AMENDED AND RESTATED ESCROW AGREEMENT
1. PARTIES.
1.1 This Amended and Restated Escrow Agreement (this "Agreement") is made and
entered into effective as of December 16, 1999 (the "Effective Date"), by
_______(the "Shareholder"), Softquad Acquisition Corp. ("SAC"), Softquad
Software Ltd. ("Softquad USA") and Thomson Kernaghan & Co. Ltd. (the "Escrow
Holder").
2. RECITALS.
2.1 This Escrow Agreement is made with reference to the following facts and
circumstances:
(a) SAC is a wholly-owned subsidiary of Softquad USA. SAC and/or
Softquad USA have committed to make a Qualifying Offer, as
defined in a Lock Up Agreement between the Shareholder and SAC
dated December 16, 1999 ("Lock Up Agreement"), to acquire all
of the common shares of the Shareholder in Softquad Software
Inc. ("Softquad Canada") namely nil common shares (the
"Softquad Canada Shares") and to assume Softquad Canada's
obligations with respecting any outstanding common stock
purchase option agreements on the basis that Softquad USA
would issue one Softquad USA common share upon the exercise of
each option to purchase one Softquad Canada common share for
the consideration set out in existing Softquad Canada option
agreements. And whereas the Shareholder is entitled to
purchase 5,000 common shares of Softquad Canada pursuant to
existing stock option agreements (any Softquad USA common
shares or Softquad Canada shares issued to the Shareholder
upon exercise of rights to purchase common shares shall be
referred to as the "Option Shares").
(b) The Shareholder has agreed to tender Softquad Canada Shares to
the Offeror(s) under the Qualifying Offer for:
(i) nil common shares in Softquad USA; or
(ii) nil Exchangeable Shares in SAC which may be converted
into an equivalent number of common shares of Softquad
USA.
(either one referred to as the "Escrowed Shares")
(c) The Escrow Holder shall release the number of Escrowed Shares
and Option Shares to the Shareholder and transmit the share
certificates representing such shares on the dates specified
in section 4.1.
3. ESCROW
3.1 By the execution of this Agreement, the Shareholder directs Softquad USA
and/or SAC to deliver, upon completion of the Qualifying Offer and thereafter
from time to time on the exercise of options, the certificates representing the
Escrowed Shares and Option Shares to the Escrow Holder to be held, delivered and
released in accordance with the terms of this Agreement.
3.2 The Escrowed Shares and Option Shares shall be represented by such number of
certificates for such numbers of Escrowed Shares and Option Shares as the
Shareholder shall specify, which certificates shall be registered in the name of
the Shareholder.
3.3 In the event of any capital reorganization, consolidation, stock split or
other corporate event which requires the Escrow Holder to surrender the Escrowed
Shares and Option Shares to the transfer agent of SAC and/or Softquad USA, the
Escrow Holder may effect such substitution. By virtue of this agreement, the
Shareholder hereby provides to the Escrow Holder such rights, including
irrevocable power of attorney to act on behalf of the Shareholder and to take
such steps and execute such documents on behalf of the Shareholder as are
necessary to effect the share substitutions, provided that the substituted
shares shall remain subject to the terms hereof.
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3.4 Upon receipt of a written notice from the Shareholder advising the Escrow
Holder of the Shareholder's intention to exchange the SAC Exchangeable Shares
for Softquad USA common shares, the Escrow Holder shall submit the Exchangeable
Shares to the transfer agent of SAC and instruct Softquad USA to deliver the
Softquad USA common shares to the Escrow Holder. By virtue of this agreement,
the Shareholder hereby provides to the Escrow Holder such rights, including
irrevocable power of attorney to act on behalf of the Shareholder and to take
such steps and execute such documents on behalf of the Shareholder as are
necessary to effect such exchanges, provided that the Softquad USA common shares
issued in favour of the Shareholder shall remain subject to the terms hereof.
4. RELEASE OF ESCROWED SHARES / RESALE OF ESCROWED SHARES / SHAREHOLDER
RIGHTS
4.1 (a) The Shareholder shall be held by the Escrow Holder and
shall be released (and certificates representing such shares
shall be delivered to the Shareholders) on the following
schedule:
(i) nil Escrowed Shares on December 16, 2000;
(ii) nil Escrowed Shares on December 16, 2001; and
(iii) the balance of the Escrowed Shares on
December 16, 2002.
(b) Any Option Shares issued to the Shareholder shall be held by
the Escrow Holder and shall be released (and certificates
representing such shares shall be delivered to the
Shareholders) on the following schedule:
(i) to a maximum of 1,666 Option Shares on December 16,
2000;
(ii) to a maximum of 1,666 Option Shares on
December 16, 2001; and
(iv) the balance of the Option Shares on
December 16, 2002.
(c) Notwithstanding (a) and (b), in the event that a registration
statement under the U.S. Securities Act of 1933 has not been
filed by Softquad USA and declared effective by the Securities
and Exchange Commission on or before October 31, 2000, all of
the Escrowed Shares and Option Shares shall be immediately
released from escrow.
4.2 The Shareholder agrees that the Shareholder shall not sell, transfer,
assign, pledge, hypothecate, hedge or otherwise deal with the Escrowed Shares
and/or Option Shares until such Escrowed Shares and/or Option Shares are
released to the Shareholder in accordance with this Agreement.
4.3 Other than as set out in paragraph 4.2, nothing in this Agreement shall
diminish the rights of the Shareholder (as a shareholder of SAC or Softquad USA)
and without limiting the generality of the foregoing, the Shareholder shall
retain voting control over the Escrowed Shares and Option Shares and shall be
entitled to receive dividends, as and when declared and paid.
5. TERMINATION.
5.1. This Escrow Agreement shall terminate on the earlier of: (a) the date on
which all of the Escrowed Shares and Option Shares have been released from
escrow; and (b) December 16, 2002.
6. LIMITATION ON THE ESCROW HOLDER'S LIABILITY; INDEMNIFICATION.
6.1 The Escrow Holder shall not be liable to the Shareholder, or to any other
person or entity for any action taken or omitted by it, except for the Escrow
Holder's own negligence or wilfull misconduct. Without limiting the generality
of the foregoing the Escrow Holder may rely upon, and shall be protected in
acting or refraining from acting in reliance upon, any notice, certificate,
instrument, request, paper or other document reasonably believed by it to be
genuine and made, sent, signed or presented by the Shareholder, Softquad Canada,
Softquad USA and/or SAC, or any other person or entity.
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6.2 The Escrow Holder shall not be responsible for the validity or
enforceability of any provision of this Escrow Agreement, or for the execution
thereof by any parties to this agreement, or for the truth or accuracy of any
recitals or other statements of fact contained in this Escrow Agreement.
6.3 The Escrow Holder is not, and shall not be deemed for any purpose to be, a
fiduciary under this Escrow Agreement or otherwise, for any party to this
agreement, or for any other person or entity.
7. MISCELLANEOUS PROVISIONS.
7.1 No amendment, modification, termination, or waiver of any provision of this
Escrow Agreement, nor consent to any departure by the Shareholder or the Escrow
Holder from any of its provisions, shall in any event be effective unless the
same shall be in writing and signed by the other, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
7.2. All notices given under this Escrow Agreement shall be in writing,
addressed to the parties as set forth below (except in the case of the
Shareholder, in which event it shall be sent to the last address shown for the
Shareholder in the relevant shareholders' register), and shall be effective on
the earliest of (i) the date received, or (ii) if given by facsimile transmittal
on the date given if transmitted before 5:00 p.m. the recipient's time,
otherwise it is effective the next day, or (iii) on the second business day
after delivery to a major international air delivery or air courier service
(such as Federal Express or Network Couriers):
If to the Escrow Holder: If to SAC
Thomson Kernaghan & Co. Ltd. Softquad Acquisition Corp.
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Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (that does not constitute If to Softquad USA
Notice) to: Softquad Software Ltd.
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▇▇▇▇▇▇▇▇ at Law ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (that does not
constitute notice) to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Stapells ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
7.3 No failure or delay on the part of the Escrow Holder in exercising any
right, power, or remedy hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right, power, or remedy preclude any
other or further exercise thereof or the exercise of any other right, power, or
remedy hereunder. The rights and remedies provided herein are cumulative, and
are not exclusive of any other rights, powers, privileges, or remedies, now or
hereafter existing, at law or in equity or otherwise.
7.4 This Escrow Agreement shall be binding upon and inure to the benefit of the
Shareholder, SAC, Softquad USA and the Escrow Holder, and their respective
successors and assigns, except that the Shareholder may not assign or transfer
any of its rights under this Escrow Agreement without the prior written consent
of the Escrow Holder.
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7.5 The Shareholder agrees to pay on demand all costs and expenses incurred by
the Escrow Holder in connection with the preparation, execution, delivery,
filing, and administration of this Escrow Agreement, and of any amendment,
modification, or supplement hereto, including, without limitation, the fees and
out-of-pocket expenses of counsel for the Escrow Holder incurred in connection
with advising the Escrow Holder as to its rights and responsibilities hereunder.
The Shareholder also agrees to pay all such costs and expenses, including court
costs, incurred in connection with enforcement of this Escrow Agreement, or any
amendment, modification, or supplement thereto, whether by negotiation, legal
proceedings, or otherwise. In addition, the Shareholder shall pay any and all
stamp and other taxes and fees payable or determined to be payable in connection
with the issuance, transfer and deliver of any Escrowed Shares, and agrees to
hold the Escrow Holder harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
and fees. This provision shall survive termination of this Escrow Agreement.
7.6 This Agreement shall be governed by and interpreted in accordance with the
laws of the Province of Ontario and the laws of Canada as applicable; provided,
however, that if any provision of this Agreement is unenforceable under the laws
of the Province of Ontario or the laws of Canada as applicable, but is
enforceable under Delaware law, then such provision shall be governed by and
interpreted in accordance with Delaware law. The parties agree that the courts
of the Province of Ontario, Canada, shall have exclusive jurisdiction and venue
for the adjudication of any civil action between them arising out of relating to
this Agreement, and hereby irrevocably consent to such jurisdiction and venue.
7.7 This agreement may be signed in counterpart and by fax.
IN WITNESS WHEREOF, the Shareholder and the Escrow Holder have executed
this Escrow Agreement as of the Effective Date.
THOMSON KERNAGHAN & CO. LIMITED. SOFTQUAD ACQUISITION CORP.
By _________________________________ By _________________________________
SOFTQUAD SOFTWARE LTD.
By _________________________________
____________________________________ ____________________________________
WITNESS SIGNATURE OF SELLING SHAREHOLDER
____________________________________
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