ASSET AND SHARE PURCHASE AGREEMENT
BETWEEN
1308870 ONTARIO INC.
- AND -
SOFTQUADINC.
- AND -
SOFTQUAD INTERNATIONAL INC.
MADE AS OF NOVEMBER 6, 1998
TABLE OF CONTENTS
PAGE
ARTICLE 1 INTERPRETATION...............................................1
1.01. Defined Terms................................................1
1.02. Knowledge....................................................3
1.03. Schedules....................................................3
1.04. Currency.....................................................3
1.05. Choice of Law and Attorney...................................3
1.06. Interpretation Not Affected by Headings or Party Drafting....4
1.07. Number and Gender............................................4
1.08. Time of Essence..............................................4
ARTICLE 2 PURCHASE AND SALE............................................4
2.01. Purchased Assets.............................................4
2.02. Unassignable Contracts.......................................8
2.03. Excluded Assets..............................................8
2.04. Assumed Liabilities..........................................9
2.05. Excluded Liabilities and Indemnity...........................9
2.06. Purchased Shares............................................10
2.07. Purchase Price..............................................11
2.08. Payment of Purchase Price...................................11
2.09. Allocation of Purchase Price................................11
2.10. Section 22 Election Re: Accounts Receivable.................11
2.11. Payment of Taxes............................................11
2.12. Goods and Services Tax Exemption............................11
ARTICLE 3 REPRESENTATIONS AND WARRANTIES..............................12
3.01. Representations and Warranties by the Vendor and SoftQuad...12
(1) Corporate Matters..................................12
(2) No Other Purchase Agreements.......................13
(3) Contractual and Regulatory Approvals...............13
(4) Governmental Licences..............................13
(5) Compliance with Constating Documents, Agreements
and Laws...........................................13
(6) Intellectual Property Rights.......................14
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(7) Financial Records..................................15
(8) Liabilities........................................15
(9) Absence of Certain Change or Events................15
(10) Tax Matters........................................16
(11) Litigation.........................................16
(12) Environmental Matters..............................16
(13) Title to Assets....................................16
(14) Real Properties....................................16
(15) Leased Premises....................................16
(16) Works Orders and Deficiencies......................17
(17) Lease of Personal Property.........................17
(18) Affiliates.........................................18
(19) Partnerships or Joint Ventures.....................18
(20) Restriction on Doing Business......................18
(21) Warranties and Discounts...........................18
(22) Licences, Agency and Distributorship Agreements....19
(23) Outstanding Agreements.............................19
(24) Good Standing of Agreements........................19
(25) Employees..........................................20
(26) Employment Agreements..............................20
(27) Labour Matters and Employment Standards............20
(28) Employee Benefit and Pension Plans.................20
(29) Insurance..........................................21
(30) Non-Arm's Length Matters...........................21
(31) Government Assistance..............................21
(32) Compliance with Laws...............................22
(33) Complete Conveyance................................22
(34) Vendor Residency...................................22
(35) Copies of Documents................................22
(36) Disclosure.........................................22
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3.02. Representations and Warranties by SoftQuad..................22
(1) Corporate Authority and Binding Obligation.........22
(2) Status of UK.......................................22
(3) Authorized and Issued Capital of UK................23
(4) No Other Purchase Agreements.......................23
3.03. Representations and Warranties by the Purchaser.............23
(1) Corporate Authority and Binding Obligation.........23
(2) Authorized and Issued Capital of the Purchaser.....23
(3) No Other Purchase Agreements.......................24
(4) Contractual and Regulatory Approvals...............24
(5) Compliance with Constating Documents, Agreements
and Laws...........................................24
(6) Investment Canada Act..............................24
ARTICLE 4 SURVIVAL AND LIMITATIONS OF REPRESENTATIONS AND WARRANTIES..25
4.01. Survival of Warranties by the Vendor and SoftQuad...........25
4.02. Survival of Warranties by Purchaser.........................25
4.03. Limitations on Warranty Claims..............................25
ARTICLE 5 COVENANTS...................................................26
5.01. Covenant by the Vendor and SoftQuad.........................26
(1) Investigation of Business and Examination of
Documents..........................................26
(2) Conduct of Business................................26
(3) Transfer of Purchased Assets and Purchased Shares..27
(4) General Conveyance.................................27
(5) Retail Sales Tax...................................27
(6) Bulk Sales Act Legislation.........................27
(7) Pledge of Shares...................................27
(8) Transfer of Assumed Contracts......................28
(9) Payment to the Purchaser...........................28
(10) Loan to the Purchaser..............................28
(11) Non-Competition Agreement..........................28
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(12) Licence Agreement re SoftQuad......................28
(13) Assignment of Loans to UK..........................28
(14) Assignment of Accounts Receivable..................28
5.02. Covenants by the Purchaser..................................28
(2) Employees..........................................29
(3) Post-Closing Access................................30
(4) Use of Names.......................................30
(5) Investment Canada Act..............................30
ARTICLE 6 CONDITIONS..................................................30
6.01. Conditions to the Obligations of the Purchaser..............30
(1) Accuracy of Representations and Warranties and
Performance of the Covenants.......................30
(2) No Restraining Proceedings.........................31
(3) Consents...........................................31
(4) Estoppel Certificates..............................31
(5) Employee...........................................31
(6) Leases for Premises................................31
(7) North American Distribution........................31
(8) Advance to the Purchaser...........................31
(9) Indemnity and Share Pledge.........................32
(10) Non-Competition Agreement..........................32
(11) Licence Agreement re SoftQuad......................32
(12) Assignment Agreements re Vendor's Trademarks
and Software.......................................32
(13) Assignment of Loans to UK Agreement................32
(14) Shareholders' Agreement............................32
(15) Protege Contract...................................32
(16) Payment of Accounts Payable Not Assumed............32
(17) Employee Stock Loans...............................32
(18) Opinion of Vendor Counsel..........................32
6.02. Waiver or Termination by Purchaser..........................33
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PAGE
6.03. Conditions to the Obligations of the Vendor.................33
(1) Accuracy of Representations and Warranties and
Performance of Covenants...........................33
(2) No Restraining Proceedings.........................33
(3) Consents...........................................34
(4) Shareholders' Agreement............................34
(5) Promissory Note....................................34
(6) Opinion of Purchaser's Counsel.....................34
6.04. Waiver or Termination by Vendor.............................34
ARTICLE 7 CLOSING.....................................................34
7.01. Closing Arrangements........................................34
7.02. Documents to be Delivered...................................34
ARTICLE 8 INDEMNIFICATION AND SET-OFF.................................35
8.01. Indemnity by SoftQuad and the Vendor........................35
8.02. Indemnity by the Purchaser..................................36
8.03. Provisions Relating to Indemnity Claims.....................36
8.04. Right to Set -Off...........................................38
ARTICLE 9 GENERAL PROVISIONS..........................................38
9.01. Further Assurance...........................................38
9.02. Remedies Cumulative.........................................38
9.03. Notices.....................................................39
9.04. Counterparts................................................40
9.05. Expenses of Parties.........................................40
9.06. Brokerage and Finder's Fees.................................40
9.07. Announcements...............................................41
9.08. Assignment..................................................41
9.09. Successors and Assigns......................................41
9.10. Entire Agreement............................................41
9.11. Waiver......................................................41
9.12. Amendments..................................................41
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SCHEDULES
Schedule No. Description
------------ -----------
2.01(a) Cash and Bank Balances
2.01(b) Accounts Receivable
2.01(c) Inventories
2.01(e) Machinery, Equipment, Furniture and Furnishings
2.01(f) Leased Equipment and Vehicles
2.01(g) Computer Equipment
2.01(h) Leased Computer Equipment
2.01(i) Leased Premises
2.01(k) Customer Contracts
2.01(m) Technology, Intellectual Property and Software
2.01(o) Licence Rights
2.04 (a) Assumed Liabilities
2.08 Not Used
2.09 Allocation of Purchase Price
3.01(3) Vendor's Contractual and Regulatory Approvals
3.01(6) Intellectual Property Rights
3.01(11) Litigation
3.01(12) Environmental Matters
3.01(13) Encumbrances to be Discharged
3.01(21) Warranties and Discounts
3.01(23) Contracts, Leases and Agreements
3.01(25) Employees
3.01(27) Labour Matters and Employment Standards
3.01(28) Employee Pension Plans
3.01(29) Insurance Policies
3.01(30) Non-Arm's Length Matters
3.01(31) Government Assistance
5.01 (10) Form of Promissory Note
5.01(11) Form of Non-Competition Agreement
5.01(12) Form of Trademark Licence Agreement
5.01(13) Form of U.K. Loan Assignment
6.01(7) Form of Agreement with Alpha Software Corporation
6.01(9) Form of Indemnity and Share Pledge Agreement
6.01(12) Form of Assignment Agreement re: Vendor's Trademarks
and Software Assignment Agreement
6.01(14) Form of Shareholders' Agreement
6.01(18) Opinion of Vendor's Counsel
6.03(6) Opinion of Purchaser's Counsel
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ASSET AND SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of this 6th day of November, 1998. AMONG:
1308870 ONTARIO INC., a corporation incorporated under the
laws of the Province of Ontario (the "PURCHASER")
- and -
SOFTQUAD INC., a corporation amalgamated under the laws of the
Province of Ontario (the "VENDOR").
- and -
SOFTQUAD INTERNATIONAL INC., a corporation continued under the
laws of the Province of New Brunswick ("SOFTQUAD").
WHEREAS the Vendor is engaged in the development, marketing, licensing
and sale of certain software products;
AND WHEREAS the Vendor wishes to sell, and the Purchaser wishes to
purchase, the undertaking and the assets of such business upon the terms and
subject to the conditions hereinafter contained;
NOW THEREFORE, in consideration of the premises and the mutual
agreements and covenants herein contained, the parties hereto hereby covenant
and agree as follows:
ARTICLE 1
INTERPRETATION
1.01. Defined Terms
-------------
In this Agreement and in the Schedules hereto, unless there is
something in the subject matter or context inconsistent therewith, the following
terms and expressions will, have the following meanings:
(a) "AFFILIATE" of any person means any corporation which, directly or
indirectly, is controlled by, controls or is under direct or indirect
common control with such person;
(b) "ARM'S LENGTH" has the meaning ascribed to such term under the Income
Tax Act (Canada);
(c) "ASSUMED CONTRACTS" means all contracts, agreements, orders,
commitments and other engagements by or with third parties relating to
the Business which are included in the Purchased Assets;
(d) "ASSUMED LIABILITIES" means the liabilities of the Vendor which are to
be assumed by the Purchaser pursuant to Section 2.04 hereof,
(e) "BUSINESS" means the business carried on by the Vendor which primarily
involves the development, marketing, licensing and sale of certain
software products;
(f) "BUSINESS DAY" means any day other than a day which is a Saturday, a
Sunday or a statutory holiday in the City of Toronto;
(g) "CLOSING DATE" means November 6, 1998 or such other date as the Vendor
and Purchaser may agree upon;
(h) "CLOSING TIME" means 4 p.m. (Toronto time) on the Closing Date or such
other time on the Closing Date as the parties hereto may agree upon;
(i) "CONDITION OF THE BUSINESS" means the condition of the assets,
liabilities, operations, activities, earnings, prospects, affairs or
financial position of the Business;
(j) "CONTROL" means, with respect to any corporation, the ownership of more
than 50% of the voting shares of that corporation, including any shares
which are voting only upon the occurrence of a contingency where such
contingency has occurred and is continuing;
(k) "CUSTOMER CONTRACTS" means any and all agreements entered into between
the Vendor and one or more third parties relating to the sale or
provision of goods or services by the Vendor to such third parties in
connection with the Business, including unfilled orders, commitments
and other engagements by or with such third parties; including without
limitation, those listed on Schedule 2.01(k) attached hereto;
(l) "EFFECTIVE DATE" means September 30, 1998;
(m) "ENCUMBRANCES" means mortgages, charges, pledges, security interests,
liens, encumbrances, actions, claims, demands and equities of any
nature whatsoever or howsoever arising and any rights or privileges
capable of becoming any of the foregoing;
(n) "EXCLUDED ASSETS" means those assets of the Business referred to in
Section 2.03 hereof;
(o) "EXCLUDED LIABILITIES" means all liabilities of the Vendor relating to
the Business other than the Assumed Liabilities;
(p) "LEASED PREMISES" means all premises leased by the Vendor under the
Leases;
(q) "LEASES" means the leases and the agreements to lease under which the
Vendor leases any real property, all of which are listed in Schedule
2.01(i) attached hereto;
(r) "LICENCE RIGHTS" means all licence rights granted to the Vendor by
third parties relating to the Business; including without limitation,
those listed on Schedule 2. 01 (o) attached hereto;
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(s) "PERSON" means and includes any individual, corporation, partnership,
firm, joint venture, syndicate, association, trust, government,
governmental agency or board or commission or authority, and any other
form of entity or organization;
(t) "PURCHASE PRICE" means the amount calculated, pursuant to Section 2.06
hereof, which amount is payable by the Purchaser to the Vendor for all
of the Purchased Assets, as provided herein;
(u) "PURCHASED ASSETS" means the undertaking and assets of the Business
which are to be sold by the Vendor to the Purchaser pursuant to Section
2.01 hereof;
(v) "PURCHASED SHARES" means 100 Ordinary Shares in the capital of UK,
being all of the issued and outstanding shares of UK;
(w) "UK" means SoftQuad UK Limited;
(x) "UK LOAN" means the amount owed by UK to SoftQuad at the Time of
Closing; and
(y) "WARRANTY CLAIM" means a claim made by either the Purchaser or the
Vendor based on or with respect to the inaccuracy or non-performance or
non-fulfilment or breach of any representation or warranty made by the
other party contained in this Agreement or contained in any document or
certificate given in order to carry out the transactions contemplated
hereby.
1.02. Knowledge
---------
Any reference herein to "the knowledge" of the Vendor and/or SoftQuad
will mean the actual knowledge of the Vendor and/or SoftQuad and the knowledge
which they would have had if they had conducted a diligent inquiry into the
relevant subject matter.
1.03. Schedules
---------
The Schedules attached to this Agreement are incorporated into this
Agreement by reference and are deemed to be part hereof.
1.04. Currency
--------
Unless otherwise indicated, all dollar amounts referred to in this
agreement are in lawful money of Canada.
1.05. Choice of Law and Attorney
--------------------------
This agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable therein.
The parties agree that the courts of that Province will have exclusive
jurisdiction to determine all disputes and claims arising between the parties.
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1.06. Interpretation Not Affected by Headings or Party Drafting
---------------------------------------------------------
The division of this Agreement into articles, sections, paragraphs,
subparagraphs and clauses and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement. The terms "this Agreement", "hereof', "herein", "hereunder" and
similar expressions refer to this Agreement and the Schedules hereto and not to
any particular article, section, paragraph, subparagraph, clause or other
portion hereof and include any agreement or instrument supplementary or
ancillary hereto. Each party hereto acknowledges that it and its legal counsel
have reviewed and participated in settling the terms of this Agreement, and the
parties hereby agree that any rule of construction to the effect that any
ambiguity is to be resolved against the drafting party shall not be applicable
in the interpretation of this Agreement.
1.07. Number and Gender
-----------------
In this Agreement, unless there is something in the subject matter or
context inconsistent therewith,
(a) words in the singular number include the plural and such words
shall be construed as if the plural had been used,
(b) words in the plural include the singular and such words shall
be construed as if the singular had been used, and
(c) words importing the use of any gender shall include all
genders where the context or party referred to so requires,
and the rest of the sentence shall be construed as if the
necessary grammatical and terminological changes had been
made.
1.08. Time of Essence
---------------
Time shall be of the essence hereof.
ARTICLE 2
PURCHASE AND SALE
2.01. Purchased Assets
----------------
Subject to Section 2.02 and on the terms and subject to the fulfillment
of the conditions hereof, the Vendor hereby agrees to sell, transfer and assign
to the Purchaser, and the Purchaser hereby agrees to purchase and accept from
the Vendor, the undertaking of the Business as a going concern and all
properties, assets, rights and interests of the Vendor related to the Business
of every kind and description and wheresoever situate (which purchased assets
are referred to herein as the "Purchased Assets"), except for the Excluded
Assets. Without limiting the generality of the foregoing, the Purchased Assets
will include all assets of the Business, other than
(i) Excluded Assets, and
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(ii) assets which have been disposed of or consumed in the
ordinary course of the Business since the Effective
Date,
and will include the following assets:
(a) CASH AND BANK BALANCES: all cash, bank balances, monies in the
possession of banks and other depositories, term or time
deposits, guaranteed investment certificates, treasury bills,
other securities and other similar cash or cash-equivalent
items owned by the Vendor as of the Closing Date, including,
without limitation, those amounts set out in Schedule 2.01 (a)
attached hereto;
(b) ACCOUNTS RECEIVABLE: all accounts receivable relating to the
Business as of the Closing Time including without limitation,
those referred to in Schedule 2.01(b) which are as at the
Effective Date and attached hereto;
(c) INVENTORIES: all inventories of or relating to the Business as
of the Closing Time, including without limitation, those items
referred to in Schedule 2.01(c) and all packaging materials,
works in progress and finished applications;
(d) PREPAID EXPENSES: all prepaid expenses relating to the
Business as of the Closing Time, including without limitation,
business taxes, rents, telephone and insurance relating to the
Business and all deposits with public utilities, municipal,
governmental and other public authorities but excluding income
or other taxes which are personal to the Vendor;
(e) MACHINERY, EQUIPMENT, FURNITURE AND FURNISHINGS: all
machinery, equipment, furniture, furnishings and other
miscellaneous items used in or relating to the Business
including, without limitation, all those listed in Schedule
2.01 (e) attached hereto;
(f) LEASED EQUIPMENT AND VEHICLES: all right and interest of the
Vendor in and under leases of equipment (other than computer
hardware) and vehicles used in or relating to the Business
including, without limitation, all leases and other agreements
listed in Schedule 2.01(f) attached hereto;
(g) COMPUTER EQUIPMENT: all of the Vendor's right, title and
interest in all computer hardware used in the Business
including, without limitation, that described in Schedule
2.01(g) attached hereto;
(h) LEASED COMPUTER EQUIPMENT: all the Vendor's right and interest
in all computer hardware used in the Business leased by the
Vendor from third parties including, without limitation, that
described in Schedule 2.01(h) attached hereto;
(i) LEASED PREMISES AND LEASEHOLD IMPROVEMENTS: all right and
interest of the Vendor in and to the Leased Premises and under
the Leases (all of which are described in Schedule 2.01(i)
attached hereto) including, without limitation, any prepaid
rent and security deposits thereunder and all leasehold
improvements owned by the Vendor and forming part of the
Leased Premises subject to the terms and conditions of the
Leases;
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(j) CUSTOMER LISTS AND INFORMATION: all customer lists, prospect
lists, files, data and information relating to customers and
prospective customers of the Business as of the Closing Time;
(k) CUSTOMER CONTRACTS: all right, title and interest of the
Vendor in and to all Customer Contracts, including licensing
agreements and distribution agreements, including, without
limitation, those listed in Schedule 2.01 (k) attached hereto;
(l) BUSINESS RECORDS: copies of all books, records, files and
documents relating to the Business, including without
limitation, books of account, ledgers, journals, sales and
purchase records, lists of suppliers, credit information, cost
and pricing information, business reports, plans and
projections and all other correspondence, data and
information, financial or otherwise, in any format and media
whatsoever, related to the Business;
(m) GOODWILL, NAME ETC.: the goodwill of the Business, together
with the exclusive right of the Purchaser to represent itself
as carrying on the Business in continuation of and in
succession to the Vendor (and, subject to subsection 5.02(4),
rights in and title to the names associated with the Business;
including without limitation, those listed in Schedule 2.01(m)
attached hereto);
(n) TECHNOLOGY, INTELLECTUAL PROPERTY AND SOFTWARE: subject to
subsections 5.02(4), the intellectual property which is the
subject matter of the trademark licence agreement attached
hereto as Schedule 5.01(12), all trade secrets, research data,
designs, proprietary know-how, processes, technical
information, specifications and materials in whatever form or
media recording or evidencing technology or proprietary
information used in or relating to the Business, and all
rights and interests in and to all inventions, patents,
applications for patents, copyrights, trade marks, trade xxxx
registrations, trade xxxx applications, trade names, brands,
styles, logos, industrial designs and any and all other
intellectual property used in or relating to the Business, and
all computer software, licences, sub-licences used in the
Business including, without limitation, all those relating to
computer programs, system and application software and rights
to all related codes (including source codes), specifications,
documentation, revisions, enhancements and modifications
thereto, tools, utilities and other supporting materials, in
whatever form and media, including, without limitation, the
trademarks, copyrights, patents, licenses and agreements
listed in Schedule 2.01(m) and the software which is the
subject matter of the software agreement attached hereto as
Schedule 5.01(12), but not including intellectual property
licensed by the Vendor from third parties;
(o) LICENCE RIGHTS: all licences (including non-exclusive rights,
permits, approvals, consents, registrations, certificates and
other authorizations) relating to the Business granted to the
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Vendor by any third party under all contracts and agreements
(written or oral), including, without limitation, those listed
in Schedule 2.01(o) attached hereto;
(p) REGULATORY LICENCES: all licences, registrations and
qualifications of the Business required by any governmental or
regulatory authority, to the extent transferable;
(q) INSURANCE BENEFITS: any benefits payable under all insurance
policies relating to the Business or the other Purchased
Assets in respect of claims based on occurrences prior to the
Closing Time;
(r) SUPPLY CONTRACTS: the full benefit of all contracts providing
for the supply of goods and services to the Business;
(s) WARRANTY RIGHTS AND MAINTENANCE CONTRACTS: the full benefit of
all warranties and warranty rights (express and implied)
against manufacturers or sellers which apply to any of the
Purchased Assets and all maintenance contracts on equipment
and the other Purchased Assets;
(t) MARKETING MATERIALS: all right, title and interest of the
Vendor in and to marketing materials relating to the Business
and including, without limitation, trade show booths,
marketing agreements, marketing collateral and marketing
materials;
(u) INCOME TAX REFUNDS: investment tax credits, income tax refunds
and other tax credits and refunds receivable by the Vendor for
the period to and including the Effective Date;
(v) INTERLEAF AGREEMENT: the benefit and obligations of the Vendor
contained in and to Sections 1.4, 11.2(b) and (c) the asset
purchase agreement between the Vendor and Interleaf, Inc.
dated as of September 11, 1998 (the "INTERLEAF AGREEMENT") and
a letter agreement between the Vendor and Interleaf, Inc.
dated as of September 11, 1998 (the "CO-MARKETING AGREEMENT")
and the Purchaser agrees to be bound, in addition to the
Vendor, to Sections 11.2(a) and (d) of the Interleaf Agreement
and the Co-marketing Agreement; and
(w) OTHER AGREEMENTS: all of the Vendor's rights, title and
interest to and under all other contracts and agreements
(written or oral) relating directly or indirectly to the
Business including, without limitation, the benefit of all
restrictive agreements and negative covenants which the Vendor
may have with its employees to which the Purchaser shall have
duties, obligations and liabilities toward under this
Agreement or otherwise, other than those contracts and
agreements (written or oral) relating to the Excluded Assets;
and
such sale, assignment and transfer to be effective as at the close of business
on the Effective Date.
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2.02. Unassignable Contracts
----------------------
If any rights, benefits or remedies (hereinafter, in this section,
collectively called the "RIGHTS") under any Assumed Contracts are not assignable
by the Vendor to the Purchaser without the consent of the other party thereto
(hereinafter, in this section, called the "THIRD PARTY") the Vendor hereby
covenants to use its reasonable efforts at the expense of the Purchaser to
obtain such consents prior to the Closing Time and until such consents are
obtained or if any such consent is not obtained, then, unless the Purchaser
exercises its rights under Section 6.02 hereof,
(a) the Vendor will hold the Rights for the benefit of the
Purchaser,
(b) the Vendor will, at the request and expense and under the
direction of the Purchaser, in the name of the Vendor or
otherwise as the Purchaser shall specify, take all such
actions and do all such things as shall, in the opinion of the
Purchaser, acting reasonably, be necessary or desirable in
order that the obligations of the Vendor under such Assumed
Contracts may be performed in a manner such that the Rights
shall enure to the benefit of the Purchaser and such that all
monies receivable under the Assumed Contracts may be received
by the Purchaser,
(c) the Vendor will pay over to the Purchaser all such monies
collected by the Vendor in respect of such Assumed Contracts,
and
(d) to the extent permitted by the Third Party and provided, in
the Purchaser's opinion, acting reasonably, it would not be
prejudicial to the Purchaser's rights to do so, the Purchaser
will perform the obligations under such Assumed Contracts on
behalf of the Vendor, and will indemnify the Vendor against
all liabilities, costs and expenses incurred by the Vendor in
performing such obligations under this section from the
Closing Time.
2.03. Excluded Assets
---------------
There shall be specifically excluded from the assets being purchased
and sold hereunder, the following assets, properties, rights and interests of
the Vendor related to the Business (which excluded assets are referred to herein
as the "EXCLUDED ASSETS"):
(a) Licences: all extra-provincial, sales, excise or other
licences or registrations issued to or held by the Vendor,
whether in respect of the Business or otherwise, except as
specifically set forth herein;
(b) Shares: all shares held by the Vendor in SoftQuad U.S.A. Inc.;
and
(c) Interleaf Agreement: the rights, interests and obligations of
the Vendor under the Interleaf Agreement not specifically
sold, transferred or assigned to the Purchaser pursuant to
Section 2.01(v) of this Agreement.
-8-
2.04. Assumed Liabilities
-------------------
In partial satisfaction of the Purchase Price (as defined in Section
2.07 hereof) for the Business and the Purchased Assets, the Purchaser hereby
agrees to assume and become liable for and shall pay, satisfy, assume,
discharge, observe, perform, fulfil and indemnify the Vendor against the
following liabilities of the Vendor in respect of the Business and the Purchased
Assets (which liabilities are referred to herein as the "ASSUMED LIABILITIES");
(a) all accounts payable listed in Schedule 2.04 (a);
(b) all product liability claims and liabilities for warranty or
product return claims relating to any product or service of
the Business produced, sold, performed or delivered on or
after the Effective Date, except that liabilities for all
HoTMetaL 4.0 returns as of the Effective Date shall be assumed
by the Purchaser; liabilities for marketing development fund
("NMF") for commitments relating to versions prior to HoTMetaL
4.0 shall be assumed by SoftQuad, MDF commitments relating to
HoTMetaL 4.0 still open as of the Effective Date shall be
assumed, as to 50%, by SoftQuad and, as to 50%, by the
Purchaser and the Purchaser shall assume all liabilities,
whether MDF or returns, for HoTMetaL 5.0 and future versions;
(c) all liabilities for salaries, wages, commissions, bonuses,
vacation pay and any other compensation and all liabilities
under employee benefit plans relating to the Business arising
after the Effective Date and all accrued vacation pay to and
including the Effective Date. In addition, the Purchaser will
be liable for all severance payments, damages for wrongful
dismissal for which an employer is liable in respect of the
termination of the employment of the employees of the Business
who were employees immediately before the Effective Date;
(d) all liabilities for claims for injury, disability, death or
worker's compensation arising from or related to the Business
arising on or after the Effective Date;
(e) all obligations and liabilities of the Vendor accruing on and
after the Effective Date under the Assumed Contracts; and
(f) all obligations or liabilities of the Vendor in connection
with the Business or the Purchased Assets for environmental
and health and safety matters, claims or damages arising on or
after the Effective Date.
For greater certainty, except as specifically set forth in clause 2.04(b) and
(c) hereof, the Assumed Liabilities shall include all obligations and
liabilities in respect of the Business and the Purchased Assets arising on or
after the Effective Date.
2.05. Excluded Liabilities and Indemnity
----------------------------------
The Purchaser will not assume and will not be liable for, and the
Vendor will indemnify the Purchaser from and against, all obligations,
commitments and liabilities of and claims of any kind whatsoever against the
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Vendor (whether absolute, accrued or contingent) relating to the Business and
the Purchased Assets, except for the Assumed Liabilities. Without limiting the
generality of the foregoing, it is agreed that the Purchaser will have no
liability for any of the following obligations or liabilities:
(a) all liabilities in respect of the indebtedness of the Vendor
to all persons, except to those listed in Schedule 2.04(a).
(b) except for those liabilities as of the Effective Date which
the Purchaser has agreed to assume in Section 2.04(b), all
product liability claims and liabilities for product return
claims relating to any product or service of the Business
produced, sold, performed or delivered prior to the Effective
Date
(c) all liabilities for all taxes, duties, levies, assessments and
other such charges, including any penalties, interests and
fines with respect thereto, payable by the Vendor to any
federal, provincial, municipal or other government or
governmental agency, authority, board, bureau or commission,
domestic or foreign, including, without limitation, any taxes
in respect of or measured by the sale, consumption or
performance by the Vendor of any product or service prior to
the Effective Date and any tax pursuant to the Employer Health
Tax Act (Ontario) or any similar legislation in respect of all
remuneration payable to all persons employed in the Business
prior to the Effective Date;
(d) all liabilities for salaries, wages, commissions, bonus and
any other compensation and all liabilities under employee
benefit plans of the Vendor relating to employment of all
persons in the Business prior to and on the Effective Date,
but not including those liabilities assumed by the Purchaser
under Section 2.04(c) of this Agreement.
(e) all liabilities for claims for injury, disability, death or
worker's compensation arising from or related to employment in
the Business prior to the Effective Date; and
(f) all liabilities in connection with any litigation or
threatened litigation, including legal costs, settlement costs
and other costs incurred in connection therewith, relating to
the Business as it was carried on before the Effective Date,
including, without limitation, those matters referred to in
Schedule 3.01(l 1) attached hereto.
2.06. Purchased Shares
----------------
On the terms and subject to the fulfilment of the conditions hereof,
SoftQuad covenants and agrees to sell, assign and transfer to the Purchaser and
the Purchaser covenants and agrees to purchase from SoftQuad, the Purchased
Shares for a Purchase Price of $1.00.
-10-
2.07. Purchase Price
--------------
The aggregate purchase price (the "PURCHASE PRICE") payable by the
Purchaser to the Vendor and SoftQuad for the Purchased Assets and the Purchased
Shares will be the sum of $1,3 89,83 1.
2.08. Payment of Purchase Price
-------------------------
The Purchaser shall pay and satisfy the Purchase Price as follows:
(a) as to an amount equal to the estimated aggregate book value of
the Assumed Liabilities by the assumption of the Assumed
Liabilities by the delivery at the Closing Time of a general
conveyance, assignment and assumption agreement; and
(b) by the issuance to the Vendor by the Purchaser of 140,741
common shares in the capital of the Purchaser and the entering
into of option agreements with the Vendor made as of the
Closing Date for an additional 49,259 common shares in the
capital of the Purchaser.
2.09. Allocation of Purchase Price
----------------------------
The Purchase Price shall be allocated among the Purchased Assets and
Purchased Shares in the manner provided by Schedule 2.09 attached hereto.
SoftQuad and the Purchaser shall file their respective tax returns prepared in
accordance with such allocation.
2.10. Section 22 Election Re: Accounts Receivable
-------------------------------------------
The Vendor and the Purchaser will jointly execute, and each of them
will file promptly following the Closing Date, an election under Section 22 of
the Income Tax Act (Canada) with respect to the accounts receivable of the
Business included in the Purchased Assets. Such election will designate the
portion of the Purchase Price allocated to the accounts receivable pursuant to
Section 2.09 hereof as the consideration paid therefor by the Purchaser.
2.11. Payment of Taxes
----------------
The Purchaser shall be liable for and shall remit to the appropriate
government authority all applicable federal and provincial sales taxes, goods
and services taxes, excise taxes and all other taxes (other than income taxes of
the Vendor), duties and other like charges properly payable upon and in
connection with the conveyance and transfer of the Purchased Assets to the
Purchaser. The Vendor will do and cause to be done such things as are reasonably
requested to enable the Purchaser to comply with such obligation in an efficient
manner.
2.12. Goods and Services Tax Exemption
--------------------------------
(a) The Vendor hereby represents and warrants to the Purchaser
that:
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(i) the Vendor is registered for purposes of Part IX of
the Excise Tax Act (Canada) (hereinafter, in this
section, called the "GST Legislation"); and
(ii) the Purchased Assets comprise all or substantially
all of the property used in the Business; and
(iii) the Business is a "commercial activity" for the
purposes of the GST Legislation.
(b) The Purchaser hereby represents and warrants to the Vendor
that the Purchaser is registered for purposes of the GST
Legislation.
(c) The Vendor and the Purchaser will jointly execute in
prescribed form, and the Purchaser will file within the
required time, an election under subsection 167(l) of the
Excise Tax Act (Canada) that no tax be payable pursuant to the
GST Legislation with respect to the purchase and sale of the
Purchased Assets hereunder.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.01. Representations and Warranties by the Vendor and SoftQuad
---------------------------------------------------------
The Vendor and SoftQuad hereby jointly represent and warrant to the
Purchaser as follows, and confirm that the Purchaser is relying upon the
accuracy of each of such representations and warranties in connection with the
purchase of the Purchased Assets and the completion of the other related
transactions hereunder:
(1) Corporate Matters
-----------------
The Vendor is a corporation duly amalgamated and validly subsisting
under the laws of Ontario. The Vendor has all necessary corporate power
to own its properties and to carry on its business as it is now being
conducted. The Vendor has good right, full corporate power and absolute
authority to enter into this Agreement and to sell, assign and transfer
the Purchased Assets to the Purchaser in the manner contemplated herein
and to perform all of the Vendor's obligations under this Agreement.
The Vendor and its shareholders have taken all necessary or desirable
actions, steps and corporate and other proceedings to approve or
authorize, validly and effectively, the entering into of, and the
execution, delivery and performance of, this Agreement and the sale and
transfer of the Purchased Assets by the Vendor to the Purchaser, except
in respect of matters to be completed on or before the Closing Date.
This Agreement is a legal, valid and binding obligation of the Vendor,
enforceable against it in accordance with its terms subject to (i) bulk
sales legislation and bankruptcy, insolvency, moratorium,
reorganization and other laws relating to or affecting the enforcement
of creditors' rights generally and (ii) the fact that equitable
remedies, including the remedies of specific performance and
injunction, may only be granted in the discretion of a court.
-12-
(2) No Other Purchase Agreements. No person has any agreement, option,
understanding or commitment, or any right or privilege (whether by law,
preemptive or contractual) capable of becoming an agreement, option or
commitment, for the purchase or other acquisition from the Vendor of
any of the Purchased Assets, or any rights or interest therein, other
than in the ordinary course of the Business.
(3) Contractual and Regulatory Approvals. Except as specified in Schedule
3.01(3) attached hereto, the Vendor is not under any obligation,
contractual or otherwise, to request or obtain the consent of any
person, and no permits, licences, certifications, authorizations or
approvals of, or notifications to, any federal, provincial, municipal
or local government or governmental agency, board, commission or
authority are required,
(a) in connection with the execution, delivery or performance by
the Vendor of this Agreement or the completion of any of the
transactions contemplated herein, or
(b) to avoid the loss of any permit, licence, certification or
other authorization relating to the Business, or
(c) in order that the Purchaser has the authority to carry on the
Business in the ordinary course and in the same manner as
presently conducted following the closing of the transactions
contemplated hereunder to the knowledge of the Vendor.
To the knowledge of the Vendor and SoftQuad, complete and correct
copies of any agreements under which the Vendor is obligated to request
or obtain any such consent have been provided to the Purchaser.
(4) Governmental Licences
---------------------
(a) The Vendor holds all necessary licences, registrations and
qualifications in each jurisdiction in which
(i) it owns or leases any of the Purchased Assets, or
(ii) the nature or conduct of the business or any part
thereof, or the nature of the Purchased Assets or any
part thereof, makes such qualification necessary or
desirable to enable the Business to be carried on as
now conducted or to enable the Purchased Assets to be
owned, leased and operated.
(5) Compliance with Constating Documents, Agreements and Laws. The
execution, delivery and performance of this Agreement and each of the
other agreements contemplated or referred to herein by the Vendor, and
the completion of the transactions contemplated hereby, will not
constitute or result in a violation, breach or default or cause the
acceleration of any obligations which are included in the Assumed
Liabilities, in the aggregate, material to the Business or Condition of
the Business, under:
-13-
(a) any term or provision of any of the articles, by-laws or other
constating documents of the Vendor, or
(b) subject to obtaining the contractual consents referred to in
Schedule 3.01(3) hereof, the terms of any indenture, agreement
(written or oral), instrument or understanding or other
obligation or restriction to which the Vendor is a party or by
which it is bound including, without limitation, any of the
Assumed Contracts, or
(c) subject to obtaining the regulatory consents referred to in
Schedule 3.01(3) hereof and to the knowledge of the Vendor and
SoftQuad, any term or provision of any of the Licence Rights
or any order of any court, governmental authority or
regulatory body or any law or regulation of any jurisdiction
in which the Business is carried on.
(6) Intellectual Property Rights.
-----------------------------
(a) Schedule 2.01 (m) lists all trademarks, trademark applications
and registrations, trade names, styles, logos, copyrights,
copyright applications and registrations owned by the Vendor
and relating to the Business, to the knowledge of the Vendor
and SoftQuad. The Vendor neither owns any registered patents
or patent applications registered or unregistered industrial
designs or design applications, nor has any rights or licences
therefor as used in connection with the Purchased Assets other
than as set out in Schedule 3.01(6). There has not been any
infringement or (to the knowledge of the Vendor or SoftQuad)
alleged infringement by others of any of the copyrights,
patents, trade secrets, trademarks, industrial designs, trade
names, styles, logos, or any of the technical documentation or
other intellectual property included among the Purchased
Assets (collectively, the "INTELLECTUAL PROPERTY RIGHTS").
Except as set forth on Schedule 3.01(6), the Vendor is not a
party to any contract, agreement or licence, whether as
licensor, licensee, franchisor, franchisee, dealer,
distributor, or otherwise, with respect to any Intellectual
Property Rights (other than licences of the Products to
customers in the ordinary course of business).
(b) To the knowledge of the Vendor and SoftQuad, the Vendor is the
owner of and has the right to use all Intellectual Property
Rights as are necessary to enable the Vendor to use, and the
Purchaser to continue to use after the Closing Date, the
Purchased Assets in the manner presently used by the Vendor
and that use has not conflicted with, infringed, or otherwise
violated any rights of any entity. To the knowledge of the
Vendor and SoftQuad, except as set forth on Schedule 3.01(6),
no Affiliate or employee of the Vendor or any of the Vendor's
affiliates owns or uses any of the Intellectual Property
Rights, and except as set forth on Schedule 3.01(6), the
Vendor owns the Intellectual Property Rights with unencumbered
good and marketable title, free and clear of any and all
attachments, liens, claims, charges, options, pledges or other
encumbrances and the Vendor has the unrestricted right to sell
-14-
or assign to the Purchaser all such Intellectual Property
Rights.
(c) To the knowledge of the Vendor, the Intellectual Property
Rights are valid, in good standing and will be in full force
and effect as of the Closing Date. Except as set forth in
Schedule 3.01(6) and 3.01(l 1), there have been no
interference or infringement actions or other judicial,
arbitration, or other adversary proceedings commenced or (to
the knowledge of the Vendor or SoftQuad) threatened naming the
Vendor and concerning the Intellectual Property Rights and the
Vendor and SoftQuad have no knowledge of any reasonable
grounds upon which any proceeding would be instituted which
could challenge or affect the rights of the Vendor or
Purchaser (after the Closing Time) of any of the Intellectual
Property Rights. Each application for a trademark listed on
Schedule 2.01(m) hereto is awaiting action by its respective
appropriate recording office. Except as set forth on Schedule
3.01(6), the manufacture, use, performance or sale of the
Products do not violate or infringe on any intellectual
property right or other similar proprietary right of any
person or entity. Except as set forth on Schedule 3.01(6), the
Vendor has the exclusive right to use and the unrestricted
right to transfer to the Vendor all of the Vendor's trade
secrets used in connection with the Purchased Assets, and none
of such trade secrets have been used, divulged, or
appropriated for the benefit of any past or present employees
of the Vendor, or to the detriment of the Vendor.
(d) The conduct of the Business and the use of the Intellectual
Property Rights does not infringe, and the Vendor has not
received any notice, complaint, threat or claim alleging
infringement of, any patent, trade xxxx, trade name,
copyright, industrial design, trade secret or other
Intellectual Property Rights or propriety night of any other
person, and the conduct of the Business does not include any
activity which may constitute passing off.
(7) Financial Records. All material financial transactions of the Business
in respect of the Purchased Assets have been recorded in the financial
books and records of the Vendor in accordance with good business
practice. No information, records or systems pertaining to the
operation or administration of the Business are in the possession of,
recorded, stored, maintained by or otherwise dependent upon any other
person.
(8) Liabilities. There are no liabilities (contingent or otherwise) of the
Vendor of any kind whatsoever in respect of which the Purchaser may
become liable on or after the consummation of the transactions
contemplated by this Agreement, except the Assumed Liabilities.
(9) Absence of Certain Change or Events. Other than the transactions
completed under the Interleaf Agreement, from December 31, 1997 to
September 30, 1998, there has not been any material adverse change in
the Condition of the Business.
-15-
(10) Tax Matters. For purposes of this Agreement, the term "GOVERNMENTAL
CHARGES" means and includes all taxes, customs duties, rates, levies,
assessments, reassessments and other charges, together with all
penalties, interest and fines with respect thereto, payable to any
federal, provincial, municipal, local or other government or
governmental agency, authority, board, bureau or commission, domestic
or foreign. The Vendor has paid all Governmental Charges which are due
and payable by it on or before the Effective Date. There are no
actions, suits, proceedings, investigations, enquiries or claims now
pending or made or, to the best of the knowledge of the Vendor and
SoftQuad, threatened against the Vendor in respect of Governmental
Charges. The Vendor has withheld from each amount paid or credited to
any person the amount of Governmental Charges required to be withheld
therefrom and has remitted such Governmental Charges to the proper tax
or other receiving authorities within the time required under
applicable legislation.
(11) Litigation. Except for the matters referred to in Schedule 3.01 (11)
attached hereto, there are no actions, suits or proceedings, judicial
or administrative (whether or not purportedly on behalf of the Vendor)
pending or, to the best of the knowledge of the Vendor and SoftQuad,
threatened, by or against or affecting the Vendor which relate to the
Business, at law or in equity, or before or by any court or any
federal, provincial, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign. Except for the matters referred to in Schedule 3.01(11) there
are no grounds on which any such action, suit or proceeding might be
commenced with any reasonable likelihood of success to the Vendor's and
SoftQuad's knowledge.
(12) Environmental Matters. The Vendor has not received any notice of any
non-compliance with any Environmental Laws. For the purposes of this
subparagraph 3.01(12) "Environmental Laws" means all applicable
federal, provincial, municipal and local laws, regulations and orders
issued by any governmental or regulatory agency relating to the
environment, occupational health and safety, product safety, product
liability and storage and transportation of goods.
(13) Title to Assets. The Vendor is the owner of and has good and marketable
title to all of the Purchased Assets free and clear of all Encumbrances
whatsoever, except for:
(i) the properties and assets disposed of, utilized or
consumed since September 30, 1998 in the ordinary
course of the Business; and
(ii) the Encumbrances described in Schedule 3.01(13)
attached hereto, all of which will be discharged
prior to the conveyance of the Purchased Assets to
the Purchaser at the Closing Time, except for the
Assumed Liabilities.
No other person owns any assets which are being used in the Business,
except for the Leased Premises, software leases, licences and personal
property leased by the Vendor.
(14) Real Properties. The Vendor does not own any real properties.
---------------
(15) Leased Premises. Schedule2.01(i) attached hereto describes all leases
or agreements to lease under which the Vendor leases any real property
relating to the Business. Complete and correct copies of the Leases
-16-
have been provided to the Purchaser. The Vendor is entitled to all
rights and benefits as lessee under the Leases and the Vendor has not
sublet, assigned, licensed or otherwise conveyed any rights in the
Leased Premises or the Leases to any other person. The names of the
other parties to the Leases, the description of the Leased Premises,
the term, rent and other amounts payable under the Leases and all
renewal options available under the Leases are accurately described in
Schedule 2.01 (i). Other than obligations of the Vendor to Horizon
Construction and the 1997 operating taxes for the Vancouver premises,
which premises are more particularly described in Schedule 2.01(i), all
rental and other payments and other obligations required to be paid and
performed by the Vendor pursuant to the Leases have been duly paid and
performed; the Vendor is not in default of any of its obligations under
the Leases; and, to the best of the knowledge of the Vendor and
SoftQuad, none of the landlords or other parties to the Leases are in
default of any of their obligations under the Leases. The Vendor is
entitled to assign all of its rights and interest under the Leases and
in and to the Leased Premises to the Purchaser, subject to obtaining
the consents referred to in Schedule 3.01(3) attached hereto. Subject
to obtaining such consents, the terms and conditions of the Leases will
not be affected by, nor will any of the Leases be in default as a
result of, the completion of the transactions contemplated hereunder.
The use by the Vendor of the Leased Premises is not in breach of any
building, zoning or other statute, by-' law, ordinance, regulation,
covenant, restriction or official plan. The Vendor has adequate rights
of ingress to and egress from the Leased Premises for the operation of
the Business in the ordinary course.
(16) Works Orders and Deficiencies. There are no outstanding work orders,
non-compliance orders, deficiency notices or other such notices
relative to the Leased Premises, the other Purchased Assets or the
Business which have been issued by any regulatory authority, police or
fire department, sanitation, labour, health or other governmental
authorities or agencies. There are no matters under discussion with any
such department or authority relating to work orders, non-compliance
orders, deficiency notices or other such notices. No amounts are owing
by the Vendor in respect of the Leased Premises to any governmental
authority or public utility, other than current accounts which are not
in arrears.
(17) Lease of Personal Property. Schedule 2.01(f) attached hereto describes
all leases of equipment and vehicles used in or relating to the
Business. Complete and correct copies of those leases have been
provided to the Purchaser. The Vendor is entitled to all rights and
benefits as lessee under those leases, and the Vendor has not sublet,
assigned, licensed or otherwise conveyed any rights in those licenses
or in the property leased thereunder to any other person. Other than as
disclosed in the Assumed Liabilities, all payments and other
obligations required to be paid and performed by the Vendor under those
leases have been duly paid and performed; the Vendor is not in default
of any its obligations under those leases; and, to the best of the
knowledge of the Vendor and SoftQuad, none of the lessors or any other
parties to those leases are in default of any of their obligations
under those leases. The Vendor is entitled to assign all of its right
and interest under those leases and in and to the property leased
thereunder to the Purchaser, subject to obtaining the consents referred
to in Schedule 3.01(3) attached hereto. Subject to obtaining such
-17-
consents, the terms and conditions of those leases will not be affected
by, nor will any of those leases be in default as a result of, the
completion of the transaction contemplated hereunder.
(18) Affiliates. Other than pursuant to informal distribution arrangements
with Alpha Software Corporation and an agreement between SoftQuad and
Prot6g6 Software Holdings Ltd., no part of the Business and none of the
Purchased Assets are owned or operated by any Affiliate of the Vendor.
(19) Partnerships or Joint Ventures. The Vendor is not, in relation to any
part of the Business, a partner or participant in any partnership,
joint venture, profit-sharing arrangement or other association of any
kind and is not party to any agreement under which the Vendor agrees to
carry on any part of the Business in such manner or by which the Vendor
agrees to share any revenue or profit of the Business with any other
person.
(20) Restriction on Doing Business. To the knowledge of the Vendor and
SoftQuad, the Vendor, is not a party to or bound by any agreement in
relation to the Business which would restrict or limit its right to
carry on any activity or to solicit business from any person or in any
geographical area or otherwise to conduct the Business as the Vendor
may determine. The Vendor is not subject to any judgement, order or
requirement of any court or governmental authority in relation to the
Business which is not of general application to persons carrying on a
business similar to the Business. To the knowledge of the Vendor and
SoftQuad, there are no facts or circumstances in relation to the
Business which could materially adversely affect the ability of the
Purchaser to continue to operate the Business as presently conducted
following the completion of the transactions contemplated by this
Agreement.
(21) Warranties and Discounts. Except as described in Schedule 3.01(21)
attached hereto, to the knowledge of the Vendor,
(i) the Vendor has not given any guarantee or warranty in
respect of any of the products sold or the services
provided as part of the Business, except warranties
made in the ordinary course of the Business and in
the form of the standard written warranty, a copy of
which has been provided to the Purchaser, and except
for warranties implied by law;
(ii) during each of the 3 fiscal years of the Vendor ended
immediately preceding the date hereof, no claims have
been made against the Vendor for breach of warranty
or contract requirement or negligence or for a price
adjustment or other concession in respect of any
defect in or failure to perform or deliver any
products, services or work in connection with the
Business which had, in any such year, an aggregate
cost exceeding $1,000;
(iii) other than as listed in the Assumed Liabilities,
there are no maintenance obligations in favour of the
customers or users of products of the Business except
obligations incurred in the ordinary course of the
Business; and
-18-
(iv) no product liability or other tort claims have been
made or, to threatened in writing against the Vendor,
relating to products sold or services performed by
the Business in the past two (2) years.
(22) Licences, Agency and Distributorship Agreements. Schedule 2.01(o)
attached hereto lists all agreements to which the Vendor is a party or
by which it is bound under which the right to manufacture, use or
market any product, service, technology, information, data, computer
hardware or software or other property used in or produced or sold by
the Business has been granted, licensed or otherwise provided to the
Vendor or by the Vendor to any other person, or under which the Vendor
has been appointed or any person has been appointed by the Vendor as an
agent, distributor or licensee for any of the foregoing. Complete and
correct copies of all of the agreements relating to the License Rights
have been provided to the Purchaser. The Vendor is entitled to assign
all of its interest in the License Rights to the Purchaser, subject to
obtaining the consents required under material contracts with the
Vendor and referred to in Schedule 3.01(3) attached hereto. None of the
agreements relating to the License Rights grant to any person any
authority to incur any liability or obligation or to enter into any
agreement on behalf of the Vendor.
(23) Outstanding Agreements. The Vendor is not a party to or bound by any
material outstanding or executory agreement, contract or commitment,
whether written or oral, relating to the Business, except for
(a) any contract, lease or agreement described or referred to in
this Agreement or in the Schedules hereto, and
(b) the contracts, leases and agreements described in Schedule
3.01(23) attached hereto.
To the knowledge of the Vendor and SoftQuad, complete and correct
copies of each of the contracts, leases and agreements described in
Schedule 3.01(23) have been provided to the Purchaser.
(24) Good Standing of Agreements. Other than with respect to the Assumed
Liabilities, the Vendor is not in default or breach of any of its
obligations under any one or more contracts, agreements (written or
oral), commitments, indentures or other instruments to which it is a
party or by which it is bound relating to the Business, and to the
knowledge of the Vendor and SoftQuad, there exists no state of facts
which, after notice or lapse of time or both, would constitute such a
default or breach. All such contracts, agreements, commitments,
indentures and other instruments are now in good standing and in full
force and effect without amendment thereto, the Vendor is entitled to
all benefits thereunder and, to the knowledge of the Vendor and
SoftQuad, the other parties to such contracts, agreements, commitments,
indentures and other instruments are not in default or breach of any of
their obligations thereunder. To the knowledge of the Vendor and
SoftQuad, there are no contracts, agreements, commitments, indentures
or other instruments relating to the Business under which the Vendor's
rights or the performance of its obligations are dependent upon or
-19-
supported by the guarantee of or any security provided by any other
person.
(25) Employees. Schedule 3.01(25) attached hereto sets forth the name and
department name of each employee and independent contractor of the
Business. Schedule 3.01(25) also sets forth the names of all employees
and independent contractors of the Business who are now on disability,
maternity or other authorized leave or who are receiving workers'
compensation or short-term or long-term disability benefits.
(26) Employment Agreements. Except for those employees set out in Schedule
3.01(25),the Vendor is not a party to any written or oral employment,
service or consulting agreement relating to any one or more persons
working in the Business, except for oral employment agreements which
are of indefinite term and without any special arrangements or
commitments with respect to the continuation of employment or payment
of any particular amount upon termination of employment. Other than
those employees set out in Schedule 3.01(25), there are no employees of
the Business who cannot be dismissed upon such period of notice as is
required by law in respect of a contract of hire for an indefinite
term.
(27) Labour Matters and Employment Standards.
---------------------------------------
(a) The Vendor is not subject to any agreement with any labour
union or employee association and has not made any commitment
to or conducted negotiations with any' labour union or
employee association with respect to any future agreement and,
to the best of the knowledge of the Vendor and SoftQuad, there
is no current attempt to organize, certify or establish any
labour union or employee association, in relation to any of
the employees of the Business.
(b) Except as disclosed in Schedule 3.01(27), the Vendor has
complied with all applicable laws, rules, regulations and
orders relating to employment in the Business, including those
relating to wages, hours, collective bargaining, occupational
health and safety, employment standards, pay equity and
workers' compensation in respect of former employees of the
Vendor. There are no outstanding charges or complaints against
the Vendor relating to unfair labour practices or
discrimination or under any legislation relating to former
employees. The Vendor has paid in full all amounts owing under
the Workplace Safety and Insurance Act (Ontario) and under
comparable provincial legislation in the province of British
Columbia, if any, and the workers' compensation claims
experience of the Vendor would not permit a penalty
reassessment under such legislation.
(28) Employee Benefit and Pension Plans.
----------------------------------
(a) Except as listed in Schedule 3.01(28) attached hereto, the
Vendor does not have, and is not subject to any present or
future obligation or liability under, any pension plan,
deferred compensation plan, retirement income plan, other than
the Canada Pension Plan. Complete and correct copies of all
documentation establishing or relating to the stock option or
-20-
stock purchase plan, profit sharing plan, bonus plan or
policy, employee group insurance plan, hospitalization plan,
disability plan or other employee benefit plan, program,
policy or plan (collectively the "BENEFIT PLANS") or written
summaries of the terms thereof have been provided to the
Purchaser.
(b) There are no pending claims by any former employee covered
under the Benefit Plans except as set out in Schedule 3.01(11)
which allege a breach of fiduciary duties or violation of
governing law or which may result in liability to the employer
and, to the best of the knowledge of the Vendor and SoftQuad,
there is no basis for such a claim.
(29) Insurance. Schedule 3.01(29) attached hereto contains a true and
complete list of all insurance policies maintained by the Vendor or
under which the Vendor is covered in respect of the properties, assets,
operations and personnel of the Business as of the date hereof.
Complete and correct copies of all such insurance policies have been
provided to the Purchaser. Such insurance policies are in full force
and effect and the Vendor is not in default with respect to the payment
of any premium or compliance with any of the provisions contained in
any such insurance policy. To the best of the knowledge of the Vendor
and SoftQuad, there are no circumstances under which the Vendor would
be required to or, in order to maintain its coverage, should give any
notice to the insurers under any such insurance policies which has not
been given. The Vendor has not received notice from any of the insurers
regarding cancellation of such insurance policies. The Vendor has not
failed to give any notice of or to present any claim under any such
insurance policy in due and timely fashion. The Vendor has not received
notice from any of the insurers denying any claims.
(30) Non-Arm's Length Matters. Except as disclosed in Schedule 3.01(30),
with respect to the Business, the Vendor is not a party to or bound by
any agreement with, is not indebted to, and no amount is owing to the
Vendor by, any of the Affiliates of the Vendor or any officers, former
officers, former directors, shareholders, former shareholders,
employees (except for oral employment agreements with employees) or
former employees of the Vendor or to any person not dealing at arm's
length with any of the foregoing.
(31) Government Assistance. Schedule 3.01(31) attached hereto describes all
agreements, loans, other funding arrangements and assistance programs
(collectively called "GOVERNMENT ASSISTANCE PROGRAMS") which have been
provided to the Business from any federal, provincial, municipal or
other government or governmental agency, board, commission or
authority, domestic or foreign (collectively called "GOVERNMENT
AGENCIES"). Complete and correct copies of all documents relating to
the Government Assistance Programs have been delivered to the
Purchaser. The Vendor has performed all of its obligations under the
Government Assistance Programs, and no basis exists for any Government
Agencies to seek payment or repayment of any amount or benefit provided
under any of the Government Assistance Programs.
-21-
(32) Compliance with Laws. In relation to the Business, the Vendor is not in
violation of any federal, provincial or other law, regulation or order
of any government or governmental or regulatory authority, domestic or
foreign.
(33) Complete Conveyance. The Purchased Assets include all rights,
properties, interests, assets (both tangible and intangible) and
agreements necessary to enable the Purchaser to carry on the Business
in the same manner and to the same extent as it has been carried on by
the Vendor prior to the date hereof
(34) Vendor Residency. The Vendor is not a non-resident of Canada within the
meaning of the Income Tax Act (Canada).
(35) Copies of Documents. Complete and correct copies (including all
amendments) of all leases, material contracts and other documents
referred to in this Agreement or any Schedule hereto or required to be
disclosed hereby have been delivered to the Purchaser.
(36) Disclosure. No representation or warranty contained in this Section
3.01, and no statement contained in any Schedule, certificate, list,
summary or other disclosure document provided or to be provided to the
Purchaser pursuant hereto, or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact which
is necessary in order to make the statements contained therein not
misleading.
3.02. Representations and Warranties by SoftQuad. SoftQuad hereby represents
and warrants to the Purchaser as follows, and confirms that the
Purchaser is relying upon the accuracy of each of such representations
and warranties in connection with the purchase of the Purchased Shares
and the completion of the other related transactions hereunder:
(1) Corporate Authority and Binding Obligation. SoftQuad is a corporation
duly incorporated and validly subsisting under the laws of New
Brunswick. SoftQuad has good right, fall corporate power and absolute
authority to enter into this Agreement and to sell, assign and transfer
the Purchased shares to the Purchaser in the manner contemplated herein
and to perform all of SoftQuad's obligations under this Agreement.
SoftQuad and its shareholders and board of directors have taken all
necessary or desirable actions, steps and corporate and other
proceedings to approve or authorize, validly and effectively, the
entering into of, and the execution, delivery and performance of, this
Agreement and the sale and transfer of the Purchased Shares to the
Purchaser. This Agreement is a legal, valid and binding obligation of
SoftQuad, enforceable against it in accordance with its terms subject
to (i) bulk sales legislation and bankruptcy, insolvency, moratorium,
reorganization and other laws relating to or affecting the enforcement
of creditors' rights generally and (ii) the fact that equitable
remedies, including the remedies of specific performance and
injunction, may only be granted in the discretion of a court.
(2) Status of UK. UK is a corporation duly incorporated and validly
subsisting under the laws of its jurisdiction of incorporation. UK has
all necessary corporate power to own its properties and to carry on its
business as it is now being conducted. UK has no subsidiaries.
-22-
(3) Authorized and Issued Capital of UK. The authorized capital of UK
consists of 1,000 ordinary shares, of which 100 ordinary shares have
been duly issued and are outstanding as fully paid and non-assessable
shares, all of which are owned by SoftQuad.
(4) No Other Purchase Agreements. No person has any agreement, option,
understanding or commitment, or any right or privilege (whether by law,
preemptive or contractual) capable of becoming an agreement, option or
commitment, including convertible securities, warrants or convertible
obligations of any nature, for:
(a) the purchase, subscription, allotment or issuance of, or
conversion into, any of the unissued shares in the capital of
UK or any securities of UK;
(b) the purchase from SoftQuad of any of the Purchased Shares, or
any rights or interest therein; and
(c) the purchase or other acquisition from UK of any of its
undertaking, property, assets, other than in the ordinary
course of business.
3.03. Representations and Warranties by the Purchaser. The Purchaser hereby
represents and warrants to the Vendor and SoftQuad as follows, and
confirms that the Vendor and SoftQuad are relying upon the accuracy of
each of such representations and warranties i connection with the sale
of the Purchased Assets and the completion of the other transactions
hereunder:
(1) Corporate Authority and Binding Obligation. The Purchaser is a
corporation duly incorporated and validly subsisting under the laws of
its jurisdiction of incorporation. The Purchaser has all necessary
corporate power to own its properties and to carry on its business as
it is now being conducted. The Purchaser has good right, full corporate
power and absolute authority to enter into this Agreement and to
purchase the Purchased Assets from the Vendor and the Purchased Shares
from SoftQuad in the manner contemplated herein and to perform all of
the Purchaser's obligations under this Agreement. The Purchaser and its
shareholders and board of directors have taken all necessary or
desirable actions, steps and corporate and other proceedings to approve
or authorize, validly and effectively, the entering into of, and the
execution, delivery and performance of, this Agreement and the purchase
Of the Purchased Assets from the Vendor and the purchase of the
Purchased Shares from SoftQuad. This Agreement is a legal, valid and
binding obligation of the Purchaser. enforceable against it in
accordance with its terms subject to (i) bankruptcy, insolvency,
moratorium, reorganization and other laws relating to or affecting the
enforcement of creditors' rights generally and (ii) the fact that
equitable remedies, including the remedies of specific performance and
injunction, may only be granted in the discretion of a court.
(2) Authorized and Issued Capital of the Purchaser. The authorized capital
of the Purchaser consists of an unlimited number of common shares, of
which I common shares have been duly issued and are outstanding as
fully paid and non-assessable shares. After giving effect to the
transactions contemplated in this Agreement, the common shares to be
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issued to the Vendor pursuant to clause 2.07(b) hereof shall represent
19.0% of the issued and outstanding common shares of the Purchaser.
(3) No Other Purchase Agreements. Other than pursuant to the Shareholders
Agreement attached as Schedule 6.01(14), no person has any agreement,
option, understanding or commitment, or any right or privilege (whether
by law, preemptive or contractual) capable of becoming an agreement,
option or commitment, includin2 convertible securities, warrants or
convertible obligations of any nature, for:
(a) the purchase, subscription, allotment or issuance of, or
conversion into, any of the unissued shares in the capital of
the Purchaser or any securities of the Purchaser; and
(b) the purchase or other acquisition from the Purchaser of any of
its undertaking, property, assets, other than in the ordinary
course of business.
(4) Contractual and Regulatory Approvals. The Purchaser is not under any
obligation, contractual or otherwise to request or obtain the consent
of any person, and no permits, licences, certifications, authorizations
or approvals of, or notifications to, any federal, provincial,
municipal or local government or governmental agency, board, commission
or authority are required to be obtained by the Purchaser in connection
with the execution, delivery or performance by the Purchaser of this
Agreement or the completion of any of the' transactions contemplated
herein.
(5) Compliance with Constating Documents, Agreements and Laws. The
execution, delivery and performance of this Agreement and each of the
other agreements contemplated or referred to herein by the Purchaser,
and the completion of the transactions contemplated hereby, will not
constitute or result in a violation or breach of or default under:
(a) any term or provision of any of the articles, by-laws or other
constating documents of the Purchaser;
(b) the terms of any indenture, agreement (written or oral),
instrument or understanding or other obligation or restriction
to which the Purchaser is a party or by which it is bound, or
(c) any term or provision of any licences, registrations or
qualification of the Purchaser or any order of any court,
governmental authority or regulatory body or any applicable
law or regulation of any jurisdiction.
(6) Investment Canada Act. The Purchaser is a "non-Canadian" for purposes
of and within the meaning of the Investment Canada Act.
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ARTICLE 4
SURVIVAL AND LIMITATIONS OF
REPRESENTATIONS AND WARRANTIES
4.01. Survival of Warranties by the Vendor and SoftQuad
-------------------------------------------------
The representations and warranties made by the Vendor and SoftQuad and
contained in this Agreement, or contained in any document or certificate given
in order to carry out the transactions contemplated hereby, will survive the
closing of the purchase of the Purchased Assets and the Purchased Shares
provided for herein and, notwithstanding such closing or any investigation made
by or on behalf of the Purchaser or any other person or any knowledge of the
Purchaser or any other person, shall continue in full force and effect for the
benefit of the Purchaser provided that no Warranty Claim may be made or brought
by the Purchaser after the date which is two years following the Closing Date.
After the expiration of such period of time, the Vendor and SoftQuad will be
released from all obligations and liabilities in respect of the representations
and warranties made by the Vendor and contained in this Agreement or in any
document or certificate given in order to carry out the transactions
contemplated hereby.
4.02. Survival of Warranties by Purchaser
-----------------------------------
The representations and warranties made by the Purchaser and contained
in this Agreement or contained in any document or certificate given in order to
carry out the transactions contemplated hereby will survive the closing of the
purchase and sale of the Purchased Assets and the Purchased Shares provided for
herein and, notwithstanding such closing or any investigation made by or on
behalf of the Vendor or any other person or any knowledge of the Vendor or any
other person, shall continue in full force and effect for the benefit of the
Vendor.
4.03. Limitations on Warranty Claims
------------------------------
(1) The Purchaser shall not be entitled to make a Warranty Claim if the
Purchaser has been advised in writing or otherwise has actual knowledge
prior to the Closing Time of the inaccuracy, non-performance,
non-fulfilment or breach which is the basis for such Warranty Claim and
the Purchaser completes the transactions hereunder notwithstanding such
inaccuracy, nonperformance, non-fulfilment or breach.
(2) The amount of any damages which may be claimed by the Purchaser
pursuant to a Warranty Claim shall be calculated to be the cost or loss
to the Purchaser after giving effect to any insurance proceeds
available to the Purchaser in relation to the matter which is the
subject of the Warranty Claim.
(3) The Purchaser shall not be entitled to make any Warranty Claim until
the aggregate amount of all damages, losses, liabilities and expenses
incurred by the Purchaser as a result of all misrepresentations and
breaches of warranties contained in this Agreement or contained in any
document or certificate given in order to carry out the transactions
contemplated hereby, after taking into account clause (b) of this
section, is equal to $25,000.
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(4) Notwithstanding any other provisions of this Agreement or of any
agreement, certificate or other document made in order to carry out the
transactions contemplated hereby, the maximum aggregate liability of
the Vendor and SoftQuad together in respect of all Warranty Claims by
the Purchaser will be limited to a maximum as set out in the form of
indemnity agreement attached hereto as Schedule 6.01(9).
ARTICLE 5
COVENANTS
5.01. Covenant by the Vendor and SoftQuad
-----------------------------------
The Vendor covenants to the Purchaser that it will do or cause to be
done the following:
(1) Investigation of Business and Examination of Documents
------------------------------------------------------
The Vendor will provide access to and will permit the Purchaser,
through its representatives, to make such investigation of, the
operations, properties, assets and records of the Business and of its
financial and legal condition as the Purchaser deems necessary or
advisable to familiarize itself with such operations, properties,
assets, records and other matters. Without limiting the generality of
the foregoing, the Vendor will permit the Purchaser and its
representatives to have access to the premises used in connection with
the Business, and will produce for inspection and provide copies to the
Purchaser of:
(a) all agreements and other documents referred to in Sections
2.01 and 3.01 hereof or in any of the Schedules attached
hereto and all other contracts, leases, licences, title
documents, title opinions, insurance policies, pension plans,
information relating, to employees of the Business, customer
lists, information relating to customers and suppliers of the
Business, documents relating to legal or administrative
proceedings and all other documents of or in the possession of
the Vendor relating to the Business;
(b) all books, records, accounts, tax returns and financial
statements of the Business; and
(c) all other information which, in the reasonable opinion of the
Purchaser's representatives, is required in order to make an
examination of the Business.
Subject to Section 4.03 hereof, such investigations and inspections
shall not mitigate or affect the representations and warranties of the
Vendor and SoftQuad hereunder, which shall continue in full force and
effect.
(2) Conduct of Business. Except as contemplated by this agreement or with
the prior written consent of the Purchaser, from and including the date
of this Agreement to and including the Closing Date, the Vendor and
SoftQuad will:
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(a) operate the Business and the business of UK only in the
ordinary course thereof, consistent with past practices.
(b) not create, incur or assume any Encumbrance upon any of the
Purchased Assets or assets of UK;
(c) not dispose of any of the Purchased Assets or assets of UK
except in the ordinary course of the Business; and
(d) not terminate or waive any right of substantial value of the
Business or to the business of UK.
(3) Transfer of Purchased Assets and Purchased Shares. At or before the
Closing Time, the Vendor and SoftQuad will cause all necessary steps
and corporate proceedings to be taken in order to permit the Purchased
Assets and Purchased Shares to be duly and regularly transferred to the
Purchaser.
(4) General Conveyance. At the Closing Time, the Vendor will deliver to the
Purchaser good and marketable title to and exclusive possession of the
Purchased Assets. At the Closing Time, the Vendor will execute and
deliver to the Purchaser one or more forms of general conveyance or
bills of sales in respect of the assignment, conveyance, transfer and
delivery of the Purchased Assets to the Purchaser in form acceptable to
the Purchaser.
(5) Retail Sales Tax. At or before the Closing Time, the Vendor will
deliver to the Purchaser a duplicate copy of a certificate issued
pursuant to Section 6 of the Retail Sales Tax Act (Ontario) and will
deliver evidence satisfactory to the Purchaser that all taxes required
to be paid by the Vendor under similar legislation in the Province of
British Columbia have been paid.
(6) Bulk Sales Act Legislation. The Purchaser hereby waives compliance by
the Vendor with the provisions of the Bulk Sales Act (Ontario) and
similar legislation in the Province of British Columbia. The Vendor
will provide the Purchaser with a statement of the Vendor's creditors
in accordance with section 4 of the Bulk Sales Act (Ontario). The
Vendor will indemnify the Purchaser in a form satisfactory to the
Purchaser's solicitors, acting reasonably, with respect to all costs,
expenses, damages and losses which the Purchaser may incur or suffer as
a result of the Vendor's non-compliance with the Bulk Sales Act
(Ontario) and similar legislation in the Province of British Columbia,
except to the extent that such damages arise from the Purchaser's
failure to pay and satisfy any of the Assumed Liabilities.
(7) Pledge of Shares. If the Vendor fails to comply with the provisions of
the Bulk Sales Act (Ontario) and similar legislation in the Province of
British Columbia, as security for the obligations of the Vendor
pursuant to the Bulk Sales Act (Ontario) and such similar legislation,
at or before the Closing Time, the Vendor will pledge in favour of the
Purchaser the Common Shares issued to the Vendor pursuant to section
2.08(b) hereof in the form attached as Schedule 6.01(9).
-27-
(8) Transfer of Assumed Contracts. Subject to Section 2.02, at the Closing
Time, the Vendor will deliver to the Purchaser
(a) an assignment of the Assumed Contracts in form acceptable to
the Purchaser, and
(b) consents to the assignment of all of the Assumed Contracts
under which consent may be required and which the Vendor has
been able to obtain.
(9) Payment to the Purchaser. SoftQuad shall make cash payments to the
Purchaser in the amount of any payroll refund received from Interleaf,
Inc. for the period from September 11 to September 15, 1998 inclusive
in respect of the Interleaf Agreement.
(10) Loan to the Purchaser. SoftQuad shall provide the Purchaser with the
sum of U.S. $100,000, less the amount of any payroll costs incurred by
SoftQuad to meet the September 30, 1998 and October 30, 1998 payroll of
the Vendor (the "Advance"), as a three year, non-interest bearing loan
to be repaid by the Purchaser pursuant to the terms of a promissory
note to be made by the Purchaser in favour of SoftQuad on the Closing
Date, a copy of the form of such promissory note is attached hereto as
Schedule 5.01(10). SoftQuad's advance in the amount of U.S.$ 100,000
less the Advance shall be made on or before the Closing Date.
(11) Non-Competition Agreement. At the Closing Time, the Vendor and SoftQuad
will execute and deliver to the Purchaser a non-competition agreement
in the form of the draft agreement attached hereto as Schedule 5.01(l
1).
(12) Licence Agreement re SoftQuad. Name. On or before the Closing Date, the
Vendor and/or SoftQuad shall execute and deliver a trademark licence
agreement with the Purchaser granting the Purchaser a licence to use of
any and all "SoftQuad" trademarks which also contain the words
"Softquad", "Q and design" in the form of the licence agreement
attached hereto as Schedule 5.01(12).
(13) Assignment of Loans to UK. At the Closing Time, SoftQuad will execute
and deliver to the Purchaser an assignment agreement assigning,
transferring and setting over to the Purchaser the loans outstanding by
UK to SoftQuad for the aggregate consideration of $380,374 in the form
of the assignment agreement attached hereto as Schedule 5.01(13).
(14) Assignment of Accounts Receivable. At the Closing Time, the Vendor and
SoftQuad shall cause Alpha Software Corporation to execute and deliver
an assignment in favour of the Purchaser of all of Alpha Software
Corporation's accounts receivable owing from Xxxxxx Micro Inc. derived
from the sale of HoTMetaL software.
5.02. Covenants by the Purchaser.
--------------------------
The Purchaser covenants to the Vendor and SoftQuad that it will do or
cause to be done the following:
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(1) Confidentiality. Prior to the Closing Time and, if the transaction
contemplated hereby is not completed, at all times after the Closing
Time, the Purchaser will keep confidential all information obtained by
it relating to the Business and UK, except such information which
(a) prior to the date hereof was already in the possession of the
Purchaser, as demonstrated by written records;
(b) is generally available to the public, other than as a result
of a disclosure by the Purchaser,
(c) is made available to the Purchaser on a non-confidential basis
from a source other than the Vendor or its representatives; or
(d) is required to be disclosed by law, applicable regulatory
authorities or stock exchanges.
The Purchaser further agrees that such information will be disclosed
only to those of its employees and representatives of its advisors who
need to know such information for the purposes of evaluating and
implementing the transaction contemplated hereby. Notwithstanding the
foregoing provisions of &s subclause, the obligation to maintain the
confidentiality of such information will not apply to the extent that
disclosure of such information is required in connection with
governmental or other applicable filings relating to the transactions
hereunder, provided that, in such case, unless the Vendor otherwise
agrees, the Purchaser will, if possible, request confidentiality in
respect of such governmental or other filings. If the transactions
contemplated hereby are not consummated for any reason, the Purchaser
will return forthwith, without retaining any copies thereof, all
information and documents obtained from the Vendor.
(2) Employees
---------
(a) At or before the Closing Time, the Purchaser will offer
employment to all employees of the Business at rates of
compensation, with employee benefits and on terms not less
favourable on a cumulative basis than those provided to and on
which such employees were employed by the Vendor on the date
hereof.
(b) The Vendor will remain responsible and liable for all amounts
which have accrued to all employees of the Business prior to
the Effective Date including all liability of the Vendor under
the employee stock purchase/option plan, except for accrued
vacation pay, including, without limitation, all salary,
wages, commissions, bonus and employee benefits (other than
benefits under the employee stock purchase/option plan). In
addition, the Purchaser will be liable for all severance
payments, damages for wrongful dismissal for which an employer
is liable at law in respect of the termination of the
employment of the employees of the Business who do not accept
an offer of employment by the Purchaser.
-29-
(3) Post-Closing Access
-------------------
After the Closing Date, upon reasonable notice, the Purchaser shall
give to the representatives, employees, counsel and accountants of the
Vendor, access, during normal business hours, to the Business Records
which relate to periods prior to the Closing Date and will permit such
persons to examine and copy such records, at the Vendor's expense, to
the extent reasonably requested by the Vendor in connection with the
preparation of tax and financial reporting matters, audits, legal
proceedings, governmental investigations and other business purposes.
However, the Purchaser shall not be obliged to take any action pursuant
to this subsection that would unreasonably disrupt the normal course of
its business, violate the terms of any contract to which it is a party
or to which the Purchaser or any of its assets is subject or to grant
access to any of its proprietary, confidential or classified
information.
(4) Use of Names. On or before 2 years after the Closing Date, the
Purchaser shall chance the name of the Business and shall discontinue
all use of any and all trademarks of the Vendor which also contain the
word "SoftQuad", unless the Vendor has assigned such trademarks to the
Purchaser in accordance with the Licence Agreement attached hereto as
Schedule 5.01(12).
(5) Investment Canada Act. The Purchaser shall comply with the provisions
of the Investment Canada Act in respect of its acquisition of the
Purchased Assets.
ARTICLE 6
CONDITIONS
6.01. Conditions to the Obligations of the Purchaser.
----------------------------------------------
Notwithstanding anything herein contained, the obligation of the
Purchaser to complete the transactions provided for herein will be subject to
the fulfilment of the following conditions at or prior to the Closing Time, and
the Vendor and SoftQuad jointly and severally covenant to use their best efforts
to ensure that such conditions are fulfilled.
(1) Accuracy of Representations and Warranties and Performance of the
Covenants. The representations and warranties of the Vendor and
SoftQuad contained in this Agreement or in any documents delivered in
order to carry out the transactions contemplated hereby shall be true
and accurate on the date hereof and at the Closing Time with the same
force and effect as though such representations and warranties had been
made as of the Closing Time (regardless of the date as of which the
information in this Agreement or in any Schedule or other document made
pursuant hereto is given), except as such representations and
warranties may be affected by the occurrence of events or transactions
expressly contemplated and permitted hereby. In addition, the Vendor
and SoftQuad shall have complied with all covenants and agreements
herein agreed to be performed or caused to be performed by them at or
prior to the Closing Time. In addition, the Vendor and SoftQuad shall
have delivered to the Purchaser a certificate confirming that the facts
with respect to each of such representations and warranties by the
Vendor and SoftQuad are as set out herein at the Closing Time and that
the Vendor and SoftQuad have performed all covenants required to be
performed by it or them hereunder.
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(2) No Restraining Proceedings. No order, decision or ruling of any court,
tribunal or regulatory authority having jurisdiction shall have been
made, and no action or proceeding shall be pending or threatened which,
in the opinion of counsel to the Purchaser, is likely to result in an
order, decision or ruling.
(a) to disallow, enjoin, prohibit or impose any limitations or
conditions on the purchase and sale of the Business or the
Purchased Assets contemplated hereby or the right of the
Purchaser to own the Business or the Purchased Assets; or (b)
to impose any limitations or conditions which may have a
material adverse affect on the Condition of the Business.
(3) Consents. All consents, permits, licences, certifications,
authorizations or approvals required to be obtained or notifications
required to be sent in order to carry out the transactions contemplated
hereby in compliance with all laws and agreements binding upon the
parties hereto shall have been obtained or sent as the case may be,
including the consents and other matters referred to in Schedules
3.01(3) and 3.02(5) attached hereto.
(4) Estoppel Certificates. Prior to the Closing Time, the Purchaser shall
have received from the landlord of each of the Leased Premises executed
copies of estoppel certificates in a form acceptable to the Purchaser.
(5) Employee. Prior to the Closing Time, the employees of the Business
listed in Schedule 3.01(25) shall have accepted the Purchaser's offer
of employment referred to in subsection 5.02(2) hereof.
(6) Leases for Premises. Prior to the Closing Time, SoftQuad and the
Purchaser shall have negotiated the assignment of the net office lease
between SoftQuad, as tenant, and Greenwin Construction Company Limited,
Ye Landhold Inc., Chestertnere Investments Limited, Metropolitan Life
Insurance Company, Yeoman Investment Limited and Swindon Investments
Limited, as "landlord", as amended or supplemented, in respect of
certain Toronto offices at 00 Xxxxxxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxx,
to the Purchaser with such "landlord"'s consent. Prior to the Closing
Time, SoftQuad and the Purchaser shall have negotiated the assignment
of the office premises at 108 and 110 - 00000 Xxxx Xxxxxx Xxxxxxx,
Xxxxxx, Xxxxxxx Xxxxxxxx to the Purchaser with such "landlord's"
consent.
(7) North American Distribution. Alpha Software Corporation shall have
entered into an agreement with the Purchaser substantially in the form
of the draft agreement attached hereto as Schedule 6.01(7).
(8) Advance to the Purchaser. SoftQuad shall have advanced the loan
described in subsection 5.01(10) hereof, subject to the terms of a
promissory note to be made by the Purchaser in favour of SoftQuad on
the Closing Date.
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(9) Indemnity and Share Pledge. The Vendor shall have delivered the
indemnity and share pledge to the Purchaser described in subsection
4.03(4) and 5.01(6) and (7) substantially in the form of indemnity and
share pledge attached hereto as Schedule 6.01(9).
(10) Non-Competition Agreement. The Vendor and SoftQuad shall have delivered
to the Purchaser a non-competition agreement substantially in the form
of the draft agreement attached hereto as Schedule 5.01(11).
(11) Licence Agreement re SoftQuad. The Vendor and/or SoftQuad shall have
delivered a trademark licence agreement to the Purchaser substantially
in the form of the licence agreement attached hereto as Schedule
5.01(12).
(12) Assignment Agreements re Vendor's Trademarks and Software. The Vendor
shall have delivered an assignment agreement to the Purchaser assigning
all of the Vendor's right, title and interest in and to certain
trademarks to the Purchaser, in the form of the trademark assignment
agreement attached hereto as Schedule 6.01(12) and all of the Vendor's
right, title and interest in and to certain software to the Purchaser
in the form of software assignment agreement attached hereto as
Schedule 6.01(12).
(13) Assignment of Loans to UK Agreement. SoftQuad shall have delivered to
the Purchaser an assignment agreement substantially in the form of the
assignment agreement attached hereto as Schedule 6.01(13).
(14) Shareholders' Agreement. At the Closing Time, SoftQuad shall have
entered into a shareholders' Agreement in the form of the agreement
attached as Schedule 6.01(14) hereto;
(15) Protege Contract. Subject to obtaining the consent of Protege Software
Holdings Ltd., SoftQuad hereby assigns the Protege Software Holdings
Ltd. agreement with SoftQuad dated December 20, 1995, and as amended on
December 20, 1996 and August 7, 1997 to the Purchaser.
(16) Payment of Accounts Payable Not Assumed. The Vendor shall have provided
evidence to the satisfaction of the Purchaser, acting reasonably, that
the Vendor has paid all of the accounts payable other than the Assumed
Liabilities on or before closing. Failing which, SoftQuad shall execute
and deliver to the Purchaser the pledge agreement in substantially the
form of agreement attached hereto as Schedule 6.01(9) hereto.
(17) Employee Stock Loans. The Vendor shall have provided evidence to the
satisfaction of the Purchaser, acting reasonably, that the Vendor has
extended the Employee loans incurred in correction with the employee
stock purchase/option plan to those employees of the Vendor to whom the
Purchaser has offered employment pursuant to section 5.02(a).
(18) Opinion of Vendor Counsel. At the Closing Time, the Purchaser shall
have received an opinion of legal counsel for the Vendor substantially
in the form of the draft opinion attached hereto as Schedule 6.01(18),
which opinion may rely on certificates of one or more senior officers
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of the Vendor as to factual matters and refer to opinions of local
counsel.
6.02. Waiver or Termination by Purchaser.
----------------------------------
The conditions contained in Section 6.01 hereof are inserted for the
exclusive benefit of the Purchaser and may be waived in whole or in part by the
Purchaser at any time. The Vendor and SoftQuad acknowledge that the waiver by
the Purchaser of any condition or any part of any condition shall constitute a
waiver only of such condition or such part of such condition, as the case may
be, and shall not constitute a waiver of any covenant, agreement, representation
or warranty made by the Vendor or SoftQuad herein that corresponds or is related
to such condition or such part. of such condition, as the case may be. If any of
file conditions contained in Section 6.01 hereof are not fulfilled or complied
with as herein provided, the Purchaser may, at or prior to the Closing Time at
its option, rescind this Agreement by notice in writing to the Vendor and
SoftQuad and in such event the Purchaser shall be released from all obligations
hereunder and, unless the condition or conditions which have not been fulfilled
are reasonably capable of being fulfilled or caused to be fulfilled by the
Vendor and SoftQuad, then the Vendor and SoftQuad shall also be released from
all obligations hereunder.
6.03. Conditions to the Obligations of the Vendor
-------------------------------------------
Notwithstanding anything herein contained, the obligations of the
Vendor and SoftQuad to complete the transactions provided for herein will be
subject to the fulfilment of the following conditions at or prior to the Closing
Time, and the Purchaser will use its best efforts to ensure that such conditions
are fulfilled.
(1) Accuracy of Representations and Warranties and Performance of
Covenants. The representations and warranties of the Purchaser
contained in this Agreement or in any documents delivered in order to
carry out the transactions contemplated hereby will be true and
accurate on the date hereof and at the Closing Time with the same force
and effect as though such representations and warranties had been made
as of the Closing Time (regardless of the date as of which the
information in this Agreement or any such Schedule or other document
made pursuant hereto is given). In addition, the Purchaser shall have
complied with all covenants and agreements herein agreed to be
performed or caused to be performed by it at or prior to the Closing
Time. In addition, the Purchaser shall have delivered to the Vendor and
SoftQuad a certificate confirming that the facts with respect to each
of the representations and warranties of the Purchaser are as set out
herein at the Closing Time and that the Purchaser has performed each of
the covenants required to be performed by it hereunder.
(2) No Restraining Proceedings. No order, decision or ruling of any court,
tribunal or regulatory authority having jurisdiction shall have been
made, and no action or proceeding shall be pending or threatened which,
in the opinion of counsel to the Vendor, is likely to result in an
order, decision or ruling, to disallow, enjoin or prohibit the purchase
and sale of the Purchased Assets contemplated hereby.
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(3) Consents. All consents required to be obtained in order to carry out
the transactions contemplated hereby in compliance with all laws and
agreements binding upon the parties hereto shall have been obtained,
including the consents referred to in Schedules 3.01(3), 3.02(6) and
3.03(4) attached hereto.
(4) Shareholders' Agreement. At the Closing Time, Vendor shall have entered
into a shareholders' Agreement in the form of the agreement attached as
Schedule 6.01(14) hereto;
(5) Promissory Note. The Purchaser shall have entered into the promissory
note evidencing the loan from SoftQuad as set forth in Section
5.01(10).
(6) Opinion of Purchaser's Counsel. At the Closing Time, the Vendor shall
have received an opinion of legal counsel for the Purchaser
substantially in the form of the draft opinion attached hereto as
Schedule 6.03(6), which opinion may rely on certificates of one or more
senior officers of the Purchaser as to factual matters.
6.04. Waiver or Termination by Vendor
-------------------------------
The conditions contained in Section 6.03 hereof are inserted for the
exclusive benefit of the Vendor and may be waived in whole or in part by the
Vendor and SoftQuad at any time. The Purchaser acknowledges that the waiver by
the Vendor and SoftQuad of any condition or any part of any condition shall
constitute a waiver only of such condition or such part of such condition, as
the case may be, and shall not constitute a waiver of any covenant, agreement,
representation or warranty made by the Purchaser herein that corresponds or is
related to such condition or such part of such condition, as the case may be. If
any of the conditions contained in Section 6.03 hereof are not fulfilled or
complied with as herein provided, the Vendor or SoftQuad may, at or prior to the
Closing Time at its option, rescind this Agreement by notice in writing to the
Purchaser and in such event the Vendor and SoftQuad shall be released from all
obligations hereunder and, unless the condition or conditions which have not
been fulfilled are reasonably capable of being fulfilled or caused to be
fulfilled by the Purchaser, then the Purchaser shall also be released from all
obligations hereunder.
ARTICLE 7
CLOSING
7.01. Closing Arrangements
--------------------
Subject to the terms and conditions hereof, the transactions
contemplated herein shall be closed at the Closing Time at the offices of Xxxxxx
XxXxxxxx Stapells Xxxxxxxx, 00 Xxxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxx or at such
other place or places as may be mutually agreed upon by the Vendor and the
Purchaser.
7.02. Documents to be Delivered
-------------------------
At or before the Closing Time, the Vendor and SoftQuad shall execute,
or cause to be executed, and shall deliver, or cause to be delivered, to the
Purchaser all documents, instruments and things which are to be delivered by the
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Vendor and SoftQuad pursuant to the provisions of this Agreement and the
Purchaser shall execute, or cause to be executed, and shall deliver, or cause to
be delivered, to the Vendor and SoftQuad all cheques or bank drafts and all
documents, instruments and things which the Purchaser is to deliver or to cause
to be delivered pursuant to the provisions of this Agreement.
ARTICLE 8
INDEMNIFICATION AND SET-OFF
8.01. Indemnity by SoftQuad and the Vendor
------------------------------------
(1) SoftQuad and the Vendor hereby agree to jointly and severally indemnify
and save the Purchaser harmless from and against any claims, demands,
actions, causes of action, damage, loss, deficiency, cost, liability
and expense ("Claims") which may be made or brought against the
Purchaser or which the Purchaser may suffer or incur as a result of, in
respect of or arising out of:
(a) any non-performance or non-fulfilment of any covenant or
agreement on the part of the Vendor and SoftQuad contained in
this Agreement or in any document given in order to carry out
the transactions contemplated hereby;
(b) any misrepresentation, inaccuracy, incorrectness or breach of
any representation or warranty made by the Vendor and SoftQuad
contained in this Agreement or contained in any document or
certificate given in order to carry out the transactions
contemplated hereby;
(c) Claims brought by shareholders of SoftQuad in connection with
this Agreement and the transactions contemplated hereby;
(d) Claims arising out of actions of the Vendor prior to the
Effective Date;
(e) Claims brought by third parties with respect to Vendor's
intellectual property rights to any of the Vendor's software
assets; and
(f) all costs and expenses including, without limitation, legal
fees on a solicitor and client basis, incidental to or in
respect of the foregoing;
(2) The obligations of indemnification by the Vendor pursuant to this
Section 8.01 will be subject to:
(a) the limitations referred to in Section 4.01 hereof with
respect to the survival of the representations and warranties
by the Vendor;
(b) the limitations referred to in Section 4.03 hereof; and
(c) the provisions of Section 8.03 hereof.
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8.02. Indemnity by the Purchaser
--------------------------
(1) The Purchaser hereby agrees to indemnify and save SoftQuad and the
Vendor harmless from and against any Claims which may be made or
brought against SoftQuad or the Vendor which SoftQuad or the Vendor may
suffer or incur as a result of, in respect of or arising out of:
(a) any nonperformance or non-fulfilment of any covenant or
agreement on the part of the Purchaser contained in this
Agreement or in any document given in order to carry out the
transactions contemplated hereby;
(b) any misrepresentation, inaccuracy, incorrectness or breach of
any representation or warranty made by the Purchaser contained
in this Agreement or contained in any document or certificate
given in order to carry out the transactions contemplated
hereby;
(c) liabilities which the Purchaser assumes pursuant to this
Agreement and the transactions contemplated hereby;
(d) Claims pursuant to this transaction by employees of the Vendor
who accept the Purchaser's offer of employment;
(e) Claims in respect of the obligation to repay certain loans to
SoftQuad; and
(f) all costs and expenses including, without limitation, legal
fees on a solicitor and client basis, incidental to or in
respect of the foregoing.
8.03. Provisions Relating to Indemnity Claims
---------------------------------------
The following provisions will apply to any claim (the "INDEMNITY
CLAIM") by a party seeking indemnification under this Article 8 (the
"INDEMNIFIED PARTY").
(1) Promptly after becoming aware of any matter that may give rise to an
Indemnity Claim, the indemnified party will provide to the party
against whom a claim for indemnification is sought (the "INDEMNIFYING
PARTY") written notice of the Indemnity Claim specifying (to the extent
that information is available) the factual basis for the Indemnity
Claim and the amount of the Indemnity Claim or, if an amount is not
then determinable, an estimate of the amount of the Indemnity Claim, if
an estimate is feasible in the circumstances.
(2) If an Indemnity Claim relates to an alleged liability to any other
person (hereinafter, in this section, called a "THIRD PARTY
LIABILITY"), including without limitation any governmental or
regulatory body or any taxing authority, which is of a nature such that
the indemnified party is required by applicable law to make a payment
to a third party before the relevant procedure for challenging the
existence or quantum of the alleged liability can be implemented or
completed, then the indemnified party may, notwithstanding the
provisions of subsections (3) and (4) of this section, make such
payment and forthwith demand reimbursement for such payment from the
indemnifying party in accordance with this Agreement; provided that, if
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the alleged liability to the third party as finally determined upon
completion of settlement negotiations or related legal proceedings is
less than the amount which is paid by the indemnifying party in respect
of the related Indemnity Claim, then the indemnified party shall
forthwith following the final determination pay to the indemnifying
party the amount by which the amount of the liability as finally
determined is less than the amount which is so paid by the indemnifying
party.
(3) The indemnified party shall not negotiate, settle, compromise or pay
(except in the case of payment of a judgment) any Third Party Liability
as to which it proposes to assert an Indemnity Claim, except with the
prior consent of the indemnifying party (which consent shall not be
unreasonably withheld or delayed), unless there is a reasonable
possibility that such Third Party Liability may materially and
adversely affect the Condition of the Business or the indemnified
party, in which case the indemnified party shall have the right, after
notifying the indemnifying party, to negotiate, settle, compromise or
pay such Third Party Liability without prejudice to its rights of
indemnification hereunder.
(4) With respect to any Third Party Liability, provided the indemnifying
party first admits the indemnified party's right to indemnification for
the amount of such Third Party Liability which may at any time be
determined or settled, then in any legal, administrative or other
proceedings in connection with the matters forming the basis of the
Third Party Liability, the following procedures will apply:
(a) except as contemplated by clause (c) of this subsection, the
indemnifying party will have the right to assume carriage of
the compromise or settlement of the Third Party Liability and
the conduct of any related legal, administrative or other
proceedings, but the indemnified party shall have the right
and shall be given the opportunity to participate in the
defence of the Third Party Liability, to consult with The
indemnifying party in the settlement of the Third Party
Liability and the conduct of related legal, administrative and
other proceedings (including consultation with counsel) and to
disagree on reasonable grounds with the selection and
retention of counsel, in which case counsel satisfactory to
the indemnifying party and the indemnified party shall be
retained by the indemnifying party;
(b) The indemnifying party will co-operate with the indemnified
party in relation to the Third Party Liability, will keep it
fully advised with respect thereto, will provide it with
copies of all relevant documentation as it becomes available,
will provide it with access to all records and files relating
to the defence of the Third Party Liability and will meet with
representatives of the indemnified party at all reasonable
times to discuss the Third Party Liability; and
(c) notwithstanding clauses (a) and (b) of this subsection, the
indemnifying party will not settle the Third Party Liability
or conduct any legal, administrative or other proceedings in
any manner which could, in the reasonable opinion of the
indemnified party, have a material adverse affect on the
Condition of the Business or the indemnified party, except
with the prior written consent of the indemnified party.
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(5) If, with respect to any Third Party Liability, the indemnifying party
does not admit the indemnified party's right to indemnification or
declines to assume carriage of the settlement or of any legal,
administrative or other proceedings relating to the Third Party
Liability, then the following provisions will apply:
(a) the indemnified party, at its discretion, may assume carriage
of the settlement or of any legal, administrative or other
proceedings relating to the Third Party Liability and may
defend or settle the Third Party Liability on such terms as
the indemnified party, acting in good faith, considers
advisable; and
(b) any cost, loss, damage or expense incur-red or suffered by the
indemnified party in the settlement of such Third Party
Liability or the conduct of any legal, administrative or other
proceedings shall be added to the amount of the Indemnity
Claim.
8.04. Right to Set-Off.
-----------------
The Purchaser, the Vendor and SoftQuad shall have the right to satisfy
any amount from time to time owing by it to any of the others by way of set-off
against any amount from time to time owing by such other to it, including any
amount owing pursuant to Article 8 hereof.
ARTICLE 9
GENERAL PROVISIONS
9.01. Further Assurance.
-----------------
Each of the Vendor, SoftQuad and the Purchaser hereby covenants and
agrees that at any time and from time to time after the Closing Date it will,
upon the request of another, do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged and delivered all such further acts, deeds,
assignments, transfers, conveyances and assurances as may be required for the
better carrying out and performance of all the terms of this Agreement.
9.02. Remedies Cumulative
-------------------
The rights and remedies of the parties under this Agreement are
cumulative and in addition to and not in substitution for any rights or remedies
provided by law. Any single or partial exercise by any party hereto of any right
or remedy for default of breach of any term, covenant or condition of this
Agreement does not waive, alter, affect or prejudice any other right or remedy
to which such party may be lawfully entitled for the same default or breach.
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9.03. Notices.
-------
Any notice, designation, communication, request, demand or other
document, required or permitted to be given or sent or delivered hereunder to
any party hereto shall be sufficiently given or sent or delivered if it is:
(a) delivered personally to an officer or director of such party;
or
(b) sent to the party entitled to receive it by registered mail,
postage prepaid, mailed in Canada; or
(c) sent by telecopy machine.
Notices shall be sent to the following addresses or telecopy numbers:
in the case of the Vendor:
SOFTQUAD INC.
c/o 000 Xxxxxxxxx Xxxxxxxx
Xxxxxxxxxx, XX
00000
Attention: Xxxxxx Xxxxx
Telecopier No.: (000) 000-0000
in the case of SoftQuad:
SOFTQUAD INTERNATIONAL INC.
c/o 000 Xxxxxxxxx Xxxxxxxx
Xxxxxxxxxx, XX
00000
Attention: Xxxxxx Xxxxx
Telecopier No.: (000) 000-0000
in the case of the Purchaser:
1308870 Ontario Inc.
00 Xxxxxxxx Xxxxxx Xxxx,
00xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxxxxxxxx
Telecopier No.: (000) 000-0000
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or to such other address or telecopies number as the party entitled to or
receiving such notice, designation, communication, request, demand or other
document shall, by a notice given in accordance with this section, have
communicated to the party given or sending or delivering such notice,
designation, communication, request, demand or other document.
Any notice, designation, communication, request, demand or other document given
or sent or delivered as aforesaid shall:
(i) if delivered as aforesaid, be deemed to have been
given, sent, delivered and received on the date of
delivery;
(ii) if sent by mail as aforesaid, be deemed to have been
given, sent, delivered and received (but not actually
received) on the fourth Business Day following the
date of mailing, unless at any time between the date
of mailing and the fourth Business Day thereafter
there is a discontinuance or interruption of regular
postal service, whether due to strike or lockout or
work slowdown, affecting postal service at the point
of dispatch or delivery or any intermediate point, in
which case the same shall be deemed to have been
given, sent, delivered and received in the ordinary
course of the mails, allowing for such discontinuance
or interruption of regular postal service; and
(iii) if sent by telecopy machine, be deemed to have been
given, sent, delivered and received on the Business
Day the sender receives the telecopy answer back from
the recipient confirming receipt by the recipient.
9.04. Counterparts
------------
This Agreement may be executed in several counterparts, each of which
so executed shall be deemed to be an original, and such counterparts together
shall constitute but one and the same instrument and, further, this Agreement
may be executed by facsimile signatures.
9.05. Expenses of Parties
-------------------
Each of the parties hereto shall bear all expenses incurred by it in
connection with this Agreement including, without limitation, the charges of
their respective counsel, accountants, financial advisors and finders.
9.06. Brokerage and Finder's Fees
---------------------------
SoftQuad agrees to indemnify the Purchaser and hold it harmless in
respect of any claim for brokerage or other commissions relative to this
Agreement or the transactions contemplated hereby which is caused by actions of
the SoftQuad, the Vendor or any of its Affiliates. The Purchaser will indemnify
the Vendor and SoftQuad and hold them harmless in respect of any claim for
brokerage or other commissions relative to this Agreement or to the transactions
contemplated hereby which is caused by actions of the Purchaser or any of its
Affiliates.
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9.07. Announcements
-------------
No announcement with respect to this Agreement will be made by any
party hereto without the prior approval of the other parties. The foregoing will
not apply to any announcement by any party required in order to comply with laws
pertaining to timely disclosure, provided that such party consults with the
other party before making any such announcement.
9.08. Assignment
----------
This rights of each party hereunder shall not be assignable without the
written consent of the other party.
9.09. Successors and Assigns
----------------------
This Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective successors and permitted assigns. Nothing
herein, express or implied, is intended to confer upon any person, other than
the parties hereto and their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
9.10. Entire Agreement
----------------
This Agreement and the Schedules referred to herein constitute the
entire agreement between the parties hereto and supersede all prior agreements,
representations, warranties, statements, promises, information, arrangements and
understandings, whether oral or written, express or implied, with respect to the
subject matter hereof None of the parties hereto shall be bound or charged with
any oral or written agreements, representations, warranties, statements,
promises, information, arrangements or understandings not specifically set forth
in this Agreement or in the Schedules, documents and instruments to be delivered
on or before the Closing Date pursuant to this Agreement. The parties hereto
further acknowledge and agree that, in entering into this Agreement and in
delivering the Schedules, documents and instruments to be delivered on or before
the Closing Date, they have not in any way relied, and will not in any way rely,
upon any oral or written agreements, representations, warranties, statements,
promises, information, arrangements or understandings, express or implied, not
specifically set forth in this Agreement or in such Schedules, docuirf6nts or
instruments.
9.11. Waiver
------
Any party hereto which is entitled to the benefits of this Agreement
may, and has the right to, waive any term or condition hereof at any time on or
prior to the Closing Time; provided, however, that such waiver shall be
evidenced by written instrument duly executed on behalf of such party.
9.12. Amendments
----------
No modification or amendment to this Agreement may be made unless
agreed to by the parties hereto in writing.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement under seal as of the day and year first above written.
1308870 ONTARIO INC.
by: c/s
-----------------------------------
Name:
Title
Name:
Title
SOFTQUAD INC.
by: c/s
-----------------------------------
Name:
Title
Name:
Title
SOFTQUAD INTERNATIONAL INC.
by: c/s
-----------------------------------
Name:
Title
Name:
Title
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