Exhibit 2(7)
WARRANT OPTION AGREEMENT
THIS AGREEMENT made as of the 19th day of May, 1998.
BETWEEN:
THE LIVERPOOL LIMITED PARTNERSHIP, A BERMUDA LIMITED
PARTNERSHIP AND WESTGATE INTERNATIONAL, L.P., A CAYMAN LIMITED
PARTNERSHIP
(herein respectively referred to "Liverpool" and "Westgate" or
collectively as the "Optionor")
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RED REEF LIMITED, A BODY CORPORATE GOVERNED BY THE LAWS OF THE
BRITISH VIRGIN ISLANDS
(herein referred to as the "Optionee")
WHEREAS:
A. The Optionor holds Warrants (as hereinafter defined) which entitle the
holders thereof to acquire an aggregate of 12,500,000 common shares of
the share capital of the Corporation (as hereinafter defined); and
B. The Optionor wishes to grant the Optionee an option to purchase
the Warrants.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
mutual covenants hereinafter set forth, and for other valuable consideration,
the parties hereto have agreed as follows:
ARTICLE ONE
DEFINITIONS
1.01 In this Agreement the following terms shall have the following
meanings:
A. "Agreement" means this agreement made as of the date first
written above, among the Optionor and the Optionee, and the
expressions "above", "below", "herein", "hereof" and similar
expressions refer to this Agreement.
B. "Corporation" means Xenotech Inc. and any successor or
continuing corporation resulting from any form of corporate
reorganization.
C. "Covered Shares" means those Shares of the Corporation, as
defined in the Registration Rights Agreement.
D. "Expiration Date" means May 5, 2000.
E. "Option Date" means August 17, 1998.
F. "Option Warrants" means the Warrants the Optionee is entitled
to purchase under the Warrant Option.
G. "Registration Rights Agreement" means the Registration Rights
Agreement entered into as of May 19, 1998, between Xenotech,
Liverpool and Westgate.
H. "SEC" means the U.S. Securities and Exchange Commission.
I. "Warrant Option" means an option to purchase the 12,500,000
Warrants held by the Optionor pursuant to this Agreement and
includes any portion of that option.
J. "Warrants" means the common share purchase warrants evidenced
by the warrant certificates attached as Schedule "A" and
Schedule "B" hereto registered in the names of Liverpool and
Westgate respectively. Each Warrant entitles the holder to
acquire one (1) common share of the capital of the
Corporation upon payment of $0.40 per share on or before May
15, 2000.
1.02 In this Agreement, the masculine gender shall include the feminine
gender and the singular shall include the plural and vice versa
wherever the context requires.
1.03 All dollar amounts stated herein are in Canadian currency.
ARTICLE TWO
WARRANT OPTION
2.01 The Optionor hereby grants to the Optionee, subject to the terms and
conditions hereinafter set out, an irrevocable option to purchase the Option
Warrants, at any time or from time to time after the Option Date and on or
before the Expiration Date on the following basis:
(a) 4,500,000 Warrants, at an exercise price of $0.01 per
Warrant;
(b) 4,000,000 Warrants, at an exercise price of $0.20 per
Warrant; and
(c) the remaining 4,000,000 Warrants, at an exercise price of
$0.40 per Warrant.
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2.02 Each of Westgate and Liverpool hereby agree to tender an aggregate of
the number of the Warrants purchased by the Optionee pursuant to Article 4 of
this Agreement.
2.03 At 4:30 p.m. Calgary time, on the Expiration Date, the Warrant Option
shall forthwith expire and terminate and be of no further force or effect
whatsoever as to such of the Option Warrants in respect of which the Warrant
Option hereby granted have not then be exercised.
2.04 The Warrant Option granted pursuant to Article 2.01 above may only be
exercised by the Optionee in the event that: (a) the Common Shares of the
Corporation are listed and trading on the NASDAQ National Market or the NASDAQ
Small Cap Market; (b) and the Common Shares of the Corporation are registered
under the US Securities Exchange Act of 1934, as amended, and (c) the Covered
Shares are "US Registered" (as defined in Section 3(a) of the Registration
Rights Agreement).
ARTICLE THREE
MATERIAL CHANGE
3.01 In the event that, prior to the Expiration Date or exercise in full of
the Warrant Option, the outstanding share capital of the Corporation shall be
subdivided or consolidated into a greater or lesser number of common shares and
Warrants, or, in the event of the payment of a stock dividend by the
Corporation, or in the event that all of the shareholders of the Corporation are
granted the right to purchase additional common shares of the share capital of
the Corporation, the number and exercise price of Option Warrants remaining
subject to the Warrant Option hereunder shall be increased or reduced
accordingly, as the case may be.
ARTICLE FOUR
EXERCISE OF THE WARRANT OPTION
4.01 The Warrant Option may be exercised by the Optionee from time to time
in whole or in part, in accordance with the provisions hereof by delivery of the
option exercise form attached hereto as Schedule "C" to the Optionors and by
tendering the payment therefor by wire or by certified cheque to the
Corporation's counsel in trust, against delivery of certificates representing
the Warrants to be acquired upon such exercise of the Warrant Option.
4.02 Upon receiving the option exercise form attached hereto as Schedule
"C":
(a) Liverpool agrees to forthwith deliver a certificate
evidencing Warrants and provide the Corporation with
irrevocable instructions to cancel the said certificate and
reissue:
(i) certificates evidencing one-half of the number of
Warrants indicated upon the exercise form tendered by
the Optionee pursuant to Article 4.01 hereof
registered in accordance with the instructions
provided by the Optionee; and
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(ii) a certificate evidencing the balance of the Warrants,
if any, not registered pursuant to Article
4.02(a)(i), registered in accordance with the
instructions of Liverpool, which shall be delivered
along with the proceeds of the exercise in accordance
with the instructions of Liverpool, without deduction
or setoff.
(b) Westgate agrees to forthwith deliver a certificate evidencing
Warrants and provide the Corporation with irrevocable
instruction to cancel the said certificate and reissue:
(i) certificates evidencing one-half of the number of
Warrants indicated upon the exercise form tendered by
the Optionee pursuant to Article 4.01 hereof
registered in accordance with the instructions
thereby given; and
(ii) a certificate evidencing the balance of the Warrants,
if any, not registered pursuant to Article
4.02(b)(i), registered in accordance with the
instructions of Westgate, which shall be delivered
along with the proceeds of the exercise in accordance
with the instructions of Westgate, without deduction
or setoff.
ARTICLE FIVE
GENERAL
5.01 Any notice or other communication required or permitted to be given
under this Agreement shall be in writing and may be delivered personally or sent
by fax, addressed:
If to the Optionor:
The Liverpool Limited Partnership
c/o A.S. & K. Services Ltd.
P.O. Box HM 1179
Hamilton, Bermuda HMEX
Attn: Ms. Deborah Hendrickson
Fax: 011-441-295-5328
Westgate International, L.P.
c/o Midland Bank Trust Corporation (Cayman) Limited
P.O. Box 1109
Mary Street, Grand Cayman
Cayman Islands, BWI
Attn: Mr. Greg Taylor
Fax. (809) 949-7634
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Copy to:
Richard Mansouri
Stonington Management Corp.
712 - 5th Avenue, 36th Floor
New York, New York
10019
Fax: (212) 974-2092
If to the Optionee:
Red Reef Limited
P.O. Box 3152, Road Town,
Tortola, British Virgin Islands
Fax: 011 44 1481 710091
Copy to:
Xenotech, Inc.
c/o Ogilvie and Company
1600 Canada Place
407 2nd Street SW
Calgary, Alberta
T2P 2Y3
Attn: Ms. Sara-Lane Sirey
Fax: (403) 262-7896
Any such notice or other communication given as aforesaid shall be deemed to
have been effectively given, if sent by fax or other similar form of
telecommunications, on the next business day following such transmission or, if
delivered, to have been received on the date of such delivery. Any party may
change its address for service from time to time by notice given in accordance
with the foregoing and any subsequent notice shall be sent to the party as its
changed address.
5.02 The parties hereto covenant that they shall and will from time to time
and at all times hereafter do and perform all such acts and things and execute
all such additional documents as may be required to give effect to the terms and
intention of this Agreement.
5.03 This Agreement supersedes all other agreements, documents, writings
and verbal understandings among the parties relating to the subject matter
hereof and represents the entire agreement between the parties relating to the
subject matter hereof.
5.04 Subject to the other provisions hereof, this Agreement shall enure to
the benefit of and be binding upon the parties hereto and their respective
heirs, executors, administrators, successors and permitted assigns.
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5.05 This Agreement may not be assigned or transferred by the Optionee,
except to an affiliated entity or a director, officer or employee of the
Corporation.
5.06 Time shall be of the essence of this Agreement.
5.07 This Agreement shall be governed by and construed in accordance with
the laws of the Province of Alberta and the parties hereto attorn to the
jurisdiction of the courts of the Province of Alberta.
5.08 This Agreement may be executed in several counterparts and by original
or by facsimile signature, each of which when so executed shall be deemed to be
an original, and such counterparts together shall constitute one and the same
instrument and, notwithstanding their date of execution, shall be deemed to bear
the date as of the date above written.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the day and year first above written.
THE LIVERPOOL LIMITED PARTNERSHIP
BY: LIVERPOOL ASSOCIATES, LTD.
GENERAL PARTNER
BY:
---------------------------------
PAUL SINGER, PRESIDENT
WESTGATE INTERNATIONAL, L.P.
BY: MARTLEY INTERNATIONAL, INC.
ATTORNEY-IN-FACT
BY:
---------------------------------
PAUL SINGER, PRESIDENT
RED REEF LIMITED
PER:
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OPTION EXERCISE FORM
TO: WESTGATE INTERNATIONAL, L.P.
C/O MIDLAND BANK TRUST CORPORATION (CAYMAN) LIMITED
P.O. BOX 1109, MARY STREET
GRAND CAYMAN, CAYMAN ISLANDS
BRITISH WEST INDIES
ATTENTION: GREG TAYLOR
FAX: (345) 949-7634
AND:
THE LIVERPOOL LIMITED PARTNERSHIP
C/O A.S. & K. SERVICES LTD.
P.O. BOX HM 1179
HAMILTON, BERMUDA HMEX
ATTENTION: DEBORAH HENDRICKSON
FAX. (441) 295-5328
COPY TO: RICHARD MANSOURI
STONINGTON MANAGEMENT CORP.
712 - 5TH AVENUE, 36TH FLOOR
NEW YORK, NEW YORK
10019
FAX: (212) 974-2092
Red Reef Limited hereby exercises the right to purchase _______________________
Warrants of Xenotech Inc. at purchase price of CDN$_________________ per
Warrant, payment for which is submitted with this Exercise Form pursuant to and
in accordance with the terms and conditions of the Warrant Option Agreement made
as of May 15, 1998 among Westgate International L.P., The Liverpool Limited
Partnership and Red Reef Limited.
The Optionee hereby directs that the Warrants hereby acquired by this Exercise
Form be issued and delivered as follows:
NAME:
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ADDRESS IN FULL:
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NUMBER OF WARRANTS
BEING ACQUIRED:
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TOTAL EXERCISE
PRICE TENDERED:
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DATED:
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(Signature of Optionee)
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