SUPPORT AGREEMENT
BETWEEN
JAWS TECHNOLOGIES, INC.
a Delaware corporation
and
JAWS ACQUISITION CANADA CORP.
an Alberta corporation
Entered into effective as of August 1, 2000
SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT is entered into effective as of August 1, 2000, between
JAWS TECHNOLOGIES, INC., a Delaware corporation ("Jaws US"), and JAWS
ACQUISITION CANADA CORP., an Alberta corporation ("Jaws Canada").
RECITALS
WHEREAS Jaws US, through Jaws Canada, intends to make acquisitions from time to
time on the basis of Exchangeable Shares being issued as the consideration in
whole or in part for the entities or assets being acquired.
WHEREAS, the Articles of Incorporation of Jaws Canada sets forth the rights,
privileges, restrictions and conditions (collectively, the "Exchangeable Share
Provisions") attaching to the Exchangeable Shares.
WHEREAS, the parties hereto desire to make appropriate provision and to
establish a procedure whereby Jaws US will take certain actions and make certain
payments and deliveries necessary to ensure that Jaws Canada will be able to
make certain payments and to deliver or cause to be delivered shares of Jaws US
Common Stock in satisfaction of the obligations of Jaws Canada under the
Exchangeable Share Provisions with respect to the payment and satisfaction of
dividends, Liquidation Amounts, Retraction Prices and Redemption Prices, all in
accordance with the Exchangeable Share Provisions.
NOW, THEREFORE, in consideration of the respective covenants and agreements
provided in this Agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties agree as
follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms
Each term denoted herein by initial capital letters and not
otherwise defined herein shall have the meaning attributed thereto in the
Exchangeable Share Provisions, unless the context requires otherwise.
1.2 Interpretation Not Affected by Headings, Etc.
The division of this Agreement into articles, sections and
paragraphs and the insertion of headings are for convenience of reference only
and shall not affect the construction or interpretation of this Agreement.
1.3 Number, Gender, Etc.
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Words importing the singular number only shall include the plural
and vice versa. Words importing the use of any gender shall include all genders.
1.4 Date for Any Action
If any date on which any action is required to be taken under this
Agreement is not a Business Day, such action shall be required to be taken on
the next succeeding Business Day.
ARTICLE II
COVENANTS OF JAWS US AND JAWS CANADA
2.1 Covenants of Jaws US Regarding Exchangeable Shares
So long as any Exchangeable Shares are outstanding, Jaws US will:
(a) not declare or pay any dividend on Jaws US Common Stock
unless (i) Jaws Canada will have sufficient assets, funds
and other property available to enable the due
declaration and the due and punctual payment in
accordance with applicable law of an equivalent dividend
on the Exchangeable Shares and (ii) subjection 2.1 (b)
shall be complied with in connection with such dividend;
(b) cause Jaws Canada to declare simultaneously with the
declaration of any dividend on Jaws US Common Stock an
equivalent dividend on the Exchangeable Shares and, when
such dividend is paid on Jaws US Common Stock, cause Jaws
Canada to pay simultaneously therewith such equivalent
dividend on the Exchangeable Shares, in each case in
accordance with the Exchangeable Share Provisions;
(c) advise Jaws Canada sufficiently in advance of the
declaration by Jaws US of any dividend on Jaws US Common
Stock and take all such other actions as are necessary,
in cooperation with Jaws Canada, to ensure that the
respective declaration date, record date and payment date
for a dividend on the Exchangeable Shares shall be the
same as the record date, declaration date and payment
date for the corresponding dividend on Jaws US Common
Stock;
(d) ensure that the record date for any dividend declared on
Jaws US Common Stock is not less than ten Business Days
after the declaration date for such dividend;
(e) take all such actions and do all such things as are
necessary or desirable to enable and permit Jaws Canada,
in accordance with applicable law, to pay and otherwise
perform its obligations with respect to the satisfaction
of the Liquidation Amount in respect of each issued and
outstanding Exchangeable Share upon the liquidation,
dissolution or winding-up of Jaws Canada or any other
distribution of the assets of Jaws Canada for the purpose
of winding-up its affairs, including without limitation
all such actions and all such things as are necessary or
desirable to enable and permit Jaws Canada to cause to be
delivered shares of Jaws US Common Stock to the holders
of Exchangeable Shares in accordance with the provisions
of Article 5 of the Exchangeable Share Provisions;
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(f) take all such actions and do all such things as are
necessary or desirable to enable and permit Jaws Canada,
in accordance will be applicable law, to pay and
otherwise perform its obligations with respect to the
satisfaction of the Retraction Price and the Redemption
Price, including without limitation all such actions and
all such things as are necessary or desirable to enable
and permit Jaws Canada to cause to be delivered shares of
Jaws US Common Stock to the holders of Exchangeable
Shares, upon the retraction or redemption of the
Exchangeable Shares in accordance with the provisions of
Article 6 or Article 7 of the Exchangeable Share
Provisions, as the case may be; and
(g) not exercise its vote as a direct or indirect shareholder
to initiate the voluntary liquidation, dissolution or
winding-up of Jaws Canada nor take any action or omit to
take any action that is designed to result in the
liquidation, dissolution or winding-up of Jaws Canada.
2.2 Segregation of Funds
Jaws US will cause Jaws Canada to deposit a sufficient amount of
funds in a separate account and segregate a sufficient amount of such assets and
other property as is necessary to enable Jaws Canada to pay or otherwise satisfy
the applicable dividends, Liquidation Amount, Retraction Price or Redemption
Price, in each case for the benefit of holders from time to time of the
Exchangeable Shares, and Jaws Canada will use such funds, assets and other
property so segregated exclusively for the payment of dividends and the payment
or other satisfaction of the Liquidation Amount, the Retraction Price or the
Redemption Price, as applicable, net of any corresponding withholding tax
obligations and for the remittance of such withholding tax obligations.
2.3 Reservation of Shares of Jaws US Common Stock
Jaws US hereby represents, warrants and covenants that it has
irrevocably reserved for issuance and will at all times keep available, free
from pre-emptive and other rights, out of its authorized and unissued capital
stock such number of shares of Jaws US Common Stock (or other shares or
securities into which Jaws US Common Stock may be reclassified or changed as
contemplated by section 2.7 hereof) (i) as is equal to the sum of (A) the number
of Exchangeable Shares issued and outstanding from time to time and (B) the
number of Exchangeable Shares issuable upon the exercise of all rights to
acquire Exchangeable Shares outstanding from time to time and (ii) as are now
and may hereafter be required to enable and permit Jaws Canada to meet its
obligations hereunder, under the Voting and Exchange Trust Agreement, under the
Exchangeable Share Provisions and under any other security or commitment
pursuant to the Offer with respect to which Jaws US may now or hereafter be
required to issue shares of Jaws US Common Stock.
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2.4 Notification of Certain Events
In order to assist Jaws US to comply with its obligations hereunder,
Jaws Canada will give Jaws US notice of each of the following events at the
times set forth below:
(a) immediately, in the event of any determination by the
Board of Directors of Jaws Canada to take any action
which would require a vote of the holders of Exchangeable
Shares for approval;
(b) immediately, upon the earlier of (i) receipt by Jaws
Canada of notice of, and (ii) Jaws Canada otherwise
becoming aware of, any threatened or instituted claim,
suit, petition or other proceedings with respect to the
involuntary liquidation, dissolution or winding-up of
Jaws Canada or to effect any other distribution of the
assets of Jaws Canada among its shareholders for the
purpose of winding-up its affairs;
(c) immediately, upon receipt by Jaws Canada of a Retraction
Request (as defined in the Exchangeable Share
Provisions);
(d) at least 130 days prior to any Automatic Redemption Date
determined by the Board of Directors of Jaws Canada in
accordance with clause (b) of the definition of
Automation Redemption Date in the Exchangeable Share
Provisions;
(e) as soon as practicable upon the issuance by Jaws Canada
of any Exchangeable Shares or rights to acquire
Exchangeable Shares; and
(f) in the event of any determination by the Board of
Directors of Jaws Canada to institute voluntary
liquidation, dissolution or winding-up proceedings with
respect to Jaws Canada or to effect any other
distribution of the assets of Jaws Canada among its
shareholders for the purpose of winding-up its affairs,
at least 60 days prior to the proposed effective date of
such liquidation, dissolution, winding-up or other
distribution.
2.5 Delivery of Shares of Jaws US Common Stock
In furtherance of its obligations hereunder, upon notice of any
event which requires Jaws Canada to cause to be delivered shares of Jaws US
Common Stock to any holder of Exchangeable Shares, Jaws US shall, forthwith
issue and deliver the requisite shares of Jaws US Common Stock to or to the
order of the former holder of the surrendered Exchangeable Shares, as Jaws
Canada shall direct. All such shares of Jaws US Common Stock shall be duly
issued as fully paid and non-assessable and shall be free and clear of any lien,
claim, encumbrance, security interest or adverse claim or interest.
2.6 Qualification of Shares of Jaws US Common Stock
Jaws shall use its reasonable commercial efforts to file such
documents or take such actions as may be reasonably necessary to ensure that any
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shares of Jaws US Common Stock received by a holder of Exchangeable Shares upon
the exchange thereof may be freely traded in the United States without
restriction except for certain restrictions imposed upon directors, officers and
affiliates of Jaws.
2.7 Equivalence
(a) Jaws US will not:
(i) issue or distribute shares of Jaws US Common Stock
(or securities exchangeable for or convertible
into or carrying rights to acquire shares of Jaws
US Common Stock) to the holders of all or
substantially all of the then outstanding shares
of Jaws US Common Stock by way of stock dividend
or other distribution; or
(ii) issue or distribute rights, options or warrants to
the holders of all or substantially all of the
then outstanding shares of Jaws US Common Stock
entitling them to subscribe for or to purchase
shares of Jaws US Common Stock (or securities
exchangeable for or convertible into or carrying
rights to acquire shares of Jaws US Common Stock);
or
(iii) issue or distribute to the holders of all or
substantially all of the then outstanding shares
of Jaws US Common Stock (A) shares or securities
of Jaws US of any class other than Jaws US Common
Stock (other than shares convertible into or
exchangeable for or carrying rights to acquire
shares of Jaws US Common Stock), (B) rights,
options or warrants other than those referred to
in subsection 2.7 (a) (ii) above, (C) evidences of
indebtedness of Jaws US or (D) assets of Jaws US;
unless
(iv) one or both of Jaws US and Jaws Canada is
permitted under applicable law to issue or
distribute the economic equivalent on a per share
basis of such rights, options, warrants,
securities, shares, evidences of indebtedness or
other assets to the holders of the Exchangeable
Shares; and
(v) one or both of Jaws US and Jaws Canada shall issue
or distribute the economic equivalent on a per
share basis of such rights, options, warrants,
securities, shares, evidences of indebtedness or
other assets simultaneously to the holders of the
Exchangeable Shares.
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(b) Jaws US will not:
(i) subdivide, redivide or change the then outstanding
shares of Jaws US Common Stock into a greater
number of shares of Jaws US Common Stock; or
(ii) reduce, combine or consolidate or change the then
outstanding shares of Jaws US Common Stock into a
lesser number of shares of Jaws US Common Stock;
or
(iii) reclassify or otherwise change the shares of Jaws
US Common Stock or effect an amalgamation, merger,
reorganization or other transaction involving or
affecting the shares of Jaws US Common Stock;
unless
(iv) Jaws Canada is permitted under applicable law to
simultaneously make the same or an economically
equivalent change to, or in the rights of the
holders of, the Exchangeable Shares; and
(v) the same or an economically equivalent change is,
simultaneously made to, or in the rights of the
holders of, the Exchangeable Shares.
(c) Jaws US will ensure that the record date for any event
referred to in section 2.7 (a) or 2.7 (b) above, or (if
no record date is applicable for such event) the
effective xxxx for any such event, is not less than 10
Business Days after the date on which such event is
declared or announced by Jaws US (with simultaneous
notice thereof to be given by Jaws US to Jaws Canada).
2.8 Tender Offers, Etc.
In the event that a tender offer, share exchange offer, issuer bid,
take-over bid or similar transaction with respect to Jaws US Common Stock (a
"Tender Offer") is proposed by Jaws US or is proposed to Jaws US or its
shareholders and is recommended by the Board of Directors of Jaws US, or is
otherwise effected or to be effected with the consent or approval of the Board
of Directors of Jaws US, Jaws US shall, in good faith, take all such
restrictions and do all such things as are necessary or desirable to enable and
permit holders of Exchangeable Shares to participate in such Tender Offer to the
same extent and or an equivalent basis as the holders of shares of Jaws US
Common Stock, without discrimination, including, without limiting the generality
of the foregoing, Jaws US will use its good faith efforts expeditiously to (and
shall, in the case of a transaction proposed by Jaws US or where Jaws US is a
participant in the negotiation thereof) ensure that holders of Exchangeable
Shares may participate in all such Tender Offers without being required to
retract Exchangeable Share as against Jaws Canada (or, if or required, to ensure
that any such retraction shall be effective only upon, and shall be conditional
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upon, the closing of the Tender Offer and only to the extent necessary to tender
or deposit to the Tender Offer).
2.9 Ownership of Outstanding Shares
Without the prior approval of Jaws Canada and the prior approval of
the holders of the Exchangeable Shares given in accordance with Section 10.2 of
the Exchangeable Share Provisions, Jaws US covenants and agrees in favor of Jaws
Canada that, as long as any outstanding Exchangeable Shares are owned by any
person or entity other than Jaws US or any of its Subsidiaries, Jaws US will be
and remain the direct or indirect beneficial owner of all issued and outstanding
common shares of Jaws Canada. Notwithstanding the foregoing, this Section 2.9
shall not require Jaws US to own the common shares of Jaws Canada longer than
that date which is three years following the date hereof.
2.10 Jaws US Not to Vote Exchangeable Shares
Jaws US covenants and agrees that it will appoint and cause to be
appointed proxy holders with respect to all Exchangeable Shares held by Jaws US
and its Subsidiaries for the sole purpose of attending each meeting of holders
of Exchangeable Shares in order to be counted as part of the quorum for each
such meeting. Jaws US further covenants and agrees that it will not, and will
cause its Subsidiaries not to, exercise any voting rights which may be
exercisable by holders of Exchangeable Shares from time to time pursuant to the
Exchangeable Share Provisions or pursuant to the provisions of the Act with
respect to any Exchangeable Shares held by it or by its Subsidiaries in respect
of any matter considered at any meeting of holders of Exchangeable Shares.
ARTICLE III
GENERAL
3.1 Term
This Agreement shall come into force and be effective as of the date
hereof and shall terminate and be of no further force and effect at such time as
no Exchangeable Shares (or securities or rights convertible into or exchangeable
for or carrying rights to acquire Exchangeable Shares) are held by any party
other than Jaws US and any of its Subsidiaries.
3.2 Changes in Capital of Jaws US and Jaws Canada
Notwithstanding the provisions of section 3.4 hereof, at all times
after the occurrence of any event effected pursuant to section 2.7 or 2.8
hereof, as a result of which either Jaws US Common Stock or the Exchangeable
Shares or both are in any way changed, this Agreement shall forthwith be amended
and modified as necessary in order that it shall apply with full force and
effect, mutatis mutandis, to all new securities into which Jaws US Common Stock
or the Exchangeable Shares or both are so changed, and the parties hereto shall
as soon as possible execute and deliver an agreement in writing giving effect to
and evidencing such necessary amendments and modifications.
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3.3 Severability
If any provision of this Agreement is held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remainder of this
Agreement shall not in any way be affected or unpaired thereby and this
Agreement shall be carried out as nearly as possible in accordance with its
original terms and conditions.
3.4 Amendments, Modifications, Etc.
This Agreement may not be amended, modified or waived except by an
agreement in writing executed by Jaws Canada and Jaws US and approved by the
holders of the Exchangeable Shares in accordance with Section 10.2 of the
Exchangeable Share Provisions.
3.5 Ministerial Amendments
Notwithstanding the provisions of section 3.4, the parties to this
Agreement may in writing, at any time and from time to time, without the
approval of the holders of the Exchangeable Shares, amend or modify this
Agreement for the purposes of:
(a) adding to the covenants of either or both parties for the
protection of the holders of the Exchangeable Shares:
(b) making such amendments or modifications not inconsistent
with this Agreement as may be necessary or desirable with
respect to matters or questions which, in the opinion of
the board of directors of each of Jaws Canada and Jaws
US, it may be expedient to make, provided that each such
board of directors shall be of the opinion that such
amendments or modifications will not be prejudicial to
the interests of the holders of the Exchangeable Shares;
or
(c) making such changes or corrections which, on the advice
of counsel to Jaws Canada and Jaws US, are required for
the purpose of curing or correcting any ambiguity or
defect or inconsistent provision or clerical omission or
mistake or manifest error; provided that the boards of
directors of each of Jaws Canada and Jaws US shall be of
the opinion that such changes or corrections will not be
prejudicial to the interests of the holders of the
Exchangeable Shares.
3.6 Meeting to Consider Amendments
Jaws Canada, at the request of Jaws US, shall call a meeting or
meetings of the holders of the Exchangeable Shares for the purpose of
considering any proposed amendment or modification requiring approval of such
shareholders. Any such meeting or meetings shall be called and held in
accordance with the by-laws of Jaws Canada, the Exchangeable Share Provisions
and all applicable laws.
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3.7 Amendments Only in Writing
No amendment to or modification or waiver of any of the provisions
of this Agreement otherwise permitted hereunder shall be effective unless made
in writing and signed by both of the parties hereto.
3.8 Enurement
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and the holders, from time to time, of Exchangeable Shares and
each of their respective heirs, successors and assigns.
3.9 Notices to Parties
All notices and other communications between the Parties shall be in
writing and shall be deemed to have been given if directed personally or by
confirmed telecopy to the parties at the following addresses (or at such other
address for either such party as shall be specified in like notice):
(a) if to Jaws US to: Jaws Technologies, Inc.
Xxxxx 000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention. Director, Corporate Finance
Facsimile No. 000-000-0000
(b) if to Jaws Canada to: Jaws Acquisition Canada Corp.
Xxxxx 000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Director, Corporate Finance
Facsimile No. 000-000-0000
Any notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of confirmed receipt thereof,
unless such day is not a Business Day, in which case it shall be deemed To have
been given and received upon the immediately following Business Day.
3.10 Counterparts
This Agreement may be executed in counterparts, each of which shall
be deemed an original, and all of which taken together shall constitute one and
the same instrument.
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3.11 Jurisdiction
This Agreement shall be construed and enforced in accordance with
the laws of the Province of Alberta and the federal laws of Canada applicable
therein.
3.12 Attornment
Jaws US agrees that any action or proceeding arising out of or
relating to this Agreement may be instituted in the courts of the Province of
Alberta, waives any objection which it may have now or hereafter to the venue of
any such action or Proceeding, irrevocably submits to the jurisdiction of such
courts in any such action or proceeding, agrees to be bound by any judgment of
such courts and not to seek, and hereby waives, any review of the merits of any
such judgment by the courts of any other jurisdiction and hereby appoints Jaws
Canada at its registered office in the Province of Alberta as Jaws US's attorney
for service of process.
IN WITNESS WHEREOF, Jaws US and Jaws Canada have caused this
Agreement to be signed by their respective officers thereunder duly authorized,
on this 15th day of August, 2000, to be effective as of August 1, 2000.
JAWS TECHNOLOGIES, INC. JAWS ACQUISITION CANADA CORP.
(a Delaware corporation) (an Alberta corporation)
By:____________________________ By:____________________________
Xxxx Xxxxxxx Xxxx Xxxxxxx
Director Director
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INTERPRETATION..................................1
1.1 Defined Terms...................................................1
1.2 Interpretation Not Affected by Headings, Etc....................1
1.3 Number, Gender, Etc.............................................1
1.4 Date for Any Action.............................................2
ARTICLE II COVENANTS OF JAWS US AND JAWS CANADA............................2
2.1 Covenants of Jaws US Regarding Exchangeable Shares..............2
2.2 Segregation of Funds............................................3
2.3 Reservation of Shares of Jaws US Common Stock...................3
2.4 Notification of Certain Events..................................4
2.5 Delivery of Shares of Jaws US Common Stock......................4
2.6 Qualification of Shares of Jaws US Common Stock.................4
2.7 Equivalence.....................................................5
2.8 Tender Offers, Etc..............................................6
2.9 Ownership of Outstanding Shares.................................7
2.10 Jaws US Not to Vote Exchangeable Shares.........................7
ARTICLE III GENERAL.........................................................7
3.1 Term............................................................7
3.2 Changes in Capital of Jaws US and Jaws Canada...................7
3.3 Severability....................................................8
3.4 Amendments, Modifications, Etc..................................8
3.5 Ministerial Amendments..........................................8
3.6 Meeting to Consider Amendments..................................8
3.7 Amendments Only in Writing......................................9
3.8 Enurement.......................................................9
3.9 Notices to Parties..............................................9
3.10 Counterparts....................................................9
3.11 Jurisdiction...................................................10
3.12 Attornment.....................................................10
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