EXHIBIT 2.5
DATED DECEMBER 4, 2001
AUTHORISZOR HOLDINGS LIMITED (1)
WRDC LIMITED (2)
XXXXXX XXXXXX and xxxxx xxxxxxxxx (3)
and
AUTHORISZOR INC. (4)
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DEED OF AGREEMENT
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Xxxxxxx Xxxxxxxx Xxxx
0 Xxxx Xxxx Xxxxx XX0 0XX DX 26441 Leeds
Telephone x00 (0)000 000 0000 Fax x00 (0)000 000 0000
xxx.xxxxxxxxxxxxxxxxxxx.xxx
DATE OF DEED OF AGREEMENT 2002
PARTIES
(1) AUTHORISZOR HOLDINGS LIMITED (Company Number 3873915) whose registered
office is at Xxxxxxx Xxxxx Xxxxxxxx Xxxx Xxxxxxxxx XX0 0XX
("Authoriszor");
(2) WRDC LIMITED (Company Number 2945379) whose registered office is at
Windsor House aforesaid (the "Company");
(3) XXXXXX XXXXXX of Xxxx 0X 0 Xxxxxxx Xxxx Xxxxxx X00 0XX ("Xx Xxxxxx")
and XXXXX XXXXXXXXX of Rosedean, 00 Xxxxxxxxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxxx, X00 0XX ("Xx Xxxxxxxxx"); and
(4) AUTHORISZOR INC. a public company incorporated under the laws of the
state of Delaware whose principal executive offices are situated at
Xxxxxxx Xxxxx Xxxxxxxx Xxxx Xxxxxxxxx XX0 0XX ("Inc.").
RECITALS
A This Deed is supplemental to a subscription agreement made 8th May 2001
between (1) Authoriszor (2) the Company (3) Xx Xxxxxx and Xx Xxxxxxxxx
and (4) Inc. ("the Subscription Agreement").
B Under the terms of the Subscription Agreement, Inc. has agreed to
purchase 542,500 'A' Ordinary Shares from Xx Xxxxxx being all of the
issued share capital of the Company held by Xx Xxxxxx not already
beneficially owed by Inc. or Authoriszor and 542,500 'B' Ordinary
Shares from Xxxxx Xxxxxxxxx being all of the issued share capital of
the Company held by Xx Xxxxxxxxx not already beneficially owned by Inc.
or Authoriszor (Xx Xxxxxx'x shares together with Xx Xxxxxxxxx'x shares
being the "Sale Shares"), in accordance with clauses 5 and 7 of the
Subscription Agreement at an acquisition price of (pound)1.7964 per
Sale Share ("the Price").
C The Subscription Agreement provides that Inc. shall satisfy 55% of the
Price by way of procuring the issue and allotment of shares of Inc.
common stock, par value $0.01 per share (the "Common Stock"), subject
to the limitations (the "NASDAQ Limitations") set forth in clause 7.4
of the Subscription Agreement, which provide that Inc. shall pay in
pound sterling an amount equal to the fair market value of the shares
(the "Excess Shares") of Common Stock that cannot be issued because of
the NASDAQ Limitations. 55% of the Price is (pound)536,000.85 for the
'A' Ordinary Shares and (pound)536,000.85 for the 'B' Ordinary Shares.
D The Subscription Agreement provides that Inc. shall satisfy the
remaining 45% of the Price in pounds sterling, and 45% of the Price is
(pound)438,546.15 in the case of the 'A' Ordinary Shares and
(pound)438,546.15 in the case of the 'B' Ordinary Shares.
E Xx Xxxxxx and Xx Xxxxxxxxx hereby irrevocably and unconditionally agree
to vary their rights under the Subscription Agreement to provide that
the Company's obligation with respect to the Excess Shares shall be
satisfied by the issue and allotment of shares of Inc. preferred stock
(the "Preferred Stock"), the terms of which are set forth as Schedule 1
of this Deed.
1
IT IS HEREBY AGREED as follows:
1 Pursuant to the terms and conditions set forth in this Deed, Xx Xxxxxx
has agreed to sell, and Inc. has agreed to buy with full title
guarantee, free from all liens and encumbrances, 542,500 "A" Ordinary
Shares in the equity of the Company at an acquisition price of
(pound)1. 7964 per 'A' Ordinary Share and Xx Xxxxxxxxx has agreed to
sell, and Inc. has agreed to buy, with full guarantee, free from all
liens and encumbrances 542,500 'B' Ordinary Shares in the equity of the
Company at an acquisition price of (pound)1. 7964 per 'B' Ordinary
Share.
2 Completion of the sale and purchase of the Sale Shares shall take place
on the date hereof (the "Completion Date").
2.1 On Completion Inc. shall:
(i) release the amount of (pound)828,325.30, held to the order of
Inc. pursuant to an undertaking given to Inc. by Shulmans
Solicitors dated 3 December 2001, to Shulmans Solicitors on
behalf of Xx Xxxxxx and Xx Xxxxxxxxx in accordance with
Schedule 2 to this Deed, which is the cash portion of the
Price less a sum equal to the Director's Loans referred to in
Schedule 2 to this Deed, which Inc. shall immediately pay to
the Company (receipt of which the Company hereby acknowledges)
in discharge of the Director's Loans;
(ii) pay (pound)5000 (plus VAT) by telegraphic transfer to Shulmans
Solicitors on behalf of Xx Xxxxxx and Xx Xxxxxxxxx being the
contribution that Inc. has agreed to pay to the costs of Xx
Xxxxxx and Xx Xxxxxxxxx subject to Xx Xxxxxx and Xx Xxxxxxxxx
bearing all costs and disbursements over and above such
amount;
(iii) transmit to Inc.'s transfer agent irrevocable instructions to
the issue the shares (the "Common Shares") of Common Stock to
Xx Xxxxxx and Xx Xxxxxxxxx, credited as fully paid, in the
amount set out opposite their respective names in Schedule 3
of this Deed; and
(iv) deliver a share certificate in respect of the shares of
Preferred Stock (the "Preferred Shares") to each of Xx Xxxxxx
and Xx Xxxxxxxxx, credited as fully paid, in the amount set
out opposite their respective names in Schedule 3 of this Deed
and shall enter the names of Xx Xxxxxx and Xx Xxxxxxxxx in the
stock records of Inc. with respect to the Preferred Shares.
2.2 Inc. shall deliver a share certificate in respect of the Common Shares
to each of Xx Xxxxxx and Xx Xxxxxxxxx within fifteen (15) days of the
Completion Date and shall enter the name of Xx Xxxxxx and Xx Xxxxxxxxx
in the stock records of Inc. by such date with respect to the Common
Shares.
2.3 On Completion each of Xx Xxxxxx and Xx Xxxxxxxxx shall:
(i) deliver to Inc. the share certificate in respect of the Sale
Shares or an appropriate lost share certificate indemnity
together with an executed stock transfer form in respect of
the Sale Shares in favour of Inc. or such other person as Inc
may nominate;
2
(ii) deliver to Inc. a Letter of Representation, in the form set
out in Schedule 4 of this Deed, in respect of the Common
Shares; and
(iii) deliver to Inc. a Letter of Representation, in the form set
out in Schedule 5 of this Deed, in respect of the Preferred
Stock.
3 For the purposes of clause 8.5 of the Subscription Agreement, the
relevant "Cash Element" shall now be a reference to the cash
consideration received by Xx Xxxxxx and Xx Xxxxxxxxx under this Deed,
and the relevant "Share Consideration" shall now be a reference to the
consideration received by Xx Xxxxxx and Xx Xxxxxxxxx by way of the
issue and allotment of shares under this Deed.
4 The parties hereby unconditionally and irrevocably agree to terminate
with immediate effect the obligation (and to vary the terms of the
Subscription Agreement accordingly) contained within the Subscription
Agreement at clause 3.8(e) for Authoriszor to subscribe for Further
Subscription Shares in WRDC. The parties further agree to waive all and
any rights, obligations or otherwise that each or any of them may have
under clause 3.8(e) with immediate effect.
5 For the avoidance of doubt the Director's Bonus provided for in point 4
of the letter addressed to Xx Xxxxxx and Xx Xxxxxxxxx from the Company
and dated 8th May 2001 shall continue to apply and if the relevant
target is achieved shall be paid in cash on 1st March 2002.
6 This deed of agreement shall be governed by and construed in accordance
with English Law and the parties all irrevocably submit to the
exclusive jurisdiction of the English Courts.
7 Words and phrases used in this Deed shall have the same meanings as in
the Subscription Agreement unless the context otherwise requires.
8 All the other provisions of the Subscription Agreement unless
specifically varied by this Deed shall remain in full force and effect.
AS WITNESS the heads of the parties on the date shown on the front page as a
deed.
3
SCHEDULE 1
PREFERRED STOCK
CERTIFICATE OF DESIGNATIONS
SCHEDULE 2
Shareholder Number of Sale Shares to Price in cash Directors' Loan Balance after
be purchased deduction of
Directors Loan
---------------------- -------------------------- -------------------- --------------------- ---------------------
Xx Xxxxxx 244,125 'A' Ordinary (pound)438,546.15 (pound)29,049.00 (pound)409,497.15
shares
---------------------- -------------------------- -------------------- --------------------- ---------------------
Xx Xxxxxxxxx 244,125 'B' Ordinary (pound)438,546.15 (pound)19,718.00 (pound)418,828.15
Shares
---------------------- -------------------------- -------------------- --------------------- ---------------------
TOTALS 488,250 (pound)877,092.30 (pound)48,767.00 (pound)828,325.30
---------------------- -------------------------- -------------------- --------------------- ---------------------
SCHEDULE 3
Details of Common Shares and Preferred Shares to be Issued and Allotted
to Xx Xxxxxx and Xx Xxxxxxxxx
Shareholder Number of Sale Shares to be Number of Common Shares to be Number of Preferred Shares to be
purchased issued and allotted in issued and allotted in
consideration consideration
---------------------- ----------------------------------- -------------------------------- ----------------------------------
Xx Xxxxxx 298,375 'A' Ordinary Shares 1,062,680 194,897
---------------------- ----------------------------------- -------------------------------- ----------------------------------
Xx Xxxxxxxxx 298,375 'B' Ordinary Shares 1,062,680 194,897
---------------------- ----------------------------------- -------------------------------- ----------------------------------
SCHEDULE 4
Letter of Representation
Authoriszor Inc.
Xxxxxxx Xxxxx
Xxxxxxxx Xxxx
Xxxxxxxxx
XX0 2 PW
USA
Attention: Xx. Xxxx Xxxxx
President
Gentlemen:
In connection with the issuance to the undersigned of ____________ shares (the
"Shares"), of common stock, par value $0.01 per share, of Authoriszor Inc., a
Delaware corporation (the "Company"), the undersigned warrants and represents
that:
1 The undersigned is acquiring the Shares for investment solely for his
own account and not for distribution, transfer or resale to others.
2 The undersigned has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks
of the acquisition of the Shares.
3 The undersigned understands that the Shares to be acquired have not
been registered under the Securities Act of 1933, as amended (the
"Securities Act"), nor pursuant to the provisions of the securities
laws or other laws of any other applicable jurisdiction, in reliance
upon exemptions for private offerings contained in the Securities Act
and the regulations promulgated thereunder and in the applicable laws
of such jurisdictions. The undersigned is fully aware that the Shares
subscribed for by the undersigned are to be issued to the undersigned
in reliance upon such exemptions based upon the representations set
forth herein. The undersigned is also fully aware of the restrictions
on sale, transferability and assignment of the Shares.
4 The undersigned will be subject to the Company's xxxxxxx xxxxxxx policy
and the Company's Regulation FD Policy as such policies may be amended
from time to time.
Because the Shares have not been registered under any securities laws, they will
be "restricted securities" as defined in Securities and Exchange Commission Rule
144. Accordingly, the undersigned, as a stockholder, may not sell, transfer, or
otherwise dispose of them without registration under the Securities Act and
applicable securities laws or the applicability of an exemption from
registration (in which case the undersigned may be required to provide the
Company with a legal opinion, in form and substance satisfactory to the Company
and its counsel, that registration is not required).
5 The Shares are not being acquired directly or indirectly as nominee,
trustee, agent, or representative for any other person or persons.
6 The undersigned acknowledges and consents that certificates now or
hereafter issued for the Shares will bear a legend substantially as
follows:
"The shares of stock of Authoriszor Inc. (the "Company") represented by
this certificate have not been registered under the Securities Act of
1933, as amended (the "Act"), and the holder hereof cannot make any
sale, pledge, hypothecation, assignment or other transfer of any shares
of such stock except pursuant to an offering of such shares duly
registered under the Act, and any applicable state securities laws, or
under other such circumstances which in the opinion of counsel for the
Company, at the time, does not require registration under the Act or
any applicable state securities laws. The shares represented by this
certificate are "restricted securities" within the meaning of Rule 144
promulgated by the Securities and Exchange Commission under the Act and
may be subject to the limitations and reporting requirements of said
rule upon resale or other distribution thereof."
7 The undersigned warrants that the information set forth in this
Investment Letter is true and correct, with the knowledge that the
Company is relying on the accuracy of the information and truth of the
representations contained herein in connection with the Company's
compliance with applicable securities laws. The undersigned further
agrees to indemnify and hold harmless the Company from any and all
liabilities, losses, costs, and expenses arising out of or related to
the resale or other distribution by the undersigned of all or any
portion of the Shares in violation of the Securities Act or of any
applicable state securities laws as well as any and all liabilities,
losses, costs, and expenses to which the Company may be put or that the
Company may incur by reason of or in connection with any
misrepresentation made by the undersigned, any breach of any of its
warranties, or its failure to fulfil any of the covenants or agreements
set forth herein. The representations and warranties contained herein
(i) are made from the date the Board of Directors approved the issuance
of the Shares to the undersigned, and (ii) are binding upon the heirs,
legal representatives, successors, and assigns of the undersigned.
Executed as of this 4th day of December, 2001
[Xx Xxxxxx]/[Xx Xxxxxxxxx]
Address (for purpose of the Company's stock transfer records):
SCHEDULE 5
Letter of Representation
Authoriszor Inc.
Xxxxxxx Xxxxx
Xxxxxxxx Xxxx
Xxxxxxxxx
XX0 2 PW
USA
Attention: Xx. Xxxx Xxxxx
President
Gentlemen:
In connection with the issuance to the undersigned of ____________ shares (the
"Shares"), of preferred stock, par value $0.01 per share, of Authoriszor Inc., a
Delaware corporation (the "Company"), the undersigned warrants and represents
that:
1 The undersigned is acquiring the Shares for investment solely for his
own account and not for distribution, transfer or resale to others.
2 The undersigned has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks
of the acquisition of the Shares.
3 The undersigned understands that the Shares to be acquired have not
been registered under the Securities Act of 1933, as amended (the
"Securities Act"), nor pursuant to the provisions of the securities
laws or other laws of any other applicable jurisdiction, in reliance
upon exemptions for private offerings contained in the Securities Act
and the regulations promulgated thereunder and in the applicable laws
of such jurisdictions. The undersigned is fully aware that the Shares
subscribed for by the undersigned are to be issued to the undersigned
in reliance upon such exemptions based upon the representations set
forth herein. The undersigned is also fully aware of the restrictions
on sale, transferability and assignment of the Shares.
4 The undersigned will be subject to the Company's xxxxxxx xxxxxxx policy
and the Company's Regulation FD Policy as such policies may be amended
from time to time.
Because the Shares have not been registered under any securities laws, they will
be "restricted securities" as defined in Securities and Exchange Commission Rule
144. Accordingly, the undersigned, as a stockholder, may not sell, transfer, or
otherwise dispose of them without registration under the Securities Act and
applicable securities laws or the applicability of an exemption from
registration (in which case the undersigned may be required to provide the
Company with a legal opinion, in form and substance satisfactory to the Company
and its counsel, that registration is not required).
5 The Shares are not being acquired directly or indirectly as nominee,
trustee, agent, or representative for any other person or persons.
6 The undersigned acknowledges and consents that certificates now or
hereafter issued for the Shares will bear a legend substantially as
follows:
"The shares of stock of Authoriszor Inc. (the "Company") represented by
this certificate have not been registered under the Securities Act of
1933, as amended (the "Act"), and the holder hereof cannot make any
sale, pledge, hypothecation, assignment or other transfer of any shares
of such stock except pursuant to an offering of such shares duly
registered under the Act, and any applicable state securities laws, or
under other such circumstances which in the opinion of counsel for the
Company, at the time, does not require registration under the Act or
any applicable state securities laws. The shares represented by this
certificate are "restricted securities" within the meaning of Rule 144
promulgated by the Securities and Exchange Commission under the Act and
may be subject to the limitations and reporting requirements of said
rule upon resale or other distribution thereof."
7 The undersigned warrants that the information set forth in this
Investment Letter is true and correct, with the knowledge that the
Company is relying on the accuracy of the information and truth of the
representations contained herein in connection with the Company's
compliance with applicable securities laws. The undersigned further
agrees to indemnify and hold harmless the Company from any and all
liabilities, losses, costs, and expenses arising out of or related to
the resale or other distribution by the undersigned of all or any
portion of the Shares in violation of the Securities Act or of any
applicable state securities laws as well as any and all liabilities,
losses, costs, and expenses to which the Company may be put or that the
Company may incur by reason of or in connection with any
misrepresentation made by the undersigned, any breach of any of its
warranties, or its failure to fulfil any of the covenants or agreements
set forth herein. The representations and warranties contained herein
(i) are made from the date the Board of Directors approved the issuance
of the Shares to the undersigned, and (ii) are binding upon the heirs,
legal representatives, successors, and assigns of the undersigned.
Executed as of this _______ day of _______________, 2001
[Xx Xxxxxx]/[Xx Xxxxxxxxx]
Address (for purpose of the Company's stock transfer records):
EXECUTED (but not delivered until )
the date hereof) AS A DEED by )
WRDC LIMITED acting by: )
Director:
Director/Secretary
EXECUTED (but not delivered until )
the date hereof) AS A DEED by )
XXXXXX XXXXXX )
Witness signature:
Name:
Address:
Occupation:
EXECUTED (but not delivered until )
the date hereof) AS A DEED by )
XXXXX XXXXXXXXX )
Witness signature:
Name:
Address:
Occupation:
EXECUTED (but not delivered until
the date hereof) AS A DEED by )
AUTHORISZOR INC acting by: )
)
Director:
Director/Secretary
EXECUTED (but not delivered until )
the date hereof) AS A DEED by )
AUTHORISZOR HOLDINGS )
LIMITED acting by: )
Director:
Director/Secretary
