SHARE EXCHANGE AGREEMENT (the "Agreement"), effective as of February 23, 2004,
by and among:
INTELLIPHARMACEUTICS CORP., a Canadian corporation, with offices located at
000 Xxxxxxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxx Xxxxxx X0X 0X0
("IPC");
READY CAPITAL CORP., a New York corporation, with offices at 0 Xxxxxxxx
Xxxx Xxxx Xxx., Xxxx Xxxxxx, Xxx Xxxx 00000 ("Ready");
INTELLIPHARMACEUTICS INC., an Ontario corporation, located at 000 Xxxxxxxxx
Xxxx Xxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxx Xxxxxx X0X 0X0, ("Holdco"); and
ISA ODIDI, XXXXX XXXXX, AND THE ISA ODIDI FAMILY TRUST, being collectively
all the shareholders of Holdco, (individually or collectively, the
"Shareholders");
WHEREAS, the Boards of Directors of Ready and IPC have each determined that
it is advisable and in the best interests of their respective shareholders for
Ready to acquire IPC by exchanging all the issued and outstanding common shares
of IPC (the "IPC Shares") for convertible preferred shares of Newco, a Nova
Scotia unlimited liability company to be formed from the merger or amalgamation
of IPC and a wholly owned subsidiary of Ready, which shall be convertible into
11,000,000 voting exchangeable shares of Newco (the "Newco Exchangeable
Shares"), upon the terms and conditions set forth herein (the "Acquisition");
the Newco Exchangeable Shares to be issued upon such amalgamation;
WHEREAS, the Shareholders own all the outstanding shares of Holdco, and
Holdco owns all the outstanding shares of IPC;
WHEREAS, Ready, Newco, and Holdco will enter into a Voting and Support
Agreement (the "Voting and Support Agreement") providing, among other things,
that each Newco Exchangeable Share shall be exchangeable into one share of Ready
Common Stock, $.001 par value (the "Ready Common Shares") at any time;
WHEREAS, Ready intends to offer for sale, on a "best efforts part or none"
basis, a minimum of two million (2,000,000) and a maximum of four million
(4,000,000) shares of its common stock at $2.00 per share ("Offering"), thereby
raising gross proceeds of from $4,000,000 to $8,000,000, pursuant to Rule 506 of
Regulation D of the Securities Act of 1933, as amended ("Securities Act"); and
WHEREAS, Ready and IPC have approved and adopted this Agreement as a plan
of reorganization under section 368(a)(1) of the Internal Revenue Code of 1986,
as amended (the "Code"), and constitute a tax deferred transfer in accordance
with the applicable provisions of the Income Tax Act (Canada)(the "Tax Act") to
the Shareholders;
NOW, THEREFORE, in consideration of the covenants set forth herein, it is
agreed as follows:
ARTICLE 1
DEFINITIONS
The following terms, as used herein, have the following meanings:
"$" and "Dollars" means United States dollars, except as otherwise expressly
indicated.
"GAAP" means generally accepted accounting principles, applied on a consistent
basis in Canada or the United States, as the case may be.
"Governmental Authority" means any United States (whether federal, territorial,
state, municipal or local), Canadian (whether federal, territorial, provincial,
municipal or local) or foreign government, governmental authority,
quasi-governmental authority, instrumentality, court, government or
self-regulatory organization, commission, tribunal or organization or any
regulatory, administrative or other agency, or any political or other
subdivision, department or branch of any of the foregoing.
"GST" means all goods and services taxes, sales taxes levied by the federal
government of Canada, value added taxes or multi-stage taxes and all provincial
sales taxes integrated with such federal taxes, assessed, rated or charged upon
the Corporation.
"Tax" means all taxes imposed of any nature including any United States (whether
federal, territorial, state or local), Canadian (whether federal, territorial,
provincial or local) or foreign income tax, alternative or add-on minimum tax,
profits or excess profits tax, franchise tax, gross income, adjusted gross
income or gross receipts tax, employment related tax (including employee
withholding or employer payroll tax or employer health tax), capital tax, real
or personal property tax or ad valorem tax, sales or use tax, excise tax, stamp
tax or duty, any withholding or back up withholding tax, value added tax, GST,
severance tax, prohibited tax, premiums tax, occupation tax, customs and import
duties, together with any interest or any penalty, addition to tax or additional
amount imposed by any Governmental Authority responsible for the imposition of
any such tax or in respect of or pursuant to any United States (whether federal,
territorial, state or local), Canadian (whether federal, territorial, provincial
or local) or other applicable law.
ARTICLE 2
ACQUISITION
2.1 Closing:
(a) The Acquisition contemplated by Article 2 of this Agreement shall
be effective within ten (10) business days after the completion of the Offering,
and the satisfaction and/or waiver of the conditions described in this Agreement
(the "Closing", or "Closing Date"). The Closing Date may be changed by mutual
agreement of the parties.
(b) After the Closing Date, and from time to time thereafter, the
parties to this Agreement shall execute such additional instruments and take
such other action as either party may reasonably request in order to effectuate
the transactions contemplated by this Agreement.
2.2 Prior to the Closing: Subject to the terms and conditions of this
Agreement, the following will occur prior to the Closing Date:
(a) IPC shall be continued (the "Continuance") from the Canada Business
Corporations Act (Canada) to the Companies Act (Nova Scotia) (the "Companies
Act");
(b) Ready shall form a wholly-owned unlimited liability company under
the Companies Act ("Ready Sub") with an authorized capital consisting of common
stock, preferred
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stock, and exchangeable stock; and
(c) Ready shall reincorporate in Delaware, and, effective the Closing
Date, change its name to IntelliPharmaCeutics, Corp.
2.3 At the Closing: Subject to the terms and conditions of this Agreement,
the following will occur on the Closing Date in the following order:
(a) IPC shall amalgamate with Ready Sub (the "Amalgamation") and
continue under the name IntelliPharmaCeutics Corp. as a Nova Scotia unlimited
liability company ("Newco") such that (i) the property of each of IPC and Ready
Sub shall continue to be the property of Newco; and (ii) Newco shall be
authorized to issue an unlimited number of common shares, an unlimited number of
convertible preferred shares, and an unlimited number of Newco Exchangeable
Shares, which shall have the rights, privileges, restrictions and conditions set
forth in the Articles of Amalgamation and the Companies Act.
(b) The Articles of Amalgamation of Newco shall be in a form agreeable
to all parties hereto. The by-laws of Newco shall be the by-laws of Ready Sub.
(c) The officers and directors of Ready at the Closing Date shall,
subject to Section 7.5, be those persons who were the officers and directors of
Ready and Newco immediately before the Closing Date.
(d) Ready shall receive one fully-paid and non-assessable share of
Newco common stock for each share of Ready Sub common stock held by Ready,
following which all Ready Sub common stock shall be cancelled. As a result,
Ready will be the holder of all outstanding shares of Newco common stock.
(e) Holdco shall exchange the IPC Shares for convertible preferred
shares of Newco, which, at the option of the holder, are convertible into
11,000,000 Newco Exchangeable Shares, following which all IPC Shares will be
cancelled;
(f) Pursuant to the Amalgamation, Ready will own all outstanding Newco
common stock, and Holdco will own all outstanding convertible preferred shares
of Newco;
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(g) Holdco will convert its convertible preferred shares of Newco into
11,000,000 Newco Exchangeable Shares;
(h) Following the Amalgamation and the Offering, Ready will have
reserved 11,000,000 shares of Ready common stock for issuance upon exercise of
the Put Agreement (as defined below), and will have outstanding (i) 6,900,000
shares of Ready common stock, consisting of (a) up to 1,800,000 shares held by
former Ready shareholders, subject to adjustment as provided in Section 7.1(c),
(b) between 2,000,000 and 4,000,000 shares of common stock held by investors in
the Offering, and (c) 100,000 shares held by a consultant to Ready, and (ii)
11,000,000 special voting shares held by Holdco, or as Holdco may direct.
Additionally, options and warrants to purchase up to 5,450,000 shares of Ready
common stock will be outstanding, inclusive of those issued under Section 7.2.
(i) Ready and Holdco shall enter into the Voting and Support Agreement;
(j) Ready and Holdco shall enter into a Put Agreement (the "Put
Agreement") whereby Holdco is entitled to put its Newco Exchangeable Shares to
Ready in exchange for Ready Common Shares;
(k) Each Newco Exchangeable Share shall, among other things:
(i) entitle the holder to voting rights;
(ii) entitle the holder to receive Canadian dollar equivalent
dividends equal to dividends paid on Newco common stock;
(iii) be retractable at the option of the holder, at his or her
election from time to time upon 30 days' written notice given by
such holder, for one Ready Common Share, plus an additional
amount for declared and unpaid dividends (the "Right of
Retraction"); and
(iv) entitle the holder, on Ready's liquidation, to receive in
exchange for each Newco Exchangeable Share one Ready Common
Share, plus an amount for declared and unpaid dividends.
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(l) Ready and Newco shall be entitled to deduct and withhold from the
consideration otherwise payable to any holder of Exchangeable Shares, including
any dividend payments in respect of the Exchangeable Shares, such amount as
Ready or Newco is required or permitted to deduct and withhold with respect to
such payment under the United States Internal Revenue Code, the Income Tax Act
(Canada) or any provision of state, provincial, local or foreign tax law.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF IPC
IPC represents and warrants as follows:
3.1 Organization and Standing. IPC is a corporation duly organized, validly
existing and in good standing under the federal laws of Canada and has all
requisite power, qualification and authority, corporate or otherwise, to own,
lease and operate its properties and assets and carry on its business as and in
the places where such properties and assets are now owned, leased or operated or
such business is now being conducted. IPC is in good standing in each and every
jurisdiction where its failure to qualify or to be in good standing would have a
material adverse effect on its financial condition, the conduct of its business
or the ownership of its assets.
3.2 Access to Due Diligence. IPC has provided to Ready, or allowed access,
to all corporate documents in its possession or control responsive to due
diligence requests made by Ready. IPC is not aware of any documents other than
those provided to Ready which would be responsive to Ready's due diligence
requests.
3.3 Authorization. IPC has the requisite power and authority to execute,
deliver and perform this Agreement. All necessary corporate proceedings of IPC
have been duly taken to authorize the execution, delivery and performance of
this Agreement. This Agreement has been duly authorized, executed and delivered
by IPC, constitutes the legal valid and binding obligation of IPC, and is
enforceable as to IPC in accordance with the terms hereof, except as such
enforceability may be limited by principles of public policy and subject to the
laws of general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies.
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3.4 No Further Action Needed. Except as disclosed in Schedule 3.4, or as
will be obtained prior to the Closing Date: (a) no consent, authorization,
approval, order, license, certificate, or permit of or from, or declaration or
filing with, any federal, state, local or other governmental authority or any
court or other tribunal is required by IPC for the execution, delivery and/or
performance of this Agreement, and (b) no consent of any party to any contract,
agreement, instrument, lease, license, arrangement, or understanding to which
IPC is a party, or to which it or any of its properties or assets are subject,
is required for the execution, delivery and/or performance of this Agreement,
other than has been obtained, or will be obtained, prior to the Closing Date.
3.5 No Conflict. The execution, delivery and performance of this Agreement
will not (i) violate, result in a breach of, conflict with, or entitle any party
to terminate or call a default under any term of any contract, agreement,
instrument, lease, license, arrangement, or understanding whereby IPC is a party
to, or (ii) violate or result in a breach of any term of IPC's Articles of
Incorporation (or other charter document) or by-laws; (iii) violate, result in a
breach of, or conflict with any law, rule, regulation, order, judgment, or
decree binding on IPC or to which any of its operations, business, properties or
assets are subject; and/or (iv) cause or give any person grounds to cause (with
or without notice, the passage of time, or both), the maturity of any liability
or obligation of IPC to be accelerated or will increase any such liability or
obligation.
3.6 Capitalization. The authorized capital stock of IPC consists of an
unlimited number of common shares, and an unlimited number of first preferred
shares, issuable in series, of which 90,000,000 common shares are issued and
outstanding. Each share of outstanding common stock is validly authorized,
validly issued and fully paid and non-assessable, has not been issued and is not
owned or held in violation of any preemptive rights of any stockholder. There
are no other voting or equity securities authorized or issued, nor any
authorized or issued securities convertible into voting stock, and no
outstanding subscriptions, warrants, calls, options, rights, commitments or
agreements by which IPC is bound, calling for the issuance of any additional
shares of common stock or any other voting or equity security.
3.7 Financial Condition. IPC will provide in accordance with Section 10.1,
true and complete (i) unaudited balance sheet from inception to September 30,
2003, and related unaudited statement of income and cash flow of IPC together
with all related notes thereto, and (ii) unaudited balance sheets for any
predecessor company for the years ended December 31, 2002 and 2001, and related
unaudited statements of income and cash flows of IPC together with all related
notes thereto (collectively, the "IPC Financial Statements"). The IPC Financial
Statements (i) were
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prepared in accordance with the books of account and other financial records of
IPC or its predecessor, (ii) present fairly the financial condition, results of
operations and cash flows of IPC or its predecessor as of the dates thereof and
for the periods covered thereby, (iii) have been prepared in accordance with
Canadian GAAP applied on a basis consistent with the past practices of IPC or
its predecessor, and (iv) include all adjustments (consisting only of normal
recurring accruals) that are necessary for a fair presentation of the financial
conditions of IPC or its predecessor, the results of operations and cash flows
of IPC or its predecessor as of the dates thereof or for the periods covered
thereby.
3.8 Lack of Material Changes.
(a) Except as described in Schedule 3.8 attached hereto, since
September 30, 2003 (the most recent unaudited financial statement date):
(i) There has not been any change having a "material adverse
effect" on IPC. The term "material adverse effect", as used in
this Agreement, means any circumstance, change, event,
transaction, loss, failure, effect or other occurrence that is,
or is reasonably likely to be materially adverse to the business,
operations, properties (including any intangible properties),
condition (financial or otherwise) assets, liabilities, results
of operations or prospects of IPC.
(ii) IPC has not (a) authorized, declared, paid, or effected any
dividend or liquidating or other distribution in respect of its
capital stock or any direct or indirect redemption, purchase, or
other acquisition of any such stock; (b) declared or effected any
split (forward or reverse) of its securities; and/or (c) amended
its Articles of Incorporation or Bylaws.
(iii) The operations and business of IPC have been conducted in
all respects only in the ordinary course.
(iv) IPC has not mortgaged, pledged or subjected to lien or other
encumbrances any of its respective assets, except as described in
Section 3.13.
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(v) IPC has not suffered an extraordinary loss (whether or not
covered by insurance) or waived any right of substantial value.
(vi) IPC has not sold or transferred any of its assets having a
book value of $100,000 or more, or canceled any debts or claims,
except, in each case, in the ordinary course of business.
(vii) IPC has not issued any common stock, preferred stock,
capital stock, bonds, warrants, options, rights or any other form
of corporate securities except as described in Section 3.6.
(viii) There has not been any strike, lockout, labor trouble or
any similar event or condition of any character which would have
a material adverse effect on IPC.
(ix) There has not been any increase in the compensation payable
or to become payable by IPC to any of its respective officers,
employees or agents, or any known payment or arrangement made to
or with any of such persons.
(x) IPC has not made any change in the method of accounting or
accounting practice or policy used by IPC, other than changes
required by Canadian GAAP.
(xi) IPC has not made any material changes in the customary
methods of operations of IPC, including practice and policies
relating to purchasing, inventory, marketing, selling or pricing.
(xii) IPC has not merged with, been merged with or entered into a
consolidation with or acquired (by purchase, merger,
consolidation, stock acquisition or otherwise) a substantial
portion of the assets of any entity or otherwise acquired assets
other than in the ordinary course and in accordance with past
practices.
(xiii) IPC has not agreed, whether in writing or otherwise, to
take any of the acts specified in this Article 3.8, except for
those contemplated by this
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Agreement.
(b) There is no fact known to IPC which could reasonably be expected to
have a material adverse effect on the financial condition, results of
operations, business, properties, assets, liabilities, or future prospects of
IPC which has not been disclosed to Ready; provided, however, that IPC expresses
no opinion as to political or economic matters of general applicability.
3.9 Absence of Undisclosed Liabilities. Except as described in Schedule 3.9
attached hereto, IPC has no liabilities or obligations of any nature (whether
absolute, accrued, contingent, or otherwise) including without limitation
liabilities for federal, state, local, or foreign taxes, liabilities to
customers or suppliers, direct or indirect, claims, losses, damages,
deficiencies (including deferred income tax and other net tax deficiencies),
costs, expenses, obligations, guarantees, or responsibilities, whether accrued,
absolute, or contingent, known or unknown, fixed or unfixed, liquidated or
unliquidated, secured or unsecured, (hereinafter collectively referred to as
"Liabilities") other than the following:
(a) Liabilities for which full provision and disclosure have been made
on the IPC Financial Statements; and/or
(b) other liabilities arising since September 30, 2003 and prior to the
Closing Date which have been incurred in the ordinary course of business and
which are not contained on the IPC Financial Statements and which are not
inconsistent with the representations and warranties of IPC contained in this
Agreement or any other provisions of this Agreement and do not individually
exceed $10,000 and in the aggregate exceed $100,000.
3.10 Taxes.
(a) Except as set forth in the IPC Financial Statements or Schedule
3.10, (i)(A) all material returns and reports in respect of federal, provincial,
and/or local Taxes ("Tax Returns" or "Return") required to be filed with respect
to IPC (including the federal income Tax Returns and provincial income Tax
Returns) have been timely filed; (B) all Taxes shown to be payable on such
Returns or otherwise due, and all assessments of Tax made against IPC with
respect to such Returns, have been paid; (C) all such Returns are true, correct,
and complete in all material respects, and (D) no adjustment relating to such
Returns has been proposed formally or informally by any Tax authority and, to
the knowledge of IPC, no basis exists for any such adjustment; (ii)
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there is not pending nor, to the knowledge of IPC, is there any threatened
actions or proceedings for the assessment or collection of Taxes against IPC;
(iii) there are no Tax liens on any assets of IPC; (iv) there are no outstanding
waivers or agreements extending the statute of limitations with respect to any
Tax to which IPC may be subject; (v) there are no outstanding requests for
information made by a taxing authority to IPC; (vi) IPC has not been advised by
any taxing authority of any proposed reassessments of the value (or other Tax
base) of any property owned by IPC that could increase the amount of a property
Tax to which IPC would be subject; (vii) IPC has made all payments of estimated
Taxes required to be made under federal or provincial Tax provisions; (viii) all
Taxes required to be withheld, collected or remitted by or with respect to IPC
have been timely withheld, collected or remitted, as the case may be, and, to
the extent required, have been paid to the relevant taxing authority, and (iv)
no power of attorney that is currently in force has been granted with respect to
any matter relating to Taxes that could affect IPC.
(b) Reserves and allowances have been provided on the IPC Financial
Statements that are adequate to satisfy all Liabilities for Taxes relating to
IPC for periods through the date of such financial statements (without regard to
the materiality thereof).
(c) IPC has delivered or made available to Ready correct and complete
copies of all federal and provincial Tax Returns of IPC since inception, and
correct and complete copies (or summaries) of all examination reports,
correspondence with taxing authorities, statements of deficiencies assessed
against or agreed to by IPC since IPC's inception.
(d) IPC has not been and is not currently required to file any Returns
with any taxation authority located in any jurisdiction outside Canada or
outside the province of Ontario.
(e) None of the Shareholders is a non-resident of Canada for the
purposes of the Income Tax Act (Canada) and none of them (or their asset
protection vehicles, as the case may be) shall be a non-resident of Canada for
the purposes of the Income Tax Act (Canada) at Closing.
3.11 Litigation and Claims. Except as described in Schedule 3.11 attached
hereto, there is no litigation, arbitration, claim, governmental,
administrative, regulatory or other proceeding or investigation (formal or
informal) pending, threatened, or in process (or any basis therefore known to
IPC) with respect to IPC, its capital stock, any transaction in IPC's
securities, the transactions contemplated by this Agreement, or any of IPC's
business, properties, or assets which would have a material adverse effect if
such proceeding was determined not in favor of IPC. IPC is not in violation of,
or in default with respect to, any law, rule, regulation, order, judgment, or
decree;
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nor is any action required to be taken in order to avoid such violation or
default. There are no judgments, citations, fines or penalties heretofore
asserted against IPC under any federal, state or local laws which remain unpaid
or which otherwise bind the assets of IPC and/or effect the capital stock of
IPC.
3.12 Assets. IPC has provided to Ready, or allowed access, to all documents
in IPC's possession or control responsive to Ready's request for documents
evidencing IPC's real and other properties and material assets including but not
limited to machinery, equipment, inventories and intangibles owned, leased, used
in its business and/or licensed to IPC (collectively the "Assets"). The Assets
constitute all such properties and assets which are necessary to conduct the
business as is currently conducted.
3.13 Title to Assets. Except as disclosed to Ready, IPC has good and
marketable titles to all of the Assets (except real and other properties and
assets as are held pursuant to leases as described in Schedule 3.13 attached
hereto), free and clear of all liens, mortgages, security interests, pledges,
charges, conditional sales agreements and encumbrances.
3.14 Lack of Restrictions. No real property owned, leased, licensed, or
used by IPC lies in the area which is, or to the knowledge of IPC will be,
subject to zoning, use, or building code restriction which would prohibit, and
no state of facts relating to the actions of another person or entity or its
ownership, leasing, licensing, or use of any real or personal property exists or
will exist which would prevent, the continued effective ownership, leasing,
licensing, or use of such real property in the business in which IPC is engaged
or the business in which they contemplate engaging.
3.15 Contracts and Other Instruments.
(a) IPC has provided to Ready, or allowed access, to all documents in
its possession or control which accurately and completely details all contracts,
licenses, instruments, powers of attorney and agreements material to the
business of IPC and to which IPC is a party, including but not limited to, all
agency agreements; supply agreements; manufacturer agreements; price protection
agreements; distributorship agreements; partnership agreements; fiduciary
agreements; license agreements; marketing agreements; commission agreements;
sales agency agreements; evidences of indebtedness; joint venture agreements;
employment agreements; labor agreements; salesmen commission agreements;
independent contractor agreements; contracts, agreements, arrangements, or
understandings with any stockholder, any director, officer, or
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employee, any relatives or affiliate of any stockholder or of any such director,
officer, or employee, or any other corporation or enterprise in which any
stockholder, any such director, officer, or employee, or any such relative or
affiliate then had or now has a 5% or greater equity or voting or other
substantial interest; government contracts; franchise agreements; management
agreements; advisory agreements; consulting agreements; advertising agreements;
warehousing agreements; engineering agreements; design agreements; major utility
agreements and any other agreements which involve the payment of in excess of
$25,000 prior to the date it can be terminated without penalty or premium; (all
of which contracts, licenses, instruments, power of attorneys and agreements are
hereinafter referred to collectively as the "Contracts").
(b) IPC is not in violation or breach of, or in default with respect to
complying with, any material provision of any such Contract thereof, and each
such Contract, is in full force and effect and is a legal, valid, and binding
obligation of IPC and is enforceable as to IPC in accordance with its respective
terms. Neither IPC nor any other party to any such Contract has given notice of
termination or taken any action inconsistent with the continuance thereof.
3.16 Leases. IPC has provided to Ready copies of all leases and subleases
to which it is a party ("Leases"). IPC enjoys peaceful and undisturbed
possession under all such Leases. All such Leases are legal, valid and binding
agreements and IPC is tenant or possessor in good standing thereunder, free of
any default or breach whatsoever and quietly enjoys the premises provided for
therein. Each rental and other payment due thereunder has been made; each act
required to be performed which, if not performed, will constitute a material
breach thereof has been duly performed; and no acts have been performed which
are prohibited to be performed thereunder, or which, if performed, would
constitute a material breach thereof. Each of such leases are in full force and
effect and there is not under any such lease any default or claim of default or
event which, with or without notice of the lapse of time or both would
constitute a breach or default thereunder.
3.17 Capital Projects. As of the date of this Agreement, IPC has not
undertaken any uncompleted capital projects the cost of completion of which
would exceed $100,000.
3.18 Environmental Laws
(a) Hazardous Materials. IPC has not operated any underground storage
tanks, and has no knowledge of the existence, without further inquiry, at any
time, of any underground storage tank (or related piping or pumps), at any
property that IPC has at any time owned,
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operated, occupied or leased. No Hazardous Materials (as defined below) are
present as a result of the actions or omissions of IPC, or, to IPC's knowledge,
without further inquiry, as a result of any actions of any third party or
otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water thereof, that IPC has at any time
owned, operated, occupied or leased.
(b) Hazardous Materials Activities. IPC has not transported, stored,
used, manufactured, disposed of, or released or exposed its employees or others
to Hazardous Materials in violation of any Environmental Laws as defined below
in effect on or before the Closing, nor has IPC disposed of, transported, sold,
or manufactured any product containing a Hazardous Material (any or all of the
foregoing being collectively referred to as "Hazardous Materials Activities") in
violation of any Environmental Laws (as defined below) or any rule, regulation,
treaty or statute promulgated by any Governmental Authority in effect prior to
or as of the date hereof to prohibit, regulate or control Hazardous Materials or
any Hazardous Material Activity.
(c) Permits. IPC currently holds all environmental approvals, permits,
orders, registrations, manifests, licenses, clearances and consents (the
"Environmental Permits") necessary for the conduct of the Hazardous Material
Activities of IPC and other businesses of IPC as and to the extent that such
activities and businesses are currently being conducted.
(d) Compliance with Environmental Laws. IPC, the operation of its
business, the property and assets owned, leased or used by the IPC and the use,
maintenance and operation thereof have been and are in material compliance with
all Environmental Laws. IPC has complied in all material respects with all
reporting and monitoring requirements under all Environmental Laws. IPC has not
received any notice of any non-compliance with any Environmental Laws, and IPC
has not ever been convicted of an offense for non-compliance with any
Environmental Laws or been fined or otherwise sentenced or settled such
prosecution short of conviction.
(e) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending, or to the
IPC's knowledge, threatened concerning any Environmental Permit, Hazardous
Material or any Hazardous Materials Activity of IPC. IPC is not aware of any
fact or circumstance which could involve IPC in any environmental litigation or
impose upon IPC any environmental liability.
(f) Definition of "Hazardous Materials". As used herein, "Hazardous
Materials" shall mean any substance that has been designated by any Governmental
Authority or
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by any Environmental Law to be a pollutant, radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including, without limitation,
PCBs, asbestos, oil and petroleum products, urea-formaldehyde and all substances
listed as a "hazardous substance," "hazardous waste," "hazardous material,"
"contaminants" or "toxic substance" or words of similar import, under any
Environmental Law.
(g) Definition of "Environmental Laws". As used herein, "Environmental
Laws" shall mean all applicable statutes, regulations, ordinances, by-laws, and
codes and all international treaties and agreements, now or hereafter in
existence in Canada (whether federal, provincial or municipal) and, to the
extent applicable to the conduct of IPC's business, in the United States
(whether federal, state or local) or any other jurisdiction in which IPC carries
on business relating to the protection and preservation of the environment,
occupational health and safety, product safety or product liability.
3.19 Compliance with Laws. IPC has provided to Ready, or allowed access to
all permits, licenses, orders, certificates, and approvals (collectively
"Licenses") of all federal, state or local governmental regulatory bodies
required for IPC to conduct its business as presently conducted; all such
Licenses, are in full force and effect and no suspension or cancellation of any
of them is pending or threatened, except where the absence to be so would not
have a material adverse effect; and none of such Licenses, will be adversely
affected by the consummation of the transaction contemplated by this Agreement.
3.20 Insurance. IPC has provided to Ready, or allowed access to all
insurance policies, of any kind held by IPC. Each such policy is valid and
enforceable; all premiums and other payments due from IPC on account of any such
policy have been paid, there is no act or failure to act of which IPC is aware
which has or might cause any such policy to be canceled or terminated.
3.21 Employee Matters and Benefit Arrangements. Except as described in
Schedule 3.21 attached hereto, IPC is not a party to any union representation or
labor contract. IPC has not received any notice from any labor union or group
of employees that such union or group represents or believes or claims it
represents or intends to represent any of their employees; no strike or work
interruption by any of their employees is planned, under consideration,
threatened or imminent; and IPC has not made any loan or given anything of
value, directly or indirectly, to any officer, official, agent or representative
of any labor union or group of employees. IPC is not delinquent in payments to
any of its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed by them to the date hereof or
amounts
15
required to be reimbursed to such employees. To the best of IPC's knowledge, in
the event of termination of the employment of any said employees, IPC will not
by reason of anything done prior to the Closing Date be liable to any of said
employees for "severance pay" or any other payments. IPC is in compliance with
all federal, state and local laws and regulations respecting labor, employment
and wages and hours; and there is no unfair labor practice complaint against
them pending before the National Labor Relations Board or any comparable
Canadian agency.
3.22 Liens on Assets. Except as described in Schedule 3.22 and the IPC
Financial Statements, IPC has good and marketable title to all of its respective
Assets and such Assets are not subject to any mortgages, pledges, liens,
conditional sales agreements, encumbrances and security interests or claims
except for minor imperfections in title and encumbrances, if any, which
singularly and in the aggregate are not substantial in amount and do not
materially detract from the value of the property subject thereto or impair the
use thereof by their business.
3.23 Questionable Payments. Neither IPC nor any director, officer, agent,
employee, nor other person associated with or acting on behalf of such entities
or individuals has, directly or indirectly: (i) used any corporate funds for
unlawful contributions, gifts, entertainment, or other unlawful payment to
foreign or domestic governmental officials or employees or to foreign or
domestic governmental officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; (ii) established or maintained any
unlawful or unrecorded fund of corporate monies or other assets; (iii) made any
false or fictitious entry on the books or records of IPC; (iv) made any bribe,
rebate, payoff, influence payment, kickback, or other unlawful payment; (v)
given any favor or gift which is not deductible for federal income tax purposes;
and/or (vi) made any bribe, kickback, or other payment of a similar or
comparable nature, whether lawful or not, to any person or entity, private or
public, regardless of form, whether in money, property, or services, to obtain
favorable treatment in securing business or to obtain special concessions, or to
pay for favorable treatment for business secured or for special concessions
already obtained.
3.24 Directors and Officers. A true and complete list as of the date of
this Agreement indicating IPC's directors and officers, each of whom has been
duly elected is as follows:
Name Position
---- --------
Isa Odidi CEO and Chairman
Xxxxx Xxxxx President, COO, and Director
16
3.25 Patents, Trademarks, Et Cetera. IPC has provided access to Ready and
its representatives to all patents, patent applications, trademark, trademark
applications, trade name, service xxxx, copyright, franchise, or other
intangible property or asset (all of the foregoing being herein called
"Intangibles"), owned by, licensed by and/or pending on behalf of IPC. All
Intangibles are in good standing and uncontested. With respect to Intangibles
owned by IPC, where appropriate, IPC shall provide a statement of cost, book
value and reserve for depreciation of each item for financial reporting
purposes, and with respect to Intangibles licensed by IPC from or to a third
party, a description of such license. There is no right under any Intangible
necessary to the business of IPC as presently conducted or as it contemplates
conducting, except such as are so disclosed. IPC has not infringed, is not
infringing, and has not received notice of infringement with asserted
Intangibles of others.
3.26 Accounts and Notes Receivable. All accounts and notes receivable
reflected on the IPC Financial Statements constitute valid and binding
obligations, have been collected or are and will be good and collectible, in
each case at the aggregate recorded amounts thereof without right of recourse,
defense, deduction, return of goods, counterclaim, offset, or set off on the
part of the obligor, and, if not collected, can reasonably be anticipated to be
paid within 60 days of the date incurred.
3.27 Inventories. All inventories of IPC included in the IPC Financial
Statements are good and marketable on a normal basis in the existing product
lines of IPC and the fees valued in accordance with Canadian GAAP. All
inventories of IPC included in the IPC Financial Statements are marketable and
fit for the particular purpose for which it is intended. There have been no
material changes in IPC's inventories since the date of IPC's Financial
Statements.
3.28 Bank Accounts. IPC has allowed Ready access to the names and address
of every bank and other financial institution in which IPC maintains an account
(whether checking, savings or otherwise), lock box or safe deposit box, and the
account numbers and names of persons having signing authority or other access
thereof.
3.29 Power of Attorney. There are no outstanding Powers of Attorney
executed on behalf of IPC.
3.30 Veracity of Statements. Neither this Agreement nor the representations
and warranties by IPC contained herein or in any documents, instruments,
certificates or schedules furnished pursuant hereto or in connection with the
transactions contemplated hereby contains any
17
untrue statement of a material fact or omits to state a material fact necessary
to make the statements or facts contained herein and therein not misleading.
There is no fact which has a material effect (to the knowledge of IPC) on the
business, operations, affairs, condition or prospects of IPC, its Assets, its
business, and/or the Shares which has not been set forth in this Agreement,
provided however that IPC express no opinion as to political or economic matters
of general applicability.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF HOLDCO
Holdco hereby represents and warrants as follows:
4.1 Organization and Authorization. Holdco is a corporation duly organized,
validly existing and in good standing under the laws of the Province of Ontario.
Holdco has the requisite power and authority to execute, deliver and perform
this Agreement. All necessary corporate proceedings of Holdco have been duly
taken to authorize the execution, delivery and performance of this Agreement.
This Agreement has been duly authorized, executed and delivered by Holdco,
constitutes the legal valid and binding obligation of Holdco, and is enforceable
as to Holdco in accordance with the terms hereof, except as such enforceability
may be limited by principles of public policy and subject to the laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
4.2 No Further Action Needed. No consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or filing with, any
federal, state, local or other governmental authority or any court or other
tribunal is required by Holdco for the execution, delivery and/or performance of
this Agreement.
4.3 No Conflict. The execution, delivery and performance of this Agreement
will not (i) violate or result in a breach of any term of Holdco's Articles of
Incorporation (or other charter document) or by-laws; or (ii) violate, result in
a breach of, or conflict with any law, rule, regulation, order, judgment, or
decree binding on Holdco or to which any of its operations, business, properties
or assets are subject.
18
4.4 Tax and Legal Matters. Holdco has had an opportunity to review with its
own tax and legal advisors the tax and legal consequences to it of the
Amalgamation and the transactions contemplated by this Agreement, including the
effective sale of its ownership interests in IPC to Ready. Holdco understands
that it (and not Ready) shall be responsible for its own tax liability, if any,
that may arise as a result of the Amalgamation or the transactions contemplated
by this Agreement. Holdco acknowledges that shareholders of an unlimited
liability company (such as Newco) have unlimited liability for the debts and
obligations of that company and that Holdco has been advised to seek its own
legal advice regarding the consequences of that unlimited liability on a person
who holds shares of an unlimited liability company directly or through a holding
company.
4.5 Ownership of IPC Shares. Holdco is the sole record and beneficial owner
of the 90,000,000 common shares of IPC, being all the issued and outstanding
shares of IPC, and such shares are not and will not at any time prior to or at
the Closing be subject to any lien or to any rights of first refusal of any
kind. Except as set forth in this Agreement or a schedule hereto, there are no
options, warrants, calls, rights, commitments or agreements of any character,
written or oral, to which Holdco is a party or by which it is bound obligating
it to issue, deliver, sell, repurchase or redeem, or cause to be issued,
delivered, sold, repurchased or redeemed, any IPC shares, or obligating it to
grant or enter into any such option, warrant, call, right, commitment or
agreement and there will be no such agreements at any time prior to or at the
Closing. Holdco has, or prior to the Closing will have, good and valid title to,
and has the sole right to transfer such IPC shares. Such interests constitute
all of IPC shares owned, beneficially or of record, by Holdco. Newco will
receive good and valid title to such IPC shares in accordance with the
transactions contemplated in Article 1, subject to no claim, or Lien retained,
granted or permitted by Holdco. Except as contemplated in this Agreement, Holdco
has not engaged in any sale or other transfer of its IPC shares in contemplation
of the Acquisition.
4.6. Non-U.S. Person. Holdco is not a "U.S. Person" as that term is defined
in Regulation S promulgated under the Securities Act and is not acquiring the
Newco Exchangeable Shares for the account or benefit of a U.S. Person. Under
Regulation S, with certain exceptions, "U.S. Person" means: (i) any natural
person resident in the U.S.; (ii) any partnership or corporation organized or
incorporated under the laws of the U.S.; (iii) any estate of which any executor
or administrator is a U.S. person; (iv) any trust of which any trustee is a U.S.
person; (v) any agency or branch of a foreign entity located in the U.S.; (vi)
any non discretionary account or similar account (other than an estate or trust)
held by a dealer or other fiduciary for the benefit or account of a U.S. person;
(vii) any discretionary account or similar account (other than an estate or
19
trust) held by a dealer or other fiduciary organized, incorporated, or (if an
individual) resident in the U.S.; and (viii) any partnership or corporation if:
(A) organized or incorporated under the laws of any foreign jurisdiction; and
(B) formed by a U.S. person principally for the purpose of investing in
securities not registered under the Securities Act, unless it is organized or
incorporated and owned by accredited investors (as defined in Rule 501 (a) under
the Securities Act) who are not natural persons, estates or trusts.
4.7 Veracity of Statements. The representations and warranties by Holdco
contained herein or in any documents, instruments, certificates or schedules
furnished by Holdco pursuant hereto or in connection with the transactions
contemplated hereby do not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements or facts
contained herein and therein not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each Shareholder represents and warrants separately as follows:
5.1 Formation and Status of Shareholder. If any Shareholder is an entity,
that Shareholder is duly formed and validly existing under the laws of its
jurisdiction of formation.
5.2 Due Authorization. This Agreement has been duly and validly executed
and delivered by, or on behalf of, the Shareholder and, assuming the due
authorization, execution and delivery by Ready, constitutes a valid and binding
obligation of the Shareholder enforceable against the Shareholder in accordance
with its terms except as such enforceability may be limited by principles of
public policy and subject to the laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies. All other
documents to be executed and delivered by the Shareholder will be duly executed
and delivered by the Shareholder and will be valid and binding obligations of
the Shareholder enforceable in accordance with their respective terms, except as
such enforceability may be limited by principles of public policy and subject to
the laws of general application relating to bankruptcy, insolvency and the
relief of debtors and rules of law governing specific performance, injunctive
relief or other equitable remedies.
20
5.3 No Violation. Neither the execution and delivery of this Agreement nor
the performance by the Shareholder of its, his or her obligations hereunder will
conflict with any agreement or commitment to which the Shareholder is a party,
or violate any statute or law or any judgment, decree, order, regulation or rule
of any court or other Governmental Authority applicable to the Shareholder.
There are no legal proceedings pending, or to the Shareholder's knowledge,
threatened against such Shareholder that would prevent consummation of the
transactions contemplated by this Agreement.
5.4 No Consent Needed. No consent, waiver, approval, order or authorization
of, or declaration, filing or registration with, any Governmental Authority or
any third party is required to be made or obtained by the Shareholder in
connection with the execution and delivery by the Shareholder of this Agreement,
or the performance by the Shareholder of his, her or its obligations hereunder
or the consummation by the Shareholder of the transactions contemplated herein.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF READY
Ready hereby represents and warrants as follows:
6.1 Organization and Standing. Ready is a corporation duly organized,
validly existing and in good standing under the laws of New York and has all
requisite power, qualification and authority, corporate or otherwise, to own,
lease and operate its properties and assets and carry on its business as and in
the places where such properties and assets are now owned, leased or operated or
such business is now being conducted. Ready is in good standing in each and
every jurisdiction where its failure to qualify or to be in good standing would
have a material adverse effect on its financial condition, the conduct of its
business or the ownership of its assets.
6.2 Access to Due Diligence. Ready has provided, or allowed access, to all
corporate documents in its possession or control responsive to due diligence
requests made by IPC, Holdco, and the Shareholders. Ready is not aware of any
documents other than those provided which would be responsive to such due
diligence requests.
6.3 Authorization. Ready has the requisite power and authority to execute,
deliver and perform this Agreement, and, by the Closing Date, will have the
requisite power and authority to
21
execute, deliver and perform the Voting and Support Agreement and the Put
Agreement. All necessary corporate proceedings of Ready have been duly taken to
authorize the execution, delivery and performance of this Agreement, and, by the
Closing Date, will have been taken to authorize the execution, delivery and
performance of the Voting and Support Agreement and the Put Agreement. This
Agreement has been, and by the Closing Date the Voting and Support Agreement and
the Put Agreement will have been, duly authorized, executed and delivered by
Ready, and constitute the legal valid and binding obligation of Ready, and is,
or will be as the case may be, enforceable as to Ready in accordance with the
terms hereof or thereof, except as such enforceability may be limited by
principles of public policy and subject to the laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.
6.4 No Further Action Needed. Except as disclosed in Schedule 6.4, or as
will be obtained prior to the Closing Date: (a) no consent, authorization,
approval, order, license, certificate, or permit of or from, or declaration or
filing with, any federal, state, local or other governmental authority or any
court or other tribunal is required by Ready for the execution, delivery and/or
performance of this Agreement, and (b) no consent of any party to any contract,
agreement, instrument, lease, license, arrangement, or understanding to which
Ready is a party, or to which it or any of its properties or assets are subject,
is required for the execution, delivery and/or performance of this Agreement,
the Voting and Support Agreement and the Put Agreement, other than has been
obtained, or will be obtained, prior to the Closing Date.
6.5 No Conflict. The execution, delivery and performance of this Agreement,
the Voting and Support Agreement and the Put Agreement will not (i) violate,
result in a breach of, conflict with, or entitle any party to terminate or call
a default under any term of any contract, agreement, instrument, lease, license,
arrangement, or understanding whereby Ready is a party to, or (ii) violate or
result in a breach of any term of Ready's Articles of Incorporation (or other
charter document) or by-laws; (iii) violate, result in a breach of, or conflict
with any law, rule, regulation, order, judgment, or decree binding on Ready or
to which any of its operations, business, properties or assets are subject;
and/or (iv) cause or give any person grounds to cause (with or without notice,
the passage of time, or both), the maturity of any liability or obligation of
Ready to be accelerated or will increase any such liability or obligation.
22
6.6 Capitalization.
(a) At the Closing Date, the authorized capital stock of Ready will be
sufficient to permit the Closing with the share issuances contemplated by
Section 2.3(h) and such additional authorized shares as are agreed to by Ready
and IPC. Each share of Ready Common Stock is, or will be, validly authorized,
validly issued, fully paid and non-assessable, will not have been issued, and
will not be owned or held in violation of any preemptive rights of any
stockholder. There are no other voting or equity securities convertible into
voting stock, and no outstanding subscriptions, warrants, calls, options,
rights, commitments or agreements by which Ready is bound, calling for the
issuance of any additional shares of common stock or any other voting or equity
security.
(b) The shares of Ready Common Stock to be issued pursuant to the
Exchangeable Shares and the Put Agreement will be validly reserved, and, when
issued in accordance with, the terms of the Exchangeable Shares and the Put
Agreement will be duly authorized, validly issued, fully paid and
non-assessable, free and clear of any Liens other than any Liens created by the
holders thereof.
6.7 Acquisition Subsidiary. As of the Closing, Ready Sub will not have
engaged in or transacted any business or activity of any nature other than
activities related to their corporate organization and as contemplated by this
Agreement. Immediately prior to the Closing, Ready Sub will have no assets
(other than shares of Ready) or liabilities or obligations of any kind
whatsoever, and other than as contemplated in this Agreement and the Related
Agreements, and will not be a party to any other contract, agreement or
undertaking of any nature.
6.8 Financial Condition. Ready will provide in accordance with Section
10.1, true and complete audited balance sheets of Ready for each of the last
three fiscal years ended January 31, 2003, 2002, and 2001 and the related
audited statement of income and cash flows of Ready together with all related
notes thereto, accompanied by the report thereon of Ready's auditors
(collectively the "Ready Financial Statements"). The Ready Financial Statements
(i) were prepared in accordance with the books of account and other financial
records of Ready, (ii) present fairly the financial condition, results of
operations and cash flows of Ready as of the dates thereof and for the periods
covered thereby, (iii) have been prepared in accordance with United States
general accepted accounting principles applied on a basis consistent with the
past practices of Ready and (iv) include all adjustments (consisting only of
normal recurring accruals) that are necessary for a fair presentation of the
financial conditions of Ready, the results of operations and
23
cash flows of Ready as of the dates thereof or for the periods covered thereby.
6.9 Lack of Material Changes.
(a) Since January 31, 2003 (the most recent audited financial statement
date):
(i) There has not been any change having a "material adverse
effect" on Ready. The term "material adverse effect", as used in
this Agreement, means any circumstance, change, event,
transaction, loss, failure, effect or other occurrence that is,
or is reasonably likely to be materially adverse to the business,
operations, properties (including any intangible properties),
condition (financial or otherwise) assets, liabilities, results
of operations or prospects of Ready.
(ii) Ready has not (a) authorized, declared, paid, or effected
any dividend or liquidating or other distribution in respect of
its capital stock or any direct or indirect redemption, purchase,
or other acquisition of any such stock; (b) declared or effected
any split (forward or reverse) of its securities; and/or (c)
amended its Certificate of Incorporation or Bylaws.
(iii) The operations and business of Ready have been conducted in
all respects only in the ordinary course.
(iv) Ready has not mortgaged, pledged or subjected to lien or
other encumbrances any of its respective assets.
(v) Ready has not suffered an extraordinary loss (whether or not
covered by insurance) or waived any right of substantial value.
(vi) Ready has not sold or transferred any of its assets having a
book value of $20,000 or more or canceled any debts or claims,
except, in each case, in the ordinary course of business.
(vii) Ready has not issued any common stock, preferred stock,
capital stock, bonds, warrants, options, rights or any other form
of corporate securities.
24
(viii) There has not been any strike, lockout, labor trouble or
any similar event or condition of any character which would have
a material adverse effect on Ready.
(ix) There has not been any increase in the compensation payable
or to become payable by Ready to any of its respective officers,
employees or agents, or any known payment or arrangement made to
or with any of such persons.
(x) Ready has not made any change in the method of accounting or
accounting practice or policy used by Ready, other than changes
required by U.S. GAAP.
(xi) Ready has not made any material changes in the customary
methods of operations of Ready, including practice and policies
relating to purchasing, inventory, marketing, selling or pricing.
(xii) Ready has not merged with, been merged with or entered into
a consolidation with or acquired (by purchase, merger,
consolidation, stock acquisition or otherwise) a substantial
portion of the assets of any entity or otherwise acquired assets
other than in the ordinary course and in accordance with past
practices.
(xiii) Ready has not agreed, whether in writing or otherwise, to
take any of the acts specified in this Article 6.9, except for
those contemplated by this Agreement.
(b) There is no fact known to Ready which will have a material adverse
effect or in the future (as far as Ready can foresee) may have a material
adverse effect on the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of Ready which has not been
disclosed to Ready in this Agreement; provided, however, that Ready expresses no
opinion as to political or economic matters of general applicability.
25
6.10 Absence of Undisclosed Liabilities.
(a) Ready has no liabilities or obligations of any nature (whether
absolute, accrued, contingent, or otherwise) including without limitation
liabilities for federal, state, local, or foreign taxes, liabilities to
customers or suppliers, direct or indirect, claims, losses, damages,
deficiencies (including deferred income tax and other net tax deficiencies),
costs, expenses, obligations, guarantees, or responsibilities, whether accrued,
absolute, or contingent, known or unknown, fixed or unfixed, liquidated or
unliquidated, secured or unsecured, (hereinafter collectively referred to as
"Liabilities") other than the following:
(i) Liabilities for which full provision and disclosure have been
made in the Ready Financial Statements; and/or
(ii) other liabilities arising since January 31, 2003 and prior
to the Closing Date and which are not inconsistent with the
representations and warranties of Ready contained in this
Agreement or any other provisions of this Agreement and do not
individually exceed $20,000 and in the aggregate exceed $50,000.
6.11 Taxes.
(a) Except as set forth in the Ready Financial Statements
(i)(A) all material returns and reports in respect of federal, local, state
and/or local Taxes ("Tax Returns" or "Return") required to be filed with respect
to Ready (including the consolidated federal income Tax Returns and state and
local income or franchise Tax Returns that include Ready or any Subsidiary on a
consolidated, combined, or unitary ("combined") basis) have been timely filed;
(B) all Taxes shown to be payable on such Returns or otherwise due, and all
assessments of Tax made against Ready with respect to such Returns, have been
paid; (C) all such Returns are true, correct, and complete in all material
respects, and (D) no adjustment relating to such Returns has been proposed
formally or informally by any Tax authority and, to the best knowledge of Ready,
no basis exists for any such adjustment; (ii) there is not pending nor, to the
best knowledge of Ready, is there any threatened actions or proceedings for the
assessment or collection of Taxes against Ready; (iii) there are no Tax liens on
any assets of Ready; (iv) there are no outstanding waivers or agreements
extending the statute of limitations with respect to any Tax to which Ready may
be subject; (v) there are no outstanding requests for information made by a
taxing authority to Ready; (vi) Ready has not been advised by any taxing
authority of any proposed reassessments of the
26
value (or other Tax base) of any property owned by Ready that could increase the
amount of a property Tax to which Ready would be subject; (vii) Ready has made
all payments of estimated Taxes required to be made under the Code and all state
or local Tax provisions; (viii) all Taxes required to be withheld, collected or
deposited by or with respect to Ready have been timely withheld, collected or
deposited, as the case may be, and, to the extent required, have been paid to
the relevant taxing authority, and (iv) no power of attorney that is currently
in force has been granted with respect to any matter relating to Taxes that
could affect Ready.
(b) Reserves and allowances have been provided on the Ready Financial
Statements that are adequate to satisfy all Liabilities for Taxes relating to
Ready for periods through the date of such financial statements (without regard
to the materiality thereof).
(c) Ready has delivered or made available to IPC correct and complete
copies of all federal, state and local Tax Returns of Ready for periods ending
on or after Ready's 2000 year end, and correct and complete copies (or
summaries) of all examination reports, correspondence with taxing authorities,
statements of deficiencies assessed against or agreed to by Ready since Ready's
2000 year end and any formed or informed tax sharing arrangements to which Ready
is a party.
6.12 Litigation and Claims. There is no litigation, arbitration, claim,
governmental, administrative, regulatory or other proceeding or investigation
(formal or informal) pending, threatened, or in process (or any basis therefore
known to Ready) with respect to Ready, its capital stock, any transaction in
Ready's securities, the transactions contemplated by this Agreement, or any of
Ready's business, properties, or assets which would have a material adverse
effect if such proceeding was determined not in favor of Ready. Ready is not in
violation of, or in default with respect to, any law, rule, regulation, order,
judgment, or decree; nor is any action required to be taken in order to avoid
such violation or default. There are no judgments, citations, fines or penalties
heretofore asserted against Ready under any federal, state or local laws which
remain unpaid or which otherwise bind the assets of Ready and/or effect the
capital stock of Ready.
6.13 Questionable Payments. Neither Ready nor any director, officer, agent,
employee, nor other person associated with or acting on behalf of such entities
or individuals has, directly or indirectly: (i) used any corporate funds for
unlawful contributions, gifts, entertainment, or other unlawful payment to
foreign or domestic governmental officials or employees or to foreign or
domestic governmental officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; (ii) violated any provision of the
Foreign Corrupt Practices Act
27
of 1977; (iii) established or maintained any unlawful or unrecorded fund of
corporate monies or other assets; (iv) made any false or fictitious entry on the
books or records of Ready; (v) made any bribe, rebate, payoff, influence
payment, kickback, or other unlawful payment; (vi) given any favor or gift which
is not deductible for federal income tax purposes; and/or (viii) made any bribe,
kickback, or other payment of a similar or comparable nature, whether lawful or
not, to any person or entity, private or public, regardless of form, whether in
money, property, or services, to obtain favorable treatment in securing business
or to obtain special concessions, or to pay for favorable treatment for business
secured or for special concessions already obtained.
6.14 Directors and Officers. A true and complete list as of the date of
this Agreement indicating Ready's directors and officers, each of whom has been
duly elected is as follows:
Name Position
---- --------
Xxxxxx Will President and Director
Xxxxxx Xxxxxxxx Secretary and Director
6.15 Securities Filings.
(a) Ready was incorporated in New York on February 23, 1988 as a
"blank check" company to seek and acquire a suitable business which Ready would
operate directly or as a subsidiary. Ready has no operations and no intention to
run an active business prior to a combination with another enterprise. Ready
completed an initial public offering on January 9, 1989 under the Securities
Act. Ready has not timely filed required reports, forms or documents with the
SEC under the Securities Act and/or the Exchange Act, and any state securities
bureaus during the last two years. Ready will be required to file a registration
statement with the SEC in order to resume timely filing under the Exchange Act.
(b) Ready has not received notification from the SEC, the National
Association of Securities Dealers Inc. and/or any state securities bureaus that
any investigation (informal or formal), inquiry or claim is pending, threatened
or in process against Ready and/or relating to any of Ready's securities.
6.16 Inactivity of Ready. Ready has not engaged in any business activities,
other than as described in Schedule 6.16 attached hereto. Except as described in
the Ready Financial Statements, Ready has no material assets or property, and is
not a party to any contracts, insurance
28
policies, leases or other agreements. Ready is party to no Contracts (as defined
in Section 3.15), has undertaken no capital projects, is in compliance with all
federal, state and local laws and rules, and has, and has had, no employees.
Ready does not own or utilize, nor has it ever owned or utilized, any real
property. Ready has good and marketable title to all of its assets, free and
clear of all liens, mortgages, security interests, pledges, charges, conditional
sales agreements and encumbrances. The liabilities of Ready do not exceed, in
the aggregate $20,000. Ready is an inactive corporation as that term is defined
in Regulation S-X of the Securities Act and Rule 3-11 promulgated thereunder.
6.17 Veracity of Statements. Neither this Agreement nor the representations
and warranties by Ready contained herein or in any documents, instruments,
certificates or schedules furnished pursuant hereto or in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements or facts
contained herein and therein not misleading. There is no fact which has a
material effect, or in the future may have a material adverse effect (to the
knowledge of Ready) on the business, operations, affairs, condition or prospects
of Ready, its assets, its business, and/or the capital stock which has not been
set forth in this Agreement, provided however that Ready express no opinion as
to political or economic matters of general applicability.
ARTICLE 7
ADDITIONAL AGREEMENTS
The obligations of the parties are conditioned, in addition to the delivery
of the consideration described in Article 2 hereof and compliance with the
requirements of Articles 10 and 11 hereof, upon consummation of the following
additional agreements and commitments:
7.1 Financing.
(a) Prior to the Closing Date, Ready will prepare an offering
memorandum (the "Memorandum") covering a proposed private financing seeking to
raise gross proceeds of $8,000,000 ("Offering"). The Memorandum will be subject
to approval by any placement agent and its counsel in all respects. The Offering
will consist of a minimum of 2,000,000 and a maximum of 4,000,000 shares of
Ready Common Stock at $2.00 per share, and will be offered on a "best efforts
part or none" basis. The Offering shall provide for the payment of an 8%
29
commission on all sales in the Offering, and the issuance of one warrant for
every ten shares sold in the Offering (the "Placement Agent Warrants"). Each
Placement Agent Warrant shall be exercisable at $3.00 per share for a period of
three years from the Closing Date. Ready has agreed, at its sole expense, to
include the Common Stock and Common Stock underlying the Placement Agent
Warrants issued pursuant to the Offering in a registration statement
("Registration Statement") filed by Ready under the Securities Act, within 90
days from the Closing Date;
(b) At the completion of the Offering, Ready shall escrow the proceeds
of the Offering for a period of time not to exceed ten (10) business days after
completion of the Offering. During this time, all parties will file, transact,
and execute any applicable corporate documents as set forth in this Agreement.
(c) Should Ready sell in excess of 2,000,000 shares, but sell less than
3,000,000 shares in the Offering, Ready shall recapitalize to reduce the amount
of outstanding shares of Ready common stock prior to the Closing Date by an
amount equal to the percent amount of unsold shares below 3,000,000. For
example, if 2,400,000 shares are sold in the Offering, 600,000 shares would be
considered unsold. These unsold shares represent 20% of 3,000,000, and Ready
would therefore reduce its 1,800,000 outstanding shares by 20% to 1,440,000.
7.2. At or prior to the Closing Date, Ready shall issue 5,000,000 stock
options to Dr. Isa Odidi and Xx. Xxxxx Xxxxx jointly, or to such entity as they
may then direct in their sole discretion at the time of such issuance. The
options shall vest as follows: 500,000 exercisable at $2.00 upon acceptance of a
drug filing with the Food and Drug Administration ("FDA"), up to five (5) drugs,
and 500,000 exercisable at $2.00 upon FDA approval of a drug, up to five (5)
drugs.
7.3 At or prior to the Closing Date, Ready shall authorize and ratify an
incentive stock option plan, reserving 1,500,000 shares for issuance under the
plan.
7.4 At or prior to the Closing Date, each of Bridge Ventures, Inc., Saggi
Capital Corp, Carriages Consulting, Xxxxxx Xxxxxxxx, and Baji Xxxxxxxxx shall
have entered into a lockup agreement with Ready, pursuant to which each agrees
not to sell, pledge, hypothecate, or otherwise dispose of more than 20% of their
Ready capital stock per year during the two year period following the Closing
Date.
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7.5 At or prior to the Closing Date, (a) Ready shall elect one new member
to the Ready Board of Directors (the "Ready Board"), subject to prior approval
by IPC as to industry affiliations, experience, and qualifications, (b) Ready
shall elect four additional members to the Ready Board, nominated by IPC, one or
more of whom shall be the chairman or co-chairman, (c) other than the aforesaid
five new members, all other Ready directors and officers shall resign their
positions with Ready and shall deliver general releases in favor of Ready
releasing any and all claims which they may have against Ready, and (e) the new
Ready Board shall, if the subscription to the Offering is between $4,000,000 and
$6,000,000, elect one additional independent board member, subject to prior
approval by IPC as to industry affiliations, experience, and qualifications, and
if the subscription to the Offering is between $6,000,000 and $8,000,000, elect
two additional independent board members, subject to prior approval by IPC as to
industry affiliations, experience, and qualifications. In addition, the new
Board of Directors will appoint the officers of Ready at or prior to the Closing
Date.
7.6 Subsequent to the Closing Date, the presently outstanding obligations
owed by IPC to the Shareholders in the amount of approximately CDN $2,100,000,
or US $1,565,200, shall convert to a promissory note. The note shall be payable
from 25% of IPC quarterly revenue, pro rata, until satisfied.
7.7 The parties hereto agree that, subsequent to the Closing Date, Ready
and Newco shall use their best efforts to appoint a new Chief Executive Officer
who has experience with a U.S. public company, and has suitable contacts and
experience in the pharmaceutical and U.S. securities industries.
ARTICLE 8
TERMINATION OF AGREEMENT
8.1 Conditions of Termination. This Agreement may be terminated prior to
the Closing Date under the following conditions:
(a) by mutual consent of Ready and IPC;
(b) by either IPC or Ready if the Offering, resulting in a minimum of
2,000,000 shares and gross proceeds of $4,000,000, has not been completed the
later of April 15, 2004 or 45
31
days from completion of the private placement memorandum, subject to an
extension at IPC's discretion;
(c) by IPC if (i) Ready materially breaches a representation, warranty,
covenant or other provision of the Agreement and fails to cure such breach
within 30 days of receiving notice of the breach, (ii) any of the conditions
precedent to IPC's obligation to close the Acquisition has not been satisfied or
satisfaction is, or becomes, impossible, or (iii) upon the happening of any
occurrence or event that has a material adverse effect upon the business or
assets of Ready;
(d) by Ready if (i) IPC materially breaches a representation, warranty,
covenant or other provision of the Agreement and fails to cure such breach
within 30 days of receiving notice of the breach, or (ii) any of the conditions
precedent to Ready's obligation to close the Acquisition has not been satisfied
or satisfaction is, or becomes, impossible or (iii) upon the happening of any
occurrence or event that has a material adverse effect upon the business or
assets of IPC.
8.2 Effect of Termination. If the Agreement is terminated pursuant to the
conditions set forth above, all further obligations of the parties under the
Agreement will terminate, except that any obligations with respect to payment of
the break-up fee, as described below, will survive.
8.3 Breakup-up Fees. In the event of the termination of the Agreement by
either Ready or IPC, the Agreement shall become void and have no effect.
However, (a) if IPC terminates the Agreement because (i) the shareholders of IPC
have failed to approve the transactions contemplated hereby, or (ii) IPC has
approved a superior acquisition proposal or financing on terms more favorable to
IPC, as determined by IPC, acting reasonably, than the terms of the Offering
within six months from the date of the Agreement, assuming Ready had satisfied
its conditions under the Agreement prior to such termination by IPC, then IPC
must pay to Ready a termination fee equal to $100,000 in cash plus fees and
expenses incurred by Ready, not to exceed $100,000; or (b) if Ready terminates
the Agreement because (i) the shareholders of Ready have failed to approve the
transactions contemplated hereby, or (ii) Ready has approved a superior
acquisition proposal or financing on terms more favorable to Ready than the
terms of the Offering within six months from the date of the Agreement, assuming
IPC had satisfied its conditions under the Agreement prior to such termination
by IPC, then Ready must pay to IPC a termination fee equal to $100,000 in cash
plus fees and expenses incurred by IPC, not to exceed $100,000, and in such
event, no termination fee shall be payable by IPC, notwithstanding the
provisions of this
32
Section 8.3, including, for greater certainty, in the event that IPC
subsequently approves a superior acquisition or funding.
ARTICLE 9
CONDUCT OF BUSINESS PENDING THE ACQUISITION
9.1 Conduct of Business Pending Acquisition. Each party ("Promisor")
covenants to the others (collectively, "Promisee") and agrees that, prior to the
Closing Date, except as (i) otherwise consented to in writing by Promisee; (ii)
permitted or contemplated by this Agreement; and/or (iii) legally required, by
existing agreements or as necessary for the continuance of their respective
operations:
(a) Promisor shall conduct its operations only in the ordinary and
usual course consistent with past practice and, to the extent consistent
therewith, Promisor shall use its commercially reasonable best efforts
consistent with prudent business judgment to preserve its business organization
intact and maintain its existing relations with customers, supplies, employees
and business partners;
(b) Promisor shall not (i) sell or pledge or agree to sell or pledge or
issue any option, warrant, conversion or other right to acquire any stock owned
by it; (ii) amend its certificate of incorporation or by-laws or change the
number of directors; (iii) split, combine or reclassify the outstanding shares
of Common Stock or any other shares of its capital stock; or (iv) declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property with respect to the Shares or any other shares of its capital stock;
(c) Promisor shall not (i) issue or agree to issue any additional
shares of its capital stock of any class; any securities convertible into shares
of any class of capital stock, or options, warrants, conversion or other rights
of any kind to acquire any shares of its capital stock of any class; (ii) sell,
transfer, lease or otherwise encumber any assets or incur any indebtedness for
borrowed money other than in the ordinary course of business consistent with
past practice, and that, with respect to incurrence of indebtedness, is
prepayable without penalty or premium; (iii) acquire (by merger, consolidation,
acquisition of stock, purchase of substantial assets or otherwise) any
corporation, partnership or other business organization or enterprise; (iv)
redeem purchase or acquire, or offer to acquire, any of its capital stock; (v)
purchase or become liable for
33
any items of property, plant, equipment, machinery or other fixed or capital
stock; (v) increase the salary, compensation and/or benefits of any employee;
(v) purchase or become liable for any items of property, plant, equipment,
machinery or other fixed or capital assets for any amount in excess of $10,000
in any single transaction or series of related transactions, except that
Promisor may purchase in the ordinary course of business, or (vi) enter into or
modify in any material respect any contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(d) Promisor shall not adopt, or amend in any material respect, any
collective bargaining, bonus, profit sharing, compensation, stock option,
pension, retirement, deferred compensation, employment or other plan, agreement,
trust, fund or arrangement for the benefit of employees;
(e) No reduction shall be made by Promisor in the scope or nature or
amount of any material insurance coverage; provided however, that, with respect
to insurance coverage that lapses, expires or is otherwise terminated by the
insurer, Promisor shall, to the maximum extent reasonably practicable and renew
such insurance and comparable or greater coverage;
(f) Promisor shall not take any action or fail to take any action if
such action or failure to act would cause any of its representations and
warranties contained in this Agreement to be false in any respect on and as of
the Closing Date;
(g) Promisor shall not agree to or commit to take any of the actions
prohibited in this Article 9.
ARTICLE 10
COVENANTS OF IPC AND READY
Promisor further covenants to Promisee as follows:
10.1 On or before the Closing Date, Promisor shall deliver to Promisee the
financial statements set forth in Sections 3.7 and 6.8 herein (collectively the
"Financial Statements"). The Financial Statements (i) will be prepared in
accordance with the books of account and other financial records of Promisor
(ii) present fairly the financial condition, results of operations and cash
flows of Promisor as of the dates thereof and for the periods covered thereby
(iii) will have
34
been prepared in accordance with Canadian or U.S. GAAP, as the case may be,
applied on a basis consistent with the past practices of Promisor and (iv) will
include all adjustments (consisting only of normal recurring accruals) that are
necessary for a fair presentation of the financial conditions of Promisor, the
results of operations and cash flows of Promisor as of the dates thereof or for
the periods covered thereby.
10.2 For the purpose of Promisee conducting a "Due Diligence" investigation
of Promisor, Promisor shall afford to Promisee, its accountants, counsel and
other representatives reasonable access during normal business hours to all of
such parties properties, plants, offices, warehouses and other facilities,
books, contracts, commitments and records (including but not limited to tax
returns) and all other information concerning the business and personnel of
Promisor as Promisee may reasonably request, and, during such period, Promisor
shall furnish to Promisee promptly to each report, schedule and other document
filed by it during such period pursuant to the requirements of federal, state
and/or local laws rules or regulations. Promisee agrees that all information so
provided and marked as "Confidential" will be treated as such, that Promisee
will not make any use of such information, other than for the purpose of
consummating the transactions in this Agreement, unless the same was previously
in Promisee's possession, or became available to Promisee through
non-confidential means or shall otherwise come into the public domain.
10.3 Subject to the terms and conditions herein provided and the fiduciary
duties of the Board of Directors of Promisor, Promisor agrees to use its best
efforts consistent with prudent business judgment to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable under applicable law to consummate and make effective the transactions
contemplated by this Agreement, including using its best efforts consistent with
prudent business judgment to lift or rescind any injunction, restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, to obtain all necessary waivers, consents,
approvals and authorizations and to effect all necessary registrations and
filings under federal, state and/or local laws, rules, and regulations necessary
to consummate this Agreement.
10.4 The representations and warranties of Promisor contained in this
Agreement and in the schedules hereto shall be true and correct in all material
respects as of the Closing Date. Promisor shall give Promisee prompt notice of
any material change in any of the information contained in the representations
and warranties of Promisor, the schedules hereto or the documents furnished by
such entities in connection herewith which occurs prior to the Closing Date.
Upon the happening of any occurrence or event prior to the Closing Date, which
shall have a material
35
adverse effect upon the business or assets of Promisor, Promisee shall have the
right to terminate this Agreement by written notice, and upon such termination,
no party shall have any further liability or obligation under this Agreement
except as otherwise provided therein.
10.5 The Board of Directors of Promisor shall, at or prior to the execution
of this Agreement, prepare and present to Promisee unanimous consents of all of
Promisor's Board of Directors evidencing the approval of this Agreement and the
transactions contemplated hereby.
10.6 Promisor will, prior to the Closing Date, comply with all laws
affecting operation of its respective businesses in all material respects, will
not operate said businesses other than in the ordinary course, and will give
notice to Promisee of any event or circumstance not in the ordinary course which
materially affect Promisor, which action is not otherwise contemplated by this
Agreement.
10.7 Promisor shall use its best efforts to take or cause to be taken all
action and do or cause to be done all things necessary and proper to consummate
the transactions contemplated by this Agreement, including, without limitation,
to obtain all consents, approvals and authorizations of third parties, to make
all filings with and give all notices to third parties which may be necessary or
required in order to effectuate the transactions contemplated hereby.
10.8 Promisor will cause itself to conduct its respective affairs so that
at the Closing Date no representation or warranty contained in this Agreement
and schedules will be inaccurate, no covenant, commitment or agreement of
Promisor herein will be breached, and no condition in this Agreement will remain
unfulfilled by reason of the actions or omissions of Promisor. Except as
otherwise requested by Promisee in writing, Promisor will use its best efforts
to preserve Promisor's business operation as such business is presently operated
upon the signing of this Agreement, to keep available the services of its
present personnel, to preserve in full force and effect all of their respective
Contracts and Leases and to preserve the goodwill of their respective suppliers,
customers, and others having business relations with them as the same exist upon
the signing of this Agreement. Unless this Agreement is rightfully terminated,
Promisor will cause itself to conduct its business and operation in all respects
only in the ordinary course.
36
ARTICLE 11
CONDITIONS OF ACQUISITION
11.1 The obligations of IPC to close hereunder shall be subject to the
fulfillment and satisfaction, prior to or at the Closing Date, of the following
conditions or the written waiver thereof by IPC:
(a) Additional Agreements. All of the agreements and commitments set
forth in Article 7 of this Agreement shall be consummated, including but not
limited to the completion of the Offering described in Article 7.1, and all
representations, warranties and covenants of Ready contained in such Article
shall be true and accurate.
(b) Effectiveness of Amalgamation. The Amalgamation shall be deemed
effective pursuant to applicable Law.
(c) Financial Statements. The Ready Financial Statements shall contain
financial results and other information acceptable to IPC.
(d) Due Diligence. IPC shall be satisfied, in its respective
discretion, with the results of "Due Diligence" and "Environmental"
investigations of Ready's business, books, records, liabilities, properties,
assets and other matters.
(e) Board Approval. The Board of Directors of Ready shall have approved
the transactions contemplated by this Agreement.
(f) Representations and Warranties. The representations and warranties
of Ready in this Agreement shall be true and correct in all material respects
when made and shall be true and correct in all material respects on and as of
the Closing Date.
(g) Delivery of Officers' Certificate. A Certificate signed by the
president of Ready shall be delivered to IPC certifying that each of the
warranties and representations made by Ready set forth in this Agreement are
materially true and accurate as of the Closing Date and that no event or
occurrence has transpired as of the Closing Date which has or will have a
material adverse effect upon the business of IPC or Ready.
37
(h) Compliance with Agreement. Ready shall have honored, performed and
complied with all of its covenants and obligations under this Agreement.
(i) Absence of Suit. No action, suit or proceedings before any court or
any governmental or regulatory authority shall have been commenced or threatened
against Ready, which suit would have a material adverse effect on the securities
of Ready, its business and/or financial condition and, no investigation by any
governmental or regulatory authority shall have been commenced seeking to
restrain, prevent or change the transactions contemplated hereby, or questioning
the validity or legality of any such transactions, or seeking damages in
connection with any of such transactions.
(j) Receipt of Approvals, Etc. All approvals, consents and/or waivers
for Ready that are necessary to effect the transactions contemplated hereby
shall have been received.
(k) Accuracy of Financial Statements. All balance sheets, statements of
income, statements of changes in financial position and/or cash flows, pro forma
financial statements and other financial statements furnished to IPC, including
but not limited to the Ready Financial Statements, shall be true, accurate and
prepared in accordance with generally accepted accounting principles.
(l) Proceedings and Instruments Satisfactory; Certificates. All
proceedings, corporate or otherwise, to be taken in connection with the
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as IPC may reasonably request shall have
been delivered to IPC.
11.2 The obligation of Ready to close hereunder shall be subject to the
fulfillment and satisfaction, prior to or at the Closing Date, of the following
conditions by Ready or the written waiver thereof by Ready:
(a) Additional Agreements. All of the agreements and commitments set
forth in Article 6 of this Agreement shall be consummated, including but not
limited to the completion of the Offering described in Article 6.1, and all
representations, warranties and covenants of IPC contained in such Article shall
be true and accurate.
(b) Effectiveness of Amalgamation. The Amalgamation shall be deemed
effective pursuant to applicable Law.
38
(c) Financial Statements. The IPC Financial Statements shall contain
financial results and other information acceptable to Ready.
(d) Due Diligence. Ready shall be satisfied, in its respective
discretion, with the results of "Due Diligence" and "Environmental"
investigations of IPC's business, books, records, liabilities, properties,
assets and other matters.
(e) Board Approval. The Board of Directors of IPC shall have approved
the transactions contemplated by this Agreement.
(f) Representations and Warranties. The representations and warranties
of IPC in this Agreement shall be true and correct in all material respects when
made and shall be true and correct in all material respects on and as of the
Closing Date.
(g) Delivery of Officers' Certificate. A Certificate signed by the
president of IPC shall be delivered to Ready certifying that each of the
warranties and representations made by IPC set forth in this Agreement are
materially true and accurate as of the Closing Date and that no event or
occurrence has transpired as of the Closing Date which has or will have a
material adverse effect upon the business of IPC.
(h) Compliance with Agreement. IPC shall have honored, performed and
complied with all of its covenants and obligations under this Agreement.
(i) Absence of Suit. No action, suit or proceedings before any court or
any governmental or regulatory authority shall have been commenced or threatened
against IPC, which suit would have a material adverse effect on the securities
of IPC, its business and/or financial condition and, no investigation by any
governmental or regulatory authority shall have been commenced seeking to
restrain, prevent or change the transactions contemplated hereby, or questioning
the validity or legality of any such transactions, or seeking damages in
connection with any of such transactions.
(j) Receipt of Approvals, Etc. All approvals, consents and/or waivers
for IPC that are necessary to effect the transactions contemplated hereby shall
have been received.
(k) Accuracy of Financial Statements. All balance sheets, statements of
income, statements of changes in financial position and/or cash flows, pro forma
financial statements and
39
other financial statements furnished to Ready, including but not limited to the
IPC Financial Statements, shall be true, accurate and prepared in accordance
with generally accepted accounting principles.
(l) Proceedings and Instruments Satisfactory; Certificates. All
proceedings, corporate or otherwise, to be taken in connection with the
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as Ready may reasonably request shall
have been delivered to Ready.
ARTICLE 12
INDEMNIFICATION
12.1 By IPC. IPC shall defend and promptly indemnify Ready, its officers,
board members and stockholders, and save and hold them harmless from, against,
for and in respect of and shall pay any and all damages, liabilities, claims,
costs and expenses, including without limitation, reasonable attorneys' fees and
other costs and expenses incident to any suit, action, investigation, claim or
proceeding suffered, sustained, incurred or required to be paid by Ready, its
officers, stockholders and/or board members by reason of (i) the existence of
any and all obligations and/or liabilities of IPC which were not disclosed in,
or pursuant to, this Agreement; (ii) any breach or failure of observance or
performance of any representation, warranty, covenant, agreement or commitment
made by IPC hereunder or relating hereto or as a result of any such
representation, warranty, covenant, agreement or commitment being untrue or
incorrect in any respect, and/or (iii) any and all actions, suits,
investigations, proceedings, demands, assessments, audits, judgments and claims
arising out of any of the foregoing or from any material misrepresentation or
omission from any Schedules or Exhibits to this Agreement, certificates,
financial statements or from any document furnished by IPC required to be
furnished hereunder.
12.2 By Ready. Ready shall defend and promptly indemnify IPC and its
officers, directors and shareholders, and save and hold them harmless from,
against, for and in respect of and shall pay any and all damages, liabilities,
claims, costs and expenses, including without limitation, reasonable attorneys'
fees and other costs and expenses incident to any suit, action, investigation,
claim or proceeding suffered, sustained, incurred or required to be paid by any
of them by reason of (i) the existence of any and all obligations and/or
liabilities of Ready which were not disclosed in, or pursuant to, this
Agreement; (ii) any breach or failure of observance or
40
performance of any representation, warranty, covenant, agreement or commitment
made by Ready hereunder or relating hereto or as a result of any such
representation, warranty, covenant, agreement or commitment being untrue or
incorrect in any respect, and/or (iii) any and all actions, suits,
investigations, proceedings, demands, assessments, audits, judgments and claims
arising out of any of the foregoing or from any material misrepresentation or
omission from any Schedules or Exhibits to this Agreement, certificates,
financial statements or from any document furnished or required to be furnished
by Ready.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 Entire Agreement. This Agreement along with the additional agreements
referred to herein constitutes the entire agreement of the parties with respect
to the subject matter hereof. The representations, warranties, covenants and
agreements set forth in this Agreement and in any financial statements,
schedules or exhibits delivered pursuant hereto constitute all the
representations, warranties, covenants and agreements of the parties hereto and
upon which the parties have relied and except as may be specifically provided
herein. No change, modification, amendment, addition or termination of this
Agreement or any part thereof shall be valid unless in writing and signed by or
on behalf of the party to be charged therewith.
13.2 Survival of Covenants, etc. All warranties, representations and
covenants set forth herein shall survive this Agreement for a period of two
years from the Closing Date.
13.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be given or made pursuant to any of the provisions of
this Agreement shall be deemed to have been duly given or made for all purposes
if sent by Federal Express delivery or by certified or registered mail, return
receipt requested and postage prepaid or hand delivered as follows:
If to IPC, the Shareholders, or Holdco:
000 Xxxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx Xxxxxx, X0X 0X0
Attn: Isa Odidi
41
Copy to:
Gowling Xxxxxxx Xxxxxxxxx LLP
Suite 5800, 00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx Xxxxxx MSH327
Attn: Xxxxxxxxxxx Xxxxxxxx
If to Ready:
0 Xxxxxxxx Xxxx Xxxx Xxx.
Xxxx Xxxxxx, XX 00000
Attn: Xxxxxx Will
Copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
Law Office of Xxxxxxx X. Xxxxxxxx, PLLC
000 Xxxx 00xx Xxxxxx, Xxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
13.4 Waiver. No waiver of the provisions hereof shall be effective unless
in writing and signed by the party to be charged with such waiver. No waiver
shall be deemed a continuing waiver or waiver in respect of any subsequent
breach or default, either of a similar or different nature, unless expressly so
stated in writing.
13.5 Governing Law. This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of New York applicable to
contracts to be performed entirely within that State. Any dispute in any way
related to the subject matter of this Agreement shall be litigated exclusively
within the State of New York and all parties hereto, consent to the jurisdiction
of the State and/or United States Federal District Courts of New York. Should
any clause, section or part of this Agreement be held or declared to be void or
illegal for any reason, all other clauses, sections or parts of this Agreement
which can be affected without such illegal clause, section or part shall
nevertheless continue in full force and effect.
13.6 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
or heirs and personal representatives; provided, however, that no party may
assign any of its rights or delegate any of its duties under this Agreement
without the prior written consent of the other parties hereto.
42
13.7 Captions. The headings, captions or titles of paragraphs under
sections or subsections of this Agreement are for convenience and reference only
and do not in any way modify, interpret or construe the intent of the parties or
effect any of the provisions of this Agreement.
13.8 Time Periods. Any time period provided for herein which shall end or
expire on a Saturday, Sunday, or legal holiday shall be deemed extended to the
next full business day thereafter.
13.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same Agreement.
13.10 Confidentiality. Neither this Agreement nor any memorandum of this
Agreement shall be recorded amongst the Public Records of any State or County.
The parties hereto agree to keep this Agreement confidential, as well as any
information or document obtained by either party in connection with this
transaction, except to the extent disclosure is required to or by any government
agency or regulatory or quasi-regulatory body. Neither party will release any
information by press release or otherwise regarding this transaction without the
other party.
13.11 Joint Draftsmanship. The preparation of this Agreement has been a
joint effort of the parties and this Agreement shall not, solely as a matter of
judicial construction, be construed more severely against one of the parties
than the other.
43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed on the date and year first above written.
INTELLIPHARMACEUTICS CORP.
By: /s/ Dr. Isa Odidi
-----------------------------------
Dr. Isa Odidi, Chairman
INTELLIPHARMACEUTICS, INC.
By: /s/ Dr. Isa Odidi
-----------------------------------
Dr. Isa Odidi, Chairman
READY CAPITAL CORP.
By: /s/ Xxxxxx Will
-----------------------------------
Xxxxxx Will, President
/s/ Dr. Isa Odidi
-----------------------------------
Dr. Isa Odidi, Shareholder
/s/ Xx. Xxxxx Xxxxx
-----------------------------------
Xx. Xxxxx Xxxxx, Shareholder
THE ISA ODIDI FAMILY TRUST
By: /s/ Dr. Isa Odidi
-----------------------------------
Dr. Isa Odidi, Trustee
44
Schedule 3.4
------------
IPC Consents
None.
45
Schedule 3.8
-------------
IPC Material Changes since September 30, 2003
None.
46
Schedule 3.9
------------
IPC Undisclosed Liabilities
None.
47
Schedule 3.10
-------------
IPC Taxes
None.
48
Schedule 3.11
-------------
IPC Litigation and Claims
There is presently no active litigation of any nature involving the Company. A
former client and licensee of the Company did threaten litigation in 2002 and
the parties have been engaged in settlement discussions with a view to reaching
a mutually satisfactory resolution. In the opinion of management, while the cost
of defending litigation, if commenced, could be significant, it is not presently
anticipated that the result of any such litigation, or the effect of any
settlement, would have a material adverse effect on the business of the Company.
49
Schedule 3.13
-------------
IPC Title to Assets
Lease with respect of 000 Xxxxxxxxx Xxxx Xxxx, Xxxxxxxxxxx, Xxxxxxx.
50
Schedule 3.21
-------------
IPC Labor Disputes
None.
51
Schedule 3.22
-------------
IPC Liens on Assets
None.
52
Schedule 6.4
------------
Ready Consents
None.
53
