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EXHIBIT 4.14
JAWS TECHNOLOGIES, INC.
0000 00XX XXXXXX, X.X.
XXXXXXX, XXXXXXX X0X0X0
XXXXXX
PLACEMENT AGENCY AGREEMENT
SmallCaps Online LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, President
Gentlemen:
This Placement Agency Agreement (the "Agreement") confirms the
retention by JAWS Technologies, Inc., a Nevada corporation (the "Company"), of
SmallCaps Online LLC (the "U.S. Placement Agent"), to act as the sales agent
in the United States on a best efforts basis in connection with the private
placement of Units (as defined below) of the Company on the terms set forth
below, including the financial and other terms set forth in Schedule A hereto,
which is hereby incorporated by reference into this Agreement.
1. PLACEMENT
(a) Each unit (a "Unit") shall consist of one share of common stock,
par value $.001 per share (the "Common Stock), of the Company, and a warrant
(each, a "Warrant" and collectively, the "Warrants") to acquire 1/2 (one-half)
of a share of Common Stock at an exercise price of US$ 6.50 per share. The
placement of the Units (the "Placement") will be made pursuant to the U.S.
Memorandum (as defined in Section 2 below). Except as provided in Schedule A,
the Units (and the shares of Common Stock and Warrants included therein) will
not be registered under the Securities Act of 1933, as amended, or any
applicable successor statute (the "Act"), but will be issued in reliance on
the private offering exemption available under Section 4(2) of the Act and the
rules and regulations promulgated thereunder, including Regulation D, and
outside the United States, through exemptions from any prospectus
requirements of applicable foreign securities laws. The U.S. Placement Agent
understands that all subscriptions for Units are subject to acceptance by the
Company. The Company and the U.S. Placement Agent reserve the right in their
reasonable discretion to accept or reject any or all subscriptions for Units in
whole or in part. Investors shall be required to subscribe for a minimum
number of Units with additional increments available at the Company's
discretion as set forth in Schedule A or as provided in the U.S. Memorandum.
Any subscription monies received by the U.S. Placement Agent from investors
will be handled in accordance with Rule 15c2-4 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), whether or not the U.S.
Placement Agent is subject to the Exchange Act, and as otherwise may be
prescribed by the terms of the U.S. Memorandum.
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Without limiting the generality of the foregoing, the U.S. Placement Agent
agrees with the Company that, in connection with the Placement and the
Concurrent Offering, the Canadian Placement Agent (as defined below) will
receive all funds in connection therewith and promptly deposit the same in a
separate bank account, as agent or trustee for the persons who have a
beneficial interest therein, until the closing occurs, the offerings are
terminated or another appropriate event or contingency has occurred, at which
time the funds shall be promptly transmitted or retained, as the case may be,
to the Company or the person entitled thereto.
(b) The Company is making an offering of the Units, concurrent
with the making of the private placement of Units in the United States as
described herein (the "Placement"), in Canada and outside of the United States
and Canada as described herein through the Company's Canadian Placement agent,
Thomson Kernaghan & Co. Limited (the "Canadian Placement Agent"). Such
concurrent offering is referred to herein as the "Concurrent Offering." The
U.S. Placement Agent will only offer Units to prospective investors in the
United States and the Canadian Placement Agent will only offer Units to
prospective investors in Canada and outside of the United States and Canada as
described herein. The terms of the Concurrent Offering are substantially
identical to the terms of this Placement, except to the extent that either the
laws of the United States, Canada and/or outside of Canada and the United
States require special disclosure in the U.S. Memorandum and/or terms in this
Agreement for the placement agent agreement with the Canadian Placement Agent
and/or terms in the Subscription Agreement (as defined below) or the
subscription agreement between the Company and applicable investors. The
Units, Shares and Warrants sold in the United States, Canada and outside of
Canada and the United States will be identical in all respects. For purposes
of calculating the minimum and maximum sizes of the offering, Units sold in the
United States, Canada and outside of Canada and the United States will be
aggregated.
2. OFFERING CIRCULAR
The Company will prepare an Offering Circular relating to the Company
(such Offering Circular, together with the exhibits and attachments thereto or
available thereunder and any amendments or supplements thereto prepared and
furnished by the Company, being referred to herein as the "U.S. Memorandum")
which describes the Placement and certain investment risks relating thereto.
The Company has been and will continue to be responsible for preparing and
filing required documentation, if any, with the authorities in the United
States and provincial securities regulatory authorities in Canada prior to (and
subsequent to, if required by the laws of such jurisdiction) the distribution
of the U.S. Memorandum to prospective investors (the parties acknowledging,
however, that the offering of Units is intended and expected to be wholly or
partially exempt from filing requirements in the United States by reason of an
"accredited investor" exemption). The U.S. Placement Agent and its counsel
and the Company and its counsel will jointly prepare a form of Subscription
Agreement to be entered into between the Company and U.S. and other purchasers
of the Units (the "Subscription Agreement"), with such representations,
warranties, conditions and covenants as are customary in private placements of
corporate equity securities with United States institutional accredited
investors. The U.S. Placement Agent and its counsel shall have an
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opportunity to review the final form of the U.S. Memorandum and Subscription
Agreement prior to the distribution thereof to prospective investors, and the
U.S. Memorandum and the Subscription Agreement will be the only offering
documents (other than cover letters which may be used by the U.S. Placement
Agent, and any documents made available to investors in accordance with the
terms of the U.S. Memorandum) shown to prospective investors. The Company and
its counsel will advise the U.S. Placement Agent and its counsel in writing of
those jurisdictions in which Units may lawfully be offered and sold, and the
manner in which the Units may lawfully be offered and sold in each such
jurisdiction, in connection with the Placement, and the U.S. Placement Agent
agrees that the Units will be offered or sold only in such jurisdictions and in
the manner specified by the Company. The offering of Units will be made in
accordance with the requirements of Section 4(2) under the Act to investors
that qualify as accredited investors, as defined in Rule 501(a) under the Act
("Accredited Investors"), purchasing for their own account for investment
purposes and not for distribution in violation of securities laws.
3. PLACEMENT AGENT
(a) Upon the terms and conditions set forth in this Agreement and
Schedule A hereto, the Company hereby employs the U.S. Placement Agent as
its sales agent in the United States for the purpose of placing the Units for
the account and risk of the Company. This appointment shall be exclusive with
respect to the Placement, and the Company shall not have the right to appoint
additional sales agents in the United States without the U.S. Placement
Agent's express prior written consent (other than the Canadian Placement Agent
with respect to the Concurrent Offering); provided that this Agreement shall
not give the U.S. Placement Agent any right to act as sales agent or receive
compensation in connection with any future offerings sponsored by the Company
absent a separate agreement to such effect between the U.S. Placement Agent
and the Company. Subject to the provisions of Section 5 hereof and to the
performance by the Company of all of its obligations to be performed hereunder,
the U.S. Placement Agent agrees to use its best efforts to assist in arranging
for sales of Units. The U.S. Placement Agent will also assist the Company in
the preparation of the U.S. Memorandum and presentations to prospective
investors. It is understood and agreed that this Agreement does not create any
partnership, joint venture or other similar relationship between or among the
U.S. Placement Agent and the Company, that the U.S. Placement Agent is acting
only as a sales agent and that, except as specifically set forth in Schedule A,
there is no undertaking on the U.S. Placement Agent's part to purchase any of
the Units or to arrange or participate in any other financing in connection
with the Placement.
(b) For the services of the U.S. Placement Agent hereunder, the
Company will pay or caused to be paid to the U.S. Placement Agent the
commissions, fees and expenses ("Fees") stated in Schedule A (it being
understood and agreed that the U.S. Placement Agent may deduct such Fees from
the aggregate amount of subscriptions received by the U.S. Placement Agent in
respect of any Closing).
(c) Upon receipt by the Company from a proposed purchaser of
completed subscription materials in the form set prepared by the Company, and
such other documents
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as the Company requests, the Company and the U.S. Placement Agent will
determine in their reasonable discretion whether they wish to accept or reject
the subscription.
(d) Subject to the provisions relating thereto contained in
Schedule A, the U.S. Placement Agent's commissions, fees and expenses based on
a percentage of gross proceeds and all other expenses reimbursable or payable
by the Company as provided herein or in Schedule A will be paid in full upon
transfer to the account of the Company of the purchase price of such Units;
provided, however, that no such commissions or fees shall be payable until
subscriptions for the minimum number of Units described in the U.S. Memorandum
have been accepted and the purchase price of the Units to be purchased from the
Company has been transferred to the account of the Company. For purposes of
calculating the minimum and maximum sizes of the offering, Units sold in the
United States, Canada and outside of the United States will be aggregated.
(e) The Company and the U.S. Placement Agent agree to the terms
of, and to comply with, the agreements set forth on Schedule A hereto as if
such terms and agreements were repeated herein in their entirety.
4. PLACEMENT EXPENSES
(a) The Company will pay, whether or not any Units are sold in
connection with the Placement, all reasonable, accountable costs and expenses
incurred by the U.S. Placement Agent in connection with the Placement as
provided in Schedule A. Reimbursement of the U.S. Placement Agent's
reasonable, accountable out-of-pocket costs and expenses hereunder shall be
made promptly in full in the event the U.S. Placement Agent elects to
terminate this Agreement in accordance with Section 5.
(b) Without limiting the generality of the foregoing, the Company
hereby agrees to pay all fees, charges and expenses incident to the performance
by the Company and the U.S. Placement Agent of its respective obligations
hereunder, including, without limitation, all fees, charges, and expenses in
connection with (i) the preparation, printing, reproduction, filing,
distribution and mailing of the U.S. Memorandum and all other documents
relating to the offering, purchase, sale and delivery of the Units, and any
supplements or amendments thereto, including the fees and expenses of counsel
to the Company and to the U.S. Placement Agent, and the cost of all copies
thereof, (ii) the issuance, sale, transfer and delivery of the Units, the
Shares, and the Warrants, including any transfer or other taxes payable thereon
and the fees of any transfer agent, warrant agent or registrar, (iii) the
registration or qualification of the Units or the securing of an exemption
therefrom under state of foreign "blue sky" or securities laws, including,
without limitation, filing fees payable in the jurisdictions in which such
registration or qualification or exemption therefrom is sought, the costs of
preparing preliminary, supplemental and final "blue sky surveys" relating to
the offer and sale of the Units and the fees and disbursements of counsel to
the Placement Agents in connection with such "blue sky" matters, and (iv) the
filing fees, if any, payable to the applicable securities regulatory
authorities.
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5. TERMINATION OF PLACEMENT
The Placement may be terminated by the mutual consent of the U.S.
Placement Agent and the Canadian Placement Agent at any time by them giving
written notice to the Company if (a) in the opinion of the U.S. Placement
Agent, the U.S. Memorandum contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary in
order to make the statements appearing therein not misleading in the light of
the circumstances in which they were made, and the Company shall not have
corrected such untrue statement or omission to the reasonable satisfaction of
the U.S. Placement Agent and the Canadian Placement Agent and their counsel
within ten business days after the Company receives notice of such untrue
statement or omission, provided that notwithstanding such ten business day
period, no such closing shall occur hereunder until the U.S. Placement Agent
and the Canadian Placement Agent shall have notified the Company that they are
satisfied, in their reasonable determination, that the Company has taken such
steps (including circulating amended offering materials) to allow any such
closing to occur, or (b) the Company shall be in material breach of any
representation, warranty or covenant made by it in this Agreement.
6. CLOSING
(a) Subject to the conditions set forth in Section 10
hereof, if subscriptions to purchase at least 500,000 Units in the aggregate in
the Placement and the Concurrent Offering have been received prior to the
expiration of the offering period and accepted by the Company, the initial
closing under this Agreement (the "Closing") shall be held at the offices of
Battle Xxxxxx LLP, Park Avenue Tower, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
at 10:00 A.M., New York time, on February 18, 2000 or at such other place, time
and/or date as the Company and the U.S. Placement Agent shall agree upon. The
Company shall provide the notice required by the preceding sentence as promptly
as practicable. The date upon which the Closing is held shall hereinafter be
referred to as the "Closing Date."
(b) Subject to the conditions set forth in Section 10
hereof, if, subsequent to the date the subscriptions referred to in Section
6(a) hereof are received and accepted and prior to the expiration of the
offering period, additional subscriptions to purchase Shares are received from
prospective investors, which subscriptions are accepted by the Company, one or
more additional closings under this Agreement (each, an "Additional Closing")
shall be held at the offices of Battle Xxxxxx LLP, Park Avenue Tower, 00 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 10:00 A.M., New York time, on the third
business day following the date upon which the U.S. Placement Agent receives
notice from the Company that additional subscriptions have been so accepted, or
at such other place, time or date as the Company and the U.S. Placement Agent
shall agree upon. The Company shall notify the U.S. Placement Agent as
promptly as practicable whether any additional subscriptions so received have
been accepted. The date upon which any additional Closing is held shall
hereinafter be referred to as an "Additional Closing Date."
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(c) Promptly after the Closing Date or an Additional
Closing Date, as the case may be, the Company shall deliver to the purchasers
(or the U.S. Placement Agent, on behalf of the purchasers) of Unit certificates
representing the Shares and agreements representing the Warrants to which they
are entitled.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents and warrants to, and covenants with, the U.S.
Placement Agent that:
(a) The Company has been validly formed and is legally existing as
a corporation in good standing under the laws of the State of Nevada, with full
corporate power and authority to conduct its business as currently conducted,
and is in good standing in each jurisdiction in which the conduct of its
business or the nature of its properties requires such qualification or
authorization, except where the failure to be so qualified or authorized and in
good standing could not reasonably be expected to have a material adverse
effect on the business and financial condition of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect"). As of the date
hereof, the Company does not have, directly or indirectly, any material
subsidiaries other than Jaws Technologies Inc. an Alberta corporation ("Jaws
Canada"), Pace Systems Group Inc., incorporated under the laws of the Province
of Ontario ("Pace"), Jaws Technologies (Delaware), Inc., a Delaware corporation
("Jaws Delaware"), Offsite Data Services Inc., an Alberta corporation
("Offsite"), Jaws Technologies, Inc., an Ontario corporation ("Jaws Ontario")
and Jaws Acquisition Corp., an Alberta corporation ("JAC" and collectively with
Jaws Canada, Pace, Jaws Delaware, and Offsite, the "Subsidiaries"). Each
Subsidiary has been duly organized, is validly existing and in good standing
under the laws of the jurisdiction of its organization, has the power and
authority to own its properties and to conduct its business and is duly
qualified and authorized to transact business and is in good standing in each
jurisdiction in which the conduct of its business or the nature of its
properties requires such qualification or authorization, except where the
failure to be so qualified or authorized and in good standing could not
reasonably be expected to have a Material Adverse Effect. All of the
outstanding capital stock of each Subsidiary is owned by the Company, free and
clear of any liens, and has been duly authorized and validly issued, and is
non-assessable, except for such failures as could not reasonably be expected to
have a Material Adverse Effect.
(b) Neither the U.S. Memorandum nor the Subscription Agreement
contain any untrue statement of a material fact, and the U.S. Memorandum and
the Subscription Agreement taken as a whole will not omit to state any material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading, except that the
Company shall have no liability for any information provided to the Company in
writing by, and relating to, the U.S. Placement Agent, for use in and used in
the U.S. Memorandum. It is understood that any summary in the U.S. Memorandum
of a document which appears therein in full (either as signed or substantially
in the form to be signed) does not constitute an untrue or misleading statement
merely because it is a summary; provided, however, that any such summary may
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made,
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in light of the circumstances under which they were made, not misleading. If,
at any time before the Placement is completed or terminated or before all
subscriptions are accepted by the Company, there should be any change which
would cause the U.S. Memorandum or the Subscription Agreement not to comply
with this paragraph 7(b), the Company will promptly advise the U.S. Placement
Agent thereof and prepare and furnish the U.S. Placement Agent with, for
distribution to investors, after prior review and approval by the U.S.
Placement Agent and its counsel (such approval not to be unreasonably
withheld), such copies of such supplements or amendments to the U.S. Memorandum
and the Subscription Agreement as will cause the U.S. Memorandum and the
Subscription Agreement, as so supplemented or amended, to comply with this
paragraph 7(b), and will authorize the U.S. Placement Agent to make to
investors, if (i) deemed necessary by counsel to the U.S. Placement Agent and
approved by the U.S. Placement Agent or (ii) if deemed necessary by counsel to
the Company, an offer of rescission.
(c) The execution, delivery and performance of this Agreement, and
all other documents to be entered into by the Company in connection with any
transaction described in the U.S. Memorandum and the consummation of the
transactions contemplated hereby and thereby have been or will be prior to such
execution, delivery, performance or consummation, as the case may be, duly and
validly authorized by the Company and do not and will not (i) constitute, or
result in, a breach or violation of any of the terms, provisions or conditions
of the articles of incorporation or bylaws of the Company or any of its
Subsidiaries, (ii) constitute, or result in, a material violation of any
applicable statute, law, ordinance or regulation of any state, territory or
other jurisdiction, or (iii) violate, constitute, or result in, a default under
(or an event which with the passing of time or the giving of notice or both
would constitute a default under) or breach of the terms, provisions or
conditions of any material indenture, note, contract, commitment, instrument or
document to which the Company or any of its Subsidiaries is or will be a party
or by which the Company or any of their respective properties are bound, or any
award, judgment, decree, rule or regulation of any court or governmental or
regulatory agency or body having jurisdiction over the Company or any of its
Subsidiaries or their respective activities or properties, in each case which
breach, violation or default would have a Material Adverse Effect; and no
material consent, approval, authorization or order of any court or governmental
or regulatory agency or body is required on the part of the Company for the
lawful consummation of the transactions contemplated hereby and thereby, except
for such consents and approvals with respect to the offer and sale of Units in
certain jurisdictions which are identified to you by counsel for the Company.
(d) Neither the Company nor any of its officers, employees, agents
or representatives has taken or will take any action which has caused or may
cause the Placement not to qualify for exemption from the registration
requirements of the Act or of United States federal or state, or other
securities laws. In connection with the Placement, the Company shall not offer
or cause to be offered the Units by any form of general solicitation or general
advertising as defined in Rule 502(c) of Regulation D, has not taken and shall
not take any action (except for actions contemplated by the U.S. Memorandum)
that would cause the Placement to be integrated with other transactions under
Rule 502(a) of Regulation D.
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(e) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms (except insofar as enforcement of the indemnification or contribution
provisions hereof may be limited by applicable laws or principles of public
policy and subject, as to enforcement, to the availability of equitable
remedies and limitations imposed by bankruptcy, insolvency, reorganization and
other similar laws and related court decisions relating to or affecting
creditors' rights generally).
(f) The Company will not offer the Units for sale hereunder on the
basis of any communications or documents relating to the U.S. Placement Agent
or the Units except the U.S. Memorandum and the exhibits thereto and documents
described or referred to therein (including the Subscription Agreement).
(g) So long as the Units (or the Shares, Warrants or shares of
Common Stock underlying the Warrants) are "restricted securities" within the
meaning of Rule 144(a)(3) under the Act, the Company, during any period in
which it is not subject to and in compliance with Section 13 or 15(d) of the
Exchange Act, or is not exempt from such reporting requirements pursuant to and
in compliance with Rule 12g3-2b under the Exchange Act, provide to each holder
of such Units and to each prospective purchaser (as designated by such holder)
of such Units, upon the request of such holder or prospective holder, any
information required to be provided by Rule 144A(d)(4) under the Act.
(h) The Company will initially invest the proceeds of the Offering
of the Units and all other funds of the Company in such a manner so as to cause
the Company not to be subject to the United States Investment Company Act of
1940, as amended (the "1940 Act"), and will thereafter use its best efforts to
avoid the Company's becoming subject to the 1940 Act.
(i) In addition to the foregoing, to the extent not set forth
herein, the U.S. Placement Agent may rely on the representations and
warranties made by the Company in the Subscription Booklet provided by the
Company and used in connection with the Placement.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
U.S. PLACEMENT AGENT
The U.S. Placement Agent hereby represents and warrants to, and
covenant with, the Company that:
(a) This Agreement has been duly authorized, executed and
delivered by the U.S. Placement Agent and constitutes the legal, valid and
binding obligation of the Placement Agent, enforceable against it in accordance
with its terms (except insofar as enforcement of the indemnification or
contribution provisions hereof may be limited by applicable laws or principles
of public policy and subject, as to enforcement, to the availability of
equitable
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remedies and limitations imposed by bankruptcy, insolvency, reorganization and
other similar laws and related court decisions relating to or affecting
creditors' rights generally).
(b) The U.S. Placement Agent will cooperate with the Company to
ensure that the offering and sale of the Units will comply with the
requirements of Rule 506 under the Act, including, without limitation, the
general conditions contained in Regulation D and the federal securities laws,
and will follow the reasonable advice of the Company with respect to the manner
in which to offer and sell the Units so as to ensure that the offering and sale
thereof will comply with the securities laws of the jurisdictions which is not
listed in Exhibit A or in any jurisdiction in which Units are offered by the
U.S. Placement Agent, and the U.S. Placement Agent will not make an offer of
Units in any jurisdiction which is not listed on Exhibit A or in any
jurisdiction in which the Company advises it in writing that such offer would
be unlawful for the U.S. Placement Agent to offer or sell securities.
(c) The U.S. Placement Agent is (i) a registered broker-dealer
under the Exchange Act, (ii) a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"), and (iii) registered as a
broker-dealer in each jurisdiction in which it is required to be registered as
such in order to offer and sell the Units in such jurisdiction.
(d) The U.S. Placement Agent has not and will not make an offer
of Units (or of any securities, the offering of which may be integrated with
the Placement), on the basis of any communications or documents relating to the
Company or the Units except the U.S. Memorandum and the exhibits thereto and
documents described or referred to therein (including the Subscription
Agreement), and the cover letters referred to in Section 2 hereof. Without
limiting the generality of the foregoing, the U.S. Placement Agent has not and
will not make any representation as to any rate of return on investment that an
offeree may obtain from the ownership of Units other than as set forth in the
U.S. Memorandum. The Placement Agent will deliver a copy of the U.S.
Memorandum to each prospective investor solicited by it prior to such offeree's
execution of a Purchase Agreement or, in the case of amendments or supplements
to the U.S. Memorandum (other than those amendments and supplements approved in
writing by the Company but designated in writing as not subject to this
requirement), prior to such offeree's execution of an acknowledgment of receipt
of such amendment or supplement and reconfirmation of intent to subscribe.
(e) The U.S. Placement Agent has not and will not make an offer
of Units on behalf of the Company, or of any securities, the offering of which
may be integrated with the Placement, by any form of general solicitation or
general advertising in violation of Rule 502(c) of Regulation D such as would
cause the offering of Units not to qualify under Section 4(2) of the Act as a
transaction exempt from Section 5 thereof. The U.S. Placement Agent has not
and will not supply in writing for inclusion in the U.S. Memorandum or any
related sales materials any information relating to the U.S. Placement Agent
containing any untrue statement of a material fact or omitting to state any
material fact required to be stated therein or necessary to make such
information, in light of the circumstances under which it is used, not
misleading.
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(f) The Placement Agent will not transmit to the Company any
written offer from an offeree to purchase a Unit or Units unless, immediately
prior thereto, it reasonably believes that:
(i) the offeree is an Accredited Investor; and
(ii) the offeree meets all other offeree and/or purchaser
suitability standards, if any, required under applicable securities
laws and regulations.
(g) The U.S. Placement Agent will exercise reasonable care to
determine that prospective investors are not "underwriters" within the meaning
of Section 2(11) of the Act, and in that connection will obtain from each
investor purchasing Units in the Placement a duly executed Subscription
Agreement, in the form provided to the U.S. Placement Agent by the Company.
(h) The U.S. Placement Agent will periodically notify the Company
of the jurisdiction in which the Units are being offered by it or will be
offered by it pursuant to this Agreement, and will periodically notify the
Company of the status of the offering conducted pursuant to this Agreement.
(i) The U.S. Placement Agent will take such other action or
refrain from taking such action as the Company may reasonably request in order
to comply with all applicable United States laws and all applicable securities
laws of those jurisdictions listed in Schedule A of which the Company advises
the U.S. Placement Agent, including using its best efforts to cause offerees
and subscribers for Units to execute and deliver such additional documents and
instruments as the Company may reasonably require, except that the Company
shall be required to complete all necessary securities qualifications with
respect to those jurisdictions listed in Schedule A as provided in Section 2.
(j) The U.S. Placement Agent has delivered or caused to be
delivered to each prospective investor the U.S. Memorandum.
9. COVENANTS
(a) Covenants of the Company. The Company covenants to
the U.S. Placement Agent that it will:
(i) Notify the U.S. Placement Agent as soon as
practicable, and confirm such notice promptly in writing, (A) when any event
shall have occurred during the period commencing on the date hereof and ending
on the later of the Closing Date and the last Additional Closing Date (if any)
as a result of which the U.S. Memorandum would include any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (B) of
the receipt of any notification with respect to the modification, recission,
withdrawal or suspension of the qualification or registration of the Shares or
of an exemption from such registration or qualification in any jurisdiction.
The Company will use its reasonable best efforts to prevent
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the issuance of any such modification, rescission, withdrawal or suspension
and, if any such modification, rescission, withdrawal or suspension is issued
and you so request, to obtain the lifting thereof as promptly as possible.
(ii) Not supplement or amend the U.S. Memorandum
unless the U.S. Placement Agent shall have approved of such supplement or
amendment in writing. If, at any time during the period commencing on the date
hereof and ending on the later of the Closing Date and the last Additional
Closing Date (if any), any event shall have occurred as a result of which the
U.S. Memorandum contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, or if, in the opinion of counsel to the
Company or counsel to the U.S. Placement Agent, it is necessary at any time to
supplement or amend the U.S. Memorandum to comply with the Act, Regulation D or
any applicable securities or "blue sky" laws, the Company will promptly prepare
an appropriate supplement or amendment (inform and substance reasonably
satisfactory to you) which will correct such statement or omission or which
will effect such compliance.
(iii) Deliver without charge to the U.S. Placement
Agent such number of copies of the U.S. Memorandum and any supplement or
amendment thereto as may reasonably be requested by the U.S. Placement Agent.
(iv) Not directly or indirectly, solicit any offer
to buy from, or offer to sell to, any person any Units except through the U.S.
Placement Agent or the Canadian Placement Agent.
(v) Not solicit any offer to buy or offer to sell
Units by any form of general solicitation or advertising, including, without
limitation, any advertisement, article, notice or other communication published
in any newspaper, magazine or similar medium or broadcast over television or
radio or any seminar or meeting whose attendees have been invited by any
general solicitation or advertising.
(vi) At all times during the period commencing on
the date hereof and ending on the later of the Closing Date and the last
Additional Closing Date (if any), provide to each prospective investor or his
purchaser representative, if any, on reasonable request, such information (in
addition to that contained in the U.S. Memorandum) concerning the Placement,
the Company and any other relevant matters as it possesses or can acquire
without unreasonable effort or expense and extend to each prospective investor
or his purchaser representative, if any, the opportunity to ask questions of,
and receive answers from the Company concerning the terms and conditions of the
Placement and the business of the Company and to obtain any other additional
information, to the extent it possesses the same or can acquire it without
unreasonable effort or expense, as such prospective investor or purchaser
representative may consider necessary in making an informed investment decision
or in order to verify the accuracy of the information furnished to such
Prospective Investor or purchaser representative, as the case may be.
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(vii) Notify the U.S. Placement Agent promptly of
the acceptance or rejection of any subscription. Any subscription unreasonably
rejected shall be deemed to have been accepted for purposes of determining
whether at least 500,000 Units have been sold solely for the purpose of
determining whether the U.S. Placement Agent is entitled to its compensation
pursuant to Schedule A hereof.
(viii) File five (5) copies of a Notice of Sales of
Securities on Form D with the Securities and Exchange Commission (the
"Commission") no later than 15 days after the first sale of the Units, if
required by law. The Company shall file promptly such amendments to such
Notices on Form D as shall become necessary and shall also comply with any
filing requirement imposed by the laws of any province or jurisdiction in which
offers and sales are made. The Company shall furnish you with copies of all
such filings.
(ix) Place the following legend on all
certificates representing the Units and the Warrants:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS
WHICH, IN THE OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL
AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS
CORPORATION, IS AVAILABLE."
(x) Not, directly or indirectly, engage in any
act or activity which may jeopardize the status of the offering and sale of the
Units as exempt transactions under the Act or under the securities or "blue
sky" laws of any jurisdiction in which the Placement may be made.
(xi) Apply the net proceeds from the sale of the
Units for the purposes set forth under the caption "Use of Proceeds" in the
U.S. Memorandum in substantially the manner indicated thereunder.
(xii) Not, during the period commencing on the date
hereof and ending on the later of the Closing Date and the last Additional
Closing Date (if any) issue any press release or other communication or hold
any press conference with respect to the Company, its financial condition,
results of operations, business properties, assets, liabilities or future
prospects of the Placement, without the prior written consent of the U.S.
Placement Agent and the Canadian Placement Agent, which consent will not be
unreasonably withheld.
(xiii) Not, prior to the completion of the Offering,
bid for, purchase, attempt to induce others to purchase, or sell, directly or
indirectly, any shares of Common
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Stock or any other securities in violation of the provisions of Regulation M
under the Exchange Act.
10. CONDITIONS OF THE U.S. PLACEMENT AGENT'S OBLIGATIONS
The obligations of the U.S. Placement Agent pursuant to this
Agreement shall be subject, in its discretion, to the continuing accuracy of
the representations and warranties of the Company contained herein and in each
certificate and document contemplated under this Agreement to be delivered to
the U.S. Placement Agent, as of the date hereof and as of the Closing Date
(and, if applicable, each Additional Closing Date), to the performance by the
Company of its obligations hereunder, and to the following conditions:
(a) At the Closing and each Additional Closing, as the
case may be, the Placement Agents shall have received the favorable opinion of
each of Battle Xxxxxx LLP, Xxxxxxx Xxxxx, Xxxxxxxx & Xxxxxxxx LLP, Xxxxxx,
Xxxxxx & Xxxxxxx LLP, and Xxxxx Winter LLP, in each case, as counsel for the
Company, in form and substance reasonably satisfactory to the Placement Agents.
(b) On or prior to the Closing Date and each Additional
Closing Date, as the case may be, the U.S. Placement Agent shall have been
furnished such information, documents and certificates as it may reasonably
require for the purpose of enabling it to review the matters referred to in
this Section 10 and in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties, covenants, agreements
or conditions herein contained, or as it may otherwise reasonably request.
(c) At the Closing and each Additional Closing, as the
case may be, the U.S. Placement Agent shall have received a certificate of the
chief executive officer of the Company, dated the Closing Date or such
Additional Closing Date, as the case may be, to the effect that, as of the date
of this Agreement and as of the Closing Date or such Additional Closing Date,
as the case may be, the representations and warranties of the Company contained
herein were and are accurate, and that as of the Closing Date or such
Additional Closing Date, as the case may be, the obligations to be performed by
the Company hereunder on or prior thereto have been fully performed.
(d) All proceedings taken in connection with the
issuance, sale and delivery of the Shares shall be reasonably satisfactory in
form and substance to you and your counsel.
Any certificate or other document signed by any officer of the Company
and delivered to you or to your counsel as required hereunder shall be deemed a
representation and warranty by the Company hereunder as to the statements made
therein. If any condition to your obligations hereunder has not been fulfilled
as and when required to be so fulfilled, you may terminate this Agreement or,
if you so elect, in writing waive any such conditions which have not been
fulfilled or extended the time for their fulfillment. In the event that you
elect to terminate this Agreement, you shall notify the Company of such
election in writing. Upon such termination, neither party shall have any
further liability or obligation to the other except as provided in Section 11
hereof.
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11. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless the U.S.
Placement Agent, any person who controls the Placement Agent within the meaning
of the Act, Section 20(a) of the Exchange Act or any applicable statute and
each partner, director, officer, employee, agent and representative of the U.S.
Placement Agent or any person who controls any such Placement Agent from and
against any loss, damage, expense, liability or claim, or actions or
proceedings in respect thereof (including, without limitation, reasonable
attorneys' fees and expenses incurred in investigating, preparing or defending
against any litigation commenced) which any such person may incur or which may
be made or brought against any such person arising out of or based upon (i) any
breach of any of the agreements, representations or warranties of the Company
contained in this Agreement or Schedule A, (ii) any violation of securities
laws attributable to the offer or sale of Units in a jurisdiction listed in
Schedule A and in a manner authorized by the Company, or (iii) any violation of
law by the Company or any Affiliate thereof, or any director, officer,
employee, agent or representative of any of them, related to or arising out of
the Placement. This indemnity agreement by, and the agreements, warranties and
representations of, the Company shall survive the offer, sale and delivery of
the Units and the termination of this Agreement and shall remain in full force
and effect regardless of any investigation made by or on behalf of any person
indemnified hereunder, and termination of this Agreement and acceptance of any
payment for the Units hereunder.
(b) The U.S. Placement Agent agrees to indemnify and hold
harmless the Company and its Affiliates, any person who controls any of them
within the meaning of the Act, Section 20(a) of the Exchange Act or any
applicable statute, and each officer, director, employee, agent and
representative of the Company or any of its Affiliates from and against any
loss, damage, expense, liability or claim or actions or proceedings in respect
thereof (including, without limitation, reasonable attorneys' fees and expenses
incurred in investigating, preparing or defending against any litigation
commenced) which any such person may incur or which may be made or brought
against any such person, but only to the extent the same arises out of or is
based upon (i) any breach of any of the agreements, representations or
warranties of the U.S. Placement Agent contained in this Agreement or Schedule
A or (ii) any untrue statement of a material fact in any information provided
to the Company in writing by, and relating to, the U.S. Placement Agent,
expressly for use in and used in the U.S. Memorandum, or any omission in any
information provided to the Company in writing by, and relating to, the U.S.
Placement Agent, expressly for use in and used in the U.S. Memorandum of any
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading. This indemnity
agreement by, and the agreements, warranties and representations of, the U.S.
Placement Agent shall survive the offer, sale and delivery of the Units and
shall remain in full force and effect regardless of any investigation made by
or on behalf of any person indemnified hereunder, and termination of this
Agreement and acceptance of any payment for the Units hereunder.
(c) If any action is brought against a party (the "Indemnified
Party") in respect of which indemnity may be sought against one or more other
parties (the "Indemnifying Party"
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or "Indemnifying Parties"), the Indemnified Party shall promptly notify the
Indemnifying Party or Parties in writing of the institution of such action;
provided, however, the failure to give such notice shall not release the
Indemnifying Party or Parties from its or their obligation to indemnify the
Indemnified Party hereunder except to the extent the Indemnifying Party
actually incurs damage by reason of such failure and shall not release the
Indemnifying Party or Parties from any other obligations or liabilities to the
Indemnified Party in any event. The Indemnifying Party or Parties may at its
or their own expense elect to assume the defense of such action, including the
employment of counsel reasonably acceptable to the Indemnified Party; provided,
however, that no Indemnifying or Indemnified Party shall consent to the entry
of any judgment or enter into any settlement by which the other party is to be
bound without the prior written consent of such other party, which consent
shall not be unreasonably withheld. In the event the Indemnifying Party or
Parties assume a defense hereunder, the Indemnified Party shall be entitled to
retain its own counsel in connection therewith and, except as provided below,
shall bear the fees and expenses of any such counsel, and counsel to the
Indemnified Party or Parties shall cooperate with such counsel to the
Indemnifying Party in connection with such proceeding. If an Indemnified Party
reasonably determines that there are or may be differing or additional defenses
available to the Indemnified Party which are not available to the Indemnifying
Party, or that there is or may be a conflict between the respective positions
of the Indemnifying Party and of the Indemnified Party in conducting the
defense of any action, then the Indemnifying Party shall bear the reasonable
fees and expenses of any counsel retained by the Indemnified Party in
connection with such proceeding. All references to the Indemnified Party
contained in this paragraph 8(c) include, and extend to and protect with equal
effect, any persons who may control the Indemnified Party within the meaning of
the Act, Section 20(a) of the Exchange Act or any applicable statute, any
successor to the Indemnified Party and each of its partners, officers,
directors, employees, Agents and representatives. The indemnity agreements set
forth in this paragraph 8 shall be in addition to any other obligations or
liabilities of the Indemnifying Party or Parties hereunder or at common law or
otherwise.
(d) If recovery is not available under the foregoing
indemnification provisions of this paragraph, for any reason other than as
specified therein, the party entitled to indemnification by the terms thereof
shall be entitled to contribution to losses, damages, liabilities and expenses
of the nature contemplated by such indemnification provisions. In determining
the amount of such losses, damages, contribution, there shall be considered the
relative benefits received by the Company on the one hand, and the U.S.
Placement Agent on the other hand from the Placement (which shall be deemed to
be the portion of the proceeds of the Placement realized by each party), the
parties' relative knowledge and access to information concerning the matter
with respect to which the claim was asserted, the opportunity to correct and
prevent any statement or omission, the relative culpability of the parties and
any other equitable considerations appropriate under the circumstances. No
party shall be liable for contribution with respect to any action or claim
settled without its consent. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be made
against another party or parties under this Section, notify such party or
parties from whom contribution may be sought, but the omission to so notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation
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it or they may have under this Section or otherwise. For purposes of this
Section, each person, if any, who controls a party to this Agreement within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall
have the same rights to contribution as that party to this Placement Agreement.
(e) In any claim for indemnification for United States Federal or
state securities law violations, the party seeking indemnification shall place
before the court the position of (i) the United States Securities and Exchange
Commission and (ii) if applicable, any state securities commissioner or agency
having jurisdiction with respect to the issue of indemnification for securities
law violations.
12. MISCELLANEOUS
(a) The agreements set forth in this Agreement have been made and
are made solely for the benefit of the Company, the U.S. Placement Agent,
their affiliates and the respective heirs, personal representatives and
permitted successors and assigns thereof, and except as expressly provided
herein nothing expressed or mentioned herein is intended or shall be construed
to give any other person, firm or corporation any legal or equitable right,
remedy or claim under or in respect of this Agreement or any representation,
warranty or agreement herein contained. The term "successors and assigns" as
used herein shall not include any purchaser of any Units merely because of such
purchase.
(b) Any notice or other communication required or appropriate
under the provisions of this Agreement shall be given in writing addressed as
follows: (i) if to the Company, at the address set forth above, Attention:
President; and (ii) if to the U.S. Placement Agent, SmallCaps Online LLC, 0000
Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxxx X.
Xxxxx, or at such other address as any party may designate to the others in
accordance with this paragraph.
(c) This Agreement and Schedule A constitute the entire agreement
between the parties hereto with respect to the Placement and supercedes any and
all prior agreements, and may be amended or modified only by a duly authorized
writing signed by such parties. This Agreement and Schedule A may be executed
in any number of counterparts, each of which shall be deemed an original and
all of which shall constitute a single instrument.
[SIGNATURE PAGE FOLLOWS]
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This Agreement is executed and shall be effective as of
February 15, 2000, and shall be governed and construed in accordance with the
laws of the State of New York, without giving effect to conflicts of law
provisions thereof.
JAWS TECHNOLOGIES, INC.
By:/s/ XXXX XXXXXXX
---------------------------------
Name:
Title:
Agreed and accepted:
SMALLCAPS ONLINE LLC
By: /s/ XXXXXXX X. XXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
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SCHEDULE A
JAWS TECHNOLOGIES, INC.
The parties hereto enter into this Schedule A to the Placement Agency
Agreement (the "Agreement") effective as of February 15, 2000 (the "Effective
Date"), and incorporate said Agreement herein by reference in full.
Capitalized terms used in this Schedule and not otherwise defined have the
meanings provided in the Agreement. All dollar amounts are in $USD.
Issuer: JAWS Technologies, Inc., a Nevada corporation.
Placement Agents: US: SmallCaps Online LLC.
CDN: Thomson Kernaghan & Co. Limited.
Security Offered: Units, each Unit consisting of (i) one share of common stock, par value $.001 per share
(the "Common Stock"), of the Company and (ii) one warrant to purchase 1/2 (one half)
a share of Common Stock at an exercise price of $6.50 per share (subject to adjustment, as
described below), which warrants shall expire on the third anniversary date of the
effective date of the registration statement relating thereto (as described below).
Certificates representing shares of Common Stock and warrants shall bear appropriate
legends, including those relating to "restricted securities" under the Act.
Number of Units: A minimum of 500,000 Units (aggregate gross proceeds of $2,125,000) and a maximum of
900,000 Units (gross proceeds of $3,825,000).
Offering Price
(Per Unit): $4.25 per Unit.
Minimum Subscription: $100,000, or greater if required by local law.
Use of Proceeds: Working capital and general corporate purposes, and acquisitions yet to be identified.
Placement Period: From February 15, 2000 to February 22, 2000, unless extended by the Company in its sole
discretion. The anticipated date of the initial closing is February 18, 2000.
Sales Commissions, Warrants
and Financial Advisory Fees
to Placement Agents: An aggregate cash payment to the Placement Agents of a 7% sales commission and a 3%
financial advisory fee,
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in each case, based upon the gross proceeds from all Units sold by or on behalf of the
Company.
On the closing date, the Company shall issue to the Placement Agents an aggregate number
of warrants to purchase shares of Common Stock equal to 10% of the number of Units sold,
one-half of which will constitute a financial advisory fee. The warrants will be
exercisable at an exercise price of $4.25 per share, and will expire on the third
anniversary date of the effectiveness of the registration statement relating thereto (as
described below). The warrants will be issued pursuant to a warrant agreement and/or form
of warrant certificate in form and substance satisfactory to the Company and the Placement
Agents.
Expenses of Placement Agents
to be Reimbursed: Each Placement Agent will receive reimbursement of all reasonable, accountable
out-of-pocket expenses, including legal fees and disbursements of one counsel, and travel
and due diligence expenses.
Jurisdictions in Which
Units Will Be Offered United States: New York
Canada: Ontario
Bermuda, Isle of Man, St. Xxxxxxx and the Grenadines
Registration of
Common Stock: The Company will use its best efforts to file, no later than 30 days following the final
closing date, a registration statement with the United States Securities and Exchange
Commission registering for resale all of the shares of Common Stock included in the Units,
and shares of Common Stock issuable upon exercise of the warrants included in the Units
and the warrants issued to the Placement Agents. The Company will use its best efforts to
cause such registration statement to become effective no later than 90 days following the
final closing date, and to cause such registration statement to remain effective until 30
days following the date on which all warrants have been exercised or expired, and/or have
been called and repurchased by the Company as provided below. During such period, the
Company will file all documents required to be filed by it under the Securities Exchange
Act of 1934, as amended.
If a registration statement covering such shares of Common Stock is not declared effective
within 90 days,
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but prior to 180 days, following the final closing date, the exercise price of the
warrants sold to Investors shall be reduced by $0.25 per month, or a pro rated amount
thereof for partial months, until a registration statement covering such shares is
declared effective. If a registration statement covering such shares of Common Stock is
not declared effective within 180 days following the final closing date, the exercise
price of the warrants sold to Investors shall be reduced by $0.50 per month, or a pro
rated amount thereof for partial months, until a registration statement covering such
shares of Common Stock is declared effective. Notwithstanding the foregoing, in no event
shall the exercise price of the Warrants sold to Investors be reduced to a price lower
than $3.75 per share.
Call Rights on Warrants: If at any time following the effectiveness of the registration statement described above
the last reported sale price per share of Common Stock exceeds $9.75 for any consecutive
thirty day trading period, then the Company may, at any time upon thirty days notice, call
and repurchase warrants issued to the purchasers and the Placement Agents at a call price
of $.001 per warrant.
Definitive Agreements: The purchase and sale of Units is subject to the execution and delivery of definitive
agreements containing such representations, warranties, terms and conditions as the
respective parties and their counsel may agree.
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