REGISTRATION RIGHTS AGREEMENT
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This Agreement is dated for reference the 15th day of August, 2000.
BETWEEN:
JAWS Technologies, Inc. a corporation duly incorporated pursuant to the
laws of Delaware
("JAWS")
AND:
VENDORS, Michael Pluscauskas and Tyson Macaulay
(the "Vendors")
WHEREAS:
A. JAWS and the Vendors have executed a Share Purchase Agreement dated as of
August 15th, 2000 (the "Share Purchase Agreement"); and
B. it is a condition to the Vendors' obligations under the Share Purchase
Agreement that JAWS and the Vendors enter into this Agreement in order to
provide the Vendors with certain rights to register the JAWS Shares issued
under the Share Purchase Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
recitals and of the mutual covenants and conditions hereinafter contained and
the payment of one dollar made by each party to the other, the receipt and
sufficiency of which is acknowledged by each party, the parties agree as
follows:
1. Registrations Rights. JAWS and the Vendors covenant and agree as follows:
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1.1 Definitions and Interpretation. In this part:
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(a) Forms S-1. The term "Form S-1" means such the form under the U.S.
Securities Act of 1933, as amended (the "Securities Act") as are in
effect on the date hereof or any successor forms under the
Securities Act;
(b) Holder. The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in
accordance with section 1.9 of this Agreement;
(c) Registration. The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and
the declaration or ordering of effectiveness of such registration
statement;
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(d) Registrable Securities. The term "Registrable Securities" means: (i)
the JAWS Shares issued to the Vendors pursuant to the Share Purchase
Agreement, and (ii) any other JAWS Shares issued as (or issuable
upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of, the JAWS Shares
referred to in (i); provided, however, that the foregoing definition
shall exclude in all cases any Registrable Securities sold by a
person in a transaction for or in replacement of, the JAWS Shares
referred to in (i); provided, however, that the foregoing definition
shall exclude in all cases any Registrable Securities sold by a
person in a transaction in which the person's rights under this
Agreement are not assigned. Notwithstanding the foregoing, JAWS
Shares or other securities shall only be treated as Registrable
Securities if and so long as they have not been: (A) sold to or
through a broker or dealer or underwriter in a public distribution
or a public securities transaction, or (B) sold in a transaction
exempt from the registration and prospectus delivery requirements of
the Securities Act under section 4(1) thereof so that all transfer
restrictions, and restrictive legends with respect thereto, if any,
are removed upon the consummation of such sale.
(e) Registrable Securities Outstanding. The number of "Registrable
Securities then outstanding" shall be determined by the number of
JAWS Shares outstanding which are Registrable Securities, and the
number of JAWS Shares issuable pursuant to then exercisable or
convertible securities which are Registrable Securities; and
(f) SEC. The term "SEC" means the U.S. Securities and Exchange
Commission.
1.2 Request for Registration - Long Form Registration - Demand Registration.
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(a) JAWS shall use its reasonable best efforts to effect as soon as
practicable the registration under the Securities Act of all
Registrable Securities which the Holders request to be registered
and in any event not later than one hundred and twenty (120) days
from the date of such request.
1.3 Piggy-Back Registration. If (but without any obligation to do so) JAWS
proposes to register any of its shares under the Securities Act in
connection with the public offering of such securities solely for cash
(other than a registration relating solely to the sale of securities to
participants pursuant to a stock option, stock purchase or similar plan or
an SEC Rule 145 transaction, a registration in which the only shares being
registered are JAWS Shares issuable upon conversion of debt securities
which are also being registered, or any registration on any form which does
not include substantially the same information as would be required to be
included in a registration statement covering the sale of the Registrable
Securities), JAWS shall, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by JAWS, JAWS shall,
subject to the provisions of section 1.6, cause to be registered under the
Securities Act all of the Registrable Securities that each such Holder has
requested to be registered. Each Holder
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shall be entitled to have its Registrable Securities included in an
unlimited number of registrations pursuant to this section 1.3.
1.4 Obligations of JAWS. Whenever required under this section 1 to effect the
registration of any Registrable Securities, JAWS shall, as expeditiously as
reasonably possible:
(a) prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its reasonable best efforts
to cause such registration statement to become effective, and, upon
the request of the Holders of a majority of the Registrable
Securities registered thereunder, keep such registration statement
effective for up to fourteen (14) days;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement;
(c) furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they
may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them;
(d) use its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other
securities or state laws of such jurisdictions as shall be
reasonably requested by the Holders, provided that JAWS shall not be
required in connection therewith or as a condition thereto to
qualify to do business, or to file a general consent to service of
process or to subject itself to taxation in any such states or
jurisdictions;
(e) in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering.
Each Holder participating in such underwriting shall cooperate in
good faith with JAWS in negotiating the underwriting agreement and
enter into and perform its obligations under such an agreement;
(f) notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing, such obligation to continue for one hundred twenty
(120) days;
(g) cause all Registrable Securities registered hereunder to be listed
on each securities exchange on which similar securities issued by
JAWS are then listed;
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(h) provide a transfer agent and registrar for all Registrable
Securities registered hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective
date of such registration; and
1.5 Furnish Information. It shall be a condition precedent to the obligations
of the JAWS to take any action pursuant to this section 1 with respect to
the Registrable Securities of any selling Holder that such Holder furnish
to the JAWS such information regarding the Holder, the Registrable
Securities held by the Holder, and the intended method of disposition of
such securities as shall be required to effect the registration of such
Holder's Registrable Securities.
1.6 Expenses of Registration.
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(a) Demand Registration. All expenses other than: (i) underwriting fees,
discounts and commissions, (ii) stock transfer taxes, and (iii) fees
and disbursements of counsel for the Holders, incurred in connection
with registrations, filings or qualifications pursuant to section
1.2, including (without limitation) all registration, filing and
qualification fees, printers' and accounting fees and fees and
disbursements of counsel for the JAWS, shall be borne by the JAWS;
provided, however, that the JAWS shall not be required to pay for
any expenses of any registration proceeding begun pursuant to
section 1.2 if the registration request is subsequently withdrawn at
the request of the Holders of a majority of the Registrable
Securities to be registered (in which case all participating Holders
shall bear such expenses), unless the Holders of a majority of the
Registrable Securities agree to forfeit their right to a demand
registration pursuant to Section 1.2; provided further, however,
that if at the time of such withdrawal, the Holders have learned of
a material adverse change in the condition, business, or prospects
of the JAWS from that known to the Holders at the time of their
request and have withdrawn the request with reasonable promptness
following disclosure by the JAWS of such material adverse change,
then the Holders shall not be required to pay any of such expenses
and shall retain their rights pursuant to section 1.2.
(b) JAWS Registration. All expenses other than: (i) underwriting fees,
discounts, commissions, (ii) stock transfer taxes, and (iii) fees
and disbursements of counsel for the Holders, incurred in connection
with registrations, filings or qualifications of Registrable
Securities pursuant to section 1.3 for each Holder (which right may
be assigned as provided in Section 1.19), including (without
limitation) all registration, filing, and qualification fees,
printers' and accounting fees and fees and disbursements of counsel
for JAWS, shall be borne by JAWS.
1.7 Indemnification. In the event any Registrable Securities are included in a
registration statement under this section 1:
(a) to the extent permitted by law, JAWS will indemnify and hold
harmless each Holder, any underwriter (as defined in the Securities
Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning
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of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), against any losses, claims, damages,
or liabilities (joint or several) to which they may become subject
under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of
the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement
of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission
or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by JAWS of
the Securities Act, the Exchange Act, any state securities law or
any rule or regulation promulgated under the Securities Act, the
Exchange Act or any state securities law; and JAWS will pay to each
such Holder, underwriter or controlling person, as incurred, any
legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity
agreement contained in this subsection 1.7(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the
consent of JAWS (which consent shall not be unreasonably withheld),
nor shall JAWS be liable to any Holder, underwriter or controlling
person for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by
any such Holder, underwriter or controlling person or from a failure
of such Holder to deliver to a person at or prior to the written
confirmation of a sale a copy of the final prospectus, as amended or
supplemented, if JAWS has previously furnished copies thereof to
such Holder in a timely fashion;
(b) to the extent permitted by law, each selling Holder will indemnify
and hold harmless JAWS, each of its directors and officers who has
signed the registration statement, each person, if any, who controls
JAWS within the meaning of the Securities Act, any underwriter, any
other Holder of selling securities in such registration statement
and any controlling person of any such underwriter or other Holder,
against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject,
under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use and
in connection with such registration; and each such Holder will pay,
as incurred, any legal or other expenses reasonably incurred by any
person intended to be indemnified pursuant to this subsection
1.7(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 1.7(b) shall not
apply to amounts paid in
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settlement of any such loss, claim, damage, liability or action if
such settlement is effected without the consent of the Holder, which
consent shall not be unreasonably withheld; provided, that in no
event shall any indemnity under this subsection 1.7(b) exceed the
net proceeds from the offering received by such Holder, except in
the case of willful fraud by such Holder;
(c) promptly after receipt by an indemnified party under this section
1.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under
this section 1.7, deliver to the indemnifying party a written notice
of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an
indemnified party (together with all other indemnified parties which
may be represented without conflict by one counsel) shall have the
right to retain one separate counsel, with the reasonable fees and
expenses to be paid by the indemnifying party, if representation of
such indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to
deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action, if such failure is
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under
this section 1.7, but the omission so to deliver written notice to
the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this section
1.7;
(d) if the indemnification provided for in this Section 1.7 is held by a
court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim damage or expense
referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to
the amount paid or payable by such indemnified party as a result of
such loss, liability, claim, damage, or expense in such proportion
as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such
loss, liability, claim, damage or expense as well as any other
relevant equitable considerations; provided, that in no event shall
any contribution by a Holder under this Subsection 1.7(d) exceed the
net proceeds from the offering received by such Holder, except in
the case of willful fraud by such Holder. The relative fault of the
indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or
prevent such statement or omission;
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(e) notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the
provisions in the underwriting agreement shall control; and
(f) the obligations of JAWS and Holders under this Section 1.7 shall
survive the completion of any offering of Registrable Securities in
a registration statement under this Section 1, and otherwise.
1.8 Reports Under Securities Exchange Act of 1934. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any
time permit a Holder to sell securities of JAWS to the public without
registration or pursuant to a registration on Form S-1, JAWS agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety
(90) days after the effective date of the first registration
statement filed by JAWS for the offering of its securities to the
general public for as long as JAWS remains subject to the periodic
reporting requirements under Sections 13 or 15(d) of the Exchange
Act;
(b) take such action, including the voluntary registration of its JAWS
Shares under Section 12 of the Exchange Act, as is necessary to
enable the Holders to utilize Form S- 1 or Form S-3 for the sale of
their Registrable Securities, such action to be taken as soon as
practicable after the end of the fiscal year in which the
registration statement filed by JAWS is declared effective;
(c) file with the SEC in a timely manner all reports and other documents
required of JAWS under the Securities Act and the Exchange Act; and
(d) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request: (i) a written statement by JAWS
that it has complied with the reporting requirements of SEC Rule 144
(at any time after ninety (90) days after the effective date of the
first registration statement filed by JAWS), the Securities Act and
the Exchange Act (at any time after it has become subject to such
reporting requirements), or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-1 or Form S-3 (at any
time after it so qualifies), (ii) a copy of the most recent annual
or quarterly report of JAWS and such other reports and documents so
filed by JAWS, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without
registration or pursuant to such form.
1.9 Assignment of Registration Rights. The rights to cause JAWS to register
Registrable Securities pursuant to this section 1 may be assigned (but only
with all related obligations) to a transferee or assignee of all of the
Registrable Securities held by such Holder, provided JAWS is, within a
reasonable time after such transfer, furnished with
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written notice of the name and address of such transferee or assignee and
the securities with respect to which such registration rights are being
assigned, subject to assumption by the assignee in writing of the
corresponding obligations hereunder; and provided, further, that such
assignment shall be effective only if immediately following such transfer
the further disposition of such securities by the transferee or assignee is
restricted under the Securities Act.
2. Miscellaneous.
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2.1 Successors and Assigns. Except as otherwise provided in this Agreement, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective permitted successors and assigns of the parties
(including transferees of any of the JAWS Shares or JAWS Shares issued upon
conversion thereof or any other Registrable Securities). Nothing in this
Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
2.2 Amendments and Waivers. Any term of this Agreement may be amended or waived
only with the written consent of each party. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each
holder of Registrable Securities then outstanding, each future holder of
all such Registrable Securities, and JAWS.
2.3 Notices. Unless otherwise provided, any notice required or permitted by
this Agreement shall be in writing and shall be deemed sufficient upon
delivery, when delivered personally or by overnight courier or sent by
telegram or fax, or forty-eight (48) hours after being deposited in the
Canadian mail, as certified or registered mail, with postage prepaid, and
addressed to the party to be notified at such party's address or fax number
as set forth below or as subsequently modified by written notice.
2.4 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then:
(i) such provision shall be excluded from this Agreement, (ii) the balance
of the Agreement shall be interpreted as if such provision were so
excluded, and (iii) the balance of the Agreement shall be enforceable in
accordance with its terms.
2.5 Governing Law. This Agreement and all acts and transactions pursuant hereto
shall be governed, construed and interpreted in accordance with the laws of
the Province of Ontario, without giving effect to principles of conflicts
of laws. Any dispute arising under or in relation to this Agreement shall
be resolved in the courts of Ontario and each of the parties hereto attorns
to the exclusive jurisdiction of such courts.
2.6 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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2.7 Titles and Subtitles. The title and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement. In this Agreement, unless the context
otherwise requires, words importing the singular include the plural and
vice versa.
The Parties have executed this Registration Rights Agreement as of the date
first above written.
JAWS Technologies, Inc.
Per:____________________________
Authorized Signatory
VENDORS
Per:____________________________
Michael Pluscauskas
Per:____________________________
Tyson Macaulay
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