as the Holder owns any Registrable Securities, furnish
to the Holder upon request, a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so
filed as the Holder may reasonably request in availing itself of any rule
or regulation of the Commission allowing the Holder to sell any such
securities without registration.
(h) Termination. The registration rights set forth in this Section 2 shall
not be available to any Holder if, (i) in the written opinion of counsel to the
Company, all of the Registrable Securities then owned by such Holder could be
sold in any 90-day period pursuant to Rule 144 (without giving effect to the
provisions of Rule 144(k)) or (ii) all of the Registrable Securities held by
such Holder have been sold in a registration pursuant to the Securities Act or
pursuant to Rule 144.
SECTION 3. MISCELLANEOUS
(a) Directly or Indirectly. Where any provision in this Agreement refers to
action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person.
(b) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State.
(c) Section Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
(d) Notices.
-10-
(i) All communications under this Agreement shall be in writing and
shall be delivered by hand or facsimile or mailed by overnight courier or
by registered or certified mail, postage prepaid:
(1) if to the Company, at: 2838 Highway 7, Norval, Ontario, Canada L0P
1K, Attention: Jeremy N. Kendall, or at such other address or facsimile
number as it may have furnished the Investors in writing, with a copy to
Michael Armstrong, Q.C. LaFleur Brown LLP, National Bank Building, 150 York
St. 14th Floor, Toronto, Ontario, Canada M5H 3S5.
(2) if to the Investor, to Claridge Israel LLC, c/o Davies Ward
Phillips & Vineberg LLP, 625 Madison Avenue, 12th floor, New York, NY
10022, Facsimile: (212) 308-0132, Attention: Guy P. Lander, or at such
other address or facsimile number as may have been furnished the Company in
writing, with a copy to Willkie Farr & Gallagher, 787 Seventh Avenue, New
York, NY 10019 (facsimile: (212) 728-8111), Attention: Michael A. Schwartz,
Esq.
(ii) Any notice so addressed shall be deemed to be given: if delivered
by hand or facsimile, on the date of such delivery; if mailed by courier,
on the first business day following the date of such mailing; and if mailed
by registered or certified mail, on the third business day after the date
of such mailing.
(e) Reproduction of Documents. This Agreement and all documents relating
thereto, including, without limitation, any consents, waivers and modifications
which may hereafter be executed may be reproduced by the Holders by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and the Holders may destroy any original document so reproduced.
The parties hereto agree and stipulate that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by the Holders in the regular course of business) and that
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties.
(g) Entire Agreement; Amendment and Waiver. This Agreement constitutes the
entire understanding of the parties hereto and supersedes all prior
understanding among such parties. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with (and only with) the
written consent of the Company, Phillips and the Holders holding a majority of
the then outstanding Registrable Securities.
(h) Severability. In the event that any part or parts of this Agreement
shall be held illegal or unenforceable by any court or administrative body of
competent jurisdiction, such determination shall not affect the remaining
provisions of this Agreement which shall remain in full force and effect.
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(i) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
STAKE TECHNOLOGY LTD.
By: /s/ Jeremy N. Kendall
------------------------------
Name: Jeremy N. Kendall
Title: Chairman and Chief Executive
Officer
CLARIDGE ISRAEL LLC
By: /s/ Guy P. Lander
------------------------------
Name: Guy P. Lander
Title:
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