EXHIBIT 4
OPTION AGREEMENT
This OPTION AGREEMENT is dated as of April 13, 1998 (this "Option
Agreement"), by and among Xxxxx X. Xxxxxxxxx ("Xxxxxxxxx"), Xxxxx X.
Xxxxxxxx ("Xxxxxxxx"), Lynx Ventures L.P., a Delaware limited partnership
(the "Investor") and Livent Inc., a corporation existing under the laws of
the Province of Ontario (the "Corporation").
WHEREAS, Drabinsky has agreed to grant the Investor an option to
purchase 500,000 shares of common stock, no par value, of the Corporation
(the "Common Shares"), subject to the terms and conditions set forth
herein;
WHEREAS, Xxxxxxxx has agreed to grant the Investor an option to
purchase 1,500,000 Common Shares, subject to the terms and conditions set
forth herein;
WHEREAS, the Corporation and the Investor have entered into an
Investment Agreement dated as of the date hereof (the "Investment
Agreement"); and
WHEREAS, the execution of this Option Agreement by Drabinsky,
Gottlieb and the Investor is a condition to the Investor's obligations to
consummate the transactions contemplated by the Investment Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Option
Agreement, intending to be legally bound, hereby agree as follows:
1. Options to Purchase Common Shares
(a) Drabinsky hereby grants the Investor an option (the
"Drabinsky Option") to purchase, at the discretion of the Investor all or
part of up to 500,000 Common Shares owned by Drabinsky at a purchase price
of $8.00 per share. The Drabinsky Option may be exercised at any time,
commencing on the Effective Date (as defined herein) and terminating on the
one year anniversary of the Effective Date.
(b) Xxxxxxxx hereby grants the Investor options (the
"Xxxxxxxx Options") to purchase, at the discretion of the Investor all or
part of up to 1,500,000 Common Shares owned by Xxxxxxxx. The Xxxxxxxx
Options shall be comprised of four option tranches as follows:
i. An option to purchase 75,000 Common Shares which may be
exercised at any time, commencing on the Effective Date and
terminating on the two year anniversary of the Effective
Date (the "Tranche 1 Xxxxxxxx Option"). The purchase price
of the Tranche 1 Xxxxxxxx Option is $8.00 per share.
ii. An option to purchase 425,000 Common Shares which may be
exercised at any time, commencing on the Effective Date and
terminating on the two year anniversary of the Effective
Date (the "Tranche 2 Xxxxxxxx Option"). The purchase price
of the Tranche 2 Xxxxxxxx Option is $9.00 per share.
iii. An option to purchase 500,000 Common Shares which may be
exercised at any time, commencing on the Effective Date and
terminating on the three year anniversary of the Effective
Date (the "Tranche 3 Xxxxxxxx Option"). The purchase price
of the Tranche 3 Xxxxxxxx Option is $10.50 per share.
iv. An option to purchase 500,000 Common Shares which may be
exercised at any time, commencing on the Effective Date and
terminating on the four year anniversary of the Effective
Date (the "Tranche 4 Xxxxxxxx Option"). The purchase price
of the Tranche 4 Xxxxxxxx Option is $12.00 per share.
(c) As used herein the term "Effective Date" shall mean the
date on which the earlier of either of the following events, if any, shall
have occurred: (i) the closing of the transactions contemplated by the
Investment Agreement; or (ii) the occurrence of both a proposal for a
Significant Transaction (as defined in the Investment Agreement) by a third
party involving the Company and a breach of Section 6.3 of the Investment
Agreement (the no solicitation clause).
2. Manner of Exercise.
(a) The Drabinsky Option or the Xxxxxxxx Options (either,
an "Option") may be exercised by the Investor by delivery of written notice
to either Drabinsky or Xxxxxxxx, as the case may be. Such notice shall
include the whole number of Common Shares that the Investor has elected to
purchase.
(b) The closing date for the sale of the shares pursuant to
any Option shall be on a date mutually acceptable to the parties; provided,
however, that the closing shall be within 15 days of the date of the notice
at the offices of the Company.
(c) The payment of the purchase price shall be made by
certified or official bank check payable to either Drabinsky or Xxxxxxxx,
as the case may be, in the amount obtained by multiplying (x) the number of
Common Shares to be purchased, times (y) the purchase price per share of
the Option.
(d) In the event that an Option is exercised in part only,
the Investor shall have the right to purchase additional Common Shares, up
to the number granted pursuant to the applicable Option, through the end of
the term of the applicable Option.
3. Option Adjustment. In the event of any change in the number
of Common Shares outstanding, whether by recapitalization, declaration of a
stock split, payment of a stock dividend or otherwise, the number of shares
delivered upon exercise and the purchase price shall be appropriately
adjusted. Any dividend (in excess of normal dividends, if any) or other
distribution (cash, stock or otherwise) on the Common Shares with a record
date after the date of this Agreement will be for the account of the
Investor and will delivered to the Investor on the date of receipt thereof.
4. Representation and Warranty of Drabinsky and Xxxxxxxx.
Xxxxxxxxx and Xxxxxxxx, jointly and severally, represent and warrant to the
Investor that, as of the date hereof and each closing date, the following
are true and correct:
(a) Title to the Shares. Each of Drabinsky and Xxxxxxxx
has the complete and unrestricted power and the unqualified right to sell,
assign, transfer and deliver to the Investor and the Investor will acquire
at the closing date good and valid title to the purchased Common Shares
free and clear of all liens, security interest, mortgages, options, rights
or other encumbrances.
(b) Authorization. Each of Drabinsky and Xxxxxxxx has all
requisite right, power and authority and full legal capacity to enter into
this Option Agreement, to carry out its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and
delivery of this Option Agreement by each of Drabinsky and Xxxxxxxx, and
the consummation by each of Drabinsky and Xxxxxxxx of the transactions
contemplated hereby have been duly authorized by all necessary action on
the part of each of Drabinsky and Xxxxxxxx and, no other proceedings on the
part of any of Drabinsky and Xxxxxxxx or any other Person are necessary to
authorize this Option Agreement or to consummate the transactions
contemplated hereby. This Option Agreement constitutes a valid and binding
agreement of each of Drabinsky and Xxxxxxxx, enforceable in accordance with
its terms.
(c) No Violations. The execution, delivery and performance
of this Option Agreement by each of Drabinsky and Xxxxxxxx or the
consummation of the transactions contemplated hereby do not and will not
(i) conflict with or violate any applicable law, (ii) result in the
creation of any lien or encumbrance on the Optioned Shares (as defined
herein) or (iii) result in any breach of, or constitute a default (or event
which with the giving of notice or lapse of time, or both, would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument to which Drabinsky, Gottlieb or the Corporation is a party or by
which any of the Common Shares subject to the Options may be bound.
(d) Consents and Approvals. The execution, delivery and
performance of this Option Agreement by each of Drabinsky and Xxxxxxxx does
not and will not, require any consent, approval, authorization,
governmental approval or other action by, or filing with or notification
to, any third party or any governmental authority.
5. Covenants.
(a) Drabinsky and Xxxxxxxx shall surrender to the
Corporation certificates representing the number of Common Shares which are
subject to this Option Agreement within 5 days of the date hereof (the
"Optioned Shares"). The Company will issue new certificates to Drabinsky
and Xxxxxxxx bearing the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER, PURSUANT TO AN OPTION AGREEMENT, DATED AS OF APRIL 13, 1998. A
COPY OF THE OPTION AGREEMENT IS ON FILE AT THE COMPANY. THE TRANSFER OF
THESE SHARES IS SPECIFICALLY FORBIDDEN BY THE TERMS OF SUCH AGREEMENT."
(b) During the term of this Option Agreement, Drabinsky and
Xxxxxxxx hereby jointly and severally covenant and agree that, except for
encumbrances which exist as of the date hereof, they shall not, without the
prior written consent of the Investor, sell, transfer, assign, pledge or
otherwise encumber or dispose of, including without limitation, grant any
option or similar right to purchase (each a "Transfer") any Optioned Shares
to any other third party. Drabinsky and Xxxxxxxx hereby jointly and
severally covenant and agree to use their best efforts to cause all
encumbrances on the Optioned Shares existing as of the date hereof to be
removed on or before the date of the closing of the transactions
contemplated by the Investment Agreement.
(c) During the term of this Option Agreement, the
Corporation hereby covenants and agrees that it shall not, and shall cause
its Transfer Agent to not, recognize any Transfer of Common Shares by
Drabinsky and Xxxxxxxx which would leave either Drabinsky and Xxxxxxxx,
individually or collectively, beneficially and of record with less than the
number of Common Shares necessary to fulfill their obligations under the
Options.
(d) To the extent the approval of the shareholders of the
Corporation is required in connection with the transactions contemplated by
the Investment Agreement, Drabinsky and Xxxxxxxx hereby agree to vote all
Common Shares for which they have the authority to vote on matters
presented to the shareholders of the Corporation in favor of each such
proposed transaction.
(e) In the event that at any time after the one month
anniversary of the closing of the transactions contemplated by the
Investment Agreement the market price for Common Shares is in excess of
$8.00 per share for the trailing 20 trading days prior thereto, the
Investor shall, within 30 days after receipt of written notice thereof from
Xxxxxxxx, exercise the Tranche 1 Xxxxxxxx Option to purchase the Common
Shares subject thereto. Neither Xxxxxxxx nor Drabinsky will take action to
manipulate the market price for Common Shares such that it exceeds $8 per
share.
6. Early Termination. The Options shall terminate if at
anytime following the closing of the transactions contemplated by the
Investment Agreement the Investor and its affiliates (as defined in the
federal securities laws) collectively beneficially own less than 500,000
Common Shares (as such amount shall be appropriately adjusted from time to
time in the event of a distribution of securities by the Corporation
requiring an adjustment to the Options pursuant to Section 3 hereof).
7. Reallocation of Optioned Shares. In the event that Xxxxxxxx
is incapable of delivering 1,500,000 unencumbered Common Shares to the
depositary under the Voting Trust Agreement (as defined in the Investment
Agreement) upon the closing of the transactions contemplated by the
Investment Agreement, the Common Shares subject to the Options shall be
automatically reallocated in the following manner (the "Reallocation"):
(i) the number of Common Shares owned by Xxxxxxxx which shall be
subject to the Xxxxxxxx Options (A) shall be reduced to the
number of unencumbered Common Shares delivered to the depositary
by Xxxxxxxx under the Voting Trust Agreement and (B) such
reduction in Optioned Shares subject to the Xxxxxxxx Options
shall be equally allocated among tranches 2 through 4 of the
Xxxxxxxx Options; and
(ii) additional Common Shares owned by Drabinsky (A) shall become
subject to this Option Agreement to the extent of the shortfall
resulting from the reduction in the number of Common Shares
subject to the Xxxxxxxx Options and (B) all such additional
Common Shares shall be subject to the terms and conditions
applicable to the purchase of Common Shares included in tranches
2 through 4 of the Xxxxxxxx Options, equally allocated among
tranches 2 through 4.
The Investor shall, upon the exercise of Options for Common Shares subject
to the Reallocation, deliver the entire exercise price for such reallocated
Options to Xxxxxxxx. Any redistribution of such proceeds required to be
made to Drabinsky by Xxxxxxxx shall be subject to an agreement between
Drabinsky and Xxxxxxxx. Each of Drabinsky and Xxxxxxxx hereby waive any
claim either of them may have against the Investor in connection with the
Reallocation process. Drabinsky and Xxxxxxxx agree to use their best
efforts to avoid a Reallocation or minimize the number of Common Shares
subject to a Reallocation.
8. Specific Performance. Without limiting the rights of each
party hereto to pursue all other legal and equitable rights available to
such party for the other parties' failure to perform their obligations
under this Option Agreement, the parties hereto acknowledge and agree that
the remedy at law for any failure to perform their obligations hereunder
would be inadequate and that each of them, respectively, shall be entitled
to specific performance, injunctive relief or other equitable remedies in
the event of any such failure.
9. Successors and Assigns.
(a) Except as otherwise provided herein, this Option
Agreement will bind and inure to the benefit of the respective successors
and assigns of the parties hereto whether so expressed or not.
(b) Neither Drabinsky nor Xxxxxxxx may assign their rights
or obligations under this Option Agreement, without the prior written
consent of the Investor. The Investor may freely assign its rights or
obligations under this Option Agreement.
10. Amendment and Waiver. The provisions of this Option
Agreement may be amended and waived only through a written instrument, duly
executed by the parties to this Option Agreement.
11. Further Assurances. Each of the parties to this Option
Agreement shall do all such acts and things and shall execute and deliver,
or cause to be executed and delivered, all such documents, instruments and
agreements as may be necessary or desirable to give effect to the
provisions of and the intent of this Option Agreement.
12. Survival of Representations and Warranties. All
representations and warranties made by any party contained in this Option
Agreement or made in writing in connection with the transactions
contemplated by this Option Agreement shall survive the termination of this
Option Agreement through the date prescribed by the applicable statute of
limitations, regardless of any investigation made by the Investor or on its
behalf.
13. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for
any reason, the parties shall negotiate in good faith with a view to the
substitution therefor of a suitable and equitable solution in order to
carry out, so far as may be valid and enforceable, the intent and purpose
of such invalid provision, provided, however, that the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
14. Notices. Any notice or other document required or permitted
to be given pursuant to this Option Agreement shall be validly given if
delivered or sent by registered mail, postage prepaid, to the address of
the addressee as follows:
i. in the case of Drabinsky:
Livent Inc.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx X. Xxxxxxxxx
xx. in the case of Xxxxxxxx:
Livent Inc.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx X. Xxxxxxxx
iii. in the case of the Investor:
Lynx Ventures L.P.
c/o Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx
xx. in the case of the Corporation:
Livent Inc.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: The Secretary
Any notice or other document given by mail as aforesaid shall be
deemed to have been received on the second business day following the date
on which such notice or document was mailed.
In lieu of notice by mail as aforesaid, any notice or other
document required or permitted to be given pursuant to this Option
Agreement may be validly given if delivered to the address of the
addressees set forth above and any such notice or document so delivered
shall be deemed to have been given at the time of delivery.
If by reason of a strike, lockout or other work stoppage, actual
or threatened, of postal employees or other disruption of normal postal
services, any notice to be given hereunder would reasonably be unlikely to
reach its destination, such notice shall be valid and effective only if
delivered to the appropriate address in accordance with this Section 8 or
by telecopy, telegram, telex or other means of prepaid transmitted or
recorded communication.
Any party may change its address for service from time to time by
notice given in accordance with the foregoing provisions.
15. GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS OPTION AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE PROVINCE OF
ONTARIO, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PROVISION OR RULE (WHETHER OF THE PROVINCE OF ONTARIO OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE PROVINCE OF ONTARIO.
16. Counterparts. This Option Agreement may be executed in
separate counterparts each of which shall be an original and all of which
taken together shall constitute one and the same agreement.
17. Descriptive Headings. The descriptive headings of this
Option Agreement are inserted for convenience only and do not constitute a
part of this Option Agreement.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
XXXXX X. XXXXXXXXX
By: /s/ Xxxxx X. Xxxxxxxxx
XXXXX X. XXXXXXXX
By: /s/ Xxxxx X. Xxxxxxxx
LYNX VENTURES L.P.
By: Lynx Ventures L.L.C.,
its General Partner
By: /s /Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Managing Member
THIS OPTION AMENDING AGREEMENT made as of the 12th day of June, 1998.
A M O N G:
XXXXX X. XXXXXXXXX,
an individual residing
in the City of Toronto, in the Province of Ontario
- and -
XXXXX X. XXXXXXXX,
an individual residing
in the City of Toronto, in the Province of Ontario
- and -
LYNX VENTURES L.P.,
a limited partnership
organized under the laws of Delaware
WHEREAS Lynx Ventures L.P. ("Lynx"), Xxxxx X. Xxxxxxxxx ("GHD")
and Xxxxx X. Xxxxxxxx ("MIG") have entered into an option agreement dated
April 13, 1998 (the "Option Agreement") pursuant to which, among other
things, GHD has granted to Lynx an option (the "Lynx Option") exercisable
until the first anniversary of the date hereof to purchase from GHD 500,000
common shares of Livent Inc. (the "Lynx Optioned Shares") at U.S. $8.00 per
share;
AND WHEREAS the purpose of this agreement is to record certain
amendments to the Option Agreement relating to the Lynx Optioned Shares.
NOW THEREFORE in consideration of the covenants herein and the
sum of $2.00 now paid by each of the parties to each of the others (the
receipt and sufficiency of all of which is hereby acknowledged by each of
the parties) the parties agree as follows:
1. GHD represents and warrants to Lynx that at the date hereof GHD
holds valid and exercisable options ("GHD Employee Options") to purchase
common shares of Livent Inc. ("GHD SOP Shares") pursuant to the provisions
of the Livent Inc. Stock Option Plan, the particulars of which are set out
on the accompanying chart.
2. GHD has asked Lynx to provide the following loan arrangement to
facilitate the exercise by GHD of the GHD Employee Options and the delivery
of the Lynx Optioned Shares pursuant to the Lynx Option. GHD covenants
that, notwithstanding this amending agreement, he will honour the rights of
Lynx pursuant to the Option Agreement in accordance with its terms and
will, if the Lynx Option is exercised, deliver unencumbered shares in
satisfaction thereof. The parties have made the following agreement with
respect to the giving of financial assistance by Lynx to GHD to enable GHD
to exercise the GHD Employee Options.
3. At such time as Lynx gives notice to GHD of Lynx's exercise of
the Lynx Option, if GHD is unable to honour the Lynx Option except by
exercising GHD Employee Options, then Lynx will lend to GHD an amount of
United States dollars (the "Loan Amount") equal to the amount required to
enable GHD to purchase that number of Canadian dollars representing the
exercise price pursuant to the GHD Employee Options of that number of GHD
SOP Shares equal to the number of Lynx Optioned Shares in respect of which
Lynx is exercising its option. The loan from Lynx to GHD will be repayable
on demand and shall bear interest at a rate of 10% per annum commencing on
the second business day after the Loan Amount is advanced, compounded on
each anniversary date of the making of the loan.
4. Forthwith upon receiving the Loan Amount, GHD will exercise its
options on the appropriate number of GHD SOP Shares and will deliver to
Lynx a certificate or certificates properly endorsed in blank representing
the appropriate number of Lynx Optioned Shares. The Loan Amount will be
set off against the exercise price of the Lynx Option and the Loan
cancelled in that amount. In the event the Loan Amount exceeds the
exercise price of the Lynx Option, GHD shall forthwith pay an amount equal
to the excess to Lynx. In the event the exercise price of the Lynx Option
exceeds the Loan Amount, Lynx shall forthwith pay an amount equal to the
excess to GHD.
5. In respect of 193,750 of the Lynx Optioned Shares, the expiry
date of the Lynx Option shall be May 14, 1999, rather than one year from
the date hereof.
6. The parties hereto acknowledge their mutual understanding that
the GHD Employee Options are by their terms non-assignable and non-
transferable. This amendment to the Option Agreement is not intended to
create proprietary rights in Lynx in the GHD Employee Options.
7. In the event GHD fails, at any time, to deliver the requisite
number of Lynx Optioned Shares upon the exercise by Lynx of the Lynx Option
and Lynx shall have used all reasonable efforts to cause GHD to deliver
such shares, MIG shall, within 15 days after receipt of notice of the
foregoing from Lynx, deliver to Lynx against payment to MIG of the exercise
price of the Lynx Option, such number of common shares of Livent as shall
be necessary to satisfy the Lynx Option.
8. Except as amended hereby, the Option Agreement is confirmed in
all respects.
IN WITNESS WHEREOF the parties hereto have caused this Agreement
to be executed on the date first set forth herein.
SIGNED, SEALED AND DELIVERED )
in the presence of )
) /s/ Xxxxx X. Xxxxxxxxx
) __________________________
) Xxxxx X. Xxxxxxxxx
)
)
) /s/ Xxxxx X. Xxxxxxxx
) __________________________
) Xxxxx X. Xxxxxxxx
LYNX VENTURES L.P.,
by Lynx Ventures L.L.C., its general partner
by /S/ Xxxxx X. Xxxxxx
________________________
Name: Xxxxx X. Xxxxxx
Title: Manager
LIVENT OPTIONS - GHD
VESTED EXERCISE
GRANT NO. OF MAY PRICE CDN. $ EXERCISE
TRANCHE DATE SHARES 1999 & VALUE EXPIRY UNTIL
------------ --------------- ----------- ------------- ------------------- ------------ --------------
1. May 17, 1993 193,750 193,750 $9.00 $1,743,750 May 16, 1998 May 15, 1999
2. May 24, 1994 275,000 275,000 $12.625 $3,471,875 May 23, 1999 May 22, 2000
3. Nov. 13, 1996 190,000 31,250 of available $14.50 $453,125 Nov. 12, 2001 Nov. 11, 2002
------- ------ 47,500) --------
658,750 500,000 Cdn. $5,668,750
------- -------
U.S. (.69) $3,911,437
