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Exhibit 2.1
SECURITIES PURCHASE AGREEMENT
AMONG
JAWS TECHNOLOGIES, INC.
AND
THE INVESTORS SIGNATORY HERETO
DATED AS OF AUGUST 21, 2000
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SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of August 21,
2000, among Jaws Technologies, Inc., a Delaware corporation (the "Company"), and
the investors signatory hereto (each such investor is a "Purchaser" and all such
investors are, collectively, the "Purchasers").
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to issue and sell to the Purchasers and the Purchasers,
severally and not jointly, desire to purchase from the Company, shares of the
Company's common stock, $.001 par value per share (the "Common Stock"), and
certain other securities of the Company as more fully described in this
Agreement. All references to $ (dollars) shall be to US$ (United States
dollars).
NOW, THEREFORE, IN CONSIDERATION of these premises, the mutual covenants
contained in this Agreement, and for other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the Company and the
Purchasers agree as follows:ARTICLE I
ARTICLE I
PURCHASE AND SALE
1.1 The Closing.
(a) The Closing. (i) Subject to the terms and conditions set forth in
this Agreement, the Company shall issue and sell to the Purchasers and the
Purchasers shall, severally and not jointly, purchase aggregate of 1,000,000
shares of Common Stock (the "Shares") for an aggregate purchase price of
$5,000,000. The closing of the purchase and sale of the Shares (the "Closing")
shall take place at the offices of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP ("Xxxx
Xxxxxxxx"), 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, immediately
following the execution hereof or such later date as the parties shall agree.
The date of the Closing is hereinafter referred to as the "Closing Date."
(ii) At the Closing, the parties shall deliver or shall cause to be
delivered the following: (A) the Company shall deliver to each Purchaser (1) a
stock certificate representing 60% of the number of Shares indicated below such
Purchaser's name on the signature page to this Agreement, registered in the name
of such Purchaser, (2) a Common Stock purchase warrant, in the form of Exhibit
A, registered in the name of such Purchaser, pursuant to which such Purchaser
shall have the right to acquire shares of Common Stock upon the terms and in
such number as set forth therein (each an "Adjustable Warrant"), (3) a Common
Stock purchase warrant, in the form of Exhibit B, registered in the name of such
Purchaser, pursuant to which such Purchaser shall have the right to acquire the
number of shares of Common Stock indicated below such Purchaser's name on the
signature page of this Agreement, upon the terms and at the exercise price set
forth therein a "Closing Warrant" and together with the Adjustable Warrants, the
"Warrants"), (4) the legal opinion of Xxxx, Hastings Xxxxxxxx & Xxxxxx LLP,
outside counsel to the Company, substantially in the form of Exhibit C, (5) an
executed Registration Rights Agreement, dated the date hereof, among the Company
and the Purchasers, in the form of Exhibit D (the "Registration Rights
Agreement") and (6) the Transfer Agent Instructions, in the form of Exhibit E,
executed by the Company and delivered to and
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acknowledged by the Company's transfer agent (the "Transfer Agent
Instructions"); and (B) each Purchaser shall deliver: (1) 60% of the purchase
price indicated below such Purchaser's name on the signature page to this
Agreement in United States dollars in immediately available funds by wire
transfer to an account designated in writing by the Company for such purpose and
(2) an executed Registration Rights Agreement.
(iii) On August 30, 2000, (A) the Company will, against delivery of
the amounts set forth in clause (B) in this paragraph, deliver to each
Purchaser, a stock certificate representing 40% of the number of Shares
indicated below such Purchaser's name on the signature page of this Agreement
(subject to equitable adjustment for stock splits, recombinations and similar
events), registered in the name of such Purchaser, and (B) each Purchaser will
deliver to the Company, 40% of the purchase price indicated below such
Purchaser's name on the signature page to this Agreement in United States
dollars in immediately available funds by wire transfer to an account designated
in writing by the Company for such purpose.
1.2 Certain Defined Terms. For purposes of this Agreement, "Trading Day"
and "Per Share Market Value" shall have the meanings set forth in Exhibit A and
"Business Day" shall mean any day except Saturday, Sunday and any day which
shall be a federal legal holiday in the United States or Canada or a day on
which banking institutions in the State of New York or the province of Alberta,
Canada are authorized or required by law or other governmental action to close.
A "Person" means an individual or corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Company. The Company hereby makes
the following representations and warranties to the Purchasers. As used in this
Agreement, as it relates to the Company, the terms, "knowledge," "to our best
knowledge" and the like mean the actual knowledge of Xxxx Xxxxxxx, Chief
Financial Officer of the Company, without independent investigation or
independent inquiry.
(a) Organization and Qualification. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, with the requisite corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted. The
Company has no subsidiaries other than as set forth in Schedule 2.1(a)
(collectively, the "Subsidiaries"). Each of the Subsidiaries is an entity, duly
incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted. Each
of the Company and the Subsidiaries is duly qualified to do business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not,
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individually or in the aggregate, (x) adversely affect the legality, validity or
enforceability of the Securities (as defined below) or any of this Agreement,
the Registration Rights Agreement, the Transfer Agent Instructions or the
Warrants (collectively, the "Transaction Documents"), (y) have or result in a
material adverse effect on the results of operations, assets, prospects, or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole, or (z) adversely impair the Company's ability to perform fully on a
timely basis its obligations under any of the Transaction Documents (any of (x),
(y) or (z), a "Material Adverse Effect").
(b) Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company. Each of
the Transaction Documents has been duly executed by the Company and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors rights and remedies. Neither the Company nor any
Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, by-laws or other organizational or
charter documents.
(c) Capitalization. As of August 1, 2000, the number of authorized,
issued and outstanding capital stock of the Company is set forth in Schedule
2.1(c). Except as disclosed in Schedule 2.1(c), the Company owns all of the
capital stock of each Subsidiary. No shares of Common Stock are entitled to
preemptive or similar rights, nor is any holder of the securities of the Company
entitled to preemptive or similar rights arising out of any agreement or
understanding with the Company or any Subsidiary by virtue of any of the
Transaction Documents. Except as a result of the purchase and sale of the Shares
and the Warrants and except as disclosed in Schedule 2.1(c), there are no
outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock.
(d) Issuance of the Securities. The Securities (as defined below) are
duly authorized and, when issued and paid for in accordance with the terms
hereof and the Warrants, the Shares and the Underlying Shares shall have been
duly and validly issued, fully paid and nonassessable, free and clear of all
liens, encumbrances and rights of first refusal of any kind (collectively,
"Liens"). The Company has reserved a number of duly authorized shares of Common
Stock for issuance hereunder upon exercise of the Warrants that is not less than
the sum of (i) the Shares to be issued hereunder; (ii) the number of shares of
Common Stock issuable upon exercise of the Adjustable Warrants on the First
Vesting Date (as defined in the Adjustable Warrant), assuming for such purposes
that, on the First Vesting Date, (A) the Applicable Share Number (as defined in
the Adjustable
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Warrant) equals the entire number of Shares purchased hereunder and (B) the
Adjustment Price (as defined in the Adjustable Warrant) equals 50% of the Per
Share Market Value on the Trading Day immediately preceding the Closing Date,
and (iii) the number of shares of Common Stock as are issuable upon exercise in
full of the Closing Warrants (the number of shares of Common Stock contemplated
in (i), (ii) and (iii), the "Initial Minimum"). The shares of Common Stock
issuable upon exercise of the Warrants are referred to herein as the "Underlying
Shares." The Shares, the Warrants and the Underlying Shares are collectively
referred to herein as, the "Securities."
(e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other charter documents (each as amended
through the date hereof), or (ii) subject to obtaining the Required Approvals
(as defined below), conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt or otherwise)
or other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), as could not, individually or in the aggregate, have or
result in a Material Adverse Effect. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any governmental
authority, except for violations which, individually or in the aggregate, could
not have or result in a Material Adverse Effect.
(f) Filings, Consents and Approvals. Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filings required pursuant to Section
3.10, (ii) the filing with the Securities and Exchange Commission (the
"Commission") of a registration statement meeting the requirements set forth in
the Registration Rights Agreement and covering the resale of the Shares and the
Underlying Shares by the Purchasers (the "Underlying Shares Registration
Statement"), (iii) the application(s) to the Nasdaq National Market ("NASDAQ")
for the listing of the Underlying Shares for quotation on the NASDAQ (and with
any other national securities exchange or market on which the common Stock is
then listed) in the time and manner required thereby; and (iv) in all other
cases where the failure to obtain such consent, waiver, authorization or order,
or to give such notice or make such filing or registration could not have or
result in, individually or in the aggregate, a Material Adverse Effect
(collectively, the "Required Approvals").
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(g) Litigation; Proceedings. Except as stated in Schedule 2.1(g), there
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries or any of their respective properties before
or by any court, arbitrator, governmental or administrative agency or regulatory
authority (federal, state, county, local or foreign) (collectively, an "Action")
which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
could, individually or in the aggregate, have or result in a Material Adverse
Effect.
(h) No Default or Violation. Neither the Company nor any Subsidiary (i)
is in default under or in violation of (and no event has occurred which has not
been waived which, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the Company or any
Subsidiary received notice of a claim that it is in default under or that it is
in violation of, any indenture, loan or credit agreement or any other agreement
or instrument to which it is a party or by which it or any of its properties is
bound, (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is in violation of any statute, rule or regulation
of any governmental authority, in each case of clauses (i), (ii) or (iii) above,
except as would not individually or in the aggregate, have or result in a
Material Adverse Effect.
(i) Private Offering. Assuming the accuracy of the representations and
warranties of the Purchasers set forth in Sections 2.2(b)-(g), the offer,
issuance and sale of the Securities to the Purchasers as contemplated hereby do
not require registration under the Securities Act of 1933, as amended (the
"Securities Act"). Neither the Company nor, to the Company's knowledge, any
Person acting on its behalf has taken or is, to the knowledge of the Company,
contemplating taking any action which could subject the offering, issuance or
sale of the Securities to the registration requirements of the Securities Act.
The Company has not engaged in any general solicitation with respect to the
securities offered by the Company pursuant to this Agreement. To the Company's
knowledge, the Company has not offered or sold securities in the six month
period prior to the date hereof which would be integrated with the offering of
securities pursuant to this Agreement.
(j) SEC Documents; Financial Statements. The Company has filed all
reports required to be filed by it under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (or such shorter period as
the Company was required by law to file such material) (the foregoing materials
being collectively referred to herein as the "SEC Documents" and, together with
the Schedules to this Agreement, the "Disclosure Materials") on a timely basis
or has received a valid extension of such time of filing and has filed any such
SEC Documents prior to the expiration of any such extension. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Documents, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. All material agreements to which the Company is
a party or to which the property or assets of the Company are subject
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have been appropriately filed as exhibits to the SEC Documents as and to the
extent required under the Exchange Act. The financial statements of the Company
included in the SEC Documents comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved ("GAAP"), except as
may be otherwise specified in such financial statements or the notes thereto,
and fairly present in all material respects the financial position of the
Company and its consolidated subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal, immaterial, year-end audit
adjustments. Since December 31, 1999, except as specifically disclosed in the
SEC Documents, (a) there has been no event, occurrence or development that has
or that could result in a Material Adverse Effect, (b) the Company has not
incurred any liabilities (contingent or otherwise) other than (x) liabilities
incurred in the ordinary course of business consistent with past practice and
(y) liabilities not required to be reflected in the Company's financial
statements pursuant to GAAP or required to be disclosed in filings made with the
Commission, (c) the Company has not altered its method of accounting or the
identity of its auditors and (d) the Company has not declared or made any
payment or distribution of cash or other property to its stockholders or
officers or directors (other than in compliance with existing Company stock
option plans) with respect to its capital stock, or purchased, redeemed (or made
any agreements to purchase or redeem) any shares of its capital stock.
(k) Investment Company. The Company is not, and is not an Affiliate (as
defined in Rule 405 under the Securities Act) of, an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(l) Certain Fees. Except for certain fees payable to SmallCaps Online
LLC, no fees or commissions will be payable by the Company to any broker,
financial advisor or consultant, finder, placement agent, investment banker,
bank or other Person with respect to the transactions contemplated by this
Agreement. The Purchasers shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of other Persons for fees of a
type contemplated in this Section that may be due in connection with the
transactions contemplated by this Agreement. The Company shall indemnify and
hold harmless the Purchasers, their employees, officers, directors, agents, and
partners, and their respective Affiliates, from and against all claims, losses,
damages, costs (including the costs of preparation and attorney's fees) and
expenses suffered in respect of any such claimed or existing fees, as such fees
and expenses are incurred.
(m) Solicitation Materials. Neither the Company nor any Person acting
on the Company's behalf has solicited any offer to buy or sell the Securities by
means of any form of general solicitation or advertising.
(n) Form S-1 Eligibility. The Company is eligible to register its
Common Stock for resale under Form S-1 promulgated under the Securities Act.
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(o) Listing and Maintenance Requirements. Except as set forth in the
SEC Documents, the Company has not, in the two years preceding the date hereof
received notice (written or oral) from the NASDAQ any stock exchange, market or
trading facility on which the Common Stock is or has been listed (or on which it
has been quoted) to the effect that the Company is not in compliance with the
maintenance requirements of such exchange, market or trading facility. The
Company is in compliance with all maintenance requirements and will use its best
efforts to maintain such compliance.
(p) Patents and Trademarks. The Company and its Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and rights which
are necessary or material for use in connection with their respective businesses
as described in the SEC Documents and which the failure to so have would have a
Material Adverse Effect (collectively, the "Intellectual Property Rights").
Except as set forth in Schedule 21.(p), neither the Company nor any Subsidiary
has received a written notice that the Intellectual Property Rights used by the
Company or its Subsidiaries violates or infringes upon the rights of any Person.
To the best knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of
the Intellectual Property Rights.
(q) Registration Rights; Rights of Participation. Except as set forth
on Schedule 6(b) to the Registration Rights Agreement, the Company has not
granted or agreed to grant to any Person any rights (including "piggy-back"
registration rights) to have any securities of the Company registered with the
Commission or any other governmental authority which has not been satisfied.
Except as set forth on Schedule 6(b) to the Registration Rights Agreement, no
Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the
Transaction Documents.
(r) Regulatory Permits. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses as described in the SEC Documents, except where the failure to
possess such permits could not, individually or in the aggregate, have or result
in a Material Adverse Effect ("Material Permits"), and neither the Company nor
any such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit.
(s) Title. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them which is material to the
business of the Company and its Subsidiaries and good and marketable title in
all personal property owned by them which is material to the business of the
Company and its Subsidiaries, in each case free and clear of all Liens, except
for Liens as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its Subsidiaries. Any real property and facilities held under lease
by the Company and its Subsidiaries are held by them under valid, subsisting and
enforceable leases of which the Company and its Subsidiaries are in compliance
and do not interfere with the use made and proposed to be made of such property
and buildings by the Company and its Subsidiaries.
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(t) Absence of Certain Proceedings. Except as described in the SEC
Documents, (i) there is no Action pending or, to the knowledge of the Company,
threatened against the Company, in any such case wherein an unfavorable
decision, ruling or finding would have or result in a Material Adverse Effect;
(ii) neither the Company nor any Subsidiary, nor any director or officer
thereof, is or has been the subject of any Action involving (A) a claim of
violation of or liability under federal or state securities laws or (B) a claim
of breach of fiduciary duty; (iii) the Company does not have pending before the
Commission any request for confidential treatment of information and the Company
has no knowledge of any expected such request that would be made prior to the
Effectiveness Date (as defined in the Registration Rights Agreement); and (iv)
there has not been, and to the best of the Company's knowledge there is not
pending or contemplated, any investigation by the Commission involving the
Company or any current or former director or officer of the Company.
(u) Labor Relations. No material labor problem exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company.
(v) Disclosure. The Company confirms that neither it nor any other
Person acting on its behalf has provided any of the Purchasers or its agents or
counsel with any information that constitutes or might constitute material
non-public information. The Company understands and confirms that the Purchasers
shall be relying on the foregoing representations in effecting transactions in
securities of the Company. All disclosure provided to the Purchasers regarding
the Company, its business and the transactions contemplated hereby, including
the Schedules to this Agreement, furnished by or on behalf of the Company are
true and correct and do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
2.2 Representations and Warranties of the Purchasers. Each Purchaser hereby
for itself and for no other Purchaser represents and warrants to the Company as
follows:
(a) Organization; Authority. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The purchase by such Purchaser of the Securities
hereunder has been duly authorized by all necessary action on the part of such
Purchaser. Each of this Agreement and the Registration Rights Agreement has been
duly executed by such Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its
terms.
(b) Investment Intent. Such Purchaser is acquiring the Securities as
principal for its own account for investment purposes only, not as a nominee or
agent, and not with a view to or for distributing or reselling such Securities
or any part thereof, without prejudice, however, to such Purchaser's right,
subject to the provisions of this Agreement, the Registration Rights Agreement
and the Warrant, at all times to sell or otherwise dispose of all or any part of
such Securities pursuant to an effective registration statement under the
Securities Act or under an
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exemption from such registration and in compliance with applicable federal and
state securities laws. Nothing contained herein shall be deemed a representation
or warranty by such Purchaser to hold Securities for any period of time. Such
Purchaser is acquiring the Securities hereunder in the ordinary course of its
business. Such Purchaser does not have any agreement or understanding, directly
or indirectly, with any Person to distribute the Securities.
(c) Purchaser Status. At the time such Purchaser was offered the
Securities, it was, and at the date hereof it is, and at each exercise date
under its respective Warrants, it will be, an "accredited investor" as defined
in Rule 501(a) under the Securities Act.
(d) Experience of such Purchaser. Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.
(e) Ability of such Purchaser to Bear Risk of Investment. Such
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.
(f) Access to Information. Such Purchaser acknowledges that it has
reviewed the Disclosure Materials (including, without limitation, (i) the
Company's annual report on Form 10-K for its fiscal year ended December 31,
1999, (ii) the Company's quarterly report on Form 10-Q for the period ended
Xxxxx 00, 0000, (xxx) the Company's definitive proxy statement under Schedule
14A filed with the Commission on April 28, 2000, (iv) the Company's registration
statement on Form S-1 (Reg. No. 333-30406) (v) the Company's registration
statement on Form S-1 filed with the Commission on May 30, 2000 (vi) the
Company's registration statement on Form S-1/A filed with the Commission on July
13, 2000 (vii) the Company's preliminary proxy statement under Schedule 14A
filed with the Commission on August 9, 2000, and (viii) the Company's quarterly
report on Form 10-Q for the period ended June 30, 2000, and has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of the offering of the Securities and the merits and risks of
investing in the Securities; (ii) access to information about the Company and
the Company's financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment; and
(iii) the opportunity to obtain such additional information which the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the investment
and to verify the accuracy and completeness of the information contained in the
Disclosure Materials. Neither such inquiries nor any other investigation
conducted by or on behalf of such Purchaser or its representatives or counsel
shall modify, amend or affect such Purchaser's right to rely on the truth,
accuracy and completeness of the Disclosure Materials and the Company's
representations and warranties contained in the Transaction Documents.
(g) General Solicitation. Such Purchaser is not purchasing the
Securities as a result of or in response to any advertisement, article, notice
or other communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over
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television or radio or presented at any seminar or any other general
solicitation or general advertisement.
(h) Reliance. Such Purchaser understands and acknowledges that (i) the
Securities are being offered and sold to it without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and such Purchaser hereby consents to such
reliance.
(i) Investment Control of Purchasers Securities. Thomson Kernaghan &
Co. Limited, has voting and investment power over securities owned by the
Purchasers, including the securities to be acquired by the Purchasers pursuant
to this Agreement. Each Purchasers is a Bermuda Limited Partnership.
To the best knowledge of each Purchaser, except for any fees payable
pursuant to Section 4.1, no fees or commissions will be payable by any Purchaser
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement.
The Company acknowledges and agrees that no Purchaser makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 Transfer Restrictions. (a) Securities may only be disposed of pursuant
to an effective registration statement under the Securities Act, to the Company
or pursuant to an available exemption from or in a transaction not subject to
the registration requirements of the Securities Act, and in compliance with any
applicable federal and state securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration statement or to the
Company, except as otherwise set forth herein, the Company may require the
transferor thereof to provide to the Company an opinion of counsel selected by
the transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act. Any such
transferee shall agree in writing to be bound by the terms of this Agreement and
shall have the rights of a Purchaser under this Agreement and the Registration
Rights Agreement.
(b) The Purchasers agree to the imprinting, so long as is required by
this Section 3.1(b), of the following legend on the Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES
ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES
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COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.
Neither the Shares nor the Underlying Shares shall contain the legend set
forth above nor any other legend while an Underlying Shares Registration
Statement is effective under the Securities Act or the holder is relying on Rule
144 promulgated under the Securities Act ("Rule 144") in connection with the
resale of such Underlying Shares, or in the event there is not an effective
Underlying Shares Registration Statement and Rule 144 is not then available for
resale of the Underlying Shares, at such time, as such legend is not required
under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission). The
Company shall cause its internal securities counsel to deliver the direction
letter included in the Transfer Agent Instructions to the Company's transfer
agent on the date that such Underlying Shares Registration Statement is declared
effective by the Commission (the "Effective Date"). The Company agrees that,
following the Effective Date, it will, no later than four (4) Business Days
following the delivery by a Purchaser to the Company of a certificate or
certificates representing Shares, deliver to such Purchaser an identical
certificate or certificates representing such Shares which shall be free from
such legend. The Company further agrees that if any Shares or Underlying Shares
are issued with a legend in accordance with this Section 3.1(b), it will, within
four (4) Business Days after request therefor by a Purchaser, provide such
Purchaser with a certificate or certificates representing such Shares or
Underlying Shares, free from such legend at such time as such legend would not
have been required under this Section 3.1(b) had such issuance occurred on the
date of such request. The Company may not make any notation on its records or
give instructions to any transfer agent of the Company which enlarge the
restrictions of transfer set forth in this Section.
3.2 Acknowledgment of Dilution. The Company acknowledges that the issuance
of Underlying Shares upon exercise of the Warrants will result in dilution of
the outstanding shares of Common Stock, which dilution may be substantial under
certain market conditions. The Company further acknowledges that its obligation
to issue Underlying Shares upon exercise of the Warrants is unconditional and
absolute, subject to the limitations set forth in the Warrants regardless of the
effect of any such dilution.
3.3 Furnishing of Information. As long as the Purchasers own Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to Section 13(a) or 15(d) of the
Exchange Act. As long as the Purchasers own Securities, if the Company is not
required to file reports pursuant to such sections, it will prepare and furnish
to the Purchasers and make publicly available in accordance with Rule 144(c)
promulgated under the Securities Act such information as is required for the
Purchasers to sell the Securities under Rule 144 promulgated under the
Securities Act. The Company further
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covenants that it will take such further action as any holder of Securities may
reasonably request, all to the extent required from time to time to enable such
Person to sell Underlying Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144 promulgated under
the Securities Act, including causing its attorneys to render and deliver any
legal opinion required in order to permit a Purchaser to receive Underlying
Shares free of all restrictive legends and to subsequently sell Underlying
Shares under Rule 144 upon receipt of a notice of an intention to sell or other
form of notice having a similar effect. Upon the request of any such Person, the
Company shall deliver to such Person a written certification of a duly
authorized officer as to whether it has complied with such requirements.
3.4 Integration. The Company shall not, and shall use its best efforts to
ensure that, no Affiliate of the Company shall, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchasers, or that would be
integrated with the offer or sale of the Securities for the purposes of the
applicable rules and regulations of NASDAQ.
3.5 Increase in Authorized Shares. If on any date the Company would be, if
a notice of exercise were to be delivered on such date, precluded from issuing
the sum of (i) 150% of the number of Underlying Shares then issuable upon
exercise in full of the Adjustable Warrants and (ii) the number of Underlying
Shares issuable upon exercise in full of the Closing Warrants (the "Current
Required Minimum") due to the unavailability of a sufficient number of
authorized but unissued or reserved shares of Common Stock, then the Board of
Directors of the Company shall promptly (and in any case, within 30 Business
Days from such date) prepare and mail to the stockholders of the Company proxy
materials requesting authorization to amend the Company's certificate or
articles of incorporation to increase the number of shares of Common Stock which
the Company is authorized to issue to at least such number of shares as
reasonably requested by the Purchasers in order to provide for such number of
authorized and unissued shares of Common Stock to enable the Company to comply
with its issuance, exercise and reservation of shares obligations as set forth
in this Agreement and the Warrants (the sum of (x) the number of shares of
Common Stock then outstanding plus all shares of Common Stock issuable upon
exercise of all outstanding options, warrants and convertible instruments other
than the Warrants and (y) the Current Required Minimum, shall be a reasonable
number). In connection therewith, the Board of Directors shall (a) adopt proper
resolutions authorizing such increase, (b) recommend to and otherwise use its
best efforts to promptly and duly obtain stockholder approval to carry out such
resolutions (and hold a special meeting of the stockholders no later than the
earlier to occur of the 60th day after delivery of the proxy materials relating
to such meeting and the 90th day after request by a holder of Warrants to issue
the number of Underlying Shares in accordance with the terms hereof) and (c)
within five Business Days of obtaining such stockholder authorization, file an
appropriate amendment to the Company's certificate or articles of incorporation
to evidence such increase. The Company shall use its best efforts to cause
management of the Company to vote all of their respective shares of Common Stock
in favor of all resolutions to increase the authorized stock of the Company
hereunder.
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3.6 Reservation and Listing of Underlying Shares. (a) The Company shall (i)
in the time and manner required by NASDAQ and such other exchange, market or
quotation system on which the Common Stock is traded, prepare and file with
NASDAQ (and such national securities exchange, market, trading or quotation
facility on which the Common Stock is then traded an additional shares listing
application covering a number of shares of Common Stock which is not less than
the Initial Minimum, (ii) use its best efforts to cause such shares of Common
Stock to be approved for listing in the NASDAQ (as well as on any such other
national securities exchange or market or trading or quotation facility on which
the Common Stock is then listed as soon as possible thereafter, and (iii)
provide to the Purchasers evidence of such listing, and the Company shall use
its best efforts to maintain the listing of its Common Stock thereon. If the
number of Underlying Shares issuable upon exercise of the then unexercised
portion of the Warrants exceeds 85% of the number of Underlying Shares
previously listed on account thereof with NASDAQ (and any such other required
exchanges, then the Company shall take the necessary actions to immediately list
a number of Underlying Shares as equals no less than the then Current Required
Minimum.
(b) The Company shall maintain a reserve of shares of Common Stock for
issuance upon exercise in full of the Warrants in accordance with this Agreement
and the Warrants, respectively, in such amount as may be required to fulfill its
obligations in full under the Transaction Documents, which reserve shall equal
no less than the then Current Required Minimum.
3.7 Exercise Procedures. The Transfer Agent Instructions and Form of
Election to Purchase under the Warrants set forth the totality of the procedures
with respect to the exercise of the Warrants, including the form of internal
securities counsel direction letter, if necessary, that shall be rendered to the
Company's transfer agent and such other information and instructions as may be
reasonably necessary to enable the Purchasers to exercise their Warrants.
3.8 Exercise Obligations. The Company shall honor exercises of the Warrants
and shall deliver Underlying Shares in accordance with the terms, conditions and
time periods set forth in the Warrants.
3.9 Right of First Refusal; Subsequent Registrations. (a) The Company shall
not, directly or indirectly, without the prior written consent of the
Purchasers, offer, sell, grant any option to purchase, or otherwise dispose of
(or announce any offer, sale, grant or any option to purchase or other
disposition) any of its or its Affiliates' equity or equity-equivalent
securities including the issuance of any debt or other instrument at any time
over the life thereof convertible into or exchangeable for Common Stock, or any
other transaction intended to be exempt or not subject to registration under the
Securities Act (collectively, a "Subsequent Placement") for a period of 180 days
after the Closing Date, provided, that such 180 day period shall be extended for
the number of Trading Days(which in the aggregate, may not exceed a total of 90
calendar days) during such period (A) in which trading in the Common Stock is
suspended by any securities exchange or market or quotation system on which the
Common Stock is then listed, or (B) during which the Underlying Shares
Registration Statement is not effective, or (C) during which the prospectus
included in the Underlying Shares Registration Statement may not be used by the
holders thereof for the resale of Underlying Shares, unless (A) the Company
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delivers to each of the Purchasers a written notice (the "Subsequent Placement
Notice") of its intention to effect such Subsequent Placement, which Subsequent
Placement Notice shall describe in reasonable detail the proposed terms of such
Subsequent Placement, the amount of proceeds intended to be raised thereunder,
the Person with whom such Subsequent Placement shall be effected, and attached
to which shall be a term sheet or similar document relating thereto and (B) such
Purchaser shall not have notified the Company in writing by 6:30 p.m. (New York
City time) on the seventh Trading Day after its receipt of the Subsequent
Placement Notice of its commitment to provide (or to cause its sole designee to
provide), subject to completion of mutually acceptable documentation consistent
with the information contained in the Subsequent Placement Notice, financing to
the Company on the same terms set forth in the Subsequent Placement Notice. If
the Purchasers shall fail to notify the Company of their intention to enter into
such negotiations within such time period, the Company may effect the Subsequent
Placement substantially upon the terms and to the Persons (or Affiliates of such
Persons) set forth in the Subsequent Placement Notice; provided, that the
Company shall provide the Purchasers with a second Subsequent Placement Notice,
and the Purchasers shall again have the right of first refusal set forth above
in this paragraph (a), if the Subsequent Placement subject to the initial
Subsequent Placement Notice shall not have been consummated for any reason on
the terms set forth in such Subsequent Placement Notice within thirty Trading
Days after the date of the initial Subsequent Placement Notice with the Person
(or an Affiliate of such Person) identified in the Subsequent Placement Notice.
If the Purchasers shall indicate a willingness to provide financing in excess of
the amount set forth in the Subsequent Placement Notice, then each Purchaser
shall be entitled to provide financing pursuant to such Subsequent Placement
Notice up to an amount equal to such Purchaser's pro-rata portion of the
aggregate number of Shares purchased by such Purchaser under this Agreement, but
the Company shall not be required to accept financing from the Purchasers in an
amount in excess of the amount set forth in the Subsequent Placement Notice. The
right of first refusal set forth in this Section shall not apply to (i) the
granting of options or warrants to employees, officers, directors or
consultants, and the issuance of shares upon exercise of options granted, under
any stock option plan approved by the Board of Directors of the Company, (ii)
the issuance of securities pursuant to an underwritten public offering, (iii)
the issuance of shares of Common Stock in payment of the purchase price of a
Strategic Transaction (as defined below), (iv) the issuance of up to an
aggregate of 80,000 shares (as appropriately adjusted for stock splits, stock
dividends, and similar adjustments after the issuance date) of Common Stock (or
convertible preferred stock, options, warrants or other securities convertible
into or exercisable for Common Stock) at a price less than $5.00 and not
otherwise excepted pursuant to clause (i), (ii) or (iii) above, (v) the issuance
of 80,000 shares of Common Stock or Common Stock Equivalents at a per share
price, or exercise or conversion price, as the case may be, of at least 90% of
the current market value or the Exercise Price on the date the Company becomes
obligated to issue or sell such shares or Common Stock Equivalents and (vi) the
issuance of shares of Common Stock or Common Stock Equivalents to the Holder
pursuant to its right of first refusal under the Securities Purchase Agreement.
A "Strategic Transaction" shall mean a transaction or relationship, including,
but not limited, to an acquisition or joint venture, in which the Company issues
shares of Common Stock to a Person which is, itself or through its subsidiaries,
an operating company in a business related or synergistic to the business of the
Company and in which the Company reasonably believes it will receive material
benefits in addition to the investment of funds, but shall not
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include a transaction in which the Company is issuing securities primarily for
the purpose of raising capital.
(b) Except for (x) Underlying Shares, (y) other "Registrable
Securities" (as such term is defined in the Registration Rights Agreement) to be
registered, and securities of the Company permitted, as reflected in Schedule
6(b) to the Registration Rights Agreement, to be registered, in the Underlying
Shares Registration Statement in accordance with the Registration Rights
Agreement, and (z) Common Stock permitted to be issued pursuant to paragraph
(a)(i) - (vi) of Section 3.9 (a), the Company shall not, for a period of not
less than 90 Trading Days after the Effective Date, without the prior written
consent of the Purchasers (i) issue or sell any of its or any of its Affiliates'
equity or equity-equivalent securities pursuant to Regulation S promulgated
under the Securities Act, or (ii) register any securities of the Company(other
than shares of Common Stock (and shares of Common Stock issuable upon exercise
of options and warrants outstanding prior to the Closing Date) issued prior to
the Closing Date, and shares of Common Stock registered on Form S-8 or its
successor). Any days after the Effective Date that a Purchaser is unable to sell
Underlying Shares under the Underlying Shares Registration Statement shall be
added to such 90 Trading Day period. Notwithstanding anything herein to the
contrary, the restrictions contained in sub-section 3.9(b) shall not apply to
issuances of shares of Common Stock as payment of the purchase price for an
acquisition of assets or stock of an unaffiliated Person (the primary purpose of
which is not to raise equity capital).
3.10 Certain Securities Laws Disclosures; Publicity. The Company shall
promptly, but no later than three days following the Closing Date, issue a press
release acceptable to the Purchasers disclosing the transactions contemplated
hereby. The Company and the Purchasers shall consult with each other in issuing
any other press releases or otherwise making public statements or filings and
other communications with the Commission or any regulatory agency or stock
market or trading facility with respect to the transactions contemplated hereby
and neither party shall issue any such press release or otherwise make any such
public statement, filings or other communications without the prior written
consent of the other, which consent shall not be unreasonably withheld or
delayed, except that no prior consent shall be required if such disclosure is
required by law, in which such case the disclosing party shall provide the other
party with prior notice of such public statement, filing or other communication.
Notwithstanding the foregoing, the Company shall not publicly disclose the names
of the Purchasers, or include the names of the Purchasers in any filing with the
Commission, or any regulatory agency, trading facility or stock market without
the prior written consent of the Purchasers, except to the extent such
disclosure (but not any disclosure as to the controlling Persons thereof) is
required by law or stock market regulations, in which case the Company shall
provide the Purchasers with prior notice of such disclosure.
3.11 Use of Proceeds. The Company shall use the net proceeds from the sale
of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company's debt (other than payment of trade
payables in the ordinary course of the Company's business and prior practices),
to redeem any Company equity or equity-equivalent securities or to settle any
outstanding litigation.
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3.12 Reimbursement. If any Purchaser, other than by reason of its gross
negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by or against any Person, including
stockholders of the Company, in connection with or as a result of (i) any
violation by the Company of the federal securities laws or the securities laws
of any states, or otherwise arising out of the transactions contemplated hereby,
except in respect of any matters as to which a Purchaser shall have been
adjudicated to have acted with willful misconduct or gross negligence, or (ii)
any breach by the Company of any of its representations, warranties or covenants
contained in this Agreement, the Company will reimburse such Purchaser for its
reasonable legal and other expenses (including the cost of any investigation
preparation and travel in connection therewith) incurred in connection
therewith, as such expenses are incurred. In addition, other than with respect
to any matter in which a Purchaser is a named party, the Company will pay such
Purchaser the charges, as reasonably determined by such Purchaser, for the time
of any officers or employees of such Purchaser devoted to appearing and
preparing to appear as witnesses, assisting in preparation for hearings, trials
or pretrial matters, or otherwise with respect to inquiries, hearings, trials,
and other proceedings relating to the subject matter of this Agreement. The
reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any Affiliates of the Purchasers who are
actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may
be, of the Purchasers and any such Affiliate, and shall be binding upon and
inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Purchasers and any such Affiliate and any
such Person. The Company also agrees that neither the Purchasers nor any such
Affiliates, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company in connection with or as a result of the consummation of
the Transaction Documents except to the extent that any losses, claims, damages,
liabilities or expenses incurred by the Company result from the fraud, gross
negligence or willful misconduct of the applicable Purchaser or entity in
connection with the transactions contemplated by this Agreement.
ARTICLE IV
MISCELLANEOUS
4.1 Fees and Expenses. The Company shall pay the reasonable fees and
expenses of Purchaser's advisers, counsel, accountants and other experts, if
any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all stamp and other taxes and duties levied in connection with the
issuance of the Securities.
4.2 Entire Agreement; Amendments. The Transaction Documents, together with
the Exhibits and Schedules thereto and Transfer Agent Instructions, contain the
entire understanding of the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, oral or written, with
respect to such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules.
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4.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (New York City
time) on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Agreement later than 6:30 p.m. (New York City
time) on any date and earlier than 11:59 p.m. (New York City time) on such date,
(iii) the Business Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given; provided, however, that any such
delivery to an attorney of Purchaser or the Company shall not constitute notice
for purposes of this Agreement. The address for such notices and communications
shall be as follows:
If to the Company: Jaws Technologies, Inc.
000 0 Xxxxxx
X.X. Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Fax: (000) 000-0000
Attn: Chief Financial Officer
and
Fax: (000) 000-0000
Attn: General Counsel
With a copy to: Paul, Hastings, Xxxxxxxx &Walker LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attn: Xxxx X. Xxxxxx, III, Esq.
If to a Purchaser: To the address set forth under such
Purchaser's name on the signature
pages hereto
With a copy to: VMH Investment Management Ltd.
c/o Xx. Xxxxxxxx Xxxxxxxx
000 Xxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
and
Xxxx X. Xxxx, Esq.
Attorney at Law
0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
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or such other address as may be designated in writing hereafter, in the
same manner, by such Person.
4.4 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
both the Company and each of the Purchasers or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
4.5 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
4.6 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Except as set forth in
Section 3.1(a), the Purchasers may not assign this Agreement or any of the
rights or obligations hereunder without the consent of the Company. This
provision shall not limit any Purchaser's right to transfer securities or
transfer or assign rights under the Registration Rights Agreement.
4.7 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
4.8 Governing Law. This Agreement, the Warrant, the Adjustable Warrant, the
Registration Rights Agreement and the Transfer Agent Instructions shall be
governed by, and construed in accordance with, the laws of the Province of
Ontario, Canada. The courts of the Province of Ontario, Canada shall have
jurisdiction and venue for the adjudication of any civil action between or among
any of them arising out of or relating to this Agreement or the Warrant,
Adjustable Warrant or Registration Rights Agreement or the Transfer Agent
Instructions. The parties to this Agreement hereby irrevocably consent to such
jurisdiction and venue, and hereby irrevocably waive any claim of forum non
conveniens or right to change such venue. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.
4.9 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery and exercise of the
Warrants.
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4.10 Execution. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
4.11 Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
4.12 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers will be entitled to specific performance of the obligations of the
Company under the Transaction Documents. The Company and each of the Purchasers
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of its obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be adequate.
4.13 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document is several and not
joint with the obligations of any other Purchaser and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert with respect to such obligations or
the transactions contemplated by the Transaction Document. Each Purchaser shall
be entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
JAWS TECHNOLOGIES, INC.
By:_____________________________________
Name:
Title:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
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CALP II LIMITED PARTNERSHIP
By:_____________________________________
Name: Xxxx Xxxxxxxxx,
Title: President of VMH Investment Management Ltd.,
As: General Partner for CALP II Limited Partnership
By:_____________________________________
Name: Xxx XxXxxxxx
Title:
As:
By:_____________________________________
Name: Xxxxxxxx XxXxxxxx
Title:
As:
Purchase Price for Shares: $5,000,000
Number of Shares to be acquired: 1,000,000
Warrant Shares subject to Closing
Warrant: 300,000
Address for Notice:
CALP II Limited Partnership
c/o Forum Fund Services
Xxxxxxxxxx Xxxx, 0xx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
ATTN: Xxxx Xxxxxxxxx
TEL: 000-000-0000
FAX: 000-000-0000
With a copy to:
Xxxx X. Xxxx, Esq.
Attorney at Law
0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
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DISCLOSURE SCHEDULE
TO
SECURITIES PURCHASE AGREEMENT
This Disclosure Schedule dated as of August 21, 2000 (the "Schedule")
is delivered pursuant to Article II of the Securities Purchase Agreement (the
"Agreement") among JAWS Technologies, Inc. ("Company"), and CALP II Limited
Partnership (the "Purchaser"). Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Agreement. If a
disclosure is made in one of the Schedules, such disclosure will be deemed to
have also been made in each other Schedule hereto to which such disclosure
relates; provided, that such disclosure was expressly and specifically set forth
in the Schedules hereto. The fact that any item or information has been included
in any of the Schedules hereto shall not be construed to establish, in whole or
in part, any standard of materiality.
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SCHEDULE 2.1(A)
SUBSIDIARIES
(1) JAWS Technologies (Delaware), Inc.
(2) JAWS (Illinois), Inc.
(3) JAWS Acquisition Corp.
(4) JAWS Technologies Inc. (Alberta)
(5) JAWS Acquisition Canada Corp.
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SCHEDULE 2.1(C)
CAPITALIZATION
JAWS TECHNOLOGIES, INC
CAPITALIZATION TABLE
AUGUST 21, 2000
(a) AUTHORIZED CAPITAL STOCK
ISSUED AND OUTSTANDING 29,379,018
Acquisition of Pace Systems Group Inc. (1) 1,731,932
Share exchange transaction with the former stockholders of Offsite Data 5,067,474
Services Ltd. ("Offsite") as of January 29, 2000 (the "Offsite
Transaction"). (2)
STOCK OPTIONS 4,925,444
WARRANTS
Glentel, Inc. (private placement dated June 21, 1999)
834,000 warrants at an exercise price of $2.25
Warrants expire June 30, 2001 834,000
Private Placement on June 21, 1999 to Xxxxxx X. Xxxxxxxx, A. Xxxxx
Xxxxxxxx, Xxxxxx Xxxxxxxx, Xxxxx Xxxxxxxx, Xxxx Xxxxxxxx, Xxxxx Xxxxxxxx,
Xxxxxxx Droulis, Xxxxxxxx Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, and Xxxxxxx 166,800
Lowndes.
166,800 warrants at an exercise price of $2.25
Warrants expire June 30, 2001
Bristol Asset Management, LLC
850,000 warrants at an exercise price of $0.70
Warrants expire April 15, 2002 850,000
Small Caps Online, LLC
(Formerly named Bridge Technology Group, LLC)
5,000 warrants per month at an exercise price of $2.00 (beginning August
1, 1999) 55,000
26
Private Placement on November 1, 1999, to
Heronwood, Ltd.
411,765 warrants at an exercise price of $1.70 411,765
Warrants expire November 30, 2002
Private Placement on December 31, 1999 1,088,207
to BPI Canadian Small Companies Fund, Interward Capital Corporation,
Rockhaven Holdings Ltd., YMG Capital Management Inc., Acuity Investment
Management Inc., Beluga NV, Pinetree Capital Corp., Fallingbrook
Investments Ltd., Xxxxxx International Equities (1990) Inc., Xxxx
Xxxxxxx, Xxxxxxx & Coo., Royal Trust Corp. of Canada ITF 2363129003,
Glentel, Inc., and Thomson Kernaghan.
Exercise price of $3.25 per half warrant Warrants expire 3 years from the
effectiveness of the Registration Statement
Small Caps Online, LLC
Placement Agent Warrants
217,642 warrants at an exercise price of $4.25
Warrants expire 3 years from the effectiveness of
the Registration Statement 217,642
Financing - February 23, 2000
Warrants expire 3 years from the effectiveness of
the Registration Statement 294,119
SmallCaps Online LLC
Placement Agent Warrants
Warrants expire 3 years from the effectiveness of
the Registration Statement 58,824
Strong River Investments and Bay Harbor Investments 1,736,630
(private placement dated June 22, 2000)
240,000 warrants at an exercise price of $5.00
Warrants expire June 22, 2005
Up to 1,496,630 warrants at an exercise price of $0.01, subject to
certain adjustments
Warrants expire March 20, 2001, subject to a 90-calendar day extension at
the option of Strong River Investments or Bay Harbor Investments
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(1) The number stated assumes that all revenue performance conditions are
fulfilled and the total possible number of Company shares are issued.
(2) If all of the Offsite shares, warrants and options will be exchanged for
Exchangeable Shares and the Exchangeable Shares will be exchanged for the
Company's common stock, than this Offsite Transaction may result in the issuance
of 6,102,769 shares of the Company. The Company owns 99.8% interest in Offsite,
which would otherwise be considered a wholly-owned subsidiary, based on the
final terms set forth in the Offsite Transaction documents. To date, 1,035,295
shares of the Company have been issued to Offsite pursuant to the exchange
described in this paragraph.
(b) OTHER OUTSTANDING COMPANY OBLIGATIONS
The Company has contractual obligations to issue the following
securities:
1. SDTC Transaction - 47,587 shares of the Company's common stock.
2. Director's Fees Issuable - 113,208 shares of the Company's common
stock.
3. Nucleus Transaction - 285,714 shares of the Company's common
stock.
4. Thomson Kernaghan - Approximately 40,000 shares of the Company's
common stock.
5. Xxxxxx Xxxxx - Approximately 3,500 shares of the Company's common
stock every 90 days, subject to a formula set forth in the
consulting agreement, dated December 1, 1999, by and between the
Company and Xxxxxx Xxxxx. This consulting agreement expires
December 1, 2000.
6. XxxxxxXxxxxxx.xxx Inc. - 20,000 shares of the Company's common
stock.
7. RWI Consulting - 250,000 shares of the Company's common stock.
8. Members of the Board of Directors receive shares of the Company's
common stock valued at $60,000 at the end of each term of office.
9. Xxxxxx & Xxxxxx - 30,000 shares of the Company's common stock, for
services previously rendered.
10. 10,000 shares of a signing bonus to an employee of the Company.
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SCHEDULE 2.1(G)
LITIGATION; PROCEEDINGS
On August 21, 2000, Bristol Asset Management, LLC ("Bristol") filed a
complaint in Superior Court of the State of California (Case No. SC 062765)
against the Company and its Chairman alleging, among other things, breach of
contract, fraud in the inducement, breach of fiduciary duty and unfair
competition and requesting, among other things, specific performance, statutory
penalties and injunctive relief and damages in excess of $10 million (the
"Complaint"). The Complaint relates to a warrant (the "Warrant") issued by the
Company to Bristol to purchase 1,000,000 shares of the Company's common stock,
and Bristol's rights relating to the exercise of the Warrant and the
registration of shares underlying the Warrant. The Company is currently
reviewing the Complaint and intends to defend it vigorously.
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SCHEDULE 2.1(P)
PATENTS AND TRADEMARKS
None
