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SPECIAL WARRANT PURCHASE AGREEMENT
BETWEEN
SOFTQUAD SOFTWARE, LTD.
(THE COMPANY)
AND
THOMSON KERNAGHAN & CO. LIMITED, AS AGENT
(THE AGENT)
DATED AS OF MAY 18, 2000
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SPECIAL WARRANT PURCHASE AGREEMENT
This Special Warrant Purchase Agreement (this "Agreement") is made and
entered into as of May 19, 2000 (the "Effective Date") between SoftQuad Software
Ltd. (the "Company"), a Delaware corporation, and Thomson Kernaghan & Co.
Limited (the "Agent"), an Ontario, Canada, corporation, as agent for certain
purchasers (the "Purchasers").
Background
The Company has authorized the issuance, sale, and delivery of 1,000,000
Special Warrants in the form of Exhibit B attached to this Agreement (the
"Special Warrants") to purchase 1,000,000 shares (the "Shares") of the Company's
Common Stock, par value $0.001 ("Common Stock") at a price per Special Warrant
of $2.50, in currency of the United States of America, for a total purchase
price of $2,500,000.00. The Agent wishes to purchase the Special Warrants for
the account of the Purchasers upon the terms and conditions stated in this
Agreement. The Agent is purchasing the Special Warrants for the account of the
Purchasers in reliance upon the exemption from the registration requirements of
Section 5 of the U.S. Securities Act of 1933, as amended (the "Securities Act"),
and the safe harbor afforded by Rule 903 promulgated by the U.S. Securities and
Exchange Commission (the "SEC").
In connection with the issuance and sale of the Special Warrants to the
Agent, the Company has authorized the issuance and delivery of a warrant in the
form of Exhibit C attached to this Agreement (the "Agent's Warrant") to Thomson
Kernaghan & Co. Limited to purchase 100,000 shares of Common Stock at $2.50 per
share.
Agreement
For and in consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Purchaser hereby agree as
follows:
Section 1. Common Stock.
Section 1.1. Issuance and Sale of the Special Warrants and the Agent's
Warrant.
The Company agrees (i) to issue and sell the Special Warrants to the Agent
for the Purchasers' account and the Agent agrees to purchase the Special
Warrants from the Company for the Purchasers' account, at the Closing, for the
Purchase Price of US$2,500,000; and (ii) to issue and deliver the Agent's
Warrant to the Agent.
Section 1.2. Closing.
The closing of the purchase and sale of the Special Warrants (the
"Closing") shall take place at the offices of Thomson Kernaghan & Co. Limited,
Tenth Floor, 365 Bay Street, Toronto, Ontario M5H 2V2, Canada, at 3:00pm,
Toronto time, on Thursday, May 19, 2000 (the "Closing Date"), or on such other
date or such other time or place as the parties may agree.
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Section 1.3 Deliveries at Closing
At the Closing, the Company shall deliver to the Agent:
(a) this Agreement, executed by the Company;
(b) a certificate for the Special Warrants, registered in the Purchasers'
name or in the Agent's name as nominee, as the Agent may specify; and
(c) the Registration Rights Agreement (defined in Section 4.9 below),
executed by the Company, in substantially the form of Exhibit A
hereto.
At the Closing, the Company shall also deliver the Agent's Warrant to the
Agent.
Section 2. Purchasers' Representations and Warranties
The Agent represents and warrants with respect to the Purchasers:
Section 2.1. Investment Purpose
The Purchasers are acquiring the Special Warrants, for their own account
for investment only and not with a view towards, or for resale in connection
with, the public sale or distribution thereof, provided however, that by making
the representations herein, the Purchasers do not agree to hold any Special
Warrants or the underlying Shares for any minimum or other specific term. The
Agent acknowledges that the Special Warrants may not be resold in the United
States, or to or for the account of a U.S. person as defined by SEC Rule 902(k),
except pursuant to an effective registration statement under the Securities Act
or after the expiration of the one-year distribution compliance period provided
in SEC Rule 903(b)(3)(iii)(A).
Section 2.2. Accredited Purchaser Status
Each Purchaser is an "accredited investor" as that term is defined in Rule
501(a)(3) of Regulation D of the SEC.
Section 2.3. Reliance on Regulation S Exemption
The Purchasers understand that the Special Warrants are being offered and
sold to it in reliance on the exemption from the registration requirements of
Section 5 of the Securities Act for offshore transactions as defined in SEC Rule
902(h), and that the Company is relying in part upon the truth and accuracy of,
and the Purchasers' compliance with, the representations, warranties,
agreements, acknowledgments, and understandings of the Purchasers set forth
herein in order to determine the availability of such exemptions and the
eligibility of the Purchasers to acquire such Special Warrants. With respect to
that exemption, the Agent further represents and warrants to the Company that:
(a) No Purchaser is a U.S. Person as defined in SEC Rule 902(k).
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(b) The offer to sell the Special Warrants to the Purchasers was not made
in the United States, and was made in Toronto, Ontario.
(c) The Purchasers' buy orders for the Special Warrants were made outside
the United States, and were made in Toronto, Ontario.
(d) The Purchasers have complied with all of the conditions required of
then by SEC Rule 903(b)(3).
Section 2.4. Information
The Purchasers and their advisors, if any, have been furnished with all
materials relating to the proposed business, financial condition, and operations
of the Company and materials relating to the offer and sale of the Special
Warrants, that have been requested by the Purchasers. The Purchasers and their
advisors, if any, have been afforded the opportunity to ask questions of the
Company. Neither such inquiries nor any other due diligence investigations
conducted by the Purchasers or their advisors, if any, or their representatives
shall modify, amend, or affect the Purchasers' right to rely on the Company's
representations and warranties contained in Section 3 below. The Purchasers
understand that their investment in the Special Warrants involves a high degree
of risk. The Purchasers have sought such accounting, legal, and tax advice as it
has considered necessary to make an informed investment decision with respect to
their acquisition of the Special Warrants.
Section 2.5. No Governmental Review
The Purchasers understand that no United States federal or state agency or
any other government or governmental agency has passed on or made any
recommendation or endorsement of the Special Warrants, or the fairness or
suitability of the investment in the Special Warrants, nor have such authorities
passed upon or endorsed the merits of the offering of the Special Warrants.
Section 2.6. Authorization Enforcement
This Agreement has been duly and validly authorized, executed, and
delivered by the Agent on behalf of the Purchasers and is a valid and binding
agreement of the Purchasers severally enforceable in accordance with its terms,
subject as to enforceability to general principles of equity and to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation, and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
Section 2.7. Organization
The Agent is a corporation organized under the laws of the Province of
Ontario, Canada.
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Section 2.8. No Scheme to Evade Registration.
The acquisition of the Special Warrants is not a transaction (or any
element of a series of transactions) that is part of a plan or scheme by the
Purchasers to evade the registration provisions of the Securities Act.
Section 3. Representations And Warranties Of The Company
The Company represents and warrants to the Agent and the Purchasers that:
Section 3.1. Organization and Qualification
The Company is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted. The Company is not qualified as a foreign corporation to do business
in any other jurisdiction.
Section 3.2. Authorization, Enforcement, Compliance with Other Instruments.
(a) the Company has the requisite corporate power and authority to enter
into and perform this Agreement and to issue the Special Warrants;
(b) the execution and delivery of this Agreement by the Company, and the
consummation by it of the transactions contemplated hereby, including
without limitation the issuance of the Special Warrants, have been
duly authorized by the Company's Board of Directors and no further
consent or authorization is required by the Company, its Board of
Directors or its stockholders;
(c) this Agreement has been duly executed and delivered by the Company and
the persons signing on behalf of the Company have full power and
authority to do so; and
(d) this Agreement constitutes the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation, or similar laws relating to, or affecting
generally, the enforcement of creditors' rights and remedies.
Section 3.3. Capitalization
Immediately prior to Closing, the authorized capital stock of the Company
consisted of 50,000,000 shares, divided into (i) 25,000,000 shares of Common
Stock, $0.001 par value; and (ii) 25,000,000 shares of Preferred Stock, $0.001
par value, of which (a) 1,473,405 shares have been designated Class A
Convertible Preferred Stock, and (b) 1,722,222 shares have been designated Class
B Convertible Preferred Stock. No shares of the Company's capital stock are
subject to preemptive rights or any other similar rights.
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Section 3.4. Issuance of Special Warrants
The Special Warrants are duly authorized and, upon issuance in accordance
with the terms hereof, shall be validly issued. The Special Warrants are
"restricted securities" as defined by SEC rules, and may be transferred,
assigned or resold by the Purchaser only in accordance with the Securities Act
and the SEC rules promulgated thereunder.
Section 3.5. No Conflicts
The execution, delivery, and performance of this Agreement by the Company,
and the consummation by the Company of the transactions contemplated hereby and
thereby, will not (a) result in a violation of the Certificate of Incorporation,
any Certificate of Designation applicable to any Preferred Stock of the Company,
or the Bylaws of the Company or (b) conflict with, constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration, or
cancellation of, any agreement, indenture, or instrument to which the Company is
a party, or result in a violation of any law, rule, regulation, order, judgment,
or decree (including federal and state securities laws and regulations)
applicable to the Company or by which any property or asset of the Company is
bound or affected. The Company is not in violation of any term of, or in default
under, its Certificate of Incorporation or Bylaws, or any material contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree, or
order or any statute, rule, or regulation applicable to the Company. The
business of the Company is not being conducted and shall not be conducted in
violation of any law, ordinance, or regulation of any governmental entity.
Except as specifically contemplated by this Agreement and as required under the
Securities Act and any applicable state securities laws, the Company is not
required to obtain any consent, authorization, or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver, and perform any of its obligations under or contemplated by
this Agreement in accordance with the terms hereof. All consents,
authorizations, orders, filings, and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof. The Company is unaware of any facts or
circumstances which might give rise to any of the foregoing.
Section 3.6. Absence of Certain Changes
Since the date of the Company's opening balance sheet, there has been no
material adverse change and no material adverse development in the business,
properties, operations, financial condition, results of operations, or prospects
of the Company. The Company has not taken any steps, and does not currently
expect to take any steps, to seek protection pursuant to any bankruptcy law nor
does the Company have any knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy proceedings.
Section 3.7. Absence of Litigation
There is no action, suit, proceeding, inquiry, or investigation before or
by any court, public board, government agency, self-regulatory organization, or
body pending or, to the
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knowledge of the Company, threatened against or affecting the Company, in which
an unfavorable decision, ruling or finding would (a) have a material adverse
effect on the transactions contemplated hereby, (b) adversely affect the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under this Agreement, or any of the other documents
contemplated herein, or (c) have a material adverse effect on the business,
operations, properties, financial condition, or results of operation of the
Company.
Section 3.8. Purchase of Special Warrants
The Company acknowledges and agrees that the Agent is acting solely in the
capacity of an agent for the account of the Purchasers with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that the Agent is not acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to this Agreement, or the
transactions contemplated herein. The Company further represents to the
Purchasers that the Company's decision to enter into this Agreement has been
based solely on the independent evaluation by the Company and its
representatives.
Section 3.9. No Undisclosed Events, Liabilities, Developments, or
Circumstances
No event, liability, development, or circumstance has occurred or exists,
or is contemplated to occur, with respect to the Company or its businesses,
properties, prospects, operations, or financial condition, which could be
material but which has not been publicly announced or disclosed in writing to
the Purchaser.
Section 3.10. No General Solicitation
Neither the Company, nor any of its affiliates, nor any person acting on
its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) in
connection with the offer or sale of the Special Warrants.
Section 3.11. No Integrated Offering
Neither the Company, nor any of its affiliates, nor any person acting on
its or their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would require registration of the Special Warrants under the Securities Act or
cause this offering of the Special Warrants to be integrated with prior
offerings by the Company for purposes of the Securities Act or any applicable
stockholder approval provisions.
Section 3.12. Internal Accounting Controls
The Company maintains a system of internal accounting controls sufficient
to provide reasonable assurance that (a) transactions are executed in accordance
with management's general or specific authorizations, (b) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (c) access to assets is permitted only in accordance with
management's
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general or specific authorization, and (d) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
Section 3.13. No Materially Adverse Contracts, Etc.
The Company is not subject to any charter, corporate, or other legal
restriction, or any judgment, decree, order, rule, or regulation which in the
judgment of the Company's officers has, or is expected in the future to have, a
material adverse effect on the business, properties, operations, financial
condition, results of operations, or prospects of the Company. The Company is
not a party to any contract or agreement which in the judgment of the Company's
officers has, or is expected to have, a material adverse effect on the business,
properties, operations, financial condition, results of operations, or prospects
of the Company.
Section 3.14. Tax Status
The Company has made or filed all federal and state income and all other
tax returns, reports, and declarations required by any jurisdiction to which it
is subject (unless and only to the extent that the Company has set aside on its
books provisions reasonably adequate for the payment of all unpaid and
unreported taxes), and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports, and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports,
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
Section 3.15. Certain Transactions
Except for arm's length transactions pursuant to which the Company makes
payments in the ordinary course of business upon terms no less favorable than
the Company could obtain from third parties, none of the officers, directors, or
employees of the Company is presently a party to any transaction with the
Company (other than for services as employees, officers, and directors),
including any contract, agreement, or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director, or such employee or, to the knowledge of the Company, any corporation,
partnership, trust, or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee, or
partner.
Section 3.16. Fees and Rights of First Refusal
The Company is not obligated to offer the securities offered hereunder on a
right of first refusal basis or otherwise to any third parties including, but
not limited to, current or former shareholders of the Company, underwriters,
brokers, agents, or other third parties. The Company is not obligated to pay any
commission or fee in connection with the issuance and sale of the Special
Warrants for which the Agent or any Purchaser is or may become liable.
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Section 3.17. Regulation S Exemption
The Company understands that the Agent is purchasing the Special Warrants
in reliance on the exemption from the registration requirements of Section 5 of
the Securities Act for offshore transactions as defined in SEC Rule 902(h), and
that the Agent is relying in part upon the truth and accuracy of, and the
Company's compliance with, the representations, warranties, agreements,
acknowledgments, and understandings of the Company set forth herein in order to
determine the availability of such exemptions and the eligibility of the Company
to issue and sell the Special Warrants to the Purchaser without having complied
with those registration requirements. With respect to that exemption, the
Company further represents and warrants to the Agent and the Purchasers that:
(a) The Company has not offered any of the Special Warrants to a U.S.
Person (as defined in SEC Rule 902(k)) or to a person in the United
States.
(b) The offer and sale of the Special Warrants to the Purchasers are being
made in an offshore transaction as defined in SEC Rule 902(h).
(c) The Company has not engaged in any directed selling efforts, as
defined in SEC Rule 902(c), with respect to the Special Warrants.
(d) The Company has complied with all of the conditions required of it
under SEC Rule 902(b)(3).
Section 4. Covenants
Section 4.1. Best Efforts
Each party shall use its best efforts timely to satisfy each of the
conditions to be satisfied by it as provided in Sections 5 and 6 of this
Agreement.
Section 4.2. Compliance with Regulation S
Each party shall comply with all of the terms of SEC Rule 903(b)(3)
required of it with respect to the Special Warrants.
Section 4.3. Reporting Status
The Company is a "reporting company" under the Securities and Exchange Act
of 1934, as amended (the "Exchange Act"), as defined by the rules and
regulations of the SEC and the NASD, and shall file in a timely manner all
reports and other information required by it to be filed with the SEC under the
Exchange Act in order to remain a reporting company, for so long as the
Purchaser is the holder or beneficial owner of any Special Warrants or Common
Stock.
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Section 4.4. Use of Proceeds
The Company will use the proceeds from the sale of the Special Warrants for
general working capital purposes.
Section 4.5 Listings
The Company shall maintain the listing of its Common Stock on the NASDAQ
OTC Bulletin Board, and upon the NASDAQ Small Cap Market as soon thereafter as
it is eligible therefor. The Company shall promptly provide to the Agent copies
of any notices it receives regarding the eligibility of the Common Stock for
trading in the over-the-counter market.
Section 4.6. Expenses
The Company shall pay the Agent's expenses, including reasonable attorney's
fees, incurred in connection with this Agreement.
Section 4.7. Corporate Existence
So long as the Purchasers hold, in the aggregate 1% or more of the
outstanding Common Stock, the Company shall not directly or indirectly
consummate any merger, reorganization, restructuring, consolidation, sale of all
or substantially all of the Company's assets, or any similar transaction or
related transactions (each such transaction, a "Sale of the Company") except if
the surviving or successor entity in such transaction is a publicly traded
corporation whose Common Stock is listed for trading on the New York Stock
Exchange, Inc., the American Stock Exchange, or the NASDAQ National Market.
Section 4.8. Transactions With Affiliates
So long as the Purchasers hold, in the aggregate, of 1% or more of the
outstanding Common Stock, the Company shall not, and shall cause each of its
subsidiaries not to, enter into, amend, modify, or supplement, or permit any
subsidiary to enter into, amend, modify, or supplement any agreement,
transaction, commitment, or arrangement with any of its or any subsidiary's
officers, directors, persons who were officers or directors at any time during
the previous two years, stockholders who beneficially own 5% or more of any
class of the Company's capital stock, or affiliates, or with any individual
related by blood, marriage, or adoption to any such individual or with any
entity in which any such entity or individual owns a 5% or more beneficial
interest (each, a "Related Party"), except for (i) customary employment
arrangements and benefit programs on reasonable terms, (ii) any agreement,
transaction, commitment, or arrangement on an arms-length basis on terms no less
favorable than terms which would have been obtainable from a person other than
such Related Party, (iii) any agreement, transaction, commitment, or arrangement
which is approved by a majority of the disinterested directors of the Company,
for purposes hereof, any director who is also an officer of the Company or any
subsidiary of the Company shall not be disinterested director with respect to
any such agreement, transaction, commitment, or arrangement. "Affiliate" for
purposes hereof means, with respect to any person or entity, another person or
entity that, directly or indirectly, (1) has a 5% or more equity interest in
that person or entity, (2) has 5% or more
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common ownership with that person or entity, (3) controls that person or entity,
or (4) share common control with that person or entity. "Control" or "controls"
for purposes hereof means that a person or entity has the power, direct or
indirect, to conduct or govern the policies of another person or entity.
Section 4.9. Registration Rights
As soon as is practicable after the date of this Agreement, the Company
shall file a registration statement (the "Registration Statement") with the SEC
to register the resale of the Common Stock in to which the Special Warrants are
convertible, and shall use its best efforts to cause the Registration Statement
to become effective, all as provided in the Registration Rights Agreement (the
"Registration Rights Agreement") attached as Exhibit A to this Agreement.
Section 5. Conditions To The Company's Obligation To Sell
The obligation of the Company hereunder to issue and sell the Special
Warrants to the Agent at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion:
(a) The Agent shall have executed this Agreement and delivered the same to
the Company.
(b) The Agent shall have delivered the Purchase Price for the Special
Warrants to the Company.
(c) The representations and warranties of the Purchaser shall be true and
correct in all material respects as of the date when made and as of
the Closing Date as though made at that time, and the Agent shall have
performed, satisfied, and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied, or complied with by the Purchaser at or prior to
the Closing Date.
Section 6. Conditions To The Purchasers' Obligation To Purchase
The obligation of the Agent hereunder to purchase the Special Warrants at
the Closing is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions, provided that these conditions are for the
Agent's sole benefit and may be waived by the Agent at any time in its sole
discretion:
(a) The Company shall have executed this Agreement.
(b) The Company shall have executed the Registration Rights Agreement.
(c) The representations and warranties of the Company shall be true and
correct in all material respects (except to the extent that any of
such representations and warranties is already qualified as to
materiality in Section 3 above, in which case,
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such representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Closing
Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall
have performed, satisfied, and complied in all material respects with
the covenants, agreements, and conditions required by this Agreement
to be performed, satisfied, or complied with by the Company at or
prior to the Closing Date.
Section 7. Indemnification
In consideration of the Agent's execution and delivery of this Agreement
and acquiring the Special Warrants hereunder and in addition to all of the
Company's other obligations under this Agreement, the Company shall defend,
protect, indemnify, and hold harmless the Agent and each Purchaser, and all of
its officers, directors, employees, and agents (including, without limitation,
those retained in connection with the transactions contemplated by this
Agreement) (collectively, the "Indemnitees") from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities, and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements
(the "Indemnified Liabilities"), incurred by the Indemnitees or any of them as a
result of, or arising out of, or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Company in this Agreement, or any
other certificate, instrument, or document contemplated hereby, (b) any breach
of any covenant, agreement, or obligation of the Company contained in this
Agreement, or (c) any cause of action, suit, or claim brought or made against
such Indemnitee and arising out of or resulting from the execution, delivery,
performance, or enforcement of this Agreement, or any other instrument,
document, or agreement executed pursuant hereto by any of the Indemnities, any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Special Warrants, or the
status of the Agent or any Purchaser or holder of the Special Warrants, as a
stockholder in the Company. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
Section 8. General Provisions
Section 8.1. Governing Law
This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Delaware; provided, however, (i) that if any provision of
this Agreement is unenforceable under the laws of the State of Delaware, but is
enforceable under the laws of the Province of Ontario, Canada, then such
provision shall be governed by and interpreted in accordance with the laws of
the Province of Ontario; and (ii) that the exemption from the registration
requirements of the Securities Act for the sale shall be governed by SEC Rule
903. The parties agree that the courts of the Province of Ontario, Canada, shall
have exclusive
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jurisdiction and venue for the adjudication of any civil action between them
arising out of relating to this Agreement, and hereby irrevocably consent to
such jurisdiction and venue.
Section 8.2. Counterparts
This Agreement may be executed in two or more identical counterparts, all
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause four (4)
additional original executed signature pages to be physically delivered to the
other party within five (5) days of the execution and delivery hereof.
Section 8.3. Headings
The headings of this Agreement are for convenience of reference and shall
not form part of, or affect the interpretation of, this Agreement.
Section 8.4. Severability
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
Section 8.5. Entire Agreement, Amendments
This Agreement supersedes all other prior oral or written agreements
between the Purchaser, the Company, their affiliates and persons acting on their
behalf with respect to the issuance and sale of the Special Warrants, and this
Agreement and the instruments referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the Company, nor the
Agent, nor any Purchaser makes any representation, warranty, covenant, or
undertaking with respect to such matters. No provision of this Agreement may be
waived or amended other than by an instrument in writing signed by the party to
be charged with enforcement.
Section 8.6. Notices
Any notices, consents, waivers, or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered (a) upon receipt, when delivered
personally, (b) upon receipt, when sent by facsimile, provided a copy is mailed
by U.S. certified mail, return receipt requested, (c) three (3) days after being
sent by certified mail, return receipt requested, or (d) one (1) day after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:
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if to the Company: with a copy (which shall not
constitute notice) to:
SoftQuad Software, Ltd.
Suite 400 Goodman Phillips & Vineberg
161 Eglinton Ave. East 250 Yonge Street
Toronto, Ontario Suite 2400
M5P 1J5 Toronto, Ontario
M5B 2M6
Attention: Roberto Drassinower
Telephone: (416) 554-3000 Attention: Neill May
Facsimile: (416) 554-0306 Telephone: (416) 597-4187
Facsimile: (416) 979-1234
if to the Agent: with a copy (which shall not
constitute notice) to:
Thomson Kernaghan & Co. Limited
365 Bay Street, 10th Floor John M. Mann
Toronto, Ontario M5H 2V2, Canada Attorney at Law
Attention: Mark E. Valentine, 1330 Post Oak Boulevard,
Chairman Suite 2800
Telephone: (416) 860-8800 Houston, Texas 77056-3060
Facsimile: (416) 367-8055 Telephone: (713) 622-7114
Facsimile: (713) 622-7185
Each party shall provide five (5) day's prior written notice to the other party
of any change in address or facsimile number.
Section 8.7. Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Purchaser. The Agent and the Purchasers may assign their
respective rights hereunder without the consent of the Company, provided
however, that any such assignment shall not release the Purchasers from their
obligations hereunder unless such obligations are assumed by such assignee and
the Company has consented to such assignment and assumption.
Section 8.8. No Third Party Beneficiaries
This Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the benefit of, nor
may any provision hereof be enforced by, any other person.
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Section 8.9. Survival
Unless this Agreement is terminated under Section 8.12, the representations
and warranties of the Company and the Agent contained in Sections 2 and 3, the
agreements and covenants set forth in Sections 4 and 5, and the indemnification
provisions set forth in Section 7, shall survive the Closing. The Purchaser
shall be responsible only for its own representations, warranties, agreements,
and covenants hereunder.
Section 8.10. Publicity
The Company and the Agent shall have the right to approve, before issuance,
any press releases or any other public statements with respect to the
transactions contemplated hereby; provided however, that the Company shall be
entitled, without the prior approval of the Agent, to make any press release or
other public disclosure with respect to such transactions as is required by
applicable law and regulations (although the Agent shall be consulted by the
Company in connection with any such press release or other public disclosure
prior to its release and shall be provided with a copy thereof).
Section 8.11. Further Assurances
Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments, and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
Section 8.12. Termination
In the event that the Closing shall not have occurred with respect to the
Agent on or before five (5) business days from the date hereof due to the
Company's or Agent's failure to satisfy the conditions set forth in Sections 5
and 6 above (and the non-breaching party's failure to waive such unsatisfied
condition(s)), the non-breaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business on such
date without liability of any party to any other party; provided however, that
if this Agreement is terminated pursuant to this Section 8.12, the Company shall
remain obligated to reimburse the Purchaser for the expenses described in
Section 4.6 above.
Section 8.13. No Strict Construction
The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
Section 8.14. Currency
All dollar amounts expressed in this Agreement are currency of the United
States of America.
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In witness whereof, the Company and the Agent have caused this Common Stock
Purchase Agreement to be duly executed as of the date first written above.
SoftQuad Software, Ltd. Thomson Kernaghan & Co. Limited, as Agent
By ______________________________ By __________________________________
Name ____________________________ Name ________________________________
Title ___________________________ Title _______________________________
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EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
<PAGE>
EXHIBIT B
SPECIAL WARRANT CERTIFICATE
<PAGE>
EXHIBIT C
AGENT'S WARRANT
