THIS AGREEMENT is made on January 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");
(3) THOSE PERSONS whose names and addresses and shareholdings in the Company
are set out in Schedule 7 ("Shareholders"); and
(4) AUTHORISZOR INC. a public company registered under the laws of the state of
Delaware whose principle executive offices are situated at 0000 Xxxxxxx
Xxxx, Xxxxx 0000, Xxxxxx Xxxxx, 00000 (the "Guarantor").
RECITALS:
(A) The Company is a private limited company incorporated in England and Wales
on 4 July 1994. It has prior to the passing of the Resolutions an
authorised share capital of <25,000 divided into:
o 1,125,000 "A" Ordinary Shares of 1 xxxxx each;
o 1,125,000 "B" Ordinary Shares of 1 xxxxx each; and
o 250,000 non-voting "C" Ordinary Shares of 1 xxxxx each;
(B) Of the authorised share capital, all "A" Ordinary Shares and all "B"
Ordinary Shares are issued and fully paid and held by Xxxxxx Xxxxxx and
Xxxxx Xxxxxxxxx respectively. No non-voting "C" Ordinary Shares are in
issue, but options have been granted to employees of the Company in respect
of 132,500 non-voting "C" Ordinary Shares.
(C) Following Completion the Shareholders and Authoriszor have agreed to
co-operate in the management of the Business through the Company as
provided in, and in accordance with, this Agreement.
(D) The Guarantor has agreed to guarantee the obligations of Authoriszor under
the terms of this Agreement.
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:
"Additional Disclosure Letter" means a letter and its annexures dated
and delivered in accordance with the provisions of Clause 6.2 or
Schedule 10 and addressed from the Shareholders to Authoriszor;
"the Agreed Form" in relation to any document, that document initialled
for the purposes of identification by or on behalf of the parties
hereto;
"A" Ordinary Shares" the "A" ordinary shares of 1 xxxxx each in the
capital of the Company;
"the Articles of Association" the new Articles of Association of the
Company to be adopted pursuant to the Resolutions in the Agreed Form
annexed hereto and marked "A";
"AL" Authoriszor Limited, Company Number 3302620;
"AL Loan Variation" the variation of the Initial Loan in the Agreed
form;
"Authoriszor's Solicitors" Xxxxxxx Suddards of 0 Xxxx Xxxx, Xxxxx XX0
0XX;
"the Board" the board of directors of the Company from time to time;
""B" Ordinary Shares" the "B" ordinary shares of 1 xxxxx each in the
capital of the Company;
"Business" means the business of communication consultants and related
business;
"Business Plan" the business plan relating to the strategy and business
of the Company in the Agreed Form;
"Business Day" means a day (other than Saturday or Sunday) when the
clearing banks are open for business in the City of London;
""C" Option Shares" means the options over "C" Ordinary Shares pursuant
to the WRDC Limited No. 1 Share Option Scheme;
""C" Ordinary Shares" means the non-voting "C" Ordinary Shares of 1
xxxxx each in the capital of the Company;
"Completion" the completion of this Agreement by the parties in
accordance with Clause 2;
"Completion Date" the date of Completion;
"Control" or "Controlled" shall be determined by reference to the
provisions of Section 416 TA 1988 and a "Change of Control" when
applied to any party shall be deemed to have occurred if any person or
persons who Control such party at the date of execution of this
Agreement (or the date such party becomes bound by the terms of this
Agreement (if later)) subsequently cease to Control it or if any person
or persons subsequently acquire Control of it;
""D" Director" means the director of the Company for the time being
appointed or deemed to have been appointed pursuant to Clause 4.1 or
the Articles of Association by Authoriszor as holder of the "D"
Ordinary Shares;
""D" Ordinary Shares" the "D Ordinary Shares of 1 xxxxx each in the
capital of the Company;
"Disclosure Letter" means the letter and its annexures dated with
today's date delivered immediately before the execution of this
Agreement and addressed from the Shareholders to Authoriszor;
"Deed of Covenant" a deed in the agreed form;
"Deed of Undertaking" a deed in the form set out in Schedule 6;
"Fundraising" means the private placing currently being undertaken by
the Guarantor through its brokers Xxxxxx Xxxxxxx;
"the General Undertakings" the undertakings set out in Schedule 1;
"Initial Loan" the initial loan of <100,000 made by AL to the Company
on 14 December 1999;
"Issued Share Capital" shall mean the entire issued share capital of
the Company;
"Last Accounts" means the audited balance sheet of the Company as at
the Last Accounts Date and the audited profit and loss account of the
Company up to the Last Accounts Date and the auditor's and directors'
report and notes thereon;
"Last Accounts Date" 31 July 1999;
"Letter of Representation" means the letter in the form set out in
Schedule 11 with such amendments or changes that may be required at the
time of issue of such letter under the rules of NASDAQ or US law
(including federal and state securities laws);
"the Loan Agreement" the loan agreement to be made between Authoriszor
and the Company in the Agreed Form;
"NPBT" the net operating profit on ordinary activities of the Company
before interest and taxation, calculated in accordance with the
accounting conventions, policies, principles, methods and practices
adopted or applied by the Company and otherwise in accordance with the
generally accepted accounting principles of the UK, in respect of the
last financial year ended prior to the Option Period for which "NPBT"
is required to be calculated, based upon the Company's audited
financial statement for such financial year;
"Option" the options exercisable by Authoriszor under the provisions of
Clause 9;
"Option Period" shall mean the periods during which Authoriszor is
entitled to exercise an Option in accordance with Clause 9, PROVIDED
THAT in the event that the audited accounts for the last financial
period ended prior to any specified Option Period in Clause 9, are not
furnished to the Authoriszor within 3 months of the end of such
financial period, then such specified Option Period shall not commence
until the day following the date on which such audited accounts are
furnished to Authoriszor, and shall be deemed to end, 2 months
thereafter.
"Option Shares" shall have the meaning set out in Clause 9;
"Price" shall have the meaning set out in Clause 9.3;
"Relevant Share Capital" shall mean the entire issued share capital of
the Company plus those "C" Ordinary Shares that have not been issued
but over which options have been granted for the time being;
"the Resolutions" the written resolutions of the Company to be
passed at or before Completion in the form set out in Schedule 2;
"the Revenue" the turnover of the Company calculated in accordance with
the accounting conventions, policies, principles, methods and practices
adopted or applied by the Company and otherwise in accordance with
generally accepted accounting principles of the UK, in respect of the
last financial year ended prior to the Option Period for which
"Revenue" is required to be calculated based upon the Company's audited
financial statement for such financial year;
"Security Interest" means any mortgage, charge assignment or
assignation by way of security, guarantee, indemnity, debenture,
hypothecation, pledge, declaration of trust, lien, right of set off or
combination of accounts, or any security interest whatsoever, howsoever
created or arising; "the Service Agreements" the new service agreements
to be entered into between the Company and each of Xxxxxx Xxxxxx, Xxxxx
Xxxxxxxxx and Xxxx Xxxx in the Agreed Form;
"Shares" shares in the share capital of the Company;
"Subscription" means the subscription for 840,000 "D" Ordinary Shares
to be made by Authoriszor on Completion pursuant to the terms of this
Agreement.
"Shareholders Solicitors" means Shulmans 00 Xxxx Xxxxx, Xxxxx, XX0 0XX;
"Subsidiary" and "Holding Company" have the meanings ascribed thereto
by Section 736 Companies Xxx 0000;
"Taxation" means all forms of taxation, charge, duty, impost
withholding, deduction, rate, levy and governmental charge (whether
national or local) in the nature of the tax (including without
limitation, national insurance and other similar contributions, stamp
duty and stamp duty reserve tax) whatsoever and whenever created,
enacted or imposed, and whether of the United Kingdom or elsewhere, and
any amount payable to any taxation authority or any other person as a
result of any enactment relating to any taxation authority or any other
person as a result of any enactment relating to taxation, together with
all fines, penalties, interest, costs, charges, surcharges and expenses
connected therewith and "Tax" shall be construed accordingly; and
"TA 1988" the Income and Corporation Taxes Xxx 0000.
"Warranties" shall mean the Warranties set out in Schedule 4, save
where the provisions of Clause 9.5 apply, when Schedule 4 shall be
deemed to be varied or supplemented as set out in Schedule 10.
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. CONDITIONS PRECEDENT, SUBSCRIPTION AND COMPLETION
2.1 Subject to the terms and conditions of this Agreement, Authoriszor shall
make the Subscription on Completion.
2.2 The Shareholders hereby waive all rights of pre-emption (if any) that
they may have now or at Completion over the Shares the subject of the
Subscription to which they may be entitled under the Articles of
Association of the Company or otherwise.
2.3 The Shareholders and Company agree that any sums due to the Company
pursuant to the Subscription shall be paid by Authoriszor to the
Shareholders' Solicitors whose receipt shall constitute a full
discharge of Authoriszor's obligations to make any such payment.
2.4 Completion of the Subscription is conditional upon:
(a) completion of the Fundraising; and
(b) subject to the terms of the Disclosure Letter each of the
Warranties being true and accurate to the reasonable
satisfaction of Authoriszor as at Completion.
2.5 Authoriszor shall use all reasonable endeavours to ensure that the
condition at Clause 2.4(a) above is satisfied by the date specified in
Clause 2.8.
2.6 Authoriszor shall promptly give notice to the Shareholders of the
satisfaction of the condition in Clause 2.4(a) within 2 Business Days of
becoming aware of such satisfaction.
2.7 if:
(a) the condition set out in Clause 2.4(a) has not been satisfied
or waived by Authoriszor in writing; and
(b) the condition set out in Clause 2.4(b) has not been waived by
Authoriszor in writing;
on or before 30 April 2000 this Agreement shall cease to have effect as
from such date and no party shall have any further or other obligation
to the other save in respect of any antecedent breach and for the
avoidance of doubt the provisions of Clause 6.3 shall apply.
2.8 Subject to the relevant satisfaction or waiver (as referred to in
clause 2.7) of the conditions set out in Clause 2.4 and the provisions
of Clause 6, Completion shall take place at the office of the
Authoriszor's Solicitors on 30 April 2000 or on such earlier date
(being not more than 5 Business Days after this Agreement shall have
ceased to be conditional under Clause 2.4) as Authoriszor may specify
in writing to the Shareholders when each of the events set out in
Clause 2.9 shall occur.
2.9 At Completion:
(a) the Shareholders shall procure that there shall be duly
convened and held a meeting of the board of Directors of the
Company to transact and unanimously resolve upon the business,
set out in Schedule 5 and shall procure the passing of the
resolutions set out in Schedule 2;
(b) Authoriszor shall deliver or cause to be delivered to the
Company an application for the allotment to Authoriszor of
840,000 "D" Ordinary Shares duly signed on behalf of
Authoriszor together with a bankers draft (or such other form
of payment as the Company may agree) in respect of the
Subscription price for the "D" Ordinary Shares of <378,000;
(c) the Company shall allot and issue the "D" Ordinary Shares to
Authoriszor upon payment being received by the Company and the
Company shall register Authoriszor as the holder of the "D"
Shares, and shall prepare and deliver to Authoriszor share
certificates in respect thereof;
(d) the Company and Authoriszor shall execute the Loan Agreement
and Authoriszor shall pay to the Company the sum of <122,000
being the amount of the first draw down under the Loan
Agreement;
(e) the Company and Xxxxxx Xxxxxx, Xxxxx Xxxxxxxxx and Xxxx Xxxx
shall execute and exchange the Service Agreements;
(f) Xxx XxXxxxx shall be appointed the "D" Director pursuant to
the Articles of Association and on the terms set out in
Clause 4;
(g) The Company and AL shall enter into the AL Loan Variation; and
(h) Authoriszor and the Company shall execute the Deed of
Covenant.
2.10 Following Completion the Company shall procure that all necessary
documents and returns are duly completed and delivered to the Registrar
of Companies in compliance with the Companies Xxx 0000.
2.11 In the event that Authoriszor confirms in writing that the condition
set out in Clause 2.4(a) is satisfied and that it intends to confirm
that the condition set out in Clause 2.4(b) will be waived on
Completion then if any of the provisions of Clause 2.9 are not complied
with in all respects as required by the Shareholders and the Company on
the date of Completion, then Authoriszor shall be entitled in its
absolute discretion:
(a) to rescind this Agreement forthwith by notice in writing to
the Shareholders; or
(b) to effect Completion so far as is practicable having regard to
the defaults which have occurred without prejudice to any
other rights that Authoriszor may have against the
Shareholders and the Company in respect of such breach; or
(c) to specify a new date for Completion (being a Business Day not
more than 5 Business Days after the agreed date for Completion
pursuant to Clause 2.8 in which event the provisions of this
Clause 2.11 (except for this Clause 2.11 (c) shall apply to
Completion as so deferred.
2.12 In the event that Authoriszor confirms that the condition set out in
Clause 2.4(a) is satisfied and that it has waived the condition set out
in Clause 2.4(b), then if any of the provisions of Clause 2.9 which
require an action by Authoriszor are not complied with in all respects
as on the date of Completion, then the Shareholders and the Company
shall be entitled in their absolute unanimous discretion:
(a) to rescind this Agreement forthwith by notice in writing to
Authoriszor; or
(b) to effect Completion so far as is practicable having regard to
the defaults which have occurred without prejudice to any
other rights they may have against Authoriszor in respect of
such breach; or
(c) to specify a new date for Completion (being a Business Day not
more than 5 business days after the agreed date for Completion
pursuant to Clause 2.8 in which event the provisions of this
Clause 2.12 (except for this Clause 2.12(c)) shall apply to
Completion as so deferred.
3. CONTINUING AND FURTHER OBLIGATIONS
3.1 Each of the undertakings given by the parties hereto pursuant to this
Agreement shall continue in full force and effect notwith- standing
Completion.
3.2 Subject to the provisions of Clause 3.4:
(a) the Company undertakes to Authoriszor and the Shareholders in
the terms of the General Undertakings and to comply so
far as is lawful with the terms of the General Undertakings;
(b) the Shareholders undertake to Authoriszor and Authoriszor
undertakes to the Shareholders to exercise any powers that
they may have as shareholders and to vote in person or by
proxy their respective Shares in favour of any resolutions
proposed in general meetings necessary to give effect to the
General Undertakings and not to vote their respective Shares
against any resolution proposed in general meeting which would
to its knowledge either directly or indirectly give rise to a
breach of the General Undertakings; and
(c) the Shareholders and Authoriszor undertake to each other to
procure that the Directors appointed by them in their capacity
as a director of the Company shall do all acts within their
power to procure compliance by the Company with the General
Undertakings PROVIDED THAT nothing in this Clause 3.2((c))
will impose an obligation to procure that any Director acts or
omits to act in a way which would be in excess of or in breach
of his duties (including his overriding duty to act in the
best interests of the Company) as a director of the company or
which would be unlawful.
3.3 If the Company fails to comply with its obligations under sub clause
3.2((a)) to supply information to Authoriszor or the Shareholders (as the
case may be) under the General Undertakings, and continues to fail to
comply 14 days following a written request from
Authoriszor or the Shareholders (as the case may be) Authoriszor or the
Shareholders (as the case may be) shall be entitled to instruct a firm of
chartered accountants to prepare and submit to Authoriszor or the
Shareholders (as the case may be) and to the Company (at the cost of the
Company) such information as should have been supplied to Authoriszor or
the Shareholders (as the case may be) under the General Undertakings and
such other financial information concerning the Company (and any
subsidiaries) as Authoriszor or the Shareholders (as the case may be) shall
require and the Company shall (and shall procure that each subsidiary
shall) give such accountants access to its premises and financial records
and all the assistance which such accountants may request for this purpose.
3.4
(a) the Company shall only be entitled to act in breach of its obligations
pursuant to Clause 3.2((a)) with respect to paragraph 1 of Schedule 1 with
the written consent of Authoriszor and the Shareholders;
(b) the Shareholders and Authoriszor agree that on an annual basis, they shall
review, update or renew the Business Plan. The Shareholders and Authoriszor
agree that they will negotiate and discuss such matters in good faith and
that neither the Shareholders nor Authoriszor nor the "D" Director may
unreasonably withhold their respective consents to amend, vary or update
the Business Plan. The Shareholders agree that it will be reasonable for
Authoriszor to object to any amendment, variation or update of the Business
Plan if such amendment, variation or update would set the projected growth
in turnover of the Company at less than 50% and the increase net profits at
less than 5%. Authoriszor agrees that it will be reasonable for either
Shareholder to object to any amendment, variation or update of the Business
Plan if such amendment variation or update would set the projected growth
in turnover of the Company at more than 50% and the projected increase in
net profits at more than 5%.
3.5 The Company and each of the Shareholders and Authoriszor hereby undertake
to each other:
(a) to exercise their respective powers and votes (including such
powers and votes as may be vested in any nominee) to ensure
that:
(i) the terms of this Agreement and the Articles of
Association are complied with;
(ii) all meetings of the Board and the Company shall be
quorate;
(iii) generally to endeavour to promote the Company's
business and its interests;
(b) to execute any further documents, take all steps, exercise all
voting rights and other powers of control available to them in
relation to the Company or otherwise and generally to take any
other such action and do all other things as are required of
them (including without limitation amending the Articles of
Association) at any time to give full force and effect to the
provisions of this Agreement.
3.6 Save as herein expressly provided, in the case of any conflict between
the terms of this Agreement and the provisions of the Articles of
Association of the Company or of any subsidiary of the Company, the
terms of this Agreement shall prevail on all the parties to this
Agreement. Authoriszor and each Shareholder agree that they will, if so
requested by the others procure to the extent of their respective
rights to vote as a shareholder of the Company any necessary amendment
to the Articles of Association or the articles of association of any
subsidiary of the Company (as the case may be) so as to remove such
conflict.
3.7 The Shareholders and Authoriszor agree that:
(a) whilst he remains an employee and/or director of the Company, Xxxxxx Xxxxxx
will be entitled to perform the duties of Managing Director of the Company
and have full responsibility for all operational matters;
(b) they will use reasonable endeavours to procure that agreements are entered
into between the Company and AL to deal with:
(i) AL providing technology, products and technical
support to the Company, and
(ii) the Company providing implementation support and
other services to the Authoriszor Inc and its
subsidiaries,
in each case on agreed commercial terms.
3.8 Authoriszor hereby agrees that the terms of this Agreement are not
intended to restrict the management of the Company in the ordinary
course and Authoriszor acknowledges that the intention is for the
Company to continue to operate as an independent company wherever
possible.
4. THE BOARD OF DIRECTORS
4.1 Subject to clause 4.2 Authoriszor shall have the right to appoint a
maximum of one director of the Company (the "D" Director) and of such
of its subsidiaries as it may specify from time to time and to remove
from office any such person so appointed and to appoint another in his
place. Any such appointment or removal shall be in writing, served on
the Company and signed by Authoriszor. The first "D" Director shall be
Xxx XxXxxxx.
4.2 When Authoriszor wishes to appoint a replacement for Xxx XxXxxxx, it
shall supply the Shareholders with the name (and any other details
which the Shareholders may reasonably request) of the proposed new "D"
Director (the "Proposed Director"). The Shareholders shall be entitled
to reject up to three Proposed Directors on the first appointment after
Xxx XxXxxxx and following that be entitled to reject one Proposed
Director on each occasion of a new appointment of a new "D" Director
Authoriszor shall not be entitled to put forward as a Proposed Director
any person who has been previously rejected by the Shareholders unless
the Shareholders otherwise agree. The performance of the "D" Director
shall be reviewed at annual intervals (the first review to take place
on the first anniversary of the date of this Agreement) by the
Shareholders and if the Shareholders are not reasonably satisfied with
the performance of the "D" Director, then the Shareholders shall be
entitled to remove the "D" Director (without the consent of
Authoriszor) and Authoriszor undertakes to procure the removal of the
"D" Director in which event Authoriszor shall be entitled to appoint
another in his place in accordance with the provisions of this Clause
4.
4.3 The Company shall not remove or purport to remove any "D" Director of
the Company without the prior written consent of Authoriszor (except in
accordance with the provisions of Clause 4.2).
4.4 The "D" Director shall be entitled to report back to Authoriszor such
information as may be necessary for Authoriszor to monitor its
investment in the Company. The "D" Director shall be entitled to be
paid a reasonable directors fee as set out in the Business Plan and
reasonable expenses by the Company commensurate with the time spent and
services provided by him.
5. UNDERTAKINGS
5.1 In further consideration of the agreement of Authoriszor, the Guarantor
and the Company to enter into this Agreement and the Deeds of Covenant
(as appropriate), each of Xxxxxx Xxxxxx and Xxxxx Xxxxxxxxx hereby
undertakes to Authoriszor, the Guarantor and the Company that he shall
not at any time during the period up to the date on which he ceases to
be beneficially interested in any Shares of the Company or two years
following the date on which he ceases to be an employee of the Company
(whichever is earlier), do or permit any of the following without the
prior written consent of Authoriszor:
(a) either solely or jointly or on behalf of any person directly
or indirectly carry on or be engaged or interested in any
business competing with the business of the Company;
(b) solicit the custom of any person who is or has been at any
time during the period set out above, a customer of the
Company for the purpose of offering to such customer goods or
services similar to or competing with those of the Company;
(c) solicit or entice away or endeavour to solicit or entice away
any Director or employee of the Company;
(d) cause or permit any person directly or indirectly under its
control to do any of the foregoing acts or things; or
(e) at any time (not withstanding the time limitations set out
above) divulge to any third party whatsoever (save to the
extent required by law or any regulatory requirement) or use,
take away, conceal, destroy or retain for his own or another's
advantage or to the detriment of the Company any of the trade
secrets, accounts, financial or trading information or other
confidential information which he may receive or obtain in
relation to the businesses, finances, dealings or affairs of
the Company including any information regarding the products,
processes or the customers, suppliers or agents of the Company
and including any papers or records howsoever recorded
(whether in writing or print or by photographic, electrical,
magnetic, symbolic or other means).
5.2 The undertakings in Clause 5.1 (a) to (d) shall not apply if Xxxxxx
Xxxxxx or Xxxxx Xxxxxxxxx (as the case may be) is removed as an
employee without good cause. For the purposes of this Clause 5.2 the
term "good cause" shall mean either (a) voluntary termination by the
employee in circumstances other than which the employee successfully
claims constructive dismissal or (b) lawful termination by the Company
of the relevant Service Agreement by reason of a breach of the relevant
Service Agreement on the part of the employee;
5.3 In further consideration of the agreement of the Company, Authoriszor
and the Shareholders to enter into this Agreement, Authoriszor and the
Guarantor hereby jointly and severally undertake with the Company and
separately with each of the Shareholders that it shall not at any time
whilst it is beneficially interested in any shares of the Company do or
permit any of the following without the prior written consent of the
Shareholders;
(a) (and it shall procure that no member of its group shall) solicit or entice
away or endeavour to solicit or entice away any director or employee of the
Company involved in management or technical matters or sales; or
(b) at any time (not withstanding the time limitations set out above) (and it
shall procure that no member of its group shall) divulge to any third party
whatsoever (save to the extent required by law or any regulatory
requirement) or use, take away, conceal,
destroy or retain for his own or another's advantage or to the detriment of
the Company any of the trade secrets, accounts, financial or trading
information or other confidential information which it may receive or
obtain in relation to the businesses, finances, dealings or affairs of the
Company including any information regarding the products, processes or the
customers, suppliers or agents of the Company and including any papers or
records howsoever recorded (whether in writing or print or by photographic,
electrical, magnetic, symbolic or other means) or to use such information
to solicit the custom of any person who is or has been at any time during
the term of this Agreement a customer of the Company for the purpose of
offering to such customer goods or services similar to or competing with
those of the Company.
5.4 Nothing contained in Clauses 5.1(a) to (e) (inclusive) or Clauses
5.3(a) and (b) (inclusive) shall prevent Xxxxxx Xxxxxx or Xxxxx
Xxxxxxxxx or Authoriszor (or any member of its group) from being the
holder or beneficial owner of any class of securities in any company if
such class of securities is listed on a recognised stock exchange, and
he (together with his spouse and any issue) neither holds nor is
beneficially interested in more than a total of 3 per cent of any
single class of the securities in that company.
5.5 Each of the undertakings contained in each of Clauses 5.1(a) to (e)
(inclusive) and Clause 5.3(a) and (b) shall be, and is, a separate
undertaking by each of Xxxxx Xxxxxxxxx, Xxxxxx Xxxxxx and Authoriszor
and shall be enforceable by the Company, Authoriszor or the
Shareholders (as the case may be) separately and independently of the
right of the Company or Authoriszor (as the case may be) to enforce any
one or more of the other covenants contained in Clause 5 and in the
event that any of such undertakings shall be found to be void but would
be valid if some part thereof were deleted then such undertaking shall
apply with such deletion as may be necessary to make it valid and
effective.
6. WARRANTIES
6.1 Subject to matters disclosed in the Disclosure Letter, the Shareholders
warrant to Authoriszor in the terms set out in Schedule 4 at the date
of this Agreement and acknowledge that Authoriszor has entered into
this Agreement in reliance on the Warranties contained in Schedule 4.
The provisions of Schedule 9 shall apply to the Warranties.
6.2 Subject to matters disclosed in the Disclosure Letter or any Additional
Disclosure Letter (which shall, if deemed appropriate by the
Shareholders, inter alia, set out those Warranties which cannot be
given at Completion by the Shareholders due to there being a material
breach of such Warranties) the Warranties in the terms of Schedule 4
shall be repeated by the Shareholders to Authoriszor at Completion save
that reference in Schedule 4 to the Disclosure Letter shall be a
reference to both the Disclosure Letter and any such Additional
Disclosure Letter. Without prejudice to the generality of the foregoing
the Shareholders may
in the Additional Disclosure Letter update or amend matters contained in
the Disclosure Letter. The provisions of Schedule 9 shall apply to the
Warranties to be given at Completion.
6.3 The Shareholders shall procure that any matters arising or notified to
them or the Company after the date of this Agreement but prior to
Completion which may reasonably constitute a breach of the Warranties
are notified to Authoriszor, by way of issue of an Additional
Disclosure Letter. If on Completion the Shareholders are unable to give
the Warranties in the same terms as the Warranties given on the date of
this Agreement, subject to the same disclosures made in the Disclosure
Letter, only, Authoriszor shall be entitled to terminate this Agreement
forthwith by notice in writing to the Shareholders PROVIDED THAT
Authoriszor shall not be entitled to claim damages or other
compensation from the Shareholders (whether in contract tort or
otherwise) in relation to the rescission of this Agreement for any
reason or in relation to any matter against which disclosure has been
made in the Additional Disclosure Letter or where the Shareholders
indicate that a Warranty can no longer be given in the Additional
Disclosure Letter.
6.4 The Shareholders hereby undertake to Authoriszor that they will not and
will procure that the Company will not intentionally take any action or
knowingly ornit to do any act which is reasonably likely to result in a
breach of the Warranties at Completion insofar as such matters are
within the knowledge and control of the Shareholders.
6.5 Where any Warranty is qualified by the words "so far as the
Shareholders are actually aware" then this shall be a reference to the
actual knowledge of the Shareholders at the time of giving the Warranty
without imputing the knowledge of any other person to the Shareholders
and the Shareholders shall not be deemed to have made any enquiries
whatsoever or taken any steps to ensure accuracy (without prejudice to
any enquiries actually made or steps actually taken).
6.6 Where any Warranty is qualified by the words "so far as the
Shareholders are aware", then this shall be a reference to the
knowledge the Shareholders, having been deemed to have made due and
careful enquiry into the subject matter of such Warranty of the
officers, legal advisors and auditors of the Company
7. BREACH BY SHAREHOLDERS
7.1 A breach by Shareholders shall be deemed to have occurred:
(a) in the event that any Shareholder shall exercise any right
that he may have as a shareholder or director of the Company
in a manner that would result in a breach by the Shareholder
of the provision of Schedule 1; or
(b) if any Shareholder shall knowingly commit any substantial
breach of this Agreement and fail to remedy such breach within
30 days of the service of a notice from Authoriszor requesting
the same to be remedied (such notice to give adequate
particulars of the alleged breach) or if the breach is one
which requires more than 30 days to remedy, has not commenced.
the remedying thereof within 30 days and thereafter not
diligently made efforts to complete such rectification.
7.2 In the event of the occurrence of a breach by a Shareholder in
accordance with Clause 7.1 then (without prejudice to any of the
remedies that Authoriszor may have under law, or equity or pursuant
hereto): (a) then in relation only to that Shareholder, Authoriszor
shall be entitled to exercise its Option in accordance with
Clause 9.1 within 28 days of such breach, whether or not this
exercise falls with the Option Periods set out in Clause 9.3;
and
(b) prior to any such exercise of its Option, Authoriszor shall
notify each of the other Shareholders of its intention to
exercise the Option under this Clause 7 and the relevant
financial year for which the Price shall be calculated shall
be the last complete financial year ended prior to the
exercise of the Option; and
(c) in all other material respects, the provisions of Clause 9
shall apply in full to the exercise of Options pursuant to
this Clause 7, and in so far as clause 9.15 is concerned if
the exercise of the Option under this Clause 7 would have the
effect of giving Authoriszor a 50% interest or more in the
Relevant Share Capital, then the Shareholder who is not in
breach of this Agreement shall be entitled to require
Authoriszor to purchase his shares ("the Relevant Shares") at
the same time as acquiring the defaulting Shareholder's shares
and on the same terms and conditions as those applying to the
defaulting Shareholder; and
(d) if the Shareholder who is not in breach of this Agreement
serves notice on Authoriszor within 28 days of exercise of the
Option referred to in clause 7.2(a) Authoriszor shall become
bound to complete the purchase of the Relevant Shares in
accordance with the relevant provisions of Clause 9 adapted
accordingly.
7.3 In the event that Authoriszor is entitled to and exercises its Option in
accordance with Clause 7.2 above, prior to I November 2001, it is hereby
agreed that the Price per Option Share shall be calculated as:
1.25 x Revenue
----------------------
Relevant Share Capital
based on the Revenue as evidenced in the most recent audited accounts
for a full financial year of the Company as are available at that time.
7.4 In the event of an Event of Default by Authoriszor or the Guarantor in
accordance with the provisions of Clause 12 then (without prejudice to
any of the remedies the Shareholders mayhave under law, equity or
pursuant hereto) the Shareholders shall have an option to acquire all
the Shares held by Authoriszor on like terms to those set out in
Clauses 7.2 and 7.3 above in favour of Authoriszor, and Clauses. 7.2
and 7.3 and the Price per Option Share shall be interpreted and
construed accordingly.
8. STAFF
8.1 The Company shall recruit and employ such staff as the Board shall from
time to time consider necessary for the proper conduct of the Business
in accordance with the Business Plan.
9. OPTION ARRANGEMENTS
9.1 Subject to clauses 9.14 9.15 and 12 Authoriszor shall have the Option
to require the Shareholders to sell any or all of the Shares not
already owned by Authoriszor and owned by them ("Option Shares") at the
Price (as hereinafter provided) per Option Share, and on the exercise
of any such Option, the Shareholders shall be bound to sell, with full
title guarantee (free from any liens, charges or encumbrances), and the
Authoriszor shall be bound to complete the purchase of the relevant
Option Shares on payment of the Price in accordance with the terms of
this Agreement.
9.2 Subject to clauses 9.14 9.15 and 12 an Option can only be exercised by
notice in writing by Authoriszor in the form similar to that set out in
Schedule 8 served on the Shareholders during an Option Period, and all
Options will lapse and cease to have any further effect as set out
below. An Option Notice once served may not be withdrawn without the
written consent of the Company and the Shareholders, save where
Authoriszor determines that it does not wish to proceed to complete the
exercise of the relevant Options by reason of the contents of
anyAdditional Disclosure Letter served on Authoriszor by the
Shareholders after Completion.
9.3 Subject to Clause 9.4 below, the Price per Option Share shall be calculated
as follows:
Financial Year Option Period* Price (per Option Share)
(1) Period to 31 July None (a) None
2000
(2) period to 31 July 1/11/2001 to 31/12/2001 1.25 x Revenue
2001 --------------
Relevant Share Capital
(3) period to 31 July 1/11/2002 to 31/12/2002 (0.75 x Revenue) + (2.5 x NPBT
2002 ------------------------------
Relevant Share Capital
(4) period to 31 July 1/11/2003 to 31/12/2003 (0.5 x Revenue) + (5 x NPBT
2003 ---------------------------
Relevant Share Capital
(5) period to 31 July 1/11/2004 to 31/12/2004 10 x NPBT
2004 -----------------------
Relevant Share Capital
(6) period to 31 July None - Option lapses None
2005
* See definition of Option Periodfor the possible extension of these periods and
Clause 7 in respect of the exercise of Options on breach.
9.4 If Completion takes place after 29 February 2000, the Price (per Option
Share), in relation to the Option Period of I November 2001 to 31
December 2001 (including any possible extension of that period) as set
out in the table at Clause 9.3 only, it shall be calculated as follows:
1.25 x Revenue
----------------------
Relevant Share Capital
plus
1.25 x Revenue x N
---------------------------
Relevant Share Capital x 80
Where "N" is the number of full calendar weeks, or part
thereof, that elapse between29 February 2000 and the actual
date of Completion.
9.5 The completion of the exercise of an Option shall take place at the
offices of Authoriszor's Solicitors within 10 business days of final
determination of the Price in accordance with Clauses 9.6 to 9.9 below
when the events set out below shall occur:
(a) the Shareholders holding Option Shares shall deliver to Authoriszor's'
Solicitors certificates in respect of the Option Shares and duly completed
and executed transfers of the Option Shares in favour of the Authoriszor or
as it directs and Letters of Representation executed by each of them;
(b) Authoriszor shall pay or procure the payment of the Price multiplied by the
number of Option shares in accordance with Clause 10 below; and
(c) if the exercise of an Option has the effect of giving Authoriszor a 50%
interest or more in the Relevant Share Capital, then the Shareholders the
subject of the Option shall (subject to the provisions of Schedule 10)
warrant to Authorizsor in the terms set out in Schedule 4, as at the date
of completion of such Option, and acknowledge that Authorizsor will
exercise such Option in reliance on the Warranties.
9.6 The Company and Shareholders shall procure, that within 30 days of the
date of the service of the Option Notice the Company will prepare and
deliver to Authoriszor a draft statement setting out the Price
calculated by reference to the Option Period in respect of which the
Option Notice has been given and detailed working papers showing how
the Price has been calculated by the Company's accountants for the tune
being to ensure that the Price has been calculated in accordance with
the terms of this Agreement.
9.7 Within 30 days of receipt by Authoriszor of the draft statement of
Price, Authoriszor will inform the Shareholders in writing whether or
not it agrees or disagrees with such statement and, if it disagrees,
shall specify in writing the matters on which he disagrees. If
Authoriszor confirms in writing that it accepts the draft statement of
Price, or if it fails to inform the Shareholders within 30 days of
receipt whether or not it accepts that the draft statement of Price,
such draft statement shall be deemed to show the correct Price.
9.8 If Authoriszor informs the Shareholder, in accordance with Clause 9.7,
that it does not agree the draft Statement of Price, Authoriszor and
the Shareholders will hold discussions in good faith with a view to
agreeing the statement of Price. If such agreement is reached, and is
confirmed in writing by the parties, it shall be final and binding on
the parties.
9.9 The Company and Authoriszor and the Shareholders shall severally procure
that all records, working papers, and other information as may be
reasonably required for the purposes of this Clause 9 by the Company's
accountants (or the independent accountant referred to in Clause 9. 10
below) for the time being shall be made available on request and shall
generally render
all reasonable assistance necessary for the preparation of the statement of
Price and the resolution of any dispute in relation to the same.
9.10 Any dispute about the Price which remains unresolved 45 days after
receipt by Authoriszor of the draft statement of Price shall, at the
request of either Authoriszor or the Shareholder, be referred to a firm
of chartered accountants nominated jointly by the Shareholders and
Authorizsor or, failing such nomination, within 14 days after request
by either of them, by the President for the time being of the Institute
of Chartered Accountants in England and Wales.Such independent firm
shall act as experts and not as arbitrators and its decisions shall (in
the absence of manifest error) be final and binding on the parties. In
relation to this Clause 9. 10 the fees of such independent firm shall
be payable by the Shareholders and Authorizsor in such proportions as
such firm determines or (failing such determination) in equal shares.
9.11 The Shareholders undertake to Authoriszor that until the lapse of all
possible Options, in order to preserve the rights of Authoriszor
hereunder, there does not currently exist, nor will they create or
permit to subsist any Security Interest over their respective Shares.
9.12 Notwithstanding and without prejudice to the provisions of the
remainder of this Agreement, the parties acknowledge that because they
wish to have flexibility to manage and develop the Business in the
future it is not practical in defining Revenue and NPBT to cater
adequately for each event that may occur which would or might adversely
affect the Revenue or NPBT and therefore the Price payable upon the
exercise of the Option. Accordingly, the parties have set out below
certain overriding principles in relation to the promotion and
development of the Business that the parties shall take account solely
for the purposes of the calculation of Revenue or NPBT and any
appropriate adjustments thereto resulting from any failure by either
party to observe the following overriding principles:
(a) the Business shall not be affected by any transaction or arrangement to the
extent not a bona fide commercial transaction or arrangement on arms length
terms;
(b) neither party shall do anything with the intention of adversely affecting
the value of Revenue or NPBT at any relevant time; and
(c) it is the intention of the Authoriszor and the Shareholders to promote and
develop the Business
9.13 The parties shall exercise all voting and other rights available to them to
ensure the implementation of the preceding provisions of this Clause and
that any provisions contained in the Articles of Association of the Company
restricting transfers of shares (including without limit the provisions of
article 8) shall be waived or suspended to allow such sales and
purchases to proceed as provided above and the parties shall procure the
registration of any transfer of any shares in the Company pursuant to this
Agreement accordingly.
9.14 If Authoriszor wishes to exercise an Option then it shall be obliged to
exercise its Option for an equal number of "A" Ordinary Shares as "B"
Ordinary Shares and vice versa and Authoriszor shall treat such shares
the same in relation to the split of the price between cash and shares
as provided in clause 10.2 below
9.15 If the exercise of an Option will have the effect of giving Authorizsor
a 50% interest or more in the Issued Share Capital, then it shall be a
condition precedent of Authon'szor exercising its Option that
Authoriszor shall exercise the Option in relation to all the issued
shares in the capital of the Company not then held by Authoriszor (and
not part only) and in addition acquire from all persons holding 'C'
Share Option and/or 'C' Ordinary Shares the entire unexercised 'C'
Share Options and 'C' Ordinary Shares that are in issue on the terms of
the Deed of Covenant
10. PRICE
10.1 On Completion of an Option, Authoriszor shall procure the payment of
the Price multiplied by the number of Option Shares to the relevant
Shareholders who are selling Option Shares. The price shall be payable
in pounds sterling or such other currency then adopted by the
government of England.
10.2 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 such numbers of fully paid shares of common stock (excluding
fractions but rounded up to the nearest share) in Authoriszor Inc
("Consideration Shares") , its parent company as shall have a value
(ascertained by reference to Clause 10.2(a)) nearest to but not less
than that sum to the relevant Shareholders as part satisfaction of
consideration payable to such relevant Shareholders subject to the
provisions of this Clause 10. All payments of Price made by Authoriszor
in cash shall be paid to the Shareholders by way of telegraphic
transfer or bankers draft. In addition:
(a) for the purposes of Clause 10.2 the value of each of the Consideration
Shares shall be the average of the daily closing prices for the five (5)
consecutive days ending five (5) trading days before the date on which the
relevant Option is due to be completed in accordance with the provisions of
Clause 9.5 (as adjusted for any split, combination or reclassification that
took effect during such five (5) trading day period so as to not prejudice
the position of the Shareholders). The closing price for each day shall be
the last reported sale price or, in case no such reported sale takes place
on such day, the average of the last closing bid and asked prices, in
either case on the principal national
securities exchange or NASDAQ on which the Consideration Shares are listed
or admitted to trading, or if not listed or admitted to trading.
(b) the consideration shares to be issued pursuant to Clause 10.2 shall rank
pari passu in all respects with the common stock of Authoriszor Inc.
already in issue and listed at the relevant time and so far as regards any
dividend on such stock declared or paid by reference to a record date
falling on or after the date of their registration 'in the register of
members of Authoriszor Inc shall rank as if they had been issued (fully
paid) on and from the commencement of the period in respect of which such
dividend is declared or paid;
(c) it shall be a condition of the satisfaction of part of the Price by
Consideration Shares that the Consideration Shares shall be listed on
NASDAQ or listed on such other recognised and publicly quoted market in
North America or Europe of equivalent or better standing; and
(d) the conversion between United States Dollars to the pounds sterling or the
currency then adopted by the government of England shall be calculated by
reference to the average exchange rate for such currencies specified in the
Financial Times of England on the last business day immediately prior to
the date on which the relevant Option is exercised.
11. DIVIDEND AND DISTRIBUTION POLICY
11.1 The Shareholders shall procure that the Company's profit available for
distribution in respect of each financial year during the term of this
Agreement shall be distributed by the Company to the Shareholders and
Authoriszor by way of dividend in accordance with the Business Plan.
12. EVENT OF DEFAULT
12.1 Notwithstanding any other provisions of this Agreement, the rights of
Authoriszor under Clause 9 shall irrevocably lapse if Authoriszor
and/or the Guarantor becomes subject of an Event of Default and this
provision shall be in addition to and without prejudice to any other
rights and remedies which the Company and/or the Shareholders may have
12.2 For the purposes of this Clause Event of Default means;
(a) a material breach the terms of this Agreement or of the Loan Agreement or
the Deed of Covenant or the AL Loan Variation which Authoriszor and/or the
Guarantor and/or AL fas to remedy within 30 days of the service of a notice
from the Shareholders requesting the same to be remedied (such notice to
give adequate
particulars of the alleged breach) and without prejudice to the generality
of the foregoing a failure on the part of Authoriszor and/or the Guarantor
to honour any sum requested to be drawn down and required to be advanced to
the Company under the terms of the Loan Agreement shall be deemed to be a
material breach of the terms of the Loan Agreement;
(b) the cessation of the whole or a substantial part of Authoriszor's and/or
the Guarantor business or an act whether of Authoriszor and/or the
Guarantor or another person which by itself results in a formal step being
taken for the receivership administration liquidation dissolution or other
insolvency proceedings of or in respect of Authoriszor and/or the Guarantor
or their assets;
(c) if either Authoriszor or the Guarantor files or is served with any petition
for relief under the US Bankruptcy Code or any similar federal or state
statute and such is not dismissed or stayed within 60 days of such filing
or service;
(d) Authoriszor (or the relevant transferee under Clause 12.2 (d)) ceasing to
be a member of the same group as the Guarantor;.
(e) The transfer by Authoriszor or any member of the same group as the
Guarantor of any "D" Ordinary Shares to any entity outside the group of the
Guarantor.
13. GUARANTOR
13.1 In consideration of the Shareholders and the Company entering into this
Agreement at the request of the Guarantor and in consideration of the
payment of f I to the Guarantor by each of the Shareholders and the
Company (the receipt of which is hereby acknowledged by the Guarantor),
the Guarantor covenants with the Shareholders and the Company;
(a) to procure and guarantee the performance of Authoriszor of all
obligations under this Agreement which are expressed to relate
to Authoriszor and of all obligations under any agreement
("Ancillary Agreement") entered into by Authoriszor pursuant
to this Agreement (which shall include without limitation the
Loan Agreement); and
(b) to guarantee to the Shareholders and the Company the due
payment by Authoriszor of any monies due the Shareholders
and/or the Company under the terms of this Agreement or under
any Ancillary Agreement and this shall be a continuing
guarantee until all monies due are paid.
13.2 The liability of the Guarantor shall not be discharged or impaired by any
amendment to or variation of this Agreement, any release of or granting of
time or other indulgence
to Authoriszor or any third party or any act, event or ornission which but
for this Clause would operate to impair or discharge the liability of such
party under this Clause.
14. ASSIGNMENT
14.1 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 14.
14.2 Except as provided in Clause 12.2 (d), when the Options shall lapse
each of the Shareholders and Authoriszor may assign the benefit of this
Agreement to any person to whom they transfer any 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 3 and subject to executing such deed of adherence, such
assignee shall be entitled, and shall be assumed to have, all the
benefits and obligations of this Agreement which would have been
conferred it if it had been a Shareholder or Authoriszor (as the case
may be) at the date hereof and thereafter all references to the
Shareholders in this Agreement shall be read and construed as including
such person as if it had been an original party hereto.
14.3 All deeds of adherence executed pursuant to Clause 14.2 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.
14.4 If any Shareholder or Authoriszor ceases to hold Shares or ceases to be
the beneficial owner of shares in the Company, then subject to the
provisions of Clause 14.2, it shall cease to have the benefit of this
Agreement and shall have no liability or obligations hereunder other
than any liability accrued at the date he ceases to hold any Shares or
ceases to be the beneficial owner of any Shares or in respect of
obligations hereunder expressed to survive any termination of this
Agreement including, but not limited to, those under Clause 5 hereof.
14.5 The Company and the Shareholders and Authoriszor undertake to each
other that they will procure to the extent of their respective rights
(whether as directors or shareholders of the Company or otherwise)
that:
(a) no person is registered as holder of any shares in the Company (whether
upon transfer or transmission or by issue) except in accordance with the
Articles of Association and this Agreement; and
(b) no person shall be so registered unless he enters into a deed of ad
substantially the form set out in Schedule 3.
15. 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 Agreement
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. Any notice sent to the
"D" Director must also be copied to Authoriszor at the same time.
16. GENERAL
16.1 Failure by any party hereto at any time or times to require performance
of any provision of this Agreement 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 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.
16.2 This Agreement 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 Agreement 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 15.
16.3 This Agreement may be entered into by each of the parties signing one or
more counterparts which, taken together, shall constitute a complete
agreement.
16.4 Except where the context otherwise requires, each of the restrictions
contained in this Agreement shall be construed as independent of every
other restriction and of every other provision of this Agreement 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 Agreement or the application of such
restriction to any other person or circumstance.
16.5 Nothing contained in this Agreement and no action taken by any party
pursuant to this Agreement 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.
16.6 This Agreement (together with the documents executed pursuant to it)
constitutes the entire agreement between the parties and supersedes and
revokes any previous shareholder agreement between any of the
Shareholders in relation to the Company.
16.7 Each Shareholders will at their own expense execute and do all such
assurances, acts and things as Authoniszor may require for perfecting
the title of Authoriszor (or its nominee) to the Option Shares owned by
the particular Shareholder following the exercise of an Option.
16.8 The Shareholders hereby irrevocably by way of security for the
performance of its obligation under Clause 9 of this Agreement (within
the meaning of Section 4 of the Powers of Attorney Act 197 1) 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 and deliver, all documents deeds and instruments, which may be
required (or which the attorney reasonably considers necessary) for
carrying out any obligation imposed on the Shareholders to execute any
such documents, deeds or instruments pursuant to Clause 9 of this
Agreement.
16.9 The Shareholders will ratify and confirm all transactions entered into and
all things done by the attorney in the exercise or purported exercise of
their powers.
AS WITNESS the hands of the parties or their duly authorised representatives on
the date shown on the first page as a deed.
SCHEDULE 1
General Undertakings
I . The Company will:
1.1 comply with the restrictions imposed upon the Company by the Articles of
Association;
1.2 develop the business of the Company in accordance with and within the scope
of the Business Plan (as reviewed by the Board from time to time);
1.3 convene at least one Board Meeting per quarter (unless otherwise agreed by
the Shareholders and Authoriszor);
1.4 furnish the Shareholders and Authoriszor with:
(a) monthly management accounts containing a balance sheet, profit and loss
statement and cash flow statement together with a commentary on the period
in question comparing the same with the current budget and the same period
in the previous year together with a rolling forecast of profits and cash
flow for the next 12 months, and such further management information which
is customarily prepared by the Company on a monthly basis within twenty-one
days of the end of each month; and
(b) audited accounts of the Company within four months of the end of each
financial year; and
(c) not less than seven days notice of all meetings of the Board and the
agendas for such meetings unless each of the directors agrees a shorter
period ; and
(d) such further information as may from time to time be reasonably requested
in writing by them as to all matters relating to the business, the
financial position and the affairs of the Company and any information
customarily required to run a business such as that of the Company,
including, for the avoidance of doubt, copies of the register of members of
the Company and full details of any share options granted or exercised;
1.5 not later than one calendar month before the end of each of its
financial years adopt detailed operating budgets for the Company in
respect of the next financial year of the Company PROVIDED THAT no such
budgets shall be approved without the approval of the Shareholders and
Authorizsor;
1.6 if requested in writing by Authoriszor, procure that the "D" Director is
appointed director of any subsidiary for the time being of the Company; and
1.7 take action in respect of or enforce or comply with any provision of this
Agreement for which the consent of any other party is necessary immediately
upon receipt by the Company of that consent; and
2. The Company will not and the Shareholders and Authoriszor shall not
(subject to paragraphs 4 and 5 below) consent or authorise without the
prior written consent of Authoriszor or the "D" Director and the
Shareholders and so far as is lawful:
2.1 create allot or issue any shares or other securities of the Company or
grant any right to require the allotment or issue of any such shares or
securities (other than the creation allotment or issue or the grant of
any right to require the allotment or issue of any shares or securities
pursuant to this Agreement) other than pursuant to and in accordance
with the rules of the WRDC Limited No I Share Option Scheme;
2.2 increase, reduce, repay, redeem, subdivide, consolidate, reclassify,
cancel or otherwise vary the authon'sed or issued Share capital of the
Company or the rights attaching thereto or reduce the amount, if any,
standing to the credit of the share prenuium account or capital
redemption reserve other than pursuant to and in accordance with the
rules of the WRDC Limited No. I Share Option Scheme;
2.3 permit the winding up of or the appointment of a receiver to the Company or
any of its subsidiaries unless on the written advice of a Licensed
Insolvency Practitioner for reasons of insolvency;
2.4 merge, sell, transfer, lease, licence or in any way dispose of all or a
material part of its business, undertaking, property or other assets,
including shares in any subsidiary (other than a disposal of
stock-in-trade in the ordinary course of business) whether by a single
transaction or a series of transactions, related or not;
2.5 make or permit any material alteration (including cessation) to the
general nature of the business of the Company proposed to be carried on
after the date hereof except for the reasons referred to in paragraph
2.3 above;
2.6 enter into any contract or agreement for the acquisition of freehold or
leasehold property;
2.7 create any subsidiaries of the Company
2.8 enter into any transaction, arrangement or agreement with or for the
benefit of any director of the Company or any person connected with any
such director within the meaning of Section 839 TA 1988;
2.9 incur any obligations in the nature of debt (including hire purchase,
lease finance or other quasi borrowings) in excess of those proposed in
the then current operating budget or give any guarantee or indemnity,
other than in relation to the supply of goods in the normal course of
business or as may be envisaged in the Business Plan;
2.10 create or issue any debenture, mortgage, charge or other security;
2.11 acquire any share capital or any loan capital of any other entity;
2.12 make any loans (other than intra-group, loans and credit given in the
normal course of trading);
2.13 incur capital expenditure in excess of the operating budget referred to in
the Business Plan or in paragraph 1.5 above (or any approved revision
thereof) or increase employment benefits of any director;
2.14 enter into any contract or arrangement, which:
(a) is outside the ordinary course of business of the Company; or
(b) is otherwise than at arms length.
2.15 give notice of any resolution to purchase its own shares;
2.16 capitalise any undistributed profits (whether or not the same are
available for distribution and including profits standing to any
reserve) or any sums standing to the credit of the Company's share
premium account or capital redemption reserve;
2.17 give notice of the passing of any elective resolution as defined and for
any of the purposes set out in Section 379A of the Companies Xxx 0000;
2.18 instigate, settle or compromise any litigation or similar process involving
an amount claimed in excess of(pound)25,000;
2.19 remove the auditors of the Company, change the year end of the Company
or make any material change to any accounting policy or principle
adopted or applied for the preparation of the audited or management
accounts of the Company;
2.20 exercise any discretion of the Board in respect of the provisions of the
Articles of Association relating to the transfer of shares;
2.21 until the Options have all lapsed, enter into any negotiations concerning:
(a) the sale of a material number of Shares in the capital of the Company or of
any material part of the business undertaking or assets of the Company and
its Subsidiaries taken as a whole; or
(b) the refinancing of the Company or the making of any approach or application
or the submission of any business plan to any potential investor or
financier with a view to attracting additional or substitute finance for
the Company and its Subsidiaries; or
(c) the application for the admission of any of the Shares of the Company to
dealings on any recognised investment exchange (as that term is used in the
Financial Services Act 1986);
2.22 increase the number of directors of the Company beyond 6 or constitute a
committee of the directors of the Company;
2.23 make any changes to, or adopt a new, Business Plan (subject to the
provision of Clause 3.4(b) of this Agreement); and
2.24 not to permit any transfer of any "C" Ordinary Shares or any "C" Share
Option in relation thereto to any person without the transferee
entering into a deed of adherence in the form set out in the Deed of
Covenant.
3. The Company will procure that each and every subsidiary of it shall
give effect to each of the undertakings contained in paragraphs I and 2
above as if the undertakings contained therein had also been given
individually by each of such subsidiaries and the name of each such
subsidiary had appeared therein in substitution for "the Company"
wherever it therein occurs.
4. In the event that the Company and/or the shareholders have given
Authoriszor and the "D" Director notice of its/their wish or intent to
carry out any of the activities set out in paragraph 2 above and
neither Authoriszor nor the "D" Director has responded to any such
notice within 30 days of receipt of such notice, then the Company and
the Shareholders shall be entitled to carry out such activity as
detailed in the notice without the prior written consent of Authoriszor
or the "D" Director.
5. None of the restrictions set out in paragraph 2 above shall apply to the
extent that such matter is expressly provided for or dealt with in the
Business Plan.
SCHEDULE 2
The Resolutions
THE COMPANIES ACT 1985
WRDC LIMITED
COMPANY NUMBER 2945379
WRITTEN RESOLUTION
__________ 2000
We, the undersigned, being the holders of the entire issued share capital of the
Company hereby pass the following resolutions as written resolutions of the
Company pursuant to Section 381A of the Companies Xxx 0000 with effect as if the
said resolutions of the Company had been passed as resolutions of the Company in
general meeting.
WRITTEN RESOLUTIONS
1. That the authorised share capital of the Company be increased from
L25,000 to 03,400 by the creation of 840,000 "D" ordinary shares of
LO.01 each, having the rights set out in the new Articles of
Association to be adopted by the Company today pursuant to resolution 2
below.
2. That the regulations contained the printed document annexed hereto be
adopted as the new Articles of Association of the Company in
substitution for and to the exclusion of all the existing articles of
association and in substitution for all existing rights and privileges
of the authorised share capital of the Company.
-------------------------
Xxxxxx Xxxxxx
-------------------------
Xxxxx Xxxxxxxxx
-------------------------
Dated
SCHEDULE 3
Deed of Adherence
THIS DEED OF ADHERENCE is made on _____________199__
BETWEEN:
(1) ___________ of ___________ ("the Covenantor"); and
(2) WRDC LIMITED (Registered in England No. 2945) ("the Company") for itself
and as attorney for the other parties to the Agreement.
RECITAL
This Deed is supplemental to a Shareholders' Agreement 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
Agreement and hereby covenants with each of the parties hereto to observe,
perform and be bound by all the terms of the Agreement (other than Clause
2) as if it were a party thereto or named therein as a Shareholder.
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
Agreement (other than Clause 2) as if it were a party thereto and named
therein as a Shareholder.
3. The Covenantor hereby appoints the Company to be its attorney for the
purposes of clause [ 14.3] 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.
SCHEDULE 4
The Warranties
1. CORPORATE
1.1 The information relating to the Company contained in the Recitals (A) and
(B) to this Agreement is true and complete in all respects -
1.2 Save as set out in this paragraph
(a) there are no agreements or arrangements in force, other than
this Agreement, which grant to any person the right to call
for the issue, allotment or transfer of any share or loan
capital of the Company; and
(b) there are no third party consents required by the Company to enter into or
perform the obligations set out in this Agreement
Name Number of C' Share Options held
P Xxxxxx 50,000
M Xxxx 50,000
A Xxxxxxx 7,500
X Xxxxxx 12,500
G Waddington 12,500
1.3 Save for immaterial errors the register of members and other statutory
books of the Company have been properly kept and contain an accurate
and complete record of the matters with which they should deal.
1.4 All returns, particulars, resolutions and documents required by any
legislation to be filed with the Registrar of Companies in respect of
the Company have been duly filed and were correct.
1.5 The Company has full power and authority to enter into and perform this
Agreement, which when executed will constitute valid and binding
obligations on the Company and Shareholders which are enforceable in
accordance with their respective terms.
1.6 The Company is validly incorporated as a private limited company under the
Companies Xxx 0000.
1.7 No order has been made or petition presented, meeting convened or
resolution passed for the winding up of the Company nor has any
receiver been appointed or any distress, execution or other process
been levied in respect of its business or the assets.
1.8 No composition in satisfaction of the debts of the Company or scheme of
arrangement of its affairs or compromise or arrangement between it and
either or both of its creditors or members or any class of either or
both of its creditors or members has been proposed, sanctioned or
approved.
1.9 No distress, distraint, charging order, garnishee order, execution or
other process has been levied or applied for in respect of the whole or
any part of the Company's Business or the assets.
1.10 No event has occurred causing, or which upon intervention or notice by
any third party may cause, any floating charge created by the Company
to crystallise over its business or assets or any of them or any charge
created by it to become enforceable over the business or assets or any
of them nor has any such crystallisation occurred nor is such
enforcement in process.
2. ACCOUNTS
2.1 The Last Accounts have been prepared in accordance with the historical
cost convention, and the bases and policies of accounting adopted for
the purpose of preparing the Last Accounts are the same as those
adopted in preparing the audited accounts of the Company in respect of
the last three preceding accounting periods apart from changes required
to conform to current FRSs.
2.2 The Last Accounts:
(a) give a true and fair view of the assets and liabilities of the
Company at the Last Accounts Date and its profits or losses
for the financial period ended on that date;
(b) comply with the requirements of the Companies Acts;
(c) comply with all generally accepted United Kingdom accounting
principles and practices whic were applicable at the relevant
time to a United Kingdom company;
(d) to the extent required by the Companies Act and the relevant
FRS provided or reserved for all actual liabilities and
capital commitments of the Company outstanding at the Last
Accounts Date including contingent liabilities and provision
reasonably regarded as adequate for all bad and doubtful
debts;
(e) provide or reserve in accordance with the principles set out
in the notes included in the Last Accounts for all Taxation to
the extent required by the relevant FRSs liable to be assessed
on the Company or for which it may be accountable in respect
of the period ended on the Last Accounts Date.
2.3 All the accounts, books, ledgers and financial records, of the Company
are in its possession, have been fully, properly and accurately kept
and completed and disclose with reasonable accuracy the financial
position of the company at that time.
3. FINANCIAL
3 1 The Company did not have any capital coninutments outstanding at the Last
Accounts Date and the Company has not, to any material extent since then,
incurred or agreed to incur any capital expenditure or commitments or
disposed of any capital assets.
3.2 Since the Last Accounts Date the Company has not paid or declared any
dividend or made any other payment which is, or is treated as, a
distribution for the purposes of ICTA Part VI Chapter II.
3.3 The Company has not, since the Last Accounts Date, repaid, or become
liable to repay, any indebtedness in advance of its stated maturity.
3.4 There are no liabilities (including contingent liabilities) which are
outstanding on the part of the Company other than those liabilities
disclosed in the Last Accounts or incurred in the ordinary and proper
course of trading. No liabilities have been discharged by the Company
since the Last Accounts Date other than in the ordinary course of
business.
3.5 No part of the amounts included in the Last Accounts as owing by any
debtor remains unpaid or has been released on terms that any debtor
pays less than the full book value of his debt.
3.6 There is not now outstanding in respect of the Company any guarantee, or
agreement for indemnity or for suretyship, given by, or for the
accommodation of, the Company.
3.7 So far as the Shareholders are actually aware there has been no material
adverse change in the financial position of the Company since the Last
Accounts Date.
4. TAXATION
4.1 Save as provided for in the Last Accounts there is no existing, material
contingent or deferred liability for Taxation including (but without
prejudice to the generality of the foregoing) liability for Taxation which
would arise:
(a) on the Company ceasing to trade or;
(b) on its ceasing to use or occupy any asset for the purposes of its trade or;
(c) on its disposing of any asset at its book value as shown in the Last
Accounts or;
(d) which might arise as a result of the execution or Completion of this
Agreement or;
(e) which might arise if any other person fails to pay any tax charged,
assessed or payable by such other person (including any liability for
Taxation which might arise as a result of two or more such events);
but excluding any liability for Taxation which arises solely as the result
of the realisation by the Company of trading stock or work in progress in
the ordinary course of its business and no material changes in the assets
and liabilities as shown in the Last Accounts have occurred since the Last
Accounts Date which might result in any such liability.
4.2 So far as the Shareholders are actually aware the Company has duly complied
with all requirements imposed upon it by the Taxation Statutes -
4.3 The Company is not liable and has not since the Last Accounts Date been
liable to pay any interest, penalty, fine or sum of a similar nature in
respect of Taxation and there is in existence no Inland Revenue charge
over or in respect of any of the Company's assets.
4.4 The Company is not in dispute with the Inland Revenue, H.M. Customs and
Excise or any other fiscal authorities (whether of the UK or elsewhere)
and is not aware of any circumstances which may give rise to such a
dispute and in particular, (but without prejudice to the generality of
the foregoing) the Company has not withm. the last six years been a
party to, entered into, or been involved with any artificial scheme for
the avoidance or deferral of Taxation.
4.5 The Company is duly registered and is a taxable person for the purposes of
value added tax and is not a member of a group.
4.6 Since the Last Accounts Date no expenditure has been incurred or is or
has become liable to be incurred after that date which will not be
wholly deductible in computing the taxable profits of the Company
except for expenditure on the acquisition of an asset to be held
otherwise than as stock in trade.
5. TRADING
5.1 Since the Last Accounts Date the business of the Company has been
continued in the ordinary and normal course, and there has been no
deterioration in its turnover, trading position, or its prospects.
5.2 The Company is not nor has it agreed to become, a member of a Partnership
(as defined by the Partnership Act 1890).
5.3 The Company is not engaged in any litigation or arbitration
proceedings, as plaintiff or defendant or third party; there are no
such proceedings pending or threatened, either by or against the
Company and there are no circumstances of which the Shareholders are
actually aware which are likely to give rise to any litigation or
arbitration.
5.4 So far as the Shareholders are aware there is no dispute with any
government or any agency or body acting on behalf of such government or
any other authority in the United Kingdom or elsewhere, in relation to
the affairs of the Company and so far as the Shareholders are actually
aware there are no facts or circumstances which may give rise to any
such dispute.
5.5 There are no claims pending or threatened, against the Company, by an
employee, independent contractor or any other third party, in respect
of any accident, disease, illness or injury, which are not fully
covered by insurance.
5.6 So far as the Shareholders are aware the Company has conducted and is
conducting its business in all respects in accordance with all
applicable laws and regulations, of the United Kingdom.
5.7 There are no outstanding authorities (express or implied) by which any
person except a director may enter into any contract or commitment to do
anything on behalf of the Company.
5.8 The Company has not received notice of any unresolved complaints from
any customers with regard to the products or services provided by the
Company, save as disclosed in the Disclosure Letter.
5.9 The Company is not a party to, nor have its profits during the three
years prior to the date of this Agreement been affected by any contract
which is not of an entirely arm's length nature.
6. PROPERTY
Save in respect of the leasehold premises at Xxxxx Xxxxx, Xxxx Xxxxx,
Xxxxxxxx, Xxxxx, XxxxXxxxxxxxx, the Company does not occupy and has no
obligations or liabilities in respect of any other property or
premises.
7. EMPLOYMENT
7.1 Save as set out in paragraph 1.2 above, there are no schemes (whether
contractual or discretionary) 'in operation by or in relation to the
Company under which any employee of the Company is entitled to any
benefits.
7.2 The terms and conditions of employment of each of Xxxxxx Xxxxxx, Xxxxx
Xxxxxxxxx and Xxxx Xxxx are fully contained within the Service Agreements
7.3 Save in respect of Xxxxxx Xxxxxx, Xxxxx Xxxxxxxxx and Xxxx Xxxx, all
employees of the Company are employed on the standard terms and conditions
of employment of the Company.
8. ASSETS
8.1 The Company owned at the Last Accounts Date, and had good and
marketable title to, and (except for current assets subsequently sold
or realised in the ordinary course of business) still owns and has good
and marketable title to, all the assets included in the Last Accounts
and to all assets acquired since the Last Accounts Date and not
subsequently sold or realised as mentioned.
8.2 The Company has not created or granted or agreed to create or grant any
mortgage, charge, encumbrance or other security interest in respect of
its undertaking or assets, and none of the undertaking or assets owned
absolutely by the Company is subject to any option or right of
pre-emption.
8.3 The plant, machinery, equipment, vehicles and other equipment used in
connection with the business of the Company are the absolute property of
the Company:
8.4 The schedule of the insurance polices held by the Company contained in the
Disclosure Letter in true and accurate and all premiums payable under such
policies have been paid in full.
8.5 No claim is outstanding, under any of such insurance policies
9. GENERAL
The factual information set out in the schedules contained or referred to at
documents 9 to 15 of Schedule I of the Disclosure Letter is true and accurate
and not misleading to any material extent as at the date of this Agreement.
SCHEDULE5
(Completion Board Minutes)
WRDC Limited
MINUTES of a Meeting of the Directors of the Company held at _______________ on
________________________, 2000 commencing at __________ am/pm
Present: _______________________________________________________________________
________________________________________________________________________________
In attendance: _________________________________________________________________
________________________________________________________________________________
OPENING
Xxxxxx Xxxxxx took the Chair, noted that the meeting had been duly convened and
that a quorum was present.
2. DECLARATION OF DIRECTORS' INTERESTS
Each Director declared whether or not he had an interest in the matters to
be discussed for the purposes of Section 317 of the Companies Xxx 0000.
There was then produced to the meeting a written resolution of the Company,
duly executed by its existing shareholders, increasing the authorised share
capital of the Company and adopting new articles of association for the
Company. IT WAS RESOLVED that the written resolution be accepted and that
the secretary of the Company be authorised to file a copy of the written
resolution, the new articles of association of the Company and a duly
completed form 123 at Companies House.
4. IT WAS NOTED that, pursuant to a shareholders agreement ("Agreement")
entered into on - January 2000 between Messrs Xxxxxx and Xxxxxxxxx (1), the
Company (2), Authoriszor Holdings Limited ("AHL") (3) and Authoriszor Inc.
(4), Authoriszor Inc. had completed its fundraising as contemplated in that
Agreement and that all parties had now agreed to proceed to complete the
Agreement.
5. ALLOTMENT OF SHARES
5.1 There was then produced to the meeting an allotment letter, issued by AHL,
requesting that the Company issue to AHL, 840,000 "D" Ordinary Shares of
(pound) O.01 each in the capital of the Company, at an aggregate
subscription price of (pound) 378,000, together with a cheque for that
amount. IT WAS RESOLVED that it was in the best interests of the Company to
make the allotment of 840,000 "D" Ordinary Shares of E0.01 each to AHL, and
that the secretary be authorised to write up the Company's statutory books
accordingly, to issue an appropriate share certificate to AHL, and to file
a duly completed form 88(2) at Companies House.
DOCUMENTS
6.1 There were then produced to the meeting:
(a) a loan agreement between the Company and AHL setting out the terms on which
up to (pound) 122,000 could be drawn by the Company by way of loan from
AHL;
(b) a deed of covenant setting out the terms upon which AHL could compel
holders of options in "C" Ordinary Shares to sell their holdings to AHL,
(c) a loan agreement between the Company and Authoriszor Limited, varying the
terms of an existing loan of (pound) 100,000; and
(d) new service agreements for Messrs Xxxxxx, Xxxxxxxxx and Xxxx relating to
their terms of employment with the Company.
(together, "the Documents").
6.2 After careful consideration, IT WAS RESOLVED that it was in the best
interests of the Company to make and enter into the Documents and that
Xxxxxx Xxxxxx and/or Xxxxx Xxxxxxxxx and each other director of the
Company be authorised to further negotiate, agree any amendments to and
approve the Documents and any other document whatsoever that may fall
to be approved for, or is necessary or incidental to the Documents and
to execute the Documents and any other document whatsoever that may
fall to be signed or executed pursuant to them, whether as a deed or
otherwise.
7. IT WAS RESOLVED that Xxx XxXxxxx, having consented to act, be appointed
as an additional director of the Company with immediate effect.
8. CLOSING
There being no further business, the meeting closed at ____________ am/pm.
------------------------
Chairman
SCHEDULE 6
Deed of Undertaking
THIS DEED OF UNDERTAKING is made on ________________ 99______________
BETWEEN:
(1) ______________________ LIMITED (Registered in England No._______________
whose registered office is at ______________________ (the "Subsidiary");
and
(2) [[A] and [B]] (the "Shareholders")
RECITAL
This Deed of Undertaking is executed pursuant to Clause [) ] of an agreement of
today's date between [Newcol Limited (the "Company") (1) [A] (2) and [B] (3)
(the "Agreement").
THIS DEED WITNESSES as follows:
The Subsidiary undertakes to each of the Shareholders that in any case where
under the terms of the Agreement:
(a) an obligation or restriction is imposed upon a "Group Company",
"Subsidiary" or "Member of the Group" (as therein defined); or
(b) an obligation is imposed upon the Company to procure that an obligation or
restriction is observed or performed by a "Group Company", "member of the
Group" or "Subsidiary" (as therein defined);
it will (so far as that obligation or restriction falls to be observed or
performed by or in respect of it) observe or perform such obligation or
restriction.
IN WITNESS whereof this Deed has been executed and delivered by each of the
parties the day and year first above written.
SCHEDULE 7
Shareholders
Name No. of Shares
(1) Xxxxxx Xxxxxx 1. 125,000 "A" Ordinary Shares
00 Xx Xxxxx Xxxx
Xxxxxx
Xxxx Xxxxxxxxx
XX00 0XX
(2) Xxxxx Xxxxxxxxx 1. 1,125,000 "B" Ordinary Shares
Rosedean
00 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx
Xxxxxxxxx
Xxxxx Xxxxxxxxx
X00 ITE
SCHEDULE 8
Form of Option Notice
From:Authoriszor Holdings Limited of Xxxxxxx Xxxxx, Xxxxxxxx Xxxx, Xxxxxxxxx HG
I 2PW.
To: Xxxxxx Xxxxxx of 00 Xx Xxxxx Xxxx, Xxxxxx, Xxxx Xxxxxxxxx XX00 0XX,
Xxxxx Xxxxxxxxx of Rosedene, 00 Xxxxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxx,
Xxxxx Xxxxxxxxx X00 0XX.
Dear Sirs
OPTION NOTICE
________________[Date]
We hereby give notice, pursuant to Clause 9 of the Shareholders Agreement
between us and WRDC Limited dated [ ], of our exercise of our option over the
following shares owned by the following individuals.
Number of Shares Registered Holder:
[ ] [ ]
Duly authorised for and on behalf of Authoriszor Holdings Limited
SCHEDULE 9
Vendor Protection
I Notwithstanding anything to the contrary contained in Clause 6 of this
Agreement the Warranties shall be qualified by the provisions of this Schedule
and in the event of inconsistency between the provisions of this Schedule and
the Warranties and/or Clause 6, the provisions of this Schedule shall prevail.
2. The Shareholders shall not be liable in respect of any claim under the
Warranties to the extent that the matter or matters giving rise to such claim
are accurately disclosed in the Disclosure Letter and/or the Additional
Disclosure Letter..
3. The liability of the Shareholders in respect of breach of the Warranties
given by the shareholders under this Agreement shall be limited as follows:
The aggregate maximum liability of the Shareholders in respect of all and any
claims under the Warranties shall in any event not exceed (pound)378,000
5. The Shareholders shall not be liable in respect any claim under the
Warranties where the amount of such claim or a group of related claims does not
exceed (pound)5,000
6. The Shareholders shall not be liable in respect of all and any claims made by
Authoriszor under the Warranties unless and until the aggregate cumulative
liability of the Shareholders in respect of all and any such claims (ignoring
for those purpose all and any claims in respect of which the Shareholders do not
have liability pursuant to tile provisions of paragraph 5 of this Schedule)
exceeds (pound)30,000 in which event the Shareholders shall be liable for the
full amount (and not merely the excess) of the relevant claims.
7. The Shareholders shall not be liable in respect of any claim under the
Warranties unless it shall have been made in the case of the Warranties set out
in paragraph 4 of Schedule 4 to this Agreement before the expiry of 6 years from
the date hereof and in the case of all other Warranties before the expiry of 2
years from the date hereof.
8. The limitations on liability contained in this Schedule shall not apply to
any matters directly arising from the fraud and dishonesty of the Shareholder
involved in relation to that Shareholder.
SCHEDULE 10
Changes to Warranties
1. In the circumstances where the provisions of this Schedule 10 apply,
Schedule 4 will be deemed to be amended as follows:
(a) The definition of "Last Accounts" shall mean the audited balance sheet of
the Company at, and the audited profit and loss account of the Company for,
the last financial period of the Company ended prior to the date on which
the Option was exercised.
(b) The Warranty at paragraph 9 of Schedule 4 shall be deleted.
2. The Warranties given to Authoriszor under the provisions of Clause 9.5(c)
of the Agreement shall be given subject to matters disclosed in the
Disclosure Letter or any Additional Disclosure Letter before completion of
such Option described in Clause 9.5(c) by the Shareholders to Authoriszor.
Without prejudice to the generality of the foregoing the Shareholders may
in the Additional Disclosure Letter update or amend matters contained in
the Disclosure Letter or previous Additional Disclosure Letter.
3. The provisions of Schedule 9 will be repeated in favour of the Shareholders
and applied to the Warranties given to Authoriszor under the provisions of
Clause 9.5(c) in addition to the application of Schedule 9 under the
provisions of Clauses 6.1 and 6.2 but amended as follows:
(a) The liability of the Shareholders under the Warranties shall be limited to
the actual amount paid for the Option shares at the relevant time and
paragraph 4 of Schedule 9 shall be amended accordingly.
(b) The threshold for Warranty claims set out in paragraph 6 of Schedule 9,
shall be amended to an amount equal to
(i) (pound) 30,000 plus
(ii) (pound) 30,000 multiplied by the percentage increase (if any) in the net
assets of the Company as stated in the Last Accounts as defined in Clause I
of the Agreement) and the Last Accounts (as defined at paragraph I of this
Schedule 10).
(c) The time periods for making Warranty claims set out in paragraph 4 of
Schedule 9 shall be deemed to commence on the date of completion of the
exercise of the Option under the provisions of Clause 9.5(c) and not the
date hereof.
SCHEDULE 11
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 StocW'), 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.
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 _______________, 2000.
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[Shareholder]
Address (for purpose of the Company's stock transfer records):
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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 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
