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Exhibit 4.1
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") dated as of the 23rd
day of October, 1997, is made by and between Harbinger Corporation, a Georgia
corporation (the "Company"), and the holders of the common stock of the Company
listed in Schedule I, attached hereto (the "Shareholders").
W I T N E S S E T H:
WHEREAS, the Shareholders are the owners of the shares of Common Stock
of the Company listed on Schedule I hereto;
WHEREAS, it is a condition to the consummation of the transactions
contemplated by that certain Share Purchase Agreement, dated as of the date
hereof, by and among the Company and the Shareholders (the "Purchase
Agreement"), that this Agreement be executed by the parties hereto;
WHEREAS, pursuant to the Purchase Agreement, the Company has acquired
all of the share capital of API Systems Limited, a company formed under the laws
of England and Wales (Reg. No. 2942785) ("API") in consideration of the issuance
of certain shares of Common Stock of the Company to the Shareholders; and
WHEREAS, the parties are willing to execute this Agreement and to be
bound by the provisions hereof.
NOW, THEREFORE, in consideration of the mutual agreements and promises
contained herein, in the Purchase Agreement and in the other agreements
contemplated thereby, and other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Shareholders and the Company,
each with the other, do hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
"Common Stock" means the common stock, $0.0001 par value per share, of
the Company.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Holder" means any Shareholder and any permitted transferee of
Shareholder's rights under this Agreement pursuant to Section 2.8.
"Lancashire Holder" means Lancashire Enterprise Ventures Limited and
any transferee of Lancashire Enterprise Ventures Limited's rights under this
Agreement pursuant to Section 2.8.
"Lancashire Holder Representative" means Lancashire Enterprise Ventures
Limited.
"Management Holder" means any Shareholder other than Lancashire
Enterprise Ventures Limited and any permitted transferee of any such
Shareholder's rights under this Agreement pursuant to Section 2.8.
"Management Holder Representative" means Xxxxx X. Xxxx or, such time
that he no longer owns any Registrable Securities, the Management Holder who
owns the largest number of Registrable Securities.
"Registrable Securities" means the Shares as the same may be adjusted
from time to time to reflect any stock split, stock dividend or other
distribution of capital stock in respect thereof, or issuance of capital stock
in replacement thereof or exchange therefor. The term "Registrable Securities"
does not include shares of Common Stock that have been registered, as defined
below, and sold pursuant to such registration.
The terms "register," "registered," and "registration" refer to a
registration effected by preparing the filing of a registration statement in
compliance with the Securities Act, and the declaration or order by the
Commission of the effectiveness of such registration statement.
"Requesting Lancashire Holders" has the meaning assigned to it in
Section 2.2.
"Requesting Management Holders" has the meaning assigned to it in
Section 2.1.
"Restricted Period" means the period beginning on the Closing Date (as
defined in the Purchase Agreement) and ending on the earlier of (i) the date of
filing by the Company with the Commission of the Company's annual report on Form
10-K, quarterly report on Form 10-Q or other filing with the Commission, or (ii)
the date of dissemination by the Company of a press release, that reports the
combined financial results of the Company and API covering at least 30 days of
combined operations of the Company and API within the meaning of Section 201.01
of the Commission's Codification of Financial Reporting Policies.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
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"Shareholders" means the persons listed on Schedule I attached hereto.
"Shares" means the shares of Common Stock of the Company listed on
Schedule I hereto. In the event the Company shall declare a stock split, stock
dividend or other distribution of capital stock in respect of, or issue capital
stock in replacement of or exchange for, the Shares, such additional shares
shall be Shares within the meaning of this Agreement.
"Underwritten Public Offering" means a public offering of Common Stock
for cash which is offered and sold in a registered transaction on a firm
commitment underwritten basis through one or more underwriters, all pursuant to
an underwriting agreement between the Company and any selling shareholders on
the one hand and such underwriters on the other hand.
ARTICLE II
REGISTRATION RIGHTS
Section 2.1 Demand Registration Rights of Management Holders.
(a) Upon written notice delivered by the Management Holder
Representative (as defined below) to the Company following the expiration of the
Restricted Period, the Company agrees to effect on behalf of the Management
Holders designated in the written notice (the "Requesting Management Holders")
on one occasion a registration with respect to such number of Registrable
Securities of the Requesting Management Holders as designated in the written
notice, subject to the terms hereof, on a "shelf" registration statement for
sale in the open market for a period not to exceed 45 days as provided in this
Section 2.1; provided, however, that the parties shall agree in good faith to a
reasonable number of days for the "shelf" registration statement to be effective
for sale in the open market for a reasonable period in excess of 45 days if the
"shelf" registration statement offers in excess of one million shares of Common
Stock of the Company. Such registration statement shall be on Form S-3 if the
Company is eligible to use such form. The fees and expenses of such registration
and offering pursuant to this Section 2.1 shall be borne by the Company;
provided, however, that the Requesting Management Holders will pay all of the
underwriting discounts and commissions, transfer taxes and the expenses,
disbursements and charges of their own counsel with respect to the Registrable
Securities and, in the case of an Underwritten Public Offering, the expenses of
the Company, including travel expenses, incurred in connection with the
marketing of the Registrable Securities; provided, however, that if the Company
includes any securities to be offered and sold by it in such registration
statement, then the Company shall pay its relative percentage (equal to its
percentage of the total number of shares being registered) of all out-of-pocket
expenses (including travel expenses) incurred by the Company in connection with
the marketing of the Registrable Securities. Each Management Holder agrees that
the Management Holder Representative shall have the authority to act, or to
forebear from acting, pursuant to this Agreement as he or she may determine in
his or her discretion.
(b) Whenever required under this Section 2.1 to effect the registration
of the Registrable Securities, the Company shall use its reasonable best efforts
to:
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(i) As promptly as reasonably practicable, prepare and
file with the Commission a registration statement
with respect to all of the Registrable Securities,
cause such registration statement to become effective
as promptly as reasonably practicable, and keep such
registration statement effective for the earlier of
(A) forty-five (45) days or such longer period as is
agreed upon by the Company and the Management Holder
Representative for registration of in excess of one
million shares or (B) until all such shares are sold;
and
(ii) Prepare and file with the Commission such amendments
and supplements to such registration statement and
the prospectus used in connection with such
registration statement (including documents
incorporated therein) as may be necessary to comply
with the provisions of the Securities Act with
respect to the disposition of all Registrable
Securities covered by such registration statement.
(c) The Management Holder Representative may request that the offer and
sale of Registrable Securities by the Requesting Management Holders be made in
an Underwritten Public Offering and shall include in its request made pursuant
to this Section 2.1 the name of the managing underwriter or underwriters, if
any, that the Management Holder Representative would propose to employ in
connection with the public offering proposed to be made pursuant to the
registration requested. The Company may reasonably object to any managing
underwriter or underwriters proposed by the Management Holder Representative, in
which case the Management Holder Representative shall propose another managing
underwriter or underwriters that is or are reasonably acceptable to the Company.
The Company and each Requesting Management Holder shall use its reasonable
efforts to enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting in the manner set
forth above. The Company will take such reasonable actions as are necessary to
comply with the terms and obligations of such underwriting agreement and will
furnish such underwriters and their respective representatives full access to
all information reasonably requested in connection with their due diligence
review of the Company and its operations.
(d) The Company shall be entitled to defer for a reasonable period of
time, but not exceeding one hundred twenty (120) days, the filing of any
registration statement otherwise required to be prepared and filed by it
pursuant to this Section 2.1 if the Company's Board of Directors determines in
good faith that such deferral is necessary to avoid a requirement to disclose
prematurely information regarding a possible merger or acquisition transaction
or they otherwise determine in good faith that such registration would be
materially opposed to the best interests of the Company and its shareholders;
provided that such right to defer registration shall be exercised no more than
one time in any six month period. If the Company shall so postpone the filing of
a registration statement, the Management Holder Representative shall have the
right to withdraw such request for registration by giving written notice to the
Company within fifteen (15) days after receipt of notice from the Company of
such postponement. In the event of such withdrawal, such request shall not be
counted for purposes of Section 2.1 hereof.
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(e) The Company shall be entitled to include in any registration
statement referred to in this Section 2.1, for sale in accordance with the
method of disposition specified by the Management Holder Representative, shares
of the Company's Common Stock to be sold by the Company for its own account, or
other shareholders for their own account (except as and to the extent that, in
the opinion of the managing underwriter if such method of disposition shall be
effected as an Underwritten Public Offering, such inclusion would result in any
of the Registrable Securities being excluded from the offering or would
materially adversely affect the marketing of the Registrable Securities).
(f) Anything in this Section 2.1 to the contrary notwithstanding, the
Company shall not be required to file a registration statement requested
pursuant to this Section 2.1 which would be declared effective after the last
day of a fiscal year of the Company and prior to the date on which the Company's
audited financial statements for such fiscal year are first available, if such
registration would require the inclusion of audited financial statements other
than such audited financial statements.
(g) No request for registration under this Section 2.1 may be made
within three (3) months after the effective date of any other registration
statement filed by the Company, provided that the Holders were eligible to
participate in such registration and were permitted to include in such
registration all Registrable Securities sought to be included therein. A
registration statement requested pursuant to this Section 2.1 which does not
become effective after the Company has commenced preparation of such
registration statement by reason of the withdrawal from such registration (other
than pursuant to Section 2.1(d)), prior to effectiveness, by Holders of a
majority of the Registrable Securities participating in such registration (other
than a withdrawal based on advice of counsel relating to a matter primarily with
respect to disclosure relating to the Company) shall be deemed to satisfy the
Company's obligation to register once upon the request of the Holders unless
such Holders shall have elected to pay or reimburse all costs and expenses
incurred by the Company in connection with such registration. Notwithstanding
the foregoing, such obligation shall be deemed not satisfied (i) if the offering
is prevented by any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court for any reason other than by
reason of some act or omission of any Holder of Registrable Securities
participating in such registration, or (ii) if the conditions to closing agreed
to be the Company specified in any underwriting agreement entered into in
connection with such registration are not satisfied by reason of a breach by the
Company of its covenants contained therein.
Section 2.2 Demand Registration Rights of Lancashire Holders. (a) Upon
written notice delivered by the Lancashire Holder Representative (as defined
below) to the Company following the expiration of the Restricted Period, the
Company agrees to effect on behalf of the Lancashire Holders designated in the
written notice (the "Requesting Lancashire Holders") on one occasion a
registration with respect to such number of Registrable Securities of the
Requesting Lancashire Holders as designated in the written notice, subject to
the terms hereof, on a "shelf" registration statement for sale in the open
market for a period not to exceed 45 days as provided in this Section 2.2;
provided, however, that the parties shall agree in good faith to a reasonable
number of days for the "shelf" registration statement to be effective for sale
in the
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open market for a reasonable period in excess of 45 days if the "shelf"
registration statement offers in excess of one million shares of Common Stock of
the Company. Such registration statement shall be on Form S-3 if the Company is
eligible to use such form. The fees and expenses of such registration and
offering pursuant to this Section 2.2 shall be borne by the Company; provided,
however, that the Requesting Lancashire Holders will pay all of the underwriting
discounts and commissions, transfer taxes and the expenses, disbursements and
charges of their own counsel with respect to the Registrable Securities and, in
the case of an Underwritten Public Offering, the expenses of the Company,
including travel expenses, incurred in connection with the marketing of the
Registrable Securities; provided, however, that if the Company includes any
securities to be offered and sold by it in such registration statement, then the
Company shall pay its relative percentage (equal to its percentage of the total
number of shares being registered) of all out-of-pocket expenses (including
travel expenses) incurred by the Company in connection with the marketing of the
Registrable Securities. Each Lancashire Holder agrees that the Lancashire Holder
Representative shall have the authority to act, or to forebear from acting,
pursuant to this Agreement as he or she may determine in his or her discretion.
(b) Whenever required under this Section 2.2 to effect the registration
of the Registrable Securities, the Company shall use its reasonable best efforts
to:
(i) As promptly as reasonably practicable, prepare and
file with the Commission a registration statement
with respect to all of the Registrable Securities,
cause such registration statement to become effective
as promptly as reasonably practicable, and keep such
registration statement effective for the earlier of
(A) forty-five (45) days or such longer period as is
agreed upon by the Company and the Lancashire Holder
Representative for registration of in excess of one
million shares or (B) until all such shares are sold;
and
(ii) Prepare and file with the Commission such amendments
and supplements to such registration statement and
the prospectus used in connection with such
registration statement (including documents
incorporated therein) as may be necessary to comply
with the provisions of the Securities Act with
respect to the disposition of all Registrable
Securities covered by such registration statement.
(c) The Lancashire Holder Representative may request that the offer and
sale of Registrable Securities by the Requesting Lancashire Holders be made in
an Underwritten Public Offering and shall include in its request made pursuant
to this Section 2.2 the name of the managing underwriter or underwriters, if
any, that the Lancashire Holder Representative would propose to employ in
connection with the public offering proposed to be made pursuant to the
registration requested. The Company may reasonably object to any managing
underwriter or underwriters proposed by the Holder Representative, in which case
the Holder Representative shall propose another managing underwriter or
underwriters that is or are reasonably acceptable to the Company. The Company
and each Requesting Holder shall use its reasonable efforts to
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enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting in the manner set forth above. The
Company will take such reasonable actions as are necessary to comply with the
terms and obligations of such underwriting agreement and will furnish such
underwriters and their respective representatives full access to all information
reasonably requested in connection with their due diligence review of the
Company and its operations.
(d) The Company shall be entitled to defer for a reasonable period of
time, but not exceeding one hundred twenty (120) days, the filing of any
registration statement otherwise required to be prepared and filed by it
pursuant to this Section 2.2 if the Company's Board of Directors determines in
good faith that such deferral is necessary to avoid a requirement to disclose
prematurely information regarding a possible merger or acquisition transaction
or they otherwise determine in good faith that such registration would be
materially opposed to the best interests of the Company and its shareholders;
provided that such right to defer registration shall be exercised no more than
one time in any six month period. If the Company shall so postpone the filing of
a registration statement, the Holder Representative shall have the right to
withdraw such request for registration by giving written notice to the Company
within fifteen (15) days after receipt of notice from the Company of such
postponement. In the event of such withdrawal, such request shall not be counted
for purposes of Section 2.2 hereof.
(e) The Company shall be entitled to include in any registration
statement referred to in this Section 2.2, for sale in accordance with the
method of disposition specified by the Holder Representative, shares of the
Company's Common Stock to be sold by the Company for its own account, or other
shareholders for their own account (except as and to the extent that, in the
opinion of the managing underwriter if such method of disposition shall be
effected as an Underwritten Public Offering, such inclusion would result in any
of the Registrable Securities being excluded from the offering or would
materially adversely affect the marketing of the Registrable Securities).
(f) Anything in this Section 2.2 to the contrary notwithstanding, the
Company shall not be required to file a registration statement requested
pursuant to this Section 2.2 which would be declared effective after the last
day of a fiscal year of the Company and prior to the date on which the Company's
audited financial statements for such fiscal year are first available, if such
registration would require the inclusion of audited financial statements other
than such audited financial statements.
(g) No request for registration under this Section 2.2 may be made
within three (3) months after the effective date of any other registration
statement filed by the Company, provided that the Holders were eligible to
participate in such registration and were permitted to include in such
registration all Registrable Securities sought to be included therein. A
registration statement requested pursuant to this Section 2.2 which does not
become effective after the Company has commenced preparation of such
registration statement by reason of the withdrawal from such registration (other
than pursuant to Section 2.2(d)), prior to effectiveness, by Holders of a
majority of the Registrable Securities participating in such registration (other
than a withdrawal based on advice of counsel relating to a matter primarily with
respect to
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disclosure relating to the Company) shall be deemed to satisfy the Company's
obligation to register once upon the request of the Holders unless such Holders
shall have elected to pay or reimburse all costs and expenses incurred by the
Company in connection with such registration. Notwithstanding the foregoing,
such obligation shall be deemed not satisfied (i) if the offering is prevented
by any stop order, injunction or other order or requirement of the Commission or
other governmental agency or court for any reason other than by reason of some
act or omission of any Holder of Registrable Securities participating in such
registration, or (ii) if the conditions to closing agreed to be the Company
specified in any underwriting agreement entered into in connection with such
registration are not satisfied by reason of a breach by the Company of its
covenants contained therein.
Section 2.3 "Piggyback" Registration Rights. If the Company, at any
time after the expiration of the Restricted Period and prior to the earlier of
(i) the date on which all Registrable Securities shall have been disposed of by
the Holders thereof or (ii) one year after the date of this Agreement, proposes
to register under the Securities Act any class of the Company's equity or debt
securities for sale to the public on a registration statement on Form X-0, X-0,
X-0 or any successor form for the sale of equity securities to the public, then
and in each such case the Company shall give fifteen (15) days prior written
notice of such proposed registration to the Management Holder Representative and
the Lancashire Holder Representative and shall cause such number of Registrable
Securities as shall be requested by the Holder Representatives on behalf of the
Holders included in such request within ten (10) days thereafter to be included,
upon the same terms (including the method of distribution), in any such
offering. The Company may, without the consent of the Management Holder
Representative and/or the Lancashire Holder Representative, as applicable,
withdraw any such registration and abandon any proposed offering if in the
reasonable good faith belief of the Board of Directors of the Company such
withdrawal and abandonment appears to be in the Company's best interests. The
failure of any Holder to exercise its rights hereunder with respect to any
registration shall not constitute a waiver of its rights to participate in any
other registration. The foregoing obligations shall be subject to the following
conditions and limitations:
(i) The Company shall not be required to give such notice
or include any Registrable Securities in any form of
registration statement unless such Registrable
Securities of such Holder are eligible for inclusion
in the applicable form of registration statement as
described above;
(ii) In an Underwritten Public Offering of the Registrable
Securities, each Holder shall agree (a) to have the
Registrable Securities sold to or by such underwriter
or managing agent on terms substantially equivalent
to the terms upon which the Company is selling the
securities so registered by it, and (b) to delay the
sale of any securities of the Company not sold by it
in such registration statement for the period
requested by such underwriter or managing agent up to
180 days (or such lesser amount of time if permitted
by such underwriter or managing agent) following the
effective date of such registration statement,
provided that the length of time which the Company
shall be required to maintain the effectiveness of
any shelf
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registration statement which shall then be effective
pursuant to Section 2.1 or Section 2.2 shall be
extended by the number of days of such delay;
(iii) If any underwriter in such Underwritten Public
Offering shall advise the Company that it declines to
include a portion of the Registrable Securities
requested by the Holders to be included in the
registration statement, then in case of an exclusion
as to a portion of such Registrable Securities, such
portion shall be allocated among the Holders in
proportion to the respective number of shares of
common stock requested to be registered by such
Holders of the Company's securities. The Holders
hereby acknowledge and agree that the Holders shall
be subordinate in priority of registration to any
person to whom the Company has granted registration
rights prior to the date hereof, and the Company
hereby acknowledges and agrees that the Holders shall
rank pari passu in priority of registration to any
person to whom the Company may grant rights to
registration after the date hereof and that the
Company shall not grant any "piggyback" or incidental
registration rights after the date hereof which shall
be superior in priority of registration to the rights
of the Holders; and
(iv) The fees and expenses of the offering shall be borne
by the Company; provided, however, that the Holders
will pay all of the underwriting discounts and
commissions, transfer taxes, transfer agent fees and
the expenses, disbursements and charges of their own
counsel with respect to the Registrable Securities.
Section 2.4 Undertakings of Holders. As a condition of the registration
provided for in this Section 2, each Holder who includes Registrable Securities
in such registration shall (a) furnish such information concerning itself and
the terms of its proposed offering to the Company as requested in connection
with such registration; (b) agree to indemnify the Company (and each of its
officers and directors who have signed the registration statement relating to
the registration) and each person, if any, who controls the Company within the
meaning of the Securities Act, the underwriters and each person, if any, who
controls such underwriter within the meaning of the Securities Act, to the
extent customary and reasonably deemed necessary by the Company with respect to
the accuracy of any information so furnished by such Holder; and (c) reasonably
cooperate with the Company and its representatives to cause such registration to
become effective at the earliest practicable time.
Section 2.5 Additional Undertakings of the Company. Without limiting
the generality of the provisions of this Section 2, if and whenever the Company
is under an obligation to effect the registration of any Registrable Securities,
the Company shall at its sole cost and expense:
(i) furnish to the Holder such numbers of each prospectus
(including each preliminary prospectus and prospectus
supplement) in conformity with the requirements of
the Securities Act, and such other documents as are
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reasonably requested by the Holder to facilitate the
public offering of its Registrable Securities; and
(ii) use its reasonable efforts to register or qualify the
Registrable Securities covered by such registration
under the securities or blue sky laws of such
jurisdictions (and shall do any and all other acts or
things) as is reasonable to enable the Holder to
consummate the public sale or the disposition of its
Registrable Securities; provided, however, that the
Company shall not be required in connection therewith
or as a condition thereto to qualify to do business
or to file a general consent to service of process in
any such states or jurisdictions.
Section 2.6 Indemnification.
(a) In the case of each registration effected by the Company pursuant
to this Agreement in which any Holder's Registrable Securities are included, the
Company agrees to indemnify and hold harmless such Holder against any and all
losses, claims, damages or liabilities to which they or any of them may become
subject under the Securities Act or any other statute or common law, including
any amount paid in settlement of any litigation, commenced or threatened, if
such settlement is effected with the written consent of the Company, and to
reimburse them for any reasonable legal or other reasonable expenses incurred by
them in connection with the investigation of any claims and defenses of any
actions (subject to Section 2.6(c)), insofar as any such losses, claims,
damages, liabilities or actions arise out of or are based upon: any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto or any document incorporated by
reference therein, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the indemnification agreement
contained in this Section 2.6(a) shall not apply to such losses, claims,
damages, liabilities or actions arising out of, or based upon, any such untrue
statement or alleged untrue statement, or any such omission or alleged omission,
if such statement or omission was made in reliance upon and in conformity with
information furnished to the Company in writing by a Holder for use in
connection with the preparation of the registration statement or any preliminary
prospectus or final prospectus contained in the registration statement or any
such amendment thereof or supplement thereto or any document incorporated by
reference therein.
(b) In the case of each registration effected by the Company pursuant
to this Agreement in which any Holder's Registrable Securities are included,
such Holder shall be obligated, in the same manner and to the same extent as set
forth in Section 2.6(a), to indemnify and hold harmless the Company and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act, its directors and officers, with respect to any statement or
alleged untrue statement in, or omission or alleged omission from, such
registration statement or any post-effective amendment thereof or any
preliminary prospectus or final prospectus (as amended or supplemented, if
amended or supplemented as aforesaid) contained in such registration statement,
if such statement or omission was made in reliance upon and in
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conformity with information furnished in writing to the Company by such
indemnifying person for use in connection with the preparation of such
registration statement or any preliminary prospectus or final prospectus
contained in such registration statement or any such amendment thereof or
supplement thereto; provided, however, that the liability of each Holder
hereunder shall be limited to the proceeds received by each Holder from the sale
of Registrable Securities covered by such registration statement, amendment,
supplement or prospectus, as the case may be.
(c) Each person to be indemnified pursuant to this Section 2.6 shall,
promptly after its receipt of written notice of the commencement of any action
against such indemnified person in respect of which indemnity may be sought from
an indemnifying person under this Section 2.6, notify the indemnifying person in
writing of the commencement thereof. The omission of any indemnified person to
so notify an indemnifying person of the commencement of any such action shall
not relieve the indemnifying person from any liability in respect of such action
which it may have to such indemnified person on account of the indemnity
agreement contained in this Section 2.6 except to the extent the indemnifying
person shall be prejudiced thereby. If any such action shall be brought against
any indemnified person and it shall notify an indemnifying person of the
commencement thereof, the indemnifying person shall be entitled to participate
therein and, to the extent it may desire, jointly with any other indemnifying
persons similarly notified, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified person, and after notice from the
indemnifying person to such indemnified person of its election so to assume the
defense thereof, the indemnifying person shall not be liable to such indemnified
person under this Section 2.6 for any legal or other expenses subsequently
incurred by such indemnified person in connection with the defense thereof other
than reasonable costs of investigation unless (i) the indemnified party shall
have employed counsel in an action in which the indemnified party and
indemnifying party are both defendants and there is a conflict of interest
between such parties that would prevent counsel from adequately representing
both parties, (ii) the indemnifying party shall not have employed counsel
satisfactory within the exercise of reasonable judgment of the indemnified party
to represent the indemnified party within a reasonable time after the notice of
the commencement of the action or (iii) the indemnifying party has authorized
the employment of counsel for the indemnified party at the expense of the
indemnifying party. The undertaking contained in this Section 2.6 shall be in
addition to any liabilities which the indemnifying person may have pursuant to
law.
(d) If the indemnification provided for in this Section 2.6 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 2.6 (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative fault of the Company and the Holders in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by
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the Company or the Holders and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
Section 2.7 Rule 144 Requirements. For a period commencing on the date
of this Agreement ending upon the first to occur of (i) the second anniversary
of the date of this Agreement or (ii) the sale of all Registrable Securities by
the Holders, with a view to making available to each Holder the benefits of Rule
144 (or any successor rule thereto) promulgated under the Securities Act, the
Company agrees to file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act. Each Holder's right to require the Company to register the
Registrable Securities pursuant to Sections 2.1, 2.2 and 2.3 shall expire at
such time as the Registrable Securities held by such Holder are eligible for
sale in the open market pursuant to Rule 144 (or any successor rule thereto)
under the Securities Act or Section 4(1) thereof.
Section 2.8 Transfer of Registration Rights. The registration rights
described in this Section 2 shall not be transferable without the prior consent
of the Company; provided, however, that a Holder may transfer such registration
rights to a permitted transferee of Shares so long as (i) such transfer of
Shares is conducted in compliance with all applicable transfer restrictions,
whether imposed by contract, applicable law or otherwise, and (ii) such
transferee is (a) a member of the Holder's immediate family or is a trust or
family limited partnership established for the benefit of such a family member
or (b) an affiliate, partner or shareholder of any Holder that is not a natural
person; provided further, that such registration rights shall not be
transferable by any transferee contemplated by the foregoing proviso who is a
natural person.
ARTICLE III
TRANSFERABILITY
Section 3.1 Transferability. Transfer of the Shares shall be made only
on the books of the Company by the holders of record thereof or by their legal
representatives who shall furnish proper evidence of authority to transfer, or
by their attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the Company, subject to the restrictions set forth
in the Purchase Agreement and the documents and agreements contemplated thereby.
The Holder(s) in whose name the Shares stand on the books of the Company shall
be deemed by the Company to be owner(s) thereof for all purposes.
Section 3.2 Restrictive Legends. Unless and until otherwise permitted
by this Section, each instrument evidencing Shares shall contain or otherwise be
imprinted with a suitable legend in substantially the following form:
The shares evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended, or
under the securities laws of any state, and such shares may
not be sold, transferred, pledged or hypothecated unless (1)
covered by an effective registration statement under the
Securities Act of 1933; (2) in accordance with Rule 144 of
the rules and regulations of such act; or (3) in accordance
with some other transaction which is exempt from the
registration requirements of such act. Furthermore, the
shares evidenced by this certificate
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have been offered and sold in reliance on the exemption from
registration provided by Regulation S and/or other exemptions
promulgated under the Securities Act of 1933.
The shares represented by this certificate were issued
pursuant to a business combination that is accounted for as a
"pooling of interest" and may not be sold, nor may the owner
thereof reduce his risk relative thereto in any way (except
as permitted by SEC Staff Accounting Bulletin No. 76), until
such time as Harbinger Corporation has published financial
results covering at least 30 days of combined operations
after the effective date of the event through which the
business combination was effected.
The Company is hereby authorized to place "stop transfer" instructions on its
records or to instruct any transfer agent to prevent the transfer of such shares
except in conformity with this Article. Upon the request of the Holder, the
Company shall cause the certificates representing the Shares to be reissued free
of any legend relating to restrictions or transfer, as soon as practicable after
the Company has been furnished evidence satisfactory to it that the restrictions
of Regulation S are no longer applicable or, if the issuance of such shares was
not pursuant to Regulation S, that the shares can be transferred pursuant to
Rule 144(k).
Section 3.3 Restriction on Transfer. No Shares may be transferred prior
to the expiration of the Restricted Period. In addition, no Shareholder may
transfer Shares other than under Sections 2.1, 2.2 and 2.3 until it has
delivered written notice to the Company describing briefly the manner of any
such proposed transfer and until (i) the Company has received from the
Shareholder's counsel an opinion (reasonably satisfactory in form and substance
to the Company's counsel) that such transfer can be made without compliance with
the registration provisions of the Securities Act or any state securities law,
or (ii) such transfer complies with Rule 144 or Regulation S (or comparable
successor provisions) promulgated under the said Securities Act and applicable
state securities act requirements, or (iii) a registration statement filed by
the Company is declared effective by the SEC and under applicable state
securities laws or steps necessary to perfect exemptions from such registration
are completed.
Notwithstanding anything to the contrary herein, in the event that
there is an Underwritten Public Offering of securities of the Company pursuant
to a registration covering Registrable Securities and a Holder of Registrable
Securities does not sell his Registrable Securities to the underwriters of the
Company's securities in connection with such offering, such Holder shall refrain
from selling such Registrable Securities during the period of distribution of
the Company's securities by such underwriters and the period in which the
underwriting syndicate participates in the after market; provided, however, that
such Holder shall, in any event, be entitled to sell its Registrable Securities
commencing on the ninetieth (90th) day after the effective date of such
registration statement in accordance with the terms hereof or such other amount
of time that may be required by the underwriter of similarly situated holders of
the Company's securities and provided further that the length of time which the
Company shall be required to maintain the effectiveness of any shelf
registration statement which shall then be
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effective pursuant to Section 2.1 or Section 2.2 shall be extended by the number
of days of which the Holders shall be required to refrain from selling pursuant
to this paragraph.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Notices. All notices, communications and deliveries hereunder
shall be made in writing signed by the party making the same, shall specify the
Section hereunder pursuant to which it is given or being made, and shall be
delivered personally or by telecopy transmission or sent by registered or
certified mail or by any express mail service (with postage and other fees
prepaid) as follows:
If to Company: Harbinger Corporation
0000 Xxxxx Xxxx Xxxx.
Xxxxxxx, Xxxxxxx 00000-0000
Attn: President
Telecopy No.: 404/467-3476
with a copy to: Harbinger Corporation
0000 Xxxxx Xxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xx. Xxxxx X. Xxxxxxxxxxx
Telecopy No. 404/467-3476
and a copy to: Xxxxxx, Xxxxxxx & Xxxxxx, L.L.P.
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxx, Esq.
Telecopy No.: 404/365-9532
If to the Management Holders: c/o Xxxxx X. Xxxx
00 Xxxxxx Xxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxx, XXX 0XX, Xxxxxxx, X.X.
Telecopy No.: 01942 814712
If to the Lancashire Holders: c/o Lancashire Enterprise Ventures Limited
00 Xxxxxxxxxxx Xxxxx
Xxxxxxx XX0 0XX, Xxxxxxx, X.X.
Attn: Xx. Xxxxxxx Xxxxxxx
Telecopy No.: 011-44-1772-880697
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with a copy to: LAYTONS
00 Xx. Xxxx Xxxxxx
Xxxxxxxxxx X0 0XX, Xxxxxxx, X.X.
Attn: Xxxx Xxxxx
Telecopy No.: 011-44-161-834-6862
Section 4.2 Remedies. Each party hereto acknowledges that a remedy at
law for any breach or attempted breach of this Agreement will be inadequate,
agrees that each other party hereto shall be entitled to specific performance
and injunctive and other equitable relief in case of any such breach or
attempted breach, and further agrees to waive any requirement for the securing
or posting of any bond in connection with the obtaining of any such injunctive
or any other equitable relief.
Section 4.3 Effect of Sale. Any Holder who sells all of his Registrable
Securities pursuant to the terms of this Agreement shall cease to be a party to
this Agreement and shall have no further rights or obligations hereunder.
Section 4.4 Amendment. This Agreement may not be modified or amended
except in a writing signed by the Company and the holders of 66-2/3% of the
total Registrable Securities outstanding at such time (with any shares of
Registrable Securities issuable upon conversion of other securities deemed to be
outstanding for these purposes).
Section 4.5 Governing Law. This Agreement shall be subject to and
governed by the laws of the State of Georgia, U.S.A.
Section 4.6 Jurisdiction. All legal actions to enforce or interpret the
provisions of this Agreement shall be filed in a court of the State of Georgia
or of the United States District Court having jurisdiction over Xxxxxx County,
Georgia. All parties irrevocably waive any objection they may have to the laying
of venue of any suit, action or proceeding arising out of or relating hereto
brought in any such court, irrevocably waive any claim that any such suit,
action or proceeding so brought has been brought in an inconvenient forum and
further waive the right to object that such court does not have jurisdiction
over such party. No party shall bring a suit, action or proceeding in respect of
this Agreement in any other jurisdiction than as aforesaid.
Section 4.7 Successors and Assigns. This Agreement shall be binding
upon and inure to the parties contained in this Agreement and their respective
heirs, executors, distributees, successors (including successors by merger) and
permitted assigns.
Section 4.8 Invalid Provisions. Should any portion of this Agreement be
adjudged or held to be invalid, unenforceable or void, such holding shall not
have the effect of invalidating or voiding the remainder of this Agreement and
the parties hereby agree that the portion so held invalid, unenforceable or void
shall, if possible, be deemed amended or reduced in scope, or to otherwise be
stricken from this Agreement to the extent required for the purposes of validity
and enforcement thereof.
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Section 4.9 Section Headings. The section and paragraph headings
contained herein are for reference purposes only and shall not in any way affect
the meaning and interpretation of this Agreement.
Section 4.10 Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed an original, and such counterparts together shall constitute
only one instrument.
Section 4.11 Entire Agreement. This Agreement constitutes the sole and
entire agreement between the parties hereto with respect to the subject matter
hereof.
Section 4.12 Time of the Essence. Time is of the essence with respect
to every provision of this Agreement.
Section 4.13 Pooling of Interests. If any provision of this Agreement
or the application of any such provision to any person or circumstance precludes
the use of "pooling of interests" accounting treatment in connection with the
Purchase Agreement, then such provision shall be of no force and effect to the
extent, and solely to the extent necessary to preserve such accounting treatment
pursuant to the Purchase Agreement, and in that event, the remainder of this
Agreement shall not be affected, and in lieu of such provision there shall be
added as part of this Agreement a provision as similar in terms as may be
possible for the purchase under the Purchase Agreement to be treated as a
"pooling of interests" for accounting purposes.
Section 4.14 Number; Gender. Whenever the context so requires, the
singular number shall include the plural and the plural shall include the
singular, and the gender of any pronoun shall include the other gender.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed by its duly
authorized officers and the Shareholders have executed this Agreement, as of the
day and year first above written.
HARBINGER CORPORATION
By:
----------------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President
SHAREHOLDERS:
LANCASHIRE ENTERPRISE VENTURES LIMITED
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
--------------------------------------------
Xxxxxx X. Xxxx
--------------------------------------------
Xxxxx X. Xxxx
--------------------------------------------
Xxx P.C. Xxxxxxxx
--------------------------------------------
X.X. Xxxxxxx
00
00
Xxxxxxxx I
Shareholder Number of Shares
----------- ----------------
Lancashire Enterprise
Ventures Limited 84,837
Xxxxxx X. Xxxx 84,152
Xxxxx X. Xxxx 84,152
Xxx P.C. Xxxxxxxx 29,129
X.X. Xxxxxxx 29,129
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