UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM F-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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Bontan Corporation Inc.
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant's name into English)
Ontario Not Applicable
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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47 Avenue Road, Suite 200
Toronto, Ontario, M5R 2G3 Canada
(416) 860-0211
(Address and telephone number of Registrant's principal executive offices)
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Kam Shah, Chief Executive Officer
47 Avenue Road, Suite 200
Toronto, Ontario, M5R 2G3 Canada
(416) 860-0211
(Name, address and telephone number of agent for service)
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Copies of communications to:
Jeffrey C. Robbins, Esq
Messerli & Kramer P.A.
150 South Fifth Street, Suite 1800
Minneapolis, Minnesota 55402 USA
(612) 672-3706
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Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box. |X|
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. |_|
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Calculation of Registration Fee
Title of Securities To Be Registered | Amount To Be Registered(1) | Proposed Maximum Price Per Share (2) | Proposed Maximum Aggregate Offering | Amount Of Registration Fee |
Common shares, no par value(2) | 11,339,711 | $1.03 | $11,679,902 | $1,374.73 |
(1)
These shares are being registered for resale on behalf of the selling shareholders and consist of (a) 4,073,699 outstanding common shares and (b) 7,266,012 common shares issuable upon the exercise of outstanding warrants. Pursuant to Rule 416, this Registration Statement also relates to an indeterminate number of additional common shares resulting from stock splits, stock dividends or similar transactions with respect to the common shares being registered hereunder.
(2)
Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) of the Securities Act of 1933 on the basis of the average bid and asked price on the Over-the-Counter Bulletin Board of NASDAQ as of March 8, 2005.
The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The selling shareholders named in this prospectus may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. The prospectus made part of this registration statement is not an offer to sell these securities and it is not a solicitation of an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted. IF YOU ARE NOT A NAMED SELLING SHAREHOLDER YOU MAY NOT SELL OUR COMMON SHARES PURSUANT TO THE PROSPECTUS MADE PART OF THIS REGISTRATION STATEMENT.
Subject to Completion, dated March 23, 2005
PROSPECTUS
BONTAN CORPORATION INC.
11,339,711 Common Shares
The selling shareholders listed herein may, from time to time, offer and sell up to 11,339,711 common shares under this prospectus. These consist of (i) 4,073,699 outstanding common shares that were acquired by the selling shareholders from us in a private placement transaction commencing April 2003 and ending May 2004, and (ii) 7,266,012 common shares issuable upon the exercise of outstanding warrants granted to selling shareholders in connection with the private placement. Our registration of the common shares does not necessarily mean that the selling shareholders will exercise any of the warrants or sell all or any of the shares covered by this prospectus. The selling shareholders will receive all of the proceeds from the sale of the shares offered in this prospectus. We will receive the exercise price of the warrants described in this prospectus to the extent they are exercised by the selling shareholders or their transferees.
Our common shares are quoted on the Nasdaq Over-the-Counter Bulletin Board (“OTCBB”) under the symbol “BNTNF”. On March 8, 2005, the average of the closing bid and asked prices of our common shares on the OTCBB was $1.03 per share.
The selling shareholders may sell their common shares directly or through one or more broker-dealers on the OTCBB or on any national securities exchange or automated quotation system on which our common shares may then be listed or traded, in negotiated transactions or otherwise, at prices related to the prevailing market price or at negotiated prices. We will pay all expenses to register the common shares. Any underwriting commissions, expenses, brokerage fees, transfer taxes, or other fees incurred by the selling shareholders in selling their common shares shall be the responsibility of the selling shareholders. Please see “Plan of Distribution” and "Expenses Associated with the Registration."
An investment in our common shares involves a high degree of risk and only people who can afford the loss of their entire investment should consider investing. See “Risk Factors” beginning on page 4.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offence. IF YOU ARE NOT A NAMED SELLING SHAREHOLDER HEREIN YOU MAY NOT SELL SHARES OF OUR COMMON STOCK PURSUANT TO THIS PROSPECTUS. See page 10 for a list of selling shareholders.
The date of this Prospectus is ________, 2005.
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TABLE OF CONTENTS
PAGE | ||
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS | 3 | |
THE COMPANY | 3 | |
RISK FACTORS | 4 | |
CAPITALIZATION AND INDEBTEDNESS | 8 | |
MARKETS | 9 | |
INFORMATION ON OUTSTANDING SHARES | 10 | |
REASONS FOR THE REGISTRATION AND USE OF PROCEEDS | 10 | |
SELLING SHAREHOLDERS | 10 | |
PLAN OF DISTRIBUTION | 13 | |
EXPENSES ASSOCIATES WITH THE REGISTRATION | 15 | |
MATERIAL CHANGES | 15 | |
EXPERTS | 16 | |
LEGAL MATTERS | 16 | |
INCORPORATION OF DOCUMENTS BY REFERENCE | 16 | |
WHERE YOU CAN GET MORE INFORMATION | 17 | |
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES | 17 | |
ENFORCEABILITY OF CIVIL LIABILITIES | 18 |
The terms "Company", "we", "us" and "our" as used in this prospectus refer to Bontan Corporation Inc. and its subsidiaries, as a combined entity, except where the context requires otherwise.
We prepare our consolidated financial statements in accordance with Canadian generally accepted accounting principles (“GAAP”) and all financial information set out herein has been determined in accordance with Canadian GAAP. All financial information presented in this prospectus is in Canadian dollars, unless otherwise indicated. All references to “$” or “dollars” means Canadian dollars and all references to “US$” means United States dollars. On March 8, 2005, $1.00 Canadian dollar equalled approximately $.83 U.S. dollars.
We are a "foreign private issuer" as defined in Rule 3b-4 under the Securities Exchange Act of 1934 (the "Exchange Act"). As a result, our proxy solicitations are not subject to the disclosure and procedural requirements of Regulation 14A under the Exchange Act and transactions in our equity securities by our officers and directors are exempt from Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. We file annually an annual report containing financial statements that have been examined and reported on, with an opinion expressed by, a qualified independent auditor or certified public accountant.
The distribution of this prospectus and the offering or sale of the common shares in certain jurisdictions is restricted by law. This prospectus may not be used for, or in connection with, and does not constitute, any offer to, or solicitation by, anyone in any jurisdiction or under any circumstance in which such offer or solicitation is not authorized or is unlawful. Persons into whose possession this prospectus may come are required to inform themselves about and to observe such restrictions. IF YOU ARE NOT A NAMED SELLING SHAREHOLDER HEREIN YOU MAY NOT SELL OUR COMMON SHARES PURSUANT TO THIS PROSPECTUS.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes and incorporates forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Exchange Act. All statements included or incorporated in this prospectus regarding our strategy, future operations, financial position, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The words "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We cannot guarantee that we actually will achieve the plans, intentio ns or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included or incorporated in this prospectus, particularly under the heading "Risk Factors", that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. We do not assume any obligation to update any forward-looking statements.
THE COMPANY
Background. We are a Canadian corporation incorporated under the laws of the Province of Ontario. Since April 2003, we have been a diversified natural resource company that invests in exploration, development and exploitation projects worldwide through our wholly-owned subsidiaries by acquiring joint venture, indirect and direct participation interests and working interests in those projects. We currently own interests in an oil exploration program in Papua New Guinea, and a gas exploration project in Louisiana. We recently discontinued our diamond operations in Brazil due to an adverse working environment.
We were originally incorporated under the Business Corporation Act (Ontario) in 1973 under the name Kamlo Gold Mines Limited and went through multiple name changes and five major changes in our business activities including a marine propulsion business, a snack food business, and an emerging technology investments business. Details of these changes are provided in our Registration Statement on Form 20-F dated June 12, 2000. On April 21, 2003, we changed our name to "Bontan Corporation Inc." when we adopted our current business strategy focused on the natural resource sector.
Corporate Information. Our corporate offices are located at 47 Avenue Road, Suite 200, Toronto, Ontario Canada M5R 2G3 and our telephone number is (416) 860-0211. We are a reporting issuer in the province of Ontario. Our common shares are listed on the NASDAQ OTCBB under the symbol "BNTNF" in the United States.
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RISK FACTORS
Please consider carefully the following risk factors and uncertainties, which the Company faces in its business, and other information contained in this prospectus, before investing in the Company's common shares. This summary of risk factors is not meant to be exhaustive. If any of the following risks actually occur, the Company's business, results of operations and financial condition could suffer significantly and you could lose all or part of your investment.
Risk Factors Related to Our Company
We have a history of operating losses and may not achieve or sustain profitability in the future.
We have incurred significant operating losses during recent fiscal years and for the nine months ended December 31, 2004. We have not yet had any revenue from the exploration activities on our properties nor have we found that development activity is warranted on any of our properties. As of December 31, 2004, the date of our most recent financial statements (unaudited), we had an accumulated deficit of approximately C$22.9 million.
We expect to continue to incur losses until it is determined that properties in which we have an investment can be sufficiently developed for commercialization. Even if it is determined that such properties should be developed for commercialization, there is no certainty that the Company will produce revenue, operate profitably or provide a return on investment in the future. We can not assure you that we will be able to achieve or sustain profitable operations in the future.
There is substantial doubt about our ability to continue as a going concern.
The audit report of our auditors covering the March 31, 2004 consolidated financial statements contains comments stating that conditions and events exist that cast substantial doubt on our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty.
In the past, the Company has relied on borrowings from shareholders and sales of equity securities to meet most of its cash requirements. There can be no assurance that funding from these sources will be available or sufficient in the future to satisfy operational requirements and cash commitments. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern.
We will need to raise additional funds in the future, which may not be available to us.
The Company is currently without a source of revenue and will most likely be required to issue additional securities to finance its operations and the development of its projects. We may not be able to obtain additional financing on acceptable terms or at all. Failure to obtain additional financing on a timely basis could cause the Company to sell or forfeit its interest in its properties and reduce or terminate its operations on such properties or discontinue operations entirely.
There is a substantial risk of dilution through possible equity financings and stock options.
Any equity or debt financings, if available at all, may cause dilution to our then-existing shareholders. If additional funds are raised through the issuance of equity securities, the net tangible book value per share of our common shares would decrease and the percentage ownership of then current shareholders would be diluted.
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Additionally, the Company may in the future grant to some or all of its own and its subsidiaries' directors, officers, insiders and key consultants options to purchase the Company's common shares as non-cash incentives to those people. Such options may be granted at exercise prices equal to market prices at time when the public market is depressed or below fair market value. To the extent that significant numbers of such options may be granted and exercised, the interests of the then existing shareholders of the Company may be subject to additional dilution.
Our operations are subject to substantial exploration and development risks.
The Company is participating in resource properties in the hope of locating reserves. The Company's property interests are in the exploration stage only. Accordingly, there is little likelihood that the Company will realize any profits in the short to medium term. Any profitability in the future from the Company's business will be dependent upon locating reserves, which itself is subject to numerous risk factors.
The business of exploring for and producing oil and gas involves a substantial risk of investment loss, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. The principal resources necessary for the exploration and production of crude oil and natural gas are leasehold prospects under which crude oil and natural gas reserves may be discovered, drilling rigs and related equipment to explore for such reserves and knowledgeable personnel to conduct all phases of crude oil and natural gas operations, all of which requires a substantial investment.
Drilling oil and gas wells involves the risk that the wells will be unproductive or that, although productive, the wells do not produce oil and/or gas in economic quantities. Other hazards, such as unusual or unexpected geological formations, pressures, fires, blowouts, loss of circulation of drilling fluids or other conditions may substantially delay or prevent completion of any well. Adverse weather conditions can also hinder drilling operations.
A productive well may become uneconomic in the event water or other deleterious substances are encountered, which impair or prevent the production of oil and/or gas from the well. In addition, production from any well may be unmarketable if it is impregnated with water or other deleterious substances. As with any petroleum property, there can be no assurance that oil and gas will be produced from the properties in which the Company has interests.
In addition, the marketability of oil and gas, which may be acquired or discovered, will be affected by numerous factors beyond the control of the Company. These factors include the proximity and capacity of oil and gas pipelines and processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental protection.
The extent of these factors cannot be accurately predicted, but the combination of these factors may result in the Company not receiving an adequate return on invested capital. There is no assurance that our exploration and development activities in our current and future resource properties will ultimately yield oil or gas in commercial quantities. Drilling for oil and gas may be unprofitable. Dry holes and wells that are productive but do not produce sufficient net revenues after drilling, operating and other costs are unprofitable. We can not assure you that we will be able to achieve profitable operations in the future.
Our interests are subject to uninsurable risks.
Our industry also experiences numerous operating risks. These operating risks include the risk of fire, explosions, blow-outs, pipe failure, abnormally pressured formations and environmental hazards. Environmental hazards include oil spills, natural gas leaks, ruptures or
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discharges of toxic gases. Such events could result in substantial damage to oil and gas wells, producing facilities and other property and personal injury.
Although management believes the operator of any properties in which the Company and its subsidiaries may acquire interests, will acquire and maintain appropriate insurance coverage in accordance with standard industry practice, the Company and its subsidiaries may suffer losses from uninsurable hazards or from hazards which the operator has chosen not to insure against because of high premium costs or other reasons. If any of these industry operating risks occur, the Company and its subsidiaries may face liability. The payment of any such liabilities may have a material, adverse effect on the Company's financial position. We cannot assure you that insurance held by the operator of any of our properties will be adequate to cover losses or liabilities.
Environmental and other regulatory requirements may delay production and development of our resource interests.
The current or future operations of the Company, including development activities and commencement of production on its properties, require permits from various governmental authorities and such operations will be subject to laws and regulations governing prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, safety and other matters. Companies engaged in the development and operation of natural resource properties and related facilities generally experience increased costs, and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits. There can be no assurance that approvals and permits required to commence production on its properties will be obtained. Additional permits and studies, which may include environmental impact studies conducted before permits can b e obtained, may be necessary prior to operation of the properties in which the Company acquires interests and there can be no assurance that the operator of these interests or the Company will be able to obtain or maintain all necessary permits that may be required to commence construction, development or operation of oil and gas extraction facilities at these properties on terms which enable operations to be conducted at economically justifiable costs.
Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement actions against the operator of any of our resource properties or us, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions.
Conducting business in foreign countries subjects us to special risks which we have no control over.
Company’s current business strategy involves participation in overseas projects in the resource sector. Consequently, the Company will be subject to certain risks associated with foreign ownership, including currency fluctuations, inflation, political instability and political risk. Oil, gas and other resource exploration and production activities in foreign countries may be affected in varying degrees by political stability and government regulations relating to the resource industry. Any changes in regulations or shifts in political conditions are beyond the control of the Company and may adversely affect its business. Operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, restriction of earnings, taxation laws, expropriation of property, environmental legislation, water use and workplace safety.
We are dependent upon of our key managerial consultants, the loss of which would negatively affect our business.
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Our performance depends on a small number of key managerial consultants. In particular, we believe our success is highly dependent upon the services of our Chief Executive Officer and Chief Principal Officer, Mr. Kam Shah, as well as Mr. Terrance Robinson who has been significantly involved in locating and negotiating our resource investments. Loss of either of their services could negatively affect our business.
Our officers and directors reside outside of the United States and there is a risk that civil liabilities and judgments may be unenforceable.
The Company and its officers and all but one of its directors are residents of countries other than the United States, and most of the Company's assets are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons or enforce in the United States against such persons judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of United States federal securities laws or state securities laws.
Risk Factors Relating to Our Common Shares
Our share price has been volatile in the past and may decline in the future.
In recent years, the securities markets in Canada and the United States have experienced a high level of price and volume volatility, and the market prices of securities of many companies, particularly small mineral exploration companies like the Company, have experienced wide fluctuations which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. Our shares may continue to experience significant market price and volume fluctuations in the future in response to factors which are beyond our control.
Shares eligible for future sale may depress our stock price.
At March 3, 2005, we had 12,871,719 shares of common stock outstanding of which 4,841,769 are restricted securities under Rule 144 promulgated under the Securities Act. We also have 8,879,571 and 3,592,500 shares of commons stock issuable under presently exercisable warrants and options, respectively. 4,073,699 of our restricted shares and 7,266,012 shares of the common stock issuable upon exercise of the warrants are being registered hereunder and will be eligible for resale in the public market upon our registration statement covering such shares being declared effective. The shares of the common stock issuable upon exercise of the stock options have been registered under the Securities Act.
Sales of shares of common stock pursuant to an effective registration statement or under Rule 144 or another exemption under the Securities Act could have a material adverse effect on the price of our common stock and could impair our ability to raise additional capital through the sale of equity securities.
We do not intend to pay dividends.
All of the Company's available funds will be invested to finance the growth of the Company's business and therefore investors cannot expect and should not anticipate receiving a dividend on the Company's common shares in the foreseeable future.
Our common stock is subject to penny stock rules.
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The capital stock of the Company would be classified as “penny stock” as defined in Reg. § 240.3a51-1 promulgated under the Securities Exchange Act of 1934 (the “1934 Act”). In response to perceived abuse in the penny stock market generally, the 1934 Act was amended in 1990 to add new requirements in connection with penny stocks. In connection with effecting any transaction in a penny stock, a broker or dealer must give the customer a written risk disclosure document that (a) describes the nature and level of risk in the market for penny stocks in both public offerings and secondary trading, (b) describes the broker’s or dealer’s duties to the customer and the rights and remedies available to such customer with respect to violations of such duties, (c) describes the dealer market, including “bid” and “ask” prices for penny stock and the significance of the sp read between the bid and ask prices, (d) contains a toll-free telephone number for inquiries on disciplinary histories of brokers and dealers, and (e) define significant terms used in the disclosure document or the conduct of trading in penny stocks. In addition, the broker-dealer must provide to a penny stock customer a written monthly account statement that discloses the identity and number of shares of each penny stock held in the customer’s account, and the estimated market value of such shares. The extensive disclosure and other broker-dealer compliance related to penny stocks may result in reducing the level of trading activity in the secondary market for such stocks, thus limiting the ability of the holder to sell such stock.
Your rights and responsibilities as a shareholder will be governed by Canadian law and differ in some respects from the rights and responsibilities of shareholders under U.S. law.
We are incorporated under Ontario Canada law. The rights and responsibilities of holders of our shares are governed by our memorandum of association, our articles of association and by Canadian law. These rights and responsibilities may differ in some respects from the rights and responsibilities of shareholders in typical U.S. corporations.
CAPITALIZATION AND INDEBTEDNESS
The following sets forth on an unaudited, consolidated Canadian GAAP basis (a) the Company's actual capitalization and indebtedness as of February 28, 2005, and (b) the Company's capitalization and indebtedness as of February 28, 2005 as adjusted to give effect to the exercise of 7,266,012 warrants by the selling shareholders for gross proceeds of $7,266,012. No adjustment has been made for actual or estimated costs the Company may incur with respect to this offering. There is no assurance that any or all of the warrants will be exercised by the selling shareholders.
| Actual February 28, 2005 | Pro-forma – Position at February 28, 2005 adjusted by the proceeds of warrants |
Current Liabilities | ||
Total Debts | 113,427 | 113,427 |
Shareholders’ Equity |
|
|
Share capital | 26,087,872 | 33,353,884 |
Retained earnings (deficit) | (23,008,441) | (23,008,441) |
Total Shareholders’ Equity | $ 3,079,431 | $ 10,345,443 |
Total Capitalization
$ 3,192,858
$ 10,458,870
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MARKETS
Our shares trade on the NASDAQ Over-the-Counter Bulletin Board (OTCBB) under the symbol BNTNF (formerly DCHK). The Company's shares traded during the periods and at the prices set out below. The Company effected a 7:1 reverse stock split on April 21, 2003.
The following table outlines the annual high and low market prices for the five most recent fiscal years:
Fiscal year ended March 31 | High In US $ | Low In US$ |
2004 | 2.47* | .03 * |
2003 | .34 | .03 |
2002 | .69 | .04 |
2001 | 2.88 | .13 |
2000 | 7.06 | 2.16 |
* Prices are prior to a 7:1 reverse stock split on April 21, 2003.
The following table outlines the high and low market prices for each of the two most recent full financial years and subsequent periods:
Fiscal Quarter ended | High | Low |
| In US$ | In US$ |
December 31, 2004 | 2.15 | 0.48 |
September 30, 2004 | 1.13 | 0.33 |
June 30, 2004 | 2.05 | .90 |
March 31, 2004 | 2.47 | 1.01 |
December 31, 2003 | 1.45 | .80 |
September 30, 2003 | 2.05 | .80 |
June 30, 2003 | 1.45 | .03* |
March 31, 2003 | .07* | .03* |
December 31, 2002 | .29* | .04* |
September 30, 2002 | .34* | .06* |
June 30, 2002 | .28* | .06* |
* Prices are prior to a 7:1 reverse stock split on April 21, 2003.
The following table outlines the high and low market prices for each of the most recent six months:
Month | High | Low |
| In US$ | In US$ |
February 2005 January 2005 December 2004 | 1.38 1.70 2.15 | 1.09 0.92 1.32 |
November 2004 | 2.04 | 1.05 |
October 2004 | 1.13 | .42 |
September 2004 | 0.50 | 0.33 |
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INFORMATION ON OUTSTANDING SHARES
The number of shares outstanding before and after this offering are set forth below:
-
Common shares outstanding before the offering:
12,871,719
-
Common shares to be outstanding after the offering
assuming exercise of all the warrants at the exercise
20,137,731
price
The number set forth above for the common shares outstanding before this offering is the number of shares outstanding as at March 3, 2005, excluding the common shares which may be issued upon exercise of the warrants being offered for resale by this prospectus. The numbers set forth above do not include 3,592,500 common shares that are issuable upon the exercise of outstanding options issued under our 1999 Consultants Stock Option Plan and 2003 Consultants Stock Option Plan. These options are exercisable at prices ranging from $0.35 to $1.75 per share, with a weighted average exercise price of $0.48 per share.
REASONS FOR THE REGISTRATION AND USE OF PROCEEDS
This prospectus relates to the registration of 11,339,711 of our common shares for resale by the selling shareholders. On May 26, 2004, we completed a private placement of 8,879,571 units at US$0.35. Each unit was comprised of one of our common shares and a warrant for the purchase of one additional common share at a price of US$1.00 within twenty-four months of the date of issuance of the unit. All of the warrants are currently exercisable and expire at various times beginning April 2005 and ending May 2006, unless extended by us. None of the warrants have been exercised. We are registering the shares to permit the selling shareholders to dispose of the shares from time to time. We conducted our private placement upon reliance on an exemption from registration under Rule 506 of Regulation D of the Securities Act of 1993.
Of the shares and warrants issued in the private placement, we are excluding from registration, (1) issued shares already sold pursuant to an available exemption from registration such as Rule 144, (2) issued shares held by substantially all United States shareholders, and (3) shares to be issued under warrants held by substantially all United States warrant holders. We will not receive any of the proceeds from the sale by the selling shareholders of our common shares. We will, however, receive the proceeds from the exercise of the warrants if and when they are exercised.
SELLING SHAREHOLDERS
The table below lists the selling shareholders and other information regarding the beneficial ownership of the shares and shares issuable upon exercise of warrants received in the private placement. We are not registering shares a shareholder may have acquired other than through the private placement or shares already sold pursuant to an available exemption from registration such as Rule 144.
The second and third columns list the number and percentage of shares beneficially owned by each selling shareholder as of the date of this prospectus, assuming full exercise of the warrants held by each selling shareholder.
The fourth column lists the number of shares being offered by this prospectus by each of the selling shareholders.
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The fifth and sixth columns of the following table assume the sale of all of the shares offered by the selling shareholders pursuant to this prospectus. The selling shareholders may sell all, some or none of their shares in this offering.
Except as otherwise indicated, the Company believes the beneficial owner of the common shares listed below has sole voting and investment power over the number of shares listed opposite their name.
Name and Location of Selling Shareholder | Number of shares beneficially owned prior to this offering | % of shares beneficially owned prior to this offering | Number of shares offered pursuant to this prospectus | Number of Shares beneficially owned after this offering | % of shares beneficially owned after this offering | |||
1 | Andrew Cumming (1) | Toronto, ON, Canada | 322,500 | 1.6% | 322,500 | 0 | 0 | |
2 | Barry Biniaris(2) | Toronto, ON, Canada | 315,571 | 1.6% | 315,571 | 0 | 0 | |
3 | Bill Gaskey(3) | Toronto, ON, Canada | 55,000 | * | 55,000 | 0 | 0 | |
4 | Jim Sanderson Kirby(4) | Toronto, ON, Canada | 259,328 | 1.3% | 259,328 | 0 | 0 | |
5 | Brian Gruson(5) | Toronto, ON, Canada | 346,928 | 1.7% | 346,928 | 0 | 0 | |
6 | Brian Kadey(6) | Toronto, ON, Canada | 100,000 | * | 100,000 | 0 | 0 | |
7 | Carole Hall(7) | Toronto, ON, Canada | 100,000 | * | 100,000 | 0 | 0 | |
8 | Centrum Bank AG(8) | Vaduz, Liechtenstein | 270,000 | 1.3% | 270,000 | 0 | 0 | |
9 | Shirlee Williams(9) | Toronto, ON, Canada | 28,571 | * | 28,571 | 0 | 0 | |
10 | David Gillis(10) | Toronto, ON, Canada | 30,000 | * | 30,000 | 0 | 0 | |
11 | CastleRock DMG Investment Mgmt(11) | Dollard-Des-Ormeaux, QC, Canada | 245,714 | 1.2% | 245,714 | 0 | 0 | |
12 | Marlene Tersigni(12) | St. Catharines, ON, Canada | 57,143 | * | 57,143 | 0 | 0 | |
13 | Dr. S Pritchard(13) | Toronto, ON, Canada | 375,500 | 1.9% | 375,500 | 0 | 0 | |
14 | Elder Insurance Trust(14) | Hamilton, Bermuda | 285,972 | 1.4% | 285,972 | 0 | 0 | |
15 | Ellizabeth Falconer(15) | Aurora, ON, Canada | 30,000 | * | 30,000 | 0 | 0 | |
16 | G Scott Paterson(16) | Toronto, ON, Canada | 187,000 | * | 187,000 | 0 | 0 | |
17 | George Hardy(17) | Toronto, ON, Canada | 50,000 | * | 50,000 | 0 | 0 | |
18 | The Joshua Tree Inc.(18) | Toronto, ON, Canada | 137,286 | * | 137,286 | 0 | 0 | |
19 | Olivia Karen Anne Foster(19) | Toronto, ON, Canada | 416,286 | 2% | 416,286 | 0 | 0 | |
20 | John Hanemaayer(20) | Fenwick, ON, Canada | 85,714 | * | 85,714 | 0 | 0 | |
21 | John Powell(21) | Toronto, ON, Canada | 20,000 | * | 20,000 | 0 | 0 | |
22 | John Robinson(22) | Toronto, ON, Canada | 1,626,488 | 8.1% | 1,626,488 | 0 | 0 | |
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23 | Laura Bester(23) | Richmond, North Yorkshire, UK | 142,857 | * | 142,857 | 0 | 0 | |
24 | Communix Corporation in Trust(24) | Toronto, ON, Canada | 427,286 | 2% | 427,286 | 0 | 0 | |
25 | Mountainview Opportunistic Growth Fund LP (25) | North York, ON, Canada | 300,000 | 1.5% | 300,000 | 0 | 0 | |
26 | Nehoc Bahamas Ltd.(26) | Nassau, Bahamas | 600,000 | 3% | 600,000 | 0 | 0 | |
27 | Pentadan Management Inc.(27) | Richmond Hill, ON, Canada | 172,712 | * | 172,712 | 0 | 0 | |
28 | R J Kasner Co. Ltd.(28) | Kirkland Lake, ON, Canada | 100,000 | * | 100,000 | 0 | 0 | |
29 | Ralph Sickinger(29) | Toronto, ON, Canada | 22,140 | * | 22,140 | 0 | 0 | |
30 | Richard Elder(30) | Toronto, ON, Canada | 628,572 | 3.12% | 628,572 | 0 | 0 | |
31 | Robert Mendel(31) | Montreal, QC, Canada | 387,000 | 1.9% | 387,000 | 0 | 0 | |
32 | Robert & Katie Seidenschwarz(32) | Missoula, MT, USA | 21,429 | * | 21,429 | 0 | 0 | |
33 | Scott Cowie(33) | East York, ON, Canada | 20,000 | * | 20,000 | 0 | 0 | |
34 | Sheldon Inwentash(34) | Toronto, ON, Canada | 100,000 | * | 100,000 | 0 | 0 | |
35 | Snapper Inc.(35) | Turks & Caicos, BWI | 2,837,000 | 14.08% | 2,837,000 | 0 | 0 | |
36 | Sunil Jhaveri(36) | Central, Hong Kong | 85,714 | * | 85,714 | 0 | 0 | |
37 | Trevor Wright(37) | Vancouver, BC, Canada | 120,000 | * | 120,000 | 0 | 0 | |
38 | Glenn Kasner(38) | Kirkland Lake, ON, Canada | 30,000 | * | 30,000 | 0 | 0 | |
| TOTALS | 11,339,711 | 11,339,711 | |||||
* Less than 1%
(1) Includes 217,500 shares issuable upon the exercise of currently exercisable warrants.
(2) Includes 285,714 shares issuable upon the exercise of currently exercisable warrants.
(3) Includes 55,000 shares issuable upon the exercise of currently exercisable warrants.
(4) Includes 185,714 shares issuable upon the exercise of currently exercisable warrants.
(5) Includes 285,714 shares issuable upon the exercise of currently exercisable warrants.
(6) Includes 100,000 shares issuable upon the exercise of currently exercisable warrants.
(7) Includes 100,000 shares issuable upon the exercise of currently exercisable warrants.
(8) Includes 135,000 shares issuable upon the exercise of currently exercisable warrants.
(9) Includes 28,571 shares issuable upon the exercise of currently exercisable warrants.
(10) Includes 30,000 shares issuable upon the exercise of currently exercisable warrants.
(11) Includes 122,857 shares issuable upon the exercise of currently exercisable warrants.
(12) Includes 57,143 shares issuable upon the exercise of currently exercisable warrants.
(13) Includes 300,000 shares issuable upon the exercise of currently exercisable warrants.
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(14) Includes 142,986 shares issuable upon the exercise of currently exercisable warrants.
(15) Includes 30,000 shares issuable upon the exercise of currently exercisable warrants.
(16) Includes 150,000 shares issuable upon the exercise of currently exercisable warrants.
(17) Includes 50,000 shares issuable upon the exercise of currently exercisable warrants.
(18) Includes 114,286 shares issuable upon the exercise of currently exercisable warrants.
(19) Includes 357,143 shares issuable upon the exercise of currently exercisable warrants.
(20) Includes 85,714 shares issuable upon the exercise of currently exercisable warrants.
(21) Includes 20,000 shares issuable upon the exercise of currently exercisable warrants.
(22) Includes 859,103 shares issuable upon the exercise of currently exercisable warrants.
(23) Includes 142,857 shares issuable upon the exercise of currently exercisable warrants.
(24) Includes 357,143 shares issuable upon the exercise of currently exercisable warrants.
(25) Includes 200,000 shares issuable upon the exercise of currently exercisable warrants.
(26) Includes 300,000 shares issuable upon the exercise of currently exercisable warrants.
(27) Includes 142,855 shares issuable upon the exercise of currently exercisable warrants.
(28) Includes 50,000 shares issuable upon the exercise of currently exercisable warrants.
(29) Includes 22,140 shares issuable upon the exercise of currently exercisable warrants.
(30) Includes 314,286 shares issuable upon the exercise of currently exercisable warrants.
(31) Includes 250,000 shares issuable upon the exercise of currently exercisable warrants.
(32) Includes 21,429 shares issuable upon the exercise of currently exercisable warrants.
(33) Includes 20,000 shares issuable upon the exercise of currently exercisable warrants.
(34) Includes 100,000 shares issuable upon the exercise of currently exercisable warrants.
(35) Includes 1,500,000 shares issuable upon the exercise of currently exercisable warrants.
(36) Includes 42,857 shares issuable upon the exercise of currently exercisable warrants.
(37) Includes 60,000 shares issuable upon the exercise of currently exercisable warrants.
(38) Includes 30,000 shares issuable upon the exercise of currently exercisable warrants.
No selling shareholder has held a position as a director or executive officer nor has had a material employment relationship with the Company or any of its affiliates, or its or their predecessors, within the past three years except for the following:
1.
John Robinson is the sole owner and director of Current Capital Corp., which provides investor and media relations services to the Company. Our Chief Executive Officer/Chief Financial Officer and director of the Company provides accounting services to Current Capital Corp., as an independent consultant. John Robinson is a brother of Terrance Robinson who is an ex-chief executive officer and currently a consultant of the Company.
PLAN OF DISTRIBUTION
We are registering the shares offered hereby on behalf of the selling shareholders. As used herein, "selling shareholders" includes donees, pledgees, transferees or other successors-
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in-interest selling shares received after the date of this prospectus from a named selling shareholder as a gift, pledge, partnership distribution or other transfer. All costs, expenses and fees in connection with the registration of the shares offered by this prospectus will be borne by us other than brokerage commissions and similar selling expenses, if any, attributable to the sale of shares offered hereby which will be borne by the selling shareholders.
Sales of the shares offered hereby may be effected by selling shareholders from time to time in one or more types of transactions (which may include block transactions) including the following: on the OTCBB at prevailing market prices, in negotiated transactions, through publicly or privately negotiated put or call options transactions relating to the shares offered hereby, through short sales of the shares offered hereby (including the closing of any open short position), through transactions in options, swaps or other derivatives, any other method permitted by applicable law, or a combination of such methods of sale, at market prices prevailing at the time of sale, or at negotiated prices. The selling shareholders may also enter into other transactions which require the delivery of the shares offered by this prospectus, which shares such counterparties may resell pursuant to this prospectus (as amended or supplemented, if necessary, to reflect such transaction).
Such transactions may or may not involve brokers or dealers. We have not been advised by any selling shareholder that they have entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their securities, nor is there an underwriter or coordinating broker acting in connection with the proposed sale of the shares offered hereby by the selling shareholders.
The selling shareholders may effect these transactions by selling the shares offered hereby directly to purchasers or to or through broker-dealers, which may act as agents or principals. Such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the selling shareholders and/or the purchasers of the shares offered hereby for whom such broker-dealers may act as agents or to whom they sell as principal, or both (which compensation as to a particular broker-dealer might be in excess of customary brokerage commissions).
The selling shareholders and any broker-dealers that act in connection with the sale of the shares offered hereby might be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act, and any commissions received by such broker-dealers and any profit on the disposition of the shares offered hereby sold by them while acting as principals might be deemed to be underwriting discounts or commissions under the Securities Act. We have not agreed to indemnify any selling shareholder against certain liabilities, including liabilities arising under the Securities Act. The selling shareholders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares offered hereby against certain liabilities, including liabilities arising under the Securities Act.
Because selling shareholders may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act, the selling shareholders will be subject to the prospectus delivery requirements of the Securities Act.
Selling shareholders also may resell all or a portion of the shares offered hereby in open market transactions in reliance upon Rule 144 under the Securities Act, provided they meet the criteria and conform to the requirements of Rule 144 or another exemption under the Securities Act.
Upon our being notified by a selling shareholder that any material arrangement has [been entered into with a broker-dealer for the sale of shares offered hereby through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing:
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·
the name of each such selling shareholder and of the
participating broker-dealer(s);
·
the number of shares involved;
·
the initial price at which such shares were sold;
·
the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
·
that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in
this prospectus; and
·
other facts material to the transaction.
EXPENSES ASSOCIATED WITH THE REGISTRATION
We have agreed to bear all expenses relating to the registration of the shares covered by this prospectus. We estimate these expenses to be approximately US$13,000, which include the following categories of expenses:
SEC registration fee............................. $ 1,374.73
Printing and photocopying fees...................
150.00
Legal fees and expenses ......................... 10,000.00
Accounting fees and expenses.....................
Transfer agent and registrar fees and expenses... 1,000.00
Miscellaneous expenses .......................... 500.00
Total Expenses.......................... US $ 13,024.73
MATERIAL CHANGES
The following summarizes recent material events relating to the Company's business, including material changes in its affairs that have occurred since March 31, 2004, the end of the most recent fiscal year for which audited financial statements are incorporated by reference in the registration statement and that have not been described herein or in a current report on Form 6-K which are also incorporated by reference herein. This discussion should be read in conjunction with the other information included in this prospectus, including “Risk Factors” beginning on page 4:
1.
On January 19, 2005, a consultant who holds 250,000 options to acquire equal number of common shares of the Company at an option price of US$1.00 exercised 200,000 options. The Company received net proceeds of US$ 200,000.
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EXPERTS
Our consolidated financial statements included in our Form 20-F for the year ended March 31, 2004 and for each of the years in the three year period ended March 31, 2004 have been audited by Sloan Paskowitz Adelman LLP, independent registered public accounting firm, as set forth in their report thereon and incorporated in this prospectus by reference. Such consolidated financial statements are incorporated by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
The audit report of Sloan Paskowitz Adelman LLP covering the March 31, 2004 consolidated financial statements contains comments stating that conditions and events exist that cast substantial doubt on our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty.
Sloan Paskowitz Adelman LLP changed its name to Sloan Partners LLP and their consent letter is included in the Exhibits under their new name.
LEGAL MATTERS
Certain legal matters in connection with the registration of the shares hereunder will be passed upon for us by Messerli & Kramer P.A., our U.S. securities counsel.
INCORPORATlON OF DOCUMENTS BY REFERENCE
The SEC allows the Company to "incorporate by reference" the information it files with the SEC into this prospectus. This means that the Company can disclose important information to you by referring you to other documents, which we have filed or will file with the SEC. The information incorporated by reference is considered to be part of this prospectus, and later information filed with the SEC will update and supersede information previously filed. The Company incorporates by reference the documents listed below:
a)
Our annual report on Form 20-F filed on August 30, 2004 for the fiscal year ended March 31, 2004;
b)
Our current reports on Form 6-K submitted to the SEC on September 2, 2004, September 22, 2004, October 14, 2004, October 15, 2004, December 8, 2004, January 3, 2005, February 15, 2005 and March 1, 2005;
c)
All other reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the annual report incorporated by reference herein pursuant to (a) above;
d)
The description of our securities contained in our registration statement on Form 20-F filed with the Securities and Exchange Commission on June 12, 2000, including any amendment or report filed for the purpose of updating such description.
Prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, the Company also incorporates by reference all of its subsequent annual reports filed with the SEC on Form 20-F and all of its subsequent reports on Form 6-K under the Exchange Act submitted to the SEC that it specifically identifies in such form as being incorporated by reference into this prospectus.
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Certain statements in and portions of this prospectus update and replace information in the above listed documents incorporated by reference. Likewise, statements in or portions of a future document incorporated by reference in this prospectus may update and replace statements in and portions of this prospectus or the above listed documents.
The Company shall undertake to provide without charge to each person to whom a copy of this prospectus has been delivered, upon the written or oral request of any such person to us, a copy of any or all of the documents referred to above that have been or may be incorporated into this prospectus by reference, including exhibits to such documents, unless such exhibits are specifically incorporated by reference to such documents. Requests for such copies should be directed to our Chief Financial Officer, Bontan Corporation Inc. at 47 Avenue Road, Suite 200, Toronto, Ontario M5R 2G3, Canada, Tel: 416-860-0211. Our SEC filings are also available over the Internet at the SEC's website at http://www.sec.gov.
You should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement. The Company has not authorized anyone else to provide you with different information. This prospectus is an offer to sell or to buy only the securities referred to in this prospectus, and only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus or any prospectus supplement is current only as of the date on the front page of those documents. Also, you should not assume that there has been no change in our affairs since the date of this prospectus or any applicable prospectus supplement.
WHERE YOU CAN GET MORE INFORMATION
This prospectus is a part of a registration statement on Form F-3, which we filed with the Securities and Exchange Commission under the Securities Act of 1933. As permitted by the rules and regulations of the SEC, this prospectus does not contain all of the information contained in the registration statement and the exhibits and schedules thereto. As such we make reference in this prospectus to the registration statement and to the exhibits and schedules thereto. For further information about us and about the securities we hereby offer, you should consult the registration statement and the exhibits and schedules thereto. You should be aware that statements contained in this prospectus concerning the provisions of any documents filed as an exhibit to the registration statement or otherwise filed with the SEC are not necessarily complete, and in each instance reference is made to the copy of such document so filed. Each su ch statement is qualified in its entirety by such reference.
We file annual and special reports and other information with the SEC. These filings contain important information, which does not appear in this prospectus. For further information about us, you may read and copy these filings at the SEC’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330, and may obtain copies of our filings from the public reference room by calling (202) 942-8090.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
As described in the registration statement of which this prospectus forms a part, the Company's articles of association and certain provisions of Canadian law contain provisions relating to the ability of our officers and directors to be indemnified by the Company for costs, charges, expenses, losses and other liabilities which are sustained or incurred in the performance of the officer’s or director’s duties for the Company. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to the Company's directors, officers and controlling
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persons pursuant to the charter provision, by-law, contract, arrangements, statute or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
ENFORCEABILITY OF CIVIL LIABILITIES
Service of process upon the Company and upon its directors and officers and the Canadian experts named in this prospectus, most of whom reside outside the U.S., may be difficult to obtain within the U.S. Furthermore, because substantially all of the assets and substantially all of the directors and officers are located outside the U.S., any judgment obtained in the U.S. against the Company or any of its directors and officers may not be collectible within the U.S.
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BONTAN CORPORATION INC.
11,339,711 SHARES
PROSPECTUS
You should rely only on the information contained in this prospectus or incorporated by reference herein. We have not authorized anyone to provide you with different information and you should not rely on any such different information. No offer to sell or buy any of the securities covered by this prospectus is being made in any state where the offer is not permitted. You should not assume that the information in this prospectus is accurate as of any date other than the date that appears below.
__________, 2005
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 8. Indemnification of Directors and Officers
Under the Business Corporations Act (Ontario) (the “Act”), the Company may indemnify a present or former director or officer or a person who acts or acted at the Company’s request as a director or officer or of another corporation of which the Company is or was a shareholder or creditor, and his heirs and legal representatives, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by him in respect of any civil, criminal or administrative action or proceeding to which he is made a party by reason of being or having been such a director or officer if the director or officer acted honestly and in good faith with a view to the best interests of the Company and, in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, had reasonable grounds for believing that his conduct was lawful. Such indemnification ma y be made in connection with an action by or on behalf of the Company or such other corporation only with court approval. A director or officer is entitled to indemnification from the Company as a matter of right in respects of all costs, charges and expenses reasonably incurred by him in connection with the defence of any civil, criminal or administrative proceeding to which he is a party by reason of being or having been a director or officer of such corporation if he was substantially successful on the merits and fulfilled the conditions set forth above.
The by-laws of the Company provide that each director, each officer, each former director, each former officer and each person who acts or acted at the Company’s request as a director or officer or of a body corporate of which the Company is or was a shareholder or creditor, and his heirs and legal representatives, shall be indemnified and saved harmless by the Company from and against all costs, charges and expenses, including without limitation, each amount paid to settle an action or satisfy a judgment, reasonably incurred by him in respect of any civil, criminal or administrative action or proceeding to which his is made a party by reason or being or having been a director or officer of the Company or such body corporation, if he acted honestly and in good faith with a view to the Company’s best interests and in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty he had reasonable grounds for believing his conduct was lawful. In certain circumstances the Company has provided its Directors or its subsidiaries’ Directors with a written indemnification confirming the indemnification available under its by-laws.
The Company currently does not maintain directors’ and officers’ liability insurance.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that, in the opinion of the U.S. Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933, as amended and is therefore unenforceable.
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Item 9.
Exhibits.
Item 10. Undertakings.
The undersigned Registrant hereby undertakes:
| (1) |
| To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: |
(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement;
(iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, provided that the Registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration statements on Form F-3, a post-ef fective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Act or Rule 3-19 of Regulation S-K if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3.
(5)
That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(6)
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defence of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, on the 23rd day of March, 2005.
Bontan Corporation Inc.
By: /s/ Kam Shah
----------------------------------
Name: Kam Shah
Title: Chief Executive Officer and
Chief Financial Officer
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kam Shah, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign this Registration Statement and any and all amendments thereto (including post-effective amendments and registration statements filed pursuant to Rule 462(b) under the Securities Act of 1933 and otherwise), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact and agents, or his substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
Signature
Title
------------------------------------- --------------------------------------
By: /s/ Kam Shah
Director, Chief Executive Officer,
-------------------------------
Chief Financial Officer
Name: Kam Shah
Date: March 22, 2005
By: /s/ Dean Bradley
Director
-------------------------------
Name: Dean Bradley
Date: March 22, 2005
By: /s/ Kevin S. Markland Director
-------------------------------
Name: Kevin S Markland
Date: March 22, 2005
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EXHIBIT INDEX
Exhibit Number | Description of Documents |
4.1 | Form of Common Share Certificate (Incorporated by reference to Exhibit 1(viii) to the Company’s Annual Report on Form 20-F filed on September 23, 2003). |
4.2 | Form of Private Placement Agreement for April 2003. |
4.3 | Form of Share purchase warrants regarding April 2003 private placement. |
5.1 | Opinion of Messerli & Kramer P.A. as to the legality of the common shares being registered hereby. |
10.1 | Exploration Agreement dated June 21, 2004, effective as of May 1, 2004 with Keystone Oil Company, Inc. |
23.1 | Consent of Sloan Partners LLP. |
23.2 | Consent of Messerli & Kramer P.A. (Included in their opinion filed as Exhibit 5.1 hereto). |
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EXPLORATION AGREEMENT
BELL CITY, SOUTH AREA
Calcasieu Parish, Louisiana
This agreement (the “Agreement”), when executed by the parties hereto in the manner provided herein, will constitute the entire agreement by and between Keystone Oil Company, Inc. (“Keystone”), a Texas Corporation, whose address is 5646 Milton Street, Suite 713, Dallas, TX 75206 and Bontan Oil and Gas Corporation (“Bontan”), a Canadian Corporation, whose address is 47 Avenue Road, Suite 200, Toronto, Ontario, Canada M5R2G3 (individually a “Party”, or collectively the “Parties”). This Agreement will control the acquisition of oil and gas leases and the drilling and testing of a well or wells for the purpose of producing oil and natural gas located within the Bell City, South Prospect (the “Prospect”) in Calcasieu Parish, Louisiana. The Prospect consists of all lands included within the Area of Mutual Interest (the “AMI”) as define d on the attached Exhibit A which by reference is incorporated herein and made a part hereof.
Keystone represents that, based on its own geological and geophysical evaluation of the AMI, it has identified areas within the AMI which warrant further evaluation by drilling. Also Keystone has identified portions of the AMI which, pending results of the initial test well, warrant further evaluation by acquiring additional seismic data subsequent to drilling, testing and completion of the initial test well. Bontan hereby represents that it has obtained a technical report, through the services of a qualified, consulting geophysicist who is not an employee of, or contractor to, Keystone, which describes the geo-scientific aspects of the AMI. On the basis of this report and on business and financial considerations, Bontan has determined that its participation in the Prospect is appropriate for, and suitable to, Bontan.
THEREFORE,
The Parties agree as follows:
1. Regardless of the date of execution, the effective date of this Agreement is May 1, 2004, and the Agreement will remain in force and effect for so long as the oil and gas leases within the AMI continue in force, unless earlier terminated, or extended, by written consent of both Parties.
2. In consideration for its interest acquired in the Prospect as set forth in Paragraph 3 hereof, Bontan will pay to Keystone a geological fee of $19,600 and a prospect fee (for recovery of Keystone’s cost) of $124,950. $5,000 of said geological fee is to be paid upon execution of the Agreement by Bontan with the balance of $14,600 to be paid upon completion of lease acquisition in the area described in Exhibit A as the initial prospect area (the “Initial Prospect Area”). Said prospect fee is to be paid upon completion of lease acquisition in the Initial Prospect Area of a minimum of 1,300 net and gross mineral acres or such larger position within the Initial Prospect Area as Keystone determines, in its sole determination, is a sufficient leasehold position to drill a test well (the “Initial Well”) on the Initial Prospect Exploration Agreement
page 2 of 6
Area. Without the prior written consent of Bontan, no lease shall be taken within the Initial
Prospect Area (I) naming any person or entity other than Keystone as lessee or (ii) containing restrictions on assignability of the lessee’s interest.
3. Bontan will own an undivided forty-nine percent (49 %) lessee interest in any lease acquired within the Initial Prospect Area by paying forty-nine percent (49 %) of the cost of lease acquisition. For leases acquired outside the Initial Prospect Area, but within the AMI, Bontan will own forty-one and sixty-five hundredths percent (41.65%) undivided lessee interest by paying forty-one and sixty-five hundredths percent (41.65%) of the cost of lease acquisition. The cost of lease acquisition will include lessor bonus, brokerage, title examination and curative, recording and any other costs or fees incidental to lease acquisition and maintenance, all subject to the other terms hereof. Subject to the terms of any lease acquired hereunder, Bontan will receive a recorded assignment of its undivided interest in said lease within sixty (60) days subsequent to the completion of the Initial Well as a well capable of production. Bontan will bear the cost of preparing and recording said assignment. If the Initial Well is a dry hole, Bontan will receive said assignment only if Bontan commits to pay its proportionate share of any delay rentals that may become due under the leases within the Initial Prospect Area within the next year. The decision to pay, and each owner’s elections regarding the paying of delay rentals will be made in accordance with the Operating Agreement (herein so-called), attached hereto as Exhibit B, but if Bontan elects to pay delay rentals on leases within the Initial Prospect Area, it will pay forty-nine percent (49 %) of any such delay or other rentals for leases acquired within the Initial Prospect Area. Bontan’s leasehold interest will be subject to a proportionally reduced overriding royalty interest in favor of Keystone and its assigns in each lease equal to the lesser of (I) 4% and (ii) the difference between lessor royalty and thirty percent (30 %), in any event proportiona lly reduced if the respective lease covers less than all of the minerals in any tract covered by such lease. As used herein, lease acquisition will include any renewal or extension of a lease taken within two (2) years of the expiration of such lease, or a top lease of same.
The cost of lease acquisition in the Initial Prospect Area will not exceed the gross amount of $400,000 (8/8 lessee interest) without the prior written approval of Bontan. If Bontan elects not to participate in acquisition of leases costing in excess of $400,000, or fails to respond within 15 business days to a written proposal for said lease acquisition, then Bontan will have no interest in, or rights to, said leases. Keystone will not acquire any lease providing lessor royalty equal to more than thirty percent (30 %) without the prior written consent of Bontan.
4. Pending acquisition of the adequate leasehold required by Section 2 above, Bontan will participate in drilling the Initial Well by paying forty-nine percent (49 %) of the actual cost for drilling and completion to earn a forty-nine percent (49 %) working interest before payout. The Initial Well will be drilled at a location selected by Keystone in Sec.12-T11S-R7W to a sufficient depth, estimated to be 15,300 feet, to test the sand (or its stratigraphic Exploration Agreement
page 3 of 6
equivalent) encountered in the Tee No.2 Richard well (Sec.13-T11S-R7W) in the depth
interval 15,050 to 15,130 feet as measured by electric log. The failure by Bontan or Keystone to participate in drilling the Initial Well will result in the forfeiture of rights as provided in the Operating Agreement.
5. The Initial Well only will be subject to a proportionally reduced fifteen percent (15 %) of 8/8 working interest backin after payout in favor of Keystone and its assigns. Costs included for the purpose of calculating payout will be the geological fee of $19,600, the prospect fee of $124,950, and Bontan’s actual costs for leasehold acquisition, including brokerage expense, title examination, drilling, testing and completion, unitization expense, lease operating expense, and state and local taxes. Keystone will be responsible for preparing, or causing the preparation of, monthly payout status reports and will provide said record to the Parties monthly until payout occurs.
6. Subject to the non-consent provisions of the Operating Agreement, Bontan will have the right, but not the obligation, to participate in any well drilled subsequent to the Initial Well (a “Subsequent Well”) with a working interest equal to forty-one and sixty-five hundredths percent (41.65 %) which is equal to the initial working interest of forty-nine percent (49 %) less a backin after payout equal to fifteen percent (15 %) proportionally reduced, whether or not the Initial Well has paid out at the time when any Subsequent Well may be proposed. The Operating Agreement contains provisions requiring Bontan and Keystone successors and assigns to offer to each other the right to participate in acquisitions within the AMI, and neither Bontan nor Keystone will transfer any interest in any leases acquired under Section 2 above or in this Agreement unless the transfer is made expressly subject to this Agreement and the Operating Agreement.
7. With respect to the currently licensed 3-D seismic data (five square miles), any future expenditures for geological and/or geophysical studies that may be deemed by Keystone as necessary to select the drillsite location for any Subsequent Well will be charged to the cost of the respective Subsequent Well. Said expenditures are restricted to actual costs incurred by Keystone, including, but not limited to, rental of a computer work station, seismic processing and travel expenses, but will not include compensation for time required for such studies by Keystone personnel. However, if additional seismic data are acquired within the AMI (“After Acquired Seismic”), in addition to the costs enumerated above, Keystone will receive compensation in the amount of $250 (8/8 basis) per day for services rendered pursuant to processing and interpreting said seismic data. However, nothing contained herein will req uire Bontan to participate in acquisition of After Acquired Seismic without Bontan’s prior written approval.
8. All drilling, testing, completion, producing and marketing operations, whether for the Initial Well or for a Subsequent Well, will be conducted subject to the Operating Agreement (and attached COPAS, Gas Balancing Agreement and other Exhibits). A Division Order Exploration Agreement
page 4 of 6
identifying the interest owned by each Party will be executed by each Party; subsequent to
said execution each Party will be paid any proceeds that may be due from the sale of oil and/or natural gas directly by the holder of the Division Order or by the first purchaser of production as applicable.
9. Keystone will make periodic and timely cash calls to Bontan pursuant to funding the
lease and seismic acquisitions contemplated herein, and Bontan will timely respond by providing the required funds to Keystone within seven (7) business days. Failure by Bontan to so remit funds following thirty (30) days written notice of non-payment by Keystone will result in Bontan’s forfeiture of its rights to, and interest in, the proposed acquisition. Pre-billing for drilling cost and accounting for other operational matters will be covered by the Operating Agreement.
10. Keystone, at its sole option, may assign any portion of its compensation and/or interest created in and under this Agreement to a third party, or parties.
11. Bontan acknowledges and represents to Keystone that: (I) it is able to bear the economic, operational and geo-scientific risks of the investment(s) contemplated herein; (ii) its interest acquired hereunder is for its own account and not for the direct distribution or sale thereof; (iii) it has no intention of distributing or selling any interests in violation of the Securities Act of 1933 or any other applicable federal or state securities law or regulations; (iv) it is acting solely for its own account in making any evaluation of the AMI.
12. The terms and provisions hereof are binding upon and inure to the benefit of the Parties and their respective legal representatives, successors and, to the extent permitted by this Agreement, their assigns.
13. Nothing contained herein shall be construed as creating or forming a partnership, a mining partnership or similar association or entity whatever. In no event will the Parties be liable as partners. Each Party is responsible only for its own obligations and is liable only for its proportionate share of the costs hereunder.
14. KEYSTONE WILL NOT HAVE ANY LIABILITY TO BONTAN HEREUNDER ON ANY BASIS, WHETHER IN CONTRACT, TORT JOINTLY, CONCURRENTLY, SEVERALLY OR OTHERWISE, FOR ANY LOSSES, DIRECT OR INDIRECT, EXCEPT AS MAY RESULT FROM INTENTIONAL GROSS
NEGLIGENCE OR WILLFUL CRIMINAL CONDUCT OF KEYSTONE.
15. This Agreement may be amended only in writing executed by both Parties.
16. Due to the proprietary nature of operations contemplated herein, the Parties will hold all information regarding the status of, or results from, any operation conducted hereunder in Exploration Agreement
page 5 of 6
strictest confidence. No public disclosure of said information is to be made except as may be
required by law, rule or regulation promulgated by a governing authority or authorities.
17. Any dispute among the Parties which has not been resolved within twenty (20) days shall be submitted to binding arbitration in Dallas, Texas in accordance with the Rules of the American Arbitration Association. Any award rendered by the arbitrator or arbitration panel shall be final and enforceable in a court of competent jurisdiction. The prevailing Party shall be entitled to recover costs and attorney’s fees incurred in connection with the arbitration proceeding. The arbitrator (s) shall permit reasonable discovery, enforce relevant production by subpoena, and may award equitable as well as legal relief. Any Party may apply to the courts in Dallas, Texas for the appointment of an impartial arbitrator (or, in the discretion of the court, a panel of impartial arbitrators) to hear and resolve any dispute arising between the Parties concerning the impartiality of the arbitrator. The cost s associated with any such application to such court shall be divided equally among the Parties. The fees of the arbitrator shall be paid by the Party against whom the award is rendered. Any arbitration award shall be appealable on the ground that it is erroneous as a matter of law. Nothing contained herein shall preclude the Parties from stipulating to mediation as a less expensive and more expeditious means of resolving disputes between them or from obtaining injunctive relief from a Texas court pending arbitration or mediation.
18. This Agreement is governed by and constructed in accordance with the laws of the State of Texas to the fullest extent possible.
19. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions will nevertheless continue in full force and effect without being impaired or invalid in any manner.
20. In the event that any terms of this Agreement conflict with any concurrent terms or provisions of the Operating Agreement the terms of the Exploration Agreement will prevail.
21. If, because of force majeure any Party is rendered unable, in whole or in part, to carry out its obligations, other than obligations to pay money, the affected Party will give the other Party prompt notice describing the force majeure situation in reasonable detail, whereupon the obligations will be suspended during, and to the extent prevented by, the force majeure. As used herein, the phrase “Force Majeure” means strike, lockout or other industrial disturbance; act of a public enemy, war, blockade, riot; lightening, fire, storm, flood or explosion; government action or inaction, restraint or delay; unavailability of drilling rigs or other facilities or equipment or transportation thereof including inability to secure workers, lease brokers, title abstracts; inability to obtain ingress or egress to conduct operations; or any other cause, whether similar or dissimilar, which is not reasonably within the control of the effected Party, provided, however, the effected Party will exercise all reasonable diligence to remove the cause of the force majeure.
Exploration Agreement
page 6 of 6
22. All first notices shall be in writing and delivered in person or by U.S. or Canadian Mail,
Fax or other agreed upon methods. However, if a drilling rig is on location and standby
charges are accumulating, or will begin accumulating, such notices will be given by telephone and immediately confirmed in writing. Notices will be deemed given only when received by the Party whom such notice is directed. Each Party’s response to a proposal will be in writing to the other Party. Failure of either Party to respond to a notice within the required period will be deemed to be a negative vote. All notices will be sent to the Parties or their appointed representative at the above address. Each Party will have the right to change its designated representative and/or address by giving thirty (30) days prior notice to the effective date of the change.
23. All monetary references stated herein, and all monetary transactions contemplated herein are in United States Dollars.
Agreed to and Executed this 16 Day of June , 2004, but effective as of May 1, 2004,
Keystone Oil Company, Inc.
By: /s/ Robert O. Gross
Robert O. Gross, President
Agreed to and Executed this 21 Day of JUNE , 2004, but effective as of May 1, 2004,
Bontan Oil and Gas Corporation
By: /s/ Kam Shah
Kam Shah
bontan01 wpdoc 06/14/04
May 24, 2004
TO: Mr. Kam Shah
c/o Bontan Oil and Gas Company
via fax 416-361-6228; eight pages including this page
FROM: Robert Gross
Keystone Oil Company, Inc.
voice 214-890-0430
fax 214-890-0431
Dear Mr. Shah:
I believe the attached Exploration Agreement incorporates the changes and provisions which we discussed by telephone earlier today. Please let me know of any corrections and/or additions that Bontan may require.
I anticipate receiving the Operating Agreement from Wadi Petroleum this week and I will send it to you as soon as I have an opportunity to review it.
I have not had an opportunity to call the geophysicist we discussed today, but I will do so tomorrow.
Thanks for your assistance with this agreement. If you need any additional information regarding this project do not hesitate to call.
Very truly yours,
/s/ Robert O. Gross
Robert O. Gross
KEYSTONE OIL COMPANY, INC.
5646 Milton Street, Suite 713
Dallas, TX 75206-3935
voice 214-890-0430
fax 214-890-0431
robt144@swbell.net
June 16, 2004
Mr. Kam Shah
Bontan Oil and Gas Corporation
47 Avenue Road, Suite 200
Toronto, Ontario
Canada M5R2G3
Re: Bell City, South Area
Calcasieu Parish, Louisiana
Dear Mr. Shah:
Enclosed please find two copies of the Exploration Agreement for the subject area. Please initial and date each page, including Exhibit A, and sign on page six. Please return one executed copy to me at the letterhead address.
I just spoke with Mr. Kevin Dice, Vice President of Wadi Petroleum, and we are progressing toward finalizing the Operating Agreement. At the first opportunity, I will forward a copy for your signature.
Thank you for your assistance in completing the contracts pursuant to our leasing and drilling program at Bell City, South.
Very truly yours,
/s/ Robert O. Gross
Robert O. Gross
bontan01 wpdocs
LOGO
INDEPENDENT AUDITORS’ CONSENT
The Board of Directors
Bontan Corporation Inc.
We consent to the use of our report dated August 10, 2004, with respect to the consolidated balance sheets of Bontan Corporation Inc. as of March 31, 2004 and the related consolidated statements of operations, shareholders' equity and cash flows for the year ended March 31, 2004, incorporated herein by reference, and to the reference to our firm under the heading “Experts” in the prospectus. Our report dated August 10, 2004, included additional comments for U.S. readers that states that conditions and events exist that cast substantial doubt on the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty.
Dated February 2, 2005
“Sloan Partners LLP”
Thornhill, Ontario, Canada
formerly Sloan Paskowitz Adelman LLP
MESSERLI & KRAMER P.A.
1800 Fifth Street Towers
150 South Fifth Street
Minneapolis, Minnesota 55402-4246
Telephone (612) 672-3600
Facsimile (612) 672-3777
March 23, 2005
Bontan Corporation Inc.
47 Avenue Road, Suite 200
Toronto, Ontario, Canada M5R 2G3
Re: Issuance of Securities for Registration Statement on Form F-3
Ladies and Gentlemen:
You have requested our opinion as your special U.S. securities counsel with respect to certain matters in connection with the filing by Bontan Corporation Inc. (the "Company") of the Registration Statement on Form F-3 (the "Registration Statement") with the Securities and Exchange Commission covering the sale by the certain shareholders of (i) 4,073,699 of the Company's common shares (the "Shares") which were issued to such shareholders in a private placement, and (ii) 7,266,012 of the Company's common shares (the "Warrant Shares") that are issuable upon exercise of warrants (the "Warrants") which were also issued to such shareholders in a private placement.
In connection with this opinion, we have examined the Registration Statement and such other documents, records, certificates, memoranda and other instruments as we deem necessary as a basis for this opinion. We have assumed the genuineness and authenticity of all documents submitted to us as originals, the conformity to originals of all documents submitted to us as copies thereof and execution and delivery of all documents, where execution and delivery are a prerequisite to the effectiveness thereof.
We advise you that we are licensed to practice in Minnesota. Accordingly, our opinion assumes that the provincial laws of Ontario and the federal laws of Canada would yield the same opinion as application of the laws of the State of Minnesota and the federal laws of the United States.
On the basis of the foregoing, and in reliance thereon, we are of the opinion that (1) the Shares are duly authorized, validly issued, fully paid and non-assessable; and (2) upon exercise of the Warrants and payment therefor in accordance with the terms of the Warrants, the Warrant Shares will be duly authorized, validly issued, fully paid and non-assessable.
We consent to the filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
/MESSERLI & KRAMER P.A./
Messerli & Kramer P.A.
THIS PRIVATE PLACEMENT AGREEMENT made this day of , 200 _
BETWEEN:
BONTAN CORPORATION INC.
(herein called “BONTAN” )
OF THE FIRST PART
- and -
(herein called "Private Placee")
OF THE SECOND PART
WHEREAS BONTAN is a reporting issuer in the Province of Ontario;
AND WHEREAS BONTAN wishes to make a private placement of 7,143,000 units, each unit comprised of one (1) BONTAN common share and one BONTAN share purchase warrant, each such whole warrant entitling the Private Placee to purchase one (1) further BONTAN common share at a price of $1.00 US Funds until 5:00 p.m. Toronto time on the date which is twenty Four (24) months from the closing date;
AND WHEREAS the Private Placee has informed itself as to BONTAN's state of affairs and its assets and wishes to make a private placement investment in BONTAN securities by acquiring ____________________ units of BONTAN;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises and for other good and valuable consideration and the payment of ten dollars ($10.00) by each party to the other, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby covenant and agree each with the other as follows:
A. SUBSCRIPTION
1 The recitals set out above shall form an integral part of this Agreement.
2. The Private Placee hereby subscribes for and agrees to purchase from BONTAN the following:
__________________ units (the "Purchased Units") of BONTAN. The price of the Purchased Units is $0.35 US Funds each or _________________ US in the aggregate (the "Purchase Price").
Each unit is comprised of one (1) BONTAN common share and one BONTAN share purchase warrant, each such whole warrant entitling the Private Placee to purchase one (1) further BONTAN common share at the price of $1.00 US Funds until 5:00 p.m. Toronto time on the date which is twenty four (24) months from the closing date.
The Private Placee's warrants shall be non-transferable by it except in accordance with the provisions of the securities legislation of the jurisdiction in which such transfer takes place, and shall expire and be of no value if unexercised by the time prescribed. The warrants shall be in the form of the draft Share Purchase Warrants certificate annexed hereto as Schedule "A", and forming a part hereof.
3.
The Private Placee shall pay the Purchased Price to BONTAN on or before the earlier of the date of full subscription of the private placement and May 26, 2004 (CLOSING DATE). Payment shall be made by a wire transfer to BONTAN at the following address:
Bontan Corporation Inc.
Bank of Montreal, Main Branch Toronto, First Canadian Place, Toronto ON M5X 1A3 Canada
Account # 4658-156, bank code 001, Branch code 00022
Bank Phone # 416-867-5050
Or by a certified cheque to be delivered to the BONTAN’s corporate office at 47 Avenue Road, Suite 200, Toronto, Ontario M5R 2G3, Canada.
The date of receipt of the full amount of the Purchase Price shall be deemed to be the closing date (the "Closing Date") of this transaction. The time of closing (the "Time of Closing") shall be deemed to be 4:00 p.m. on the Closing Date. The Purchased Units shall be deemed acquired as of the Time of Closing.
4.
The parties hereto acknowledge and agree that the Purchased Units are not qualified for sale in Canada (or any province thereof) or the United States of America ("USA") and may not be offered or sold, directly or indirectly, in Canada (or any province thereof) or the USA or to a Canadian or USA resident.
B. PRIVATE PLACEES’ ACKNOWLEDGEMENTS AND AGREEMENTS
The Private Placee understands, acknowledges and agrees that:
1. This subscription may be accepted or rejected in whole or in part by BONTAN, in its sole discretion.
2. Except as provided under applicable securities laws, this subscription is and shall be irrevocable except that (i) the Private Placee's execution and delivery of this Subscription Agreement will not constitute an agreement between BONTAN and the Private Placee until this Subscription Agreement is accepted on behalf of BONTAN and, if not so accepted, the Private Placee's subscription and obligations hereunder will terminate and (ii) the Private Placee can, at any time prior to acceptance of this Subscription Agreement, request in writing that he or it be released from his or its obligations hereunder (and BONTAN may, but need not, in its discretion, elect to release the Private Placee from his or its subscription and from such obligations).
2
THE COMMON SHARES, THE WARRANT, AND THE WARRANT SHARES HAVE NOT BEEN RECOMMENDED BY THE SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE OR PROVINCIAL SECURITIES COMMISSION
OR REGULATORY AUTHORITY. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
3. Because Purchased Units, and the Warrant Shares will not have been registered under the Securities Act of 1933, as amended (the "Securities Act"), or applicable state securities laws, the Private Placee is aware that any resale inconsistent with the Securities Act may create liability on his or its part and/or the part of BONTAN, and agrees not to assign, sell, pledge, transfer or otherwise dispose of or transfer Purchased Units and the Warrant Shares except in compliance with the Securities Act and applicable state securities laws. The Private Placee is also aware that any resale inconsistent with applicable securities laws in the province of Ontario ("Canadian Securities Laws") may create liability on his or its part and/or the part of BONTAN, and agrees not to assign, sell, pledge, transfer or otherwise dispose of or transfer the Purchased Units, and the Warrant Shares except in compliance with Canadian Securities Laws.
4. Unless permitted under Canadian Securities legislation, the Private Placee shall not trade the Purchased Units in the Province of Ontario before the date that is four months and one day after the Closing Date.
5. Each certificate representing the Purchased Units and the Warrant Shares will bear a legend to the following effect:
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF BONTAN THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO BONTAN, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) INSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT, IF AVAILABLE. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES AND THE COMMON SHARES ISSUABLE UPON THE EXERCISE OR CONVERSION THEREOF SHALL NOT TRADE THE SECURITIES IN THE PROVINCE OF ONTARIO BEFORE THE DATE THAT I S FOUR MONTHS AND ONE DAY AFTER THE CLOSING DATE”
provided that, if any such Purchased Units, and the Warrant Shares are being sold under Rule 144 under the Securities Act, the legend may be removed by delivery to Equity Transfer Services Inc. of an opinion of counsel, of recognized standing reasonably satisfactory to BONTAN, to the effect that such legend is no longer required under applicable requirements of the Securities Act or state securities laws.
6. Provided that nothing herein shall limit the rights of BONTAN and the Private Placee to register the Purchased Units, the Private Placee acknowledges that neither BONTAN nor any other representative on behalf of BONTAN has made any
3
representations with respect to registration under the Securities Act or qualification under Canadian Securities Laws of Purchased Units that no such registration is contemplated, that there can be no assurance that there will be any market for the Purchased Units in the United States in the foreseeable future or any liquid market for four months, and that, as a result, the Private Placee may be required to bear the economic risk of his or its investment for an indefinite period of time under the Securities Act, or a period of four months and one day under the Canadian Securities Laws.
C. BONTAN WARRANTIES AND REPRESENTATIONS
BONTAN hereby represents and warrants to the Private Placee as follows and acknowledges that the Private Placee is relying upon the following representations and warranties in connection with its subscription for the Purchased Units:
1. BONTAN is a corporation duly organized and validly existing under the laws of the Province of Ontario, is duly qualified to carry on its business and is in good standing in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets requires such qualification, and has all requisite corporate power, authority and capacity to carry on its business as now conducted and to own, lease or operate its property and assets and to enter into, execute, deliver and perform its obligations under this Agreement. BONTAN is conducting business in compliance in all material respects with all applicable laws, rules and regulations of each jurisdiction in which its business is carried on, and all licenses, registrations and qualifications of BONTAN are valid, subsisting and in good standing, except in respect of matters that do not and would not reasonably be expected to have a Material Adverse Effect on BONTAN, and except for a failure to be so qualified or the absence of any such license, registration or qualification which does not and would not reasonably be expected to have a Material Adverse Effect on BONTAN;
"Material Adverse Effect" means a material adverse effect on the business, operation, results of operations, assets, liabilities or financial condition of BONTAN and the subsidiaries of BONTAN taken as a whole;
2. (i) The execution and delivery of this Agreement by BONTAN and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action and no further consent or authorization of BONTAN or its Directors is required (ii) this Agreement has been duly executed and delivered by BONTAN and is a valid and binding obligation of BONTAN enforceable against BONTAN in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, receivership or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application;
3. Each of BONTAN's subsidiaries is a wholly-owned subsidiary corporation duly incorporated and organized and validly existing under the laws of its jurisdiction of incorporation, is duly qualified to carry on its business and is in good standing in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets requires such qualification, and has all requisite corporate power, authority and capacity to carry on its business as now conducted and to own, lease or operate its property and assets, except for the failure to be so qualified that does not and would not reasonably be expected to have a Material Adverse Effect on BONTAN.
4
4. As of the date hereof, the authorized capital of BONTAN consists of an unlimited number of Common Shares;
5. BONTAN is a "reporting issuer" not in default, in the Province of Ontario, and a “reporting foreign issuer” not in default, in the USA.
6. The issued and outstanding common shares of BONTAN are listed and posted for trading on Over The Counter Bulletin Board of NASDAQ (OTCBB) and no order ceasing or suspending trading in any securities of BONTAN or prohibiting the sale of the Purchased Units or the trading of any of BONTAN's issued securities has been issued;
7. All necessary corporate action has been taken by and on behalf of BONTAN to authorize the creation, issuance and sale of the Purchased Units and upon receipt of the purchase price therefore, such securities shall be issued as fully paid and non-assessable securities of BONTAN; and
8. Neither BONTAN nor any of its subsidiaries has committed an act of bankruptcy or sought protection from its creditors from any court or pursuant to any legislation, proposed a compromise or arrangement to its creditors generally, taken any proceeding with respect to a compromise or arrangement, taken any proceeding to have itself declared bankrupt or wound up, as the case may be, taken any proceeding to have a receiver appointed of any part of its assets, had any encumbrance or receiver take possession of any of its property, had an execution or distress become enforceable or levied upon any portion of its property or had any petition for a receiving order in bankruptcy filed against it.
D. PRIVATE PLACEE'S REPRESENTATIONS AND WARRANTIES
The Private Placee hereby represents and warrants to BONTAN as follows:
1. (i) The Private Placee has all requisite corporate or other power and capacity and has taken all requisite corporate or other action to execute and deliver this Agreement, to purchase the Purchased Units, the Warrant Shares to be purchased by it and to carry out and perform all of its obligations under this Agreement; and (ii) this Agreement constitutes the legal, valid and binding obligation of the Private Placee, enforceable against the Private Placee in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, receivership or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application.
2. The Private Placee is an "accredited investor" as defined in Rule 501(a) of Regulation D under the Securities Act and/or Rule 45-501 of the Ontario Securities Commission. The Private Placee is aware of BONTAN's business affairs and financial condition and has had access to and has acquired sufficient information about BONTAN to reach an informed and knowledgeable decision to acquire Purchased Units, and the Warrant Shares. Private Placee has such business and financial experience as is required to permit it to protect his or its own interests in connection with the purchase of Purchased Units, and the Warrant Shares. The Private Placee's financial condition is such that it is able to bear the risk of holding Purchased Units, the Warrant Shares for an indefinite period of time and the risk of loss of his or its entire investm ent.
5
3. The Private Placee is purchasing the Purchased Units, and the Warrant Shares for his or its own account as principal, for investment purposes only, and not with a present view to, or for, the resale distribution thereof, in whole or in part, within the meaning of the Securities Act or any state or provincial securities laws. The Private Placee understands that its acquisition of Purchased Units, and the Warrant Shares has not been registered under the Securities Act or registered or qualified under any state or provincial law in reliance on specific exemptions therefrom, which exemptions may depend upon, among other things, the bona fide nature of the Private Placee's investment intent as expressed herein. Except as contemplated by this Agreement, the Private Placee has no present agreement, undertaking, arra ngement, obligation or commitment providing for the disposition of the Purchased Units, or the Warrant Shares. The Private Placee represents that it has not been organized, reorganized or recapitulated specifically for the purpose of investing in the Purchased Units. The Private Placee will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of Purchased Units, or the Warrant Shares except in compliance with the Securities Act, and the rules and regulations promulgated thereunder and applicable state securities laws.
6. The Private Placee is aware that the purchase of the Purchased Units, and the Warrant Shares may have tax consequences both in Canada and the United States.
7. The foregoing representations and warranties are true as of the date of this Agreement and shall be true as of the final date that BONTAN issues and sells the Purchased Units to the Private Placee and the date BONTAN issues the Warrant Shares. If such representations and warranties shall not be true in any respect prior to any such date, the Private Placee will give prompt written notice of such fact to BONTAN.
E. CONDITIONS TO CLOSING
BONTAN's obligation to sell and issue the Purchased Units at the Closing is at the option of BONTAN, subject to the fulfillment or waiver of the following conditions:
1. The representations made by the Private Placee and BONTAN herein shall be true and correct when made, and shall be true and correct on the Closing Date with the same force and effect as if they had been made on and as of each such date.
2. All covenants, agreements and conditions contained in this Agreement to be performed by the Private Placee on or prior to the Closing Date shall have been performed or complied with in all material respects.
3. All necessary regulatory approvals shall have been obtained by BONTAN.
4. No proceeding challenging this Agreement or the transactions contemplated hereby, or seeking to prohibit, alter, prevent or materially delay the Closing, shall have been instituted or be pending before any court, arbitrator, governmental body, agency or official.
5. The sale of Purchased Units by BONTAN shall not be prohibited by any law or governmental order or regulation and shall not require any additional consent or approval other that the ones obtained by BONTAN.
6
6. The issue and sale of the Purchased Units is exempt from the requirement to file a prospectus and the requirement to deliver an offering memorandum under applicable securities laws.
7. The delivery of a share certificate representing the Common Shares and the Warrant or at the Initial Closing.
F. MISCELLANEOUS
1. The terms of this Agreement may be waived or amended with the written consent of BONTAN and the Private Placee.
2. This Agreement shall be governed in all respects by and construed in accordance with the laws of the Province of Ontario without any regard to conflicts of laws principles.
3.
BONTAN will use its best efforts to effect, as expeditiously as possible, the required registration of shares and warrants covered by the Units being sold under this private placement, under the Securities Acts to enable the Private Placee to hold them or dispose them of as freely tradable securities.
4. The representations, warranties, covenants and agreements made in this Agreement shall survive any investigation made by BONTAN or the Private Placee and the Closing.
5. The provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties to this Agreement. Notwithstanding the foregoing, the Private Placee shall not assign this Agreement or its rights hereunder without the prior written consent of BONTAN.
6. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subjects thereof.
7. All notices and other communications required or permitted under this Agreement shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, overnight delivery service or registered or certified United States or Canadian mail addressed to BONTAN or the Private Placee, as the case may be, at their respective addresses set forth in subsection 13 or at such other address as BONTAN or the Private Placee shall have furnished to the other party in writing. All notices and other communications shall be effective upon the earlier of actual receipt thereof by the person to whom notice is directed or (i) in the case of notices and communications sent by personal delivery or telecopy, one business day after such notice or communication arrives at the applicable address or was successfully sent to the appli cable telecopy number, (ii) in the case of notices and communications sent by overnight delivery service, at noon (local time) on the second business day following the day such notice or communication was sent, and (iii) in the case of notices and communications sent by United States or Canadian mail seven days after such notice or communication shall have been deposited in the United States or Canadian mail.
8. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
7
9. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.
10. Each party to this Agreement shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as the other party hereto may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
11. BONTAN and the Private Placee shall each bear its own costs and expenses incurred on its behalf with respect to this Agreement and the transactions contemplated hereby, including fees of legal counsel.
12. Except as otherwise specified, all references to "dollars" or "$" in this Agreement (including the Exhibits attached hereto) shall be deemed to refer to United States dollars.
13.
a)
Name and Address of Private Placee
Name:____________________________________
Address:
__________________________________
__________________________________
__________________________________
__________________________________
Attention: _______________________________
Phone No.:_______________________________
Contact: ________________________________
Phone: _________________________________
b)
In the event that the Private Placee is contracting hereunder on behalf of one or more disclosed principals, the name and address of each such disclosed principal is set forth below (if space is insufficient, attach a list):
Name: ______________________________ Name: __________________________
Address: ____________________________ Address: _________________________
______________________________
___________________________
c)
Registration of the certificates representing the common shares and warrants being acquired pursuant to this agreement should be made as follows (if space is insufficient, attach a list):
8
Registration
(Account reference: if applicable)
Name:____________________________
Address:__________________________
________________________
__________________________(Contact Name)
__________________________
________________________
(Phone No.)
d)
The certificate representing the common shares and warrants being acquired pursuant to this agreement should:
be mailed to the registered holder at the address set forth in (C) above; or
be made available to be picked up at the principal office of BONTAN in Toronto, Ontario,' or
be mailed to the following person at the following address:
Contact:___________________________________________
Address:__________________________________________
__________________________________________
Please check one box, failing which such certificates will be mailed to the registered holder as described above.
14.
This Agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate effective as of the date first above written.
SIGNED, SEALED AND DELIVERED )
)
BONTAN CORPORATION INC.
) Per:
)
) ___________________________
Terence Robinson, Director CEO
)
) Per:
)
) ___________________________
( Name of the Private Placee)
BONTAN CORPORATION INC.
- and -
_____________________________
PRIVATE PLACEMENT AGREEMENT
_________________ UNITS
Certificate No.: _______
2
Endnotes
3
Share Purchase Warrant # __________
Void After 5:00 p.m (Toronto time) on __ , 2005
SHARE PURCRASE WARRANTS
BONTAN CORPORATION INC.
THIS IS TO CERTIFY THAT, for value received, (the "Warrant Holder") shall have the right to purchase from BONTAN CORPORATION INC. (the "BONTAN"), upon and subject to the terms and conditions hereinafter referred to one fully paid and non-assessable common share of BONTAN for each one (1) warrant represented hereby at the price of $1.00 US Funds per common share in lawful money of the United States until 5:00 p.m. Toronto time on &n bsp; - , 2005.
The right to purchase common shares of BONTAN may only be exercised by the Warrant Holder within the time hereinbefore set out by: (a) duly completing and executing the subscription form attached hereto, in the manner therein indicated; (b) surrendering this warrant certificate to BONTAN at 47 Avenue Road, Suite 200, Toronto, Ontario M5R 2G3; and (c) paying the appropriate purchase price for the common shares of BONTAN subscribed for by a wire transfer to the following account of BONTAN.
Bontan Corporation Inc.
Bank of Montreal, Main Branch Toronto, First Canadian Place, Toronto ON M5X 1A3 Canada
Account # 4658-156, bank code 001, Branch code 00022
Bank Phone # 416-867-5050
Or by a certified cheque to be delivered to the BONTAN’s corporate office at 47 Avenue Road, Suite 200, Toronto, Ontario M5R 2G3, Canada.
Upon surrender and payment, BONTAN will issue to the Warrant Holder the number of common shares subscribed for. Within five business days of surrender and payment BONTAN will mail to the Warrant Holder a certificate evidencing the common shares subscribed for. If the Warrant Holder subscribes for a lesser number of common shares than the number of shares permitted by this warrant certificate, BONTAN shall forthwith cause to be delivered to the Warrant Holder a further warrant certificate in respect of the common shares referred to in this warrant certificate but not subscribed for.
Save and except in the case of the issuance of additional shares of BONTAN for consideration, if the issued and outstanding shares of BONTAN are changed by a subdivision, consolidation, reduction in capital or by any other capital reorganization or reclassification of the capital stock of BONTAN, or consolidation or merger of BONTAN with another corporation shall be effected, then, the warrants herein shall be adjusted and lawful and adequate provision shall be made whereby the Warrant Holder hereof shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions specified in this warrant certificate and in lieu of the shares of BONTAN immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for a number of
outstanding shares equal to the number of shares of such stock immediately theretofore purchasable and receivable upon the exercise of the warrants represented hereby had such reorganization, reclassification, consolidation or merger not taken place, and in any such case appropriate provision shall be made with respect to the rights and interest of the Warrant Holder to the end that the provisions hereof (including without limitation provisions for adjustments of the exercise price of the warrants herein and of the number of shares purchasable upon conversion of the warrants herein) shall thereafter be applicable, as nearly as may be in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise of the warrants herein.
THE WARRANTS AND THE SECURITIES REPRESENTED THE WARRANTS HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, OR (C) IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT, IF AVAILABLE. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.
UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES SHALL NOT TRADE THE WARRANT OR COMMON SHARES ISSUABLE ON EXERCISE THEREOF IN THE PROVINCE OF ONTARIO BEFORE THE DATE THAT IS FOUR MONTHS AND ONE DAY AFTER THE CLOSING DATE.
THE WARRANT HOLDER, BY ACCEPTANCE OF THIS WARRANT CERTIFICATE, AGREES TIIAT THE WARRANTS REPRESENTED HEREBY AND ANY SHARES ACQUIRED PURSUANT TO THIS WARRANT CERTIFICATE ARE NOT TO BE SOLD BY THE HOLDER THEREOF, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE SECURITIES LEGISLATION OF THE JURISDICTION IN WHICH SUCH TRANSFER OR SALE TAKES PLACE.
IN WITNESS WHEREOF, BONTAN has caused this warrant certificate to be issued as of the
.
BONTAN CORPORATION INC.
Per:
&n bsp;
SUBSCRIPTION FORM
TO:
THE DIRECTORS, BONTAN CORPORATION INC.
47 Avenue Road, Suite 200
Toronto, Ontario
M5R 2G3
Dear Sirs:
The undersigned hereby exercises the right to purchase and hereby subscribes for _____________ common shares in the capital stock of BONTAN CORPORATION INC. referred to in the warrant certificate surrendered herewith according to the conditions thereof and herewith makes payment by cash or certified cheque of $_____________US Funds being the purchase price in full for the said shares.
Please issue a certificate for the shares being purchased as follows in the name of the undersigned:
NAME: _____________________________
(please print)
ADDRESS:__________________________
___________________________
___________________________
Please deliver a warrant certificate in respect of the common shares referred to in the warrant certificate surrendered herewith but not presently subscribed for, to the undersigned.
DATED this
day of
, ______
Per:_________________________