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EXHIBIT 4.13
JAWS TECHNOLOGIES, INC.
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PLACEMENT AGENCY AGREEMENT
Thomson Kernaghan & Co. Limited
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Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Gentlemen:
This Placement Agency Agreement (the "Agreement") confirms the retention
by JAWS Technologies, Inc., a Nevada corporation (the "Company"), of Thomson
Kernaghan & Co. Limited, (the "Canadian Placement Agent"), to act as the sales
agent in Canada and outside of Canada and 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 Canadian 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 Canadian Placement Agent understands that all
subscriptions for Units are subject to acceptance by the Company. The Company
and the Canadian 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 Canadian Memorandum. Any subscription monies
received by the Canadian 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 Canadian
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Placement Agent is subject to the Exchange Act, and as otherwise may be
prescribed by the terms of the Canadian Memorandum. Without limiting the
generality of the foregoing, the Canadian Placement Agent agrees with the
Company that, in connection with the Placement and the Concurrent Offering, it
will receive all funds in connection therewith and promptly deposit the same in
a separate bank account, as agent or trustee for the persons who have a
beneficial interest therein, until the closing occurs, the offerings are
terminated or another appropriate event or contingency has occurred, at which
time the funds shall be promptly transmitted or retained, as the case may be, to
the Company or the person entitled thereto.
(b) The Company is making an offering of the Units, concurrent with the
making of the private placement of Units in Canada and outside Canada and the
United States as described herein (the "Placement"), in the United States
through the Company's US Placement agent, SmallCaps Online LLC ("SmallCaps").
Such concurrent United States offering is referred to herein as the "Concurrent
Offering." The Canadian Placement Agent will only offer Units to prospective
investors in Canada and outside of Canada and the United States and SmallCaps
will only offer Units to prospective investors in the United States. The terms
of the Concurrent Offering are substantially identical to the terms of this
Placement, except to the extent that either the laws of the United States,
Canada and/or outside of Canada and the United States require special disclosure
in the Canadian Memorandum and/or terms in this Agreement for the placement
agent agreement with SmallCaps and/or terms in the Subscription Agreement (as
defined below) or the subscription agreement between the Company and United
States investors. The Units, Shares and Warrants sold in the United States,
Canada and outside of Canada and the United States will be identical in all
respects. For purposes of calculating the minimum and maximum sizes of the
offering, Units sold in the United States, Canada and outside of Canada and the
United States will be aggregated.
2. OFFERING CIRCULAR
The Company will prepare an Offering Circular relating to the Company
(such Offering Circular, together with the exhibits and attachments thereto or
available thereunder and any amendments or supplements thereto prepared and
furnished by the Company, being referred to herein as the "Canadian Memorandum")
which describes the Placement and certain investment risks relating thereto. The
Company has been and will continue to be responsible for preparing and filing
required documentation, if any, with the authorities in the United States and
provincial securities regulatory authorities in Canada prior to (and subsequent
to, if required by the laws of such jurisdiction) the distribution of the
Canadian Memorandum to prospective investors (the parties acknowledging,
however, that the offering of Units is intended and expected to be wholly or
partially exempt from filing requirements in the United States by reason of an
"accredited investor" exemption). The Canadian 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 Canadian and other
purchasers of the Units (the "Subscription Agreement"), with such
representations, warranties, conditions and covenants as are customary in
private placements of corporate equity securities with United States accredited
investors. The Canadian Placement Agent and its counsel shall have an
opportunity to review the final form of the Canadian Memorandum and Subscription
Agreement prior to the distribution thereof to prospective investors, and the
Canadian
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Memorandum and the Subscription Agreement will be the only offering documents
(other than cover letters which may be used by the Canadian Placement Agent, and
any documents made available to investors in accordance with the terms of the
Canadian Memorandum) shown to prospective investors. The Company and its counsel
will advise the Canadian Placement Agent and its counsel in writing of those
jurisdictions in which Units may lawfully be offered and sold, and the manner in
which the Units may lawfully be offered and sold in each such jurisdiction, in
connection with the Placement, and the Canadian 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 Canadian Placement Agent as
its sales agent in Canada and outside of the United States and Canada 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 Canada and
outside of the United States without the Canadian Placement Agent's express
prior written consent (other than SmallCaps with respect to the Concurrent
Offering); provided that this Agreement shall not give the Canadian 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 Canadian 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 Canadian Placement Agent agrees
to use its best efforts to assist in arranging for sales of Units. The Canadian
Placement Agent will also assist the Company in the preparation of the Canadian
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 Canadian Placement Agent and the
Company, that the Canadian Placement Agent is acting only as a sales agent and
that, except as specifically set forth in Schedule A, there is no undertaking on
the Canadian 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 Canadian Placement Agent hereunder, the
Company will pay or cause to be paid to the Canadian Placement Agent the
commissions, fees and expenses ("fees") stated in Schedule A (it being
understood and agreed that the Placement Agent may deduct such fees from the
aggregate amount of subscriptions received by the Placement Agent in respect of
any Closing).
(c) Upon receipt by the Company from a proposed purchaser of completed
subscription materials in the form set prepared by the Company, and such other
documents
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as the Company requests, the Company and the Canadian 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 Canadian Placement Agent's commissions, fees and expenses based on a
percentage of gross proceeds and all other expenses reimbursable or payable by
the Company as provided herein or in Schedule A will be paid in full upon
transfer to the account of the Company of the purchase price of such Units;
provided, however, that no such commissions or fees shall be payable until
subscriptions for the minimum number of Units described in the Canadian
Memorandum have been accepted and the purchase price of the Units to be
purchased from the Company has been transferred to the account of the Company.
For purposes of calculating the minimum and maximum sizes of the offering, Units
sold in the United States, Canada and outside of the United States will be
aggregated.
(e) The Company and the Canadian 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 Canadian Placement Agent in connection with the Placement as
provided in Schedule A. Reimbursement of the Canadian Placement Agent's
reasonable, accountable out-of-pocket costs and expenses hereunder shall be made
promptly in full in the event the Canadian 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 Canadian 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 Canadian 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 Canadian Placement Agent and the cost of all copies
thereof, (ii) the issuance, sale, transfer and delivery of the Units, the
Shares, and the Warrants, including any transfer or other taxes payable thereon
and the fees of any transfer agent, warrant agent or registrar, (iii) the
registration or qualification of the Units or the securing of an exemption
therefrom under state of foreign "blue sky" or securities laws, including,
without limitation, filing fees payable in the jurisdictions in which such
registration or qualification or exemption therefrom is sought, the costs of
preparing preliminary, supplemental and final "blue sky surveys" relating to the
offer and sale of the Units and the fees and disbursements of counsel to the
Placement Agents in connection with such "blue sky" matters, and (iv) the filing
fees, if any, payable to the applicable securities regulatory authorities.
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5. TERMINATION OF PLACEMENT
The Placement may be terminated by the mutual consent of the Canadian
Placement Agent and SmallCaps at any time by them giving written notice to the
Company if (a) in the opinion of the Canadian Placement Agent, the Canadian
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 Canadian Placement
Agent and SmallCaps and their counsel within ten business days after the Company
receives notice of such untrue statement or omission, provided that
notwithstanding such ten business day period, no such closing shall occur
hereunder until the Canadian Placement Agent and SmallCaps shall have notified
the Company that they are satisfied, in their reasonable determination, that the
Company has taken such steps (including circulating amended offering materials)
to allow any such closing to occur, or (b) the Company shall be in material
breach of any representation, warranty or covenant made by it in this Agreement.
6. CLOSING
(a) Subject to the conditions set forth in Section 10 hereof, if
subscriptions to purchase at least 500,000 Units in the aggregate in the
Placement and the Concurrent Offering have been received prior to the expiration
of the offering period and accepted by the Company, the initial closing under
this Agreement (the "Closing") shall be held at the offices of Battle ▇▇▇▇▇▇
LLP, Park Avenue Tower, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 A.M.,
New York time, on February 18, 2000 or at such other place, time and/or date as
the Company and the Canadian Placement Agent shall agree upon. The Company shall
provide the notice required by the preceding sentence as promptly as
practicable. The date upon which the Closing is held shall hereinafter be
referred to as the "Closing Date."
(b) Subject to the conditions set forth in Section 10 hereof, if,
subsequent to the date the subscriptions referred to in Section 6(a) hereof are
received and accepted and prior to the expiration of the offering period,
additional subscriptions to purchase Shares are received from prospective
investors, which subscriptions are accepted by the Company, one or more
additional closings under this Agreement (each, an "Additional Closing") shall
be held at the offices of Battle ▇▇▇▇▇▇ LLP, Park Avenue Tower, ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 A.M., New York time, on the third business
day following the date upon which the Canadian 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 Canadian Placement Agent shall
agree upon. The Company shall notify the Canadian 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) Promptly after the Closing Date or an Additional Closing
Date, as the case may be, the Company shall deliver to the purchasers (or the
Canadian Placement Agent,
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on behalf of the purchasers) of Unit certificates representing the Shares and
agreements representing the Warrants to which they are entitled.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents and warrants to, and covenants with, the Canadian
Placement Agent that:
(a) The Company has been validly formed and is legally existing as a
corporation in good standing under the laws of the State of Nevada, with full
corporate power and authority to conduct its business as currently conducted,
and is in good standing in each jurisdiction in which the conduct of its
business or the nature of its properties requires such qualification or
authorization, except where the failure to be so qualified or authorized and in
good standing could not reasonably be expected to have a material adverse effect
on the business and financial condition of the Company and its subsidiaries,
taken as a whole (a "Material Adverse Effect"). As of the date hereof, the
Company does not have, directly or indirectly, any material subsidiaries other
than Jaws Technologies Inc. an Alberta corporation ("Jaws Canada"), Pace Systems
Group Inc., an Ontario corporation ("Pace"), Jaws Technologies (Delaware), Inc.,
a Delaware corporation ("Jaws Delaware"), Offsite Data Services Ltd., an Alberta
corporation ("Offsite"), Jaws Technologies, Inc., an Ontario corporation ("Jaws
Ontario") and Jaws Acquisition Corp., an Alberta corporation ("JAC" and
collectively with Jaws Canada, Pace, Jaws Delaware, and Offsite, the
"Subsidiaries"). Each Subsidiary has been duly organized, is validly existing
and in good standing under the laws of the jurisdiction of its organization, has
the power and authority to own its properties and to conduct its business and is
duly qualified and authorized to transact business and is in good standing in
each jurisdiction in which the conduct of its business or the nature of its
properties requires such qualification or authorization, except where the
failure to be so qualified or authorized and in good standing could not
reasonably be expected to have a Material Adverse Effect. All of the outstanding
capital stock of each Subsidiary is owned by the Company, free and clear of any
liens, and has been duly authorized and validly issued, and is non-assessable,
except for such failures as could not reasonably be expected to have a Material
Adverse Effect.
(b) Neither the Canadian Memorandum nor the Subscription Agreement
contain any untrue statement of a material fact, and the Canadian 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 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 Placement is completed or terminated or before all subscriptions are
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accepted by the Company, there should be any change which would cause the
Canadian Memorandum or the Subscription Agreement not to comply with this
paragraph 7(b), the Company will promptly advise the Canadian Placement Agent
thereof and prepare and furnish the Canadian 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 the Subscription Agreement as will cause the Canadian Memorandum
and the Subscription Agreement, as so supplemented or amended, to comply with
this paragraph 7(b), 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.
(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 Canadian Memorandum and the consummation of the
transactions contemplated hereby and thereby have been or will be prior to such
execution, delivery, performance or consummation, as the case may be, duly and
validly authorized by the Company and do not and will not (i) constitute, or
result in, a breach or violation of any of the terms, provisions or conditions
of the articles of incorporation or bylaws of the Company or any of its
Subsidiaries, (ii) constitute, or result in, a material violation of any
applicable statute, law, ordinance or regulation of any state, territory or
other jurisdiction, or (iii) violate, constitute, or result in, a default under
(or an event which with the passing of time or the giving of notice or both
would constitute a default under) or breach of the terms, provisions or
conditions of any material indenture, note, contract, commitment, instrument or
document to which the Company or any of its Subsidiaries is or will be a party
or by which the Company or any of their respective properties are bound, or any
award, judgment, decree, rule or regulation of any court or governmental or
regulatory agency or body having jurisdiction over the Company or any of its
Subsidiaries or their respective activities or properties, in each case which
breach, violation or default would have a Material Adverse Effect; and no
material consent, approval, authorization or order of any court or governmental
or regulatory agency or body is required on the part of the Company for the
lawful consummation of the transactions contemplated hereby and thereby, except
for such consents and approvals with respect to the offer and sale of Units in
certain jurisdictions which are identified to you by counsel for the Company.
(d) Neither the Company nor any of its officers, employees, agents or
representatives has taken or will take any action which has caused or may cause
the Placement not to qualify for exemption from the registration requirements of
the Act or of United States federal or state, or other securities laws. In
connection with the Placement, the Company shall not offer or cause to be
offered the Units by any form of general solicitation or general advertising as
defined in Rule 502(c) of Regulation D, has not taken and shall not take any
action (except for actions contemplated by the Canadian Memorandum) that would
cause the Placement to be integrated with other transactions under Rule 502(a)
of Regulation D.
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(e) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms (except
insofar as enforcement of the indemnification or contribution provisions hereof
may be limited by applicable laws or principles of public policy and subject, as
to enforcement, to the availability of equitable remedies and limitations
imposed by bankruptcy, insolvency, reorganization and other similar laws and
related court decisions relating to or affecting creditors' rights generally).
(f) The Company will not offer the Units for sale hereunder on the basis
of any communications or documents relating to the Canadian Placement Agent or
the Units except the Canadian Memorandum and the exhibits thereto and documents
described or referred to therein (including the Subscription Agreement).
(g) So long as the Units (or the Shares, Warrants or shares of Common
Stock underlying the Warrants) are "restricted securities" within the meaning of
Rule 144(a)(3) under the Act, the Company, during any period in which it is not
subject to and in compliance with Section 13 or 15(d) of the Exchange Act, or is
not exempt from such reporting requirements pursuant to and in compliance with
Rule 12g3-2b under the Exchange Act, provide to each holder of such Units and to
each prospective purchaser (as designated by such holder) of such Units, upon
the request of such holder or prospective holder, any information required to be
provided by Rule 144A(d)(4) under the Act.
(h) The Company will initially invest the proceeds of the Offering of
the Units and all other funds of the Company in such a manner so as to cause the
Company not to be subject to the United States Investment Company Act of 1940,
as amended (the "1940 Act"), and will thereafter use its best efforts to avoid
the Company's becoming subject to the 1940 Act.
(i) In addition to the foregoing, to the extent not set forth herein,
the Canadian Placement Agent may rely on the representations and warranties made
by the Company in the Subscription Booklet provided by the Company and used in
connection with the Placement.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
CANADIAN PLACEMENT AGENT
The Canadian 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 Canadian 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
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other similar laws and related court decisions relating to or affecting
creditors' rights generally).
(b) The Canadian 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 Canadian
Placement Agent, and the Canadian 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 Canadian Placement Agent to offer or sell securities.
(c) The Canadian Placement Agent is a registered as a broker-dealer in
each jurisdiction in which it is required to be registered as such in order to
offer and sell the Units in such jurisdiction.
(d) The Canadian 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 Canadian 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 Canadian 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
Canadian Memorandum. The Placement Agent will deliver a copy of the Canadian
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 Canadian 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 Canadian 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 Canadian Placement Agent has not and will not
supply in writing for inclusion in the Canadian Memorandum or any related sales
materials any information relating to the Canadian Placement Agent containing
any untrue statement of a material fact or omitting to state any material fact
required to be stated therein or necessary to make such information, in light of
the circumstances under which it is used, not misleading.
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(f) The Placement Agent will not transmit to the Company any written
offer from an offeree to purchase a Unit or Units unless, immediately prior
thereto, it reasonably believes that:
(i) the offeree is an Accredited Investor; and
(ii) the offeree meets all other offeree and/or purchaser
suitability standards, if any, required under applicable securities laws
and regulations.
(g) The Canadian 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 Canadian Placement Agent by the Company.
(h) The Canadian 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 Canadian Placement Agent will take such other action or refrain
from taking such action as the Company may reasonably request in order to comply
with all applicable United States laws and all applicable securities laws of
those jurisdictions listed in Schedule A of which the Company advises the
Canadian 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 Canadian Placement Agent has delivered or caused to be delivered
to each prospective investor the Canadian Memorandum.
9. COVENANTS
(a) Covenants of the Company. The Company covenants to the Canadian
Placement Agent that it will:
(i) Notify the Canadian 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 Canadian 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
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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 Canadian Memorandum unless
the Canadian 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 Canadian 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 Canadian Placement Agent, it is necessary at any time to supplement or amend
the Canadian Memorandum to comply with the Act, Regulation D or any applicable
securities or "blue sky" laws, the Company will promptly prepare an appropriate
supplement or amendment (inform and substance reasonably satisfactory to you)
which will correct such statement or omission or which will effect such
compliance.
(iii) Deliver without charge to the Canadian Placement Agent
such number of copies of the Canadian Memorandum and any supplement or amendment
thereto as may reasonably be requested by the Canadian 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 Canadian
Placement Agent or SmallCaps.
(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 Canadian Memorandum) concerning the Placement, the Company
and any other relevant matters as it possesses or can acquire without
unreasonable effort or expense and extend to each prospective investor or his
purchaser representative, if any, the opportunity to ask questions of, and
receive answers from the Company concerning the terms and conditions of the
Placement and the business of the Company and to obtain any other additional
information, to the extent it possesses the same or can acquire it without
unreasonable effort or expense, as such prospective investor or purchaser
representative may consider necessary in making an informed investment decision
or in order to verify the accuracy of the information furnished to such
Prospective Investor or purchaser representative, as the case may be.
(vii) Notify the Canadian Placement Agent promptly of the
acceptance or rejection of any subscription. Any subscription unreasonably
rejected shall
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be deemed to have been accepted for purposes of determining whether at least
500,000 Units have been sold solely for the purpose of determining whether the
Canadian Placement Agent is entitled to its compensation pursuant to Schedule A
hereof.
(viii) File five (5) copies of a Notice of Sales of
Securities on Form D with the Securities and Exchange Commission (the
"Commission") no later than 15 days after the first sale of the Units, if
required by law. The Company shall file promptly such amendments to such Notices
on Form D as shall become necessary and shall also comply with any filing
requirement imposed by the laws of any province or jurisdiction in which offers
and sales are made. The Company shall furnish you with copies of all such
filings.
(ix) Place the following legend on all certificates
representing the Units and the Warrants:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND NEITHER
THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE
OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE."
(x) Not, directly or indirectly, engage in any act or
activity which may jeopardize the status of the offering and sale of the Units
as exempt transactions under the Act or under the securities or "blue sky" laws
of any jurisdiction in which the Placement may be made.
(xi) Apply the net proceeds from the sale of the Units for
the purposes set forth under the caption "Use of Proceeds" in the Canadian
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 Canadian Placement Agent and SmallCaps,
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.
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10. CONDITIONS OF THE CANADIAN PLACEMENT AGENT'S OBLIGATIONS
The obligations of the Canadian 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 Canadian Placement Agent, as of the date hereof and as of the Closing Date
(and, if applicable, each Additional Closing Date), to the performance by the
Company of its obligations hereunder, and to the following conditions:
(a) At the Closing and each Additional Closing, as the case may
be, the Placement Agents shall have received the favorable opinion of each of
Battle ▇▇▇▇▇▇ LLP, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, and ▇▇▇▇▇ Winter LLP, in each case, as counsel for the Company, in
form and substance reasonably satisfactory to the Placement Agents.
(b) On or prior to the Closing Date and each Additional Closing
Date, as the case may be, the Canadian Placement Agent shall have been furnished
such information, documents and certificates as it may reasonably require for
the purpose of enabling it to review the matters referred to in this Section 10
and in order to evidence the accuracy, completeness or satisfaction of any of
the representations, warranties, covenants, agreements or conditions herein
contained, or as it may otherwise reasonably request.
(c) At the Closing and each Additional Closing, as the case may
be, the Canadian 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
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(a) The Company agrees to indemnify and hold harmless the Canadian
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 Canadian
Placement Agent or any person who controls any such Placement Agent from and
against any loss, damage, expense, liability or claim, or actions or proceedings
in respect thereof (including, without limitation, reasonable attorneys' fees
and expenses incurred in investigating, preparing or defending against any
litigation commenced) which any such person may incur or which may be made or
brought against any such person arising out of or based upon (i) any breach of
any of the agreements, representations or warranties of the Company contained in
this Agreement or Schedule A, (ii) any violation of securities laws attributable
to the offer or sale of Units in a jurisdiction listed in Schedule A and in a
manner authorized by the Company, or (iii) any violation of law by the Company
or any Affiliate thereof, or any director, officer, employee, agent or
representative of any of them, related to or arising out of the Placement. This
indemnity agreement by, and the agreements, warranties and representations of,
the Company shall survive the offer, sale and delivery of the Units and the
termination of this Agreement and shall remain in full force and effect
regardless of any investigation made by or on behalf of any person indemnified
hereunder, and termination of this Agreement and acceptance of any payment for
the Units hereunder.
(b) The Canadian 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 Canadian 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 Canadian Placement Agent, expressly for use in and used in the
Canadian Memorandum, or any omission in any information provided to the Company
in writing by, and relating to, the Canadian Placement Agent, expressly for use
in and used in the Canadian 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 Canadian 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
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such notice shall not release the Indemnifying Party or Parties from its or
their obligation to indemnify the Indemnified Party hereunder except to the
extent the Indemnifying Party actually incurs damage by reason of such failure
and shall not release the Indemnifying Party or Parties from any other
obligations or liabilities to the Indemnified Party in any event. The
Indemnifying Party or Parties may at its or their own expense elect to assume
the defense of such action, including the employment of counsel reasonably
acceptable to the Indemnified Party; provided, however, that no Indemnifying or
Indemnified Party shall consent to the entry of any judgment or enter into any
settlement by which the other party is to be bound without the prior written
consent of such other party, which consent shall not be unreasonably withheld.
In the event the Indemnifying Party or Parties assume a defense hereunder, the
Indemnified Party shall be entitled to retain its own counsel in connection
therewith and, except as provided below, shall bear the fees and expenses of any
such counsel, and counsel to the Indemnified Party or Parties shall cooperate
with such counsel to the Indemnifying Party in connection with such proceeding.
If an Indemnified Party reasonably determines that there are or may be differing
or additional defenses available to the Indemnified Party which are not
available to the Indemnifying Party, or that there is or may be a conflict
between the respective positions of the Indemnifying Party and of the
Indemnified Party in conducting the defense of any action, then the Indemnifying
Party shall bear the reasonable fees and expenses of any counsel retained by the
Indemnified Party in connection with such proceeding. All references to the
Indemnified Party contained in this paragraph 8(c) include, and extend to and
protect with equal effect, any persons who may control the Indemnified Party
within the meaning of the Act, Section 20(a) of the Exchange Act or any
applicable statute, any successor to the Indemnified Party and each of its
partners, officers, directors, employees, Agents and representatives. The
indemnity agreements set forth in this paragraph 8 shall be in addition to any
other obligations or liabilities of the Indemnifying Party or Parties hereunder
or at common law or otherwise.
(d) If recovery is not available under the foregoing indemnification
provisions of this paragraph, for any reason other than as specified therein,
the party entitled to indemnification by the terms thereof shall be entitled to
contribution to losses, damages, liabilities and expenses of the nature
contemplated by such indemnification provisions. In determining the amount of
such losses, damages, contribution, there shall be considered the relative
benefits received by the Company on the one hand, and the Canadian 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.
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(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 Canadian 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 Canadian Placement Agent, Thomson Kernaghan & Co. Limited, ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, or at such
other address as any party may designate to the others in accordance with this
paragraph.
(c) This Agreement and Schedule A constitute the entire agreement
between the parties hereto with respect to the Placement and supercedes any and
all prior agreements, and may be amended or modified only by a duly authorized
writing signed by such parties. This Agreement and Schedule A may be executed in
any number of counterparts, each of which shall be deemed an original and all of
which shall constitute a single instrument.
[SIGNATURE PAGE FOLLOWS]
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This Agreement is executed and shall be effective as of February 15,
2000, and shall be governed and construed in accordance with the laws of the
State of New York, without giving effect to conflicts of law provisions thereof.
JAWS TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Name:
Title:
Agreed and accepted:
THOMSON KERNAGHAN & CO. LIMITED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President and Director
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SCHEDULE A
JAWS TECHNOLOGIES, INC.
The parties hereto enter into this Schedule A to the Placement Agency
Agreement (the "Agreement") effective as of February 15, 2000 (the "Effective
Date"), and incorporate said Agreement herein by reference in full.
Capitalized terms used in this Schedule and not otherwise defined have the
meanings provided in the Agreement. All dollar amounts are in $USD.
Issuer: JAWS Technologies, Inc., a Nevada corporation.
Placement Agents: US: SmallCaps Online LLC.
CDN: Thomson Kernaghan & Co. Limited.
Security Offered: Units, each Unit consisting of (i) one share of common stock, par value $.001 per share
(the "Common Stock"), of the Company and (ii) one warrant to purchase 1/2 (one half) a
share of Common Stock at an exercise price of $6.50 per share (subject to adjustment, as
described below), which warrants shall expire on the third anniversary date of the
effective date of the registration statement relating thereto (as described below).
Certificates representing shares of Common Stock and warrants shall bear appropriate
legends, including those relating to "restricted securities" under the Act.
Number of Units: A minimum of 500,000 Units (aggregate gross proceeds of $2,125,000) and a maximum of
900,000 Units (gross proceeds of $3,825,000).
Offering Price
(Per Unit): $4.25 per Unit.
Minimum Subscription: $100,000, or greater if required by local law.
Use of Proceeds: Working capital and general corporate purposes, and acquisitions yet to be identified.
Placement Period: From February 15, 2000 to February 22, 2000, unless extended by the Company in its sole
discretion. The anticipated date of the initial closing is February 18, 2000.
Sales Commissions, Warrants
and Financial Advisory Fees
to Placement Agents: An aggregate cash payment to the Placement Agents of a 7% sales commission and a 3%
financial advisory fee,
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in each case, based upon the gross proceeds from all Units sold by or on behalf of the
Company.
On the closing date, the Company shall issue to the Placement Agents an aggregate number
of warrants to purchase shares of Common Stock equal to 10% of the number of Units sold,
one-half of which will constitute a financial advisory fee. The warrants will be
exercisable at an exercise price of $4.25 per share, and will expire on the third
anniversary date of the effectiveness of the registration statement relating thereto (as
described below). The warrants will be issued pursuant to a warrant agreement and/or form
of warrant certificate in form and substance satisfactory to the Company and the Placement
Agents.
Expenses of Placement Agents
to be Reimbursed: Each Placement Agent will receive reimbursement of all reasonable, accountable
out-of-pocket expenses, including legal fees and disbursements of one counsel, and travel
and due diligence expenses.
Jurisdictions in Which
Units Will Be Offered United States: New York
Canada: Ontario
Bermuda, Isle of Man, St. ▇▇▇▇▇▇▇ and the Grenadines
Registration of
Common Stock: The Company will use its best efforts to file, no later than 30 days following the final
closing date, a registration statement with the United States Securities and Exchange
Commission registering for resale all of the shares of Common Stock included in the Units,
and shares of Common Stock issuable upon exercise of the warrants included in the Units
and the warrants issued to the Placement Agents. The Company will use its best efforts to
cause such registration statement to become effective no later than 90 days following the
final closing date, and to cause such registration statement to remain effective until 30
days following the date on which all warrants have been exercised or expired, and/or have
been called and repurchased by the Company as provided below. During such period, the
Company will file all documents required to be filed by it under the Securities Exchange
Act of 1934, as amended.
If a registration statement covering such shares of Common Stock is not declared effective
within 90 days,
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but prior to 180 days, following the final closing date, the exercise price of the
warrants sold to Investors shall be reduced by $0.25 per month, or a pro rated amount
thereof for partial months, until a registration statement covering such shares is
declared effective. If a registration statement covering such shares of Common Stock is
not declared effective within 180 days following the final closing date, the exercise
price of the warrants sold to Investors shall be reduced by $0.50 per month, or a pro
rated amount thereof for partial months, until a registration statement covering such
shares of Common Stock is declared effective. Notwithstanding the foregoing, in no event
shall the exercise price of the Warrants sold to Investors be reduced to a price lower
than $3.75 per share.
Call Rights on Warrants: If at any time following the effectiveness of the registration statement described above
the last reported sale price per share of Common Stock exceeds $9.75 for any consecutive
thirty day trading period, then the Company may, at any time upon thirty days notice, call
and repurchase warrants issued to the purchasers and the Placement Agents at a call price
of $.001 per warrant.
Definitive Agreements: The purchase and sale of Units is subject to the execution and delivery of definitive
agreements containing such representations, warranties, terms and conditions as the
respective parties and their counsel may agree.
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