SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D)
of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) November 4, 1999
JAWS TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
<TABLE>
<CAPTION>
<S> <C>
7371 98-0167013
(Commission File Number) (IRS Employer Identification Number)
</TABLE>
1013 17TH AVENUE SW T2T 0A7
CALGARY, ALBERTA CANADA
(Address of principal executive offices)
(403) 508-5055
(Registrant's telephone number, including area code)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
- --------------------------------------------------
On November 4, 1999, JAWS Technologies, Inc., a Nevada corporation ("JAWS
U.S.") entered into an agreement to acquire, through its wholly owned
subsidiary, JAWS Technologies Inc., an Alberta corporation ("JAWS Canada"), all
of the outstanding common shares of the capital stock of Offsite Data Services
Ltd. ("Offsite"). The agreement also provides for the acquisition of all of the
outstanding options and warrants of Offsite.
The consideration to be paid to acquire Offsite is $0.60 for each share of
Offsite and will be paid by the delivery to Offsite shareholders of Exchangeable
Shares of JAWS Canada which may be exchanged, at each shareholders option, for
shares of common stock of JAWS U.S. The deemed value of each share of JAWS U.S.
will be $1.70 (one (1) Offsite share will be equal to 0.3524 JAWS U.S. common
shares). The Exchangeable Shares will have the same voting rights, dividend
entitlements and other attributes of the Shares of common stock of JAWS U.S.
Holders of Offsite warrants will be offered warrants of JAWS Canada on
substantially the same terms as the Offsite warrants except that the JAWS
warrants will be exercisable into Exchangeable Shares. On a fully diluted basis,
Offsite has approximately 16.8 million shares, including shares issuable on
exercise of all warrants and options outstanding. The price per share was
determined by a premium on Offsite's trading price on the Alberta Stock Exchange
and consideration was further determined on an arms-length basis through
negotiations between JAWS and the management and Board of Directors of Offsite.
When determining the purchase price for Offsite, JAWS considered the value of
all of the assets of Offsite including the future potential of integrating
Offsite's product lines with JAWS' product lines. The offer by JAWS U.S. to
acquire all of the outstanding shares, options and warrants of Offsite is
subject to certain conditions being satisfied including the release of certain
shares of Offsite from escrow and the entering into of lock-up agreements by
certain shareholders of Offsite. Consummation of the transaction is also
conditional upon the deposit of at least 90% of the outstanding shares of
Offsite under the offer and the receipt of all necessary regulatory and
government approvals. The offer is expected to expire on or about December 21,
1999. Documents relating to the transaction are expected to be sent to
shareholders of Offsite on or before November 30, 1999.
It is the intention of JAWS U.S. to acquire all remaining shares of Offsite
not deposited under the offer pursuant to a subsequent acquisition transaction
as soon as practicable after the completion of the offer.
Prior to the transaction described above, there was no material
relationship between the officers, directors and shareholders of Offsite and
JAWS or any of its affiliates, directors, officers or any associate of any such
directors or officers.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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Financial Statements
(a) Financial Statements of business acquired (not applicable).
(b) Pro Forma financial information (not applicable).
Exhibits
Exhibit A - Pre-Acquisition Agreement among JAWS Technologies Inc. and
Offsite Data Services Ltd(filed herewith).
Exhibit B - Press Release dated November 4, 1999 (filed herewith).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
JAWS TECHNOLOGIES, INC.
By:/s/Robert J. Kubbernus
------------------------
Robert J. Kubbernus, President
Date: November 15, 1999
<PAGE>
Exhibit A - Page 37
Exhibit A - Page 1
EXHIBIT A
PRE-ACQUISITION AGREEMENT
THIS AGREEMENT made as of the 2nd day of November, 1999,
AMONG:
JAWS TECHNOLOGIES INC., a corporation duly incorporated under and governed by
the laws of the Province of Alberta and having its head and principal office in
the City of Calgary, in the Province of Alberta (hereafter referred to as "JAWS
CANADA")
OF THE FIRST PART,
- and -
JAWS TECHNOLOGIES INC., a corporation duly incorporated under and governed by
the laws of the State of Nevada (hereafter referred to as "JAWS US")
OF THE SECOND PART,
(Jaws Canada and Jaws US are hereafter sometimes referred to together as "JAWS")
- and -
OFFSITE DATA SERVICES LTD., a corporation duly incorporated under and governed
by the laws of the Province of Alberta and having its head and principal office
in the City of Calgary, in the Province of Alberta (hereafter referred to as
"ODS")
OF THE THIRD PART.
WHEREAS the Board of Directors of each of Jaws Canada, Jaws US and ODS have
determined that it is in the best interests of their respective corporations and
shareholders that Jaws and ODS combine their business interests with the result
that there shall be one economic enterprise and that such combination be
effected through an offer by Jaws Canada to purchase all of the outstanding
shares of ODS;
AND WHEREAS the Board of Directors of ODS has determined to unanimously
recommend acceptance of the Jaws Canada offer to the shareholders of ODS;
AND WHEREAS the Board of Directors of ODS has determined that it would be in the
best interests of ODS and its shareholders to enter into this Agreement;
AND WHEREAS Jaws Canada is willing to make an offer subject to the terms and
conditions of this Agreement.
NOW THEREFORE IN CONSIDERATION OF the mutual covenants hereinafter
contained and other good and valuable consideration (the receipt and adequacy
whereof is hereby acknowledged), the parties hereto agree as follows:
INTERPRETATION
DEFINITIONS
In this Agreement, unless there is something in the subject matter or
context inconsistent therewith:
"A WARRANTS" means warrants issued pursuant to a Warrant Indenture dated
November 25, 1998, each warrant entitling the holder thereof to acquire one ODS
Share upon payment of $0.25 and which expire on December 15, 1999;
"B WARRANTS" means warrants issued pursuant to a Warrant Indenture dated
November 25, 1998, each warrant entitling the holder thereof to a acquire one
ODS Share upon payment of $0.40 and which expire on March 15, 2000;
"C WARRANTS" means warrants issued to Bob Mahood, each warrant entitling the
holder thereof to acquire one ODS Share upon payment of $0.50 ($0.55 in some
circumstances.)
"ACT" means the Business Corporations Act (Alberta) as the same has been and may
hereafter from time to time be amended;
"AGREEMENT", "THIS AGREEMENT", "HEREIN", "HERETO", and "HEREOF" and similar
expressions refer to this Agreement, as the same may be amended or supplemented
from time to time and, where applicable, to the appropriate Schedules hereto;
"ASE" means the Alberta Stock Exchange;
"BUSINESS DAY" means any day excepting a Saturday, Sunday or statutory holiday
in Calgary, Alberta;
"DILUTED BASIS" means, with respect to the number of outstanding ODS Shares at
any time, such number of outstanding ODS Shares calculated assuming that all
outstanding options and other rights to purchase ODS Shares are exercised;
"EFFECTIVE TIME" means the time that Jaws shall have acquired ownership of and
paid for at least the Minimum Required Shares pursuant to the terms of the
Offer;
"EXPIRY TIME" means the Initial Expiry Time unless the Offer has been extended,
in which case it means the expiry time of the Offer as extended from time to
time;
"IN WRITING" means written information including documents, files, records,
books and other materials made available, delivered or produced to one party by
or on behalf of the other party in the course of conducting its due diligence
review in respect of such other party and its subsidiaries between October 29,
1999, being the date of the Confidentiality Agreement between ODS and Jaws, and
the date of this Agreement;
"INITIAL EXPIRY TIME" means 6:00 p.m. (Calgary time) on the first Business Day
which falls after the 21st day following the day of the mailing of the Offer
Documents to the shareholders of ODS (where the first day of this period is the
day immediately following the day of mailing);
"JAWS" means Jaws US and Jaws Canada together;
"JAWS CANADA" means Jaws Technologies Inc., the party of the first part;
"JAWS CANADA GOVERNING DOCUMENTS" means the Certificate and Articles of
Incorporation and By-Laws of Jaws Canada and all amendments thereto;
"JAWS EXCHANGEABLE SHARE" means a share of Jaws Canada which shall be the
economic equivalent of one share in the common stock of Jaws US;
"JAWS US" means Jaws Technologies Inc., the party of the second part;
"JAWS US GOVERNING DOCUMENTS" means the Corporate Charter and Articles of
Incorporation and By-laws of Jaws US and all amendments thereto;
"MATERIAL ADVERSE CHANGE" means any change (or any condition, event or
development involving a prospective change) in the business, operations, results
of operations, assets, capitalization, financial condition, licenses, permits,
concessions, rights, liabilities, prospects or privileges, whether contractual
or otherwise, of a party or any of its subsidiaries which is materially adverse
to the business of such party and its subsidiaries considered as a whole other
than a change (i) which arises out of a matter that has been publicly disclosed
or otherwise disclosed in writing to the other parties to this Agreement, (ii)
resulting from conditions affecting the industry in which the parties hereto
operate as a whole, or (iii) resulting from general economic, financial,
currency exchange, securities or commodity market conditions in Canada or
elsewhere;
"MARKET PRICE" means U.S.$1.70. The Market Price shall be converted to Canadian
dollars using the exchange rate on the date hereof based on the noon buying rate
in the City of New York for cable transfers in Canadian dollars as certified by
the Federal Reserve Bank of New York;
"MINIMUM CONDITION" means the condition set forth in paragraph (a) of Schedule
A;
"MINIMUM REQUIRED SHARES" means at least that number of the outstanding ODS
Shares required pursuant to the Minimum Condition unless Jaws Canada shall have
waived the Minimum Condition in which case "Minimum Required Shares" means that
number of the outstanding ODS Shares which Jaws Canada takes up on the Take-up
Date, provided that such number of ODS Shares shall be at least that number of
ODS Shares tendered pursuant to the pre-tender agreements referred to in Section
2.2(b);
"ODS" means Offsite Data Services Ltd.;
"ODS FOUNDERS" means Bob Mahood, Trent Johnsen, Michael Rowell and Greg Baldick;
"ODS GOVERNING DOCUMENTS" means the Certificate and Articles of Incorporation
and By-laws of ODS and all amendments thereto;
"ODS OPTIONS" means the outstanding options to acquire ODS Shares under the
Stock Option Plan;
"ODS SHARES" means common shares in the share capital of ODS;
"OFFER" has the meaning set forth in Section 2.1(b);
"OFFER DOCUMENTS" has the meaning set forth in Section 2.3(a);
"OFFICER OBLIGATIONS" means any obligations or liabilities of ODS or any
subsidiary of ODS to pay any amount to its officers, directors, or employees,
other than for salary, bonuses under their existing bonus arrangements and
directors' fees in the ordinary course in each case in amounts consistent with
historic practices and, without limiting the generality of the foregoing,
Officer Obligations shall include the obligations of ODS or any of its
subsidiaries to officers or employees for severance or termination payments on
the change of control of ODS pursuant to any executive involuntary severance and
termination agreements in the case of officers and pursuant to ODS' severance
policy in the case of employees;
"RELATED PARTY TRANSACTION" means any agreement entered into by a corporation
with an officer or director of the corporation except in the ordinary course of
business or any transaction in which a debt or obligation is incurred by an
officer or director of the corporation;
"SECOND STAGE TRANSACTION" has the meaning set forth in Section 4.1;
"SECURITIES AUTHORITIES" means the appropriate securities commissions or similar
regulatory authorities in Canada and each of the provinces and territories
thereof and in the United States and each of the states thereof;
"SECURITIES LAWS" has the meaning set forth in Section 2.3(a);
"STOCK OPTION PLAN" means the stock option plan of ODS approved by the
shareholders of ODS on January 21, 1998;
"SUBSIDIARY" has the meaning set forth in the Act;
"SUPERIOR TAKE-OVER PROPOSAL" means any bona fide written Take-over Proposal
which, in the opinion of ODS' Board of Directors after consultation with its
financial advisors, constitutes a commercially feasible transaction for which
adequate financial arrangements have been made and which could be carried out
within a time frame that is reasonable in the circumstances and, if consummated,
would be superior to the Offer from a financial point of view to ODS and to ODS'
shareholders;
"TAKE-OVER PROPOSAL" means, in respect of ODS or its subsidiaries or their
assets, any proposals or offers regarding any take-over bid, merger,
consolidation, amalgamation, arrangement, sale of a material amount of assets,
sale of treasury shares (other than pursuant to options under the Stock Option
Plan) or other business combination or similar transaction; and
"TAKE-UP DATE" means the date that Jaws Canada first takes up and acquires ODS
Shares pursuant to the Offer;
SINGULAR, PLURAL, ETC.
Words importing the singular number include the plural and vice versa and
words importing gender include the masculine, feminine and neuter genders.
DEEMED CURRENCY
In the absence of a specific designation of any currency any undescribed
dollar amount herein shall be deemed to refer to Canadian dollars.
HEADINGS, ETC.
The division of this Agreement into Articles and Sections, the provision of
a table of contents hereto and the insertion of the recitals and headings are
for convenience of reference only and shall not affect the construction or
interpretation of this Agreement and, unless otherwise stated, all references in
this Agreement or in the Schedules to Articles, Sections and Schedules refer to
Articles, Sections and Schedules of and to this Agreement or of the Schedules in
which such reference is made.
DATE FOR ANY ACTION
In the event that any date on which any action is required to be taken
hereunder by any of the parties hereunder is not a Business Day, such action
shall be required to be taken on the next succeeding day which is a Business
Day.
GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with the
laws of the Province of Alberta and the laws of Canada applicable therein.
ATTORNMENT
The parties hereby irrevocably and unconditionally consent to and submit to
the courts of the Province of Alberta for any actions, suits or proceedings
arising out of or relating to this Agreement or the matters contemplated hereby
(and agree not to commence any action, suit or proceeding relating thereto
except in such courts) and further agree that service of any process, summons,
notice or document by single registered mail to the addresses of the parties set
forth in this Agreement shall be effective service of process for any action,
suit or proceeding brought against either party in such court. The parties
hereby irrevocably and unconditionally waive any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
matters contemplated hereby in the courts of the Province of Alberta and hereby
further irrevocably and unconditionally waive and agree not to plead or claim in
any such court that any such action, suit or proceeding so brought has been
brought in an inconvenient forum.
INCORPORATION OF SCHEDULES
Schedules A to E attached hereto and described below shall, for all
purposes hereof, form an integral part of this Agreement.
Schedule A Conditions to the Offer
Schedule B Form of Pre-tender Agreement
Schedule C Form of Joint Press Release
Schedule D Conditions in Favour of ODS
THE OFFER
THE OFFER
Jaws shall mail before 11:59 p.m. (Calgary time) on November 30, 1999, an offer
(the "Offer", which term shall include any amendments to, or extensions of, such
Offer, including, without limitation, increasing the consideration, removing or
waiving any condition or extending the date by which ODS Shares may be tendered)
to purchase all of the outstanding ODS Shares for a price of $0.88 for each ODS
Share with the consideration to be paid by the delivery to ODS shareholders of
Jaws Exchangeable Shares. Jaws Canada will pay for each ODS Share that number
of Jaws Exchangeable Shares equal to $0.88 divided by the Market Price of one
share of Jaws US common stock. The Offer shall be made in accordance with
Securities Laws and be subject only to the conditions set forth in Schedule A
hereto. The Offer shall be prepared in the English language and, if necessary,
the French language, and in accordance with Securities Laws. Jaws shall provide
ODS with a draft copy of the Offer Documents prior to mailing for its review and
comment. In connection with the Offer, Jaws Canada will purchase the
outstanding warrants of ODS in exchange for warrants of Jaws Canada which shall
contain substantially the same terms and conditions as the warrants of ODS
except that they will be exercisable for Jaws Exchangeable Shares.
The Offer shall expire on the Initial Expiry Time, except that the Offer may be
extended, subject to Section 2.1(c), if the conditions thereto set forth in
Schedule A are not satisfied on the date and time at which the Offer expires and
if Jaws Canada determines, acting reasonably, that there is a reasonable
prospect that the conditions of the Offer may be satisfied prior to the Expiry
Time.
Subject to the satisfaction or waiver of the conditions set forth in Schedule A
hereto, Jaws Canada shall, as soon as is practicable in the circumstances and in
any event within the time periods required by law, accept for payment and pay
for all ODS Shares validly tendered (and not properly withdrawn) pursuant to the
Offer. Jaws Canada shall use all commercially reasonable efforts to consummate
the Offer, subject to the terms and conditions thereof.
Notwithstanding the foregoing, if any of the conditions set out in paragraph
[(B)] of Schedule A has not been satisfied or waived on the Initial Expiry Time,
Jaws agrees to extend the Offer for such period of time, not to exceed 60 days
following the Initial Expiry Time, as is necessary to satisfy or fulfill such
condition, but only if Jaws has made a bona fide determination, acting
reasonably, that there is a reasonable prospect that such condition may be
satisfied within such 60 day period.
It is agreed that Jaws Canada may, in its sole discretion:
waive any term or condition of the Offer for its benefit provided that if Jaws
Canada takes up and pays for any ODS Shares it shall acquire not less than the
Minimum Required Shares; and
amend any term or condition of the Offer, provided that Jaws shall not change
the number of ODS Shares for which the Offer is made, decrease or change the
form of the consideration to be paid for each ODS Share, amend the Offer or
modify the conditions to the Offer in a manner that is, in the opinion of ODS,
acting reasonably, adverse to the holders of ODS Shares.
Jaws Canada agrees to provide ODS with not less than two days prior written
notice of any waiver or amendment of any term or condition of the Offer.
Jaws Canada will instruct the depositary under the Offer to advise ODS from time
to time, not less frequently than every two Business Days until the day
immediately prior to the Expiry Time and thereafter on an hourly basis, if
requested by ODS and in such manner as ODS may reasonably request, as to the
number of ODS Shares that have been tendered (and not withdrawn) under the
Offer.
Jaws Canada's obligation to make the Offer as set forth in Section 2.1(a) is
subject to the following conditions being satisfied or waived by Jaws Canada:
Release of ODS Shares from Escrow
The ASE shall have provided its approval to the tendering to the Offer of all of
the ODS Shares held by the ODS Founders, pursuant to the pre-tender agreements
referred to in Section 2.2(b) no later than November 26, 1999;
Pre-tender Agreements
each of the ODS Founders shall have entered into the pre-tender agreements
referred to in Section 2.2(b) no later than November 26, 1999;
Escrow Agreements with Jaws Canada
each of the ODS Founders shall have entered into an escrow agreement with Jaws
Canada no later than November 26, 1999 in a form satisfactory to Jaws Canada
pursuant to which each of the ODS Founders shall agree not to sell, assign,
convey or otherwise dispose of or exchange for shares of US common stock (A) 45%
of the Jaws Exchangeable Shares issued to them in connection with the Offer
until after the first anniversary of the Effective Time and (B) 45% of the Jaws
Exchangeable Shares issued to them in connection with the Offer until after the
second anniversary of the Effective Time;
Outstanding ODS Options
each and every holder of ODS Options shall have agreed no later than November
14, 1999 to amend the terms of the ODS Options so that such ODS Options are
exercisable for Jaws Exchangeable Shares rather than ODS Shares and any
documentation relating thereto shall be in a form satisfactory to Jaws, but
shall provide that the options for Keith Smith and Ben Dulley expire no less
than one year from the Effective Time; and
ODS Employment Agreements
each and every employee of ODS who is a party to an employment agreement with
ODS shall have agreed no later than November 14, 1999 to waive any provisions
contained in such employment agreement relating to termination thereof upon the
occurrence of a change of control of ODS and such waivers shall be in a form
satisfactory to Jaws.
ODS DIRECTORS' CIRCULAR
ODS hereby consents to the Offer as set forth in Section 2.1 and confirms that
its Board of Directors (other than the ODS Founders who intend to abstain from
voting) has unanimously approved the Offer and this Agreement and has resolved
to unanimously recommend acceptance of the Offer by the holders of ODS Shares,
subject to Sections 2.2(c) and (e), provided that the Offer is not amended
except in accordance with the terms of this Agreement. ODS shall prepare and
mail at the same time as Jaws Canada mails the Offer, in the English language,
and, if necessary, the French language, a directors' circular prepared in
accordance with Securities Laws. The directors' circular will set forth (among
other things) the recommendation of the Board of Directors of ODS as described
above. ODS shall provide Jaws with a draft copy of the directors' circular
prior to mailing for their review and comment.
The Board of Directors of ODS has been advised that each of the ODS Founders
intends to tender his ODS Shares under the Offer and, in furtherance thereof, to
execute and deliver to Jaws a pre-tender agreement in the form or substantially
in the form of the agreement attached hereto as Schedule B. The directors'
circular shall reflect the execution and delivery of such pre-tender agreements
and the intention of the ODS Founders to tender their ODS Shares pursuant to the
Offer.
Notwithstanding Section 2.2(a), in the event that, prior to the expiry of the
Offer, a Superior Take-over Proposal is offered or made to the holders of ODS
Shares or ODS, the Board of Directors of ODS may withdraw, modify or change any
recommendation regarding the Offer if, in the opinion of the Board of Directors
acting in good faith after written advice from outside counsel (confirmation of
which shall be immediately delivered to Jaws), the failure to so withdraw,
modify or change any recommendation regarding the Offer would be inconsistent
with the performance by the directors of ODS of their fiduciary duties under
applicable law. ODS shall as soon as possible but in any event prior to 10:00
a.m. (Calgary time) on the day following receipt of any Take-over Proposal,
advise orally and in writing that a Take-over Proposal has been offered or made
to the Board of Directors of ODS or to ODS (which notice in writing must
identify the party proposing such transaction and the terms and conditions
thereof, which must include a copy of the terms and conditions of any written
form of Take-over Proposal and which must provide an undertaking to provide to
Jaws any further documents relating to the terms or conditions thereof delivered
to the Board of Directors of ODS or to ODS by the offeror). If the Board of
Directors of ODS believes that the Take-over Proposal constitutes a Superior
Take-over Proposal, ODS shall give Jaws at least four Business Days advance
notice of any action to be taken by the Board of Directors of ODS to withdraw,
modify or change any recommendation regarding the Offer or to enter into an
agreement to implement the Superior Take-over Proposal. Such notice shall
provide to Jaws Canada the right during such four Business Days to advise the
Board of Directors of ODS that it will immediately announce and as soon as
possible in the circumstances amend its Offer to provide that the holders of ODS
Shares shall receive a value per ODS Share equal to or having a value greater
than the value per ODS Share provided in the Superior Take-over Proposal. If
Jaws Canada so advises the Board of Directors prior to the expiry of such four
Business Days period, the Board of Directors of ODS shall not withdraw, modify
or change any recommendation with respect to the Offer, as so amended, or take
any action to approve or implement the Superior Take-over Proposal.
The Board of Directors of ODS may withdraw, modify or change any recommendation
with respect to the Offer:
as permitted under Section 2.2(c); or
in the event that the conditions set forth in Schedule D hereto are not
satisfied or waived at the applicable time by ODS in its discretion acting
reasonably;
in the event that there has been a misrepresentation, breach or non-performance
by Jaws of any representation, warranty or covenant contained in this Agreement
provided that any misrepresentation, breach or non-performance would have or
would be reasonably likely to have a material adverse effect on Jaws and
provided further that Jaws has been given notice thereof and not less than 10
days to cure any such misrepresentation, breach or non-performance; or
(iv) in the event that on or before November 5, 1999 written notice is given
to Jaws that searches of the public record in the State of Nevada have disclosed
litigation or liabilities (contingent or otherwise) that in the reasonable
opinion of the ODS directors is material.
For purposes of this Section 2.2(d), "material adverse effect" means any event,
change or effect that is or would reasonably be expected to be materially
adverse to the financial condition, operations, assets, liabilities or business
of Jaws and its subsidiaries considered as a whole other than a change (A) which
arises out of a matter that has been publicly disclosed or otherwise disclosed
in writing to ODS, (B) resulting from changes in general economic conditions or
conditions generally affecting the industry in which Jaws operates, or (C)
resulting from general economic, financial, currency exchange, securities or
commodity market conditions in Canada or elsewhere.
Notwithstanding Section 2.2(a), the obligation of the Board of Directors of ODS
to unanimously recommend acceptance of the Offer by the holders of ODS Shares is
subject to the receipt by the Board of Directors of ODS of a fairness opinion
from its financial advisers in a form reasonably satisfactory to the Board of
Directors of ODS.
OFFER DOCUMENTS
Within the time periods required by law, Jaws Canada shall file or cause to be
filed with the appropriate Securities Authorities an Offer to Purchase and
Take-over Circular and the related Letter of Transmittal and Notice of
Guaranteed Delivery pursuant to which the Offer will be made (collectively, the
"Offer Documents"). The Offer Documents, when filed with Securities Authorities
and when mailed to holders of ODS Shares, shall contain (or shall be amended in
a timely manner to contain) all information which is required to be included
therein in accordance with the Act and any applicable Canadian provincial
securities laws, United States securities laws, the "blue sky" or securities
laws of the states of the United States and any other applicable law
(collectively, the "Securities Laws").
ODS agrees to provide such reasonable assistance as Jaws or its agents may
reasonably request in connection with communicating the Offer and any amendments
and supplements thereto to the holders of the ODS Shares and to such other
persons as are entitled to receive the Offer under Securities Laws, including
providing lists of the shareholders of ODS and of the holders of ODS Options and
other securities convertible into or exchangeable for ODS Shares (to the extent
known by ODS) and mailing labels with respect to all such holders of securities
as soon as possible after the date of this Agreement but in any event no later
than the close of business in Calgary on November 15, 1999 and updates or
supplements thereto from time to time as may be requested by Jaws.
PUBLICITY AND SOLICITATION
PUBLICITY
Each of Jaws and ODS shall receive the prior consent, not to be unreasonably
withheld, of the other parties prior to issuing, or permitting any of its
subsidiaries, directors, officers, employees or agents to issue any press
release or other written statement to the press or any third party with respect
to this Agreement or the transactions contemplated hereby. Jaws and ODS shall
not issue any such press release or make any such public statement prior to such
consent, except upon the advice of counsel that such action is required by
applicable law or by obligations pursuant to any listing agreement with a stock
exchange and only after using its best efforts to consult the other party taking
into account the time constraints to which it is subject as a result of such law
or obligation.
ODS and Jaws agree that the press release attached hereto as Schedule C shall be
issued immediately following the execution of this Agreement.
TRANSACTIONS FOLLOWING COMPLETION OF THE OFFER
SECOND STAGE TRANSACTION
If Jaws Canada takes up and pays for ODS Shares pursuant to the terms of
the Offer, and thereby acquires at least the Minimum Required Shares, Jaws
Canada agrees to use all commercially reasonable efforts to acquire, and ODS
agrees to use all commercially reasonable efforts to assist Jaws Canada in
acquiring, the balance of the ODS Shares as soon as practicable and in any event
within a period of six months following the Take-up Date by way of a statutory
arrangement, amalgamation, merger, reorganization, consolidation,
recapitalization or other type of acquisition transaction or transactions
("Second Stage Transaction") carried out for a consideration per ODS Share not
less than the consideration paid pursuant to the Offer. Nothing herein shall be
construed to prevent Jaws from acquiring, directly or indirectly, additional ODS
Shares in the open market or in privately negotiated transactions, in accordance
with Securities Laws (including by way of compulsory acquisition) following
completion of the Offer.
INFORMATION CIRCULAR, ETC.
Without limiting Section 4.1, ODS agrees that if Jaws Canada is required to
effect a Second Stage Transaction which requires approval of ODS' shareholders
in a meeting of ODS' shareholders, ODS shall take all action necessary in
accordance with the Securities Laws, other applicable Canadian laws, the ODS
Governing Documents and the requirements of the ASE or any other regulatory
authority having jurisdiction to duly call, give notice of, convene and hold a
meeting of its shareholders as promptly as practicable to consider and vote upon
the action proposed by Jaws Canada. In the event of such a meeting or meetings,
ODS shall use all commercially reasonable efforts to mail to its shareholders an
Information Circular with respect to the meeting of ODS' shareholders. The term
"Information Circular" shall mean such proxy or other required informational
statement or circular, as the case may be, and all related materials at the time
required to be mailed to ODS' shareholders and all amendments or supplements
thereto, if any. Jaws and ODS each shall use all commercially reasonable
efforts to obtain and furnish the information required to be included in any
Information Circular. The information provided and to be provided by Jaws and
ODS for use in the Information Circular, on both the date the Information
Circular is first mailed to ODS' shareholders and on the date any such meeting
is held, shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading and will comply in all material respects with all applicable
requirements of law. Jaws and ODS each agree to correct promptly any such
information provided by it for use in any Information Circular which shall have
become false or misleading.
REPRESENTATIONS AND WARRANTIES OF ODS
As of the date hereof, ODS hereby represents and warrants to Jaws as
follows and acknowledges that Jaws is relying upon these representations and
warranties in connection with the entering into of this Agreement:
ORGANIZATION AND QUALIFICATION
ODS is a corporation duly incorporated and organized and validly subsisting
under the laws of the Province of Alberta and has the requisite corporate power
and authority to carry on its business as it is now being conducted. Each of
ODS' subsidiaries is a corporation duly incorporated and organized and validly
subsisting under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to carry on its business as now being
conducted. ODS and each of its subsidiaries is duly registered to do business
and is in good standing in each jurisdiction in which the character of its
properties, owned or leased, or the nature of its activities make such
registration necessary, except where the failure to be so registered or in good
standing would not have a material adverse effect on ODS and its subsidiaries
taken as a whole.
AUTHORITY RELATIVE TO THIS AGREEMENT
ODS has the requisite corporate authority to enter into this Agreement and
to carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by ODS' Board of Directors, and no other corporate proceedings
on the part of ODS are necessary to authorize this Agreement (except for
obtaining shareholder approval in respect of any Second Stage Transaction) and
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by ODS and constitutes the legal, valid and binding obligation of ODS
enforceable against ODS in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and to general principles
of equity.
NO VIOLATIONS
Except as previously disclosed in writing to Jaws, neither the execution and
delivery of this Agreement by ODS, the consummation of the transactions
contemplated hereby nor compliance by ODS with any of the provisions hereof
will: (i) violate, conflict with, or result in breach of any provision of,
require any consent, approval or notice under, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
or result in a right of termination or acceleration under, or result in a
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of ODS or any of its subsidiaries under, any of the terms,
conditions or provisions of (x) the ODS Governing Documents or (y) any material
note, bond, mortgage, indenture, loan agreement, deed of trust, agreement, lien,
contract or other instrument or obligation to which ODS or any of its
subsidiaries is a party or to which any of them, or any of their respective
properties or assets, may be subject or by which ODS or any of its subsidiaries
is bound; or (ii) subject to compliance with the statutes and regulations
referred to in Section 5.3(b), violate any judgment, ruling, order, writ,
injunction, determination, award, decree, statute, ordinance, rule or regulation
applicable to ODS or any of its subsidiaries (except, in the case of each of
clauses (i) and (ii) above, for such violations, conflicts, breaches, defaults,
terminations which, or any consents, approvals or notices which if not given or
received, would not have any material adverse effect on the business, operations
or financial condition of ODS and its subsidiaries taken as a whole or on the
ability of ODS to consummate the transactions contemplated hereby).
Except as previously disclosed in writing to Jaws, other than in connection with
or in compliance with the provisions of Securities Laws, the rules of the ASE,
the United States Securities Exchange Act of 1934, as amended, and state
securities or "blue-sky" laws of the states of the United States, as amended,
(i) there is no legal impediment to ODS' consummation of the transactions
contemplated by this Agreement and (ii) no filing or registration with, or
authorization, consent or approval of, any domestic or foreign public body or
authority is necessary by ODS in connection with the making or the consummation
of the Offer, except for such filings or registrations which, if not made, or
for such authorizations, consents or approvals, which, if not received, would
not have a material adverse effect on the ability of ODS to consummate the
transactions contemplated hereby.
CAPITALIZATION
As of the date hereof, the authorized share capital of ODS consists of an
unlimited number of common shares, Class A shares, preferred shares, Special A
shares and Special B shares. As of the date hereof, 12,565,528 ODS Shares are
issued and outstanding. No other shares are issued and outstanding. As of the
date hereof, 1,040,584 ODS Shares are issuable pursuant to the exercise of
outstanding ODS Options granted under the Stock Option Plan. As of the date
hereof, ODS has 928,976 A Warrants, 1,803,250 B Warrants and 500,000 C Warrants
issued and outstanding. Except as set forth above, there are no options,
warrants or other rights, agreements or commitments of any character whatsoever
requiring the issuance, sale or transfer by ODS of any shares of ODS (including
the ODS Shares) or any securities convertible into, or exchangeable or
exercisable for, or otherwise evidencing a right to acquire, any shares of ODS
(including the ODS Shares), nor are there any outstanding stock appreciation
rights, phantom equity or similar rights, agreements, arrangements or
commitments based upon the book value, income or other attribute of ODS. All
outstanding ODS Shares have been duly authorized and validly issued, are fully
paid and non-assessable and are not subject to, nor were they issued in
violation of, any preemptive rights, and all ODS Shares issuable upon exercise
of outstanding stock options in accordance with their respective terms will be
duly authorized and validly issued, fully paid and non-assessable and will not
be subject to any preemptive rights.
NO MATERIAL ADVERSE CHANGE
Since December 31, 1998, there has not been any Material Adverse Change.
NO UNDISCLOSED MATERIAL LIABILITIES
Except (a) as disclosed or reflected in the consolidated internal interim
unaudited financial statements of ODS as at June 30, 1999 previously delivered
to Jaws, and (b) for liabilities and obligations (i) incurred in the ordinary
course of business and consistent with past practice, (ii) pursuant to the terms
of this Agreement, or (iii) as disclosed in writing to Jaws, neither ODS nor any
of its subsidiaries has incurred any liabilities of any nature, whether accrued,
contingent or otherwise (or which would be required by generally accepted
accounting principles to be reflected on a consolidated balance sheet of ODS and
its subsidiaries) that have constituted or would be reasonably likely to
constitute a Material Adverse Change.
IMPAIRMENT
The making of the Offer will not result in Material Adverse Change.
OFFICER OBLIGATIONS
The Officer Obligations do not exceed an aggregate of $435,000.
BROKERAGE FEES
ODS has not retained nor will it retain any financial advisor, broker,
agent or finder or paid or agreed to pay any financial advisor, broker, agent or
finder on account of this Agreement, any transaction contemplated hereby or any
transaction presently ongoing or contemplated, except that
PricewaterhouseCoopers LLP and Evans & Evans Inc. have been retained as ODS'
financial advisors in connection with certain matters including the transactions
contemplated hereby. ODS has delivered to Jaws a true and complete copy of its
agreement with PricewaterhouseCoopers LLP and Evans & Evans Inc.
CONDUCT OF BUSINESS
Since June 30, 1999 neither ODS nor any of its subsidiaries has taken any
action that would be in violation of Section 8.1 if such provision had been in
effect since such date, other than violations which would not have any material
adverse effect on the business, operations or financial condition of ODS and its
subsidiaries considered as a whole or would materially affect ODS' ability to
consummate the transactions contemplated hereby.
REPORTS
ODS has heretofore delivered to Jaws true and complete copies of (i) ODS' 1999
Annual Information Form, Information Circular relating to ODS' 1999 annual and
meeting of shareholders and 1998 Annual Report to shareholders and (ii) all
prospectuses or other offering documents used by ODS in the offering of its
securities or filed with Securities Authorities and (iii) the audited financial
statements of ODS dated June 30, 1999. As of their respective dates, such form,
statements, prospectuses and other offering documents (including all exhibits
and schedules thereto and documents incorporated by reference therein) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading and
complied in all material respects with all applicable requirements of law. The
audited financial statements and unaudited interim financial statements of ODS
and its consolidated subsidiaries publicly issued by ODS or included or
incorporated by reference in such form, statements, prospectuses and other
offering documents were prepared in accordance with generally accepted
accounting principles in Canada (except (i) as otherwise indicated in such
financial statements and the notes thereto or, in the case of audited
statements, in the related report of ODS' independent accountants or (ii) in the
case of unaudited interim financial statements, to the extent they may not
include footnotes or may be condensed or summary statements), and fairly present
the consolidated financial position, results of operations and changes in
financial position of ODS and its consolidated subsidiaries as of the dates
thereof and for the periods indicated therein (subject, in the case of any
unaudited interim financial statements, to normal year-end audit adjustments).
ODS will deliver to Jaws as soon as they become available true and complete
copies of any report or statement filed by it with Securities Authorities
subsequent to the date hereof. As of their respective dates, such reports and
statements (excluding any information therein provided by Jaws, as to which ODS
makes no representation) will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
are made, not misleading and will comply in all material respects with all
applicable requirements of law. The consolidated financial statements of ODS
issued by ODS or to be included in such reports and statements (excluding any
information therein provided by Jaws, as to which ODS makes no representation)
will be prepared in accordance with generally accepted accounting principles in
Canada (except (i) as otherwise indicated in such financial statements and the
notes thereto or, in the case of audited statements, in the related report of
ODS' independent accountants or (ii) in the case of unaudited interim financial
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and will present fairly the consolidated financial position,
results of operations and changes in financial position of ODS as of the dates
thereof and for the periods indicated therein (subject, in the case of any
unaudited interim financial statements, to normal year-end audit adjustments).
SUBSIDIARIES
All of ODS' subsidiaries are wholly-owned by ODS and the shares of such
subsidiaries are beneficially owned, directly or indirectly, with valid and
marketable title thereto, free and clear of any and all liens, charges, security
interests, adverse claims, encumbrances and demands of any nature or kind
whatsoever.
BOOKS AND RECORDS
The minute books and other similar records of ODS as made available to Jaws
US prior to the execution of this Agreement contain a true and complete record
in all material respects of all action taken at such meetings and by such
written consents and resolutions in lieu of meetings of the stockholders,
directors and directors committees of ODS. ODS does not have any of its books
and records recorded, stored, maintained, operated or otherwise wholly or partly
dependent upon or held by any means which are not under the exclusive and direct
ownership and control of ODS.
LEGAL PROCEEDINGS
There are no demands, claims, actions or proceedings of any kind taken,
pending or, to the knowledge of ODS, threatened against, relating to or
affecting ODS or any of its assets which: (i) could reasonably be expected to
result in any order or judgment restraining, enjoining or otherwise prohibiting
or making illegal the consummation of any of the transactions contemplated by
this Agreement; or (ii) if determined adversely against ODS could reasonably be
expected to result in (A) any injunction or other equitable relief against ODS
that would interfere in any material respect with its business or operations, or
(B) any damages or other losses by ODS that individually or in the aggregate
would exceed $5,000.
INTELLECTUAL PROPERTY RIGHTS
ODS owns or licenses all intellectual property used in its business and has
all right, title and interest in such intellectual property or a valid and
binding rights under written contract or license to use such intellectual
property. ODS is not infringing on any intellectual property of any other
person, no claim is pending or has been made that has not been resolved.
Y2K
All intellectual property owned by or licensed to ODS are able to
accurately process and store date data (including, but not limited to,
calculating, comparing displaying, recording and sequencing operations involving
date/time data) during, from, into and between the year 1999 and 2000, including
leap year calculations.
DISCLOSURE
All material facts relating to the assets, business and conditions of ODS
have been disclosed to Jaws US in or in connection with this Agreement. No
representation or warranty contained in this Agreement and no fact or statement
contained in any certificate, list or other writing furnished to Jaws US
pursuant to any provision of this Agreement (including without limitation the
June 30, 1999 financial statements of ODS) contains any untrue statement or
material fact or omits to state a material fact necessary in order to make the
statements herein or therein, in the light of the circumstances under which they
were made, not misleading.
REPRESENTATIONS AND WARRANTIES OF JAWS CANADA
As of the date hereof, Jaws Canada hereby represents and warrants to ODS as
follows and acknowledges that ODS is relying upon these representations and
warranties in connection with the entering into of this Agreement:
ORGANIZATION AND QUALIFICATION
Jaws Canada is a corporation duly incorporated and organized and validly
subsisting under the and has the requisite corporate power and authority to
carry on its business as it is now being conducted. Jaws Canada is duly
registered to do business and is in good standing in each jurisdiction in which
the character of its properties, owned or leased, or the nature of its
activities make such registration necessary, except where the failure to be so
registered or in good standing would not have a material adverse effect on Jaws
Canada. Jaws Canada does not have any subsidiaries.
AUTHORITY RELATIVE TO THIS AGREEMENT
Jaws Canada has the requisite corporate authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by Jaws Canada's Board of Directors, and no
other corporate proceedings on the part of Jaws Canada are necessary to
authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Jaws Canada and constitutes
the legal, valid and binding obligation of Jaws Canada enforceable against Jaws
Canada in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other laws relating to or
affecting creditors' rights generally and to general principles of equity.
NO VIOLATIONS
Except as previously disclosed in writing to ODS, neither the execution and
delivery of this Agreement by Jaws Canada, the consummation of the transactions
contemplated hereby nor compliance by Jaws Canada with any of the provisions
hereof will: (i) violate, conflict with, or result in breach of any provision
of, require any consent, approval or notice under, or constitute a default (or
an event which, with notice or lapse of time or both, would constitute a
default) or result in a right of termination or acceleration under, or result in
a creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of Jaws Canada under, any of the terms, conditions or
provisions of (x) the Jaws Canada Governing Documents or (y) any material note,
bond, mortgage, indenture, loan agreement, deed of trust, agreement, lien,
contract or other instrument or obligation to which Jaws Canada is a party or to
which any of its properties or assets, may be subject or by which Jaws Canada is
bound; or (ii) subject to compliance with the statutes and regulations referred
to in Section 6.3(b), violate any judgment, ruling, order, writ, injunction,
determination, award, decree, statute, ordinance, rule or regulation applicable
to Jaws Canada (except, in the case of each of clauses (i) and (ii) above, for
such violations, conflicts, breaches, defaults, terminations which, or any
consents, approvals or notices which if not given or received, would not have
any material adverse effect on the business, operations or financial condition
of Jaws Canada or on the ability of Jaws Canada to consummate the transactions
contemplated hereby).
Except as previously disclosed in writing to ODS, other than in connection with
or in compliance with the provisions of Securities Laws, the United States
Securities Exchange Act of 1934, as amended, and state securities or "blue-sky"
laws of the states of the United States, as amended, (i) there is no legal
impediment to Jaws Canada's consummation of the transactions contemplated by
this Agreement and (ii) no filing or registration with, or authorization,
consent or approval of, any domestic or foreign public body or authority is
necessary by Jaws Canada in connection with the making or the consummation of
the Offer, except for such filings or registrations which, if not made, or for
such authorizations, consents or approvals, which, if not received, would not
have a material adverse effect on the ability of Jaws Canada to consummate the
transactions contemplated hereby.
CAPITALIZATION
As of the date hereof, the authorized share capital of Jaws Canada consists
of an unlimited number of Class "A", "B", "C", "D" and "E" common shares and an
unlimited number of Class "F", "G" and "H" preferred shares. As of the date
hereof, 1,000 Class "A" common shares are issued and outstanding and all of such
shares are owned beneficially and of record by Jaws US. No other shares are
issued and outstanding. There are no options, warrants or other rights,
agreements or commitments of any character whatsoever requiring the issuance,
sale or transfer by Jaws Canada of any shares of Jaws Canada or any securities
convertible into, or exchangeable or exercisable for, or otherwise evidencing a
right to acquire, any shares of Jaws Canada, nor are there any outstanding stock
appreciation rights, phantom equity or similar rights, agreements, arrangements
or commitments based upon the book value, income or other attribute of Jaws
Canada. All outstanding Jaws Canada shares have been duly authorized and
validly issued, are fully paid and non-assessable and are not subject to, nor
were they issued in violation of, any preemptive rights.
NO MATERIAL ADVERSE CHANGE
Since December 31, 1998, there has not been any Material Adverse Change.
NO UNDISCLOSED MATERIAL LIABILITIES
Except (a) as disclosed or reflected in the consolidated internal interim
unaudited financial statements of Jaws Canada as at June 30, 1999 previously
delivered to ODS, and (b) for liabilities and obligations (i) incurred in the
ordinary course of business and consistent with past practice, (ii) pursuant to
the terms of this Agreement, or (iii) as disclosed in writing to ODS, Jaws
Canada has not incurred any liabilities of any nature, whether accrued,
contingent or otherwise (or which would be required by generally accepted
accounting principles to be reflected on a consolidated balance sheet of Jaws
Canada) that have constituted or would be reasonably likely to constitute a
Material Adverse Change.
IMPAIRMENT
The making of the Offer will not result in a Material Adverse Change.
BROKERAGE FEES
Jaws Canada has not retained nor will it retain any financial advisor,
broker, agent or finder or paid or agreed to pay any financial advisor, broker,
agent or finder on account of this Agreement, any transaction contemplated
hereby or any transaction presently ongoing or contemplated.
CONDUCT OF BUSINESS
Since June 30, 1999 Jaws Canada has not taken any action that would be in
violation of Section 9.1 if such provision had been in effect since such date,
other than violations which would not have any material adverse effect on the
business, operations or financial condition of Jaws Canada or would materially
affect Jaws Canada's ability to consummate the transactions contemplated hereby.
BOOKS AND RECORDS
The minute books and other similar records of Jaws Canada as made available
to ODS prior to the execution of this Agreement contain a true and complete
record in all material respects of all action taken at such meetings and by such
written consents and resolutions in lieu of meetings of the stockholders,
directors and directors committees of Jaws Canada. Jaws Canada does not have
any of its books and records recorded, stored, maintained, operated or otherwise
wholly or partly dependent upon or held by any means which are not under the
exclusive and direct ownership and control of Jaws Canada.
LEGAL PROCEEDINGS
There are no demands, claims, actions or proceedings of any kind taken,
pending or, to the knowledge of Jaws Canada, threatened against, relating to or
affecting Jaws Canada or any of its assets which: (i) could reasonably be
expected to result in any order or judgment restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement; or (ii) if determined adversely against Jaws
Canada could reasonably be expected to result in (A) any injunction or other
equitable relief against Jaws Canada that would interfere in any material
respect with its business or operations, or (B) any damages or other losses by
Jaws Canada that individually or in the aggregate would exceed $5,000.
INTELLECTUAL PROPERTY RIGHTS
Jaws Canada owns or licenses all intellectual property used in its business
and has all right, title and interest in such intellectual property or a valid
and binding rights under written contract or license to use such intellectual
property. Jaws Canada owns and has the exclusive right to use the variable bit
length encryption algorithym known as the L5 encryption technology and all
applications and variants thereof including without limitation the products
known as Jaws L5 desktop, Jaws L5 Memo and Jaws Xmail and all patents,
applications for patents, copyrights and other intellectual property rights
related thereto (collectively, the "L5 Encryption Technology"); except as
disclosed by Jaws Canada in regards to Alberta Court of Queen's Bench action no.
9901-08241, no person has made or threatened to make any claim that would be
adverse to Jaws Canada's exclusive ownership of the L5 Encryption Technology or
Jaws Canada's exclusive right to use the L5 Encryption Technology; all
registrations with and applications to all governmental and regulatory
authorities in respect of the L5 Encryption Technology are valid and in full
force and effect and are not subject to the taking of any actions by Jaws Canada
to maintain their validity and effectiveness; and except as claimed by Jaws
Canada in Alberta Court of Queen's Bench action no. 9901-08241, no person is
infringing on the L5 Encryption Technology. Jaws Canada is not infringing on
any intellectual property of any other person and no claim is pending or has
been made that has not been resolved.
Y2K
All intellectual property owned by or licensed to Jaws Canada are able to
accurately process and store date data (including, but not limited to,
calculating, comparing displaying, recording and sequencing operations involving
date/time data) during, from, into and between the year 1999 and 2000, including
leap year calculations.
DISCLOSURE
All material facts relating to the assets, business and conditions of Jaws
Canada have been disclosed to ODS in or in connection with this Agreement. No
representation or warranty contained in this Agreement and no fact or statement
contained in any certificate, list or other writing furnished to ODS pursuant to
any provision of this Agreement contains any untrue statement or material fact
or omits to state a material fact necessary in order to make the statements
herein or therein, in the light of the circumstances under which they were made,
not misleading.
REPRESENTATIONS AND WARRANTIES OF JAWS US
As of the date hereof, Jaws US hereby represents and warrants to ODS as
follows and acknowledges that ODS is relying upon these representations and
warranties in connection with the entering into of this Agreement:
ORGANIZATION AND QUALIFICATION
Jaws US is a corporation duly incorporated and organized and validly
subsisting under the laws of the State of Nevada and has the requisite corporate
power and authority to carry on its business as it is now being conducted. Each
of Jaws US' subsidiaries is a corporation duly incorporated and organized and
validly subsisting under the laws of the jurisdiction of its incorporation and
has the requisite corporate power and authority to carry on its business as now
being conducted. Jaws US and each of its subsidiaries is duly registered to do
business and is in good standing in each jurisdiction in which the character of
its properties, owned or leased, or the nature of its activities make such
registration necessary, except where the failure to be so registered or in good
standing would not have a material adverse effect on Jaws US and its
subsidiaries taken as a whole.
AUTHORITY RELATIVE TO THIS AGREEMENT
Jaws US has the requisite corporate authority to enter into this Agreement
and to carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by Jaws US' Board of Directors, and no other corporate
proceedings on the part of Jaws US are necessary to authorize this Agreement and
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by Jaws US and constitutes the legal, valid and binding obligation of
Jaws US enforceable against Jaws US in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other laws relating to or affecting creditors' rights generally and to general
principles of equity.
NO VIOLATIONS
Except as previously disclosed in writing to ODS, neither the execution and
delivery of this Agreement by Jaws US, the consummation of the transactions
contemplated hereby nor compliance by Jaws US with any of the provisions hereof
will: (i) violate, conflict with, or result in breach of any provision of,
require any consent, approval or notice under, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
or result in a right of termination or acceleration under, or result in a
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of Jaws US or any of its subsidiaries under, any of the
terms, conditions or provisions of (x) the Jaws US Governing Documents or (y)
any material note, bond, mortgage, indenture, loan agreement, deed of trust,
agreement, lien, contract or other instrument or obligation to which Jaws US or
any of its subsidiaries is a party or to which any of them, or any of their
respective properties or assets, may be subject or by which Jaws US or any of
its subsidiaries is bound; or (ii) subject to compliance with the statutes and
regulations referred to in Section 7.3(b), violate any judgment, ruling, order,
writ, injunction, determination, award, decree, statute, ordinance, rule or
regulation applicable to Jaws US or any of its subsidiaries (except, in the case
of each of clauses (i) and (ii) above, for such violations, conflicts, breaches,
defaults, terminations which, or any consents, approvals or notices which if not
given or received, would not have any material adverse effect on the business,
operations or financial condition of Jaws US and its subsidiaries taken as a
whole or on the ability of Jaws US to consummate the transactions contemplated
hereby).
Except as previously disclosed in writing to ODS other than in connection with
or in compliance with the provisions of Securities Laws, the rules of the NASD,
the United States Securities Exchange Act of 1934, as amended, and state
securities or "blue-sky" laws of the states of the United States, as amended,
(i) there is no legal impediment to Jaws US' consummation of the transactions
contemplated by this Agreement and (ii) no filing or registration with, or
authorization, consent or approval of, any domestic or foreign public body or
authority is necessary by Jaws US in connection with the making or the
consummation of the Offer, except for such filings or registrations which, if
not made, or for such authorizations, consents or approvals, which, if not
received, would not have a material adverse effect on the ability of Jaws US to
consummate the transactions contemplated hereby.
CAPITALIZATION
As of the date hereof, the authorized share capital of Jaws US consists of
95,000,000 shares of common stock, with a par value of U.S. $0.001 per share and
5,000,000 shares of preferred stock, with a par value of U.S. $0.001 per share.
As of the date hereof, 13,485,949 shares of common stock are issued and
outstanding and no other shares are issued and outstanding. As of the date
hereof, no greater than 2,450,000 shares of common stock of Jaws US are issuable
pursuant to the exercise of outstanding Jaws US options granted under its stock
option plan. As of the date hereof, there are 5,133,847 shares of common stock
issuable upon the exercise of outstanding warrants. Additional shares of common
stock of Jaws US are issuable pursuant to the Thomson Kernaghan financing under
the debenture acquisition agreement dated September 25, 1998 and the debenture
amendment agreement dated April 27, 1999. An additional 400,000 shares of
common stock of Jaws US are issuable pursuant to the stock for stock agreement
dated February 10, 1998. Except as set forth above, there are no options,
warrants or other rights, agreements or commitments of any character whatsoever
requiring the issuance, sale or transfer by Jaws US of any shares of Jaws US or
any securities convertible into, or exchangeable or exercisable for, or
otherwise evidencing a right to acquire, any shares of Jaws US, nor are there
any outstanding stock appreciation rights, phantom equity or similar rights,
agreements, arrangements or commitments based upon the book value, income or
other attribute of Jaws US. All outstanding Jaws US shares have been duly
authorized and validly issued, are fully paid and non-assessable and are not
subject to, nor were they issued in violation of, any preemptive rights, and all
Jaws US shares issuable upon exercise of outstanding stock options in accordance
with their respective terms will be duly authorized and validly issued, fully
paid and non-assessable and will not be subject to any preemptive rights.
NO MATERIAL ADVERSE CHANGE
Since November 1, 1999 being the date that the Form 10-SB Registration
Statement of Jaws US was accepted by the United States Securities and Exchange
Commission, there has not been any Material Adverse Change.
NO UNDISCLOSED MATERIAL LIABILITIES
Except (a) as disclosed or reflected in the consolidated internal interim
unaudited financial statements of Jaws US as at June 30, 1999 previously
delivered to ODS, and (b) for liabilities and obligations (i) incurred in the
ordinary course of business and consistent with past practice, (ii) pursuant to
the terms of this Agreement, or (iii) as disclosed in writing to ODS, neither
Jaws US nor any of its subsidiaries has incurred any liabilities of any nature,
whether accrued, contingent or otherwise (or which would be required by
generally accepted accounting principles to be reflected on a consolidated
balance sheet of Jaws US and its subsidiaries) that have constituted or would be
reasonably likely to constitute a Material Adverse Change.
IMPAIRMENT
The making of the Offer will not result in Material Adverse Change.
BROKERAGE FEES
Jaws US has not retained nor will it retain any financial advisor, broker,
agent or finder or paid or agreed to pay any financial advisor, broker, agent or
finder on account of this Agreement, any transaction contemplated hereby or any
transaction presently ongoing or contemplated.
CONDUCT OF BUSINESS
Since June 30, 1999 neither Jaws US nor any of its subsidiaries has taken
any action that would be in violation of Section 9.1 if such provision had been
in effect since such date, other than violations which would not have any
material adverse effect on the business, operations or financial condition of
Jaws US and its subsidiaries considered as a whole or would materially affect
Jaws' ability to consummate the transactions contemplated hereby.
REPORTS
Jaws US has heretofore delivered to ODS true and complete copies of (i) Form
10-SB Registration Statement of Jaws US accepted by United States Securities and
Exchange Commission November 1, 1999, (ii) the debenture acquisition agreement
dated September 25, 1998 and the debenture amendment agreement dated April 27,
1999 relating to the Thomson Kernaghan financing, (iii) all prospectuses or
other offering documents used by Jaws US in the offering of its securities or
filed with Securities Authorities, and (iv) the consolidated internal interim
unaudited financial statements of Jaws US dated June 30, 1999. As of their
respective dates, such form, statements, prospectuses and other offering
documents (including all exhibits and schedules thereto and documents
incorporated by reference therein) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading and complied in all material respects with
all applicable requirements of law. The audited financial statements and
unaudited interim financial statements of Jaws US and its consolidated
subsidiaries publicly issued by Jaws were prepared in accordance with generally
accepted accounting principles in the United States (except (i) as otherwise
indicated in such financial statements and the notes thereto or, in the case of
audited statements, in the related report of Jaws US' independent accountants or
(ii) in the case of unaudited interim financial statements, to the extent they
may not include footnotes or may be condensed or summary statements), and fairly
present the consolidated financial position, results of operations and changes
in financial position of Jaws US and its consolidated subsidiaries as of the
dates thereof and for the period indicated therein (subject, in the case of any
unaudited interim financial statements, to normal year-end audit adjustments).
Jaws US will deliver to ODS as soon as they become available true and complete
copies of any report or statement filed by it with Securities Authorities
subsequent to the date hereof. As of their respective dates, such reports and
statements (excluding any information therein provided by ODS, as to which Jaws
US makes no representation) will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
are made, not misleading and will comply in all material respects with all
applicable requirements of law. The consolidated financial statements of Jaws
US issued by Jaws US or to be included in such reports and statements (excluding
any information therein provided by ODS, as to which Jaws US makes no
representation) will be prepared in accordance with generally accepted
accounting principles in the United States (except (i) as otherwise indicated in
such financial statements and the notes thereto or, in the case of audited
statements, in the related report of Jaws US' independent accounts or (ii) in
the case of unaudited interim financial statements, to the extent they may not
include footnotes or may be condensed or summary statements) and will present
fairly the consolidated financial position, results of operations and changes in
financial position of Jaws US as of the dates thereof and for the periods
indicated therein (subject, in the case of any unaudited interim financial
statements, to normal year-end audit adjustments).
SUBSIDIARIES
All of Jaws US' subsidiaries are wholly-owned by Jaws US and all shares of
such subsidiaries are beneficially owned, directly or indirectly, with valid and
marketable title thereto, free and clear of any and all liens, charges, security
interests, adverse claims, encumbrances and demands of any nature or kind
whatsoever.
BOOKS AND RECORDS
The minute books and other similar records of Jaws US as made available to
ODS prior to the execution of this Agreement contain a true and complete record
in all material respects of all action taken at such meetings and by such
written consents and resolutions in lieu of meetings of the stockholders,
directors and directors committees of Jaws US. Jaws US does not have any of its
books and records recorded, stored, maintained, operated or otherwise wholly or
partly dependent upon or held by any means which are not under the exclusive and
direct ownership and control of Jaws US.
LEGAL PROCEEDINGS
There are no demands, claims, actions or proceedings of any kind taken,
pending or, to the knowledge of Jaws US, threatened against, relating to or
affecting Jaws US or any of its assets which: (i) could reasonably be expected
to result in any order or judgment restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement; or (ii) if determined adversely against Jaws US
could reasonably be expected to result in (A) any injunction or other equitable
relief against Jaws US that would interfere in any material respect with its
business or operations, or (B) any damages or other losses by Jaws US that
individually or in the aggregate would exceed $5,000.
INTELLECTUAL PROPERTY RIGHTS
Jaws US owns or licenses all intellectual property used in its business and
has all right, title and interest in such intellectual property or a valid and
binding rights under written contract or license to use such intellectual
property. Jaws US is not infringing on any intellectual property of any other
person, no claim is pending or has been made that has not been resolved.
Y2K
All intellectual property owned by or licensed to Jaws US are able to
accurately process and store date data (including, but not limited to,
calculating, comparing displaying, recording and sequencing operations involving
date/time data) during, from, into and between the year 1999 and 2000, including
leap year calculations.
DISCLOSURE
All material facts relating to the assets, business and conditions of Jaws
US have been disclosed to ODS in or in connection with this Agreement. No
representation or warranty contained in this Agreement and no fact or statement
contained in any certificate, list or other writing furnished to ODS pursuant to
any provision of this Agreement (including without limitation the June 30, 1999
financial statements of Jaws US) contains any untrue statement or material fact
or omits to state a material fact necessary in order to make the statements
herein or therein, in the light of the circumstances under which they were made,
not misleading.
PACE ACQUISITION
There are no material liabilities, contingent or otherwise, in relation to
Pace Systems Group Inc. or its acquisition by Jaws US that are not disclosed in
the share purchase agreement between the parties provided to ODS.
CONDUCT OF BUSINESS OF ODS
CONDUCT OF BUSINESS BY ODS
ODS covenants and agrees that, during the period from the date of this
Agreement until either: (i) the time of the next annual meeting of shareholders
of ODS at which directors are to be elected; or (ii) this Agreement is
terminated by its terms, unless Jaws shall otherwise agree in writing, except as
required by law or in connection with a Take-over Proposal or as otherwise
expressly permitted or specifically contemplated by this Agreement:
the business of ODS and its subsidiaries shall be conducted only in, and ODS and
its subsidiaries shall not take any action except in, the usual and ordinary
course of business and consistent with past practice, and ODS shall use all
commercially reasonable efforts to maintain and preserve its business
organization, assets, employees and advantageous business relationships;
ODS shall not directly or indirectly do or permit to occur any of the following:
(i) amend the ODS Governing Documents; (ii) declare, set aside or pay any
dividend or other distribution or payment (whether in cash, shares or property)
in respect of its shares owned by any person; (iii) issue, grant, sell or pledge
or agree to issue, grant, sell or pledge any shares of ODS or its subsidiaries,
or securities convertible into or exchangeable or exercisable for, or otherwise
evidencing a right to acquire, shares of ODS or its subsidiaries, other than ODS
Shares issuable pursuant to the terms of the ODS Options; (iv) redeem, purchase
or otherwise acquire any of its outstanding shares or other securities; (v)
split, combine or reclassify any of its shares; (vi) adopt a plan of liquidation
or resolutions providing for the liquidation, dissolution, merger, consolidation
or reorganization of ODS; or (vii) enter into or modify any contract, agreement,
commitment or arrangement with respect to any of the foregoing, except as
permitted above;
neither ODS nor any of its subsidiaries shall directly or indirectly do any of
the following other than pursuant to commitments entered into prior to the date
of this Agreement: (i) sell, pledge, dispose of or encumber any assets except
in the ordinary course of business for a consideration not in excess of $25,000
in aggregate; (ii) acquire (by merger, amalgamation, consolidation or
acquisition of shares or assets) any corporation, partnership or other business
organization or division thereof, or, except for investments in securities made
in the ordinary course of business, make any investment either by purchase of
shares or securities, contributions of capital (other than to subsidiaries),
property transfer, or, except in the ordinary course of business, purchase of
any property or assets of any other individual or entity, in each case having a
value in excess of $25,000; (iii) incur any indebtedness for borrowed money or
any other material liability or obligation or issue any debt securities or
assume, guarantee, endorse or otherwise as an accommodation become responsible
for, the obligations of any other individual or entity, or make any loans or
advances, in each case in excess of $25,000, except in the ordinary course of
business; (iv) except for the Officer Obligations or amounts less than $25,000
pay, discharge or satisfy any material claims, liabilities or obligations other
than the payment, discharge or satisfaction in the ordinary course of business
consistent with past practice of liabilities reflected or reserved against in
its financial statements or incurred in the ordinary course of business
consistent with past practice; (v) authorize, recommend or propose any release
or relinquishment of any material contract right other than in the ordinary
course of business consistent with past practice; (vi) waive, release, grant or
transfer any rights of material value or modify or change in any material
respect any existing material license, lease, contract, production sharing
agreement, government land concession or other document, other than in the
ordinary course of business consistent with past practice; (vii) enter into any
interest rate swaps, currency swaps or any other rate fixing agreement for a
financial transaction or enter into any call arrangement of any sort or any
forward sale agreement for commodities, other than in the ordinary course of
business consistent with past practice; or (viii) authorize or propose any of
the foregoing, or enter into or modify any contract, agreement, commitment or
arrangement to do any of the foregoing.
neither ODS nor any of its subsidiaries shall create any new Officer Obligations
and, except for payment of the existing Officer Obligations, neither ODS nor any
of its subsidiaries shall grant to any officer or director an increase in
compensation in any form, grant any general salary increase other than in
accordance with the requirements of any existing collective bargaining or union
contracts, grant to any other employee any increase in compensation in any form
other than routine increases in the ordinary course of business consistent with
past practices, make any loan to any officer or director, or take any action
with respect to the grant of any severance or termination pay arising from the
Offer or a change of control of ODS or the entering into of any employment
agreement with, any senior officer or director, or with respect to any increase
of benefits payable under its current severance or termination pay policies; and
neither ODS nor any of its subsidiaries shall adopt or amend or make any
contribution to any bonus, profit sharing, option, pension, retirement, deferred
compensation, insurance, incentive compensation, other compensation or other
similar plan, agreement, trust, fund or arrangements for the benefit of
employees, except as is necessary to comply with the law or with respect to
existing provisions of any such plans, programs, arrangements or agreements.
CONDUCT OF BUSINESS OF JAWS
CONDUCT OF BUSINESS BY JAWS
Each of Jaws Canada and Jaws US covenants and agrees that, during the
period from the date of this Agreement until either: (i) the time of the next
annual meeting of shareholders of Jaws US at which directors are to be elected;
or (ii) this Agreement is terminated by its terms, unless ODS shall otherwise
agree in writing, except as required by law or as otherwise expressly permitted
or specifically contemplated by this Agreement:
the business of Jaws and their subsidiaries shall be conducted only in, and Jaws
and their subsidiaries shall not take any action except in, the usual and
ordinary course of business and consistent with past practice, and Jaws shall
use all commercially reasonable efforts to maintain and preserve their business
organization, assets, employees and advantageous business relationships;
Jaws shall not directly or indirectly do or permit to occur any of the
following: (i) amend the Jaws Canada or Jaws US Governing Documents; (ii)
declare, set aside or pay any dividend or other distribution or payment (whether
in cash, shares or property) in respect of its shares owned by any person; (iii)
issue, grant, sell or pledge or agree to issue, grant, sell or pledge any shares
of Jaws or their subsidiaries, or securities convertible into or exchangeable or
exercisable for, or otherwise evidencing a right to acquire, shares of Jaws
Canada or Jaws US or their subsidiaries, other than shares issuable pursuant to
the terms of presently issued and outstanding options; (iv) redeem, purchase or
otherwise acquire any of their outstanding shares or other securities; (v)
split, combine or reclassify any of their shares; (vi) adopt a plan of
liquidation or resolutions providing for the liquidation, dissolution, merger,
consolidation or reorganization of Jaws; or (vii) enter into or modify any
contract, agreement, commitment or arrangement with respect to any of the
foregoing, except as permitted above;
neither Jaws nor any of their subsidiaries shall directly or indirectly do any
of the following other than pursuant to commitments entered into prior to the
date of this Agreement: (i) sell, pledge, dispose of or encumber any assets
except in the ordinary course of business for a consideration not in excess of
$1,000,000 in aggregate; (ii) except for the acquisition of Pace Systems Group
Inc., acquire (by merger, amalgamation, consolidation or acquisition of shares
or assets) any corporation, partnership or other business organization or
division thereof, or, except for investments in securities made in the ordinary
course of business, make any investment either by purchase of shares or
securities, contributions of capital (other than to subsidiaries), property
transfer, or, except in the ordinary course of business, purchase of any
property or assets of any other individual or entity, in each case having a
value in excess of $1,000,000; (iii) incur any indebtedness for borrowed money
or any other material liability or obligation or issue any debt securities or
assume, guarantee, endorse or otherwise as an accommodation become responsible
for, the obligations of any other individual or entity, or make any loans or
advances, in each case in excess of $1,000,000, except in the ordinary course of
business; (iv) except for the amounts less than $1,000,000 pay, discharge or
satisfy any material claims, liabilities or obligations other than the payment,
discharge or satisfaction in the ordinary course of business consistent with
past practice of liabilities reflected or reserved against in its financial
statements or incurred in the ordinary course of business consistent with past
practice; (v) authorize, recommend or propose any release or relinquishment of
any material contract right other than in the ordinary course of business
consistent with past practice; (vi) waive, release, grant or transfer any rights
of material value or modify or change in any material respect any existing
material license, lease, contract, production sharing agreement, government land
concession or other document, other than in the ordinary course of business
consistent with past practice; (vii) enter into any interest rate swaps,
currency swaps or any other rate fixing agreement for a financial transaction or
enter into any call arrangement of any sort or any forward sale agreement for
commodities, other than in the ordinary course of business consistent with past
practice; or (viii) authorize or propose any of the foregoing, or enter into or
modify any contract, agreement, commitment or arrangement to do any of the
foregoing; and
neither Jaws nor any of their subsidiaries shall enter into any Related Party
Transactions except in the ordinary course of business consistent with past
practices.
COVENANTS OF ODS
NOTICE OF MATERIAL CHANGE
From the date hereof until the termination of this Agreement, ODS shall promptly
notify Jaws in writing of:
any material change (actual, anticipated, contemplated or, to the knowledge of
ODS, threatened, financial or otherwise) in the business, affairs, operations,
assets, liabilities (contingent or otherwise) or capital of ODS and its
subsidiaries considered as a whole; or
any change in any representation or warranty set forth in Article 5 which change
is or may be of such a nature as to render any such representation or warranty
misleading or untrue in a material respect.
ODS shall in good faith discuss with Jaws any change in circumstances (actual,
anticipated, contemplated or, to the knowledge of ODS, threatened, financial or
otherwise) which is of such a nature that there may be a reasonable question as
to whether notice need to be given to Jaws pursuant to this section.
NO SOLICITATION
ODS shall immediately cease and cause to be terminated all existing discussions
and negotiations, if any, with any parties conducted before the date of this
Agreement with respect to any Take-over Proposal. ODS shall immediately request
the return or destruction of all information provided to any third parties who
have entered into a confidentiality agreement with ODS relating to a potential
Take-Over Proposal and shall use all reasonable efforts to ensure that such
requests are honored. ODS agrees not to release any third party from any
confidentiality or standstill obligation set forth in any agreement to which ODS
and such third party are parties except for the standstill obligation in
connection with a Superior Take-over Proposal by such third party.
Neither ODS nor any of its subsidiaries, or any of their respective directors,
officers, employees, agents, financial advisors, counsel or other
representatives shall, directly or indirectly, (i) solicit, initiate or
knowingly encourage the initiation or continuation of any inquiries,
discussions, negotiations, proposals or offers from any corporation, person or
other entity or group (other than Jaws and its subsidiaries and their respective
directors, officers, employees, agents, financial advisors, counsel or other
representatives) in respect of any matter or thing which is inconsistent with
the successful completion of the Offer and the merger of Jaws and ODS, including
any Take-over Proposal or (ii) provide any confidential information to,
participate in any discussions or negotiations relating to any Take-over
Proposal with, or otherwise cooperate with or assist or participate in any
effort to consider, review or initiate a Take-over Proposal by, any corporation,
person or other entity or group; provided, however, that ODS shall not be bound
by the foregoing restrictions in this Section 10.2(b) in respect of any proposal
or offer in writing received by ODS from another party, which offer was not
solicited by ODS or any of its subsidiaries or, of any of their respective
directors, officers, employees, agents, financial advisors, counsel or other
representatives after the date hereof, which the Board of Directors of ODS
believes is reasonably likely to become a Superior Take-over Proposal and at any
such time that ODS or its Board of Directors starts to provide any confidential
information in accordance with this proviso, ODS shall so notify Jaws of any
such provision of confidential information and provided further that the
provision of any such confidential information shall be on terms and conditions
no more favorable to such other party than those contained in the
confidentiality agreement dated October 29, 1999 between Jaws and ODS.
ODS BOARD OF DIRECTORS
The Board of Directors of ODS immediately following the acquisition by Jaws of
more than 50% of the outstanding ODS Shares pursuant to the Offer shall be
reconstituted through resignations of all existing ODS directors and the
appointment of Jaws nominees in their stead. ODS shall, in accordance with the
foregoing and subject to the provisions of the Act, assist Jaws to secure the
resignations of all ODS directors to be effective at such time as may be
required by Jaws and to use its best efforts to cause the election of the Jaws
nominees to fill the vacancies so created in order to effect the foregoing
without the necessity of a shareholder meeting.
COVENANTS OF JAWS
NOTICE OF MATERIAL CHANGE
From the date hereof until the termination of this Agreement, Jaws shall
promptly notify ODS in writing of:
any material change (actual, anticipated, contemplated or, to the knowledge of
Jaws, threatened, financial or otherwise) in the business, affairs, operations,
assets, liabilities (contingent or otherwise) or capital of Jaws and its
subsidiaries considered as a whole; or
any change in any representation or warranty set forth in Article 6 or 7 which
change is or may be of such a nature as to render any such representation or
warranty misleading or untrue in a material respect.
Jaws shall in good faith discuss with ODS any change in circumstances (actual,
anticipated, contemplated or, to the knowledge of Jaws, threatened, financial or
otherwise) which is of such a nature that there may be a reasonable question as
to whether notice need to be given to ODS pursuant to this section.
EMPLOYMENT AGREEMENTS
Jaws covenants and agrees, and after the Effective Time will cause ODS and any
successor to ODS to agree, to honour and comply with the terms of those existing
executive termination and severance agreements, plans or policies of ODS and
its subsidiaries which ODS has disclosed to Jaws in writing prior to the date
hereof.
STRUCTURE OF TRANSACTION
Jaws shall cooperate with ODS in structuring the acquisition by Jaws of ODS in a
tax efficient manner, including without limitation, by completing to the
satisfaction of ODS, acting reasonably, the reorganization of the share capital
of Jaws Canada to create the Jaws Exchangeable Shares and such other
transactions or arrangements between Jaws Canada and Jaws US required in a
typical cross-border share exchange transaction.
REGISTRATION RIGHTS
No later than one year from the Effective Time, Jaws shall, at its own expense,
file with the U.S. Securities Exchange Commission a registration statement on
Form S-3 or Form S-1 (or any successor form thereto) registering each share in
the common stock of Jaws US issuable or issued upon exchange of the Jaws
Exchangeable Shares for a public offering in the United States of such shares by
such holders. Jaws shall make all commercially reasonable efforts to cause any
such registration statement to be declared effective as soon as possible after
being filed and to remain effective for a period of not less than two years.
Jaws shall cause such shares to be qualified under applicable "blue sky" or
other state securities laws in such jurisdictions as the holders reasonably
request.
At any time and from time to time subsequent to the date the registration
statement referred to in Section 11.4(a) is no longer required to be maintained
as effective and upon the demand of holders of Jaws Exchangeable Shares and
common stock issued on exchange of the Jaws Exchangeable Shares equal to not
less than 10% of the Jaws Exchangeable Shares then outstanding, Jaws shall, at
its expense, file a registration statement under the United States Securities
Act of 1933, as amended, and make all commercially reasonable efforts to cause
such registration statement to become effective as soon as possible and take all
other steps necessary to effect the registration and qualification (including,
without limitation, qualification under applicable blue sky or other state
securities laws in such jurisdictions as the holders reasonably request) so
requested and as would permit or facilitate the sale and distribution of all
common shares then issued or issuable under the Exchangeable Shares. Jaws shall
use its best efforts to cause any such registration statement to be declared
effective as soon as possible after being filed and to remain effective until
the earlier of (i) 90 days or (ii) until the distribution under such
registration statement is completed. No more than three demands may be made
pursuant to this Section 11.4(b).
VOTING ARRANGEMENTS FOR JAWS EXCHANGEABLE SHARES
Immediately following the Effective Time, Jaws US shall issue to and deposit
with a trustee one share of special voting stock of Jaws US to be thereafter
held of record by such trustee as trustee for and on behalf of, and for the use
and benefit of, the holders of Jaws Exchangeable Shares. For purposes of the
foregoing and to establish a procedure whereby voting rights in Jaws US shall be
exercisable by holders from time to time of Jaws Exchangeable Shares by and
through such trustee, Jaws US agrees to enter into a voting and exchange trust
agreement with such trustee immediately following the Effective Time in a form
consistent with a typical exchangeable share transaction.
The voting and exchange trust agreement will also provide that the trustee will
send to the holders of the Jaws Exchangeable Shares the notice of each meeting
at which the Jaws US shareholders are entitled to vote, together with the
related meeting materials and a statement as to the manner in which such holders
may instruct the trustee to exercise the votes attaching to the special voting
stock, at the same time as Jaws US sends such notice and materials to the Jaws
US shareholders. The trustee will also be required to send to the holders of
Jaws Exchangeable Shares copies of all information statements, interim and
annual financial statements, reports and other materials sent by Jaws US to the
Jaws US shareholders at the same time as such materials are sent to the Jaws US
shareholders. To the extent such materials are provided to the trustee by Jaws
US, the Trustee will also be required to send to the holders of Jaws
Exchangeable Shares all material sent by third parties to Jaws US shareholders,
including dissident proxy circulars and tender and exchange offer circulars, as
soon as possible after such materials are first sent to Jaws US shareholders.
SUPPORT AGREEMENT
Immediately following the Effective Time, Jaws US and Jaws Canada will enter
into a support agreement in a form consistent with a typical exchangeable share
transaction. Under the support agreement Jaws US will agree among other things
that so long as any Jaws Exchangeable Shares are outstanding:
it will not declare or pay dividends on the Jaws US common stock unless Jaws
Canada is able to and simultaneously pays an equivalent dividend on the Jaws
Exchangeable Shares;
it will cause Jaws Canada to declare and pay an equivalent dividend on the Jaws
Exchangeable Shares simultaneously with Jaws US's declaration and payment of
dividends on the Jaws US common stock;
it will advise Jaws Canada in advance of the declaration of any dividend on the
Jaws US common stock and ensure that the declaration date, record date and
payment date for dividends on the Jaws Exchangeable Shares are the same as that
for the Jaws US common stock;
it will ensure that the record date for any dividend declared on Jaws US common
stock is not less than 10 Business Days after the declaration date for such
dividends;
it will take all actions and do all things necessary to ensure that Jaws Canada
is able to provide to the holders of the Jaws Exchangeable Shares the equivalent
number of shares of Jaws US common stock in the event of a liquidation,
dissolution or winding-up of Jaws Canada or any other distribution of the assets
of Jaws Canada for the purpose of winding-up its affairs, a retraction request
by a holder of Jaws Exchangeable Shares or a redemption of Jaws Exchangeable
Shares; and
it will not vote or otherwise take any action or omit to take any action causing
the liquidation, dissolution or winding-up of Jaws Canada.
The support agreement will contain a representation, warranty and covenant of
Jaws US that it has irrevocably reserved for issuance and will at all times keep
available, free from pre-emptive and other rights, out of its authorized and
unissued capital stock such number of shares of Jaws US common stock as is equal
to the sum of the number of Jaws Exchangeable Shares issued and outstanding from
time to time and the number of Jaws Exchangeable Shares issuable upon the
exercise of all rights to acquire Jaws Exchangeable Shares outstanding from time
to time. The support agreement will also provide that, upon notice of any event
which requires Jaws Canada to cause to be delivered shares of Jaws US common
stock to any holder of Jaws Exchangeable Shares, Jaws US shall forthwith issue
and deliver the requisite shares of Jaws US common stock to or to the order of
the former holder of the surrendered Jaws Exchangeable Shares as Jaws Canada
shall direct. All such shares of Jaws US common stock will be duly issued as
fully paid and non-assessable and shall be free and clear of any lien, claim,
encumbrance, security interest or adverse claim or interest.
The support agreement will also provide that Jaws US shall not distribute
additional shares of Jaws US common stock or rights to subscribe therefor or
other property or assets to all or substantially all holders of shares of Jaws
US common stock, nor change the Jaws US common stock nor effect any tender
offer, share exchange offer, issuer bid, take-over bid or similar transaction
affecting the Jaws US common stock, unless the same or an equivalent
distribution or change in the Jaws Exchangeable Shares (or in the rights of the
holders thereof) is made simultaneously. Furthermore, the support agreement
will provide that for a specified period of time following the Effective Time
and provided there remain outstanding Jaws Exchangeable Shares not owned by Jaws
US or any entity controlled by Jaws US, Jaws US will remain the beneficial
owner, directly or indirectly, of all outstanding shares of Jaws Canada. Jaws
US will also agree not to exercise any voting rights attached to the Jaws
Exchangeable Shares owned by it or any entity controlled by it on any matter
considered at meetings of holders of Jaws Exchangeable Shares.
LISTING OF JAWS EXCHANGEABLE SHARES
Jaws shall use its reasonable commercial efforts to cause the Jaws
Exchangeable Shares to be listed on the ASE as soon as practicable or, in the
event that a listing on the ASE is not available, on another recognized Canadian
stock exchange.
CERTAIN REGULATORY MATTERS
Prior to the Effective Time, Jaws shall apply to Securities Authorities for
such rulings or orders as may be required under applicable Securities Laws which
shall provide exemptions from registration and prospectus requirements to
permit, among other things:
the issuance of the Jaws Exchangeable Shares to holders of ODS Shares;
the issuance of Jaws US common stock to holders of Jaws Exchangeable Shares upon
the exchange thereof; and
the resale of the Jaws Exchangeable Shares and Jaws US common stock issued to
holders of Jaws Exchangeable Shares upon the exchange thereof without
restriction by a shareholder other than a "control person" provided that, among
other things, no unusual effort is made to prepare the market for any such
resale or to create a demand for the securities which are the subject of any
such resale and no extraordinary commission or consideration is paid in respect
thereof.
ELECTION FORMS
Holders of ODS Shares who are residents of Canada for purposes of the
Income Tax Act (Canada) and who receive Jaws Exchangeable Shares pursuant to the
Offer shall be entitled to make an income tax election pursuant to subsection
85(1) of the Income Tax Act (Canada) with respect to the transfer of their ODS
Shares to Jaws Canada by providing two signed copies of the necessary election
forms to Jaws Canada within 90 days following the Effective Time, duly completed
with the details of the number of shares transferred and the applicable agreed
amounts for the purposes of such elections. Thereafter, subject to the election
forms complying with the provisions of the Income Tax Act (Canada), Jaws Canada
agrees to sign the election forms and return the election forms to holders of
ODS Shares for filing with Revenue Canada, Customs, Excise and Taxation.
MUTUAL COVENANTS
OTHER FILINGS
Jaws and ODS shall, as promptly as practicable hereafter, prepare and file any
filings required under any Securities Law, the rules of the ASE and the NASD,
the United States Securities Exchange Act of 1934, as amended, state securities
or "blue-sky" laws of the states of the United States, as amended, or any other
applicable law relating to the transactions contemplated herein.
ADDITIONAL AGREEMENTS
Subject to the terms and conditions herein provided and to fiduciary obligations
under applicable law, each of the parties hereto agrees to use all commercially
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement and to cooperate with each other in connection with the foregoing,
including using commercially reasonable efforts (i) to obtain all necessary
waivers, consents and approvals from other parties to material agreements,
leases and other contracts or agreements (including, without limitation, the
agreement of any persons as may be required pursuant to any agreement,
arrangement or understanding relating to ODS' operations), (ii) to obtain all
necessary consents, approvals and authorizations as are required to be obtained
under any federal, provincial or foreign law or regulations, (iii) to defend all
lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby, (iv) to cause to be lifted
or rescinded any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions contemplated
hereby, (v) to effect all necessary registrations and other filings and
submissions of information requested by governmental authorities and (vi) to
fulfill all conditions and satisfy all provisions of this Agreement and the
Offer. For purposes of the foregoing, the obligation to use "commercially
reasonable efforts" to obtain waivers, consents and approvals to loan
agreements, leases and other contracts shall not include any obligation to agree
to a materially adverse modification of the terms of such documents or to prepay
or incur additional material obligations to such other parties.
ACCESS TO INFORMATION
Subject to the existing Confidentiality Agreement between ODS and Jaws dated
October 29, 1999, upon reasonable notice, each party shall (and shall cause each
of its subsidiaries to) afford to the other party's officers, employees,
counsel, accountants and other authorized representatives and advisers
reasonable access, during normal business hours and at such other time or times
as such other party may reasonably request from the date hereof and until the
expiration of this Agreement, to its properties, books, contracts and records as
well as to its management personnel.
TERMINATION, AMENDMENT AND WAIVER
TERMINATION
This Agreement may be terminated by written notice given to the other parties
hereto, at any time prior to completion of the transactions contemplated hereby:
by mutual written consent of ODS and Jaws;
by either Jaws or ODS if Jaws Canada shall not have taken up and paid for the
Minimum Required Shares under the Offer on or before the times required by this
Agreement, unless the absence of such occurrence shall be due to the failure of
the party seeking to terminate this Agreement to perform the obligations under
this Agreement required to be performed by it;
by either Jaws or ODS if a court of competent jurisdiction or a governmental,
regulatory or administrative agency or commission shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting any of the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become final and
non-appealable, provided that the party seeking to terminate this Agreement
pursuant to this Section 13.1(c) shall have used all commercially reasonable
efforts to remove such order, decree, ruling or injunction;
by either Jaws or ODS, if the Offer terminates or expires at the Expiry Time,
without Jaws Canada taking up and paying for any ODS Shares on account of the
failure of any condition specified in Schedule A which has not been waived by
Jaws Canada, unless the absence of such occurrence shall be due to the failure
of the party seeking to terminate this Agreement to perform the obligations
under this Agreement required to be performed by it;
by either Jaws or ODS, if there has been a misrepresentation, breach or
non-performance by the other party of any representation, warranty or covenant
contained in this Agreement which would have or would be reasonably likely to
have a material adverse effect on the party seeking to terminate, provided the
breaching party has been given notice of and three days to cure any such
misrepresentation, breach or non-performance;
by ODS or Jaws if ODS enters into an agreement providing for a Superior
Take-over Proposal;
by ODS if the Take-up Date has not occurred within 60 days of the Initial Expiry
Time; or
by Jaws if there has been a misrepresentation, breach or non-performance by an
ODS shareholder of any representation, warranty or covenant contained in the
pre-tender agreement referred to in Section 2.2(b), which would have or would be
reasonably likely to have a material adverse effect on Jaws, provided that such
shareholders shall have been given notice of and three days to cure any such
misrepresentation, breach or non-performance.
EFFECT OF TERMINATION
In the event of the termination of this Agreement as provided in Section 13.1,
this Agreement shall forthwith have no further force or effect and there shall
be no obligation on the part of Jaws or ODS hereunder except as set forth in
Section 14.4, which provision shall survive the termination of this Agreement.
Nothing herein shall relieve either party from liability for any breach of this
Agreement.
AMENDMENT
This Agreement may be amended by mutual agreement between the parties hereto.
This Agreement may not be amended except by an instrument in writing signed by
the appropriate officers on behalf of each of the parties hereto.
WAIVER
Each of Jaws and ODS may (i) extend the time for the performance of any of the
obligations or other acts of the other, (ii) waive compliance with any of the
other's agreements or the fulfillment of any conditions to its own obligations
contained herein or (iii) waive inaccuracies in any of the other's
representations or warranties contained herein or in any document delivered by
the other party hereto; provided, however, that any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party.
GENERAL PROVISIONS
NOTICES
All notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made as of the date
delivered or sent if delivered personally or sent by cable, telegram, telecopier
or telex or sent by prepaid overnight carrier to the parties at the following
addresses (or at such other addresses as shall be specified by the parties by
like notice):
if to Jaws:
Jaws Technologies Inc.
1013 - 17th Avenue SW
Calgary, Alberta
T2T OA7
Attention: Mr. Riaz Mamdani
Telecopy No.: (403) 508-5058
with a copy to:
Bennett Jones
4500 Bankers Hall East
855 - 2nd Street SW
Calgary, Alberta
T2P 4K7
Attention: Mr. Jim Smeltzer
Telecopy No.: (403) 265-7219
if to ODS:
Offsite Data Services Ltd.
#2330, 140 - 4th Avenue SW
Calgary, Alberta
T2P 3N3
Attention: Mr. Trent Johnsen
Telecopy No.: (403) 216-6314
with a copy to:
Tingle & Associates
1250 Standard Life Building
639 - 5th Avenue SW
Calgary, Alberta
T2P OM9
Attention: Mr. Bryce C. Tingle
Telecopy No.: (403) 571-8008
MISCELLANEOUS
This Agreement (i) except for the Confidentiality Agreement dated October 29,
1999 between the parties hereto, constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, between
the parties, with respect to the subject matter hereof and (ii) shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. The parties hereto shall be entitled to rely upon
delivery of an executed facsimile copy of the Agreement, and such facsimile copy
shall be legally effective to create a valid and binding agreement among the
parties hereto. The parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the Province of Alberta having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
ASSIGNMENT
Except as expressly permitted by the terms hereof, neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by
either of the parties hereto without the prior written consent of the other
party.
EXPENSES
All fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such cost
or expense, whether or not the Offer is consummated, provided that Jaws agrees
to pay ODS' out of pocket expenses for professional fees to a minimum of $15,000
if Jaws has misrepresented any of the matters referred to in Article 6 or
Article 7.
SEVERABILITY
Whenever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law. Any provision of this
Agreement that is invalid or unenforceable in any jurisdiction shall be
ineffective to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and any
such invalidity or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
COUNTERPART EXECUTION
This Agreement may be executed in any number of counterparts and each such
counterpart shall be deemed to be an original instrument but all such
counterparts together shall constitute one agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above by their respective officers thereunto duly
authorized.
JAWS TECHNOLOGIES INC.
(THE ALBERTA CORPORATION)
Per:
Name
Title
Per:
Name
Title
-----
JAWS TECHNOLOGIES INC.
(THE U.S. CORPORATION)
Per:
Name
Title
Per:
Name
Title
-----
OFFSITE DATA SERVICES LTD.
Per:
Name
Title
Per:
Name
Title
-----
<PAGE>
Exhibit A - Page 32
SCHEDULE A
CONDITIONS TO THE OFFER
-----------------------
The capitalized terms used in this Schedule A have the meanings set forth
in the attached Pre-Acquisition Agreement dated November 2, 1999 (the
"Agreement") between Jaws and ODS, except that the term "Offeror" shall be
deemed to refer to Jaws Canada.
Notwithstanding any other provision of the Offer, but subject to the provisions
of the Agreement, the Offeror reserves the right to withdraw or terminate the
Offer and not take up and pay for, or to extend the period of time during which
the Offer is open and postpone taking up and paying for, any ODS Shares
deposited under the Offer unless all of the following conditions are satisfied
or waived by the Offeror:
at the Expiry Time, and at the time the Offeror first takes up and pays for
ODS Shares under the Offer, there shall have been validly deposited under the
Offer and not withdrawn at least 90% of the outstanding ODS Shares (calculated
on a diluted basis) and 90% of the outstanding warrants of ODS, other than ODS
Shares held at the date of the Offer by or on behalf of the Offeror, or its
affiliates or associates (as each of such terms is defined in the Act);
all other requisite regulatory approvals and consents (including, without
limitation, those of any stock exchanges or other securities or regulatory
authorities) shall have been obtained on terms and conditions satisfactory to
the Offeror, acting reasonably, and all applicable statutory or regulatory
waiting periods shall have expired or been terminated;
(i) no act, action, suit, proceeding, objection or opposition shall have
been threatened or taken before or by any domestic or foreign court or tribunal
or governmental agency or other regulatory authority or administrative agency or
commission by any elected or appointed public official or by any private person
in Canada or elsewhere, whether or not having the force of law, and (ii) no law,
regulation or policy (including applicable tax laws and regulations in those
jurisdictions in which ODS or any of its subsidiaries carries on business) shall
have been proposed, enacted, promulgated, amended or applied, which in either
case, in the judgment of the Offeror acting reasonably:
has the effect or may have the effect to cease trade, enjoin, prohibit or
impose material limitations, damages or conditions on the purchase by, or the
sale to, the Offeror of the ODS Shares or the right of the Offeror to own or
exercise full rights of ownership of the ODS Shares;
has had, or if the Offer was consummated would result in, a Material
Adverse Change or, in the case of (ii) above, would have a material adverse
effect on the Offeror;
has a material adverse effect on the completion of any compulsory
acquisition or any amalgamation, statutory arrangement or other transaction
involving the Offeror and/or an affiliate of the Offeror and ODS and/or the
holders of ODS Shares for the purposes of ODS becoming, directly or indirectly,
a wholly-owned subsidiary of the Offeror or affecting an amalgamation or merger
of ODS' business and assets with or into the Offeror and/or an affiliate of the
Offeror (a "Subsequent Acquisition Transaction");
there shall not exist any prohibition at law against the Offeror making the
Offer or taking up and paying for all of the ODS Shares under the Offer or
completing any compulsory acquisition or Subsequent Acquisition Transaction in
respect of any ODS Shares not acquired under the Offer;
the Offeror shall have determined in its sole judgment acting reasonably
that ODS has not taken or proposed to take any action that would be a Material
Adverse Change; and
in the sole judgment of the Offeror, acting reasonably, (i) ODS shall not
have breached, or failed to comply with, in any material respect, any of its
covenants or other obligations under the Agreement, and (ii) all representations
and warranties of ODS contained in the Agreement shall have been true and
correct in all material respects as of the date of the Agreement and shall not
have ceased to be true and correct in any material respect thereafter; provided
that any misrepresentation, breach and non-performance would have, or would be
reasonably likely to have, a material adverse effect on the Offeror and provided
further that ODS has been given notice of and 3 days to cure any such
misrepresentation, breach or non-performance.
<PAGE>
Exhibit A - Page 34
SCHEDULE B
FORM OF PRE-TENDER AGREEMENT
----------------------------
November , 1999
Dear Sir:
RE: OFFER BY JAWS TECHNOLOGIES INC. ("JAWS") TO PURCHASE ALL OF THE
OFFSITE DATA SERVICES LTD. SHARES
Reference is made to the Pre-Acquisition Agreement dated November 2, 1999 (the
"Pre-Acquisition Agreement") between Jaws and ODS pursuant to which Jaws has
agreed to make an offer to purchase all of the issued and outstanding ODS
Shares. All capitalized terms referred to herein shall have the meanings
attributed thereto in the Pre-Acquisition Agreement.
We understand that you (the "Shareholder") beneficially own, directly or
indirectly, or exercise control or direction over, the number of ODS Shares set
forth in your acceptance at the end of this letter agreement. Any references in
this letter agreement to ODS Shares owned by the Shareholder shall mean such
number of ODS Shares.
Covenants of Controlling Shareholder
---------------------------------------
By the acceptance of this letter agreement, the Shareholder hereby agrees,
subject to the terms of paragraph 5 hereof, from the date hereof until the
completion of the Offer:
not to sell, assign, convey or otherwise dispose of any of the ODS Shares
owned by such Shareholder and, if the Shareholder is a corporation, not to
permit any affiliate of such Shareholder to sell, assign, convey or otherwise
dispose of any of the shares of the Shareholder owned by it;
unconditionally and irrevocably to accept the Offer made by Jaws by
depositing the ODS Shares presently owned or hereafter acquired by such
Shareholder immediately following the mailing of the Offer and in accordance
with the terms and conditions of the Offer;
not to exercise any statutory or other rights of withdrawal with respect to any
ODS Shares owned by such Shareholder once deposited pursuant to the Offer unless
this letter agreement is terminated prior to Jaws Canada taking up the ODS
Shares under the Offer; and
not to exercise any shareholder rights or remedies available at common law or
pursuant to the Business Corporations Act (Alberta) or applicable securities
legislation to delay, hinder, upset or challenge the Offer.
Covenants of Jaws
-------------------
Jaws Canada shall make the Offer in accordance with the terms and
conditions of the Pre-Acquisition Agreement and shall comply with the provisions
of Article 2 thereof in respect of the Offer. Jaws shall not amend Article 2 of
the Pre-Acquisition Agreement without the consent of the Shareholder.
Jaws Canada shall, subject to the satisfaction or waiver of the conditions
set forth in the Offer, take up and pay for all of the ODS Shares owned by the
Shareholder deposited pursuant to the Offer, all in accordance with the terms
and conditions of the Offer and the provisions of the Pre-Acquisition Agreement.
Representations
---------------
The Controlling Shareholder hereby represents and warrants to Jaws Canada
as follows:
the ODS Shares are beneficially owned by such Shareholder with valid and
marketable title thereto, free and clear of any and all liens, charges, security
interests, adverse claims, encumbrances and demands of any nature or kind
whatsoever;
no person, firm or corporation has any agreement or option, or any right or
privilege (whether by law, pre-emptive or contractual) capable of becoming an
agreement or option, for the purchase, acquisition or transfer of any of the ODS
Shares or any interest therein or right thereto, except pursuant to this letter
agreement;
if it is a corporation, the Shareholder is a valid and subsisting
corporation with all necessary corporate power and authority to execute and
deliver this letter agreement and to perform its obligations hereunder; and
this letter agreement has been duly executed and delivered by the
Shareholder and constitutes a valid and binding obligation of the Shareholder,
enforceable in accordance with its terms.
Expenses
--------
Jaws Canada and the Shareholder agree to pay their own respective expenses
incurred in connection with this letter agreement.
Termination
-----------
It is understood and agreed that the respective rights and obligations
hereunder of Jaws and the Shareholder shall cease and this letter agreement
shall terminate in the event that the Pre-Acquisition Agreement is terminated
pursuant to Article 13 thereof other than pursuant to Section 13.1(h) thereof.
In the event of such termination of this letter agreement the Shareholder may
withdraw all of the ODS Shares deposited in accordance with the terms and
conditions of the Offer, this letter agreement shall forthwith be of no further
force and effect and there shall be no liability on the part of either the
Shareholder or Jaws Canada, except to the extent that either such party is in
default of its obligations herein contained.
No Solicitation
----------------
The Shareholder shall immediately cease and cause to be terminated all
existing discussions and negotiations, if any, with any parties conducted before
the date of this letter agreement with respect to any Take-over Proposal.
The Shareholder shall not, directly or indirectly, (a) solicit, initiate or
knowingly encourage the initiation or continuation of any inquiries,
discussions, negotiations, proposals or offers from any corporation, person or
other entity or group (other than Jaws and its subsidiaries and their respective
directors, officers, employees, agents, financial advisors, counsel or other
representatives) in respect of any matter or thing which is inconsistent with
the successful completion of the Offer and the merger of Jaws and ODS, including
any Take-over Proposal or (b) provide any confidential information to,
participate in any discussions or negotiations relating to any Take-over
Proposal with, or otherwise cooperate with or assist or participate in any
effort to consider, review or initiate a Take-over Proposal by, any corporation,
person or other entity or group.
Amendment
---------
Except as expressly set forth herein, this letter agreement constitutes the
whole of the agreement between the parties and may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
Assignment
----------
No party to this letter agreement may assign any of its rights or
obligations under this letter agreement without the prior written consent of the
other party.
Disclosure
----------
Prior to first public disclosure of the existence and terms and conditions
of this letter, none of the parties hereto shall disclose the existence of this
letter agreement, or any details hereof, to any person other than ODS, its
directors and officers, without the prior written consent of the other parties
hereto, except to the extent required by law. The existence and terms and
conditions of this letter agreement may be disclosed by Jaws and ODS in the
press release issued in connection with the execution of the Pre-Acquisition
Agreement and the Offer Documents and the Directors Circular prepared by ODS.
Enurement
---------
This letter agreement will be binding upon and enure to the benefit of
Jaws, the Shareholder and their respective executors, administrators, successors
and permitted assigns.
Applicable Law
---------------
This letter agreement shall be governed and construed in accordance with
the laws of the Province of Alberta and the federal laws of Canada applicable
therein and each of the parties hereto irrevocably attorns to the jurisdiction
of the courts of the Province of Alberta.
Counterparts
------------
This letter agreement may be signed in counterparts which together shall be
deemed to constitute one valid and binding agreement and delivery of such
counterparts may be effected by means of telecopier.
Yours truly,
JAWS TECHNOLOGIES INC.
(THE ALBERTA CORPORATION)
Per:
Per:
ACCEPTANCE
----------
The foregoing is hereby accepted as of and with effect from the day of
November, 1999 and the undersigned hereby represents that the undersigned
beneficially owns, directly or indirectly, or exercises control or direction
over Offsite Data Services Ltd. Shares.
<PAGE>
Exhibit A - Page 38
SCHEDULE C
FORM OF JOINT PRESS RELEASE
---------------------------
<PAGE>
3
Exhibit G - Page 3
Exhibit A - Page 39
SCHEDULE D
CONDITIONS IN FAVOUR OF ODS
---------------------------
The capitalized terms used in this Schedule D have the meanings set forth
in the attached Pre-Acquisition Agreement dated November 2, 1999 (the
"Agreement") between Jaws and ODS, except that the term "Offeror" shall be
deemed to refer to Jaws Canada.
Notwithstanding any other provision of the Agreement, the Board of Directors of
ODS reserves the right to withdraw, modify or amend its recommendation with
respect to the Offer unless all of the following conditions are satisfied or
waived by ODS prior to the Expiry Time:
(a) all requisite regulatory approvals and consents (including, without
limitation, those of any stock exchanges or other securities or regulatory
authorities) shall have been obtained and all applicable statutory or regulatory
waiting periods shall have expired or been terminated and no objection or
opposition shall have been filed, initiated or made during any applicable
statutory or regulatory period; and
(i) no order shall have been issued by any domestic or foreign court or
tribunal or governmental agency or other regulatory authority or administrative
agency or commissions, and
no law shall have been enacted;
which has the effect or may have the effect of cease trading, enjoining or
prohibiting the purchase by, or the sale to, the Offeror of the ODS Shares.
<PAGE>
Exhibit B - Page 1
EXHIBIT B
JAWS TECHNOLOGIES INC. ANNOUNCES AGREEMENT
TO ACQUIRE OFFSITE DATA SERVICES LTD.
JAWS TO LAUNCH INTERNET DATA VAULT DIVISION
CALGARY, Canada, November 4, 1999 - JAWS Technologies Inc. (JAWZ: OTC-BB) ("JAWS
U.S.") announced today that it has entered into an agreement to acquire, through
its wholly-owned subsidiary, an Alberta corporation also named JAWS Technologies
Inc. ("JAWS Canada"), all of the outstanding shares of Offsite Data Services
Ltd. The agreement also provides for the acquisition of all of the outstanding
options and warrants of Offsite Data Services.
"This combined entity creates one of the world's most comprehensive information
security services and products companies," said Robert Kubbernus, Chairman and
CEO, JAWS Technologies Inc. JAWS U.S. and Offsite Data Services are each
independently positioned with a strong presence and growing market share within
their respective business areas. "We expect that this strategy will reward our
customers, our employees and our shareholders."
The goal of the combined company will be to further enhance its position as an
industry leader providing information security solutions for businesses,
governments and organizations. "Extending our business model to the automated,
internet enabled secure data storage allows JAWS' professionals to offer our
customers a full suite of information security services, products and
solutions," said Kubbernus.
Riaz Mamdani, Chief Financial Officer of JAWS Technologies Inc. stated that the
offer of U.S. $0.60/share (CDN $0.88/share) or U.S. $9.9 million (CDN $14.8
million) will be paid by the delivery to Offsite shareholders of Exchangeable
Shares of JAWS Canada which may be exchanged, at each shareholder's option, for
shares of common stock of JAWS U.S. The deemed value of each share of JAWS U.S.
will be U.S.$1.70. Thus, one Offsite share will be equal to 0.3524 JAWS U.S.
common shares. The Exchangeable Shares will have the same voting rights,
dividend entitlements and other attributes of the shares of common stock of JAWS
U.S. On a fully diluted basis, Offsite has 16.8 million shares, options and
warrants outstanding.
Holders of Offsite warrants will be offered warrants of JAWS Canada on
substantially the same terms as the Offsite warrants except that the JAWS
warrants will be exercisable into Exchangeable Shares.
The making of the offer by JAWS U.S. to acquire all of the outstanding shares,
options and warrants of Offsite is subject to certain conditions being satisfied
including, among other things, the release of certain shares of Offsite from
escrow and the entering into of lock-up agreements by certain shareholders of
Offsite.
"By creating this new convertible class of shares, Offsite's Canadian
shareholders will be able to participate as a JAWS' shareholder and obtain tax
deferred rollover treatment upon disposition of their Offsite common shares,"
said Mamdani. "As a U.S. company acquiring a Canadian company, we have created
an advantageous tax situation by allowing Canadian shareholders to defer their
capital gains."
Consummation of the transaction is conditional upon, among other things, the
deposit of at least 90 per cent of the outstanding shares of Offsite under the
offer and the receipt of all necessary regulatory and government approvals. The
offer is expected to expire on or about December 21, 1999. Documents relating
to the transaction are expected to be sent to shareholders on or before November
30, 1999. It is JAWS U.S.' intention to acquire all remaining shares of Offsite
not deposited under the offer pursuant to a subsequent acquisition transaction
as soon as practicable after the completion of the offer.
"We are particularly excited about becoming the secure on-line information
division within the JAWS family," said Trent Johnsen, President, Offsite Data
Services. "JAWS' national and growing international presence gives Offsite
shareholders the opportunity to be part of a total information security
company," said Johnsen. The agreement has been unanimously recommended by
Offsite Data Service's Board of Directors.
On completion of the acquisition, Offsite Data Services will be marketed as
'JAWS Internet Data Vault Division'. "We expect that we will roll out a
strategy whereby we would have targeted market data vaults which will tie-in to
our information security solutions, such as 'JAWS Medical Vault', 'JAWS Law
Vault', 'JAWS Financial Vault' and 'JAWS ASP Vault'," said Kubbernus.
About Offsite Data Services: "Forward Thinking in Back-Up"
Offsite Data Services is a Calgary-based Internet data storage management
company originally incorporated in 1995, and began trading on the Alberta Stock
Exchange early in 1999. Offsite offers a comprehensive set of services and
facilities that provides a simple, convenient and cost-effective solution for
organizations requiring a reliable, secure method of backing-up, storing and
retrieving their data. Offsite provides on-line data storage management using a
proprietary system developed by HARBOR Systems Management and with EDS
Systemhouse as a strategic partner. Customers include numerous oil and gas
companies, legal firms, health care professionals, WestJet Airlines and the
University of Calgary. For more information, visit the company's website at
www.offsitedata.com.
About JAWS Technologies: "Information is Power. Protect It."
JAWS Technologies has become a leader in the provision of information security
technology products and consulting services. JAWS' is based in Calgary, Canada
and has offices in Toronto, Canada and Pasadena, California, USA. Throughout
the world JAWS U.S. has over twenty strategic partners, approximately 100
corporate clients, over 300 authorized re-sellers and has distributed
approximately 550,000 copies of JAWS XMail. JAWS U.S. is a fully-reporting
issuer traded on the NASD-OTC BB, under the symbol JAWZ. For more information,
visit the company's website at www.jawstech.com or call 1-888-301-5297.
----------------
Forward-looking statements and comments in this press release are made pursuant
to safe harbor provisions of the Securities Exchange Act of 1934. Such
statements relating to, among other things, the prospects for the companies to
complete the transaction and enhance operating results, are necessarily subject
to risks and uncertainties, some of which are significant in scope and nature.
These risks may be further discussed in periodic reports and registration
statements to be filed by the Company form time to time with the Securities and
Exchange Commission in the future.
