EXHIBIT 10.13
JAWS Technologies, Inc.
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PLACEMENT AGENCY AGREEMENT
SmallCaps Online LLC
1285 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Gentlemen:
This Placement Agency Agreement (the "Agreement") confirms the retention
by JAWS Technologies, Inc., a Nevada corporation (the "Company"), of SmallCaps
Online LLC, a Delaware limited liability company (the "US Placement Agent"), to
act as the sales agent in the United States on a best efforts basis in
connection with the private placement of Units (as defined below) of the Company
on the terms set forth below, including the financial and other terms set forth
in Schedule A hereto, which is hereby incorporated by reference into this
Agreement.
1. PLACEMENT
(a) Each unit (a "Unit") shall consist of one share of common stock, par
value $.001 per share (the "Common Stock), of the Company, and a warrant (each,
a "Warrant" and collectively, the "Warrants") to acquire 1/2 (one-half) of a
share of Common Stock at an exercise price of US$ 6.50 per share. The placement
of the Units (the "Placement") will be made pursuant to the Memorandum (as
defined in Section 2 below). Except as provided in Schedule A, the Units (and
the shares of Common Stock and Warrants included therein) will not be registered
under the Securities Act of 1933, as amended, or any applicable successor
statute (the "Act"), but will be issued in reliance on the private offering
exemption available under Section 4(2) of the Act and the rules and regulations
promulgated thereunder, including Regulation D, and outside the United States,
through exemptions from any prospectus requirements of applicable foreign
securities laws. The US Placement Agent understands that all subscriptions for
Units are subject to acceptance by the Company. The Company and the US Placement
Agent reserve the right in their reasonable discretion to accept or reject any
or all subscriptions for Units in whole or in part. Investors shall be required
to subscribe for a minimum number of Units with additional increments available
at the Company's discretion as set forth in Schedule A or as provided in the
Memorandum. Any subscription monies received by the US Placement Agent from
investors will be handled in accordance with Rule 15c2-4 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") , whether or not the US
Placement Agent is subject to the Exchange Act, and as otherwise may be
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prescribed by the terms of the Memorandum. Without limiting the generality of
the foregoing, the Company and the US Placement Agent shall enter into an escrow
agreement (the "Escrow Agreement") with the United States Trust Company of New
York (or other escrow agent mutually acceptable to the parties (the "Escrow
Agent") and shall establish a separate account with the Escrow Agent entitled
"JAWS Technologies, Inc.--Escrow Account." All funds received by either the
Company or the US Placement Agent shall be immediately deposited in such escrow
account pending an initial closing hereunder.
(b) The Company is making an offering of the Units, concurrent with the
making of the private placement of Units in the United States as described
herein (the "Placement"), in Canada through the Company's Canadian placement
agent, Thomson Kernaghan & Co. Limited ("TK"). Such concurrent Canadian offering
is referred to herein as the "Concurrent Offering." The US Placement Agent will
only offer Units to prospective investors in the United States and TK will only
offer Units to prospective investors in Canada and, with the Company's consent
in Belgium. The terms of the Concurrent Offering are substantially identical to
the terms of this Placement, except to the extent that either the laws of the
United States and/or Canada require special disclosure in the Memorandum and/or
terms in this Agreement for the placement agent agreement with TK and/or terms
in the Subscription Agreement (as defined below) or the subscription agreement
between the Company and Canadian investors. The Units, Shares and Warrants sold
in the United States and Canada will be identical in all respects. For purposes
of calculating the minimum and maximum sizes of the offering, Units sold in the
United States and in Canada will be aggregated.
2. OFFERING CIRCULAR
The Company will prepare an Offering Circular relating to the Company
(such Offering Circular, together with the exhibits and attachments thereto or
available thereunder and any amendments or supplements thereto prepared and
furnished by the Company, being referred to herein as the "Memorandum") which
describes the Placement and certain investment risks relating thereto. The
Company has been and will continue to be responsible for preparing and filing
required documentation, if any, with authorities in United States prior to (and
subsequent to, if required by the laws of such jurisdiction) the distribution of
the Memorandum to prospective investors (the parties acknowledging, however,
that the offering of Units is intended and expected to be wholly or partially
exempt from filing requirements in most jurisdictions by reason of an
"accredited investor" exemption). The US Placement Agent and its counsel and the
Company and its counsel will jointly prepare a form of Subscription Agreement to
be entered into between the Company and United States purchasers of the Units
(the "Subscription Agreement"), with such representations, warranties,
conditions and covenants as are customary in private placements of corporate
equity securities with United States accredited investors. The US Placement
Agent and its counsel shall have an opportunity to review the final form of the
Memorandum and Subscription Agreement prior to the distribution thereof to
prospective investors, and the Memorandum and the Subscription Agreement will be
the only offering documents (other than cover letters which may be used by the
US Placement Agent, and any documents made available to investors in accordance
with the terms of the Memorandum) shown to prospective investors. The Company
and its counsel will advise the US Placement Agent and its counsel in writing of
those jurisdictions in which Units may lawfully be offered and sold, and the
manner in which the Units may
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lawfully be offered and sold in each such jurisdiction, in connection with the
Placement, and the US Placement Agent agrees that the Units will be offered or
sold only in such jurisdictions and in the manner specified by the Company. The
offering of Units will be made in accordance with the requirements of Section
4(2) under the Act to investors that qualify as accredited investors, as defined
in Rule 501(a) under the Act ("Accredited Investors"), purchasing for their own
account for investment purposes and not for distribution in violation of
securities laws.
3. PLACEMENT AGENT
(a) Upon the terms and conditions set forth in this Agreement and
Schedule A hereto, the Company hereby employs the US Placement Agent as its
sales agent in the United States for the purpose of placing the Units for the
account and risk of the Company. This appointment shall be exclusive with
respect to the Placement, and the Company shall not have the right to appoint
additional sales agents in the United States without the US Placement Agent's
express prior written consent (other than TK with respect to the Concurrent
Offering); provided that this Agreement shall not give the US Placement Agent
any right to act as sales agent or receive compensation in connection with any
future offerings sponsored by the Company absent a separate agreement to such
effect between the US Placement Agent and the Company. Subject to the provisions
of Section 5 hereof and to the performance by the Company of all of its
obligations to be performed hereunder, the US Placement Agent agrees to use its
best efforts to assist in arranging for sales of Units. The US Placement Agent
will also assist the Company in the preparation of the Memorandum and
presentations to prospective investors. It is understood and agreed that this
Agreement does not create any partnership, joint venture or other similar
relationship between or among the US Placement Agent and the Company, that the
US Placement Agent is acting only as a sales agents and that, except as
specifically set forth in Schedule A, there is no undertaking on the US
Placement Agent's part to purchase any of the Units or to arrange or participate
in any other financing in connection with the Placement.
(b) For the services of the US Placement Agent hereunder, the Company
will pay or caused to be paid to the US Placement Agent the commissions, fees
and expenses stated in Schedule A.
(c) Upon receipt by the Company from a proposed purchaser of completed
subscription materials in the form set prepared by the Company, and such other
documents as the Company requests, the Company and the US Placement Agent will
determine in their reasonable discretion whether they wish to accept or reject
the subscription.
(d) Subject to the provisions relating thereto contained in Schedule A,
the US Placement Agent's commissions, fees and expenses based on a percentage of
gross proceeds and all other expenses reimbursable or payable by the Company as
provided herein or in Sche dule A will be paid in full upon transfer to the
account of the Company of the purchase price of such Units; provided, however,
that no such commissions or fees shall be payable until subscriptions for the
minimum number of Units described in the Memorandum have been accepted and the
purchase price of the Units to be purchased from the Company has been
transferred to the account of the Company. For purposes of calculating the
minimum and
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maximum sizes of the offering, Units sold in the United States and in Canada
will be aggregated.
(e) The Company and the US Placement Agent agree to the terms of, and to
comply with, the agreements set forth on Schedule A hereto as if such terms and
agreements were repeated herein in their entirety.
4. PLACEMENT EXPENSES
(a) The Company will pay, whether or not any Units are sold in
connection with the Placement, all reasonable, accountable costs and expenses
incurred by the US Placement Agent in connection with the Placement as provided
in Schedule A . Reimbursement of the US Placement Agent's reasonable,
accountable out-of-pocket costs and expenses hereunder shall be made promptly in
full in the event the US Placement Agent elects to terminate this Agreement in
accordance with Section 5.
(b) Without limiting the generality of the foregoing, the Company hereby
agrees to pay all fees, charges and expenses incident to the performance by the
Company and the US Placement Agent of its respective obligations hereunder,
including, without limitation, all fees, charges, and expenses in connection
with (i) the preparation, printing, reproduction, filing, distribution and
mailing of the Memorandum and all other documents relating to the offering,
purchase, sale and delivery of the Units, and any supplements or amendments
thereto, including the fees and expenses of counsel to the Company and to the US
Placement, and the cost of all copies thereof, (ii) the issuance, sale, transfer
and delivery of the Units, the Shares, and the Warrants, including any transfer
or other taxes payable thereon and the fees of any transfer agent, warrant agent
or registrar, (iii) the registration or qualification of the Units or the
securing of an exemption therefrom under state of foreign "blue sky" or
securities laws, including, without limitation, filing fees payable in the
jurisdictions in which such registration or qualification or exemption therefrom
is sought, the costs of preparing preliminary, supplemental and final "blue sky
surveys" relating to the offer and sale of the Units and the fees and
disbursements of counsel to the Placement Agents in connection with such "blue
sky" matters, (iv) the filing fees, if any, payable to the Commission, and (v)
the retention of the Escrow Agent, including the reasonable fees and expenses of
the Escrow Agent for serving as such and the reasonable fees and expenses of its
counsel.
5. TERMINATION OF PLACEMENT
The Placement may be terminated by the mutual consent of the US
Placement Agent and TK at any time by them giving written notice to the Company
if (a) in the opinion of the US Placement Agent, the Memorandum contains an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary in order to make the statements appearing
therein not misleading in the light of the circumstances in which they were
made, and the Company shall not have corrected such untrue statement or omission
to the reasonable satisfaction of the US Placement Agent and TK and their
counsel within ten business days after the Company receives notice of such
untrue statement or omission, provided that notwithstanding such ten business
day period, no such closing shall occur
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hereunder until the US Placement Agent and TK shall have notified the Company
that they are satisfied, in their reasonable determination, that the Company has
taken such steps (including circulating amended offering materials) to allow any
such closing to occur, or (b) the Company shall be in material breach of any
representation, warranty or covenant made by it in this Agreement.
6. CLOSING
(a) Subject to the conditions set forth in Section 10 hereof, if
subscriptions to purchase at least 2,000,000 Units in the aggregate in the
Placement and the Concurrent Offering have been received prior to the expiration
of the offering period and accepted by the Company, the initial closing under
this Agreement (the "Closing") shall be held at the offices of Battle ▇▇▇▇▇▇
LLP, Park Avenue Tower, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 A.M.,
New York time, on December 23, 1999 (provided that subscriptions to purchase at
least 2,000,000 Units have been accepted) or at such other place, time and/or
date as the Company and the US Placement Agent shall agree upon. The date upon
which the Closing is held shall hereinafter be referred to as the "Closing
Date."
(b) Subject to the conditions set forth in Section 10 hereof, if,
subsequent to the date the subscriptions referred to in Section 6(a) hereof are
received and accepted and prior to the expiration of the offering period,
additional subscriptions to purchase Shares are received from prospective
investors, which subscriptions are accepted by the Company, one or more
additional closings under this Agreement (each, an "Additional Closing") shall
be held at the offices of Battle ▇▇▇▇▇▇ LLP, Park Avenue Tower, ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 A.M., New York time, on the third business
day following the date upon which the US Placement Agent receives notice from
the Company that additional subscriptions have been so accepted, or at such
other place, time or date as the Company and the US Placement Agent shall agree
upon. The Company shall notify the US Placement Agent as promptly as practicable
whether any additional subscriptions so received have been accepted. The date
upon which any additional Closing is held shall hereinafter be referred to as an
"Additional Closing Date."
(c) At the Closing or an Additional Closing, as the case may be,
the Company shall instruct the Escrow Agent to pay to the US Placement Agent at
the Closing or an Additional Closing, from the funds deposited in the applicable
Escrow Account in payment for the Shares, any cash amounts payable to the US
Placement Agent pursuant to Schedule A of this Agreement. Promptly after the
Closing Date or an Additional Closing Date, as the case may be, the Company
shall deliver to the purchasers of Unit certificates representing the Shares and
agreements representing the Warrants to which they are entitled.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents and warrants to, and covenants with, the US
Placement Agent that:
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(a) The Company has been validly formed and is legally existing as a
corporation in good standing under the laws of the State of Nevada, with full
corporate power and authority to conduct its business as currently conducted,
and is in good standing in each jurisdiction in which the conduct of its
business or the nature of its properties requires such qualification or
authorization, except where the failure to be so qualified or authorized and in
good standing could not reasonably be expected to have a material adverse effect
on the business and financial condition of the Company and its subsidiaries,
taken as a whole (a "Material Adverse Effect"). As of the date hereof, the
Company does not have any material subsidiaries other than JAWS Technologies,
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
capital stock of each Subsidiary is owned by the Company, free and clear of any
liens, and has been duly authorized and validly issued, and is non-assessable,
except for such failures as could not reasonably be expected to have a Material
Adverse Effect.
(b) Neither the Memorandum nor the Subscription Agreement contain any
untrue statement of a material fact, and the Memorandum and the Subscription
Agreement taken as a whole will not omit to state any material fact necessary in
order to make the statements made, in light of the circumstances under which
they were made, not misleading, except that the Company shall have no liability
for any information provided to the Company in writing by, and relating to, the
US Placement Agent, for use in and used in the Memorandum. It is understood that
any summary in the 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 Placement is completed or terminated or
before all subscriptions are accepted by the Company, there should be any change
which would cause the Memorandum or the Subscription Agreement not to comply
with this paragraph 7(b), the Company will promptly advise the US Placement
Agent thereof and prepare and furnish the US Placement Agent with, for
distribution to investors, after prior review and approval by the US Placement
Agent and their counsel (such approval not to be unreasonably withheld), such
copies of such supplements or amendments to the Memorandum and the Subscription
Agreement as will cause the Memorandum and the Subscription Agreement, as so
supplemented or amended, to comply with this paragraph 7(b), and will authorize
the US Placement Agent to make to investors, if (i) deemed necessary by counsel
to the US Placement Agent and approved by the US Placement Agent or (ii) if
deemed necessary by counsel to the Company, an offer of rescission.
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(c) The execution, delivery and performance of this Agreement, and all
other documents to be entered into by the Company in connection with any
transaction described in the Memorandum and the consummation of the transactions
contemplated hereby and thereby have been or will be prior to such execution,
delivery, performance or consummation, as the case may be, duly and validly
authorized by the Company and do not and will not (i) constitute, or result in,
a breach or violation of any of the terms, provisions or conditions of the
articles of incorporation or bylaws of the Company or any of its Subsidiaries,
(ii) constitute, or result in, a material violation of any applicable statute,
law, ordinance or regulation of any state, territory or other jurisdiction, or
(iii) violate, constitute, or result in, a default under (or an event which with
the passing of time or the giving of notice or both would constitute a default
under) or breach of the terms, provisions or conditions of any material
indenture, note, contract, commitment, instrument or document to which the
Company or any of its Subsidiaries is or will be a party or by which the Company
or any of their respective properties are bound, or any award, judgment, decree,
rule or regulation of any court or governmental or regulatory agency or body
having jurisdiction over the Company or any of its Subsidiaries or their
respective activities or properties, in each case which breach, violation or
default would have a Material Adverse Effect; and no material consent, approval,
authori zation or order of any court or governmental or regulatory agency or
body is required on the part of the Company for the lawful consummation of the
transactions contemplated hereby and thereby, except for such consents and
approvals with respect to the offer and sale of Units in certain jurisdictions
which are identified to you by counsel for the Company.
(d) Neither the Company nor any of its officers, employees, agents or
representatives has taken or will take any action which has caused or may cause
the Placement not to qualify for exemption from the registration requirements of
the Act or of United States federal or state, or other securities laws. In
connection with the Placement, the Company shall not offer or cause to be
offered the Units by any form of general solicitation or general advertising as
defined in Rule 502(c) of Regulation D, and shall not take any action (except
for actions contemplated by the Memorandum) that would cause the Placement to be
integrated with other transactions under Rule 502(a) of Regulation D.
(e) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms (except
insofar as enforcement of the in demnification or contribution provisions hereof
may be limited by applicable laws or principles of public policy and subject, as
to enforcement, to the availability of equitable remedies and limitations
imposed by bankruptcy, insolvency, reorganization and other similar laws and
related court decisions relating to or affecting creditors' rights generally).
(f) The Company will not offer the Units for sale on the basis of any
communications or documents relating to the US Placement Agent or the Units
except the Memorandum and the exhibits thereto and documents described or
referred to therein (including the Subscription Agreement).
(g) So long as the Units (or the Shares, Warrants or shares of Common
Stock underlying the Warrants) are "restricted securities" within the meaning of
Rule 144(a)(3) under the Act, the Company, during any period in which it is not
subject to and in compliance with
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Section 13 or 15(d) of the Exchange Act, or is not exempt from such reporting
requirements pursuant to and in compliance with Rule 12g3-2b under the Exchange
Act, provide to each holder of such Units and to each prospective purchaser (as
designated by such holder) of such Units, upon the request of such holder or
prospective holder, any information required to be provided by Rule 144A(d)(4)
under the Act.
(h) The Company will initially invest the proceeds of the Offering of
the Units and all other funds of the Company in such a manner so as to cause the
Company not to be subject to the United States Investment Company Act of 1940,
as amended (the "1940 Act"), and will thereafter use its best efforts to avoid
the Company's becoming subject to the 1940 Act.
(i) In addition to the foregoing, to the extent not set forth herein,
the US Placement Agent may rely on the representations and warranties made by
the Company in the Subscription Booklet provided by the Company and used in
connection with the Placement.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF US PLACEMENT AGENT
The US Placement Agent hereby represents and warrants to, and covenant
with, the Company that:
(a) This Agreement has been duly authorized, executed and delivered by
the US Placement Agent and constitutes the legal, valid and binding obligation
of the Placement Agent, enforceable against it in accordance with its terms
(except insofar as enforcement of the indemnification or contribution provisions
hereof may be limited by applicable laws or principles of public policy and
subject, as to enforcement, to the availability of equitable remedies and
limitations imposed by bankruptcy, insolvency, reorganization and other similar
laws and related court decisions relating to or affecting creditors' rights
generally).
(b) The US Placement Agent will cooperate with the Company to ensure
that the offering and sale of the Units will comply with the requirements of
Rule 506 under the Act, including, without limitation, the general conditions
contained in Regulation D and the federal securities laws, and will follow the
reasonable advice of the Company with respect to the manner in which to offer
and sell the Units so as to ensure that the offering and sale thereof will
comply with the securities laws of the jurisdictions which is not listed in
Exhibit A or in any jurisdiction in which Units are offered by the US Placement
Agent, and the US Placement Agent will not make an offer of Units in any
jurisdiction which is not listed on Exhibit A or in any jurisdiction in which
the Company advises it in writing that such offer would be unlawful for the US
Placement Agent to offer or sell securities.
(c) The US Placement Agent is (i) a registered broker-dealer under the
Exchange Act, and (ii) a member in good standing of the National Association of
Securities Dealers, Inc. (the "NASD"), and (iii) registered as a broker-dealer
in each jurisdiction in which it is required to be registered as such in order
to offer and sell the Units in such jurisdiction. The US Placement Agent, as
applicable, will comply with all applicable rules, regulations and
interpretations of the NASD relating to the receipt and disclosure of
compensation in connection with the Placement.
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(d) The US Placement Agent has not and will not make an offer of Units
(or of any securities, the offering of which may be integrated with the
Placement), on the basis of any communications or documents relating to the
Company or the Units except the Memorandum and the exhibits thereto and
documents described or referred to therein (including the Subscription
Agreement), and the cover letters referred to in Section 2 hereof. Without
limiting the generality of the foregoing, the US Placement Agent has not and
will not make any representation as to any rate of return on investment that an
offeree may obtain from the ownership of Units other than as set forth in the
Memorandum. The Placement Agent will deliver a copy of the Memorandum to each
prospective investor solicited by it prior to such offeree's execution of a
Purchase Agreement or, in the case of amendments or supplements to the
Memorandum (other than those amendments and supplements approved in writing by
the Company but designated in writing as not subject to this requirement), prior
to such offeree's execution of an acknowledgment of receipt of such amendment or
supplement and reconfirmation of intent to subscribe.
(e) The US Placement Agent has not and will not make an offer of Units
on behalf of the Company, or of any securities, the offering of which may be
integrated with the Placement, by any form of general solicitation or general
advertising in violation of Rule 502(c) of Regulation D such as would cause the
offering of Units not to qualify under Section 4(2) of the Act as a transaction
exempt from Section 5 thereof. The US Placement Agent has not and will not
supply in writing for inclusion in the Memorandum or any related sales materials
any information relating to the US Placement Agent containing any untrue
statement of a material fact or omitting to state any material fact required to
be stated therein or necessary to make such information, in light of the
circumstances under which it is used, not misleading.
(f) The Placement Agent will not transmit to the Company any written
offer from an offeree to purchase a Unit or Units unless, immediately prior
thereto, it reasonably believes that:
(i) the offeree is an Accredited Investor; and
(ii) the offeree meets all other offeree and/or purchaser
suitability standards, if any, required under applicable securities laws
and regulations.
(g) The US Placement Agent will exercise reasonable care to determine
that prospective investors are not "underwriters" within the meaning of Section
2(11) of the Act, and in that connection will obtain from each investor
purchasing Units in the Placement a duly executed Subscription Agreement, in the
form provided to the US Placement Agent by the Company.
(h) The US Placement Agent will periodically notify the Company of the
jurisdiction in which the Units are being offered by it or will be offered by it
pursuant to this Agreement, and will periodically notify the Company of the
status of the offering conducted pursuant to this Agreement.
(i) The US Placement Agent will take such other action or refrain from
taking such action as the Company may reasonably request in order to comply with
all applicable United
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States laws and all applicable securities laws of those jurisdictions listed in
Schedule A of which the Company advises the US Placement Agent, including using
its best efforts to cause offerees and subscribers for Units to execute and
deliver such additional documents and instruments as the Company may reasonably
require, except that the Company shall be required to complete all necessary
securities qualifications with respect to those jurisdictions listed in Schedule
A as provided in Section 2.
(j) The US Placement Agent has delivered or caused to be delivered to
each prospective investor who received the Memorandum each of (i) the Company's
quarterly report on form 10-Q, filed with the Securities and Exchange Commission
on December 15, 1999, (ii) the amended form of warrant amending the form of
warrant attached to the Memorandum as Appendix F and (iii) the supplement to
confidential private placement memorandum supplementing the Memorandum, and has
informed prospective investors that such documents, in each case, constitute
supplements to the Memorandum.
9. COVENANTS
(a) Covenants of the Company. The Company covenants to the US
Placement Agent that it will:
(i) Notify the US Placement Agent as soon as practicable,
and confirm such notice promptly in writing, (A) when any event shall have
occurred during the period commencing on the date hereof and ending on the later
of the Closing Date and the last Additional Closing Date (if any) as a result of
which the Memorandum would include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and (B) of the receipt of any
notification with respect to the modification, recission, withdrawal or
suspension of the qualification or registration of the Shares or of an exemption
from such registration or qualification in any jurisdiction. The Company will
use its reasonable best efforts to prevent the issuance of any such
modification, rescission, withdrawal or suspension and, if any such
modification, rescission, withdrawal or suspension is issued and you so request,
to obtain the lifting thereof as promptly as possible.
(ii) Not supplement or amend the Memorandum unless the US
Placement Agent shall have approved of such supplement or amendment in writing.
If, at any time during the period commencing on the date hereof and ending on
the later of the Closing Date and the last Additional Closing Date (if any), any
event shall have occurred as a result of which the Memorandum contains any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
or if, in the opinion of counsel to the Company or counsel to the US Placement
Agent, it is necessary at any time to supplement or amend the Memorandum to
comply with the Act, Regulation D or any applicable securities or "blue sky"
laws, the Company will promptly prepare an appropriate supplement or amendment
(inform and substance reasonably satisfactory to you) which will correct such
statement or omission or which will effect such compliance.
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(iii) Deliver without charge to the US Placement Agent
such number of copies of the Memorandum and any supplement or amendment thereto
as may reasonably be requested by the US Placement Agent.
(iv) Not directly or indirectly, solicit any offer to buy
from, or offer to
sell to, any person any Units except through the US Placement Agent or TK.
(v) Not solicit any offer to buy or offer to sell Units by
any form of general solicitation or advertising, including, without limitation,
any advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over television or radio or
any seminar or meeting whose attendees have been invited by any general
solicitation or advertising.
(vi) At all times during the period commencing on the date
hereof and ending on the later of the Closing Date and the last Additional
Closing Date (if any), provide to each prospective investor or his purchaser
representative, if any, on reasonable request, such information (in addition to
that contained in the Memorandum) concerning the Placement, the Company and any
other relevant matters as it possesses or can acquire without unreasonable
effort or expense and extend to each prospective investor or his purchaser
representative, if any, the opportunity to ask questions of, and receive answers
from the Company concerning the terms and conditions of the Placement and the
business of the Company and to obtain any other additional information, to the
extent it possesses the same or can acquire it without unreasonable effort or
expense, as such prospective investor or purchaser representative may consider
necessary i making an informed investment decision or in order to verify the
accuracy of the information furnished to such Prospective Investor or purchaser
representative, as the case may be.
(vii) Notify the US Placement Agent promptly of the
acceptance or rejection of any subscription. Any subscription unreasonably
rejected shall be deemed to have been accepted for purposes of determining
whether at least 2,000,000 Units have been sold solely for the purpose of
determining whether the US Placement Agent is entitled to its compensation
pursuant to Schedule A hereof.
(viii) File five (5) copies of a Notice of Sales of
Securities on Form D with the Securities and Exchange Commission (the
"Commission") no later than 15 days after the first sale of the Units. The
Company shall file promptly such amendments to such Notices on Form D as shall
become necessary and shall also comply with any filing requirement imposed by
the laws of any state or jurisdiction in which offers and sales are made. The
Company shall furnish you with copies of all such filings.
(ix) Place the following legend on all certificates
representing the Units and the Warrants:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD,
896966.8
11
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS
OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS
WHICH, IN THE OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL
AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS
CORPORATION, IS AVAILABLE."
(x) Not, directly or indirectly, engage in any act or
activity which may jeopardize the status of the offering and sale of the Units
as exempt transactions under the Act or under the securities or "blue sky" laws
of any jurisdiction in which the Placement may be made.
(xi) Apply the net proceeds from the sale of the Units for
the purposes set forth under the caption "Use of Proceeds" in the Memorandum in
substantially the manner indicated thereunder.
(xii) Not, during the period commencing on the date hereof
and ending on the later of the Closing Date and the last Additional Closing Date
(if any) issue any press release or other communication or hold any press
conference with respect to the Company, its financial condition, results of
operations, business properties, assets, liabilities or future prospects of the
Placement, without the prior written consent of the US Placement Agent and TK,
which consent will not be unreasonably withheld.
(xiii) Not, prior to the completion of the Offering, bid
for, purchase, attempt to induce others to purchase, or sell, directly or
indirectly, any shares of Common Stock or any other securities in violation of
the provisions of Regulation M under the Exchange Act.
10. CONDITIONS OF US PLACEMENT AGENT'S OBLIGATIONS
The obligations of the US Placement Agent pursuant to this Agreement
shall be subject, in its discretion, to the continuing accuracy of the
representations and warranties of the Company contained herein and in each
certificate and document contemplated under this Agreement to be delivered to
the US Placement Agents, as of the date hereof and as of the Closing Date (and,
if applicable, each Additional Closing Date), to the performance by the Company
of its obligations hereunder, and to the following conditions:
(a) At the Closing and each Additional Closing, as the case may
be, the Placement Agents shall have received the favorable opinion of Battle
▇▇▇▇▇▇ LLP and ▇▇▇▇▇▇▇ ▇▇▇▇▇, as counsel for the Company, in substantially the
forms of Exhibit B hereto.
(b) On or prior to the Closing Date and each Additional Closing
Date, as the case may be, the US Placement Agent shall have been furnished such
information, documents and certificates as it may reasonably require for the
purpose of enabling it to review the matters referred to in this Section 10 and
in order to evidence the accuracy, completeness or
896966.8
12
satisfaction of any of the representations, warranties, covenants, agreements or
conditions herein contained, or as it may otherwise reasonably request.
(c) At the Closing and each Additional Closing, as the case may
be, the US Placement Agent shall have received a certificate of the chief
executive officer of the Company, dated the Closing Date or such Additional
Closing Date, as the case may be, to the effect that, as of the date of this
Agreement and as of the Closing Date or such Additional Closing Date, as the
case may be, the representations and warranties of the Company contained herein
were and are accurate, and that as of the Closing Date or such Additional
Closing Date, as the case may be, the obligations to be performed by the Company
hereunder on or prior thereto have been fully performed.
(d) All proceedings taken in connection with the issuance, sale
and delivery of the Shares shall be reasonably satisfactory in form and
substance to you and your counsel.
Any certificate or other document signed by any officer of the Company
and delivered to you or to your counsel as required hereunder shall be deemed a
representation and warranty by the Company hereunder as to the statements made
therein. If any condition to your obligations hereunder has not been fulfilled
as and when required to be so fulfilled, you may terminate this Agreement or, if
you so elect, in writing waive any such conditions which have not been fulfilled
or extended the time for their fulfillment. In the event that you elect to
terminate this Agreement, you shall notify the Company of such election in
writing. Upon such termination, neither party shall have any further liability
or obligation to the other except as provided in Section 11 hereof.
11. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless the US Placement
Agent, any person who controls the Placement Agent within the meaning of the
Act, Section 20(a) of the Exchange Act or any applicable statute and each
partner, director, officer, employee, agent and representative of the US
Placement Agent or any person who controls any such Placement Agent from and
against any loss, damage, expense, liability or claim, or actions or proceedings
in respect thereof (including, without limitation, reasonable attorneys' fees
and expenses incurred in investigating, preparing or defending against any
litigation commenced) which any such person may incur or which may be made or
brought against any such person arising out of or based upon (i) any breach of
any of the agreements, representations or warranties of the Company contained in
this Agreement or Schedule A, (ii) any violation of securities laws attributable
to the offer or sale of Units in a jurisdiction listed in Schedule A and in a
manner authorized by the Company, or (iii) any violation of law by the Company
or any Affiliate thereof, or any director, officer, employee, agent or
representative of any of them, related to or arising out of the Placement. This
indemnity agreement by, and the agreements, warranties and representations of,
the Company shall survive the offer, sale and delivery of the Units and the
termination of this Agreement and shall remain in full force and effect
regardless of any investigation made by or on behalf of any person indemnified
hereunder, and termination of this Agreement and acceptance of any payment for
the Units hereunder.
896966.8
13
(b) The US Placement Agent agrees to indemnify and hold harmless the
Company and its Affiliates, any person who controls any of them within the
meaning of the Act, Section 20(a) of the Exchange Act or any applicable statute,
and each officer, director, employee, agent and representative of the Company or
any of its Affiliates from and against any loss, damage, expense, liability or
claim or actions or proceedings in respect thereof (including, without
limitation, reasonable attorneys' fees and expenses incurred in investigating,
preparing or defending against any litigation commenced) which any such person
may incur or which may be made or brought against any such person, but only to
the extent the same arises out of or is based upon (i) any breach of any of the
agreements, representations or warranties of the respective US Placement Agent
contained in this Agreement or Schedule A or (ii) any untrue statement of a
material fact in any information provided to the Company in writing by, and
relating to, the US Placement Agent, expressly for use in and used in the
Memorandum, or any omission in any information provided to the Company in
writing by, and relating to, the US Placement Agent, expressly for use in and
used in the Memorandum of any material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading. This indemnity agreement by, and the agreements, warranties and
representations of, the US Placement Agent shall survive the offer, sale and
delivery of the Units and shall remain in full force and effect regardless of
any investigation made by or on behalf of any person indemnified hereunder, and
termination of this Agreement and acceptance of any payment for the Units
hereunder.
(c) If any action is brought against a party (the "Indemnified Party")
in respect of which indemnity may be sought against one or more other parties
(the "Indemnifying Party" or "Indemnifying Parties"), the Indemnified Party
shall promptly notify the Indemnifying Party or Parties in writing of the
institution of such action; provided, however, the failure to give such notice
shall not release the Indemnifying Party or Parties from its or their obligation
to indemnify the Indemnified Party hereunder except to the extent the
Indemnifying Party actually incurs damage by reason of such failure and shall
not release the Indemnifying Party or Parties from any other obligations or
liabilities to the Indemnified Party in any event. The Indemnifying Party or
Parties may at its or their own expense elect to assume the defense of such
action, including the employment of counsel reasonably acceptable to the
Indemnified Party; provided, however, that no Indemnifying or Indemnified Party
shall consent to the entry of any judgment or enter into any settlement by which
the other party is to be bound without the prior written consent of such other
party, which consent shall not be unreasonably withheld. In the event the
Indemnifying Party or Parties assume a defense hereunder, the Indemnified Party
shall be entitled to retain its own counsel in connection therewith and, except
as provided below, shall bear the fees and expenses of any such counsel, and
counsel to the Indemnified Party or Parties shall cooperate with such counsel to
the Indemnifying Party in connection with such proceeding. If an Indemnified
Party reasonably determines that there are or may be differing or additional
defenses available to the Indemnified Party which are not available to the
Indemnifying Party, or that there is or may be a conflict between the respective
positions of the Indemnifying Party and of the Indemnified Party in conducting
the defense of any action, then the Indemnifying Party shall bear the reasonable
fees and expenses of any counsel retained by the Indemnified Party in connection
with such proceeding. All references to the Indemnified Party contained in this
paragraph 8(c) include, and extend to and protect with equal effect, any persons
who may control the Indemnified Party within the meaning of the Act, Section
20(a) of the Exchange Act or any applicable statute, any successor to the
896966.8
14
Indemnified Party and each of its partners, officers, directors, employees,
Agents and representatives. The indemnity agreements set forth in this paragraph
8 shall be in addition to any other obligations or liabilities of the
Indemnifying Party or Parties hereunder or at common law or otherwise.
(d) If recovery is not available under the foregoing indemnification
provisions of this paragraph, for any reason other than as specified therein,
the party entitled to indemnification by the terms thereof shall be entitled to
contribution to losses, damages, liabilities and expenses of the nature
contemplated by such indemnification provisions. In determining the amount of
such losses, damages, contribution, there shall be considered the relative
benefits received by the Company on the one hand, and the US Placement Agent on
the other hand from the Placement (which shall be deemed to be the portion of
the proceeds of the Placement realized by each party), the parties' relative
knowledge and access to information concerning the matter with respect to which
the claim was asserted, the opportunity to correct and prevent any statement or
omission, the relative culpability of the parties and any other equitable
considerations appropriate under the circumstances. No party shall be liable for
contribution with respect to any action or claim settled without its consent.
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section, notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have under this Section or otherwise. For purposes of this Section,
each person, if any, who controls a party to this Agreement within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the
same rights to contribution as that party to this Placement Agreement.
(e) In any claim for indemnification for United States Federal or state
securities law violations, the party seeking indemnification shall place before
the court the position of (i) the United States Securities and Exchange
Commission and (ii) if applicable, any state securities commissioner or agency
having jurisdiction with respect to the issue of indemnification for securities
law violations.
12. MISCELLANEOUS
(a) The agreements set forth in this Agreement have been made and are
made solely for the benefit of the Company, the US Placement Agent, their
affiliates and the respective heirs, personal representatives and permitted
successors and assigns thereof, and except as expressly provided herein nothing
expressed or mentioned herein is intended or shall be construed to give any
other person, firm or corporation any legal or equitable right, remedy or claim
under or in respect of this Agreement or any representation, warranty or
agreement herein contained. The term "successors and assigns" as used herein
shall not include any purchaser of any Units merely because of such purchase.
(b) Any notice or other communication required or appropriate under the
provisions of this Agreement shall be given in writing addressed as follows: (i)
if to the Company, at the address set forth above, Attention: President; and
(ii) if to the US Placement Agent, 1285 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President, or at such other
address as any party may designate to the others in accordance with this
paragraph.
896966.8
15
(c) This Agreement and Schedule A constitute the entire agreement
between the parties hereto with respect to the Placement and supercedes any and
all prior agreements, and may be amended or modified only by a duly authorized
writing signed by such parties. This Agreement and Schedule A may be executed in
any number of counterparts, each of which shall be deemed an original and all of
which shall constitute a single instrument.
[Signature page follows]
896966.8
16
This Agreement is executed and shall be effective as of December
__, 1999, and shall be governed and construed in accordance with the laws of the
State of New York, without giving effect to conflicts of law provisions thereof.
JAWS TECHNOLOGIES, INC.
By: /s/▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------
Name:▇▇▇▇ ▇▇▇▇▇▇▇
Title:V.P. Administration
Agreed and accepted:
SMALLCAPS ONLINE LLC
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
896966.8
SCHEDULE A
JAWS Technologies, Inc.
The parties hereto enter into this Schedule A to the Placement Agency
Agreement (the "Agreement") effective as of December 13, 1999 (the "Effective
Date"), and incorporate said Agreement herein by reference in full. Capitalized
terms used in this Schedule and not otherwise defined have the meanings provided
in the Agreement. All dollar amounts are in $USD.
Issuer:
JAWS Technologies, Inc., a Nevada
corporation.
Placement Agents: US: SmallCaps Online LLC. CDN: Thomson
Kernaghan & Co. Limited.
Security Offered: Units, each Unit consisting of (i) one share
of common stock, par value $.001 per share
(the "Common Stock"), of the Company and
(ii) one warrant to purchase1/2(one half) a
share of Common Stock at an exercise price
of $6.50 per share (subject to adjustment,
as described below), which warrants shall
expire on the third anniversary date of the
effective date of the registration statement
relating thereto (as described below).
Certificates representing shares of Common
Stock and warrants shall bear appropriate
legends, including those relating to
"restricted securities" under the Act.
Number of Units: A minimum of 2,000,000 Units (aggregate
gross proceeds of $8,500,000) and a maximum
of 3,500,000 Units (gross proceeds of
$14,875,000).
Offering Price
(Per Unit): $4.25 per Unit.
Minimum Subscription: $100,000, or greater if required by local
law.
Use of Proceeds: Working capital and general corporate
purposes, and acquisitions yet to be
identified.
Placement Period: From December 13, 1999 to January 14, 2000,
unless extended by the Company in its sole
discretion. The anticipated date of the
initial closing is December 23, 1999.
Sales Commissions, Warrants
and Financial Advisory Fees
to Placement Agents: An aggregate cash payment to the Placement
Agents of a 7% sales commission and a 3%
financial advisory fee,
896966.8
A-1
in each case, based upon the gross proceeds
from all Units sold by or on behalf of the
Company.
On the closing date, the Company shall issue
to the Placement Agents an aggregate number
of warrants to purchase shares of Common
Stock equal to 10% of the number of Units
sold, one-half of which shall be allocated
as a financial advisory fee. The warrants
will be exercisable at an exercise price of
$4.25 per share, and will expire on the
third anniversary date of the effectiveness
of the registration statement relating
thereto (as described below). The warrants
will be issued pursuant to a warrant
agreement and/or form of warrant certificate
in form and substance satisfactory to the
Company and the Placement Agents.
Expenses of Placement Agents
to be Reimbursed: Each Placement Agent will receive
reimbursement of all reasonable, accountable
out-of-pocket expenses, including legal fees
and disbursements of one counsel, and travel
and due diligence expenses.
Jurisdictions in Which
Units Will Be Offered United States: New York, Connecticut,
Massachusetts, California, Georgia, Texas
and Colorado.
Canada: Ontario, Alberta, Manitoba and
British Columbia
Belgium
Registration of
Common Stock: The Company will use its best efforts to
file, no later than 30 days following the
final closing date, a registration statement
with the United States Securities and
Exchange Commission registering for resale
all of the shares of Common Stock included
in the Units, and shares of Common Stock
issuable upon exercise of the warrants
included in the Units and the warrants
issued to the Placement Agents. The Company
will use its best efforts to cause such
registration statement to become effective
no later than 90 days following the final
closing date, and to cause such registration
statement to remain effective until 30 days
following the date on which all warrants
have been exercised or expired, and/or have
been called and repurchased by the Company
as provided below. During such period, the
Company will file all documents required to
be filed by it under the Securities Exchange
Act of 1934, as amended.
If a registration statement covering such
shares of Common Stock is not declared
effective within 90 days, but prior to 180
days, following the final closing date, the
896966.8
A-2
exercise price of the warrants sold to
Investors shall be reduced by $0.25 per
month, or a pro rated amount thereof for
partial months, until a registration
statement covering such shares is declared
effective. If a registration statement
covering such shares of Common Stock is not
declared effective within 180 days following
the final closing date, the exercise price
of the warrants sold to Investors shall be
reduced by $0.50 per month, or a pro rated
amount thereof for partial months, until a
registration statement covering such shares
of Common Stock is declared effective.
Notwithstanding the foregoing, in no event
shall the exercise price of the Warrants
sold to Investors be reduced to a price
lower than $3.75 per share.
Call Rights on Warrants: If at any time following the effectiveness
of the registration statement described
above the last reported sale price per share
of Common Stock exceeds $9.75 for any
consecutive thirty day trading period, then
the Company may, at any time upon thirty
days notice, call and repurchase warrants
issued to the purchasers and the Placement
Agents at a call price of $.001 per warrant.
Definitive Agreements: The purchase and sale of Units is subject to
the execution and delivery of definitive
agreements containing such representations,
warranties, terms and conditions as the
respective parties and their counsel may
agree.
896966.8
A-3
