SUBSCRIPTION AGREEMENT
dated as of February 22, 2001
by and among
SIDEWARE SYSTEMS, INC.
and
THE PURCHASERS NAMED HEREIN
TABLE OF CONTENTS
Page
No.
ARTICLE I
PURCHASE AND SALE OF SHARES 1
1.01 Purchase and Sale 1
1.02 Purchase Price 1
1.03 Closing 1
1.04 Restrictive Legend 1
1.05 Ontario Regulatory Requirements 2
1.06 Opinion of Counsel 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY 3
2.01 Organization and Qualification 4
2.02 Authority 4
2.03 Capital Stock 4
2.04 No Conflicts; Approvals and Consents 5
2.05 SEC Reports and Financial Statements 6
2.06 Absence of Certain Changes or Events 7
2.07 Legal Proceedings 7
2.08 Compliance with Laws and Orders 7
2.09 Compliance with Agreements; Certain Agreements7
2.10 Affiliate Transactions 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASERS 8
3.01 Organization 8
3.02 Authority 8
3.03 No Conflicts; Approvals and Consents 9
3.04 Legal Proceedings 9
3.05 Purchase of Units 9
3.06 Not Resident In Ontario 10
3.07 Accredited Investor 10
ARTICLE IV
DEFINITIONS 11
4.01 Definitions 11
ARTICLE V
MISCELLANEOUS 14
5.01 Non-Survival of Representations,
Warranties, Covenants and Agreements 14
5.02 Notices 14
5.03 Entire Agreement. 15
5.04 Expenses 15
5.05 Public Announcements 15
5.06 Confidentiality 15
5.07 Waiver 15
5.08 Amendment 16
5.09 No Third Party Beneficiary 16
5.10 No Assignment; Binding Effect 16
5.11 Headings 16
5.12 Invalid Provisions 16
5.13 Governing Law 16
5.14 Arbitration 16
5.15 Counterparts 17
Exhibit A List of Purchasers
Exhibit B Legal Opinion
This SUBSCRIPTION AGREEMENT dated as of February 22, 2001
is made and entered into by and among SIDEWARE SYSTEMS, INC., a
Canadian corporation (the "Company") and each of the investors listed
on the signature pages hereto (each a "Purchaser" and collectively, the
"Purchasers"). Capitalized terms not otherwise defined herein have the
meanings set forth in Section 4.01.
WHEREAS, the Company desires to sell, and each Purchaser
desires to purchase, that number of Units set forth next to such
Purchaser's name on Exhibit A, on the terms and subject to the
conditions set forth in this Agreement. Each Unit (collectively
"Units") consists of 131,579 Common shares without par value (the
"Common Shares") and 131,579 Common stock purchase warrants (the
"Warrants"), with each Warrant entitling the holder to purchase one
additional common share (the "Warrant Shares"). The aggregate number
of Units being sold is equal to 50;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.01 Purchase and Sale. The Company hereby sells to each
Purchaser, and each Purchaser hereby purchases from the Company, the
respective number of Units set forth next to such Purchaser's name on
Exhibit A at the Closing, on the terms and subject to the conditions
set forth in this Agreement.
1.02 Purchase Price. The aggregate purchase price for the
Units is $100,000 (the "Purchase Price"), payable in immediately
available United States funds at the Closing in the manner provided in
Section 1.03.
1.03 Closing. The Closing will take place at the offices
of Sideware Systems Inc., 1600 - ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇
at 1:00 P.M. local time. The Closing will take place on the Closing
Date which, which shall be as soon as reasonably practicable following
receipt of preliminary approval from the Toronto Stock Exchange, and
which shall be determined in accordance with section 1.07. At the
Closing, each Purchaser will pay such Purchaser's portion of Purchase
Price as set forth next to such Purchaser's name on Exhibit A by wire
transfer of immediately available funds to such account as the Company
may reasonably direct by written notice delivered to Purchaser by the
Company before the Closing Date. Simultaneously, the Company will
deliver to the Purchaser's Representative a certificate or certificates
representing the respective number of Common Shares purchased by such
Purchaser (the "Share Certificates") and a certificate or certificates
representing the number of Warrants purchased by such Purchaser (the
"Warrant Certificates").
1.04 Restrictive Legend. Each Share Certificate and each
Warrant Certificate issued at the Closing will bear a legend in the
following terms:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE OR FOREIGN SECURITIES LAWS, AND ACCORDINGLY,
SUCH SECURITIES MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH THE REGISTRATION OR
QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL, STATE AND FOREIGN
SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM."
All of the restrictions imposed by this Section 1.04 upon the
transferability of the Common Shares and Warrant Shares shall cease and
terminate as to any particular Common Share or Warrant Share when such
Common Share or Warrant Share shall have been effectively registered
under the Securities Act and applicable state securities laws and sold
by the holder thereof in accordance with such registration or sold
under and pursuant to Rule 144 or is eligible to be sold under and
pursuant to paragraph (k) of Rule 144. Whenever the restrictions
imposed by this Section 1.04 shall terminate as to any Common Share or
Warrant Share as hereinabove provided, the holder thereof shall be
entitled to receive from the Company, without expense, a new
certificate evidencing such Common Share or Warrant Share not bearing
the restrictive legend otherwise required to be borne by a certificate
evidencing such Common Share or Warrant Share; provided that the
Company may require an opinion of counsel reasonably satisfactory to it
to the effect that no legend is required under the Securities Act and
applicable state securities laws or foreign securities laws.
1.05 Ontario and Provincial Regulatory Requirements. The
Purchasers acknowledge and agree that in order to comply with the
requirements of the Ontario Securities Commission:
(a) for a period of 90 days following the Closing Date, none of the
Purchasers will re-sell any of the Common Shares or Warrant
Shares through the facilities of the Toronto Stock Exchange, or
in Ontario, or to any person whom they know or have any reason to
believe is a resident of Ontario;
(b) so long as the Company's common shares are trading on any stock
exchange in the United States or through any quotation system in
the United States, any re-sales of the Common Shares or Warrant
Shares will be made through the facilities of such United States
stock exchange or quotation service; and
(c) no re-sale as described in subsection (b) will be pre-arranged
with any person who is a resident of Ontario, or will be made to
any person whom the Purchaser knows or has any reason to believe
is a resident of Ontario.
The Purchasers will also execute such additional agreements
and undertakings as the Company may reasonably require to ensure
compliance with the regulations of the Ontario Securities Commission
regarding re-distribution of securities into Ontario, or to provide the
Toronto Stock Exchange with evidence of compliance with those
regulations.
This Agreement and the offering of Units pursuant hereto is
subject to the approval of the Toronto Stock Exchange. If approval of
the Toronto Stock Exchange is not
2
received within 21 days following the
date on which all of the Units offered have been subscribed for, this
Agreement will be null and void. The Company will use its reasonable
best efforts to obtain the required approval.
Purchasers who are not residents of the United States
further acknowledge that:
(a) such Purchasers may be required to execute an undertaking with
the Toronto Stock Exchange requiring them to agree to a six month
hold period from the Closing Date in respect of all Shares and
Warrant Shares purchased by them; and
(b) securities laws of any Canadian province in which they reside may
also impose hold periods.
1.06 Opinion of Counsel. The Purchasers Representative
shall have received an opinion, substantially in the form attached
hereto as Exhibit B, from the Law Offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, counsel to
the Company, or from another firm of attorneys satisfactory to the
Purchasers Representative, acting reasonably, dated as of the Closing
Date.
1.07 Company's Re-pricing Obligation. The obligation of
the Purchasers to close shall be conditional on the Company completing
the following re-pricing procedures:
(a) The Purchasers Representative shall notify the Company as soon as
the Purchasers Representative has received sufficient
subscriptions to meet such minimum subscription level as may be
determined by the Company (which minimum subscription level shall
not be less than $3,000,000).
(b) If the closing price for the Company's shares on the Toronto
Stock Exchange on the date preceding the notice given pursuant to
subsection (a) was less than $0.80, the Company shall apply
forthwith to re-price the Units to a price based on 95% of that
closing price.
(c) The Purchasers may withdraw from the purchase and sale of the
Units if:
(i) the Company has not received approval of the re-pricing
referred to in (b) by the end of the second business day
following the notice given pursuant to (a); and
(ii) the closing price for the Company's shares on the Toronto
Stock Exchange on the business day following the notice
given pursuant to (a) is less than $0.80.
(d) If the Purchasers are not permitted to withdraw from the purchase
and sale of the Units pursuant to (c), the closing shall take
place on the third business day following the notice given
pursuant to (a), or as soon thereafter as the parties are able to
facilitate the closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3
The Company hereby represents and warrants to each Purchaser
as follows:
2.01 Organization and Qualification. Each of the Company
and its Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the Laws of its jurisdiction of
incorporation, and has all requisite corporate power and authority to
conduct its business as and to the extent now conducted and to own, use
and lease its Assets and Properties, except for such failures to be in
good standing or to have such power and authority which, individually
or in the aggregate, are not having and could not be reasonably
expected to have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole. Each of the Company and its
Subsidiaries is duly qualified, licensed or admitted to do business and
is in good standing in each jurisdiction in which the ownership, use or
leasing of its Assets and Properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary,
except for such failures to be so qualified, licensed or admitted and
in good standing which, individually or in the aggregate, are not
having and could not be reasonably expected to have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole.
Section 2.01 of the Company Disclosure Schedule sets forth (i) the name
and jurisdiction of incorporation of each Subsidiary of the Company,
(ii) its authorized capital stock, (iii) the number of issued and
outstanding shares of capital stock and (iv) the record owners of such
shares. Except for interests in the Subsidiaries of the Company and as
disclosed in Section 2.01 of the Company Disclosure Schedule, the
Company does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
2.02 Authority. The Company has the requisite corporate
power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby have been duly and validly approved by
the Board of Directors of the Company. No other corporate proceedings
on the part of the Company or its stockholders are necessary to
authorize the execution, delivery and performance by the Company of
this Agreement and the consummation by the Company of the transactions
contemplated hereby. This Agreement has been duly and validly executed
and delivered by the Company and constitutes valid and binding
obligations of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
Laws affecting the enforcement of creditors' rights generally and by
general equitable principles (regardless of whether such enforceability
is considered in a proceeding in equity or at Law). The Common Shares,
when issued in accordance with this Agreement, and the Warrant Shares
when issued upon exercise of the Warrants, will be duly authorized,
validly issued, fully paid and non-assessable.
2.03 Capital Stock.
(a) The authorized capital stock of
the Company consists solely of 199,949,375 common shares without par
value ("Common Stock"). As of January 8th, 2001, 60,886,415 shares
of Common Stock were issued and outstanding, 6,600,407 warrants were
outstanding, and not more than 11,590,400 shares (not including the
Company's proposed 2001 Stock Option Plan, which will reserve an
additional 6,000,000 shares for issuance) were reserved for issuance
upon the exercise of stock options granted under the Company employee
4
stock option plans. Except as set forth in Section 2.03 of the Company
Disclosure Schedule, since such date, there has been no change in the
number of issued and outstanding shares of Common Stock or shares of
Common Stock held in treasury. As of the date hereof, no shares of
Preferred Stock are issued and outstanding. All of the issued and
outstanding shares of Common Stock and all shares of Common Stock
reserved for issuance will be, upon issuance in accordance with the
terms specified in the instruments or agreements pursuant to which they
are issuable, duly authorized, validly issued, fully paid and
nonassessable. Except pursuant to this Agreement and as set forth in
Section 2.03 of the Company Disclosure Schedule, there are no
outstanding subscriptions, options, warrants, rights (including
"phantom" stock rights), preemptive rights or other contracts,
commitments, understandings or arrangements, including any right of
conversion or exchange under any outstanding security, instrument or
agreement (together, "Options"), obligating the Company or any of its
Subsidiaries to issue or sell any shares of capital stock of the
Company or of any Subsidiary or to grant, extend or enter into any
Option with respect thereto.
(b) Except as disclosed in Section 2.03 of the Company
Disclosure Schedule, all of the outstanding shares of capital stock of
each Subsidiary of the Company are duly authorized, validly issued,
fully paid and nonassessable and are owned, beneficially and of record,
by the Company or a Subsidiary wholly owned, directly or indirectly, by
the Company, free and clear of any Liens.
(c) Except as disclosed in Section 2.03 of the Company
Disclosure Schedule, there are no outstanding contractual obligations
of the Company or any Subsidiary of the Company to repurchase, redeem
or otherwise acquire any shares of Common Stock or any capital stock of
any Subsidiary of the Company or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise)
in, any Subsidiary of the Company or any other person.
2.04 No Conflicts; Approvals and Consents. The execution
and delivery by the Company of this Agreement, and the performance by
the Company of its obligations hereunder and the consummation of the
transactions contemplated hereby will not:
(a) conflict with or result in a violation or breach of
any of the terms, conditions or provisions of the certificate of
incorporation or by-laws (or other comparable corporate charter
document) of the Company;
(b) subject to obtaining the consents, approvals and
actions, making the filings and giving the notices disclosed in Section
2.04(b)of the Company Disclosure Schedule, conflict with or result in a
violation or breach of any terms or provision of any Law or Order
applicable to the Company or its Assets and Properties (other than such
conflicts, violations or breaches which could not in the aggregate be
reasonably expected to have a Material Adverse Effect on the Company
and its Subsidiaries taken as a whole or on the ability of the Company;
or
(c) except as disclosed in Section 2.04(c) of the Company
Disclosure Schedule, or as could not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole or on the ability of
the Company to consummate the transactions contemplated hereby (i)
conflict with or result in
5
a violation or breach of, (ii) constitute
(with or without notice or lapse of time or both) a default under,
(iii) require the Company to obtain any consent, approval or action of,
make any filing with or give any notice to any Person as a result or
under the terms of, or (iv) result in the creation or imposition of any
Lien upon the Company or any of its Assets or Properties under, any
contract or License to which the Company is a party or by which any of
its Assets and Properties is bound.
(d) Except as disclosed in Section 2.04(d) of the
Company Disclosure Schedule, no consent, approval or action of, filing
with or notice to any Governmental or Regulatory Authority or other
public or private third party is necessary or required under any of the
terms, conditions or provisions of any Law or Order of any Governmental
or Regulatory Authority or any contract to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective Assets or Properties is bound
for the execution and delivery of this Agreement by the Company, the
performance by the Company of its obligations hereunder or the
consummation of the transactions contemplated hereby, other than such
consents, approvals, actions, filings and notices which the failure to
make or obtain, as the case may be, individually or in the aggregate,
could not be reasonably expected to have a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole or on the ability of
the Company to consummate the transactions contemplated hereby.
2.05 SEC Reports and Financial Statements. Each Purchaser
has had access prior to the execution of this Agreement, either through
the ▇▇▇▇▇ database, or directly from the Company, to a true and
complete copy of each form, report, schedule, registration statement,
definitive proxy statement and other document (together with all
amendments thereof and supplements thereto) filed by the Company or any
of its Subsidiaries with the Securities and Exchange Commission (the
"SEC") pursuant to the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder (the "Exchange Act"),
and the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act") since
December 31, 1999 (as such documents have since the time of their
filing been amended or supplemented, the "Company SEC Reports"), which
are all the documents (other than preliminary material) that the
Company and its Subsidiaries were required to file with the SEC since
such date. As of their respective dates, the Company SEC Reports (i)
complied as to form in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and (ii)
did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The audited consolidated
financial statements and unaudited interim consolidated financial
statements (including, in each case, the notes, if any, thereto)
included in the Company SEC Reports (the "Company Financial
Statements") complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, were
prepared in accordance with Canadian or United States GAAP (as stated
therein), except as may be indicated therein or in the notes thereto
and except with respect to unaudited statements as permitted by
Form 10-Q of the SEC, and, as of the respective dates thereof, fairly
presented (subject, in the case of the unaudited interim financial
statements, to year-end audit adjustments) the consolidated financial
position of the Company and its consolidated subsidiaries as at the
respective dates thereof and the consolidated results of their
operations and cash flows for the respective periods then ended. The
Common Stock
6
has been registered under the Exchange Act for at least 12
months, and the Company has filed all required reports under the
Exchange Act during such period.
2.06 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Reports filed prior to the date of this
Agreement or in Section 2.06 of the Company Disclosure Schedule, (a)
since December 31, 1999 there has not been any change, event or
development having, or that could be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole, and (b) between December
31, 1999 and the date hereof the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary course
consistent with past practice.
2.07 Legal Proceedings. Except as disclosed in the Company
SEC Reports filed prior to the date of this Agreement or in
Section 2.07 of the Company Disclosure Schedule, (i) there are no
Actions or Proceedings pending or, to the Knowledge of the Company,
threatened against, relating to or affecting, nor to the Knowledge of
the Company are there any Governmental or Regulatory Authority
investigations or audits pending or threatened against, relating to or
affecting, the Company or any of its Subsidiaries or any of their
respective Assets and Properties which, individually or in the
aggregate, could be reasonably expected to have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole or on the
ability of the Company to consummate the transactions contemplated
hereby, and (ii) neither the Company nor any of its Subsidiaries is
subject to any continuing Order of any Governmental or Regulatory
Authority which, individually or in the aggregate, could be reasonably
expected to have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole or on the ability of the Company to
consummate the transactions contemplated by this Agreement.
2.08 Compliance with Laws and Orders. The Company and its
Subsidiaries hold all Licenses for the lawful conduct of their
respective businesses, except for failures to hold such Licenses which,
individually or in the aggregate, are not having and could not be
reasonably expected to have a Material Adverse Effect on the Company
and its Subsidiaries taken as a whole. The Company and its
Subsidiaries are in compliance with the terms of such Licenses, except
failures so to comply which, individually or in the aggregate, are not
having and could not be reasonably expected to have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole. Except as
disclosed in the Company SEC Reports filed prior to the date of this
Agreement, the Company and its Subsidiaries are not in violation of or
default under any Law or Order of any Governmental or Regulatory
Authority, except for such violations or defaults which, individually
or in the aggregate, are not having and could not be reasonably
expected to have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole.
2.09 Compliance with Agreements; Certain Agreements.
(a) Except as disclosed in the Company SEC Reports filed prior to the date
of this Agreement or Section 2.09(a) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries nor, to the
knowledge of the Company, any other party thereto is in breach or
violation of, or in default in the performance or observance of any
term or provision of, and no event has occurred which, with notice or
lapse of time or both, could be reasonably expected to result in a
default under, (i) the certificate of incorporation or bylaws (or other
comparable charter documents) of the Company or any of its Subsidiaries
or (ii) any contract to which the Company or any of its
7
Subsidiaries is
a party or by which the Company or any of its Subsidiaries or any of
their respective assets or properties is bound, except in the case of
clause (iii) for breaches, violations and defaults which, individually
or in the aggregate, do not have and could not be reasonably expected
to have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole.
(b) Except as disclosed in Section 2.09(b) of the Company
Disclosure Schedule or in the Company SEC Reports filed prior to the
date of this Agreement or as provided for in this Agreement, as of the
date hereof, neither the Company nor any of its Subsidiaries is a party
to any oral or written (i) union or collective bargaining agreement,
(ii) agreement with any executive officer or other key employee of the
Company or any of its Subsidiaries the benefits of which are contingent
or vest, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company or any of its
Subsidiaries of the nature contemplated by this Agreement, (iii)
agreement with respect to any executive officer or other key employee
of the Company or any of its Subsidiaries providing any term of
employment or compensation guarantee, or (iv) agreement or plan,
including any stock option, stock appreciation right, restricted stock
or stock purchase plan, any of the benefits of which will be increased,
or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or
the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement.
2.10 Affiliate Transactions. Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement or in
Section 2.10 of the Company Disclosure Schedule, no officer, director
or shareholder of the Company has any interest (other than as a
shareholder of the Company) in any property, real or personal, tangible
or intangible, including without limitation intellectual property, used
in or pertaining to the business of the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Each Purchaser hereby represents and warrants to the Company
as to himself or itself as follows:
3.01 Organization. To the extent Purchaser is an entity,
Purchaser is duly organized, validly existing and in good standing
under the Laws of its jurisdiction of its organization. Each Purchaser
has the requisite power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
3.02 Authority. To the extent Purchaser is an entity, the
execution, delivery and performance by Purchaser of this Agreement, and
the consummation by Purchaser of the transactions contemplated hereby,
have been duly and validly approved by Purchaser, no other action on
the part of Purchaser or its equityholders being necessary for
Purchaser to execute, deliver and perform its obligations hereunder.
This Agreement has been duly and validly executed and delivered by each
Purchaser and constitutes a legal, valid and binding obligation of such
Purchaser enforceable against such Purchaser in accordance with its
terms, except as
8
enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting
the enforcement of creditors' rights generally and by general equitable
principles (regardless of whether such enforceability is considered in
a proceeding in equity or at Law).
3.03 No Conflicts; Approvals and Consents. (a) The
execution and delivery of this Agreement by each Purchaser does not,
and the performance by such Purchaser of its obligations hereunder and
the consummation of the transactions contemplated hereby will not:
(i) with respect to each Purchaser that is an entity,
conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the certificate of incorporation, by-laws,
limited liability agreement or trust agreement (or other comparable
corporate charter document) of such Purchaser;
(ii) conflict with or result in a violation or breach of
any term or provision of any Law or Order applicable to such Purchaser
or any of its Assets and Properties; or
(iii) (i) conflict with or result in a violation or breach
of, (ii) constitute (with or without notice or lapse of time or both) a
default under, (iii) require such Purchaser to obtain any consent,
approval or action of, make any filing with or give any notice to any
Person as a result or under the terms of, or (iv) result in the
creation or imposition of any Lien upon such Purchaser or any of its
Assets or Properties under, any contract or License to which such
Purchaser is a party or by which any of its Assets and Properties is
bound.
(b) no consent, approval or action of, filing with or
notice to any Governmental or Regulatory Authority on the part of such
Purchaser is required in connection with the execution, delivery and
performance of such Purchaser's obligations hereunder or the
consummation of the transactions contemplated hereby.
3.04 Legal Proceedings. There are no Actions or
Proceedings pending or, to the knowledge of such Purchaser, threatened
against, relating to or affecting such Purchaser or any of its Assets
and Properties which could reasonably be expected to result in the
issuance of an Order restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated
by this Agreement.
3.05 Purchase of Units.
(a) Each Purchaser acknowledges
that this Agreement is made with such Purchaser in reliance upon such
Purchaser's representation to the Company, which by such Purchaser's
execution of this Agreement such Purchaser hereby confirms, that (i)
the Common Shares and the Warrants (and any Warrant Shares acquired in
the future) are being acquired by such Purchaser and will be acquired
for investment for such Purchaser's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part
thereof, and that such Purchaser has no present intention of selling,
granting any participation in, or otherwise distributing the same and
(ii) that such Purchaser is an "accredited investor" within the meaning
of Rule 501 under the Securities Act. By executing this Agreement,
each Purchaser further represents that it does not presently have any
contract, undertaking, agreement or arrangement with any Person to
sell, transfer or grant participations to such Person or to any third
Person, with respect to any of the Common Shares, Warrants or Warrant
Shares. Each
9
Purchaser represents that either (i) such Purchaser has
not been formed for the specific purpose of acquiring the Common
Shares, Warrants or Warrant Shares or (ii) if such Purchaser has been
formed for the specific purpose of acquiring the Common Shares,
Warrants or Warrant Shares, each Person that has an interest in such
Purchaser is an "accredited investor" within the meaning of Rule 501
under the Securities Act.
(b) Each Purchaser has had an opportunity to discuss the
Company's business, management, financial affairs and the terms and
conditions of the sale of the Units pursuant to this Agreement with the
Company's management. Each Purchaser understands that such
discussions, as well as the written information issued by the Company,
were intended to describe the aspects of the Company's business which
it believes to be material.
(c) Each Purchaser understands that none of the Common
Shares, Warrants or Warrant Shares have been, and none of them will be,
registered under the Securities Act, by reason of a specific exemption
from the registration provisions of the Securities Act which depends
upon, among other things, the bona fide nature of the investment intent
and the accuracy of such Purchaser's representations and warranties as
expressed in this Article III. Each Purchaser understands that the
Common Shares, Warrants or Warrant Shares are "restricted securities"
under applicable United States federal and state securities laws and
that, pursuant to these laws, such Purchaser must hold the Common
Shares, Warrants or Warrant Shares indefinitely unless they are
registered with the SEC, or an exemption from such registration and
qualification requirements is available. Each Purchaser acknowledges
that the Company has no obligation to register or qualify the Common
Shares, Warrants or Warrant Shares for resale except as expressly
provided under the Registration Rights Agreement. Each Purchaser
further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various
requirements including, but not limited to, the time and manner of
sale, the holding period for the Common Shares, Warrants or Warrant
Shares, and on requirements relating to the Company which are outside
of such Purchaser's control, and which the Company is under no
obligation and may not be able to satisfy.
(d) Each Purchaser has such knowledge and experience in
financial and business matters that such Purchaser is capable of
evaluating the merits and risks of the transactions contemplated
hereby, including the purchase of the Common Shares, Warrants and the
Warrant Shares.
(e) Each Purchaser is able to bear the economic risk of
acquiring Common Shares, Warrants and the Warrant Shares and to hold
the Common Shares, Warrants and Warrant Shares acquired by such
Purchaser pursuant to this Agreement for a substantial period of time.
3.06. Each Purchaser is not a resident in Ontario.
3.07. Accredited Investor Status. Each Purchaser is an
"accredited investor" as that term is defined in Section 4.01 and has
completed the Accredited Investor Certification on page 19.
10
ARTICLE IV
DEFINITIONS
4.01 Definitions.
(a) Defined Terms. As used in this Agreement, the following defined
terms have the meanings indicated below:
"AAA" has the meaning ascribed to it in Section 5.14.
"Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation.
"Accredited Investor" Shall mean: Any bank as defined in
Section 3(a)(2) of the Securities Act, or any savings and loan
association or other institution as defined in Section 3(a)(5)(A) of
the Securities Act, whether acting in its individual or fiduciary
capacity; any broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended; any insurance company as
defined in Section 2(13) of the Securities Act; any investment company
registered under the Investment Company Act of 1940, as amended, or a
business development company as defined in Section 2(a)(48) of that
act; any Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958, as amended; any plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the
benefit of its employees, if such plan has total assets in excess of
$5,000,000; an employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974, as amended, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of
such act, which plan fiduciary is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if
the employee benefit plan has total assets in excess of $5,000,000 or,
if a self-directed plan, with investment decisions made solely by
persons that are accredited investors; Any private business development
company as defined in Section 202(a)(22) of the Investment Advisers Act
of 1940, as amended; Any organization described in Section 501(c)(3) of
the Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership not formed for the specific purpose of
acquiring the Shares offered, with total assets in excess of
$5,000,000; Any natural person whose individual net worth or joint net
worth with that person's spouse, at the time of investment in the
Shares, exceeds $1,000,000; Any natural person who had an individual
income in excess of $200,000 in each of the two most recent calendar
years or joint income with that person's spouse in excess of $300,000
in each of those years and has a reasonable expectation of reaching
that same income level in the current year; Any partnership or trust,
with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the Shares, whose purchase is directed by a
sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D
and who has such knowledge and experience in financial and business
matters that he is capable of evaluating the risks and merits of an
investment in the units; or Any entity in which all of the equity
owners are accredited investors.
"Affiliate" means any Person that directly, or indirectly
through one of more intermediaries, controls or is controlled by or is
under common control with the Person specified. For purposes of this
definition, control of a Person means the power, direct or indirect, to
direct or cause the direction of the management and policies of such
Person whether by contract or otherwise and, in any event and without
limitation of the previous sentence, any Person owning ten percent
(10%) or more of the voting securities of another Person shall be
deemed to control that Person.
"Agreement" means this Subscription Agreement and the
Company Disclosure Schedules, as the same shall be amended from time to
time.
"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description (whether
real, personal or mixed, whether tangible or intangible, and wherever
situated), including the goodwill related thereto, operated, owned or
leased by such Person.
"Board of Arbitration" has the meaning ascribed to it in
Section 5.14.
11
"Closing" means the closing of the transactions contemplated
by Section 1.03.
"Closing Date" has the meaning ascribed to in Section 1.03.
"Common Shares" has the meaning ascribed to it in the
forepart of this Agreement.
"Company" has the meaning ascribed to it in the forepart of
this Agreement.
"Company Financial Statements" has the meaning ascribed to
it in Section 2.05.
"Company SEC Reports" has the meaning ascribed to it in
Section 2.05.
"Exchange Act" has the meaning ascribed to it in Section
2.05.
"GAAP" means generally accepted accounting principles,
consistently applied throughout the specified period and in the
immediately prior comparable period.
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any
domestic or foreign state, county, city or other political subdivision.
"Knowledge of the Company" means the actual knowledge of any
officer or director of the Company or any Subsidiary of the Company.
"Laws" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the
United States, any foreign country or any domestic or foreign state,
county, city or other political subdivision or of any Governmental or
Regulatory Authority.
"Licenses" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises and
similar consents granted or issued by any Governmental or Regulatory
Authority.
"Liens" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance
of any kind, or any conditional sale contract, title retention contract
or other contract to give any of the foregoing.
"Material Adverse Effect" with respect to an entity means
any event, change or effect which is materially adverse to the
business, financial condition or results of operations of such entity
(or of such group of entities taken as a whole).
"Option" has the meaning ascribed to it in Section 2.03.
"Order" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in each such
case whether preliminary or final).
12
"Person" means any natural person, corporation, limited
liability company, general partnership, limited partnership,
proprietorship, other business organization, trust, union, association
or Governmental or Regulatory Authority.
"Preferred Stock" has the meaning ascribed to it in Section
2.03.
"Purchase Price" has the meaning ascribed to it in Section
1.02.
"Purchaser" has the meaning ascribed to it in the forepart
of this Agreement.
"Purchasers Representative" shall mean ▇.▇. ▇▇▇▇▇▇▇▇▇▇
"Registration Rights Agreement" means the Registration
Rights Agreement, dated the date hereof, by and among the Company and
Purchasers.
"Rule 144" shall mean Rule 144 promulgated by the SEC under
the Securities Act (or any successor or similar rule then in force).
"SEC" has the meaning ascribed to it in Section 2.05.
"Securities Act" has the meaning ascribed to it in Section
2.05.
"Share Certificates" has the meaning ascribed to it in
Section 1.03.
"Shares" has the meaning ascribed to it in the forepart of
this Agreement.
"Subsidiary" means any Person in which the Company, directly
or indirectly through Subsidiaries or otherwise, beneficially owns more
than fifty percent (50%) of either the equity interests in, or the
voting control of, such Person.
"Unit" has the meaning ascribed to it in the forepart of
this Agreement.
"Warrant Certificates" has the meaning ascribed to it in
Section 1.03.
"Warrant Shares" has the meaning ascribed to it in the
forepart of this Agreement.
"Warrants" has the meaning ascribed to it in the forepart of
this Agreement.
(b) Construction of Certain Terms and Phrases. Unless the
context of this Agreement otherwise requires, (i) words of any gender
include each other gender; (ii) words using the singular or plural
number also include the plural or singular number, respectively; (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words
refer to this entire Agreement; (iv) the terms "Article" or "Section"
refer to the specified Article or Section of this Agreement; and (v)
the phrase "ordinary course of business" refers to the business of the
Company or a Subsidiary. Whenever this Agreement refers to a number of
days, such number shall refer to calendar days unless business days are
specified. All accounting terms used herein and not expressly defined
herein shall have the meanings given to them under GAAP. Any
representation or warranty contained herein as to the enforceability of
a contract shall be subject to the effect of any bankruptcy,
insolvency, reorganization, moratorium or other similar law
13
affecting
the enforcement of creditors' rights generally and to general equitable
principles (regardless of whether such enforceability is considered in
a proceeding in equity or at Law).
ARTICLE V
MISCELLANEOUS
5.01 Non-Survival of Representations, Warranties, Covenants
and Agreements. The representations, warranties, covenants and
agreements contained in this Agreement or in any instrument delivered
pursuant to this Agreement shall not survive the Closing Date but shall
terminate at the Closing, except for the agreements contained in this
Article V.
5.02 Notices. All notices, requests and other
communications hereunder must be in writing and will be deemed to have
been duly given only if delivered personally or by facsimile
transmission or mailed (first class postage prepaid) to the parties at
the following addresses or facsimile numbers:
If to any Purchaser:
C/O ▇.▇. ▇▇▇▇▇▇▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Company, to:
Sideware Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President & CEO
with a copy to:
Sideware Systems Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
Facsimile No.: 604-688-0094
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Chairman
All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section, be
deemed given upon delivery, (ii) if delivered by facsimile transmission
to the facsimile number as provided in this Section, be deemed given
upon receipt, and (iii) if delivered by mail in the manner described
above to the address as provided in this Section, be deemed given upon
receipt (in each case regardless of whether such notice, request or
other communication is received by any other Person to whom a copy of
such notice, request or other communication is to be delivered pursuant
to this Section). Any party from time to time may change its address,
facsimile number or other information for the purpose of notices to
that party by giving notice specifying such change to the other party
hereto.
14
5.03 Entire Agreement. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the
subject matter hereof and contains the sole and entire agreement
between the parties hereto with respect to the subject matter hereof.
5.04 Expenses. Except as otherwise expressly provided in
this Agreement, whether or not the transactions contemplated hereby are
consummated, each party will pay its own costs and expenses incurred in
connection with the negotiation, execution and closing of this
Agreement and the transactions contemplated hereby.
5.05 Public Announcements. Except as otherwise required by
Law or the rules of any applicable securities exchange or national
market system, so long as this Agreement is in effect, Purchasers and
the Company will not, and will not permit any of their respective
representatives to, issue or cause the publication of any press release
or make any other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party,
which consent shall not be unreasonably withheld. Purchasers and the
Company will cooperate with each other in the development and
distribution of all press releases and other public announcements with
respect to this Agreement and the transactions contemplated hereby, and
will furnish the other with drafts of any such releases and
announcements as far in advance as practicable.
5.06 Confidentiality. Each party hereto will hold, and
will use its best efforts to cause its Affiliates, and in the case of
each Purchaser, any Person who has provided, or who is considering
providing, financing to such Purchaser to finance all or any portion of
the Purchase Price, and their respective representatives to hold, in
strict confidence from any Person (other than any such Affiliate, or
any Person who has provided, or who is considering providing, financing
or representative), unless (i) compelled to disclose by judicial or
administrative process (including without limitation in connection with
obtaining the necessary approvals of this Agreement and the
transactions contemplated hereby of Governmental or Regulatory
Authorities) or by other requirements of Law or (ii) disclosed in an
Action or Proceeding brought by a party hereto in pursuit of its rights
or in the exercise of its remedies hereunder, all documents and
information concerning the other party or any of its Affiliates
furnished to it by the other party or such other party's
representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or
information can be shown to have been (a) previously known by the party
receiving such documents or information, (b) in the public domain
(either prior to or after the furnishing of such documents or
information hereunder) through no fault of such receiving party or (c)
later acquired by the receiving party from another source if the
receiving party is not aware that such source is under an obligation to
another party hereto to keep such documents and information
confidential.
5.07 Waiver. Any term or condition of this Agreement may
be waived at any time by the party that is entitled to the benefit
thereof, but no such waiver shall be effective unless set forth in a
written instrument duly executed by or on behalf of the party waiving
such term or condition. No waiver by any party of any term or
condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by Law or otherwise afforded, will be
cumulative and not alternative.
15
5.08 Amendment. This Agreement may be amended,
supplemented or modified only by a written instrument duly executed by
or on behalf of each party hereto.
5.09 No Third Party Beneficiary. The terms and provisions
of this Agreement are intended solely for the benefit of each party
hereto and their respective successors or permitted assigns, and it is
not the intention of the parties to confer third-party beneficiary
rights upon any other Person.
5.10 No Assignment; Binding Effect. Neither this Agreement
nor any right, interest or obligation hereunder may be assigned by any
party hereto without the prior written consent of the other party
hereto and any attempt to do so will be void, except (a) for
assignments and transfers by operation of Law and (b) that any
Purchaser may assign any or all of its rights, interests and
obligations hereunder to a wholly-owned subsidiary, provided that any
such subsidiary agrees in writing to be bound by all of the terms,
conditions and provisions contained herein, but no such assignment
referred to in clause (b) shall relieve such Purchaser of its
obligations hereunder. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable
by the parties hereto and their respective successors and assigns.
5.11 Headings. The headings used in this Agreement have
been inserted for convenience of reference only and do not define or
limit the provisions hereof.
5.12 Invalid Provisions. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any
present or future Law, and if the rights or obligations of any party
hereto under this Agreement will not be materially and adversely
affected thereby, (a) such provision will be fully severable, (b) this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, and (c) the
remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.
5.13 Governing Law. This Agreement shall be governed by
and construed in accordance with the Laws of the State of New York
applicable to a contract executed and performed in such State, without
giving effect to the conflicts of laws principles thereof.
5.14 Arbitration. The parties to this Agreement agree that
any disputes arising out of, or in connection with, the execution,
interpretation, performance or non-performance of this Agreement
(including the validity, scope and enforceability of this arbitration
provision) shall be settled by arbitration, which shall be conducted in
New York, New York pursuant to the then prevailing rules of the
American Arbitration Association ("AAA") by a panel of three
arbitrators of the AAA (the "Board of Arbitration") acceptable to the
Company, on the one hand, and Purchaser, on the other hand. Each of
the Company, on the one hand, and all of the Purchasers, on the other
hand, shall select one (1) member and the third member shall be
selected by mutual agreement of the other members. If the other
members fail to reach agreement on a third member within thirty (30)
days after their selection, the parties shall jointly request the AAA
to designate, in accordance with AAA rules, a third member experienced
in industries in which the Company does business. The parties agree to
facilitate the arbitration by (a) making available to one another and
to the Board of Arbitration for inspection and extraction all
16
documents, books, records, and personnel under their control or under
the control of a person controlling or controlled by such party if
determined by the Board of Arbitration to be relevant to the dispute,
(b) conducting arbitration hearings to the greatest extent possible on
successive business days and (c) using their best efforts to observe
the time periods established by the rules of the AAA or by the Board of
Arbitration for the submission of evidence and briefs. The decision of
the Board of Arbitration shall be final, binding and not subject to
further review, and judgment on the award of the Board of Arbitration
may be entered in and enforced by any court having jurisdiction over
the parties or their assets. Any costs incurred in conducting the
arbitration shall be borne by the non-prevailing (as determined by the
Board of Arbitration) party.
5.15 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but
all of which together will constitute one and the same instrument.
17
ACCREDITED INVESTOR CERTIFICATION
PURCHASE OF THE SHARES AND WARRANTS INVOLVES SIGNIFICANT RISKS
AND IS A SUITABLE INVESTMENT ONLY FOR CERTAIN TYPES OF POTENTIAL
INVESTORS. SEE "RISK FACTORS."
The purchase of Shares and Warrants is suitable only for
investors who have no need for liquidity in their investments and who
have adequate means of providing for their current needs and
contingencies even if the investment in the Shares results in a total
loss. Shares will be sold only to prospective investors which are
"accredited investors" under Regulation D promulgated under the
Securities Act. "Accredited Investors" are those investors which
make certain written representations that evidence the investor comes
within one of the following categories:
(Initial the appropriate category)
----
I.) Any bank as defined in Section 3(a)(2) of the Securities
Act, or any savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the
Securities Act, whether acting in its individual or
fiduciary capacity; any broker or dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934, as
amended; any insurance company as defined in Section 2(13)
of the Securities Act; any investment company registered
under the Investment Company Act of 1940, as amended, or a
business development company as defined in Section 2(a)(48)
of that act; any Small Business Investment Company licensed
by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act
of 1958, as amended; any plan established and maintained by
a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions,
for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; an employee benefit plan
within the meaning of the Employee Retirement Income
Security Act of 1974, as amended, if the investment decision
is made by a plan fiduciary, as defined in Section 3(21) of
such act, which plan fiduciary is either a bank, savings and
loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has
total assets in excess of $5,000,000 or, if a self-directed
plan, with investment decisions made solely by persons that
are accredited investors;
----
II.) Any private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940,
as amended;
SD
---
III.) Any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership not formed for the specific
purpose of acquiring the Shares offered, with total assets
in excess of $5,000,000;
---
IV.) Any natural person whose individual net worth or joint net
worth with that person's spouse, at the time of investment
in the Shares, exceeds $1,000,000;
---
V.) Any natural person who had an individual income in excess of
$200,000 in each of the two most recent calendar years or
joint income with that person's spouse in excess of $300,000
in each of those years and has a reasonable expectation of
reaching that same income level in the current year;
---
VI.) Any partnership or trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring
the Shares, whose purchase is directed by a sophisticated
person as described in Rule 506(b)(2)(ii) of Regulation D
and who has such knowledge and experience in financial and
business matters that he is capable of evaluating the risks
and merits of an investment in the units; or
---
VII.) Any entity in which all of the equity owners are accredited
investors.
As used in this Offering Materials the term "net worth" means
the excess of total assets over total liabilities. In determining
income, an investor should add to his or her adjusted gross income any
amounts attributable to tax exempt income received, losses claimed as a
limited partner in any limited partnership, deductions claimed for
depletion, contributions to an ▇▇▇ or ▇▇▇▇▇ retirement plan, alimony
payments and without any amount by which income from long-term capital
gains has been reduced in arriving at adjusted gross income.
The Company may make or cause to be made such further inquiry and
obtain such additional information as it deems appropriate with regard
to the suitability of prospective investors. The Company may reject
subscriptions in whole or in part if, in its discretion, it deems such
action to be in the best interests of the Company. If the Offering is
oversubscribed, the Company will determine which subscriptions will be
accepted.
If any information furnished or representations made by a
prospective investor or others acting on its behalf mislead the Company
or the Company as to the suitability or other circumstances of such
investor, of if, because of any error or misunderstanding as to such
circumstances, a copy of this Offering Materials is delivered to any
such prospective investor, the delivery of this Offering Materials to
such prospective investor shall not be deemed to be an offer and this
Offering Materials must be returned to the Company immediately.
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered by the duly authorized officer of each party hereto as of
the date first above written.
SIDEWARE SYSTEMS, INC.
By: "▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇"
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chairman
PURCHASER: SDS Merchant Fund, LP
By: "▇▇▇▇▇ ▇▇▇▇▇"
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Member
AGGREGATE SUBSCRIPTION AMOUNT:
Number of Units: 3
