EXHIBIT 16
LIVENT INC.
June 12, 1998
▇▇. ▇▇▇ ▇. ▇▇▇▇▇▇
c/▇ ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇:
RE: GRANT OF OPTION
This letter agreement sets forth the terms and conditions
pursuant to which the Corporation has granted to you (the "Optionee"),
effective as of April 9, 1998 (the "Date of Grant"), an option to purchase
common shares of Livent Inc.
1. DEFINED TERMS
Where used herein, the following terms shall have the following
meanings, respectively:
(a) "Board" shall mean the board of directors of the Corporation;
(b) "Cause" shall have the meaning ascribed to such term in the Employment
Agreement;
(c) "Change in Control" shall have the meaning ascribed to such term in
the Employment Agreement;
(d) "Common Shares" shall mean the common shares of the Corporation, or,
in the event of an adjustment contemplated by Section 8 hereof, such
other shares or securities to which the Optionee may be entitled upon
the exercise of an Option as a result of such adjustment;
(e) "Corporation" shall mean Livent Inc., and includes any successor
corporation thereto;
(f) "Disability" shall have the meaning ascribed to such term in the
Employment Agreement;
(g) "Effective Time" shall mean the effective time of the consummation of
the transactions contemplated by the Investment Agreement;
(h) "Employment Agreement" shall mean the employment agreement entered
into between the Corporation and the Optionee, dated as of June 12,
1998;
(i) "Expiration Time" shall mean 5:00 p.m. (Toronto time) on April 9,
2003;
(j) "Good Reason" shall have the meaning ascribed to such term in the
Employment Agreement;
(k) "Investment Agreement" shall mean the Investment Agreement entered
into between the Corporation and Lynx Ventures L.P., dated as of April
13, 1998;
(l) "Option" shall mean the option to purchase Common Shares granted
hereunder;
(m) "Option Price" shall mean the price per share specified in Section 3
below at which Common Shares may be purchased under the Option, as the
same may be adjusted from time to time in accordance with Section 8
hereof;
(n) "Subsidiary" shall have the meaning ascribed to such term in the
Business Corporation Act (Ontario); and
(o) "Take-Over Bid" shall mean a bona fide offer to acquire Common Shares
that is a "take-over bid" as such term is defined in the Securities
Act (Ontario), as such statute is amended, varied or re-enacted from
time to time, provided that (i) such offer is made to all or
substantially all of the holders of Common Shares, (ii) such offer is
made to acquire all or substantially all of the Common Shares
outstanding on the date of such offer and (iii) the Board issues a
recommendation that holders of Common Shares accept such offer.
2. GRANT OF OPTION
The Corporation hereby grants to the Optionee, on the terms and
subject to the conditions set forth in this agreement, an irrevocable
option (the "Option") to purchase 1,025,000 Common Shares (the "Optioned
Shares"), subject to any adjustment of such shares or of the number of such
shares in accordance with Section 8 below. The Options will be granted in
four equal series, designated "Series A," "Series B," "Series C" and
"Series D," each of which will entitle the Optionee to purchase 256,250
Optioned Shares.
3. OPTION PRICE
Subject to any adjustments in accordance with Section 8 hereof,
the Option Price at which each Optioned Share may be purchased upon
exercise of the Option at any time and from time to time shall be
U.S.$8.00.
4. VESTING PERIODS
(a) Subject to the terms and conditions set forth herein, the
Optionee shall have a vested and nonforfeitable right in the Option during
the periods and in the amounts specified below:
(i) as to all of the Series A Optioned Shares and 85,417 of
the Series B Optioned Shares, on or after the first
anniversary of the Effective Time until the Expiration
Time;
(ii) as to 170,833 of the Series B Optioned Shares and 170,834
of the Series C Optioned Shares, on or after the second
anniversary of the Effective Time until the Expiration
Time; and
(iii) as to 85,416 of the Series C Optioned Shares and all of
the Series D Optioned Shares, on or after the third
anniversary of the Effective Time until the Expiration
Time.
(b) Subject to the terms and conditions set forth herein, the
Optionee shall have the right to take up and purchase the Optioned Shares,
at any time and from time to time, during the periods and in the amounts
specified below:
(i) as to the Series A Optioned Shares, after they have become
vested pursuant to Section 4(a) above;
(ii) as to the Series B Optioned Shares, after the later of (A)
the time that they have become vested pursuant to Section
4(a) above and (B) the first date after the Date of Grant
on which the twenty trading day trailing average closing
price on NASDAQ exceeds U.S. $8.80;
(iii) as to the Series C Optioned Shares, after the later of
(A) the time that they have become vested pursuant to
Section 4(a) above and (B) the first date after the
Date of Grant on which the twenty trading day trailing
average closing price on NASDAQ exceeds U.S. $10.40;
and
(iv) as to the Series D Optioned Shares, after the later of (A)
the time that they have become vested pursuant to Section
4(a) above and (B) the first date after the Date of Grant
on which the twenty trading day trailing average closing
price on NASDAQ exceeds U.S. $12.00.
5. TERMINATION
The Option shall expire and terminate and be of no further force
or effect whatsoever as to the Optioned Shares in respect of which the
Option has not been exercised as of the earlier to occur of (a) the
Expiration Time or (b) termination of the Investment Agreement prior to
consummation of the transactions contemplated thereby.
6. CHANGE IN CONTROL, TERMINATION OF EMPLOYMENT
(a) Subject to Section 6(b) below, in the event of a Take-Over Bid or
a Change in Control, the Optionee, at any time while the Take-Over Bid is
open for acceptance, and at any time following a Change in Control, and
notwithstanding any conditions to the contrary regarding exercise otherwise
attaching to such Option (whether pursuant to Section 4 above or
otherwise), may take up and purchase any or all of the Optioned Shares
covered by such Option.
(b) Upon the termination of the Optionee's employment due to (i)
death, (ii) Disability, (iii) termination by the Corporation without Cause
or (iv) termination by the Optionee for Good Reason, and notwithstanding
any conditions to the contrary regarding exercise otherwise attaching to
such Option (whether pursuant to Section 4 above or otherwise), the
Optionee (or the Optionee's legal representative, as the case may be) may
take up and purchase any or all of the Optioned Shares covered by such
Option for a period of one year following such termination of employment,
at the end of which period the Option shall expire. Upon the termination of
the Optionee's employment for any other reason, the Optionee may, for a
period of ninety days following such termination, take up and purchase
those Optioned Shares which, immediately prior to such termination, the
Optionee could have taken up pursuant to Section 4(b) above, at the end of
which period the Option shall expire, provided however, that the Option
shall terminate immediately upon the Optionee's termination of employment
by the Company for Cause.
(c) Options shall not be affected by any change of employment of the
Optionee or by the Optionee ceasing to be a director where the Optionee
continues to be employed by, or continues to be a director of, the
Corporation or any Subsidiary of the Corporation.
7. EXERCISE OF OPTIONS
(a) An Option may be exercised from time to time by delivery to the
Corporation at its registered office of a written notice of exercise
addressed to the Secretary of the Corporation specifying the number of
Common Shares with respect to which the Option is being exercised and
accompanied by payment in full of the Option Price of the Common Shares to
be purchased. Certificates for such Common Shares shall be issued and
delivered to the Optionee as soon as practicable following the receipt of
such notice and payment. Payment of the Option Price may be made (i) in
cash, (ii) by cheque or money order, or (iii) by a combination of the
foregoing methods.
(b) Notwithstanding any other provision hereof, the Corporation's
obligation to issue Common Shares to an Optionee pursuant to the exercise
of an Option shall be subject to:
(i) completion of such registration or other qualification of such
Common Shares or obtaining approval of such governmental
authority as the Corporation shall determine to be necessary or
advisable in connection with the authorization, issuance or
sale thereof;
(ii) the admission of such Common Shares to listing on any stock
exchange on which the Common Shares are then listed; and
(iii) the receipt from the Optionee of such representations,
agreements and undertakings, including as to future dealings
in such Common Shares, as the Corporation or its counsel
determines to be necessary or advisable in order to
safeguard against the violation of the securities laws of
any jurisdiction.
In this connection the Corporation shall, to the extent necessary, take all
reasonable steps to obtain such approvals, registrations and qualifications
as may be necessary for the issuance of such Common Shares in compliance
with applicable laws and for the listing of such Common Shares on any stock
exchange on which the Common Shares are then listed.
8. CERTAIN ADJUSTMENTS
Appropriate adjustments in the number and kind of Common Shares
or other property issuable upon exercise of the Option and in the Option
Price shall be made by the Board to give effect to changes in the Common
Shares of the Corporation resulting from subdivisions, consolidations or
reclassification of the Common Shares of the Corporation, the payment of
dividends or other distributions by the Corporation (other than dividends
or other distributions determined by the Board to be in the ordinary
course), mergers, consolidations, combinations or similar transactions or
other relevant changes in the capital of the Corporation.
9. REGISTRATION AND POSSESSION OF OPTION SHARES
Upon each exercise of the Option in accordance with Section 7
hereof, the Corporation shall cause the transfer agent of the Common Shares
forthwith to register in the name of the Optionee, or in such other name as
the Optionee may direct, the Optioned Shares paid for by the Optionee in
connection with that exercise of the Option (the "Purchased Shares") and to
prepare and deliver to the Optionee a definitive certificate in the name of
the Optionee, or in such other name as the Optionee may direct,
representing such Purchased Shares.
10. TERMINATION OF OPTION BY OPTIONEE
The Optionee may at any time terminate the Option by written
notice given to the Corporation at its registered address, and, forthwith
upon the receipt by the Corporation of any such notice in writing, the
Option shall expire and terminate as to the Optioned Shares in respect of
which the Option has not been exercised.
11. OPTIONEE NOT REQUIRED TO EXERCISE OPTION
The Optionee shall have no obligation to purchase and/or pay for,
and the Corporation shall have no obligation to issue, any Optioned Shares
except those Optioned Shares in respect of which the Optionee shall have
exercised the Option in accordance with the terms and conditions of this
agreement.
12. REPRESENTATION AND WARRANTY BY OPTIONEE
The Optionee represents and warrants to the Corporation, as a
continuing representation and warranty which shall be true and correct on
the date of this agreement and on each date that the Optionee exercises the
Option as if made and given on and as of each such date, that the Optionee
is acquiring the Option and will acquire the Purchased Shares as principal
and not as agent, nominee or trustee on behalf of any other party.
13. GENERAL
(a) Time shall be of the essence of this agreement.
(b) All dollar amounts referred to in this agreement are in U.S.
funds.
(c) The division of this agreement into articles, sections,
paragraphs, subparagraphs and other subdivisions and the
insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this
agreement.
(d) In the event that any day on or before which any action is to be
taken under this agreement is not a business day in the place
where the action is to be taken, then such action shall be
required to be taken on or before the requisite time on the next
succeeding day that is a business day in such place.
(e) This agreement shall be construed, interpreted and enforced in
accordance with, and the respective rights and obligations of the
parties shall be governed by, the laws of the Province of Ontario
and the federal laws of Canada applicable therein, and each party
hereby irrevocably and unconditionally agrees to the non-
exclusive jurisdiction of the courts of such Province.
(f) This agreement shall enure to the benefit of and be binding upon
the parties to this agreement and the successors and assigns of
the Corporation and legal personal representatives of the
Optionee.
(g) This agreement and the Option granted to the Optionee is non-
assignable and non-transferable otherwise than, to the extent
permitted by applicable law, by will or pursuant to the laws of
succession or descent and distribution and, during the lifetime
of the Optionee, the Option shall be exercisable only by the
Optionee, provided however that the Company shall not be required
to file a prospectus or otherwise be required to take any action
or incur any expense in connection with any proposed transfer by
will or pursuant to the laws of succession or descent and
distribution.
(h) This agreement may be executed by the parties in counterparts
and, when so executed, such counterparts shall constitute a
single agreement.
(i) The provisions of this agreement may not be modified, waived or
discharged without obtaining the consent of applicable securities
regulatory authorities and unless such waiver, modification or
discharge is agreed to in writing by the parties hereto.
(j) No portion of the Option may be exercised unless and until the
granting of the Option hereunder is approved by the shareholders
of the Corporation to be given by a resolution passed at a
meeting of the shareholders of the Corporation and accepted by
The Toronto Stock Exchange.
(k) The Optionee shall not have any rights as a shareholder of the
Corporation with respect to any of the Common Shares covered by
the Option until the Optionee shall have exercised the Option in
accordance with the terms hereof (including tendering payment in
full of the Option Price of the Common Shares in respect of which
the Option is being exercised) and the Corporation shall have
issued such Common Shares to the Optionee in accordance with the
terms hereof.
(l) Nothing herein shall confer upon the Optionee any right to
continue in the employ of the Corporation or any Subsidiary of
the Corporation or affect in any way the right of the Corporation
or any such Subsidiary to terminate the Optionee's employment at
any time; nor shall the Option be deemed or construed to
constitute an agreement, or an expression of intent, on the part
of the Corporation or any such Subsidiary to extend the
employment of the Optionee beyond the time at which the Optionee
would normally be retired pursuant to the provision of any
present or future retirement plan of the Corporation or any
Subsidiary of the Corporation or any present or future retirement
policy of the Corporation or any Subsidiary of the Corporation,
or beyond the time at which the Optionee would otherwise be
retired pursuant to the provisions of any contract of employment
with the Corporation or any Subsidiary of the Corporation.
If the terms and conditions of this agreement are acceptable to
you, please indicate your acceptance by signing this letter and printing
your name and address where indicated below.
Yours truly,
LIVENT INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman and
Chief Executive Officer
The undersigned Optionee has reviewed, and hereby accepts and
agrees to, the provisions of this letter agreement.
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
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Signature of Optionee
▇▇▇ ▇. ▇▇▇▇▇▇
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Name of Optionee
(please print)
Address:
c/o Schulte, ▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE A
NOTICE OF EXERCISE OF OPTION
TO: LIVENT INC.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Secretary
Name of Optionee: ______________________
Address of Optionee: ______________________
______________________
Date of Option Agreement ______________________
Number of Optioned Shares
in respect of which Option
is being exercised: ______________________
Aggregate Option Price: $______________________
The undersigned hereby notifies Livent Inc. (the "Corporation")
of the undersigned's exercise, as detailed above, of the option granted by
the Corporation pursuant to the above-referenced Option Agreement.
___________________________________
Signature of Optionee or of Legal
Personal Representative of Optionee