EXHIBIT 10.14
CONFIDENTIAL
Copy Number: _____
Name of Offeree: ______________________________
OFFERING OF UNITS
(each Unit consisting of one share of
common stock
and one warrant to purchase
1/2 (one-half) a share of common stock)
OF
JAWS TECHNOLOGIES, INC.
(a Nevada corporation)
------------------------------------
SUBSCRIPTION
BOOKLET
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CANADIAN PLACEMENT AGENT:
Thomson Kernaghan & Co. Limited (Canada)
December 16, 1999
SUBSCRIPTION INSTRUCTIONS
(Please read carefully)
Units (the "Units") of JAWS Technologies, Inc., a Nevada
corporation (the "Company"), are being offered in the United States and in
Canada pursuant to (i) the Company's Confidential Private Placement Memorandum
dated December 13, 1999 (the "U.S. Memorandum"), and (ii) the Company's
Confidential Private Placement Memorandum dated December 13, 1999 (the "Canadian
Memorandum"), respectively, for a minimum investment for purchasers resident in
the United States or in the Provinces of Alberta, Manitoba or British Columbia
of US$100,000 and a minimum investment for purchasers resident in the Province
of Ontario of US$ 106,250 (together, the "Offering"). You should consult with an
attorney, accountant, investment advisor or other advisor regarding an
investment in the Company and its suitability for you. The Company reserves the
right to reject any offer to purchase the Units, in whole or part, for any
reason without notice. The Company may withdraw, cancel or modify this Offering
at any time without notice.
In order to subscribe for Units, a prospective purchaser must
complete and execute the subscription documents contained in this booklet in
accordance with the instructions set forth herein. All subscription documents
must be completed correctly and thoroughly or they will not be accepted
(including checking the appropriate box(es) in Section 6 and Section 7 to
indicate accredited investor status. This entire booklet should then be returned
to Thomson Kernaghan & Co. Limited, 000 Xxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxx
X0X 0X0 (Attention: Xxxxxx X. Xxxxxxxx). Please be sure that your name appears
in exactly the same way in each signature and in each place where it is inserted
in the documents. Duplicate copies of each signed document will be returned to
you after your subscription is accepted and a closing with respect to your
subscription for Units has occurred.
NO PERSON IS AUTHORIZED TO RECEIVE THIS BOOKLET UNLESS
SUCH PERSON HAS PREVIOUSLY RECEIVED, OR SIMULTANEOUSLY RECEIVES,
COPIES OF THE MEMORANDUM BEARING ON ITS FIRST PAGE THE NAME OF
SUCH PERSON AND THE NUMBER SET FORTH ON THE COVER HEREOF. Delivery
of this booklet to anyone other than the person named on the front cover as the
offeree is unauthorized, and any reproduction or circulation of this booklet, in
whole or in part, is prohibited.
Subscriptions from suitable prospective investors ("Subscribers",
or each individually a "Subscriber") will be accepted at the sole discretion of
the Company after receipt of all subscription documents (properly completed and
executed) and after confirmation of the receipt of the appropriate payment.
897953.8
FOR ALL SUBSCRIBERS
Subscription Agreement READ, complete, date and sign. Each
Subscriber must complete and sign the
signature page and initial the
applicable boxes under Sections 6 and 7
of the Subscription Agreement entitled
"Representations and Warranties as to
Institutional Accredited Investor
Status" and "Representations and
Warranties as to Accredited Investor
Status," respectively.
Corporations, partnerships and trusts
must attach appropriate authorizing
instruments (corporate resolution or
by-laws, partnership agreement or trust
instrument). Additional documentation
may be required.
Payment The minimum investment for purchasers
resident in the United States, in the
Provinces of Alberta, Manitoba or
British Columbia or in Belgium is
US$100,000 or such greater amount
required by local law.
The minimum investment for purchasers
resident in the Province of Ontario is
US$106,250.
The purchase price is payable by either
certified cheque or wire transfer.
If making payment by certified cheque,
send a cheque payable to "Thomson
Xxxxxxxxx & Co. Limited"
Wire transfer instructions will be
provided to prospective investors by the
Placement Agent.
PLEASE PRINT IN INK OR TYPE ALL INFORMATION.
FAILURE TO COMPLY WITH THE ABOVE INSTRUCTIONS WILL CONSTITUTE
AN INVALID SUBSCRIPTION, WHICH, IF NOT CORRECTED, WILL RESULT IN
THE REJECTION OF YOUR SUBSCRIPTION REQUEST.
897953.8
No. _________ ______________________________
Name of Offeree
SUBSCRIPTION AGREEMENT
JAWS Technologies, Inc.
0000 00xx Xxxxxx, X.X.
Calgary, Alberta T2T0A7
Canada
Ladies and Gentlemen:
This Subscription Agreement is made between JAWS Technologies,
Inc., a Nevada corporation (the "Company"), and the undersigned prospective
purchaser (the "Subscriber") who is subscribing hereby for Units (the "Units")
in the Company, each Unit consisting of one share of common stock, par value
$.001 per share ( "Common Stock"), of the Company and one warrant (a "Warrant")
to purchase 1/2 (one half) of a share of Common Stock at an exercise price of
US$6.50 per share. This subscription is submitted to you in accordance with, and
subject to, the terms and conditions described in the Canadian Offering
Memorandum of the Company, together with any supplements or amendments thereto
(the "Canadian Memorandum"), relating to two concurrent offerings (together, the
"Offering") of a minimum of 2,000,000 Units and a maximum of 3,500,000 Units, at
a purchase price of US$4.25 per Unit. Thomson Kernaghan & Co. Limited (the
"Canadian Placement Agent") is acting as the placement agent on behalf of the
Company in connection with the Canadian Offering (the "Canadian Placement
Agent") and SmallCaps Online LLC is acting concurrently as the placement agent
on behalf of the Company in connection with the U.S. Offering (the "U.S.
Placement Agent" and, together with the Canadian Placement Agent, the "Placement
Agents"). It is anticipated that the initial closing will occur on or about
December 23, 1999, or such other date the Company and the Placement Agents may
agree (the "Initial Closing Date" and, collectively with all other closing
dates, the "Closing Date") pursuant to a Placement Agency Agreement by and
between the Company and each Placement Agent, respectively.
In consideration of the Company's agreement to sell Units to the
undersigned upon the terms and conditions summarized in the Canadian Memorandum,
the undersigned agrees and represents to the Company and the Canadian Placement
Agent as follows:
1. Subscription. The Subscriber hereby irrevocably subscribes
for, and agrees to purchase, Units of the Company. In accordance with the
Subscription Instructions attached hereto, the undersigned has remitted to the
Company payment in full for one hundred percent (100%) of the estimated
aggregate purchase price of the Units subscribed for hereunder.
897953.8
The undersigned acknowledges receipt of a copy of the Canadian
Memorandum.
2. Understandings. The Subscriber understands and acknowledges
that it is aware of the following:
(a) This subscription may be rejected, in whole or in part, by
the Company, in its sole and absolute discretion, for any reason without notice,
notwithstanding prior receipt by the undersigned of notice of acceptance of the
undesigned's subscription. If the undersigned's subscription is rejected in
whole or in part, the payment made by the undersigned (or, in the case of
rejection of a portion of the undersigned's subscription, the part of the
payment relating to such rejected portion) will be returned promptly, with
interest.
(b) Except as set forth in paragraph 2(a) above, the undersigned
hereby acknowledges and agrees that the subscription hereunder is irrevocable by
the undersigned and that, except as required by law, the undersigned is not
entitled to cancel, terminate, or revoke this Subscription Agreement or any
agreements of the undersigned hereunder and that this Subscription Agreement and
such other agreements shall survive the death or disability of the undersigned
and shall be binding upon and inure to the benefit of the parties and their
heirs, executors, administrators, successors, legal representatives, and
permitted assigns. If the undersigned is more than one person, the obligations
of the undersigned hereunder shall be joint and several and the agreements upon
each such person and his/her heirs, executors, administrators, successors, legal
representatives, and permitted assigns.
(c) NEITHER THE UNITS, NOR THE SHARES OF COMMON STOCK, THE
WARRANTS OR ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THE WARRANTS,
HAVE BEEN REGISTERED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND ARE
BEING OFFERED IN RELIANCE ON EXEMPTIONS FROM THE ACT AND SUCH STATE LAWS AND THE
LAWS OF OTHER APPLICABLE JURISDICTION. THE UNITS MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND/OR SUCH STATE LAWS PURSUANT TO
REGISTRATION THEREUNDER OR EXEMPTION THEREFROM. THE MEMORANDUM CONSTITUTES AN
OFFER ONLY TO THE PERSON NAMED ABOVE, AND ONLY IF THAT PERSON MEETS THE
SUITABILITY STANDARDS SET FORTH IN THE MEMORANDUM.
(d) The Offering is intended to be exempt from registration under
the Act by virtue of Section 4(2) of the Act and the provisions of Regulation D
promulgated under the Act ("Regulation D") and Rule 506 thereunder, which is in
part dependent upon the truth, completeness and accuracy of the statements made
by the undersigned hereunder.
(e) It is understood that in order not to jeopardize the
Offering's exempt status under Section 4(2) of the Act, Regulation D and Rule
506, the undersigned will, at a minimum, be required to fulfill the investor
suitability requirements hereunder.
897953.8
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(f) No governmental agency has passed upon the Units or made any
finding or determination as to the wisdom or fairness of any investments therein
nor has any such agency made any recommendation or endorsement of the Units.
(g) The Units involve a risk of loss by the Subscriber of its
entire investment, including the risks summarized in the Memorandum, and it must
bear such economic risk for an indefinite period of time. An investment in the
Units is suitable only for persons who have substantial financial resources and
have no need for liquidity in this investment.
(h) THE TAX CONSEQUENCES TO THE SUBSCRIBER OF THE INVESTMENT IN
THE COMPANY WILL DEPEND ON THE SUBSCRIBER'S PARTICULAR CIRCUMSTANCES. IN MAKING
AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE
COMPANY AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED.
PROSPECTIVE INVESTORS SHOULD NOT CONSTRUE THE CONTENTS OF THIS MEMORANDUM, THE
OTHER DOCUMENTS DELIVERED HEREWITH OR ANY OTHER COMMUNICATION FROM THE COMPANY
OR ANY PLACEMENT AGENT AS INVESTMENT OR LEGAL ADVICE. THE MEMORANDUM, THE OTHER
DOCUMENTS DELIVERED HEREWITH AND ANY SUCH OTHER MATERIALS, AS WELL AS THE NATURE
OF AN INVESTMENT IN THE SECURITIES OFFERED, SHOULD BE REVIEWED BY EACH
PROSPECTIVE INVESTOR AND SUCH INVESTOR'S INVESTMENT, TAX, LEGAL, ACCOUNTING AND
OTHER ADVISORS.
3. General Representations and Warranties. The Subscriber
represents and warrants to the Company, that:
(a) The undersigned is familiar with, and understands, the terms
of the Offering and sale of the Units and any other matters set forth in the
Canadian Memorandum. The Subscriber, its advisers, if any, and designated
representatives, if any, have the knowledge and experience in financial and
business matters necessary to evaluate the investment in the Company, and have
carefully reviewed and understand the risks of, and other considerations
relating to, the purchase of Units, including the risks set forth in the
Canadian Memorandum under "Risk Factors."
(b) The Subscriber, its advisers, if any, and designated
representatives, if any, have been afforded the opportunity to obtain any
information necessary to verify the accuracy of any representations or
information set forth in the Canadian Memorandum, have had all their inquiries
to the Company answered to their satisfaction, and have been furnished all
information requested in writing relating to the Company, the offering and sale
of the Units and any other matters set forth in the Canadian Memorandum.
(c) The Subscriber, its advisers, if any, and designated
representatives, if any, have not been furnished any offering literature other
than the Canadian Memorandum have relied only
897953.8
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on the information contained in such Canadian Memorandum and the information
described in paragraph 3(b) above furnished or made available to them at their
written request by the Company.
(d) The Subscriber, if a corporation, partnership, trust or other
legal entity, is authorized and otherwise fully qualified to purchase and hold
Units in the Company. Such entity has its principal place of business at the
address set forth on the signature page hereof and such entity has not been
formed for the specific purpose of acquiring Units in the Company.
(e) The Subscriber has adequate means of providing for current
and anticipated financial needs and contingencies, is able to bear the economic
risk for an indefinite period of time and has no need for liquidity of the
investment in the Units and could afford complete loss of such investment.
(f) The Subscriber is not subscribing for Units as a result of or
subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media (but excluding information
available through Internet-related media that would not constitute general
solicitation material under applicable federal securities laws, rules and
regulations) or broadcast over television or radio, or presented at any seminar
or meeting, or any solicitation of a subscription by a person not previously
known to the Subscriber in connection with investments in securities generally.
(g) All of the information that the Subscriber has heretofore
furnished or which is set forth herein is correct and complete as of the date of
this Subscription Agreement, and, if there should be any material change in such
information prior to the admission of the undersigned to the Company, the
Subscriber will immediately furnish revised or corrected information to you.
(h) If the Subscriber is a partnership or limited liability
company, the representations, warranties, agreements and understandings set
forth herein are true with respect to all partners or members in the Subscriber
(and if any such partner or member is itself a partnership or limited liability
company, all persons holding an interest in such partnership or limited
liability company, directly or indirectly, including through one or more
partnerships or limited liability companies), and the person executing this
Subscription Agreement has made due inquiry to determine the truthfulness of the
representations and warranties made hereby, and the undersigned agrees to
furnish to the Company, upon request, documentation satisfactory to Company in
its reasonable discretion, supporting the truthfulness of such representations
and warranties with respect to all such partners or members in the Subscriber.
(i) If the undersigned is purchasing in a representative or
fiduciary capacity, the representations and warranties herein shall be deemed to
have been made on behalf of the person or persons for whom the undersigned is so
purchasing, and the undersigned agrees to furnish to the Company, upon request,
documentation satisfactory to the Company in its sole discretion, supporting the
truthfulness of such representations and warranties as made on behalf of such
person or persons.
897953.8
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4. Representations and Warranties as to Investment Intent. The
Subscriber has read and is familiar with the Canadian Memorandum and represents
to the Company that: it is purchasing the Units for his or its own account, or
for one or more fiduciary accounts as to which the Subscriber has investment
discretion, and for investment purposes only and not with a view to their resale
or further distribution to any other person or entity; no one other than the
Subscriber will have any interest in, or any right to acquire, the Units, nor
does anyone other than the Subscriber have any interest in this subscription; it
has full right, power and authority to execute this Subscription Agreement, any
materials accompanying this Subscription Agreement, and as of the time this
Subscription Agreement, he or it has duly and validly executed, this
Subscription Agreement; and he or it has full right power and authority to
perform his or its obligations hereunder and thereunder.
5. Understanding as to Exemption from Registration. The
Subscriber understands and acknowledges that the Units in the Company are being
offered and sold in reliance upon the exemption from registration provided by
Section 4(2) of the Act; that the reliance of the Company upon that exemption is
predicated, in part, on the representations and warranties made and to be made
by the Subscriber in and pursuant to this Subscription Agreement; and that the
exemption may not be available if any of those representations and warranties is
not true and accurate.
6. Representations and Warranties as to Institutional Accredited
Investor Status. The Subscriber warrants and represents that any one of the
statements below, next to which the Subscriber has placed its initials in the
space designated therefor, which describe an institutional "accredited
investor," as that term is defined in Rule 501(a) of Regulation D promulgated by
the SEC under the Act, is true with respect to the Subscriber.
Initial one or more of the following statements, if applicable:
[ ](i) the Subscriber is a bank as defined in Section 3(a)(2) of
the Act, or any savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Act, whether acting in its individual or fiduciary
capacity;
[ ](ii) the Subscriber is a broker or dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
[ ](iii) the Subscriber is an insurance company as defined in
Section 2(13) of the Act;
[ ](iv) the Subscriber is an investment company registered under
the Investment Company Act of 1940;
[ ](v) the Subscriber is a business development company as
defined in Section 2(a)(48) of the Investment Company Act of 1940;
897953.8
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[ ](vi) the Subscriber is a Small Business Investment Company
licensed by the United States Small Business Administration under Section 301(c)
or (d) of the Small Business Investment Act of 1958;
[ ](vii) the Subscriber is a private business development company
as defined in Section 202(a)(22) of the Advisers Act;
[ ](viii) the Subscriber is a corporation, Massachusetts or
similar business trust, or partnership, not formed for the specific purpose of
acquiring Units, with total assets in excess of $5,000,000;
[ ](2)(ix) the Subscriber is a trust, with total assets in excess
of $5,000,000, not formed for the specific purpose of acquiring Units, whose
purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii) of Regulation D promulgated by the SEC under the Act; or
[ ](x) the Subscriber is an entity in which all of the equity
owners are accredited investors.
7. Representations and Warranties as to Accredited Investor
Status (if applicable). To the extent that Subscriber has not set forth its
initials in the space designated therefor in Section 6 above, the Subscriber
warrants and represents that any one of the statements below, next to which the
Subscriber has placed its initials in the space designated therefor, which
describe an institutional "accredited investor," as that term is defined in Rule
501(a) of Regulation D promulgated by the SEC under the Act, is true with
respect to the Subscriber:
Initial one or more of the following statements, if
applicable:
[ ] (i) A natural person who had individual income of more than
$200,000 in each of the most recent two years or joint income with that person's
spouse in excess of $300,000 in each of the most recent two years and who
reasonably expects to reach that same income level for the current year. For
this purpose, individual income means adjusted gross income, as reported for
federal income tax purposes, less any income attributable to a spouse or to
property owned by a spouse, (A) increased by the individual's share (and not a
spouse's share) of: (i) the amount of any tax exempt interest income received,
(ii) amounts contributed to an IRA or Xxxxx retirement plan, (iii) alimony paid,
and (iv) the excluded portion of any long-term capital gains, and (B) adjusted,
plus or minus, for any non-cash loss or gain, respectively, reported for federal
income tax purposes; and/or
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2 A Subscriber initialing this box must provide a supplemental letter with
this Subscription Agreement describing the basis by which it is a trust
directed by a sophisticated person with the knowledge and experience in
business and financial matters capable of evaluating the merits and
risks of the prospective investment.
897953.8
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[ ] (ii) A natural person whose individual net worth, or joint
net worth with that person's spouse, is in excess of $1,000,000. For this
purpose, "net worth" means the excess of total assets at fair market value,
including home and personal property, over total liabilities, provided, however,
for the purpose of determining a person's net worth, the principal residence
owned by an individual shall be valued at cost, including the cost of
improvements, net of current encumbrances upon the property or valued on the
basis of a written appraisal used by an institutional lender making a loan
secured by the property. For the purposes of this provision, "institutional
lender" means a bank, savings and loan company, industrial loan company, credit
union, or personal property broker or a company whose principal business is as a
lender upon loans secured by real property and which has such loans receivable
in the amount of $2,000,000 or more. Any person relying on the appraised value
of a principal residence must deliver to the Company, at or prior to the date of
execution hereof, a copy of such appraisal.
8. Representations and Warranties Regarding Canadian Securities
Laws (made only by Subscribers who are not U.S. Persons (as defined in
Regulation S under the Act)).
(a) The Subscriber is a resident of, or has its place of business
in, Ontario, Manitoba, British Columbia, Alberta or Belgium as is set as set
forth on the signature page hereto, which address was not created or used solely
for the purpose of acquiring Units, and the Subscriber:
(i) is not (and is not purchasing Units for the account or
benefit of) a U.S. Person;
(ii) was not offered the Units in the United States;
(iii) did not execute or deliver this Subscription Agreement in
the United States, and
(iv) will not take delivery of the Units in the United States.
(b) The Subscriber, on its own behalf and, if applicable, on
behalf of others for whom it is contracting hereunder, further represents,
warrants and covenants to the Company and the Canadian Placement Agent (and
acknowledges that the Company and the Canadian Placement Agent and their
respective counsel are relying thereon) that it falls within one of the
following prospectus exemptions applicable under Securities Laws (as used
herein, the term "Securities Laws" means the applicable securities laws of the
Province of Ontario, the Province of Alberta or the Province of Manitoba and the
respective regulations and rules made and forms prescribed thereunder, together
with all applicable published policy statements and blanket orders and rulings
of the applicable securities regulatory authority):
(i) The Subscriber is purchasing as principal and is:
897953.8
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(A) a bank listed in Schedule I or II to the Bank Act
(Canada) to which the Bank Act (Canada) applies, or the
Federal Business Development Bank incorporated under the
Federal Business Development Bank Act (Canada);
(B) a credit union or league to which the Credit Unions
and Caisses Populaires Act, 1994 (Ontario) applies;
(C) an insurance company licensed under the Insurance Act
(Ontario);
(D) a subsidiary of any company referred to above, where
the company owns all of the voting shares of the
subsidiary;
(E) a dealer registered in the category of broker,
investment dealer or securities dealer under Securities
Laws;
(F) Her Majesty in right of Canada or any province or
territory of Canada;
(G) a municipal corporation or public board or commission
in Canada; or
(H) a company or a person purchasing as principal, other
than an individual, and is recognized by the applicable
securities regulatory authority as an exempt Subscriber.
(ii) The Subscriber is purchasing as principal (of if purchasing
as agent for a disclosed or undisclosed principal, each
beneficial Subscriber for whom the Subscriber is acting is
purchasing as principal for its own account and not for the
benefit of any other person) and is purchasing a sufficient
number of Units which have an aggregate acquisition cost to the
Subscriber of not less than CDN$150,000 if resident in Ontario
and CDN$97,000 if resident in Alberta, Manitoba or British
Columbia; and the Subscriber has not been created or is not being
used primarily to permit purchases without a prospectus or the
share or portion of any disclosed or undisclosed principal,
member, partner, beneficiary or shareholder of the Subscriber (as
applicable) of the aggregate acquisition cost to such disclosed
or undisclosed, principal member, partner, beneficiary or
shareholder of the Units being purchased is not less than
CDN$150,000 if resident in Ontario and CDN$97,000 if resident in
Alberta, Manitoba or British Columbia.
(iii) The Subscriber is a trust company registered under the Loan
and Trust Corporations Act (Ontario) and is purchasing the Units
as trustee or as agent for accounts fully managed by it, or it is
a portfolio advisor as defined in Ontario Securities Commission
Rule 45-504 and it is purchasing the Units for an account of a
client established in writing under which it makes the investment
decisions for the
897953.8
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account and has full discretion to trade in securities of the
account without requiring the client's express consent to a
transaction.
(c) The Subscriber, on its own behalf and, if applicable, on
behalf of others for whom it is contracting hereunder, acknowledges that the
representations and warranties contained herein are made by it with the
intention that they may be relied upon by the Canadian Placement Agent and the
Company in determining the Subscriber's eligibility, or (if applicable) the
eligibility of others on whose behalf it is contracting hereunder to purchase
Units under Securities Laws. The Subscriber, on its own behalf and, if
applicable, on behalf of others for whom it is contracting hereunder, further
agrees that by accepting delivery of the Units on a Closing Date of the
Offering, it will be representing and warranting that the foregoing
representations and warranties are true and correct as at the time of closing
with the same force and effect as if they had been made by the Subscriber, on
its own behalf and, if applicable, on behalf of others for whom it is
contracting hereunder, at the time of closing and that they will survive the
purchase by the Subscriber of Units and will continue in full force and effect
notwithstanding any subsequent disposition by the Subscriber of such Units or
the shares of Common Stock and Warrants included in the Units, as the case may
be.
(d) The Subscriber hereby acknowledges that no prospectus has
been filed by the Company in Canada with any securities regulatory authority and
that notwithstanding that the issuance of the Units is exempted from the
prospectus requirements available under the provisions of applicable Securities
Laws:
(i) the Subscriber is restricted from using most of the civil
remedies available under applicable Securities Laws;
(ii) the Subscriber may not receive information that would
otherwise be required to be provided to him under applicable
Securities Laws; and
(iii) the Company is relieved from certain obligations that
would otherwise apply under applicable Securities Laws.
(e) if an individual, the Subscriber has attained the age of
majority and is legally competent to execute this subscription and to take all
actions required pursuant hereto;
(f) The Subscriber (or others for whom it is contracting
hereunder) agrees that the Company and/or the Canadian Placement Agent may be
required by law or otherwise to disclose to regulatory authorities the identity
of the Subscriber and each beneficial Subscriber of Units for whom the
Subscriber may be acting and authorizes the Company and/or the Canadian
Placement Agent to make any such disclosure.
897953.8
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9. Contractual Right of Action. The Company and the Subscriber
agree that, in addition to any other right available to the Subscriber at law,
the Subscriber, if resident in Ontario or Alberta, is entitled to exercise the
contractual right of action described in the Canadian Memorandum in the
circumstances described therein.
10. Further Agreements. The Subscriber agrees that:
(a) it is not entitled to cancel, terminate or revoke this
subscription;
(b) it will not transfer or assign this subscription or any
interest therein;
(c) this subscription may be accepted or rejected, in whole or in
part, by the Company, in its sole discretion, without giving any reason
therefor;
(d) if (i) this subscription is accepted in whole or in part, and
(ii) the other conditions precedent set forth above are met, it shall become a
stockholder and warrantholder of the Company, the amount to be paid by the
Subscriber for the Units to be issued to the Subscriber may be transferred to
the capital of the Company as a contribution of the Subscriber;
(e) additional Units may be offered or sold by the Company; and
(f) it will indemnify and hold harmless the Company, Thomson
Kernaghan & Co. Limited, and their respective affiliates and each other person,
if any, who controls any of the foregoing, within the meaning of Section 15 of
the Act, against any and all loss, liability, claim, damage and expense
whatsoever (including, but not limited to, any and all expenses reasonably
incurred in investigating, preparing or defending against any litigation
commenced or threatened or any claim whatsoever, including reasonable attorneys'
fees) arising out of or based upon any false representation, warranty or
acknowledgment made herein.
11. Acknowledgment. The Subscriber acknowledges that this
Subscription Agreement will not be valid, binding and enforceable until the
Subscriber hereunder is accepted and approved by the Company.
12. Miscellaneous. The Subscriber understands and agrees that:
(a) This Subscription Agreement supersedes any previous
subscription agreement executed by or on behalf of the Subscriber relative to
Units in the Company, and any such previous agreement is hereby rescinded and is
of no further force and effect.
(b) The Subscriber's representations, warranties and covenants
contained herein shall be true and correct in all respects on and as of the date
of the sale of the Units as if made on and as of such date and shall survive the
execution and delivery of this Subscription Agreement and the purchase of the
Units.
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(c) Failure of the Company to exercise any right or remedy under
this Subscription Agreement or any other agreement between the Company and the
undersigned, or delay by the Company in exercising such right or remedy, will
not operate as a waiver thereof. No waiver by the Company will be effective
unless and until it is in writing and signed by the Company.
(d) This Subscription Agreement shall be governed by, and
enforced and construed in all respects in accordance with, the laws of the State
of New York, such laws are applied by New York courts to agreements entered
into, and to be performed in, New York by and between residents of New York, and
shall be binding upon the undersigned, the undersigned's heirs, estate, legal
representatives, successors, and assigns and shall inure to the benefit of the
Company, its successors and assigns. If any provision of this Subscription
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any provision hereof that may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
hereof.
(e) The Subscriber hereby agrees to furnish the Company such
other information as the Company may request with respect to his or its
subscription hereunder.
13. Representations and Warranties of the Company. The Company
represents and warrants to the Subscriber as follows:
(a) Organization. The Company is a corporation validly existing
and in good standing under the laws of the State of Nevada and has all requisite
corporate power and authority to carry on its business as now being conducted
and to own its properties and is duly licensed or qualified and in good standing
in each jurisdiction in which the conduct of its business or the nature of its
properties requires such qualification or authorization, except where the
failure to be so qualified or authorized and in good standing could not
reasonably be expected to have a material adverse effect on the business and
financial condition of the Company and its subsidiaries, taken as a whole (a
"Material Adverse Effect"). As of the date hereof, the Company does not have any
material subsidiaries other than Jaws Technology, Inc., an Alberta corporation
("Jaws Canada"), Pace Systems, Inc., incorporated under the laws of the Province
of Ontario ("Pace"), and Jaws Acquisition Corp., an Alberta corporation ("JAC"
and collectively with Jaws Canada and Pace, the "Subsidiaries"). Each Subsidiary
has been duly organized, is validly existing and in good standing under the laws
of the jurisdiction of its organization, has the power and authority to own its
properties and to conduct its business and is duly qualified and authorized to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or the nature of its properties requires such
qualification or authorization, except where the failure to be so qualified or
authorized and in good standing could not reasonably be expected to have a
Material Adverse Effect. All of the outstanding common stock of each Subsidiary
is owned by the Company, free and clear of any liens, and has been duly
authorized and validly issued, and is non- assessable, except for such failures
as could not reasonably be expected to have a Material Adverse Effect.
897953.8
-11-
(b) Authorization. The Company has taken all action required to
authorize the execution and delivery of this Subscription Agreement and the
consummation of the transactions contemplated hereby, including the issuance of
sale of the Common Stock and the Warrants. This Subscription Agreement has been
duly executed and delivered by the Company and, subject to the due
authorization, execution and delivery by the Subscriber, constitutes a legal,
valid and binding obligation of the Company, enforceable against it in
accordance with its terms, except to the extent that enforcement thereof may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (ii) general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
(c) SEC Documents. The Company has furnished the Subscriber
herewith, or made available to the Subscriber, copies of the following reports
(the "SEC Documents") filed by the Company with the United States Securities and
Exchange Commission (the "SEC"):
(i) The Company's Pre-Effective Amendment No. 4 to Form 10-SB,
filed on November 1, 1999 (the "Form 10-SB");
(ii) The Company's two Reports on Form 8-K, both filed on
November 15, 1999; and
(iii) The Company's Quarterly Report on Form 10-Q for the period
ended September 30, 1999 (the "Form 10-Q").
Each of the SEC Documents, as of its respective date of filing,
complied in all material respects with the applicable requirements of the
Exchange Act. The Company is current in its obligations to file all periodic
reports with the SEC required to be filed under the Exchange Act and applicable
rules and regulations promulgated thereunder.
(d) Financial Statements. The financial statements of the
Company included in the Company's Form 10-SB and Form 10-Q, which are included
in the Canadian Memorandum or provided in connection therewith, fairly present,
in all material respects, the financial position, the results of operations,
cash flows and the other information purported to be shown therein at the
respective dates and for the respective periods to which they apply. Such
financial statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved, are
correct and complete, in all material respects, and are in accordance with the
books and records of the Company. There has at no time been a material adverse
change in the financial condition, results of operations, business, properties,
assets, or liabilities of the Company from the latest information set forth in
the Canadian Memorandum, except as may be described in the Canadian Memorandum
as having occurred or may occur.
897953.8
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(e) No Violations or Breaches; Consents. (i) Neither the
execution and delivery of this Subscription Agreement nor the consummation of
the transactions contemplated hereby will violate any provision of, or result in
the breach of (A) the Articles of Incorporation or By-Laws of the Company; (B)
any material agreement to which the Company is a party; (C) result in the
creation of any material claim, lien, charge or encumbrance upon any of the
property or assets of the Company; or (D) to the knowledge of the Company, any
applicable federal, state, foreign or local law, statute, ordinance, rule, code,
regulation, order, judgment or decree, except for those violations that would
not have a Material Adverse Effect. For purposes hereof, the term "knowledge"
means the actual knowledge of the directors and executive officers of the
Company; and
(ii) The Company is not in violation or breach of or in default
with respect to, complying with any material provision of any contract,
agreement, instrument, lease, license, arrangement or understanding which is
material to the Company, and each such contract, agreement, instrument, lease,
license, arrangement and understanding is in full force and effect and is the
legal, valid and binding obligation of the Company, enforceable as to it in
accordance with its terms (subject to applicable bankruptcy, insolvency and
other laws affecting the enforceability of creditors' rights generally and to
general equitable principles). The Company is not in violation or breach of, or
in default with respect to, any term of its Articles of Incorporation or
By-Laws, each as amended to date.
(iii) The Company is not in material violation of any law or
regulation relating to occupational safety and health or to the storage,
handling or transportation of hazardous or toxic materials and the Company has
received all permits, licenses and/or other approvals required of it under
applicable occupational safety and health and environmental laws and regulations
to conduct its business, and the Company is in material compliance with all
terms and conditions of any such permit, license or approval, except any such
violation of law or regulation, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals which would not, singly or in the aggregate,
result in a Material Adverse Effect.
(f) Capitalization; Issuance of Shares. As of the date of this
Subscription Agreement, the authorized capital stock of the Company consists
solely of (i) 95,000,000 authorized shares of Common Stock, of which 21,326,945
shares are issued and outstanding; and (ii) 5,000,000 authorized shares of
preferred stock, $.001 per share, none of which are issued and outstanding. Each
outstanding share of capital stock of the Company is duly authorized, validly
issued, fully paid and nonassessable and has not been issued and is not owned or
held in violation of any preemptive rights set forth in the Company's Articles
of Incorporation or By-Laws, each as amended to date, or any agreement to which
the Company is a party. There is no binding commitment, plan or arrangement to
issue, and no outstanding option, warrant or other right calling for the
issuance of, any share of capital stock of the Company or any security or other
instrument which by its terms is convertible into, exercisable for or
exchangeable for shares of capital stock of the Company, except as may be
described in or contemplated by, the Canadian Memorandum. There is outstanding
no security or other instrument which by its terms is
897953.8
-13-
convertible into or exchangeable for any class of share of capital stock of the
Company, except as may be described in the Canadian Memorandum. The capital
stock of the company conforms in all material respects to the description
thereof contained in the Canadian Memorandum.
Upon the issuance by the Company to the Subscriber of the shares
of Common Stock and the payment therefor by the Subscriber to the Company, on
the terms and subject to the conditions set forth herein, the shares of Common
Stock will have been duly authorized and validly issued and will be fully paid,
and non-assessable. The shares of Common Stock issuable upon the exercise of the
Warrant upon issuance (and upon receipt by the Company of the exercise price
thereof) will be validly issued, fully paid and non-assessable.
(g) Litigation. There is no litigation, arbitration, governmental
or other proceeding (formal or informal) or claim or investigation pending or,
to the knowledge of the Company, threatened with respect to the Company or any
of its operations, businesses, properties or assets, except as may be described
in the Canadian Memorandum or such as individually or in the aggregate do not
now have and will not likely in the future have a Material Adverse Effect. The
Company is not in violation of, or in default with respect to, any law, rule,
regulation, order, judgment or decree, except as may be described in the
Canadian Memorandum or such as in the aggregate do not have a Material Adverse
Effect.
(h) Intellectual Property. There is no right under any patent,
patent application, trademark, trademark application, trade name, service mark,
copyright, franchise or other intangible property or asset (all of the foregoing
being herein call "Intangibles") necessary to the business of the Company as
presently conducted, except as may be so designated in the Canadian Memorandum
and which the Company has the right or license to use as necessary. To the
Company's knowledge, except as described in the Canadian Memorandum, the Company
has not infringed nor is it infringing in any material respect with respect to
Intangibles or others, and the Company has not received notice of infringement
with respect to asserted Intangibles of others, which infringement would have a
Material Adverse Effect.
(i) Absence of Certain Changes. Subsequent to the date of the
Memorandum, and except as may otherwise be described in or contemplated by the
Memorandum, (A) the Company has not, except in the ordinary course of business,
incurred any material liability or obligation, primary or contingent, for
borrowed money, (B) there has not been any material change in the capital stock,
short-term debt or long-term debt of the company, (C) the Company has not
entered into any material transaction not in the ordinary course of business,
(D) the Company has not purchased any of its outstanding capital stock nor
declared or paid any dividend or distribution of any kind on its capital stock,
(E) the Company has not sustained any material loss or interference with its
businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute or any
legal or governmental proceeding, and (F) there has not been any material
adverse change which the Company reasonably believes would likely result in a
prospective material adverse change, in the financial condition, results of
897953.8
-14-
operations, business, properties, assets, or liabilities of the Company and its
Subsidiaries, taken as a whole.
(j) Insurance. The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which they are engaged; the
Company has not been refused any insurance coverage sought or applied for; and
the Company has no reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from insurers of recognized financial responsibility as may be
reasonably necessary to continue its business.
(k) Tax Matters. The Company has filed all foreign, federal,
state and local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file would not
have a Material Adverse Effect), and has paid all material taxes required to be
paid by it and any other material assessment, fine or penalty levied against it
to the extent that any of the foregoing is due and payable, except for any such
material assessment, fine or penalty that is currently being contested in good
faith or as described in the Memorandum.
(l) Accounting Controls. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(m) Disclosure. Neither the Canadian Memorandum nor this
agreement contain any untrue statement of a material fact, and the Canadian
Memorandum and this agreement taken as a whole will not omit to state any
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading, except that the
Company shall have no liability for any information provided to the Company in
writing by, and relating to, the Canadian Placement Agent, for use in and used
in the Canadian Memorandum. It is understood that any summary in the Canadian
Memorandum of a document which appears therein in full (either as signed or
substantially in the form to be signed) does not constitute an untrue or
misleading statement merely because it is a summary; provided, however, that any
such summary may not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made, in light of the
circumstances under which they were made, not misleading. If, at any time before
the Offering is completed or terminated or before all subscriptions are accepted
by the Company, there should be any change which would cause the Canadian
Memorandum or this agreement not to comply with this paragraph 13(m), the
Company will promptly advise the Canadian Placement Agent thereof and prepare
and furnish the Canadian
897953.8
-15-
Placement Agent with, for distribution to investors, after prior review and
approval by the Canadian Placement Agent and their counsel (such approval not to
be unreasonably withheld), such copies of such supplements or amendments to the
Canadian Memorandum and this agreement will cause the Canadian Memorandum and
this agreement, as so supplemented or amended, to comply with this paragraph
13(m), and will authorize the Canadian Placement Agent to make to investors, if
(i) deemed necessary by counsel to the Canadian Placement Agent and approved by
the Canadian Placement Agent or (ii) if deemed necessary by counsel to the
Company, an offer of rescission.
14. Certain Covenants.
(a) The Company covenants and agrees, at its own cost and
expense:
(i) to file a registration statement (a "Registration Statement")
with the SEC no later than 30 days following the Closing Date,
covering the resale of any and all shares of Common Stock
included in the Units and the shares of Common Stock issuable
upon exercise of the Warrants (the "Registrable Shares"),
(ii) to use its best efforts to cause such Registration Statement
to become effective within 90 days following the Closing Date and
remain effective until the earlier to occur of (i) the date on
which all the Warrants have been exercised or have expired by
their terms, and (ii) the date on which all such shares are
eligible for resale pursuant Rule 144 of the Act, without
limitation;
(iii) to prepare and file with the SEC, as expeditiously as
possible, any amendments and supplements to the Registration
Statement and the prospectus included in the Registration
Statement as may be necessary to keep the Registration Statement
effective for the period described in the foregoing clause (ii);
(iv) as expeditiously as possible, to furnish to the Subscriber
such reasonable numbers of copies of the prospectus, including a
preliminary prospectus, and such other documents as the
Subscriber may reasonably request in order to facilitate the sale
or other disposition of the Registrable Shares; and
(v) as expeditiously as possible, register or qualify the
Registrable Shares covered by the Registration Statement under
the securities or Blue Sky laws of such states as the Subscribers
shall reasonably request; provided, however, that (x) the Company
shall not for any purpose be required to qualify to do business
as a foreign corporation in any jurisdiction wherein it is not so
qualified or execute a general consent to service of process in
any jurisdiction and (y) if the Company is offering securities
for its own account, it need not register or qualify under the
securities or Blue Sky laws of any jurisdiction in which the
managing underwriter has no intention of offering or selling
securities for the account of the Company
897953.8
-16-
(except that the Company will use its best efforts to register or
qualify Registrable Shares in such additional jurisdiction as any
Subscriber may request subject to the limitation of clause (x)
and at the Subscriber's expense).
Following the issuance of any such shares of Common Stock, and
prior to such time as the applicable Registrable Shares are so registered, such
shares shall be restricted securities under the Act, will not have been
registered under the Act and may not be sold or transferred absent such
registration or unless an exception from registration is available and the
certificates evidencing such shares shall bear an appropriate legend restricting
transfers under the Act. In connection with such registration, the Subscriber
shall provide to the Company such information, and execute and deliver such
certificates and other agreements, as the Company may reasonably request in
order to effectuate the registration of the Registrable Shares including
providing information regarding such holder and the distribution proposed by
such holder as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance.
(b) The Subscriber agrees that, upon receipt of any notice from
the Company of (i) any request by the SEC for amendments or supplements to a
Registration Statement or related prospectus covering any of the Subscribers'
Registrable Shares, (ii) the issuance by the SEC of any stop order suspending
the effectiveness of a Registration Statement covering any of Subscriber's
Registrable Shares or the initiation of any proceedings for that purpose, (iii)
the receipt by the Company of any notification with respect to the suspension of
the qualification of any Registrable Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, (iv) the happening
of any event that requires the making of any changes in the Registration
Statement covering any of Subscriber's Registrable Shares so that it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading or that any related prospectus will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading, and (v) the Company's reasonable determination
that a post-effective amendment to a Registration Statement covering any of the
Subscriber's Registrable Shares or a supplement to any related prospectus is
required under the Act; the Subscriber will forthwith discontinue disposition of
such Registrable Shares until it is advised in writing by the Company that the
use of the applicable prospectus (as amended or supplemented, as the case may
be) and disposition of the Registrable Shares covered thereby pursuant thereto
may be resumed provided, however, (x) that the Subscriber shall not resume its
disposition of Registrable Shares pursuant to such Registration Statement or
related prospectus unless it has received notice from the Company that such
Registration Statement or amendment has become effective under the Act and has
received a copy or copies of the related prospectus (as then amended or
supplemented, as the case may be) unless the Registrable Shares are then listed
on a national securities exchange and the Company has advised the Subscriber
that the Company has delivered copies of the related prospectus, as then amended
or supplemented, in transactions effected upon such exchange, subject to any
subsequent receipt by such Subscriber from the Company of notice of any of the
events contemplated by
897953.8
-17-
clauses (i) through (iv) of this paragraph, and, (y) if so directed by the
Company, such holder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in the Subscriber's possession, of
the prospectus covering such Registrable Shares current at the time of receipt
of such notice.
(c) (i) In the event of any Registration of any of the
Registrable Shares under the Act pursuant to this Subscription Agreement, the
Company will indemnify and hold harmless the seller of such Registrable Shares,
and each other person, if any, who controls such seller within the meaning of
the Act or the Exchange Act against any losses, claims, damages or liabilities,
joint or several, to which such seller or controlling person may become subject
under the Act, the Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement of any material
fact contained in any Registration Statement under which such Registrable Shares
were registered under the Act, any preliminary prospectus or final prospectus
contained in the Registration Statement, or any amendment or supplement to such
Registration Statement, or arise out of or are based upon the omission to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading; and, subject to Section 12(c)(iii) below, the
Company will reimburse such seller and each such controlling person for any
legal or any other expenses reasonably incurred by such seller or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or omission made
in such Registration Statement, preliminary prospectus or final prospectus, or
any such amendment or supplement, in conformity with information furnished to
the Company, in writing, by or on behalf of such seller or controlling person
for use in the preparation thereof or inclusion therein.
The indemnity provisions in this Section 12(c)(ii) are subject to
the condition that, insofar as they related to any untrue statement or omission
made in a preliminary prospectus or prospectus but eliminated or remedied in a
final prospectus or an amended or supplemented prospectus on file with the SEC
at the time the Registration Statement becomes effective or any amended or
supplemented prospectus filed with the SEC pursuant to Rule 424 or any successor
provision under the Act (the "Final Prospectus"), such indemnity provisions
shall not inure to the benefit of the Subscriber (x) if the Subscriber is not
selling Registrable Shares through an underwriter, if the Company has previously
delivered copies of such Final Prospectus to the Subscriber or, if Registrable
Shares are then listed on a national securities exchange, if the Company has
previously delivered copies of such Final Prospectus to such national securities
exchange in accordance with Rule 153 or any successor rule under the Act, or (y)
if the Subscriber is selling Registrable Shares through an underwriter or
underwriters, the Company has previously delivered copies of such Final
Prospectus to such underwriter or underwriters.
(ii) In the event of any registration of any of the
Registrable Shares under the Act pursuant to this Subscription Agreement, the
Subscriber will indemnify and hold harmless the Company, each of its directors
and officers and each underwriter (if any), and each person,
897953.8
-18-
if any, who controls the Company or any such underwriter within the meaning of
the Act or the Exchange Act, against any losses, claims, damages or liabilities,
joint or several, to which the Company, such directors and officers, underwriter
or controlling person may become subject under the Act, Exchange Act, state
securities or Blue Sky laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement of a material fact contained in any Registration
Statement under which such Registrable Shares were registered under the Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission to state a material fact required to
be stated therein or necessary to make the statement therein not misleading, if
the statement or omission was made in conformity with information furnished in
writing to the Company by or on behalf of the Subscriber, specifically for use
in connection with the preparation of or inclusion in such Registration
Statement, prospectus, amendment or supplement; and shall reimburse the Company,
its directors and officers, and each such controlling person for any legal or
other expenses reasonably incurred by any of them in connection with
investigation or defending any such loss, claim, damage, liability or action,
provided, however, in no event shall Subscriber's indemnification obligations
hereunder exceed the gross proceeds from the sale of Registrable Shares by the
Subscriber. This indemnity shall remain in full force and effect for the
applicable statute of limitation period regardless of any investigation made by
or on behalf of the Company or such controlling person and shall survive the
transfer of shares.
(iii) Each party entitled to indemnification under this
Section 12(c)(ii) (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any loss, claim, action, damage
or liability as to which indemnity may be sought, and shall permit the
Indemnified Party to assume the defense of any such claim or any litigation
resulting therefrom; provided, that counsel for the Indemnifying Party, who
shall conduct the defense of such claim or litigation, shall be approved by the
Indemnified Party (whose approval shall not be unreasonably withheld); and,
provided, further, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnified Party of its obligations under
this Section 12(c)(ii), except to the extent that such failure to give notice
prejudices the Indemnifying Party or such Indemnifying Party is damaged by such
delay. The Indemnified Party may participate in such defense at such party's
expense; provided, however, that the Indemnifying Party shall pay such expense
(but in no event shall the Indemnifying Party be obligated to pay the fees and
expenses of more than one counsel for the Indemnified Party or Parties) if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential conflict of
interests between the Indemnified Party and any other party represented by such
counsel in such proceeding. No Indemnifying Party, in the defense of any such
claim or litigation shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation, and no Indemnified Party shall
897953.8
-19-
consent to entry of any judgment or settle such claim or litigation without the
prior written consent of the Indemnifying Party.
(iv) If the indemnification provided for in this Section
12(c) is finally determined by a court of competent jurisdiction to be
unavailable to an Indemnified Party with respect to any loss, liability, claim,
damage, or expense referred to therein or contribution is required under the Act
in circumstances for which indemnification is provided under this Section 12(c),
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage, or expense (i) in such
proportion as is in appropriate to reflect the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits received by the Indemnifying Party on the one hand and the
Indemnified Party on the other but also the relative fault of the Indemnifying
Party and the Indemnified Party as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact related to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission; provided, however, that, in any such case, (A) no
Subscriber will be required to contribute any amount in excess of the gross
proceeds of all Registered Shares sold by it pursuant to such Registration
Statement, and (B) no person or entity guilty of fraudulent misrepresentation,
within the meaning of Section 11(f) of the Act, shall be entitled to
contribution from any person or entity who is not guilty of such fraudulent
misrepresentation.
(v) The obligations under this Section 12(c) shall
survive the completion of any offering of Registered Shares in a registration
statement.
(d) As liquidated damages and Subscriber's sole and exclusive
remedy in the event of a breach by the Company of its obligations set forth in
Section 12(a) above to have a Registration Statement declared effective within
90 days following the final Closing Date, if a Company Registration Statement
covering such shares of Common Stock is not declared effective within 90 days,
but prior to 180 days, following the final Closing Date of the Offering, the
exercise price of the Warrants sold to Subscribers shall be reduced by US$0.25
per month, or a pro rated amount thereof for partial months, until a
Registration Statement covering such shares is declared effective. If a
Registration Statement covering such shares of Common Stock is not declared
effective within 180 days following the final Closing Date, the exercise price
of the Warrants shall be reduced by US$0.50 per month, or a pro rated amount
thereof for partial months, until a Registration Statement covering such shares
of Common Stock is declared effective. Notwithstanding the foregoing, in no
event should the exercise price of the Warrants sold to Subscribers be reduced
to a price lower than $3.75 per share.
897953.8
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(e) From and after the Closing Date, the Company shall use its
best efforts to file all documents required to be filed by it on a timely basis
with the SEC under the Exchange Act and with the applicable Canadian securities
regulatory authorities under the applicable Canadian provincial Securities Laws.
[Signature page follows]
897953.8
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as of the date specified below.
----------------------------- --------------------------------------------------
Number of Units Subscribed For Print Full Legal Name of Partnership, Trust or LLC
By:
----------------------------- ----------------------------------------------
Aggregate Purchase Price (Signature of Authorized Signatory)
(US$4.25 per Unit)
Name:
----------------------------- --------------------------------------------
Dated:
Title:
-------------------------------------------
Address:
-----------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
U.S. Tax Identification Number (if a U.S. Person)
--------------------------------------------------
Date and State or Jurisdiction of Incorporation or
Organization
--------------------------------------------------
Date on which Taxable Year Ends
ACCEPTED AND AGREED:
JAWS TECHNOLOGIES, INC.
By:
----------------------------
Name:
Title:
Dated:
-----------------------------
897953.8
