INTELLIPHARMACEUTICS LTD.
AND
INTELLIPHARMACEUTICS CORP.
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VOTING AND SUPPORT AGREEMENT
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September 10, 2004
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND INTERPRETATION................................................................ 2
Section 1.1 Definitions......................................................................... 2
Section 1.2 Gender and Number................................................................... 3
Section 1.3 Headings............................................................................ 3
Section 1.4 Date for Any Action................................................................. 4
ARTICLE 2 IPC DELAWARE SPECIAL VOTING SHARES............................................................ 4
Section 2.1 Issuance of IPC Delaware Special Voting Shares...................................... 4
Section 2.2 Delivery of Shares.................................................................. 4
Section 2.3 Reservation of IPC Delaware Special Voting Shares................................... 4
Section 2.4 Qualification of IPC Delaware Special Voting Shares................................. 4
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND SUPPORT COVENANTS............................................. 5
Section 3.1 Covenants of IPC Delaware Regarding Obligations of IPC Delaware and
the Corporation..................................................................... 5
Section 3.2 Notification of Certain Events...................................................... 7
Section 3.3 Delivery of Shares by IPC Delaware.................................................. 7
Section 3.4 Delivery of Shares.................................................................. 7
Section 3.5 IPC Delaware not to Vote Exchangeable Shares........................................ 8
Section 3.6 Economic Equivalence................................................................ 8
Section 3.7 Ownership of Common Shares.......................................................... 11
Section 3.8 Tender Offers, Etc.................................................................. 11
Section 3.9 Representations and Warranties of IPC Delaware...................................... 11
Section 3.10 Reservation of Exchangeable Shares.................................................. 12
Section 3.11 Reservation of IPC Delaware Common Shares........................................... 12
Section 3.12 Qualification of IPC Delaware Common Shares......................................... 12
Section 3.13 Due Performance on and after the Closing Date....................................... 13
Section 3.14 IPC Delaware Reorganizations........................................................ 13
ARTICLE 4 AMENDMENTS AND SUPPLEMENTAL AGREEMENTS........................................................ 14
Section 4.1 Amendments, Modifications, Etc...................................................... 14
Section 4.2 Changes in Capital of IPC Delaware and the Corporation.............................. 14
ARTICLE 5 TERMINATION................................................................................... 14
Section 5.1 Term................................................................................ 14
ARTICLE 6 GENERAL....................................................................................... 15
Section 6.1 Severability........................................................................ 15
Section 6.2 Enurement........................................................................... 15
Section 6.3 Notices to Parties.................................................................. 15
Section 6.4 Counterparts........................................................................ 16
Section 6.5 Jurisdiction........................................................................ 17
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Section 6.6 Attornment.......................................................................... 17
Schedule "A" - Convertible Voting Share Provisions
Schedule "A" - Exchangeable Share Provisions
Schedule "B" - IPC Delaware Voting Share Provisions
VOTING AND SUPPORT AGREEMENT
THIS AGREEMENT is entered into as of this - day of -, 2004, by
IntelliPharmaCeutics Ltd. (formerly known as Ready Capital Corp.), a Delaware
corporation ("IPC DELAWARE") and IntelliPharmaCeutics Corp., a corporation
amalgamated under the laws of Nova Scotia (the "CORPORATION").
WHEREAS, pursuant to a Share Exchange Agreement dated February 23, 2004,
by and among, inter alia, IPC Delaware and IntelliPharmaceutics Inc. and
IntelliPharmaceutics Corp. (a predecessor of the Corporation) (the "SHARE
EXCHANGE AGREEMENT"), the parties thereto agreed that on the closing of the
transactions contemplated under the Share Exchange Agreement, the parties hereto
would execute and deliver a Voting and Support Agreement containing the terms
and conditions contemplated by the Share Exchange Agreement;
AND WHEREAS, pursuant to the Share Exchange Agreement, the Corporation has
issued to IntelliPharmaceutics Inc. certain convertible voting shares of the
Corporation (the "CONVERTIBLE VOTING SHARES") which are convertible into
exchangeable shares of the Corporation (the "EXCHANGEABLE SHARES") having the
rights, privileges, restrictions and conditions set forth in Schedule "A" and
Schedule "B" annexed hereto, respectively;
AND WHEREAS, pursuant to the Share Exchange Agreement, the Corporation,
IPC Delaware and IntelliPharmaceutics Inc., in its capacity as a Holder, have
entered into an exchange agreement (the "EXCHANGE AGREEMENT") of even date
herewith which, among other things, provides IPC Delaware with the right,
exerciseable upon the occurrence of certain events, to require the Holders to
sell their Exchangeable Shares to IPC Delaware.
AND WHEREAS, IPC Delaware and the Corporation wish to make appropriate
provision and to establish a procedure whereby IPC Delaware will take certain
actions and make certain payments and deliveries necessary to ensure that the
Corporation will be able to make certain payments and to deliver or cause to be
delivered shares of common stock in the capital of IPC Delaware in satisfaction
of their respective obligations under the Exchange Agreement and the terms of
the Convertible Voting Shares and the Exchangeable Shares, including, without
limitation, the payment and satisfaction of dividends by the Corporation and the
delivery to the Holders of the Exchangeable Share Consideration (as defined
herein) by IPC Delaware or the Corporation as contemplated under the terms of
the Convertible Voting Shares, the Exchangeable Shares and the Exchange
Agreement.
NOW THEREFORE, in consideration of the respective covenants and agreements
provided in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS.
Where used herein or in any amendments hereto or in any communications
required or permitted to be given hereunder, the following capitalized terms
shall have the following meanings, unless the context otherwise requires:
"AFFILIATE" of any person means any other person directly or indirectly
controlled by, or under common control of, that person. For the purposes
of this definition, "control" (including, with correlative meanings, the
terms "controlled by" and "under common control"), as applied to any
person, means the possession by another person, directly or indirectly, of
the power to direct or cause the direction of the management and policies
of that first mentioned person, whether through the ownership of voting
securities, by contract or otherwise.
"AUTOMATIC EXCHANGE RIGHT" has the meaning ascribed thereto in the
Exchange Agreement.
"BOARD OF DIRECTORS" means the board of directors of the Corporation.
"BUSINESS DAY" means any day, other than a Saturday, a Sunday or a day
when banks are not generally open for business in Xxxxxxx, Xxxxxxx.
"CONVERTIBLE VOTING SHARE PROVISIONS" means the rights, privileges,
restrictions and conditions attaching to the Convertible Voting Shares.
"CONVERTIBLE VOTING SHARES" has the meaning ascribed thereto in the
recitals hereto.
"CORPORATION" has the meaning ascribed thereto in the recitals hereto.
"CORPORATION INSOLVENCY EVENT" has the meaning ascribed thereto in the
Exchange Agreement.
"CURRENT MARKET PRICE" has the meaning ascribed thereto in the
Exchangeable Share Provisions.
"ECONOMIC EQUIVALENT" has the meaning ascribed thereto in the Convertible
Voting Share Provisions and the Exchangeable Share Provisions.
"EXCHANGE AGREEMENT" has the meaning ascribed thereto in the recitals
hereto.
"EXCHANGEABLE SHARE CONSIDERATION" has the meaning ascribed thereto in the
Exchangeable Share Provisions.
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges, restrictions
and conditions attaching to the Exchangeable Shares.
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"EXCHANGEABLE SHARES" has the meaning ascribed thereto in the recitals
hereto.
"HOLDER(S)" means the registered holders, from time to time, of the
Convertible Voting Shares or the Exchangeable Shares.
"INSOLVENCY PUT RIGHT" has the meaning ascribed thereto in the Exchange
Agreement.
"IPC DELAWARE" has the meaning ascribed thereto in the recitals hereto.
"IPC DELAWARE COMMON SHARES" means the shares of common stock in the
capital of IPC Delaware, par value US$0.001 per share.
"IPC DELAWARE SPECIAL VOTING SHARES" means the shares of non-participating
special voting stock in the capital of IPC Delaware, par value US$ - per
share, having the rights, privileges, restrictions and conditions set
forth in Schedule "C" annexed hereto.
"LIQUIDATION AMOUNT" has the meaning ascribed thereto in the Convertible
Voting Share Provisions and the Exchangeable Share Provisions.
"LIQUIDATION CALL RIGHT" has the meaning ascribed thereto in the Exchange
Agreement.
"PERSON" includes an individual, body corporate, partnership, company,
unincorporated syndicate or organization, trust, trustee, executor,
administrator and other legal representative.
"REDEMPTION CALL RIGHT" has the meaning ascribed thereto in the Exchange
Agreement.
"REDEMPTION PUT REQUEST" has the meaning ascribed thereto in the
Exchangeable Share Provisions.
"SHARE EXCHANGE AGREEMENT" has the meaning ascribed thereto in the
recitals hereto.
"SUBSIDIARY OR SUBSIDIARIES", in relation to any person, means any body
corporate, partnership, joint venture, association or other entity of
which more than 50% of the total voting power of shares or units of
ownership or beneficial interest entitled to vote in the election of
directors (or members of a comparable governing body) is owned or
controlled, directly or indirectly, by such person.
SECTION 1.2 GENDER AND NUMBER.
Any reference in this Agreement to gender includes all genders, and words
imparting the singular number only shall include the plural and vice versa.
SECTION 1.3 HEADINGS.
The provision of a table of contents, the division of this Agreement into
Articles and Sections and the insertion of headings are for convenience of
reference only and shall not affect the interpretation of this Agreement.
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SECTION 1.4 DATE FOR ANY ACTION.
If any date on which any action is required to be taken under this
Agreement is not a Business Day, such action shall be required to be taken on
the next succeeding Business Day.
ARTICLE 2
IPC DELAWARE SPECIAL VOTING SHARES
SECTION 2.1 ISSUANCE OF IPC DELAWARE SPECIAL VOTING SHARES.
Contemporaneously with the issuance of any Convertible Voting Shares by
the Corporation, upon notice from the Corporation or the Holders of such
issuance, IPC Delaware shall forthwith issue and deliver to each Holder one IPC
Delaware Special Voting Share for each Convertible Voting Share so issued.
SECTION 2.2 DELIVERY OF SHARES.
All IPC Delaware Special Voting Shares issuable pursuant hereto shall be
duly authorized and validly issued as fully paid and non-assessable, free and
clear of any lien, hypothec, pledge, claim, encumbrance, security interest or
adverse claim or interest other than those arising under applicable securities
laws.
SECTION 2.3 RESERVATION OF IPC DELAWARE SPECIAL VOTING SHARES.
IPC Delaware hereby represents, warrants and covenants that it has
irrevocably reserved for issuance and will keep available, free from pre-emptive
and other rights, out of its authorized and unissued capital stock such number
of IPC Delaware Special Voting Shares as are now and may hereafter be required
to enable and permit IPC Delaware to meet its obligations hereunder.
SECTION 2.4 QUALIFICATION OF IPC DELAWARE SPECIAL VOTING SHARES.
If any IPC Delaware Special Voting Shares to be issued and delivered
hereunder require registration or qualification with or approval of the filing
of any document, including any prospectus or similar document, or the taking of
any proceeding with or the obtaining of any order, ruling or consent from any
governmental or regulatory authority under any Canadian or United States
federal, provincial or state securities or other law or regulation or pursuant
to the rules and regulations of any securities or other regulatory authority or
the fulfillment of any other United States or Canadian legal requirement before
such shares may be issued and delivered by IPC Delaware to the Holders or in the
order that such shares may be freely traded thereafter (other than any
restrictions of general application on transfer by reason of a holder being a
"control person" for purposes of Canadian provincial securities law or an
"affiliate" of IPC Delaware for purposes of United States federal or state
securities law), IPC Delaware will in good faith expeditiously take all such
actions and do all such things as are necessary or desirable to cause such IPC
Delaware Special Voting Shares (or such other shares or securities) to be and
remain duly registered, qualified or approved under United States and/or
Canadian law, as the case may be.
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ARTICLE 3
REPRESENTATIONS, WARRANTIES AND SUPPORT COVENANTS
SECTION 3.1 COVENANTS OF IPC DELAWARE REGARDING OBLIGATIONS OF IPC DELAWARE AND
THE CORPORATION.
So long as any Convertible Voting Shares or Exchangeable Shares are
outstanding, IPC Delaware will and, in the case of Section 3.1(c), (d), (e),
(f), (g), (h), and (i) will cause the Corporation to:
(a) not declare or pay any dividend on the IPC Delaware Common Shares
unless (i) the Corporation shall simultaneously declare or pay, as
the case may be, an equivalent dividend (as provided for in the
Exchangeable Share Provisions) on the Exchangeable Shares, (ii) the
Corporation shall simultaneously declare or pay, as the case may be,
an equivalent dividend (as provided for in the Convertible Voting
Share Provisions) on the Convertible Voting Shares, and (iii) the
Corporation shall have sufficient money or other assets or
authorized but unissued securities available to enable the due
declaration and the due and punctual payment, in accordance with
applicable law, of any such dividend on the Convertible Voting
Shares and the Exchangeable Shares;
(b) advise the Corporation sufficiently in advance of the declaration by
IPC Delaware of any dividend on IPC Delaware Common Shares and take
all such other actions as are reasonably necessary, in co-operation
with the Corporation, to ensure that the respective declaration
date, record date and payment date for a dividend on the Convertible
Voting Shares and the Exchangeable Shares shall, subject to
applicable law, be the same as the declaration date, record date and
payment date for the corresponding dividend on the IPC Delaware
Common Shares;
(c) not permit the Corporation to issue any further Convertible Voting
Shares or Exchangeable Shares, or any other shares of the
Corporation having an attribute which permits the holders thereof to
exchange or convert such shares into shares of IPC Delaware or any
Affiliate of IPC Delaware, except to existing Holders pursuant to
the Convertible Voting Share Provisions, the Exchangeable Share
Provisions or the Exchange Agreement;
(d) take all such actions and do all such things as are necessary or
desirable to enable, cause and permit the Corporation, in accordance
with and subject to applicable law, to pay and otherwise perform its
obligations with respect to the satisfaction of the Exchangeable
Share Consideration representing the Liquidation Amount in respect
of each issued and outstanding Convertible Voting Share and
Exchangeable Share upon the liquidation, dissolution or winding-up
of the Corporation or any other distribution of the assets of the
Corporation for the purpose of winding up its affairs, including,
without limitation, all such actions and all such things as are
reasonably necessary or desirable to enable and permit the
Corporation to cause to be delivered IPC Delaware Common Shares to
the
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Holders in accordance with the provisions of Article 5 of the
Convertible Voting Share Provisions and Article 5 of the
Exchangeable Share Provisions;
(e) take all such actions and do all such things as are necessary or
desirable to enable, cause and permit the Corporation, in accordance
with and subject to applicable law, to pay and otherwise perform its
obligations with respect to the satisfaction of the Exchangeable
Share Consideration representing the Redemption Price (as defined in
the Exchangeable Share Provisions) including, without limitation, to
take all such actions and do all such things as are necessary or
desirable to enable and permit the Corporation to cause to be
delivered IPC Delaware Common Shares to the Holders upon the
redemption of the Exchangeable Shares in accordance with the
provisions of Article 6 of the Exchangeable Share Provisions;
(f) take all such actions and do all such things as are necessary or
desirable to enable, cause and permit the Corporation, in accordance
with and subject to applicable law, to enable and permit the
Corporation to deliver Exchangeable Shares to the holders of
Convertible Voting Shares and otherwise perform its obligations with
respect to the conversion of the Convertible Voting Shares;
(g) take all such actions and do all such things as are necessary or
desirable to enable IPC Delaware, in accordance with applicable law,
to perform its obligations arising upon the exercise by the Holder
of any Insolvency Put Right or Automatic Exchange Right, including,
without limitation, to take all such actions and do all such things
as are necessary or desirable to enable and permit IPC Delaware to
deliver IPC Delaware Common Shares to the Holders and otherwise
perform its obligations with respect to the satisfaction of the
Exchangeable Share Consideration in accordance with the provisions
of any Insolvency Put Right or Automatic Exchange Right, as the case
may be;
(h) take all such actions and do all such things as are necessary or
desirable to enable and permit IPC Delaware, in accordance with
applicable law, to perform its obligations arising upon the exercise
by it of the Liquidation Call Right or the Redemption Call Right,
including, without limitation, to take all such actions and do all
such things as are necessary or desirable to enable and permit IPC
Delaware to deliver IPC Delaware Common Shares to the Holders in
accordance with the provisions thereof; and
(i) take all such actions and do all such things as are necessary or
desirable to enable and permit the Corporation to pay all dividends
required to be paid in accordance with the Convertible Voting Share
Provisions and the Exchangeable Share Provisions and to permit the
Corporation to have the financial reserves required so that it does
not become insolvent and to avoid any liquidation or dissolution of
the Corporation.
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SECTION 3.2 NOTIFICATION OF CERTAIN EVENTS.
In order to assist IPC Delaware to comply with its rights and obligations
hereunder and under the Exchange Agreement, the Corporation will give IPC
Delaware notice of each of the following events at the time set forth below (it
being agreed, however, that the failure to give such notices shall not relieve
IPC Delaware of any of its obligations hereunder or under the Exchange
Agreement):
(a) any determination by the Board of Directors to institute voluntary
liquidation, dissolution or winding-up proceedings with respect to
the Corporation or to effect any other distribution of the assets of
the Corporation among its shareholders for the purpose of winding up
its affairs, at least 60 days prior to the proposed effective date
of such liquidation, dissolution, winding-up or other distribution;
it being understood that any merger, amalgamation, consolidation, or
similar transaction, and any sale of all or substantially all of the
assets of the Corporation shall not, in and of itself, constitute a
liquidation, dissolution or winding-up;
(b) promptly, upon the earlier of (i) receipt by the Corporation of
notice of, and (ii) the Corporation otherwise becoming aware of, any
threatened or instituted claim, suit, petition or other proceedings
with respect to the involuntary liquidation, dissolution or
winding-up of the Corporation or to effect any other distribution of
the assets of the Corporation among its shareholders for the purpose
of winding up its affairs or of the occurrence of any Corporation
Insolvency Event;
(c) promptly, upon receipt by the Corporation of a Redemption Put
Request; and
(d) promptly in the event of any determination by the Board of Directors
to take any action which would require a vote of the holders of
Convertible Voting Shares or Exchangeable Shares.
SECTION 3.3 DELIVERY OF SHARES BY IPC DELAWARE.
Upon notice from the Corporation, IPC Delaware or the Holders of any event
that requires the Corporation or IPC Delaware to cause to be delivered IPC
Delaware Common Shares to any Holder, IPC Delaware shall forthwith issue and
deliver to the Corporation, the requisite number of IPC Delaware Common Shares,
as well as any other part of the Exchangeable Share Consideration, to be
received by and issued to or to the order of the Holder of the surrendered
Exchangeable Shares, as the Corporation shall direct and as may be required
under the Exchange Agreement or the Exchangeable Share Provisions.
SECTION 3.4 DELIVERY OF SHARES.
All IPC Delaware Common Shares issuable pursuant to the Exchange Agreement
or the Exchangeable Share Provisions shall be duly authorized and validly issued
as fully paid and non-assessable, free and clear of any lien, hypothec, pledge,
claim, encumbrance, security interest or adverse claim or interest other than
those arising under applicable securities laws.
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SECTION 3.5 IPC DELAWARE NOT TO VOTE EXCHANGEABLE SHARES.
IPC Delaware will appoint and cause to be appointed proxyholders with
respect to all Convertible Voting Shares and Exchangeable Shares held by IPC
Delaware and its Subsidiaries for the sole purpose of attending meetings of
holders of Convertible Voting Shares or Exchangeable Shares to the extent it is
necessary to meet the requirements of any corporate statute with respect to be
the quorum for each such meeting. IPC Delaware will not, and will cause its
Subsidiaries not to, exercise any voting rights which may be exercisable by the
holders of Convertible Voting Shares or Exchangeable Shares from time to time,
pursuant to the Convertible Voting Share Provisions or the Exchangeable Share
Provisions or pursuant to the provisions of the corporate statute by which the
Corporation is now or may in the future be governed, with respect to any
Convertible Voting Shares or Exchangeable Shares held by it or by its
Subsidiaries in respect of any matter considered at any meeting of holders of
Convertible Voting Shares or Exchangeable Shares.
For as long as there are any Convertible Voting Shares or Exchangeable
Shares outstanding, neither IPC Delaware nor any of its Subsidiaries will
exercise its vote as a direct or indirect shareholder to initiate the voluntary
liquidation, dissolution or winding-up of IPC Delaware nor take any action that,
or omit to take any action the omission of which is designed to result in the
liquidation, dissolution or winding-up of IPC Delaware.
SECTION 3.6 ECONOMIC EQUIVALENCE.
So long as any Convertible Voting Shares or Exchangeable Shares (other
than Convertible Voting Shares and Exchangeable Shares owned by IPC Delaware and
its Subsidiaries) are outstanding:
(a) IPC Delaware will not without the prior approval of the Corporation
and the prior approval of the holders of the Convertible Voting
Shares, if any, given in accordance with Section 9.2 of the
Convertible Voting Share Provisions and the holders of the
Exchangeable Shares, if any, given in accordance with Section 9.2 of
the Exchangeable Share Provisions:
(i) issue or distribute IPC Delaware Common Shares (or securities
exchangeable for or convertible into or carrying rights to
acquire IPC Delaware Common Shares) to the holders of all or
substantially all of the then-outstanding IPC Delaware Common
Shares by way of stock dividend or other distribution, other
than an issue of IPC Delaware Common Shares (or securities
exchangeable for or convertible into or carrying rights to
acquire IPC Delaware Common Shares) to holders of IPC Delaware
Common Shares who exercise an option to receive dividends in
IPC Delaware Common Shares (or securities exchangeable for or
convertible into or carrying rights to acquire IPC Delaware
Common Shares) in lieu of receiving cash dividends; or
(ii) issue or distribute rights, options or warrants to the holders
of all or substantially all of the then-outstanding IPC
Delaware Common Shares
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entitling them to subscribe for or to purchase IPC Delaware
Common Shares (or securities exchangeable for or convertible
into or carrying rights to acquire IPC Delaware Common
Shares); or
(iii) issue or distribute to the holders of all or substantially all
of the then-outstanding IPC Delaware Common Shares, (a) shares
or securities of IPC Delaware of any class other than IPC
Delaware Common Shares (and other than shares convertible into
or exchangeable for or carrying rights to acquire IPC Delaware
Common Shares), (b) rights, options or warrants other than
those referred to in (ii) above, (c) evidences of indebtedness
of IPC Delaware or (d) assets of IPC Delaware,
unless the Economic Equivalent on a per share basis of such rights,
options, securities, shares, evidence of indebtedness or other
assets shall be issued or distributed simultaneously to holders of
the Convertible Voting Shares and the Exchangeable Shares;
(b) IPC Delaware will not without the prior approval of the Corporation
and the prior approval of the holders of the Convertible Voting
Shares, if any, given in accordance with Section 9.2 of the
Convertible Voting Share Provisions and the holders of the
Exchangeable Shares, if any, given in accordance with Section 9.2 of
the Exchangeable Share Provisions:
(i) subdivide, redivide or change the then-outstanding IPC
Delaware Common Shares into a greater number of IPC Delaware
Common Shares; or
(ii) reduce, combine, consolidate or change the then-outstanding
IPC Delaware Common Shares into a lesser number of IPC
Delaware Common Shares; or
(iii) reclassify or otherwise change any of the terms and conditions
of the IPC Delaware Common Shares, or effect an amalgamation,
merger, reorganization or other transaction affecting IPC
Delaware Common Shares,
unless the same or an economically equivalent change shall
simultaneously be made to, or in the rights of the Holders of, the
Convertible Voting Shares and the Exchangeable Shares;
(c) IPC Delaware will ensure that the record date for any event referred
to in Section 3.6(a) or Section 3.6(b) (or if no record date is
applicable for such event the effective date for any such event) is
not less than 7 Business Days after the date on which such event is
declared or announced (with contemporaneous notification thereof to
the Corporation and the Holders.)
(d) the Board of Directors shall determine, in good faith and in its
sole discretion, economic equivalence for the purposes of any event
referred to in Section 3.6(a)
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or Section 3.6(b) and each such determination shall be conclusive
and binding on IPC Delaware. In making each such determination, the
following factors shall, without excluding other factors determined
by the Board of Directors to be relevant, be considered by the Board
of Directors:
(i) in the case of any stock dividend or other distribution
payable in IPC Delaware Common Shares, the number of such
shares issued in proportion to the number of IPC Delaware
Common Shares previously outstanding;
(ii) in the case of the issuance or distribution of any rights,
options or warrants to subscribe for or purchase IPC Delaware
Common Shares (or securities exchangeable for or convertible
into or carrying rights to acquire IPC Delaware Common
Shares), the relationship between the exercise price of each
such right, option or warrant and the Current Market Price of
a IPC Delaware Common Share;
(iii) in the case of the issuance or distribution of any other form
of property (including without limitation any shares or
securities of IPC Delaware of any class other than IPC
Delaware Common Shares, any rights, options or warrants other
than those referred to in Section 3.6(d)(ii), any evidences of
indebtedness of IPC Delaware or any assets of IPC Delaware),
the relationship between the fair market value (as determined
by the Board of Directors in the manner above contemplated) of
such property to be issued or distributed with respect to each
outstanding IPC Delaware Common Share and the Current Market
Price of a IPC Delaware Common Share;
(iv) in the case of any subdivision, redivision or change of the
then-outstanding IPC Delaware Common Shares into a greater
number of IPC Delaware Common Shares or the reduction,
combination, consolidation or change of the then-outstanding
IPC Delaware Common Shares into a lesser number of IPC
Delaware Common Shares or any amalgamation, merger,
reorganization or other transaction affecting IPC Delaware
Common Shares, the effect thereof upon the then-outstanding
IPC Delaware Common Shares; and
(v) in all such cases, the general taxation consequences of the
relevant event to Holders to the extent that such consequences
may differ from the taxation consequences to holders of IPC
Delaware Common Shares as a result of differences between the
taxation laws of Canada and the United States (except for any
differences arising as a result of differing marginal taxation
rates and without regard to the individual circumstances of
Holders).
(e) to the extent required, upon due notice from IPC Delaware, the
Corporation will use its best efforts to take or cause to be taken
such steps as may be necessary for the purposes of ensuring that
appropriate dividends are paid or other distributions are made by
the Corporation or subdivisions, redivisions or changes are made to
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the Convertible Voting Shares and the Exchangeable Shares, in order
to implement the required Economic Equivalent with respect to the
IPC Delaware Common Shares, the Convertible Voting Shares and the
Exchangeable Shares as provided for in this Section 3.6;
(f) upon the occurrence of any of the events referred to in Section
3.6(b) the type and number of securities or other consideration
issuable upon the exchange or redemption of the Exchangeable Shares
shall automatically be adjusted, without any action on the part of
any Person, such that the Holders of such Exchangeable Shares will
receive, upon the exchange or redemption of such Exchangeable
Shares, the type and number of securities or other consideration
that such Holders would have received in respect of the Exchangeable
Shares if such Exchangeable Shares had been exchanged or redeemed
immediately prior to such event or the record date therefor, as
applicable.
SECTION 3.7 OWNERSHIP OF COMMON SHARES.
So long as any Convertible Voting Shares or Exchangeable Shares are
outstanding, IPC Delaware shall remain the direct or indirect beneficial owner
of all of the issued and outstanding voting shares of the Corporation, other
than the Convertible Voting Shares, unless it obtains the prior approval of the
Holders given in accordance with Section 9.2 of the Convertible Voting Share
Provisions and Section 9.2 of the Exchangeable Share Provisions, as the case may
be.
SECTION 3.8 TENDER OFFERS, ETC.
IPC Delaware shall provide notice to the Holders, concurrently with the
notice provided to holders of IPC Delaware Common Shares, of any proposed share
exchange offer, issuer bid, take-over bid or similar transaction (an "OFFER")
with respect to IPC Delaware Common Shares proposed by IPC Delaware or proposed
to IPC Delaware or its shareholders and recommended by the board of directors of
IPC Delaware, or otherwise effected or to be effected with the consent or
approval of the board of directors of IPC Delaware. IPC Delaware will use its
reasonable efforts expeditiously and in good faith to take all such actions and
do all such things as are necessary or desirable to enable and permit Holders
(other than IPC Delaware and its Subsidiaries) to participate in such Offer to
the same extent and on an economically equivalent basis as the holders of IPC
Delaware Common Shares without discrimination. Without limiting the generality
of the foregoing, IPC Delaware will use its reasonable efforts expeditiously and
in good faith to ensure that Holders may participate in each such Offer without
being required to redeem Exchangeable Shares as against the Corporation (or, if
so required, to ensure that any such redemption shall be effective only upon,
and shall be conditional upon, the closing of such Offer and only to the extent
necessary to tender or deposit to the Offer).
SECTION 3.9 REPRESENTATIONS AND WARRANTIES OF IPC DELAWARE.
IPC Delaware hereby represents and warrants that:
(a) IPC Delaware is a corporation incorporated and existing under the
laws of Delaware and has the corporate power and authority to enter
into and perform its obligations under this Agreement;
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(b) the execution, delivery and performance by IPC Delaware of this
Agreement:
(i) have been duly authorized by all necessary corporate action on
the part of IPC Delaware;
(ii) do not (or would not with the giving of notice, the lapse of
time or the happening of any other event or condition) result
in a breach or a violation of, or conflict with, any of the
terms or provisions of its constating documents or by-laws or
any material contracts or instruments to which it is a party
or pursuant to which any of its assets or property may be
affected; and
(iii) will not result in the violation of any law; and
(c) this Agreement has been duly executed and delivered by IPC Delaware
and constitutes a legal, valid and binding obligation of IPC
Delaware, enforceable against it in accordance with its terms.
SECTION 3.10 RESERVATION OF EXCHANGEABLE SHARES.
The Corporation hereby represents, warrants and covenants that it has
irrevocably reserved for issuance and will at all times while any Convertible
Voting Shares are outstanding keep available, free from pre-emptive and other
rights, out of its authorized and unissued capital stock such number of
Exchangeable Shares as are now and may hereafter be required to enable and
permit the Corporation to meet its obligations under the Convertible Voting
Share Provisions.
SECTION 3.11 RESERVATION OF IPC DELAWARE COMMON SHARES.
IPC Delaware hereby represents, warrants and covenants that it has
irrevocably reserved for issuance and will at all times while any Convertible
Voting Shares or Exchangeable Shares are outstanding keep available, free from
pre-emptive and other rights, out of its authorized and unissued capital stock
such number of IPC Delaware Common Shares (which IPC Delaware Common Shares may
be reclassified or changed) as are now and may hereafter be required to enable
and permit the Corporation and IPC Delaware to meet their respective obligations
under the Exchange Agreement and under the Convertible Voting Share Provisions
or the Exchangeable Share Provisions. IPC Delaware further represents, warrants
and covenants that the IPC Delaware Common Shares issuable as described herein
will be duly authorized and validly issued as fully-paid and non-assessable and
shall be free and clear of any lien, claim or encumbrance.
SECTION 3.12 QUALIFICATION OF IPC DELAWARE COMMON SHARES.
If any IPC Delaware Common Shares (or other shares or securities into
which IPC Delaware Common Shares may be reclassified or changed as contemplated
by Section 3.6) to be issued and delivered hereunder require registration or
qualification with or approval of the filing of any document, including any
prospectus or similar document, or the taking of any proceeding
-12-
with or the obtaining of any order, ruling or consent from any governmental or
regulatory authority under any Canadian or United States federal, provincial or
state securities or other law or regulation or pursuant to the rules and
regulations of any securities or other regulatory authority or the fulfillment
of any other United States or Canadian legal requirement before such shares (or
such other shares or securities) may be issued and delivered by IPC Delaware at
the direction of the Corporation or in the order that such shares (or such other
shares or securities) may be freely traded thereafter (other than any
restrictions of general application on transfer by reason of a holder being a
"control person" for purposes of Canadian provincial securities law or an
"affiliate" of IPC Delaware for purposes of United States federal or state
securities law), IPC Delaware will in good faith expeditiously take all such
actions and do all such things as are necessary or desirable to cause such IPC
Delaware Common Shares (or such other shares or securities) to be and remain
duly registered, qualified or approved under United States and/or Canadian law,
as the case may be. IPC Delaware will in good faith expeditiously take all such
actions and do all such things as are reasonably necessary or desirable to cause
all IPC Delaware Common Shares (or such other shares of securities) to be
delivered hereunder to be listed, quoted or posted for trading on all stock
exchanges and quotation systems on which outstanding IPC Delaware Common Shares
(or other shares or securities) have been listed by IPC Delaware and remain
listed and are quoted or posted for trading at such time.
SECTION 3.13 DUE PERFORMANCE ON AND AFTER THE CLOSING DATE.
IPC Delaware shall duly and timely perform, and shall cause the
Corporation and IPC Delaware to duly and timely perform, all of their respective
obligations provided for in this Agreement.
SECTION 3.14 IPC DELAWARE REORGANIZATIONS.
(1) IPC Delaware shall not consummate any transaction (whether by way of
reconstruction, reorganization, consolidation, merger, transfer, sale,
lease or otherwise) whereby all or substantially all of its undertaking,
property and assets would become the property of any person or, in the
case of a merger, of the continuing corporation resulting therefrom unless
(i) such other person or continuing corporation (the "IPC DELAWARE
SUCCESSOR") by operation of law becomes, without an additional act on its
part, bound by the terms and provisions of this Agreement or, if not
bound, executes, prior to or contemporaneously with the consummation of
such transaction an agreement supplemental hereto and such other
instruments, if any, as are necessary or advisable to evidence the
assumption by the IPC Delaware Successor of all obligations of IPC
Delaware under this Agreement, (ii) in the event that IPC Delaware Common
Shares are reclassified or otherwise changed as part of such transaction,
the same or an economically equivalent change is simultaneously made to,
or in the rights of the holders of the Convertible Voting Shares and
Exchangeable Shares, and (iii) such transactions shall be upon such terms
as substantially to preserve and not impair in any material respect any of
the rights, duties, powers and authorities of the Holders hereunder, under
the Convertible Voting Share Provisions, the Exchangeable Share Provisions
or the Exchange Agreement.
-13-
(2) Whenever the conditions of Section 3.14(1) have been duly observed and
performed, the IPC Delaware Successor and the Corporation shall execute
the necessary supplemental agreement, if any is required by Section
3.14(1) (and give notice thereof to the Holders) and thereupon the IPC
Delaware Successor shall possess and from time to time may exercise each
and every right and power of IPC Delaware under this Agreement in the name
of IPC Delaware or otherwise and act or proceeding by any provision of
this Agreement required to be done or performed by the board of directors
of IPC Delaware or any officers of IPC Delaware may be done and performed
with like force and effect by the directors and officers of such IPC
Delaware Successor.
ARTICLE 4
AMENDMENTS AND SUPPLEMENTAL AGREEMENTS
SECTION 4.1 AMENDMENTS, MODIFICATIONS, ETC.
This Agreement may not be amended, modified or waived except by an
agreement in writing executed by the parties hereto.
SECTION 4.2 CHANGES IN CAPITAL OF IPC DELAWARE AND THE CORPORATION.
At all times after the occurrence of any event effected pursuant to the
Convertible Voting Share Provisions, the Exchangeable Share Provisions, this
Agreement or otherwise, as a result of which one or more of the IPC Delaware
Common Shares, the Convertible Voting Shares and the Exchangeable Shares are in
any way changed, this Agreement shall forthwith be amended and modified as
necessary in order that the Holders maintain economically equivalent rights and,
in order that, where required, this Agreement will apply with full force and
effect, mutatis mutandis, to all new securities into which one or more of the
IPC Delaware Common Shares, the Convertible Voting Shares and the Exchangeable
Shares are so changed and the parties hereto shall execute and deliver a
supplemental agreement giving effect to and evidencing such necessary amendments
and modifications. So long as there are any Convertible Voting Shares or
Exchangeable Shares outstanding, the Corporation will not issue any additional
Convertible Voting Shares or Exchangeable Shares to any Person (other than the
Holders).
ARTICLE 5
TERMINATION
SECTION 5.1 TERM.
This Agreement shall continue until the earlier to occur of the following
events:
(a) no Convertible Voting Shares or Exchangeable Shares are outstanding;
or
(b) each of the parties hereto elects in writing to terminate this
Agreement.
-14-
ARTICLE 6
GENERAL
SECTION 6.1 SEVERABILITY.
The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof. If any provision of this
Agreement, or the application thereof to any Person or entity or any
circumstance, is invalid or unenforceable:
(a) a suitable and equitable provision shall be substituted therefor in
order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision; and
(b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by
such invalidity or unenforceability nor shall such invalidity or
unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
SECTION 6.2 ENUREMENT.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
SECTION 6.3 NOTICES TO PARTIES.
Any notice, direction or other communication given under this Agreement
shall be in writing and given by mail or delivering it or sending it by telecopy
or similar form or recorded communication addressed:
(a) if to the Corporation or IPC Delaware, to:
INTELLIPHARMCEUTICS LTD.
00X Xxxxx Xxxxxx
Xxxxx Xxxxxxxx
00000, County of Kent
Attention: -
Telephone: -
Telecopier: -
-15-
with a copy to:
LAW OFFICES OF XXXXXXX X. XXXXXXXX
000 Xxxx 00xx Xxxxxx
Xxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(b) if to any Holder, to:
the address of the Holder recorded in the securities register of the
Corporation or, in the event of the address of any such Holder not
being so recorded, then at the last known address of such Holder
with a copy to:
GOWLING XXXXXXX XXXXXXXXX XXX
Xxxxx 0000, Xxxxxx Plaza
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000.
Any such communication shall be deemed to have been validly and
effectively given on the date such communication is received if such date is a
Business Day and if such communication is received prior to 4:00 p.m. (in the
jurisdiction of receipt) and otherwise on the next Business Day. Any party
hereto may change its address for service from time to time by notice given in
accordance with the foregoing and any subsequent notice shall be sent to such
party at its changed address.
SECTION 6.4 COUNTERPARTS.
This Agreement may be executed in counterparts (including counterparts by
facsimile), each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument. A transmission by
facsimile of a copy of the execution page hereto reflecting the execution of
this Agreement by any party shall be effective to evidence that party's
intention to be bound by this Agreement and that Party's agreement to the terms,
provisions and conditions hereof, all without the necessity of having to produce
an original copy of such execution page.
-16-
SECTION 6.5 JURISDICTION.
This Agreement shall be construed and enforced in accordance with the laws
of the Province of Ontario and the federal laws of Canada applicable therein.
SECTION 6.6 ATTORNMENT.
Each party hereto agrees that any action or proceeding arising out of or
relating to this Agreement may be instituted in the courts of Ontario, waives
any objection which it may have now or hereafter, irrevocably summits to the
jurisdiction of the courts of Ontario in any such action or proceeding, agrees
to be bound by any judgement of the said courts, and hereby waives any review of
the merits of any such judgement by the courts of any other jurisdiction.
Service of process may be made to each party at the address set forth in Section
6.3 hereof, with the exception of IPC Delaware, which hereby appoints the
Corporation at its registered office in the Province of Ontario as attorney for
service of process.
-17-
IN WITNESS WHEREOF, the parties hereby have executed this Agreement or caused
this Agreement to be executed by their respective duly authorized officers as of
the date first above written.
INTELLIPHARMACEUTICS LTD.
Per: /s/ XXXXXX WILL
-------------------------------
Name: XXXXXX WILL
Title: PRESIDENT
Per: _______________________________
Name:
Title:
INTELLIPHARMACEUTICS CORP.
Per: /s/ [ILLEGIBLE]
-------------------------------
Name:
Title:
Per: /s/ [ILLEGIBLE]
-------------------------------
Name:
Title:
SCHEDULE "A"
CONVERTIBLE VOTING SHARE PROVISIONS
SCHEDULE "A"
CONVERTIBLE VOTING SHARE PROVISIONS
The Convertible Voting Shares in the capital of the Company shall have the
following rights, privileges, restrictions and conditions:
ARTICLE 1
INTERPRETATION
SECTION 1.1 DEFINITIONS.
In these share provisions, the following terms have the following meanings:
"ACT" means the Companies Act (Nova Scotia), as amended, consolidated or
re-enacted from time to time.
"BOARD OF DIRECTORS" means the board of directors of the Company.
"BUSINESS DAY" means any day, other than a Saturday, a Sunday or a day
when banks are not generally open for business in Xxxxxxx, Xxxxxxx.
"CANADIAN DOLLAR EQUIVALENT" has the meaning ascribed thereto in the
Exchangeable Share Provisions.
"COMMON SHARES" means the common shares in the capital of the Company and
any other securities into which such shares may be changed.
"COMPANY" means IntelliPharmaCeutics Corp., a company amalgamated and
existing under the Act, and includes any successor company.
"CONVERSION DATE" has the meaning provided in Section 6.1(a) hereof.
"CONVERSION REQUEST" has the meaning provided in Section 6.1 hereof.
"CONVERTED SHARES" has the meaning provided in Section 6.1(a) hereof.
"CONVERTIBLE VOTING SHARE CONSIDERATION" means, with respect to each
Convertible Voting Share for any action which is an acquisition of, or
redemption of, or distribution of assets of the Company in respect of the
Convertible Voting Share by the Company or by IPC Delaware or a Subsidiary
of IPC Delaware, the aggregate of the following:
(a) the Current Market Price of one IPC Delaware Common Share, such
consideration to be fully paid, non-assessable, free and clear of
any lien, claim or encumbrance and satisfied by the delivery of one
IPC Delaware Common Share to be registered in the name of the
Holder, as evidenced by a certificate representing the aggregate
number of such IPC Delaware Common Shares; plus
(b) the Dividend Amount payable in U.S. dollars or the Canadian Dollar
Equivalent by means of a cheque payable at any branch of the bankers
of the payor; plus
(c) unless the corresponding equivalent dividend has already been
declared pursuant to Section 3.1 of these share provisions on the
Convertible Voting Share, the amount of
all cash dividends declared by IPC Delaware on a IPC Delaware Common
Share on or prior to the effective time of any such action payable
in U.S. dollars or the Canadian Dollar Equivalent by means of a
cheque payable at any branch of the bankers of the payor; plus
(d) unless the corresponding equivalent dividend has already been
declared on the Convertible Voting Share, the amount of all declared
non-cash dividends or other distributions by IPC Delaware on a IPC
Delaware Common Share on or prior to the effective time of any such
action, payable by means of a cheque payable at any branch of the
bankers of the payor in an amount equal to the fair market value of
the property distributed on the effective date of the relevant
action in U.S. dollars or the Canadian Dollar Equivalent or, at the
option of the Board of Directors, payable by the delivery of such
non-cash items;
provided that (i) any such IPC Delaware Common Share shall be duly issued
as fully paid and non-assessable, free and clear of any lien, hypothec,
pledge, claim, encumbrance, security interest or adverse claim or interest
other than those under applicable securities laws and (ii) such
consideration shall be paid less any amounts required to be deducted and
withheld therefrom pursuant to Section 12.1 hereof, and all without
interest.
"CONVERTIBLE VOTING SHARES" means the convertible voting shares in the
capital of the Company having the rights, privileges and restrictions set
forth herein.
"CURRENT MARKET PRICE" has the meaning ascribed thereto in the
Exchangeable Share Provisions.
"DIVIDEND AMOUNT" means an amount equal to and in satisfaction of all
declared and unpaid dividends or distributions on any Convertible Voting
Share on any dividend or distribution record date which occurred on or
prior to the effective time of an action described in the definition of
"Convertible Voting Share Consideration" in these share provisions.
"ECONOMIC EQUIVALENT" has the meaning provided in Section 3.2 hereof.
"EFFECTIVE DATE" means the date of first issue of the Convertible Voting
Shares.
"EXCHANGE AGREEMENT" means that certain Exchange Agreement between IPC
Delaware, the Company and certain shareholders of the Company to be
entered into contemporaneously with the first issue of Convertible Voting
Shares.
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges, restrictions
and conditions attaching to the Exchangeable Shares.
"EXCHANGEABLE SHARES" means the non-voting exchangeable shares in the
capital of the Company issuable upon conversion of the Convertible Voting
Shares.
"HOLDER" means a holder of Convertible Voting Shares shown from time to
time in the register maintained by or on behalf of the Company in respect
of the Convertible Voting Shares.
"IPC DELAWARE" means IntelliPharmaCeutics Ltd., a Delaware corporation,
and includes any successor corporation.
-2-
"IPC DELAWARE COMMON SHARES" means the shares of common stock in the
capital of IPC Delaware, par value US$0.001 per share and any other shares
or other securities into which such shares may be changed or converted.
"IPC DELAWARE DIVIDEND DECLARATION DATE" means the date on which the board
of directors of IPC Delaware declares any dividend on the IPC Delaware
Common Shares.
"LIQUIDATION AMOUNT" has the meaning provided in Section 5.1 hereof.
"LIQUIDATION DATE" has the meaning provided in Section 5.1 hereof.
"SUBSIDIARY" OR "SUBSIDIARIES", in relation to any person, means any body
corporate, partnership, joint venture, association or other entity of
which more than 50% of the total voting power of shares or units of
ownership or beneficial interest entitled to vote in the election of
directors (or members of a comparable governing body) is owned or
controlled, directly or indirectly, by such person.
"TOTAL CONVERTIBLE VOTING SHARE CONSIDERATION" means at a particular time
the Convertible Voting Share Consideration per Convertible Voting Share at
that time multiplied by the number of Convertible Voting Shares in respect
of which the Convertible Voting Share Consideration is paid or is payable
at that time.
"TOTAL LIQUIDATION AMOUNT" has the meaning provided-in-Section 5.1 hereto.
"VOTING AND SUPPORT AGREEMENT" means the agreement in respect of, among
other things, the Convertible Voting Shares to be made between IPC
Delaware and the Company as of the Effective Date, as it may be amended
from time to time.
ARTICLE 2
RANKING OF CONVERTIBLE VOTING SHARES
SECTION 2.1 RANKING.
In accordance with ARTICLE 5, the Convertible Voting Shares shall be entitled to
a preference over the Common Shares, the and any other shares which by their
terms rank junior to the Convertible Voting Shares, but shall rank pari passu
with the Exchangeable Shares, with respect to the payment of dividends and the
distribution of assets in the event of the liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary, or any other
distribution of the assets of the Company among its shareholders for the purpose
of winding up its affairs.
In the event that the Board of Directors desire to declare a dividend on the
Convertible Voting Shares in accordance with Section 3.1 hereof, such dividends
shall neither be declared nor paid unless a dividend is also declared and paid
on the Exchangeable Shares at the same time, in equal amounts per share to the
dividend so declared on the Convertible Voting Shares (unless the holders of the
Exchangeable Shares otherwise consent in writing).
In the event that rights are conferred upon the holders of the Convertible
Voting Shares pursuant to Sections 10.1 or 10.2 as a result of IPC Delaware
taking any of the actions in Sections 10.1 or 10.2, such similar rights as are
conferred upon the holders of the Exchangeable Shares under Section 10.1 or
10.2, as the case may be, of the Exchangeable Share Provisions shall be
exercised at the same time as the exercise of such rights conferred upon the
holders of the Convertible Voting Shares.
-3-
ARTICLE 3
DIVIDENDS
SECTION 3.1 DIVIDENDS.
A Holder shall be entitled to receive, and the Board of Directors shall (subject
to applicable law) declare, a dividend on each Convertible Voting Share on each
IPC Delaware Dividend Declaration Date (which shall be paid in accordance with
Section 3.4):
(a) in the case of a cash dividend declared on the IPC Delaware Common
Shares, in an amount in cash for each Convertible Voting Share in US
dollars, or the Canadian Dollar Equivalent thereof on the IPC
Delaware Dividend Declaration Date, in each case, equal to the cash
dividend declared on each IPC Delaware Common Share;
(b) in the case of a stock dividend declared on the IPC Delaware Common
Shares to be paid in IPC Delaware Common Shares, by the issuance by
the Company of such number of Convertible Voting Shares for each
Convertible Voting Share as is equal to the number of IPC Delaware
Common Shares to be paid on each IPC Delaware Common Share;
(c) in the case of a dividend declared on the IPC Delaware Common Shares
in property other than cash or IPC Delaware Common Shares, in such
type and amount of property for each Convertible Voting Share as is
the same as or the Economic Equivalent of the type and amount of
property declared as a dividend on each IPC Delaware Common Share;
or
(d) in the case of a dividend declared on the IPC Delaware Common Shares
to be paid in securities of IPC Delaware other than IPC Delaware
Common Shares, in such number of either such securities or
economically and legally equivalent securities of the Company, as
the Board of Directors determines, for each Convertible Voting Share
as is equal to the number of securities of IPC Delaware to be paid
on each share or IPC Delaware Common Shares.
Such dividends shall be paid out of money, assets or property of the Company
properly applicable to the payment of dividends, or out of authorized but
unissued shares of the Company, as applicable. Any dividend which should have
been declared on the Convertible Voting Shares pursuant to this Section 3.1 but
was not so declared due to the provisions of applicable law shall be declared,
and paid by the Company as soon as payment of such dividend is permitted by such
law.
SECTION 3.2 DETERMINATION OF ECONOMIC EQUIVALENCE.
The Board of Directors shall determine, in good faith and in its sole discretion
(with the assistance of such reputable and qualified independent financial
advisors and/or other experts as the Board of Directors may require) what the
"ECONOMIC EQUIVALENT" or the "economical and legal equivalent" is for the
purposes of these share provisions and each such determination shall be
conclusive and binding. In making such determination, the following factors
shall (without excluding other factors determined by the Board of Directors to
be relevant) be considered by the Board of Directors:
(a) in the case of a distribution payable in IPC Delaware Common Shares
(other than in the case of a stock dividend), the number of such
shares issued in proportion to the number of IPC Delaware Common
Shares previously outstanding;
-4-
(b) in the case of the issuance or distribution of any rights, options
or warrants to subscribe for or purchase IPC Delaware Common Shares
(or securities exchangeable for or convertible into or carrying
rights to acquire IPC Delaware Common Shares), the relationship
between the exercise price of each such right, option or warrant and
the Current Market Price of a IPC Delaware Common Share;
(c) in the case of the issuance or distribution of any other form of
property (including without limitation any shares or securities of
IPC Delaware of any class other than IPC Delaware Common Shares, any
rights, options or warrants other than those referred to in Section
3.2(b), any evidences of indebtedness of IPC Delaware or any assets
of IPC Delaware), the relationship between the fair market value (as
determined by the Board of Directors in the manner above
contemplated) of such property to be issued or distributed with
respect to each outstanding IPC Delaware Common Share and the
Current Market Price of a IPC Delaware Common Share;
(d) in the case of any subdivision, redivision or change of the
then-outstanding IPC Delaware Common Shares into a greater number of
IPC Delaware Common Shares or the reduction, combination,
consolidation or change of the then-outstanding IPC Delaware Common
Shares into a lesser number of IPC Delaware Common Shares or any
amalgamation, merger, reorganization or other transaction affecting
IPC Delaware Common Shares, the effect thereof upon the
then-outstanding IPC Delaware Common Shares; and
(e) in all such cases, the general taxation consequences of the relevant
event to the Holders to the extent that such consequences may differ
from the taxation consequences to the holders of IPC Delaware Common
Shares as a result of differences between the taxation laws of
Canada and the United States (except for any differing consequences
arising as a result of differing marginal taxation rates and without
regard to the individual circumstances of Holders).
SECTION 3.3 PAYMENT OF DIVIDENDS.
Cheques of the Company payable at any branch of the bankers of the Company shall
be issued in respect of any cash dividends contemplated by Section 3.1(a)
hereof and the sending of such a cheque to each holder of a Convertible Voting
Share shall satisfy the cash dividend represented thereby unless the cheque is
not paid on presentation. Certificates registered in the name of the registered
holder of Convertible Voting Shares shall be issued or transferred in respect of
any stock dividends contemplated by Section 3.1(b) or (d) hereof and the sending
of such a certificate to each holder of a Convertible Voting Share shall satisfy
the stock dividend represented thereby or dividend payable in other securities
represented thereby. Such other type and amount of property in respect of any
dividends contemplated by Section 3.1(c) hereof shall be issued, distributed or
transferred by the Company in such manner as it shall determine and the
issuance, distribution or transfer thereof by the Company to each holder of a
Convertible Voting Share shall satisfy the dividend represented thereby. No
holder of a Convertible Voting Share shall be entitled to recover by action or
other legal process against the Company any dividend that is represented by a
cheque that has not been duly presented to the Company's bankers for payment or
that otherwise remains unclaimed for a period of six years from the date on
which such dividend was payable.
-5-
SECTION 3.4 RECORD AND PAYMENT DATES.
The record date for the determination of the Holders entitled to receive payment
of, and the payment date for, any dividend declared on the Convertible Voting
Shares under Section 3.1 hereof shall be the same dates as the record date and
payment date, respectively, for the corresponding dividend declared on the IPC
Delaware Common Shares.
ARTICLE 4
CERTAIN RESTRICTIONS
SECTION 4.1 PROHIBITED ACTS.
So long as any of the Convertible Voting Shares are outstanding, the Company
shall not at any time without, but may at any time with, the approval of the
Holders given as specified in Section 9.2 hereof:
(a) amend the constating documents of the Company in a manner which
would prejudicially or adversely affect the holders of Convertible
Voting Shares in any respect; or
(b) initiate the voluntary liquidation, dissolution or winding-up of the
Company nor take any action or omit to take any action that is
designed to result in the liquidation, dissolution or winding-up of
the Company; or
(c) issue any further Convertible Voting Shares or Exchangeable Shares,
or any other shares or securities of the Company ranking equally
with, or superior to, the Convertible Voting Shares, to any person,
other than as contemplated by the Exchange Agreement, these
Convertible Voting Share Provisions or the Exchangeable Share
Provisions.
SECTION 4.2 RESTRICTIONS IF DIVIDENDS UNPAID.
So long as any of the Convertible Voting Shares are outstanding and any
dividends required to have been declared and paid on the outstanding Convertible
Voting Shares pursuant to ARTICLE 3 have not been declared and paid in full, the
Company shall not at any time without, but may at any time with, the approval of
the Holders given as specified in Section 9.2 hereof:
(a) pay any dividends on the Common Shares, or any other shares ranking
junior to the Convertible Voting Shares other than share dividends
payable in any such other shares ranking junior to the Convertible
Voting Shares;
(b) redeem, or purchase, or make any capital distribution in respect of
Common Shares or any other shares ranking junior to the Convertible
Voting Shares with respect to the payment of dividends or on any
liquidation distribution;
(c) redeem, or purchase, any other shares of the Company ranking equally
with the Convertible Voting Shares with respect to the payment of
dividends or on any liquidation distribution; or
(d) issue any Convertible Voting Shares or any shares of the Company
ranking equally with, or superior to, the Convertible Voting Shares
other than:
-6-
(i) the issue of Exchangeable Shares on the exercise of the
conversion right described in ARTICLE 6 hereof; and
(ii) by way of stock dividends to the Holders or for purposes of
implementing the required Economic Equivalent in respect of
Convertible Voting Shares as provided in Section 10.1 hereof.
ARTICLE 5
DISTRIBUTION ON LIQUIDATION
SECTION 5.1 LIQUIDATION RIGHTS.
In the event of the liquidation, dissolution or winding-up of the Company or any
other distribution of the assets of the Company among its shareholders for the
purpose of winding up its affairs, a Holder shall be entitled, subject to
applicable law, to receive from the assets of the Company in respect of each
Convertible Voting Share held by such Holder on the effective date of such
liquidation, dissolution or winding-up (the "LIQUIDATION DATE"), before any
distribution of any part of the assets of the Company to the holders of the
Common Shares or any other shares ranking junior to the Convertible Voting
Shares, an amount equal to the Convertible Voting Share Consideration applicable
on the last Business Day prior to the Liquidation Date (the "LIQUIDATION
AMOUNT"), which as set forth in Section 5.2 shall be fully paid and satisfied by
the delivery by or on behalf of the Company of the Total Convertible Voting
Share Consideration representing such Holder's total Liquidation Amount (the
"TOTAL LIQUIDATION AMOUNT").
SECTION 5.2 PAYMENT AND DELIVERY OF LIQUIDATION AMOUNT.
On or promptly after the Liquidation Date, the Company shall cause to be
delivered to the Holders the Convertible Voting Share Consideration per share
representing the Liquidation Amount for each such Convertible Voting Share upon
presentation and surrender of the certificates representing such Convertible
Voting Shares, together with such other documents and instruments as may be
required to effect a transfer of Convertible Voting Shares under the Act and the
constating documents of the Company and such additional documents and
instruments as the Company may reasonably require, at the principal executive
offices of the Company or at such other reasonable place as may be specified by
the Board of Directors by notice to the Holders. The Total Convertible Voting
Share Consideration representing the Total Liquidation Amount for such Holder's
Convertible Voting Shares shall be delivered to such Holder, at the Company's
expense, at the address of the Holder recorded in the securities register of the
Company for the Convertible Voting Shares, or, if requested by the Holder, by
holding for pick-up by the Holder at the place of delivery.
On and after the Liquidation Date, the Holders shall cease to be holders of such
Convertible Voting Shares and shall not be entitled to exercise any of the
rights of Holders in respect thereof, other than the right to receive their
proportionate share of the Total Convertible Voting Share Consideration
representing the Total Liquidation Amount, unless payment of the Total
Convertible Voting Share Consideration representing the Total Liquidation Amount
for such Convertible Voting Shares shall not be made upon presentation and
surrender of share certificates in accordance with the foregoing provisions, in
which case the rights of such Holder shall remain unaffected until the Total
Convertible Voting Share Consideration representing the Holder's Total
Liquidation Amount has been paid in the manner hereinbefore provided. The
Company shall have the right at any time after the Liquidation Date to deposit
or cause to be deposited the Total Convertible Voting Share Consideration
representing the Total Liquidation Amount in respect of the Convertible Voting
Shares represented by certificates that have not at the Liquidation Date been
surrendered by the Holders thereof in a
-7-
custodial account or for safekeeping, in the case of non-cash items, with any
chartered bank or trust company in Canada. Upon such deposit being made, the
rights of the Holders shall be limited to receiving their proportionate share of
the Total Convertible Voting Share Consideration representing the Total
Liquidation Amount so deposited for such Convertible Voting Shares, against
presentation and surrender of such certificates held by them, respectively, in
accordance with the foregoing provisions. Upon such payment or deposit of such
Total Convertible Voting Share Consideration, the Holders shall thereafter be
considered and deemed for all purposes to be the holders of the IPC Delaware
Common Shares delivered to them or the custodian on their behalf.
SECTION 5.3 RIGHTS AFTER LIQUIDATION.
After the Company has satisfied its obligations to pay a Holder the Total
Convertible Voting Share Consideration representing the Holder's Total
Liquidation Amount, such Holder shall not be entitled to share in any further
distribution of the assets of the Company.
Notwithstanding the foregoing, until such payment or deposit of such Holder's
Total Liquidation Amount, the Holder shall be deemed to still be a Holder for
purposes of all voting rights with respect thereto. Such rights shall remain
unaffected until such payment or deposit.
ARTICLE 6
CONVERSION BY HOLDER
SECTION 6.1 CONVERSION RIGHTS.
Any Holder shall be entitled at such Holder's option at any time and from time
to time to have all or any of the Convertible Voting Shares held by such Holder
converted into Exchangeable Shares as the same shall be constituted at the time
of conversion upon the basis of one Exchangeable Share for each Convertible
Voting Share in respect of which the conversion right is exercised; provided
that on conversion of any Convertible Voting Shares, the Holders thereof will
not be entitled to any adjustment of dividends on such Convertible Voting Shares
or on the Exchangeable Shares issuable on conversion. To effect such conversion
right, the Holder shall present and surrender at the principal executive offices
of the Company or at such other reasonable place as may be specified by the
Board of Directors by notice to the holders of Convertible Voting Shares the
certificate or certificates representing the Convertible Voting Shares in
respect of which the Holder thereof desires to exercise such right of
conversion, together with such other documents and instruments as may be
required to effect a conversion of Convertible Voting Shares under the Act and
the constating documents of the Company and such additional documents and
instruments as the Company may reasonable require, and together with a duly
executed statement (the "Conversion Request") in the form of Exhibit "A" hereto
or in such other form as may be acceptable to the Company:
(a) specifying that the Holder desires to have all or any number
specified therein of the Convertible Voting Shares represented by
such certificate or certificates (the "Converted Shares") converted
into Exchangeable Shares; and
(b) stating the date on which the Holder desires to have the Converted
Shares converted into Exchangeable Shares (the "Conversion Date")
which shall be the 30th day (or, if such day is not a Business Day,
the first Business Day thereafter) after the date on which the
Conversion Request is received by the. Company.
The Conversion Request shall be executed by the person registered on the books
of the Company as the holder of the Convertible Voting Shares in respect of
which such right is being exercised or by his
-8-
duly authorized attorney. The Holder shall also pay any governmental, transfer
or other tax imposed in respect of such conversion. Upon receipt of such notice,
the Company shall issue certificates representing the Exchangeable Shares upon
the basis above prescribed and in accordance with the provisions hereof to the
registered holder of the Convertible Voting Shares represented by the
certificate accompanying such notice. If less than all of the Convertible Voting
Shares represented by any certificate are to be converted, the Holder shall be
entitled to receive a new certificate for the Convertible Voting Shares
representing the shares comprised in the original certificate which are not to
be converted. All Exchangeable Shares resulting from any conversion provided for
herein shall be fully paid and assessable.
ARTICLE 7
PURCHASE FOR CANCELLATION
SECTION 7.1 PURCHASE FOR CANCELLATION.
Subject to applicable law, the Company may at any time and from time to time
purchase for cancellation all or any part of the Convertible Voting Shares by
private contract with any Holder, including all rights to any declared and
unpaid dividends or distributions thereon, at any price agreed to between the
Company and such Holder.
ARTICLE 8
VOTING RIGHTS
SECTION 8.1 VOTING RIGHTS.
The Holders shall be entitled to receive notice of and to attend all meetings of
the shareholders of the Company and to one vote at any such meeting in respect
of each Convertible Voting Share held.
ARTICLE 9
AMENDMENT AND APPROVAL
SECTION 9.1 HOLDER APPROVAL.
The rights, privileges, restrictions and conditions attaching to the Convertible
Voting Shares may be added to, changed or removed, only with the approval of the
holders of the Convertible Voting Shares (excluding Convertible Voting Shares
beneficially owned by IPC Delaware or its Subsidiaries) voting separately as a
class, given as hereinafter specified.
SECTION 9.2 QUOROM.
Any approval given by the Holders to add to, change or remove any right,
privilege, restriction or condition attaching to the Convertible Voting Shares
or any other matter requiring the approval or consent of the Holders shall be
deemed to have been sufficiently given if it shall have been given in accordance
with applicable law, provided, however, that such approval must be evidenced by
a resolution passed by not less than 66 2/3% (excluding Convertible Voting
Shares beneficially owned by IPC Delaware or its Subsidiaries) of the votes cast
on such resolution by persons represented in person or by proxy or such other
authorized person at a meeting of Holders duly called and held at which the
Holders of at least 50% of the Convertible Voting Shares outstanding at that
time are present or represented by proxy or such other authorized person
(excluding Convertible Voting Shares beneficially owned by IPC Delaware or its
Subsidiaries) or by a written resolution signed by the Holders of the
then-outstanding Convertible Voting Shares (excluding Convertible Voting Shares
-9-
beneficially owned by IPC Delaware or its Subsidiaries). If at any such meeting
the Holders of at least 50% of the Convertible Voting Shares outstanding at that
time are not present or represented by proxy or such other authorized person
within one-half hour after the time appointed for such meeting, then the meeting
shall be adjourned to such date not less than ten days thereafter and to such
time and place as may be designated by the Chairman of such meeting. At such
adjourned meeting the Holders present or represented by proxy or such other
authorized person thereat may transact the business for which the meeting was
originally called and a resolution passed thereat by the affirmative vote of not
less than 66 2/3% of the votes cast on such resolution by persons represented in
person or by proxy or such other authorized person at such meeting (excluding
Convertible Voting Shares beneficially owned by IPC Delaware or its
Subsidiaries) shall constitute the approval or consent of the Holders. For the
purposes of this Section, any spoiled votes, illegible votes, defective votes
and abstinences shall be deemed to be votes not cast.
ARTICLE 10
RECIPROCAL CHANGES, ETC. IN RESPECT OF IPC DELAWARE
COMMON SHARES
SECTION 10.1
In the event IPC Delaware takes any of the following actions:
(a) issues or distributes IPC Delaware Common Shares (or securities
exchangeable for or convertible into or carrying rights to
acquire IPC Delaware Common Shares) to the holders of all or
substantially all of the then-outstanding IPC Delaware Common Shares
by way of stock dividend or other distribution, other than an issue
of IPC Delaware Common Shares (or securities exchangeable for or
convertible into or carrying rights to acquire IPC Delaware Common
Shares) to holders of IPC Delaware Common Shares who exercise an
option to receive dividends in IPC Delaware Common Shares (or
securities exchangeable for or convertible into or carrying rights
to acquire IPC Delaware Common Shares) in lieu of receiving cash
dividends; or
(b) issues or distributes rights, options or warrants to the holders of
all or substantially all of the then-outstanding IPC Delaware Common
Shares entitling them to subscribe for or to purchase IPC Delaware
Common Shares (or securities exchangeable for or convertible into or
carrying rights to acquire IPC Delaware Common Shares); or
(c) issues or distributes to the holders of all or substantially all of
the then-outstanding IPC Delaware Common Shares, (i) shares or
securities of IPC Delaware of any class other than IPC Delaware
Common Shares (other than shares convertible into or exchangeable
for or carrying rights to acquire IPC Delaware Common Shares), (ii)
rights, options or warrants other than those referred to in Section
10.1(a) above, (iii) evidences of indebtedness of IPC Delaware, or
(iv) assets of IPC Delaware,
the Company will ensure that the Economic Equivalent on a per share basis of
such rights, options, securities, shares, evidence of indebtedness or other
assets shall be issued or distributed, in accordance with applicable law
simultaneously to holders of Convertible Voting Shares.
-10-
SECTION 10.2
IN the event IPC Delaware takes any of the following actions:
(a) subdivides, redivides or changes the then-outstanding IPC Delaware
Common Shares into a greater number of IPC Delaware Common Shares;
or
(b) reduces, combines, consolidates or changes the then-outstanding IPC
Delaware Common Shares into a lesser number of IPC Delaware Common
Shares; or
(c) reclassifies or otherwise changes any of the terms and conditions of
the IPC Delaware Common Shares, or effects an amalgamation, merger,
reorganization or other transaction affecting IPC Delaware Common
Shares,
the Company will provide at least 7 days prior written notice thereof to the
Holders and take all steps necessary to ensure that the same or an Economically
Equivalent change shall simultaneously be made to, or in the rights of the
Holders as provided for in these share provisions and will submit same to the
Holders for their approval in the manner provided in ARTICLE 9 hereof.
The Company will, to the extent required, upon due notice from IPC Delaware,
take or cause to be taken such steps as may be necessary for the purposes of
ensuring that appropriate dividends are paid or other distributions are made by
the Company, or subdivisions, redivisions or changes are made to the Convertible
Voting Shares, in order to implement the required Economic Equivalent with
respect to the IPC Delaware Common Shares and Convertible Voting Shares as
provided for in these share provisions and will, submit same to the Holders for
their approval in the manner provided in ARTICLE 9 hereof.
ARTICLE 11
ACTIONS BY THE COMPANY UNDER THE VOTING AND SUPPORT
AGREEMENT AND THE EXCHANGE AGREEMENT
SECTION 11.1
The Company will take all actions and do all such things as shall be necessary
or advisable, and will take all reasonable efforts to perform and comply with
and to ensure performance and compliance by IPC Delaware and the Company with
all provisions of the Voting and Support Agreement and the Exchange Agreement
applicable to IPC Delaware and the Company, respectively, in accordance with the
terms thereof including, without limitation, taking all such actions and doing
all such things as shall be necessary or advisable to enforce to the fullest
extent possible for the direct benefit of the Company and the Holders, all
rights and benefits in favour of the Company and the Holders under or pursuant
thereto.
SECTION 11.2
The Company will not propose, agree to or otherwise give effect to any amendment
to, or waiver or forgiveness of its obligations under, the Voting and Support
Agreement or the Exchange Agreement without the approval of the Holders (other
than IPC Delaware or any of its Subsidiaries) given in accordance with Section
9.2 hereof other than such amendments, waivers and/or forgiveness as may be
necessary or advisable for the purpose of:
-11-
(a) adding to the covenants of the other party or parties to such
agreement for the protection of the Holders (other than IPC Delaware
or any of its Subsidiaries); or
(b) making such provisions or modifications not inconsistent with the
spirit and intent of such agreement as may be necessary or desirable
with respect to matters or questions arising thereunder which, in
the good faith opinion of the Board of Directors, after consultation
with counsel, it may be expedient to make, provided that such
provisions and modifications will not be prejudicial or adverse to
the interests of any Holder; or
(c) making such changes in or corrections to such agreement which, on
the advice of counsel to the Company, are required for the purpose
of curing or correcting any defect or clerical omission or mistake
or manifest error contained therein, provided that the Board of
Directors shall be of the good faith opinion, after consultation
with counsel, that such changes or corrections win not be
prejudicial or adverse to the interests of any Holder.
ARTICLE 12
WITHHOLDING RIGHTS
SECTION 12.1 WITHHOLDING RIGHTS.
The Company and IPC Delaware, as the case may be, shall be entitled to deduct
and withhold from any dividend or consideration otherwise payable to any Holder
such amounts as the Company or IPC Delaware as the case may be, is required to
deduct and withhold with respect to such payment under the Income Tax Act
(Canada), the United States tax laws or any other relevant provisions of
provincial, state, local or foreign tax laws, in each case, as amended. To the
extent that amounts are so withheld, such withheld amounts shall be treated for
all purposes hereof as having been paid to such Holder in respect of which such
deduction and withholding was made, provided that such withheld amounts are
actually remitted to the appropriate tax authority. To the extent that such
amount so required to be deducted or withheld from any payment to a Holder
exceeds the cash portion of the consideration otherwise payable to the Holder,
the Company or IPC Delaware, as the case may be, shall promptly notify the
Holder and unless such Holder remits the difference in cash to the Company or
IPC Delaware, as the case may be, before the tax amount is required to be
remitted to the tax authority, then the Company or IPC Delaware, as the case may
be, may sell or otherwise dispose of such portion of the consideration
(including, without limitation, any of the IPC Delaware Common Shares) as is
necessary to provide sufficient funds to the Company or IPC Delaware, as the
case may be, to enable it to comply with such deduction or withholding
requirement and the Company or IPC Delaware, as the case may be, shall give an
accounting to the Holder with respect thereto and shall pay over to such Holder
and remit any unapplied balance of the net proceeds of such sale that was not
remitted to such tax authority in satisfaction of a deducting or withholding
requirement.
In order to assist the Company and IPC Delaware, as the case may be, in
complying with any such deduction and withholding requirement, the relevant
Holder shall, to the extent applicable, deliver to the Company or IPC Delaware,
as the case may be, (i) if such Holder is an individual, trust or corporation
a declaration sworn by the individual, a trustee or a director, as the case may
be, before a notary or commissioner for oaths to the effect that such Holder is
not, and will not be, on the date of payment, a non-resident of Canada for the
purposes of the Income Tax Act (Canada) or (ii) if such Holder is a partnership,
a declaration sworn by a general partner before a notary or commissioner for
oaths to the effect that such Holder is a Canadian partnership, as defined in
the Income Tax Act (Canada).
-12-
ARTICLE 13
MISCELLANEOUS
SECTION 13.1 NOTICE TO THE COMPANY.
Any notice, request or other communication to be given to the Company by a
Holder shall be in writing and shall be valid and effective if given by mail
(postage prepaid) or by telecopy or delivery to the principal executive offices
of the Company or at such other reasonable place as may be specified by the
Board of Directors by notice to the Holders, and addressed to the attention of
the President. Any such notice, request or other communication, if given by
mail, telecopy, facsimile or delivery, shall only be deemed to have been given
and received upon actual receipt thereof by the Company.
SECTION 13.2 MANNER AND RISK OF SURRENDER.
Any presentation and surrender by a Holder to the Company of certificates
representing Convertible Voting Shares in connection with the liquidation,
dissolution or winding-up of the Company or the conversion of Convertible Voting
Shares shall be made by registered mail (postage prepaid) or by delivery to the
principal executive offices of the Company or at such other reasonable place as
may be specified by the Board of Directors by notice to the Holders, in each
case addressed to the attention of the President of the Company. Any such
presentation and surrender of certificates shall only be deemed to have been
made and to be effective upon actual receipt thereof by the Company, as the case
may be, and the method of any such presentation and surrender of certificates
shall be at the sole risk of the Holder, mailing the same.
SECTION 13.3 NOTICE TO HOLDERS.
Any notice, request or other communication to be given to a Holder by or on
behalf of the Company shall be in writing and shall be valid and effective if
given by mail (postage prepaid) or by telecopy or delivery to the address of the
Holder recorded in the securities register of the Company or, in the event of
the address of any such Holder not being so recorded, then at the last known
address of such Holder. Any such notice, request or other communication, if
given by mail or telecopy, shall only be deemed to have been given and received
on the second Business Day following the date of mailing and, if given by
delivery, shall be deemed to have been given and received on the date of
delivery. Accidental failure or omission to give any notice, request or other
communication to one or more Holders shall not invalidate or otherwise alter or
affect any action or proceeding to be or intended to be taken by the Company.
SECTION 13.4 CONFLICT OR INCONSISTENCY
In the event of any inconsistency or conflict between all (or part of) a right,
privilege, restriction, or condition attaching to the Convertible Voting Shares
and all (or part of) an Article of the Articles of Association of the Company,
that right, privilege, restriction, or condition, or part thereof, as the case
may be, attaching to the Convertible Voting Shares shall to the extent of such
inconsistency or conflict govern.
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EXHIBIT "A"
CONVERSION REQUEST
TO: IntelliPharmaCeutics Corp. (the "COMPANY")
This notice is given pursuant to ARTICLE 6 of the provisions (the "CONVERTIBLE
VOTING SHARE PROVISIONS") attaching to the Convertible Voting Shares of the
Company represented by this certificate and all capitalized words and
expressions used in this notice which are defined in the Convertible Voting
Share Provisions have the meaning attributed to such words and expressions in
such Convertible Voting Share Provisions.
The undersigned hereby notifies the Company that the undersigned desires to
convert into Exchangeable Shares in accordance with ARTICLE 6 of the Convertible
Voting Share Provisions:
[ ] all share(s) represented by this certificate; or
[ ] _____________________ share(s) only.
[ ] Please check box if the certificate representing the Exchangeable Shares
is to be held for pick-up by the shareholder at the principal executive
offices of the Company or at such other reasonable place as may be
specified by the Board of Directors by notice to the Holders, failing
which the securities and any cheque(s) or other non-cash assets will be
delivered to the shareholder, at the Company's expense in accordance with
the Convertible Voting Share Provisions.
NOTE: This panel must be completed and the accompanying share certificate(s),
together with such additional documents as the Company may reasonably
require, must be deposited with the Company at its principal executive
offices or at such other reasonable place as may be specified by the Board
of Directors by notice to the holders of Convertible Voting Shares. The
Exchangeable Shares will be issued and registered in, and made payable to,
or transferred into, respectively, the name of the shareholder as it
appears on the register of the Company and the securities, cheque(s) and
other non-cash assets resulting from such redemption or purchase will be
delivered to the shareholder in accordance with the Convertible Share
Provisions.
Date
Name of person in whose name securities or
cheque(s) or other non-cash assets are to be
registered, issued or delivered
(PLEASE PRINT)
____________________________
Street Address or P.O. Box
____________________________
City, Province and Postal Code
____________________________
Signature of Shareholder
____________________________
Signature guaranteed by
NOTE: If this conversion request is for less than all of the share(s)
represented by this certificate, a certificate representing the remaining shares
of the Company will be issued and registered, at the Company's expense in the
name of the shareholder as it appears on the register of the Company, unless the
share certificate is duly endorsed for transfer in respect of such shares.
-2-
SCHEDULE "B"
EXCHANGEABLE SHARE PROVISIONS
SCHEDULE "B"
EXCHANGEABLE SHARE PROVISIONS
The Exchangeable Shares in the capital of the Company shall have the following
rights, privileges, restrictions and conditions:
ARTICLE 1
INTERPRETATION
SECTION 1.1 DEFINITIONS.
In these share provisions, the following terms have the following meanings:
"ACT" means the Companies Act (Nova Scotia), as amended, consolidated or
re-enacted from time to time.
"BOARD OF DIRECTORS" means the board of directors of the Company.
"BUSINESS DAY" means any day, other than a Saturday, a Sunday or a day
when banks are not generally open for business in Xxxxxxx, Xxxxxxx.
"CALL RIGHTS" has the meaning provided in the Exchange Agreement.
"CANADIAN DOLLAR EQUIVALENT" means in respect of an amount expressed in a
currency other than Canadian dollars (the "FOREIGN CURRENCY AMOUNT"), at
any date, the product obtained by multiplying:
(a) the Foreign Currency Amount, by
(b) the noon spot exchange rate on such date for such foreign currency
expressed in Canadian dollars as reported by the Bank of Canada or,
in the event such spot exchange rate is not available, such noon
spot exchange rate on the Business Day most recently preceding on
such date, or, if no such noon spot exchange rate is reported by the
Bank of Canada, such spot exchange rate on such date for such
foreign currency expressed in Canadian dollars as may be deemed by
the Board of Directors acting reasonably to be appropriate for such
purpose.
"COMMON SHARES" means the common shares in the capital of the Company and
any other securities into which such shares may be changed.
"CONVERTIBLE VOTING SHARES" means the convertible voting shares in the
capital of the Company each of which entitles the holder thereof to
receive one Exchangeable Share upon conversion.
"CONVERTIBLE VOTING SHARE PROVISIONS" means the rights, privileges,
restrictions and conditions attaching to the Convertible Voting Shares.
"COMPANY" means IntelliPharmaCeutics Corp., a company amalgamated and
existing under the Act, and includes any successor company.
"CURRENT MARKET PRICE" means, in respect of a IPC Delaware Common Share on
any date, the average closing price per IPC Delaware Common Share over the
period of 30 consecutive
trading days ending five trading days before such date on such national
stock exchange in the United States on which the IPC Delaware Common
Shares are listed and posted for trading which has the highest volume of
trading in such shares in the relevant period (the "RELEVANT EXCHANGE")
or, if IPC Delaware Common Shares are not then listed on a national stock
exchange in the United States, on such other principal stock exchange or
automated quotation system on which IPC Delaware Common Shares are listed
or quoted, as the case may be, as may be selected by the board of
directors of IPC Delaware for such purpose; provided, however, that if
there is no public distribution or trading activity of IPC Delaware Common
Shares during such period, then the Current Market Price of a IPC Delaware
Common Share shall be the fair market value of the IPC Delaware Common
Share as determined by the board of directors of IPC Delaware in good
faith based upon the advice of such qualified independent financial
advisors as the board of directors of IPC Delaware in good faith may deem
to be appropriate, and provided further that any such selection, opinion
or determination by the board of directors of IPC Delaware shall be
conclusive and binding.
"DIVIDEND AMOUNT" means an amount equal to and in satisfaction of all
declared and unpaid dividends or distributions on any Exchangeable Share
(or any Convertible Share upon the conversion of which the Exchangeable
Share was issued) on any dividend or distribution record date which
occurred on or prior to the effective time of any action described in the
definition of "Exchangeable Share Consideration" in these share
provisions.
"ECONOMIC EQUIVALENT" has the meaning provided in Section 3.2 hereof.
"EFFECTIVE DATE" means the date of first issue of the Convertible Voting
Shares.
"EXCHANGE AGREEMENT" means that certain Exchange Agreement between IPC
Delaware, the Company and certain shareholders of the Company to be
entered into contemporaneously with the first issue of Convertible Voting
Shares.
"EXCHANGEABLE SHARE CONSIDERATION" means, with respect to each
Exchangeable Share, for any action which is an acquisition of, or
redemption of, or distribution of assets of the Company in respect of, the
Exchangeable Share or purchase of the Exchangeable Share by the Company or
by IPC Delaware or a Subsidiary of IPC Delaware pursuant to the Exchange
Agreement or hereunder or otherwise, the aggregate of the following:
(a) the Current Market Price of one IPC Delaware Common Share, such
consideration to be fully paid, non-assessable, free and clear of
any lien, claim or encumbrance and satisfied by the delivery of one
IPC Delaware Common Share to be registered in the name of the
Holder, as evidenced by a certificate representing the aggregate
number of such IPC Delaware Common Shares; plus
(b) the Dividend Amount payable in U.S. dollars or the Canadian Dollar
Equivalent by means of a cheque payable at any branch of the bankers
of the payor; plus
(c) unless the corresponding equivalent dividend has already been
declared pursuant to Section 3.1 of these share provisions or
Section 3.1 of the Convertible Voting Share Provisions, as the case
may be, on the Exchangeable Share (or the Convertible Voting Share
upon the conversion of which the Exchangeable Share was issued), the
amount of all cash dividends declared by IPC Delaware on a IPC
Delaware Common Share on or prior to the effective time of any such
action, payable in U.S. dollars or
-2-
the Canadian Dollar Equivalent by means of a cheque payable at any
branch of the bankers of the payor; plus
(d) unless the corresponding equivalent dividend has already been
declared pursuant to Section 3.1 of these share provisions or
Section 3.1 of the Convertible Voting Share Provisions, as the case
may be, on the Exchangeable Share (or the Convertible Voting Share
upon the conversion of which the Exchangeable Share was issued), the
amount of all declared non-cash dividends or other distributions by
IPC Delaware on a IPC Delaware Common Share on or prior to the
effective time of any such action, payable by means of a cheque
payable at any branch of the bankers of the payor in an amount equal
to the fair market value of the property distributed on the
effective date of the relevant action in U.S. dollars or the
Canadian Dollar Equivalent or, at the option of the Board of
Directors, payable by the delivery of such non-cash items;
provided that (i) any such IPC Delaware Common Share shall be duly issued
as fully paid and non-assessable, free and clear of any lien, hypothec,
pledge, claim, encumbrance, security interest or adverse claim or interest
other than those under applicable securities laws and (ii) such
consideration shall be paid less any amounts required to be deducted and
withheld therefrom pursuant to Section 12.3 hereof, and all without
interest.
"EXCHANGEABLE SHARES" means the non-voting exchangeable shares in the
capital of the Company having the rights, privileges, restrictions and
conditions set forth herein.
"HOLDER" means a holder of Exchangeable Shares shown from time to time in
the register maintained by or on behalf of the Company in respect of the
Exchangeable Shares.
"IPC DELAWARE" means IntelliPharmaCeutics Ltd., a Delaware corporation,
and includes any successor corporation.
"IPC DELAWARE COMMON SHARES" means the shares of common stock in the
capital of IPC Delaware, par value US$.001 per share and any other shares
or other securities into which such shares may be changed or converted.
"IPC DELAWARE DIVIDEND DECLARATION DATE" means the date on which the board
of directors of IPC Delaware declares any dividend on the IPC Delaware
Common Shares.
"IPC DELAWARE SPECIAL VOTING SHARES" means the shares of
non-participating Special Voting Stock in the capital of IPC Delaware, par
value US$.001 per share.
"LIQUIDATION AMOUNT" has the meaning provided in Section 5.1 hereof.
"LIQUIDATION CALL RIGHT" has the meaning provided in the Exchange
Agreement.
"LIQUIDATION DATE" has the meaning provided in Section 5.1 hereof.
"REDEEMED SHARES" has the meaning provided in Section 6.1 hereof.
"REDEMPTION CALL RIGHT" has the meaning provided in the Exchange
Agreement.
"REDEMPTION DATE" has the meaning provided in Section 6.1(b) hereof.
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"REDEMPTION PRICE" has the meaning provided in Section 6.1 hereof.
"REDEMPTION PUT REQUEST" has the meaning provided in Section 6.1 hereof.
"SUBSIDIARY" or "SUBSIDIARIES", in relation to any person, means any body
corporate, partnership, joint venture, association or other entity of
which more than 50% of the total voting power of shares or units of
ownership or beneficial interest entitled to vote in the election of
directors (or members of a comparable governing body) is owned or
controlled, directly or indirectly, by such person.
"TOTAL EXCHANGEABLE SHARE CONSIDERATION" means at a particular time, the
Exchangeable Share Consideration per Exchangeable Share at that time
multiplied by the number of Exchangeable Shares in respect of which the
Exchangeable Consideration is paid or is payable at that time.
"TOTAL LIQUIDATION AMOUNT" has the meaning provided in Section 5.1 hereof.
"TOTAL REDEMPTION PRICE" has the meaning provided in Section 6.1 hereof.
"VOTING AND SUPPORT AGREEMENT" means the agreement in respect of, among
other things, the Exchangeable Shares to be made between IPC Delaware and
the Company as of the Effective Date, as it may be amended from time to
time.
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
SECTION 2.1 RANKING.
In accordance with Article 5, the Exchangeable Shares shall be entitled to a
preference over the Common Shares, the Preferred Shares and any other shares
which by their terms rank junior to the Exchangeable Shares, but shall rank pari
passu with the Convertible Voting Shares with respect to the payment of
dividends and the distribution of assets in the event of the liquidation,
dissolution or winding-up of the Company, whether voluntary or involuntary, or
any other distribution of the assets of the Company among its shareholders for
the purpose of winding up its affairs.
In the event that the Board of Directors desire to declare a dividend on the
Exchangeable Shares in accordance with Section 3.1 hereof, such dividends shall
neither be declared nor paid unless a dividend is also declared and paid on the
Convertible Voting Shares at the same time, in equal amounts per share to the
dividend so declared on the Exchangeable Shares (unless the holders of the
Convertible Voting Shares otherwise consent in writing).
In the event that rights are conferred upon the holders of the Exchangeable
Shares pursuant to Sections 10.1 or 10.2 as a result of IPC Delaware taking any
of the actions in Section 10.1 or 10.2, such similar rights as are conferred
upon the holders of the Convertible Voting Shares under Section 10.1 or 10.2, as
the case may be, of the Convertible Voting Share Provisions shall be exercised
at the same time as the exercise of such rights conferred upon the holders of
the Exchangeable Shares.
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ARTICLE 3
DIVIDENDS
SECTION 3.1 DIVIDENDS.
A Holder shall be entitled to receive, and the Board of Directors shall (subject
to applicable law) declare, a dividend on each Exchangeable Share on each IPC
Delaware Dividend Declaration Date (which shall be paid in accordance with
Section 3.4):
(a) in the case of a cash dividend declared on the IPC Delaware Common
Shares, in an amount in cash for each Exchangeable Share in US
dollars, or the Canadian Dollar Equivalent thereof on the IPC
Delaware Dividend Declaration Date, in each case, equal to the cash
dividend declared on each IPC Delaware Common Share;
(b) in the case of a stock dividend declared on the IPC Delaware Common
Shares to be paid in IPC Delaware Common Shares, by the issuance by
the Company of such number of Exchangeable Shares for each
Exchangeable Share as is equal to the number of IPC Delaware Common
Shares to be paid on each IPC Delaware Common Share;
(c) in the case of a dividend declared on the IPC Delaware Common Shares
in property other than cash or IPC Delaware Common Shares, in such
type and amount of property for each Exchangeable Share as is the
same as or the Economic Equivalent of the type and amount of
property declared as a dividend on each IPC Delaware Common Share;
or
(d) in the case of a dividend declared on the IPC Delaware Common Shares
to be paid in securities of IPC Delaware other than IPC Delaware
Common Shares, in such number of either such securities or
economically and legally equivalent securities of the Company, as
the Board of Directors determines, for each Exchangeable Share as is
equal to the number of securities of IPC Delaware to be paid on each
share or IPC Delaware Common Shares.
Such dividends shall be paid out of money, assets or property of the Company
properly applicable to the payment of dividends, or out of authorized but
unissued shares of the Company, as applicable. Any dividend which should have
been declared on the Exchangeable Shares pursuant to this Section 3.1 but was
not so declared due to the provisions of applicable law shall be declared and
paid by the Company as soon as payment of such dividend is permitted by such
law.
SECTION 3.2 DETERMINATION OF ECONOMIC EQUIVALENCE.
The Board of Directors shall determine, in good faith and in its sole discretion
(with the assistance of such reputable and qualified independent financial
advisors and/or other experts as the Board of Directors may require) what the
"ECONOMIC EQUIVALENT" or the economical and legal equivalent is for the purposes
of these share provisions and each such determination shall be conclusive and
binding. In making such determination, the following factors shall (without
excluding other factors determined by the Board of Directors to be relevant) be
considered by the Board of Directors:
(a) in the case of a distribution payable in IPC Delaware Common Shares
(other than in the case of a stock dividend), the number of such
shares issued in proportion to the number of IPC Delaware Common
Shares previously outstanding;
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(b) in the case of the issuance or distribution of any rights, options
or warrants to subscribe for or purchase IPC Delaware Common Shares
(or securities exchangeable for or convertible into or carrying
rights to acquire IPC Delaware Common Shares), the relationship
between the exercise price of each such right, option or warrant and
the Current Market Price of a IPC Delaware Common Share;
(c) in the case of the issuance or distribution of any other form of
property (including without limitation any shares or securities of
IPC Delaware of any class other than IPC Delaware Common Shares, any
rights, options or warrants other than those referred to in Section
3.2(b), any evidences of indebtedness of IPC Delaware or any assets
of IPC Delaware), the relationship between the fair market value (as
determined by the Board of Directors in the manner above
contemplated) of such property to be issued or distributed with
respect to each outstanding IPC Delaware Common Share and the
Current Market Price of a IPC Delaware Common Share;
(d) in the case of any subdivision, redivision or change of the
then-outstanding IPC Delaware Common Shares into a greater number of
IPC Delaware Common Shares or the reduction, combination,
consolidation or change of the then-outstanding IPC Delaware Common
Shares into a lesser number of IPC Delaware Common Shares or any
amalgamation, merger, reorganization or other transaction affecting
IPC Delaware Common Shares, the effect thereof upon the
then-outstanding IPC Delaware Common Shares; and
(e) in all such cases, the general taxation consequences of the relevant
event to the Holders to the extent that such consequences may differ
from the taxation consequences to the holders of IPC Delaware Common
Shares as a result of differences between the taxation laws of
Canada and the United States (except for any differing consequences
arising as a result of differing marginal taxation rates and without
regard to the individual circumstances of Holders).
SECTION 3.3 PAYMENT OF DIVIDENDS.
Cheques of the Company payable at any branch of the bankers of the Company shall
be issued in respect of any cash dividends contemplated by Section 3.1(a) hereof
and the sending of such a cheque to each holder of an Exchangeable Share shall
satisfy the cash dividend represented thereby unless the cheque is not paid on
presentation. Certificates registered in the name of the registered holder of
Exchangeable Shares shall be issued or transferred in respect of any stock
dividends contemplated by Section 3.1(b) or (d) hereof and the sending of such a
certificate to each holder of an Exchangeable Share shall satisfy the stock
dividend represented thereby or dividend payable in other securities represented
thereby. Such other type and amount of property in respect of any dividends
contemplated by Section 3.1(c) hereof shall be issued, distributed or
transferred by the Company in Such manner as it shall determine and the
issuance, distribution or transfer thereof by the Company to each holder of an
Exchangeable Share shall satisfy the dividend represented thereby. No holder of
an Exchangeable Share shall be entitled to recover by action or other legal
process against the Company any dividend that is represented by a cheque that
has not been duly presented to the Company's bankers for payment or that
otherwise remains unclaimed for a period of six years from the date on which
such dividend was payable.
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SECTION 3.4 RECORD AND PAYMENT DATES.
The record date for the determination of the Holders entitled to receive payment
of, and the payment date for, any dividend declared on the Exchangeable Shares
under Section 3.1 hereof shall be the same dates as the record date and payment
date, respectively, for the corresponding dividend declared on the IPC Delaware
Common Shares.
ARTICLE 4
CERTAIN RESTRICTIONS
SECTION 4.1 PROHIBITED ACTS.
So long as any of the Exchangeable Shares are outstanding, the Company shall not
at any time without, but may at any time with, the approval of the Holders given
as specified in Section 9.2 hereof:
(a) amend the constating documents of the Company in a manner which
would prejudicially or adversely affect the holders of Exchangeable
Shares in any respect; or
(b) initiate the voluntary liquidation, dissolution or winding-up of the
Company nor take any action or omit to take any action that is
designed to result in the liquidation, dissolution or winding up of
the Company; or
(c) issue any further Convertible Voting Shares or Exchangeable Shares,
or any other shares or securities of the Company ranking equally
with, or superior to, the Exchangeable Shares, to any person, other
than as contemplated by these share provisions, the Convertible
Voting Share Provisions or the Exchange Agreement.
SECTION 4.2 RESTRICTIONS IF DIVIDENDS UNPAID.
So long as any of the Exchangeable Shares are outstanding and any dividends
required to have been declared and paid on the outstanding Exchangeable Shares
pursuant to Article 3 have not been declared and paid in full, the Company shall
not at any time without, but may at any time with, the approval of the Holders
given as specified in Section 9.2 hereof.
(a) pay any dividends on the Common Shares, or any other shares ranking
junior to the Exchangeable Shares other than share dividends payable
in any such other shares ranking junior to the Exchangeable Shares;
(b) redeem, or purchase, or make any capital distribution in respect of
Common Shares or any other shares ranking junior to the Exchangeable
Shares with respect to the payment of dividends or on any
liquidation distribution;
(c) redeem, or purchase, any other shares of the Company ranking equally
with the Exchangeable Shares with respect to the payment of
dividends or on any liquidation distribution; or
(d) issue any Exchangeable Shares or any shares of the Company ranking
equally with, or superior to, the Exchangeable Shares other than by
way of stock dividends to the
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Holders or for purposes of implementing the required Economic Equivalent
in respect of Exchangeable Shares as provided in Section 10.1 hereof.
ARTICLE 5
DISTRIBUTION ON LIQUIDATION
SECTION 5.1 LIQUIDATION RIGHTS.
In the event of the liquidation, dissolution or winding-up of the Company or any
other distribution of the assets of the Company among its shareholders for the
purpose of winding up its affairs, a Holder shall be entitled, subject to
applicable law and the Liquidation Call Right as set forth in the Exchange
Agreement, to receive from the assets of the Company in respect of each
Exchangeable Share held by such Holder on the effective date of such
liquidation, dissolution or winding-up(the "LIQUIDATION DATE"), before any
distribution of any part of the assets of the Company to the holders of the
Common Shares or any other shares ranking junior to the Exchangeable Shares, an
amount equal to the Exchangeable Share Consideration applicable on the last
Business Day prior to the Liquidation Date (the "LIQUIDATION AMOUNT"), which as
set forth in Section 5.2 shall be fully paid and satisfied by the delivery by or
on behalf of the Company of the Total Exchangeable Share Consideration in
respect of the Holder's Exchangeable Shares representing such Holder's total
Liquidation Amount (the "TOTAL LIQUIDATION AMOUNT").
SECTION 5.2 PAYMENT AND DELIVERY OF LIQUIDATION AMOUNT.
On or promptly after the Liquidation Date, and subject to the exercise by IPC
Delaware of the Liquidation Call Right, the Company shall cause to be delivered
to the Holders the Liquidation Amount for each such Exchangeable Share upon
presentation and surrender of the certificates representing such Exchangeable
Shares, together with the certificate or certificates representing the same
number of IPC Delaware Special Voting Shares and together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares and the IPC Delaware Voting Shares under the Act and the
constating documents of the Company to effect a transfer of the IPC Delaware
Special Voting Shares and such additional documents and instruments as the
Company may reasonably require, at the principal executive offices of the
Company or at such other reasonable place as may be specified by the Board of
Directors by notice to the Holders. The Total Exchangeable Share Consideration
representing the Total Liquidation Amount for such Holder's Exchangeable Shares
shall be delivered to such Holder, at the Company's expense, at the address of
the Holder recorded in the securities register of the Company for the
Exchangeable Shares, or, if requested by the Holder, by holding for pick-up by
the Holder at the place of delivery.
On and after the Liquidation Date, the Holders shall cease to be holders of such
Exchangeable Shares and shall not be entitled to exercise any of the rights of
Holders in respect thereof, other than the right to receive their proportionate
share of the Total Exchangeable Share Consideration representing the Total
liquidation Amount of all such Exchangeable Shares unless payment of the Total
Liquidation Amount for a Holder's Exchangeable Shares shall not be made upon
presentation and surrender of share certificates in accordance with the
foregoing provisions, in which case the rights of such Holder shall remain
unaffected until the Total Exchangeable Share Consideration representing the
Holder's Total Liquidation Amount has been paid in the manner hereinbefore
provided. The Company shall have the right at any time after the Liquidation
Date to deposit or cause to be deposited the Total Exchangeable Share
Consideration representing the Total Liquidation Amount in respect of the
Exchangeable Shares represented by certificates that have not at the Liquidation
Date been surrendered by the Holders thereof in a custodial account or for
safekeeping, in the case of non-cash items, with any chartered bank or trust
company in Canada. Upon such deposit being made, the rights
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of the Holders shall be limited to receiving their proportionate share of the
Total Exchangeable Share Consideration representing the Total Liquidation Amount
so deposited for such Exchangeable Shares, against presentation and surrender of
such certificates held by them, respectively, in accordance with the foregoing
provisions. Upon such payment or deposit of such Total Exchangeable Share
Consideration, the Holders shall thereafter be considered and deemed for all
purposes to be the holders of the IPC Delaware Common Shares delivered to them
or the custodian on their behalf.
SECTION 5.3 RIGHTS AFTER LIQUIDATION.
After the Company has satisfied its obligations to pay a Holder the Total
Exchangeable Share Consideration representing the Holder's Total Liquidation
Amount, such Holder shall not be entitled to share in any further distribution
of the assets of the Company.
Notwithstanding the foregoing, until such payment or deposit of such Holder's
Total Liquidation Amount, the Holder shall be deemed to still be a Holder for
purposes of all voting rights with respect thereto. Such rights shall remain
unaffected until such payment or deposit.
ARTICLE 6
REDEMPTION OF EXCHANGEABLE SHARES BY HOLDER
SECTION 6.1 REDEMPTION RIGHTS.
A Holder shall be entitled at any time, subject to the exercise by IPC Delaware
of the Redemption Call Right as set forth in the Exchange Agreement and
applicable law, and otherwise upon compliance with the provisions of this
Article 6, to require the Company to redeem any or all of the Exchangeable
Shares registered in the name of such Holder for an amount equal to the
Exchangeable Share Consideration for each Exchangeable Share which the Holder
desires the Company to redeem (the "REDEEMED SHARES") applicable on the last
Business Day prior to the Redemption Date (the "REDEMPTION PRICE"), to be fully
paid and satisfied by the delivery by or on behalf of the Company of the Total
Exchangeable Share Consideration representing such Holder's total Redemption
Price for all such Redeemed Shares (the "TOTAL REDEMPTION PRICE"). To effect
such redemption, the Holder shall present and surrender at the principal
executive offices of the Company or at such other reasonable place as may be
specified by the Board of Directors by notice to the Holders, the certificates
representing the Redeemed Shares, together with certificates representing the
same number of IPC Delaware Special Voting Shares and, together with such other
documents and instruments as may be required to effect a transfer of Redeemed
Shares and to effect a transfer of the IPC Delaware Special Voting Shares under
the Act and the constating documents of the Company and such additional
documents and instruments as the Company may reasonably require, and together
with a duly executed statement (the "REDEMPTION PUT REQUEST") in the form of
Exhibit "A" hereto or in such other form as may be acceptable to the Company:
(a) specifying that the Holder desires to have all or any number
specified therein of the Redeemed Shares represented by such
certificate or certificates redeemed by the Company;
(b) stating the date on which the Holder desires to have the Company
redeem the Redeemed Shares (the "REDEMPTION DATE") which shall be
the 30th day (or, if such day is not a Business Day, the first
Business Day thereafter) after the date on which the Redemption Put
Request is received by the Company; and
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(c) acknowledging the Redemption Call Right of IPC Delaware in the
Exchange Agreement to purchase all but not less than all of the
Redeemed Shares directly from the Holder and that the Redemption Put
Request shall be deemed to be a revocable offer by the Holder to
sell the Redeemed Shares in accordance with the Exchange Agreement.
SECTION 6.2 PURCHASE BY COMPANY.
Subject to the exercise by IPC Delaware of the Redemption Call Right, upon
receipt by the Company in the manner specified in Section 6.1 hereof of a
certificate or certificates representing the number of Redeemed Shares, together
with a Redemption Put Request, and provided that the Redemption Put Request is
not revoked by the Holder in the manner specified in Section 6.6 hereof, the
Company shall redeem the Redeemed Shares effective at the close of business on
the Redemption Date and shall cause to be delivered to such holder the Total
Exchangeable Share Consideration representing the Total Redemption Price with
respect to such Redeemed Shares in accordance with Section 6.3 hereof. If not
all of the Exchangeable Shares represented by any certificate are redeemed, a
new certificate for the balance of such Exchangeable Shares shall be issued to
the Holder at the expense of the Company.
SECTION 6.3 PAYMENT OF REDEMPTION PRICE.
The Company shall deliver or cause to be delivered, the Total Exchangeable Share
Consideration representing the Total Redemption Price to the relevant Holder, at
the address of the Holder recorded in the securities register of the Company for
the Exchangeable Shares or at the address specified in the Holder's Redemption
Put Request or if request by the Holder by holding for pick-up by the Holder at
the principal executive offices of the Company or at such other reasonable place
as may be specified by the Board of Directors by notice to the Holders, and such
delivery of such Total Exchangeable Share Consideration to the Holder in respect
of the Holder's Redeemed Shares shall be deemed to be payment of and shall
satisfy and discharge all liability for the Total Redemption Price with respect
to such Redeemed Shares to the extent that the same is represented by such share
certificates and cheques, except as to any cheque included therein which is not
paid upon due presentation (less any tax deducted and withheld therefrom and
remitted to the proper tax authority).
SECTION 6.4 RIGHTS AFTER REDEMPTION.
After the close of business on the Redemption Date, the holder of the Redeemed
Shares shall not be entitled to exercise any of the rights of a holder in
respect thereof, other than the right to receive the Exchangeable Share
Consideration representing the total Redemption Price of the Holder's Redeemed
Shares, unless upon presentation and surrender of certificates in accordance
with the foregoing provisions, payment of the Total Exchangeable Share
Consideration representing the Total Redemption Price of such Redeemed Shares
shall not be made, in which case the rights of such Holder shall remain
unaffected until the Total Exchangeable Share Consideration representing such
Total Redemption Price has been paid in the manner hereinbefore provided. After
the close of business on the Redemption Date, provided that presentation and
surrender of certificates and payment of the Total Redemption Price has been
made in accordance with the foregoing provisions, the holder of the Redeemed
Shares so redeemed by the Company shall thereafter be considered and deemed for
all purposes to be a holder of the IPC Delaware Common Shares delivered to it.
Notwithstanding the foregoing, until payment of the Exchangeable Share
Consideration to the Holder in respect of an Exchangeable Share, the Holder
shall be deemed to still be a holder of such Exchangeable Share for purposes of
all voting rights with respect thereto. Such rights shall remain unaffected
until any cheque(s) received by Holder have cleared upon due presentation by
Holder.
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SECTION 6.5 LIMITATION ON REDEMPTION RIGHTS.
Notwithstanding any other provision of this Article 6, the Company shall not be
obligated to redeem Redeemed Shares specified by a Holder in a Redemption Put
Request to the extent that such redemption of Redeemed Shares would be contrary
to liquidity or solvency requirements or other provisions of applicable law. If
the Company believes that on any Redemption Date it would not be permitted by
any of such provisions to redeem the Redeemed Shares tendered for redemption on
such date, and provided that IPC Delaware shall not have exercised the
Redemption Call Right with respect to the Redeemed Shares, the Company shall
only be obligated to redeem Redeemed Shares specified by a Holder in a
Redemption Put Request to the extent of the maximum number that may be so
redeemed (rounded down to a whole number of shares) as would not be contrary to
such provisions and shall notify the Holder at least five Business Days prior to
the Redemption Date as to the number of Redeemed Shares which will not be
redeemed by the Company. In any case in which the redemption by the Company of
Redeemed Shares would be contrary to liquidity or solvency requirements or other
provisions of applicable law, the Company shall redeem Redeemed Shares in
accordance with Section 6.2 of these share provisions on a pro rata basis and
shall issue to each holder of Redeemed Shares a new certificate, at the expense
of the Company, representing the Redeemed Shares not redeemed by the Company
pursuant to Section 6.2 hereof. Provided that the Redemption Put Request is not
revoked by the Holder in the manner specified in Section 6.6 hereof, the holder
of any such Redeemed Shares not redeemed by the Company pursuant to Section 6.2
of these share provisions as a result of liquidity or solvency requirements or
applicable law shall be deemed by giving the Redemption Put Request to require
IPC Delaware to purchase such Redeemed Shares from such holder on the Redemption
Date or as soon as practicable thereafter on payment by IPC Delaware to such
holder of the Exchangeable Share Consideration representing the Redemption Price
for each such Redeemed Share, all as more specifically provided in the Exchange
Agreement.
SECTION 6.6 WITHDRAWAL OF REDEMPTION PUT REQUEST.
A holder of Redeemed Shares may, by notice in writing given by the Holder to the
Company before the close of business on the Business Day immediately preceding
the Redemption Date, withdraw its Redemption Put Request in which event such
Redemption Put Request shall be null and void and, for greater certainty, the
revocable offer constituted by the Redemption Put Request to sell the Redeemed
Shares to IPC Delaware shall be deemed to have been revoked.
ARTICLE 7
PURCHASE FOR CANCELLATION
SECTION 7.1 PURCHASE FOR CANCELLATION.
Subject to applicable law, the Company may at any time and from time to time
purchase for cancellation all or any part of the Exchangeable Shares by private
contract with any Holder, including all rights to any declared and unpaid
dividends or distributions thereon, at any price agreed to between the Company
and such Holder.
ARTICLE 8
VOTING RIGHTS
SECTION 8.1 VOTING RIGHTS.
Subject to the Act, the holders of the Exchangeable Shares shall not be entitled
as such (except as hereinafter specifically provided and except as otherwise
provided by the Act) to receive notice of or
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to attend all meetings of the shareholders of the Company and shall not be
entitled to vote at any such meeting.
ARTICLE 9
AMENDMENT AND APPROVAL
SECTION 9.1 HOLDER APPROVAL.
The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed, only with the approval
of the holders of Exchangeable Shares (excluding Exchangeable Shares
beneficially owned by IPC Delaware or its Subsidiaries), voting separately as a
class, given as hereinafter specified.
SECTION 9.2 QUORUM.
Any approval given by the Holders to add to, change or remove any right,
privilege, restriction or condition attaching to the Exchangeable Shares or any
other matter requiring the approval or consent of the Holders shall be deemed to
have been sufficiently given if it shall have been given in accordance with
applicable law, provided, however, that such approval must be evidenced by a
resolution passed by not less than 66 2/3% (excluding Exchangeable Shares
beneficially owned by IPC Delaware or its Subsidiaries) of the votes cast on
such resolution by persons represented in person or by proxy or such other
authorized person at a meeting of Holders duly called and held at which the
Holders of at least 50% of the Exchangeable Shares outstanding at that time are
present or represented by proxy or such other authorized person (excluding
Exchangeable Shares beneficially owned by IPC Delaware or its Subsidiaries) or
by a written resolution signed by the Holders of the then-outstanding
Exchangeable Shares (excluding Exchangeable Shares beneficially owned by IPC
Delaware or its Subsidiaries). If at any such meeting the Holders of at least
50% of the Exchangeable Shares outstanding at that time are not present or
represented by proxy or such other authorized person within one-half hour after
the time appointed for such meeting, then the meeting shall be adjourned to such
date not less than ten days thereafter and to such time and place as may be
designated by the Chairman of such meeting. At such adjourned meeting the
Holders present or represented by proxy or such other authorized person thereat
may transact the business for which the meeting was originally called and a
resolution passed thereat by the affirmative vote of not less than 66 2/3% of
the votes cast on such resolution by persons represented in person or by proxy
or such other authorized person at such meeting (excluding Exchangeable Shares
beneficially owned by IPC Delaware or its Subsidiaries) shall constitute the
approval or consent of the Holders. For the purposes of this Section, any
spoiled votes, illegible votes, defective votes and abstinences shall be deemed
to be votes not cast.
ARTICLE 10
RECIPROCAL CHANGES, ETC. IN RESPECT OF IPC DELAWARE
COMMON SHARES
SECTION 10.1
In the event IPC Delaware takes any of the following actions:
(a) issues or distributes IPC Delaware Common Shares (or securities
exchangeable for or convertible into or carrying rights to acquire
IPC Delaware Common Shares) to the holders of all or substantially
all of the then-outstanding IPC Delaware Common Shares by way of
stock dividend or other distribution, other than an issue of IPC
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Delaware Common Shares (or securities exchangeable for or
convertible into or carrying rights to acquire IPC Delaware Common
Shares) to holders of IPC Delaware Common Shares who exercise an
option to receive dividends in IPC Delaware Common Shares (or
securities exchangeable for or convertible into or carrying rights
to acquire IPC Delaware Common Shares) in lieu of receiving cash
dividends; or
(b) issues or distributes rights, options or warrants to the holders of
all or substantially all of the then-outstanding IPC Delaware Common
Shares entitling them to subscribe for or to purchase IPC Delaware
Common Shares (or securities exchangeable for or convertible into or
carrying rights to acquire IPC Delaware Common Shares); or
(c) issues or distributes to the holders of all or substantially all of
the then-outstanding IPC Delaware Common Shares, (i) shares or
securities of IPC Delaware of any class other than IPC Delaware
Common Shares (other than shares convertible into or exchangeable
for or carrying rights to acquire IPC Delaware Common Shares), (ii)
rights, options or warrants other than those referred to in Section
10.1(a) above, (iii) evidences of indebtedness of IPC Delaware, or
(iv) assets of IPC Delaware,
the Company will ensure that the Economic Equivalent on a per share basis of
such rights, options, securities, shares, evidence of indebtedness or other
assets shall be issued or distributed, in accordance with applicable law
simultaneously to the holders of Exchangeable Shares.
SECTION 10.2
In the event IPC Delaware takes any of the following actions:
(a) subdivides, redivides or changes the then-outstanding IPC Delaware
Common Shares into a greater number of IPC Delaware Common Shares;
or
(b) reduces, combines, consolidates or changes the then-outstanding IPC
Delaware Common Shares into a lesser number of IPC Delaware Common
Shares; or
(c) reclassifies or otherwise changes any of the terms and conditions of
the IPC Delaware Common Shares, or effects an amalgamation, merger,
reorganization or other transaction affecting IPC Delaware Common
Shares,
the Company will provide at least 7 days prior written notice thereof to the
Holders and take all steps necessary to ensure that the same or an Economically
Equivalent change shall simultaneously be made to, or in the rights of the
Holders as provided for in these share provisions and will submit same to the
Holders for their approval in the manner provided in Article 9 hereof.
The Company will, to the extent required, upon due notice from IPC Delaware,
take or cause to be taken such steps as may be necessary for the purposes of
ensuring that appropriate dividends are paid or other distributions are made by
the Company, or subdivisions, redivisions or changes are made to the
Exchangeable Shares, in order to implement the required Economic Equivalent with
respect to the IPC Delaware Common Shares and Exchangeable Shares as provided
for in these share provisions and will submit same to the Holders for their
approval in the manner provided in Article 9 hereof.
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ARTICLE 11
ACTIONS BY THE CORPORATION UNDER THE VOTING AND SUPPORT
AGREEMENT AND THE EXCHANGE AGREEMENT
SECTION 11.1
The Company will take all actions and do all such things as shall be necessary
or advisable, and will take all reasonable efforts to perform and comply with
and to ensure performance and compliance by IPC Delaware and the Company with
all provisions of the Voting and Support Agreement and the Exchange Agreement
applicable to IPC Delaware and the Company, respectively, in accordance with the
terms thereof including, without limitation, taking all such actions and doing
all such things as shall be necessary or advisable to enforce to the fullest
extent possible for the direct benefit of the Company and the Holders, all
rights and benefits in favour of the Company and the Holders under or pursuant
thereto.
SECTION 11.2
The Company will not propose, agree to or otherwise give effect to any amendment
to, or waiver or forgiveness of its obligations under, the Voting and Support
Agreement or the Exchange Agreement without the approval of the Holders (other
than IPC Delaware or any of its Subsidiaries) given in accordance with Section
9.2 hereof other than such amendments, waivers and/or forgiveness as may be
necessary or advisable for the purpose of:
(a) adding to the covenants of the other party or parties to such
agreement for the protection of the Holders (other than IPC Delaware
or any of its Subsidiaries); or
(b) making such provisions or modifications not inconsistent with the
spirit and intent of such agreement as may be necessary or desirable
with respect to matters or questions arising thereunder which, in
the good faith opinion of the Board of Directors, after consultation
with counsel, it may be expedient to make, provided that such
provisions and modifications will not be prejudicial or adverse to
the interests of any Holder; or
(c) making such changes in or corrections to such agreement which, on
the advice of counsel to the Company, are required for the purpose
of curing or correcting any defect or clerical omission or mistake
or manifest error contained therein, provided that the Board of
Directors shall be of the good faith opinion, after consultation
with counsel, that such changes or corrections will not be
prejudicial or adverse to the interests of any Holder.
ARTICLE 12
LEGEND; CALL RIGHTS
SECTION 12.1 LEGEND.
The certificates evidencing the Exchangeable Shares shall contain or have
affixed thereto a legend, in form and on terms approved by the Board of
Directors, with respect to the Call Rights and all other rights of the holders
of Exchangeable Shares pursuant to the Voting and Support Agreement and the
Exchange Agreement.
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SECTION 12.2 ACKNOWLEDGEMENT.
Each Holder, whether of record or beneficial, by virtue of becoming and being
such a Holder shall be deemed to acknowledge each of the Call Rights in favour
of IPC Delaware or its assignee (as provided in the Exchange Agreement) and the
overriding nature thereof in connection with the liquidation, dissolution or
winding-up of the Company or the redemption of Exchangeable Shares, as the case
may be, and to be bound thereby in favour of IPC Delaware or its assignee (as
provided in the Exchange Agreement) as therein provided.
SECTION 12.3 WITHHOLDING RIGHTS.
The Company and IPC Delaware, as the case may be, shall be entitled to deduct
and withhold from any dividend or consideration otherwise payable to any Holder
such amounts as the Company or IPC Delaware, as the case may be, is required to
deduct and withhold with respect to such payment under the Income Tax Act
(Canada), the United States tax laws or any other relevant provisions of
provincial, state, local or foreign tax laws, in each case, as amended. To the
extent that amounts are so withheld, such withheld amounts shall be treated for
all purposes hereof as having been paid to such Holder in respect of which such
deduction and withholding was made, provided that such withheld amounts are
actually remitted to the appropriate tax authority. To the extent that such
amount so required to be deducted or withheld from any payment to a Holder
exceeds the cash portion of the consideration otherwise payable to the Holder,
the Company or IPC Delaware, as the case may be, shall promptly notify the
Holder and unless such Holder remits the difference in cash to the Company or
IPC Delaware, as the case may be, before the tax amount is required to be
remitted to the tax authority, then the Company or IPC Delaware, as the case may
be, may sell or otherwise dispose of such portion of the consideration
(including, without limitation, any of the IPC Delaware Common Shares) as is
necessary to provide sufficient funds to the Company or IPC Delaware, as the
case may be, to enable it to comply with such deduction or withholding
requirement and the Company or IPC Delaware, as the case may be, shall give an
accounting to the Holder with respect thereto and shall pay over to such Holder
and remit any unapplied balance of the net proceeds of such sale that was not
remitted to such tax authority in satisfaction of a deduction or withholding
requirement.
In order to assist the Company and IPC Delaware, as the case may be, in
complying with any such deduction and withholding requirement, the relevant
Holder shall, to the extent applicable, deliver to the Company or IPC Delaware,
as the case may be, (i) if such Holder is an individual, trust or corporation, a
declaration sworn by the individual, a trustee or a director, as the case may
be, before a notary or commissioner for oaths to the effect that such Holder is
not, and will not be, on the date of payment, a non-resident of Canada for the
purposes of the Income Tax Act (Canada) or (ii) if such Holder is a partnership,
a declaration sworn by a general partner before a notary or commissioner for
oaths to the effect that such Holder is a Canadian partnership, as defined in
the Income Tax Act (Canada).
ARTICLE 13
MISCELLANEOUS
SECTION 13.1 NOTICE TO THE COMPANY.
Any notice, request or other communication to be given to the Company by a
Holder shall be in writing and shall be valid and effective if given by mail
(postage prepaid) or by telecopy or delivery to the principal executive offices
of the Company or at such other reasonable place as may be specified by the
Board of Directors by notice to the Holders, and addressed to the attention of
the President. Any such notice, request or other communication, if given by
mail, telecopy, facsimile or
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delivery, shall only be deemed to have been given and received upon actual
receipt thereof by the Company.
SECTION 13.2 MANNER AND RISK OF SURRENDER.
Any presentation and surrender by a Holder to the Company of certificates
representing Exchangeable Shares in connection with the liquidation, dissolution
or winding-up of the Company or the redemption of Exchangeable Shares shall be
made by registered mail (postage prepaid) or by delivery to the principal
executive offices of the Company or at such other reasonable place as may be
specified by the Board of Directors by notice to the Holders, in each case
addressed to the attention of the President of the Company. Any such
presentation and surrender of certificates shall only be deemed to have been
made and to be effective upon actual receipt thereof by the Company, as the case
may be, and the method of any such presentation and surrender of certificates
shall be at the sole risk of the Holder, mailing the same.
SECTION 13.3 NOTICE TO HOLDERS.
Any notice, request or other communication to be given to a Holder by or on
behalf of the Company shall be in writing and shall be valid and effective if
given by mail (postage prepaid) or by telecopy or delivery to the address of the
Holder recorded in the securities register of the Company or, in the event of
the address of any such Holder not being so recorded, then at the last known
address of such Holder. Any such notice, request or other communication, if
given by mail or telecopy, shall only be deemed to have been given and received
on the second Business Day following the date of mailing and, if given by
delivery, shall be deemed to have been given and received on the date of
delivery. Accidental failure or omission to give any notice, request or other
communication to one or more Holders shall not invalidate or otherwise alter or
affect any action or proceeding to be or intended to be taken by the Company.
SECTION 13.4 CONVERSION TO COMMON SHARES.
Immediately upon the issuance and delivery to a Holder at any time and from time
to time of IPC Delaware Common Shares and the other Exchangeable Share
Consideration (if any) pursuant to any Call Right, or any Insolvency Put Right
or Automatic Exchange Right (as such terms are defined in the Exchange
Agreement), the Exchangeable Shares which are acquired pursuant to such right
shall be automatically converted into Common Shares of the Company on a
one-for-one basis and the holder thereof shall be entitled to a certificate or
certificates upon demand representing the Common Shares resulting from such
conversion. All Common Shares issued by the Company in respect of any conversion
of issued and fully paid Exchangeable Shares shall be deemed to be fully paid
and assessable.
SECTION 13.5 CONFLICT OR INCONSISTENCY
In the event of any inconsistency or conflict between all (or part of) a right,
privilege, restriction, or condition attaching to the Exchangeable Shares and
all (or part of) an Article of the Articles of Association of the Company, that
right, privilege, restriction, or condition, or part thereof, as the case may
be, attaching to the Exchangeable Shares shall to the extent of such
inconsistency or conflict govern.
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EXHIBIT "A"
REDEMPTION PUT REQUEST
TO: IntelliPharmaCeutics Corp. (the "COMPANY")
AND TO: IntelliPharmaCeutics Ltd. ("TPC DELAWARE")
This notice is given pursuant to Article 6 of the provisions (the "EXCHANGEABLE
SHARE PROVISIONS") attaching to the Exchangeable Shares of the Company
represented by this certificate and all capitalized words and expressions used
in this notice which are defined in the Exchangeable Share Provisions have the
meaning attributed to such words and expressions in such Exchangeable Share
Provisions.
The undersigned hereby notifies the Company that, subject to the Redemption Call
Right referred to below, the undersigned desires to have the Company redeem in
accordance with Article 6 of the Exchangeable Share Provisions:
[ ] all share(s) represented by this certificate; or
[ ] ______________________share(s) only.
The undersigned hereby notifies the Company that the Redemption Date shall
be______________________________.
NOTE: The Redemption Date will be the 30th day after the date upon which this
notice is received by the Company (or, if such day is not a Business Day
the first Business Day thereafter).
The undersigned acknowledges the overriding Redemption Call Right of IPC
Delaware to purchase all but not less than all the Redeemed Shares from the
undersigned and that this request is and shall be deemed to be a revocable offer
by the undersigned to sell the Redeemed Shares to IPC Delaware in accordance
with the Redemption Call Right on the Redemption Date for the price and on the
other terms and conditions set out in the Exchange Agreement and in the
Exchangeable Share Provisions. If IPC Delaware determines not to exercise the
Redemption Call Right, the Company will notify the undersigned of such fact as
soon as possible. This notice of redemption, and this offer to sell the Redeemed
Shares to IPC Delaware, may be revoked and withdrawn by the undersigned by
notice in writing given to the Company at any time before the close of business
on the Business Day immediately preceding the Redemption Date.
The undersigned acknowledges that if, as a result of liquidity or solvency
provisions of applicable law, the Company is unable to redeem all Redeemed
Shares, the undersigned will be deemed to have exercised the Insolvency Put
Right (as defined in the Exchange Agreement) so as to require IPC Delaware to
purchase the unredeemed Redeemed Shares.
The undersigned represents and warrants to the Company and IPC Delaware that the
undersigned:
[ ] is
[ ] is not
a non-resident of Canada for purposes of the Income Tax Act (Canada). The
undersigned acknowledges that in the absence of an indication that the
undersigned is not a non-resident of Canada, withholding on account of Canadian
tax may be made from amounts payable to the undersigned from net proceeds of
sale or IPC Delaware Common Shares deliverable on the redemption or purchase of
the Redeemed Shares.
The undersigned hereby represents and warrants to the Company and IPC Delaware
that the undersigned has good title to, and owns, the share(s) represented by
this certificate to be acquired by the Company or IPC Delaware, as the case may
be, tree and clear of all liens, hypothecs, pledges, claims, encumbrances,
security interests and adverse claims or interests except pursuant to the
Exchange Agreement or the Exchangeable Share Provisions.
__________ __________________________ ________________________
(Date) (Signature of Shareholder) (Guarantee of Signature)
[ ] Please check box if the securities and any cheque(s) or other non-cash
assets resulting from the redemption of the Redeemed Shares are to be held
for pick-up by the shareholder at the principal executive offices of the
Company or at such other reasonable place as may be specified by the Board
of Directors by notice to the holders of Exchangeable Shares, failing
which the securities and any cheque(s) or other non-cash assets will be
delivered to the shareholder, at the Company's expense in accordance with
the Exchangeable Share Provisions.
NOTE: This panel must be completed and the accompanying share certificate(s),
together with such additional documents as the Company may reasonably
require, must be deposited with the Company at its principal executive
offices or at such other reasonable place as may be specified by the Board
of Directors by notice to the holders of Exchangeable Shares. The
securities and any cheque(s) or other non-cash assets resulting from the
redemption or purchase of the Redeemed Shares will be issued and
registered in, and made payable to, or transferred into, respectively, the
name of the shareholder as it appears on the register of the Company and
the securities, cheque(s) and other non-cash assets resulting from such
redemption or purchase will be delivered to the shareholder in accordance
with the Exchangeable Share Provisions.
Date
Name of person in whose name securities or
cheque(s) or other non-cash assets are to be
registered, issued or delivered
(PLEASE PRINT)
___________________________________
Street Address or P.O. Box
___________________________________
City, Province and Postal Code
___________________________________
Signature of Shareholder
___________________________________
Signature guaranteed by
NOTE: If this notice of redemption is for less than all of the share(s)
represented by this certificate, a certificate representing the remaining shares
of the Company will be issued and registered, at the Company's expense in the
name of the shareholder as it appears on the register of the Company, unless the
share certificate is duly endorsed for transfer in respect of such shares.
-2-
SCHEDULE "C"
IPC DELAWARE SPECIAL VOTING SHARE PROVISIONS
The Special Voting Shares in the capital of IPC Delaware shall have the
following rights, privileges, restrictions and conditions:
ARTICLE 1
INTERPRETATION
SECTION 1.1 DEFINITIONS.
In these share provisions, the following terms have the following meanings:
"CONVERTIBLE VOTING SHARES" means the convertible voting shares in the
capital of IntelliPharmaCeutics Corp.
"EXCHANGE AGREEMENT" means the exchange agreement to be entered into by
IPC Delaware (as hereinafter defined), IntelliPharmaCeutics Corp., a
corporation amalgamated under the laws of the Province of Nova Scotia, and
certain shareholders of IntelliPharmaCeutics Corp. which, among other
things, provides IPC Delaware with the right, exerciseable upon the
occurrence of certain events, to require certain shareholders of
IntelliPharmaCeutics Corp. to sell their Exchangeable Shares to IPC
Delaware.
"EXCHANGEABLE SHARES" means the exchangeable shares in the capital of
IntelliPharmaCeutics Corp.
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges, restrictions
and conditions attaching to the Exchangeable Shares set forth in the
articles of incorporation of IntelliPharmaCeutics Corp.
"IPC DELAWARE" means Ready Capital Corp., a corporation incorporated under
the laws of Delaware.
"IPC DELAWARE COMMON SHARES" means the shares of common stock in the
capital of IPC Delaware, par value US$.001 per share.
"SPECIAL VOTING SHARES" means the shares of non-participating special
voting stock in the capital of IPC Delaware, par value US$.001 per share,
having the rights, privileges, restrictions and conditions set forth
herein.
"SUBSIDIARY OR SUBSIDIARIES", in relation to any person, means any body
corporate, partnership, joint venture, association or other entity of
which more than 50% of the total voting power of shares or units of
ownership or beneficial interest entitled to vote in the election of
directors (or members of a comparable governing body) is owned or
controlled, directly or indirectly, by such person.
-2-
ARTICLE 2
DIVIDENDS AND DISTRIBUTIONS
SECTION 2.1 NO DIVIDENDS OR DISTRIBUTIONS.
Except as required by applicable law, a holder of a Special Voting Share shall
not be entitled to receive any dividends or distributions of IPC Delaware,
whether payable in cash, property or in shares of capital stock.
ARTICLE 3
LIQUIDATION
SECTION 3.1 NO LIQUIDATION RIGHTS.
In the event of the liquidation, dissolution or winding-up of IPC Delaware or
any other distribution of the assets of IPC Delaware among its shareholders for
the purpose of winding-up its affairs, a holder of Special Voting Shares shall
not be entitled to receive any assets of IPC Delaware available for distribution
to its shareholders.
ARTICLE 4
VOTING RIGHTS
SECTION 4.1 VOTING RIGHTS.
The holders of the Special Voting Shares shall be entitled to receive notice of
and to attend all meetings of the shareholders of IPC Delaware and to one vote
at any such meeting in respect of each Special Voting Share held and shall,
other than as required by applicable law or as contemplated by Section 6.1
hereof, vote together with the IPC Delaware Common Shares as a single class.
ARTICLE 5
NO REDEMPTION
SECTION 5.1 REDEMPTION.
The Special Voting Shares shall not be redeemable, except as follows:
(a) immediately upon the issuance and delivery of a IPC Delaware Common
Share to the holder of an Exchangeable Share pursuant to the
Exchangeable Share Provisions or the Exchange Agreement, the Special
Voting Shares held by such holder shall automatically be redeemed
and cancelled on the basis of one Special Voting Share redeemed and
cancelled for each IPC Delaware Common Share issued; and
(b) at such time as no Convertible Voting Shares or Exchangeable Shares
(other than those owned by IPC Delaware and its Subsidiaries, if
any) shall be outstanding,
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any Special Voting Shares then outstanding shall automatically be
redeemed and cancelled.
ARTICLE 6
OTHER PROVISIONS
SECTION 6.1 ADDITIONAL ISSUANCES.
IPC Delaware will not issue any additional Special Voting Shares without the
consent of the holders at the relevant time of Special Voting Shares voting
separately as a class.
