1
Exhibit 2.4
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
JAWS TECHNOLOGIES, INC.
WARRANT
Warrant No. AW3 Dated: August 21, 2000
Jaws Technologies, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, CALP II Limited Partnership, or its
registered assigns ("Holder"), is entitled, subject to the terms set forth
below, to purchase from the Company the total number of shares of common stock,
$.001 par value per share (the "Common Stock"), of the Company (each such share,
a "Warrant Share" and all such shares, the "Warrant Shares") calculated pursuant
to Section 3 of this Warrant (subject to adjustment for certain events as set
forth herein) at an exercise price equal to $.001 per share (as adjusted from
time to time as provided in Section 8, the "Exercise Price"), at the times set
forth herein through and including the 40th Business Day (as defined in Exhibit
A) following the Third Vesting Date (as defined herein) (the "Expiration Date"),
and subject to the following terms and conditions (certain terms used herein are
defined in Exhibit A attached hereto). All references to $ (dollars) shall be to
US$ (United States dollars).
1. Registration of Warrant. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.
2. Registration of Transfers. The Company shall register the transfer of
any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment
2
attached hereto duly completed and signed, to the Transfer Agent or to the
Company at the address specified in Section 13. Upon any such registration or
transfer, a new warrant to purchase Common Stock, in substantially the form of
this Warrant (any such new warrant, a "New Warrant"), evidencing the portion of
this Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance of such transferee of all
of the rights and obligations of a holder of a Warrant. Subject to Section 14(g)
below, any transfer or assignment of this Warrant and Warrant Shares obtained by
the Holder in exercise of this Warrant is subject to the requirement that such
securities be registered under the Securities Act of 1933, as amended (the "1933
Act"), and applicable state securities laws or exempt from registration under
such laws.
3. Duration, Vesting and Exercise.
(a) The vesting of the Warrant Shares which the Holder is permitted
to acquire pursuant to this Warrant shall occur on the dates set forth below. On
each such date, this Warrant shall vest on a cumulative basis with respect to a
number of Warrant Shares calculated pursuant to Section 3(b) below. Only the
Warrant Shares that have vested may be acquired upon exercise of this Warrant.
(i) The first vesting date (the "First Vesting Date") shall be
the 210th day following the Closing Date (as defined in Exhibit A);
(ii) The second vesting date (the "Second Vesting Date") shall be
the 40th Trading Day following the First Vesting Date; and
(iii) The third vesting date (the "Third Vesting Date") shall be
the 40th Trading Day following the Second Vesting Date.
Each of the First Vesting Date, Second Vesting Date, and Third Vesting
Date shall be referred to herein as a "Vesting Date." The Company covenants
that, during the last 10 days of the 40 days preceding a Vesting Date, it will
not issue or sell any shares of its Common Stock at a price per share which is
less than $5.00.
(b) On each Vesting Date, this Warrant shall vest and become
exercisable with respect to the number of Warrant Shares, if any, calculated in
accordance with the following formula:
(Applicable Share Number) x [(Purchase Price/0. 89) - (Adjustment Price)]
-------------------------------------------------------------------------
Adjustment Price
-2-
3
If the number calculated in accordance with the foregoing formula is
zero or a negative number, no Warrant Shares shall vest hereunder for such
Vesting Date and the Holder shall not be obligated to transfer any shares of
Common Stock to the Company. In addition, the Holder shall not be obligated to
transfer any shares of Common Stock to the Company and the number of Warrant
Shares exercisable hereunder which shall have previously vested will not
decrease.
(c) Notwithstanding anything herein to the contrary, if, after the
Effective Date, the average of the Per Share Market Values (as defined in
Exhibit A) for any 20 consecutive Trading Days is greater than 120% of the
Purchase Price (as defined in Exhibit A) (which number shall be subject to
equitable adjustment for stock splits, recombinations and similar events), this
Warrant shall not vest with respect to any additional Warrant Shares (and all
such vesting rights will terminate) but will remain in effect as to any Warrant
Shares which have vested prior thereto.
(d) Notwithstanding the foregoing provisions of this Section 3, at
any time during the period between the Closing Date and the Expiration Date,
within ten Trading Days following the occurrence of any of the following events
(each, an "Event"), the Holder shall have the option to elect, by providing the
Company with a notice (an "Event Vesting Notice"), to have this Warrant vest
with respect to those Warrant Shares that have not yet already vested (the
"Vested Warrant Shares"), provided, that the Event Vesting Notice may also
require the Company to redeem all or a portion of the Vested Warrant Shares at
the Mandatory Redemption Price (as defined in Exhibit A);
(i) upon the occurrence of any of (i) an acquisition after the
date hereof by an individual or legal entity or "group" (as described in Rule
13d-5(b)(1) promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of in excess of 1/3 of the voting securities of the
Company, (ii) a replacement of more than one-half of the members of the
Company's board of directors which is not approved by those individuals who are
members of the board of directors on the date hereof (or Persons appointed or
nominated thereby) in one or a series of related transactions, (iii) the merger
of the Company with or into another entity, consolidation or sale of all or
substantially all of the assets of the Company in one or a series of related
transactions, unless following such transaction or series of transactions, the
holders of the Company's securities prior to the first such transaction continue
to hold at least 2/3 of the securities of the surviving entity or acquirer of
such assets or (iv) the execution by the Company of an agreement to which the
Company is a party or by which it is bound, providing for any of the events set
forth above in (i), (ii) or (iii); provided, however, that if the price per
share paid in connection with Events (i), (iii) or (iv) (but only to the extent
that Event (iv) relates to clauses (i) or (iii)) above exceeds the quotient of
the Purchase Price divided by 0.89, then the Event Vesting Notice which the
Holder may deliver pursuant to either Event (i), (iii) or (iv) above, shall not
require the Company to redeem all or a portion of the Vested Warrant Shares.
(ii) immediately prior to an assignment by the Company for the
benefit of creditors or commencement of a voluntary case under Title 11 of the
United States Code, or an
-3-
4
entering into of an order for relief in an involuntary case under Title 11 of
the United States Code, or adoption by the Company of a plan of liquidation or
dissolution;
(iii) five (5) Business Days prior to the proposed consummation
with respect to the Company of a "Rule 13e-3 transaction" as defined in Rule
13e-3 under the Exchange Act (or, if necessary, such earlier date as the Company
shall determine in good faith to be required in order for the Holder to be able
to participate in such transaction), it being agreed that the Holder will
receive actual notice of the 13e-3 Statement filed with the Commission;
(iv) For any period of three (3) consecutive Trading Days
commencing on or after the date of issuance of this Warrant, there shall be no
closing bid price on the Common Stock on the Nasdaq (as defined in Exhibit A) or
a Subsequent Market (as defined in Exhibit A);
(v) The Common Stock fails to be listed or quoted for trading on
the Nasdaq or a Subsequent Market or for a period of three (3) consecutive
Trading Days;
(vi) After the Effective Date, a holder of Registrable Securities
(as defined in the Registration Rights Agreement) is not permitted to sell
Registrable Securities under the Underlying Shares Registration Statement (as
defined in Exhibit A) for any reason for sixty (60) consecutive days; provided,
that, if a Vesting Date occurred during such sixty consecutive day period, then,
at the Holder's option, such Vesting Date shall be delayed for the remaining
number of days during which the holder of Registrable Securities is not
permitted to sell Registrable Securities under the Underlying Shares
Registration Statement. If however, such sixty (60) consecutive day period does
not occur, then a Vesting Date shall not be delayed under this clause (vi).
(vii) The Underlying Shares Registration Statement shall not be
declared effective by the Commission on or prior to the 180th day following the
Closing Date); or
(viii) The Company shall fail for any reason to deliver
certificates to a Holder prior to the eighth day after a Date of Exercise
pursuant to and in accordance with Section 4(a);
(ix) The Company shall fail or default in the timely performance
of any material obligation under the Transaction Documents and such failure or
default shall continue uncured for a period of ten (10) Business Days after the
date on which written notice of such failure or default is first given to the
Company.
In the event the Holder delivers an Event Vesting Notice, this Warrant
shall vest with respect to the number of Warrant Shares calculated in accordance
with the formula set forth in Section 3(b), provided, that for purposes of such
calculation, (A) the Adjustment Price shall be deemed to mean the average of the
Per Share Market Values for any 10 consecutive Trading Days
-4-
5
during the 40 consecutive Trading Days preceding the date of the Event, as
selected by the Holder and (B) the Applicable Share Number shall be deemed to
mean (i) prior to the First Vesting Date, 100% of the number of shares of Common
Stock purchased by the Holder pursuant to the Purchase Agreement, (ii) after the
First Vesting Date and prior to the Second Vesting Date, 66 and 2/3% of the
number of shares of Common Stock purchased by the Holder pursuant to the
Purchase Agreement, and (iii) after the Second Vesting Date and prior to the
Third Vesting Date 33 and 1/3% of the number of shares of Common Stock purchased
by the Holder pursuant to the Purchase Agreement. After the Third Vesting Date
the Applicable Share Number shall equal zero. If the Holder shall have elected
to require the Company to redeem the Vested Warrant Shares pursuant to the terms
hereof, the Company shall pay the Mandatory Redemption Price no later than the
fifth day following the date of the delivery of the Event Vesting Notice.
Interest shall accrue on the Mandatory Redemption Price from the seventh day
after such amount is due (being the date of an Event of Default) through the
date of prepayment in full thereof at the rate of 18% per annum (or such lesser
maximum amount that is permitted to be paid by applicable law), to accrue daily
from the date such payment is due hereunder through and including the date of
payment.
(e) Subject to Sections 3(a) and (b), this Warrant shall be exercisable
by the registered Holder on any Business Day before 6:30 P.M., New York City
time, at any time and from time to time on or after the date hereof to and
including the Expiration Date, provided, however, that the minimum number of
Warrant Shares as to which this Warrant is being exercised shall not be less
than 50,000 Warrant Shares. At 6:30 P.M., New York City time on the Expiration
Date, the portion of this Warrant not exercised prior thereto shall be and
become void and of no value and, unless vested prior to such Expiration Date,
all rights of the Holder and the obligations of the Company shall terminate in
their entirety.
(f) Subject to Sections 3(a) and (b), this Warrant shall be
exercisable, either in its entirety or, from time to time, for a portion of the
number of Warrant Shares. If less than all of the Warrant Shares which may be
purchased under this Warrant are exercised at any time, the Company shall issue
or cause to be issued, at its expense, a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares for which no exercise has been
evidenced by this Warrant.
(g) This Warrant shall be not be deemed to confer upon the Holder any
right to vote or to consent to or receive notice as a stockholder of the
Company, as such, in respect of any matters whatsoever, or any other rights or
liabilities as a stockholder, prior to the exercise hereof.
-5-
6
4. Delivery of Warrant Shares.
(a) Upon surrender of this Warrant, with the Form of Election to
Purchase attached hereto duly completed and signed, to the Company at its
address for notice set forth in Section 12 and upon payment of the Exercise
Price multiplied by the number of Warrant Shares that the Holder intends to
purchase hereunder, in the manner provided hereunder, all as specified by the
Holder in the Form of Election to Purchase, the Company shall promptly (but in
no event later than 4 Business Days after the Date of Exercise (as defined
herein)) issue or cause to be issued and cause to be delivered to or, if not in
violation of applicable law, upon the written order of the Holder and in such
name or names as the Holder may designate, a certificate for the Warrant Shares
issuable upon such exercise, free of restrictive legends except (in the case of
each of the transfer and the issuance) (i) either in the event that a
registration statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable without volume restrictions pursuant to Rule
144(k) promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), or (ii) if this Warrant shall have been issued pursuant to a written
agreement between the original Holder and the Company, as required by such
agreement. Any person so designated by the Holder to receive Warrant Shares
shall be deemed to have become holder of record of such Warrant Shares as of the
Date of Exercise of this Warrant. The Company shall, if available, use its best
efforts to deliver Warrant Shares hereunder electronically through the
Depository Trust Corporation or another established clearing corporation
performing similar functions if (a) the Holder makes such a request in writing
and (b) the Holder certifies to the Company and the Transfer Agent that it
delivered a prospectus to the buyer in connection with the resale of Warrant
Shares.
A "Date of Exercise" means the date on which the Holders shall
have delivered to the Company (i) this Warrant (or any New Warrant, as
applicable), with the Form of Election to Purchase attached hereto (or attached
to such New Warrant) appropriately completed and duly signed, and (ii) payment
of the Exercise Price for the number of Warrant Shares so indicated by the
holder hereof to be purchased.
(b) If the Company fails to deliver to the Holder certificate or
certificates representing the Warrant Shares pursuant to Section 4(a) by the
fourth (4th) Business Day after the Date of Exercise, the Company shall pay to
such Holder, in cash, as liquidated damages and not as a penalty, $5,000 for
each Business day after such fourth (4th) Business Day until such certificates
are delivered. Nothing herein shall limit the Holder's right to pursue actual
damages for the Company's failure to deliver certificates representing shares of
Common Stock upon exercise within the period specified herein and the Holder
shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief. The exercise of any such rights shall not prohibit the Holder
from seeking to enforce damages pursuant to any other Section hereof or under
applicable law.
-6-
7
(c) In addition to any other rights available to the Holder, if
the Company fails to deliver to the Holder certificate or certificates
representing the Warrant Shares pursuant to Section 4(a) by the fourth (4th)
Business Day after the Date of Exercise, and if after such fourth (4th) Business
Day the Holder purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant
Shares which the Holder anticipated receiving upon such exercise (a "Buy-In"),
then the Company shall pay (1) in cash to the Holder the amount by which (x) the
Holder's total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Warrant Shares that the Company was required to
deliver pursuant to Section 4(b) to deliver to the Holder in connection with the
exercise at issue by (B) the Per Share Market Value at the time of the
obligation giving rise to such purchase obligation and (2) deliver to the Holder
the number of shares of Common Stock that would have been issued had the Company
timely complied with its exercise and delivery obligations under Section 4(b).
For example, if the Holder purchases Common Stock having a total purchase price
of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of
Common Stock with a market price on the date of exercise totaled $10,000, under
clause (A) of the immediately preceding sentence the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In.
(d) The Company's obligations to issue and deliver Warrant Shares
in accordance with the terms hereof are absolute and unconditional, irrespective
of any action or inaction by the Holder to enforce the same, any waiver or
consent with respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of
Warrant Shares. If the Company breaches its obligations under this Warrant,
then, in addition to any other liabilities the Company may have hereunder and
under applicable law, the Company shall pay or reimburse the Holder on demand
for all costs of collection and enforcement (including reasonable attorneys fees
and expenses).
5. Payment of Taxes. The Company will pay all documentary stamp
taxes attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
6. Replacement of Warrant. If this Warrant is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation
-7-
8
hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity, if requested,
satisfactory to the Company. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.
7. Reservation of Warrant Shares. The Company covenants that it will
at all times reserve and keep available out of the aggregate of its authorized
but unissued Common Stock, solely for the purpose of enabling it to issue
Warrant Shares upon exercise of this Warrant as herein provided, the number of
Warrant Shares which are then issuable and deliverable upon the exercise of this
entire Warrant, free from preemptive rights or any other actual contingent
purchase rights of persons other than the Holder (taking into account the
adjustments and restrictions of Section 8). The Company covenants that all
Warrant Shares that shall be so issuable and deliverable shall, upon issuance
and the payment of the applicable Exercise Price in accordance with the terms
hereof, be duly and validly authorized, issued and fully paid and nonassessable.
8. Certain Adjustments. The Purchase Price, the Exercise Price and
number of Warrant Shares issuable upon exercise of this Warrant are subject to
adjustment from time to time as set forth in this Section. In no event shall the
Exercise Price be less than $.001. Upon each such adjustment of the Exercise
Price pursuant to this Section, the Holder shall thereafter prior to the
Expiration Date be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(i) If the Company, at any time while this Warrant is outstanding,
(i) shall pay a stock dividend (except scheduled dividends paid on any preferred
stock which contains a stated dividend rate) or otherwise make a distribution or
distributions on shares of its Common Stock or on any other class of capital
stock payable in shares of Common Stock, (ii) subdivide outstanding shares of
Common Stock into a larger number of shares, or (iii) combine outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding before such event
and of which the denominator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding after such event. Any adjustment
made pursuant to this Section shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision or combination, and shall apply to
successive subdivisions and combinations.
(ii) In case of any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or
-8-
9
property, then the Holder shall have the right thereafter to exercise this
Warrant only into the shares of stock and other securities and property
receivable upon or deemed to be held by holders of Common Stock following such
reclassification, transfer or share exchange, and the Holder shall be entitled
upon such event to receive such amount of securities or property equal to the
amount of Warrant Shares such Holder would have been entitled to had such Holder
exercised this Warrant immediately prior to such reclassification or share
exchange. The terms of any such reclassification or share exchange shall include
such terms so as to continue to give to the Holder the right to receive the
securities or property set forth in this Section 8(b) upon any exercise
following any such reclassification or share exchange.
(iii) If the Company, at any time while this Warrant is outstanding,
shall distribute to all holders of Common Stock (and not to holders of this
Warrant) evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security (excluding those referred to in Sections
8(i), (ii) and (iv)), then in each such case the Exercise Price shall be
determined by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Exercise Price
determined as of the record date mentioned above, and of which the numerator
shall be such Exercise Price on such record date less the then fair market value
at such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock on a fully
diluted basis as determined by the Company's independent certified public
accountants that regularly examines the financial statements of the Company (an
"Appraiser").
(iv) In case of any (1) merger or consolidation of the Company with or
into another Person, or (2) sale by the Company of more than one-half of the
assets of the Company in one or a series of related transactions, the Holder
shall have the right thereafter to (A) exercise this Warrant for the shares of
stock and other securities, cash and property receivable upon or deemed to be
held by holders of Common Stock following such merger, consolidation or sale,
and the Holder shall be entitled upon such event or series of related events to
receive such amount of securities, cash and property as the Common Stock for
which this Warrant could have been exercised immediately prior to such merger,
consolidation or sales would have been entitled or (B) in the case of a merger
or consolidation, require the surviving entity to issue warrants equal to the
number of Warrant Shares to which this Warrant then permits, which new warrant
shall be identical to this Warrant mutatis mutandis. If the Holder shall elect
choice (B) in the immediately preceding sentence, the Company or the surviving
entity (as the case may be) may, by the Business Day preceding the consummation
of the business combination at issue, retire this Warrant by paying to the
Holder, in cash, the Black Scholes value of this Warrant (which value must be
agreed between the parties). Failure to so elect or pay such amount prior to the
Business Day preceding the consummation of the business combination at issue
shall be deemed an election by the Company and the surviving entity to cause the
surviving entity to issue the warrants contemplated in (B) above. In the case of
clause (B), the exercise price for such new warrant shall be based upon the
amount of securities, cash and property that each share of Common Stock would
receive in such transaction and the Exercise Price of this
-9-
10
Warrant immediately prior to the effectiveness or closing date for such
transaction. The terms of any such merger, sale or consolidation shall include
such terms so as continue to give the Holder the right to receive the
securities, cash and property set forth in this Section upon any conversion or
redemption following such event. This provision shall similarly apply to
successive such events.
(v) For the purposes of this Section 8, the following clauses shall
also be applicable:
(i) Record Date. In case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock or in securities
convertible or exchangeable into shares of Common Stock, or (B) to subscribe for
or purchase Common Stock or securities convertible or exchangeable into shares
of Common Stock, then such record date shall be deemed to be the date of the
issue or sale of the shares of Common Stock deemed to have been issued or sold
upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase, as the
case may be.
(ii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock.
(vi) All calculations under this Section 8 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. No
adjustment in the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least five cents ($0.05) in such price;
provided, however, that any adjustments which by reason of this Warrant are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment required to be made hereunder.
(vii) Upon the occurrence of each adjustment or readjustment of
the Exercise price pursuant to this Section 8, the Company at its expense will
promptly compute such adjustment or readjustment in accordance with the terms of
this Warrant and prepare a certificate setting forth such adjustment or
readjustment, including a statement of the adjusted Exercise Price or adjusted
number of shares of Common Stock, if any, issuable upon exercise of each
Warrant, describing the transactions giving rise to such adjustments and showing
in detail the facts upon which such adjustment or readjustment is based. Upon
written request, the Company will forthwith mail, by first class mail, postage
prepaid, a copy of each such certificate to the Holder of this Warrant at the
address of such Holder as shown on the books of the Company, and to its Transfer
Agent.
(viii) If (i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; (ii) the Company shall declare a special
nonrecurring cash dividend on or a redemption of its Common Stock; (iii) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; (iv) the approval of any stockholders of the Company
shall be required in
-10-
11
connection with any reclassification of the Common Stock, any consolidation or
merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share exchange
whereby the Common Stock is converted into other securities, cash or property;
or (v) the Company shall authorize the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then the Company shall cause to be
mailed to each Holder at their last addresses as they shall appear upon the
Warrant Register, at least 15 calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding up; provided, that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice.
9. Payment of Exercise Price. The Holder shall pay the Exercise
Price in one of the following manners:
(a) Cash Exercise. The Holder may deliver immediately available
funds; or
(b) Cashless Exercise. At any time after the earlier to occur of
the Effectiveness Date (as defined in the Registration Rights Agreement) and the
date the initial registration statement filed pursuant to the Registration
Rights Agreement is declared effective by the Commission, when a registration
statement covering the resale of the Warrant Shares and naming the Holder as a
selling stockholder thereunder is not then effective, the Holder may surrender
this Warrant to the Company together with a notice of cashless exercise, in
which event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be issued
to the Holder.
Y = the number of Warrant Shares with respect to which
this Warrant is being exercised.
A = the average of the closing sale prices of the Common
Stock for the five (5) trading days immediately prior to
(but not including) the Date of
-11-
12
Exercise as reported by Bloomberg Information Systems,
Inc. (or any successor to its function of reporting
stock prices).
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have been
commenced, on the issue date.
10. Certain Exercise Restrictions.
(a) A Holder may not exercise this Warrant to the extent such
exercise would result in the Holder, together with any affiliate thereof,
beneficially owning (as determined in accordance with Section 13(d) of the
Exchange Act and the rules promulgated thereunder) in excess of 4.999% of the
then issued and outstanding shares of Common Stock, including shares issuable
upon such exercise and held by such Holder after application of this Section.
Since the Holder will not be obligated to report to the Company the number of
shares of Common Stock it may hold at the time of an exercise hereunder, unless
the exercise at issue would result in the issuance of shares of Common Stock in
excess of 4.999% of the then outstanding shares of Common Stock without regard
to any other shares which may be beneficially owned by the Holder or an
affiliate thereof, the Holder shall have the authority and obligation to
determine whether the restriction contained in this Section will limit any
particular exercise hereunder and to the extent that the Holder determines that
the limitation contained in this Section applies, the determination of which
portion of this Warrant is exercisable shall be the responsibility and
obligation of the Holder. If the Holder has delivered a Form of Election to
Purchase for a number of Warrant Shares that, without regard to any other shares
that the Holder or its affiliates may beneficially own, would result in the
issuance in excess of the permitted amount hereunder, the Company shall notify
the Holder of this fact and shall honor the exercise for the maximum portion of
this Warrant permitted to be exercised on such Date of Exercise in accordance
with the periods described herein and, at the option of the Holder, either keep
the portion of the Warrant tendered for exercise in excess of the permitted
amount hereunder for future exercises or return such excess portion of the
Warrant to the Holder. The provisions of this Section may be waived by a Holder
(but only as to itself and not to any other Holder) upon not less than 61 days
prior notice to the Company. Other Holders shall be unaffected by any such
waiver.
(b) If the Company Stock is then listed for trading on the
Nasdaq or the Nasdaq SmallCap Market and the Company has not obtained the
Shareholder Approval (as defined below), then the Company may not, upon exercise
of this Warrant, issue in excess of the product of (i) 5,261,211 Warrant Shares
(which equals 19.999% of the number of shares of Common Stock outstanding on
July ___, 2000) and (ii) the quotient obtained by dividing (x) the number of
shares of Common Stock issued and sold to the original Holder on the Closing
Date by (y) the number of shares of Common Stock issued and sold by the Company
on the Closing Date (such number of shares, the "Issuable Maximum"). If any
Holder shall no longer hold Warrants then such Holder's
-12-
13
remaining portion of the Issuable Maximum shall be allocated pro-rata among the
remaining Holders. If on any Date of Exercise (A) the Company Stock is listed
for trading on the Nasdaq or the Nasdaq SmallCap Market, (B) the Exercise Price
then in effect is such that the aggregate number of shares of Common Stock that
would then be issuable upon exercise in full of this Warrant, together with any
shares of Common Stock previously issued upon exercise of this Warrant, would
equal or exceed the Issuable Maximum, and (C) the Company shall not have
previously obtained the vote of shareholders, if any, as may be required by the
applicable rules and regulations of the Nasdaq Stock Market to approve the
issuance of shares of Common Stock in excess of the Issuable Maximum pursuant to
the terms hereof (the "Shareholder Approval"), then the Company shall issue to
the Holder a number of shares of Common Stock equal to the Issuable Maximum and,
with respect to the shares whose issuance would result in an issuance of shares
of Common Stock in excess of the Issuable Maximum, (the "Excess Warrant
Shares"), the Holder shall have the option to require the Company to either (1)
use its best efforts to obtain the Shareholder Approval applicable to such
issuance as soon as possible, but in any event no later than 60 days after such
request (such 60th day, the "Target Date") or (2) pay to the Holder, within one
(1) Trading Day from the request therefor, an amount in cash equal to the
product of (x) the Excess Warrant Shares multiplied by (y) the closing sales
price of the Common Stock on (a) the Target Date or (b) the Date of Exercise
giving rise to the obligation to seek Shareholder Approval, whichever is greater
(the "Cash Payment"). In the event the Holder has elected to require the Company
to seek the Shareholder Approval pursuant to clause (1) of the immediately
preceding sentence and the Company does not obtain the Shareholder Approval on
or prior to the Target Date, then, on the Target Date, the Company shall pay the
Cash Payment to the Holder. If the Company fails to pay the Cash Payment in full
pursuant to this Section within seven (7) days after the date payable, the
Company will pay interest on such amount at a rate of 18% per annum, or such
lesser maximum amount that is permitted to be paid by applicable law, to the
Holder, accruing daily from the date payable until such amount, plus all such
interest thereon, is paid in full. The Company and the Holder understand and
agree that shares of Common Stock issued upon exercise of this Warrant and then
held by the Holder or an affiliate thereof may not cast votes or be deemed
outstanding for purposes of any vote to obtain the Shareholder Approval.
11. [Left intentionally blank]
12. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 12, be issuable
on the exercise of this Warrant, the Company shall pay an amount in cash equal
to the Exercise Price multiplied by such fraction.
13. Notices. Any and all notices or other communications or
deliveries hereunder shall be in writing and shall be deemed given and effective
on the earliest of (i) the date of
-13-
14
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 6:30 P.M. (New
York City time) on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section later than 6:30 P.M. (New
York City time) on any date and earlier than 11:59 P.M. (New York City time) on
such date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such notice is required to be given. The addresses for such
communications shall be: (i) if to the Company, to 630 8 Avenue, S.W. Calgary,
Alberta, Canada T2P 1G6, facsimile: (403) 209-6122, attention Chief Financial
Officer, and facsimile: (403) 209-6125, attention General Counsel (except for
exercise notices) or (ii) if to the Holder, to the Holder at the address or
facsimile number appearing on the Warrant Register or such other address or
facsimile number as the Holder may provide to the Company in accordance with
this Section.
14. Warrant Agent.
(a) The Company shall serve as warrant agent under this Warrant.
Upon thirty (30) days' notice to the Holder, the Company may appoint a new
warrant agent.
(b) Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any consolidation to which
the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.
15. Miscellaneous.
(a) This Warrant shall be binding on and inure to the benefit of
the parties hereto and their respective successors and assigns. This Warrant may
be amended only in writing signed by the Company and the Holder and their
successors and assigns.
(b) Subject to Section 15(a), above, nothing in this Warrant
shall be construed to give to any person or corporation other than the Company
and the Holder any legal or equitable right, remedy or cause under this Warrant.
This Warrant shall inure to the sole and exclusive benefit of the Company and
the Holder.
(c) This Adjustable Warrant shall be governed by, and construed in
accordance with, the laws of the Province of Ontario, Canada. The courts of the
Province of Ontario, Canada
-14-
15
shall have jurisdiction and venue for the adjudication of any civil action
between or among any of them arising out of or relating to this Adjustable
Warrant. The parties to this Agreement hereby irrevocably consent to such
jurisdiction and venue, and hereby irrevocably waive any claim of forum non
conveniens or right to change such venue. Each of the Company and the Holder
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by receiving a copy thereof
sent to the Company at the address in effect for notices to it under this
instrument and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
(d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
(e) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
-15-
16
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
JAWS TECHNOLOGIES, INC.
By:_____________________________________
Name:
Title:
-16-
17
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To Jaws Technologies, Inc.
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase _____________
shares of common stock ("Common Stock"), $.001 par value per share, of Jaws
Technologies, Inc. and, if such Holder is not utilizing the cashless exercise
provisions set forth in this Warrant, encloses herewith $________ in cash,
certified or official bank check or checks, which sum represents the aggregate
Exercise Price (as defined in the Warrant) for the number of shares of Common
Stock to which this Form of Election to Purchase relates, together with any
applicable taxes payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock which the undersigned is entitled
to purchase in accordance with the enclosed Warrant, the undersigned requests
that a New Warrant (as defined in the Warrant) evidencing the right to purchase
the shares of Common Stock not issuable pursuant to the exercise evidenced
hereby be issued in the name of and delivered to:
- -------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated: , Name of Holder:
------------------ -----
(Print)
-------------------------------
(By:)
---------------------------------
(Name:)
(Title:)
18
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant)
19
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of Jaws Technologies,
Inc. to which the within Warrant relates and appoints ________________ attorney
to transfer said right on the books of Jaws Technologies, Inc. with full power
of substitution in the premises.
Dated:
- ---------------, ----
--------------------------------------------------
(Signature must conform in all respects to name
of holder as specified on the face of the Warrant)
---------------------------------------------------
Address of Transferee
---------------------------------------------------
---------------------------------------------------
In the presence of:
- --------------------------
20
Exhibit A
(i) "Adjustment Price" means the average of the Per Share Market Values
for any 10 consecutive Trading Days during the 40 consecutive Trading Days
preceding a Vesting Date (which may include Trading Days prior to the Effective
Date) as selected by the Holder.
(ii) "Applicable Share Number" means 1/3 of the actual number of shares
of Common Stock purchased and paid for by the Holder pursuant to the Purchase
Agreement.
(iii) "Business Day" shall have the meaning set forth in the Purchase
Agreement.
(iv) "Closing Date" shall have the meaning set forth in the Purchase
Agreement.
(v) "Commission" means the Securities and Exchange Commission.
(vi) "Effective Date" the date on which the Underlying Shares
Registration Statement is first declared effective by the Commission.
(vii) "Mandatory Redemption Price" for each Warrant Share to be
redeemed shall equal the sum of (i) 120% multiplied by the greater of the
average of the Per Share Market Values for the five (5) Trading Days preceding
the (A) date of the delivery of the Event Vesting Notice, and (B) date the
Mandatory Redemption Price is paid in full, and (ii) all other amounts, costs,
expenses and liquidated damages due in respect of such Warrant Share.
(viii) "Nasdaq" means the Nasdaq National Market.
(ix) "Per Share Market Value" means on any particular date (a) the
closing bid price per share of the Common Stock on such date on the Nasdaq or on
any Subsequent Market on which the Common Stock is then listed or quoted, as
reported by Bloomberg Information Services, Inc. (or any successor entity
succeeding to its function of reporting prices), or if there is no such price on
such date, then the closing bid price on the Nasdaq or on such Subsequent Market
on the date nearest preceding such date, as reported by Bloomberg Information
Services, Inc. (or any successor entity succeeding to its function of reporting
prices), or (b) if the Common Stock is not then listed or quoted on the Nasdaq
or a Subsequent Market, the closing bid price for a share of Common Stock in the
over-the-counter market, as reported by the National Quotation Bureau
Incorporated or similar organization or agency succeeding to its functions of
reporting prices) at the close of business on such date, or (c) if the Common
Stock is not then reported by the National Quotation Bureau Incorporated (or
similar organization or agency succeeding to its functions of reporting prices),
then the average of the "Pink Sheet" quotes for the relevant conversion period,
as determined in good faith by the Holder, or (d) if the Common Stock is not
then publicly traded the fair market value of a share of Common Stock as
determined by an Appraiser selected in good faith by the Holders of a majority
of the applicable Warrant Shares (the Holders shall select two such Appraisers,
one of which will be a nationally recognized investment banking or accounting
firm, and the Company may then choose one of the two Appraisers selected).
(x) "Purchase Agreement" means the Securities Purchase Agreement, dated
the date hereof to which the Company and the original Holder are parties and
pursuant to which this Warrant was issued.
21
(xi) "Purchase Price" means $5.00 (which number shall be subject to
equitable adjustment for stock splits, recombinations and similar events).
(xii) "Registration Rights Agreement" means the Registration Rights
Agreement, dated the date hereof to which the Company and the original Holder
are parties.
(xiii) "Subsequent Market" shall mean any of the New York Stock
Exchange, American Stock Exchange, Nasdaq SmallCap Market or National Quotation
Bureau, Inc..
(xiv) "Trading Day" means (a) a day on which the Common Stock is traded
on the Nasdaq or on the Subsequent Market on which the Common Stock is then
listed or quoted, as the case may be, or (b) if the Common Stock is not listed
on the Nasdaq or a Subsequent Market, a day on which the Common Stock is traded
in the over-the-counter market, as reported by the OTC Bulletin Board, or (c)
if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the
Common Stock is quoted in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding its functions of reporting prices); provided, that in the event that
the Common Stock is not listed or quoted as set forth in (a), (b) and (c)
hereof, then Trading Day shall mean a Business Day.
(xv) "Transaction Documents" shall have the meaning set forth in the
Purchase Agreement.
(xvi) "Underlying Shares Registration Statement" shall have the meaning
ascribed to it in the Purchase Agreement.