SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)
(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
JAWZ Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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JAWZ INC.
12 Concorde Place, Suite 900
Toronto, Ontario, Canada M3C 3T1
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held on March 16, 2001
The Special Meeting of Stockholders of JAWZ Inc. (the "Company") will be
held at the offices of Paul, Hastings, Janofsky & Walker LLP, 399 Park Avenue,
31st Floor, Conference Rooms 3108 and 3109, New York, New York 10022, on Friday,
March 16, 2001 at 4:00 p.m., local time, to consider and act upon the following
matters:
1. To consider and vote upon one proposal to approve seven separate
amendments to the Certificate of Incorporation of the Company to
enable the Company to effect one or more reverse stock splits, ranging
from a one-for-four reverse stock split to a one-for-ten reverse stock
split of all the issued and outstanding shares of the Company's common
stock, par value $0.001 per share, in order to seek to maintain the
listing of our common stock on the NASDAQ National Market. The Board
of Directors may abandon any one or more of the amendments or make one
or more of the amendments effective by filing such amendment with the
Secretary of State of the State of Delaware at such time or times as
the Board of Directors of the Company determines to be necessary in
order to seek to maintain the listing of our common stock on the
NASDAQ National Market. If after the filing of one amendment with the
Secretary of State of the State of Delaware, the Company again fails
to comply with NASDAQ National Market Board listing requirements
regarding share price, it may file one or more of the other amendments
as necessary to seek to comply with the NASDAQ National Market Board
listing requirements within the eight months following the approval of
these amendments; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on January 26, 2001, are
entitled to notice of, and to vote at, the meeting. A list of stockholders
eligible to vote at the special meeting will be available for examination by any
stockholder who is present at the special meeting and at the principal place of
business of the Company at Suite 400, 630 - 8th Avenue, S.W., Calgary, Alberta,
T2P 1G6, during ordinary business hours during the ten day period prior to the
special meeting for any purpose germane to the meeting. The stock transfer books
of the Company will remain open for the purchase and sale of the Company's
common stock, par value $.001 per share. All stockholders are cordially invited
to attend the meeting.
By Order of the Board of Directors
/s/ Vikki Robinson
Vikki Robinson, Secretary
February 22, 2001
Calgary, Alberta
Canada
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY CARD AND PROMPTLY MAIL IT IN THE ENCLOSED ENVELOPE IN ORDER
TO ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE NEED BE
AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
JAWZ INC.
12 Concorde Gate, Suite 900
Toronto, Ontario, Canada M3G 3N6
Proxy Statement for the Special Meeting of Stockholders
To Be Held on March 16, 2001
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of JAWZ Inc. (the "Company" or "JAWZ") for use
at the Special Meeting of Stockholders to be held on March 16, 2001 at 4:00
p.m., local time, at the offices of Paul, Hastings, Janofsky & Walker LLP, 399
Park Avenue, Conference Rooms 3108 and 3109, New York, New York 10022, and at
any adjournment or adjournments of that meeting (the "Special Meeting"). All
proxies will be voted in accordance with the instructions contained therein, and
if no choice is specified, the proxies will be voted in favor of the matters set
forth in the accompanying Notice of Meeting. Any proxy may be revoked by a
stockholder at any time before it is voted by delivery of written notice of
revocation or a duly executed proxy bearing a later date, to the Secretary of
the Company, or by attending the Special Meeting and voting it in person.
Voting Securities and Votes Required
On January 26, 2001, the record date for the determination of stockholders
entitled to notice of and to vote at the meeting, there were outstanding and
entitled to vote an aggregate of 46,611,893 shares of common stock of the
Company, par value $0.001 per share ("Common Stock"), one share of special
series A preferred voting stock (the "Special Series A Preferred Voting Stock"),
having a par value of $0.001 per share and one share of special series B
preferred voting stock (the "Special Series B Preferred Voting Stock"), having a
par value of $0.001 per share. Each share of Common Stock is entitled to one
vote, the one share of Special Series A Preferred Voting Stock is entitled to a
number of votes equal to the number of outstanding exchangeable shares of the
Company's subsidiary, JAWS Acquisition Corp., an Alberta corporation ("JAC"),
which are not owned by the Company or an entity controlled by the Company, and
the one share of Special Series B Preferred Voting Stock is entitled to a number
of votes equal to the number of outstanding exchangeable shares of the Company's
subsidiary, JAWS Acquisition Canada Corp., an Alberta corporation ("JACC"),
which are not owned by the Company or an entity controlled by the Company. On
January 26, 2001 (the record date for the determination of stockholders entitled
to notice of and to vote at the Special Meeting), there were 1,932,181
exchangeable shares of JAC outstanding that were not owned by the Company or an
entity controlled by the Company and there were 3,962,370 exchangeable shares of
JACC outstanding that were not owned by the Company or an entity controlled by
the Company. Accordingly, an aggregate of 52,506,444 votes may be cast on the
matters set forth in the Notice of Special Meeting (consisting of 46,611,893
votes that may be cast in respect of the Common Stock and 5,894,551 votes that
may be cast in respect of the share of Special Series A Preferred Voting Stock
and Special Series B Preferred Voting Stock). Holders of shares of Common Stock
and the holder of the Special Series A Preferred Voting Stock and Special Series
B Voting Stock are to vote together as a single class on all matters submitted
to the Company's stockholders for approval, including the proposed amendments.
Under the Company's Bylaws, the holders of a majority of the voting power
of the outstanding shares of capital stock of the Company entitled to vote at
the meeting (including the shares represented by the Special Series A Preferred
Voting Stock and the Special Series B Preferred Voting Stock) shall constitute a
quorum with respect to the Special Meeting. Stockholders holding shares of
capital stock of the Company who are present in person or represented by proxy
(including stockholders who abstain from voting their
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shares or who do not vote with respect to one or more of the matters presented
for stockholder approval) will be counted for purposes of determining whether a
quorum is present.
The affirmative vote of the holders of a majority of the outstanding
capital stock of the Company (including the shares of Common Stock and the
shares represented by the Special Series A Preferred Voting Stock and the
Special Series B Preferred Voting Stock) entitled to vote on each of the
amendments is required for each of the seven proposed amendments of the
certificate of incorporation of the Company.
Stockholders who abstain from voting as to a particular matter, and shares
held in "street name" by brokers or nominees who indicate on their proxies that
they do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter. Accordingly,
abstentions and "broker non-votes" will have the effect of a vote "No" on the
particular matter.
Stock Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information, as of January 26,
2001, with respect to any person (including any "group," as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) who is known to the Company to be the beneficial owner of more
than five percent of any class of the Company's voting securities, and as to
those shares of the Company's equity securities beneficially owned by each of
its directors, the executive officers of the Company and all of its directors
and executive officers as a group. Unless otherwise specified in the table
below, such information, other than information with respect to the directors
and officers of the Company, is based on a review of statements filed, with the
Securities and Exchange Commission (the "Commission") pursuant to Sections
13(d), 13(f), and 13(g) of the Exchange Act with respect to the Company's Common
Stock. As of January 26, 2001, there were 46,611,893 shares of Common Stock
outstanding, 1,932,181 shares of Common Stock reserved for issuance to holders
of JAC exchangeable shares and 3,962,370 shares of Common Stock reserved for
issuance to holders of JACC exchangeable shares.
The number of shares of Common Stock beneficially owned by each person is
determined under the rules of the Commission, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under such
rules, beneficial ownership includes any shares as to which such person has sole
or shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days after January 26, 2001
through the exercise of any stock option, warrant or other right. Unless
otherwise indicated, each person has sole investment and voting power (or shares
such power with his or her spouse) with respect to the shares set forth in the
following table. The inclusion herein of any shares deemed beneficially owned
does not constitute an admission of beneficial ownership of those shares.
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Name and Address of Beneficial Owner(1) Number of Shares Percent
Beneficially Owned of Class (14)
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Robert J. Kubbernus (2) 2,693,750 5.6%
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Julia L. Johnson (3) 256,408 0.55%
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Arthur Wong (4) 313,208 0.67%
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Riaz Mamdani (5) 1,514,422 3.1%
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Dr. James Canton (6) 50,000 0.11%
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John S. Burns(7) 50,000 0.11%
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Raghu Kilambi(8) 50,000 0.11%
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Robert Mahood(9) 388,105 0.83%
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Peter Labrinos(10) 402,920 0.86%
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Greg Surbey 5,900 0.01%
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All directors and executive
officers as a group (10 persons) 5,724,713 11.5%
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Thomson Kernaghan & Co. Limited (11) 4,252,716 9.1%
365 Bay Street, 10th floor
Toronto, Ontario
Canada M5H 2V2
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Strong River Investments, Inc.(12) 4,951,889 9.6%
C/O Gonzales-Ruiz & Aleman (BVI) Limited
Wickhams Cay I, Vatnerpool Plaza
PO Box 873
Road Town, Tortola B.V.I.
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Bay Harbor Investments, Limited (12) 5,679,977 11%
C/O Gonzales-Ruiz & Aleman (BVI) Limited
Wickhams Cay I, Vanterpool Plaza
PO Box 873
Road Town, Tortola B.V.I.
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CALP II Limited Partnership(13) 10,900,000 21.4%
c/o Forum Fund Services
Washington Mall, 3rd Floor
Church Street, Hamilton HM11, Bermuda
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(1) Unless otherwise stated, the business address of each of the stockholders
named in the table is C/O JAWZ Inc., Suite 400, 630-8th Ave. SW, Calgary,
Alberta T2P 1G6. Except as otherwise indicated, to our knowledge, the persons
named in the table have sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by them.
(2) Includes 350,000 shares issuable upon the exercise of options exercisable
at $0.48 per share until July 23, 2002. Includes 350,000 shares issuable upon
the exercise of options exercisable at $1.50 per share until December 31, 2002.
Includes 250,000 shares upon the exercise of options exercisable at $1.88 per
share until December 31, 2002. Includes 350,000 shares issuable upon the
exercise of options exercisable at $0.34 per share until January 8, 2005.
(3) Includes 150,000 shares issuable upon the exercise of options exercisable
at $0.48 per share until December 31, 2003.
(4) Includes 200,000 shares issuable upon the exercise of options exercisable
at $0.48 per share until December 31, 2003.
(5) Includes 250,000 shares issuable upon the exercise of options exercisable
at $0.87 per share until December 31, 2002. Includes 200,000 shares issuable
upon the exercise of options exercisable at $1.50 per
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share until December 31, 2002. Includes 250,000 shares issuable upon the
exercise of options exercisable at $1.88 per share until December 31, 2002.
Includes 300,000 shares issuable upon the exercise of options at $0.34 per share
until January 8, 2005.
(6) Includes 50,000 shares issuable upon the exercise of options exercisable
at $3.28 per share until December 31, 2003.
(7) Includes 50,000 shares issuable upon the exercise of options exercisable
at $5.88 per share until December 31, 2003.
(8) Includes 50,000 shares issuable upon the exercise of options exercisable
at $0.44 per share until December 31, 2003.
(9) Includes 35,000 shares issuable upon the exercise of options exercisable
at $2.72 per share until November 1, 2003, 176,905 exchangeable shares and
176,200 exchangeable warrants in Jaws Acquisition Corp ("JAC"), a wholly owned
subsidiary of JAWZ Inc. Each JAC exchangeable share and each JAC warrant is
exchangeable or exercisable for one share in JAWZ Inc., capital stock.
(10) Includes 27,880 shares issuable upon the exercise of options exercisable
at $2.69 per share until December 31, 2003 and 73,035 exchangeable shares in
Jaws Acquisition Canada Corp. ("JACC"), a wholly owned subsidiary of JAWZ Inc.
Each JACC exchangeable share is exchangeable for one share of JAWZ Common Stock.
(11) Includes 276,466 shares of Common Stock issuable upon the exercise of
warrants.
(12) Includes 2,349,423 shares of Common Stock issuable upon the exercise of
adjustable warrants. Includes 2,602,466 shares of Common Stock issuable upon the
exercise of adjustable warrants, this calculation assumes a share price of
$0.40. Enright Investment Management Corp., of which Avi Vigder is managing
director, has voting and investment power over the shares beneficially owned by
Strong River Investments, Inc. and Bay Harbor Investments, Inc.
(13) Includes 4,000,000 shares of Common Stock issuable upon the exercise of
adjustable warrants. Includes 300,000 shares of Common Stock issuable upon the
exercise of warrants. The General Partner of CALP II is VMH Management Ltd., a
private Ontario corporation which has the voting and investment power over the
shares beneficially owned by CALP II Limited Partnership. The directors and
officers of VMH Management Ltd., are Mark Valentine, Ian McKinnon and Stephen
Hicks.
(14) Percent of Ownership is calculated in accordance with the Securities and
Exchange Commission's Rule 13d -3(d)(1).
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PROPOSAL NO. 1: APPROVAL OF AMENDMENTS TO CERTIFICATE
OF INCORPORATION TO EFFECT REVERSE STOCK SPLITS
General
The persons named in the enclosed proxy will vote to approve each of the
separate seven charter amendments to the Certificate of Incorporation of the
Company effecting a reverse split of the Company's Common Stock, unless the
proxy is marked otherwise. If a stockholder returns a proxy without contrary
instructions, the persons named as proxies will vote to approve each of the
following amendments to the Certificate of Incorporation of the Company.
The Board of Directors of the Company has unanimously adopted and declared
advisable, each of the following amendments to Article Fourth of the Company's
Certificate of Incorporation. Each of the separate amendments to the Certificate
of Incorporation of the Company approved by the Board of Directors and for which
the Company is seeking your approval is set forth below. As reflected on the
enclosed proxy card relating to the Special Meeting, stockholders may approve
all, none or one or more of the proposed amendments.
(a) Upon this Certificate of Amendment to the Certificate of
Incorporation of the Corporation becoming effective pursuant to the
General Corporation Law of the State of Delaware (the "Effective
Time"), each share of the Corporation's common stock, par value $.001
per share (the "Old Common Stock"), issued and outstanding
immediately prior to the Effective Time, will be automatically
reclassified as and converted into one fourth (1/4) of a share of
common stock, par value $.001 per share, of the Corporation (the "New
Common Stock"). Any stock certificate that, immediately prior to the
Effective Time, represented shares of the Old Common Stock will, from
and after the Effective Time, automatically and without the necessity
of surrendering the same for exchange, represent the number of whole
shares of the New Common Stock as equals the product obtained by
multiplying the number of shares of Old Common Stock represented by
such certificate immediately prior to the Effective Time by one
fourth (1/4) rounded up to the next highest whole number; or
(b) Upon this Certificate of Amendment to the Certificate of
Incorporation of the Corporation becoming effective pursuant to the
General Corporation Law of the State of Delaware (the "Effective
Time"), each share of the Corporation's common stock, par value $.001
per share (the "Old Common Stock"), issued and outstanding
immediately prior to the Effective Time, will be automatically
reclassified as and converted into one fifth (1/5) of a share of
common stock, par value $.001 per share, of the Corporation (the "New
Common Stock"). Any stock certificate that, immediately prior to the
Effective Time, represented shares of the Old Common Stock will, from
and after the Effective Time, automatically and without the necessity
of surrendering the same for exchange, represent the number of whole
shares of the New Common Stock as equals the product obtained by
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multiplying the number of shares of Old Common Stock represented by
such certificate immediately prior to the Effective Time by one fifth
(1/5) rounded up to the next highest whole number; or
(c) Upon this Certificate of Amendment to the Certificate of
Incorporation of the Corporation becoming effective pursuant to the
General Corporation Law of the State of Delaware (the "Effective
Time"), each share of the Corporation's common stock, par value $.001
per share (the "Old Common Stock"), issued and outstanding
immediately prior to the Effective Time, will be automatically
reclassified as and converted into one sixth (1/6) of a share of
common stock, par value $.001 per share, of the Corporation (the "New
Common Stock"). Any stock certificate that, immediately prior to the
Effective Time, represented shares of the Old Common Stock will, from
and after the Effective Time, automatically and without the necessity
of surrendering the same for exchange, represent the number of whole
shares of the New Common Stock as equals the product obtained by
multiplying the number of shares of Old Common Stock represented by
such certificate immediately prior to the Effective Time by one sixth
(1/6) rounded up to the next highest whole number; or
(d) Upon this Certificate of Amendment to the Certificate of
Incorporation of the Corporation becoming effective pursuant to the
General Corporation Law of the State of Delaware (the "Effective
Time"), each share of the Corporation's common stock, par value $.001
per share (the "Old Common Stock"), issued and outstanding
immediately prior to the Effective Time, will be automatically
reclassified as and converted into one seventh (1/7) of a share of
common stock, par value $.001 per share, of the Corporation (the "New
Common Stock"). Any stock certificate that, immediately prior to the
Effective Time, represented shares of the Old Common Stock will, from
and after the Effective Time, automatically and without the necessity
of surrendering the same for exchange, represent the number of whole
shares of the New Common Stock as equals the product obtained by
multiplying the number of shares of Old Common Stock represented by
such certificate immediately prior to the Effective Time by one
seventh (1/7) rounded up to the next highest whole number; or
(e) Upon this Certificate of Amendment to the Certificate of
Incorporation of the Corporation becoming effective pursuant to the
General Corporation Law of the State of Delaware (the "Effective
Time"), each share of the Corporation's common stock, par value $.001
per share (the "Old Common Stock"), issued and outstanding
immediately prior to the Effective Time, will be automatically
reclassified as and converted into one eighth (1/8) of a share of
common stock, par value $.001 per share, of the Corporation (the "New
Common Stock"). Any stock certificate that, immediately prior to the
Effective Time, represented shares of the Old Common Stock will, from
and after the
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Effective Time, automatically and without the necessity of
surrendering the same for exchange, represent the number of whole
shares of the New Common Stock as equals the product obtained by
multiplying the number of shares of Old Common Stock represented by
such certificate immediately prior to the Effective Time by one
eighth (1/8) rounded up to the next highest whole number; or
(f) Upon this Certificate of Amendment to the Certificate of
Incorporation of the Corporation becoming effective pursuant to the
General Corporation Law of the State of Delaware (the "Effective
Time"), each share of the Corporation's common stock, par value $.001
per share (the "Old Common Stock"), issued and outstanding
immediately prior to the Effective Time, will be automatically
reclassified as and converted into one ninth (1/9) of a share of
common stock, par value $.001 per share, of the Corporation (the "New
Common Stock"). Any stock certificate that, immediately prior to the
Effective Time, represented shares of the Old Common Stock will, from
and after the Effective Time, automatically and without the necessity
of surrendering the same for exchange, represent the number of whole
shares of the New Common Stock as equals the product obtained by
multiplying the number of shares of Old Common Stock represented by
such certificate immediately prior to the Effective Time by one ninth
(1/9) rounded up to the next highest whole number; or
(g) Upon this Certificate of Amendment to the Certificate of
Incorporation of the Corporation becoming effective pursuant to the
General Corporation Law of the State of Delaware (the "Effective
Time"), each share of the Corporation's common stock, par value $.001
per share (the "Old Common Stock"), issued and outstanding
immediately prior to the Effective Time, will be automatically
reclassified as and converted into one tenth (1/10) of a share of
common stock, par value $.001 per share, of the Corporation (the "New
Common Stock"). Any stock certificate that, immediately prior to the
Effective Time, represented shares of the Old Common Stock will, from
and after the Effective Time, automatically and without the necessity
of surrendering the same for exchange, represent the number of whole
shares of the New Common Stock as equals the product obtained by
multiplying the number of shares of Old Common Stock represented by
such certificate immediately prior to the Effective Time by one tenth
(1/10) rounded up to the next highest whole number.
Approval of each of the amendments to the FOURTH article of the Company's
Certificate of Incorporation requires the affirmative vote of holders of a
majority of the outstanding capital stock of the Company entitled to vote on
each of the amendments. The affirmative vote of the holders of a majority of the
outstanding capital stock of the Company (including the shares of Common Stock
and the shares represented by the Special Series A Preferred Voting Stock and
the Special Series B Preferred Voting Stock) entitled to vote on each of the
amendments is required for each of the amendments of the certificate of
incorporation of the Company.
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Purpose of Reverse Stock Split
Each of the proposed amendments to the Company's Certificate of
Incorporation, effectuating a reverse stock split, ranging from between a
one-for-three reverse stock split and a one-for-ten reverse stock split, has
been approved and declared advisable by the Board of Directors to reduce the
number of issued and outstanding shares of the Common Stock in order to increase
the trading price of such shares on the Nasdaq National Market. The Board took
this action because the Common Stock has failed, for more than 30 consecutive
days, to maintain the $1.00 minimum bid price required by Nasdaq Marketplace
Rule 4310(c)(4) (the "Rule"). The proposed amendments are not the first step in
a going private transaction.
While there can be no assurance, the Board of Directors believes the
implementation of one or more of the proposed amendments effectuating a reverse
stock split, if approved by our stockholders, will result in an increase in the
minimum bid price of the Common Stock to above the $1.00 per share minimum
mandated by the Nasdaq National Market for continued listing and enable the
Common Stock to continue to trade on the Nasdaq National Market. However, while
the Company believes that implementation of a reverse stock split is a
satisfactory mechanism to achieve compliance with Nasdaq's maintenance
requirements of the Nasdaq National Market, there can be no assurance that, even
if the bid price for our Common Stock exceeds the $1.00 minimum threshold for
the mandated period as a result of one or more reverse stock splits, the Nasdaq
National Market will deem the Company to be in compliance and will not delist
our Common Stock.
The Company has been formally notified of its failure to comply with the
Rule. Pursuant to Nasdaq Marketplace Rule 4310(c)(8)(b), the Nasdaq has given
the Company 90 calendar days, or until April 11, 2001, to regain compliance with
the Rule. If the minimum bid price for the Company's Common Stock is at least
$1.00 for at least ten consecutive trading days prior to April 11, 2001, the
Company will be deemed to have regained compliance with the Rule.
If the Company is unable to demonstrate compliance with the Rule on or
before April 11, 2001, the Company's Common Stock will be delisted from the
Nasdaq National Market at the opening of business on April 11, 2001. This
automatic delisting will be temporarily stayed if the Company requests a hearing
before the Nasdaq Listing Qualifications Panel (the "Panel") before the close of
business on April 11, 2001. If the Company does not regain compliance with the
Rule before April 11, 2001, the Company intends to request a hearing before the
Panel and request a stay of the delisting of the Common Stock pending
shareholder approval and implementation of one or more of the proposed
amendments effectuating a reverse stock split of our Common Stock.
If the Common Stock is delisted from the Nasdaq National Market, trading
in the Common Stock, if any, would have to be conducted on the NASDAQ Small Cap
Market, the OTC Bulletin Board or in the non-Nasdaq over-the-counter market
(also known as the pink sheet market). In such an event, an investor could find
it more difficult to dispose of, or to obtain accurate quotations as to the
market value of the Common Stock.
In addition, if the Common Stock were to become delisted from trading on
the Nasdaq National Market and the trading price were to remain below $5.00 per
share, trading in the Common Stock may also be subject to the requirements of
certain rules promulgated under the Securities Exchange Act of 1934, which
require additional disclosures by broker-dealers in connection with any trades
involving a stock defined as a "penny stock." Generally, a "penny stock" is
defined as any non-Nasdaq equity security that has a market price of less than
$5.00 per share, subject to certain exceptions. The additional burdens imposed
upon broker-
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dealers by these requirements could discourage broker-dealers from facilitating
trades in the Common Stock, which could severely limit the market liquidity of
the stock and the ability of investors to trade the Common Stock.
The Board of Directors is asking that you approve each of the proposed
amendments to the Company's Certificate of Incorporation effectuating each of
the reverse stock splits of all of the issued and outstanding Common Stock of
the Company. Notwithstanding the authorization of each of the amendments by the
stockholders of the Company, the Board may abandon any one or more of the
amendments without further action by the Company's stockholders in accordance
with Section 242(c) of the General Corporation Law of the State of Delaware. A
vote in favor of each of the amendments to the Certificate of Incorporation will
be a vote for approval of each of the proposed reverse stock splits, one or more
of which will be implemented and effectuated and one or more of which may be
abandoned at the discretion of the Board within the next eight months and for
granting authority to the Board of Directors to effectuate the reverse stock
split.
The Board of Directors has determined that each of the amendments
effectuating a reverse stock split is advisable and in your best interests and
unanimously recommends that you vote "for" each of the amendments effectuating a
reverse stock split. The Board of Directors will consider and evaluate from time
to time the following factors and criteria to determine which, if any, of the
approved amendments to implement: the capitalization of the Company (including
the number of shares of Common Stock issued and outstanding), the prevailing
trading price for our Common Stock and the volume level thereof, and the general
economic and other related conditions prevailing in our industry and in the
marketplace generally. The Board of Directors will determine as soon as
practicable which proposed amendment to implement and will provide stockholders
and other relevant persons with notice of the record date for the proposed
reverse stock split.
Effects of Reverse Stock Split
A reverse stock split is a reduction in the number of outstanding shares
of a class of a corporation's capital stock, which is accomplished by the
corporation, in this case, reclassifying and converting all the outstanding
shares of Common Stock into a proportionately fewer number of shares of Common
Stock. For example, if our Board of Directors implements a one-for-four reverse
stock split of the Common Stock, then someone holding 400 shares of the Common
Stock before the reverse stock split would receive 100 shares of the Common
Stock after the reverse stock split. This will also result in an increase in the
available number of authorized but unissued shares of the Common Stock. However,
each shareholder's proportionate ownership of the issued and outstanding shares
of the Common Stock would remain the same, except for minor changes which may
result from the provisions each of the amendments effectuating a reverse stock
split, as described below, which require the rounding of any resulting
fractional shares up to the nearest whole share.
The primary purpose of the proposed reverse stock split of Common Stock is
to combine the issued and outstanding shares of the Common Stock into a smaller
number of shares so that the shares of the Common Stock will trade at a higher
price per share than their recent trading prices. In addition to increasing the
market price of the Common Stock, a reverse stock split will also affect the
presentation of stockholders' equity in the Company's balance sheet. Because the
par value of the shares of the Common Stock is not changing as a result of the
implementation of the reverse stock split, the Company's stated capital, which
consists of the par value per share of the Common Stock multiplied by the
aggregate number of shares of the Common Stock issued and outstanding, will be
reduced proportionately on the effective date of the reverse stock split.
Correspondingly, the Company's additional paid-in capital, which consists of the
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difference between its stated capital and the aggregate amount paid to the
Company upon the issuance of all currently outstanding shares of the Common
Stock, will be increased by a number equal to the decrease in stated capital.
Finally, the reverse stock split, if implemented, will affect the
outstanding options to purchase Common Stock of the Company and certain other
presently outstanding convertible securities with respect to Common Stock
(including the exchangeable shares of JAC and JACC), issued by the Company which
contain anti-dilution provisions. All of the Company's option plans with respect
to Common Stock or the exchangeable shares of JAC and JACC, include provisions
requiring adjustments to the number of shares covered thereby and the number of
shares subject to and the exercise prices of outstanding options granted under
said plans, in the event of a reverse stock split. For example, in a
one-for-four reverse stock split, each of the outstanding options to purchase
Common Stock or exchangeable shares would thereafter evidence the right to
purchase that number of shares of the Common Stock following the reverse stock
split equal to 25% of the shares of the Common Stock previously covered by the
options (with fractional shares rounded up to the nearest whole share) and the
exercise price per share would be three times the previous exercise price.
No Fractional Shares
In order that the Company may avoid the expense and inconvenience of
issuing and transferring fractional shares of the Common Stock as a result of
the reverse stock split, we will round any fractional shares resulting from the
reverse stock split up to the nearest whole share. This means that stockholders
who would otherwise be entitled to receive a fractional share of the Common
Stock following the reverse stock split will receive a whole share in lieu
thereof. For example, if any shareholder owns, in total, 100 shares, that
shareholder's shares would be converted into 25 shares if the proposed
one-for-four reverse stock split is implemented.
The rounding of fractional shares will not reduce the number of
stockholders or stockholders of record. The Company's periodic reporting
requirements under the Securities Exchange Act of 1934 will be unaffected by the
rounding of fractional shares and JAWZ believes it will, if the reverse stock
split receives stockholder approval and is implemented by the Board as intended
and described herein, meet all Nasdaq Stock Market listing requirements.
Implementation of Reverse Stock Split
If the stockholders approve one or more of the amendments effectuating a
reverse stock split, the Board will direct management of the Company, file an
amendment to the Company's Certificate of Incorporation incorporating one of the
amendments to the Company's Certificate of Incorporation, with the Secretary of
State of the State of Delaware effecting one of the reverse stock splits. The
Board may, if the Company's stock fails for more than 30 consecutive days after
the first reverse split amendment is filed, to maintain the $1.00 minimum bid
price required, file one or more the other approved amendments.
Reasons for Reverse Stock Split: Advantages
The Board of Directors believes that a reverse stock split is
desirable for the following reasons:
(a) If shares of the Common Stock continue to trade below $1.00 per
share, the Common Stock will be delisted from the Nasdaq National Market.
Delisting could decrease the marketability, liquidity and transparency of
the Common Stock (which could, in turn, further depress our stock
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price). Our Board believes that the anticipated increase in the market
price per share resulting from a reverse stock split will lift the price
of the Common Stock above the $1.00 minimum bid threshold that currently
threatens our continued listing on Nasdaq;
(b) The anticipated increase in the per share market price of the Common
Stock should also enhance the acceptability of the Common Stock by the
financial community and the investing public.
(c) Additionally, a variety of brokerage house policies and practices
tend to discourage individual brokers within those firms from dealing with
lower priced stocks. Some of the policies and practices pertain to the
payment of broker's commissions and to time consuming procedures that
function to make the handling of lower priced stock economically
unattractive to brokers and therefore difficult for holders of Common
Stock to manage. The expected increase in the per share price of the
Common Stock may help alleviate some of such problems.
(d) In addition, the structure of trading commissions also tends to have
an adverse impact upon holders of lower priced stock because the brokerage
commission on a sale of lower priced stock generally represents a higher
percentage of the sales prices than the commission on a relatively higher
priced issue, which may discourage trading in lower priced stock. A
reverse stock split could result in a price level for the Common Stock
that may reduce, to some extent, the effect of these policies and
practices of brokerage firms and diminish the adverse impact of trading
commissions on the market for the Common Stock.
(e) The increase in the portion of the Company's authorized shares of
Common Stock that would be unissued after the reverse stock split is
effectuated could be used for any proper corporate purpose approved by the
Board of Directors. The increased number of authorized but unissued shares
of Common Stock will provide the Company with additional flexibility to
issue additional shares in connection with future financings or other
transactions. The anticipated increase in the per share market price of
the Common Stock should also enhance the acceptability of the Common Stock
by the financial community and the investing public. However, the Board of
Directors does not currently have any plans to utilize the increase in the
number of the authorized but unissued shares of the Common Stock that
would result from approval and implementation of the proposed reverse
stock split.
Reasons Against Reverse Stock Split: Disadvantages
Even though the Board of Directors believes that the potential advantages
of a reverse stock split outweigh any disadvantages that might result, the
following are the possible disadvantages of a reverse stock split:
(a) Despite the potential increase in liquidity discussed above, if we
file one or more of the amendments, the reduced number of shares resulting
from a reverse stock split could adversely affect the liquidity of the
Common Stock.
(b) A reverse stock split may leave certain stockholders with one or
more "odd lots" which are stock holdings in amounts of less than 100
shares of the Common Stock. These odd lots may be more difficult to sell
than shares in even multiples of 100. Additionally, any reduction in
brokerage commissions resulting from the reverse stock split, as discussed
above, may be offset, in whole or
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in part, by increased brokerage commissions required to be paid by
stockholders selling odd lots created by the reverse stock split.
(c) Because a reverse stock split would result in an increased number of
authorized but unissued shares of the Common Stock, it may be construed as
having an anti- takeover effect, although neither the Board of Directors
nor the Company's management views this proposal in that perspective.
However, the Board of Directors, subject to its fiduciary duties and
applicable law, could use this increased number of authorized but unissued
shares to frustrate persons seeking to take over or otherwise gain control
of the Company by, for example, privately placing shares with purchasers
who might side with the Board of Directors in opposing a hostile takeover
bid. Shares of the Common Stock could also be issued to a holder that
would thereafter have sufficient voting power to assure than any proposal
to amend or repeal the Company's by-laws or certain provisions of the
Company's Certificate of Incorporation would not receive the requisite
vote. Such uses of the Common Stock could render more difficult, or
discourage, an attempt to acquire control of the Company if such
transaction were opposed by the Board of Directors.
(d) Further, subject to NASDAQ rules on stock issuances, the increased
number of authorized but unissued shares of the Common Stock could be
issued by the Board of Directors without further shareholder approval,
which could result in further dilution to the holders of the Common Stock.
Exchange of Stock Certificates
If the reverse stock split is effectuated, the Company will not require
holders of Common Stock to surrender their stock certificates. Instead he
Company will give notice to its transfer agents of the reverse stock split and
the effective date of the amendment to the Certificate of Incorporation in order
to accurately reflect the number of issued and outstanding shares of capital
stock of the Company. Any fractional shares resulting from the reverse stock
split will be rounded up to the nearest whole share.
All holders of capital stock of the Company will continue to be entitled
to receive any dividends or other distributions that may be declared and payable
with respect to the Common Stock with a record date after the effective time of
the reverse stock split.
Federal Income Tax Consequences
The following summary of the federal income tax consequences of a reverse
stock split is based on current law, including the Internal Revenue Code of
1986, as amended, and is for general information only. The tax treatment of a
shareholder may vary depending upon the particular facts and circumstances of
such shareholder, and the discussion below may not address all the tax
consequences for a particular shareholder. For example, foreign, state and local
tax consequences are not discussed below. Accordingly, each shareholder should
consult his or her tax advisor to determine the particular tax consequences to
him or her of a reverse stock split, including the application and effect of
federal, state, local and/or foreign income tax and other laws.
Generally, a reverse stock split will not result in the recognition of
gain or loss for federal income tax purposes. The adjusted basis of the new
shares of the Common Stock will be the same as the adjusted basis of the Common
Stock exchanged for such new shares. The holding period of the new, post-split
shares of the Common Stock resulting from implementation of the reverse stock
split will include the shareholder's
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respective holding periods for the pre-split shares of the Common Stock
exchanged for the new shares. This treatment should also apply with
respect to additional shares received for fractional shares.
No Dissenters' Rights
The holders of shares of the Common Stock have no dissenters' rights of
appraisal under Delaware law, the Company's Certificate of Incorporation or the
Company's by-laws with respect to the proposed amendments to the Company's
Certificate of Incorporation effectuating a reverse stock split.
OTHER MATTERS
The Company's Board of Directors does not know of any other matters which
may come before the Special Meeting and in accordance with Section 1.05(b) of
the Company's by-laws the only business that may be conducted at a special
meeting of stockholders is that which is brought before the meeting by the
Company's notice of meeting.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph, facsimile and personal interviews. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of stock held in their names, and the Company will reimburse them for their
reasonable out-of-pocket expenses incurred in connection with the distribution
of proxy materials.
By Order of the Board of Directors
/S/ Vikki Robinson
VIKKI ROBINSON, Secretary
February 22, 2001
THE BOARD OF DIRECTORS OF THE COMPANY ENCOURAGES STOCKHOLDERS TO ATTEND
THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A PROMPT
RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR
COOPERATION WILL BE APPRECIATED. STOCKHOLDERS WHO ATTEND THIS MEETING MAY VOTE
THEIR STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
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JAWZ INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF JAWZ INC. FOR THE SPECIAL
MEETING OF STOCKHOLDERS TO BE HELD ON MARCH 16, 2001.
The undersigned, as a holder of shares of common stock, ("Shares") in JAWZ Inc.
(the "Company"), hereby appoints Robert J. Kubbernus and Riaz Mamdani, and each
of them, with full power of substitution, to vote all Shares for which the
undersigned is entitled to vote through the execution of a proxy with respect to
the Special Meeting of the Stockholders to be held on March 16, 2001 or any
adjournment thereof.
You may revoke this proxy at any time by forwarding to the Company a
subsequently dated proxy received by the Company prior to the Special Meeting,
or by attending the Special Meeting and voting in person.
Returned proxy cards will be voted (1) as specified on the matters listed below;
(2) in accordance with the Board of Directors' recommendations if the proxy is
signed but where no specification is made; and (3) in accordance with the
judgment of the proxies on any other matters that may properly come before the
meeting. Please mark your choice like this: /X/
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 1 AND ASKS
THAT YOU APPROVE EACH OF THE 7 REVERSE SPLIT AMENDMENTS SET OUT BELOW.
Proposal 1 - Approval of Amendments to Certificate of Incorporation: Approval of
proposed amendments to the Certificate of Incorporation of the Company to enable
the Company to effect one or more reverse stock splits , as set out below, in
the eight months following approval by stockholders, in order to seek to
maintain the Company's listing on the Nasdaq National Market.
(a) 1 for 4 (check one box) / / For / / Against / / Abstain
(b) 1 for 5 (check one box) / / For / / Against / / Abstain
(c) 1 for 6 (check one box) / / For / / Against / / Abstain
(d) 1 for 7 (check one box) / / For / / Against / / Abstain
(e) 1 for 8 (check one box) / / For / / Against / / Abstain
(f) 1 for 9 (check one box) / / For / / Against / / Abstain
(g) 1 for 10 (check one box) / / For / / Against / / Abstain
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER.
IF NO DIRECTION IS MADE THIS PROXY WILL BE VOTED "FOR" EACH OF THE REVERSE SPLIT
AMENDMENTS IN PROPOSAL 1.
Print and sign your name below exactly as it appears hereon and date this card.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title, as such. Joint owners should each sign. If a corporation,
please sign as full corporate name by president or authorized officer. If a
partnership, please sign in partnership name by an authorized person.
Date: ______________________________, 2001
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Signature (title, if any)
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Signature (title, if any)
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Title or Authority
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY USING THE ENCLOSED POSTAGE
PAID ENVELOPE TO: SYED HUSSAHNI, U.S. STOCK TRANSFER CORPORATION, 1745 GARDENA
AVENUE, GLENDALE, CALIFORNIA 91204-2991. IF YOU HAVE ANY QUESTIONS, PLEASE
CALL IAN H. KENNEDY AT (403) 508-5055.