SHARE EXCHANGE
AGREEMENT
THIS AGREEMENT
is made effective as of the 9 th
day of
October, 2009
URBAN BARNS
FOODS INC. , a Nevada
corporation, having an office at Office 404 – 4
th
Floor, Albany
House, 324-326 Regent Street, London, UK, W1B 3HH
URBAN BARNS
FOODS INC. an Alberta
corporation, having an office at 12936 Elbow Drive SW, Calgary,
Alberta, Canada, T2W 6G6
THE UNDERSIGNED
SHAREHOLDERS OF PRIVECO, as more
specifically set out in Schedule 1 attached hereto
(the “
Selling Shareholders ”)
A. the Selling
Shareholders are the registered and beneficial owners of all
1,000,000 issued and outstanding common shares in the capital of
Priveco;
B. Pubco has agreed
to issue 25,000,000 of its common shares as of the Closing Date, as
defined herein, to the Selling Shareholders as consideration for
the purchase by Pubco of the 1,000,000 issued and outstanding
common shares of Priveco held by the Selling
Shareholders;
C. upon the terms and
subject to the conditions set forth in this Agreement, the Selling
Shareholders have agreed to sell all of the issued and outstanding
common shares of Priveco held by the Selling Shareholders to Pubco
in exchange for common shares of Pubco; and
D. the parties wish
to enter into this Agreement,
THEREFORE, in
consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration (the receipt
and sufficiency of which are hereby acknowledged), the parties
covenant and agree as follows:
1.1
Definitions . The following terms have the
following meanings, unless the context indicates
otherwise:
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“
Agreement ” shall mean this Share Exchange Agreement,
and all schedules and other documents attached to or referred to in
this Agreement, and all amendments and supplements, if any, to this
Agreement;
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“
Closing ” shall mean the completion of the
Transaction, in accordance with Section 7 hereof, at which the
Closing Documents shall be exchanged by the parties, except for
those documents or other items specifically required to be
exchanged at a later time;
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“
Closing Date ” shall mean a date mutually agreed upon
by the parties hereto in writing and in accordance with Section
10.6 following the satisfaction or waiver by Pubco and Priveco of
the conditions precedent set out in Sections 5.1 and 5.2
respectively, provided that such date shall be no later than six
(6) weeks after delivery of the Priveco Financial Statements to be
delivered under Section 5.1(h) hereof;
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“
Closing Documents ” shall mean the papers, instruments
and documents required to be executed and delivered at the Closing
pursuant to this Agreement;
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“
Exchange Act ” shall mean the United States Securities
Exchange Act of 1934, as amended;
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“
GAAP ” shall mean United States generally accepted
accounting principles applied in a manner consistent with prior
periods;
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“
Liabilities ” shall include any direct or indirect
indebtedness, guarantee, endorsement, claim, loss, damage,
deficiency, cost, expense, obligation or responsibility, fixed or
unfixed, known or unknown, asserted choate or inchoate, liquidated
or unliquidated, secured or unsecured;
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“
Priveco Shares” shall mean the 1,000,000 common shares
of Priveco held by the Selling Shareholders, being all of the
issued and outstanding common shares of Priveco beneficially held,
either directly or indirectly, by the Selling
Shareholders;
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“
Pubco Shares ” shall mean the 25,000,000 fully paid
and non-assessable common shares of Pubco, to be issued to the
Selling Shareholders, or their designees, by Pubco on the Closing
Date;
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“
SEC ” shall mean the United States Securities and
Exchange Commission;
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“
Securities Act ” shall mean the United States
Securities Act of 1933, as amended;
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“
Taxes ” shall include international, federal, state,
provincial and local income taxes, capital gains tax, value-added
taxes, franchise, personal property and real property taxes,
levies, assessments, tariffs, duties (including any customs duty),
business license or other fees, sales, use and any other taxes
relating to the assets of the designated party or the business of
the designated party for all periods up to and including the
Closing Date, together with any related charge or amount, including
interest, fines, penalties and additions to tax, if any, arising
out of tax assessments; and
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“
Transaction ” shall mean the purchase of the Priveco
Shares by Pubco from the Selling Shareholders in consideration for
the issuance of the Pubco Shares.
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1.2
Schedules . The following schedules are attached
to and form part of this Agreement:
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Certificate of
Non-U.S. Shareholder
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National
Instrument 45-106 Investor Questionnaire
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Directors and
Officers of Priveco
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Directors and
Officers of Pubco
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Priveco
Intellectual Property
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Priveco Leases,
Subleases, Claims, Capital Expenditures, Taxes and Other Property
Interests
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Priveco
Material Contracts
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1.3
Currency . All references to currency in this
Agreement are to United States Dollars unless expressly stated
otherwise.
2.
THE OFFER, PURCHASE AND SALE OF SHARES
2.1
Offer, Purchase and Sale of Shares . Subject to
the terms and conditions of this Agreement, the Selling
Shareholders hereby covenant and agree to sell, assign and transfer
to Pubco, and Pubco hereby covenants and agrees to purchase from
the Selling Shareholders all of the Priveco Shares held by the
Selling Shareholders.
2.2
Consideration . As consideration for the sale of
the Priveco Shares by the Selling Shareholders to Pubco, Pubco
shall allot and issue the Pubco Shares to the Selling Shareholders,
or their designees, in the amount set out opposite each Selling
Shareholder’s name in Schedule 1 on the basis of 25 Pubco
Shares for each Priveco Share held by each Selling
Shareholder. The Selling Shareholders acknowledge and
agree that the Pubco Shares are being issued pursuant to an
exemption from the prospectus and registration requirements of the
Securities Act. As required by applicable securities
law, the Selling Shareholders agree to abide by all applicable
resale restrictions and hold periods imposed by all applicable
securities legislation. All certificates representing
the Pubco Shares issued on Closing will be endorsed with the
following legend pursuant to the Securities Act in order to reflect
the fact that the Pubco Shares will be issued to the Selling
Shareholders pursuant to an exemption from the registration
requirements of the Securities Act:
“THE
SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE
TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED
HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE “1933 ACT”).
NONE OF THE
SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933
ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED,
MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED
STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN
ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933
ACT. “UNITED STATES” AND “U.S.
PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933
ACT.”
2.3
Share Exchange Procedure . Each Selling
Shareholder may exchange his, her or its certificate representing
the Priveco Shares by delivering such certificate to Pubco duly
executed and endorsed in blank (or accompanied by duly executed
stock powers duly endorsed in blank), in each case in proper form
for transfer, with signatures guaranteed, and, if
applicable, with all stock transfer and any other required
documentary stamps affixed thereto and with appropriate
instructions to allow the transfer agent to issue certificates for
the Pubco Shares to the holder thereof, together with:
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a Certificate
of Non-U.S. Shareholder (the “ Certificate of Non-US
Shareholder ”), a copy of which is set out in Schedule 2;
and
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a National
Instrument 45-106 Investor Questionnaire (the “
Questionnaire ”), a copy of which is set out in
Schedule 3.
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2.4
Fractional Shares. Notwithstanding any other
provision of this Agreement, no certificate for fractional shares
of the Pubco Shares will be issued in the
Transaction. In lieu of any such fractional shares, if
any of the Selling Shareholders would otherwise be entitled to
receive a fraction of a share of the Pubco Shares upon surrender of
certificates representing the Priveco Shares for exchange pursuant
to this Agreement, the Selling Shareholders will be entitled to
have such fraction rounded up to the nearest whole number of Pubco
Shares and will receive from Pubco a stock certificate representing
same.
2.5
Closing Date. The Closing will take place,
subject to the terms and conditions of this Agreement, on the
Closing Date.
2.6
Restricted Shares . The Selling Shareholders
acknowledge that the Pubco Shares issued pursuant to the terms and
conditions set forth in this Agreement will have such hold periods
as are required under applicable securities laws and as a result
may not be sold, transferred or otherwise disposed, except pursuant
to an effective registration statement under the Securities Act, or
pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and in each
case only in accordance with all applicable securities
laws.
2.7
Exemptions . The Selling Shareholders acknowledge
that Pubco has advised such Selling Shareholders that Pubco is
relying upon the representations and warranties of the Selling
Shareholders set out in the Questionnaire to issue the Pubco Shares
under an exemption from the prospectus and registration
requirements of the Securities Act (British Columbia) (the
“ British Columbia Securities Act ”) and, as a
consequence, certain protections, rights and remedies provided by
the British Columbia Securities Act, including statutory rights of
rescission or damages, will not be available to the Selling
Shareholders.
2.8
Canadian Resale Restrictions . The Selling
Shareholders acknowledge that resale of any of the Pubco Shares by
the Selling Shareholders resident in Canada is restricted except
pursuant to an exemption from applicable securities
legislation.
3.
REPRESENTATIONS AND WARRANTIES OF PRIVECO
As of the
Closing, Priveco and the Selling Shareholders, jointly and
severally, represent and warrant to Pubco, and acknowledge that
Pubco is relying upon such representations and warranties, in
connection with the execution, delivery and performance of this
Agreement, notwithstanding any investigation made by or on behalf
of Pubco, as follows:
3.1
Organization and Good Standing . Priveco is a
corporation duly organized, validly existing and in good standing
under the laws of the Province of Alberta and has the requisite
corporate power and authority to own, lease and to carry on its
business as now being conducted. Priveco is duly
qualified to do business and is in good standing as a foreign
corporation in each of the jurisdictions in which Priveco owns
property, leases property, does business, or is otherwise required
to do so, where the failure to be so qualified would have a
material adverse effect on the business of Priveco taken as a
whole.
3.2
Authority . Priveco has all requisite corporate
power and authority to execute and deliver this Agreement and any
other document contemplated by this Agreement (collectively, the
“ Priveco Documents ”) to be signed by Priveco
and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and
delivery of each of the Priveco Documents by Priveco and the
consummation of the transactions contemplated hereby have been duly
authorized by Priveco’s board of directors. No
other corporate or shareholder proceeding on the part of Priveco is
necessary to authorize such documents or to consummate the
transactions contemplated hereby. This Agreement has
been, and the other Priveco Documents when executed and delivered
by Priveco as contemplated by this Agreement will be, duly executed
and delivered by Priveco and this Agreement is, and the other
Priveco Documents when executed and delivered by Priveco as
contemplated hereby will be, valid and binding obligations of
Priveco enforceable in accordance with their respective terms
except:
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as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of
creditors’ rights generally;
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as limited by
laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies; and
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as limited by
public policy.
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3.3
Capitalization of Priveco . The entire authorized
capital stock and other equity securities of Priveco consists of
an unlimited amount of common shares with no par
value (the “ Priveco Common Stock
”). As of the date of this Agreement, there are
1,000,000 shares of Priveco Common Stock issued and
outstanding. All of the issued and outstanding shares of
Priveco Common Stock have been duly authorized, are validly issued,
were not issued in violation of any pre-emptive rights and are
fully paid and non-assessable, are not subject to pre-emptive
rights and were issued in full compliance with all federal,
provincial and local laws, rules and regulations. There
are no outstanding options, warrants, subscriptions, conversion
rights, or other rights, agreements, or commitments obligating
Priveco to issue any additional shares of Priveco Common Stock, or
any other securities convertible into, exchangeable for, or
evidencing the right to subscribe for or acquire from Priveco any
shares of Priveco Common Stock. There are no agreements
purporting to restrict the transfer of the Priveco Common Stock, no
voting agreements, shareholders’ agreements, voting trusts,
or other arrangements restricting or affecting the voting of the
Priveco Common Stock.
3.4
Shareholders of Priveco Common Stock . As of the
Closing Date, Schedule 1 contains a true and complete list of the
holders of all issued and outstanding shares of the Priveco Common
Stock including each holder’s name, address and number of
Priveco Shares held.
3.5
Directors and Officers of Priveco . The duly
elected or appointed directors and the duly appointed officers of
Priveco are as set out in Schedule 4.
3.6
Corporate Records of Priveco . The corporate
records of Priveco, as required to be maintained by it pursuant to
all applicable laws, are accurate, complete and current in all
material respects, and the minute book of Priveco is, in all
material respects, correct and contains all records required by all
applicable laws in regards to all proceedings, consents, actions
and meetings of the shareholders and the board of directors of
Priveco.
3.7
Non-Contravention . Neither the execution,
delivery and performance of this Agreement, nor the consummation of
the Transaction, will:
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conflict with,
result in a violation of, cause a default under (with or without
notice, lapse of time or both) or give rise to a right of
termination, amendment, cancellation or acceleration of any
obligation contained in or the loss of any material benefit under,
or result in the creation of any lien, security interest, charge or
encumbrance upon any of the material properties or assets of
Priveco under any term, condition or provision of any loan or
credit agreement, note, debenture, bond, mortgage, indenture, lease
or other agreement, instrument, permit, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
Priveco or any of its material property or assets;
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violate any
provision of the incorporation or charter documents of Priveco or
any applicable laws; or
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violate any
order, writ, injunction, decree, statute, rule, or regulation of
any court or governmental or regulatory authority applicable to
Priveco or any of its material property or assets.
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3.8
Actions and Proceedings . To the best knowledge
of Priveco, there is no basis for and there is no action, suit,
judgment, claim, demand or proceeding outstanding or pending, or
threatened against or affecting Priveco or which involves any of
the business, or the properties or assets of Priveco that, if
adversely resolved or determined, would have a material adverse
effect on the business, operations, assets, properties, prospects,
or conditions of Priveco taken as a whole (a “ Priveco
Material Adverse Effect ”). There is no
reasonable basis for any claim or action that, based upon the
likelihood of its being asserted and its success if asserted, would
have such a Priveco Material Adverse Effect.
3.9
Compliance . As of the date hereof:
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to the best
knowledge of Priveco, Priveco is in compliance with, is not in
default or violation in any material respect under, and has not
been charged with or received any notice at any time of any
material violation of any statute, law, ordinance, regulation,
rule, decree or other regulation applicable to the business or
operations of Priveco;
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to the best
knowledge of Priveco, Priveco is not subject to any judgment, order
or decree entered in any lawsuit or proceeding applicable to its
business and operations that would constitute a Priveco Material
Adverse Effect;
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Priveco has
duly filed all reports and returns required to be filed by it with
governmental authorities and has obtained all governmental permits
and other governmental consents, except as may be required after
the execution of this Agreement. All of such permits and
consents are in full force and effect, and no proceedings for the
suspension or cancellation of any of them, and no investigation
relating to any of them, is pending or to the best knowledge of
Priveco, threatened, and none of them will be adversely affected by
the consummation of the Transaction; and
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Priveco has
operated in material compliance with all laws, rules, statutes,
ordinances, orders and regulations applicable to its
business. Priveco has not received any notice of any
violation thereof, nor is Priveco aware of any valid basis
therefore.
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3.10
Filings, Consents and Approvals . No filing or
registration with, no notice to and no permit, authorization,
consent, or approval of any public or governmental body or
authority or other person or entity is necessary for the
consummation by Priveco of the Transaction contemplated by this
Agreement or to enable Pubco to continue to conduct Priveco’s
business after the Closing Date in a manner which is consistent
with that in which the business is presently conducted.
3.11
Financial Representations . The audited balance
sheets for Priveco for the fiscal year ended July 31, 2009 plus any
unaudited balance sheets for Priveco for any interim period ended
no later than 35 days before the Closing Date (the “
Priveco Accounting Date ”), together with related
statements of income, cash flows, and changes in
shareholder’s equity for such fiscal year and interim period
then ended (collectively, the “ Priveco Financial
Statements ”) to be supplied on or before the Closing
Date:
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are in
accordance with the books and records of Priveco;
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present fairly
the financial condition of Priveco as of the respective dates
indicated and the results of operations for such periods;
and
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have been
prepared in accordance with GAAP.
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Priveco has not
received any advice or notification from its independent certified
public accountants that Priveco has used any improper accounting
practice that would have the effect of not reflecting or
incorrectly reflecting in the Priveco Financial Statements or the
books and records of Priveco, any properties, assets, Liabilities,
revenues, or expenses. The books, records, and accounts
of Priveco accurately and fairly reflect, in reasonable detail, the
assets and Liabilities of Priveco. Priveco has not
engaged in any transaction, maintained any bank account, or used
any funds of Priveco, except for transactions, bank accounts, and
funds which have been and are reflected in the normally maintained
books and records of Priveco.
3.12
Absence of Undisclosed Liabilities . Priveco does
not have any material Liabilities or obligations either direct or
indirect, matured or unmatured, absolute, contingent or otherwise,
which:
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are not set
forth in the Priveco Financial Statements or have not heretofore
been paid or discharged;
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did not arise
in the regular and ordinary course of business under any agreement,
contract, commitment, lease or plan except as specifically
disclosed in writing to Pubco; or
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have not been
incurred in amounts and pursuant to practices consistent with past
business practice, in or as a result of the regular and ordinary
course of its business since the date of the last Priveco Financial
Statements.
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Priveco has
timely filed all tax returns in connection with any Taxes which are
required to be filed on or prior to the date hereof, taking into
account any extensions of the filing deadlines which have been
validly granted to Priveco, and
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all such
returns are true and correct in all material respects;
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Priveco has
paid all Taxes that have become or are due with respect to any
period ended on or prior to the date hereof, and has established an
adequate reserve therefore on its balance sheets for those Taxes
not yet due and payable, except for any Taxes the non-payment of
which will not have a Priveco Material Adverse Effect;
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Priveco is not
presently under or has not received notice of, any contemplated
investigation or audit by any regulatory or governmental agency or
any foreign or state taxation authority concerning any fiscal year
or period ended prior to the date hereof;
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all Taxes
required to be withheld on or prior to the date hereof from
employees for income Taxes, social security Taxes, unemployment
Taxes and other similar withholding Taxes have been properly
withheld and, if required on or prior to the date hereof, have been
deposited with the appropriate governmental agency; and
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to the best
knowledge of Priveco, the Priveco Financial Statements contain full
provision for all Taxes including any deferred Taxes that may be
assessed to Priveco for the accounting period ended on the Priveco
Accounting Date or for any prior period in respect of any
transaction, event or omission occurring, or any profit earned, on
or prior to the Priveco Accounting Date or for any profit earned by
Priveco on or prior to the Priveco Accounting Date or for which
Priveco is accountable up to such date and all contingent
Liabilities for Taxes have been provided for or disclosed in the
Priveco Financial Statements.
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3.14
Absence of Changes . Since the Priveco Accounting
Date, Priveco has not:
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incurred any
Liabilities, other than Liabilities incurred in the ordinary course
of business consistent with past practice, or discharged or
satisfied any lien or encumbrance, or paid any Liabilities, other
than in the ordinary course of business consistent with past
practice, or failed to pay or discharge when due any Liabilities of
which the failure to pay or discharge has caused or will cause any
material damage or risk of material loss to it or any of its assets
or properties;
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sold,
encumbered, assigned or transferred any material fixed assets or
properties except for ordinary course business transactions
consistent with past practice;
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created,
incurred, assumed or guaranteed any indebtedness for money
borrowed, or mortgaged, pledged or subjected any of the material
assets or properties of Priveco to any mortgage, lien, pledge,
security interest, conditional sales contract or other encumbrance
of any nature whatsoever;
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made or
suffered any amendment or termination of any material agreement,
contract, commitment, lease or plan to which it is a party or by
which it is bound, or cancelled, modified or waived any substantial
debts or claims held by it or waived any rights of substantial
value, other than in the ordinary course of business;
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declared, set
aside or paid any dividend or made or agreed to make any other
distribution or payment in respect of its capital shares or
redeemed, purchased or otherwise acquired or agreed to redeem,
purchase or acquire any of its capital shares or equity
securities;
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suffered any
damage, destruction or loss, whether or not covered by insurance,
that materially and adversely effects its business, operations,
assets, properties or prospects;
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suffered any
material adverse change in its business, operations, assets,
properties, prospects or condition (financial or
otherwise);
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received notice
or had knowledge of any actual or threatened labour trouble,
termination, resignation, strike or other occurrence, event or
condition of any similar character which has had or might have an
adverse effect on its business, operations, assets, properties or
prospects;
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other than in
the ordinary course of business, increased the salaries or other
compensation of, or made any advance (excluding advances for
ordinary and necessary business expenses) or loan to, any of its
employees or directors or made any increase in, or any addition to,
other benefits to which any of its employees or directors may be
entitled;
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entered into
any transaction other than in the ordinary course of business
consistent with past practice; or
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agreed, whether
in writing or orally, to do any of the foregoing.
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3.15
Absence of Certain Changes or Events . Since the
Priveco Accounting Date, there has not been:
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a Priveco
Material Adverse Effect; or
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any material
change by Priveco in its accounting methods, principles or
practices.
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3.16
Subsidiaries . Priveco does not have any
subsidiaries or agreements of any nature to acquire any subsidiary
or to acquire or lease any other business operations.
3.17
Personal Property . Priveco possesses, and has
good and marketable title to all property necessary for the
continued operation of the business of Priveco as presently
conducted and as represented to Pubco. All such property
is used in the business of Priveco. All such property is
in reasonably good operating condition (normal wear and tear
excepted), and is reasonably fit for the purposes for which such
property is presently used. All material equipment,
furniture, fixtures and other tangible personal property and assets
owned or leased by Priveco is owned by Priveco free and clear of
all liens, security interests, charges, encumbrances, and other
adverse claims, except as disclosed in Schedule 7.
3.18
Intellectual Property
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Intellectual
Property Assets . Priveco
owns or holds an interest in all intellectual property assets
necessary for the operation of the business of Priveco as it is
currently conducted (collectively, the “ Intellectual
Property Assets ”), including:
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all functional
business names, trading names, registered and
unregistered trademarks, service marks, and applications
(collectively, the “ Marks ”);
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all patents,
patent applications, and inventions, methods, processes and
discoveries that may be patentable (collectively, the “
Patents ”);
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all copyrights
in both published works and unpublished works (collectively, the
“ Copyrights ”); and
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all know-how,
trade secrets, confidential information, customer lists, software,
technical information, data, process technology, plans, drawings,
and blue prints owned, used, or licensed by Priveco as licensee or
licensor (collectively, the “ Trade Secrets
”).
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Agreements
.
Schedule 6 contains a complete and accurate list and summary
description, including any royalties paid or received by Priveco,
of all contracts and agreements relating to the Intellectual
Property Assets to which Priveco is a party or by which Priveco is
bound, except for any license implied by the sale of a product and
perpetual, paid-up licenses for commonly available software
programs with a value of less than $500 under which Priveco is the
licensee. To the best knowledge of Priveco, there are no
outstanding or threatened disputes or disagreements with respect to
any such agreement.
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Intellectual
Property and Know-How Necessary for the Business
. Except
as set forth in Schedule 6, Priveco is the owner of all right,
title, and interest in and to each of the Intellectual Property
Assets, free and clear of all liens, security interests, charges,
encumbrances, and other adverse claims, and has the right to use
without payment to a third party of all the Intellectual Property
Assets. Except as set forth in Schedule 6, all former
and current employees and contractors of Priveco have executed
written contracts, agreements or other undertakings with Priveco
that assign all rights to any inventions, improvements,
discoveries, or information relating to the business of
Priveco. No employee, director, officer or shareholder
of Priveco owns directly or indirectly in whole or in part, any
Intellectual Property Asset which Priveco is presently using or
which is necessary for the conduct of its business. To
the best knowledge of Priveco, no employee or contractor of Priveco
has entered into any contract or agreement that restricts or limits
in any way the scope or type of work in which the employee may be
engaged or requires the employee to transfer, assign, or disclose
information concerning his work to anyone other than
Priveco.
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Patents
. Except
as set out in Schedule 6, Priveco does not hold any right, title or
interest in and to any Patent and Priveco has not filed any patent
application with any third party. To the best knowledge
of Priveco, none of the products manufactured and sold, nor any
process or know-how used, by Priveco infringes or is alleged to
infringe any patent or other proprietary night of any other person
or entity.
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Trademarks
.
Except as set out in Schedule 6, Priveco does not hold any right,
title or interest in and to any Mark and Priveco has not registered
or filed any application to register any Mark with any third
party. To the best knowledge of Priveco, none of the
Marks, if any, used by Priveco infringes or is alleged to infringe
any trade name, trademark, or service mark of any third
party.
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Copyrights
.
Schedule 6 contains a complete and accurate list and summary
description of all Copyrights. Priveco is the owner of
all right, title, and interest in and to each of the Copyrights,
free and clear of all liens, security interests, charges,
encumbrances, and other adverse claims. If applicable,
all registered Copyrights are currently in compliance with formal
legal requirements, are valid and enforceable, and are not subject
to any maintenance fees or taxes or actions falling due within
ninety days after the Closing Date. To the best
knowledge of Priveco, no Copyright is infringed or has been
challenged or threatened in any way and none of the subject matter
of any of the Copyrights infringes or is alleged to infringe any
copyright of any third party or is a derivative work based on the
work of a third party. All works encompassed by the
Copyrights have been marked with the proper copyright
notice.
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Trade
Secrets . Priveco
has taken all reasonable precautions to protect the secrecy,
confidentiality, and value of its Trade Secrets. Priveco
has good title and an absolute right to use the Trade
Secrets. The Trade Secrets are not part of the public
knowledge or literature, and to the best knowledge of Priveco, have
not been used, divulged, or appropriated either for the benefit of
any person or entity or to the detriment of Priveco. No
Trade Secret is subject to any adverse claim or has been challenged
or threatened in any way.
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3.19
Insurance . The products sold by and the assets
owned by Priveco are insured under various policies of general
product liability and other forms of insurance consistent with
prudent business practices. All such policies are in
full force and effect in accordance with their terms, no notice of
cancellation has been received, and there is no existing default by
Priveco, or any event which, with the giving of notice, the lapse
of time or both, would constitute a default
thereunder. All premiums to date have been paid in
full.
3.20
Employees and Consultants . All employees and
consultants of Priveco have been paid all salaries, wages, income
and any other sum due and owing to them by Priveco, as at the end
of the most recent completed pay period. Priveco is not
aware of any labour conflict with any employees that might
reasonably be expected to have a Priveco Material Adverse
Effect. To the best knowledge of Priveco, no employee of
Priveco is in violation of any term of any employment contract,
non-disclosure agreement, non-competition agreement or any other
contract or agreement relating to the relationship of such employee
with Priveco or any other nature of the business conducted or to be
conducted by Priveco.
3.21
Real Property . Priveco does not own any real
property. Each of the leases, subleases, claims or other
real property interests (collectively, the “ Leases
”) to which Priveco is a party or is bound, as set out in
Schedule 7, is legal, valid, binding, enforceable and in full force
and effect in all material respects. All rental and
other payments required to be paid by Priveco pursuant to any such
Leases have been duly paid and no event has occurred which, upon
the passing of time, the giving of notice, or both, would
constitute a breach or default by any party under any of the
Leases. The Leases will continue to be legal, valid,
binding, enforceable and in full force and effect on identical
terms following the Closing Date. Priveco has not
assigned, transferred, conveyed, mortgaged, deeded in trust, or
encumbered any interest in the Leases or the leasehold property
pursuant thereto.
3.22
Material Contracts and Transactions . Schedule 8
attached hereto lists each material contract, agreement, license,
permit, arrangement, commitment, instrument or contract to which
Priveco is a party (each, a “ Contract
”). Each Contract is in full force and effect, and
there exists no material breach or violation of or default by
Priveco under any Contract, or any event that with notice or the
lapse of time, or both, will create a material breach or violation
thereof or default under any Contract by Priveco. The
continuation, validity, and effectiveness of each Contract will in
no way be affected by the consummation of the Transaction
contemplated by this Agreement. There exists no actual
or threatened termination, cancellation, or limitation of, or any
amendment, modification, or change to any Contract.
3.23
Certain Transactions . Priveco is not a guarantor
or indemnitor of any indebtedness of any third party, including any
person, firm or corporation.
3.24
No
Brokers . Priveco has not incurred any independent
obligation or liability to any party for any brokerage fees,
agent’s commissions, or finder’s fees in connection
with the Transaction contemplated by this Agreement.
3.25
Completeness of Disclosure . No representation or
warranty by Priveco in this Agreement nor any certificate,
schedule, statement, document or instrument furnished or to be
furnished to Pubco pursuant hereto contains or will contain any
untrue statement of a material fact or omits or will omit to state
a material fact required to be stated herein or therein or
necessary to make any statement herein or therein not materially
misleading.
4.
REPRESENTATIONS AND WARRANTIES OF PUBCO
As of the
Closing, Pubco represents and warrants to Priveco and the Selling
Shareholders and acknowledges that Priveco and the Selling
Shareholders are relying upon such representations and warranties
in connection with the execution, delivery and performance of this
Agreement, notwithstanding any investigation made by or on behalf
of Priveco or the Selling Shareholders, as follows:
4.1
Organization and Good Standing . Pubco is duly
incorporated, organized, validly existing and in good standing
under the laws of the State of Nevada and has all requisite
corporate power and authority to own, lease and to carry on its
business as now being conducted. Pubco is qualified to
do business and is in good standing as a foreign corporation in
each of the jurisdictions in which it owns property, leases
property, does business, or is otherwise required to do so, where
the failure to be so qualified would have a material adverse effect
on the businesses, operations, or financial condition of
Pubco.
4.2
Authority . Pubco has all requisite corporate
power and authority to execute and deliver this Agreement and any
other document contemplated by this Agreement (collectively, the
“ Pubco Documents ”) to be signed by Pubco and
to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and
delivery of each of the Pubco Documents by Pubco and the
consummation by Pubco of the transactions contemplated hereby have
been duly authorized by its board of directors and no other
corporate or shareholder proceeding on the part of Pubco is
necessary to authorize such documents or to consummate the
transactions contemplated hereby. This Agreement has
been, and the other Pubco Documents when executed and delivered by
Pubco as contemplated by this Agreement will be, duly executed and
delivered by Pubco and this Agreement is, and the other Pubco
Documents when executed and delivered by Pubco as contemplated
hereby will be, valid and binding obligations of Pubco enforceable
in accordance with their respective terms, except:
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as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of
creditors’ rights generally;
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as limited by
laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies; and
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as limited by
public policy.
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4.3
Capitalization of Pubco . The entire authorized
capital stock and other equity securities of Pubco consist of
100,000,000 shares of common stock with a par value of $0.001 (the
“ Pubco Common Stock ”). As of the
date of this Agreement, there are 43,400,000 shares of Pubco Common
Stock issued and outstanding. All of the issued and
outstanding shares of Pubco Common Stock have been duly authorized,
are validly issued, were not issued in violation of any pre-emptive
rights and are fully paid and non-assessable, are not subject to
pre-emptive rights and were issued in full compliance with all
federal, state and local laws, rules and
regulations. There are no outstanding options, warrants,
subscriptions, conversion rights, or other rights, agreements, or
commitments obligating Pubco to issue any additional shares of
Pubco Common Stock, or any other securities convertible into,
exchangeable for, or evidencing the right to subscribe for or
acquire from Pubco any shares of Pubco Common
Stock. There are no agreements purporting to restrict
the transfer of the Pubco Common Stock, no voting agreements,
voting trusts, or other arrangements restricting or affecting the
voting of the Pubco Common Stock.
4.4
Directors and Officers of Pubco . The duly
elected or appointed directors and the duly appointed officers of
Pubco are as listed in Schedule 5.
4.5
Corporate Records of Pubco. The corporate
records of Pubco, as required to be maintained by it pursuant to
the laws of the State of Nevada, are accurate, complete and current
in all material respects, and the minute book of Pubco is, in all
material respects, correct and contains all material records
required by the law of the State of Nevada in regards to all
proceedings, consents, actions and meetings of the shareholders and
the board of directors of Pubco.
4.6
Non-Contravention . Neither the execution,
delivery and performance of this Agreement, nor the consummation of
the Transaction, will:
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conflict with,
result in a violation of, cause a default under (with or without
notice, lapse of time or both) or give rise to a right of
termination, amendment, cancellation or acceleration of any
obligation contained in or the loss of any material benefit under,
or result in the creation of any lien, security interest, charge or
encumbrance upon any of the material properties or assets of Pubco
under any term, condition or provision of any loan or credit
agreement, note, debenture, bond, mortgage, indenture, lease or
other agreement, instrument, permit, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
Pubco or any of its material property or assets;
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violate any
provision of the incorporation or charter documents of Pubco or any
applicable laws; or
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violate any
order, writ, injunction, decree, statute, rule, or regulation of
any court or governmental or regulatory authority applicable to
Pubco or any of its material property or assets.
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4.7
Validity of Pubco Common Stock Issuable upon the Transaction
. The Pubco Shares to be issued to the Selling
Shareholders upon consummation of the Transaction in accordance
with this Agreement will, upon issuance, have been duly and validly
authorized and, when so issued in accordance with the terms of this
Agreement, will be duly and validly issued, fully paid and
non-assessable.
4.8
Actions and Proceedings . To the best knowledge
of Pubco, there is no claim, charge, arbitration, grievance,
action, suit, investigation or proceeding by or before any court,
arbiter, administrative agency or other governmental authority now
pending or, to the best knowledge of Pubco, threatened against
Pubco which involves any of the business, or the properties or
assets of Pubco that, if adversely resolved or determined, would
have a material adverse effect on the business, operations, assets,
properties, prospects or conditions of Pubco taken as a whole (a
“ Pubco Material Adverse Effect
”). There is no reasonable basis for any claim or
action that, based upon the likelihood of its being as
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