THIS DEED OF COVENANT is made on 2000
BETWEEN:
(1) AUTHORISZOR HOLDINGS LIMITED (Company No. 3873915) whose registered office
is at Xxxxxxx Xxxxx, Xxxxxxxx Xxxx, Xxxxxxxxx XX0 0XX ("Authoriszor");
(2) WRDC LIMITED (Company No. 2945379) whose registered office is at Xxxxx
Xxxxx, Xxxx Xxxxx, Xxxxxxxx, Xxxxx XX0 0XX (the "Company"); and
(3) THOSE PERSONS whose names and addresses are set out in Schedule 1 ("C Share
Option Holders").
RECITALS:
(A) The Company is a private limited company incorporated in England and
Wales on 4 July 1994. It has an authorised share capital of
(pound)33,400 divided into:
o 1,125,000 "A" Ordinary Shares of 1 xxxxx each;
o 1,125,000 "B" Ordinary Shares of 1 xxxxx each;
o 250,000 "C" Ordinary Shares of 1 xxxxx each; and
o 840,000 "D" Ordinary Shares of 1 xxxxx each.
(B) Of the authorised share capital, all "A" Ordinary Shares, all "B"
Ordinary Shares and all "D" Ordinary Shares are in issue as at close of
business today and are fully paid. No "C" Ordinary Shares are in issue
although the C Share Option Holders hold Options to purchase 132,500
"C" Ordinary Shares.
(C) This deed sets out the terms upon which the C Share Option Holders have
agreed to sell or waive any and all rights they may have over "C"
Ordinary Shares pursuant to the Options.
IT IS HEREBY AGREED as follows:
1. DEFINITIONS
1.1 In this Agreement and the Recitals and the Schedules the following terms
shall have the following meanings:
""A" Ordinary Shares" means the "A" Ordinary Shares of 1 xxxxx each in
the capital of the Company;
1
""B" Ordinary Shares" means the "B" Ordinary Shares of 1 xxxxx each in
the capital of the Company; ""C" Ordinary Shares" means the non-voting
"C" Ordinary Shares of 1 xxxxx each in the capital of the Company;
"Deed of Adherence" a deed in the form set out in Schedule 4;
"Letter of Representation" means the letter of representation in the
form set out in Schedule 5, as may be amended as required by the NASDAQ
rules or US law
"Options" the options granted to the C Share Option Holders (in the
numbers set out in Schedule 1) pursuant to the "WRDC Limited Number 1
Share Option Scheme", a copy of which is set out at Schedule 2 and
which give the C Share Option Holders certain rights to acquire "C"
Ordinary Shares;
"Issued Share Capital" shall have the meaning set out in the
Shareholders Agreement;
"Shareholders Agreement" means the agreement dated January 2000 between
Authoriszor (1), the Company (2) and Xxxxxx Xxxxxx and Xxxxx Xxxxxxxxx
("Other Shareholders") (3) and Authoriszor Inc. (4) , pursuant to which
Authoriszor has agreed to subscribe for 840,000 "D" Ordinary Shares and
pursuant to which Authoriszor has been granted certain rights to
acquire the "A" Ordinary Shares and the "B" Ordinary Shares.
1.2 References to the parties hereto include their respective successors in
title, assignees, estates and legal personal representatives.
1.3 References to the singular shall include a reference to the plural and
vice versa unless the context otherwise requires.
1.4 References to Recitals, Clauses, Sub-Clauses and Schedules shall be to
recitals and schedules to and clauses and sub-clauses of this
Agreement.
1.5 References to statutes or statutory provisions and orders or
regulations made thereunder include that statute provision order or
regulation as amended, modified re-enacted or replaced from time to
time before the date hereof and to any previous statute, statutory
provision order or regulation amended modified re-enacted or replaced
by such statute provision order or regulation.
1.6 The clause headings shall not affect the construction of this Agreement
2. COVENANT
2.1 The C Share Option Holders acknowledge that pursuant to the
Shareholders Agreement, the holders of the "A" Ordinary Shares and "B"
Ordinary Shares have granted certain rights to Authoriszor to acquire
all or some of the "A" Ordinary Shares and "B" Ordinary Shares in
issue.
2
2.2 The C Share Option Holders and Authoriszor hereby covenant and agree
that in the event Authoriszor makes such an acquisition which will
result in Authoriszor owing at least 50% of the Issued Share Capital of
the Company ("Acquisition") the C Share Option Holders will sell, and
Authoriszor will acquire, their holdings of unexerised Options or
holdings of "C" Ordinary Shares (if any), in accordance with the terms
set out in this Deed.
3. PRICE AND PROCEDURE
In the event that Authoriszor makes an Acquisition pursuant to the
terms of the Shareholders Agreement then:
3.1 Authoriszor shall serve notice (in the form set out in Schedule 3)
("Notice") on any or all of the C Share Option Holders within 4 weeks
of the final agreement of the price payable for each share pursuant to
the Acquisition requiring them to sell to Authoriszor:
(a) any or all of their respective holdings of Options; and
(b) Any or all of their respective holdings if any of "C" Ordinary
Shares,
in each case, at a price per share not less than the price per share to
be paid by Authoriszor to the holders of the "A" Ordinary Shares and
"B" Ordinary Shares pursuant to the Acquisition ("Price").
3.2 The C Share Option Holders each agree that in the event that a Notice
is served on them in respect of any Options held by them, then they
shall:
(a) either exercise the number of Options specified in the Notice
immediately at the relevant Option exercise price and then
sell the resultant "C" Ordinary Shares to Authorizor as set
out above; or
(b) surrender the number of Options specified in the Notice
immediately to the Company, for nil value and in return,
Authoriszor shall pay to such C Share Option Holder or Holders
an amount equal to the sum they would have received had they
elected for option (a) above, LESS an amount equal to the
relevant exercise price that would have been payable had such
Options been exercised.
3.3
(a) As an alternative to selling or surrendering their holdings in
accordance with Clause 3.2 above, Authoriszor agrees that it
will use reasonable endeavours to offer those C Share Option
Holders who hold Options at the time that they receive a
Notice, the opportunity to receive share options in
Authoriszor's parent company, Authoriszor Inc.
3
(b) The availability, terms, number and exercise price of such
share options over shares in Authoriszor Inc. shall be at the
discretion of Authoriszor, and will, if this option is chosen,
require the relevant C Share Option Holder to surrender the
number of Options stated in their Notice, to the Company in
consideration for such grant of share options in Authoriszor
Inc.
3.4 In the event of any failure by a C Share Option Holder to comply with
the provisions of this Clause 3 in respect of any Options held by them
that are the subject of Notice, such Options shall lapse 4 weeks after
service of the Notice.
3.5 Authoriszor confirms that the Price shall be clearly and accurately
stated in any Notice issued to a C Share Option Holder.
4. COMPLETION
4.1 The completion of acquisition or surrender referred to in Clause 3
above shall take place at the offices of Authoriszor's Solicitors
within 10 business days of service of the Notice when the events set
out below shall occur:
(a) The C Share Option Holders will transfer their "C" Ordinary
Shares and/or their Option rights with full title guarantee to
Authoriszor free from any and all security interests and
together with all accrued benefits and rights accruing thereto
or, as the case may be, surrender all their rights under their
Options and shall deliver to Authoriszor in respect of the "C"
Ordinary Shares or Option referred to in their respective
Notices:
(i) Duly completed and executed transfers in respect of
any such "C" Ordinary Shares held, together with
copies of any share certificates relating thereto or
a form of indemnity in respect of any lost or
destroyed certificates relating to such "C" Ordinary
Shares.
(ii) The relevant Option certificates in respect of any
Option held.
(iii) Duly executed Letters of Representation where
Authoriszor satisfies any of the price by way of
issue of shares in, or options over, Authoriszor Inc
shares accordance with Clause 3.3 above and 5.2
below.
(b) Authoriszor shall pay the Price in accordance with Clause 5
below.
5. PAYMENT OF PRICE
Subject to the rights set out at Clause 3.3 above,
5.1 On satisfaction of the provisions of Clause 4.1(a) above, Authoriszor
shall procure the payment of the Price to the relevant C Share Option
Holders.
4
5.2 At the sole discretion of Authoriszor, Authoriszor may satisfy up to a
maximum of 40% of the Price by way of procuring the issue and allotment
of fully paid shares in Authoriszor Inc, to the relevant C Share Option
Holders as part satisfaction of consideration payable to such relevant
C Share Option Holders in accordance with the terms of this Deed.
6. ASSIGNMENT
6.1 This Agreement shall be binding upon and shall enure for the benefit of
each party's personal representatives and successors in title (as the
case may be) but shall not be assignable save as provided in this
Clause 6.
6.2 Each of the C Share Option Holders may assign the benefit of this Deed
to any person to whom they transfer any "C" Ordinary Shares in the
Company pursuant to the Articles of Association, in which case such
transferee shall execute a deed of adherence substantially in the form
set out in Schedule 4 and subject to executing such deed of adherence,
such assignee shall be entitled, and shall be assumed to have, all the
benefits of this Deed which would have been conferred it if it had been
a C Share Option Holder at the date hereof and thereafter all
references to the C Share Option Holder in this Deed shall be read and
construed as including such person as if it had been an original party
hereto.
6.3 All deeds of adherence executed pursuant to Clause 6.2 shall be
executed by the Company for itself and as attorney for all those
persons who are then parties. Such parties hereby (or, as the case may
be, by executing the relevant deed of adherence) appoint the Company as
such attorney.
7. NOTICES
Where notice is to be given in writing to any party hereto it may be
served by leaving it at the registered office or last known address of
that party or by sending it by prepaid first class post or facsimile to
the party's registered office or last known address within the United
Kingdom supplied by the party to the other parties to this Deed for the
giving of notice to that party to the other or by airmail or facsimile
to any address outside the United Kingdom supplied by that party for
the giving of notice to that party. A properly addressed and prepaid
notice sent by first class post or airmail (as the case may be) shall
be deemed to have been served at an address within the United Kingdom
at the expiry of two days after the notice is posted and served at an
address outside the United Kingdom at the expiry of ten days from the
date of posting by airmail. Where a notice is given by facsimile,
service of the same shall be deemed to be effected upon receipt of
telephone or other confirmation of its receipt.
8. GENERAL
8.1 Failure by any party hereto at any time or times to require performance
of any provision of this Deed shall in no manner affect his or its
right to enforce such provision at a later time. No waiver by any party
hereto of any condition or the breach of any term, representation or
warranty
5
contained in this Agreement whether by conduct or otherwise in any one
or more instances shall be deemed to be construed as a further or
continuing waiver of any such condition or breach or waiver of any
other condition or be deemed to be or construed as the breach of or a
waiver of any other term, covenant, representation or warranty in this
Agreement.
8.2 This Deed shall be governed by and construed in accordance with English
Law and all the parties hereto irrevocably submit to the non-exclusive
jurisdiction of the English Courts as regards any claim, dispute or
matter arising out of or relating to this Deed or any of the documents
to be executed pursuant to it. The parties hereto agree that service of
any writ, notice or other document for the purpose of any proceedings
in such Court shall be duly served upon it if delivered or sent by
registered post in the manner provided by Clause 7.
8.3 This Deed may be entered into by each of the parties signing one or
more counterparts which, taken together, shall constitute a complete
deed.
8.4 Except where the context otherwise requires, each of the restrictions
contained in this Deed shall be construed as independent of every other
restriction and of every other provision of this Deed to the intent
that if any such restriction or the application of any such restriction
to any person or to any circumstance shall be determined to be invalid
or unenforceable, then such determination shall not affect any other
restriction or provision of this Deed or the application of such
restriction to any other person or circumstance.
8.5 Nothing contained in this Deed and no action taken by any party
pursuant to this Deed shall be deemed to constitute any party, a party
to a partnership, association, joint venture or other entity. None of
the parties hereto shall by virtue hereof have any authority to bind
any other party hereto in any way except where expressly provided
herein.
8.6 The C Share Option Holders hereby irrevocably by way of security for
the performance of its obligation under this Deed (within the meaning
of Section 4 of the Powers of Attorney Act 1971) appoints Authoriszor
and any person to whom Authoriszor delegates the exercise of the power
of attorney conferred by this Clause jointly and also severally to be
the attorney or attorneys of the Shareholders and in their name and on
their behalf and as their act and deed to sign, seal, execute, deliver,
perfect and do all deeds, instruments, acts and things which may be
required (or which the attorney reasonably considers necessary) for
carrying out any obligation imposed on the C Share Option Holders
pursuant to this Deed.
8.7 The C Share Option Holders will ratify and confirm all transactions
entered into and all things done by the attorney in the exercise or
purported exercise of their powers.
8.8 In the event of there being any conflict between the provision of this
Deed and those contained in either the articles of association of the
Company or the rules of the WRDC Limited Number 1 Share Option Scheme,
all parties to this Deed agree and confirm that the provisions of this
Deed shall prevail at all times.
6
8.9 The Company agrees to be bound by the provisions of this deed
notwithstanding the provision of the articles of association of the
Company or the rules of the WRDC Limited Number 1 Share Option Scheme.
AS WITNESS the hands of the parties or their duly authorised representatives on
the date shown on the first page.
7
SCHEDULE 1
C Share Option Holders
Name
Marc St Xxxx Xxxx
00 Xxx Xxxxx
Xxxxxxxxx
Xxxxxxxxxx X00 0XX
Xxxxx Xxx Xxxxxxxxxx
00 Xxxxxxxx Xxxxx
Xxxxxx xx Xxxxxxxxxx
Xxxxxx XX00 0XX
Xxxxx Xxxxxx
0 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx
Xxxx XX0 0XX
Xxxxx Xxxx Xxxxxx
Xxx Xxxx
Xxxxxx Xxxxxxx
Xxxx Xxxxx
Xxxxxxxxxxxx XX00 0XX
Antony Xxxxxxx Xxxxxxx
00 Xxxxxxxx Xxxxxxxx
Xxxxxxxxx
Xxxxxx X0 0XX
8
SCHEDULE 2
WRDC Limited No.1 Share Option Scheme
9
SCHEDULE 3
Form of Notice
From: Authoriszor Holdings Limited of Xxxxxxx Xxxxx, Xxxxxxxx Xxxx, Xxxxxxxxx
XX0 0XX.
To:
Dear Sirs
_____ [Date]
OPTION NOTICE
We hereby give notice, pursuant to the Deed of Covenant dated [ ], of our
right to require you to:
(a) surrender [ ] options you hold over "C" Ordinary Shares in WRDC Limited;
and/or
(b) sell to us the [ ] "C" Ordinary Shares in WRDC Limited that you hold,
in each case in accordance with the terms of the Deed of Covenant.
We confirm that the Price for the Acquisition is [ ] per share of WRDC Limited.
---------------------------------------
Duly authorised for and on behalf of
Authoriszor Holdings Limited
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SCHEDULE 4
Deed of Adherence
THIS DEED OF ADHERENCE is made on o 2000
BETWEEN:
(1) _______________ LIMITED (Registered in England No ____________ whose
registered office is at________________ (the "Covenantor"); and
(2) WRDC LIMITED (Registered in England No _________________ ("the Company")
for itself and as attorney for the other parties to the Deed of Covenant.
RECITAL
This Deed is supplemental to a Deed of Covenant made on _______________ between
___________________ ("the Agreement").
THIS DEED WITNESSES as follows:
1. The Covenantor hereby confirms that it has been supplied with a copy of
the Deed of Covenant and hereby covenants with each of the parties
hereto to observe, perform and be bound by all the terms of the Deed of
Covenant as if it were a party thereto or named therein as a C Share
Option Holder.
2. Each of the other parties hereto hereby covenants with the Covenantor
that the Covenantor shall be entitled to the benefit of the terms of
the Deed of Covenant as if it were a party thereto and named therein as
a C Share Option Holder.
3. The Covenantor hereby appoints Authoriszor Limited to be its attorney
for the purposes of clause 8 of the Agreement.
4. This Deed shall be governed by and construed in accordance with English
law.
IN WITNESS whereof this Deed has been executed by the Covenantor and the Company
for itself and as attorney for the other parties to the Agreement and is
intended to be and is hereby delivered on the date shown on the first page.
11
SCHEDULE 5
Letter of Representation
Authoriszor Inc.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxxx
President
Gentlemen:
In connection with the issuance to the undersigned of ____________ shares (the
"Shares"), of common stock, par value $.01 per share (the "Common Stock"), 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. 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.
12
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 _______________, 2000.
[Shareholder]
Address (for purpose of the Company's stock transfer records):
13
EXECUTED (but not delivered until )
the date hereof) AS A DEED by )
AUTHORISZOR HOLDINGS )
LIMITED acting by: )
Director:
Director/Secretary
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 )
XXXX ST XXXX XXXX )
Witness signature:
Name:
Address:
Occupation:
14
EXECUTED (but not delivered until )
the date hereof) AS A DEED by )
XXXXX XXX XXXXXXXXXX )
Witness signature:
Name:
Address:
Occupation:
EXECUTED (but not delivered until )
the date hereof) AS A DEED by )
XXXXX XXXXXX )
Witness signature:
Name:
Address:
Occupation:
EXECUTED (but not delivered until )
the date hereof) AS A DEED by )
XXXXX XXXX XXXXXX )
Witness signature:
Name:
Address:
Occupation:
15
EXECUTED (but not delivered until )
the date hereof) AS A DEED by )
ANTONY XXXXXXX XXXXXXX )
Witness signature:
Name:
Address:
Occupation:
16
INDEX
1. DEFINITIONS........................................................1
2. COVENANT...........................................................1
3. PRICE AND PROCEDURE................................................2
4. COMPLETION.........................................................3
5. PAYMENT OF PRICE...................................................4
6. ASSIGNMENT.........................................................4
7. NOTICES............................................................4
8. GENERAL............................................................5
SCHEDULE 1.....................................................................7
C Share Option Holders.............................................7
SCHEDULE 2.....................................................................8
WRDC Limited No.1 Share Option Scheme..............................8
SCHEDULE 3.....................................................................9
Form of Notice.....................................................9
SCHEDULE 4....................................................................10
Deed of Adherence.................................................10
SCHEDULE 5....................................................................11
Letter of Representation..........................................11
DATED________________________2000
(1) AUTHORISZOR HOLDINGS LIMITED
(2) WRDC LIMITED
(3) THE SEVERAL PERSONS REFERRED TO IN SCHEDULE 1
DEED OF COVENANT
relating to
WRDC Limited
