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SCHEDULE 14A
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 Pursuant to Section 240.14a-11(c) or
Section 240.14a-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:
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[ ] 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 2001 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 29, 2001
The 2001 Annual Meeting of Stockholders of JAWZ Inc. (the "Company")
will be held at the Company's head office at 12 Concorde Place, Suite 900,
Toronto, Ontario, Canada, M3C 3T1, on Friday, June 29, 2001 at 10:00 a.m., local
time, to consider and act upon the following matters:
1. To consider and vote upon a proposal to approve the minutes of
the 2000 Annual Meeting of Stockholders;
2. To elect five directors to serve until the next Annual Meeting
of Stockholders;
3. To consider and vote upon a proposal to ratify the selection
by the board of directors of Ernst & Young LLP as the
independent auditors of the Company for the fiscal year ending
December 31, 2001; and
4. 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 May 17, 2001 are
entitled to notice of and to vote at the meeting. A list of stockholders
eligible to vote at the Annual Meeting will be available for examination by any
stockholder who is present at the Annual Meeting and at the principal place of
business of the Company at 12 Concorde Place, Suite 900 Toronto, Ontario, Canada
M3C 3T1, during ordinary business hours during the ten day period prior to the
Annual 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
Vikki Robinson, Secretary
Toronto, Ontario
Canada
May 29, 2001
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
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SHARES AT THE MEETING. NO POSTAGE NEED BE AFFIXED IF THE PROXY CARD IS MAILED IN
THE UNITED STATES.
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JAWZ INC.
12 CONCORDE PLACE, SUITE 900
TORONTO, ONTARIO, CANADA M3C 3T1
PROXY STATEMENT FOR THE 2001 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 29, 2001
This Proxy Statement is furnished in connection with the solicitation
of proxies by the board of directors of JAWZ Inc. (the "Company") for use at the
2001 Annual Meeting of Stockholders to be held on June 29, 2001 and at any
adjournment or adjournments of that meeting (the "Annual 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, including, without limitation, any
adjournment of the Annual Meeting. Any proxy may be revoked by a stockholder at
any time before it is exercised by delivery of written revocation or a later
dated proxy to the Secretary of the Company or by voting in person at the
meeting.
The Company's Annual Report for the year ended December 31, 2000, is
being mailed to stockholders with the mailing of this Notice of Meeting and
Proxy Statement on or about May 28, 2001.
VOTING SECURITIES AND VOTES REQUIRED
On May 17, 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 10,535,579 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
May 17, 2001, (the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting), there were 39,532 exchangeable
shares of JAC outstanding that were not owned by the Company or an entity
controlled by the Company and there were 10,207 exchangeable shares of JACC
outstanding that were not owned by the Company or an entity controlled by the
Company. Accordingly, an aggregate of 10,638,318 votes may be cast on the
matters set forth in the Notice of Annual Meeting (consisting of 10,535,579 that
may be cast in respect of the Common Stock and 149,739 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 Annual Meeting. Stockholders holding
shares of capital stock of the Company
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who are present in person or represented by proxy (including stockholders who
abstain from voting their 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.
In order to pass each of the proposals set out in the Notice of
Meeting the affirmative vote of the holders of a majority of the outstanding
capital stock of the Company entitled to vote (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) is required.
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 March 31,
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 March 31, 2001, there were 58,601,266 shares of Common Stock
outstanding, 1,614,821 shares of Common Stock reserved for issuance to holders
of JAC exchangeable shares and 3,213,220 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 March 31, 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.
(ALL OF THE NUMBERS IN THE TABLE BELOW ARE CALCULATED AS OF MARCH 31, 2001 AND
ARE PRE-REVERSE SPLIT)
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NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) BENEFICIALLY OWNED CLASS (13)
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Robert J. Kubbernus (2) 2,717,250 4.6%
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Julia L. Johnson (3) 305,408 0.5%
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NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) BENEFICIALLY OWNED CLASS (13)
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Arthur Wong (4) 313,208 0.5%
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Riaz Mamdani (5) 1,514,422 2.6%
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Dr. James Canton (6) 200,000 0.3%
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John S. Burns (7) 200,000 0.3%
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Raghu Kilambi (8) 50,000 -
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Robert Mahood (9) 388,105 0.7%
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Peter Labrinos (10) 402,920 0.7%
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Greg Surbey 5,900 -
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All directors and executive officers as
a group (10 persons) 10.4%
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Thomson Kernaghan & Co. Limited (11)
365 Bay Street, 10th floor 2,975,371 5.1%
Toronto, Ontario
Canada M5H 2V2
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CALP II Limited Partnership(12)
c/o Forum Fund Services 9,881,835 16.8%
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 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. Mr.
Mamdani resigned as an officer and director of the Company on March 31,
2001. He remains listed above given his status as one of the Company's
"named executive officers" in the prior fiscal year.
(6) Includes 200,000 shares issuable upon the exercise of options
exercisable at $3.28 per share until December 31, 2003.
(7) Includes 200,000 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 July , 2001, 90 days following the
date of Mr. Kilambi's resignation. On April 23, 2001, Mr. Kilambi
resigned from the Company's board of directors.
(9) Includes 35,000 shares issuable upon the exercise of options
exercisable at $2.72 per share until November 1, 2003. Includes 176,905
exchangeable shares in Jaws Acquisition Corp., a wholly owned
subsidiary of JAWZ Inc. Each exchangeable share is exchangeable for one
share of JAWZ Common Stock as well as 176,200 exchangeable warrants in
Jaws Acquisition Corp. which are exercisable for one common shares of
JAWZ capital stock.
(10) Includes 27,880 shares issuable upon the exercise of options
exercisable at $2.69 per share until December 31,
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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 2,800,000 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.
(13) Percent of Ownership is calculated in accordance with the Securities
and Exchange Commission's Rule 13d -3(d)(1).
PROPOSAL NO. 1: APPROVAL OF THE MINUTES OF
THE 2000 ANNUAL MEETING OF STOCKHOLDERS
GENERAL
The persons named in the enclosed proxy will vote to approve the
minutes of the 2000 Annual General Meeting of Stockholders, in the form attached
as Schedule A hereto and the Reconvened Meeting of Stockholders, in the form
attached as Schedule A-1 hereto, unless the proxy is marked otherwise. If a
stockholder returns a proxy without contrary instructions, the persons named as
proxies will vote to approve the minutes of the 2000 Annual Meeting of
Stockholders.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR APPROVAL OF
THE MINUTES OF THE 2000 ANNUAL GENERAL MEETING OF STOCKHOLDERS AND THE
RECONVENED MEETING OF STOCKHOLDERS.
ELECTION OF DIRECTORS
The persons named in the enclosed proxy will vote to elect as directors
the five nominees named below, unless the proxy is marked otherwise. If a
stockholder returns a proxy without contrary instructions, the persons named as
proxies will vote to elect as directors the nominees named below, each of whom
is currently a member of the board of directors of the Company.
Each director will be elected to hold office until the 2002 Annual
Meeting of Stockholders and until his successor is duly elected and qualified or
until his earlier death, resignation or removal. All of the nominees have
indicated their willingness to serve, if elected; however, if any nominee should
be unable to serve, the shares represented by proxies may be voted for a
substitute nominee designated by the board of directors of the Company.
There are no family relationships between or among any officers or
directors of the Company.
Set forth below are the name and age of each member of, or nominee to,
the board of directors of the Company and the positions and offices held by him,
his principal occupation and business experience during the past five years, the
names of other publicly held companies of which he serves as a director and the
year of the commencement of his term as a director of the Company. Information
with respect to the number of shares of Common Stock beneficially owned by each
director, directly or indirectly, as of March 31, 2001,
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appears above under the heading "Stock Ownership of Certain Beneficial Owners
and Management."
NOMINEES FOR DIRECTOR
ROBERT J. KUBBERNUS, age 42, has served as Chairman of the Board, Chief
Executive Officer and President of JAWZ since October 1997. Mr. Kubbernus'
primary responsibilities have been to oversee security product developers,
provide executive direction and develop key contacts with governmental
authorities, investors, clients, insurance underwriters and the investment
community. From October 1992 to September 1997, Mr. Kubbernus held the position
of President and Chief Executive Officer of Bankton Financial Corporation, a
company which provides business and lending advisory services, where he led a
team of corporate financial consultants who specialized in the placement of debt
instruments with institutional and private lenders.
JULIA L. JOHNSON, age 38, Ms. Johnson is a corporate executive with
MILCOM Technologies. MILCOM specializes in commercialization of military
technology and serves as the Chairman of the Information Service Technology Task
Force (Internet Task Force), having been appointed by Governor Jeb Bush in
August 1999. Ms. Johnson also serves as the national spokesperson for The Net
Compete Now Coalition, an advocacy coalition dedicated to promoting
regulation-free rapid deployment of competitive high speed Internet and
communications technology. Ms. Johnson has served as (i) a member of the Florida
Public Service Commission, a state agency which regulates utility companies,
from December 1992 to December 1999, (ii) state Chairperson of the Federal/State
Joint Board on Universal Service, a task force within the Federal Communications
Commission from 1996 to 1999, and (iii) a board member for the Markle
Foundation, a project that encourages the use of new communications technologies
for socially beneficial purposes, since 1996. Before being appointed to the
Florida Public Service Commission, Ms. Johnson served as the Director of
Legislative Affairs and senior land use attorney for the Department of Community
Affairs from November 1990 to December 1992, where she was the chief lobbyist
representing the agency before the Florida Legislature on land use issues. Ms.
Johnson graduated with a Juris Doctorate, with a concentration in corporate and
real estate transactions, from the University of Florida School of Law in 1988,
as well as a Bachelor of Science in Business Administration from the University
of Florida in 1985.
ARTHUR WONG, age 32, provides strategic direction to JAWS in the area
of channel development. Since 1992, Mr. Wong has founded three technology
companies. He has been CEO of Security-Focus.com, a database of security
knowledge and resources , since August of 1999 where he is responsible for the
management and direction of an internet security portal. From May 1998 to July
1999, Mr. Wong was the Director of Channel Development for Active Security at
Network Associates Inc. of Santa Clara, California, the world's largest
independent network security and management software company , where he was
responsible for the development and adoption of worldwide integrated security
initiatives and where he also developed standards for new security
infrastructures and worked on its integration and adaption. From July 1996 to
April 1998, he was CEO of Secure Networks Inc. of Calgary, Alberta, a company he
founded. Secure Networks developed internet security tools and offered security
consulting before it was acquired by Network Associates Inc. From April 1993 to
June 1996, Mr. Wong was President of Millennium Systems Canada Inc., a company
he founded and managed, which was a computer hardware distributor and
integrator. Since June 1994 he has been the managing director and founder of H20
Entertainment Corp., a Calgary based organization that develops products for
Nintendo and its N64 game platform. Mr. Wong graduated with a Bachelor of
Science in Communications from the University of Calgary in 1991.
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JOHN S. BURNS Q.C., age 59, has been a partner of the law firm Bennett
Jones since October, 1990. His areas of practice are principally corporate,
corporate finance and securities law. Mr. Burns acts for public and private
corporations, securities issuers and underwriters. His practice focuses on
mergers and acquisitions, public and private offerings, corporate
restructurings, cross border financings and oil, gas and banking transactions.
He has participated in conferences and panels and has authored a number of
papers and articles with respect to these areas of law. Mr. Burns is a board
member of several public and private corporations and served as a Public
Governor of the Alberta Stock Exchange from 1983 to 1998. He also served as a
member of the Board of Governors of the Olympic Trust of Canada,
Strathcona-Tweedsmuir school and is a member of the law societies of Alberta and
Upper Canada and the Calgary and Canadian Bar Associations. Mr. Burns graduated
from the University of Alberta with a Bachelor of Arts degree in 1963 and a law
degree from Dalhousie Law School in 1966.
DR. JAMES CANTON, age 50. Since 1990, Dr. Canton has been the President
and Chairman of the Institute for Global Futures, a San Francisco-based think
tank that advises Fortune 1000 companies on the impact of leading-edge
technologies on customers, markets and the economy. Dr. Canton is the author of
Technofutures: How Leading- Edge Technology Will Transform Business in the 21st
Century. Dr. Canton has been an advisor to the White House Science and
Technology Office since September 1999 and has been guest host on CNN Financial
News Network since May 1998, where he reports on the latest technology trends.
Dr. Canton was named one of the top 21 speakers of the 21st Century by
Successful Meetings Magazine. Dr. Canton graduated from Union Graduate School in
1981 with a Ph.D. in Business Systems. In 1973 Dr. Canton graduated from
Franklin Pearce College in 1973 with a B.A. in Sociology.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR EACH OF
ROBERT J. KUBBERNUS, JULIA L. JOHNSON, ARTHUR WONG, JAMES CANTON AND JOHN S.
BURNS Q.C., AS DIRECTORS OF THE COMPANY, TO HOLD OFFICE UNTIL HIS OR HER
SUCCESSOR IS DULY ELECTED AND QUALIFIED OR UNTIL HIS OR HER EARLIER DEATH,
RESIGNATION OR REMOVAL.
BOARD AND COMMITTEE MEETINGS
The board of directors of the Company has established an audit
committee consisting of Julia L. Johnson, James Canton and Arthur Wong, each of
whom is an independent director on the Company's board of directors. The audit
committee makes recommendations to the board of directors of the Company
concerning the engagement of independent public accountants, review with the
independent public accountants the scope and results of the audit engagement,
approve professional services provided by the independent public accountants,
review the independence of the independent public accountants, consider the
range of audit and non-audit fees, and review the adequacy of the Company's
internal accounting controls. The audit committee met three times during 2000.
In 2000, the compensation committee consisted of Julia L. Johnson, John
S. Burns and Arthur Wong, each of whom is an independent director on the board
of directors of the Company. The compensation committee determines and
establishes compensation levels on an annual basis for the Company's executive
officers and administers the Company's Stock Option Plan. The compensation
committee met three times in 2000. See "Report of Compensation Committee" below.
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The Company does not have a nominating committee or a committee serving
a similar function. Nominations are made by and through the full board of
directors of the Company.
The Company's board of directors held four (4) meetings during 2000.
Each director attended 100% of the total number of meetings (including consents
in lieu of meetings) of the board of directors.
COMPENSATION OF DIRECTORS
Out-of-pocket expenses of the Company's directors, related to their
attendance at meetings of the board of directors, are paid by the Company.
Pursuant to the terms of a directors' agreement by and between the Company and
each of Ms. Johnson, Mr. Burns, Dr. Canton and Mr. Wong, the Company is
obligated to compensate such directors for services rendered as directors in
cash or in shares of common stock in an amount per annual term equal to $60,000.
In addition, all directors are eligible to receive stock options under the
Company's 1998 Stock Option Plan. As of March 31, 2001, options to purchase an
aggregate of 800,000 shares, pre-reverse split of Common Stock have been granted
to non-employee directors. Of this amount, 400,000 were granted in 2000 at an
exercise price of between $3.28 and $5.88 per share under the Company's 1998
Stock Option Plan to non-employee directors. The Company does not currently
provide additional compensation for committee participation or special
assignments of the Company's board of directors.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the names, ages and positions of the
current executive officers of the Company.
NAME AGE POSITION
---- --- --------
Robert J. Kubbernus............. 42 Chairman of the Board, Chief Executive
Officer, President, interim Chief Financial
Officer and Director.
Peter Labrinos.................. 41 President, Jawz Canada (1)
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(1) Mr. Labrinos is not a director or officer of the Company, but is
included in this table because, as the senior officer of JAWZ Canada
Inc., an Alberta corporation ("JAWZ Canada") a material subsidiary of
the Company, he has performed policy-making functions in respect of the
Company. Mr. Labrinos is the President JAWZ Canada.
ROBERT J. KUBBERNUS - Mr. Kubbernus's biography is set forth under
"Election of Directors - Nominees for Director."
MR. PETER LABRINOS - 42 has been appointed President of JAWZ Canada.
Mr. Labrinos came to JAWZ in November 1999 when JAWZ acquired his company, Pace
Systems Group, a provider of strategic business and IT solutions which he
founded in 1986. After the acquisition, he became Executive Vice-President,
Eastern Region at JAWZ and was appointed COO on July 1, 2000. and is responsible
for developing and implementing strategic and tactical plans for JAWS including
departmental business plans, alliance development, managing the sales, marketing
and professional services departments, implementing the
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corporate vision and maintaining and improving corporate culture. From November
1999 to July, 2000, he was the Executive Vice President, Eastern Region for
JAWS. His primary responsibilities were to oversee the creation and growth of
the sales and professional services groups for Eastern Canada and the US, as
well as coordinate the integration of JAWS acquisitions. From 1986 to November
1999, Mr. Labrinos, as the founder and principal of Pace Systems Group Inc., was
involved in the IT industry with a primary focus in the financial services
market (banking, brokerage and retail). This position involved providing
strategic business and IT solutions to clients for secure processing of
transactions in an environment which demands adherence to high performance and
security standards. Mr. Labrinos graduated from the University of Toronto in
1982 with a Bachelor of Science in Computer Science for Data Management. From
1981 to 1986, Mr. Labrinos worked for the Toronto Dominion Bank and the Royal
Bank of Canada in their IT departments and was part of the team which
implemented new technology and services for these organizations.
Summary Compensation Table - The following table sets forth certain
information with respect to the annual and long-term compensation for the last
three fiscal years of the Company's President and Chief Executive Officer and
the Company's other executive officers (including former executive officers)
whose total annual salary and bonus for 2000 exceeded $100,000.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
------------------------------------------------ ------------
Securities All
Other Annual Underlying Other
Compensation Options Compensation
Name and Principal Position Year Salary ($) Bonus($) ($) /SARs ($)
--------------------------- ---- ---------- -------- ------------ ------------ -------------
Robert J. Kubbernus................ 2000 300,000 - - 178,070 66,667
Chairman of the Board, 1999 180,000 - - 600,000 -
Chief Executive Officer and 1998 180,000 - - 350,000 -
President and Interim Chief 1997 45,000 - 200,000(1) -
Financial Officer
Peter Labrinos..................... 2000 183,333 171,472 - 20,500 -
President, JAWZ Canada Inc.
Vijay Sachdeva..................... 2000 100,000 132,272 - 12,500 -
Executive Vice President,
Professional Services
Riaz Mamdani....................... 2000 200,000 51,710 - 20,000 -
Former Chief Financial Officer
Greg Surbey........................ 2000 91,333 107,015 - 34,200 -
Former Executive Vice
President, Global Sales
Ian Cumming........................ 2000 100,000 96,091 - 35,500 -
Former Executive Vice
President, Marketing
Tej Minhas......................... 2000 106,667 66,667 - 20,500 -
Former Chief Technical Officer
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Option Grant Table - The following table sets forth certain information
regarding options granted during the year ended December 31, 2000 by the Company
to the Company's executive officers.
(ALL OF THE NUMBERS IN THE TABLE BELOW ARE CALCULATED AS OF MARCH 31, 2001 AND
ARE PRE-REVERSE SPLIT)
OPTION/SAR GRANTS IN LAST YEAR
-------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation For
Option Term (1)
- ------------------------------------------------------------------------------------------------------------------------------------
NAME NUMBER OF Percent of Total Exercise Market Price Expiration 5% ($) 10% ($) 0%
SECURITIES Options/SARS or Base of Securities Date ($)
UNDERLYING Granted to Price Underlying
OPTIONS/SARS Employees in ($/sh) Options/SARs
GRANTED (#) Fiscal Year On Grant Date
- ------------------------------------------------------------------------------------------------------------------------------------
Robert Kubbernus 20,000 1.41% 2.56 2.56 Sep-01-04 11034 23762 -
Riaz Mamdani 20,000 1.41% 2.56 2.56 Sep-01-04 11034 23762 -
Peter Labrinos 20,500 1.44% (2) (2) (2) 11034 23762 -
Vijay Sachdeva 12,500 0.88% (3) (3) (3) 6620 14257 -
Bob Mahood 20,500 1.44% (4) (4) (4) 11034 23762 -
Greg Surbey 34,200 2.41% (5) (5) (5) 11034 23762 -
Ian Cumming 35,500 2.50% (6) (6) (6) 11034 23762 -
Tej Minhas 20,500 1.44% (7) (7) (7) 11034 23762 -
(1) Amounts represent hypothetical gains that could be achieved for options
if exercised and sold at the end of the option term. These gains are
based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date options are granted. Actual gains, if
any, on stock option exercises will depend on the future performance of
the Common Stock on the date on which the options are sold.
(2) Of the 20,500 options granted, 20,000 shares of common stock are
exercisable at $2.56 per share for a period which expires on September
1, 2004 and 500 shares of common stock are exercisable at $1.19 per
share for a period which expires on November 21, 2002.
(3) Of the 12,500 options granted, 12,000 shares of common stock are
exercisable at $6.75 per share for a period which expires on February
7, 2004 and 500 shares of common stock are exercisable at $1.19 per
share for a period which expires on November 21, 2002.
(4) Of the 20,500 options granted, 20,000 shares of common stock are
exercisable at $2.56 per share for a period which expires on September
1, 2004 and 500 shares of common stock are exercisable at $1.19 per
share for a period which expires on November 21, 2002.
(5) Of the 34,200 options granted, 20,000 shares of common stock are
exercisable at $2.56 per share for a period which expires on September
1, 2004, 500 shares of common stock are exercisable at $1.19 per share
for a period which expires on November 21, 2002 and 13,700 shares of
common stock are exercisable at $1.00 per share for a period which
expires on December 1, 2004.
(6) Of the 35,500 options granted, 20,000 shares of common stock are
exercisable at $2.56 per share for a period which expires on September
1, 2004, 500 shares of common stock are exercisable at $1.19 per share
for a period which expires on November 21, 2002 and 15,000 shares of
common stock are exercisable at $4.25 per share for a period which
expires on July 1, 2004.
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(7) Of the 20,500 options granted, 20,000 shares of common stock are
exercisable at $2.56 per share for a period which expires on September
1, 2004 and 500 shares of common stock are exercisable at $1.19 per
share for a period which expires on November 21, 2002.
Year End Option Table - The following table sets forth certain information
regarding options held as of December 31, 2000 by the Company's executive
officers.
(ALL OF THE NUMBERS IN THE TABLE BELOW ARE CALCULATED AS OF MARCH 31, 2001 AND
ARE PRE-REVERSE SPLIT)
AGGREGATE OPTION/SAR EXERCISES IN LAST YEAR AND
YEAR-END OPTION/SAR VALUES
- -----------------------------------------------------------------------------------------------------------------------
NAME Shares Acquired Value Realized Number of Securities Value of Unexercised In-
on Exercise ($) Underlying Unexercised the-Money Options/SARs
Options/SARs FYear-Ended (#) at FY-Ended (US$)
Exercisable/Unexercisable Exercisable/Unexercisable
(1)
- -----------------------------------------------------------------------------------------------------------------------
Robert Kubbernus 0 0 350,000 Exercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Robert Kubbernus 0 0 350,000 Exercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Robert Kubbernus 0 0 250,000 Exercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Robert Kubbernus 0 0 20,000 Unexercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Riaz Mamdani 100,000 268,000 100,000 Exercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Riaz Mamdani 0 0 250,000 Exercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Riaz Mamdani 0 0 250,000 Exercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Riaz Mamdani 0 0 200,000 Exercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Riaz Mamdani 0 0 20,000 Unexercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Peter Labrinos 0 0 27,880 Exercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Peter Labrinos 0 0 20,000 Unexercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Peter Labrinos 0 0 500 Unexercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Vijay Sachdeva 0 0 12,000 Exercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Vijay Sachdeva 0 0 500 Unexercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Bob Mahood 0 0 35,000 Exercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Bob Mahood 0 0 20,000 Unexercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Bob Mahood 0 0 500 Unexercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Greg Surbey 0 0 13,700 Unexercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Greg Surbey 0 0 20,000 Unexercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Greg Surbey 0 0 500 Unexercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Ian Cumming 0 0 15,000 Unexercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Ian Cumming 0 0 20,000 Unexercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Ian Cumming 0 0 500 Unexercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Tej Minhas 29,333 0(2) 29,333 Exercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Tej Minhas 0 0 25,000 Exercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Tej Minhas 0 0 20,000 Unexercisable 0
- -----------------------------------------------------------------------------------------------------------------------
Tej Minhas 0 0 500 Unexercisable 0
- ------------------------------------------------------------------------------------------------------------------------------
(1) Value is based on the closing sales price of the Company's Common Stock
on December 29, 2000 ($0.47), the last trading day of the Company's
2000 fiscal year, less the applicable option exercise price. None of
the unexercised options were In-the-Money at the Company's fiscal
year-end.
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(2) 29,333 options were exercised at a price of $0.37 per share but none
were sold.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company's board of directors, which
is currently comprised of three non-employee directors, Julia L. Johnson and
Arthur Wong, and John Burns, are responsible for determining the compensation
and benefit packages of each executive officer and recommending it to the
Company's board of directors.
The Compensation Committee sets the compensation for executive officers
and establishes compensation policies for the Company's Chief Executive Officer
and all other executive officers of the Company. Certain decisions of the
Compensation Committee are subject to approval of the Company's board of
directors.
The Company's executive compensation program is designed to promote the
achievement of the Company's business goals, and, thereby, to maximize corporate
performance and stockholder returns. Executive compensation consists of a
combination of base salary and stock-based incentives. The Compensation
Committee considers stock incentives to be a critical component of an
executive's compensation package in order to help align executive interests with
stockholder's interests.
COMPENSATION PHILOSOPHY
The objective of the executive compensation program is to align
compensation with business objectives and individual performance, and to enable
the Company to attract, retain and reward executive officers who are expected to
contribute to the long-term success of the Company. The Company's executive
compensation philosophy is based on the principles of competitive and fair
compensation and sustained performance.
Competitive and Fair Compensation
The Company is committed to providing an executive compensation program
that helps attract and retain highly qualified executives. To ensure that
compensation is competitive, the Company compares its compensation practices
with those of other companies in the industry and sets its compensation
guidelines based on this review. The Company believes compensation for its
executive officers is within the range of compensation paid to executives with
comparable qualifications, experience and responsibilities in the same or
similar businesses and of comparable size and success. The Company also strives
to achieve equitable relationships both among the compensation of individual
officers and between the compensation of officers and other employees throughout
the organization.
Sustained Performance
Executive officers are rewarded based upon corporate performance and
individual performance. Corporate performance is evaluated by reviewing the
extent to which strategic and business plan goals are met, including such
factors as achievement of operating budgets, timely development and commercial
introduction of new processes and products, establishment of strategic licensing
and development alliances with third parties and performance relative to
competitors. Individual performance is evaluated by reviewing
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attainment of specified individual objectives and the degree to which teamwork
and Company values are fostered.
In evaluating each executive officer's performance, the Company
generally conforms to the following process:
- Company and individual goals and objectives are established at the
beginning of the performance cycle.
- At the end of the performance cycle, the accomplishments of the
executive's goals and objectives and his contributions to the Company are
evaluated.
- The executive's performance is then compared with peers within the
Company and the results are communicated to the executive.
- The comparative results, combined with comparative compensation
practices of other companies in the industry, are then used to determine salary
and stock compensation levels.
Annual compensation for the Company's executives generally consists of
a base salary and from time to time, the Committee may consider the granting of
stock options and the payment of cash bonuses based upon performance in a
particular year.
The salary for executives is generally set by reviewing compensation
for competitive positions in the market and the historical compensation levels
of the executives. Increases in annual salaries are based on actual corporate
and individual performance against targeted performance and various subjective
performance criteria. Targeted performance criteria vary for each executive
based on his area of responsibility, and may include achievement of the
operating budget for the Company as a whole or of a business group of the
Company, continued innovation in development and commercialization of the
Company's technology and products, timely development and commercial
introduction of new products or processes, implementation of financing
strategies and establishment of strategic licensing and development alliances
with third parties. Subjective performance criteria include an executive's
ability to motivate others, develop the skills necessary to grow as the Company
matures, recognize and pursue new business opportunities and initiate programs
to enhance the Company's growth and success. The Committee does not use a
specific formula based on these targeted performance and subjective criteria,
but instead makes an evaluation of each executive officer's contributions in
light of all such criteria.
Compensation at the executive officer level also includes the long-term
incentives afforded by stock options. The stock option program is designed to
promote the identity of long-term interests between the Company's employees and
its shareholders and assist in the retention of executives. The size of option
grants is generally intended to reflect the executive's position with the
Company and his contributions to the Company, including his success in achieving
the individual performance criteria described above. All stock options granted
to executive officers in 2000 were granted at fair market value on the date of
grant. During 2000, the executive officers of the Company received options to
purchase an aggregate of 183,700 shares of Common Stock, at a weighted average
exercise price of $ 1.52 per share.
Base Salaries
The base salaries of the Company's executive officers have been set by
reviewing compensation for competitive positions in the market and the
historical compensation levels of such executives. The employment
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status between the Company and Mr. Kubbernus is described more fully under
"Certain Relationship and Related Transactions."
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), enacted in 1993, generally disallows a tax deduction to public
companies for compensation over $1 million paid to the corporation's Chief
Executive Officer and four other most highly compensated executive officers.
Qualifying performance compensation will not be subject to the deduction limit
if certain requirements are met. The Company intends to structure the
performance-based portion of the compensation of its executive officers (which
currently consists of stock option grants and performance based bonuses
described above), in a manner that complies with the new statute to mitigate any
disallowance of deductions.
Compensation Committee
Julie L. Johnson
Arthur Wong
John Burns, Q.C.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the compensation committee are Ms. Johnson , Mr.
Wong, and John Burns, Q.C.. None of Ms. Johnson, Mr. Burns nor Mr. Wong were at
any time during 2000, or formerly, an officer or employee of the Company or any
subsidiary of the Company, nor has any member of the compensation committee had
any relationship with the Company requiring disclosure under Item 404 of
Regulation S-K under the Exchange Act.
COMPARATIVE STOCK PERFORMANCE
The comparative stock performance graph below compares the cumulative
stockholder return on the Common Stock of the Company for the period from
January 27, 1997 through the year ended December 31, 2000 with the cumulative
total return on (i) the Nasdaq Composite Index (the "Nasdaq Index"), and (ii)
the Amex Computer Index (assuming the investment of $100 in the Company's Common
Stock (at the initial public offering price), the Nasdaq Index and the Amex
Computer Index on January 27, 1997 and reinvestment of all dividends).
Measurement points are on February 10, 1998, June 30, 1998, December
31, 1998 and the last trading day in June and December for the years ended
December 31, 1998, December 31, 1999, and December 31, 2000.
JAWZ NASDAQ COMPUTER INDEX AMEX COMPUTER INDEX
---- --------------------- -------------------
Feb 10, 1998 100 100 100
Jun 30, 1998 89 111 103
Dec 31, 1998 62 128 156
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17
JAWZ NASDAQ COMPUTER INDEX AMEX COMPUTER INDEX
----- --------------------- -------------------
Jun 30, 1999 314 157 173
Dec 31, 1999 1,119 238 250
Jun 30, 2000 629 232 271
Dec 31, 2000 69 145 141
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS PROMOTERS
Robert J. Kubbernus, the Chairman of the Board, Chief Executive Officer
and President of the Company and Bankton Financial Corporation, a company which
provides business and lending advisory services controlled by Robert Kubbernus,
are the promoters of the Company and JAWZ Canada, a wholly- owned subsidiary of
the Company. Bankton Financial Corporation was a founding shareholder in the
Company and beneficial ownership of any shares of the Company owned by Bankton
Financial Corporation are attributed to Mr. Kubbernus. From January 1, 2000 up
to and including December 31, 2000, the Company paid Mr. Kubbernus $300,000, for
his services. Until January 1, 2000 the Company did not pay Mr. Kubbernus
directly for his services, but rather paid directly to Bankton Financial
Corporation $180,000 per year for Mr. Kubbernus' services. As of January 1,
2001, Mr. Kubbernus has returned to acting as a consultant for the Company. Mr.
Kubbernus is being paid $300,000 per annum for his consulting services. The
consulting fee will be paid through the issuance of shares of the Company's
capital stock for half the value of his services and cash for the balance of his
services. On April 27th, 2001, the Company registered 300,000 shares to be
issued to Mr. Kubbernus. Bankton and Robert Kubbernus were also founding
shareholders of JAWZ Canada and received shares in the common stock of e-biz, in
consideration for their shares of JAWZ Canada. Robert Kubbernus and Bankton
Financial Corporation each subscribed for shares of the common stock of JAWZ
Canada and paid consideration equal to $0.01 per share for these shares. As
described below, on February 10, 1998, Mr. Kubbernus received 315,000 shares in
the common stock of e-biz (now named JAWS Technologies, Inc., a Nevada
corporation) worth $315,000 and Bankton Financial Corporation received 322,000
shares in the common stock of e-biz worth $322,000, in each case in connection
with the acquisition of JAWZ Canada.
PURCHASE OF JAWZ CANADA
On February 10, 1998, when the Company was still known as e-biz, the
Company entered into an agreement with the shareholders of JAWZ Canada to
purchase all of the 1,000 issued and outstanding shares of JAWZ Canada for
1,500,000 restricted shares of e-biz. Pursuant to this agreement, the following
people received common stock of e-biz, in consideration for their shares of JAWZ
Canada, as follows:
JAWZ Canada Shareholder Number of E-Biz Shares Received
----------------------- -------------------------------
Robert Kubbernus 315,000
Bankton Financial Corporation (1) 322,000
Chell McNeill, Inc.(2) 637,000
(1) Robert Kubbernus is the controlling shareholder of Bankton Financial
Corporation.
(2) Cameron Chell, who resigned as a director of JAWS on November 30, 1999,
is the controlling shareholder of Chell McNeill, Inc.
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TRANSACTIONS WITH THOMSON KERNAGHAN
As of March 31, 2001, Thomson Kernaghan & Co. Limited ("TK") is the
holder of 2,975,371 shares of the Company's common stock, representing 5.1% of
the issued and outstanding shares of common stock of the Company (3.2% on a
fully diluted basis).
Since December 13, 2000, JAWZ has borrowed $4,195,000 USD from Thomson
Kernaghan & Co. Limited ("TK") and has issued promissory notes as follows:
DATE AMOUNT
- ---- ------
December 13, 2000 $1,000,000
January 26, 2001 $1,000,000
February 14, 2001 $ 400,000
February 27, 2001 $ 945,000
March 15, 2001 $ 850,000
It was a term of the March 15, 2001 promissory note that JAWZ and TK
enter into a secured loan agreement providing security for the total amount of
$4,195,000 borrowed. On March 29, 2001, JAWZ and TK executed a loan agreement
and security agreement (the "Agreements") charging all of the property and
assets of JAWZ. Under the terms of the Agreements JAWZ can borrow up to $7.5
million dollars plus placement fees. To date, JAWZ has given consideration for
$165,000 in placement fees.
Pursuant to the terms of a placement agency between the Company and TK,
dated February 15, 2000, in connection with the private placement of 588,238
Units of the Company, each Unit consisting of one share of common stock and one
warrant to purchase one-half share of common stock for $6.50 per share, at $4.25
per Unit (the "February Canadian Agency Agreement"), TK received a sales
commission of 7% of the offering and a 3% financial advisory fee (an aggregate
of $250,001). Also pursuant to the February Canadian Agency Agreement, TK also
received 58,824 warrants, each warrant exercisable for one share of common stock
at an exercise price of $4.25 per share.
Pursuant to the terms of a placement agency agreement between the
Company and TK, dated December 31, 1999, in connection with the private
placement of 2,176,418 Units of the Company, each Unit consisting of one share
of common stock and one warrant to purchase one-half share of common stock for
$6.50 per share, at $4.25 per Unit (the "Canadian Agency Agreement"), TK
received a sales commission of 7% of the offering and a 3% financial advisory
fee (an aggregate of $924,977). Also pursuant to the Canadian Agency Agreement,
TK also received 217,642 warrants, each warrant exercisable for one share of
common stock at an exercise price of $4.25 per share.
In addition, TK and the Company entered into a consulting agreement
effective July 1, 1999 pursuant to which TK provides advisory services to the
Company, including without limitation, advising on business and financial
matters. The consulting agreement terminates on June 30, 2000 unless it is
extended by mutual agreement thereafter. Under the terms of the consulting
agreement, the Company has agreed to pay TK the lesser of (i) 7,500 shares of
the Company's common stock; and (ii) that number of shares of the Company's
common stock equal to $25,000 divided by 95% of the average price of the
Company's common stock for each calendar month over the year of the agreement.
Payments under the consulting agreement are to be made semi-annually, with the
final payment being on June 30, 2000. In addition, the Company agreed to pay
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TK a fee of 2% of the gross value of any merger and acquisition transaction in
which TK advises the Company.
On September 25, 1998, the Company entered into a $2,000,000, 10%
Convertible Debenture Agreement with TK that included 1,428,572 warrants to
purchase 1,428,572 common shares at $0.28 per common share. On April 27, 1999,
the Company and TK amended the debenture agreement, increasing the principal
amount of the convertible debentures to $5,000,000. Subsequently, a total of
$1,520,000 was advanced pursuant to the amended debenture agreement.
On November 17, 1999, the Company and TK executed a Debenture
Acquisition Agreement Amendment and Settlement Agreement (the "Settlement
Agreement") in order to settle the outstanding obligations of the parties. The
Settlement Agreement settles the conversion terms of the $1,520,000 advanced
under the amended debenture agreement and the exercise of outstanding warrants
issued under the amended debenture agreement and terminates all further
obligations related to the amended debenture agreement.
Debentures issued pursuant to the amended debenture agreement were
converted to 5,127,672 shares of the Company's common stock and warrants were
exercised for the issuance of 2,180,220 shares in the Company's common stock on
November 23, 1999.
CONSULTING FEES
As of September 25, 1999, the Company paid Bankton Financial
Corporation, a company controlled by Mr. Kubbernus, a consulting fee of $180,000
for services rendered to the Company by Mr. Kubbernus. Mr. Kubbernus and Bankton
Financial Corporation are shareholders and promoters of the Company and continue
to direct and promote the company's future development. Robert J. Kubbernus has
been employed directly by the Company JAWZ effective January 1, 2000, pursuant
to an employment contract paying $300,000 USD per annum. As of January 1, 2001,
Mr. Kubbernus has returned to acting as a consultant for the Company. Mr.
Kubbernus is being paid $300,000 per annum for his consulting services. The
consulting fee will be paid through the issuance of shares of the Company's
capital stock for half the value of his services and cash for the balance of his
services. On April 27th, 2001, the Company registered 300,000 post reverse split
shares to be issued to Mr. Kubbernus.
As of January 1, 2001, Mr. Riaz Mamdani, our former Chief Financial
Officer and director, became a consultant to the Company. Pursuant to the
consulting agreement, Mr. Mamdani is being paid $200,000 per annum for his
consulting services. The consulting fee will be paid through the issuance of
shares of the Company's capital stock for half the value of his services and
cash for the balance of his services. On April 27th, 2001, the Company
registered 200,000 post reverse split shares to be issued to Mr. Mamdani.
LEASE OF PREMISES
The Company entered into an agreement to lease premises from Shelbourne
Place Holding Corp. ("Shelbourne"), pursuant to which the Company is renting
approximately 10,000 square feet of commercial space and is obligated to pay
Shelbourne $95,600 per annum, plus operating costs of approximately $42,000 per
annum, for a five-year term commencing November 1, 1998. Riaz Mamdani, who was a
director and Chief Financial Officer of the Company, owns a majority of the
shares of Shelbourne. The Company also entered into a lease with Thorburn
Capital Corp., pursuant to which the Company is renting approximately 15,000 sq.
feet of commercial space and a lease with e Supplies (Alberta) Ltd., under which
the Company
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20
is renting 12,000 sq. ft. Riaz Mamdani, who was a director and Chief Financial
Officer of the Company, owns a majority of the shares of Thorburn and is a
director and officer of eSupplies.
TRANSACTIONS WITH ICONIX CANADA INC.
Iconix Canada Inc., is a developer of eLearning network software and
has purchased $171,667 worth of products and services from the Company. Mr.
Kubbernus is the sole director of Iconix and the Company is a controlling
shareholder of Iconix.
TRANSACTIONS WITH EFINANCIAL DEPOT.COM INC.
eFinancial Depot.Com Inc., is the developer of a financial portal for
online investment information and trading. The Company is a major shareholder of
eFinancial when it received 2,384,800 common shares in the capital stock of
eFinancial in settlement of a $2,146,392 receivable. As at December 31, 2000,
the Company has receivables of $917,284 with eFinancial.
LAUNCH OF IT FLORIDA.COM
The Company supported the launch of IT Florida.com, a government
sponsored taskforce with the expenditure of $118,023 for various miscellaneous
expenses. Julia Johnson, a director of the Company, is also the chairman of IT
Florida.com.
PROVISION OF STATIONERY AND OFFICE SUPPLIES
Mr. Mamdani was a director of eSupplies until , 2001, a stationery and
office supplies company. Until recently, the Company purchased all of its
stationery and office supplies from eSupplies at prices paid by non-related
parties in arm's-length transactions.
PROPOSAL 3: RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors of the Company, upon the recommendation of the
Audit Committee, has selected the accounting firm of Ernst & Young LLP to serve
as independent auditors of the Company for the fiscal year ending December 31,
2001, Ernst & Young LLP has served as the Company's independent auditors since
the Company's inception in January 1997 and is considered by management of the
Company to be well qualified. The Company has been advised by that firm that
neither it nor any member thereof has any financial interest, direct or
indirect, in the Company or any of its subsidiaries in any capacity. A
representative of Ernst & Young LLP will be present at the Annual Meeting, will
be given the opportunity to make a statement if he or she so desires and will be
available to respond to appropriate questions.
Although the Company is not required to submit the ratification of the
selection of its independent auditors to a vote of shareholders, the Company's
board of directors believes that it is a sound policy to do so. In the event
that the majority of the votes cast are against the selection of Ernst & Young
LLP, the
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directors will consider the vote and the reasons therefor in future decisions on
the selection of independent auditors.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE
PROPOSAL TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF
THE COMPANY.
OTHER MATTERS
The Company's board of directors does not know of any other matters
which may come before the meeting. However, if any other matters are properly
presented to the meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise act, in accordance with their judgment
on such matters.
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.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 2002 Annual
Meeting of Stockholders must be received by the Company at its principal office
in Calgary, Alberta, Canada not later than October 2, 2001 for inclusion in the
proxy statement for that meeting.
By Order of the Board of Directors
VIKKI ROBINSON
Secretary
May 29, 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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SCHEDULE A
JAWS TECHNOLOGIES, INC.
ANNUAL GENERAL MEETING OF THE STOCKHOLDERS
MAY 31, 2000
MINUTES
The Annual Meeting of the Stockholders (the "Annual Meeting") of JAWS
Technologies, Inc. (the "Corporation") was held at the River Cafe, Prince's
Island Park, Calgary, Alberta, Canada on Wednesday, May 31, 2000 at 3:00 pm
local time, pursuant to notice duly given.
The Annual Meeting was called to order by Robert Kubbernus, the
Chairman of the Board and Chief Executive Officer of the Corporation and the
minutes were kept by Vikki Robinson, the Corporate Secretary.
Mr. Kubbernus welcomed the stockholders and introduced Mr. Riaz
Mamdani, Director and Chief Financial Officer, Vikki Robinson, Corporate
Secretary, Arthur Wong, Director and John S. Burns, Director. Mr. Kubbernus then
introduced Greg Rodych from Ernst & Young, LLP, the Corporation's independent
accountants and Luke Iovine and David Luci of Paul, Hastings, Janofsky & Walker
LLP, the Corporation's American legal counsel. Mr. Kubbernus reported that after
the formal part of the stockholders meeting, he would give a brief presentation
and respond to any appropriate questions from stockholders.
Mr. Kubbernus then began the formal part of the Annual Meeting. He
reviewed the items to be considered by the stockholders at the Annual Meeting,
as set forth in the Notice of Meeting dated April 28, 2000. Mr. Kubbernus then
stated that the polls for each matter upon which stockholders would vote at the
Annual Meeting would open when such matter was called to a vote and would remain
open until he announced that the polls were closed. Mr. Kubbernus noted that the
results of the voting of each proposal would be announced near the end of the
Annual Meeting, immediately following the tabulation of the voting.
Mr. Kubbernus stated that the Board of Directors had fixed the close of
business on April 25, 2000 as the record date for the determination of
stockholders entitled to receive notice of and vote at this Annual Meeting. He
then explained that a certified list of stockholders entitled to vote at this
Annual Meeting was available and may be inspected by any stockholder and that
copies of the Notice of Meeting and Affidavit of Mailing were also available for
inspection. Mr. Kubbernus then instructed Ms. Robinson to file the list of
stockholders with the records of the Corporation and to file the Notice of
Meeting and Affidavit of Mailing with the minutes of the Annual Meeting.
Mr. Kubbernus then reported that the Board of Directors had appointed
Ms. Robinson as Inspector of Election and that she had taken the customary oath
of office which will be filed with the records of the Annual Meeting. Mr.
Kubbernus then explained that ballots had been prepared for use by those
individuals who intended to vote their shares in person at the Annual Meeting
and asked that any stockholder who wished to have a ballot raise their hand.
Those stockholders who raised their hands were given a ballot by Mr. Luci. Mr.
Kubbernus then asked Ms. Robinson, in her capacity as Inspector of Election, to
report on the number of shares represented at the meeting.
Ms. Robinson reported that there were represented at the Annual Meeting
in person or by proxy the holders of a total of 17,448,603 shares of Common
Stock and Special Series A Preferred Voting Stock and that the presence in
person or by proxy of holders of a majority of all
23
such votes that may be cast constituted a quorum. There being 17,448,603 votes
that may be cast at the Annual Meeting out of 31,012,241 votes which may be
cast, Ms. Robinson announced that a quorum existed.
Mr. Kubbernus than stated that the first matter to be considered was
the proposal to approve the minutes of the 1999 Annual Meeting of Stockholders.
Upon motion duly made by Greg Surbey and seconded by Andrew Tavender, the
following resolution was submitted to the stockholders:
RESOLVED: That the proposal to approve the minutes of the 1999 Annual Meeting of
the Stockholders, be, and hereby is, approved and adopted.
Thereupon, Mr. Kubbernus asked for any discussion on the motion, and
there being none, the stockholders proceeded to vote.
Mr. Kubbernus stated that the next matter to be considered was the
election of five directors of the Corporation for the ensuing year. Upon motion
duly made by Vera Gmitter and seconded by Greg Surbey, the following resolution
was submitted to the stockholders:
RESOLVED: That Robert J. Kubbernus, Riaz Mamdani, Julia L. Johnson, Arthur Wong
and John S. Burns, Q.C. be elected directors of the Corporation, to serve until
the 2001 Annual Meeting of Stockholders and until their successors are duly
elected and qualified.
Thereupon, Mr. Kubbernus asked for any discussion on the motion and,
there being none, the stockholders proceeded to vote.
Mr. Kubbernus then stated that the next matter to be considered was the
proposal to change the Corporations' state of incorporation from Nevada to
Delaware. He then explained that this matter was considered a non-routine
business item and could not be voted by brokers who held on behalf of clients
without obtaining the actual vote and that only a small percentage of
stockholders had the time and opportunity to cast a vote with respect to this
proposal . Therefore, the Board of Directors determined that the Annual Meeting
with regard to this matter be adjourned until 3:00pm local time on Friday, June
30, 2000 at the Jaws' boardroom on the 4th floor, 630-8th Avenue SW, Calgary,
Alberta in order to permit the stockholders to properly consider and cast their
vote on the proposal. He then said that pursuant to our bylaws, the affirmation
vote of a majority of the shares present, in person or by proxy, at this meeting
is necessary to approve the adjournment. Upon motion duly made by Kerk Hilton
and seconded by Vera Gmitter it was resolved to adjourn this motion until 3:00pm
on June 30, 2000 at the Jaws' boardroom on the 4th Floor, 630-8th Avenue SW,
Calgary, Alberta.
Thereupon, Mr. Kubbernus asked for any discussion on this motion, and
there being none he proceeded to the next item of business.
Mr. Kubbernus then stated that the next matter to be considered was the
proposal to ratify the selection of Ernst & Young, LLP as the Corporation's
independent auditors for the fiscal year ending December 31, 2000. Upon motion
duly made by Greg Surbey and seconded by Andrew Tavender, the following
resolution was submitted to stockholders:
RESOLVED: That the proposal to ratify the selection of Ernst & Young LLP as the
Corporations' independent auditors for the fiscal year ending December 31, 2000,
be and hereby is approved and adopted.
24
Thereupon, Mr. Kubbernus asked for any discussion on the motion, and
there being none, the stockholders proceeded to vote.
Mr. Kubbernus then announced that the business items on the agenda were
concluded and that the ballots would be collected. Mr. Luci proceeded to collect
the ballots. Mr. Kubbernus then stated that the polls were closed. After
tabulation of the votes, Mr. Kubbernus asked for the preliminary report of Ms.
Robinson.
Ms. Robinson reported that the holders of 17,448,603 votes entitled to
be cast at the Annual Meeting had voted to approve the minutes of the 1999
Annual Meeting of Stockholders. Mr. Kubbernus stated that the minutes of the
1999 Annual Meeting of Stockholders were approved.
Ms. Robinson reported that the holders of a plurality of votes cast at
the Annual Meeting had voted to elect Robert J. Kubbernus, Riaz Mamdani, Julia
L. Johnson, Arthur Wong and John S. Burns, QC as directors of the Corporation.
Mr. Kubbernus stated that the nominees were elected as directors of the
Corporation.
Ms. Robinson reported that the holders of 17,448,603 votes entitled to
be cast at the Annual Meeting had voted to ratify the selection of Ernst &
Young, LLP as the Corporations' independent auditors. Mr. Kubbernus declared
that Ernst & Young LLP selection had been ratified and approved.
Mr. Kubbernus then stated that the formal part of the meeting had been
completed and if there were no further business he would entertain a motion to
adjourn the meeting except for the proposal to change the Corporation's state of
incorporation which had been adjourned to 3:00pm on Friday, June 30, 2000. Upon
motion duly made by Kerk Hilton and seconded by Vera Gmitter the following
resolution was adopted:
RESOLVED: That the meeting be and hereby adjourned.
ADJOURNED.
Attest:
/s/ Vikki Robinson
----------------------------------------
Vikki Robinson
Corporate Secretary
25
SCHEDULE A-1
JAWS TECHNOLOGIES, INC.
RECONVENED/ADJOURNED 2000 ANNUAL MEETING OF STOCKHOLDERS
JUNE 30, 2000
MINUTES
The adjourned Annual Meeting of Stockholders ("the Meeting") of JAWS
Technologies, Inc.(the "Corporation") was held in the JAWS' boardroom on the 4th
floor, 630-8th Avenue SW, Calgary, Alberta on June 30, 2000 at 3:00pm local
time, pursuant to notice duly given.
The meeting was called to order by Stephen Spurgeon, General Counsel of
the Corporation and Chairman of the Meeting. The minutes were kept by Vikki
Robinson.
Mr. Spurgeon announced that the formal part of the meeting would be
conducted, votes would be taken and the meeting would be adjourned. He then
stated that after the formal part of the meeting he would respond to any
questions from stockholders.
Mr. Spurgeon reviewed the item of business to be considered by the
stockholders as set forth in the Notice of Meeting dated April 28, 2000. Mr.
Spurgeon then stated that the polls for the business item would open when such
matter was called to a vote and would remain open until he announced that the
polls were closed. He then stated that near the end of the meeting, after the
tabulation of the voting he would announce the results of the voting. He then
stated that a certified list of stockholders entitled to vote at the Meeting was
available and may be inspected by any stockholder. Mr. Spurgeon also stated that
copies of the Notice of Meeting and Affidavit of Mailing were available for
inspection as well. He then instructed Ms. Robinson to file the stockholder list
with the records of the Corporation and the Notice of Meeting and Affidavit of
Mailing with the minutes of the Meeting. He then stated that the Board of
Directors had appointed Ms. Robinson as Inspector of Election and that she had
taken the customary oath of office. Mr. Spurgeon asked Ms. Robinson, in her
capacity of Inspector of Election, to report on the number of shares represented
at the Meeting.
Ms. Robinson stated that there were present at the Meeting in person,
or by proxy a total of 18,498,030 shares of common stock and a total of
2,134,297 votes that may be cast in respect of the share of Special Series A
Preferred Voting Stock. She then stated that there being 20,632,327 votes that
may be cast at the Meeting out of 31,012,241 votes which may be cast and that
the presence in person or by proxy of a majority of all such votes that may be
cast constitute a quorum and therefore declared that a quorum existed.
Mr. Spurgeon than stated that the matter to be considered and voted
upon was the proposal to change the Corporation's state of incorporation from
Nevada to Delaware. Upon motion duly made by Kerk Hilton and seconded by Andrew
Tavender, the following resolution was submitted to stockholders:
RESOLVED: That the proposal to change the Corporation's domicile from Nevada to
Delaware, be and hereby is, approved and adopted in all respects.
Thereupon, Mr. Spurgeon asked for any discussion on the motion, and
there being none, asked if anyone required a ballot, no one required a ballot
and he declared the polls closed. Mr. Spurgeon then asked Ms. Robinson for the
preliminary report.
26
Ms. Robinson reported that the holders of 16,165,587 votes entitled to
be cast at this Meeting had voted to approve the change in the Corporation's
jurisdiction of incorporation from Nevada to Delaware. Mr. Spurgeon declared
that the change in the Corporation's jurisdiction from Nevada to Delaware had
been approved.
Mr. Spurgeon then stated that the formal part of the meeting had been
completed and if there was no further business, he would entertain a motion to
adjourn the Meeting.
Upon motion duly made by Andrew Tavender and seconded by Kerk Hilton,
the following resolution was adopted:
RESOLVED: That the meeting be and hereby is adjourned.
ADJOURNED.
Attest:
/s/ Vikki Robinson
----------------------------------------
Vikki Robinson
Corporate Secretary
27
JAWZ INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF JAWS TECHNOLOGIES, INC.
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 29, 2001.
The undersigned, as a holder of shares of common stock, ("Shares") in JAWZ
Inc. (the "Company"), hereby appoints Robert J. Kubbernus and Peter Labrinos,
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 Annual Meeting of the Stockholders to be held on June 29, 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 Annual Meeting.
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" PROPOSALS 1, 2, AND
3.
Proposal 1 -- Approval of Minutes of 2000 Annual Meeting: Approval of the
minutes of the 2000 Annual Meeting of Stockholders.
(check one box) [ ] For [ ] Against [ ] Abstain
Proposal 2 -- The Election of Directors Proposal: Approval of the election of
Robert J. Kubbernus, Julia L. Johnson, Arthur Wong, James Canton and John S.
Burns Q.C. to serve as a director of the Company until the next Annual Meeting
of the Stockholders.
(check one box for each director) Robert J. Kubbernus [ ] For [ ] Against [ ] Abstain
Julia L. Johnson [ ] For [ ] Against [ ] Abstain
James Canton [ ] For [ ] Against [ ] Abstain
Arthur Wong [ ] For [ ] Against [ ] Abstain
John S. Burns Q.C [ ] For [ ] Against [ ] Abstain
Proposal 3 -- The Independent Auditors Proposal: Approval to ratify selection by
the Board of Directors of the Company of Ernst & Young LLP as the independent
auditors of the Company for the fiscal year ending December 31, 2001.
(check one box) [ ] For [ ] Against [ ] Abstain
2
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THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER.
IF NO DIRECTION IS MADE THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2, AND 3. AT
THE DISCRETION OF EITHER ROBERT J. KUBBERNUS OR PETER LABRINOS, THIS PROXY SHALL
BE VOTED IN ORDER TO TRANSACT ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE
THE MEETING.
Date: __________________________________________ , Please print and sign your name below exactly as it
2001 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.
------------------------------------------------------
Signature (title, if any)
------------------------------------------------------
Signature, if held jointly
------------------------------------------------------
Title or Authority
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.
3