THIRD PROSPECTUS SUPPLEMENT Filed Pursuant to Rule 424(b)(3)
(to Prospectus dated May 19, 2000) Registration No. 333-32816
2,827,273 Shares
AUTHORISZOR INC.
Common Stock
$.01 par value
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This third prospectus supplement supplements and amends the prospectus
dated May 19, 2000, the first prospectus supplement dated August 24, 2000 and
the second prospectus supplement dated November 14, 2000, relating to 2,827,273
shares of the common stock, par value $.01, of Authoriszor Inc., that may be
offered and sold from time to time by certain of our stockholders. Unless the
context otherwise requires, "Authoriszor," the "Company," "we," "our," "us" and
similar expressions refers to Authoriszor Inc. and its predecessors, but not to
the selling stockholders. "Selling stockholders" refers to the stockholders
identified under the caption "Plan of Distribution; Selling Stockholder",
contained in the first prospectus supplement dated August 24, 2000.
Our common stock is traded on the Nasdaq National Market under the
symbol "AUTH." On January 29, 2001, the closing price for our common stock on
the Nasdaq National Market was $2.59.
We will receive none of the proceeds from the sale of the common stock
offered by the selling stockholders. We will pay for expenses of preparing and
filing the registration statement, the prospectus, the first prospectus
supplement, the second prospectus supplement, the third prospectus supplement
and all other prospectus supplements. The selling stockholders will pay all
selling and other expenses that they incur.
The prospectus, together with the first prospectus supplement, the
second prospectus supplement and this prospectus supplement, constitutes the
prospectus required to be delivered by Section 5(b) of the Securities Act with
respect to offers and sales of the shares of common stock. All references in the
prospectus to "this prospectus" are hereby amended to read "this prospectus (as
supplemented and amended)".
YOU SHOULD READ THE PROSPECTUS, THE FIRST PROSPECTUS SUPPLEMENT, THE
SECOND PROSPECTUS SUPPLEMENT AND THIS PROSPECTUS SUPPLEMENT CAREFULLY BEFORE YOU
INVEST, INCLUDING THE RISK FACTORS WHICH BEGIN ON PAGE 4 OF THE PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS SUPPLEMENT IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus Supplement is January 30, 2001.
This prospectus is hereby amended to reflect in its entirety the
resignation, effective January 31, 2001, of Richard A. Langevin as our
President, Chief Executive Officer and Interim Chief Financial Officer, and as a
member of the Board of Directors. This prospectus is further amended in its
entirety to reflect that, as a result of the resignation of Mr. Langevin, Paul
Ayres, currently the Managing Director of Authoriszor Ltd., was appointed by our
Board as our President and Chief Executive Officer and Andrew Cussons, currently
the Finance Director of Authoriszor Ltd., was appointed by the Board as our
Chief Financial Officer. This prospectus is further amended to reflect in its
entirety that the Board of Directors has appointed Mr. Ayres and Mr. Cussons to
our Board of Directors. Each of the foregoing appointments is effective January
31, 2001
The section of this prospectus entitled "Management" is amended to
reflect the following information with respect to Paul Ayres and Andrew Cussons
and other members of management of our Company.
Management
The information concerning Paul Ayres is contained in the second
supplement to the prospectus and is incorporated by reference herein as the
information contained therein with respect to Mr. Ayres remains substantially
accurate.
ANDREW CUSSONS was appointed Financial Director and Secretary of
Authoriszor Ltd., and Finance Director of Authoriszor Holdings Ltd., both
wholly-owned subsidiaries of the Company, in January 2000. Prior to joining
Authoriszor Ltd., Mr. Cussons was Finance Director and Secretary for
Meta4Systems, a firm specializing in engineering systems integration, from 1998
until joining the Company. From 1996 until 1998, Mr. Cussons was employed by
Cadhouse Systems Ltd., a Manchester, England based engineering software
business, as the Finance Director and Secretary. Prior to 1996, Mr. Cussons was
the proprietor of Churchgate Consulting Ltd. Mr. Cussons has a degree in
Economics from Manchester University and is a Chartered Accountant.
Mr. Cussons beneficially owns 9,300 shares of our common stock which
he purchased in a series of open market transactions prior to his employment
with us. In addition, we have granted Mr. Cussons a stock option to acquire
100,000 shares of our common stock at an exercise price of $6.75 per share in
accordance with the Authoriszor Inc. 1999 Stock Option Plan. These options vest
up to 25% per year annually beginning on January 1, 2001, assuming that Mr.
Cussons is employed by the Company on each respective vesting date. The options
terminate on January 1, 2008.
In addition, our Board of Directors made the following announcements with
respect to certain management changes:
o James L. Jackson will resign from his position as Chairman of the
Board of Authoriszor Ltd. and from his position as our Vice President
and Secretary, effective January 31, 2001. Andrew Cussons will assume
the role of Secretary of the Company; and
o Ian McNeill stepped down from his position as Chairman of the Board of
Authoriszor Holdings Ltd. and will continue as an active consultant to
our Board of Directors. Mr. McNeill will be replaced by Geoff
Shingles, a current member of our Board of Directors.
This prospectus is hereby amended to include the following description
at the beginning of the section entitled "Employment Contracts, Termination of
Employment and Change-in-Control Agreements":
Employment Contracts, Termination of Employment and Change-in-Control Agreements
On January 31, 2001, Richard A. Langevin resigned his position as the
President, Chief Executive Officer and Interim Chief Financial Officer of
Authoriszor Inc., and his position as director on the Board of Directors of our
Company. In addition, Mr. Langevin resigned from the various officer and
director positions he held in certain of our affiliate companies, including our
wholly owned subsidiaries, Authoriszor Holdings Corporation, Authoriszor U.S.
Corporation and Authoriszor Holdings Limited. In connection with such
resignation, we have entered into a Severance and Release Agreement, dated
January 31, 2001 with Mr. Langevin.
The following are the material terms and conditions of the Severance
Agreement:
o We are obligated to pay Mr. Langevin the following sums of money in
connection with the Severance Agreement on January 31, 2001:
o $19,791.67, minus applicable withholdings for federal and state income
tax, FICA, and any other withholdings required by federal, state or
local law, which payment reflects salary and bonus earned through
January 31, 2001;
o $450,000.00, minus applicable withholdings for federal and state
income tax, FICA, and any other withholdings required by federal,
state or local law, which payments reflect a severance payment equal
to two years of salary;
o $31,250.00, minus applicable withholdings for federal and state income
tax, FICA, and any other withholdings required by federal, state or
local law, for purposes of Mr. Langevin's October to December bonus
for the year 2000; and
o $23,958.00, minus applicable withholdings for federal and state income
tax, FICA, and any other withholdings required by federal, state or
local law, reflecting payment for Mr. Langevin's accrued but unused
vacation time during the year 2000.
o On January 31, 2002, we are obligated to pay Mr. Langevin the sum of
$250,000.00, minus applicable withholdings, as an additional severance
payment equal to Mr. Langevin's bonus compensation for a two year
period. However, this bonus payment will be placed in an interest
bearing escrow account on January 31, 2001 with instructions to
release such funds to Mr. Langevin on January 31, 2002. As a condition
to the payment of the funds herein, Mr. Langevin must comply with the
terms and conditions of the Severance Agreement and shall have not
revoked his releases and waivers under the Age Discrimination in
Employment Act. All interest earned on the funds held in the escrow
account will be retained by us.
o The Company and Mr. Langevin entered into a Stock Option Agreement,
dated as of January 31, 2001. The Severance Agreement provides that
all stock option agreements for which Mr. Langevin is not vested as of
the date of January 31, 2001 are rescinded and declared null and void
and replaced by this stock option agreement. The new stock option
agreement provides Mr. Langevin with an option to purchase 200,000
shares of our common stock exercisable in increments of (i) 100,000
shares exercisable beginning on January 31, 2001, and (ii) 100,000
shares exercisable beginning on January 31, 2002, all at an exercise
price of $6.75 per share. Neither the Severance Agreement nor the new
stock option agreement affects Mr. Langevin's rights to options
granted under prior stock option agreements and which were vested as
of the date of the Severance Agreement.
o Mr. Langevin has elected to reinstate and continue in accordance with
the terms of the Employer's medical plan and the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, ("COBRA"), and we have
agreed to pay on behalf Mr. Langevin, the applicable premium which is
required to reinstate and continue such group medical coverage, but
only to the extent such coverage was in effect on the date immediately
prior to Mr. Langevin's resignation date. We will continue such
premium payments until the earlier of the following: (i) the first
date that Mr. Langevin becomes eligible for medical coverage under any
other group medical plan; (ii) the date Mr. Langevin elects to
discontinue medical coverage for himself and his dependents; (iii) the
first date that Mr. Langevin is no longer otherwise eligible for
coverage under COBRA, as determined by us; and (iv) the first
anniversary of Mr. Langevin's resignation date.
o In consideration of the payment of the above described sums of money
and the issuance of the options to purchase shares of our common
stock, Mr. Langevin agreed to release and waive any and all claims
against us and our subsidiaries with respect to and including, without
limitation, any claim relating the Employment Agreement, dated as of
January 1, 2000 between Mr. Langevin and us, any claim under state or
federal law which provides for civil remedies for the enforcement or
rights arising out of the employment relationship, any claims for
unpaid or withheld wages, and any claims sounding in contract, tort or
otherwise; provided, however, that Mr. Langevin remains subject to
certain provisions in his prior Employment Agreement relating to
non-competition, non-disclosure and non-solicitation provisions.
o The Severance Agreement also provides that Mr. Langevin is required to
return all of our proprietary material, including notes, records,
reports and such other items obtained by him during the course of his
employment. In addition, Mr. Langevin is required to return the
vehicle provided to him by us. We have permitted the utilization by
Mr. Langevin, at Mr. Langevin's own expense, of a certain third-party
executive recruiting firm.
o The Severance Agreement contains a provision allowing Mr. Langevin to
revoke his acceptance of the releases and waivers contained in the
Severance Agreement with respect to the Age Discrimination in
Employment Act after he signs it for a period of seven days following
his resignation from the Company on January 31, 2001. However, the
payment in the amount of $250,000.00 shall be paid to Mr. Langevin no
sooner than the expiration of the seven day period with respect to any
releases and waivers in the Severance Agreement under the Age
Discrimination in Employment Act. Any revocation by Mr. Langevin in
accordance with such provisions, however, shall not affect the
enforceability of any other provision of the Severance Agreement, and
all other provisions, releases, waivers, and payments under the
Severance Agreement shall remain enforceable.