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EXHIBIT 2.9
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES 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 THE REGISTRATION REQUIREMENTS THEREUNDER AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
JAWZ INC. The Warrant represented
by this certificate replaces
WARRANT the Warrant represented by
Warrant Certificate AW-3
Warrant No. AW-3B Dated: November 1, 2000 originally issued August
21, 2000.
JAWZ Inc., a Delaware corporation, the successor to Jaws Technologies,
Inc., a Delaware corporation (the "Company"), hereby certifies that, for value
received, CALP II Limited Partnership, or its registered assigns ("Holder"), is
entitled, subject to the terms set forth below, to purchase from the Company the
total number of shares of common stock, $.001 par value per share (the "Common
Stock"), of the Company (each such share, a "Warrant Share" and all such shares,
the "Warrant Shares") calculated pursuant to Section 3 of this Warrant (subject
to adjustment for certain events as set forth herein) at an exercise price equal
to $.001 per share (as adjusted from time to time as provided in Section 8, the
"Exercise Price"), at the times set forth herein through and including the
twentieth (20th) Business Day (as defined in Exhibit A) following the Fourth
Vesting Date (as defined herein) (the "Expiration Date"), and subject to the
following terms and conditions (certain terms used herein are defined in Exhibit
A attached hereto). All references to $ (dollars) shall be to US$ (United States
dollars).
1. Registration of Warrant. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.
2. Registration of Transfers. The Company shall register the transfer of
any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment
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attached hereto duly completed and signed, to the Transfer Agent or to the
Company at the address specified in Section 12. Upon any such registration or
transfer, a new warrant to purchase Common Stock, in substantially the form of
this Warrant (any such new warrant, a "New Warrant"), evidencing the portion of
this Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance of such transferee of all
of the rights and obligations of a holder of a Warrant. Subject to Section 14(g)
below, any transfer or assignment of this Warrant and Warrant Shares obtained by
the Holder in exercise of this Warrant is subject to the requirement that such
securities be registered under the Securities Act of 1933, as amended (the "1933
Act"), and applicable state securities laws or exempt from registration under
such laws.
3. Duration, Vesting and Exercise.
(a) The vesting of the Warrant Shares which the Holder is permitted
to acquire pursuant to this Warrant shall occur on the dates set forth below.
On each such date, this Warrant shall vest on a cumulative basis with respect
to a number of Warrant Shares calculated pursuant to Section 3(b) below. Only
the Warrant Shares that have vested may be acquired upon exercise of this
Warrant.
(i) The first vesting date (the "First Vesting Date") shall be
the 92nd day following the Effective Date (as defined in Exhibit A);
(ii) The second vesting date (the "Second Vesting Date") shall be
the 181st day following the Effective Date;
(iii) The third vesting date (the "Third Vesting Date") shall be
the 273rd day following the Effective Date; and
(iv) The fourth vesting date (the "Fourth Vesting Date") shall be
the 365th day following the Effective Date.
Each of the First Vesting Date, Second Vesting Date, Third Vesting
Date and Fourth Vesting Date shall be referred to herein as a "Vesting
Date".
(b) On each Vesting Date, this Warrant shall vest and become
exercisable with respect to the number of Warrant Shares, if any,
calculated in accordance with the following formula, for each Trading Day
between the Effective Date (or previous Vesting Date, as the case may be)
and the Vesting Date (such period referred to as a "Vesting Period"):
(Daily Share Number) x [(Purchase Price/0. 89) - (Adjustment Price)]
--------------------------------------------------------------------
Adjustment Price
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If the number calculated in accordance with the foregoing formula is
zero or a negative number, no Warrant Shares shall vest hereunder for that
Trading Day and the Holder shall not be obligated to transfer any shares of
Common Stock to the Company. In addition, the Holder shall not be obligated
to transfer any shares of Common Stock to the Company and the number of
Warrant Shares exercisable hereunder which shall have previously vested
will not decrease. For each Trading Day that the number calculated in
accordance with the foregoing formula is positive, the number shall be
rounded to the nearest whole number of Warrant Shares and the Warrant
Shares for all such Trading Days in the Vesting Period shall vest hereunder
on the Vesting Date at the end of the Vesting Period.
(c) Notwithstanding anything herein to the contrary, if: (1), after
the Effective Date, the average of the Per Share Market Values (as defined
in Exhibit A) for any 20 consecutive Trading Days is greater than 120% of
the Purchase Price (as defined in Exhibit A) (which number shall be subject
to equitable adjustment for stock splits, recombinations and similar
events), or (2) 12 months passes; or (3) the Company's common stock, as
traded on the NASDAQ National Market, or any other NASD market, trades a
total volume where:
X more than 10 x [5,600,000 million shares + the cumulative amount of
shares to be issued under
this warrant]
and X equals the total volume of the Company's common stock, as traded on
the NASDAQ National Market, or any other NASD market, since November 1,
2000; than this Warrant shall not vest with respect to any additional
Warrant Shares (and all such vesting rights will terminate) but will remain
in effect as to any Warrant Shares which have vested prior thereto.
(d) Notwithstanding the foregoing provisions of this Section 3, at any
time during the period between the Closing Date and the Expiration Date,
within ten Trading Days following the occurrence of any of the following
events (each, an "Event"), the Holder shall have the option to elect, by
providing the Company with a notice (an "Event Vesting Notice"), to have
this Warrant vest with respect to those Warrant Shares that have not yet
already vested (the "Vested Warrant Shares"), provided, that the Event
Vesting Notice may also require the Company to redeem all or a portion of
the Vested Warrant Shares at the Mandatory Redemption Price (as defined in
Exhibit A);
(i) upon the occurrence of any of (i) an acquisition after the
date hereof by an individual or legal entity or "group" (as described in
Rule 13d-5(b)(1) promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of in excess of 1/3 of the voting securities
of the Company, (ii) a replacement of more than one-half of the members of
the Company's board of directors which is not approved by those individuals
who are members of the board of directors on the date hereof (or Persons
appointed or nominated thereby) in one or a series of related transactions,
(iii) the merger of the Company with or into another entity, consolidation
or sale of all or substantially all of the assets of the Company in one or
a series of related transactions, unless following such transaction or
series of transactions, the holders of the Company's securities
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prior to the first such transaction continue to hold at least 2/3 of the
securities of the surviving entity or acquirer of such assets or (iv) the
execution by the Company of an agreement to which the Company is a party or
by which it is bound, providing for any of the events set forth above in
(i), (ii) or (iii); provided, however, that if the price per share paid in
connection with Events (i), (iii) or (iv) (but only to the extent that
Event (iv) relates to clauses (i) or (iii)) above exceeds the quotient of
the Purchase Price divided by 0.89, then the Event Vesting Notice which the
Holder may deliver pursuant to either Event (i), (iii) or (iv) above, shall
not require the Company to redeem all or a portion of the Vested Warrant
Shares.
(ii) immediately prior to an assignment by the Company for the
benefit of creditors or commencement of a voluntary case under Title 11 of
the United States Code, or an entering into of an order for relief in an
involuntary case under Title 11 of the United States Code, or adoption by
the Company of a plan of liquidation or dissolution;
(iii) five (5) Business Days prior to the proposed consummation
with respect to the Company of a "Rule 13e-3 transaction" as defined in
Rule 13e-3 under the Exchange Act (or, if necessary, such earlier date as
the Company shall determine in good faith to be required in order for the
Holder to be able to participate in such transaction), it being agreed that
the Holder will receive actual notice of the 13e-3 Statement filed with the
Commission;
(iv) For any period of three (3) consecutive Trading Days
commencing on or after the date of issuance of this Warrant, there shall be
no closing bid price on the Common Stock on the Nasdaq (as defined in
Exhibit A) or a Subsequent Market (as defined in Exhibit A);
(v) The Common Stock fails to be listed or quoted for trading on
the Nasdaq or a Subsequent Market or for a period of three (3) consecutive
Trading Days;
(vi) After the Effective Date, a holder of Registrable Securities
(as defined in the Registration Rights Agreement) is not permitted to sell
Registrable Securities under the Underlying Shares Registration Statement
(as defined in Exhibit A) for any reason for sixty (60) consecutive days;
provided, that, if a Vesting Date occurred during such sixty consecutive
day period, then, at the Holder's option, such Vesting Date shall be
delayed for the remaining number of days during which the holder of
Registrable Securities is not permitted to sell Registrable Securities
under the Underlying Shares Registration Statement. If however, such sixty
(60) consecutive day period does not occur, then a Vesting Date shall not
be delayed under this clause (vi).
(vii) The Underlying Shares Registration Statement shall not be
declared effective by the Commission on or prior to the 180th day following
the Closing Date); or
(viii) The Company shall fail for any reason to deliver
certificates to a Holder prior to the eighth day after a Date of Exercise
pursuant to and in accordance with Section 4(a);
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(ix) The Company shall fail or default in the timely performance
of any material obligation under the Transaction Documents and such failure
or default shall continue uncured for a period of ten (10) Business Days
after the date on which written notice of such failure or default is first
given to the Company.
In the event the Holder delivers an Event Vesting Notice, this Warrant
shall vest with respect to the number of Warrant Shares calculated in
accordance with the formula set forth in Section 3(b), provided, that for
purposes of such calculation, (A) the Adjustment Price shall be deemed to
mean, for each Trading Day between the Effective Date and the Fourth
Vesting Date, the Volume Weighted Average Price of the Company's Common
Stock for that Trading Day, and (B) the Daily Share Number shall be deemed
to mean 23,333 shares Common Stock. After the Fourth Vesting Date the
Applicable Share Number shall equal zero. On a Vesting Date, the Holder
shall be entitled to receive the sum of shares of Common Stock calculated
for each Trading Day since the Effective Date or the prior Vesting Date (as
applicable). If the Holder shall have elected to require the Company to
redeem the Vested Warrant Shares pursuant to the terms hereof, the Company
shall pay the Mandatory Redemption Price no later than the fifth (5th) day
following the date of the delivery of the Event Vesting Notice. Interest
shall accrue on the Mandatory Redemption Price from the seventh day after
such amount is due (being the date of an Event of Default) through the date
of prepayment in full thereof at the rate of 18% per annum (or such lesser
maximum amount that is permitted to be paid by applicable law), to accrue
daily from the date such payment is due hereunder through and including the
date of payment.
(e) Subject to Sections 3(a) and (b), this Warrant shall be
exercisable by the registered Holder on any Business Day before 6:30 P.M.,
New York City time, at any time and from time to time on or after the date
hereof to and including the Expiration Date, provided, however, that the
minimum number of Warrant Shares as to which this Warrant is being
exercised shall not be less than 50,000 Warrant Shares. At 6:30 P.M., New
York City time on the Expiration Date, the portion of this Warrant not
exercised prior thereto shall be and become void and of no value and,
unless vested prior to such Expiration Date, all rights of the Holder and
the obligations of the Company shall terminate in their entirety.
(f) Subject to Sections 3(a) and (b), this Warrant shall be
exercisable, either in its entirety or, from time to time, for a portion of
the number of Warrant Shares. If less than all of the Warrant Shares which
may be purchased under this Warrant are exercised at any time, the Company
shall issue or cause to be issued, at its expense, a New Warrant evidencing
the right to purchase the remaining number of Warrant Shares for which no
exercise has been evidenced by this Warrant.
(g) This Warrant shall be not be deemed to confer upon the Holder any
right to vote or to consent to or receive notice as a stockholder of the
Company, as such, in respect of any matters whatsoever, or any other rights
or liabilities as a stockholder, prior to the exercise hereof.
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4. Delivery of Warrant Shares.
(a) Upon surrender of this Warrant, with the Form of Election to Purchase
attached hereto duly completed and signed, to the Company at its address for
notice set forth in Section 11 and upon payment of the Exercise Price multiplied
by the number of Warrant Shares that the Holder intends to purchase hereunder,
in the manner provided hereunder, all as specified by the Holder in the Form of
Election to Purchase, the Company shall promptly (but in no event later than 4
Business Days after the Date of Exercise (as defined herein)) issue or cause to
be issued and cause to be delivered to or, if not in violation of applicable
law, upon the written order of the Holder and in such name or names as the
Holder may designate, a certificate for the Warrant Shares issuable upon such
exercise, free of restrictive legends except (in the case of each of the
transfer and the issuance) (i) either in the event that a registration statement
covering the resale of the Warrant Shares and naming the Holder as a selling
stockholder thereunder is not then effective or the Warrant Shares are not
freely transferable without volume restrictions pursuant to Rule 144(k)
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
or (ii) if this Warrant shall have been issued pursuant to a written agreement
between the original Holder and the Company, as required by such agreement. Any
person so designated by the Holder to receive Warrant Shares shall be deemed to
have become holder of record of such Warrant Shares as of the Date of Exercise
of this Warrant. The Company shall, if available, use its best efforts to
deliver Warrant Shares hereunder electronically through the Depository Trust
Corporation or another established clearing corporation performing similar
functions if (a) the Holder makes such a request in writing and (b) the Holder
certifies to the Company and the Transfer Agent that it delivered a prospectus
to the buyer in connection with the resale of Warrant Shares.
A "Date of Exercise" means the date on which the Holders shall have
delivered to the Company (i) this Warrant (or any New Warrant, as applicable),
with the Form of Election to Purchase attached hereto (or attached to such New
Warrant) appropriately completed and duly signed, and (ii) payment of the
Exercise Price for the number of Warrant Shares so indicated by the holder
hereof to be purchased.
(b) If the Company fails to deliver to the Holder certificate or
certificates representing the Warrant Shares pursuant to Section 4(a) by the
fifth (5th) Business Day after the Date of Exercise, the Company shall pay to
such Holder, in cash, as liquidated damages and not as a penalty, $5,000 for
each Business day after such fifth (5th) Business Day until such certificates
are delivered. Nothing herein shall limit the Holder's right to pursue actual
damages for the Company's failure to deliver certificates representing shares of
Common Stock upon exercise within the period specified herein and the Holder
shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief. The exercise of any such rights shall not prohibit the Holder
from seeking to enforce damages pursuant to any other Section hereof or under
applicable law.
(c) In addition to any other rights available to the Holder, if the Company
fails to deliver to the Holder certificate or certificates representing the
Warrant Shares pursuant to Section
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4(a) by the fifth (5th) Business Day after the Date of Exercise, and if after
such fifth (5th) Business Day the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a "Buy-In"), then the Company shall pay (1) in cash to the
Holder the amount by which (x) the Holder's total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares
that the Company was required to deliver pursuant to Section 4(b) to deliver to
the Holder in connection with the exercise at issue by (B) the Per Share Market
Value at the time of the obligation giving rise to such purchase obligation and
(2) deliver to the Holder the number of shares of Common Stock that would have
been issued had the Company timely complied with its exercise and delivery
obligations under Section 4(b). For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted exercise of shares of Common Stock with a market price on the date
of exercise totaled $10,000, under clause (A) of the immediately preceding
sentence the Company shall be required to pay the Holder $1,000. The Holder
shall provide the Company written notice indicating the amounts payable to the
Holder in respect of the Buy-In.
(d) The Company's obligations to issue and deliver Warrant Shares in
accordance with the terms hereof are absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any violation or
alleged violation of law by the Holder or any other Person, and irrespective of
any other circumstance which might otherwise limit such obligation of the
Company to the Holder in connection with the issuance of Warrant Shares. If the
Company breaches its obligations under this Warrant, then, in addition to any
other liabilities the Company may have hereunder and under applicable law, the
Company shall pay or reimburse the Holder on demand for all costs of collection
and enforcement (including reasonable attorneys fees and expenses).
5. Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
6. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity, if requested, satisfactory to the Company. Applicants for
a New Warrant
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under such circumstances shall also comply with such other reasonable
regulations and procedures and pay such other reasonable charges as the Company
may prescribe.
7. Reservation of Warrant Shares. The Company covenants that it will at all
times reserve and keep available out of the aggregate of its authorized but
unissued Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holder (taking into account the adjustments and
restrictions of Section 8). The Company covenants that all Warrant Shares that
shall be so issuable and deliverable shall, upon issuance and the payment of the
applicable Exercise Price in accordance with the terms hereof, be duly and
validly authorized, issued and fully paid and nonassessable.
8. Certain Adjustments. The Purchase Price, the Exercise Price and number
of Warrant Shares issuable upon exercise of this Warrant are subject to
adjustment from time to time as set forth in this Section. In no event shall the
Exercise Price be less than $.001. Upon each such adjustment of the Exercise
Price pursuant to this Section, the Holder shall thereafter prior to the
Expiration Date be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(i) If the Company, at any time while this Warrant is outstanding, (i)
shall pay a stock dividend (except scheduled dividends paid on any preferred
stock which contains a stated dividend rate) or otherwise make a distribution or
distributions on shares of its Common Stock or on any other class of capital
stock payable in shares of Common Stock, (ii) subdivide outstanding shares of
Common Stock into a larger number of shares, or (iii) combine outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding before such event
and of which the denominator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding after such event. Any adjustment
made pursuant to this Section shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision or combination, and shall apply to
successive subdivisions and combinations.
(ii) In case of any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is converted into other
securities, cash or property, then the Holder shall have the right thereafter to
exercise this Warrant only into the shares of stock and other securities and
property receivable upon or deemed to be held by holders of Common Stock
following such reclassification, transfer or share exchange, and the Holder
shall be entitled upon such event to receive such amount of securities or
property equal to the amount
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of Warrant Shares such Holder would have been entitled to had such Holder
exercised this Warrant immediately prior to such reclassification or share
exchange. The terms of any such reclassification or share exchange shall include
such terms so as to continue to give to the Holder the right to receive the
securities or property set forth in this Section 8(b) upon any exercise
following any such reclassification or share exchange.
(iii) If the Company, at any time while this Warrant is outstanding, shall
distribute to all holders of Common Stock (and not to holders of this Warrant)
evidences of its indebtedness or assets or rights or warrants to subscribe for
or purchase any security (excluding those referred to in Sections 8(i), (ii) and
(iv)), then in each such case the Exercise Price shall be determined by
multiplying the Exercise Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the Exercise Price determined as of
the record date mentioned above, and of which the numerator shall be such
Exercise Price on such record date less the then fair market value at such
record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock on a fully
diluted basis as determined by the Company's independent certified public
accountants that regularly examines the financial statements of the Company (an
"Appraiser").
(iv) In case of any (1) merger or consolidation of the Company with or into
another Person, or (2) sale by the Company of more than one-half of the assets
of the Company in one or a series of related transactions, the Holder shall have
the right thereafter to (A) exercise this Warrant for the shares of stock and
other securities, cash and property receivable upon or deemed to be held by
holders of Common Stock following such merger, consolidation or sale, and the
Holder shall be entitled upon such event or series of related events to receive
such amount of securities, cash and property as the Common Stock for which this
Warrant could have been exercised immediately prior to such merger,
consolidation or sales would have been entitled or (B) in the case of a merger
or consolidation, require the surviving entity to issue warrants equal to the
number of Warrant Shares to which this Warrant then permits, which new warrant
shall be identical to this Warrant mutatis mutandis. If the Holder shall elect
choice (B) in the immediately preceding sentence, the Company or the surviving
entity (as the case may be) may, by the Business Day preceding the consummation
of the business combination at issue, retire this Warrant by paying to the
Holder, in cash, the Black Scholes value of this Warrant (which value must be
agreed between the parties). Failure to so elect or pay such amount prior to the
Business Day preceding the consummation of the business combination at issue
shall be deemed an election by the Company and the surviving entity to cause the
surviving entity to issue the warrants contemplated in (B) above. In the case of
clause (B), the exercise price for such new warrant shall be based upon the
amount of securities, cash and property that each share of Common Stock would
receive in such transaction and the Exercise Price of this Warrant immediately
prior to the effectiveness or closing date for such transaction. The terms of
any such merger, sale or consolidation shall include such terms so as continue
to give the Holder the right to receive the securities, cash and property set
forth in this Section upon any conversion or redemption following such event.
This provision shall similarly apply to successive such events.
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(v) For the purposes of this Section 8, the following clauses shall also be
applicable:
(i) Record Date. In case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock or in securities
convertible or exchangeable into shares of Common Stock, or (B) to subscribe for
or purchase Common Stock or securities convertible or exchangeable into shares
of Common Stock, then such record date shall be deemed to be the date of the
issue or sale of the shares of Common Stock deemed to have been issued or sold
upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase, as the
case may be.
(ii) Treasury Shares. The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or for the account
of the Company, and the disposition of any such shares shall be considered an
issue or sale of Common Stock.
(vi) All calculations under this Section 8 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be. No adjustment in the
Exercise Price shall be required unless such adjustment would require an
increase or decrease of at least five cents ($0.05) in such price; provided,
however, that any adjustments which by reason of this Warrant are not required
to be made shall be carried forward and taken into account in any subsequent
adjustment required to be made hereunder.
(vii) Upon the occurrence of each adjustment or readjustment of the
Exercise price pursuant to this Section 8, the Company at its expense will
promptly compute such adjustment or readjustment in accordance with the terms of
this Warrant and prepare a certificate setting forth such adjustment or
readjustment, including a statement of the adjusted Exercise Price or adjusted
number of shares of Common Stock, if any, issuable upon exercise of each
Warrant, describing the transactions giving rise to such adjustments and showing
in detail the facts upon which such adjustment or readjustment is based. Upon
written request, the Company will forthwith mail, by first class mail, postage
prepaid, a copy of each such certificate to the Holder of this Warrant at the
address of such Holder as shown on the books of the Company, and to its Transfer
Agent.
(viii) If (i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; (ii) the Company shall declare a special
nonrecurring cash dividend on or a redemption of its Common Stock; (iii) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; (iv) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; or (v) the Company shall authorize the voluntary
dissolution, liquidation or winding up of the affairs of the Company, then the
Company shall cause to be mailed to each Holder at their last addresses as they
shall appear upon the Warrant Register, at least 15 calendar days prior
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to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice.
9. Payment of Exercise Price. The Holder shall pay the Exercise Price in
one of the following manners:
(a) Cash Exercise. The Holder may deliver immediately available funds;
or
(b) Cashless Exercise. At any time after the earlier to occur of the
Effectiveness Date (as defined in the Registration Rights Agreement) and the
date the initial registration statement filed pursuant to the Registration
Rights Agreement is declared effective by the Commission, when a registration
statement covering the resale of the Warrant Shares and naming the Holder as a
selling stockholder thereunder is not then effective, the Holder may surrender
this Warrant to the Company together with a notice of cashless exercise, in
which event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be issued to the Holder.
Y = the number of Warrant Shares with respect to which this
Warrant is being exercised.
A = the average of the closing sale prices
of the Common Stock for the five (5) trading
days immediately prior to (but not
including) the Date of Exercise as reported
by Bloomberg Information Systems, Inc. (or
any successor to its function of reporting
stock prices).
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to
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have been acquired by the Holder, and the holding period for the Warrant Shares
shall be deemed to have been commenced, on the issue date.
10. Certain Exercise Restrictions.
(a) A Holder may not exercise this Warrant to the extent such exercise
would result in the Holder, together with any affiliate thereof, beneficially
owning (as determined in accordance with Section 13(d) of the Exchange Act and
the rules promulgated thereunder) in excess of 4.999% of the then issued and
outstanding shares of Common Stock, including shares issuable upon such exercise
and held by such Holder after application of this Section. Since the Holder will
not be obligated to report to the Company the number of shares of Common Stock
it may hold at the time of an exercise hereunder, unless the exercise at issue
would result in the issuance of shares of Common Stock in excess of 4.999% of
the then outstanding shares of Common Stock without regard to any other shares
which may be beneficially owned by the Holder or an affiliate thereof, the
Holder shall have the authority and obligation to determine whether the
restriction contained in this Section will limit any particular exercise
hereunder and to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which portion of this
Warrant is exercisable shall be the responsibility and obligation of the Holder.
If the Holder has delivered a Form of Election to Purchase for a number of
Warrant Shares that, without regard to any other shares that the Holder or its
affiliates may beneficially own, would result in the issuance in excess of the
permitted amount hereunder, the Company shall notify the Holder of this fact and
shall honor the exercise for the maximum portion of this Warrant permitted to be
exercised on such Date of Exercise in accordance with the periods described
herein and, at the option of the Holder, either keep the portion of the Warrant
tendered for exercise in excess of the permitted amount hereunder for future
exercises or return such excess portion of the Warrant to the Holder. The
provisions of this Section may be waived by a Holder (but only as to itself and
not to any other Holder) upon not less than 61 days prior notice to the Company.
Other Holders shall be unaffected by any such waiver.
(b) A Holder may not exercise this Warrant to the extent such exercise
would result in the Holder, together with any affiliate thereof, beneficially
owning (as determined in accordance with Section 13(d) of the Exchange Act and
the rules promulgated thereunder) in excess of 9.999% of the then issued and
outstanding shares of Common Stock, including shares issuable upon such exercise
and held by such Holder after application of this Section. Since the Holder will
not be obligated to report to the Company the number of shares of Common Stock
it may hold at the time of an exercise hereunder, unless the exercise at issue
would result in the issuance of shares of Common Stock in excess of 9.999% of
the then outstanding shares of Common Stock without regard to any other shares
which may be beneficially owned by the Holder or an affiliate thereof, the
Holder shall have the authority and obligation to determine whether the
restriction contained in this Section will limit any particular exercise
hereunder and to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which portion of this
Warrant is exercisable shall be the responsibility and obligation of the Holder.
If the Holder has delivered a Form of Election to Purchase for a number of
Warrant Shares that, without regard to any other shares that the Holder or its
affiliates may beneficially own, would result in the issuance in excess of the
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13
permitted amount hereunder, the Company shall notify the Holder of this fact and
shall honor the exercise for the maximum portion of this Warrant permitted to be
exercised on such Date of Exercise in accordance with the periods described
herein and, at the option of the Holder, either keep the portion of the Warrant
tendered for exercise in excess of the permitted amount hereunder for future
exercises or return such excess portion of the Warrant to the Holder. The
provisions of this Section may be waived by a Holder (but only as to itself and
not to any other Holder) upon not less than 61 days prior notice to the Company.
Other Holders shall be unaffected by any such waiver.
(c) If the Company Stock is then listed for trading on the Nasdaq or
the Nasdaq SmallCap Market and the Company has not obtained the Shareholder
Approval (as defined below), then the Company may not, upon exercise of this
Warrant, issue in excess of the product of (i) 6,191,508 Warrant Shares (which
equals 19.999% of the number of shares of Common Stock outstanding on October
31, 2000) and (ii) the quotient obtained by dividing (x) the number of shares of
Common Stock issued and sold to the original Holder on the Closing Date by (y)
the number of shares of Common Stock issued and sold by the Company on the
Closing Date (such number of shares, the "Issuable Maximum"). If any Holder
shall no longer hold Warrants then such Holder's remaining portion of the
Issuable Maximum shall be allocated pro-rata among the remaining Holders. If on
any Date of Exercise (A) the Company Stock is listed for trading on the Nasdaq
or the Nasdaq SmallCap Market, (B) the Exercise Price then in effect is such
that the aggregate number of shares of Common Stock that would then be issuable
upon exercise in full of this Warrant, together with any shares of Common Stock
previously issued upon exercise of this Warrant, would equal or exceed the
Issuable Maximum, and (C) the Company shall not have previously obtained the
vote of shareholders, if any, as may be required by the applicable rules and
regulations of the Nasdaq Stock Market to approve the issuance of shares of
Common Stock in excess of the Issuable Maximum pursuant to the terms hereof (the
"Shareholder Approval"), then the Company shall issue to the Holder a number of
shares of Common Stock equal to the Issuable Maximum and, with respect to the
shares whose issuance would result in an issuance of shares of Common Stock in
excess of the Issuable Maximum, (the "Excess Warrant Shares"), the Holder shall
have the option to require the Company to either (1) use its best efforts to
obtain the Shareholder Approval applicable to such issuance as soon as possible,
but in any event no later than 60 days after such request (such 60th day, the
"Target Date") or (2) pay to the Holder, within one (1) Trading Day from the
request therefor, an amount in cash equal to the product of (x) the Excess
Warrant Shares multiplied by (y) the closing sales price of the Common Stock on
(a) the Target Date or (b) the Date of Exercise giving rise to the obligation to
seek Shareholder Approval, whichever is greater (the "Cash Payment"). In the
event the Holder has elected to require the Company to seek the Shareholder
Approval pursuant to clause (1) of the immediately preceding sentence and the
Company does not obtain the Shareholder Approval on or prior to the Target Date,
then, on the Target Date, the Company shall pay the Cash Payment to the Holder.
If the Company fails to pay the Cash Payment in full pursuant to this Section
within seven (7) days after the date payable, the Company will pay interest on
such amount at a rate of 18% per annum, or such lesser maximum amount that is
permitted to be paid by applicable law, to the Holder, accruing daily from the
date payable until such amount, plus all such interest thereon, is paid in full.
The Company and the Holder understand and agree that shares of Common Stock
issued upon exercise of this Warrant and
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14
then held by the Holder or an affiliate thereof may not cast votes or be deemed
outstanding for purposes of any vote to obtain the Shareholder Approval.
11. Fractional Shares. The Company shall not be required to issue or cause
to be issued fractional Warrant Shares on the exercise of this Warrant. The
number of full Warrant Shares which shall be issuable upon the exercise of this
Warrant shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of this Warrant so presented. If any fraction of a
Warrant Share would, except for the provisions of this Section 11, be issuable
on the exercise of this Warrant, the Company shall pay an amount in cash equal
to the Exercise Price multiplied by such fraction.
12. Notices. Any and all notices or other communications or deliveries
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
Section 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 nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to be
given. The addresses for such communications shall be: (i) if to the Company, to
Suite 400, 000 - 0xx Xxxxxx, X.X. Calgary, Alberta, Canada T2P 1G6, facsimile:
(000) 000-0000, attention Chief Financial Officer, and facsimile: (403)
209-6125, attention General Counsel (except for exercise notices) or (ii) if to
the Holder, to the Holder at the address or facsimile number appearing on the
Warrant Register or such other address or facsimile number as the Holder may
provide to the Company in accordance with this Section.
13. Warrant Agent.
(a) The Company shall serve as warrant agent under this Warrant. Upon
thirty (30) days' notice to the Holder, the Company may appoint a new warrant
agent.
(b) Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.
14. Miscellaneous.
-14-
15
(a) This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns. This Warrant may be
amended only in writing signed by the Company and the Holder and their
successors and assigns.
(b) Subject to Section 14(a), above, nothing in this Warrant shall be
construed to give to any person or corporation other than the Company and the
Holder any legal or equitable right, remedy or cause under this Warrant. This
Warrant shall inure to the sole and exclusive benefit of the Company and the
Holder.
(c) The corporate laws of the State of Nevada shall govern all issues
concerning the relative rights of the Company and its stockholders. All other
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. The Company and the Holder hereby
irrevocably submit to the exclusive jurisdiction of the state and federal courts
sitting in the City of New York, borough of Manhattan, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, or that such suit,
action or proceeding is improper. Each of the Company and the Holder hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by receiving a copy thereof sent
to the Company at the address in effect for notices to it under this instrument
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.
(d) The headings herein are for convenience only, do not constitute a
part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
(e) In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Warrant shall not in any way be affected
or impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
[REMAINDER OF XXXX INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its authorized officer as of the date first indicated above.
JAWZ INC.
By:_____________________________________
Name:
Title:
-16-
17
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To JAWZ Inc.
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase _____________
shares of common stock ("Common Stock"), $.001 par value per share, of JAWZ Inc.
and, if such Holder is not utilizing the cashless exercise provisions set forth
in this Warrant, encloses herewith $________ in cash, certified or official bank
check or checks, which sum represents the aggregate Exercise Price (as defined
in the Warrant) for the number of shares of Common Stock to which this Form of
Election to Purchase relates, together with any applicable taxes payable by the
undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
_______________________________________
________________________________________________________________________________
(Please print name and address)
If the number of shares of Common Stock issuable upon this exercise shall
not be all of the shares of Common Stock which the undersigned is entitled to
purchase in accordance with the enclosed Warrant, the undersigned requests that
a New Warrant (as defined in the Warrant) evidencing the right to purchase the
shares of Common Stock not issuable pursuant to the exercise evidenced hereby be
issued in the name of and delivered to:
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
________________________________________________________________________________
Dated:______________, _____ Name of Holder:
(Print)__________________________
(By:)____________________________
(Name:)
(Title:)
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
18
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of JAWZ Inc. to which
the within Warrant relates and appoints ________________ attorney to transfer
said right on the books of JAWZ Inc. with full power of substitution in the
premises.
Dated:
_______________, ____
_________________________________________
(Signature must conform in all respects
to name of holder as specified on the face of the
Warrant)
_________________________________________
Address of Transferee
_________________________________________
_________________________________________
In the presence of:
__________________________
19
Exhibit A
(i) "Adjustment Price" means for each applicable Trading Day, the Volume
Weighted Average Price of the Common Stock for that Trading Day.
(ii) "Business Day" shall have the meaning set forth in the Purchase
Agreement.
(iii) "Commission" means the Securities and Exchange Commission.
(iv) "Daily Share Number" means the actual number of shares of Common Stock
purchased and paid for by the Holder pursuant to the Purchase Agreement divided
by 240 annual Trading Days, being 23,333 shares of Common Stock.
(v) "Effective Date" shall have the meaning set forth in the Purchase
Agreement.
(vi) "Mandatory Redemption Price" for each Warrant Share to be redeemed
shall equal the sum of (i) 120% multiplied by the greater of the average of the
Volume Weighted Average Prices for the five (5) Trading Days preceding the (A)
date of the delivery of the Event Vesting Notice, and (B) date the Mandatory
Redemption Price is paid in full, and (ii) all other amounts, costs, expenses
and liquidated damages due in respect of such Warrant Share.
(vii) "Nasdaq" means the Nasdaq National Market.
(viii) "Purchase Agreement" means the Securities Purchase Agreement, dated
August 21, 2000, amended as of the date hereof, to which the Company and the
original Holder are parties and pursuant to which this Warrant was issued.
(ix) "Purchase Price" means $1.25 per share (which number shall be subject
to equitable adjustment for stock splits, recombinations and similar events).
(x) "Registration Date" the date on which the Underlying Shares
Registration Statement is first declared effective by the Commission.
(xi) "Registration Rights Agreement" means the Registration Rights
Agreement, dated the date hereof to which the Company and the original Holder
are parties.
(xii) "Subsequent Market" shall mean any of the New York Stock Exchange,
American Stock Exchange, Nasdaq SmallCap Market or National Quotation Bureau,
Inc..
(xiii) "Trading Day" means (a) a day on which the Common Stock is traded on
the Nasdaq or on the Subsequent Market on which the Common Stock is then listed
or quoted, as the case may be, or (b) if the Common Stock is not listed on the
Nasdaq or a Subsequent Market, a day on which the Common Stock is traded in the
over-the-counter market, as reported by the OTC Bulletin Board , or (c) if the
Common Stock is not quoted on the OTC Bulletin Board, a day on which the Common
Stock is quoted in the over-the-counter market as reported by the National
Quotation Bureau Incorporated (or any similar organization or agency succeeding
its functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (a), (b) and (c) hereof, then
Trading Day shall mean a Business Day.
(xiv) "Transaction Documents" shall have the meaning set forth in the
Purchase Agreement.
20
(xv) "Underlying Shares Registration Statement" shall have the meaning
ascribed to it in the Purchase Agreement.
(xvi) "Volume Weighted Average Price" means on any particular Trading Day
(a) the Volume Weighted Average Price per share of the Common Stock on such date
on the Nasdaq (based on a Trading Day from 9:30 a.m. to 4:00 p.m. EST) or on any
Subsequent Market on which the Common Stock is then listed or quoted, as
reported by Bloomberg Information Services, Inc. (or any successor entity, such
as Bloomberg Financial, L.P., succeeding to its function of reporting prices)
using the AQR function for the Common Stock for such Trading Day (the "VWAP"),
or if there is no such price on such date, then the VWAP on the Nasdaq or on
such Subsequent Market on the date nearest preceding such date, as reported by
Bloomberg Information Services, Inc. (or any successor entity, such as Bloomberg
Financial, L.P., succeeding to its function of reporting prices), or (b) if the
Common Stock is not then listed or quoted on the Nasdaq or a Subsequent Market,
the Volume Weighted Average Price for a share of Common Stock in the
over-the-counter market, as reported by the National Quotation Bureau
Incorporated (or similar organization or agency succeeding to its functions of
reporting prices) at the close of business on such date, or (c) if the Common
Stock is not then reported by the National Quotation Bureau Incorporated (or
similar organization or agency succeeding to its functions of reporting prices),
then the Volume Weighted Average of the "Pink Sheet" quotes for the relevant
Trading Day, as determined in good faith by the Holder, or (d) if the Common
Stock is not then publicly traded the fair market value of a share of Common
Stock as determined by an Appraiser selected in good faith by the Holders of a
majority of the applicable Warrant Shares (the Holders shall select two such
Appraisers, one of which will be a nationally recognized investment banking or
accounting firm, and the Company may then choose one of the two Appraisers
selected).
