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Exhibit 10.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of the 27th day of January,
1999, by and between:
Bahman Koohestani, an individual residing in the
Province of Ontario ("Bahman")
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Anthony Davis, an individual resident in the Province
of Ontario ("Davis")
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Robert Gayle, an individual resident in the Province
of Ontario ("Gayle")
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John Mah, an individual resident in the Province of
Ontario ("Mah")
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Sean Maurik, an individual resident in the Province of
Ontario ("Maurik")
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John Foresi, an individual resident in the Province of
Ontario ("Foresi")
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Ron Schreiber, an individual resident in the State of
New York ("Schreiber")
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Jordan Levy, an individual resident in the State of
New York ("Levy")
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Delano Technology Corporation, a corporation governed
by the laws of Ontario (the "Corporation")
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Tofino Venture Capital Inc., a corporation governed by
the laws of Barbados ("Tofino")
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XDL Delano Holdings Inc., a corporation governed by
the laws of Ontario ("XDL")
and any other persons who, after the date of this Agreement, acquire Shares in
the capital of the Corporation and sign counterparts to this Agreement (the
"Additional Shareholders")
WHEREAS the parties to this Agreement are parties to the Amended and
Restated Shareholders' Agreement dated the date hereof relating to the
Corporation (the "Shareholders' Agreement"), which supersedes a previously
executed agreement among the shareholders of the Corporation pursuant to which
the parties thereto were granted certain registration rights; and
AND WHEREAS, in connection with the execution and delivery of the
Shareholders' Agreement, the parties desire to enter into this Agreement to set
out the registration rights of certain shareholders of the Corporation;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
DEFINITIONS
1. For purposes of this Agreement:
(a) "1933 ACT" means the United States Securities Act of 1933, as
amended.
(b) "APPROVED UNDERWRITER" has the meaning given to such term in
Section 5 of this Agreement.
(c) "APPROVED UNDERWRITER AMOUNT" has the meaning given to such
term in Section 4 of this Agreement.
(d) "AS IF CONVERTED TO SHARES BASIS" means that, for the purpose
of determining a percentage of outstanding Shares, all convertible
preference shares in the capital of the Corporation are deemed to be
converted to Shares in accordance with their terms, all shares in
the capital of the Corporation held in escrow are deemed to be
released therefrom, and all Option Pool Shares, whether or not they
are subject to an option grant and whether or not they are already
issued, are deemed to be issued.
(e) "DEMAND REGISTRATION" has the meaning given to such term in
Section 2 of this Agreement.
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(f) "DEMAND RIGHTS" shall mean the rights of any shareholder of the
Corporation to require the Corporation to register or qualify
Shares for distribution to the public.
(g) "ELECTING HOLDER" has the meaning given to such term in
Section 2 of this Agreement.
(h) "ELIGIBLE HOLDER" shall mean each of (A) XDL; and (B) Other
Shareholders individually or collectively owning Registrable Shares
to which are attached not less than 50% of the votes that may be
cast to elect the directors of the Corporation (on an as if
converted to Shares basis).
(i) "ELIGIBLE JURISDICTION" shall mean, as of a particular date,
any jurisdiction in which Shares were registered or qualified for
distribution to the public pursuant to the initial public offering
of the Shares and any other jurisdiction in which the Shares are
listed for trading on a securities exchange.
(j) "EXCHANGE ACT" means the United States Exchange Act of 1934.
(k) "FILING" shall mean any document provided to any securities
regulatory authority or made generally available to the shareholders
of the Corporation in connection with a registration, qualification
or offering of Shares.
(l) "HOLDER" shall mean any holder of Registrable Shares.
(m) "INDEMNIFIED PARTY" has the meaning given to such term in
Section 15 of this Agreement.
(n) "INDEMNIFYING PARTY" has the meaning given to such term in
Section 15 of this Agreement.
(o) "LOSSES" has the meaning given to such term in Section 13 of
this Agreement.
(p) "OPTION POOL SHARES" means shares in the capital of the
Corporation issuable pursuant to the Corporation's stock option plan
for directors, officers, consultants and employees of the
Corporation in accordance with the terms and conditions of the
Shareholders' Agreement.
(q) "OTHER SHAREHOLDERS" means, collectively, Bahman, Davis,
Gayle, Mah, Maurik, Foresi, Schreiber, Tofino, Levy and the
Additional Shareholders, if any, and their respective permitted
transferees in accordance with the terms and conditions of the
Shareholders' Agreement.
(r) "OTHER SHAREHOLDER REGISTRABLE SHARES" means any Shares now
held by Other Shareholders and any Shares issued in respect of other
shares of the Corporation held by Other Shareholders, including in
respect of share dividends or pre-
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emptive rights; provided however, that any Registrable Share shall
cease to be a Registrable Share when:
(A) a receipt for a prospectus qualifying such
Registrable Share for public distribution has been obtained
from the Ontario Securities Commission and such Registrable
Share has been disposed of pursuant to such prospectus; or
(B) a registration statement covering such
Registrable Share has been declared effective under the1933
Act by the SEC and such Registrable Share has been disposed of
pursuant to such effective registration statement.
(s) "REGISTRABLE SHARES" means all XDL Registrable Shares and
Other Shareholder Registrable Shares.
(t) "REGISTRATION FILING" has the meaning given to such term in
Section 9 of this Agreement.
(u) "RELATED OFFERING" has the meaning given to such term in
Section 9 of this Agreement.
(v) "REQUESTING HOLDER" has the meaning given to such term in
Section 2 of this Agreement.
(w) "SEC" means the U.S. Securities and Exchange Commission.
(x) "SHARES" means common shares in the capital of the
Corporation.
(y) "XDL REGISTRABLE SHARES" means any Shares now held by XDL and
any Shares issued in respect of other shares of the Corporation held
by XDL, including in respect of share dividends or pre-emptive
rights; provided however, that any Registrable Share shall cease to
be a Registrable Share when:
(A) a receipt for a prospectus qualifying such
Registrable Share for public distribution has been obtained
from the Ontario Securities Commission and such Registrable
Share has been disposed of pursuant to such prospectus; or
(B) a registration statement covering such
Registrable Share has been declared effective under the 1933
Act by the SEC and such Registrable Share has been disposed of
pursuant to such effective registration statement.
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DEMAND REGISTRATION
2. Request for Demand Registration - Subject to Sections 3 and 6 of this
Agreement, any Eligible Holder or Eligible Holders may, in respect of
Registrable Shares held by them, collectively initiate a total of three
requests at any time after 120 days from the date of any initial public
offering of the Shares for the registration or qualification of
Registrable Shares in any Eligible Jurisdiction. Each of the
registrations and/or qualifications under this Section 2 that satisfies
the requirements set forth in Section 3 of this Agreement shall be
referred to hereof as a "Demand Registration"; provided that a single
registration or qualification shall constitute a single Demand
Registration for purposes of Section 2(b) of this Agreement, even if more
than one Eligible Holder includes Registrable Shares in such registration
or qualification. Each Eligible Holder requesting a Demand Registration
shall be referred to hereof as a "Requesting Holder".
(a) Each request for a Demand Registration shall be in writing
and shall specify the number of the Registrable Shares proposed to
be sold, the intended method of disposition and the jurisdictions in
which registration and/or qualification is desired, provided that
only Eligible Jurisdictions may be selected.
(b) Subject to section 6 of this Agreement, within 10 days after
the receipt of such a request from a Requesting Holder or group of
Requesting Holders, the Corporation shall give notice thereof to the
other Holders. The Corporation shall include in such registration
and/or qualification any Registrable Shares that any other Holder
(an "Electing Holder") requests be included, provided that the
Corporation receives such request within 15 days after the
Corporation delivers its notice pursuant to this paragraph (b) of
this Section. Subject to Section 4 of this Agreement, the
Corporation shall be entitled to include in any offering made
pursuant to a Demand Registration, authorized but unissued Shares or
Shares held by shareholders other than the Holders; provided,
however, that such inclusion shall be permitted only to the extent
that it is pursuant and subject to the terms of any underwriting
agreement or arrangements entered into by the Requesting Holder(s)
(it being understood that to the extent that any offering made
pursuant to a Demand Registration is not an underwritten offering no
such inclusion of authorized but unissued Shares or Shares held by
shareholders other than the Holders shall be permitted without the
consent of the Requesting Holders); and provided further, however,
that no Shares held by shareholders other than the Holders shall be
entitled to be included unless such shareholders shall agree in
writing to pay their expenses referred to in Section 8 of this
Agreement.
(c) Subject to Section 6 of this Agreement, no later than 45 days
after receipt of a request for a Demand Registration, the
Corporation shall file with the SEC a registration statement
relating to the sale of Registrable Shares by the Holder(s) on Form
F-3 if such Form is available, and otherwise on such form as is
available to the Corporation or a prospectus with those Canadian
jurisdictions designated by the Holder pursuant to this Section and
thereafter the Corporation shall use its best efforts (A) to cause
the registration statement or prospectus, as the case may be, to
become effective or filed in final form as promptly as practicable
and to
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remain effective for the periods specified in Section 3 of this
Agreement and (B) to cause such Registrable Shares to be registered
or qualified for distribution to the public in accordance with
applicable securities laws (including, for greater certainty,
applicable blue sky laws of applicable United States jurisdictions)
and to remain effective for the periods specified in Section 3 of
this Agreement.
Notwithstanding anything to the contrary in this Agreement, Requesting
Holders may initiate more than three requests for a Demand Registration if
the Corporation is able to utilize a short-form registration statement or
prospectus, and proposed registrations or qualifications which are, for any
reason, not completed shall not be considered to be one of the three
requests allocated to each Eligible Holder pursuant to this Section.
3. Effective Demand Registration. A registration requested pursuant to
Section 2 of this Agreement shall not count as one of the Demand
Registrations to which the particular Requesting Holder(s) is or are
entitled unless: (i) such registration statement is declared effective and
remains effective until the earlier of (A) the date by which all of the
Registrable Shares covered by such registration statement have been
disposed of pursuant to such registration statement, and (B) 45 days, in
the case of an underwritten offering, or 90 days, in the case of any other
offering, after the effective date of such registration statement; and
(ii) at least 50% of the Registrable Shares which such Requesting
Holder(s) had specified in its request under subparagraph 2(a) of this
Agreement have been registered or qualified under the resulting
registration statement or prospectus, as applicable, following the
determination of the Approved Underwriter Amount under Section 4 of this
Agreement.
4. Demand Underwriting Procedures. If the Requesting Holder(s) so elect,
the offering pursuant to such Demand Registration shall be in the form of
an underwritten offering and the managing underwriter selected for such
offering shall be the Approved Underwriter selected in accordance with
Section 5 of this Agreement. In such event, if the Approved Underwriter
advises the Corporation in writing that, in its opinion, the aggregate
amount of securities requested to be included in such offering by the
Requesting Holders, the Electing Holders and the Corporation is
sufficiently large as to have a material adverse effect on the success of
such offering, then only the aggregate number of Registrable Shares that
in the opinion of the Approved Underwriter may be sold without any
material adverse effect on the success of such offering (the "Approved
Underwriter Amount") shall be included, and
(a) if the number of Registrable Shares to be included is greater
than the Approved Underwriter Amount, then each of the Holders shall
be entitled, in priority to the inclusion of other Shares in the
offering, to have included Registrable Shares sufficient for them to
receive proceeds (net of underwriting discounts or commissions)
equal to the total amount of cash invested by them in the
Corporation;
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(b) to the extent that the number of Registrable Shares to be included
by the Holders under clause (a) above is less than the Approved
Underwriter Amount, each of the Holders will be entitled to include
additional Registrable Shares equal to their respective pro rata
portion (on the basis of the number of Registrable Shares proposed
to be registered by each Holder) of the remaining balance of up to
the lessor of the Approved Underwriter Amount and the total number
of Registrable Shares proposed to be registered by all Holders; and
(c) to the extent that the total of the foregoing Registrable
Shares is less than the balance of the Approved Underwriter Amount
remaining, the Corporation shall be entitled to include, in its
discretion, unissued Shares to be issued for its own account or
Shares held by shareholders other than the Holders.
The calculation of proceeds for purposes of clauses (a) and (b) of this
Section shall be cumulative from one registration to another such that
from and after the completion of any registration or qualification
providing the Requesting and Electing Holders with receipt of all of
their respective amounts specified in clauses (a) and (b) of this
Section, the provisions of clauses (a) and (b) shall no longer be
applicable.
5. Selection of Underwriters. If any requested Demand Registration is in
the form of an underwritten offering, the Requesting Holder(s) shall
select and retain an investment banking firm to be the approved
underwriter (the "Approved Underwriter"); provided that such firm shall be
reasonably acceptable to the Corporation. In the event of an underwritten
offering pursuant to a Demand Registration, the Corporation shall enter
into an underwriting agreement in customary form reasonably satisfactory
to the Corporation with the Approved Underwriter and shall use its best
efforts to cooperate with the Approved Underwriter in the carrying out of
such offering, including, without limitation, making whatever requests are
appropriate, supplying whatever information is appropriate and otherwise
using its best efforts to obtain all legal opinions, auditor's consents
and comfort letters and experts' cooperation as may be necessary or
desirable.
6. Limitations on Demand Registrations. The Corporation shall not be
required to cause a Demand Registration to be effected or to take any
other action pursuant to Section 2 of this Agreement:
(a) within a period of 180 days after the effective date of any
registration statement of the Corporation (other than a "shelf"
registration statement pursuant to Rule 415 under the 1933 Act or
relating to any employee stock option or stock purchase or similar
plan or relating to any dividend reinvestment plan) under the 1933
Act or the date of any receipt for a prospectus of the Corporation
issued under the Canadian securities laws, in either case covering
securities of or convertible into the same class as any Registrable
Shares, if prohibited by the underwriting or agency agreement
relating to distribution of Shares pursuant to the initial public
offering of the Shares (or such longer period as required by such
underwriting or agency agreement);
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(b) if the Corporation provides notice to the Requesting Holder(s)
within 30 days of the request for a Demand Registration that the
Corporation is actively engaged in pursuing a firmly underwritten
public offering of Shares in which the Holders may include
Registrable Shares pursuant to Section 9 or 10 of this Agreement;
(c) if the Corporation provides to the Requesting Holders a
certificate signed by the Chief Executive Officer of the Corporation
stating that, in the good faith judgment of the Corporation's Board
of Directors, it would not be in the best interests of the
Corporation and its shareholders for a prospectus or registration
statement (as applicable) to be filed at such time and it is
therefore appropriate to defer the filing of such prospectus or
registration statement, in which case the Corporation may direct
that such request for a Demand Registration be delayed for a period
not in excess of 90 days, provided that such right to delay a
request may be exercised by the Corporation no more than once in any
twelve month period; or
(d) prior to such time as the Shares have been accepted for
trading by The Toronto Stock Exchange, the Montreal Exchange, the
New York Stock Exchange or the Nasdaq Stock Market Inc. for trading
through either the Nasdaq SmallCap Market or the Nasdaq National
Market.
7. Demand Registration Expenses Borne by Corporation. Except as provided in
Section 8 of this Agreement, and except as the Requesting Holders and
Electing Holders may agree pursuant to the provisions of Section 6 of this
Agreement, all fees and expenses arising out of any Demand Registration
and any offering related thereto shall be borne by the Corporation,
including, without limitation, (a) all registration and filing fees; (b)
the fees and expenses of the Corporation's compliance with applicable
securities laws including U.S. blue sky laws as applicable (including
reasonable fees and disbursements of counsel); (c) printing expenses; (d)
the fees and disbursements of counsel for the Corporation and one separate
counsel retained by the Holders; (e) the fees and expenses for independent
certified public accountants, underwriters and other persons retained in
connection with such registration, qualification or offering; (f) fees of
transfer agents and registrars; and (g) messenger and delivery expenses.
In addition, the Corporation shall pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any
annual audit or quarterly review, the expense of any liability insurance
obtained by the Corporation, and the expenses and fees for listing or
authorizing for quotation the securities to be registered on each
securities exchange or other trading facility on which Shares are then
listed or quoted.
8. Demand Registration Expenses Borne by Holders. Each Requesting and
Electing Holder shall pay any underwriting discounts and commissions
attributable to its Registrable Shares, the fees and disbursements of any
second or other additional separate counsel or other advisors retained by
the Holder and all of its internal expenses incurred in connection with
any registration, qualification or offering (including, without
limitation,
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all salaries and expenses of any officers or employees of such Holder
performing legal or accounting duties).
PIGGY-BACK REGISTRATION
9. Inclusion in Registration. If the Corporation determines (whether on its
own initiative or pursuant to the exercise of Demand Rights by a
shareholder other than a Holder) to file a prospectus under any of the
Canadian securities laws and/or a registration statement under the 1933
Act (any such prospectus or registration statement and any preliminary
prospectus or other preliminary filing related thereto a "Registration
Filing") covering any Shares, other than a Registration Filing relating to
an employee stock option, stock purchase or similar plan or relating to
any dividend reinvestment plan, or any Registration Filing on Form F-4 or
S-4 (or any successor form), the Corporation shall:
(a) within 30 days prior to the initial filing of any
Registration Filing, deliver to each Holder a written notice
thereof, describing such Registration Filing and any related public
offering (a "Related Offering"), including a list of the
jurisdictions in which the Corporation intends to attempt to qualify
the Shares under the applicable Canadian provincial or U.S. state
securities laws and, if applicable, the minimum and maximum proposed
offering price; and
(b) include in such Registration Filing (and any related
qualification under blue sky laws or other compliance) and in any
Related Offering, on the same terms (as applicable) as apply to all
other Shares included thereof, all Registrable Shares specified in
any written request made by a Holder within 15 days after receipt of
such written notice from the Corporation, except as set forth in
Section 11 of this Agreement. Such written request may specify all
or a part of the Holder's Registrable Shares.
10. Piggy-Back Underwriting Procedures. If the Corporation arranges for a
Related Offering that is underwritten and the managing underwriter of such
Related Offering advises the Corporation in writing that, in its opinion,
the aggregate number of Shares requested to be included in such Related
Offering is sufficiently large so as to have a material adverse effect on
the success of such Related Offering, then the Corporation shall include:
(a) if the registration or qualification related to such offering
was initiated pursuant to the exercise of Demand Rights by a
shareholder or shareholders other than the Holders, first, any
Shares that such shareholder(s) proposed to register and/or qualify
for sale, and, second, additional Shares to the extent of the number
of such Shares that the Corporation is so advised can be sold in (or
during the time of) such Related Offering without having such
adverse effect in the following priority: (i) any Shares proposed
to be registered and/or qualified for sale by the Corporation for
its own account and all Registrable Shares proposed to be registered
by the Holders, pro rata among such parties, provided that the
relative priorities among the Holders shall follow the procedures
set out in Section 4 of
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this Agreement, if applicable (on the basis of the number of Shares
proposed to be registered by the Corporation and each Holder); and
(ii) any Shares proposed to be registered and/or qualified for sale
by shareholders other than the shareholder(s) initially making the
demand for registration and the Holders; or
(b) if the registration or qualification related to such offering
was initiated by the Corporation and not pursuant to the exercise of
Demand Rights, first, any Shares that the Corporation proposed to
register and/or qualify for sale for its own account, and, second,
additional Shares to the extent of the number of such Shares that
the Corporation is so advised can be sold in (or during the time of)
such Related Offering without having such adverse effect in the
following priority: (i) all Registrable Shares proposed to be
registered and/or qualified for sale by the Holders, pro rata among
the Holders (on the basis of the number of shares proposed to be
registered by each Holder), provided that the relative priorities
among the Holders shall first follow the procedures set out in
Section 4 of this Agreement, if applicable; and (ii) any Shares
proposed to be registered and/or qualified by other shareholders.
11. Piggy-Back Registration Expenses Borne by Corporation. Except as
provided in Section 13 of this Agreement, the Corporation shall bear all
fees, costs and expenses of any registration, qualification or offering
that is not part of a Demand Registration, including, without limitation,
(a) all registration and filing fees; (b) the fees and expenses of the
Corporation's compliance with securities or U.S. blue sky laws and/or any
Canadian equivalent as applicable (including reasonable fees and
disbursements of counsel); (c) printing expenses; (d) the fees and
disbursements of counsel for the Corporation and one separate counsel
retained by the selling shareholders for each registration, qualification
and offering, and the fees and expenses for independent certified public
accountants, underwriters and other persons retained by the Corporation in
connection with such Registration Filing; (e) fees of transfer agents and
registrars; and (f) messenger and delivery expenses. In addition, the
Corporation shall pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit or
quarterly review, the expense of any liability insurance obtained by the
Corporation, and the expenses and fees for listing or authorizing for
quotation the securities to be registered on each securities exchange or
other trading facility on which Shares are then listed or quoted.
12. Piggy-Back Registration Expenses Borne by Holders. Each Holder shall pay
any underwriting discounts and commissions attributable to its Shares, the
fees and disbursements of any second or other additional separate counsel
or other advisors retained by the Holder and all of its internal expenses
incurred in connection with any registration, qualification or offering
(including, without limitation, all salaries and expenses of any officers
or employees of such Holder performing legal or accounting duties but
excluding fees and expenses of counsel that are payable by the Corporation
pursuant to Section 11 of this Agreement).
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INDEMNIFICATION; CONTRIBUTION
13. Indemnification by the Corporation. In the event of any proposed
registration, qualification or offering of Shares, the Corporation agrees
to indemnify and hold harmless (i) each Holder, each of such Holder's
officers, directors, partners, employees, and each of such Holder's legal
counsel and other agents and advisers, independent accountants, if any;
(ii) each person controlling any such persons within the meaning of
Section 15 of the 1933 Act or Section 20 of the Exchange Act; and (iii)
each underwriter, if any, and each person who controls any underwriter
within the meaning of Section 15 of the 1933 Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation, any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage,
liability or action, and any of the foregoing incurred in settlement of
any litigation, commenced or threatened) (collectively "Losses") arising
out of or based upon (i) any untrue statement or alleged untrue statement
of a material fact contained in any Filing in connection with or any
prospectus, offering circular or other document incidental to any
registration, qualification or offering or any omission or alleged
omission to state thereof a material fact required to be stated thereof or
necessary to make the statements thereof not misleading; (ii) any
violation by the Corporation of any rule or regulation promulgated under
any Canadian or U. S. securities law applicable to the Corporation and
relating to action or inaction by the Corporation in connection with any
registration, qualification or compliance required hereunder; or (iii) the
Corporation's breach of any representation, warranty, covenant or
agreement contained in this Agreement; provided, however, that the
Corporation shall not be liable to a Holder for any Losses to the extent
that such Losses resulted directly from any untrue statement or alleged
untrue statement of a material fact, or any omission or alleged omission
to state a material fact required to be stated or necessary to make the
statements made not misleading, in each case in any material furnished in
writing by such Holder expressly for use in a Filing in connection with
any registration, qualification or offering covering such Holder's Shares.
14. Indemnification by Holders. Each Holder agrees severally and not jointly
to indemnify and hold harmless the Corporation, its officers, directors,
employees, legal counsel and other agents and advisers and each person, if
any, who controls the Corporation within the meaning of either Section 15
of the 1933 Act or Section 20 of the Exchange Act and each underwriter, if
any, and each person who controls any underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the Exchange Act for any
Losses, to the extent that such Losses resulted directly from an untrue
statement or alleged untrue statement of a material fact, or any omission
or alleged omission to state a material fact required to be stated or
necessary to make the statements made not misleading, in each case in any
material furnished in writing by such Holder expressly for use in a Filing
in connection with any registration, qualification or offering covering
its Shares, but only to the extent of the net sale proceeds actually
received by such Holder in connection with the applicable offering.
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15. Contribution. If the indemnification provided for in this Sections 14
and 15 of this Agreement is held by a court of competent jurisdiction to
be unavailable to any party entitled to indemnification under the terms
of Sections 14 and 15 of this Agreement (an "Indemnified Party") in
respect of any Losses referred to hereof, then the party or parties
responsible for such indemnification under the terms of Sections 14 and
15 of this Agreement (an "Indemnifying Party"), in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such Losses in the following
manner: as between the Indemnifying Party on the one hand and the
Indemnified Party on the other, in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one hand and
the Indemnified Party on the other in connection with the statements or
omissions which resulted in such Losses, as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party
on the one hand and the Indemnified Party on the other 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 such
party, and the party's relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission;
provided, however, that in no event shall the obligation of any party to
contribute under this Section 16 exceed the amount that such party would
have been obligated to pay by way of indemnification if the
indemnification provided for under Sections 14 and 15 of this Agreement
had not been held to be unavailable; and provided that no person guilty
of fraudulent misrepresentation (within the meaning of subsection 11(f)
of the 1933 Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
16. Survival. The indemnity and contribution agreements contained in
Sections 14, 15 and 16 of this Agreement shall remain operative and in
full force and effect with respect to any sales or other distributions of
Shares made pursuant to any Filing in connection with any registration,
qualification or offering regardless of (a) any termination of this
Agreement, (b) any investigation made by or on behalf of any Indemnified
Party or by or on behalf of the Corporation, and (c) the consummation of
the sale or successive resale of the Shares.
17.
18.
19.
OTHER EXEMPTIONS; FILING REPORTS
20. Rule 144A; Rule 144; Other Exemptions. For so long as any Holder holds
Registrable Shares, the Corporation agrees that it shall take such action
as any Holder may reasonably request (including, but not limited to,
providing promptly any information required under Rules 144 and 144A under
the 1933 Act, including without limitation, providing promptly to any such
Holder and any prospective purchaser of such Registrable Shares, the
information required by Rule 144(c) or Rule 144A(d)(4) under the 1933
Act), all to the extent required from time to time to enable such Holders
to sell such Registrable
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Shares without registration under the 1933 Act within the limitation of
the exemptions provided by (i) Rule 144 or Rule 144A (if available with
respect to resales of such Registrable Shares) under the 1933 Act, as
such rules may be amended from time to time, or (ii) any other rules or
regulations now existing or hereafter adopted by the SEC; provided,
however, that the Corporation's obligations under this Section 18 shall
terminate at such time as all Shares held by the Holders may be sold
pursuant to Rule 144(k) without regard to the requirements of Rule
144(c).
21. Reporting Obligations. The Corporation agrees that it shall file in a
timely manner any reports required to be filed by it under applicable
Canadian or U.S. securities laws in connection with any registered
securities or previous public distributions of its securities.
REPRESENTATION OF THE CORPORATION
22. Existing Demand Rights. The Corporation hereby represents and warrants
to the Holders that except for the Demand Rights granted in this
Agreement, no party holds any Demand Rights, whether currently exercisable
or contingent on the occurrence of any event or on the passage of time,
with respect to the Corporation.
TERM
23. Term. This Agreement, including without limitation the representations,
warranties and covenants contained hereof, shall become effective on the
date first set out above and continue in full force and effect and be
binding upon the Corporation and the Shareholders unaffected by any
subsequent disposition of the Registrable Shares for a period of three
years from the earlier of: (a) the date on which the Corporation first
obtains a final receipt from the OSC for a prospectus qualifying the
distribution of Shares in Ontario; or (b) the date on which any
registration statement filed by the Corporation to register Shares in the
United States is declared effective by the SEC.
GENERAL
24. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the federal laws
of Canada applicable in Ontario.
25. Assignment. The rights of each Holder under this Agreement may be
assigned by such Holder in connection with the transfer of the Shares and
subject to assumption by the assignee in writing of the corresponding
obligations hereunder. Except as expressly otherwise provided in this
Agreement, none of the parties hereto may assign any rights or benefits
under this Agreement, including the benefit of any representation,
warranty or covenant, without the prior written consent of the
Corporation, in the case of an assignment by a Holder, or of Holders of
not less than 67% of the Registrable Shares then outstanding, in the case
of an assignment by the Corporation.
26. Time. Time is of the essence in this Agreement.
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27. Notices. Unless otherwise provided hereof, any notice or other
communication to a party under this Agreement may be made, given or
served by hand delivery, by facsimile or by registered mail postage
prepaid and addressed to the parties at their respective addresses and
facsimile numbers maintained in the records of the Corporation. Any
notice or other communication delivered personally shall be deemed to
have been given or made at the time of such delivery. Any written notice
or other communication delivered by facsimile shall be deemed to have
been given or made on the first business day following such delivery.
Any notice or other communication mailed by registered mail shall be
deemed to have been given or made on the fifth business day following its
mailing; provided that in the event of a postal strike affecting mail
delivery, any notice by mail shall be deemed to have been given when
actually received. Each party may change its address for service at any
time by providing notice in writing of such change to each other party in
accordance herewith.
28. Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all previous negotiations,
communications, agreements or understandings between the parties in any
way relating to the subject matter of this Agreement.
29. Further Assurances. Each party hereto will execute, deliver and
undertake such other documents, transfers, deeds, assurances and
procedures as are in the opinion of counsel for the Corporation necessary
for the purpose of giving effect to or completing the transactions
contemplated by this Agreement.
30. Execution in Counterparts and by Facsimile. This Agreement may be
executed in counterparts (which may be delivered by facsimile), each of
which shall be deemed to be an original and all of which together shall be
deemed to form one and the same document.
31. No Waiver - No failure or delay on the part of any party in exercising
any right, power or remedy provided under this Agreement shall operate as
a waiver thereof except as expressly otherwise provided in this Agreement;
nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of
any other right, power or remedy provided under this Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on the
date first written above.
________________________________________
BAHMAN KOOHESTANI
________________________________________
ANTHONY DAVIS
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________________________________________
ROBERT GAYLE
________________________________________
JOHN MAH
________________________________________
SEAN MAURIK
________________________________________
JOHN FORESI
________________________________________
RON SCHREIBER
________________________________________
JORDAN LEVY
DELANO TECHNOLOGY CORPORATION
By: ___________________________________
Name:
Title:
XDL DELANO HOLDINGS INC.
By: ___________________________________
Name:
Title:
TOFINO VENTURE CAPITAL INC.
By: ___________________________________
Name:
Title:
The undersigned hereby execute a counterpart to this Agreement as of
February 1, 1999 to become parties as Additional Shareholders, as
contemplated by this Agreement.
BLUE SKY CAPITAL CORPORATION
By: ___________________________________
Name:
Title:
________________________________________
TODD FINCH