Attached files
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8-K - FORM 8-K - KORE NUTRITION, INC. | f8k030310.htm |
EX-2.2 - PROMISSORY NOTE - KORE NUTRITION, INC. | ex2-2.htm |
SHARE EXCHANGE
AGREEMENT
THIS
AGREEMENT is made effective as of the 26th day of February, 2010.
AMONG:
GO ALL IN, INC., a company
incorporated pursuant to the laws of the State of Nevada and having an address
at 2505 Anthem Village, Suite E-460, Henderson, NV 89052
(the
“Target”)
AND:
THE SHAREHOLDERS OF THE
TARGET, as listed
on Schedule A attached hereto (each, a “Shareholder” and collectively,
the “Shareholders”)
AND:
KORE NUTRITION INCORPORATED, a
company incorporated pursuant to the laws of the State of Nevada and having an
address at 200-736 Granville Street, Vancouver, BC V6Z 1G3
(the
“Purchaser”)
WHEREAS:
A. The
Shareholders are the registered and/or beneficial owners of all of the issued
and outstanding common shares in the capital of the Target;
B. The
Purchaser has made an offer to issue a total of 32,500,000 common shares in the
capital of the Purchaser to the Shareholders as consideration for the
acquisition by the Purchaser of all of the issued and outstanding common shares
in the capital of the Target; and
C. Upon
the terms and subject to the conditions set forth in this Agreement, the
Shareholders have agreed to sell to the Purchaser and the Purchaser has agreed
to purchase from the Shareholders all of the Shareholders’ legal and beneficial
interest in the common shares in the capital of the Target such that, at Closing
(as defined herein), the Target will become a wholly-owned subsidiary of the
Purchaser.
NOW
THEREFORE THIS AGREEMENT WITNESSES that 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:
ARTICLE
1
INTERPRETATION
1.1 Definitions
In this
Agreement the following words and phrases will have the following
meanings:
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(a)
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“Accounting
Date” has the meaning set forth in Section 1.1(hhh);
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(b)
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“Affiliate”
with respect to any specified Person at any time, means each Person
directly or indirectly through one or more intermediaries controlling,
controlled by or under direct or indirect common control with such
specified Person at such time;
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(c)
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“Agreement”
means this Share Exchange Agreement, and all of the schedules and other
documents attached hereto, as it may from time to time be supplemented or
amended;
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(d)
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“Applicable
Law” means,
with respect to any Person, any domestic (whether
federal, state, territorial, provincial, municipal or local) or
foreign statute, law, ordinance, rule, administrative interpretation,
regulation, Order, writ, injunction, directive, judgment, decree or other
requirement, all as in effect as of the Closing, of any Governmental
Body applicable to such Person or any of its Affiliates or any
of their respective properties, assets, officers, directors, employees,
consultants or agents (in connection with such officer’s, director’s,
employee’s, consultant’s or agent’s activities on behalf of such Person or
any of its Affiliates);
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(e)
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“Applicable
Securities Laws” means all applicable securities laws in all jurisdictions
relevant to the issuance of securities of the Purchaser pursuant to the
terms of this Agreement;
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(f)
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“Associate” means
with respect to any Person (a) any other Person of which such Person is an
officer, director or partner or is, directly or indirectly, the beneficial
owner of ten percent (10%) or more of any class of equity securities
issued by such other Person, (b) any trust or other estate in which such
Person has a ten percent (10%) or more beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary capacity, and (c)
any relative or spouse of such Person, or any relative of such spouse who
has the same home as such Person or who is a director or officer of such
Person or any Affiliate thereof;
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(g)
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“BC
Act” means the British Columbia Securities
Act;
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(h)
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“BCI
51-509” means British Columbia Instrument 51-509 – Issuers Quoted in the
U.S. Over-the-Counter Markets, as adopted by the British Columbia
Securities Commission;
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(i)
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“BC
Legend” means the restrictive legend specified in BCI
51-509;
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(j)
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“Business” means
the business as heretofore or currently conducted by the
Target;
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(k)
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“Business
Day” means a
day other than a Saturday, Sunday or other day on which commercial banks
in British Columbia, Canada or Nevada, USA are authorized or required by
law to close;
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(l)
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“Certificates”
has the meaning set forth in Section 2.5;
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(m)
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“Closing”
means the closing of the Transaction pursuant to the terms of this
Agreement on the Closing Date;
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(n)
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“Closing
Date” means two weeks from the date of the effectiveness of the Split,
unless otherwise extended by the written agreement of the parties
hereto;
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(o)
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“Consideration
Shares” means,
collectively, the 32,500,000 fully paid and non-assessable Purchaser
Shares to be issued to the Shareholders on the Closing
Date;
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(p)
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“Contracts” means
all contracts, agreements, options, leases, licences, sales and purchase
orders, commitments and other instruments of any kind, whether written or
oral, to which the Target is a party on the Closing
Date;
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(q)
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“Copyrights”
has the meaning set forth in Section 3.23(a)(iii);
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(r)
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“Damages” means
all demands, claims, actions, causes of action, assessments, losses,
damages, costs, expenses, liabilities, judgments, awards, fines,
sanctions, penalties, charges and amounts paid in settlement (net of
insurance proceeds actually received), including (i) interest on cash
disbursements in respect of any of the foregoing and (ii) reasonable
costs, fees and expenses of attorneys, accountants and other agents of, or
other Persons retained by, such
Person;
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(s)
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“Disclosure
Statement” means the Disclosure Statement of the Target to be signed and
dated by the Target and delivered by the Target to the Purchaser at the
Closing;
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(t)
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“Embury”
means Deanna Embury, the President, Chief Executive Officer, Chief
Financial Officer and a director of the
Purchaser;
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(u)
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“Employee”
has the meaning set forth in Section 3.15(a)(ii);
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(v)
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“Employee
Agreement” has the meaning set forth in Section 3.15(a)(iii);
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(w)
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“Employee
Plan” has the meaning set forth in Section 3.15(a)(i);
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(x)
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“Encumbrances”
means any lien, claim, charge, pledge, hypothecation, security interest,
mortgage, title retention agreement, option or encumbrance of any nature
or kind whatsoever, other than: (i) statutory liens for Taxes not yet due
and payable and (ii) such imperfections of title, easements and
encumbrances, if any, that will not result in a Material Adverse
Effect;
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(y)
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“Exchange
Act” means the United States Securities Exchange Act of 1934, as
amended;
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(z)
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“GAAP”
means United States generally accepted accounting principles, applied on a
consistent basis with prior years;
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(aa)
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“Governmental
Body” means any
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(i)
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nation,
state, county, city, town, village, district, or other jurisdiction of any
nature,
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(ii)
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federal,
state, provincial, local, municipal, foreign, or other
government,
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(iii)
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governmental
or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other
tribunal),
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(iv)
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multi-national
organization or body, or
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(v)
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body
exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of
any nature;
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(bb)
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“Intellectual
Property Assets” has the meaning set forth in Section 3.23(a);
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(cc)
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“Key
Shareholders” means, collectively, Jeff Todd, Johnny Chan, Jason Chan and
Scott Coon, and any Related Party of those individuals, and “Key
Shareholder” means any one of such
persons;
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(dd)
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“Legal
Requirement” means any federal, state, provincial, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute
or treaty;
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(ee)
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“Liabilities” means, with
respect to any Person, any liability or obligation of such Person of any
kind, character or description, whether known or unknown, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, secured or
unsecured, joint or several, due or to become due, vested or unvested,
determined, determinable or otherwise and whether or not the same is
required to be accrued on the financial statements of such
Person;
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(ff)
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“Lien” means, with
respect to any asset, any mortgage, assignment, trust or deemed trust
(whether contractual, statutory or otherwise arising), title defect or
objection, lien, pledge, charge, security interest, hypothecation,
restriction, Encumbrance or charge of any kind in respect of such
asset;
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(gg)
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“Losses”
means any and all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs and expenses, including,
without limitation, interest, penalties, fines and reasonable attorneys,
accountants and other professional fees and expenses, but excluding any
indirect, consequential or punitive damages suffered by the Purchaser, the
Target, or the Shareholders, including damages for lost profits or lost
business opportunities;
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(hh)
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“Marks”
has the meaning set forth in Section 3.23(a)(i);
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(ii)
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“Material
Contracts” means those subsisting commitments, contracts, instruments,
leases and other agreements, oral or written, entered into by the Target,
by which the Target is bound or to which it or its respective assets are
subject which have total payment obligations on the part of the Target
which exceed $5,000 or are for a term of or in excess of one (1)
year;
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(jj)
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“Material
Adverse Effect”, when used in connection with an entity, means any change,
event, violation, inaccuracy, circumstance or effect that is materially
adverse to the business, assets (including intangible assets),
Liabilities, capitalization, ownership, financial condition or results of
operations of such entity and all of its Affiliates, taken as a whole,
other than any change, event, circumstance or effect to the extent
resulting from (A) the announcement of the execution of this Agreement and
the transactions contemplated hereby, (B) changes in legal or regulatory
conditions generally affecting the Business, except that any change,
effect, event or occurrence described in this
subsection
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(B) will
be considered in determining whether there has been, or will be, a Material
Adverse Effect if the same disproportionately affects the Target or the
Business, (C) changes or effects that generally affect the Business,
(D) changes in general economic conditions or (E) changes in
GAAP;
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(kk)
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“Material
Interest” has the meaning set forth in Section 1.1(bbb);
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(ll)
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“Order”
means any award, decision, injunction, judgment, order, ruling, subpoena
or verdict entered, issued, made or rendered by any court, administrative
agency or other Governmental Body or authority or by any
arbitrator;
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(mm)
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“Organizational
Documents” means:
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(i)
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the
articles or certificate of incorporation and the bylaws of a
corporation,
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(ii)
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any
charter or similar document adopted or filed in connection with the
creation, formation, or organization of a Person,
and
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(iii)
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any
amendment to any of the foregoing;
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(nn)
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“Patents”
has the meaning set forth in Section 3.23(a)(ii);
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(oo)
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“Permitted
Liens” means
(i) Liens for Taxes or governmental assessments, charges or claims the
payment of which is not yet due, or for Taxes the validity of which is
being contested in good faith by appropriate proceedings; (ii) statutory
Liens of landlords and Liens of carriers, warehousemen, mechanics,
materialmen and other similar Persons and other Liens imposed by
Applicable Laws incurred in the ordinary course of business for sums not
yet delinquent or being contested in good faith; (iii) Liens relating to
deposits made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other types of social
security or to secure the performance of leases, trade contracts or other
similar agreements; (iv) Liens and Encumbrances specifically identified in
the balance sheet included in the Target Financial Statements; (v) Liens
securing executory obligations under any lease that constitutes an
“operating lease” under GAAP; and (vi) other Liens set forth in the
Disclosure Statement, provided, however, that, with respect to each of
clauses (i) through (v), to the extent that any such Encumbrance or Lien
arose prior to the date of the balance sheet included in the Target
Financial Statements and relates to, or secures the payment of, a
Liability that is required to be accrued under GAAP, such Encumbrance or
Lien shall not be a Permitted Lien unless adequate accruals for such
Liability have been established therefor on such balance sheet in
conformity with GAAP;
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(pp)
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“Person”
includes an individual, corporation, body corporate, partnership, joint
venture, association, trust or unincorporated organization or any trustee,
executor, administrator or other legal representative
thereof;
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(qq)
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“Premises”
means those premises that have been occupied or used, or are occupied or
used, by the Target in connection with the
Business;
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(rr)
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“Pre-Split
Purchaser Shares” means the issued and outstanding common shares in the
capital stock of the Purchaser prior to the
Split;
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(ss)
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“Proceeding”
means any action, arbitration, audit, hearing, investigation, litigation
or suit (whether civil, criminal, administrative, investigative or
informal) commenced, brought,
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5
conducted
or heard by or before, or otherwise involving, any Governmental Body or
arbitrator;
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(tt)
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“Purchaser
Accounting Date” has the meaning set forth in Section 5.11;
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(uu)
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“Purchaser
Disclosure Statement” has the meaning set forth in Article 5;
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(vv)
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“Purchaser
Note” means the promissory note in the principal amount of $25,000 issued
by the Purchaser to A Mare Usque as Mare Ltd., dated February 4,
2010;
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(ww)
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“Purchaser
Private Placement” means the private placement of 2,000,000 units of the
Purchaser at a price of $0.50 per unit for gross proceeds of $1,000,000,
with each unit consisting of one Purchaser Share and one warrant and with
each warrant exercisable into one Purchaser Share at the exercise price of
$0.60 per share, which will be undertaken by the Purchaser to fund working
capital requirements of the Purchaser following the
Closing;
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(xx)
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“Purchaser
SEC Documents” has the meaning set forth in Section 5.10;
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(yy)
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“Purchaser
Shares” means the post-Split common shares in the capital stock of the
Purchaser;
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(zz)
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“Purchaser’s
Solicitors” means the law firm of Clark Wilson
LLP;
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(aaa)
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“Regulation
S” means Regulation S promulgated under the Securities
Act;
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(bbb)
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“Related
Party” means, with respect to a particular
individual:
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(i)
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each
other member of such individual’s
Family,
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(ii)
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any
Person that is directly or indirectly controlled by such individual or one
or more members of such individual’s
Family,
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(iii)
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any
Person in which such individual or members of such individual’s Family
hold (individually or in the aggregate) a Material Interest,
or
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(iv)
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any
Person with respect to which such individual or one or more members of
such individual’s Family serves as a director, officer, partner, executor
or trustee (or in a similar capacity),
and
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with
respect to a specified Person other than an individual:
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(i)
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any
Person that directly or indirectly controls, is directly or indirectly
controlled by, or is directly or indirectly under common control with such
specified Person,
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(ii)
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any
Person that holds a Material Interest in such specified
Person,
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(iii)
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each
Person that serves as a director, officer, partner, executor or trustee of
such specified Person (or in a similar
capacity),
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(iv)
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any
Person in which such specified Person holds a Material
Interest,
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(v)
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any
Person with respect to which such specified Person serves as a general
partner or a trustee (or in a similar capacity),
and
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(vi)
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any
Related Person of any individual described in clause (ii) or
(iii).
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For
purposes of this definition, (a) the “Family” of an individual includes (i) the
individual; (ii) the individual’s spouse; (iii) any other natural person who is
related to the individual or the individual’s spouse within the second degree;
and (iv) any other natural person who resides with such individual, and (b)
“Material Interest” means direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act) of voting securities or other voting
interests representing at least twenty percent (20%) of the outstanding voting
power of a Person or equity securities or other equity interests representing at
least twenty percent (20%) of the outstanding equity securities or equity
interests in a Person;
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(ccc)
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“Rodgers”
means Katherine Rodgers, the Secretary, Treasurer and a director of the
Purchaser;
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(ddd)
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“SEC”
means the United States Securities and Exchange
Commission;
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(eee)
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“Securities
Act” means the United States Securities Act of 1933, as
amended;
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(fff)
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“Shares”
means the common shares in the capital of the Target owned by the
Shareholders as set out in Schedule A, being all of the issued and
outstanding shares in the capital of the
Target;
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(ggg)
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“Split”
means the eight point two (8.2) for one (1) forward split of the issued
and outstanding shares of common stock of the Purchaser which is to occur
prior to Closing and which is to be payable by way of the declaration of a
share dividend;
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(hhh)
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“Target
Financial Statements” means audited financial statements for the Target
for the two fiscal years ended December 31, 2008 and unaudited financial
statements for the Target for the interim period ended September 30, 2009
(the “Accounting Date”), and the comparative fiscal years and interim
periods, together with related statements of income, cash flows, and
changes in shareholders’ equity for the fiscal years and interim periods
then ended, all prepared in accordance with GAAP and, with respect to the
audited financial statements, audited by an independent auditor registered
with the Public Company Accounting Oversight Board in the United
States;
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(iii)
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“Tax”
means any tax (including any income tax, capital gains tax, value-added
tax, sales tax, property tax, gift tax or estate tax), levy, assessment,
tariff, duty (including any customs duty), deficiency or other fee, and
any related charge or amount (including any fine, penalty, interest or
addition to tax), imposed, assessed or collected by or under the authority
of any Governmental Body or payable pursuant to any tax-sharing agreement
or any other contract relating to the sharing or payment of any such tax,
levy, assessment, tariff, duty, deficiency or
fee;
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(jjj)
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“Tax
Return” means any return (including any information return), report,
statement, schedule, notice, form or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment,
collection or payment of any Tax or in connection with the administration,
implementation or enforcement of or compliance with any Legal Requirement
relating to any Tax;
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(kkk)
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“Trade
Secrets” has the meaning set forth in Section 3.23(a)(iv);
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(lll)
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“Transaction”
means the acquisition by the Purchaser of the Shares from the Shareholders
in exchange for the issuance of the Consideration Shares to the
Shareholders;
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(mmm)
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“Transaction
Documents” has the meaning set forth in Section 3.4;
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(nnn)
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“U.S.
Person” has the meaning ascribed thereto in Regulation S;
and
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(ooo)
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“Venturex”
means Venturex Global Investment Corp., a company incorporated pursuant to
the laws of Canada.
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1.2 Schedules
The
following are the schedules to this Agreement:
Schedule
A
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—
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List
of Shareholders
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Schedule
B
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—
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Certificate
of U.S. Shareholder
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Schedule
C
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—
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Certificate
of Non-U.S. Shareholder
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Schedule
D
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—
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Canadian
Accredited Investor Questionnaire
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1.3 Interpretation
For the
purposes of this Agreement, except as otherwise expressly provided
herein:
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(a)
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all
references in this Agreement to a designated Article, Section, subsection,
paragraph or other subdivision, or to a Schedule, is to the designated
Article, section, subsection, paragraph or other subdivision of, or
Schedule to, this Agreement unless otherwise specifically
stated;
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(b)
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the
words “herein”, “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular Article,
clause, subclause or other subdivision or
Schedule;
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(c)
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the
singular of any term includes the plural and vice versa and the use of any
term is equally applicable to any gender and where applicable to a body
corporate;
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(d)
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the
word “or” is not exclusive and the word “including” is not limiting
(whether or not non-limiting language such as “without limitation” or “but
not limited to” or other words of similar import are used with reference
thereto);
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(e)
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all
accounting terms not otherwise defined in this Agreement have the meanings
assigned to them in accordance with GAAP, applied on a consistent basis
with prior years;
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(f)
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except
as otherwise provided, any reference to a statute includes and is a
reference to such statute and to the regulations made pursuant thereto
with all amendments made thereto and in force from time to time, and to
any statute or regulations that may be passed which have the effect of
supplementing or superseding such statute or such
regulations;
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(g)
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where
the phrase “to the best of the knowledge of” or phrases of similar import
are used in this Agreement, it will be a requirement that the Person in
respect of whom the phrase is used will have made such due enquiries as
are reasonably necessary to enable such Person to make the statement or
disclosure;
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(h)
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the
headings to the Articles and sections of this Agreement are inserted for
convenience of reference only and do not form a part of this Agreement and
are not intended to interpret, define or limit the scope, extent or intent
of this Agreement or any provision
hereof;
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(i)
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any
reference to a corporate entity includes and is also a reference to any
corporate entity that is a successor to such
entity;
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(j)
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the
parties acknowledge that this Agreement is the product of arm’s length
negotiation between the parties, each having obtained its own independent
legal advice, and that this Agreement will be construed neither strictly
for nor strictly against any party irrespective of which party was
responsible for drafting this
Agreement;
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(k)
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the
representations, warranties, covenants and agreements contained in this
Agreement will not merge at the Closing and will continue in full force
and effect from and after the Closing Date for the applicable period set
out in this Agreement; and
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(l)
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unless
otherwise specifically noted, all references to currency in this Agreement
and in the Target Financial Statements are or will be to United States
Dollars ($). If it is necessary to convert money from another
currency to United States Dollars, such money will be converted using the
exchange rates in effect at the date of
payment.
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ARTICLE 2
PURCHASE AND
SALE
2.1 Purchase and Sale of
Shares
Subject
to the terms and conditions of this Agreement, the Purchaser irrevocably agrees
to purchase the Shares from the Shareholders and the Shareholders irrevocably
agree to sell, assign and transfer the Shares to the Purchaser, free and clear
of all Encumbrances, on the terms and conditions herein set forth, in
consideration for the issuance by the Purchaser of the Consideration Shares to
the Shareholders, such that, at Closing, the Target will become a wholly-owned
subsidiary of the Purchaser.
2.2 Consideration
As
consideration for the Shares to be acquired by the Purchaser pursuant to the
terms of this Agreement, the Purchaser shall allot and issue the Consideration
Shares to the Shareholders in the amount set out opposite each Shareholder’s
name in Schedule A, as fully paid and non-assessable Purchaser
Shares.
2.3 Fractional
Securities
Notwithstanding
any other provision of this Agreement, no fractional Consideration Shares will
be issued in the Transaction. In lieu of any such fractional
securities, any Shareholder entitled to receive a fractional amount of
Consideration Shares will be entitled to have such fraction rounded up to the
nearest whole number of applicable Consideration Shares and will receive from
the Purchaser a certificate representing same.
9
2.4 Restricted
Securities
The
Shareholders acknowledge that the Consideration 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 of, except pursuant to an effective
registration statement or prospectus, or pursuant to an exemption from, or in a
transaction not subject to, the registration or prospectus requirements of
Applicable Securities Laws and in each case only in accordance with all
Applicable Securities Laws.
2.5 Exemptions
The
Shareholders acknowledge that the Purchaser has advised each Shareholder that it
is issuing the Consideration Shares to such Shareholder under exemptions from
the prospectus and registration requirements of Applicable Securities Laws and,
as a consequence, certain protections, rights and remedies provided by
Applicable Securities Laws, including statutory rights of rescission or damages,
will not be available to such Shareholder. To evidence each
Shareholder’s eligibility for such exemptions, each Shareholder agrees to
deliver:
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(a)
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a
fully completed and executed Certificate of Non-U.S. Shareholder in the
form attached hereto as Schedule B (the “Non-US Certificate”) OR a
Certificate of U.S. Shareholder in the form attached hereto as Schedule C
(the “US Certificate”), as applicable;
AND
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(b)
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a
fully completed and executed Canadian Accredited Investor Certificate (the
“Canadian Certificate”) in the form attached hereto as Schedule
D
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(with the
Canadian Certificate and the Non-US Certificate or the US Certificate (as
applicable) being, collectively, the “Certificates”),
to the
Purchaser, and agrees that the representations and warranties set out in the
Certificates as executed by such Shareholder will be true and complete on the
Closing Date.
ARTICLE 3
REPRESENTATIONS AND
WARRANTIES OF THE TARGET
As of the
Closing Date, and except as set forth in the Target Financial Statements or the
Disclosure Statement, or as otherwise provided for in any certificate or other
instrument delivered pursuant to this Agreement, the Target makes the following
representations to the Purchaser and acknowledges and agrees that the Purchaser
is relying upon such representations and warranties, each of which is qualified
in its entirety by the matters described in the Disclosure Statement, in
connection with the execution, delivery and performance of this
Agreement:
3.1 Organization and Good
Standing
The
Target is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada, with full corporate power, authority and
capacity to conduct its business as presently conducted, to own or use the
properties and assets that it purport to own or use, and to perform all of its
obligations under any applicable contracts. The Target is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each state or other jurisdiction in which the failure to be so
registered would be likely to result in a Material Adverse Effect on the
Target.
10
3.2 Capitalization
|
(a)
|
The
entire authorized and issued capital stock and other equity securities of
the Target are as set out in the Disclosure Statement. All of
the issued and outstanding Shares and other securities of the Target are
owned of record and beneficially by the Shareholders, free and clear of
all Encumbrances. All of the outstanding equity securities of
the Target have been duly authorized and validly issued and are fully paid
and non-assessable. None of the outstanding equity securities
or other securities of the Target, if any, were issued in violation of any
Applicable Securities Laws or any other Legal Requirement. The Target does
not own, or have any contract to acquire, any equity securities or other
securities of any Person or any direct or indirect equity or ownership
interest in any other business.
|
|
(b)
|
The
Shareholders own and have good marketable title to the Shares, as the
legal and beneficial owners thereof, free of all
Encumbrances.
|
3.3 Absence of Rights to Acquire
Securities
Other
than as set out in this Agreement, no Person has any agreement, right or option,
present or future, contingent, absolute or capable of becoming an agreement,
right or option or which with the passage of time or the occurrence of any event
could become an agreement, right or option:
|
(a)
|
to
require the Target to issue any further or other shares in its capital or
any other security convertible or exchangeable into shares in its capital
or to convert or exchange any securities into or for shares in the capital
of the Target;
|
|
(b)
|
for
the issue or allotment of any unissued shares in the capital of the
Target;
|
|
(c)
|
to
require the Target to purchase, redeem or otherwise acquire any of the
issued and outstanding shares in the capital of the Target;
or
|
|
(d)
|
to
acquire the Shares or any of them.
|
3.4 Authority
The
Target has all requisite corporate power and authority to execute and deliver
this Agreement and any other documents contemplated by this Agreement
(collectively, the “Transaction Documents”) to be signed by the Target and to
perform its respective obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of each of the
Transaction Documents by the Target and the consummation of the transactions
contemplated hereby have been duly authorized by the board of directors of the
Target. No other corporate or shareholder proceedings on the part of
the Target is necessary to authorize such documents or to consummate the
transactions contemplated hereby. This Agreement has been, and the
other Transaction Documents when executed and delivered by the Target as
contemplated by this Agreement will be, duly executed and delivered by the
Target and this Agreement is, and the other Transaction Documents when executed
and delivered by the Target as contemplated hereby will be, valid and binding
obligations of the Target, enforceable in accordance with their respective terms
except:
|
(a)
|
as
limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’
rights generally;
|
|
(b)
|
as
limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies;
and
|
11
|
(c)
|
as
limited by public policy.
|
3.5 No Conflict
Except as
set out in the Disclosure Statement, neither the execution and delivery of this
Agreement nor the consummation or performance of any of the transactions
contemplated herein will, directly or indirectly (with or without notice or
lapse of time or both):
|
(a)
|
contravene,
conflict with, or result in a violation of any provision of the
Organizational Documents of the Target, or any resolution adopted by the
board of directors of the Target or the
Shareholders;
|
|
(b)
|
contravene,
conflict with, or result in a violation of, or give any Governmental Body
or other Person the right to challenge any of the transactions
contemplated herein or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which the Target, or any of its
respective assets, may be subject;
|
|
(c)
|
contravene,
conflict with, or result in a violation of any of the terms or
requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any governmental
authorization that is held by the Target or that otherwise relates to the
Business of, or any of the assets owned or used by, the
Target;
|
|
(d)
|
cause
the Purchaser or the Target to become subject to, or to become liable for
the payment of, any Tax;
|
|
(e)
|
cause
any of the assets owned by the Target to be reassessed or revalued by any
taxing authority or other Governmental
Body;
|
|
(f)
|
contravene,
conflict with, or result in a violation or breach of any provision of, or
give any Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Material
Contract;
|
|
(g)
|
result
in the imposition or creation of any Encumbrance upon or with respect to
any of the assets owned or used by the Target;
or
|
|
(h)
|
require
the Target to obtain any consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or
performance of any of the transactions contemplated
herein.
|
3.6 Financial
Statements
|
(a)
|
The
Target has, or will prior to closing have, delivered the Target Financial
Statements to the Purchaser.
|
|
(b)
|
The
Target Financial Statements:
|
|
(i)
|
are
in accordance with the books and records of the
Target;
|
|
(ii)
|
present
fairly the financial condition of the Target as of the respective dates
indicated and the results of operations for such periods;
and
|
|
(iii)
|
have
been prepared in accordance with GAAP and reflect the consistent
application of GAAP throughout the periods
involved.
|
12
|
(c)
|
All
material financial transactions of the Target have been accurately
recorded in the books and records of the Target and such books and records
fairly present the financial position and the affairs of the
Target.
|
|
(d)
|
Other
than the costs and expenses incurred in connection with the negotiation
and consummation of the transactions contemplated herein, the Target has
no material Liabilities or obligations, net of cash, either direct or
indirect, matured or unmatured, absolute, contingent or otherwise, that
exceed $5,000, which:
|
|
(i)
|
are
not set forth in the Target Financial Statements or have not heretofore
been paid or discharged;
|
|
(ii)
|
did
not arise in the regular and ordinary course of business under any
agreement, contract, commitment, lease or plan specifically disclosed in
writing to the Purchaser; or
|
|
(iii)
|
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 Accounting
Date.
|
|
(e)
|
Except
to the extent reflected or reserved against in the Target Financial
Statements or incurred subsequent to the Accounting Date in the ordinary
and usual course of the business of the Target, the Target does not have
any outstanding indebtedness or any Liabilities or obligations (whether
accrued, absolute, contingent or otherwise), and any Liabilities or
obligations incurred in the ordinary and usual course of business since
the Accounting Date have not had a Material Adverse Effect on the
Target.
|
|
(f)
|
Since
the Accounting Date, there have not
been:
|
|
(i)
|
any
changes in the condition or operations of the business, assets or
financial affairs of the Target which have caused, individually or in the
aggregate, a Material Adverse Effect on the Target;
or
|
|
(ii)
|
any
damage, destruction or loss, labour trouble or other event, development or
condition, of any character (whether or not covered by insurance) which is
not generally known or which has not been disclosed to the Purchaser,
which has or may cause a Material Adverse Effect on the
Target.
|
|
(g)
|
Since
the Accounting Date, and other than as contemplated by this Agreement, the
Target has not:
|
|
(i)
|
transferred,
assigned, sold or otherwise disposed of any of the assets shown or
reflected in the Target Financial Statements or cancelled any debts or
claims except in each case in the ordinary and usual course of
business;
|
|
(ii)
|
incurred
or assumed any obligation or liability (fixed or contingent), except
unsecured current obligations and Liabilities incurred in the ordinary and
usual course of business;
|
|
(iii)
|
issued
or sold any shares in its capital or any warrants, bonds, debentures or
other corporate securities or issued, granted or delivered any right,
option or other commitment for the issue of any such or other
securities;
|
13
|
(iv)
|
discharged
or satisfied any Encumbrances, or paid any obligation or liability (fixed
or contingent), other than current Liabilities or the current portion of
long term liabilities disclosed in the Target Financial Statements or
current Liabilities incurred since the date thereof in the ordinary and
usual course of business;
|
|
(v)
|
declared,
made, or committed itself to make any payment of any dividend or other
distribution in respect of any of its shares, nor has it purchased,
redeemed, subdivided, consolidated, or reclassified any of its
shares;
|
|
(vi)
|
made
any gift of money or of any assets to any
Person;
|
|
(vii)
|
purchased
or sold any assets except in the ordinary and usual course of
business;
|
|
(viii)
|
amended
or changed or taken any action to amend or change its Organizational
Documents;
|
|
(ix)
|
made
payments of any kind to or on behalf of either a Shareholder or any
Related Parties of a Shareholder, nor under any management agreement save
and except business related expenses and salaries in the ordinary and
usual course of business and at the regular rates payable to
them;
|
|
(x)
|
created,
incurred, assumed or guaranteed any indebtedness for money borrowed, or
mortgaged, pledged or subjected any of the material assets or properties
of the Target to any mortgage, lien, pledge, security interest,
conditional sales contract or other encumbrance of any nature
whatsoever;
|
|
(xi)
|
made
or suffered any amendment or termination of any Material Contract, 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;
|
|
(xii)
|
suffered
any damage, destruction or loss, whether or not covered by insurance, that
has had or may be reasonably expected to have a Material Adverse Effect on
the Target;
|
|
(xiii)
|
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;
|
|
(xiv)
|
adopted,
or increased the payments to or benefits under, any profit sharing, bonus,
deferred compensation, savings, insurance, pension, retirement, or other
employee benefit plan for or with any employees of the Target;
or
|
|
(xv)
|
authorized
or agreed or otherwise have become committed to do any of the
foregoing.
|
|
(h)
|
The
Target has no guarantees, indemnities or contingent or indirect
obligations with respect to the Liabilities or obligations of any other
Person including any obligation to service the debt of or otherwise
acquire an obligation of another Person or to supply funds to, or
otherwise maintain any working capital or other balance sheet condition of
any other Person.
|
14
|
(i)
|
The
Target is not a party to, bound by or subject to any indenture, mortgage,
lease, agreement, license, permit, authorization, certification,
instrument, statute, regulation, order, judgment, decree or law that would
be violated or breached by, or under which default would occur or which
could be terminated, cancelled or accelerated, in whole or in part, as a
result of the execution and delivery of this Agreement or the consummation
of any of the transactions provided for in this
Agreement.
|
3.7 Subsidiaries
The
Target has no subsidiaries.
3.8 Books and Records
The books
of account, minute books, stock record books, and other records of the Target
are complete and correct and have been maintained in accordance with sound
business practices, including the maintenance of an adequate system of internal
controls. The minute books of the Target contain accurate and complete records
of all meetings held, and corporate action taken by, the respective
shareholders, board of directors, and committees of the board of directors of
the Target, and no meeting of any such shareholders, board of directors, or
committee has been held for which minutes have not been prepared and are not
contained in such minute books. At the Closing, all of those books
and records will be in the possession of the Target.
3.9 Title to Personal Property and
Encumbrances
The
Target possesses, and has good and marketable title to all personal property
necessary for the continued operation of the Business as presently conducted and
as represented to the Purchaser, including all assets reflected in the Target
Financial Statements or acquired since the Accounting Date. 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 the Target is owned by
the Target free and clear of all Encumbrances, except as disclosed in the
Disclosure Statement.
3.10 Title to Real Property and
Encumbrances
The
Target possesses, and has good and marketable title to all real property and
leaseholds or other such interests necessary for the continued operation of the
Business as presently conducted and as represented to the Purchaser, including
all assets reflected in the Target Financial Statements or acquired since the
Accounting Date. 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 real
property and leaseholds are owned or leased by the Target free and clear of all
Encumbrances, except as disclosed in the Disclosure Statement. The
Target has delivered or made available, or will make available on request, to
the Purchaser copies of the deeds and other instruments (as recorded) by which
the Target acquired such real property and interests, and copies of all title
insurance policies, opinions, abstracts and surveys in the possession of the
Target and relating to such property or interests.
3.11 Accounts
Receivable
All
accounts receivable of the Target that are reflected on the balance sheet
included in the Target Financial Statements or on the accounting records of the
Target as of the Closing Date (collectively, the “Accounts Receivable”) have
been recorded by the Target in accordance with its usual accounting practices
consistent with prior periods and represent or will represent valid obligations
arising from sales actually made or services actually performed in the ordinary
course of business. To the best of the knowledge of the Shareholders, the
Accounts Receivable are or will be as of the Closing Date current
and
15
collectible
net of the respective reserves shown on the balance sheet included in the Target
Financial Statements or on the accounting records of the Target. The
reserve taken for doubtful or bad debtor accounts is adequate based on the past
experience of the Target and is consistent with the accounting procedures used
in previous fiscal periods. There is nothing which would indicate that such
reserves are not adequate or that a higher reserve should be
taken. There is no contest, claim, or right of set-off, other than
returns in the ordinary course of business, under any contract with any obligor
of an Account Receivable relating to the amount or validity of such Account
Receivable. The Disclosure Statement contains a complete and accurate list of
all Accounts Receivable as of the date of the Financial Statements, which list
sets forth the aging of such Accounts Receivable.
3.12 Material
Contracts
The
Target has made available all the present outstanding Material Contracts entered
into by the Target in the course of carrying on the Business. Except
as listed in the Disclosure Statement, the Target is not party to or bound by
any other Material Contract, whether oral or written, and the contracts and
agreements are all valid and subsisting, in full force and effect and unamended,
no material default or violation exists in respect thereof on the part of the
Target or, to the best of the knowledge of the Target, on the part of any of the
other parties thereto. The Target is not aware of any intention on
the part of any of the other parties thereto to terminate or materially alter
any such contracts or agreements 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 such contracts or agreements. To the best knowledge of the
Target, the continuation, validity, and effectiveness of each Material Contract
will in no way be affected by the consummation of the transactions contemplated
by this Agreement. There exists no actual or threatened termination,
cancellation, or limitation of, or any amendment, modification, or change to any
Material Contract.
3.13 Tax Matters
|
(a)
|
The
Target has filed or caused to be filed all Tax Returns that are or were
required to be filed by or with respect to it, either separately or as a
member of a group of corporations, pursuant to all applicable statutes and
other Legal Requirements. The Target has made available to the
Purchaser copies of all such Tax Returns filed by the
Target. Except as described in the Disclosure Statement, the
Target has not given or been requested to give waivers or extensions (or
is or would be subject to a waiver or extension given by any other Person)
of any statute of limitations relating to the payment by the Target or for
which the Target may be liable.
|
|
(b)
|
All
Taxes that the Target is or was required to withhold or collect have been
duly withheld or collected and, to the extent required, have been paid to
the proper Governmental Body or other
Person.
|
|
(c)
|
All
Tax Returns filed by (or that include on a consolidated basis) the Target
are true, correct, and complete. There is no tax sharing agreement that
will require any payment by the Target after the date of this
Agreement.
|
|
(d)
|
The
Target 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 in the Target Financial Statements for those
Taxes not yet due and payable, except for (i) any Taxes the non-payment of
which will not have a Material Adverse Effect on the Target, and (ii) such
Taxes, if any, as are listed in the Disclosure Statement and are being
contested in good faith and as to which adequate reserves (determined in
accordance with GAAP) have been provided in the Target Financial
Statements.
|
16
|
(e)
|
The
Target is not presently under, or has received notice of, any contemplated
investigation or audit by any regulatory or government agency or body or
any foreign or state taxing authority concerning any fiscal year or period
ended prior to the date hereof.
|
|
(f)
|
The
Target Financial Statements contain full provision for all Taxes including
any deferred Taxes that may be assessed to the
Target.
|
3.14 No Agents
The
Target warrants to the Purchaser that no broker, agent or other intermediary has
been engaged by any of the Target in connection with the transactions
contemplated hereby and, consequently, no commission is payable or due to a
third party from the Target.
3.15 Employee Benefit Plans and
Compensation; Employment Matters.
|
(a)
|
For
purposes of this Section 3.15, the
following terms will have the meanings set forth
below:
|
|
(i)
|
“Employee
Plan” refers to any plan, program, policy, practice, contract, agreement
or other arrangement providing for bonuses, severance, termination pay,
performance awards, stock or stock-related awards, fringe benefits or
other employee benefits of any kind, whether formal or informal, funded or
unfunded and whether or not legally binding, and pursuant to which the
Target has or may have any material liability contingent or
otherwise;
|
|
(ii)
|
“Employee”
means any current, former, or retired employee, officer, or director of
the Target; and
|
|
(iii)
|
“Employee
Agreement” refers to each employment, severance, consulting or similar
agreement or contract between the Target and any
Employee.
|
|
(b)
|
The
Target has made available to
Purchaser:
|
|
(i)
|
correct
and complete copies of all documents embodying each Employee Plan and each
Employee Agreement including all amendments thereto and copies of all
forms of agreement and enrollment used in connection
therewith;
|
|
(ii)
|
the
most recent annual actuarial valuations, if any, prepared for each
Employee Plan;
|
|
(iii)
|
if
the Employee Plan is funded, the most recent annual and periodic
accounting of the Employee Plan assets;
and
|
|
(iv)
|
all
communications material to any Employee or Employees relating to the
Employee Plan and any proposed Employee Plan, in each case, relating to
any amendments, terminations, establishments, increases or decreases in
benefits, acceleration of payments or vesting schedules or other events
which would result in any material liability to the
Target.
|
|
(c)
|
The
Target has performed, in all material respects, all obligations required
to be performed by it under, is not in default or violation of, and has no
knowledge of any default or violation by another party to any Employee
Plan, and all Employee Plans have been established and maintained in all
material respects in accordance with
their
|
17
|
respective
terms and in substantial compliance with all Applicable
Laws. There are no actions, suits or claims pending, or, to the
knowledge of the Target, threatened or anticipated (other than routine
claims for benefits), against any Employee Plan or against the assets of
any Employee Plan. The Employee Plans can be amended, terminated or
otherwise discontinued after the Closing in accordance with their terms,
without liability to the Target, the Purchaser or any Affiliate thereof
(other than ordinary administration expenses typically incurred in a
termination event). There are no audits, inquiries or proceedings
pending or, to the knowledge of the Shareholders and Target threatened, by
any Governmental Body.
|
|
(d)
|
The
execution of this Agreement and the consummation of the transactions
contemplated hereby will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under an Employee
Plan, Employee Agreement, trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligation
to fund benefits with respect to any
Employee.
|
|
(e)
|
The
Target:
|
|
(i)
|
is
in compliance in all material respects with all Applicable Laws respecting
employment, employment practices, terms and conditions of employment and
wages and hours, in each case, with respect to
Employees;
|
|
(ii)
|
has
withheld all amounts required by law or by agreement to be withheld from
the wages, salaries and other payments to
Employees;
|
|
(iii)
|
is
not liable for any arrears of wages or any taxes or any penalty for
failure to comply with any of the
foregoing;
|
|
(iv)
|
is
not liable for any payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits for Employees
(other than routine payments to be made in the normal course of business
and consistent with past practice);
|
|
(v)
|
has
provided the Employees with all wages, benefits, stock options, bonuses,
incentives and all other compensation that became due and payable through
the date of the Agreement; and
|
|
(vi)
|
represents
that in the last three (3) years, no citation has been issued by any
federal, state or provincial occupational safety and health board or
agency against them and no notice of contest, claim, complaint, charge,
investigation or other administrative enforcement proceeding involving
them has been filed or is pending or, to their knowledge, threatened,
against them under any federal, state or provincial occupational safety
and health board or any other Applicable Law relating to occupational
safety and health.
|
|
(f)
|
No
work stoppage, labour strike or other “concerted action” involving
Employees against the Target is pending or, to the knowledge of the
Target, threatened. The Target is not involved in nor, to the
knowledge of the Target, threatened with, any labour dispute, grievance,
or litigation relating to labour, safety or discrimination matters
involving any Employee, including, without limitation, charges of unfair
labour practices or discrimination complaints, which, if adversely
determined, would, individually or in the aggregate, result in a Material
Adverse Effect on the Target. The Target is not
presently,
|
18
nor has
been in the past, a party to, or bound by, any collective bargaining agreement
or union contract with respect to any Employees and no collective bargaining
agreement is being negotiated. There are no activities or proceedings of a
labour union to organize any of the Employees.
|
(g)
|
Except
as described in Disclosure Statement and except for claims by Employees
under any applicable workers’ compensation or similar legislation which,
if adversely determined, would not, either individually or in the
aggregate, have a Material Adverse Effect on the Target, there are no
complaints, claims or charges pending or outstanding or, to the best of
the knowledge of the Target, anticipated, nor are there any orders,
decisions, directions or convictions currently registered or outstanding
by any tribunal or agency against or in respect of the Target under or in
respect of any employment legislation. The Disclosure Statement
lists all Employees in respect of whom of the Target has been advised by
any workers compensation or similar authority that such Employees are in
receipt of benefits under workers’ compensation or similar legislation.
There are no appeals pending before any workers compensation or similar
authority involving the Target and all levies, assessments and penalties
made against the Target pursuant to workers’ compensation or similar
legislation have been paid. The Target is not aware of any
audit currently being performed by any workers compensation or similar
authority, and all payments required to be made in respect of termination
or severance pay under any employment standards or similar legislation in
respect of former employees or employees listed on the Disclosure
Statement have been made.
|
3.16 Consents
Except as
set forth in the Disclosure Statement, no authorization, approval, order,
license, permit or consent of any Governmental Body, regulatory body, agency,
other authority or any Person, including any governmental department,
commission, bureau, board or administrative agency or court, and no
registration, declaration or filing by the Target with any such Governmental
Body, regulatory body or agency or court is required in order for the Target
to:
|
(a)
|
consummate
the transactions contemplated by this
Agreement;
|
|
(b)
|
execute
and deliver all of the documents and instruments to be delivered by the
Shareholders under this Agreement;
|
|
(c)
|
duly
perform and observe the terms and provisions of this Agreement;
or
|
|
(d)
|
render
this Agreement legal, valid, binding and
enforceable.
|
3.17 Compliance with Legal
Requirements
Except as
set forth in the Disclosure Statement:
|
(a)
|
the
Target is, and at all times has been, in full compliance with all of the
terms and requirements of each governmental authorization required for the
operation of the Business;
|
|
(b)
|
no
event has occurred or circumstance exists that may (with or without notice
or lapse of time) constitute or result directly or indirectly in a
violation of or a failure to comply with any term or requirement of any
governmental authorization required for the operation of the Business or
may result directly or indirectly in the revocation,
withdrawal,
|
19
suspension,
cancellation, or termination of, or any modification to, any governmental
authorization required for the operation of the Business;
|
(c)
|
the
Target has not received, except as set forth in the Disclosure Statement,
any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding any actual, alleged,
possible, or potential violation of or failure to comply with any term or
requirement of any governmental authorization, or any actual, proposed,
possible, or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to any governmental authorization;
and
|
|
(d)
|
all
applications required to have been filed for the renewal of the
governmental authorizations required for the operation of the Business
have been duly filed on a timely basis with the appropriate Governmental
Bodies, and all other filings required to have been made with respect to
such governmental authorizations have been duly made on a timely basis
with the appropriate Governmental
Bodies.
|
3.18 Legal Proceedings
|
(a)
|
Other
than as set forth in the Disclosure Statement, there is no pending
Proceeding:
|
|
(i)
|
that
has been commenced by or against the Target or that otherwise relates to
or may affect the Business, or any of the assets owned or used by, the
Target; or
|
|
(ii)
|
that
challenges, or that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the transactions
contemplated herein.
|
|
(b)
|
To
the knowledge of the Target and Shareholders, no Proceeding has been
threatened, and no event has occurred or circumstance exists
that may give rise to or serve as a basis for the commencement of any
such Proceeding.
|
|
(c)
|
Except
as set forth in the Disclosure
Statement:
|
|
(i)
|
there
is no Order to which either of the Target, the Business, or any of the
assets owned or used by either of them, is subject;
and
|
|
(ii)
|
no
officer, director, agent, or employee of the Target is subject to any
Order that prohibits such officer, director, agent, or employee from
engaging in or continuing any conduct, activity, or practice relating to
the Business.
|
3.19 Insurance
|
(a)
|
Except
as set forth in the Disclosure Statement, all insurance policies to which
the Target a party or that provides coverage to the Target, or to any
director or officer of the Target:
|
|
(i)
|
are
valid, outstanding, and
enforceable;
|
|
(ii)
|
are
issued by an insurer that is financially sound and
reputable;
|
|
(iii)
|
taken
together, provide adequate insurance coverage for the assets and the
operations of the Target for all risks normally insured against by a
Person carrying on the same business as the
Target;
|
20
|
(iv)
|
are
sufficient for compliance with all Legal Requirements and contracts to
which the Target is a party or by which is
bound;
|
|
(v)
|
will
continue in full force and effect following the consummation of the
transactions contemplated herein;
and
|
|
(vi)
|
do
not provide for any retrospective premium adjustment or other
experienced-based liability on the part of the
Target.
|
|
(b)
|
The
Target has not received (a) any refusal of coverage or any notice that a
defense will be afforded with reservation of rights, or (b) any notice of
cancellation or any other indication that any insurance policy is no
longer in full force or effect or will not be renewed or that the issuer
of any policy is not willing or able to perform its obligations
thereunder.
|
|
(c)
|
The
Target has paid all premiums due, and has otherwise performed all of its
respective obligations, under each policy to which the Target is a party
or that provides coverage to the Target or any director
thereof.
|
|
(d)
|
The
Target has given prompt notice to its insurers of all claims or possible
claims that may be insured by any of its respective
policies.
|
3.20 Indebtedness to
Target
Except
for (i) the payment of salaries and reimbursement for out-of-pocket expenses in
the ordinary and usual course, or (ii) amounts disclosed in the Disclosure
Statement or the Target Financial Statements, the Target is not indebted to the
Shareholders, any Related Party of the Shareholder or any directors, officers or
employees of the Target, on any account whatsoever.
3.21 Certain Payments
Since the
Accounting Date, neither the Target nor any director, officer, agent, or
employee of the Target, nor any other Person associated with or acting for or on
behalf of the Target, has directly or indirectly:
|
(a)
|
made
any contribution, gift, bribe, rebate, payoff, influence payment,
kickback, or other payment to any Person, private or public, regardless of
form, whether in money, property, or
services:
|
|
(i)
|
to
obtain favorable treatment in securing
business;
|
|
(ii)
|
to
pay for favorable treatment for business
secured;
|
|
(iii)
|
to
obtain special concessions or for special concessions already obtained,
for or in respect of the Target or any Related Party of the Target;
or
|
|
(iv)
|
in
violation of any Legal Requirement;
or
|
|
(b)
|
established
or maintained any fund or asset that has not been recorded in the books
and records of the Target
|
21
3.22
|
|
Undisclosed
Information
|
|
(a)
|
The
Target does not have any specific information relating to the Target which
is not generally known or which has not been disclosed to the Purchaser
and which could reasonably be expected to have a Material Adverse Effect
on the Target.
|
|
(b)
|
No
representation or warranty of the Target in this Agreement and no
statement in the Disclosure Statement omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not
misleading.
|
3.23 Intellectual
Property
|
(a)
|
The
Target owns or holds an interest in all intellectual property assets
necessary for the operation of the Business as it is currently conducted
(collectively, the “Intellectual Property Assets”),
including:
|
|
(i)
|
all
functional business names, trading names, registered and unregistered
trademarks, service marks, and applications (collectively, the
“Marks”);
|
|
(ii)
|
all
patents, patent applications, and inventions, methods, processes and
discoveries that may be patentable (collectively, the
“Patents”);
|
|
(iii)
|
all
copyrights in both published works and unpublished works (collectively,
the “Copyrights”); and
|
|
(iv)
|
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 the Target as
licensee or licensor (collectively, the “Trade
Secrets”).
|
|
(b)
|
The
Target has not transferred, assigned or encumbered the Intellectual
Property Assets or its interests therein in any
way.
|
|
(c)
|
The
conduct of the Business does not infringe the intellectual property or
contractual rights or obligations of any Person and is in accordance with
any and all agreements pursuant to which the Target has the right to use
or license any third-party intellectual property. No Person has instituted
or threatened any proceeding or action against the Target alleging any
infringement by the Target of the intellectual property of such
Person.
|
|
(d)
|
There
are no third parties challenging, infringing or otherwise violating the
Target’s rights in the Intellectual Property
Assets.
|
|
(e)
|
The
Target has used the Intellectual Property Assets in such a manner as to
preserve their rights therein, including the use of proper notices
indicating ownership of the Intellectual Property Assets to the extent
necessary for the protection of all rights therein and the prevention of
any disclosure to the public of any confidential information related to
the Intellectual Property Assets.
|
|
(f)
|
Each
Employee has entered into a valid and subsisting employment contract that
obliges the Employee to maintain the confidential information related to
the Intellectual Property Assets during and following employment and to
assign all right, title and interest in
the
|
22
|
Intellectual
Property Assets to the Target and to waive any and all moral rights that
such Employees may have therein.
|
3.24 Other
Representations
All
statements contained in any certificate or other instrument delivered by or on
behalf of the Target pursuant hereto or in connection with the transactions
contemplated by this Agreement will be deemed to be representations and
warranties of the Target hereunder.
3.25 Survival
With the
exception of the representations and warranties of the Target set forth in
Sections 3.2 and 3.4 hereto, the representations and
warranties of the Target hereunder will not survive the Closing.
3.26 Reliance
The
Target and the Shareholders acknowledge and agree that the Purchaser has entered
into this Agreement relying on the warranties and representations and other
terms and conditions contained in this Agreement, notwithstanding any
independent searches or investigations that have been or may be undertaken by or
on behalf of the Purchaser, and that no information which is now known or should
be known or which may hereafter become known by the Purchaser or its officers,
directors or professional advisers, on the Closing Date, will limit or
extinguish the right to indemnification hereunder.
|
ARTICLE 4
|
|
REPRESENTATIONS,
WARRANTIES AND ACKNOWLEDGEMENTS OF
SHAREHOLDERS
|
4.1 Each
of the Shareholders, as applicable, acknowledges, represents and warrants to the
Purchaser, and acknowledges that the Purchaser is relying upon such
acknowledgements, representations and warranties in connection with the
execution, delivery and performance of this Agreement, notwithstanding any
investigation made by or on behalf of the Purchaser, as follows:
|
(a)
|
Each
Shareholder is the registered and beneficial owner of the number of Shares
listed next to his, her or its name in Schedule A to this Agreement free
and clear of all Encumbrances, and each Shareholder has no interest, legal
or beneficial, direct or indirect, in any other shares of, or the assets
or business of, the Target; and
|
|
(b)
|
Each
Shareholder has the power and capacity and good and sufficient right and
authority to enter into this Agreement on the terms and conditions herein
set forth and to transfer the beneficial title and ownership of its
respective Shares to the Purchaser.
|
4.2 Except
as provided for in this Agreement, each Shareholder is agreeing to waive all
rights held by such Shareholder under prior agreements, including shareholder
agreements, pertaining to the Shares held by such Shareholder and the
Shareholder will remise, release and forever discharge the Purchaser and its
respective directors, officers, employees, successors, solicitors, agents and
assigns from any and all obligations to the Shareholder under any such prior
agreements.
4.3 The
representations and warranties of the Shareholders hereunder will survive the
Closing and the issuance of the Consideration Shares and, notwithstanding the
Closing and the issuance of the Consideration Shares or the waiver of any
condition by the Purchaser, the representations,
warranties, covenants and agreements of the Target will (except where otherwise
specifically provided in this Agreement) survive the Closing and will continue
in full force and effect indefinitely.
23
ARTICLE 5
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASER
As of the
Closing Date and except as set forth in the disclosure statement signed and
dated by the Purchaser and delivered by the Purchaser to the Target at Closing
(the “Purchaser Disclosure Statement”) or as otherwise provided for in any
certificate or other instrument delivered pursuant to this Agreement, the
Purchaser makes the following representations to the Target, and the Purchaser
acknowledges that the Target is relying upon such representations and
warranties, each of which is qualified in its entirety by the matters described
in the Purchaser Disclosure Statement, in connection with the execution,
delivery and performance of this Agreement, as follows:
5.1 Organization and Good
Standing
The
Purchaser is a corporation duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation, with full
corporate power, authority and capacity to conduct its business as presently
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under any applicable
contracts. The Purchaser is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the activities conducted by it, requires such
qualification.
5.2 Capitalization
The
entire authorized capital stock of the Purchaser consists of 150,000,000
Purchaser Shares with a par value of $0.001 per share and 50,000,000 preferred
shares with a par value of $0.001 per share of which 14,294,490 Pre-Split
Purchaser Shares are currently issued and outstanding and no preferred shares
are currently outstanding. Immediately after the Split and prior to
Closing, there will be approximately 27,620,000 Purchaser Shares issued and
outstanding (with such adjustment as may be necessary to effect the rounding up
of fractional Purchaser Shares that may result upon the effectiveness of the
Split). Except as set out in this Agreement and the Purchaser
Disclosure Statement, there are no outstanding options, warrants, subscriptions,
conversion rights, or other rights, agreements, or commitments obligating the
Purchaser to issue any additional Purchaser Shares, or any other securities
convertible into, exchangeable for, or evidencing the right to subscribe for or
acquire from the Purchaser any Purchaser Shares. There are no
agreements purporting to restrict the transfer of any of the issued and
outstanding Purchaser Shares, no voting agreements, shareholders’ agreements,
voting trusts, or other arrangements restricting or affecting the voting of any
of the Purchaser Shares to which the Purchaser is a party or of which the
Purchaser is aware.
5.3 Authority
The
Purchaser has all requisite corporate power and authority to execute and deliver
the Transaction Documents to be signed by the Purchaser and to perform its
obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of each of the Transaction
Documents by the Purchaser and the consummation of the transactions contemplated
hereby have been duly authorized by the board of directors of the
Purchaser. No other corporate or shareholder proceedings on the part
of the Purchaser are necessary to authorize such documents or to consummate the
transactions contemplated hereby. This Agreement has been, and the
other Transaction Documents when executed and delivered by the Purchaser as
contemplated by this Agreement will be, duly executed and delivered by the
Purchaser and this Agreement is, and the other Transaction Documents when
executed and delivered by the Purchaser as contemplated hereby will be, valid
and binding obligations of the Purchaser enforceable in accordance with their
respective terms except:
24
(a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors’ rights
generally;
|
(b)
|
as
limited by laws relating to the availability of specific performance,
injunctive relief of other equitable remedies;
and
|
|
(c)
|
as
limited by public policy.
|
5.4 Validity of Consideration Shares
Issuable upon the Transaction
The
Consideration Shares to be issued to the Shareholders at Closing will, upon
issuance, have been duly and validly authorized and, the Consideration Shares
when so issued in accordance with the terms of this Agreement, will be duly and
validly issued, fully paid and non-assessable.
5.5 Non-Contravention
Neither
the execution, delivery and performance of this Agreement, nor the consummation
of the transactions contemplated herein, will:
|
(a)
|
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 the Purchaser 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 the Purchaser or its material property or
assets;
|
|
(b)
|
violate
any provision of the Organizational Documents of the Purchaser or any
Applicable Laws; or
|
|
(c)
|
violate
any Order, writ, injunction, decree, statute, rule, or regulation of any
court or Governmental Body applicable to the Purchaser or any of its
material property or assets.
|
5.6 Corporate Records of the
Purchaser
The
corporate records of the Purchaser, 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 books of the Purchaser are, in all material
respects, correct and contain all material records required by the laws of the
State of Nevada in regards to all proceedings, consents, actions and meetings of
the shareholders and the board of directors of the Purchaser.
5.7 Actions and
Proceedings
Except as
disclosed in the Purchaser SEC Documents, to the best knowledge of the
Purchaser, there is no basis for and there is no claim, charge, arbitration,
grievance, action, suit, judgment, demand, investigation or Proceeding by or
before any court, arbiter, administrative agency or other Governmental Body now
outstanding or pending or, to the best knowledge of the Purchaser, threatened
against or affecting the Purchaser which involves any of the business, property
or assets of the Purchaser that, if adversely resolved or determined, would have
a Material Adverse Effect on the Purchaser. 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 a Material Adverse Effect on
the Purchaser.
25
5.8 Compliance
|
(a)
|
To
the best knowledge of the Purchaser, the Purchaser 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 Applicable Laws related to the business or operations of
the Purchaser.
|
|
(b)
|
To
the best knowledge of the Purchaser, the Purchaser is not subject to any
judgment, Order or decree entered in any lawsuit or Proceeding applicable
to its business and operations that would have a Material Adverse Effect
on the Purchaser.
|
|
(c)
|
The
Purchaser has duly filed all reports and returns required to be filed by
it with Governmental Bodies 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 the Purchaser, threatened, and none of them will
be affected in a material adverse manner by the consummation of the
Transaction.
|
5.9 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 any other Person is necessary for
the consummation by the Purchaser of the transactions contemplated herein or to
continue to conduct its business after the Closing Date in a manner which is
consistent with that in which it is presently conducted.
5.10 SEC Filings
The
Purchaser has furnished or made available to the Shareholders a true and
complete copy of each report, schedule and registration statement filed by the
Purchaser with the SEC (collectively, and as such documents have since the time
of their filing been amended, the “Purchaser SEC Documents”). As of their
respective dates, the Purchaser SEC Documents complied in all material respects
with the requirements of the Securities Act, and the rules and regulations of
the SEC thereunder applicable to such Purchaser SEC Documents. The
Purchaser SEC Documents constitute all of the documents and reports that the
Purchaser was required to file with the SEC and the rules and regulations
promulgated thereunder by the SEC. The SEC has not initiated any
inquiry, investigation or Proceeding in respect of the Purchaser and the
Purchaser is not aware of any event and does not have any information which
would result in the SEC initiating an inquiry, investigation or Proceeding or
otherwise affect the registration of the Purchaser Shares.
5.11 Financial
Representations
Included
with the Purchaser SEC Documents are true, correct, and complete copies of
audited consolidated balance sheets for the Purchaser dated as of December 31,
2008 and 2007 and unaudited consolidated balance sheets for the Purchaser for
the interim period ended September 30, 2009 (the “Purchaser Accounting Date”)
and the comparative interim period ended September 30, 2008, together with
related statements of income, cash flows, and changes in shareholders’ equity
for the fiscal years and interim periods then ended (collectively, the
“Purchaser Financial Statements”). The Purchaser Financial
Statements:
|
(a)
|
are
in accordance with the books and records of the
Purchaser;
|
26
|
(b)
|
present
fairly the financial condition of the Purchaser as of the respective dates
indicated and the results of operations for such periods;
and
|
|
(c)
|
have
been prepared in accordance with
GAAP.
|
The
Purchaser has not received any advice or notification from its independent
certified public accountants that the Purchaser has used any improper accounting
practice that would have the effect of not reflecting or incorrectly reflecting
in the Purchaser Financial Statements or the books and records of the Purchaser,
any properties, assets, Liabilities, revenues, or expenses. The
books, records and accounts of the Purchaser accurately and fairly reflect, in
reasonable detail, the assets and Liabilities of the Purchaser. The
Purchaser has not engaged in any transaction, maintained any bank account, or
used any funds of the Purchaser, except for transactions, bank accounts and
funds which have been and are reflected in the normally maintained books and
records of the Purchaser.
5.12 Absence of Undisclosed
Liabilities
The
Purchaser has no material Liabilities or obligations either direct or indirect,
matured or unmatured, absolute, contingent or otherwise, other than: (i)
payments contemplated by this Agreement to be made by the Purchaser at Closing,
and (ii) reasonable accounting and legal fees of the Purchaser incurred in
connection with the Transaction which are as set out in a schedule of
Liabilities of the Purchaser to be delivered to the Target at the
Closing.
5.13 Tax Matters
|
(a)
|
As
of the date hereof:
|
|
(i)
|
the
Purchaser 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 it, and
|
|
(ii)
|
all
such returns are true and correct in all material
respects.
|
|
(b)
|
The
Purchaser 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 Material Adverse Effect on the
Purchaser.
|
|
(c)
|
The
Purchaser is not presently under and has not received notice of, any
contemplated investigation or audit by any regulatory or government agency
or body or any foreign or state taxing authority concerning any fiscal
year or period ended prior to the date
hereof.
|
|
(d)
|
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 Body.
|
|
(e)
|
To
the best knowledge of the Purchaser, the Purchaser Financial Statements
contain full provision for all Taxes including any deferred Taxes that may
be assessed to the Purchaser for the accounting period ended on the
Purchaser 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 Purchaser Accounting Date or for which the Purchaser is
accountable up to such date and all contingent Liabilities for Taxes have
been provided for or disclosed in the Purchaser Financial
Statements.
|
27
5.14
|
Absence of
Changes
|
Since the
Purchaser Accounting Date, except as disclosed in the Purchaser SEC Documents
and except as contemplated in this Agreement, the Purchaser has
not:
|
(a)
|
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 Adverse Effect to it or
any of its assets or properties;
|
|
(b)
|
sold,
encumbered, assigned or transferred any material fixed assets or
properties;
|
|
(c)
|
created,
incurred, assumed or guaranteed any indebtedness for money borrowed, or
mortgaged, pledged or subjected any of the material assets or properties
of the Purchaser to any mortgage, Lien, pledge, security interest,
conditional sales contract or other Encumbrance of any nature
whatsoever;
|
|
(d)
|
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;
|
|
(e)
|
declared,
set aside or paid any dividend or made or agreed to make any other
distribution or payment in respect of the Purchaser Shares or redeemed,
purchased or otherwise acquired or agreed to redeem, purchase or acquire
any of the Purchaser Shares;
|
|
(f)
|
suffered
any damage, destruction or loss, whether or not covered by insurance, that
has had a Material Adverse Effect on its business, operations, assets,
properties or prospects;
|
|
(g)
|
suffered
any material adverse change in its business, operations, assets,
properties, prospects or condition (financial or
otherwise);
|
|
(h)
|
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 a Material Adverse
Effect on its business, operations, assets, properties or
prospects;
|
|
(i)
|
made
commitments or agreements for capital expenditures or capital additions or
betterments exceeding in the aggregate
$5,000;
|
|
(j)
|
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;
|
|
(k)
|
entered
into any transaction other than in the ordinary course of business
consistent with past practice; or
|
|
(l)
|
agreed,
whether in writing or orally, to do any of the
foregoing.
|
28
5.15
|
Absence of Certain Changes or
Events
|
Since the
Purchaser Accounting Date, except as and to the extent disclosed in the
Purchaser SEC Documents, there has not been:
|
(a)
|
a
Material Adverse Effect with respect to the Purchaser;
or
|
|
(b)
|
any
material change by the Purchaser in its accounting methods, principles or
practices.
|
5.16 Personal Property
There are
no material equipment, furniture, fixtures or other tangible personal property
and assets owned or leased by the Purchaser, except as disclosed in the
Purchaser SEC Documents. The Purchaser possesses, and has good and
marketable title to all property necessary for the continued operation of the
business of the Purchaser as presently conducted and as represented to the
Shareholders. All such property is used in the business of the
Purchaser. 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 the Purchaser are owned by the Purchaser free and clear of
all Liens, security interests, charges, Encumbrances and other adverse claims,
except as previously disclosed to the Shareholders.
5.17 Insurance
The
assets owned by the Purchaser 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 the Purchaser, 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.
5.18 Employees and
Consultants
To the
best knowledge of the Purchaser, no employee of the Purchaser 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 the Purchaser or any other nature of the business conducted
or to be conducted by the Purchaser.
5.19 Real Property
The
Purchaser does not own any real property. Each of the leases,
subleases, claims or other real property interests (collectively, the “Purchaser
Leases”) to which the Purchaser is a party or is bound, as disclosed in writing
to the Shareholders or as disclosed in the Purchaser SEC Documents, 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 the
Purchaser pursuant to any such Purchaser 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 Purchaser
Leases. The Purchaser Leases will continue to be legal, valid,
binding, enforceable and in full force and effect on identical terms following
the Closing Date. The Purchaser has not assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in the Purchaser
Leases or the leasehold property pursuant thereto.
29
5.20 Material Contracts and
Transactions
Other
than as expressly contemplated by this Agreement, there are no material
contracts, agreements, licenses, permits, arrangements, commitments, instruments
or understandings, whether written or oral, express or implied, contingent,
fixed or otherwise, to which the Purchaser is a party (the “Purchaser
Contracts”), except as previously disclosed to the Shareholders or as disclosed
in the Purchaser SEC Documents. The Purchaser has made available to
the Shareholders each Purchaser Contract. Each Purchaser Contract is
in full force and effect, and there exists no material breach or violation of or
default by the Purchaser under any Purchaser 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 Purchaser Contract by the Purchaser. To
the best knowledge of the Purchaser, the continuation, validity and
effectiveness of each Purchaser Contract will in no way be affected by the
consummation of the Transaction. There exists no actual or threatened
termination, cancellation or limitation of, or any amendment, modification or
change to, any Purchaser Contract.
5.21 Certain
Transactions
Except as
previously disclosed to the Shareholders or as disclosed in the Purchaser SEC
Documents, the Purchaser is not a guarantor or indemnitor of any indebtedness of
any Person.
5.22 Internal Accounting
Controls
The
Purchaser maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
5.23 Listing and Maintenance
Requirements
The
Purchaser is currently quoted on the OTC Bulletin Board and has not, in the 12
months preceding the date hereof, received any notice from the OTC Bulletin
Board or FINRA or any trading market on which the Purchaser Shares are or have
been listed or quoted, to the effect that the Purchaser is not in compliance
with the quoting, listing or maintenance requirements of the OTC Bulletin Board
or such other trading market. No securities commission or other regulatory
authority has issued any order preventing or suspending the trading of the
Purchaser Shares or prohibiting the issuance of the Consideration Shares to be
delivered hereunder, and, to the Purchaser’s knowledge, no Proceedings for such
purpose are pending or threatened.
5.24 No SEC or FINRA
Inquiries
Neither
the Purchaser nor any of its past or present officers or directors is the
subject of any formal or informal inquiry or investigation by the SEC or
FINRA. The Purchaser currently does not have any outstanding comment
letters or other correspondences from the SEC or FINRA. The Purchaser
does not reasonably know of any event or have any information which would result
in the SEC or FINRA initiating an inquiry, investigation or Proceeding or
otherwise affect the Purchaser.
30
5.25 No Agents
The
Purchaser warrants to the Shareholders that no broker, agent or other
intermediary has been engaged by the Purchaser in connection with the
transactions contemplated hereby, and consequently, no commission is payable or
due to a third party from the Purchaser.
5.26 Undisclosed
Information
|
(a)
|
The
Purchaser does not have any specific information relating to the Purchaser
which is not generally known or which has not been disclosed to the
Shareholders and which could reasonably be expected to have a Material
Adverse Effect on the Purchaser.
|
|
(b)
|
To
the Purchaser’s knowledge, no representation or warranty of the Purchaser
in this Agreement and no statement in the Purchaser Disclosure Statement
omits to state a material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were made, not
misleading.
|
5.27 Other
Representations
All
statements contained in any certificate or other instrument delivered by or on
behalf of the Purchaser pursuant hereto or in connection with the transactions
contemplated by this Agreement will be deemed to be representations and
warranties by the Purchaser hereunder.
5.28 Survival
With the
exception of the representations and warranties of the Purchaser set forth in
Sections 5.2 and 5.3 hereto, the representations and
warranties of the Purchaser hereunder will not survive the Closing.
5.29 Reliance
The
Purchaser acknowledges and agrees that the Target and the Shareholders have
entered into this Agreement relying on the warranties and representations and
other terms and conditions contained in this Agreement, notwithstanding any
independent searches or investigations that have been or may be
undertaken by or on behalf of the Target or the Shareholders, and that no
information which is now known or should be known or which may hereafter become
known by the Target or the Shareholders or their respective professional
advisers, on the Closing Date, will limit or extinguish the right to
indemnification hereunder.
ARTICLE 6
CLOSING
6.1 Closing Date and
Location
The
transactions contemplated by this Agreement will be completed at 10:00 a.m.
(Pacific time) on the Closing Date, at the offices of the Purchaser’s
Solicitors, or at such other location and time as is mutually agreed to by the
Purchaser and the Shareholders. Notwithstanding the location of the
Closing, each party agrees that the Closing may be completed by the exchange of
undertakings between the respective legal counsel for the Purchaser and the
Shareholders, provided such undertakings are satisfactory to each party’s
respective legal counsel.
31
6.2 Target and Shareholders Closing
Documents
On the
Closing Date, the Target and the Shareholders will deliver, or cause to be
delivered, to the Purchaser the documents set forth in Section 7.1 and such other documents as the
Purchaser may reasonably require to perfect the transactions contemplated
hereby.
6.3 Purchaser Closing
Documents
On the
Closing Date, the Purchaser will deliver, or cause to be delivered, to the
Target the documents set forth in Section 8.1 and such other documents as the Target
may reasonably require to effect the transactions contemplated
hereby.
ARTICLE 7
PURCHASER’S CONDITIONS
PRECEDENT
7.1 Purchaser’s
Conditions
The
obligation of the Purchaser to complete the transactions contemplated by this
Agreement will be subject to the satisfaction of, or compliance with, at or
before the Closing Date, of the conditions precedent set forth
below. The Closing of the Transaction will be deemed to mean a waiver
of all conditions to Closing. These conditions precedent are for the
benefit of the Purchaser and may be waived by the Purchaser in its
discretion:
|
(a)
|
the
Purchaser will have cash holdings or confirmed financing of
$1,000,000;
|
|
(b)
|
the
representations and warranties of the Target and each of the Shareholders
set forth in this Agreement will be true, correct and complete in all
material respects as of the Closing Date and with the same effect as if
made at and as of the Closing Date and the Purchaser will have
received:
|
|
(i)
|
from
the Target, a certificate executed by an officer of the Target certifying
that the representations and warranties of the Target set forth
in this Agreement are true and correct in all material respects as at the
Closing Date; and
|
|
(ii)
|
from
each Shareholder, completed and executed copies of each of the required
Certificates;
|
|
(c)
|
approval
of the board of directors of the Purchaser and the Target being
obtained;
|
|
(d)
|
the
Target and the Shareholders will have performed and complied with all of
their respective material obligations, covenants and agreements required
hereunder;
|
|
(e)
|
this
Agreement, the Transaction Documents and all other documents necessary or
reasonably required to consummate the transactions contemplated hereby,
all in form and substance reasonably satisfactory to the Purchaser, will
have been executed and delivered to the
Purchaser;
|
|
(f)
|
the
Purchaser will be reasonably satisfied that its due diligence, analysis
and other customary examinations that it has performed regarding the
financial position of and the business of the Target are consistent, in
all material respects, with the representations and warranties of the
Target and the Shareholders set forth in this
Agreement;
|
32
|
(g)
|
no
injunction or restraining order of any court or administrative tribunal of
competent jurisdiction will be in effect prohibiting the transactions
contemplated by this Agreement and no action or Proceeding will have been
instituted or be pending before any court or administrative tribunal to
restrain or prohibit the transactions contemplated by this
Agreement;
|
|
(h)
|
no
claim will have been asserted or made that any Person (other than the
Purchaser or the Shareholders) is the holder or the beneficial owner of,
or has the right to acquire or to obtain beneficial ownership of, any of
the Shares, or any other voting, equity, or ownership interest in, the
Target, or (other than the Shareholders) is entitled to all or any portion
of the Consideration Shares;
|
|
(i)
|
no
Material Adverse Effect will have occurred with respect to the Business or
the Shares;
|
|
(j)
|
all
consents, renunciations, authorizations or approvals of third parties,
which, in the Purchaser’s reasonable opinion must be obtained prior to the
Closing in order to give effect to the purchase of the Shares and the
other transactions contemplated herein, must be obtained to the
Purchaser’s satisfaction or in accordance with the relevant agreements,
covenants or applicable law;
|
|
(k)
|
the
Purchaser shall have received a copy of the Target Financial Statements
from the Target and the Purchaser and its accountants will be reasonably
satisfied with their review of the Target Financial
Statements;
|
|
(l)
|
on
the Closing Date, the Target’s total Liabilities, net of cash, shall not
exceed $750,000; and
|
|
(m)
|
the
Purchaser will have received from the Target, the following closing
documentation:
|
|
(i)
|
a
certified copy of resolutions of the directors of the Target authorizing
the transfer of the Shares to the Purchaser, the registration of the
Shares in the name of the Purchaser and the issue of share certificates
representing the Shares registered in the name of the
Purchaser;
|
|
(ii)
|
a
certified copy of the central securities register of the Target showing
the Purchaser as the registered owner of the
Shares;
|
|
(iii)
|
all
such instruments of transfer, duly executed, which in the opinion of the
Purchaser acting reasonably are necessary to effect and evidence the
transfer of the Shares to the Purchaser free and clear of all
Encumbrances; and
|
|
(iv)
|
the
corporate minute books and all other books and records of the
Target.
|
7.2 Waiver/Survival
The
conditions set forth in this Article 7 are for the exclusive benefit
of the Purchaser and may be waived by the Purchaser in writing in whole or in
part on or before the Closing Date. Notwithstanding any such waiver, the
completion of the transactions contemplated by this Agreement will not prejudice
or affect in any way the rights of the Purchaser in respect of the warranties
and representations of the Target and the Shareholders in this Agreement, and
the representations and warranties of the Target and the Shareholders in this
Agreement will survive the Closing and issuance of the Consideration Shares for
the applicable period set out in Sections 3.25 and 4.3, as
applicable.
33
7.3 Covenant
of the Target and the Shareholders
The
Target and the Shareholders covenant to deliver all of the closing documentation
set out in Section 7.1.
ARTICLE 8
TARGET’S CONDITIONS
PRECEDENT
8.1 Target’s
Conditions
The
obligation of the Target and the Shareholders to complete the transactions
contemplated by this Agreement will be subject to the satisfaction of, or
compliance with, at or before the Closing Date, of the conditions precedent set
forth below. The Closing of the Transaction will be deemed to mean a
waiver of all conditions to Closing. These conditions precedent are
for the benefit of the Target and may be waived by the Target in its
discretion:
|
(a)
|
the
Purchaser will have commenced the Purchaser Private
Placement;
|
|
(b)
|
the
Purchaser will have cash holdings or confirmed financing of $1,000,000, of
which $150,000 will have been provided to the Target as a bridge loan
within 1 day of the execution of this Agreement pursuant to the terms of a
bridge loan agreement between the Purchaser and the
Target;
|
|
(c)
|
at
Closing, the Purchaser shall have no Liabilities other than: (i) payments
contemplated by this Agreement to be made by the Purchaser at Closing, and
(ii) reasonable accounting and legal fees of the Purchaser incurred in
connection with the Transaction. For greater certainty, the
following payments will be made by the Purchaser at or prior to
Closing:
|
|
(i)
|
$22,500
to Embury in accordance with Section 10.11 of this Agreement, in full and
final settlement of the following Liabilities, as set forth on the
Purchaser’s balance sheet as of the Purchaser Accounting
Date:
|
|
A.
|
accrued
salaries and expense reimbursement in the amount of
$91,275;
|
|
B.
|
short
term related party loan in the amount of $25,626;
and
|
|
C.
|
loans
from shareholders in the amount of
$39,245,
|
together
with any amounts that may have accrued thereon between the Purchaser Accounting
Date and the Closing,
|
(ii)
|
$25,000
for repayment of the Purchaser Note, in accordance with Section 10.12 of this Agreement,
and
|
|
(iii)
|
$25,000
to Embury and $15,000 to Rodgers as consideration for the cancellation of
certain restricted Purchaser Shares held by Embury and Rodgers, in
accordance with Section 10.13 of
this Agreement;
|
|
(d)
|
the
Purchaser will have delivered evidence satisfactory to the Target of the
cancellation at Closing of certain restricted Purchaser Shares
held by Embury and Rodgers, in accordance with Section 10.13 of this
Agreement;
|
34
|
(e)
|
the
Purchaser will have delivered evidence satisfactory to the Target of the
proposed conversion of the debt of Venturex into Purchaser Shares, to be
effective upon Closing, in accordance with Section 10.4 of this
Agreement;
|
|
(f)
|
the
aggregate number of Shares in respect of which the Shareholders shall have
exercised, and not withdrawn the exercise of, rights of dissent as
provided for in Section 92A.380 of the Nevada Revised Statutes shall not
be in excess of 1% of the Shares issued and outstanding on the Closing
Date;
|
|
(g)
|
the
representations and warranties of the Purchaser set forth in this
Agreement will be true, correct and complete in all respects as of the
Closing Date and with the same effect as if made at and as of Closing and
the Target will have received from the Purchaser a certificate executed by
an officer of the Purchaser certifying that the representations and
warranties of the Purchaser set forth in this Agreement are true and
correct as at the Closing Date;
|
|
(h)
|
the
Purchaser will have performed and complied with all of the obligations,
covenants and agreements to be performed and complied with by it
hereunder;
|
|
(i)
|
this
Agreement, the Transaction Documents and all other documents necessary or
reasonably required to consummate the transactions contemplated hereby,
all in form and substance satisfactory to the Target will have been
executed and delivered to the
Target;
|
|
(j)
|
the
Target and its accountants will be reasonably satisfied with their review
of the Purchaser Financial
Statements;
|
|
(k)
|
all
consents, renunciations, authorizations or approvals of third parties,
which, in the Target’s reasonable opinion are necessary to give effect to
the transactions contemplated herein, must be obtained to the Target’s
satisfaction or in accordance with the relevant agreements, covenants or
applicable law;
|
|
(l)
|
no
Material Adverse Effect will have occurred with respect to the business of
the Purchaser;
|
|
(m)
|
the
Consideration Shares will have been delivered in accordance with
Section 6.3;
and
|
|
(n)
|
no
injunction or restraining order of any court or administrative tribunal of
competent jurisdiction will be in effect prohibiting the transactions
contemplated by this Agreement and no action or proceeding will have been
instituted or be pending before any court or administrative tribunal to
restrain or prohibit the transactions contemplated by this
Agreement.
|
8.2 Waiver/Survival
The
conditions set forth in this Article 8 are for the exclusive benefit
of the Target and the Shareholders and may be waived by the Target and the
Shareholders in writing in whole or in part on or before the Closing Date.
Notwithstanding any such waiver, completion of the transactions contemplated by
this Agreement by the Target and the Shareholders will not prejudice or affect
in any way the rights of the Target and the Shareholders in respect of the
warranties and representations of the Purchaser set forth in this Agreement, and
the representations and warranties of the Purchaser in this Agreement will
survive the Closing and issuance of the Consideration Shares for the applicable
period set out in Section 5.28.
35
8.3 Covenant of the
Purchaser
The
Purchaser covenants to deliver all of the closing documentation set out in
Section 8.1.
ARTICLE 9
CONDUCT OF BUSINESS PRIOR TO
CLOSING
9.1 Conduct
Except as
otherwise contemplated or permitted by this Agreement, or as set forth in the
Disclosure Statement, during the period from the date of this Agreement to the
Closing Date, the Target will do the following:
|
(a)
|
conduct
the Business in the ordinary and usual course and in a continuous fashion
and will not, without the prior written consent of the
Purchaser:
|
|
(i)
|
enter
into any transaction which would constitute a breach of the Target’s or
Shareholders’ representations, warranties or agreements contained
herein,
|
|
(ii)
|
increase
the salaries or other compensation of, or make any advance (excluding
advances for ordinary and necessary business expenses) or loan to, any of
its Employees, officers or directors or make any increase in, or any
addition to, other benefits to which any of its Employees, officers or
directors may be entitled,
|
|
(iii)
|
create,
incur, assume or guarantee any indebtedness for money borrowed, or
mortgaged or pledged by the Target or a third party, and will not subject
any of the material assets or properties of the Target to any mortgage,
lien, pledge, security interest, conditional sales contract or other
Encumbrance related to any such indebtedness for money
borrowed,
|
|
(iv)
|
declare,
set aside or pay any dividend or make or agree to make any other
distribution or payment in respect of the Target’s capital shares or
redeem, repurchase or otherwise acquire or agree to redeem, purchase or
acquire any of the Target’s capital shares or equity securities,
or
|
|
(v)
|
pay
any amount (other than salaries in the ordinary course of business) to any
Related Party of the Target or the
Shareholders;
|
|
(b)
|
comply
with all laws affecting the operation of the Business and pay all required
Taxes;
|
|
(c)
|
not
take any action or omit to take any action which would, or would
reasonably be expected to, result in a breach of or render untrue any
representation, warranty, covenant or other obligation of the Target or
the Shareholders contained herein;
|
|
(d)
|
use
commercially reasonable efforts to preserve intact the Business and the
assets, operations and affairs of the Target and carry on the Business and
the affairs of the Target substantially as currently conducted, and use
commercially reasonable efforts to promote and preserve for the Purchaser
the goodwill of suppliers, customers and others having business relations
with the Target;
|
|
(e)
|
take
all necessary actions, steps and proceedings that are necessary to approve
or authorize, or to validly and effectively undertake, the execution and
delivery of this Agreement and the completion of the transactions
contemplated by this Agreement;
|
36
|
(f)
|
otherwise
respond reasonably promptly to reasonable requests from the Purchaser for
information concerning the status of the Business, operations, and
finances of the Target;
and
|
|
(g)
|
comply
with the provisions of Article 10 of this
Agreement.
|
ARTICLE 10
ADDITIONAL COVENANTS OF THE
PARTIES
10.1 Shareholder Approval and Dissent
Rights
|
(a)
|
The
Target shall obtain the consent of the Shareholders for the Transaction in
accordance with the requirements of the Nevada Revised
Statutes.
|
|
(b)
|
Shareholders
may exercise dissent rights in respect of the Transaction if such rights
are exercised strictly in compliance with the dissent procedures set forth
in Section 92A.380 of the Nevada Revised
Statutes.
|
10.2 Articles of
Exchange
On the
Closing Date, the Purchaser shall file Articles of Exchange with the Secretary
of State of the State of Nevada to evidence the completion of the
Transaction.
10.3 Purchaser Private
Placement
|
(a)
|
At
or prior to Closing, the Purchaser will use commercially reasonable
efforts to commence the Purchaser Private
Placement.
|
|
(b)
|
The
Target will provide the Purchaser with a detailed use of proceeds for the
proceeds of the Purchaser Private
Placement.
|
|
(c)
|
The
placees of any securities of the Purchaser issued in connection with the
Purchaser Private Placement will be granted first priority registration
rights with respect to such securities on terms to be agreed upon by the
Purchaser and such placees, subject to the applicable rules and
requirements of the SEC.
|
10.4 Issuance of Purchaser Shares to
Venturex
On the
Closing Date, the Purchaser will issue 1,000,000 Purchaser Shares, at a price of
$0.50 per share, to Venturex in full and final settlement of the whole of the
debt owed by the Target to Venturex.
10.5 Lock Up
Agreements
On or
prior to the Closing, each Shareholder, other than the Key Shareholders, will
enter into a lock-up agreement with the Purchaser (each, a “Lock-Up Agreement”),
in a form reasonably satisfactory to the Purchaser, pursuant to which each such
Shareholder will agree not to offer, sell, assign, pledge or otherwise transfer
any of the Consideration Shares held by such Shareholder for a period of 15
months from the closing of the Transaction.
10.6 Escrow Agreements
On or
prior to the Closing, each of the Key Shareholders will enter into an escrow
agreement with the Purchaser and an escrow agent to be appointed by the
Purchaser, in a form reasonably satisfactory to the
37
Purchaser,
pursuant to which the ability of the Key Shareholders to offer, sell, assign,
pledge or otherwise transfer their Consideration Shares will be restricted in
accordance with the terms of such escrow agreement.
10.7 Employment
Agreements
At
Closing, the Purchaser will enter into employment agreements with such employees
of the Target as the Purchaser deems necessary to operate the
Business.
10.8 Board of Directors of the
Purchaser
|
(a)
|
The
current directors of the Purchaser will adopt resolutions appointing five
nominees of the Target to the Board of Directors of the Purchaser and
accepting the resignation of Rodgers from the Board of Directors of the
Purchaser, which appointments and resignation will be effective on Closing
or, if applicable, ten days after the filing of a Schedule 14f-1 in
connection with the Transaction.
|
|
(b)
|
If
applicable, the Purchaser will prepare and file a Schedule 14f-1
information statement with the SEC as required under the Exchange Act in
connection with the change of directors arising in connection with the
completion of the Transaction.
|
10.9 Officers of the
Purchaser
The
current directors of the Purchaser will adopt resolutions appointing nominees of
the Shareholders as officers of the Purchaser and will accept the resignations
of Rodgers and Embury as officers of the Corporation, which appointments and
resignations will be effective on Closing.
10.10 Stock Option Plan
|
(a)
|
At
or prior to Closing, the Purchaser will adopt a stock incentive plan (the
“Plan”) pursuant to which 5% of the issued and outstanding Purchaser
Shares will be reserved for stock option grants to key employees,
officers, and directors of the
Purchaser.
|
|
(b)
|
Any
options granted under the Plan to a Shareholder who is a party to a
Lock-Up Agreement will become subject to the terms and conditions of such
Shareholder’s respective Lock-Up
Agreement.
|
10.11 Settlement of Embury
Debt
On
Closing, the Purchaser will pay to Embury $22,500 in complete satisfaction of
any debt owed by the Purchaser to Embury and Embury will provide the Target with
a signed document indicating the release of all Liabilities owed by the
Purchaser to Embury.
10.12 Repayment of Purchaser
Note
On
Closing, the Purchaser will repay the principal amount of the Purchaser Note and
all accrued but unpaid interest thereon.
10.13 Cancellation of Restricted
Stock
On
Closing:
38
(a) in
consideration for the payment by the Purchaser to Embury of $25,000, Embury will
surrender for cancellation to the treasury of the Purchaser such number of
Purchaser Shares so that, after such cancellation, Embury holds an aggregate of
100,000 Purchaser Shares; and
|
(b)
|
in
consideration for the payment by the Purchaser to Rodgers of $15,000,
Rodgers will surrender for cancellation to the treasury of the Purchaser
such number of Purchaser Shares so that, after such cancellation, Rodgers
holds an aggregate of 20,000 Purchaser
Shares.
|
10.14 Notification of Financial
Liabilities
The
Shareholders and the Target will immediately notify the Purchaser in accordance
with Section 14.4 hereof, if the Target
receives any advice or notification from its independent certified public
accountants that the Target has used any improper accounting practice that would
have the effect of not reflecting or incorrectly reflecting in the books,
records, and accounts of the Target, any properties, assets, Liabilities,
revenues, or expenses.
10.15 Consents
The
parties covenant and agree that they will use commercially reasonable efforts to
obtain the consents, renunciations and approvals of third parties which are
necessary to the completion of the transactions contemplated by this Agreement,
provided that such consents, renunciations or approvals may be validly given by
such third parties in accordance with relevant agreements, covenants or
applicable law.
10.16 Exclusivity
Until
such time, if any, as this Agreement is terminated pursuant to Article 12, the Shareholders and the
Target (through their advisors, directors, bankers, employees, shareholders,
agents or otherwise) will not, directly or indirectly:
|
(a)
|
solicit,
initiate, encourage, facilitate or discuss any proposition, offer,
inquiry, submission or proposal from any other Person concerning the
purchase of whatever part of the issued and outstanding Shares, other
securities, significant elements of assets of the Target or any merger,
reorganization, arrangement, capitalization or any other form of business
merger implicating, directly or indirectly, the Target or the Business (a
“Proposed Transaction”); or
|
|
(b)
|
enter
into any agreement, discussions or negotiations with any Person, company
or other entity with respect to a Proposed
Transaction.
|
The
Target and the Shareholders will inform the Purchaser of all propositions,
offers, bids or information requests that they might receive regarding a
Proposed Transaction and must provide the Purchaser with all relevant
information in their possession.
10.17 Access for
Investigation
|
(a)
|
Between
the date of this Agreement and the Closing Date, the Target
will:
|
|
(i)
|
afford
the Purchaser, the Purchaser’s Solicitors and the Purchaser’s
representatives, advisors, prospective lenders and their representatives
(collectively, the “Purchaser’s Advisors”) full and free access to the
Target’s personnel, properties, contracts, books and records, and other
documents and data, in each case during normal business hours, upon a
reasonable number of
|
39
occasions,
upon reasonable notice and in a manner calculated to minimize disruption of the
Business;
|
(ii)
|
furnish
the Purchaser and the Purchaser’s Advisors with copies of all such
contracts, books and records, and other existing documents and data, as
the Purchaser may reasonably request;
and
|
|
(iii)
|
furnish
the Purchaser and the Purchaser’s Advisors with such additional financial,
operating, and other data and information, as the Purchaser may reasonably
request.
|
|
(b)
|
Between
the date of this Agreement and the Closing Date, the Purchaser
will:
|
|
(i)
|
afford
the Shareholders and its representatives, legal and advisors and
prospective lenders and their representatives (collectively, the
“Shareholders’ Advisors”) full and free access to the Purchaser’s
personnel, properties, contracts, books and records, and other documents
and data, in each case during normal business hours, upon a reasonable
number of occasions, upon reasonable notice and in a manner calculated to
minimize disruption of the Purchaser’s
business;
|
|
(ii)
|
furnish
the Shareholders and the Shareholders’ Advisors with copies of all such
contracts, books and records, and other existing documents and data, as
the Shareholders may reasonably request;
and
|
|
(iii)
|
furnish
the Shareholders and the Shareholders’ Advisors with such additional
financial, operating, and other data and information, as the Shareholders
may reasonably request.
|
10.18 Required
Approvals
|
(a)
|
As
promptly as practicable after the date of this Agreement, the Target will
make all filings required by Legal Requirements to be made by it in order
to consummate the transactions contemplated herein. Between the date of
this Agreement and the Closing Date, the Target and the Shareholders will
cooperate with the Purchaser with respect to all filings that the
Purchaser elects to make or is required by Legal Requirements to make in
connection with the transactions contemplated
herein.
|
|
(b)
|
As
promptly as practicable after the date of this Agreement, the Purchaser
will make all filings required by Legal Requirements to be made by it in
order to consummate the transactions contemplated herein. The Purchaser
will (i) provide the Shareholders with copies of all correspondence with
Governmental Bodies relating to such Legal Requirements, (ii) allow the
Shareholders to participate on all discussions or meetings (whether in
person or via phone or other technology) with Governmental Bodies relating
to such Legal Requirements, and (iii) provide the Shareholders with
reasonable notice of each of the foregoing, and a reasonable opportunity
to participate in the process where
appropriate.
|
10.19 Notification
Between
the date of this Agreement and the Closing Date, each of the parties hereto will
promptly notify the other parties hereto in writing if any such party becomes
aware of any fact or condition that causes or constitutes a breach of any of the
representations and warranties set forth herein, as of the date of
this
40
Agreement,
or if such party becomes aware of the occurrence after the date of this
Agreement of any fact or condition that would (except as expressly contemplated
by this Agreement) cause or constitute a breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. Should any such fact or
condition require any change in the Disclosure Statement if the Disclosure
Statement were dated the date of the occurrence or discovery of any such fact or
condition, the Target and the Shareholders will promptly deliver to the
Purchaser a supplement to the Disclosure Statement specifying such change.
During the same period, each party hereto will promptly notify the other parties
hereto of the occurrence of any breach of any covenant set forth herein or of
the occurrence of any event that may make the satisfaction of the conditions set
forth herein impossible or unlikely.
10.20 Best Efforts
Between
the date of this Agreement and the Closing Date, the parties will use their best
efforts to cause the conditions contained in this Agreement to be
satisfied.
10.21 Disclosure of Confidential
Information
|
(a)
|
Until
the Closing Date and, if this Agreement is terminated without consummation
of the transactions contemplated herein, then after such termination, the
Purchaser, the Target and each of the Shareholders will maintain in
confidence, will cause their respective directors, officers, employees,
agents, and advisors to maintain in confidence, and will not use to the
detriment of another party or divulge to any third parties, other than
their respective legal and financial advisors, auditors, representatives
and any other Governmental Bodies having jurisdiction, any confidential
written, oral, or other information obtained during the course of the
investigations in connection with this Agreement or the transactions
contemplated herein, unless:
|
|
(i)
|
such
information is already known to such party or to others not bound by a
duty of confidentiality or such information becomes publicly available
through no fault of such party;
|
|
(ii)
|
the
use of such information is necessary or appropriate pursuant to the rules
of any stock exchange or in making any filing or obtaining any consent or
approval required for the consummation of the transactions contemplated
herein; or
|
|
(iii)
|
the
furnishing or use of such information is required by or necessary or
appropriate in connection with legal
proceedings.
|
10.22 Public Notices
The
parties agree that they will not release or issue any reports or statements or
make any public announcements relating to this Agreement or the transactions
contemplated herein without the prior written consent of the other party, except
as may be required upon written advice of counsel to comply with applicable laws
or regulatory requirements after consulting with the other party hereto and
seeking their reasonable consent to such announcement.
41
ARTICLE 11
POST-CLOSING
COVENANTS
11.1 Purchaser Name
Change
Within 90
days of the Closing Date, the Purchaser shall file an amendment to its
certificate of incorporation with the Secretary of State of the State of Nevada
to change its name from “Kore Nutrition Incorporated” to “Go All In Inc.” in
accordance with applicable corporate and securities laws.
11.2 Milestone Payment
In the
event that the Target achieves net revenues, as determined in accordance with
GAAP, of $250,000 (evidenced by audited financial statements of the Target
reflecting same (the “Milestone
Financial Statements”)), within 45 days of the Target providing the
Milestone Financial Statements to the Purchaser, the Purchaser will arrange for
a milestone payment of $500,000 to be paid to the Target by a party which will
be disclosed by the Purchaser to the Target at the Closing.
11.3 Intellectual Property of the
Purchaser
Within 90
days of Closing, the Purchaser will assign, transfer and grant all Intellectual
Property Assets related to the operation of the Purchaser’s business as it is
currently conducted, including all Marks, Copyrights, and know-how, to Embury
and Rodgers.
ARTICLE 12
TERMINATION
12.1 Termination
This
Agreement may be terminated at any time prior to the Closing Date
by:
|
(a)
|
mutual
agreement of the Purchaser and the
Target;
|
|
(a)
|
the
Purchaser, if there has been a material breach by the Target or a
Shareholder of any material representation, warranty, covenant or
agreement set forth in this Agreement on the part of the Target or a
Shareholder that is not cured, to the reasonable satisfaction of the
Purchaser, within ten (10) business days after notice of such breach is
given by the Purchaser (except that no cure period will be provided for a
breach by the Target or a Shareholder that, by its nature, cannot be
cured);
|
|
(b)
|
the
Target, if there has been a material breach by the Purchaser of any
material representation, warranty, covenant or agreement set forth in this
Agreement on the part of the Purchaser that is not cured, to the
reasonable satisfaction of the Shareholders, within ten (10) business days
after notice of such breach is given by the Target or the Shareholders
(except that no cure period will be provided for a breach by the Purchaser
that by its nature cannot be
cured);
|
|
(c)
|
the
Purchaser or the Target if any permanent injunction or other order of a
Governmental Body of competent authority preventing the consummation of
the transaction contemplated by this Agreement has become final and
non-appealable; or
|
|
(d)
|
if
the transactions contemplated herein have not been consummated prior to
the Closing Date, unless otherwise extended by the written agreement of
the parties hereto.
|
42
12.2
|
Effect of
Termination
|
In the
event of the termination of this Agreement as provided in Section 12.1, this Agreement will be of no further
force or effect, provided, however, that no termination of this Agreement will
relieve any party of liability for any breaches of this Agreement that are based
on a wrongful refusal or failure to perform any obligations under this
Agreement.
ARTICLE 13
INDEMNITIES
13.1 Agreement of the Purchaser to
Indemnify
The
Purchaser will indemnify, defend, and hold harmless, to the full extent of the
law, the Shareholders from, against, and in respect of any and all Losses
asserted against, relating to, imposed upon, or incurred by the Shareholders by
reason of, resulting from, based upon or arising out of:
|
(a)
|
the
material breach by the Purchaser of any representation or warranty of the
Purchaser contained in or made pursuant to this Agreement or any
certificate or other instrument delivered pursuant to this Agreement;
or
|
|
(b)
|
the
material breach or partial breach by the Purchaser of any covenant or
agreement of the Purchaser made in or pursuant to this Agreement or any
certificate or other instrument delivered pursuant to this
Agreement.
|
13.2 Agreement of the Target and the
Shareholders to Indemnify
The
Target and each Shareholder will indemnify, defend, and hold harmless, to the
full extent of the law, the Purchaser from, against, and in respect of any and
all Losses asserted against, relating to, imposed upon, or incurred by the
Purchaser by reason of, resulting from, based upon or arising out
of:
|
(a)
|
the
material breach by the Target or a Shareholder of any representation or
warranty of the Target or a Shareholder contained in or made pursuant to
this Agreement or any certificate or other instrument delivered pursuant
to this Agreement; or
|
|
(b)
|
the
material breach or partial breach by the Target or a Shareholder of any
covenant or agreement of the Target or a Shareholder made in or pursuant
to this Agreement or any certificate or other instrument delivered
pursuant to this Agreement.
|
13.3 Third Party
Claims
|
(a)
|
If
any third party notifies a party entitled to indemnification under Section
13.1 or 13.2 (each an “Indemnified Party”)
with respect to any matter (a “Third-Party Claim”) which may give rise to
an indemnity claim against a party required to indemnify such Indemnified
Party under Section 13.1 or 13.2 (each an “Indemnifying Party”),
then the Indemnified Party will promptly give written notice to
Indemnifying Party; provided, however, that no delay on the part of the
Indemnified Party in notifying the Indemnifying Party will relieve the
Indemnifying Party from any obligation under this Article 13, except to the extent
such delay actually and materially prejudices the Indemnifying
Party.
|
|
(b)
|
The
Indemnifying Party will be entitled to participate in the defense of any
Third-Party Claim that is the subject of a notice given by the Indemnified
Party pursuant to Section 13.3(a). In addition, the
Indemnifying Party will have the right to defend the Indemnified Party
against the Third-Party Claim with counsel of its choice reasonably
satisfactory to
|
43
the
Indemnified Party so long as (i) the Indemnifying Party gives written notice to
the Indemnified Party within fifteen days after the Indemnified Party has given
notice of the Third-Party Claim that the Indemnifying Party elects to assume the
defense of such Third-Party Claim, (ii) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the Indemnified Party
that the Indemnifying Party will have adequate financial resources to defend
against the Third-Party Claim and fulfill its indemnification obligations
hereunder, (iii) if the Indemnifying Party is a party to the Third-Party Claim
or, in the reasonable opinion of the indemnified Party some other actual or
potential conflict of interest exists between the Indemnifying Party and the
Indemnified Party, the Indemnified Party determines in good faith that joint
representation would not be inappropriate, (iv) the Third-Party Claim does not
relate to or otherwise arise in connection with Taxes or any criminal or
regulatory enforcement action, (v) settlement of, an adverse judgment with
respect to or the Indemnifying Party’s conduct of the defense of the Third-Party
Claim is not, in the good faith judgment of the Indemnified Party, likely to be
materially adverse to the Indemnified Party’s reputation or continuing business
interests (including its relationships with current or potential customers,
suppliers or other parties material to the conduct of its business) and (vi) the
Indemnifying Party conducts the defense of the Third-Party Claim actively and
diligently. The Indemnified Party may retain separate co-counsel at
its sole cost and expense and participate in the defense of the Third-Party
Claim; provided, however, that the Indemnifying Party will pay the reasonable
fees and expenses of separate co-counsel retained by the Indemnified Party that
are incurred prior to Indemnifying Party’s assumption of control of the defense
of the Third-Party Claim.
|
(c)
|
The
Indemnifying Party will not consent to the entry of any judgment or enter
into any compromise or settlement with respect to the Third-Party Claim
without the prior written consent of the Indemnified Party unless such
judgment, compromise or settlement (i) provides for the payment by the
Indemnifying Party of money as sole relief for the claimant, (ii) results
in the full and general release of the Indemnified Party from all
liabilities arising or relating to, or in connection with, the Third-Party
Claim and (iii) involves no finding or admission of any violation of Legal
Requirements or the rights of any Person and has no effect on any other
claims that may be made against the Indemnified
Party.
|
|
(d)
|
If
the Indemnifying Party does not deliver the notice contemplated by Section
13.3(b)(i), or the evidence
contemplated by Section 13.3(b)(ii), within fifteen days
after the Indemnified Party has given notice of the Third-Party Claim, or
otherwise at any time fails to conduct the defense of the Third-Party
Claim actively and diligently, the Indemnified Party may defend, and may
consent to the entry of any judgment or enter into any compromise or
settlement with respect to, the Third-Party Claim in any manner it may
deem appropriate; provided, however, that the Indemnifying Party will not
be bound by the entry of any such judgment consented to, or any such
compromise or settlement effected, without its prior written consent
(which consent will not be unreasonably withheld or
delayed). In the event that the Indemnified Party conducts the
defense of the Third-Party Claim pursuant to this Section 13.3(d), the Indemnifying Party will
(i) advance the Indemnified Party promptly and periodically for the costs
of defending against the Third-Party Claim (including reasonable
attorneys’ fees and expenses) and (ii) remain responsible for any and all
other Losses that the Indemnified Party may incur or suffer resulting
from, arising out of, relating to, in the nature of or caused by the
Third-Party Claim to the fullest extent provided in this Article 13.
|
44
13.4
|
Exclusive
Remedy
|
After the
Closing, this Article 13 shall be
the sole and exclusive remedy for any inaccuracy of any representation and
warranty, or breach of any covenant obligation, made in connection with this
Agreement.
ARTICLE 14
GENERAL
14.1 Expenses
All costs
and expenses incurred in connection with the preparation of this Agreement and
the transactions contemplated by this Agreement will be paid by the party
incurring such expenses, provided that the Purchaser and the Target acknowledge
and agree that each of the parties’ costs will be paid from the proceeds of a
financing to be undertaken by the Purchaser in connection this
Transaction.
14.2 Indemnifications Not Affected by
Investigation
The right
to indemnification, payment of damages or other remedy based on the
representations, warranties, covenants, and obligations contained herein will
not be affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or obligation. The waiver of any condition based
on the accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of damages, or other remedy based on such
representations, warranties, covenants, and obligations.
14.3 Assignment
No
parties to this Agreement may assign any of their respective rights under this
Agreement without the prior consent of each of the other parties. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of each
of the parties, as applicable. Nothing expressed or referred to in
this Agreement will be construed to give any Person other than the parties to
this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and assigns, as
applicable.
14.4 Notices
Any
notice required or permitted to be given under this Agreement will be in writing
and may be given by delivering, sending by electronic facsimile transmission or
other means of electronic communication capable of producing a printed copy, or
sending by prepaid registered mail, the notice to the following address or
number:
45
If to the
Purchaser:
Kore
Nutrition Incorporated
200-736
Granville Street
Vancouver,
BC V6Z 1G3
Attention: Deanna
Embury
Telephone: (604)
685-6472
Facsimile: (604)
685-5829
With a
copy (which will not constitute notice) to:
Clark
Wilson LLP
Barristers
& Solicitors
Suite 800
– 885 West Georgia Street
Vancouver,
British Columbia, Canada V6C 3H1
Attention: Virgil
Z. Hlus
Telephone: (604)
687-5700
Facsimile: (604)
687-6314
If to the
Shareholders or to the Target:
Go All
In, Inc.
2505
Anthem Village, Suite E-460
Henderson,
Nevada, USA 89052
Attention: Jeffrey
Todd
Telephone:
Facsimile:
With a
copy (which will not constitute notice) to:
Cane
Clark LLP
3273 E.
Warm Springs Rd.
Las
Vegas, Nevada, USA 89120
Attention: Scott
Doney
Telephone: (702)
312-6255
Facsimile: (702)
944-7100
(or to
such other address or number as any party may specify by notice in writing to
another party).
Any
notice delivered or sent by electronic facsimile transmission or other means of
electronic communication capable of producing a printed copy on a business day
will be deemed conclusively to have been effectively given on the day the notice
was delivered, or the transmission was sent successfully to the number set out
above, as the case may be.
Any
notice sent by prepaid registered mail will be deemed conclusively to have been
effectively given on the third business day after posting; but if at the time of
posting or between the time of posting and the third business day thereafter
there is a strike, lockout, or other labour disturbance affecting postal
service, then the notice will not be effectively given until actually
delivered.
46
14.5 Governing Law;
Venue
This
Agreement, the legal relations between the parties and the adjudication and the
enforcement thereof, shall be governed by and interpreted and construed in
accordance with the substantive laws of the State of Nevada without regard to
applicable choice of law provisions thereof. The parties hereto agree
that any action, suit or proceeding arising out of or relating to this Agreement
or the transactions contemplated hereby will be brought in a suitable court
located in the State of Nevada and each party hereto irrevocably submits to the
exclusive jurisdiction of those courts.
14.6 Severability
If any
covenant or other provision of this Agreement is invalid, illegal, or incapable
of being enforced by reason of any rule of law or public policy, then such
covenant or other provision will be severed from and will not affect any other
covenant or other provision of this Agreement, and this Agreement will be
construed as if such invalid, illegal, or unenforceable covenant or provision
had never been contained in this Agreement. All other covenants and
provisions of this Agreement will, nevertheless, remain in full force and effect
and no covenant or provision will be deemed dependent upon any other covenant or
provision unless so expressed herein.
14.7 Entire Agreement
This
Agreement, the schedules attached hereto and the other documents in connection
with this transaction contain the entire agreement between the parties with
respect to the subject matter hereof and supersede all prior arrangements and
understandings, both written and oral, expressed or implied, with respect
thereto. Any preceding correspondence or offers are expressly
superseded and terminated by this Agreement.
14.8 Further
Assurances
The
parties will execute and deliver all such further documents, do or cause to be
done all such further acts and things, and give all such further assurances as
may be necessary to give full effect to the provisions and intent of this
Agreement.
14.9 Enurement
This
Agreement and each of the terms and provisions hereof will enure to the benefit
of and be binding upon the parties and their respective heirs, executors,
administrators, personal representatives, successors and assigns.
14.10 Amendment
This
Agreement may not be amended except by an instrument in writing signed by each
of the parties.
14.11 Schedules and Disclosure
Statements
The
schedules attached, the Disclosure Statement and the Purchaser Disclosure
Statement provided pursuant to this Agreement are incorporated
herein.
47
14.12 Counterparts
This
Agreement may be executed in several counterparts, each of which will be deemed
to be an original and all of which will together constitute one and the same
instrument and delivery of an executed copy of this Agreement by electronic
facsimile transmission or other means of electronic communication capable of
producing a printed copy will be deemed to be execution and delivery of this
Agreement as of the date set forth on page one of this Agreement.
IN
WITNESS WHEREOF the parties have duly executed this Agreement as of the day and
year first above written.
GO
ALL IN, INC
Per: “Jeffrey
Todd”
Authorized
Signatory
|
|
KORE
NUTRITION INCORPORATED
Per: “Deanna
Embury”
Authorized
Signatory
|
|
48
SCHEDULE
A
[LIST
OF GO ALL IN, INC. SHAREHOLDERS]
49
SCHEDULE
B
CERTIFICATE
OF NON-U.S. SHAREHOLDER
Capitalized
terms used but not otherwise defined in this Certificate shall have the meanings
given to such terms in that certain Share Exchange Agreement dated February 26,
2010 among the Purchaser, the Target and all of the shareholders of the Target,
including the undersigned. In connection with the issuance of the
Consideration Shares to the undersigned, the undersigned hereby agrees,
acknowledges, represents and warrants that:
1. the
undersigned is not a “U.S. Person” as such term is defined by Rule 902 of
Regulation S (the definition of which includes, but is not limited to, an
individual resident in the U.S. and an estate or trust of which any executor or
administrator or trust, respectively is a U.S. Person and any partnership or
corporation organized or incorporated under the laws of the U.S.);
2. none
of the Consideration Shares have been or will be registered under the Securities
Act, or under any state securities or “blue sky” laws of any state of the United
States, and may not be offered or sold in the United States or, directly or
indirectly, to U.S. Persons, as that term is defined in Regulation S, except in
accordance with the provisions of Regulation S or pursuant to an exemption from,
or in a transaction not subject to, the registration requirements of the
Securities Act and in compliance with any Applicable Securities
Laws;
3. offers
and sales of any of the Consideration Shares prior to the expiration of a period
of six months after the date of original issuance of the Consideration Shares
(the six month period hereinafter referred to as the “Distribution Compliance
Period”) shall only be made in compliance with the safe harbor provisions set
forth in Regulation S, pursuant to the registration provisions of the
Securities Act or an exemption therefrom, and that all offers and sales after
the Distribution Compliance Period shall be made only in compliance with the
registration provisions of the Securities Act or an exemption therefrom and in
each case only in accordance with applicable state and foreign securities
laws;
4. the
undersigned will not engage in any hedging transactions involving any of the
Consideration Shares unless such transactions are in compliance with the
provisions of the Securities Act and in each case only in accordance with
Applicable Securities Laws;
5. the
undersigned is acquiring the Consideration Shares for investment only and not
with a view to resale or distribution and, in particular, it has no intention to
distribute either directly or indirectly any of the Consideration Shares in the
United States or to U.S. Persons;
6. the
undersigned has not acquired the Consideration Shares as a result of, and will
not itself engage in, any directed selling efforts (as defined in Regulation S)
in the United States in respect of the Consideration Shares which would include
any activities undertaken for the purpose of, or that could reasonably be
expected to have the effect of, conditioning the market in the United States for
the resale of any of the Consideration Shares; provided, however, that the
undersigned may sell or otherwise dispose of the Consideration Shares pursuant
to registration thereof under the Securities Act and any Applicable Securities
Laws or under an exemption from such registration requirements;
7. the
statutory and regulatory basis for the exemption claimed for the sale of the
Consideration Shares, although in technical compliance with Regulation S, would
not be available if the offering is part of a plan or scheme to evade the
registration provisions of the Securities Act or any Applicable Securities
Laws;
8. except
as set out in the Agreement, the Purchaser has not undertaken, and will have no
obligation, to register any of the Consideration Shares under the Securities
Act;
50
9. the
Purchaser is entitled to rely on the acknowledgements, agreements,
representations and warranties of the undersigned contained in the Agreement and
this Certificate, and the undersigned will hold harmless the Purchaser from any
loss or damage either one may suffer as a result of any such acknowledgements,
agreements, representations and/or warranties made by the undersigned not being
true and correct;
10. the
undersigned has been advised to consult its own respective legal, tax and other
advisors with respect to the merits and risks of an investment in the
Consideration Shares and, with respect to applicable resale restrictions, is
solely responsible (and the Purchaser is not in any way responsible) for
compliance with applicable resale restrictions;
11. the
undersigned and the undersigned’s advisor(s) have had a reasonable opportunity
to ask questions of and receive answers from the Purchaser in connection with
the acquisition of the Consideration Shares under the Agreement, and to obtain
additional information, to the extent possessed or obtainable by the Purchaser
without unreasonable effort or expense;
12. the
books and records of the Purchaser were available upon reasonable notice for
inspection, subject to certain confidentiality restrictions, by the undersigned
during reasonable business hours at its principal place of business and that all
documents, records and books in connection with the acquisition of the
Consideration Shares under the Agreement have been made available for inspection
by the undersigned, the undersigned’s attorney and/or advisor(s);
13. the
undersigned:
|
(a)
|
is
knowledgeable of, or has been independently advised as to, the Applicable
Securities Laws of the securities regulators having application in the
jurisdiction in which the undersigned is resident (the “International
Jurisdiction”) which would apply to the acquisition of the Consideration
Shares;
|
|
(b)
|
the
undersigned is acquiring the Consideration Shares pursuant to exemptions
from prospectus or equivalent requirements under Applicable Securities
Laws or, if such is not applicable, the undersigned is permitted to
acquire the Consideration Shares under the Applicable Securities Laws of
the securities regulators in the International Jurisdiction without the
need to rely on any exemptions;
|
|
(c)
|
the
Applicable Securities Laws of the authorities in the International
Jurisdiction do not require the Purchaser to make any filings or seek any
approvals of any kind whatsoever from any securities regulator of any kind
whatsoever in the International Jurisdiction in connection with the issue
and sale or resale of the Consideration Shares;
and
|
|
(d)
|
the
acquisition of the Consideration Shares by the undersigned does not
trigger:
|
|
(i)
|
any
obligation to prepare and file a prospectus or similar document, or any
other report with respect to such purchase in the International
Jurisdiction; or
|
|
(ii)
|
any
continuous disclosure reporting obligation of the Purchaser in the
International Jurisdiction; and
|
the
undersigned will, if requested by the Purchaser, deliver to the purchaser a
certificate or opinion of local counsel from the International Jurisdiction
which will confirm the matters referred to in Sections 13(c) and 13(d) above to
the satisfaction of the Purchaser, acting reasonably;
51
14. the
undersigned (i) is able to fend for itself in connection with the acquisition of
the Consideration Shares; (ii) has such knowledge and experience in business
matters as to be capable of evaluating the merits and risks of its prospective
investment in the Consideration Shares; and (iii) has the ability to bear the
economic risks of its prospective investment and can afford the complete loss of
such investment;
15. the
undersigned is not aware of any advertisement of any of the Consideration Shares
and is not acquiring the Consideration Shares as a result of any form of general
solicitation or general advertising including advertisements, articles, notices
or other communications published in any newspaper, magazine or similar media or
broadcast over radio or television, or any seminar or meeting whose attendees
have been invited by general solicitation or general advertising;
16. except
as set out in the Agreement, no Person has made to the undersigned any written
or oral representations:
|
(a)
|
that
any Person will resell or repurchase any of the Consideration
Shares;
|
|
(b)
|
that
any Person will refund the purchase price of any of the Consideration
Shares;
|
|
(c)
|
as
to the future price or value of any of the Consideration Shares;
or
|
|
(d)
|
that
any of the Consideration Shares will be listed and posted for trading on
any stock exchange or automated dealer quotation system or that
application has been made to list and post any of the Consideration Shares
on any stock exchange or automated dealer quotation system, except that
currently certain market makers make market in the Purchaser Shares on the
OTC Bulletin Board;
|
17. the
undersigned is outside the United States when receiving and executing this
Agreement and is acquiring the Consideration Shares as principal for their own
account, for investment purposes only, and not with a view to, or for, resale,
distribution or fractionalization thereof, in whole or in part, and no other
Person has a direct or indirect beneficial interest in the Consideration
Shares;
18. neither
the SEC nor any other securities commission or similar regulatory authority has
reviewed or passed on the merits of the Consideration Shares;
19. the
Consideration Shares are not being acquired, directly or indirectly, for the
account or benefit of a U.S. Person or a Person in the United
States;
20. the
undersigned understands and agrees that the Consideration Shares issued to the
undersigned will bear the following legend:
“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
52
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.”;
22. if
the undersigned is a resident of British Columbia, the undersigned acknowledges
and agrees that, in addition to the legend set forth in paragraph 21 above, the
Consideration Shares issued to the undersigned will also bear the following
restrictive legend (the “BC Legend”) specified in BCI 51-509:
|
“UNLESS
OTHERWISE PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS
SECURITY MUST NOT TRADE THE SECURITY IN OR FROM BRITISH COLUMBIA UNLESS
THE CONDITIONS IN SECTION 12(2) OF BC INSTRUMENT 51-509 ISSUERS QUOTED IN
THE U.S. OVER-THE-COUNTER MARKET ARE
MET.”;
|
22. if
the undersigned is not a resident of British Columbia, the undersigned
acknowledges, agrees, represents and warrants that:
|
(a)
|
pursuant
to BCI 51-509, a subsequent trade in any of the Consideration Shares in or
from British Columbia will be a distribution subject to the prospectus and
registration requirements of Canadian Applicable Securities Laws
(including the BC Act) unless certain conditions are met, which conditions
include, among others, a requirement that any certificate representing the
Consideration Shares (or ownership statement issued under a direct
registration system or other book entry system) bear the BC
Legend;
|
|
(b)
|
the
undersigned is not a resident of British Columbia and undertakes not to
trade or resell any of the Consideration Shares in or from British
Columbia unless the trade or resale is made in accordance with BCI
51-509. The undersigned understands that others will rely upon
the truth and accuracy of the representations and warranties contained in
this Certificate and agrees that if such representations and warranties
are no longer accurate or have been breached, the undersigned shall
immediately notify the Purchaser;
|
|
(c)
|
by
executing and delivering the Agreement and this Certificate and as a
consequence of the representations and warranties made by the undersigned
contained in this Certificate, the undersigned will have directed the
Purchaser not to include the BC Legend on any certificates representing
any of the Consideration Shares to be issued to the
undersigned. As a consequence, the undersigned will not be able
to rely on the resale provisions of BCI 51-509, and any subsequent trade
in any of the Consideration Shares in or from British Columbia will be a
distribution subject to the prospectus and registration requirements of
the BC Act; and
|
|
(d)
|
if
the undersigned wishes to trade or resell any of the Consideration Shares
in or from British Columbia, the undersigned agrees and undertakes to
return, prior to any such trade or resale, any certificate representing
the Consideration Shares to the Purchaser’s transfer agent or the
Purchaser, as applicable, to have the BC Legend imprinted on such
certificate or to instruct the Purchaser’s transfer agent to include the
BC Legend on any ownership statement issued under a direct registration
system or other book entry system; and
[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT
BLANK]
|
53
|
|
23. the
Purchaser shall refuse to register any transfer of Consideration Shares not made
in accordance with the provisions of Regulation S, pursuant to registration
under the Securities Act, pursuant to an available exemption from registration
under the Securities Act or pursuant to an available exemption from the
registration and prospectus requirements of the BC Act.
IN
WITNESS WHEREOF, I have executed this Certificate of Non-U.S.
Shareholder.
________________________________________
Date:_____________________________, 2010
Signature
________________________________________
Print
Name
________________________________________
Title (if
applicable)
________________________________________
Address
________________________________________
54
SCHEDULE
C
CERTIFICATE
OF U.S. SHAREHOLDER
Capitalized
terms used but not otherwise defined in this Certificate shall have the meanings
given to such terms in that certain Share Exchange Agreement dated February 26,
2010 among the Purchaser, the Target and all of the shareholders of the Target,
including the undersigned (the “Agreement”). In connection with the
issuance of the Consideration Shares to the undersigned, the undersigned hereby
agrees, acknowledges, represents and warrants, as an integral part of the
Agreement, that:
1. the
undersigned satisfies one or more of the categories of “Accredited Investor”, as
defined by Regulation D promulgated under the Securities Act, as indicated
below: (Please initial in the space provide those categories, if any,
of an “Accredited Investor” which the undersigned satisfies.)
___________
|
Category
1
|
An
organization described in Section 501(c)(3) of the United States Internal
Revenue Code, a corporation, a Massachusetts or similar business trust or
partnership, not formed for the specific purpose of acquiring the Shares,
with total assets in excess of
US $5,000,000.
|
___________
|
Category
2
|
A
natural person whose individual net worth, or joint net worth with that
person’s spouse, on the date of purchase exceeds
US $1,000,000.
|
___________
|
Category
3
|
A
natural person who had an individual income in excess of US $200,000
in each of the two most recent years or joint income with that person’s
spouse in excess of US $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current
year.
|
___________
|
Category
4
|
A
private business development company as defined in Section 202(a)(22)
of the Investment
Advisers Act of 1940 (United
States).
|
___________
|
Category
5
|
A
director or executive officer of the Target who will continue to be a
director or executive officer of the Purchaser after the
Closing.
|
___________
|
Category
6
|
A
trust with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Shares, whose purchase is directed by a
sophisticated person as described in Rule 506(b)(2)(ii) under the
Securities Act.
|
___________
|
Category
7
|
An
entity in which all of the equity owners satisfy the requirements of one
or more of the foregoing
categories.
|
Note that
if the undersigned is claiming to satisfy one of the above categories of
Accredited Investor, the undersigned may be required to supply the Purchaser
with a balance sheet, prior years’ federal income tax returns or other
appropriate documentation to verify and substantiate the undersigned’s status as
an Accredited Investor.
If the
undersigned is an entity which initialled Category 7 in reliance upon the
Accredited Investor categories above, state the name, address, total personal
income from all sources for the previous calendar year, and the net worth
(exclusive of home, home furnishings and personal automobiles) for each equity
owner of the said entity:
______________________________________________________________________________
55
2. none
of the Consideration Shares have been or will be registered under the Securities
Act, or under any state securities or “blue sky” laws of any state of the United
States, and may not be offered or sold in the United States or, directly or
indirectly, to U.S. Persons, as that term is defined in Regulation S, except in
accordance with the provisions of Regulation S or pursuant to an exemption from,
or in a transaction not subject to, the registration requirements of the
Securities Act and in compliance with any applicable state and foreign
securities laws;
3. the
undersigned understands and agrees that offers and sales of any of the
Consideration Shares shall be made only in compliance with the registration
provisions of the Securities Act or an exemption therefrom and in each case only
in accordance with applicable state and foreign securities laws;
4. the
undersigned understands and agrees not to engage in any hedging transactions
involving any of the Consideration Shares unless such transactions are in
compliance with the provisions of the Securities Act and in each case only in
accordance with applicable state and provincial securities laws;
5. the
undersigned is acquiring the Consideration Shares for investment only and not
with a view to resale or distribution and, in particular, it has no intention to
distribute either directly or indirectly any of the Consideration Shares in the
United States or to U.S. Persons;
6. except
as set out in the Agreement, the Purchaser has not undertaken, and will have no
obligation, to register any of the Consideration Shares under the Securities
Act;
7. the
Purchaser is entitled to rely on the acknowledgements, agreements,
representations and warranties and the statements and answers of the undersigned
contained in the Agreement and this Certificate, and the undersigned will hold
harmless the Purchaser from any loss or damage either one may suffer as a result
of any such acknowledgements, agreements, representations and/or warranties made
by the undersigned not being true and correct;
8. the
undersigned has been advised to consult their own respective legal, tax and
other advisors with respect to the merits and risks of an investment in the
Consideration Shares and, with respect to applicable resale restrictions, is
solely responsible (and the Purchaser is not in any way responsible) for
compliance with applicable resale restrictions;
9. the
undersigned and the undersigned’s advisor(s) have had a reasonable opportunity
to ask questions of and receive answers from the Purchaser in connection with
the acquisition of the Consideration Shares under the Agreement, and to obtain
additional information, to the extent possessed or obtainable by the Purchaser
without unreasonable effort or expense;
10. the
books and records of the Purchaser were available upon reasonable notice for
inspection, subject to certain confidentiality restrictions, by the undersigned
during reasonable business hours at its principal place of business and that all
documents, records and books in connection with the acquisition of the
Consideration Shares under the Agreement have been made available for inspection
by the undersigned, the undersigned’s attorney and/or advisor(s);
11. the
undersigned (i) is able to fend for itself in connection with the acquisition of
the Consideration Shares; (ii) has such knowledge and experience in business
matters as to be capable of evaluating the merits and risks of its prospective
investment in the Consideration Shares; and (iii) has the ability to bear the
economic risks of its prospective investment and can afford the complete loss of
such investment;
12. the
undersigned is not aware of any advertisement of any of the Consideration Shares
and is not acquiring the Consideration Shares as a result of any form of general
solicitation or general advertising including advertisements, articles, notices
or other communications published in any newspaper, magazine or
56
similar
media or broadcast over radio or television, or any seminar or meeting whose
attendees have been invited by general solicitation or general
advertising;
13. except
as set out in the Agreement, no person has made to the undersigned any written
or oral representations:
|
(a)
|
that
any person will resell or repurchase any of the Consideration
Shares;
|
|
(b)
|
that
any person will refund the purchase price of any of the Consideration
Shares;
|
|
(c)
|
as
to the future price or value of any of the Consideration Shares;
or
|
|
(d)
|
that
any of the Consideration Shares will be listed and posted for trading on
any stock exchange or automated dealer quotation system or that
application has been made to list and post any of the Consideration Shares
on any stock exchange or automated dealer quotation system, except that
currently certain market makers make market in the common shares of the
Purchaser on the OTC Bulletin
Board;
|
14. none
of the Consideration Shares are listed on any stock exchange or automated dealer
quotation system and, except as set out in the Agreement, no representation has
been made to the undersigned that any of the Consideration Shares will become
listed on any stock exchange or automated dealer quotation system, except that
currently certain market makers make market in the common shares of the
Purchaser on the OTC Bulletin Board;
15. the
undersigned is acquiring the Consideration Shares as principal for their own
account, for investment purposes only, and not with a view to, or for, resale,
distribution or fractionalization thereof, in whole or in part, and no other
person has a direct or indirect beneficial interest in the Consideration
Shares;
16. neither
the SEC nor any other securities commission or similar regulatory authority has
reviewed or passed on the merits of the Consideration Shares;
17. the
Purchaser shall refuse to register any transfer of Consideration Shares not made
in accordance with the provisions of Regulation S, pursuant to registration
under the Securities Act, or pursuant to an available exemption from
registration under the Securities Act;
18. the
Consideration Shares issued to the undersigned will bear the following
legend:
“NONE OF
THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (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. “UNITED STATES” AND “U.S.
PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.”;
57
19. the
address of the undersigned included herein is the sole address of the
undersigned as of the date of this certificate;
20. the
undersigned is the beneficial owner of the Shares free and clear of all liens,
charges and encumbrances of any kind whatsoever;
21. other
than the constating documents of the Target, there are no written instruments,
buy-sell agreements, registration rights or agreements, voting agreements or
other agreements by and between or among the undersigned and any other Person,
imposing any restrictions upon the transfer, prohibiting the transfer of or
otherwise pertaining to the Shares or the ownership thereof;
22. no
Person has or will have any agreement or option or any right capable at any time
of becoming an agreement to purchase or otherwise acquire the Shares or require
the undersigned to sell, transfer, assign, pledge, charge, mortgage or in any
other way dispose of or encumber any of the Shares other than under the
Agreement;
23. the
undersigned waives all claims and actions connected with the issuance of or
rights attached to the Shares, including without limitation, the benefit of any
representations, warranties and covenants in favour of the undersigned contained
in any share purchase or subscription agreement(s) for such Shares; and any
registration, liquidation, or any other rights by and between or among the
undersigned and any other Person, which may be triggered as a result of the
consummation of the Transaction;
24. pursuant
to BCI 51-509, a subsequent trade in any of the Consideration Shares in or from
British Columbia will be a distribution subject to the prospectus and
registration requirements of Canadian Applicable Securities Laws (including the
BC Act) unless certain conditions are met, which conditions include, among
others, a requirement that any certificate representing the Consideration Shares
(or ownership statement issued under a direct registration system or other book
entry system) bear the restrictive legend (the “BC Legend”) specified in BCI
51-509;
25. the
undersigned is not a resident of British Columbia and undertakes not to trade or
resell any of the Consideration Shares in or from British Columbia unless the
trade or resale is made in accordance with BCI 51-509. The
undersigned understands that others will rely upon the truth and accuracy of the
representations and warranties contained in this Certificate and agrees that if
such representations and warranties are no longer accurate or have been
breached, the undersigned shall immediately notify the Purchaser;
27. by
executing and delivering the Agreement and as a consequence of the
representations and warranties made by the undersigned contained in this
Certificate, the undersigned will have directed the Purchaser not to include the
BC Legend on any certificates representing any of the Consideration Shares to be
issued to the undersigned. As a consequence, the undersigned will not
be able to rely on the resale provisions of BCI 51-509, and any subsequent trade
in any of the Consideration Shares in or from British Columbia will be a
distribution subject to the prospectus and registration requirements of the BC
Act; and
28. if
the undersigned wishes to trade or resell any of the Consideration Shares in or
from British Columbia, the undersigned agrees and undertakes to return, prior to
any such trade or resale, any certificate representing the Consideration Shares
to the Purchaser’s transfer agent or the Purchaser, as applicable, to have the
BC Legend imprinted on such certificate or to instruct the Purchaser’s transfer
agent to include the BC Legend on any ownership statement issued under a direct
registration system or other book entry system.
IN
WITNESS WHEREOF, I have executed this Certificate of U.S.
Shareholder.
________________________________________
Date:____________________________, 2010
Signature
________________________________________
Print
Name
________________________________________
Title (if
applicable)
________________________________________
Address
________________________________________
59
SCHEDULE
D
CANADIAN ACCREDITED INVESTOR
CERTIFICATE
Capitalized
terms used but not otherwise defined in this Certificate shall have the meanings
given to such terms in that certain Share Exchange Agreement dated February 26,
2010 among the Purchaser, the Target and all of the shareholders of the Target,
including the undersigned (the “Agreement”). In connection with the
issuance of the Consideration Shares to the undersigned, the undersigned hereby
agrees, acknowledges, represents and warrants, as an integral part of the
Agreement, that it is in all respects described by the category or categories
set forth directly next to which the undersigned has marked below.
[MARK
BELOW THE CATEGORY OR CATEGORIES WHICH DESCRIBES THE UNDERSIGNED]
q (1)
|
a
person registered under the securities legislation of a jurisdiction of
Canada as an adviser or dealer, other than a person registered solely as a
limited market dealer under one or both of the Securities Act
(Ontario) or the Securities Act
(Newfoundland and Labrador).
|
q (2)
|
an
individual registered or formerly registered under the securities
legislation of a jurisdiction of Canada as a representative of a person
referred to in paragraph (1).
|
q (3)
|
an
individual who, either alone or with a spouse, beneficially owns, directly
or indirectly, financial assets having an aggregate realizable value that
before taxes, but net of any related liabilities, exceeds
$1,000,000.
|
q (4)
|
an
individual whose net income before taxes exceeded $200,000 in each of the
two (2) most recent calendar years or whose net income before taxes
combined with that of a spouse exceeded $300,000 in each of the two (2)
most recent calendar years and who, in either case, reasonably expects to
exceed that net income level in the current calendar
year.
|
q (5) an
individual who, either alone or with a spouse, has net assets of at least
$5,000,000.
q (6)
|
a
person, other than an individual or investment fund, that has net assets
of at least $5,000,000 as shown on its most recently prepared financial
statements.
|
q (7) an
investment fund that distributes or has distributed its securities only
to
|
(a)
|
a
person that is or was an accredited investor at the time of the
distribution,
|
|
(b)
|
a
person that acquires or acquired securities in the circumstances referred
to in sections 2.10 [Minimum amount
investment], and 2.19 [Additional investment in
investment funds] of NI 45-106,
or
|
|
(c)
|
a
person described in paragraph (a) or (b) that acquires or acquired
securities under section 2.18 [Investment fund
reinvestment] of NI 45-106.
|
q (8)
|
an
investment fund that distributes or has distributed securities under a
prospectus in a jurisdiction of Canada for which the regulator or, in
Québec, the securities regulatory authority, has issued a
receipt.
|
q (9)
a person acting on behalf of a fully managed account managed by that person, if
that person
|
(a)
|
is
registered or authorized to carry on business as an adviser or the
equivalent under the securities legislation of a jurisdiction of Canada or
a foreign jurisdiction, and
|
|
(b)
|
in
Ontario, is purchasing a security that is not a security of an investment
fund.
|
q (10)
|
a
person in respect of which all of the owners of interests, direct,
indirect or beneficial, except the voting securities required by law to be
owned by directors, are persons that are accredited
investors.
|
The
undersigned acknowledges and agrees that the undersigned may be required by the
Purchaser to provide such additional documentation as may be reasonably required
by the Purchaser and the Purchaser’s Solicitors in determining the undersigned’s
eligibility to acquire the Consideration Shares under relevant
legislation.
IN
WITNESS WHEREOF, the undersigned has executed this Canadian Accredited Investor
Certificate as of the ________ day of ______________________, 2010.
If
an Individual:
|
If
a Corporation, Partnership or Other Entity:
|
________________________________
Signature
________________________________
Print
or Type Name
|
_______________________________
Print
or Type Name of Entity
_______________________________
Signature
of Authorized Signatory
_______________________________
Type
of Entity
|
60