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Exhibit 4.14
JAWS TECHNOLOGIES, INC.
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PLACEMENT AGENCY AGREEMENT
SmallCaps Online LLC
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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 (the "U.S. 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 U.S.
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 U.S. Placement Agent understands that all
subscriptions for Units are subject to acceptance by the Company. The Company
and the U.S. 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 U.S. Memorandum. Any subscription monies
received by the U.S. 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 U.S. Placement Agent is
subject to the Exchange Act, and as otherwise may be prescribed by the terms of
the U.S. Memorandum.
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Without limiting the generality of the foregoing, the U.S. Placement Agent
agrees with the Company that, in connection with the Placement and the
Concurrent Offering, the Canadian Placement Agent (as defined below) 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 the United States as described
herein (the "Placement"), in Canada and outside of the United States and Canada
as described herein through the Company's Canadian Placement agent, Thomson
Kernaghan & Co. Limited (the "Canadian Placement Agent"). Such concurrent
offering is referred to herein as the "Concurrent Offering." The U.S. Placement
Agent will only offer Units to prospective investors in the United States and
the Canadian Placement Agent will only offer Units to prospective investors in
Canada and outside of the United States and Canada as described herein. 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 U.S. Memorandum and/or terms in this Agreement for the placement agent
agreement with the Canadian Placement Agent and/or terms in the Subscription
Agreement (as defined below) or the subscription agreement between the Company
and applicable 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 "U.S. 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 U.S.
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 U.S. 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 U.S. 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 institutional accredited investors. The U.S. Placement Agent
and its counsel shall have an
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opportunity to review the final form of the U.S. Memorandum and Subscription
Agreement prior to the distribution thereof to prospective investors, and the
U.S. Memorandum and the Subscription Agreement will be the only offering
documents (other than cover letters which may be used by the U.S. Placement
Agent, and any documents made available to investors in accordance with the
terms of the U.S. Memorandum) shown to prospective investors. The Company and
its counsel will advise the U.S. 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 U.S. 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 U.S. 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 U.S. Placement Agent's
express prior written consent (other than the Canadian Placement Agent with
respect to the Concurrent Offering); provided that this Agreement shall not give
the U.S. 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 U.S. 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 U.S.
Placement Agent agrees to use its best efforts to assist in arranging for sales
of Units. The U.S. Placement Agent will also assist the Company in the
preparation of the U.S. 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 U.S. Placement
Agent and the Company, that the U.S. 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 U.S. 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 U.S. Placement Agent hereunder, the Company
will pay or caused to be paid to the U.S. Placement Agent the commissions, fees
and expenses ("Fees") stated in Schedule A (it being understood and agreed that
the U.S. Placement Agent may deduct such Fees from the aggregate amount of
subscriptions received by the U.S. 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 U.S. 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 U.S. 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 U.S. 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 U.S. 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 U.S. Placement Agent in connection with the Placement as
provided in Schedule A. Reimbursement of the U.S. Placement Agent's reasonable,
accountable out-of-pocket costs and expenses hereunder shall be made promptly in
full in the event the U.S. 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 U.S. 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 U.S. 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 U.S. 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 U.S.
Placement Agent and the Canadian Placement Agent at any time by them giving
written notice to the Company if (a) in the opinion of the U.S. Placement Agent,
the U.S. 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 U.S.
Placement Agent and the Canadian Placement Agent 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 U.S. Placement Agent and the Canadian
Placement Agent 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 U.S. 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 U.S. 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 U.S. Placement Agent shall
agree upon. The Company shall notify the U.S. 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."
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(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
U.S. Placement Agent, 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 U.S.
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., incorporated under the laws of the Province of Ontario ("Pace"),
Jaws Technologies (Delaware), Inc., a Delaware corporation ("Jaws Delaware"),
Offsite Data Services Inc., 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 U.S. Memorandum nor the Subscription Agreement contain
any untrue statement of a material fact, and the U.S. 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 U.S. Placement Agent, for use in and used in the U.S.
Memorandum. It is understood that any summary in the U.S. 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,
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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 U.S. Memorandum or the Subscription Agreement not to comply with
this paragraph 7(b), the Company will promptly advise the U.S. Placement Agent
thereof and prepare and furnish the U.S. Placement Agent with, for distribution
to investors, after prior review and approval by the U.S. Placement Agent and
its counsel (such approval not to be unreasonably withheld), such copies of such
supplements or amendments to the U.S. Memorandum and the Subscription Agreement
as will cause the U.S. Memorandum and the Subscription Agreement, as so
supplemented or amended, to comply with this paragraph 7(b), and will authorize
the U.S. Placement Agent to make to investors, if (i) deemed necessary by
counsel to the U.S. Placement Agent and approved by the U.S. 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 U.S. 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 U.S. 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 U.S. Placement Agent or
the Units except the U.S. 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 U.S. 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 U.S. PLACEMENT AGENT
The U.S. 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 U.S. 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
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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 U.S. 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 U.S.
Placement Agent, and the U.S. 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 U.S. Placement Agent to offer or sell securities.
(c) The U.S. Placement Agent is (i) a registered broker-dealer under
the Exchange Act, (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.
(d) The U.S. 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 U.S. 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 U.S. 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
U.S. Memorandum. The Placement Agent will deliver a copy of the U.S. 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 U.S.
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 U.S. 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 U.S. Placement Agent has not and will not
supply in writing for inclusion in the U.S. Memorandum or any related sales
materials any information relating to the U.S. 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 U.S. 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 U.S. Placement Agent by the Company.
(h) The U.S. 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 U.S. 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 U.S.
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 U.S. Placement Agent has delivered or caused to be delivered to
each prospective investor the U.S. Memorandum.
9. COVENANTS
(a) Covenants of the Company. The Company covenants to the
U.S. Placement Agent that it will:
(i) Notify the U.S. 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 U.S. 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
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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 U.S. Memorandum
unless the U.S. 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
U.S. 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 U.S. Placement Agent, it is necessary at any time to
supplement or amend the U.S. 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 U.S. Placement
Agent such number of copies of the U.S. Memorandum and any supplement or
amendment thereto as may reasonably be requested by the U.S. 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 U.S.
Placement Agent or the Canadian Placement Agent.
(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 U.S. 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.
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(vii) Notify the U.S. 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 500,000 Units have been sold solely for the purpose of
determining whether the U.S. 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 U.S.
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 U.S. Placement Agent and
the Canadian Placement Agent, 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
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or any other securities in violation of the provisions of Regulation M under the
Exchange Act.
10. CONDITIONS OF THE U.S. PLACEMENT AGENT'S OBLIGATIONS
The obligations of the U.S. 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 U.S. 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 U.S. 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 U.S. 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.
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11. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless the U.S.
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 U.S.
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 U.S. 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 U.S. 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
U.S. Placement Agent, expressly for use in and used in the U.S. Memorandum, or
any omission in any information provided to the Company in writing by, and
relating to, the U.S. Placement Agent, expressly for use in and used in the U.S.
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 U.S. 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"
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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 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 U.S. 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
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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 U.S. 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 U.S. Placement Agent, SmallCaps Online LLC, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, 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:
SMALLCAPS ONLINE LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
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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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