Exhibit 2(5)
SCHEDULE 2.3
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE SOLD OR OFFERED FOR SALE
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAW OR AN APPLICABLE EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS. THIS WARRANT MAY NOT BE TRANSFERRED TO ANY RESIDENT
OF THE PROVINCE OF ALBERTA UNTIL AUGUST 17, 1998.
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May 19, 1998 XENOTECH INC. No. 98A-1
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Common Share Purchase Warrant
XENOTECH INC., an Alberta corporation (the "Company"), hereby certifies
that for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, THE LIVERPOOL LIMITED PARTNERSHIP, having an address
c/o A.S. & K. Services Ltd., P.O. Box HM1179, ▇▇▇▇▇▇▇▇ Bermuda ("Purchaser") or
any other Warrant Holder is entitled, on the terms and conditions set forth
below, to purchase from the Company at any time beginning on the date hereof and
ending twenty-four (24) months after the date hereof (the "Term"), 6,250,000
fully paid and nonassessable common shares, of the Company (the "Common
Shares"), at a purchase price per share of Cdn. $0.40 per share (the "Purchase
Price"), as the same may be adjusted pursuant to Section 5 herein.
Notwithstanding the foregoing, upon the listing of the Common Shares on the NNM
or the NASDAQ Small Cap (each as defined in the Investment Agreement) (In either
case, a "U.S. Listing"), if not prohibited by the rules of such trading market,
the Term shall be automatically extended without further action, such that this
Warrant shall be exercisable for a period of thirty-six (36) months from the
date hereof. The Company shall provide the Warrant Holder with prompt written
notice of any U.S. Listing, which notice shall indicate whether the
aforementioned extension of the Term shall have been effected.
1. DEFINITIONS.
(a) the term "Warrant Holder" shall mean the Purchaser or any
assignee of all or any portion of this Warrant.
(b) the term "Warrant Shares" shall mean the Common Shares or
other securities issuable upon exercise of this Warrant.
(c) the term "Registration Rights Agreement" shall mean the
Registration Rights Agreement, dated May 19, 1998, between the Company and the
Purchaser.
(d) the term "Investment Agreement" shall mean the Investment
Agreement dated May 19, 1998, between the Company and the Purchaser.
(e) the term "Warrant Option Agreement" shall mean the Warrant
Option Agreement dated May 19, 1998, between the Purchaser and Red Reef Limited.
2. EXERCISE OF WARRANT.
(a) This Warrant may be exercised by the Warrant Holder, in
whole or in part, at any time and from time to time by the following method:
Subject to the rights of Red Reef pursuant to the terms of the
Warrant Option Agreement, the Warrant Holder may surrender
this Warrant, together with the form of subscription at the
end hereof duly executed by the Warrant Holder ("Subscription
Notice"), at the offices of the Company or any transfer agent
for the Common Shares.
(b) In the event that the Warrant is not exercised in full,
the number of Warrant Shares shall be reduced by the number of such Warrant
Shares for which this Warrant is exercised, and the Company, at its expense,
shall forthwith issue and deliver to or to the order of the Warrant Holder a new
Warrant of like tenor in the name of the Warrant Holder or as the Warrant Holder
(upon payment by the Warrant Holder of any applicable transfer taxes) may
request, reflecting such adjusted Warrant Shares.
3. DELIVERY OF STOCK CERTIFICATES.
(a) Subject to the terms and conditions of this Warrant, as
soon as practicable after the exercise of this Warrant in full or in part, and
in any event within three (3) "trading days" (as defined below) thereafter, the
Company shall transmit the certificates (together with any other stock or other
securities or property to which Warrant Holder is entitled upon exercise) by
messenger or overnight delivery service to reach the address designated by such
holder within three (3) trading days after the receipt of the Subscription
Notice ("T+3") and the purchase price for the Warrant Shares purchased pursuant
thereto.
The term "trading day" means a day on which there is
trading on the Alberta Stock Exchange or such other market or exchange on which
the Common Shares are then traded.
(b) This Warrant may not be exercised as to fractional Common
Shares. In the event that the exercise of this Warrant, in full or in part,
would result in the issuance of any fractional Common Shares, then in such event
the Warrant Holder shall be entitled to cash equal to the fair market value of
such fractional share. For purposes of this Warrant, "fair market value" shall
equal the closing trading price of the Common Shares on the then principal
trading exchange or market for the Common Shares (the "Principal Market") on the
date of determination
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or, if the Common Shares are not listed or admitted to trading on any Canadian
or U.S. national securities exchange, the average of the closing bid and asked
prices on the over-the-counter market as furnished by any member of a Canadian
or U.S. stock exchange reasonably selected from time to time by the Company for
that purpose and reasonably acceptable to the Warrant Holder, or, if the Common
Shares are not listed or admitted to trading on any Canadian or U.S. national
securities exchange or traded over-the-counter and the average price cannot be
determined as contemplated above, the fair market value of the Common Shares
shall be as reasonably determined in good faith by the Company's Board of
Directors with the concurrence of the Warrant Holder.
4. (A) REPRESENTATIONS AND COVENANTS OF THE COMPANY.
(a) The Warrant Shares have been approved for listing on The
Alberta Stock Exchange, subject to issuance.
(b) The Company shall comply with its obligations under the
Registration Rights Agreement with respect to the Warrant Shares.
(c) The Company shall take all necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, including, without limitation, the notification of the Principal
Market, for the legal and valid issuance of this Warrant and the Warrant Shares
to the Warrant Holder under this Warrant.
(d) From the date hereof through the last date on which this
Warrant is exercisable, the Company shall take all steps reasonably necessary
and within its control to insure that it maintains its status as a "reporting
issuer not in default" under the Securities Act (Alberta) and the Common Shares
remain listed on the Principal Market.
(e) The Company shall at all times reserve and keep available,
solely for issuance and delivery as Warrant Shares hereunder, such Common Shares
as shall from time to time be issuable hereunder.
(f) The Warrant Shares, when issued in accordance with the
terms hereof, will be duly authorized and, when paid for or issued in accordance
with the terms hereof, shall be validly issued, fully paid and non-assessable.
(B) REPRESENTATIONS AND COVENANTS OF THE PURCHASER.
The Purchaser shall not resell the Warrant Shares in the
United States, unless such resale is pursuant to an effective registration
statement under the Securities Act or pursuant to an applicable exemption from
such registration requirements, in which case it will deliver a legal opinion of
counsel to such effect. The Purchaser shall comply with its obligations under
the Registration Rights Agreement.
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5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The
number of and kind of securities purchasable upon exercise of this Warrant
and the Purchase Price shall be subject to adjustment from time to time as
follows:
(a) SUBDIVISIONS, COMBINATIONS AND OTHER ISSUANCES. If the
Company shall at any time after the date hereof but prior to the expiration of
this Warrant subdivide its outstanding securities as to which purchase rights
under this Warrant exist, by split-up, spin-off, or otherwise, or combine its
outstanding securities as to which purchase rights under this Warrant exist, the
number of Warrant Shares as to which this Warrant is exercisable as of the date
of such subdivision, split-up, spin-off or combination shall forthwith be
proportionately increased in the case of a subdivision, or proportionately
decreased in the case of a combination. Appropriate adjustments shall also be
made to the Purchase Price payable per share, but the aggregate Purchase Price
payable for the total number of Warrant Shares purchasable under this Warrant as
of such date shall remain the same.
(b) STOCK DIVIDEND. If at any time after the date hereof the
Company declares a dividend or other distribution on Common Shares payable in
Common Shares or other securities or rights convertible into Common Shares
("Common Share Equivalents") without payment of any consideration by holders of
Common Shares for the additional Common Shares or the Common Share Equivalents
(including the additional Common Shares issuable upon exercise or conversion
thereof), then the number of Common Shares for which this Warrant may be
exercised shall be increased as of the record date (or the date of such dividend
distribution if no record date is set) for determining which holders of Common
Shares shall be entitled to receive such dividends, in proportion to the
increase in the number of outstanding shares (and Common Shares issuable upon
conversion of all such securities convertible into Common Shares) of Common
Shares as a result of such dividend, and the Purchase Price shall be adjusted so
that the aggregate amount payable for the purchase of all the Warrant Shares
issuable hereunder immediately after the record date (or on the date of such
distribution, if applicable), for such dividend shall equal the aggregate amount
so payable immediately before such record date (or on the date of such
distribution, if applicable).
(c) OTHER DISTRIBUTIONS. If at anytime after the date hereof
the Company distributes to holders of its Common Shares any shares of its
capital stock, any evidence of indebtedness or any of its assets (including
cash), then the number of Warrant Shares for which this Warrant is exercisable
shall be adjusted to equal: (i) the number of Warrant Shares for which this
Warrant is exercisable immediately prior to such event, (ii) multiplied by a
fraction, (A) the numerator of which shall be the "Fair Market Value" (as
defined in Section 5(f) hereof) per Common Share on the record date for the
dividend or distribution, and (B) the denominator of which shall be the Fair
Market Value per Common Share on the record date for the dividend or
distribution minus the amount allocable to one Common Share of the value (as
jointly determined in good faith by the Board of Directors of the Company and
the Warrant Holder) of any and all such evidences of indebtedness, shares of
capital stock, other securities or property, so distributed. The Purchase Price
shall be adjusted to equal: (i) the Purchase Price in effect immediately before
the occurrence of any event (ii) multiplied by a fraction, (A) the numerator of
which is the number of Warrant Shares for which this Warrant is exercisable
immediately before
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the adjustment, and (B) the denominator of which is the number of Warrant Shares
for which this Warrant is exercisable immediately after the adjustment.
(d) MERGER, ETC. If at any time after the date hereof there
shall be a merger or consolidation of the Company with or into or a transfer of
all or substantially all of the assets of the Company to another entity, then
the Warrant Holder shall be entitled to receive upon such transfer, merger or
consolidation becoming effective, and upon payment of the aggregate Purchase
Price then in effect, the number of shares or other securities or property of
the Company or of the successor corporation resulting from such merger or
consolidation, which would have been received by Warrant Holder for the shares
of stock subject to this Warrant had this Warrant been exercised just prior to
such transfer, merger or consolidation becoming effective or to the applicable
record date thereof, as the case may be. The Company will not merge or
consolidate with or into any other corporation, or sell or otherwise transfer
its property, assets and business substantially as an entirety to another
corporation, unless the corporation resulting from such merger or consolidation
(if not the Company), or such transferee corporation, as the case may be, shall
expressly assume prior to the consummation thereof, by supplemental agreement
reasonably satisfactory in form and substance to the Warrant Holder, the due and
punctual performance and observance of each and every covenant and condition of
this Warrant to be performed and observed by the Company.
(e) RECLASSIFICATION, ETC. If at any time after the date
hereof there shall be a reorganization or reclassification of the securities as
to which purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, then the Warrant Holder
shall thereafter be entitled to receive upon exercise of this Warrant, during
the period specified herein and upon payment of the Purchase Price then in
effect, the number of shares or other securities or property resulting from such
reorganization or reclassification, which would have been received by the
Warrant Holder for the shares of stock subject to this Warrant had this Warrant
at such time been exercised.
(f) PURCHASE PRICE ADJUSTMENT. In the event that the Company
issues or sells any Common Shares or securities which are convertible into or
exchangeable for its Common Shares or any convertible securities, or any
warrants or other rights to subscribe for or to purchase or any options for the
purchase of its Common Shares or any such convertible securities (other than
shares or options issued or which may be issued pursuant to the Company's
employee or director option plans not to exceed the aggregate of (i) the number
of Common Shares issuable pursuant to such options on the date hereof, and (ii)
10% of the Common Shares outstanding on the date hereof) at an effective
purchase price per share which is less than the closing trading price of the
Common Shares on the Principal Market on the trading day next preceding such
issue or sale ("Fair Market Value"), then in each such case, the Purchase Price
in effect immediately prior to such issue or sale shall be reduced effective
concurrently with such issue or sale to an amount determined by multiplying the
Purchase Price then in effect by a fraction, (x) the numerator of which shall be
the sum of (1) the number of Common Shares outstanding immediately prior to such
issue or sale, including, without duplication, those deemed to have been issued
under any provision of this Warrant plus (2) the number of Common Shares which
the aggregate consideration received by the Company for such additional shares
would purchase at such Fair Market Value; and (y) the denominator of which shall
be the number of Common Shares
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outstanding immediately after such issue or sale including, without duplication,
those deemed to have been issued under any provision of the Warrants. The number
of shares which may be purchased hereunder shall be increased proportionately to
any reduction in Purchase Price pursuant to this Section 5(f), so that after
such adjustments the aggregate Purchase Price payable hereunder for the
increased number of shares shall be the same as the aggregate Purchase Price in
effect just prior to such adjustments.
For the purposes of the foregoing adjustment, in the case of
the issuance of any convertible securities, warrants, options or other rights to
subscribe for or to purchase or exchange for, Common Shares ("Convertible
Securities"), the maximum number of Common Shares issuable upon exercise,
exchange or conversion of such Convertible Securities shall be deemed to be
outstanding, provided that no further adjustment shall be made upon the actual
issuance of Common Shares upon exercise, exchange or conversion of such
Convertible Securities. If any of the convertible securities, warrants, option
or other rights to subscribe for or to purchase or exchange for Common Shares
are issued or granted but expire without being converted or exercised, then such
rights shall revert and be calculated back to the Company; provided, that any
such recalculation shall not effect any prior exercises of this Warrant.
6. NO IMPAIRMENT. The Company will not, by amendment of its constating
documents (including its Certificate of Incorporation or By-Laws) or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Warrant Holder against impairment. Without limiting the
generality of the foregoing, the Company will take all such action as may be
reasonably necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares on the exercise of
this Warrant.
7. NOTICE OF ADJUSTMENTS NOTICES. Whenever the Purchase Price or number
of Warrant Shares purchasable hereunder shall be adjusted pursuant to Section 5
hereof, the Company shall execute and deliver to the Warrant Holder a
certificate setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated and the Purchase Price and number of shares purchasable hereunder
after giving effect to such adjustment, and shall cause a copy of such
certificate to be mailed (by first class mail, postage prepaid) to the Warrant
Holder.
8. RIGHTS AS SHAREHOLDER. Prior to exercise of this Warrant, the
Warrant Holder shall not be entitled to any rights as a shareholder of the
Company with respect to the Warrant Shares, including (without limitation) the
right to vote such shares, receive dividends or other distributions thereon or
be notified of stockholder meetings. However, in the event of any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, any
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right to subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right, the
Company shall mail to each Warrant Holder, at least 10 days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, and the amount
and character of such dividend, distribution or right.
9. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of the
Warrant and, in the case of any such loss, theft or destruction of the Warrant,
on delivery of an indemnity agreement or security reasonably satisfactory in
form and amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of such Warrant, the Company at its expense will
execute and deliver, in lieu thereof a new Warrant of like tenor.
10. CONSENT TO JURISDICTION, CHOICE OF LAW.
(a) This agreement shall be governed by and interpreted in
accordance with the laws of Alberta and the applicable laws of Canada, and the
parties hereto attorn to the jurisdiction of the Courts of the Province of
Alberta.
11. ENTIRE AGREEMENT; AMENDMENTS. This Warrant, the Exhibits hereto and
the provisions contained in the Investment Agreement or the Registration Rights
Agreement and incorporated into this Warrant and the Warrant Shares contain the
entire understanding of the parties with respect to the matters covered hereby
and thereby and, except as specifically set forth herein and therein, neither
the Company nor the Warrant Holder makes any representation, warranty, covenant
or undertaking with respect to such matters. No provision of this Agreement may
be waived or amended other than by a written instrument signed by the Party
against whom enforcement of any such amendment or waiver is sought.
12. NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery or delivery by telex (with correct answer back received), telecopy or
facsimile (on receipt of the fax-confirmation) at the address or number
designated below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be:
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to the Company:
Xenotech Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇. ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Vorys, ▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇.
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
to Purchaser:
The Liverpool Limited Partnership
▇/▇ ▇.▇ & ▇. ▇▇▇▇▇▇▇▇ ▇▇▇.
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Fax: ▇▇▇ ▇▇▇ ▇▇▇-▇▇▇▇
Either Party hereto may from time to time change its address for notices under
this Section 12 by giving at least 10 days prior written notice of such changed
address to the other party hereto.
13. MISCELLANEOUS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
Party against which enforcement of such change, waiver, discharge or termination
is sought. The headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision.
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14. ASSIGNMENT. Subject to compliance with applicable securities laws,
this Warrant may be transferred or assigned, in whole or in part, at any time
and from time to time by the then Warrant Holder by submitting this Warrant to
the Company together with a duly executed Assignment in substantially the form
and substance of the Form of Assignment which accompanies this Warrant and, upon
the Company's receipt hereof, and in any event, within three (3) business days
thereafter, the Company shall issue a Warrant to the Warrant Holder to evidence
that portion of this Warrant, if any as shall not have been so transferred or
assigned.
Dated: May 19, 1998 XENOTECH INC.
By:
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman
THE LIVERPOOL LIMITED PARTNERSHIP
By:Liverpool Associates, Ltd.
General Partner
By:
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▇▇▇▇ ▇▇▇▇▇▇, President
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(SUBSCRIPTION NOTICE)
FORM OF WARRANT EXERCISE
(TO BE SIGNED ONLY ON EXERCISE OF WARRANT)
TO __________________
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise this Warrant for, and to purchase thereunder,
_______ Common Shares of Xenotech Inc., an Alberta corporation (the "Company"),
and herewith makes payment of Cdn. $________ therefor; or
The undersigned requests that the certificates for such shares
be issued in the name of, and delivered to ___________________, whose address is
______________________ _______________.
Dated:
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(Signature must conform to name of holder as
specified on the face of the Warrant)
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(Address)
FORM OF ASSIGNMENT
(TO BE SIGNED ONLY ON TRANSFER OF WARRANT)
For value received, the undersigned hereby sells, assigns, and transfers unto
_________________ the right represented by the within Warrant to purchase ____
Common Shares of Xenotech Inc., an Alberta corporation, to which the within
Warrant relates, and appoints ________ Attorney to transfer such right on the
books of Xenotech Inc., an Alberta corporation, with full power of substitution
of premises.
Dated:
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(Signature must conform to name of holder as
specified on the face of the Warrant)
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(Address)
Signed in the presence of:
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