EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is entered into this ___ day of
_______ 2000, by and among Authoriszor Inc., a Delaware corporation (the
"Company") and Xxxxxx Xxxxxxx Limited, a company registered in England and Wales
("BG").
WHEREAS, The Company has agreed to issue and sell to purchasers
arranged by BG upon the terms set forth in a placing agreement dated the date
hereof (the "Placing Agreement"), 2,727,273 shares (the "Securities") of common
stock, par value $.01 per share, of the Company ("Common Stock") (such
transaction being referred to as the Initia1 Placement"); and
WHEREAS, As an inducement to BG to enter into the Placing Agreement and
in satisfaction of a condition to its obligations thereunder, the Company agrees
with BG, (i) for BG's benefit and the benefit of any subsequent successors or
assigns of BG and (ii) for the benefit of the holders from time to time of the
Securities (including BG) (each of the foregoing a "Holder" and together the
"Holders"), to grant certain registration rights and to assume certain
obligations as contained in this Agreement; and
THEREFORE, in light of the mutual covenants contained herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows.
1. Definitions. Capitalized terms used herein without definition shall have
their respective meanings set forth in the Purchase Agreement. As used in
this Agreement, the following capitalized defined terms shall have the
following meanings:
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person which,
directly or indirectly, controls, is controlled by, or is under common
control with, such specified person. For purposes of this
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definition, control of a person means the power, direct or indirect, to
direct or cause the direction of the management and policies of such
person whether by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Closing Date" means the date on which the Securities are first issued
and sold by the Company.
"Commission" means the United States Securities and Exchange Commission
"Demand Registration Period" has the meaning set forth in Section 3(c).
"Demand Registration Statement" means a registration statement of the
Company on an appropriate form other than a Shelf Registration
Statement pursuant to the provisions of Section 3 hereof which
registers the offer and sale of some or all of the Securities in an
underwritten public offering thereof on an appropriate form, including
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Final Memorandum" has the meaning set forth in the Placing Agreement.
"Holder" has the meaning set forth in the preamble.
"Holders, Counsel" has the meaning set forth in Section 5.
"Initial Placement" has the meaning set forth in the preamble hereto.
"Majority Holders" means the Holders of a majority of the total number
of Securities registered under a Registration Statement.
"Managing Underwriters" means the investment banker or investment
bankers and manager or managers that shall administer an underwritten
offering.
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"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A under the
Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Securities
covered by such Registration Statement, and all amendments and
supplements to the Prospectus, including post-effective amendments.
"Registrable Securities" means all shares of Common Stock owned by the
Holders, including the Securities; provided, however, that each share
of Common Stock shall cease to be a Registrable Security when (i) its
offer and sale has been effectively registered under the Securities Act
and it has been disposed of in accordance with the Registration
Statement covering it; (ii) it is distributed to the public pursuant to
Rule 144 promulgated under the Securities Act (or any similar
provisions then in force) under the Securities Act or otherwise if, as
a result of or following any sale referred to in this clause (ii), no
restriction on transfer exists under the Securities Act with respect to
such shares or (iii) it is eligible for resale under Rule 144
promulgated under the Securities Act (or other similar provisions then
in force under the Securities Act) and the aggregate number of shares
of Common Stock held by the holder thereof constitutes less than 1% of
the total number of shares of Common Stock then outstanding; provided
further, that for purposes of this definition "Common Stock" shall
include all shares of capital stock convertible into, exercisable for
or exchangeable into Common Stock.
"Registration Statement" means any Reoffer Registration Statement,
Demand Registration Statement or Shelf Registration Statement on an
appropriate form that covers any of the Securities pursuant to the
provisions of this Agreement, amendments and supplements to such
registration statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"Reoffer Registration Period" means the period during which the Reoffer
Registration Statement is effective, exclusive of any period during
which any stop order shall be in effect suspending the effectiveness of
the Reoffer Registration Statement.
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"Reoffer Registration Statement" means a registration statement of the
Company on an appropriate form under the Act with respect to the offer
and sale of the Securities by the Holders, all amendments and
supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference
therein.
"Securities" has the meaning set forth in the preamble.
"Shelf Registration" means a registration effected pursuant to Section
3 hereof.
"Shelf Registration Period" has the meaning set forth in Section 3(b)
hereof.
"Shelf Registration Statement" means a "shelf" registration statement
of the Company pursuant to the provisions of Section 3 hereof which
covers some or all of the Securities on an appropriate form under Rule
415 promulgated under the Act, or any similar rule that may be adopted
by the Commission, amendments and supplements to such registration
statement, including post-effective amendments, in each case including
the Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"underwriter" means any underwriter of Securities in connection with an
offering thereof.
2. Reoffer Registration Statement.
(a) The Company shall prepare and shall file with the Commission as soon as
reasonably practicable, but in any event, not later than that date which is
thirty (30) calendar days after the Closing Date, the Reoffer Registration
Statement with respect to the offer and sale of the Securities by the
Holders thereof on such date from time to time, in brokerage transactions,
over a stock exchange, utilising the facilities of an inter-dealer
quotation system, in an underwritten offering or in privately negotiated
off-market transactions. The Company shall cause the Reoffer Registration
Statement to become effective under the Act not later than that date which
is sixty (60) days after the Reoffer Registration Statement is filed;
provided that if BG determines, such determination to be made reasonably,
that the
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Company is acting in good faith to cause the Reoffer Registration Statement
to be declared effective such date will be extended to 90 days after filing
thereof.
(b) The Company shall use its best efforts to keep the Reoffer Registration
Statement continuously effective in order to permit the Prospectus forming
part thereof to be usable by Holders for a period of two years from the
date the Reoffer Registration Statement is declared effective by the
Commission. The Company shall be deemed not to have used its best efforts
to keep the Reoffer Registration Statement effective during the requisite
period if it voluntarily takes any action that would result in Holders of
securities covered thereby not being able to offer and sell such securities
during that period, unless (i) such action is required by applicable law or
(ii) such action is taken by the Company in good faith and for valid
business reasons (not including avoidance of the Company's obligations
hereunder), including, without limitation, the acquisition or divestiture
of assets, so long as the Company promptly thereafter complies with the
requirements of Section 4(k) hereof, if applicable.
3. Demand Registration and Shelf Registration. If, (i) for any reason the
Reoffer Registration Statement is not filed with the Commission or the
Reoffer Registration Statement is not declared effective, in each instance,
within the time periods prescribed in Section 2(a) or (iii) the Reoffer
Registration Statement ceases to be effective so that the Prospectus
contained therein is not usable by the Holders for offers and sales of the
Securities during the time period prescribed in Section 2(b); or (iii) any
of the Securities remain Registrable Securities following the Reoffer
Registration Period, then if any Holder so requests with respect to
Securities which remain Registrable Securities the following will apply:
(a) The Company shall as promptly as practicable (but in no event
not more than 30 days after so requested by any Holder
pursuant to this Section 3) file with the Commission and
thereafter shall use its best efforts to cause to be declared
effective under the Act, at the election of the Holder so
requesting, a Demand Registration Statement or a Shelf
Registration Statement relating to the offer and sale of the
Securities or any other Registrable Securities by the
requesting Holder from time to time in accordance with the
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methods of distribution elected by such Holder and set forth
in such Demand Registration Statement or Shelf Registration
Statement; provided, that if permitted under the Act and by
the Commission, the Company may file a pre or post effective
amendment or supplement to the Reoffer Registration Statement
if such action would completely fulfil its obligations under
this Section 3.
(b) The Company shall use its best efforts to keep the Shelf Registration
Statement continuously effective in order to permit the Prospectus forming
part thereof to be usable by Holders for a period of two years from the
date the Shelf Registration Statement is declared effective by the
Commission or such shorter period that will terminate when all the
Securities or any other Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement (in any such case, such period being called the "Shelf
Registration Period"). The Company shall be deemed not to have used its
best efforts to keep the Shelf Registration Statement effective during the
requisite period if it voluntarily takes any action that would result in
Holders of securities covered thereby not being able to offer and sell such
securities during that period, unless (i) such action is required by
applicable law or (ii) such action is taken by the Company in good faith
and for valid business reasons (not including avoidance of the Company's
obligations hereunder), including, without limitation, the acquisition or
divestiture of assets, so long as the Company promptly thereafter complies
with the requirements of Section 4(k) hereof, if applicable.
(c) The Company shall use its best efforts to keep the Demand Registration
Statement continuously effective in order to permit the Prospectus forming
part thereof to be usable by Holders until all the Securities or any other
Registrable Securities covered by the Demand Registration Statement have
been sold pursuant to the Demand Registration Statement (in any such case,
such period being called the "Demand Registration Period"). The Company
shall be deemed not to have used its best efforts to keep the Demand
Registration Statement effective during the requisite period if it
voluntarily takes any action that would result in Holders of securities
covered thereby not being able to offer and sell
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such securities during that period, unless (i) such action is required by
applicable law or (ii) such action is taken by the Company in good faith
and for valid business reasons (not including avoidance of the Company's
obligations hereunder), including, without limitation, the acquisition or
divestiture of assets, so long as the Company promptly thereafter complies
with the requirements of Section 4(k) hereof, if applicable.
4. Registration Procedures. In connection with any Shelf Registration
Statement and, to the extent applicable, any Reoffer Registration Statement
and any Demand Registration Statement, the following provisions shall
apply:
(a) The Company shall furnish to BG and any applicable Holder,
prior to the filing thereof with the Commission, a copy of any
Registration Statement, and each amendment thereof and each
amendment or supplement, if any, to the Prospectus included
therein and shall use its best efforts to reflect in each such
document, when so filed with the Commission, such comments as
BG or the Majority Holders may reasonably and timely propose.
(b) The Company shall ensure that (i) any Registration Statement and any
amendment thereto and any Prospectus forming part thereof and any amendment
or supplement thereto complies in all material respects with the Act and
the rules and regulations thereunder, (ii) any Registration Statement and
any amendment thereto does not, when it becomes effective, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading and (iii) any Prospectus forming part of any Registration
Statement, and any amendment or supplement to such Prospectus, does not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
(c) (1) The Company shall advise BG and the Holders of securities covered
thereby, and, if requested by BG or any such Holder, confirm such advice in
writing:
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(i) when a Registration Statement and any amendment thereto has been filed with
the Commission and when the Registration Statement or any post-effective
amendment thereto has become effective; and
(ii) of any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus included therein or for additional
information.
(2) The Company shall advise BG and the Holders of securities covered thereby,
and if requested by your or such Holder, confirm such advice in writing:
(i) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose;
(ii) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the securities included therein for sale
in any jurisdiction or the initiation or threatening of any proceeding for
such purpose; and
(iii)of the happening of any event that requires the making of any changes in
the Registration Statement or the Prospectus so that, as of such date, the
statements therein are not misleading and do not omit to state a material
fact required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in the light of the circumstances
under which they were made) not misleading (which advice shall be
accompanied by an instruction to suspend the use of the Prospectus until
the requisite changes have been made).
(d) The Company shall use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of any Registration Statement at the
earliest possible time.
(e) The Company shall furnish to each Holder of securities included within the
coverage of any Reoffer Registration Statement or Shelf Registration
Statement, without charge, at least one copy of such Registration Statement
and any post-effective amendment thereto, including
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financial statements and schedules, and, if the Holder so requests in
writing, any documents incorporated by reference therein and all exhibits
(including those incorporated by reference therein).
(f) The Company shall, during the Reoffer Registration Period and the Shelf
Registration Period, deliver to each Holder of securities included within
the coverage of any Reoffer Registration Statement or Shelf Registration
Statement, without charge, as many copies of the Prospectus (including each
preliminary Prospectus) included in such Registration Statement and any
amendment or supplement thereto as such Holder may request; and the Company
consents to the use of the Prospectus or any amendment or supplement
thereto by each of the Holders selling securities in connection with the
offer and sale of the securities covered by the Prospectus or any amendment
or supplement thereto.
(g) The Company shall furnish to each Holder of securities included within the
coverage of any Demand Registration Statement and to the Managing
Underwriter, without charge, at least one copy of such Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, and, if the Holder so requests in writing, any
documents incorporated by reference therein and all exhibits (including
those incorporated by reference therein).
(h) The Company shall furnish to each Holder of securities included within the
coverage of any Demand Registration Statement and to the Managing
Underwriter, without charge, as many copies of the Prospectus (including
each preliminary Prospectus) included in such Registration Statement and
any amendment or supplement thereto as such Holder or underwriter may
request; and the Company consents to the use of the Prospectus or any
amendment or supplement thereto by each of the selling Holders of
securities or underwriter in connection with the offer and sale of the
securities covered by the Prospectus or any amendment or supplement
thereto.
(i) Prior to any offering of securities pursuant to any Registration Statement,
the Company shall register or qualify or co-operate with the Holders of
securities included therein and
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Holders' Counsel in connection with the registration or qualification of
such securities for offer and sale under the securities or blue sky laws of
such jurisdictions as any such Holder reasonably requests in writing and do
any and all other acts or things necessary or advisable to enable the offer
and sale in such jurisdictions of the securities covered by such
Registration Statement; provided, however, that the Company will not be
required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action which would subject it to
general service of process or to taxation in any such jurisdiction where it
is not then so subject.
(j) The Company shall co-operate with the Holders of Securities to facilitate
the timely preparation and delivery of certificates representing Securities
to be sold pursuant to any Registration Statement free of any restrictive
legends and in such denominations and registered in such names as Holders
may request prior to sales of securities pursuant to such Registration
Statement.
(k) Upon the occurrence of any event contemplated by paragraph 2(b), 3(b) or
4(c)(2)(iii) above, the Company shall promptly prepare a post-effective
amendment to any Registration Statement or an amendment or supplement to
the related Prospectus or file any other required document so that, as
thereafter delivered to purchasers of the securities included therein, the
Prospectus will not include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(1) Not later than the effective date of any such Registration Statement
hereunder, the Company shall provide a CUSIP number for the Securities, as
the case may be, registered under such Registration Statement, and provide
printed certificates for such Securities, in a form, if requested by the
applicable Holder or Holder's Counsel, eligible for deposit with The
Depository Trust Company.
(m) The Company shall use its best efforts to comply with all applicable rules
and regulations of the Commission to the extent and so long as they are
applicable to the Reoffer
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Registration Statement, any Demand Registration Statement or any Shelf
Registration Statement or the transactions contemplated thereby and will
make generally available to its security holders a consolidated earnings
statement (which need not be audited) covering a twelve-month period
commencing after the effective date of any Registration Statement and
ending not later than 15 months thereafter, as soon as practicable after
the end of such period, which consolidated earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act.
(n) Each Holder of Registrable Securities to be sold pursuant to any
Registration Statement shall furnish to the Company such information
regarding such Holder and the distribution of such securities as the
Company may from time to time reasonably require for inclusion in such
Registration Statement (and shall promptly correct any information
previously furnished if the inclusion of such information in such
Registration Statement would be materially misleading), and the Company may
exclude from such Registration Statement the Securities of any Holder that
fails to furnish such information after receiving a request therefor.
(o) The Company shall, if requested, promptly incorporate in a Prospectus
supplement or post-effective amendment to a Registration Statement, such
information as the Managing Underwriter, if applicable, and the Majority
Holders agree should be included therein and shall make all required
filings of such Prospectus supplement or post-effective amendment as soon
as notified of the matters to be incorporated in such Prospectus supplement
or post-effective amendment.
(p) In the case of any Registration Statement, the Company shall enter into
such agreements and take all other appropriate actions in order to expedite
or facilitate the registration or the disposition of the Securities, and in
connection therewith, if an underwriting agreement is entered into, cause
the same to contain indemnification provisions and procedures no less
favourable than those set forth in Section 6 hereof (or such other
provisions and procedures acceptable to the Majority Holders and the
Managing Underwriters, if any),
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with respect to all parties to be indemnified pursuant to Section 6 hereof
from Holders of Securities to the Company.
(q) In the case of any Shelf Registration Statement or Demand Registration
Statement, the Company shall (i) make reasonably available for inspection
by the Holders of securities to be registered thereunder, any underwriter
participating in any disposition pursuant to such Registration Statement,
and any attorney, accountant or other agent retained by the Holders or any
such underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries;
(ii) cause the Company's officers, directors and employees to supply all
relevant information reasonably requested by the Holders or any such
underwriter, attorney, accountant or other agent in connection with any
such Registration Statement as is customary for similar due diligence
examinations; provided , however, that any information that is designated
in writing by the Company, in good faith, as confidential at the time of
delivery of such information shall be kept confidential by the Holders or
any such underwriter, attorney, accountant or other agent, unless such
disclosure is made in connection with a court proceeding or required by
law, or such information becomes available to the public generally or
through a third party without an accompanying obligation of
confidentiality; (iii) make such representations and warranties to the
Holders of securities registered thereunder and the underwriters, if any,
in form, substance and scope as are customarily made by issuers to
underwriters in primary underwritten offerings; (iv) obtain opinions of
counsel to the Company (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the Managing Underwriters,
or if there is no Managing Underwriter, the Majority Holders) addressed to
each selling Holder and the underwriters, if any, covering such matters as
are customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such Holders and
underwriters; (v) obtain "cold comfort" letters (or, in the case of any
person that does not satisfy the conditions for receipt of a "cold comfort"
letter specified in Statement on Auditing Standards No. 72, an "agreed-upon
procedures letter") and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other independent
certified public accountants of
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any subsidiary of the Company or of any business acquired by the Company
for which financial statements and financial data are, or are required to
be, included in the Registration Statement), addressed to each selling
Holder of securities registered thereunder and the underwriters, if any, in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten offerings;
and (vi) deliver such documents and certificates as may be reasonably
requested by the Majority Holders and the Managing Underwriters, if any,
including those to evidence compliance with Section 4(k) and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company. The foregoing actions set forth in
clauses (iii), (iv), (v) and (vi) of this Section 4(q) shall be performed
at (A) the effective date of such Registration Statement and each
post-effective amendment thereto and (B) each closing under any
underwriting or similar agreement as and to the extent required thereunder.
(r) In the case of the Reoffer Registration Statement, the Company shall (i)
make reasonably available for inspection by each Holder, and any attorney,
accountant or other agent retained by such Holder, all relevant financial
and other records, pertinent corporate documents and properties of the
Company and its subsidiaries; (ii) cause the Company's officers, directors
and employees to supply all relevant information reasonably requested by
such Holder or any such attorney, accountant or other agent in connection
with the Reoffer Registration Statement as is customary for similar due
diligence examinations; provided, however, that any information that is
designated in writing by the Company, in good faith, as confidential at the
time of delivery of such information shall be kept confidential by such
Holder or any such attorney, accountant or other agent, unless such
disclosure is made in connection with a court proceeding or required by
law, or such information becomes available to the public generally or
through a third party without an accompanying obligation of
confidentiality; (iii) make such representations and warranties to the
Holders, in form, substance and scope as are customarily made by issuers to
underwriters in primary underwritten offerings; (iv) obtain opinions of
counsel to the Company, which counsel and opinions (in form, scope and
substance) shall be reasonably
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satisfactory to the Majority Holders and their counsel, addressed to all
Holders, covering such matters as are customarily covered in opinions
requested in underwritten offerings and such other matters as may be
reasonably requested by the Majority Holders or their counsel; (v) obtain
"cold comfort" letters and updates thereof front the independent certified
public accountants of the Company (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed to the Holders, in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with primary underwritten offerings, or if requested by the
Majority Holders or their counsel in lieu of a "cold comfort" letter, an
agreed-upon procedures letter under Statement on Auditing Standards No. 35,
covering matters requested by the Majority Holders or their counsel; and
(vi) deliver such documents and certificates as may be reasonably requested
by the Majority Holders or their counsel, including those to evidence
compliance with Section 4(k) and with conditions customarily contained in
underwriting agreements. The foregoing actions set forth in clauses (iii),
(iv), (v), and (vi) of this Section 4(r) shall be performed at the
effective date of the Reoffer Registration Statement and the effective date
of any post-effective amendment to the Reoffer Registration Statement.
5. Registration Expenses. The Company shall bear all expenses incurred in
connection with the performance of its obligations under Sections 2, 3 and
4 hereof and, in the event of the Reoffer Registration Statement and any
Shelf Registration Statement or Demand Registration Statement, will
reimburse the Holders for the reasonable fees and disbursements of one firm
or counsel (in addition to one local counsel in each relevant jurisdiction)
designated by the Majority Holders to act as counsel for Holders in
connection therewith ("Holders' Counsel") up to $20,000.
6. Indemnification and Contribution.
(a) In connection with any Registration Statement, the Company, jointly and
severally, agree to indemnify and hold harmless each Holder of securities
covered thereby, the directors, officers, employees and agents of each such
Holder and each other person, if any, who
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(1) controls any such Holder within the meaning of Section 15 the Act or
Section 20 of the Exchange Act against any and all losses, claims, damages
or liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement as originally filed
or in any amendment thereof, or in any preliminary Prospectus or
Prospectus, or in any amendment thereof or supplement thereto, or arise out
of or are based upon 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, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that (i) the
Company will not be liable in any case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any such Holder specifically
for inclusion therein and (ii) the Company shall not be liable to any
indemnified party under this indemnity agreement with respect to the
Registration Statement or Prospectus to the extent that any such loss,
claim, damage or liability of such indemnified party results solely from an
untrue statement of a material fact contained in, or the omission of a
material fact from, the Registration Statement or Prospectus which untrue
statement or omission was corrected in an amended or supplemented
Registration Statement or Prospectus, if the person alleging such loss,
claim, damage or liability was not sent or given, at or prior to the
written confirmation of such sale, a copy of the amended or supplemented
Registration Statement or Prospectus if the Company had previously
furnished copies thereof to such indemnified party and if delivery of a
prospectus is required by the Act and was not so made. This indemnity
agreement will be in addition to any liability which the Company may
otherwise have.
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(b) Each Holder of securities covered by a Registration Statement severally but
not jointly agrees to indemnify and hold harmless (i) the Company (ii) each
of the Company's directors, (iii) each of the Company's officers who signs
such Registration Statement and (iv) each other person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act to the same extent as the foregoing indemnity from
the Company to each such Holder, but only with reference to written
information relating to such Holder furnished to the Company by or on
behalf of such Holder specifically for inclusion in the documents referred
to in the foregoing indemnity. This indemnity agreement will be in addition
to any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 6 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
this Section 6, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party
(i) will not relieve it from liability under paragraph (a) or (b) above
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defences and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than
the indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint as counsel one firm of
attorneys of the indemnifying party's choice at the indemnifying party's
expense, which counsel, together with one local counsel in each
jurisdiction, shall act on behalf of all the indemnified parties in any
action for which indemnification is sought (in which case the indemni-fying
party shall not thereafter be responsible for the fees and expenses of any
separate counsel retained by the indem-nified party or parties except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying
party's election to appoint counsel to represent the indemnified party in
an action, the indemnified party shall have the right to employ separate
counsel (including local counsel), and the indemnifying party shall bear
the reasonable fees, costs and expenses of such separate
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counsel (and local counsel) if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defences available to it
and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, (iii) the indemnifying party
shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after
notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. No indemnifying party shall be liable
for any settlement of any such action effected without its written consent
(which consent shall not be unreasonably withheld), but if settled with its
written consent or if there be a final judgment for the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless
any indemnified party from and against any loss or liability by reason of
such settlement or judgment. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of this
Section 6 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses") to
which such indemnified party may be subject in such proportion as is
appropriate to reflect the relative benefits received
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(1) by such indemnifying party, on the one hand, and such indemnified party, on
the other hand, from the Initial Placement and the Registration Statement
which resulted in such Losses; provided, however, that in no case shall any
Purchaser or any subsequent Holder of any Security be responsible, in the
aggregate, for any amount in excess of the purchase discount or commission
applicable to such Security as set forth on the cover page of the Final
Memorandum, nor shall any underwriter be responsible for any amount in
excess of the underwriting discount or commission applicable to the
securities purchased by such underwriter under the Registration Statement
which resulted in such Losses. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the
indemnifying party and the indemnified party shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of such indemnifying party, on the one hand, and
such indemnified party, on the other hand, in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall
be deemed to be equal to the total net proceeds from the Initial Placement
(before deducting expenses) as set forth on the cover page of the Final
Memorandum. Benefits received by BGs shall be deemed to be equal to the
total purchase discounts and commissions as set forth on the cover page of
the Final Memorandum, and benefits received by any other Holders shall be
deemed to be equal to the value of receiving Securities registered under
the Act. Benefits received by any underwriter shall be deemed to be equal
to the total underwriting discounts and commissions, as set forth on the
cover page of the Prospectus forming a part of the Registration Statement
which resulted in such Losses. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission relates to
information provided by the indemnifying party, on the one hand, or by the
indemnified party, on the other hand. The parties agree that it would not
be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to
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(1) contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 6, each person who controls
a Holder within the meaning of either the Act or the Exchange Act and each
director, officer, employee and agent of such Holder shall have the same
rights to contribution as such Holder, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to contribution as
the Company, subject in each case to the applicable terms and conditions of
this paragraph (d).
(e) The provisions of this Section 6 will remain in full force and effect,
regardless of any investigation made by or on behalf of any Holder, the
Company or any of the officers, directors or controlling persons referred
to in Section 6 hereof, and will survive the sale by a Holder of securities
covered by a Registration Statement.
7. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not, as of the date hereof,
entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that is inconsistent with the
rights granted to the Holders herein or otherwise conflicts with the
provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the Company has obtained the written
consent of the Holders of at least a majority of the then outstanding
Securities; provide that, with respect to any matter that directly or
indirectly affects the rights of any Holder hereunder, the Company shall
obtain the written consent of each such Holder against which such
amendment, qualification, supplement, waiver or consent is to be effective.
Notwithstanding the foregoing (except the foregoing proviso), a waiver or
consent to departure from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders whose securities are
being sold pursuant to a
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Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by the Majority Holders, determined on
the basis of securities being sold rather than registered under such
Registration Statement.
(c) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, fax
or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such holder to the
Company in accordance with the provisions of this Section 7(c), which
address initially is, with respect to each Holder, the address of such
Holder maintained by the Company's registrar, with a copy in like manner to
Xxxxxx Xxxxxxx Limited;
(2) if to BG, initially at the respective addresses set forth in the Placing
Agreement; and
(3) if to the Company, initially at its address set forth in the Placing
Agreement.
All such notices and communications shall be have been duly given when
received. BGs or the Company by notice to the other may designate
additional or different addresses for subsequent notices or communications.
(d) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties, including,
without the need for an express assignment or any consent by the Company
thereto, subsequent Holders of Securities. The Company each hereby agrees
to extend the benefits of this Agreement to any Holder of Securities and
any such Holder may specifically enforce the provisions of this Agreement
as if an original party hereto.
(e) Counterparts. This agreement may be executed in any number of counterparts
and by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
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(f) Headings. The headings in this agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This agreement shall be governed by and construed in
accordance with the internal laws of the State of New York (without regard
to the conflict of law provisions thereof).
(h) Severability. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances. is held invalid,
illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect
and of the remaining provisions hereof shall not be in any way impaired or
affected thereby, it being intended that all of the rights and privileges
of the parties shall be enforceable to the fullest extent permitted by law.
(i) Securities Held by the Company. etc. Whenever the consent or approval of
Holders of a specified percentage of Securities is required hereunder,
Securities, as applicable, held by the Company or its Affiliates (other
than subsequent Holders of Securities if such subsequent Holder are deemed
to be Affiliates solely by reason of their holdings of such Securities)
shall not be counted in determining whether such consent or approval was
given by the Holders of such required percentage.
(j) Further Assurances. Each party shall cooperate and take such action as may
be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
(k) Remedies. In the event of a breach or a threatened breach by any party to
this Agreement of its obligations under this Agreement, any party injured
or to be injured by such breach, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled
to specific performance of its rights under this Agreement, it being agreed
by the parties that the remedy at law, including monetary damages, for
breach of such provision will be inadequate compensation for any loss and
that any defence in any action for specific performance that a remedy at
law would be adequate is waived.
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(l) Company Repurchase. In the event that the Company fails to comply with any
provision of this Agreement, the Company shall within 30 days after the
date on which the Company was required to take any action or if such date
is undeterminable, the date of the receipt by the Company of a demand from
any Holder (in either case, the "Initial Date"), purchase from each Holder
all Registrable Securities held by each respective Holder for a purchase
price (the "Purchase Price") equal to the product of (a) the average Market
Value Per Share during the period beginning on the Initial Date and ending
on the date of payment of the Purchase Price multiplied by (b) the number
of Registrable Securities held by such Holder. The Company shall also pay
all reasonable costs (including all tranfer taxes, stamp duty or SDRT) and
fees associated with such purchase by the Company. Payment of the Purchase
Price shall be in immediately available funds. Each Holder may, in its sole
discretion, waive its right, in whole or in part, to have the Company
repurchase the Registrable Securities held by him and retain the ownership
of such Registrable Securities. "Market Value Per Share" at any date shall
be (i) the highest reported sale price on that date with respect to each
type of security in question listed on an international securities exchange
or admitted to unlisted trading privileges on such an exchange or, if
applicable, (ii) the highest reported sale price on that date with respect
to each type of security in question quoted on the National Association of
Securities Dealers Automated Quotations System ("NASDAQ") or the European
Association of Securities Dealers Automated Quotation System ("EASDAQ") or,
if applicable, (iii) if no such sale is made on such day, the mean of the
closing bid and asked prices for such day on such exchange or reported by
NASDAQ or EASDAQ.
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IN WITNESS WHEREOF, the parties have set their hands hereto as of the
date first above written.
AUTHORISZOR INC.
By:___________________
Name:________________
Title:_________________
XXXXXX XXXXXXX LIMITED
By:___________________
Name:________________
Title:_________________
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