Exhibit 1.1
STAKE TECHNOLOGY LTD.
7,000,000 COMMON SHARES
UNDERWRITING AGREEMENT
August 12, 2003
Desjardins Securities Inc.
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc.
AS REPRESENTATIVES OF THE SEVERAL UNDERWRITERS
c/▇ ▇▇▇▇▇▇▇▇▇▇ Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Dear Sirs:
1. Introductory. Stake Technology Ltd., a corporation organized and
existing under the laws of Canada (the "Company"), proposes, subject to the
terms and conditions stated herein, to issue and sell to the several
Underwriters named on Schedule A hereto (the "Underwriters") 7,000,000 of its
common shares (the "Common Shares") (the "Firm Securities") and, at the election
of Desjardins Securities Inc. ("Desjardins") and BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc. ("BMO",
and together with Desjardins, the "Representatives"), sell to the Underwriters
an aggregate of up to an additional 500,000 Common Shares (the "Optional
Securities") (the Firm Securities and the Optional Securities which the
Underwriters may elect to purchase pursuant to Section 3 hereof are herein
collectively called the "Offered Securities"). The Underwriters hereby severally
agree to purchase from the Company in the respective percentages set forth on
Schedule A hereto, upon and subject to the terms and conditions contained herein
on the First Closing Date (as defined below), the Firm Securities at a price per
Common Share of US $7.00 for each Firm Security, whether sold in Canada or the
United States. In consideration of the Underwriters' purchase of the Offered
Securities provided for herein and in consideration of the services to be
rendered by the Underwriters in connection therewith, the Company agrees to pay
to the Underwriters, on the First Closing Date, a fee (the "Underwriting Fee"),
equal to 4% of the aggregate purchase price of the Firm Securities, which
Underwriting Fee shall be payable in U.S. dollars, as set forth in Section 3
below.
All dollar amounts in this Agreement are expressed in U.S. dollars, and
references to "US $" and "$" are to U.S. dollars.
The Company hereby agrees with the several Underwriters as follows:
2. Representations, Warranties and Covenants of the Company. The Company
represents, warrants and covenants to, and agrees with, the Underwriters that:
(a) A registration statement on Form S-3 (File number 333-107374)
with respect to senior debt securities, subordinated debt securities,
special shares, warrants and common shares has been prepared by the
Company in conformity in all material respects with the requirements of
the United States Securities Act of 1933 (the "Act"), and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "SEC") thereunder, has been filed with the SEC and has
become effective. As used in this Agreement: (i) "Registration Statement"
means such registration statement (including all documents incorporated
therein by reference) at the date of this Agreement; (ii) "Basic
Prospectus" means the prospectus (including all documents incorporated
therein by reference) included in the Registration Statement; and (iii)
"U.S. Prospectus" means the Basic Prospectus, together with any amendments
or supplements thereto, including without limitation, any preliminary
prospectus supplement and any prospectus supplement (the "Prospectus
Supplement") (including in each case all documents incorporated therein by
reference) specifically relating to the Offered Securities, as filed with
the SEC pursuant to Rule 424(b) of the Rules and Regulations. The SEC has
not issued any order preventing or suspending the use of the U.S.
Prospectus or the distribution of securities thereunder, and, to the
Company's knowledge, no proceedings for such purpose are pending before,
or threatened by, the SEC.
(b) The Company has prepared and filed with the securities
regulatory authorities (collectively, the "Canadian Securities
Regulators") in the provinces of British Columbia, Alberta, Saskatchewan,
Manitoba and Ontario (collectively, the "Qualifying Provinces") in
accordance with National Instrument 44-101 - Short Form Prospectus
Distributions (the "POP Procedures"), a preliminary short form prospectus
dated August 11, 2003 qualifying the Offered Securities for distribution
in each of the Qualifying Provinces (the "Canadian Preliminary
Prospectus") and has obtained a preliminary decision document (the
"Decision Document") dated August 11, 2003 from the Ontario Securities
Commission (the "OSC"), in its capacity as principal regulator pursuant to
the mutual reliance review system procedures provided for under National
Policy 43-201 - Mutual Reliance Review System for Prospectuses and Annual
Information Forms of the Canadian Securities Regulators (the "MRRS").
(c) The Company shall use its commercially reasonable best efforts
to respond to and resolve all comments, if any, issued by the Canadian
Securities Regulators with respect to the Canadian Preliminary Prospectus
as soon as practicable following the receipt thereof, and immediately
following the resolution of all such comments, shall prepare and file in
the Qualifying Provinces, in accordance with the POP Procedures, a final
short form prospectus qualifying the Offered Securities for distribution
in each of the Qualifying Provinces (the "Canadian Final Prospectus") and
obtain a final Decision Document from the OSC, in its capacity as
principal regulator pursuant to the MRRS on behalf of the Canadian
Securities Regulators.
"Canadian Prospectus" shall mean the Canadian Final Prospectus,
including the documents incorporated by reference therein. The U.S.
Prospectus and the Canadian Prospectus are referred to collectively herein
as the "Prospectus." None of the Canadian Securities Regulators has issued
any order preventing or suspending the use of the Canadian Prospectus or
the distribution of securities thereunder and, to the Company's
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knowledge, no proceedings for such purpose are pending before, or
threatened by, any Canadian Securities Regulator.
The Registration Statement, as of the time it became effective and
as of the date of this Agreement and the U.S. Prospectus, complied and, in
the case of any amendment or supplement to any such document, or any
material incorporated by reference in any such document filed with the SEC
after the date as of which this representation is being made, will comply,
in all material respects, at all times during the period specified in
Section 5(d) hereof and on the Closing Date, with the provisions of the
Act, the Rules and Regulations, the United States Securities Exchange Act
of 1934 (the "Exchange Act" and, together with the Act, the "U.S.
Securities Laws") and the rules and regulations of the SEC thereunder. The
Registration Statement, as of the time it became effective and as of the
date of this Agreement, did not and will not at any time during the period
specified in Section 5(d) hereof and on the Closing Date, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
made therein not misleading; and the U.S. Prospectus, as amended or
supplemented as of the date of this Agreement and at the time the
Registration Statement became effective, did not and will not, at any time
during the period specified in Section 5(d) and on the Closing Date,
contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(d) At the respective times of filing and at all times subsequent to
the filing thereof during the period of distribution or distribution to
the public, as the case may be, of the Offered Securities in Canada, the
Canadian Prospectus (and any amendment thereto) will comply in all
material respects with the requirements of all applicable securities laws
in each of the Qualifying Provinces and the respective regulations made
thereunder, together with applicable published national and local policy
statements, rules, notices, blanket orders and blanket rulings of the
Canadian Securities Regulators (collectively, the "Canadian Securities
Laws" and, together with the U.S. Securities Laws, the "Securities Laws"),
and the Canadian Prospectus will provide full, true and plain disclosure
of all material facts relating to the Company and to the Offered
Securities as required by Canadian Securities Laws, and the Canadian
Prospectus will not contain any misrepresentation (as defined in Canadian
Securities Laws).
(e) No holder of any security of the Company has the right which has
not been waived to have any security owned by such holder included in the
Registration Statement or qualified by the Canadian Prospectus or, except
as disclosed in the Prospectus, any right to demand registration of any
security owned by such holder.
(f) The Company has been duly incorporated under the laws of Canada
and each of its Canadian and U.S. subsidiaries named on Schedule B hereto
(collectively, the "Subsidiaries") has been duly organized and is validly
existing and in good standing under the laws of its jurisdiction of
incorporation. Neither the Company nor any of its Subsidiaries is
discontinued or has been dissolved; each of the Company and its
Subsidiaries has the corporate power and authority necessary, and is duly
qualified to conduct its business as now conducted and as described in the
Prospectus and to own its
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properties and assets; the Company has all requisite power and authority
to enter into and perform its obligations under this Agreement;
information concerning the Company's ownership of each of its Subsidiaries
as indicated on Schedule B is complete and accurate in all material
respects.
(g) Except for its Subsidiaries, the Company has no other
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.
(h) As of the Closing Date, the execution and delivery of this
Agreement have been duly authorized by all necessary corporate action of
the Company, and this Agreement constitutes a legal, valid and binding
obligation of the Company enforceable against it in accordance with its
terms.
(i) All of the issued and outstanding shares in the capital of the
Company including the Offered Securities have been duly authorized and
validly issued and are fully paid and non-assessable and have been issued
in compliance with all Securities Laws (as defined below); and the
shareholders of the Company have no pre-emptive rights with respect to the
Offered Securities that have not been waived.
(j) The Company is eligible to distribute securities pursuant to the
POP Procedures in each of the Qualifying Provinces.
(k) The attributes of the Common Shares conform in all material
respects with the description thereof contained in the Prospectus.
(l) The issuance and sale by the Company of the Offered Securities
and the compliance by the Company with all the provisions of this
Agreement and the consummation by the Company of the other transactions
contemplated by this Agreement, do not require the consent, approval,
permit, authorization, order or qualification of, or filing or
registration with, any court, governmental body or regulatory authority in
the United States or Canada, except for (i) any consents, approvals or
notifications under applicable Securities Laws (which consents or
approvals the Company has applied for or obtained); (ii) the filing of the
Canadian Final Prospectus with the Canadian Securities Regulators and the
Prospectus with the SEC; (iii) required approvals, notices and filings to
or with the Toronto Stock Exchange (the "TSX") and the Nasdaq Small Cap
Market (the "NASDAQ"); and (iv) any qualifications required under blue sky
or state securities laws.
(m) The execution and delivery of this Agreement, the issuance and
sale of the Offered Securities, the performance by the Company of all of
its obligations under this Agreement and the consummation of the
transactions contemplated in this Agreement do not and will not conflict
with or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, (whether after notice or lapse of time
or both), (A) any law, statute, rule or regulation applicable to the
Company including, without limitation, applicable Securities Laws, (B) the
constating documents, by-laws or resolutions of the Company or any of its
Subsidiaries which are in effect as of the date hereof, or (C) any
mortgage, note, indenture, contract, agreement, instrument, lease or
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other document to which the Company or any of its Subsidiaries is a party
or by which it is bound, or (D) any judgment, decree or order binding the
Company or the property or assets of the Company, except in the case of
(C) or (D), which default or breach would, individually or in the
aggregate, not have a material adverse effect on the assets, liabilities
(contingent or otherwise), financial condition, business, properties,
results of operations, capital or prospects (financial or otherwise) of
the Company or its Subsidiaries taken as a whole (a "Material Adverse
Effect").
(n) The Company and each of its Subsidiaries has conducted and is
conducting its business in compliance in all respects with all applicable
laws, rules and regulations of each jurisdiction in which such business is
carried on, except where the failure to do so would not result in a
Material Adverse Effect.
(o) Except as disclosed in the Prospectus, there are no actions,
suits, proceedings, inquiries or arbitration pending or threatened against
or affecting the Company or its Subsidiaries at law or in equity or before
or by any governmental department, commission, board, bureau, agency or
instrumentality which in any way could reasonably be expected to have a
Material Adverse Effect, or which could prevent or restrict the
distribution of the Offered Securities.
(p) Except as disclosed in the Prospectus, since December 31, 2002,
the Company has not incurred, assumed or suffered any liability (absolute,
accrued, contingent or otherwise) or entered into any transaction which
could reasonably be expected to have a Material Adverse Effect.
(q) Except as disclosed in the Prospectus, or as could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, there has been no adverse change (actual,
anticipated, contemplated or threatened, whether financial or otherwise)
in the business, affairs, operations, assets or liabilities (contingent or
otherwise) of the Company and its Subsidiaries considered as a whole or
the capital of the Company since the date of the latest unaudited
consolidated financial statements included or incorporated by reference in
the Prospectus and, except as disclosed or contemplated by the Prospectus,
there has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.
(r) The historical consolidated financial statements (including the
related notes and supporting schedules) of the Company contained or
incorporated by reference in the Registration Statement and the Prospectus
(the "Financial Statements") present fairly in all material respects the
financial position and condition of the Company and its Subsidiaries at
the respective dates indicated and the results of its operations and its
cash flows for the respective periods indicated. Such Financial Statements
have been prepared in accordance with generally accepted accounting
principles in Canada applied on a consistent basis throughout the periods
involved and have been reconciled to generally accepted accounting
principles in the United States in accordance with Item 18 of Form 20-F
under the Exchange Act, and the selected consolidated financial data and
the summary consolidated financial data contained or incorporated by
reference in the Registration Statement and the Prospectus present fairly
in all material respects the
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information shown therein and have been compiled on a basis consistent
with that of the Financial Statements.
(s) The description of the assets and liabilities of the Company and
its Subsidiaries (taken as a whole) set forth in the Financial Statements
fairly presents, in accordance with generally accepted accounting
principles in Canada and having been reconciled to generally accepted
accounting principles in the United States in accordance with Item 18 of
Form 20-F under the Exchange Act, the financial position and condition of
the Company and its Subsidiaries (taken as a whole) as at the dates
thereof and reflects all material liabilities (absolute, accrued,
contingent or otherwise) of the Company as at the dates thereof.
(t) The Company and each of its Subsidiaries has timely filed all
necessary federal, state, provincial, local and foreign income, payroll,
franchise and other 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 result in a Material Adverse Effect 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.
(u) No default exists in the performance or observance of any
material obligation, agreement, covenant or condition contained in any
contract, indenture, loan agreement, note, lease or other agreement or
instrument to which the Company or any of its Subsidiaries is a party.
(v) The Company is (A) a "reporting issuer" (or equivalent thereof)
under U.S. Securities Laws and in each Qualifying Province where such
concept exists and is not in default of any requirement thereof and (B) in
compliance with its timely disclosure obligations under the Securities
Laws.
(w) The authorized capital of the Company consists of (A) an
unlimited number of Common Shares, of which 43,289,778 are issued and
outstanding as of the date hereof, and (B) an unlimited number of special
shares, issuable in series, none of which is issued and outstanding as of
the date hereof.
(x) No person has any agreement or option, or right or privilege
(whether pre-emptive or contractual) capable of becoming an agreement or
option, for the purchase, acquisition, subscription or issuance of any of
the unissued shares, warrants or other securities of the Company except as
otherwise described in the Prospectus and other than: (i) issuances of
stock options or issuances of Common Shares upon exercise of stock options
pursuant to compensation arrangements existing on the date hereof; or (ii)
issuances required in connection with earnout payments for acquisitions
prior to the date hereof or upon the exercise of any outstanding
securities or rights convertible, exchangeable or exercisable for Common
Shares as disclosed on Schedule C.
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(y) Except as disclosed in Schedule B hereto, the Company, directly
or indirectly, is the sole registered and beneficial owner of all issued
and outstanding securities of each of its Subsidiaries.
(z) The delivery by the Company to the Underwriters of commercial
copies of the Prospectus shall constitute the consent of the Company to
use such documents in connection with the distribution of the Offered
Securities pursuant to the terms of this Agreement.
(aa) The Company has not filed any confidential material change
reports under the Securities Laws.
(bb) 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.
(cc) The Company or one of its Subsidiaries has all proprietary
rights provided in law to all patents, trademarks, trademark applications,
trade names, service marks, copyrights, copyright applications, licenses,
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 a Material
Adverse Effect.
(dd) 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 a Material
Adverse Effect, and has no knowledge of any claim of adverse ownership in
respect thereof.
(ee) 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, service marks,
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.
(ff) 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, except with regards to the License Agreement dated March 19,
1996 between CrystalGrit, Inc. and ▇▇▇▇▇▇ Environmental, Inc. (which was
amalgamated with the Company on July 1, 1996), whereby ▇▇▇▇▇▇
Environmental, Inc.
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agreed to pay a royalty based on a percentage of net sales of a specific
intellectual property that utilizes raw materials provided under such
license agreement.
(gg) There are no claims against the Company in connection with
product warranties or the production or sale of defective or inferior
products which could be reasonably expected to have a Material Adverse
Effect.
(hh) Except as disclosed in the Prospectus, 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.
(ii) Except as disclosed in the Prospectus, 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.
(jj) Except as disclosed in the Prospectus, 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.
(kk) Except as disclosed in the Prospectus, 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 Financial Statements.
(ll) 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.
(mm) Other than as disclosed in the Prospectus or as could not
reasonably be expected to have a Material Adverse Effect, the Company and
its Subsidiaries have good and marketable title to, or leasehold interests
in, all properties and assets, as described in the Prospectus and the
Registration Statement, owned by the Company and its Subsidiaries, free
and clear of all liens, charges, encumbrances or restrictions.
(nn) 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.
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(oo) no labour dispute with the employees of the Company or any of
its Subsidiaries exists or, to the knowledge of the Company, is imminent,
and the Company is not aware of any existing or imminent labour
disturbance by the employees of any of its or any Subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in any such
case, could reasonably be expected to have a Material Adverse Effect.
(pp) 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.
(qq) Except in each case as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect:
(i) the Company and its Subsidiaries possess such permits,
certificates, licenses, approvals, consents and other authorizations
(collectively, the "Governmental Licenses") issued by the
appropriate federal, provincial, state, local or foreign regulatory
agencies or bodies necessary to conduct the business now operated by
them;
(ii) the Company and its Subsidiaries are in compliance with
the terms and conditions of all such Governmental Licenses;
(iii) all such Governmental Licenses are valid and in full
force and effect; and
(iv) no revocation or limitation of any of such Governmental
Licenses is pending or threatened and none of the Company and its
Subsidiaries is in default or in violation of any thereof, and the
sale and delivery of the Offered Securities does not and will not
conflict with, or result in a breach of any of the terms or
provisions of, or constitute a default under, any of such
Governmental Licenses.
(rr) Other than as disclosed in the Prospectus or as could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect:
(i) neither the Company nor any of its Subsidiaries is in
violation of any federal, provincial, state, local, municipal or
foreign statute, law, rule, regulation, ordinance, code, policy or
rule of common law or civil law or any judicial or administrative
interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to the pollution or
protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of
chemicals, pollutants, contaminants, waste, toxic substances,
hazardous substances, petroleum or petroleum products (collectively,
"Hazardous Materials" or to the manufacture, processing,
distribution, use,
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treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, "Environmental Laws");
(ii) the Company and its Subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are in compliance with the requirements
thereunder;
(iii) there are no pending or, to the knowledge of the
Company, threatened administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of
non-compliance or violation, investigation or proceedings relating
to any Environmental Laws against the Company or any of its
Subsidiaries; and
(iv) there are no events or circumstances that might
reasonably be expected to form the basis of any order for clean up
or remediation, or an action, suit or proceeding by any private
party or governmental body or agency, against or affecting the
Company or any of its Subsidiaries relating to Hazardous Material or
any Environmental Laws.
(ss) The Company is not now, and will not as a result of the sale of
the Offered Securities, be required to be registered as an "investment
company" within the meaning of the United States Investment Company Act of
1940, as amended and the rules and regulations of the SEC promulgated
thereunder.
(tt) Neither any Canadian Securities Regulators, the SEC, the TSX,
the NASDAQ nor any similar regulatory authority has issued any order which
is currently outstanding preventing or suspending trading in any
securities of the Company and the Company is not in default of any
material requirement of applicable Securities Laws.
(uu) The outstanding Common Shares are, and upon issuance the
Offered Securities will be, listed and posted for trading on the TSX and
quoted for trading on the NASDAQ.
(vv) Other than as disclosed in the Prospectus or as could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, the Company and its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are customary in the businesses in which they
engage or propose to engage, and the Company and its Subsidiaries have no
reason to believe that they will not be able to renew their existing
insurance coverage as and when such coverage expires or obtain similar
coverage from similar insurers as may be necessary to continue their
business at a similar cost to that of their existing coverage.
(ww) As of the Closing Date, the Common Shares will (A) be qualified
investments under the Income Tax Act (Canada) for trusts governed by
registered retirement savings plans, registered retirement income funds,
deferred profit sharing plans (other than those trusts governed by
deferred profit sharing plans for which any employer is the Company, or is
a corporation which does not deal at arm's length with the Company) and
registered education savings plans (collectively, "Deferred Income
Plans"); and (B) not
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constitute "foreign property" to Deferred Income Plans and certain
other persons who are generally exempt from tax.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Company, the number of Firm Securities set forth opposite the names of
the several Underwriters on Schedule A at a purchase price equal to the number
of Firm Securities multiplied by $7.00 (the "Purchase Price"). The Purchase
Price will be payable to the Company in U.S. dollars. In consideration of the
Underwriters' purchase of the Firm Securities, the Company agrees to pay to the
Underwriters on the First Closing Date a fee equal to 4% of the Purchase Price,
which fee shall be payable to the Underwriters in U.S. dollars. The Underwriters
shall advise the Company of the number of Offered Securities not later than the
second Business Day ("Business Day" means any day other than Saturday, Sunday or
other day on which commercial banks in the State of New York or chartered banks
in the Province of Ontario are authorized or required by law or executive order
to close) following the date hereof, provided, however, that the number of the
Offered Securities shall equal the number of Firm Securities.
The Company will deliver against payment of the Purchase Price evidence
satisfactory to the Underwriters of the book entry transfer of the Firm
Securities to the Underwriters through the facilities of the Canadian Depository
for Securities Limited ("CDS"). Payment for the Firm Securities shall be made by
the Representatives in Federal (same day) funds by official check or checks or
wire transfer to an account designated by the Company at Bank of Montreal,
Georgetown, Ontario, drawn to the order of Stake Technology Ltd. at the office
of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ Apps & Dellelce, LLP, ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇.▇. ▇▇▇ ▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ at 8:30 A.M. (Toronto time),
on August 27, 2003, or at such other date and time not later than seven full
Business Days thereafter as the Representatives and the Company determine, such
time being herein referred to as the "First Closing Date", against delivery to
the Underwriters of such evidence of book entry transfer of the Firm Securities.
In addition, upon written notice from the Representatives given to the
Company from time to time not more than 30 days subsequent to the First Closing
Date, the Underwriters may purchase all or less than all of the Optional
Securities at the same purchase price per Optional Security as they pay for each
Firm Security, which purchase price shall be payable to the Company in U.S.
dollars. In consideration of the Underwriters' purchase of the Optional
Securities, the Company agrees to pay to the Underwriters on each Option Closing
Date (as defined below) with respect to each Optional Security purchased on that
date, a fee equal to 4% of the purchase price therefor, which fee shall be
payable to the Underwriters in U.S. dollars. The Company agrees to sell to the
Underwriters the number of Optional Securities specified in such notice. Such
Optional Securities shall be purchased from the Company by the Underwriters on a
pro rata basis according to the number of Firm Securities purchased by each
Underwriter, unless otherwise agreed among the Underwriters. The right to
purchase the Optional Securities or any portion thereof may be exercised from
time to time and to the extent not previously exercised may be surrendered and
terminated at any time upon notice by the Representatives to the Company.
-11-
Each time for the transfer and payment for the Optional Securities, being
herein referred to as the "Option Closing Date", which may be the First Closing
Date (the First Closing Date and each Option Closing Date, if any, being
sometimes referred to as a "Closing Date"), shall be determined by the
Representatives but shall not be later than seven full Business Days after
written notice of election to purchase Optional Securities is given. The Company
will deliver against payment of the purchase price for the Optional Securities
evidence satisfactory to the Underwriters of the book entry transfer of the
Optional Securities to the Underwriters through the facilities of CDS. Payment
for such Optional Securities shall be made by the Representatives in Federal
(same day) funds by official certified check or checks or wire transfer to an
account designated by the Company at either Bank of Montreal, Georgetown,
Ontario, drawn to the order of Stake Technology Ltd., against delivery to the
Underwriters of such evidence of book entry transfer of the Optional Securities.
4. Offering by Underwriters. It is understood that the Underwriters
propose to offer the Offered Securities for sale to the public as set forth in,
and only through, the Prospectus. The Offered Securities will be offered for
sale in Canada and the United States at $7.00 per Offered Security.
5. Certain Agreements of the Company. The Company agrees with the several
Underwriters that:
(a) The Company (i) shall furnish promptly to the Representatives
and to counsel for the Underwriters a signed copy of the Registration
Statement as originally filed and a copy of each amendment thereto (in
each case together with all exhibits filed therewith) filed prior to or on
the date of this Agreement or related to or covering the Offered
Securities, and a copy of the U.S. Prospectus filed with the SEC; and (ii)
shall advise the Representatives promptly of any proposal to amend or
supplement the Registration Statement or the U.S. Prospectus and will not
effect such amendment or supplementation without the Representatives'
consent, which shall not be unreasonably withheld.
(b) The Company shall deliver promptly to the Representatives,
without charge, such number of the following documents as the
Representatives may reasonably request: (i) conformed copies of the
Registration Statement (excluding exhibits thereto); (ii) the Prospectus;
and (iii) any documents incorporated by reference in the Prospectus; and
the Company authorizes the Underwriters and all dealers to whom any
Offered Securities may be offered or sold by the Underwriters to use such
documents during the period referred to in Section 5(d) in connection with
the sale of the Offered Securities in accordance with the applicable
provisions of the Securities Laws; provided that the Company shall be
deemed to have complied with the requirements of clause (iii) of this
paragraph with respect to any document filed electronically with the SEC
or a Canadian Securities Regulator.
(c) Promptly following the filing of the Canadian Final Prospectus,
the Company shall deliver to each of the Underwriters:
(i) a copy of the Canadian Final Prospectus signed and
certified;
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(ii) a copy of the certificates of authentication in respect
of the Canadian Final Prospectus signed and certified as required by
the Canadian Securities Laws; and
(iii) a copy of any other document required to be filed by the
Company under the laws of each of the Qualifying Provinces in
compliance with the Canadian Securities Laws in connection with the
offering of the Offered Securities.
(d) During such period following the date of this Agreement (A) in
the case of the offering of the Offered Securities in the United States, a
prospectus is required by law to be delivered, and (B) in the case of the
offering of the Offered Securities in the Qualifying Provinces, until the
completion of distribution or distribution to the public, as the case may
be; the Company shall furnish copies of: (i) any amendment to the
Registration Statement; (ii) the Prospectus or any amendment or supplement
thereto; or (iii) any document incorporated by reference in any of the
foregoing or any amendment or supplement to any such incorporated document
to the Representatives and to counsel for the Underwriters prior to filing
any of such items with the SEC or a Canadian Securities Regulator and
shall not file any such item to which the Representatives shall reasonably
object; provided that despite any such objection but after consultation
with the Representatives, including the furnishing to the Representatives
of drafts thereof, the Company may file any amendment, supplement, report
or statement which in the written opinion of its counsel furnished to the
Representatives it is required to file pursuant to the Securities Laws.
(e) The Company shall advise the Representatives promptly: (i) when
any post-effective amendment to the Registration Statement related to or
covering the Offered Securities becomes effective; (ii) of any request by
the SEC or a Canadian Securities Regulator for an amendment or supplement
(insofar as the amendment or supplement relates to or covers the Offered
Securities) to the Registration Statement, to the Prospectus, to any
document incorporated by reference in any of the foregoing or for any
additional information related to the Registration Statement; (iii) of the
issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the issuance of any order by the SEC or a
Canadian Securities Regulator directed to the Prospectus or any document
incorporated therein by reference or the initiation of any stop order
proceeding or of any challenge to the accuracy or adequacy of any document
incorporated by reference in the Prospectus; and (iv) of receipt by the
Company of any notification with respect to the suspension of the
qualification of the Offered Securities for sale in any jurisdiction or
the initiation of any proceeding for the purpose. If at any time during
the period referred to in Section 5(d) when the Prospectus related to the
Offered Securities is required to be delivered under the Securities Laws,
any event occurs as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of material fact or omit to
state a material fact necessary in order to make the statements therein in
the light of the circumstances under which they were made not misleading,
or if it shall be necessary to amend or supplement the Prospectus to
comply with the Securities Laws, the Company shall promptly prepare and
file with the SEC or a Canadian Securities Regulator, as the case may be,
subject to Section 5(d), an
-13-
amendment or supplement that will correct such statement or omission or an
amendment or supplement which will effect such compliance.
(f) If, during the period referred to in Section 5(d), the SEC or a
Canadian Securities Regulator shall issue a stop order suspending the
effectiveness of the Registration Statement or retracting or suspending
the use of the Prospectus, the Company shall use its best efforts to
obtain the lifting of that order at the earliest possible time.
(g) As soon as practicable, or in accordance with Rule 158 of the
Rules and Regulations, the Company shall make generally available to its
security holders and to the Representatives an earnings statement (which
need not be audited) of the Company and its consolidated Subsidiaries,
that will satisfy the provisions of Section 11(a) of the Act and Rule 158
thereunder.
(h) The Company will pay all expenses incidental to the performance
of its obligations under this Agreement including (i) expenses in
connection with the execution, issue, authentication, packaging and
initial delivery of the Offered Securities, the printing (or reproduction)
of this Agreement, the Offered Securities, the Prospectus and amendments
and supplements thereto, and any other document relating to the issuance,
offer, sale and delivery of the Offered Securities; (ii) the cost of
qualifying the Offered Securities for listing on the NASDAQ and the TSX
and any expenses incidental thereto; (iii) for any expenses (including
reasonable fees and disbursements of counsel) incurred in connection with
qualification of the Offered Securities for sale under the laws of such
jurisdictions as the Representatives designate and the printing of
memoranda relating thereto; and (iv) for expenses incurred in distributing
any Registration Statement, Basic Prospectus and Prospectus (including any
amendments and supplements thereto) to the Underwriters. The Company will
reimburse the Underwriters for all expenses of the Underwriters incident
to the performance of their obligations under this Agreement, including,
without limitation, the fees, disbursements and expenses of U.S. and
Canadian counsel for the Underwriters.
(i) In connection with the offering of the Offered Securities, until
the Representatives shall have notified the Company and the other
Underwriters of the completion of the sale of the Offered Securities, the
Company will not take, directly or indirectly, any action designed to or
which has constituted or which might reasonably be expected to cause or
result in, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of the Company or to facilitate
the sale of the Offered Securities.
(j) In connection with the offering of the Offered Securities, until
the Representatives shall have notified the Company and the other
Underwriters of the completion of the sale of the Offered Securities,
neither the Company nor any of its affiliates has or will, either alone or
with one or more other persons, bid for or purchase for any account in
which it or any of its affiliates has a beneficial interest any Offered
Securities or attempt to induce any person to purchase any Offered
Securities (provided that this subsection (j) shall not apply to directors
and officers who purchase Offered
-14-
Securities in this offering pursuant to the Prospectus); and neither it
nor any of its affiliates will make bids or purchases for the purpose of
creating actual, or apparent, active trading in, or of raising the price
of, the Offered Securities.
(k) For a period of 90 days after the date of the initial offering
of the Offered Securities by the Underwriters, the Company will not offer,
sell, contract to sell, pledge, or otherwise dispose of, directly or
indirectly, or file with the SEC or a Canadian Securities Regulator a
registration statement or another offering document relating to, any
securities of the Company that are substantially similar to the Offered
Securities, any additional Common Shares, or securities convertible into
or exchangeable or exercisable for Common Shares or warrants or other
rights to purchase Common Shares of the Company, without the prior written
consent of the Representatives, which consent shall not be unreasonably
withheld, or publicly disclose the intention to make any such offer, sale,
pledge, disposition or filing, other than (i) issuances of stock options
or Common Shares upon exercise of stock options or otherwise pursuant to
compensation arrangements existing on the date hereof; (ii) issuances
required in connection with earnout payments for acquisitions prior to the
date hereof or upon the exercise of any outstanding securities or rights
convertible, exchangeable or exercisable for Common Shares as disclosed on
Schedule C; (iii) any filing of a registration statement in connection
with any of the items listed in the foregoing clauses (i) and (ii); and
(iv) the filing of a registration statement for 196,809 Common Shares
issued to acquire indirectly 100% of the outstanding shares of Kettle
Valley Dried Fruits Ltd. and Kettle Valley Dried Fruits, Inc.
(l) The Company will reimburse the Underwriters against any
documentary, stamp or similar issuance tax, including any interest and
penalties, on the creation, issuance and sale of the Offered Securities
and on the execution and delivery of this Agreement. All payments to be
made by the Company hereunder shall be made without withholding or
deduction for or on account of any present or future taxes, duties or
governmental charges whatsoever unless the Company is compelled by law to
deduct or withhold such taxes, duties or charges. In that event, the
Company shall pay such additional amounts as may be necessary in order
that the net amounts received after such withholding or deduction shall
equal the amounts that would have been received if no withholding or
deduction had been made.
(m) The Company shall make every reasonable effort to arrange for
the qualification of the Offered Securities for sale under the laws of
such jurisdictions as the Representatives may reasonably designate and the
Company shall approve, which approval shall not be unreasonably withheld,
and the Company shall pay all expenses (including fees and disbursements
of counsel) in connection with such qualifications, and shall maintain
such qualifications in effect during the period set forth in Section 5(d);
provided, however, that the Company shall not be required to qualify to do
business in any jurisdiction where it is not so qualified at the date of
this Agreement or to take any action that would subject it to general or
unlimited service of process or to the imposition of any taxes based on,
or measured by, all or any part of the income of the Company, in any
jurisdiction where it is not at such date so subject.
-15-
(n) Prior to the filing of the Canadian Final Prospectus (and any
amendments thereto), the Company shall permit the Underwriters and their
counsel to participate fully in the preparation of such documents and
allow the Underwriters and their counsel to conduct all due diligence
which the Underwriters may reasonably require in order to fulfill their
obligations under Canadian Securities Laws and in order to enable the
Underwriters to execute responsibly any certificate required to be
executed by the Underwriters in connection with the Canadian Final
Prospectus (and any amendments thereto).
(o) The Company will use its best efforts to ensure that the Offered
Securities will be listed and posted for trading on the NASDAQ and the TSX
upon issuance.
6. Conditions of the Obligations of the Underwriters. The obligations of
the Underwriters to purchase and pay for the Firm Securities on the First
Closing Date and for the Optional Securities on each Option Closing Date will be
subject to the accuracy in all material respects of the representations and
warranties not qualified as to materiality or Material Adverse Effect and the
accuracy in all respects of the representations and warranties qualified as to
materiality or Material Adverse Effect on the part of the Company herein, to the
accuracy in all material respects of the statements of officers of the Company
made pursuant to the provisions hereof, to the performance in all material
respects by the Company of its obligations hereunder and to the following
additional conditions precedent:
(a) At or before the Closing Date, no stop order suspending the
effectiveness of the Registration Statement or any order directed to any
document incorporated by reference in the Prospectus shall have been
issued and remain in effect and no proceeding for that purpose shall be
pending or, to the knowledge of the Company or the Representatives,
threatened by the SEC or a Canadian Securities Regulator.
(b) The Underwriters shall have received a letter, dated the date of
this Agreement, of PricewaterhouseCoopers LLP, in form and substance
satisfactory to the Underwriters acting reasonably, relating to the
verification of certain of the financial information and statistical and
accounting data relating to the Company contained in the prospectus, or
incorporated by reference therein.
(c) Subsequent to the execution and delivery of this Agreement, the
Representatives may terminate this Agreement by notice in writing to the
Company at any time prior to the completion of the offering of the Offered
Securities if (i) there is, in their sole opinion, a material change or a
change in any material fact or a new material fact shall arise which could
be expected to have an adverse change or effect on the business, affairs,
or profitability of the Company or on the market price or the value of the
securities of the Company; (ii) the state of the financial markets is such
that, in their sole opinion, it would be unprofitable to offer or continue
to offer the Offered Securities for sale; (iii) there should develop,
occur or come into effect any event of any nature, including without
limitation, accident, governmental law or regulation which, in their sole
opinion adversely affects or may adversely affect the financial markets or
the business, affairs or profitability of the Company or the market price
or value of the securities of the Company; (iv) there is an inquiry or
investigation (whether formal or informal) in relation to the Company or
any of the officers or directors or principal
-16-
shareholders of the Company; (v) any order to cease trading in securities
of the Company is made or threatened by a securities regulatory authority;
or (vi) the Company is in breach of a term, condition or covenant of this
Agreement, or any representation or warranty given by the Company in this
Agreement becomes or is false.
(d) The Underwriters shall have received an opinion, in form and
substance satisfactory to them, dated such Closing Date, of ▇▇▇▇▇▇ ▇▇▇▇▇
LLP, Canadian counsel to the Company, that:
(i) The Company has been duly incorporated under the laws of
Canada and each of its Canadian Subsidiaries named on Schedule B
hereto has been duly organized under the laws of its jurisdiction of
incorporation, and each of the Company and its Canadian Subsidiaries
has corporate power and authority to conduct its business as
currently conducted and described in the Prospectus and is not
discontinued and has not been dissolved;
(ii) The Offered Securities have been duly authorized by all
necessary corporate action of the Company, and have been issued by
the Company and are fully paid and nonassessable;
(iii) The execution and delivery of this Agreement have been
duly authorized by the Company under the law of the Province of
Ontario and the federal laws of Canada applicable therein and this
Agreement constitutes a valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to such standard
exceptions as counsel to the Company and the Underwriters mutually
agree;
(iv) To the best of such Counsel's knowledge, no order
directed to any document incorporated by reference in the Prospectus
has been issued and remains in effect, or is threatened to be
issued, by the SEC or a Canadian Securities Regulator;
(v) To the best of such Counsel's knowledge, other than as
disclosed in the Prospectus neither the Company nor any of its
properties in Canada is involved in any litigation, arbitration or
legal proceedings which would individually or in the aggregate have
a Material Adverse Effect, nor is there any such litigation,
arbitration or legal proceedings pending or threatened;
(vi) The statements set forth under the caption "Description
of Share Capital" in the Basic Prospectus and the Canadian
Prospectus, insofar as they purport to constitute a summary of
certain terms of the Offered Securities, fairly summarize in all
material respects the matters referred to therein;
(vii) The issue and sale of the Offered Securities by the
Company pursuant to this Agreement and the performance by the
Company of its obligations pursuant to this Agreement do not
conflict with or constitute a breach of or default under (A) the
constating documents or by-laws of the Company, or (B) any of the
agreements to which the Company is a party which are filed as an
-17-
exhibit to, or incorporated by reference into, the Registration
Statement or the Prospectus, other than a conflict, breach or
default which would not have a Material Adverse Effect;
(viii) The submission by the Company to the non-exclusive
jurisdiction of the federal and state courts in the Borough of
Manhattan in The City of New York, contained in Section 17 of this
Agreement, would be recognized and given effect to by the courts of
the Province of Ontario as a valid submission to the jurisdiction of
such courts, provided that the provisions of Section 17 respecting
service of process on the Company are duly complied with.
(ix) The Company is a "reporting issuer" or equivalent in each
of the Qualifying Provinces where such concept applies and does not
appear on any list of defaulting reporting issuers in any Qualifying
Province where the Canadian Securities Regulator therein maintains
such a list and makes such a list publicly available;
(x) No person has any agreement or option, or right or
privilege (whether pre-emptive or contractual) capable of becoming
an agreement or option, for the purchase, acquisition, subscription
or issuance of any of the unissued shares, warrants or other
securities of the Company except as otherwise described in the
Prospectus and other than: (i) issuances of stock options or
issuances of Common Shares upon exercise of stock options pursuant
to compensation arrangements existing on the date hereof or (ii)
issuances required in connection with earnout payments for
acquisitions prior to the date hereof or upon the exercise of any
outstanding securities or rights convertible, exchangeable or
exercisable for Common Shares;
(xi) The Company is eligible to distribute securities pursuant
to the POP Procedures;
(xii) The issue and sale of the Offered Securities by the
Company pursuant to this Agreement and the performance by the
Company of its obligations pursuant to this Agreement (x) do not
require the consent, approval or authorization of or filing or
registration with, any governmental body or regulatory authority in
Canada except for (i) required filings with relevant Canadian
securities regulatory authorities; and (ii) required approvals,
notices and filings to or with the TSX;
(xiii) All documents have been filed and all requisite
proceedings have been taken by the Company and all approvals,
permits, consents and authorizations of the Canadian Securities
Regulators under the Canadian Securities Laws have been obtained by
the Company to qualify the Offered Securities for distribution or
distribution to the public in each of the Qualifying Provinces
through investment dealers or brokers duly registered under the
applicable laws of the Qualifying Provinces who have complied with
such applicable laws;
-18-
(xiv) The statements set forth in the Prospectus under the
heading "Canadian Federal Income Tax Consequences for
Non-Residents", insofar as such statements purport to summarize
certain federal income tax laws of Canada, constitute a fair summary
of the principal Canadian federal income tax consequences of an
investment in the Offered Securities; and
(xv) The Offered Securities are qualified investments under
the Income Tax Act (Canada) and the Regulations thereunder for
trusts governed by registered retirement savings plans, registered
retirement income funds and deferred profit sharing plans
(collectively, "Deferred Income Plans") and trusts governed by
registered education savings plans, and, in addition, the Offered
Securities will not constitute "foreign property" for Deferred
Income Plans and other persons subject to tax under Part XI of the
Income Tax Act (Canada).
Such counsel shall further state that:
(A) the Canadian Prospectus or any document incorporated by
reference therein (in each case, except the Financial Statements and
schedules and other financial and related statistical data included
therein, as to which such counsel expresses no view), appeared on
their face to be appropriately responsive in all material respects
to the requirements of the Canadian Securities Laws applicable in
the Province of Ontario;
(B) no information has come to such counsel's attention that
causes him to believe that the Registration Statement (except the
Financial Statements and schedules and other financial and related
statistical data included therein, as to which such counsel
expresses no view) at the time it became effective, contained any
untrue statement of a material fact or omitted to state any material
fact necessary in order to make the statements therein not
misleading, or that the Prospectus (except as aforesaid) as of the
date of the Prospectus and as of the date of such opinion contained
or contains any untrue statement of a material fact or omitted or
omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided that, in each of (A) and
(B) above, counsel's opinion shall not extend to statements in or
omissions from the Prospectus based upon written information
furnished to the Company by any Underwriter.
(e) The Underwriters shall have received an opinion, dated such
Closing Date, of ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, special United States
counsel to the Company, that
(i) Each of the Company's U.S. Subsidiaries named on Schedule
B hereto has been duly organized under the laws of its jurisdiction
of incorporation, with corporate power and authority to conduct its
business as currently conducted and described in the Prospectus and
is not discontinued and has not been dissolved;
-19-
(ii) The statements set forth in the Prospectus Supplement
under the caption "U.S. Federal Income Tax Consequences," insofar as
such statements purport to summarize the principal federal income
tax consequences of an investment in the Offered Securities,
provide, subject to the qualifications and limitations stated
therein, a fair summary of such provisions;
(iii) The issue and sale of the Offered Securities pursuant to
this Agreement and the performance by the Company of its obligations
under this Agreement (x) do not require any consent, approval,
authorization, registration or qualification of or with, any
governmental authority of the United States, except for such as have
been obtained or effected under the Act, the Exchange Act and the
Rules and Regulations of the NASDAQ (but we express no opinion as to
any consent, approval, authorization, registration or qualification
that may be required under state securities or blue sky laws);
(iv) The Registration Statement is effective under the Act
and, to the best of such Counsel's knowledge, no stop order with
respect thereto has been issued, or proceeding for that purpose has
been instituted or threatened, by the SEC;
(v) To the best of such Counsel's knowledge, no order directed
to any document incorporated by reference in the Prospectus has been
issued and remains in effect, or is threatened to be issued, by the
SEC or a Canadian Securities Regulator;
(vi) The Company is not and, after giving effect to the
offering and sale of the Offered Securities, will not be required to
be registered as an "investment company", as such term is defined in
the United States Investment Company Act of 1940, as amended;
(vii) Under the laws of the State of New York relating to
submission of personal jurisdiction, the Company has, pursuant to
Section 17 of the Agreement, validly appointed National Registered
Agents, Inc. as its authorized agent for the purposes described in
Section 17 of the Agreement; and
(viii) Assuming that the choice of the laws of the Province of
Ontario as the governing law of this Agreement has been made in good
faith and not with a view to avoiding the consequences of the laws
of any other relevant jurisdiction, such choice would, to the extent
such laws were specifically pleaded and proved as a fact by expert
evidence, be recognized and applied in an action brought before a
court of competent jurisdiction in the State of New York, and such
laws would accordingly be applied by such court to all issues which
under conflict of law rules in the State of New York are
characterized to be contract issues, except for such laws as such
court considered: (1) to be procedural in nature; (2) to be revenue,
penal, public or similar laws; and (3) the application of which
would be inconsistent with the public policy of the State of New
York.
-20-
Such counsel shall further deliver a statement to the effect that,
in the course of such counsel's acting as U.S. counsel to the Company in
connection with its preparation of the Registration Statement and the
Prospectus, based on such counsel's participation in conferences and
telephone conversations with representatives of the Company,
representatives of the independent public accountants for the Company,
representatives of the Underwriters and representatives of counsel for the
Underwriters, during which conferences and conversations the contents of
the Registration Statement and the Prospectus, portions of certain of the
documents incorporated by reference therein and related matters were
discussed, and such counsel's review of certain corporate records and
documents furnished to such counsel by the Company, such counsel advises
that (1) the Registration Statement (except the Financial Statements and
schedules and other financial and related statistical data included
therein, as to which such counsel express no view), at the time it became
effective, and the Prospectus (except as aforesaid), as of the date
thereof, appeared on their face to be appropriately responsive in all
material respects to the requirements of the Act and the Rules and
Regulations thereunder and (2) the documents incorporated by reference in
the Registration Statement and the Prospectus (except the Financial
Statements and the schedules and other financial and related statistical
data included therein, as to which such counsel expresses no view), as of
the respective dates of their filing with the SEC, appeared on their face
to be appropriately responsive in all material respects to the
requirements of the Act and the Rules and Regulations thereunder, and no
information has come to such counsel's attention (A) that causes such
counsel to believe that the Registration Statement (except the Financial
Statements and schedules and other financial and related statistical data,
included therein, as to which such counsel expresses no view) at the time
it became effective contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the
statements therein not misleading, or (B) that the Prospectus (except as
aforesaid) as of the date of the Prospectus and as of the date of such
opinion contained or contains any untrue statement of a material fact or
omitted or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, provided that, counsel's letter shall not
extend to statements in or omissions from the Prospectus based upon
written information furnished to the Company by any Underwriter.
(f) An opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Thomson Apps & Dellelce, LLP,
Canadian counsel to the Underwriters, dated such Closing Date, in form and
substance satisfactory to the Underwriters, acting reasonably, with
respect to such matters as the Underwriters may reasonably request
relating to the distribution of the Offered Securities.
(g) An opinion of White & Case LLP, U.S. counsel to the
Underwriters, dated such Closing Date, in form and substance satisfactory
to the Underwriters, acting reasonably, with respect to such matters as
the Underwriters may reasonably request relating to the distribution of
the Offered Securities.
(h) The Underwriters shall have received a certificate, dated such
Closing Date, of either (x) both the Chief Executive Officer and the Chief
Financial Officer, or (y) of one of the aforesaid officers and any one of
the President, Corporate Secretary, the Controller, the Treasurer, any
Assistant Secretary, any Assistant Controller or any
-21-
Assistant Treasurer of the Company in which such officers, to the best of
their knowledge after reasonable investigation, shall state on behalf of
the Company as to the accuracy in all material respects of the
representations and warranties not qualified as to materiality or Material
Adverse Effect and the accuracy in all respects of the representations and
warranties qualified as to materiality or Material Adverse Effect on the
part of the Company herein, that the Company has complied in all material
respects with all agreements and satisfied all conditions on its part to
be performed or satisfied hereunder at or prior to such Closing Date, and
that, subsequent to the date of the most recent consolidated financial
statements included or incorporated in the Prospectus there has been no
change, nor any development or event involving a prospective change which
would result in a Material Adverse Effect except as set forth in or
contemplated by the Prospectus or as described in such certificate.
(i) The Underwriters shall have received a letter, dated such
Closing Date, of PricewaterhouseCoopers LLP which meets the requirements
of subsection (b) of this Section, except that the specified date referred
to in such subsection will be a date not more than three days prior to
such Closing Date for the purposes of this subsection.
(j) Desjardins, on behalf of the Underwriters, shall have received,
on or prior to the date of this Agreement, lockup letters from Claridge
Israel LLC and each of the directors and officers of the Company named on
Schedule D hereto. The form of such lockup letter is attached as Schedule
E hereto.
(k) The Underwriters shall have received (i) a certificate of
compliance issued by Industry Canada in respect of the Company; (ii) a
certificate of compliance, a certificate of status or the equivalent
issued by the applicable regulatory authority in respect of each of the
Subsidiaries; and (iii) a reporting issuer certificate issued by each of
the Canadian Securities Regulators in respect of the Company.
The Company will furnish the Underwriters with such conformed copies
of such opinions, certificates, letters and documents as the Underwriters
reasonably request. The Representatives may in their sole discretion waive
on behalf of the Underwriters compliance with any conditions to the
obligations of the Underwriters hereunder.
7. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each Underwriter,
its partners, directors and officers and each person, if any, who controls
such Underwriter within the meaning of Section 15 of the Act, against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Securities Laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
-22-
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and will
reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the
Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter through either of the Representatives specifically for
use therein;
(ii) any order made or inquiry, investigation or proceeding
(formal or informal) commenced or threatened by any officer or
official of the SEC or any Canadian Securities Regulator or any
other regulatory authority based upon the circumstances described in
clause (i) above which operates to prevent or restrict trading in or
distribution of the Offered Securities in any of the Qualifying
Provinces or in the United States;
(iii) the breach of any representations, warranties or
covenants of the Company contained herein or delivered pursuant
hereto; or
(iv) the non-compliance or alleged non-compliance by the
Company with any requirement of applicable Securities Laws in
connection with the transactions contemplated herein, including,
without limitation, non-compliance with any statutory requirement to
make any document available for inspection.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and any person controlling the Company to the same
extent as the foregoing indemnity from the Company to each Underwriter,
but only with reference to information relating to such Underwriter
furnished in writing by such Underwriter expressly for use in the
Registration Statement, the Prospectus, any amendment or supplement
thereto, or any related preliminary prospectus.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under subsection (a) or (b) above, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party otherwise than under subsections (a)
and (b) above. In case any such action is brought against any indemnified
party and it notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such
-23-
indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after notice
from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable
to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall be liable for any
settlement of any action contemplated by subsection (a) or (b) above
effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if
there be a final judgment for the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement
or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party (which consent shall not be unreasonably
withheld), effect any settlement of any pending or threatened action in
respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party
unless such settlement (i) includes an unconditional release of such
indemnified party from all liability on any claims that are the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault or failure to act by or on behalf of any indemnified
party.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) above, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) above
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other
from the offering of the Offered Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company
on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities as well as any other equitable considerations; provided,
however, that (i) in no case shall the Underwriters be responsible, in the
aggregate, for any amount in excess of the purchase discount or commission
applicable to the Offered Securities, as set forth in this Agreement and
(ii) no person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. Benefits
received by the Company shall be deemed to be equal to the sum of the
total net proceeds from the offering (before deducting expenses) of the
Offered Securities. Benefits received by the Underwriters shall be deemed
to be equal to the total Underwriting Fee received in connection with the
offering of the Offered Securities. The relative fault 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 Company or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first sentence
of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of
this subsection (d). Notwithstanding the provisions of this subsection
(d), no Underwriter shall be required to
-24-
contribute any amount in excess of the amount by which the total price at
which the Offered Securities sold by it exceeds the amount of any damages
which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
The Underwriters' obligations in this subsection (d) to contribute are
several in proportion to their respective purchase obligations and not
joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act or the Exchange
Act; and the obligations of the Underwriters under this Section shall be
in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to
each person, if any, who controls the Company within the meaning of the
Act or the Exchange Act.
8. Default of Underwriters. Subject to the terms and conditions hereof,
the obligation of the Underwriters to purchase the Offered Securities shall be
several and not joint. If at the Closing Time any of the Underwriters fails to
purchase its applicable percentage of the Offered Securities, the other
Underwriters shall have the right, but shall not be obligated to purchase some
or all of the Offered Securities which would otherwise have been purchased by
the Underwriter which fails to purchase. In the event that such right is not
exercised, the Underwriters which are able and willing to purchase shall be
relieved of all obligations to the Company on submission to the Company of
reasonable evidence of its ability and willingness to fulfill its obligations
hereunder at the Closing Time.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation, or statement as to the results thereof, made by or on behalf of
any Underwriter, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If this Agreement is terminated pursuant
to Section 6 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Company and the Underwriters pursuant to Section 7 shall
remain in effect and if any Offered Securities have been purchased hereunder the
representations and warranties in Section 2 and all obligations under Section 5
shall remain in effect. If the purchase of the Offered Securities by the
Underwriters is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 6, the Company will reimburse
the Underwriters for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by them in connection with the
offering of the Offered Securities.
-25-
10. Notice. Any notice or other communication to be given hereunder shall
be addressed as follows:
If to the Corporation:
Stake Technology Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Financial Officer
with copies to:
▇▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to the Underwriters, each of:
Desjardins Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇
1 First Canadian Place
4th Floor, P.O. Box 150
Toronto, Ontario
M5X 1H3
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
-26-
With copies to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ Apps Dellelce, LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, P.O. Box 4
Toronto, Ontario
M5X 1A9
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ Pocaluyko
White & Case LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the controlling
persons referred to in Section 7, and no other person will have any right or
obligation hereunder.
12. Representation of Underwriters. The Representatives will act for the
several Underwriters in connection with this purchase, and any action under this
Agreement taken by the Representatives will be binding upon all the
Underwriters.
13. Entire Agreement. This Agreement contains the entire understanding of
the parties hereto with respect to the subject matter contained herein and
supersedes the Engagement Letter dated June 10, 2003 between the Representatives
and the Company (the "Engagement Letter") as well as all other prior agreements
and understandings, oral and written, with respect thereto, other than Section
15 of the Engagement Letter.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement. The
transmission by facsimile of a copy of the execution page hereof reflecting the
execution of this Agreement by any party hereto shall be effective to evidence
that party's intention to be bound by this Agreement and that party's agreement
to the terms, provisions and conditions hereof, all without the necessity of
having to produce an original copy of such execution page.
15. Severability. If any provision of this Agreement is determined to be
void or unenforceable in whole or in part, it shall be deemed not to affect or
impair the validity of any other provision of this Agreement and such void or
unenforceable provision shall be severable from this Agreement.
-27-
16. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE PROVINCE OF ONTARIO AND THE FEDERAL LAWS OF
CANADA APPLICABLE THEREIN, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS TO
THE EXTENT SUCH RULES WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.
17. AGENT FOR SERVICE. The Company hereby submits to the non-exclusive
jurisdiction of the Federal and state courts in the Borough of Manhattan in The
City of New York in any suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby. The Company irrevocably
appoints National Registered Agents, Inc., as its authorized agent in the
Borough of Manhattan in The City of New York upon which process may be served in
any such suit or proceeding, and agrees that service of process upon such agent,
and written notice of said service to the Company, by the person serving the
same to the address provided in Section 10, shall be deemed in every respect
effective service of process upon the Company, as the case may be, in any such
suit or proceeding. The Company further agrees to take any and all action as may
be necessary to maintain such designation and appointment of such agent in full
force and effect for a period of seven years from the date of this Agreement.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
-28-
If the foregoing is in accordance with the Underwriters' understanding of
our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement among the Company and the
several Underwriters in accordance with its terms.
Very truly yours,
STAKE TECHNOLOGY LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman & Chief Executive Officer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President and CFO
The foregoing Underwriting Agreement is hereby confirmed and accepted as
of the date first above written.
DESJARDINS SECURITIES INC.
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ INC.
Acting on behalf of themselves and as the Representatives of the several
Underwriters.
By DESJARDINS SECURITIES INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
By BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ INC.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice-President
-29-
SCHEDULE A
------------------------------------------------------------ ---------------------------------------------------------
UNDERWRITER AMOUNT OF FIRM SECURITIES
------------------------------------------------------------ ---------------------------------------------------------
Desjardins Securities Inc. 2,181,550
------------------------------------------------------------ ---------------------------------------------------------
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc. 2,181,550
------------------------------------------------------------ ---------------------------------------------------------
TD Securities Inc. 1,817,900
------------------------------------------------------------ ---------------------------------------------------------
Miller, Johnson, Steichen, Kinnard, Inc. 273,000
------------------------------------------------------------ ---------------------------------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ Limited 273,000
------------------------------------------------------------ ---------------------------------------------------------
Octagon Capital Corporation 273,000
------------------------------------------------------------ ---------------------------------------------------------
Total: 7,000,000
------------------------------------------------------------ ---------------------------------------------------------
SCHEDULE B
SUBSIDIARIES
Province /State
Company Status of Incorporation
------- ------ ----------------
1108176 Ontario Limited Stake owns: Ontario
-----------
100 Common Shares
(100% of the issued and outstanding)
800,000 Class "A" Preferred Shares (100% of
the issued and outstanding)
▇▇▇▇▇ ▇▇▇▇▇▇ owns:
------------------
199,168 Class "B" Preferred Shares (100% of
the issued and outstanding)
Temisca Inc. Stake owns: Quebec
-----------
15,401,866 Common Shares (100% of the issued
and outstanding)
175,000 Class "A" Preferred Shares
(100% of the issued and outstanding)
93,547 Class "H" Preferred Shares
(63% of the issued and outstanding)
Other Shareholders own:
-----------------------
54,788 Class "H" Preferred Shares
(27% of the issued and outstanding)
4157656 Canada Inc. (Wholly Owned Subsidiary) Canada
1511046 Ontario Inc. (Wholly Owned Subsidiary) Ontario
Stake Tech LP (Wholly Owned Subsidiary) Delaware
3060385 Nova Scotia Company (Wholly Owned Subsidiary) Nova Scotia
Stake Technology LLC (Wholly Owned Subsidiary) Delaware
Sunrich Food Group Inc. (Wholly Owned Subsidiary) Minnesota
Northern Food and Dairy Inc. (Wholly Owned Subsidiary) Minnesota
Nordic Aseptic, Inc. (Wholly Owned Subsidiary) Minnesota
Sunrich, Inc. (Wholly Owned Subsidiary) Minnesota
Opta Food Ingredients, Inc. (Wholly Owned Subsidiary) Delaware
Canadian Harvest Process Ltd. (Wholly Owned Subsidiary) Canada
Opta Food Ingredients Canada, Ltd. (Wholly Owned Subsidiary) Canada
Virginia Materials Inc. (Wholly Owned Subsidiary) Delaware
International Materials & Supplies, Inc. (Wholly Owned Subsidiary) Virginia
4157648 Canada Inc.
(formally Simply Organic Co. Ltd.) (Wholly Owned Subsidiary) Canada
632100 B.C. Ltd. (Wholly Owned Subsidiary) B.C.
Drive Organics Corporation (Wholly Owned Subsidiary) B.C.
Stake owns:
-----------
3,130,705 Common Shares
B.C.
Integrated Drying Systems Inc. Other Shareholders Own
----------------------
197,778 Preferred Shares
Kettle Valley Dried Fruits Ltd. (Wholly Owned Subsidiary) B.C.
Kettle Valley Dried Fruits Inc. (Wholly Owned Subsidiary) Washington
Sunrich Valley Inc. (Wholly Owned Subsidiary) Canada
Stake Owns:
-----------
Midwestern Coal Slag Co. LLC 50% of the issued and outstanding Common South Carolina
Shares (no other issued securities)
Stake Owns:
-----------
Easton Minerals Limited 32% of the issued and outstanding Common B.C.
Shares (no other issued securities)
SCHEDULE C
Outstanding Convertible and Exchangeable Securities and
Other Rights to Acquire Securities of the Company
I Outstanding Warrants and Units as per July 31, 2003
------------------------ ---------------------- --------------------- ----------------- ---------------------
Certificate No. Issued to No. of Warrants Exercise Price Expiry Date
------------------------ ---------------------- --------------------- ----------------- ---------------------
W1 PP#1 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 106,379 $1.75 March 31, 2004
------------------------ ---------------------- --------------------- ----------------- ---------------------
The Equity Group
W2 PP#1 (▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇) 85,106 $1.75 March 31, 2004
------------------------ ---------------------- --------------------- ----------------- ---------------------
Polaris Partners
W9 PP#1 (▇▇▇▇▇ ▇▇▇▇▇▇▇) 90,909 $1.75 March 31, 2004
------------------------ ---------------------- --------------------- ----------------- ---------------------
W16 PP#1 Roytor & Co. 16,150 $2.40 March 31, 2004
------------------------ ---------------------- --------------------- ----------------- ---------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ for
▇▇▇▇▇▇▇▇ (▇▇▇▇▇
▇▇▇ ▇▇#▇ ▇▇▇▇▇▇▇▇) 125,000 $2.40 March 31, 2004
------------------------ ---------------------- --------------------- ----------------- ---------------------
W20 PP#1 ▇▇▇▇▇▇ ▇▇▇▇ 5,000 $2.40 March 31, 2004
------------------------ ---------------------- --------------------- ----------------- ---------------------
------------------------ ---------------------- --------------------- ----------------- ---------------------
W7 PP#2 Eleuterra Investments 37,500 $2.40 March 31, 2004
------------------------ ---------------------- --------------------- ----------------- ---------------------
Casurina Limited
W8 PP#2 (▇▇▇▇▇ ▇▇▇▇▇▇) 87,500 $2.40 March 31, 2004
------------------------ ---------------------- --------------------- ----------------- ---------------------
AGF Growth Fund (▇▇▇
W9 PP# 2 ▇▇▇▇▇▇▇▇▇▇▇) 234,850 $2.40 March 31, 2004
------------------------ ---------------------- --------------------- ----------------- ---------------------
IG AGF Cdn
Diversified (▇▇▇
W11 PP#2 ▇▇▇▇▇▇▇▇▇▇▇) 49,800 $2.40 March 31, 2004
------------------------ ---------------------- --------------------- ----------------- ---------------------
GWL Growth Equity
W12 PP#2 (▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇) 22,600 $2.40 March 31, 2004
------------------------ ---------------------- --------------------- ----------------- ---------------------
GWL London Life (▇▇▇
W13 PP#2 ▇▇▇▇▇▇▇▇▇▇▇) 20,450 $2.40 March 31, 2004
------------------------ ---------------------- --------------------- ----------------- ---------------------
Claridge Israel 2,250,000 $2.40 September 30, 2004
------------------------ ---------------------- --------------------- ----------------- ---------------------
Claridge Israel 250,000 $3.25 November 30, 2004
------------------------ ---------------------- --------------------- ----------------- ---------------------
------------------------ ---------------------- --------------------- ----------------- ---------------------
Desjardins
Securities (▇▇▇▇
▇▇▇▇▇▇) (1) 150,000 $2.00 September 28, 2003
------------------------ ---------------------- --------------------- ----------------- ---------------------
Desjardins
Securities (▇▇▇▇
▇▇▇▇▇▇) (1) 112,500 $2.40 September 28, 2004
------------------------ ---------------------- --------------------- ----------------- ---------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 375,000 $1.50 September 15, 2005
------------------------ ---------------------- --------------------- ----------------- ---------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 100,000 $1.50 September 15, 2005
------------------------ ---------------------- --------------------- ----------------- ---------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (2) 17,500 $1.70 February 28, 2006
------------------------ ---------------------- --------------------- ----------------- ---------------------
▇▇▇ ▇▇▇▇▇▇▇ (2) 17,500 $1.70 February 28, 2006
------------------------ ---------------------- --------------------- ----------------- ---------------------
Total 4,153,744
------------------------ ---------------------- --------------------- ----------------- ---------------------
(1) Has a right to acquire these warrants and shares in accordance with
an Agreement with Stake pursuant to the private placements completed
in 2001.
(2) ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ based on achieving certain predetermined profit
targets were eligible to receive up to an additional 140,000
warrants (35,000 per year) during the period 2002 to 2005. No
additional warrants were issued for 2002.
II Outstanding Options as per July 31, 2003
---------------------------------------- ----------------- --------------------
Plan Total outstanding Price Range
---------------------------------------- ----------------- --------------------
---------------------------------------- ----------------- --------------------
2003 stock purchase plan 0 0
---------------------------------------- ----------------- --------------------
---------------------------------------- ----------------- --------------------
2002 Option plan 901,330 $2.15 - $5.24
---------------------------------------- ----------------- --------------------
2001 Option plan 476,050 $1.06 - $2.10
---------------------------------------- ----------------- --------------------
1999 Option plan 678,760 $1.06 - $2.10
---------------------------------------- ----------------- --------------------
1998 Option plan 38,200 $1.06 - $2.10
---------------------------------------- ----------------- --------------------
1996 Option plan 53,600 $1.31 - $2.10
---------------------------------------- ----------------- --------------------
1993 Option plan 24,700 $1.31
---------------------------------------- ----------------- --------------------
Total Option and Purchase plans 2,172,640
---------------------------------------- ----------------- --------------------
III Outstanding Debenture
--------------------- ----------------- --------------------- ------------------
Conversion
Conversion price Effective Date &
Issued to Debenture $ Amt and shares Expiry Date
--------------------- ----------------- --------------------- ------------------
--------------------- ----------------- --------------------- ------------------
Claridge Israel LLC USD $5,000,000 $3.00 / sh December 1, 2003
1,666,667 November 30, 2004
--------------------- ----------------- --------------------- ------------------
SCHEDULE D
Officers and Directors Required to Provide Lock-Up Letters Pursuant
to Section 6(l)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman of the Board and Chief Executive Officer
▇▇▇▇▇ ▇▇▇▇▇
President, Environmental Industrial Group
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President, Specialty Food Ingredients Group
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Executive Vice President and Chief Financial Officer
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Director and President, Grains and Soy Products Group
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Director
▇▇▇▇▇ (▇▇▇▇) ▇▇▇▇▇▇▇▇
Consultant, Food Group
▇▇▇▇▇ ▇. Ing
Secretary and Director
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Vice President Finance, Corporate Controller and Treasurer
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Director
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Director
SCHEDULE E
August 12, 2003
Desjardins Securities Inc.
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc.
c/▇ ▇▇▇▇▇▇▇▇▇▇ Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Dear Sirs:
As an inducement to the Underwriters to execute an underwriting agreement
(the "Underwriting Agreement"), pursuant to which an offering will be made of
common shares (the "Offered Common Shares") of Stake Technology Ltd., and any
successor (by merger or otherwise) thereto, (the "Company"), the undersigned
hereby agrees that from the date hereof and until 90 days after the later of the
respective offering or closing dates set forth on the final prospectus or final
prospectus supplements (as the case may be) used to sell the Offered Common
Shares (the "Offering Date") pursuant to the Underwriting Agreement to which you
are or expect to become parties, the undersigned will not offer, sell, contract
to sell, pledge or otherwise dispose of, directly or indirectly, any common
shares of the Company (the "Common Shares") or securities convertible into or
exchangeable or exercisable for, or entitling the holder to receive, any Common
Shares, enter into a transaction which would have the same effect, or enter into
any swap, hedge or other arrangement that transfers, in whole or in part, any of
the economic consequences of ownership of the Common Shares, whether any such
aforementioned transaction is to be settled by delivery of the Common Shares or
such other securities, in cash or otherwise, or publicly disclose the intention
to make any such offer, sale, pledge or disposition, or to enter into any such
transaction, swap, hedge or other arrangement, without, in each case, the prior
written consent of Desjardins Securities Inc. and BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc. In
addition, the undersigned agrees that, without the prior written consent of
Desjardins Securities Inc. and BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc., he will not, during the
period commencing on the date hereof and ending 90 days after the Offering Date,
make any demand for or exercise any right with respect to, the registration of
any Common Shares or any security convertible into or exercisable or
exchangeable for, or entitling the holder to receive, the Common Shares.
Any Common Shares received upon exercise of options granted to the
undersigned will also be subject to this Agreement. Notwithstanding the
foregoing, the undersigned may transfer the undersigned's Common Shares (i)
provided they were purchased on the open market, (ii) as a bona fide gift or
gifts, provided that the donee or donees thereof agree to be bound in writing by
the restrictions set forth herein, (iii) to any corporation controlled by the
undersigned or trust for the direct or indirect benefit of the undersigned or
the immediate family of the undersigned, provided in the case of a transfer to
any such trust that the trustee of the trust agrees to be bound in writing by
the restrictions set forth herein, and provided further, that any such transfer
shall not involve a disposition for value other than for the benefit of the
undersigned's immediate
family, or (iv) as pledges of Common Shares in connection with the purchase of
such Common Shares upon the exercise of stock options following termination of
employment or service with the Company, provided that the lender or lenders to
whom such Common Shares are pledged agree in writing to be bound by the
restrictions set forth herein. For purposes of this agreement, "immediate
family" shall mean any relationship by blood, marriage or adoption, not more
remote than first cousin.
In furtherance of the foregoing, the Company and its transfer agent and
registrar are hereby authorized to decline to make any transfer of Common Shares
if such transfer would constitute a violation or breach of this Agreement.
This Agreement shall be binding on the undersigned and the successors,
heirs, personal representatives and assigns of the undersigned. This Agreement
shall lapse and become null and void if the Offering Date shall not have
occurred on or before September 15, 2003.
Very truly yours,
--------------------------------------
Name:
Title:
-2-
