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SHARE PURCHASE AGREEMENT
Dated the 15th day August, 2000
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JAWS ACQUISITION CANADA CORP.
-AND-
JAWS TECHNOLOGIES, INC.
-AND-
THE SHAREHOLDERS OF 0XXXX.XXX INC.
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TABLE OF CONTENTS
Page Number
ARTICLE 1.
INTERPRETATION
SECTION 1.1 DEFINITIONS 1
SECTION 1.2 EXPANDED MEANINGS 4
SECTION 1.3 ENTIRE AGREEMENT 5
SECTION 1.4 HEADINGS AND TABLE OF CONTENTS 5
SECTION 1.5 SEVERABILITY 5
SECTION 1.6 NOT A BUSINESS DAY 5
SECTION 1.7 CONSENTS AND APPROVALS 5
SECTION 1.8 SCHEDULES 6
ARTICLE 2.
PURCHASE AND SALE
SECTION 2.1 PURCHASE AND SALE 6
ARTICLE 3.
PAYMENT
SECTION 3.1 PAYMENT OF PURCHASE CONSIDERATION 6
SECTION 3.2 ESCROW PROVISIONS 7
SECTION 3.3 INCOME TAX ELECTIONS 7
ARTICLE 4.
REPRESENTATIONS
SECTION 4.1 REPRESENTATIONS OF THE VENDORS 8
SECTION 4.2 REPRESENTATIONS OF JAWS AND THE PURCHASER 14
ARTICLE 5.
Vendors'S COVENANTS
SECTION 5.1 COVENANTS OF THE VENDORS 14
ARTICLE 6.
NO MERGER AND SURVIVAL
SECTION 6.1 NON-MERGER 16
SECTION 6.2 SURVIVAL 16
ARTICLE 7.
INDEMNITY
SECTION 7.1 VENDORS'S INDEMNITY 16
ARTICLE 8.
PRE-CLOSING MATTERS
SECTION 8.1 COVENANTS OF THE VENDORS 17
SECTION 8.2 COVENANTS OF THE PURCHASER AND JAWS 17
SECTION 8.3 EXAMINATION AND INVESTIGATION BY THE PURCHASER AND JAWS 18
SECTION 8.4 EXAMINATION AND INVESTIGATION BY THE VENDORS 18
SECTION 8.5 CORPORATION'S FINANCIAL STATEMENTS 18
SECTION 8.6 JAWS' FINANCIAL STATEMENTS 18
ARTICLE 9.
NON-DISCLOSURE AND USE OF INFORMATION
SECTION 9.1 USE OF CORPORATION'S INFORMATION 19
SECTION 9.2 USE OF PURCHASER'S INFORMATION 20
SECTION 9.3 PRESS RELEASES 21
ARTICLE 10.
CONDITIONS PRECEDENT TO THE PERFORMANCE UNDER THIS AGREEMENT
SECTION 10.1 PURCHASER'S CONDITIONS 21
SECTION 10.2 VENDORS' CONDITIONS 24
SECTION 10.3 RIGHTS OF THE PURCHASER 24
SECTION 10.4 RIGHTS OF THE VENDORS 25
SECTION 10.5 RIGHTS OF TERMINATION 25
ARTICLE 11.
CLOSING
SECTION 11.1 PLACE OF CLOSING AND CLOSING TIME 25
SECTION 11.2 DELIVERIES BY VENDORS 25
SECTION 11.3 DELIVERIES OF THE PURCHASER AND JAWS AT CLOSING 26
SECTION 11.4 CLOSING ESCROW 26
ARTICLE 12.
MISCELLANEOUS
SECTION 12.1 GOVERNING LAW AND ATTORNMENT 27
SECTION 12.2 TIME OF THE ESSENCE 27
SECTION 12.3 NOTICES 27
SECTION 12.4 PRIOR AGREEMENTS 28
SECTION 12.5 FURTHER ASSURANCES 28
SECTION 12.6 ENUREMENT 28
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made the 15th day of August, 2000.
BETWEEN:
JAWS ACQUISITION CANADA CORP., a corporation incorporated under the
laws of the Province of Alberta, Canada.
(herein called the "Purchaser")
- and -
JAWS TECHNOLOGLES, INC., a corporation incorporated under the
laws of the State of Delaware, U.S.A.,
(herein called "JAWS")
- and -
THE PARTIES HEREIN DEFINED
AS AND WHO EXECUTE THIS AGREEMENT
AS THE VENDORS (herein called the "Vendors")
WHEREAS the Vendors wish to sell and convey their respective Vendor's
Rights to the Purchaser and the Purchaser wishes to purchase and receive such
Vendors's Rights from the Vendors in exchange for the Purchase Consideration.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
premises hereto and the mutual covenants, warranties, representations,
agreements and payments herein set forth, the Parties hereto agree as follows:
ARTICLE 1.
INTERPRETATION
SECTION 1.1 DEFINITIONS
In this Agreement, including the premises hereto, this clause and any
Schedules hereto, the words and phrases set forth below shall have the meaning
ascribed thereto below, namely:
"Business Day" means a day other than a Saturday or Sunday or a statutory
holiday in the City of Calgary, in the Province of Alberta.
"Closing Date" means August 15, 2000 or such other date as the parties may
mutually determine.
"Closing Time" means 10:00 a.m. on the Closing Date or as agreed upon by
the parties.
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"Corporation" means 0Xxxx.xxx Inc.
"Corporation's Assets" means all the Property owned or held by the Corporation
or to which the Corporation is entitled as more particularly described in
Schedule "A".
"Corporation's Financial Statements" means the most recent unaudited financial
statements of the Corporation dated the ___ day of August, a copy of which are
attached as Schedule "B".
"Corporation's Shares" means the common voting shares in the capital of the
Corporation, as the same exist at the date hereof and at the Closing Date.
"Escrow Agent" means Montreal Trust Company of Canada;
"Escrow Agreement" means the escrow agreement between JAWS, the Purchaser, the
Vendors and the Escrow Agent, dated as of the Closing Date;
"Exchangeable Shares" means the exchangeable shares of the Purchaser, which
shares have the rights, privileges, restrictions and conditions as more
particularly set out in Schedule "D" attached hereto to be issued by the
Purchaser as the Purchase Consideration.
"JAWS" means JAWS Technologies, Inc., a Delaware Corporation, whose common
shares trade on the NASDAQ National Board in the United States of America.
"JAWS Shares" means a total of 1,444,221 common shares in the capital stock of
JAWS that are tradeable on the NASDAQ National Board, to be issued by JAWS in
exchange for the Exchangeable Shares.
"Party" or "Parties" means a party or parties to and bound by this Agreement.
"Permitted Encumbrances" means, in respect of the Corporation's Assets, the
encumbrances set out in Schedule "C" hereto or as the case may be:
(a) inchoate liens, taxes, assessments or governmental charges which are
due or which are not delinquent; and
(b) inchoate liens incurred or created in the ordinary course of business
as security in favour of any other person who is conducting the
development or operation of the property to which such liens relate for
the Corporation's or the Purchaser's share of the costs and expenses of
such development or operation, as the case may be, the payment of which
is not then due;
"Person" means any individual, corporation, body corporate, partnership, joint
venture, association, group, trust, or other legal entity and includes any duly
constituted government of or in Canada and any minister, department, commission,
board, bureau, agency, authority, instrumentality or court and the like of any
such government.
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"Property" means the interests of the Corporation, the Purchaser or JAWS, as the
case may be, in and to all property, assets and rights, including, without
limiting the generality of the foregoing, the entire interest of such Party in
and to:
(a) all contracts, agreements, documents, production sales contracts,
books, records and reports relating to the provision of products and
services to its customers and any and all rights in relation thereto;
(b) all intellectual property and rights developed, acquired or
incorporated into the products and services of the Corporation, the
Purchaser or JAWS, as the case may be, or purchased in the course of
carrying on the business of the Corporation, the Purchaser or JAWS, as
the case may be.
"Purchaser" means Jaws Acquisition Canada Corp., an Alberta Corporation, whose
articles of incorporation have created a class of exchangeable shares, that are
exchangeable into common shares in the capital stock of JAWS and is a wholly
owned subsidiary of JAWS.
"Purchase Consideration" means (in $ USD):
(1) $142,963 cash on the Closing Date plus the working capital of
0Xxxxx.xxx equal to $112,884 CDN as at July 15, 2000 (the parties agree
that the working capital review is subject to review, verification and
adjustment as required);
(2) $ 457,037 worth of Exchangeable Shares on the Closing Date at the
Trading Price to be registered in accordance with section 3.1.1.2; and
(3) $ 4,694,007 worth of Exchangeable Shares to be issued in accordance
with Article 3 at the Trading Price;
"Purchase Price" means Five Million Two Hundred Ninety Four Thousand Seven
Dollars ($ 5,294,007) United States Dollars plus working capital of $112,884
CDN.
"Purchaser's Assets" means the Property owned or held by the Purchaser or JAWS
Technologies, Inc.;
"Regulations" means all applicable statutes, laws, rules, orders, regulations,
directives or other instruments (and all applicable requirements thereunder) of
any governmental agencies or authorities in the United States of America or
Canada having jurisdiction over the Parties, the Corporation, the Corporation's
Assets, or the specific property or matter in question, in effect from time to
time.
"Support Agreement" means the support agreement between JAWS and the Purchaser,
dated effective, August 1, 2000;
"SuperHighway Systems, Inc." means SuperHighway Systems, Inc., a corporation
incorporated in the Province of Ontario, owned and directed by Xxxxxxxx Xxxxxx
and Xxxxxx Slodichak;
"Trading Price" means $3.2502 USD;
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"Vendors" mean:
Xxxxxxxx Xxxxxx;
Xxxxxx Slodichak; and
1423001 Ontario Limited.
"Vendors's Rights" means, in respect of a Vendor, all:
(a) the Vendors's Shares,
(b) amounts owing to the Vendors, by the Corporation, whether presently due or
otherwise, except those amounts listed in Schedule "C"; and
(c) rights to acquire any securities of the Corporation, from the Corporation
or from any other Person, howsoever granted or acquired.
"Vendors's Shares" means, in respect of the Vendors, all the issued and
outstanding shares of the Corporation owned by the Vendors, or to which the
Vendors are entitled, at the Closing Date, as follows:
Xxxxxxxx Xxxxxx - 557,285 Class D Preference Shares
Xxxxxx Slodichak - 267,715 Class D Preference Shares
1423001 Ontario Limited - 100 Class B Shares
"Voting and Exchange Trust Agreement" means the voting and exchange trust
agreement between JAWS, the Purchaser and Montreal Trust Company of Canada,
dated August 11, 2000;
SECTION 1.2 EXPANDED MEANINGS
Unless the context otherwise necessarily requires, the following
provisions shall govern the interpretation of this Agreement:
1.2.1 Words used herein importing the singular number only shall include
the plural and vice versa, and words importing the use of any gender
shall include all genders;
1.2.2 the terms "in writing" or "written" include printing, typewriting,
or any electronic means of communication by which words are capable
of being visually reproduced at a distant point of reception,
including by telecopier or telex;
1.2.3 references herein to any agreement or instrument, including this
Agreement, shall be deemed to be references to the agreement or
instrument as varied, amended, modified, supplemented or replaced
from time to time, and any specific references herein to any
enactment shall be deemed to be references to such enactment as the
same may be amended or replaced from time to time; and
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1.2.4 "this Agreement" "the Agreement" "hereto", "herein", "hereby",
"hereunder", "hereof" and similar expressions refer to this Share
Purchase Agreement and not to any particular Article, Section,
Subsection, clause, subdivision or other portion hereof and include
any and every instrument amending, supplementing or replacing this
agreement.
SECTION 1.3 ENTIRE AGREEMENT
This Agreement and all schedules attached hereto together with the
agreements and other documents to be executed and delivered pursuant hereto,
constitute the entire agreement between the Parties and supersedes all other
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties and there are no warranties, representations, covenants
or other agreements between the Parties except as specifically set forth herein.
No supplement, modification or waiver or termination of this Agreement shall be
binding unless executed in writing by the Party to be bound thereby. No waiver
of any of the provisions of this Agreement shall be valid unless in writing and
no such waiver shall constitute nor be deemed to constitute a waiver of any
other provisions (whether or not similar) nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
SECTION 1.4 HEADINGS AND TABLE OF CONTENTS
The division of this Agreement into articles, sections and other
subdivisions, the provision of a table of contents and the insertion of headings
are for convenience of reference only and shall not affect or be utilized in the
construction or interpretation hereof.
SECTION 1.5 SEVERABILITY
If any one or more of the provisions or parts thereof contained in
this Agreement should be or become invalid, illegal or unenforceable in any
respect in any jurisdiction, the remaining provisions or parts thereof contained
herein shall be and shall be conclusively deemed to be, as to such jurisdiction,
severable therefrom and:
1.5.1 the validity, legality or enforceability of such remaining
provisions or parts thereof shall not in any way be affected or
impaired by the severance of the provisions or parts thereof
severed; and
1.5.2 the invalidity, illegality or unenforceability of any provision or
any part thereof contained in this Agreement in any jurisdiction
shall not effect or impair such provision or part thereof or any
other provisions of this Agreement in any other jurisdiction.
SECTION 1.6 NOT A BUSINESS DAY
In the event that any day on or before which any action is required
to be taken hereunder is not a Business Day, then such action shall be required
to be taken on or before the requisite time on the next succeeding day that is a
Business Day.
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SECTION 1.7 CONSENTS AND APPROVALS
It shall be a condition hereof that any consent or approval of any
Party hereto, required hereby, shall be obtained in writing prior to the event
for which it is required.
SECTION 1.8 SCHEDULES
The following are the Schedules referred to and incorporated in this
Agreement, which are deemed to be a part hereof:
Schedule "A" - Corporation's Assets
Schedule "B" - Corporation's Financial Statements
Schedule "C" - Permitted Encumbrances & Liabilities
Schedule "D" - Exchangeable Share Provisions
Schedule "E" - Earn-out Provisions
ARTICLE 2.
PURCHASE AND SALE
SECTION 2.1 PURCHASE AND SALE
Subject to the terms and conditions of this Agreement, the Vendors
hereby sell, assign, transfer and convey to the Purchaser and the Purchaser
hereby purchases and acquires from the Vendors the Vendors's Rights, effective
as of the Closing Date, to have and hold the same together with all benefits and
advantages to be derived therefrom, absolutely, subject only to the terms and
conditions of this Agreement, at and for the Purchase Consideration equal to the
Purchase Price.
ARTICLE 3.
PAYMENT
SECTION 3.1 PAYMENT OF PURCHASE CONSIDERATION
3.1.1 Purchase Consideration - Subject to Article 3.2, the Purchase
Consideration equal to the Purchase Price shall be payable by the
Purchaser to the Vendors by:
3.1.1.1 the payment of $142,963 and the working capital of
$112,884 CDN on the Closing Date;
3.1.1.2 the issuance to the Vendors of 140,618 Exchangeable
Shares at the Trading Price in accordance with the table
Set out below on the Closing Date to be registered
pursuant to an S-1 registration statement filed with the
Securities and Exchange Commission in accordance with the
Securities Act of 1933 (United States) within 90 days of
the Closing Date;
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Vendors # of shares to be released on the Closing Date
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Xxxxxxxx Xxxxxx 69,911
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Xxxxxx Slodichak 33,585
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1423001 Ontario Limited 37,122
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and
3.1.1.3 the issuance of 1,444,221 Exchangeable Shares at the
Trading Price on the Closing Date to be released in
accordance with the table set out below and subject to
section 3.2.
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Vendors # of shares to # of shares to # of shares to # of shares to Total
be released be released be released be released
on the 12 months 24 months 36 months
Closing Date after the after the after the
Closing Date Closing Date Closing Date
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1423001 361,055 361,055 361,055 361,055 1,444,220
Ontario
Limited
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SECTION 3.2 ESCROW PROVISIONS
3.2.1 Exchangeable Share Releases - The Exchangeable Shares shall be
released on the Closing Date to the Vendors in accordance with the
provisions of 3.1.1.3, on the Closing Date, on the first (1st),
second (2nd) and third (3rd) 12 month anniversary of the Closing
Date, subject to the Parties giving Notice to the Escrow Agent in
accordance with the terms of the Escrow Agreement and the Earnout
Provisions set out in Schedule "E". Notwithstanding the foregoing,
the Exchangeable Shares to be released on the Closing Date in the
table above are not subject to the Escrow Agreement.
3.2.2 Release from Escrow - The Exchangeable Shares shall be released in
accordance with the terms of the Escrow Agreement and the Earnout
Provisions set out in Schedule "E" attached hereto.
SECTION 3.3 INCOME TAX ELECTIONS
The Purchaser hereby agrees, at the request of the Vendors, to
jointly elect with the Purchaser under subsection 85(1) of the Act, in the
prescribed form and within the time referred to
8
in subsection 85(6) of the Act, with respect to the purchase and sale of the
Exchangeable Shares and for the purposes of such election, the agreed amount in
respect of each Exchangeable Share shall be an amount specified by the Vendor
provided that such amount is within the parameters set forth in the Act.
ARTICLE 4.
REPRESENTATIONS
SECTION 4.1 REPRESENTATIONS OF THE VENDORS
The Vendors hereby separately represent and warrant to the Purchaser and
JAWS, except as set forth in Schedule C, in respect of their Vendors's Rights
that:
4.1.1 Restrictions - There are no restrictions in either the charter
documents or the by-laws of the Corporation, each as amended, nor
are there any collateral agreements or rights of first refusal or
other pre-emptive rights of purchase, which would arise by reason of
the execution of this Agreement, completion of the sale or otherwise
and affect the transferability of the Vendors's Rights from the
Vendors to the Purchaser.
4.1.2 Title to the Vendors's Rights - The Vendors each has good and
marketable title to the Vendors's Rights free and clear of any
mortgages, liens, charges, security interests, adverse claims,
pledges, encumbrances, options, pre-emptive rights of purchase (such
as rights of first refusal), restrictions, claims or demands of any
kind or nature whatsoever.
4.1.3 Assets of the Corporation - Other than the Corporation's Assets and
as disclosed in the Corporation's Financial Statements, the
Corporation has no property, assets or undertakings of any nature or
kind whatsoever.
4.1.4 Insurance - During the period from the date of the Corporation's
Financial Statements until the Closing Time:
4.1.4.1 the Corporation's Assets shall be insured by the
Corporation against loss or damage under contracts of
insurance with reputable insurers which insurance is
customary for the Corporation's business for both the
type of coverage and the coverage amount; and
4.1.4.2 all third Party insurable liabilities of the Corporation
shall be insured against on an occurrence basis under
the contracts of insurance.
4.1.5 Policies of Insurance - In connection with any and all policies of
insurance:
4.1.5.1 neither the Vendors nor the Corporation:
(a) has misrepresented or omitted to disclose to the
insurers thereunder or in connection therewith any
material fact or is in default with respect to any of
the provisions contained in any such insurance policy,
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(b) has failed to give any notice or present any claim under
any such policy in due and timely fashion, and no such
claim is outstanding and in dispute,
4.1.5.2 the Corporation, or the lessor of the equipment leased
by the Corporation, is the named insured with loss
payable to it, or the lessor as the case may be, on
those policies owned by it or obtained for their
benefit; and
4.1.5.3 there is no outstanding request, notice or order from
any insurer for any modification to or remedial action
in respect of any of the insured assets or premises
included in the Corporation's Assets.
4.1.6 Capital Structure - The authorized share capital of the Corporation
consists of an unlimited number of Class A Shares, an unlimited
number of Class B Shares and an unlimited number of Class C Shares
of which only 1510 Class B Shares are issued and outstanding as
fully paid and non-assessable. No securities, options, warrants or
other rights to purchase shares or other securities of the
Corporation have been authorized or agreed to be issued or are
outstanding except as contemplated by this Agreement.
4.1.7 Financial Statements of the Corporation - The Corporation's
Financial Statements have been prepared in accordance with
applicable law and generally accepted accounting principles and
present fairly the financial position as at the dates indicated and
the results of operation of the Corporation for the period indicated
and no material adverse change in such financial position or such
results of operations has occurred since the date thereof
4.1.8 No Undisclosed Liabilities - The Corporation is not subject to any
liability or liabilities, absolute or contingent, which individually
or in the aggregate are material, and which are not disclosed, or
which are in excess of the amounts disclosed or reserved for in, the
balance sheet of the Corporation or which are not otherwise
disclosed in this Agreement, other than liabilities of the same
nature as those set forth in the Corporation's Financial Statements
or disclosed herein and reasonably incurred in the usual and
ordinary course of business to the Closing Date, provided that the
same do not materially and adversely affect the financial position
of the Corporation.
4.1.9 Material Contracts - The Corporation is not in default under any
material contract, nor are the Vendors aware of any default by any
other Party under any material contract, and the Vendors are not
aware of any facts or circumstances which would, with the giving of
notice or the lapse of time, give rise to a default by the
Corporation under a material contract.
4.1.10 Taxes - With respect to its taxes:
4.1.10.1 the Corporation has, at the prescribed times:
(a) filed all tax returns required to be filed by it in all
applicable jurisdictions,
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(b) made and remitted all required or desirable deductions
or withholdings at source, and
(c) paid all taxes, levies, assessments, reassessments,
penalties, interest and fines due and payable by it;
4.1.10.2 all such tax returns properly reflect, and do not in any
respect understate, the taxable income or the liability
for taxes of the Corporation in the relevant tax year or
calendar year;
4.1.10.3 adequate provision has been made in the Corporation's
Financial Statements for all taxes, governmental
charges, and assessments, whether relating to income,
sales, real or personal property, or other types of
taxes, governmental charges, or assessments, including
interest and penalties thereon, payable in respect of
the business or assets of the Corporation or otherwise,
for all relevant periods;
4.1.10.4 All provincial and federal income tax assessments have
been issued to the Corporation covering all past periods
up to and including the Corporation's fiscal year ending
in December 31, 1999 and any assessments for stub
periods thereafter, and such assessments, if any amounts
were owing in respect thereof, have been paid;
4.1.10.5 assessments for all other applicable federal and
Provincial taxes and levies have been issued and any
amounts owing thereunder have been paid;
4.1.10.6 there are no actions, suits or other proceedings or
investigations or claims in progress, pending or, to the
best of the Vendor's knowledge, threatened against the
Corporation in respect of any taxes, governmental
charges, or assessments and, in particular, there are no
currently outstanding reassessments or written enquiries
that have been issued or raised by any governmental
authority relating to any such taxes, governmental
charges and assessments;
4.1.10.7 to the knowledge of the Vendors, there is no basis for
any adverse reassessment by any taxing authority for any
year remaining open for reassessment; and
4.1.10.8 the Corporation has not waived any statutory period for assessment
of any tax. Without limiting the generality of the foregoing, the
Corporation is in absolute compliance with all registration, timely
reporting, and remittance obligations in respect of all Provincial
and Federal sales tax legislation and of any other Provincial or
Federal tax it may be subject to.
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4.1.11 No Indebtedness to Corporation - The Vendors are not indebted to the
Corporation.
4.1.12 Accounts Receivable Collectible - All accounts receivable are bona
fide, good and collectable, without set off or counterclaim and to
the best of the Vendor's knowledge all such accounts receivable
shall be paid in a timely fashion subject to a reasonable reserve
for bad debts.
4.1.13 Amounts In Trust - There are no amounts deposited in trust, for the
benefit of any third party, with the Corporation as at the date
hereof except as listed in Schedule "C".
4.1.14 No Material Adverse Change - There has been no material adverse
change in the business, assets, liabilities or financial condition
of the Corporation since date of the Corporation's Financial
Statements dated June 30, 2000.
4.1.15 Distributions to Shareholders - Since the date of the Corporation's
Financial Statements, the Corporation has not declared or made any
payment of any dividend or other distribution in respect of any
shares in its capital or purchased or redeemed any such shares or
effected any subdivision, consolidation, reclassification or other
modification of its share capital which has not been approved in
writing by the Purchaser prior to the Closing Date.
4.1.16 Withholding Amounts - The Corporation has withheld all amounts
required to be withheld, including without limiting the generality
of the foregoing, all amounts required to be withheld under the
Income Tax Act (Canada), for employment insurance and for the Canada
Pension Plan and any other amounts required by law to be withheld
from any payments made to any of the officers, directors and
employees of the Corporation, and these witholdings have been or
will be paid to the proper taxing authority or receiving offices.
4.1.17 Corporate Records - The corporate records and minute books of the
Corporation contain all minutes of the meetings of directors and
shareholders of the Corporation are complete, accurate and
up-to-date and the stock register of the Corporation is complete and
accurate in all material respects.
4.1.18 Breach of Order - The Corporation is not in, and has not received
notice of any, material default under any order, writ, injunction or
decree of any court or governmental agency or authority having
jurisdiction, nor any agreement or obligation by which the
Corporation is bound or to which it is subject and which materially
affects or relates to the Corporation.
4.1.19 No Subsidiaries - The Corporation does not have any ownership
interest (either directly or indirectly) in any other entity, nor is
it a party to or bound by any agreement to acquire such an interest,
4.1.20 Employees - There are no written employment contracts or incentive
plans in effect between the Corporation and any employee in respect
of which either the Corporation
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or the Purchaser shall have any obligations subsequent to the
Closing Date except as noted in Schedule "C".
4.1.21 Guarantee and Indemnity Agreements - The Corporation is not a party
as guarantor or indemnitor to any agreements of guarantee or
indemnity for debts or obligations of the Vendors or any other
person.
4.1.22 Debt Instruments - On the Closing Date the Corporation will not have
any outstanding bonds, debentures, mortgages, notes or other
evidence of indebtedness other than trade debts, trade accounts or
similar obligations entered into in the ordinary course of the
Corporation's business and as listed on Schedule B hereto, and the
Corporation is not under my obligation to create or issue any bonds,
debentures, mortgages, notes or other indebtedness.
4.1.23 Incentive Payments - To the best knowledge of the Vendors, the
Corporation has not received any incentives, credits, grants or
other governmental assistance pursuant to the Regulations in effect
at the relevant time which will have to be repaid by the
Corporation, or if accrued in the books and records of the
Corporation, will be disallowed.
4.1.24 Workers' Compensation - All payments due to the Workplace Safety &
Insurance Board (or similar body in any other jurisdiction) in
respect of the Corporation are current.
4.1.25 Bank Accounts - All information with respect to all deposits of
money with any bank, trust company, treasury branch or other entity
empowered or authorized to receive and hold deposits of money and
includes any and all deposit certificates or receipts or other
instrument of like tenor, held for or in the name of the
Corporation, have been provided to the Purchaser.
4.1.26 Execution of Agreement - The execution and delivery of this
Agreement and each and every agreement or document to be executed
and delivered hereunder and the consummation of the transactions
contemplated herein will not violate, nor be in conflict with, any
provision of any agreement or instrument to which the Vendors are a
parry or the Corporation is bound, or any judgment, decree, order,
statute, rule or regulation applicable to the Vendors or the
Corporation.
4.1.27 Binding Obligation - This Agreement has been duly executed and
delivered by the Vendors and constitutes legal, valid and binding
obligations of the Vendors enforceable in accordance with its terms.
4.1.28 Broker's Fees - The Vendors have not incurred any obligation or
liability, contingent or otherwise, for brokers' or finders' fees in
respect of this transaction for which the Purchaser shall have any
obligation or liability.
4.1.29 Defaults under Statutes - The Corporation has not received any
notices of any breach of any statutes, regulations, rules, orders
and directives, including but not limited to
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those pertaining to environmental matters, of all governmental
agencies, departments and authorities having jurisdiction over the
business of the Corporation.
4.1.30 Operating Records - The books and records of the Corporation
disclose all material transactions entered into by the Corporation
or on its behalf to the Closing Date.
4.1.31 Deterrence - Except for information relating to general economic
climate and general industry conditions and any changes of law, the
Vendors have no information or knowledge of any fact relating to the
Vendors's Rights, the Corporation's business or the Corporation's
ownership and operation of the Corporation's Assets not disclosed to
the Purchaser or JAWS which, if known to the Purchaser or JAWS,
might reasonably be expected to deter the Purchaser from completing
the transactions herein contemplated.
4.1.32 Title - The Vendors do not warrant title to the Corporation's
Assets, provided however, the Vendors does represent and warrant
that the Corporation has not done anything whereby any of the
Corporation's interest in and to the Corporation's Assets may be
cancelled or determined, nor has the Corporation or the Vendors
encumbered or alienated same and the Corporation's Assets shall be,
at the Closing Date, free and clear of all liens, encumbrances,
adverse claims, demands and royalties created by, through or under
the Vendors or the Corporation except for the Permitted Encumbrances
or as expressly set forth in Schedule "A". Except as otherwise
provided herein, neither the Vendors nor the Corporation have
received notice of any material defect in the Corporation's title to
the Corporation's Assets.
4.1.33 Notices of Default - The Corporation has received no notices of
default relating to the Corporation's Assets or any of them.
4.1.34 Lawsuits - The Corporation is not a party to any action, suit or
other legal, administrative or arbitration proceeding or government
investigation, actual or, to the best of the Vendor's knowledge,
threatened, which might reasonably be expected to result in a
material impairment or loss of the Corporation's interest in the
Corporation's Assets or any part thereof and no particular
circumstance, matter or thing has become known to the Vendors which
could reasonably be anticipated to give rise to any such action,
suit or other legal, administrative or arbitration proceeding or
government investigation.
4.1.35 Financial Commitments - There are no financial commitments which are
outstanding or due, or that hereafter may become due in respect of
the Corporation or the Corporation's Assets, or operations in
respect of the Corporation's Assets and which shall become the
responsibility of the Purchaser except as disclosed in Schedule "C".
4.1.36 Pre-emptive Rights - All rights of first refusal or other
pre-emptive rights applicable to any disposition of the
Corporation's Assets have been waived or satisfied in all respects.
4.1.37 SuperHighway Systems Inc. - this Corporation will file articles of
dissolution, as soon as it they be reasonably filed after the
Closing Date.
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SECTION 4.2 REPRESENTATIONS OF JAWS AND THE PURCHASER
JAWS and the Purchaser hereby represent and warrant to the Vendors
in respect of the purchase of the Vendors' Rights that:
4.2.1 Organization of Jaws and The Purchaser - JAWS and the Purchaser are
both a corporation duly organized and existing under the laws of its
jurisdiction of incorporation and the laws of those jurisdictions in
which it is required to be registered.
4.2.2 Corporate Authority - JAWS and the Purchaser both have all the
requisite power and authority to enter into this Agreement, to
purchase and pay for and accept title to the Vendors's Rights on the
terms described herein and to perform the Purchaser's and JAWS'
other obligations under this Agreement.
4.2.3 Execution of Agreement - The execution and delivery of this
Agreement and each and every agreement or document to be executed
and delivered hereunder and the consummation of the transactions
contemplated herein will not violate, nor be in conflict with, any
provision of this Agreement or instrument to which JAWS and the
Purchaser is a party or is bound, or any judgment, decree, order,
statute, rule or regulation applicable to JAWS and the Purchaser or
the constating documents or bylaws of JAWS or the Purchaser.
4.2.4 Binding Obligation - This Agreement has been duly executed and
delivered by JAWS and the Purchaser and constitutes a legal, valid
and binding obligation of JAWS and the Purchaser enforceable in
accordance with its terms.
4.2.5 Broker's Fees - Neither JAWS nor the Purchaser have incurred any
obligation or liability, contingent or otherwise, for brokers' or
finders' fees in respect of this transaction for which the Vendors
shall have any obligation or liability.
ARTICLE 5.
VENDORS'S COVENANTS
SECTION 5.1 COVENANTS OF THE VENDORS
The Vendors hereby separately covenant to and with the Purchaser and JAWS
as follows:
5.1.1 Tax Returns and Other Records - The Vendors shall cause the
Corporation to deliver to the Purchaser any information, books,
accounts, records, tax returns or other data and information
relating to the Corporation on or as soon after the Closing Date as
reasonably possible.
15
5.1.2 Filing Tax Information - The Vendors shall cause the Corporation to
complete and file on a timely basis all returns, forms and elections
required to be filed by the Corporation in respect of its taxation
year ending immediately before the Closing Date and shall cause the
Corporation to pay any tax, interest or penalties payable in respect
thereof and the expenses of the preparation and filing of same.
5.1.3 Securities Law Compliance Regarding Purchaser's Securities Received
- The Vendors acknowledges that the JAWS Shares acquired hereunder
may be subject to resale restrictions under applicable securities
legislation and policies and hereby agrees that the Vendors will
comply with all relevant securities legislation and policies
concerning any resale of such securities and will consult with the
Vendors's own legal advisors with respect to complying with all
applicable restrictions applying to any such resale. The Vendors
agree that the Purchaser shall legend the JAWS Shares, unless
subject to the Registration Right, as follows:
"The securities represented hereby have not been and will not be
registered under the United States Securities Act of 1933, as
amended (the "Securities Act"). These securities may be offered,
sold, pledged or otherwise transferred only (a) to the corporation,
(b) outside the United States in compliance with Rule 903 or 904 of
Regulation S under the Securities Act, (c) in compliance with the
exemption from the registration requirements under the Securities
Act provided by Rule 144 thereunder, if available, and in accordance
with applicable state securities laws, or (d) in a transaction that
does not require registration under the Securities Act or any
applicable state laws and regulations governing the offer and sale
of securities, and the holder has, prior to such sale, furnished to
the corporation an opinion of counsel, of recognized standing, or
other evidence of exemption, reasonably satisfactory to the
corporation, Hedging transactions involving the securities
represented hereby may not be conducted unless in compliance with
the Securities Act."
5.1.4 Compliance for this Trade - If required by applicable securities
legislation, policy or order of any securities commission, stock
exchange or other regulatory authority, subject always to the
conditions precedent contained in section 10.2 hereof, the Vendors
will execute, deliver, file and otherwise assist the Purchaser in
filing, such reports, undertakings and other documents with respect
to this transaction.
5.1.5 Compliance with Future Stock Exchange Requirements - Subject always
to the conditions precedent contained in section 10.2 hereof, the
Vendors agree that if the Vendors are required by any stock exchange
or securities commission to give any undertakings, to file any
personal information or to escrow all or any of the JAWS' Common
Shares received hereunder in order for the Purchaser or any
successor corporation to meet the requirements of such stock
exchange or securities commission in connection with any offering or
listing of shares of the Purchaser or successor corporation, the
Vendors will give all such undertakings, file such personal
information and/or enter into such escrow as shall be required for
such purpose.
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ARTICLE 6.
NO MERGER AND SURVIVAL
SECTION 6.1 NON-MERGER
The covenants, representations and warranties set forth in Articles 4. and
5, shall be deemed to apply to all assignments, conveyances, transfers and
documents conveying any of the Vendors's Rights from the Vendors to the
Purchaser and there shall not be any merger of any covenant, representation or
warranty in such assignments, transfers or documents notwithstanding any rule of
law, equity or statute to the contrary and all such rules are hereby waived.
SECTION 6.2 SURVIVAL
The covenants, representations and warranties set forth in Articles 4. and
5, shall survive the closing of the purchase and sale of the Vendors's Rights
and, notwithstanding such closing or any investigation made by or on behalf of
the Vendors or the Purchaser, shall continue in full force and effect for the
benefit of the other Party, provided, however, that:
6.2.1 the covenants, representations and warranties of the Vendors, JAWS
and the Purchaser, except those relating to the tax liability of the
Corporation, shall terminate at the expiry of one year following the
Closing Date;
6.2.2 those covenants, representations and warranties of the Vendors, JAWS
and the Purchaser relating to the tax liability of the Corporation,
shall, unless resulting from any negligent misrepresentations made
or fraud committed in filing a return or supplying information for
the purposes of any Regulations or any other legislation imposing
tax on the Corporation terminate at the expiry of the last of the
limitation periods contained in the applicable Regulations or any
other legislation imposing tax on the Corporation subsequent to the
expiry of which an assessment, reassessment, or other form of
recognized document assessing liability for any year ended or deemed
to have ended prior to the Closing Date cannot be issued to the
Corporation; and
6.2.3 there shall be no limit on the covenants, representations and
warranties of the Vendors relating to tax liability of the
Corporation based upon any negligent misrepresentations made or
fraud committed in filing a return or in supplying information for
the purposes of any Regulations or other legislation imposing tax on
the Corporation.
ARTICLE 7.
INDEMNITY
SECTION 7.1 VENDORS'S INDEMNITY
The Vendors shall indemnify and save JAWS, the Purchaser and the
Corporation, harmless from and against any loss whatsoever arising out of, under
or pursuant to:
7.1.1 all claims, liabilities, contracts, undertakings and arrangements of
the Corporation, including, without limiting the generality of the
foregoing, any liabilities for federal, Provincial, sales,
17
excise, income, corporate and any other taxes of the Corporation,
existing at the Closing Date and not disclosed in, provided for or
included in the Corporation's Financial Statements save and except
those liabilities;
7.1.1.1 disclosed in this Agreement or any Schedule hereto, or
7.1.1.2 accruing or incurred in the ordinary course of business
subsequent to the date of the Corporation's Financial
Statements and up to the Closing Date; and
7.1.1.3 any and all reassessments for income tax, sales tax,
excise tax and any interest or penalty for any period
ending on or before the Closing Date for which no
adequate reserve has been provided in the Corporation's
Financial Statements in respect of any matter arising
prior to the Closing Date.
7.1.2 any and all claims of and from any and all manner of action and
actions, cause and causes of action, suits, debts, sums of money,
indemnities, expenses, general damages, special damages, interest,
costs and claims of any and every kind and nature whatsoever, at law
or in equity, or under any statute, which might still arise.
ARTICLE 8.
PRE-CLOSING MATTERS
SECTION 8.1 COVENANTS OF THE VENDORS
During the period from the date hereof to the Closing Time:
8.1.1 the Vendors shall use their best efforts to cause all of the
conditions for the benefit of the Purchaser to be fulfilled at or
before the Closing Time;
8.1.2 the Vendors shall not submit or entertain any offers from any other
Person in respect of and shall not enter into discussions with any
other Person relating to a proposed disposition by the Vendors of
any interest in the Corporation or a disposition by the Corporation
of the Corporation's Assets or any part thereof without the
acknowledgement and consent of the Purchaser; and
8.1.3 the Vendors shall not permit, cause or acquiesce in the issuance of
any securities by the Corporation to any Person.
SECTION 8.2 COVENANTS OF THE PURCHASER AND JAWS
During the period from the date hereof to the Closing Time, JAWS shall use
their best efforts to cause all of the conditions for the benefit of the Vendors
to be fulfilled at or before the Closing Time;
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SECTION 8.3 EXAMINATION AND INVESTIGATION BY THE PURCHASER AND JAWS
The Vendors shall permit or cause the Corporation to permit employees,
advisors and representatives of the Purchaser full and complete access to all
facilities and premises and all current and historical records and information
of every nature and kind within the Vendors' or the Corporation's possession or
control which relate to the acquisition, exploration, development, construction,
operation, maintenance, or ownership of any of the Corporation's Assets or the
conduct of its business or with respect to the incorporation, organization,
operations, or financial position of the Corporation or the acquisition or
ownership of the shares of the Corporation for the purposes of reviewing same
and such employees, advisors, and representatives shall be permitted to make
copies of such records and information as they may deem advisable. The Vendors
shall use its best efforts to make available, or cause the Corporation to make
available, to the Purchaser any pertinent information that is possessed by
another Person or which is relevant to the operation, maintenance, and ownership
of the Corporation's Assets or the conduct of its business. The Purchaser and
its employees, advisors, and representatives shall be entitled to make copies of
such information as they reasonably consider necessary. The Vendors shall not
require the return or destruction of any information prior to the Closing Time.
SECTION 8.4 EXAMINATION AND INVESTIGATION BY THE VENDORS
JAWS shall permit employees and advisors and representatives of the
Vendors full and complete access to all facilities and premises and all current
and historical records and information of every nature and kind within the
Purchaser's or JAWS' possession or control which relate to the acquisition or
ownership of any of the Purchaser's Assets or JAWS Shares or the conduct of
their business or with respect to the incorporation, organization, operations,
or financial position of the Purchaser or JAWS or the acquisition or ownership
of JAWS Shares for the purposes of reviewing same and such employees, advisors,
and representatives shall be permitted to make copies of such records and
information as they may deem advisable. JAWS shall use their best efforts to
make available to the Vendors any pertinent information that is possessed by
another Person or which is relevant to acquisition and ownership of the
Purchaser's Assets or JAWS Shares or the conduct of their business. The Vendors
and their employees, advisors, and representatives shall be entitled to make
copies of such information as they reasonably consider necessary. JAWS shall not
require the return or destruction of any information prior to the Closing Time.
SECTION 8.5 CORPORATION'S FINANCIAL STATEMENTS
To the extent not previously delivered, the Vendors shall cause the
Corporation as soon as practical, to deliver the Corporation's Financial
Statements to the Purchaser.
SECTION 8.6 JAWS' FINANCIAL STATEMENTS
To the extent not previously delivered, the Purchaser shall deliver JAWS
Financial Statements to the Vendors.
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ARTICLE 9.
NON-DISCLOSURE AND USE OF INFORMATION
SECTION 9.1 USE OF CORPORATION'S INFORMATION
Notwithstanding the obligations of the Vendors to provide information to
the Purchaser pursuant to Article 8 hereof:
9.1.1 the Vendors and the Corporation shall not be under any obligation to
give such access or furnish such information if to do so would cause
the Corporation to be in violation of any confidentiality agreement
with any Person, if such Person has refused to permit the release of
such information to the Purchaser following exercise by the
Corporation of its best efforts to obtain consent to such release
when the exercise of such best efforts was requested by the
Purchaser;
9.1.2 any information provided to the Purchaser or any employee, advisor
and representative of the Purchaser hereunder which is not publicly
disclosed, is confidential or is proprietary in nature (the
"Corporation's Information") shall be kept confidential and shall
not, without the prior written consent of the Corporation, be
disclosed by a recipient in any manner whatsoever, in whole or in
part, and shall not be used by the Purchaser or any such employee,
advisor or representative (other than in connection with this
transaction) or following the termination of this Agreement in the
acquisition of any securities of the Corporation or any of the
Corporation's Assets in another transaction for a period of one year
following the termination of this Agreement. The Corporation's
Information shall be revealed only to employees, advisors and
representatives who need to know it for the purpose of implementing
the transaction who will be informed of the confidential nature of
the Corporation's Information and agree to act in accordance
herewith;
9.1.3 the term the Corporation's Information shall not include information
which:
9.1.3.1 is or becomes generally available to the public other
than as a result of a disclosure by the Purchaser or any
other recipient of the Corporation's Information
hereunder, or
9.1.3.2 is or becomes available to the Purchaser or any other
recipient of the Corporation's Information hereunder on
a non-confidential basis from a source other than the
Corporation which is not prohibited from disclosing such
Corporation's Information to the Purchaser by a legal,
contractual or fiduciary obligation to the Corporation;
and
9.1.4 in the event that the Purchaser or any other recipient of the
Corporation's Information hereunder becomes legally obliged to
disclose any of the Corporation's Information, the Purchaser shall
provide the Corporation with prompt notice of such obligation (and
in any event not less than 24 hours prior to the time that the
Corporation's Information is required to be disclosed) so that the
Corporation may seek a protective order or other appropriate remedy
and/or waive compliance with this Subsection. In the event that such
protective order or other remedy is not obtained, or that the
Corporation waives compliance with this
20
Subsection, the Purchaser or any other recipient of the
Corporation's Information hereunder shall furnish only that portion
of the Corporation's Information which is legally required to be
disclosed and exercise their best efforts to obtain reliable
assurance that confidential treatment will be accorded the
Corporation's Information.
SECTION 9.2 USE OF PURCHASER'S INFORMATION
Notwithstanding the obligations of JAWS to provide information to the
Vendors pursuant to Article 8 hereof:
9.2.1 JAWS shall not be under any obligation to give such access or
furnish such information if to do so would cause JAWS to be in
violation of any confidentiality agreement with any Person, if such
Person has refused to permit the release of such information to the
Vendors following exercise by JAWS of its best efforts to obtain
consent to such release when the exercise of such best efforts was
requested by the Vendors;
9.2.2 any information provided to the Vendors or the Corporation or any
employee, advisor and representative of the Vendors or the
Corporation hereunder which is not publicly disclosed, is
confidential or is proprietary in nature (the "Purchaser's
Information") shall be kept confidential and shall not, without the
prior written consent of the Purchaser, be disclosed by a recipient
in any manner whatsoever, in whole or in part, and shall not be used
by the Vendors or the Corporation or any such employee, advisor or
representative (other than in connection with this transaction) or
following the termination of this Agreement in the acquisition of
any securities of the Purchaser or any of the Purchaser's Assets in
another transaction for a period of one year following the
termination of this Agreement. The Purchaser's Information shall be
revealed only to employees, advisors and representatives who need to
know it for the purpose of implementing the transaction who will be
informed of the confidential nature of the Purchaser's Information
and agree to act in accordance herewith;
9.2.3 the term the Purchaser's Information shall not include information
which:
9.2.3.1 is or becomes generally available to the public other
than as a result of a disclosure by the Vendors or the
Corporation or any other recipient of the Purchaser's
Information hereunder, or
9.2.3.2 is or becomes available to the Vendors or the
Corporation or any other recipient of the Purchaser's
Information hereunder on a non-confidential basis from a
source other than the Purchaser which is not prohibited
from disclosing such Purchaser's Information to the
Vendors or the Corporation by a legal, contractual or
fiduciary obligation to the Purchaser; and
9.2.4 in the event that the Vendors or the Corporation or any other
recipient of the Purchaser's Information hereunder becomes legally
obliged to disclose any of the Purchaser's Information, the Vendors
or the Corporation shall provide the Purchaser with prompt notice of
such obligation (and in any event not less than 24 hours prior to
the time that the Purchaser's Information is required to be
disclosed) so that the Purchaser may seek a protective order or
other appropriate remedy and/or waive compliance with this
Subsection. In the event that
21
such protective order or other remedy is not obtained, or that the
Purchaser waives compliance with this Subsection, the Vendors, the
Corporation or any other recipient of the Purchaser's Information
hereunder shall furnish only that portion of the Purchaser's
Information which is legally required to be disclosed and exercise
their best efforts to obtain reliable assurance that confidential
treatment will be accorded the Purchaser's Information.
SECTION 9.3 PRESS RELEASES
All press releases or other similar public written communications of
any sort by JAWS, the Vendors or the Corporation relating to this transaction
and this Agreement and the method of release for publication thereof, will bc
subject to the approval of the Purchaser and the Vendors. The Purchaser and the
Vendors will deal expeditiously with a request for approval of such a written
communication. The Vendors and the Purchaser will cooperate in relation to other
public communications with respect to their respective businesses or this
transaction with a view to achieving consistency in the content of such
communication and ensuring that such communications are consistent with this
Agreement.
ARTICLE 10.
CONDITIONS PRECEDENT TO THE PERFORMANCE UNDER THIS AGREEMENT
SECTION 10.1 PURCHASER'S CONDITIONS
The obligation of the Purchaser to complete the purchase of the
Vendors's Rights shall be subject to the satisfaction of, or compliance with, at
or before the Closing Time, each of the following conditions (each of which is
hereby acknowledged to be inserted for the exclusive benefit of the Purchaser
and may be unilaterally waived by the Purchaser in whole or in part):
10.1.1 Truth and Accuracy of Representations - All of the
representations and warranties of the Vendors set forth in this
Agreement shall be true and correct as at the Closing Time with
the same force and effect as though made at the Closing Time
except to the extent affected by the transactions contemplated by
this Agreement.
10.1.2 Satisfactory Due Diligence - All requests for information about
the Vendors and the Corporation shall have been responded to by
the Vendors and the Corporation to the satisfaction of the
Purchaser in its sole discretion and the Purchaser shall have
received all documentation required to be delivered to the
Purchaser at or before the Closing Time in accordance with this
Agreement.
10.1.3 Compliance with Agreement - All of the terms, covenants,
agreements and conditions of this Agreement to be complied with
or performed by the Vendors at or before the Closing Time shall
have been complied with or performed.
10.1.4 Receipt of Closing Documentation - The Purchaser shall have
received all documentation required to be delivered to the
Purchaser at or before the Closing Time in accordance with this
Agreement.
10.1.5 Approvals - All approvals relating to the consummation of the
transactions hereby contemplated shall have been obtained from
the relevant regulatory bodies;
22
10.1.6 Discharges - All liens, charges, encumbrances, security interests
and other claims, whatsoever, registered or made by any Person on
or against The Vendors's Rights shall have been discharged or
provision therefor, satisfactory to the Purchaser shall have been
made at or before the Closing Time.
10.1.7 Legal Formalities - All actions and proceedings and all
instruments and documents required to implement this Agreement or
any other agreements incidental tbereto, and all other legal
matters relating to the purchase of the Vendors's Rights by the
Purchaser shall have been approved as to form and legality by
counsel for the Purchaser.
10.1.8 Condition of Corporation's Financial Statements - The Purchaser
shall have received the Corporation's Financial Statements in
accordance with Section 8.5 and shall be satisfied with the
financial condition of the Corporation based on the contents of
the Corporation's Financial Statements.
10.1.9 No Restrictions - No action or proceeding, judicial (at law or in
equity) or extra-judicial, shall be pending or threatened by any
Person to enjoin, restrict or prohibit:
10.1.9.1 the purchase and sale of the Vendors's Rights
contemplated hereby or the subsequent use, benefit and
enjoyment thereof; or
10.1.9.2 the right of the Corporation or the Purchaser from and
after the Closing Time to conduct, expand and develop
the business of the Corporation.
10.1.10 Opinion of Counsel to Vendors - The Vendors shall have delivered
to the Purchaser and Purchaser's counsel a favourable opinion of
counsel to the Vendors as to:
10.1.10.1 the legal status, power and authority of the Vendors to
execute and perform the terms of this Agreement and any
other agreement, document or instrument required to be
delivered by the Vendors hereunder;
10.1.10.2 the valid, binding and enforceable nature of all such
agreements, documents and instruments;
10.1.10.3 any other matters which, in the opinion of counsel for
the Purchaser, acting reasonably, are material in
connection with the transactions herein contemplated;
and
Provided that counsel for the Vendors, in rendering the opinions
required in this Section, may rely as to any factual matters on a
certificate or certificates provided to them by the Vendors,
which certificate of certificates shall be attached to such
opinions and as to the laws of any jurisdiction other than the
Province of Ontario, may rely on opinions addressed to them from
other counsel satisfactory to counsel for the Vendors, and which
opinions from other counsel shall also be addressed to the
Purchaser and to counsel for the Purchaser.
23
10.1.11 No Change of Laws - After the date hereof and prior to the
Closing Time, there shall have been no change in the laws in
force in any jurisdiction in which any of the Corporation's
business is carried on, or any of the Corporation's Assets are
located including, without limitation, amendment to or repeal of
existing statutes, regulations, rules or policies and enactment
or implementation of new statutes, regulations, rules or
policies, nor the occurrence of any general or specific event
which, in the opinion of the Purchaser, could materially
adversely affect the Corporation's Assets, the conduct of its
business, or the transactions contemplated herein or the ability
of the Corporation to conduct, expand or develop its business or
to own or operate the Corporation's Assets after the Closing
Time, and no such change shall have been proposed.
10.1.12 Concurrent Closings - All of the conditions precedent to the
obligations of the Purchaser to complete the transactions herein
contemplated or contemplated in the other agreements contemplated
or required hereby and Schedules hereto shall have been fulfilled
or satisfactorily performed in accordance therewith including,
without limitation, the delivery of all documents required to be
delivered thereunder.
10.1.13 No Change in Operations - Except as agreed to in writing by the
Purchaser, the Corporation shall not and the Vendors shall take
such steps as may be necessary to cause the Corporation not to:
10.1.13.1 acquire or agree to acquire any assets or acquire or
agree to acquire by amalgamating, merging or
consolidating with, purchasing substantially all of the
assets of or otherwise, any business or any corporation,
partnership, association or other business organization
or division thereof;
10.1.13.2 agree to sell, lease or otherwise dispose of or grant
any option with respect to any of its assets;
10.1.13.3 guarantee the payment of indebtedness or incur
indebtedness for money borrowed or issue any debt
securities; or
10.1.13.4 grant any director, any officer or any employee who has
a policy making function or who manages a principal
business unit, any increase in compensation or in
severance or termination pay (whether or not such
compensation or pay is payable in cash), or enter into
any employment agreement with any such director, officer
or employee, or hire or promote any Person, except in
the ordinary course of business.
10.1.14 No Damage - No destruction, material damage, appropriation,
expropriation or seizure of any of the Corporation's Assets or
Vendors's Rights or of all the Corporation's Assets shall have
occurred.
10.1.15 Statutory Restrictions - There shall be no impediment,
prohibition or restriction existing and no offence would occur or
result at the Closing Time under any applicable statute or
regulation to which the transactions contemplated hereby would be
subject, by the Closing of the transactions contemplated hereby.
24
SECTION 10.2 VENDORS' CONDITIONS
The obligation of each Vendors to complete the sale of the Vendors's
Rights shall be subject to the satisfaction of, or compliance with, at or before
the Closing Time, each of the following conditions (each of which is hereby
acknowledged to be inserted for the exclusive benefit of each Vendors and may be
unilaterally waived by each Vendors in whole or in part):
10.2.1 Truth and Accuracy of Representations - All of the
representations and warranties of JAWS and the Purchaser set
forth in this Agreement shall be true and correct as at the
Closing Time with the same force and effect as though made at the
Closing Time.
10.2.2 Performance of Obligations - All of the terms, covenants,
agreements and conditions of this Agreement to be complied with
or performed by JAWS and the Purchaser at or before the Closing
Time shall have been complied with or performed.
10.2.3 Employment Agreements - JAWS shall have delivered to each of the
Vendors, a satisfactory employment agreement and/or consulting
services agreement.
SECTION 10.3 RIGHTS OF THE PURCHASER
If any of the conditions for the exclusive benefit of the Purchaser as
set forth in Section 10.1 shall not have been fulfilled at or prior to the
Closing Time, the Purchaser shall be entitled, by notice to the Vendors prior to
the time of completion of the Closing:
10.3.1 to terminate their obligations hereunder and this Agreement
effective as of the time of such notice; or
10.3.2 to proceed with the Closing as contemplated by Article 11.
If no such notice is given prior to the completion of the Closing, the Purchaser
shall be deemed to have elected to proceed with the Closing as contemplated by
Article 11.
SECTION 10.4 RIGHTS OF THE VENDORS
If any of the conditions for the exclusive benefit of the Vendors set
forth in Section 10.2 shall not have been fulfilled at or prior to the Closing
Time, the Vendors shall be entitled, by notice to the Purchaser and JAWS prior
to the time of completion of the Closing:
10.4.1 to terminate their obligations hereunder and this Agreement
effective as of the time of such notice; or
10.4.2 to proceed with the Closing as contemplated by Article 11.
If no such notice is given prior to the completion of the Closing, the Vendors
shall be deemed to have elected to proceed with the Closing as contemplated by
Article 11.
25
SECTION 10.5 RIGHTS OF TERMINATION
If this Agreement has been terminated pursuant to Section 10.3.1 or
Section 10.4.1 hereof, all Parties to this Agreement shall be released from all
their obligations under this Agreement.
ARTICLE 11.
CLOSING
SECTION 11.1 PLACE OF CLOSING AND CLOSING TIME
The Closing shall take place at the Closing Time in Calgary, or at such
other place as may be agreed upon by the Vendors and the Purchaser; PROVIDED
However, if the Parties are diligently pursuing completion of the conditions
precedent to Closing, the Parties hereby agree that the Time for Closing shall
be extended for such reasonable period as shall be necessary to complete such
matters.
SECTION 11.2 DELIVERIES BY VENDORS
At the Closing Time and at the place of the Closing, each Vendors shall
deliver to the Purchaser:
11.2.1 certificates or other instruments representing or evidencing the
Vendors's Rights duly endorsed for transfer or assignment to the
Purchaser;
11.2.2 a certified copy of a resolution of the directors of the
Corporation consenting to the transfer of the Vendors's Rights
and authorizing the registration of such transfer on the
appropriate registers of the Corporation;
11.2.3 one or more certificates or other instruments representing or
evidencing the Vendors's Rights, registered in the name of the
Purchaser duly signed by the proper officers of the Corporation
and evidence satisfactory to the Purchaser that it is registered
as the holder thereof on the appropriate registers of the
Corporation;
11.2.4 at the Closing Time the resignations, or proof of termination, of
all of the directors, officers and employees of the Corporation
effective immediately upon the delivery thereof, together with a
complete release and discharge by such directors and officers of
any and all claims against the Corporation which may have arisen
prior to the Closing Time;
11.2.5 a certificate signed by each Vendors to the effect that the
representations and warranties of the Vendors herein contained
are true and correct as at the Closing Time;
11.2.6 the opinion of counsel to the Vendors referred to in Section
10.1.10;
11.2.7 deliver to the Purchaser such other documents as the Purchaser
may reasonably request.
26
SECTION 11.3 DELIVERIES OF THE PURCHASER AND JAWS AT CLOSING
At the Closing Time and at the Place of Closing, the Purchaser and JAWS
shall deliver to each of the Vendors:
11.3.1 one or more certificates or other instruments representing or
evidencing the Purchase Consideration herein payable to each of
the Vendors, in accordance with section 3.1 and subject to
section 3.2;
11.3.2 an executed Voting and Exchange Trust Agreement;
11.3.3 an executed Support Agreement;
11.3.4 certified resolutions of the Purchaser and JAWS authorizing the
transactions contemplated hereby;
11.3.5 a certificate signed by an officer of the Purchaser and JAWS to
the effect that the representations and warranties of JAWS,
herein contained are true and correct as at the Closing Time; and
11.3.6 such other documents as the Vendors may reasonably request.
SECTION 11.4 CLOSING ESCROW
All payments or documents delivered by any Person at the Closing Time
shall be deemed not to have been delivered until each of the Vendors, the
Purchaser and JAWS has declared that it is satisfied with the form and substance
of the payments or documents to be delivered to such Person and all conditions
to the delivery or release of any payments or documents to be delivered at the
Closing Time by Parties other than the Vendors or the Purchaser shall have been
satisfied.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.1 GOVERNING LAW AND ATTORNMENT
This Agreement shall, in all respects, be subject to and be
interpreted, construed and enforced in accordance with the laws in effect within
the State of Delaware. Each Party hereby expressly attorns to the jurisdiction
of the courts of the State of Delaware and all courts of appeal therefrom.
SECTION 12.2 TIME OF THE ESSENCE
Time shall in all respects be of the essence of this Agreement.
27
SECTION 12.3 NOTICES
The address for notices of each of the Parties shall be as follows:
JAWS TECHNOLOGIES, INC.
JAWS ACQUISITION CANADA CORP.
000 - 0xx Xxxxxx X.X.,
Xxxxxxx, Xxxxxxx
Attention: Xxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
XXXXXXXX XXXXXX, XXXXXX SLODICHAK
AND 1423001 ONTARIO LIMITED
c/o 0Xxxx.xxx Inc.
0000 Xxxxxxx Xxxxx
0xx Xxxxx
Xxxxxxxxxx, Xxxxxxx, X0X 0X0
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Each of the Parties may from time to time change their address for
service herein by giving written notice to the other Party. Any notice, required
or contemplated hereunder, may be served by personal service upon an officer or
director of a Party or by telecopy, facsimile transmission or mailing the same,
except during periods of actual or anticipated postal disruptions, by prepaid
registered post in a properly addressed envelope addressed to the Party at its
address for service hereunder, as the same may be amended from time to time in
accordance herewith. Any notice given by service upon an officer or director of
a Party shall be deemed to be given on the date of such service, Any notice
given by mail shall be deemed to be given to and received by the addressee on
the fifth Business Day after the mailing thereof. Any notice given by telecopy
or facsimile transmission shall be deemed to be given to and received by the
addressee on the next Business Day after the sending thereof.
SECTION 12.4 PRIOR AGREEMENTS
This Agreement shall supersede and replace any and all prior agreements
between the Parties relating to the sale and purchase of the Vendors's Rights
and may be amended only by written instrument signed by all Parties,
SECTION 12.5 FURTHER ASSURANCES
Each Party hereto shall, from time to time, and at all times hereafter
at the request of any other Party hereto, but without further consideration, do
all such further acts and execute and deliver all such further instruments,
notices, releases and documents as shall be reasonably required in order to
fully perform and carry out the terms hereof.
28
This instrument states the entire agreement between the Parties.
SECTION 12.6 ENUREMENT
This Agreement shall be binding upon and shall enure to the benefit of
and be binding upon the Parties and their respective successors, receivers,
receiver-managers, trustees and permitted assigns, as the case maybe.
IN WITNESS WHEREOF the Parties hereto have duly executed this Agreement
as of the date first above written.
JAWS ACQUISITION CANADA CORP. 1423001 ONTARIO LIMITED
Per: /s/ Xxxx Xxxxxxx Per:
Xxxx Xxxxxxx, President ---------------------------
JAWS TECHNOLOGIES, INC.
Per: /s/ Xxxxxx Xxxxxxxxx PER: /s/ Xxxx Xxxxxxx
Xxxxxx Xxxxxxxxx, CEO Xxxx Xxxxxxx, CFO
/s/ Xxxxxxxx Xxxxxx -------------------------------
XXXXXXXX XXXXXX WITNESS
/s/ Xxxxxx Slodichak -------------------------------
XXXXXX SLODICHAK WITNESS
SCHEDULE "A" TO THAT SHARE PURCHASE AGREEMENT DATED THE
15TH, DAY OF AUGUST, 2000, BETWEEN XXXXXXXX XXXXXX, XXXXXX
SLODICHAK, JAWS ACQUISITION CANADA CORP. AND JAWS
TECHNOLOGIES, INC.
Corporation's Assets
See attached and Financials dated the ___ day of August, 2000.
Office Inventory
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX X0X 0X0
Lease Equipment
Quantity Description
-------- -----------
1 Pitney Xxxxx (6200) Postage Meter
1 Weight Scale - 500 Grams
1 Xxxxxx 5025/Photocopier/Fax Machine/Printer
1 Xxxxxx 5603DC Colour Printer
Office Inventory
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX X0X 0X0
Tom's Office
Quantity Description
-------- -----------
1 72" Mahogany Bookcase
1 2 Drawer Lateral File Cabinet
1 Plum Obus Chair
1 Plastic Chair Mat
1 Garbage Pail
1 M7310 Northern Telecom Phone
1 Fellows Paper Shredder
1 Set of Mirrored Blinds
1 Mahogany U-Shaped Desk
Office Inventory
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX X0X 0X0
Front Lobby
Quantity Description
-------- -----------
3 Navy Blue Arm Chairs
3 Xxxxx Round Table
2 7' Silk Plant
2 Silk Plants in Vases
1 M7208 Northern Telecom Phone
Kitchen
Quantity Description
-------- -----------
1 Recycle Container
1 Garbage Pail
1 XxXxxxx Refrigerator
1 Cool Wave Water Cooler
1 Microwave
1 Xxxxxxx Silex Toaster Oven
1 Xxxxx Coffee Maker
1 Kettle
1 Set of 4 Utensils (knives, forks, spoons)
1 Set of 4 Dinnerware (plates, cups, bowls, 20 coffee
mugs)
1 First Aid Kit
1 Watering can
1 Dishwasher
Office Inventory
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX X0X 0X0
Susan's Office
Quantity Description
-------- -----------
2 2 Drawer Mahogany Lateral File Cabinets
1 M7310 Northern Telecom Phone
1 Burgundy Leather Chairs
1 Plum Obus Chair
1 Whiteboard
1 Set of Mirror Blinds
1 Mahogany U-Shaped Desk
1 Garbage Pail
1 Plastic Chair Mat
1 4 Drawer Mahogany Lateral Filing Cabinet
1 Northern Telecom Headset
1 Canon P20-DH Calculator
Office Inventory
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX X0X 0X0
Erin's Area
Quantity Description
-------- -----------
2 72" Mahogany bookshelf
1 Mahogany Printer Stand
1 Secretarial L-Shaped Mahogany Desk
1 M7324 Northern Telecom Phone System c/w StarTalk mini
1 Canon P1 DH11
1 Garbage Pail
1 Plum Obus Chair
1 Plastic Chair Mat
Storage Room
1 Weight Scale - 20kg
1 Garbage Pail
1 Ladder
1 Dirtbuster
1 Easy Touch Xxxx Phone
1 Binding Machine
1 Electric Pencil Sharpener
1 Bostich Heavy Duty Stapler
1 Paper Cutter
1 Xxxxx Corona Electric Typewriter
Office Inventory
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX X0X 0X0
Boardroom
Quantity Description
-------- -----------
4 Burgundy Leather Chairs
1 Garbage Pail
1 Conference Table
1 M7310 Northern Telecom Phone
1 Sharp 27" Television
1 Mahogany Printer Stand
1 Set of Mirror Blinds
1 Whiteboard
1 Oak Pedestal Desk
1 JVC Mini CD/Cassette Player
1 Bar Fridge
1 Silk Plant
1 Glasses (6 tall, 6 med, 5 small, 4 champagne glasses)
1 Metal Cash Box
Office Inventory
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX X0X 0X0
Sales & Technical Area
Quantity Description
-------- -----------
5 Bleached Oak U-Shaped Desk c/w Hutch
5 Plastic Chair Mats
5 Black Opus Chairs
7 Garbage Pails
7 M7310 Northern Telecom Phones
1 Northern Telecom Headset c/w amplifiers
1 Computer Stand
1 Bleached Oak U-Shaped Desk
1 2 Drawer Sand Lateral Filing Cabinet
2 Literature Racks
2 4 Drawer Sand Lateral Filing Cabinets
7 Fabric Vertical Blinds
1 48" Bleached Oak Bookshelf
2 72" Bleached Oak Bookshelves
1 Whiteboard c/w Stand
2 L-Shaped Bleached Oak Desks
List Of Burloak Equipment
Computers
---------
--------------------------------------------------------------------------------
Comments Quantit Name/Make Model # Details Year Purchased
--------------------------------------------------------------------------------
Comanche 1 Dell PowerEdge 1300 PII400, 128 MB RAM 1999
RLN 1 Dell Optiplex XM575 P75, 16 MB RAM
Brad, Justin, Xxxxxx 3 Clone PII400, 128MB RAM 1999
Xxxx 1 Clone PIII500, 128MB 2000
XXX 0 Xxxxx XXX000, 000XX RAM 1999
SecureZone 1 Clone P133, 64 MB RAM
SecureZone 1 Clone P133, 32MB RAM
Xxxxxx 1 Clone P133, 64MB RAM
Xxxx 1 Clone P100, 32 MB RAM
Xxxxx 1 Clone P133, 32MB RAM
Lab 1 Sun SparcStation LX 66Mhz, 64 MB RAM 1999
Lab (NT/Win9x) 1 Compaq Deskpro 575XLS P120, 64 MB
Lab (MailSweeper) 1 Compaq Prosignea 3[X] P90, 32MB RAM
Lab (NT Server) 1 Compaq Prolinea 575 P75, 64 MB RAM
Lab (NetWare) 1 Compaq Prolinea 466 I486-66Mhz, 16MB RAM
Lab (OpenBSD) 1 Compaq Prolinea 466 I486-66Mhz, 16MB RAM
Lab (Win95) 1 Compaq Prolinea 466 I486-66Mhz, 24MB RAM
Lab (Linux) 1 Patriot I386
--------------------------------------------------------------------------------
Monitors
--------
--------------------------------------------------------------------------------
Comments Quantit Name/Make Model # Details Year Purchased
--------------------------------------------------------------------------------
1 Sony Trinitron GDM-2036S 20" Monitor
4 Magitronic C-SV1700PS 17" Monitor
4 Mag Innovision DX-15F 15" Monitor
2 Magitronic C-SV1500PS 15" Monitor
1 Vision Lab GM 710 17" Monitor 1999
SecureZone Aamazing CM-8489GX Monitor
Lab TTX TTX-1450T Monitor
Lab SUN GDM 1662B Monitor
--------------------------------------------------------------------------------
Others
------
-----------------------------------------------------------------------------------------------------
Comments Quantit Name/Make Model # Details Year Purchased
-----------------------------------------------------------------------------------------------------
Bullpen Xxxxxx 5025 Multi-function printer 1999
Susan'S Xxxxxx 5603-DC Colour-Multi-function printer 1999
Xxxxx, Xxxx Lexmark Optra Lxi Laser printer
Supra 288PNP External Modem
Express
USRobotics Sportster 0459 External Modem 1999
Practical Periphelas PM144MTI External Modem
2 Kingston KNE8TPJH 8 Port Network 1999
D-Link DE-809TC 8 Port Network
Hub
Servers 1 APC SmartUPS VIS 650 Uninterruptable Power Supply 1999
Firewalls/Router 1 APC Back-UPS 500 Uninterruptable Power Supply 1999
Burloak Xxxxxxxxxx Portmaster ISDN Router ISDN OR-U
Burloak to UUNet Cisco 1604 ISDN Router 1999
UUNet
-----------------------------------------------------------------------------------------------------
Office Equipment & Furniture for
000 Xxxxxxxxxxxxx Xxxx
Quantity Description
-------- -----------
1 17" Monitor
1 Flat Screen Monitor
1 Notebook
1 Lexmark Printer
1 Router
2 15" Monitors
1 Server
3 UPS
1 Fax
1 Computer
1 Mahogany Desk
4 Leather Burgundy Chairs
2 Obus Chairs
2 Teal Couches
1 Blue Couch
3 Blue Chairs
1 Coffee Table
1 Boardroom Table
SCHEDULE "B" TO THAT SHARE PURCHASE AGREEMENT DATED THE
15TH, DAY OF AUGUST, 2000, BETWEEN XXXXXXXX XXXXXX, XXXXXX
SLODICHAK, JAWS ACQUISITION CANADA CORP. AND JAWS
TECHNOLOGIES, INC.
Corporation's Financial Statements
SCHEDULE "C" TO THAT SHARE PURCHASE AGREEMENT DATED THE
15TH, DAY OF AUGUST, 2000, BETWEEN XXXXXXXX XXXXXX, XXXXXX
SLODICHAK, JAWS ACQUISITION CANADA CORP. AND JAWS
TECHNOLOGIES,INC.
Permitted Encumbrances & Litibilities.
None.
SCHEDULE "D" TO THAT SHARE PURCHASE AGREEMENT DATED THE
15TH, DAY OF AUGUST, 2000, BETWEEN XXXXXXXX XXXXXX, XXXXXX
SLODICHAK, JAWS ACQUISITION CANADA CORP. AND JAWS
TECHNOLOGIES, INC.
Exchangeable Share Provisions
SCHEDULE OF SHARE CAPITAL
A. SHARE CAPITAL
PROVISIONS ATTACHING TO THE COMMON SHARES
The common shares ("Common Shares") in the capital of the Corporation
shall have attached thereto the following rights, privileges, restrictions and
conditions:
Dividends
Subject to the prior rights of the Exchangeable Shares and any other
shares ranking prior To the Common Shares, holders of Common Shares have a right
to receive dividends when declared by the Board of Directors out of property of
the Corporation legally available therefor.
Liquidation
Subject to the prior rights of the Exchangeable Shares and any other
shares ranking prior to the Common Shares, the holders of Common Shares shall,
upon any liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary, or other distribution of the assets of the Corporation
for the purpose of winding-up its affairs, be entitled to receive the remaining
property and assets of the Corporation.
Voting
The holders of the Common Shares shall be entitled to receive notice of
and to attend all meetings of shareholders (other than separate meetings of
other classes or series of shares), and shall be entitled to one vote for each
Common Share held.
PROVISIONS ATTACHING TO THE EXCHANGEABLE SHARES
The exchangeable shares (the "Exchangeable Shares") in the capital of the
Corporation shall have the following rights, privileges, restrictions and
conditions:
ARTICLE 1
INTERPRETATION
1.1 For the purposes of these rights, privileges, restrictions and conditions:
"Act" means the Business Corporations Act (Alberta), as amended,
consolidated or reenacted from time to time.
"Aggregate Equivalent Vote Amount" means, with respect to any matter,
proposition or question on which holders of Jaws US Common Stock are
entitled to vote, consent or otherwise act, the product of (i) the number
of Exchangeable Shares then issued and
outstanding and held by holders (other than Jaws US and its Subsidiaries)
multiplied by
-2-
(ii) the number of votes to which a holder of one share of Jaws US Common
Stock is entitled with respect to such matter, proposition or question.
"Automatic Redemption Date" means the date for the automatic redemption by
the Corporation of Exchangeable Shares pursuant to Article 7 of these
share provisions, which date shall be the first to occur of (a) the date,
if any, selected pursuant to this clause (a) by the Board of Directors of
the Corporation, (b) the Business Day prior to the record date for any
meeting or vote of the shareholders of the Corporation to consider any
matter on which the holders of Exchangeable Shares would be entitled to
vote as shareholders of the Corporation, but excluding any meeting or vote
as described in clause (c) below, or (c) the Business Day following the
day on which the holders of Exchangeable Shares fail to take the necessary
action at a meeting or other vote of holders of Exchangeable Shares, if
and to the extent such action is required, to approve or disapprove, as
applicable, any change to, or in the rights of the holders of,
Exchangeable Shares, if the approval or disapproval, as applicable, of
such change would be required to maintain the economic and legal
equivalence of the Exchangeable Shares and the Jaws US Common Stock.
"Board of Directors" means the board of directors of the Corporation and
any committee thereof acting within its authority.
"Business Day" means any day other than a Saturday, a Sunday or a day when
banks are not open for business in either or both of Delaware and Alberta.
"Common Shares" means the common shares in the capital of the Corporation.
"Corporation" means JAWS Acquisition Canada Corp., a corporation organized
and existing under the Act and includes any successor corporation.
"Current Market Price" means, in respect of a share of Jaws US Common
Stock on any date, the average of the closing sale price per share
(computed and rounded to the third decimal point) of shares of Jaws US
Common Stock during the period of 20 consecutive trading days ending not
more than five trading days before such date on the Nasdaq National Board
(the "NASDAQ"), or, if Jaws US Common Stock is not then traded on the
NASDAQ, or such other U.S. stock exchange or automated quotation system on
which the Jaws US Common Stock is listed or quoted, as the case may be, as
may be selected by the Board of Directors for such purpose; provided,
however, that if, in the opinion of the Board of Directors the public
distribution or trading activity of Jaws US Common Stock during such
period does not create a market which reflects the fair market value of a
share of Jaws US Common Stock, then the Current Market Price of a share of
Jaws US Common Stock shall be determined by the Board of Directors based
upon the advice of such qualified independent financial advisors as the
Board of Directors may deem to be appropriate, and provided further than
any such selection, opinion or determination by the Board of Directors
shall be conclusive and binding.
"Effective Date" means the date on which a registration statement or
amendment or supplement thereto filed from time to time by Jaws US
pursuant to the Securities Act to
-3-
register the Jaws US Common Stock from time to time issuable upon the
exchange of the Exchangeable Shares is declared effective;
"Exchange Put Date" has the meaning provided in Section 8.2.
"Exchange Put Right" has the meaning provided in Section 8.1.
"Exchangeable Share Consideration" means, for any acquisition of or
redemption of or distribution of assets of the Corporation in respect of
or purchase pursuant to these share provisions, the Support Agreement or
the Voting and Exchange Trust Agreement:
(a) certificates representing the aggregate number of shares of Jaws US
Common Stock deliverable in connection with such action;
(b) a cheque or cheques payable at par at any branch of the bankers of
the payor in the amount of all declared, payable and unpaid, and all
undeclared but payable, cash dividends deliverable in connection
with such action; and
(b) such stock or other property constituting any declared and unpaid,
and all undeclared but payable, non-cash dividends deliverable in
connection with such action,
provided that (i) part of the consideration which represents (a) above,
shall be fully paid and satisfied by the delivery of one share of Jaws US
Common Stock for each one Exchangeable Share, such share to be duly issued
as a fully paid and non-assessable share, (ii) part of the consideration
which represents (c) above shall be fully paid and satisfied by delivery
of such non-cash items, and (iii) any such consideration shall be
delivered free and clear of any lien, claim, encumbrance, security
interest or adverse claim or interest less any tax required to be deducted
and withheld therefrom and without interest.
"Exchangeable Share Price" means, for each Exchangeable Share, an amount
equal to the aggregate of:
(a) the Current Market Price of a share of Jaws US Common Stock; plus
(b) an additional amount equal to the full amount of all cash dividends
declared, payable and unpaid on such Exchangeable Share; plus
(c) an additional amount equal to all dividends declared and payable on
Jaws US Common Stock which have not been declared on Exchangeable
Shares in accordance herewith; plus
(d) an additional amount representing non-cash dividends declared,
payable and unpaid on such Exchangeable Share.
"Exchangeable Shares" means the Exchangeable Shares of the Corporation
having the rights, privileges, restrictions and conditions set forth
herein.
-4-
"Jaws US" means Jaws Technologies, Inc., a corporation organized and
existing under the Jaws of the State of Delaware, and includes any
successor corporation or any corporation in which the holders of Jaws US
Common Stock bold securities resulting from the application of Section 2.7
of the Support Agreement.
"Jaws US Call Notice" has the meaning provided in Section 6.3.
"Jaws US Common Stock" means the shares of common stock of Jaws US, with a
par value of U.S. $0.001 per share, having voting rights of one vote per
share, and any other securities resulting from the application of Section
2.7 of the Support Agreement.
"Jaws US Dividend Declaration Date" means the date on which the board of
directors of Jaws US declares any dividend on the Jaws US Common Stock.
"Jaws US Special Share" means the one share of Special Voting Stock of
Jaws US, with a par value of U.S. $0.001, and having voting rights at
meetings of holders of Jaws US Common Stock equal to the Aggregate
Equivalent Voting Amount.
"Liquidation Amount" has the meaning provided in Section 5.1.
"Liquidation Call Right" has the meaning provided in the Articles of
Incorporation of the Corporation.
"Liquidation Date" has the meaning provided in Section 5.1.
"NASDAQ" means the Nasdaq National Board electronic stock exchange;
"Purchase Price" has the meaning provided in Section 6.3.
"Redemption Call Purchase Price" has the meaning provided in the Articles
of Incorporation of the Corporation.
"Redemption Call Right" has the meaning provided in the Articles of
Incorporation of the Corporation.
"Redemption Price" has the meaning provided in Section 7.1.
"Retracted Shares" has the meaning provided in subsection 6.1(a).
"Retraction Call Right" has the meaning provided in subsection 6.1(c).
"Retraction Date" has the meaning provided in subsection 6.1(b).
"Retraction Price" has the meaning provided in Section 6. 1.
"Retraction Request" has the meaning provided in Section 6.1.
"Securities Act" means the Securities Xxx 0000 (United States), as amended
from time to time.
-5-
"Subsidiary", in relation to any person, means any body corporate,
partnership, joint venture, association or other entity of which more than
50% of the total voting power of shares of stock or units of ownership or
beneficial interest entitled to vote in the election of directors (or
members of a comparable governing body) is owned or controlled, directly
or indirectly, by such person.
"Support Agreement" means the Support Agreement between Jaws US and the
Corporation, made effective as of August 1, 2000, as amended or
supplemented to from time to time.
"Transfer Agent" means the duly appointed transfer agent for the time
being of the Exchangeable Shares, and, if there is more than one such
transfer agent, then the principal Canadian transfer agent.
"Trustee" means the Trustee appointed under the Voting and Exchange Trust
Agreement, and any successor trustee.
"Voting and Exchange Trust Agreement" means the Voting and Exchange Trust
Agreement among the Corporation, Jaws US and the Trustee, made effective
as of August 1, 2000, as amended or supplemented from time to time.
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
2.1 The Exchangeable Shares shall be entitled to a preference over the Common
Shares and any other shares ranking junior to the Exchangeable Shares, with
respect to the payment of dividends and the distribution of assets in the event
of the liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary, or any other distribution of the assets of the
Corporation among its shareholders for the purpose of winding-up its affairs.
ARTICLE 3
DIVIDENDS
3.1 A holder of an Exchangeable Share shall be entitled to receive and the
Board of Directors shall, subject to applicable law, on each Jaws US Dividend
Declaration Date, declare a dividend on each Exchangeable Share (a) in the case
of a cash dividend declared on the Jaws US Common Stock, in an amount in cash
for each Exchangeable Share equal to the cash dividend declared on each share of
Jaws US Common Stock, (b) in the case of a stock dividend declared on the Jaws
US Common Stock to be paid in Jaws US Common Stock, in such number of
Exchangeable Shares for each Exchangeable Share as is equal to the number of
shares of Jaws US Common Stock to be paid on each share of Jaws US Common Stock,
(c) in the case of a dividend declared on the Jaws US Common Stock in property
other than cash or securities of Jaws US, in such type and amount of property
for each Exchangeable Share as is the same as the type and amount of property
declared as a dividend on each share of Jaws US Common Stock or (d) in the case
of a dividend declared on the Jaws US Common Stock to be paid in securities of
Jaws US other than Jaws US Common Stock, in such number of either such
securities or economically equivalent securities of the Corporation, as the
Board of Directors determines, for each Exchangeable Share as is equal to the
number of securities of Jaws US to be paid on each share of Jaws US Common
-6-
Stock. Such dividends shall be paid out of money, assets or property of the
Corporation properly applicable to the payment of dividends, or out of
authorized but unissued shares of the Corporation.
3.2 Cheques of the Corporation payable at par at any branch of the bankers of
the Corporation shall be issued in respect of any cash dividends contemplated by
subsection 3.1(a) hereof and the sending of such a cheque to each holder of an
Exchangeable Share (less any tax required to be deducted and withheld from such
dividends paid or credited by the Corporation) shall satisfy the cash dividends
represented thereby unless the cheque is not paid on presentation. Certificates
registered in the name of the registered holder of Exchangeable Shares shall be
issued or transferred in respect of any stock dividends contemplated by
subsections 3.1(b) or (d) hereof and the sending of such a certificate to each
bolder of an Exchangeable Share shall satisfy the stock dividend represented
thereby or dividend payable in other securities represented thereby. Such other
type and amount of property in respect of any dividends contemplated by
subsection 3.1 (c) hereof shall be issued, distributed or transferred by the
Corporation in such manner as it shall determine and the issuance, distribution
or transfer thereof by the Corporation to each holder of an Exchangeable Share
shall satisfy the dividend represented thereby. In all cases, any such dividends
shall be subject to any reduction or adjustment for tax required to be deducted
and withheld from such dividends paid or credited by the Corporation. No holder
of an Exchangeable Share shall be entitled to recover by action or other legal
process against the Corporation any dividend which is represented by a cheque
that has not been duly presented to the Corporation's bankers for payment or
which otherwise remains unclaimed for a period of six years from the date on
which such dividend was payable.
3.3 The record date for the determination of the holders of Exchangeable
Shares entitled to receive payment of, and the payment date for, any dividend
declared on the Exchangeable Shares under Section 3.1 hereof shall be the same
dates as the record date and payment date, respectively, for the corresponding
dividend declared on the Jaws US Common Stock.
3.4 If on any payment date for any dividends declared on the Exchangeable
Shares under Section 3.1 hereof the dividends are not paid in full on all of the
Exchangeable Shares then outstanding, any such dividends which remain unpaid
shall be paid on a subsequent date or dates determined by the Board of Directors
on which the Corporation shall have sufficient moneys, assets or property
properly applicable to the payment of such dividends.
3.5 Except as provided in this Article 3, the holders of Exchangeable Shares
shall not be entitled to receive dividends in respect thereof.
ARTICLE 4
CERTAIN RESTRICTIONS
4.1 So long as any of the Exchangeable Shares are outstanding, the Corporation
shall not at any time without, but may at any time with, the approval of the
holders of the Exchangeable Shares given as specified in Article 10 of these
share provisions:
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(a) pay any dividends on the Common Shares, or any other shares ranking
junior to the Exchangeable Shares, other than stock dividends
payable in any such other shares ranking junior to the Exchangeable
Shares;
(b) redeem or purchase or make any capital distribution in respect of
Common Shares or any other shares ranking junior to the Exchangeable
Shares with respect to the payment of dividends or on any
liquidation distribution;
(c) redeem or purchase any other shares of the Corporation ranking
equally with the Exchangeable Shares with respect to the payment of
dividends or on any liquidation distribution; or
(d) amend the articles or by-laws of the Corporation, in either case in
any manner that would affect the rights or privileges of the holders
of the Exchangeable Shares.
The restrictions in subsections 4.1 (a), 4.1 (b) and 4.1 (c) above shall
not apply if all dividends on the outstanding Exchangeable Shares corresponding,
to dividends declared on the Jaws US Common Stock shall have been declared on
the Exchangeable Shares and paid in full. Nothing herein shall be interpreted to
restrict the Corporation from issuing additional Common Shares or Exchangeable
Shares.
4.2 The Exchangeable Shares have not been and will not be registered under the
Securities Act. The Exchangeable Shares may be offered, sold, pledged or
otherwise transferred only (a) to the Corporation, (b) outside the United States
in compliance with Rule 903 or 904 of Regulation S under the Securities Act, (c)
in compliance with the exemption from the registration requirements under the
U.S. Securities Act provided by Rule 144 thereunder, if available, and in
accordance with applicable state securities laws, or (d) in a transaction that
does not require registration under the Securities Act or any applicable state
laws and regulations governing the offer and sale of securities, and the holder
has, prior to such sale, furnished to the Corporation an opinion of counsel, of
recognized standing, or other evidence of exemption, reasonably satisfactory to
the Corporation. The Corporation and the Transfer Agent will not register the
transfer of any Exchangeable Shares not made in accordance with the requirements
in this Section 4.2. The Corporation and the Transfer Agent may require written
certification that any transfer of Exchangeable Shares is made in accordance
with the requirements in this Section 4.2.
4.3 Notwithstanding any other provisions pertaining to the Exchangeable Shares
contained herein, no Exchangeable Shares may be exchanged for Jaws US Common
Stock, no holder of Exchangeable Shares can require Jaws US to exchange the
Exchangeable Shares and no Jaws US Common Stock may be issued to holders of
Exchangeable Shares, except in the event of the liquidation, dissolution or
winding up of the Corporation or any other distribution of the assets of the
Corporation among its shareholders for the purpose of winding-up its affairs in
accordance with Article 5 herein, until: (i) after the Effective Date or (ii)
the Trustee has been provided with a written certification in form satisfactory
to the Trustee that the provisions of Section 4.2 have been complied with.
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4.4 The Exchangeable Shares may be exchanged for Jaws US Common Stock at any
time. However, if the Exchangeable Shares are exchanged prior to the Effective
Date, the certificates representing the Jaws US Common Stock will be legended
and subject to transfer restrictions.
ARTICLE 5
DISTRIBUTION ON LIQUIDATION
5.1 In the event of the liquidation, dissolution or winding-up of the
Corporation or any other distribution of the assets of the Corporation among its
shareholders for the purpose of winding-up its affairs, a holder of Exchangeable
Shares shall be entitled, subject to applicable law, to receive from the assets
of the Corporation in respect of each Exchangeable Share held by such holder on
the effective date of such liquidation, dissolution or winding-up (the
"Liquidation Date"), before any distribution of any part of the assets of the
Corporation to the holders of the Common Shares or any other shares ranking
junior to the Exchangeable Shares, an amount equal to the Exchangeable Share
Price applicable on the last Business Day prior to the Liquidation Date (the
"Liquidation Amount") in accordance with Section 5.2. In connection with payment
of the Liquidation Amount, the Corporation shall be entitled to liquidate some
of the Jaws US Common Stock which would otherwise be deliverable as Exchangeable
Share Consideration to the particular holder of Exchangeable Shares in order to
fund any statutory withholding tax obligation.
5.2 On or promptly after the Liquidation Date, and subject to the exercise by
Jaws US of the Liquidation Call Right, the Corporation shall cause to be
delivered to the holders of the Exchangeable Shares the Liquidation Amount for
each such Exchangeable Share upon presentation and surrender of the certificates
representing such Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares under
applicable law and the by-laws of the Corporation and such additional documents
and instruments as the Transfer Agent may reasonably require, at the registered
office of the Corporation or at any office of the Transfer Agent as may be
specified by the Corporation in Schedule A hereto or by notice to the holders of
the Exchangeable Shares. Payment of the total Liquidation Amount for such
Exchangeable Shares shall be made by delivery to each holder, at the address of
the holder recorded in the securities register of the Corporation for the
Exchangeable Shares or by holding for pick up by the holder at the registered
office of the Corporation or at any office of the Transfer Agent as may be
specified by the Corporation in Schedule A hereto or by notice to the holders of
Exchangeable Shares, on behalf of the Corporation of the Exchangeable Share
Consideration representing the total Liquidation Amount. On and after the
Liquidation Date, the holders of the Exchangeable Shares shall cease to be
holders of such Exchangeable Shares and shall not be entitled to exercise any of
the rights of holders in respect thereof, other than the right to receive their
proportionate part of the total Liquidation Amount, unless payment of the total
Liquidation Amount for such Exchangeable Shares shall not be made upon
presentation and surrender of share certificates in accordance with the
foregoing provisions, in which case the rights of the holders shall remain
unaffected until the total Liquidation Amount has been paid in the manner
hereinbefore provided. The Corporation shall have the right at any time on or
after the Liquidation Date to deposit or cause to be deposited the Exchangeable
Share Consideration in respect of the Exchangeable Shares represented by
certificates that have not at the Liquidation Date been surrendered by the
holders thereof in a custodial account or for safe keeping, in the case of
non-cash items, with any
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chartered bank or trust company in Canada. Upon such deposit being made, the
rights of the holders of Exchangeable Shares after such deposit shall be limited
to receiving their proportionate part of the total Liquidation Amount for such
Exchangeable Shares so deposited, against presentation and surrender of the said
certificates held by them, respectively, in accordance with the foregoing
provisions. Upon such payment or deposit of such Exchangeable Share
Consideration, the holders of the Exchangeable Shares shall thereafter be
considered and deemed for all purposes to be the holders of the Jaws US Common
Stock delivered to them. Notwithstanding the foregoing, until such payment or
deposit of such Exchangeable Share Consideration, the holder shall be deemed to
still be a holder of Exchangeable Shares for purposes of all voting rights with
respect thereto under the Voting and Exchange Trust Agreement.
5.3 After the Corporation has satisfied its obligations to pay the holders of
the Exchangeable Shares the Liquidation Amount per Exchangeable Share, such
holders shall not be entitled to share in any further distribution of the assets
of the Corporation.
ARTICLE 6
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
6.1 A holder of Exchangeable Shares shall be entitled at any time, subject to
the exercise by Jaws US of the Retraction Call Right and otherwise upon
compliance with the provisions of this Article 6, to require the Corporation to
redeem any or all of the Exchangeable Shares registered in the name of such
holder for an amount equal to the Exchangeable Share Price applicable on the
last Business Day prior to the Retraction Date (the "Retraction Price") in
accordance with Section 6.4. In connection with payment of the Retraction Price,
the Corporation shall be entitled to liquidate some of the Jaws US Common Stock
that would otherwise be deliverable as Exchangeable Share Consideration to the
particular holder of Exchangeable Shares in order to fund any statutory
withholding tax obligation. To effect such redemption, the holder shall present
and surrender at the registered office of the Corporation or at any office of
the Transfer Agent as may be specified by the Corporation in Schedule A hereto
or by notice to the holders of Exchangeable Shares the certificate or
certificates representing the Exchangeable Shares which the holder desires to
have the Corporation redeem, together with such other documents and instruments
as may be required to effect a transfer of Exchangeable Shares under applicable
law and the by-laws of the Corporation and such additional documents and
instruments as the Transfer Agent may reasonably require, and together with a
duly executed statement (the "Retraction Request") in the form of Schedule "A"
hereto or in such other form as may be acceptable to the Corporation:
(a) specifying that the holder desires to have all or any number
specified therein of the Exchangeable Shares represented by such
certificate or certificates (the "Retracted Shares") redeemed by the
Corporation;
(b) stating the Business Day on which the holder desires to have the
Corporation redeem the Retracted Shares (the "Retraction Date"),
provided that the Retraction Date shall be not less than five
Business Days nor more than 10 Business Days after the date on which
the Retraction Request is received by the Corporation and further
provided that, in the event that no such Business Day is specified
by the
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holder in the Retraction Request, the Retraction Date shall be
deemed to be the tenth Business Day after the date on which the
Retraction Request is received by the Corporation; and
(c) acknowledging the overriding right (the "Retraction Call Right") of
Jaws US to purchase all but not less than all the Retracted Shares
directly from the holder and that the Retraction Request shall be
deemed to be a revocable offer by the holder to sell the Retracted
Shares in accordance with the Retraction Call Right on the terms and
conditions set out in Section 6.3 below.
6.2 Subject to the exercise by Jaws US of the Retraction Call Right, upon
receipt by the Corporation or the Transfer Agent in the manner specified in
Section 6.1 hereof of a certificate or certificates representing the number of
Exchangeable Shares which the holder desires to have the Corporation redeem,
together with a Retraction Request, and provided that the Retraction Request is
not revoked by the holder in the manner specified in Section 6.7, the
Corporation shall redeem the Retracted Shares effective at the close of business
on the Retraction Date and shall cause to be delivered to such holder the total
Retraction Price with respect to such shares in accordance with Section 6.4
hereof. If only a part of the Exchangeable Shares represented by any certificate
are redeemed or purchased by Jaws US pursuant to the Retraction Call right, a
new certificate for the balance of such Exchangeable Shares shall be issued to
the holder at the expense of the Corporation.
6.3 Upon receipt by the Corporation of a Retraction Request, the Corporation
shall immediately notify Jaws US thereof. In order to exercise the Retraction
Call Right, Jaws US must notify the Corporation in writing of its determination
to do so (the "Jaws US Call Notice") within two Business Days of such
notification. If Jaws US does not so notify the Corporation within such two
Business Days, the Corporation will notify the holder as soon as possible
thereafter that Jaws US will not exercise the Retraction Call Right. If Jaws US
delivers the Jaws US Call Notice within such two Business Days, and provided
that the Retraction Request is not revoked by the holder in the manner specified
in Section 6.7, the Retraction Request shall thereupon be considered only to be
an offer by the holder to sell the Retracted Shares to Jaws US in accordance
with the Retraction Call Right. In such event, the Corporation shall not redeem
the Retracted Shares and Jaws US shall purchase from such holder and such holder
shall sell to Jaws US on the Retraction Date the Retracted Shares for a purchase
price per share (the "Purchase Price") equal to the Retraction Price. For the
purposes of completing a purchase pursuant to the Retraction Call Right, Jaws US
shall deposit with the Transfer Agent, on or before the Retraction Date, the
Exchangeable Share Consideration representing the total Purchase Price. Provided
that such Exchangeable Share Consideration has been so deposited with the
Transfer Agent, the closing of the purchase and sale of the Retracted Shares
pursuant to the Retraction Call Right shall be deemed to have occurred as at the
close of business on the Retraction Date and, for greater certainty, no
redemption by the Corporation of such Retracted Shares shall take place on the
Retraction Date. In the event that Jaws US does not deliver a Jaws US Call
Notice within two Business Days or otherwise comply with these Exchangeable
Share provisions in respect thereto, and provided that Retraction Request is not
revoked by the holder in the manner specified in Section 6.7, the Corporation
shall redeem the Retracted Shares on the Retraction Date and in the manner
otherwise contemplated in this Article 6.
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6.4 The Corporation or Jaws US, as the case may be, shall deliver or cause the
Transfer Agent to deliver to the relevant holder, at the address of the holder
recorded in the securities register of the Corporation for the Exchangeable
Shares or at the address specified in the holder's Retraction Request or by
holding for pick up by the holder at the registered office of the Corporation or
at any office of the Transfer Agent as may be specified by the Corporation in
Schedule A hereto or by notice to the holders of Exchangeable Shares, the
Exchangeable Share Consideration representing the total Retraction Price or the
total Purchase Price, as the case may be, and such delivery of such Exchangeable
Share Consideration to the Transfer Agent shall be deemed to be payment of and
shall satisfy and discharge all liability for the total Retraction Price or
total Purchase Price, as the case may be, except as to any cheque included
therein which is not paid on due presentation.
6.5 On and after the close of business on the Retraction Date, the holder of
the Retracted Shares shall cease to be a holder of such Retracted Shares and
shall not be entitled to exercise any of the rights of a holder in respect
thereof, other than the right to receive such holder's proportionate part of the
total Retraction Price or total Purchase Price, as the case may be, unless upon
presentation and surrender of certificates in accordance with the foregoing
provisions, payment of the total Retraction Price or the total Purchase Price,
as the case may be, shall not be made, in which case the rights of such holder
shall remain unaffected until the Exchangeable Share Consideration representing
the total Retraction Price or the total Purchase Price, as the case may be, has
been paid in the manner hereinbefore provided. On and after the close of
business on the Retraction Date, provided that presentation and surrender of
certificates and payment of the Exchangeable Share Consideration representing
the total Retraction Price or the total Purchase Price, as the case may be, has
been made in accordance with the foregoing provisions, the holder of the
Retracted Shares so redeemed by the Corporation or purchased by Jaws US shall
thereafter be considered and deemed for all purposes to be a holder of the Jaws
US Common Stock delivered to it. Notwithstanding the foregoing, until such
payment of such Exchangeable Share Consideration to the holder, the holder shall
be deemed to still be a holder of Exchangeable Shares for purposes of all voting
rights with respect thereto under the Voting and Exchange Trust Agreement.
6.6 Notwithstanding any other provision of this Article 6, the Corporation
shall not be obligated to redeem Retracted Shares specified by a holder in a
Retraction Request to the extent that such redemption of Retracted Shares would
be contrary to liquidity or solvency requirements or other provisions of
applicable law. If the Corporation believes that on any Retraction Date it would
not be permitted by any of such provisions to redeem the Retracted Shares
tendered for redemption on such date, and provided that Jaws US shall not have
expired the Retraction Call Right with respect to the Retracted Shares, the
Corporation shall only be obligated to redeem Retracted Shares specified by a
holder in a Retraction Request to the extent of the maximum number that may be
so redeemed (rounded down to a whole number of shares) as would not be contrary
to such provisions and shall notify the holder at least two Business Days prior
to the Retraction Date as to the number of Retracted Shares which will not be
redeemed by the Corporation. In any case in which the redemption by the
Corporation of Retracted Shares would be contrary to liquidity or solvency
requirements or other provisions of applicable law, the Corporation shall redeem
Retracted Shares in accordance with Section 6.2 of these share provisions on a
pro rata basis and shall issue to each holder of Retracted Shares a new
certificate, at the expense of the Corporation, representing the Retracted
Shares not
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redeemed by the Corporation pursuant to Section 6.2 hereof. Provided that the
Retraction Request is not revoked by the holder in the manner specified in
Section 6.7, the holder of any such Retracted Shares not redeemed by the
Corporation pursuant to Section 6.2 of these share provisions as a result of
liquidity or solvency requirements or applicable law shall be deemed by giving
the Retraction Request to require Jaws US to purchase such Retracted Shares from
such holder on the Retraction Date or as soon as practicable thereafter on
payment by Jaws US to such holder of the Purchase Price for each such Retracted
Share, all as more specifically provided in the Voting and Exchange Trust
Agreement, and Jaws US shall make such purchase.
6.7 A holder of Retracted Shares may, by notice in writing given by the holder
to the Corporation before the close of business on the Business Day immediately
preceding the Retraction Date, withdraw its Retraction Request in which event
such Retraction Request shall be null and void and, for greater certainty, the
revocable offer constituted by the Retraction Request to sell the Retracted
Shares to Jaws US shall be deemed to have been revoked.
ARTICLE 7
REDEMPTION OF EXCHANGEABLE SHARES BY THE CORPORATION
7.1 Subject to applicable law, and if Jaws US does not exercise the Redemption
Call Right, the Corporation shall on the Automatic Redemption Date redeem the
whole of the then outstanding Exchangeable Shares for an amount equal to the
Exchangeable Share Price applicable on the last Business Day prior to the
Automatic Redemption Date (the "Redemption Price") in accordance with Section
7.3. In connection with payment of the Redemption Price, the Corporation shall
be entitled to liquidate some of the Jaws US Common Stock which would otherwise
be deliverable as Exchangeable Share Consideration to the particular holder of
Exchangeable Shares in order to fund any statutory withholding tax obligation.
7.2 In any case of a redemption of Exchangeable Shares under this Article 7,
the Corporation, or the Transfer Agent on behalf of the Corporation, shall, at
least 45 days before an Automatic Redemption Date or before a possible Automatic
Redemption Date which may result from a failure of the holders of Exchangeable
Shares to take necessary action as described in clause (c) of the definition of
Automatic Redemption Date, send or cause to be sent to each holder of
Exchangeable Shares a notice in writing of the redemption or possible redemption
by the Corporation or the purchase by Jaws US under the Redemption Call Right,
as the case may be, of the Exchangeable Shares held by such holder. Such notice
shall set out the Redemption Price or the Redemption Call Purchase Price, as the
case may be, the Automatic Redemption Date and, if applicable, particulars of
the Redemption Call Right. In the case of any notice given in connection with a
possible Automatic Redemption Date, such notice will be given contingently and
will be withdrawn if the contingency does not occur.
7.3 On or after the Automatic Redemption Date and subject to the exercise by
Jaws US of the Redemption Call Right, the Corporation shall cause to be
delivered to the holders of the Exchangeable Shares to be redeemed the
Redemption Price for each such Exchangeable Share upon presentation and
surrender at the registered office of the Corporation or at any office of the
Transfer Agent as may be specified by the Corporation in such notice of the
certificates representing such Exchangeable Shares, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under applicable law and the by-
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laws of the Corporation and such additional documents and instruments as the
Transfer Agent may reasonably require. Payment of the total Redemption Price for
such Exchangeable Shares shall be made by delivery to each holder, at the
address of the holder recorded in the securities register or at any office of
the Transfer Agent as may be specified by the Corporation in such notice, on
behalf of the Corporation, of the Exchangeable Share Consideration representing
the total Redemption Price. On and after the Automatic Redemption Date, the
holders of the Exchangeable Shares called for redemption shall cease to be
holders of such Exchangeable Shares and shall not be entitled to exercise any of
the rights of holders in respect thereof, other than the right to receive their
proportionate part of the total Redemption Price, unless payment of the total
Redemption Price for such Exchangeable Shares shall not be made upon
presentation and surrender of certificates in accordance with the foregoing
provisions, in which case the rights of the holders shall remain unaffected
until the total Redemption Price has been paid in the manner hereinbefore
provided. The Corporation shall have the right at any time after the sending of
notice of its intention to redeem the Exchangeable Shares as aforesaid to
deposit or cause to be deposited the Exchangeable Share Consideration with
respect to the Exchangeable Shares so called for redemption, or of such of the
said Exchangeable Shares represented by certificates that have not at the date
of such deposit been surrendered by the holders thereof in connection with such
redemption, in a custodial account or for safe keeping, in the case of non-cash
items, with any chartered bank or trust company in Canada named in such notice.
Upon the later of such deposit being made and the Automatic Redemption Date, the
Exchangeable Shares in respect whereof such deposit shall have been made shall
be redeemed and the rights of the holders thereof after such deposit or
Automatic Redemption Date, as the case may be, shall be limited to receiving
their proportionate part of the total Redemption Price for such Exchangeable
Shares so deposited, against presentation and surrender of the said certificates
held by them, respectively, in accordance with the foregoing provisions. Upon
such payment or deposit of such Exchangeable Share Consideration, the holders of
the Exchangeable Shares shall thereafter be considered and deemed for all
purposes to be holders of the Jaws US Common Stock delivered to them.
Notwithstanding the foregoing, until such payment or deposit of such
Exchangeable Share Consideration is made, the holder shall be deemed to still be
a holder of Exchangeable Shares for purposes of all voting rights with respect
thereto under the Voting and Exchange Trust Agreement.
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ARTICLE 8
EXCHANGE PUT RIGHT
8.1 Upon and subject to the terms and conditions contained in these share
provisions and the Voting and Exchange Trust Agreement:
(a) a holder of Exchangeable Shares shall have the right (the "Exchange
Put Right") at any time to require Jaws US to purchase all or any
part of the Exchangeable Shares of the holder; and
(b) upon the exercise by the holder of the Exchange Put Right, the
holder shall be required to sell to Jaws US, and Jaws US shall be
required to purchase from the holder, that number of Exchangeable
Shares in respect of which the Exchange Put Right is exercised, in
consideration of the payment by Jaws US of the Exchangeable Share
Price applicable thereto (which shall be the Exchangeable
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Share Price applicable on the last Business Day prior to receipt of
notice required under section 8.2) and delivery by or on behalf of
Jaws US of the Exchangeable Share Consideration representing the
total applicable Exchangeable Share Price. In connection with
payment of the Exchangeable Share Consideration, the Corporation
shall be entitled to liquidate some of the Jaws US Common Stock
which would otherwise be deliverable to the particular holder of
Exchangeable Shares in order to fund any statutory withholding tax
obligation.
8.2 The Exchange Put Right provided in section 8.1 hereof and in Article 5 of
the Voting and Exchange Trust Agreement may be exercised at any time by notice
in writing given by the holder to and received by the Trustee (the date of such
receipt, the "Exchange Put Date") and accompanied by presentation and surrender
of the certificates representing such Exchangeable Shares, together with such
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the Act and the by-laws of the Corporation and such
additional documents and instruments as the Trustee may reasonably require, at
the principal transfer office of the Trustee, or at such other office or offices
of the Trustee or of other persons designated by the Trustee for that purpose as
may from time to time be maintained by the Trustee for that purpose. Such notice
may be (i) in the form of the panel, if any, on the certificates representing
Exchangeable Shares, (ii) in the form of the notice and election contained in
any letter of transmittal distributed or made available by the Corporation for
that purpose, or (iii) in other form satisfactory to the Trustee (or such other
persons aforesaid), shall stipulate the number of Exchangeable Shares in respect
of which the right is exercised (which may not exceed the number of shares
represented by certificates surrendered to the Trustee), shall be irrevocable
unless the exchange is not completed in accordance herewith and with the Voting
and Exchange Trust Agreement and shall constitute the holder's authorization to
the Trustee (and such other persons aforesaid) to effect the exchange on behalf
of the holder.
8.3 The completion of the sale and purchase referred to in section 8.1 shall
be required to occur, and Jaws US shall be required to take all actions on its
part necessary to permit it to occur, not later than the close of business on
the third Business Day following the Exchange Put Date.
8.4 The surrender by the holder of Exchangeable Shares under section 8.2 shall
constitute the representation, warranty and covenant of the holder that the
Exchangeable Shares so purchased are sold free and clear of any lien,
encumbrance, security interest or adverse claim or interest.
8.5 If a part only of the Exchangeable Shares represented by any certificate
are to be sold and purchased pursuant to the exercise of the Exchange Put Right,
a new certificate for the balance of such Exchangeable Shares shall be issued to
the holder at the expense of the Corporation.
8.6 Upon receipt by the Trustee of the notice, certificates and other
documents or instruments required by section 8.2, the Trustee shall deliver or
cause to be delivered, on behalf of Jaws US and subject to receipt by the
Trustee from Jaws US of the applicable Exchangeable Share Consideration, to the
relevant holder at the address of the holder specified in the notice or by
holding for pick-up by the holder at the registered office of the Corporation or
at any office of the Trustee (or other persons aforesaid) maintained for that
purpose, the Exchangeable Share Consideration representing the total applicable
Exchangeable Share Price, within the time stipulated in section 8.3. Delivery by
Jaws US to the Trustee of such Exchangeable Share
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Consideration shall be deemed to be payment of and shall satisfy and discharge
all liability for the total applicable Exchangeable Share Price, except as to
any cheque included therein which is not paid on due presentation.
8.7 On and after the close of business on the Exchange Put Date, the holder of
the Exchangeable Shares in respect of which the Exchange Put Right is exercised
shall not be entitled to exercise any of the rights of a holder in respect
thereof, other than the right to receive the total applicable Exchangeable Share
Price, unless upon presentation and surrender of certificates in accordance with
the foregoing provisions, payment of the Exchangeable Share Consideration shall
not be made, in which case the rights of such holder shall remain unaffected
until such payment has been made. On and after the close of business on the
Exchange Put Date provided that presentation and surrender of certificates and
payment of the Exchangeable Share Consideration has been made in accordance with
the foregoing provisions, the holder of the Exchangeable Shares so Purchased by
Jaws US shall thereafter be considered and deemed for all purposes to be a
holder of the Jaws US Common Stock delivered to it. Notwithstanding the
foregoing, until payment of the Exchangeable Share Consideration to the holder,
the holder shall be deemed to still be a holder of Exchangeable Shares for
purposes of all voting rights with respect thereto under the Voting and Exchange
Trust Agreement.
ARTICLE 9
VOTING RIGHTS
9.1 Except as required by applicable law and the provisions hereof, the holders
of the Exchangeable Shares shall not be entitled as such to receive notice of or
to attend any meeting of the shareholders of the Corporation or to vote at any
such meeting.
ARTICLE 10
AMENDMENT AND APPROVAL
10.1 The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but, except as
hereinafter provided, only with the approval of the holders of the Exchangeable
Shares given as hereinafter specified.
10.2 Any approval given by the holders of the Exchangeable Shares to add to,
change or remove any right, privilege, restriction or condition attaching to the
Exchangeable Shares or any other matter requiring the approval or consent of the
holders of the Exchangeable Shares shall be deemed to have been sufficiently
given if it shall have been given in accordance with applicable law subject to a
minimum requirement that such approval be evidenced by resolution passed by not
less than 66 2/3% of the votes cast on such resolution by persons represented in
person or by proxy at a meeting of holders of Exchangeable Shares (excluding
Exchangeable Shares beneficially owned by Jaws US or its Subsidiaries) duly
called and held at which the holders of at least 20% of the outstanding
Exchangeable Shares at that time are present or represented by proxy. If at any
such meeting the holders of at least 20% of the outstanding Exchangeable Shares
at that time are not present or represented by proxy within one-half hour after
the time appointed for such meeting, then the meeting shall be adjourned to such
date not less than 10 days thereafter and to such time and place as may be
designated by the Chairman of such meeting. At such adjourned meeting, the
holders of Exchangeable Shares present or represented by proxy
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thereat may transact the business for which the meeting was originally called
and a resolution passed thereat by the affirmative vote of not less than 66 2/3%
of the votes cast on such resolution by persons represented in person or by
proxy at such meeting (excluding Exchangeable Shares beneficially owned by Jaws
US or its Subsidiaries) shall constitute the approval or consent of the holders
of the Exchangeable Shares. For the purposes of this section, any spoiled votes,
illegible votes, defective votes and abstinences shall be deemed to be votes not
cast.
ARTICLE 11
RECIPROCAL CHANGES, ETC. IN RESPECT OF JAWS US COMMON STOCK
11.1 (a) Each holder of an Exchangeable Share acknowledges that the Support
Agreement provides, in part, that Jaws US will not:
(i) issue or distribute shares of Jaws US Common Stock (or
securities exchangeable for or convertible into or carry
rights to acquire shares of Jaws US Common Stock) to the
holders of all or substantially all of the then outstanding
shares of Jaws US Common Stock by way of stock dividend or
other distribution; or
(ii) issue or distribute rights, options or warrants to the
holders of all or substantially all of the then outstanding
shares of Jaws US Common Stock entitling them to subscribe
for or to purchase shares of Jaws US Common Stock (or
securities exchangeable for or convertible into or carrying
rights to acquire shares of Jaws US Common Stock); or
(iii)issue or distribute to the holders of all or substantially
all of the then outstanding shares of Jaws US Common Stock
(A) shares or securities of Jaws US of any class other than
Jaws US Common Stock (other than shares convertible into or
exchangeable for or carrying rights to acquire shares of
Jaws US Common Stock), (B) rights, options or warrants other
than those referred to in subsection 11.1 (a) (ii) above,
(C) evidences of indebtedness of Jaws US or (D) assets of
Jaws US;
unless
(iv) one or both of Jaws US and the Corporation is permitted
under applicable law to issue or distribute the economic
equivalent on a per share basis of such rights, options,
warrants, securities, shares, evidences of indebtedness or
other assets to the holders of the Exchangeable Shares; and
(v) one or both of Jaws US and the Corporation shall issue or
distribute the economic equivalent on a per share basis of
such rights, options, warrants, securities, shares,
evidences of indebtedness or other assets simultaneously to
the holders of the Exchangeable Shares.
(b) Each holder of an Exchangeable Share acknowledges that the Support
Agreement further provides, in part, that Jaws US will not:
-17-
(i) subdivide, redivide or change the then outstanding shares of
Jaws US Common Stock into a greater number of shares of Jaws
US Common Stock; or
(ii) reduce, combine or consolidate or change the then
outstanding shares of Jaws US Common Stock into a lesser
number of shares of Jaws US Common Stock; or
(iii)reclassify or otherwise change the shares of Jaws US Common
Stock or effect an amalgamation, merger, reorganization or
other transaction involving or affecting the shares of Jaws
US Common Stock;
unless
(iv) the Corporation is permitted under applicable law to
simultaneously make the same or an economically equivalent
change to, or in the rights of the holders of, the
Exchangeable Shares; and
(v) the same or an economically equivalent change is
simultaneously made to, or in the rights of the holders of,
the Exchangeable Shares.
The Support Agreement further provides, in part, that, with the exception
of certain ministerial amendments, the aforesaid provisions of the Support
Agreement shall not be changed without the approval of the holders of the
Exchangeable Shares given in accordance with Article 10 of these share
provisions.
-17-
ARTICLE 12
ACTIONS BY THE CORPORATION UNDER SUPPORT AGREEMENT
12.1 The Corporation will take all such actions and do all such things as shall
be necessary or advisable to perform and comply with and to ensure performance
and compliance by Jaws US with all provisions of the Support Agreement, the
Voting and Exchange Trust Agreement and Jaws US's Certificate of Incorporation
applicable to the Corporation and Jaws US, respectively, in accordance with the
terms thereof including, without limitation, taking all such actions and doing
all such things as shall be necessary or advisable to enforce to the fullest
extent possible for the direct benefit of the Corporation all rights and
benefits in favour of the Corporation under or pursuant thereto.
12.2 The Corporation shall not propose, agree to or otherwise give effect to
any amendment to, or waiver or forgiveness of its rights or obligations under,
the Support Agreement, the Voting and Exchange Trust Agreement or Jaws US's
Certificate of Incorporation, without the approval of the holders of the
Exchangeable Shares given in accordance with Article 10 of these share
provisions other than such amendments, waivers and/or forgiveness as may be
necessary or advisable for the purpose of:
(a) adding to the covenants of the other party or parties to such
agreement for the protection of the Corporation or the holders of
Exchangeable Shares; or
-18-
(b) making such provisions or modifications not inconsistent with such
agreement or certificate as may be necessary or desirable with
respect to matters or questions arising thereunder which, in the
opinion of the Board of Directors, it may be expedient to make,
provided that the Board of Directors shall be of the opinion, after
consultation with counsel, that such provisions and modifications
will not be prejudicial to the interests of the holders of the
Exchangeable Shares; or
(c) making such changes in or corrections to such agreement or
certificate which, on the advice of counsel to the Corporation, are
required for the purpose of curing or correcting any ambiguity or
defect or inconsistent provision or clerical omission or mistake or
manifest error contained therein, provided that the Board of
Directors shall be of the opinion, after consultation with counsel,
that such changes or corrections will not be prejudicial to the
interests of the holders of the Exchangeable Shares.
ARTICLE 13
LEGEND
13.1 The certificates evidencing the Exchangeable Shares shall contain or have
affixed thereto a legend in the following form:
"The securities represented hereby have not been and will not be
registered under the U.S. Securities Act of 1933, as amended (the
"U.S. Securities Act"). These securities may be offered, sold,
pledged or otherwise transferred only (a) to the Corporation, (b)
outside the United States in compliance with Rule 903 or 904 of
Regulation S under the U.S. Securities Act, (c) in compliance
with the exemption from the registration requirements under the
U.S. Securities Act provided by Rule 144 thereunder, if
available, and in accordance with applicable state securities
laws, or (d) in a transaction that does not require registration
under the U.S. Securities Act or any applicable state laws and
regulations governing the offer and sale of securities and the
holder has, prior to such sale, furnished to the Corporation an
opinion of counsel, of recognized standing, or other evidence of
exemption, reasonably satisfactory to the Corporation. Hedging
transactions involving the securities represented hereby may not
be conducted unless in compliance with the U.S. Securities Act.
Delivery of this certificate may not constitute "good delivery"
in settlement of transactions on stock exchanges in Canada."
ARTICLE 14
MISCELLANEOUS
14.1 Any notice, request or other communication to be given to the Corporation
by a holder of Exchangeable Shares shall be in writing and shall be valid and
effective if given by mail (postage prepaid) or by telecopy or by delivery to
the registered office of the Corporation and addressed to
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the attention of the President. Any such notice, request or other communication,
if given by mail, telecopy or delivery, shall only be deemed to have been given
and received upon actual receipt thereof by the Corporation.
14.2 Any presentation and surrender by a holder of Exchangeable Shares to the
Corporation or the Transfer Agent of certificates representing Exchangeable
Shares in connection with the liquidation, dissolution or winding-up of the
Corporation or the retraction, redemption or exchange of Exchangeable Shares
shall be made by registered mail (postage prepaid) or by delivery to the
registered office of the Corporation or to such office of the Transfer Agent as
may be specified by the Corporation, in each case addressed to the attention of
the President of the Corporation. Any such presentation and surrender of
certificates shall only be deemed to have been made and to be effective upon
actual receipt thereof by the Corporation or the Transfer Agent, as the case may
be, and the method of any such presentation and surrender of certificates shall
be at the sole risk of the holder.
14.3 Any notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of the Corporation shall be in writing and
shall be valid and effective if given by mail (postage prepaid) or by delivery
to the address of the holder recorded in the securities register of the
Corporation or, in the event of the address of any such holder not being so
recorded, then at the last address of such holder known to the Corporation. Any
such notice, request or other communication, if given by mail, shall be deemed
to have been given and received on the fifth Business Day following the date of
mailing and, if given by delivery, shall be deemed to have been given and
received on the date of delivery. Accidental failure or omission to give any
notice, request or other communication to one or more holders of Exchangeable
Shares shall not invalidate or otherwise alter or affect any action or
proceeding to be or intended to be taken by the Corporation.
14.4 For greater certainty, the Corporation shall not be required for any
purpose under these share provisions to recognize or take account of persons who
are not so recorded in such securities register.
14.5 All Exchangeable Shares acquired by the Corporation upon the redemption or
retraction thereof shall be cancelled.
SCHEDULE "A"
RETRACTION REQUEST
To the Corporation and Jaws Technologies, Inc. ("Jaws US")
This Retraction Request is given pursuant to Article 6 of the provisions
(the "Share Provisions") attaching to the Exchangeable Shares of the Corporation
and all capitalized words and expressions used in this Retraction Request which
are defined in the Share Provisions have the meaning attributed to such words
and expressions in such Share Provisions.
The undersigned hereby notifies the Corporation that, subject to the
Retraction Call Right referred to below, the undersigned requests the
Corporation to redeem in accordance with Article 6 of the Share Provisions:
[ ] all share(s) represented by the accompanying certificate(s); or
[ ] ______________ share(s) only.
The Undersigned hereby notifies the Corporation that the Retraction Date
shall be: ______________________.
NOTE: The Retraction Date must be a Business Day and must not be less than
five Business Days nor more than 10 Business Days after the date
upon which this Retraction Request and the accompanying shares are
received at the registered office of the Corporation or at any
office of the Transfer Agent as may be specified in this Retraction
Request or as may be specified by the Corporation by notice to the
holders of the Exchangeable Shares. In the event that no such
Business Day is correctly specified above, the Retraction Date shall
be deemed to be the tenth Business Day after the date on which this
Retraction Request is received by the Corporation.
The undersigned acknowledges the Retraction Call Right of Jaws US to
purchase all but not less than all the Retracted Shares from the undersigned and
that this Retraction Request shall be deemed to be a revocable offer by the
undersigned to sell the Retracted Shares to Jaws US in accordance with the
Retraction Call Right on the Retraction Date for the Retraction Price and on the
other terms and conditions set out in Section 6.3 of the Share Provisions. If
Jaws US determines not to exercise the Retraction Call Right, the Corporation
will notify the undersigned of such fact as soon as possible. This Retraction
Request, and offer to sell the Retracted Shares to Jaws US, may be revoked and
withdrawn by the undersigned by notice in writing given to the Corporation at
any time before the close of business on the Business Date immediately preceding
the Retraction Date.
The undersigned acknowledges that if, as a result of liquidity or solvency
provisions of applicable law, the Corporation is unable to redeem all Retracted
Shares, the undersigned will be deemed to have exercised the Exchange Right (as
defined in the Voting and Exchange Trust Agreement) so as to require Jaws US to
purchase the unredeemed Retracted Shares.
-2-
The undersigned hereby represents and warrants to the Corporation and Jaws
US that the undersigned has good title to, and owns, the share(s) represented by
the accompanying certificate free and clear of all liens, claims, encumbrances,
security interests and adverse claims or interests.
----------- ------------------------------ ----------------------------
(Date) (Signature of Shareholder) Guarantee of Signature
-3-
[ ] Please check box if the legal or beneficial owner of the Retracted
Shares is a non-resident of Canada.
[ ] Please check box if the securities and any cheque(s) or other
non-cash assets resulting from the retraction of the Retracted
Shares are to be held for pick-up by the shareholder at the
principal transfer office of the Transfer Agent in Calgary, Alberta,
failing which the securities and any cheque(s) or other non-cash
assets will be delivered to the shareholder in accordance with the
share provisions.
NOTE: This panel must be completed and the accompanying certificate,
together with such additional documents as the Transfer Agent
may require, must be deposited with the Transfer Agent at its
principal transfer office in Calgary, Alberta. The securities
and any cheque(s) or other non-cash assets resulting from the
retraction or purchase of the Retracted Shares will be issued
and registered in, and made payable to, or transferred into,
respectively, the name of the shareholder as it appears on the
register of the Corporation and the securities, cheque (s) and
other non-cash assets resulting from such retraction or
purchase will be delivered to the shareholder in accordance
with the Share Provisions.
--------------------------------------------------------------------------------
Name of Person in Whose Name Securities or Date
Cheque(s) or Other Non-cash Assets Are To Be
Registered, Issued or Delivered (please print)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Street Address or P.O. Box Signature of Shareholder
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
City, Province Signature Guaranteed by
--------------------------------------------------------------------------------
NOTE: If this Retraction Request is for less than all of the share(s)
represented by the accompanying certificate, a certificate
representing the remaining shares of the Corporation will be
issued and registered in the name of the shareholder as it
appears on the register of the Corporation or its lawful
transferee.
B. OTHER PROVISIONS
1.1 Meetings
Meetings of Shareholders of the Corporation shall be held in the location
determined by the directors of the Corporation, and may be held in Delaware or
at any location within Alberta.
1.2 Definitions
Unless there is something in the subject matter or context inconsistent
therewith in Sections 1.3, 1.4 and 1.5 below, the following terms shall have the
respective meanings set out below and grammatical variations of such terms shall
have corresponding meanings:
"ABCA" means the Business Corporations Act (Alberta), as amended;
"Automatic Redemption Date" has the meaning provided in the Exchangeable
Share Provisions;
"Business Day" has the meaning provided in the Exchangeable Share
Provisions;
"Exchange Put Right" has the meaning provided in the Exchangeable Share
Provisions;
"Exchangeable Share Consideration" has the meaning provided in the
Exchangeable Share Provisions;
"Exchangeable Share Price" has the meaning provided in the Exchangeable
Share Provisions;
"Exchangeable Share Provisions" means the rights, privileges, restrictions
and conditions attaching to the Exchangeable Shares;
"Exchangeable Shares" means the Exchangeable Shares in the capital of the
Corporation;
"Jaws US" has the meaning provided in the Exchangeable Share Provisions;
"Jaws US Common Stock" has the meaning provided in the Exchangeable Share
Provisions;
"Liquidation Call Purchase Price" has the meaning provided in Section 1.3;
"Liquidation Call Right" has the meaning provided in Section 1.3;
"Liquidation Date" has the meaning provided in the Exchangeable Share
Provisions;
"Redemption Call Purchase Price" has the meaning provided in Section 1.4;
"Redemption Call Right" has the meaning provided in Section 1.4;
"Subsidiary" has the meaning provided in the Exchangeable Share
Provisions;
-2-
"Transfer Agent" means the duly appointed transfer agent for the time
being of the Exchangeable Shares, and, if there is more than one such
transfer agent, then the principal Canadian transfer agent; and
"Voting and Exchange Trust Agreement" has the meaning provided in the
Exchangeable Share Provisions.
1.3 Jaws US Liquidation Call Right
(a) Jaws US shall have the overriding right (the "Liquidation Call
Right"), in the event of and notwithstanding any proposed
liquidation, dissolution or winding-up of the Corporation as
referred to in Article 5 of the Exchangeable Share Provisions, to
purchase from all but not less than all of the holders (other than
Jaws US or any Subsidiary thereof) of Exchangeable Shares on the
Liquidation Date all but not less than all of the Exchangeable
Shares held by such holders on payment by Jaws US to each holder of
the Exchangeable Share Price applicable on the last Business Day
prior to the Liquidation Date (the "Liquidation Call Purchase
Price") in accordance with subsection 1.3(c). In the event of the
exercise of the Liquidation Call Right by Jaws US, each holder shall
be obligated to sell all the Exchangeable Shares held by such holder
to Jaws US on the Liquidation Date on payment by Jaws US to the
holder of the Liquidation Call Purchase Price for each such share.
(b) To exercise the Liquidation Call Right, Jaws US must notify the
Corporation's Transfer Agent in writing, as agent for the holders of
Exchangeable Shares, and the Corporation of Jaws US's intention to
exercise such right at least 55 days before the Liquidation Date in
the case of a voluntary liquidation, dissolution or winding-up of
the Corporation and at least five Business Days before the
Liquidation Date in the case of an involuntary liquidation,
dissolution or winding-up of the Corporation. The Transfer Agent
will notify the holders of Exchangeable Shares as to whether or not
Jaws US has exercised the Liquidation Call Right forthwith after the
expiry of the date by which the same may be exercised by Jaws US. If
laws US exercises the Liquidation Call Right, on the Liquidation
Date, Jaws US will purchase and the holders will sell all of the
Exchangeable Shares then outstanding for a price per share equal to
the Liquidation Call Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Liquidation Call Right, Jaws US shall deposit
with the Transfer Agent, on or before the Liquidation Date, the
Exchangeable Share Consideration representing the total Liquidation
Call Purchase Price. Provided that such Exchangeable Share
Consideration has been so deposited with the Transfer Agent, on and
after the Liquidation Date, the right of each holder of Exchangeable
Shares will be limited to receiving such holder's proportionate part
of the total Liquidation Call Purchase Price payable by Jaws US,
without interest, upon presentation and surrender by the holder of
certificates representing the Exchangeable Shares held by such
holder and the holder shall, on and after the
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Liquidation Date, be considered and deemed for all purposes to be
the holder of the Jaws US Common Stock delivered to such holder.
Upon surrender to the Transfer Agent of a certificate or
certificates representing Exchangeable Shares, together with such
other documents and instruments as may be required to effect a
transfer of Exchangeable Shares under the ABCA and the by-laws of
the Corporation and such additional documents and instruments as the
Transfer Agent may reasonably require, the holder of such
surrendered certificate or certificates shall be entitled to receive
in exchange therefor, and the Transfer Agent on behalf of Jaws US
shall deliver to such holder, the Exchangeable Share Consideration
to which such holder is entitled. If Jaws US does not exercise the
Liquidation Call Right in the manner described above, on the
Liquidation Date, the holders of the Exchangeable Shares will be
entitled to receive in exchange therefor the liquidation price
otherwise payable by the Corporation in connection with the
liquidation, dissolution or winding-up of the Corporation pursuant
to Article 5 of the Exchangeable Share Provisions. Notwithstanding
the foregoing, until such Exchangeable Share Consideration is
delivered to the holder, the holder shall be deemed to still be a
holder of Exchangeable Shares for purposes of all voting rights with
respect thereto under the Voting and Exchange Trust Agreement.
1.4 Jaws US Redemption Call Right
(a) Jaws US shall have the overriding right (the "Redemption Call
Right"), notwithstanding any proposed redemption of the Exchangeable
Shares by the Corporation pursuant to Article 7 of the Exchangeable
Share Provisions, to purchase from all but not less than all of the
holders (other than Jaws US or any Subsidiary thereof) of
Exchangeable Shares on the Automatic Redemption Date all but not
less than all of the Exchangeable Shares held by each such holder on
payment by Jaws US to the holder of the Exchangeable Share Price
applicable on the last Business Day prior to the Automatic
Redemption Date (the "Redemption Call Purchase Price") in accordance
with subsection 1.4(c). In the event of the exercise of the
Redemption Call Right by Jaws US, each holder shall be obligated to
sell all the Exchangeable Shares held by the holder to Jaws US on
the Automatic Redemption Date on payment by Jaws US to the holder of
the Redemption Call Purchase Price for each such share.
(b) To exercise the Redemption Call Right, Jaws US must notify the
Transfer Agent in writing, as agent for the holders of Exchangeable
Shares, and the Corporation of the Corporation's intention to
exercise such right not later than the date by which the Corporation
is required to give notice of the Automatic Redemption Date. The
Transfer Agent will notify the holders of the Exchangeable Shares as
to whether or not Jaws US has exercised the Redemption Call Right
forthwith after the date by which the same may be exercised by Jaws
US. If Jaws US exercises the Redemption Call Right, on the Automatic
Redemption Date, Jaws US will purchase and the holders will sell all
of the Exchangeable Shares then outstanding for a price per share
equal to the Redemption Call Purchase Price.
-4-
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Redemption Call Right, Jaws US shall deposit
with the Transfer Agent, on or before the Automatic Redemption Date,
the Exchangeable Share Consideration representing the total
Redemption Call Purchase Price. Provided that such Exchangeable
Share Consideration has been so deposited with the Transfer Agent,
on and after the Automatic Redemption Date, the rights of each
holder of Exchangeable Shares will be limited to receiving such
holder's proportionate part of the total Redemption Call Purchase
Price payable by Jaws US upon presentation and surrender by the
holder of certificates representing the Exchangeable Shares held by
such holder and the holder shall on and after the Automatic
Redemption Date be considered and deemed for all purposes to be the
holder of the Jaws US Common Stock delivered to such holder. Upon
surrender to the Transfer Agent of a certificate or certificates
representing Exchangeable Shares, together with such other documents
and instruments as may be required to effect a transfer of
Exchangeable Shares under the ABCA and the by-laws of the
Corporation and such additional documents and instruments as the
Transfer Agent may reasonably require, the holder of such
surrendered certificate or certificates shall be entitled to receive
in exchange therefor, and the Transfer Agent on behalf of Jaws US
shall deliver to such holder, the Exchangeable Share Consideration
to which such holder is entitled. If Jaws US does not exercise the
Redemption Call Right in the manner described above, on the
Automatic Redemption Date, the holders of the Exchangeable Shares
will be entitled to receive in exchange therefor the redemption
price otherwise payable by the Corporation in connection with the
redemption of the Exchangeable Shares pursuant to Article 7 of the
Exchangeable Share Provisions. Notwithstanding the foregoing, until
such Exchangeable Share Consideration is delivered to the holder,
the holder shall be deemed to still be a holder of Exchangeable
Shares for purposes of all voting rights with respect thereto under
the Voting and Exchange Trust Agreement.
SCHEDULE "E" TO THAT SHARE PURCHASE AGREEMENT DATED THE 15TH, DAY
OF AUGUST, 2000, BETWEEN XXXXXXXX XXXXXX, XXXXXX SLODICHAK, JAWS
ACQUISITION CANADA CORP. AND JAWS TECHNOLOGIES, INC.
Earn-Out Provisions
Calculation of Deferred JAWS Common Stock Payments:
---------------------------------------------------
The number of shares of deferred JAWS common stock payable to Seller shall be
calculated as follows, where X=actual revenue, X1=target revenue, Y=actual EBIT,
Y1=target EBIT. For all calculations, the share price is assumed at $5.00 U.S.
'Full Grant'=Dollar Value of Deferred Payout for the Period ($1,173,502 USD)
'Revenue Factor' = (X/X1)
'Adjusted EBIT FACTOR' = (Y/Yl)
'Weighted Average'=('Revenue Factor'*0.3)+('Adjusted EBIT Factor'*0.7)
'Shares' Issued'=(Full Grant/Share Price)*('Weighted Average')
* if 'Weighted Average' is less than 25%, the 'Weighted Average' value will be
set to 25%.
The foregoing calculation shall be made for each of the three periods specified
below, and in each case, may result in the issuance of a maximum of 234,700
shares of Deferred JAWS Common Stock.
Revenue:
--------
12 Month Target Revenue: $3,491,333 USD
24 Month Target Revenue: $5,474,667 USD
36 Month Target Revenue: $8,424,667 USD
Revenue shall be determined to be all revenue recognized and recorded in
accordance with US Generally Accepted Accounting Principles (GAAP) and SEC
Guidelines. In addition, revenue shall be determined to be revenue generated
under the leadership, salesmanship, or management of Seller or other existing
0xxxx.xxx employees resident in the Burloak office (subject to change only by
mutual agreement). All financial results are subject to an independent review or
audit by JAWS' outside accountants.
12 Month Target Revenue is to be calculated for the period beginning at the
closing date and ending on the twelve (12) month anniversary date of closing.
24 Month Target Revenue is to be calculated for the period beginning twelve (12)
months following the closing date and ending on the twenty-four (24) month
anniversary date of closing.
36 Month Target Revenue is to be calculated for the period beginning twenty-four
(24) months following the closing date and ending on the thirty-six (36) month
anniversary date of closing.
EBIT:
-----
12 Month Target EBIT: $ 615,055 USD
24 Month Target EBIT: $1,041,860 USD
36 Month Target EBIT: $1,826,693 USD
Earnings Before Interest & Taxes (EBIT), as recognized and recorded in
accordance with US Generally Accepted Accounting Principles (GAAP) and SEC
Guidelines, is calculated as the net profit of projects sold or managed by the
Burloak office before any interest or taxes. Net profit is determined to be
gross revenue less cost of sales less all direct and indirect expenses
attributable to the Burloak office. The corporate overhead allocated to the
Burloak office shall be limited to reasonable direct and actual costs. All
financial results are subject to an independent review or audit by our JAWS'
accountants.
12 Month Target EBIT is to be calculated for the period beginning at the closing
date and ending on the twelve (12) month anniversary date of closing.
24 Month Target EBIT is to be calculated for the period beginning twelve (12)
months from the closing date and ending on the twenty-four (24) month
anniversary date of closing.
36 Month Target EBIT is to be calculated for the period beginning twenty-four
(24) months from the closing date and ending on the thirty-six (36) month
anniversary date of closing.
Scehdule A - JAWS Technologies Inc.
0xxxx.xxx Inc. Earnout - Maximum 75% Holdback
JAWS Share Price $ 5.00
JAWS Proposed Formula
Revenue Factor = (Actual Gross Revenue/Target Gross Revenue)
Adjusted EBIT Factor =(Actual Adjusted EBIT / Target Adjusted EBIT)
Weighted Average = (Rev Factor x 0.3) + (EBIT Factor x 0.7)
Shares Issued = (Full Grant/Share Price) x Weighted Average
12 Months Target Scenarios - 12 Month Results
Scenario #1 Scenario #2 Scenario #3 Scenario #4
100% Both 120% Both 80% Both 120% Rev,
Rounded for Ease of Use 80% EBIT
Gross Revenue $ 3,491,333 $ 3,491,333 $ 4,189,600 $ 2,793,066 $ 4,189,600
Adjusted EBIT $ 615,055 $ 615,055 $ 738,066 $ 492,044 $ 492,044
Rev Factor 100% 120% 80% 120%
EBIT Factor 100% 120% 80% 80%
Weighted Average 100% 120% 80% 92%
Purchase Amount Based on Perf in 2000 $ 1,173,502 $ 1,173,502 $ 1,173,502 $ 1,173,502
Number of Shares 234,700 234,700 234,700 234,700
Shares to be issued 234,700 234,700 187,760 215,924
Share Grant of Total 100% 100% 80% 92%
24 Months Target Scenarios - 24 Month Results
Scenario #1 Scenario #2 Scenario #3 Scenario #4
100% Both 120% Both 80% Both 120% Rev,
Rounded for Ease of Use 80% EBIT
Gross Revenue $ 5,474,667 $ 5,474,667 $ 6,569,600 $ 4,379,734 $ 6,569,600
Adjusted EBIT $ 1,041,860 $ 1,041,860 $ 1,250,232 $ 833,488 $ 833,488
Rev Factor 100% 120% 80% 120%
EBIT Factor 100% 120% 80% 80%
Weighted Average 100% 120% 80% 92%
Purchase Amount Based on Perf in 2000 $ 1,173,502 $ 1,173,502 $ 1,173,502 $ 1,173,502
Number of Shares 234,700 234,700 234,700 234,700
Shares to be issued 234,700 234,700 187,760 215,924
Share Grant of Total 100% 100% 80% 92%
36 Months Target Scenarios - 36 Month Results
Scenario #1 Scenario #2 Scenario #3 Scenario #4
100% Both 120% Both 80% Both 120% Rev,
Rounded for Ease of Use 80% EBIT
Gross Revenue $ 8,424,667 $ 8,424,667 $ 10,109,600 $ 6,739,734 $ 10,109,600
Adjusted EBIT $ 1,826,693 $ 1,826,693 $ 2,192,032 $ 1,461,354 $ 1,461,354
Rev Factor 100% 120% 80% 120%
EBIT Factor 100% 120% 80% 80%
Weighted Average 100% 120% 80% 92%
Purchase Amount Based on Perf in 2000 $ 1,173,502 $ 1,173,502 $ 1,173,502 $ 1,173,502
Number of Shares 234,700 234,700 234,700 234,700
Shares to be issued 234,700 234,700 187,760 215,924
Share Grant of Total 100% 100% 80% 92%
12 Months Target Scenarios - 12 Month Results
Scenario #0 Xxxxxxxx #0 Xxxxxxxx #0
200% Rev, 160% Rev, 10% Rev,
Rounded for Ease of Use 0% EBIT 0% EBIT 10% EBIT
Gross Revenue $ 3,491,333 $ 6,982,666 $ 5,237,000 $ 349,133
Adjusted EBIT $ 615,055 $ - $ - $ 61,505
Rev Factor 200% 150% 10%
EBIT Factor 0% 0% 10%
Weighted Average 60% 45% 10%
Purchase Amount Based on Perf in 2000 $ 1,173,502 $ 1,173,502 $ 1,173,502
Number of Shares 234,700 234,700 234,700
Shares to be issued 140,820 105,615 56,675
Share Grant of Total 60% 45% 25%
24 Months Target Scenarios - 24 Month Results
Scenario #0 Xxxxxxxx #0 Xxxxxxxx #0
200% Rev, 160% Rev, 10% Rev,
Rounded for Ease of Use 0% EBIT 0% EBIT 10% EBIT
Gross Revenue $ 5,474,667 $ 10,949,334 $ 8,212,001 $ 547,467
Adjusted EBIT $ 1,041,860 $ - $ - $ 104,186
Rev Factor 200% 150% 10%
EBIT Factor 0% 0% 10%
Weighted Average 60% 45% 10%
Purchase Amount Based on Perf in 2000 $ 1,173,502 $ 1,173,502 $ 1,173,502
Number of Shares 234,700 234,700 234,700
Shares to be issued 140,820 105,615 56,675
Share Grant of Total 60% 45% 25%
36 Months Target Scenarios - 36 Month Results
Scenario #0 Xxxxxxxx #0 Xxxxxxxx #0
200% Rev, 160% Rev, 10% Rev,
Rounded for Ease of Use 0% EBIT 0% EBIT 10% EBIT
Gross Revenue $ 8,424,667 $ 16,849,334 $ 12,637,001 $ 842,467
Adjusted EBIT $ 1,826,693 $ - $ - $ 182,669
Rev Factor 200% 150% 10%
EBIT Factor 0% 0% 10%
Weighted Average 60% 45% 10%
Purchase Amount Based on Perf in 2000 $ 1,173,502 $ 1,173,502 $ 1,173,502
Number of Shares 234,700 234,700 234,700
Shares to be issued 140,820 105,615 56,675
Share Grant of Total 60% 45% 25%
* At the sole discretion of JAWS, should EBIT become impractical to
identify for 4comm, the earn-out will be calculated based solely on
the above revenue targets, and EBIT would be left at the risk of
JAWS to achieve.
