Exemption Orders (Discretionary)
XENEX INNOVATIONS LTD.
2001 BCSECCOM 1162
ORDER UNDER SECTIONS 48 AND 76 OF THE SECURITIES ACT, R.S.B.C. 1996, c. 418
XENEX INNOVATIONS LTD.
Background
[para 1]
Xenex has applied for an exemption from the requirements to be registered to trade and to obtain receipts for a preliminary prospectus and a prospectus in sections 34(1)(a) and 61 of the Act, for certain intended trades in options of Xenex to members of its advisory board.
Representations
[para 2]
Xenex represents that:
1. Xenex was incorporated under the laws of Bermuda, is a reporting issuer under the Act, and is not in default of any requirement of the Act or the Securities Rules, B.C. Reg. 194/97;
2. the authorized capital of Xenex consists of 20,000,000 common shares, of which 6,725,000 common shares were issued and outstanding as of October 25, 2001;
3. the common shares of Xenex are listed and posted for trading on the Canadian Venture Exchange Inc. (CDNX);
4. Xenex, on completing its qualifying transaction, will be in the business of developing, marketing and licensing computer-aided marine navigation systems;
5. Xenex grants options under a share option plan (Plan) accepted by the CDNX to directors, officers, and employees of Xenex and other persons who provide a service of value to Xenex and contribute to the success of Xenex;
6. Xenex has formed an advisory board comprised of consultants (Advisors) each who:
(a) provides ongoing consulting services to Xenex under a written contract;
(b) possesses technical and business experience and expertise in technology companies similar to Xenex; and
(c) has knowledge of the business and affairs of Xenex, which is equivalent to that held by certain directors, officers, and employees of Xenex;
7. at the request of management, at least one time a year, the Advisors will review and provide Xenex with advice on marketing and developing products, corporate strategy and certain financial matters;
8. individual Advisors are not consultants as defined under BC Instrument 45-507 (BCI 45-507) because, as members of an advisory board, the Advisors do not spend a significant amount of time and attention on the business and affairs of Xenex or an affiliate of Xenex, but are consulted by Xenex as needed on an ongoing basis in the area of their expertise;
9. Xenex proposes to grant options under the Plan to Advisors who are not directors, officers or employees of Xenex and are not affiliated, associated or related in any other way to Xenex;
10. the options will be granted as an incentive mechanism for the Advisors to continue to provide bona fide, ongoing valuable services to Xenex and not for repayment or partial repayment of a debt owed to the Advisors;
11. the participation of the Advisors in the trade is voluntary;
12. the total number of the shares of Xenex reserved for issuance to consultants (as defined in BCI 45-507) and the Advisors does not exceed two percent of the issued and outstanding securities of Xenex as of the date of the grant of such options;
13. the options will be granted in accordance with the bylaws, rules and policies of the CDNX at an exercise price determined according to the Plan, by referring to the prevailing market price of the common shares of Xenex without any discount;
14. the options are non-transferable and non-assignable, except that on an Advisor’s death any options may be transferred to and exercised by the Advisor’s executor or other legal representative, or the beneficiaries of the Advisor’s estate in accordance with the terms of the option;
15. the options expire five years from the date of the grant; and
16. the Advisors will not be induced to acquire common shares of Xenex on the exercise of the options by expectation of continued membership on the advisory board or employment with Xenex.
Order
[para 3]
Because it is not prejudicial to the public interest, the Executive Director orders that, under sections 48 and 76 of the Act, the intended trades of options by Xenex to the Advisors are exempt from the requirements of sections 34(1)(a) and 61 of the Act provided that:
(a) Xenex provides each Advisor with a copy of this order; and
(b) Xenex files a Form 45-902F with respect to the distribution of options by it to an Advisor on or before the 10th day after the distribution in reliance on this order.
[para 4]
DATED December 13, 2001.
Rosann Youck
Acting Manager