Attached files
SHARE EXCHANGE
AGREEMENT
THIS
AGREEMENT is made effective as of the 28th day of May, 2010
AMONG:
PRINCIPLE SECURITY INTERNATIONAL,
INC., a Nevada corporation, of Unit B – 2015 Burrard Street, Vancouver,
British Columbia, V6J 3H4
(“Pubco”)
AND:
LEEWARD GROUP, INC., a
Delaware corporation with a registered office at 108 West 13th Street,
Wilmington, Delaware 19801
(“Priveco”)
AND:
THE
UNDERSIGNED SHAREHOLDERS OF PRIVECO AS LISTED ON SCHEDULE 1 ATTACHED
HERETO
(the
“Selling Shareholders”)
WHEREAS:
A.
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The
Selling Shareholders are the registered and beneficial owners of all
12,106,002 issued and outstanding common shares in the capital of
Priveco;
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B.
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Pubco
has agreed to issue up to 65,000,000 common shares in the capital of Pubco
as of the Closing Date, as defined herein, to the Selling Shareholders as
consideration for the purchase by Pubco of the issued and outstanding
common shares of Priveco held by the Selling Shareholders;
and
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C.
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Upon
the terms and subject to the conditions set forth in this Agreement, the
Selling Shareholders have agreed to sell all of the issued and outstanding
common shares of Priveco held by the Selling Shareholders to Pubco in
exchange for common shares of
Pubco.
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THEREFORE,
in consideration of the mutual covenants and agreements herein contained and
other good and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged), the parties covenant and agree as follows:
1.
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DEFINITIONS
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1.1.
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Definitions.
The following terms have the following meanings, unless the context
indicates otherwise:
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(a)
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“Agreement” shall mean
this Agreement, and all the exhibits, schedules and other documents
attached to or referred to in this Agreement, and all amendments and
supplements, if any, to this
Agreement;
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1
(b)
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“Closing”
shall mean the completion of the Transaction, in accordance with Section 7
hereof, at which the Closing Documents shall be exchanged by the parties,
except for those documents or other items specifically required to be
exchanged at a later time;
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(c)
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“Closing
Date” shall mean a date mutually agreed upon by the parties hereto in
writing and in accordance with Section 10.6 following the satisfaction or
waiver by Pubco and Priveco of the conditions precedent set out in
Sections 5.1 and 5.2 respectively, provided that such date shall be no
later than six (6) weeks after delivery of the Priveco Financial
Statements to be delivered under Section 5.1(j)
hereof;
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(d)
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“Closing
Documents” shall mean the papers, instruments and documents required to be
executed and delivered at the Closing pursuant to this
Agreement;
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(e)
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“Exchange
Act” shall mean the United States Securities Exchange Act of 1934, as
amended;
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(f)
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“GAAP”
shall mean United States generally accepted accounting principles applied
in a manner consistent with prior
periods;
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(g)
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“HE
Capital Shares” means 11,989,775 Pubco common shares to be issued to HE
Capital at Closing;
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(h)
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“Liabilities”
shall include any direct or indirect indebtedness, guaranty, endorsement,
claim, loss, damage, deficiency, cost, expense, obligation or
responsibility, fixed or unfixed, known or unknown, asserted choate or
inchoate, liquidated or unliquidated, secured or
unsecured;
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(i)
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“Priveco
Shares” shall mean the 12,106,002 common shares of Priveco held by the
Selling Shareholders, being all of the issued and outstanding common
shares of Priveco beneficially held, either directly or indirectly, by the
Selling Shareholders;
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(j)
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“Pubco
Shares” shall mean the up to 65,000,000 fully paid and non-assessable
common shares of Pubco, to be issued to the Selling Shareholders by Pubco
on the Closing Date;
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(k)
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“SEC”
shall mean the Securities and Exchange
Commission;
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(l)
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“Securities
Act” shall mean the United States Securities Act of 1933, as
amended;
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(m)
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“Taxes”
shall include international, federal, state, provincial and local income
taxes, capital gains tax, value-added taxes, franchise, personal property
and real property taxes, levies, assessments, tariffs, duties (including
any customs duty), business license or other fees, sales, use and any
other taxes relating to the assets of the designated party or the business
of the designated party for all periods up to and including the Closing
Date, together with any related charge or amount, including interest,
fines, penalties and additions to tax, if any, arising out of tax
assessments; and
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(n)
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“Transaction”
shall mean the purchase of the Priveco Shares by Pubco from the Selling
Shareholders in consideration for the issuance of the Pubco
Shares.
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1.2.
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Schedules. The
following schedules are attached to and form part of this
Agreement:
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Schedule
1
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–
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Selling
Shareholders
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Schedule
2
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–
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Certificate
of U.S Shareholder
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Schedule
3
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–
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National
Instrument 45-106 Investor Questionnaire
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Schedule
4
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–
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Directors
and Officers of Priveco
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Schedule
5
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–
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Directors
and Officers of Pubco
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Schedule
6
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–
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Priveco
Leases, Subleases, Claims, Capital Expenditures, Taxes and Other Property
Interests
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Schedule
7
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–
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Priveco
Intellectual Property
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Schedule
8
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–
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Priveco
Material Contracts
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Schedule
9
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–
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Priveco
Employment Agreements and Arrangements
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1.3 Currency. All
references to currency referred to in this Agreement are in United States
Dollars (US$), unless expressly stated otherwise.
2.
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THE OFFER, PURCHASE
AND SALE OF SHARES
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2.1.
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Offer, Purchase and
Sale of Shares. Subject to the terms and conditions of this
Agreement, the Selling Shareholders hereby covenant and agree to sell,
assign and transfer to Pubco, and Pubco hereby covenants and agrees to
purchase from the Selling Shareholders all of the Priveco Shares held by
the Selling Shareholders.
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2.2.
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Consideration.
As consideration for the sale of the Priveco Shares by the Selling
Shareholders to Pubco, Pubco shall allot and issue the Pubco Shares to the
Selling Shareholders in the amount set out opposite each Selling
Shareholder’s name in Schedule 1 on the basis of 5.3692375 Pubco Shares
for each Priveco Share held by each Selling Shareholder. The Selling
Shareholders acknowledge and agree that the Pubco Shares are being issued
pursuant to an exemption from the prospectus and registration requirements
of the Securities Act. As required by applicable securities law, the
Selling Shareholders agree to abide by all applicable resale restrictions
and hold periods imposed by all applicable securities legislation. All
certificates representing the Pubco Shares issued on Closing will be
endorsed with the following legend pursuant to the Securities Act in order
to reflect the fact that the Pubco Shares will be issued to the Selling
Shareholders pursuant to an exemption from the registration requirements
of the Securities Act:
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“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. IN ADDITION, HEDGING TRANSACTIONS
INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933
ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE
1933 ACT.”
2.3.
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Share Exchange
Procedure. Each Selling Shareholder may exchange his, her or its
certificate representing the Priveco Shares by delivering such certificate
to Pubco duly executed and endorsed in blank (or accompanied by duly
executed stock powers duly endorsed in blank), in each case in proper form
for transfer, with signatures guaranteed, and, if applicable, with all
stock transfer and any other required documentary stamps affixed thereto
and with appropriate instructions to allow the transfer agent to issue
certificates for the Pubco Shares to the holder thereof, together
with
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(a)
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a
Certificate of U.S. Shareholder (the “Rule 506 Certificate”), a copy of
which is set out in Schedule 2;
and
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(b)
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a
National Instrument 45-106 Investor Questionnaire
(the “Questionnaire”), a copy of which is set out in Schedule
3.
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2.4.
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Fractional
Shares. Notwithstanding any other provision of this Agreement, no
certificate for fractional shares of the Pubco Shares will be issued in
the Transaction. In lieu of any such fractional shares, if any of the
Selling Shareholders would otherwise be entitled to receive a fraction of
a share of the Pubco Shares upon surrender of certificates representing
the Priveco Shares for exchange pursuant to this Agreement, the Selling
Shareholders will be entitled to have such fraction rounded up to the
nearest whole number of Pubco Shares and will receive from Pubco a stock
certificate representing same.
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2.5.
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Closing Date.
The Closing will take place, subject to the terms and conditions of this
Agreement, on the Closing Date.
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2.6.
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Restricted
Shares. The Selling Shareholders acknowledge that the Pubco Shares
issued pursuant to the terms and conditions set forth in this Agreement
will have such hold periods as are required under applicable securities
laws and as a result may not be sold, transferred or otherwise disposed,
except pursuant to an effective registration statement under the
Securities Act, or pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and in
each case only in accordance with all applicable securities
laws.
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2.7.
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Exemptions. The
Selling Shareholders acknowledge that Pubco has advised such Selling
Shareholders that Pubco is relying upon the representations and warranties
of the Selling Shareholders set out in the Questionnaires to issue the
Pubco Shares under an exemption from the prospectus and registration
requirements of the British Columbia Securities Act (the “BC Securities
Act”) and, as a consequence, certain protections, rights and remedies
provided by such BC Securities Act, including statutory rights of
rescission or damages, will not be available to the Selling
Shareholders.
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2.8.
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Canadian Resale
Restrictions. The Selling Shareholders acknowledge that there are
applicable hold periods under the BC Securities Act, and the Pubco Shares
may be subject to resale restrictions in Canada for such period of time.
Additionally, the Selling Shareholders acknowledge that resale of any of
the Pubco Shares by the Selling Shareholders in Canada is restricted
except pursuant to an exemption from applicable securities
legislation.
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3.
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REPRESENTATIONS AND
WARRANTIES OF PRIVECO
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As of the
Closing, Priveco and the Selling Shareholders, jointly and severally, represent
and warrant to Pubco, and acknowledge that Pubco is relying upon such
representations and warranties, in connection with the execution, delivery and
performance of this Agreement, notwithstanding any investigation made by or on
behalf of Pubco, as follows:
3.1.
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Organization and Good
Standing. Priveco is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
requisite corporate power and authority to own, lease and to carry on its
business as now being conducted. Priveco is duly qualified to do business
and is in good standing as a foreign corporation in each of the
jurisdictions in which Priveco owns property, leases property, does
business, or is otherwise required to do so, where the failure to be so
qualified would have a material adverse effect on the business of Priveco
taken as a whole. Priveco has delivered to Pubco true and complete copes
of the articles of incorporation and bylaws of Priveco (the “Priveco
Charter Documents”).
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3.2.
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Authority.
Priveco has all requisite corporate power and authority to execute and
deliver this Agreement and any other document contemplated by this
Agreement (collectively, the “Priveco Documents”) to be signed by Priveco
and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of each of
the Priveco Documents by Priveco and the consummation of the transactions
contemplated hereby have been duly authorized by Priveco’s board of
directors. No other corporate or shareholder proceedings on the part of
Priveco is necessary to authorize such documents or to consummate the
transactions contemplated hereby. This Agreement has been, and the other
Priveco Documents when executed and delivered by Priveco as contemplated
by this Agreement will be, duly executed and delivered by Priveco and this
Agreement is, and the other Priveco Documents when executed and delivered
by Priveco as contemplated hereby will be, valid and binding obligations
of Priveco enforceable in accordance with their respective terms
except:
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(a)
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as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors’
rights generally;
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(b)
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as
limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies;
and
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(c)
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as
limited by public policy.
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3.3.
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Capitalization of
Priveco. The entire authorized capital stock and other equity
securities of Priveco consists of 100,000,000 common shares (the “Priveco
Common Stock”), par value $0.01 per share. As of the date of
this Agreement, there are 12,106,002 shares of Priveco Common Stock issued
and outstanding. All of the issued and outstanding shares of Priveco
Common Stock have been duly authorized, are validly issued, were not
issued in violation of any pre-emptive rights and are fully paid and
non-assessable, are not subject to pre-emptive rights and were issued in
full compliance with the laws of the State of Delaware the Priveco Charter
Documents, or any contract to which Priveco is a party or otherwise bound.
There are no bonds, debentures, notes or other indebtedness of the Company
having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which holders of
Priveco Common Stock may vote. There are no outstanding options, warrants,
subscriptions, conversion rights, exchange rights, “phantom” stock rights,
stock appreciation rights, or other rights, agreements, or commitments
obligating Priveco to issue any additional common shares of Priveco Common
Stock, or any other securities convertible into, exchangeable for, or
evidencing the right to subscribe for or acquire from Priveco any common
shares of Priveco Common Stock. There are no agreements purporting to
restrict the transfer of the Priveco Common Stock, no voting agreements,
shareholders’ agreements, voting trusts, or other arrangements restricting
or affecting the voting of the Priveco Common
Stock.
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3.4.
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Shareholders of
Priveco Common Stock. As of the Closing Date, Schedule 1 contains a
true and complete list of the holders of all issued and outstanding shares
of the Priveco Common Stock including each holder’s name, address and
number of Priveco Shares held.
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3.5.
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Directors and Officers
of Priveco. The duly elected or appointed directors and the duly
appointed officers of Priveco are as set out in Schedule
4.
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3.6.
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Corporate Records of
Priveco. The corporate records of Priveco, as required to be
maintained by it pursuant to all applicable laws, are accurate, complete
and current in all material respects, and the minute book of Priveco is,
in all material respects, correct and contains all records required by all
applicable laws, as applicable, in regards to all proceedings, consents,
actions and meetings of the shareholders and the board of directors of
Priveco.
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3.7.
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Non-Contravention.
Neither the execution, delivery and performance of this Agreement, nor the
consummation of the Transaction,
will:
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(a)
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conflict
with, result in a violation of, cause a default under (with or without
notice, lapse of time or both) or give rise to a right of termination,
amendment, cancellation or acceleration of any obligation contained in or
the loss of any material benefit under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the material
properties or assets of Priveco or any of its subsidiaries under any term,
condition or provision of any loan or credit agreement, note, debenture,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Priveco or any of its subsidiaries, or any of
their respective material property or assets;
or
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(b)
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violate
any provision of the Constitution, Articles of Association or any other
constating documents of Priveco, any of its subsidiaries or any applicable
laws.
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3.8.
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Actions and
Proceedings. There is no basis for and there is no action, suit,
judgment, claim, demand or proceeding outstanding or pending, or
threatened against Priveco or which involves any of the business, or the
properties or assets of Priveco that, if adversely resolved or determined,
would have a material adverse effect on the business, operations, assets,
properties, prospects, or conditions of Priveco taken as a whole (a
“Priveco Material Adverse Effect”). There is no reasonable basis for any
claim or action that, based upon the likelihood of its being asserted and
its success if asserted, would have such a Priveco Material Adverse
Effect.
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3.9.
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Compliance.
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(a)
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To
the best knowledge of Priveco, Priveco is in compliance with, is not in
default or violation in any material respect under, and has not been
charged with or received any notice at any time of any material violation
of any statute, law, ordinance, regulation, rule, decree or other
applicable regulation to the business or operations of
Priveco;
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(b)
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To
the best knowledge of Priveco, Priveco is not subject to any judgment,
order or decree entered in any lawsuit or proceeding applicable to its
business and operations that would constitute a Priveco Material Adverse
Effect; and
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(c)
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Priveco
has operated in material compliance with all laws, rules, statutes,
ordinances, orders and regulations applicable to its business. Priveco has
not received any notice of any violation thereof, nor is Priveco aware of
any valid basis therefore.
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3.10.
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Financial
Representations. The consolidated audited balance sheets for
Priveco for its last two fiscal years ended December 31, 2008 and December
31, 2009 and the unaudited interim balance sheet for the three month
period ended March 31, 2010 (the “Priveco Accounting
Date”), together with related statements of income, cash flows, and
changes in shareholder’s equity for such fiscal years and interim period
then ended (collectively, the “Priveco Financial
Statements”) to be supplied on or before the Closing
Date:
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(a)
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are
in accordance with the books and records of
Priveco;
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(b)
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present
fairly the financial condition of Priveco as of the respective dates
indicated and the results of operations for such periods;
and
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(c)
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have
been prepared in accordance with GAAP by a Public Company Accounting
Oversight Board (“PCAOB”) registered independent accounting
firm.
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Priveco
has not received any advice or notification from its independent certified
public accountants that Priveco has used any improper accounting practice that
would have the effect of not reflecting or incorrectly reflecting in the Priveco
Financial Statements or the books and records of Priveco, any properties,
assets, Liabilities, revenues, or expenses. The books, records, and accounts of
Priveco accurately and fairly reflect, in reasonable detail, the assets, and
Liabilities of Priveco. Priveco has not engaged in any transaction, maintained
any bank account, or used any funds of Priveco, except for transactions, bank
accounts, and funds which have been and are reflected in the normally maintained
books and records of Priveco.
3.11.
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Absence of Undisclosed
Liabilities. Priveco does not have any Liabilities or obligations
either direct or indirect, matured or unmatured, absolute, contingent or
otherwise, which:
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(a)
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are
not set forth in the Priveco Financial Statements or have not heretofore
been paid or discharged;
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(b)
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did
not arise in the regular and ordinary course of business under any
agreement, contract, commitment, lease or plan specifically disclosed in
writing to Pubco; or
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(c)
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have
not been incurred in amounts and pursuant to practices consistent with
past business practice, in or as a result of the regular and ordinary
course of its business since the date of the last Priveco Financial
Statements
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3.12.
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Tax
Matters.
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(a)
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As
of the date hereof:
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(i)
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Priveco
has timely filed all tax returns in connection with any Taxes which are
required to be filed on or prior to the date hereof, taking into account
any extensions of the filing deadlines which have been validly granted to
Priveco, and
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(ii)
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all
such returns are true and correct in all material
respects;
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(b)
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Priveco
has paid all Taxes that have become or are due with respect to any period
ended on or prior to the date hereof, and has established an adequate
reserve therefore on its balance sheets for those Taxes not yet due and
payable, except for any Taxes the non-payment of which will not have a
Priveco Material Adverse Effect;
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(c)
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Priveco
is not presently under or has not received notice of, any contemplated
investigation or audit by regulatory or governmental agency of body or any
foreign or state taxing authority concerning any fiscal year or period
ended prior to the date hereof;
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(d)
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all
Taxes required to be withheld on or prior to the date hereof from
employees for income Taxes, social security Taxes, unemployment Taxes and
other similar withholding Taxes have been properly withheld and, if
required on or prior to the date hereof, have been deposited with the
appropriate governmental agency;
and
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(e)
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to
the best knowledge of Priveco, the Priveco Financial Statements contain
full provision for all Taxes including any deferred Taxes that may be
assessed to Priveco for the accounting period ended on the Priveco
Accounting Date or for any prior period in respect of any transaction,
event or omission occurring, or any profit earned, on or prior to the
Priveco Accounting Date or for any profit earned by Priveco on or prior to
the Priveco Accounting Date or for which Priveco is accountable up to such
date and all contingent Liabilities for Taxes have been provided for or
disclosed in the Priveco Financial
Statements.
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3.13.
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Absence of
Changes. Since the Priveco Accounting Date, Priveco has
not:
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(a)
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incurred
any Liabilities, other than Liabilities incurred in the ordinary course of
business consistent with past practice, or discharged or satisfied any
lien or encumbrance, or paid any Liabilities, other than in the ordinary
course of business consistent with past practice, or failed to pay or
discharge when due any Liabilities of which the failure to pay or
discharge has caused or will cause any material damage or risk of material
loss to it or any of its assets or
properties;
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(b)
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sold,
encumbered, assigned or transferred any material fixed assets or
properties except for ordinary course business transactions consistent
with past practice;
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(c)
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created,
incurred, assumed or guaranteed any indebtedness for money borrowed, or
mortgaged, pledged or subjected any of the material assets or properties
of Priveco or its subsidiaries to any mortgage, lien, pledge, security
interest, conditional sales contract or other encumbrance of any nature
whatsoever;
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(d)
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made
or suffered any amendment or termination of any material agreement,
contract, commitment, lease or plan to which it is a party or by which it
is bound, or cancelled, modified or waived any substantial debts or claims
held by it or waived any rights of substantial value, other than in the
ordinary course of business;
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(e)
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declared,
set aside or paid any dividend or made or agreed to make any other
distribution or payment in respect of its capital shares or redeemed,
purchased or otherwise acquired or agreed to redeem, purchase or acquire
any of its capital shares or equity
securities;
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(f)
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suffered
any damage, destruction or loss, whether or not covered by insurance, that
materially and adversely effects its business, operations, assets,
properties or prospects;
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(g)
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suffered
any material adverse change in its business, operations, assets,
properties, prospects or condition (financial or
otherwise);
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(h)
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received
notice or had knowledge of any actual or threatened labor trouble,
termination, resignation, strike or other occurrence, event or condition
of any similar character which has had or might have an adverse effect on
its business, operations, assets, properties or
prospects;
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(i)
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made
commitments or agreements for capital expenditures or capital additions or
betterments;
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(j)
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other
than in the ordinary course of business, increased the salaries or other
compensation of, or made any advance (excluding advances for ordinary and
necessary business expenses) or loan to, any of its employees or directors
or made any increase in, or any addition to, other benefits to which any
of its employees or directors may be
entitled;
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(k)
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entered
into any transaction other than in the ordinary course of business
consistent with past practice; or
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(l)
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agreed,
whether in writing or orally, to do any of the
foregoing.
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3.14.
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Absence of Certain
Changes or Events. Since the Priveco Accounting Date, there has not
been:
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(a)
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a
Priveco Material Adverse Effect; or
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(b)
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any
material change by Priveco in its accounting methods, principles or
practices.
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3.15.
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Subsidiaries.
Priveco does not have any subsidiaries or agreements of any nature to
acquire any subsidiary or to acquire or lease any other business
operations.
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3.16.
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Personal
Property. Priveco possesses, and has good and marketable title of
all property necessary for the continued operation of the business of
Priveco as presently conducted and as represented to Pubco. All such
property is used in the business of Priveco. All such property is in
reasonably good operating condition (normal wear and tear excepted), and
is reasonably fit for the purposes for which such property is presently
used. All material equipment, furniture, fixtures and other tangible
personal property and assets owned or leased by Priveco is owned by
Priveco free and clear of all liens, security interests, charges,
encumbrances, and other adverse claims, except as disclosed in Schedule
6.
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3.17.
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Intellectual
Property
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(a)
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Intellectual Property
Assets. Priveco owns or holds an interest in all intellectual
property assets necessary for the operation of the business of Priveco as
it is currently conducted (collectively, the “Intellectual Property
Assets”), including:
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(i)
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all
functional business names, trading names, registered and unregistered
trademarks, service marks, and applications (collectively, the “Marks”);
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(ii)
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all
patents, patent applications, and inventions, methods, processes and
discoveries that may be patentable (collectively, the “Patents”);
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(iii)
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all
copyrights in both published works and unpublished works (collectively,
the “Copyrights”);
and
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(iv)
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all
know-how, trade secrets, confidential information, customer lists,
software, technical information, data, process technology, plans,
drawings, and blue prints owned, used, or licensed by Priveco as licensee
or licensor (collectively, the “Trade
Secrets”).
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(b)
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Agreements.
Schedule 7 contains a complete and accurate list and summary description,
including any royalties paid or received by Priveco, of all contracts and
agreements relating to the Intellectual Property Assets to which Priveco
is a party or by which Priveco is bound, except for any license implied by
the sale of a product and perpetual, paid-up licenses for commonly
available software programs with a value of less than $500 under which
Priveco is the licensee. To the best knowledge of Priveco, there are no
outstanding or threatened disputes or disagreements with respect to any
such agreement.
|
(c)
|
Intellectual Property
and Know-How Necessary for the Business. Except as set forth in
Schedule 7, Priveco is the owner of all right, title, and interest in and
to each of the Intellectual Property Assets, free and clear of all liens,
security interests, charges, encumbrances, and other adverse claims, and
has the right to use without payment to a third party of all the
Intellectual Property Assets. Except as set forth in Schedule 7, all
former and current employees and contractors of Priveco have executed
written contracts, agreements or other undertakings with Priveco that
assign all rights to any inventions, improvements, discoveries, or
information relating to the business of Priveco. No employee, director,
officer or shareholder of Priveco owns directly or indirectly in whole or
in part, any Intellectual Property Asset which Priveco is presently using
or which is necessary for the conduct of its business. To the best
knowledge of Priveco, no employee or contractor of Priveco has entered
into any contract or agreement that restricts or limits in any way the
scope or type of work in which the employee may be engaged or requires the
employee to transfer, assign, or disclose information concerning his work
to anyone other than Priveco.
|
(d)
|
Patents. Except
as set out in Schedule 7, Priveco does not hold any right, title or
interest in and to any Patent and Priveco has not filed any patent
application with any third party. To the best knowledge of Priveco, none
of the products manufactured and sold, nor any process or know-how used,
by Priveco infringes or is alleged to infringe any patent or other
proprietary night of any other person or
entity.
|
(e)
|
Trademarks.
Except as set out in Schedule 7, Priveco does not hold any right, title or
interest in and to any Mark and Priveco has not registered or filed any
application to register any Mark with any third party. To the best
knowledge of Priveco, none of the Marks, if any, used by Priveco infringes
or is alleged to infringe any trade name, trademark, or service mark of
any third party.
|
(f)
|
Copyrights.
Schedule 7 contains a complete and accurate list and summary description
of all Copyrights. Priveco is the owner of all right, title, and interest
in and to each of the Copyrights, free and clear of all liens, security
interests, charges, encumbrances, and other adverse claims. If applicable,
all registered Copyrights are currently in compliance with formal legal
requirements, are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety days after
the Closing Date. To the best knowledge of Priveco, no Copyright is
infringed or has been challenged or threatened in any way and none of the
subject matter of any of the Copyrights infringes or is alleged to
infringe any copyright of any third party or is a derivative work based on
the work of a third party. All works encompassed by the Copyrights have
been marked with the proper copyright
notice.
|
9
(g)
|
Trade Secrets.
Priveco has taken all reasonable precautions to protect the secrecy,
confidentiality, and value of its Trade Secrets. Priveco has good title
and an absolute right to use the Trade Secrets. The Trade Secrets are not
part of the public knowledge or literature, and to the best knowledge of
Priveco, have not been used, divulged, or appropriated either for the
benefit of any person or entity or to the detriment of Priveco. No Trade
Secret is subject to any adverse claim or has been challenged or
threatened in any way.
|
3.18.
|
Insurance. The
products sold by and the assets owned by Priveco are insured under various
policies of general product liability and other forms of insurance
consistent with prudent business practices. All such policies are in full
force and effect in accordance with their terms, no notice of cancellation
has been received, and there is no existing default by Priveco, or any
event which, with the giving of notice, the lapse of time or both, would
constitute a default thereunder. All premiums to date have been paid in
full.
|
3.19.
|
Employees and
Consultants. All employees and consultants of Priveco have been
paid all salaries, wages, income and any other sum due and owing to them
by Priveco, as at the end of the most recent completed pay period. Priveco
is not aware of any labor conflict with any employees that might
reasonably be expected to have a Priveco Material Adverse Effect. To the
best knowledge of Priveco, no employee of Priveco is in violation of any
term of any employment contract, non-disclosure agreement, non-competition
agreement or any other contract or agreement relating to the relationship
of such employee with Priveco or any other nature of the business
conducted or to be conducted by
Priveco.
|
3.20.
|
Real Property.
Priveco does not own any real property. Each of the leases, subleases,
claims or other real property interests (collectively, the “Leases”) to which
Priveco is a party or is bound, as set out in Schedule 6, is legal, valid,
binding, enforceable and in full force and effect in all material
respects. All rental and other payments required to be paid by Priveco
pursuant to any such Leases have been duly paid and no event has occurred
which, upon the passing of time, the giving of notice, or both, would
constitute a breach or default by any party under any of the Leases. The
Leases will continue to be legal, valid, binding, enforceable and in full
force and effect on identical terms following the Closing Date. Priveco
has not assigned, transferred, conveyed, mortgaged, deeded in trust, or
encumbered any interest in the Leases or the leasehold property pursuant
thereto.
|
3.21.
|
Material Contracts and
Transactions. Schedule 8 attached hereto lists each material
contract, agreement, license, permit, arrangement, commitment, instrument
or contract to which Priveco is a party (each, a “Contract”). Each
Contract is in full force and effect, and there exists no material breach
or violation of or default by Priveco under any Contract, or any event
that with notice or the lapse of time, or both, will create a material
breach or violation thereof or default under any Contract by Priveco. The
continuation, validity, and effectiveness of each Contract will in no way
be affected by the consummation of the Transaction contemplated by this
Agreement. There exists no actual or threatened termination, cancellation,
or limitation of, or any amendment, modification, or change to any
Contract.
|
3.22.
|
Certain
Transactions. Priveco is not a guarantor or indemnitor of any
indebtedness of any third party, including any person, firm or
corporation.
|
3.23.
|
No Brokers.
Priveco has not incurred any independent obligation or liability to any
party for any brokerage fees, agent’s commissions, or finder’s fees in
connection with the Transaction contemplated by this
Agreement.
|
3.24.
|
Completeness of
Disclosure. No representation or warranty by Priveco in this
Agreement nor any certificate, schedule, statement, document or instrument
furnished or to be furnished to Pubco pursuant hereto contains or will
contain any untrue statement of a material fact or omits or will omit to
state a material fact required to be stated herein or therein or necessary
to make any statement herein or therein not materially
misleading.
|
10
3.25.
|
Benefit Plans.
Priveco does not have or maintain any collective bargaining agreement or
any bonus, pension, profit sharing, deferred compensation, incentive
compensation, share ownership, share purchase, share option, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or
former employee, officer or director of Priveco. As of the date
of this Agreement there are no severance or termination agreements or
arrangements between Priveco and any current or former employee, officer
or director of Priveco, nor does Priveco have any general severance plan
or policy.
|
3.26.
|
Compliance With
Applicable Laws. Priveco is in compliance with all applicable laws,
including those relating to occupational health and safety and the
environment, except for instances of noncompliance that, individually and
in the aggregate, have not had and would not reasonably be expected to
have a Company Priveco Material Adverse Effect. This Section
3.26 does not relate to matters with respect to Taxes, which are the
subject of Section 3.12.
|
3.27.
|
Transactions With
Affiliates and Employees. None of the officers or directors of
Priveco and, to the knowledge of Priveco, none of the employees of Priveco
is presently a party to any transaction with Priveco (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to
or by, providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of Priveco, any entity in which any officer,
director, or any such employee has a substantial interest or is an
officer, director, trustee or
partner.
|
3.28.
|
Application of
Takeover Protections. Priveco has taken all necessary action, if
any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a
rights agreement) or other similar anti-takeover provision under Priveco’s
charter documents or the laws of its state of incorporation that is or
could become applicable to the Selling Shareholders as a result of the
Selling Shareholders and Priveco fulfilling their obligations or
exercising their rights under this Agreement, including, without
limitation, the issuance of the Pubco Shares and the Selling Shareholders’
ownership of the Pubco Shares.
|
3.29.
|
No Additional
Agreements. Priveco does not have any agreement or understanding
with the Selling Shareholder with respect to the transactions contemplated
hereby other than as specified in this
Agreement.
|
3.30.
|
Foreign Corrupt
Practices. Neither Priveco, nor, to Priveco’s knowledge, any
director, officer, agent, employee or other person acting on behalf of
Priveco has, in the course of its actions for, or on behalf of, Priveco
(i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity;
(ii) made any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or
employee.
|
4.
|
REPRESENTATIONS AND
WARRANTIES OF PUBCO
|
As of the
Closing, Pubco represents and warrants to Priveco and the Selling Shareholders
and acknowledges that Priveco and the Selling Shareholders are relying upon such
representations and warranties in connection with the execution, delivery and
performance of this Agreement, notwithstanding any investigation made by or on
behalf of Priveco or the Selling Shareholders, as follows:
4.1.
|
Organization and Good
Standing. Pubco is duly incorporated, organized, validly existing
and in good standing under the laws of the State of Nevada and has all
requisite corporate power and authority to own, lease and to carry on its
business as now being conducted. Pubco is qualified to do business and is
in good standing as a foreign corporation in each of the jurisdictions in
which it owns property, leases property, does business, or is otherwise
required to do so, where the failure to be so qualified would have a
material adverse effect on the businesses, operations, or financial
condition of Pubco.
|
11
4.2.
|
Authority.
Pubco has all requisite corporate power and authority to execute and
deliver this Agreement and any other document contemplated by this
Agreement (collectively, the “Pubco Documents”) to be
signed by Pubco and to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of each
of the Pubco Documents by Pubco and the consummation by Pubco of the
transactions contemplated hereby have been duly authorized by its board of
directors and no other corporate or shareholder proceedings on the part of
Pubco is necessary to authorize such documents or to consummate the
transactions contemplated hereby. This Agreement has been, and the other
Pubco Documents when executed and delivered by Pubco as contemplated by
this Agreement will be, duly executed and delivered by Pubco and this
Agreement is, and the other Pubco Documents when executed and delivered by
Pubco, as contemplated hereby will be, valid and binding obligations of
Pubco enforceable in accordance with their respective terms,
except:
|
(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
|
(c)
|
as
limited by public policy.
|
4.3.
|
Capitalization of
Pubco. The entire authorized capital stock and other equity
securities of Pubco consists of 100,000,000 shares of common stock with a
par value of $0.0001 (the “Pubco Common Stock”) and
100,000,000 shares of preferred stock with a par value of
$0.0001. As of the date of this Agreement, there are 23,010,225
shares of Pubco Common Stock issued and outstanding. All of the issued and
outstanding shares of Pubco Common Stock have been duly authorized, are
validly issued, were not issued in violation of any pre-emptive rights and
are fully paid and non-assessable, are not subject to pre-emptive rights
and were issued in full compliance with all federal, state, and local
laws, rules and regulations. There are no outstanding options, warrants,
subscriptions, phantom shares, conversion rights, or other rights,
agreements, or commitments obligating Pubco to issue any additional shares
of Pubco Common Stock, or any other securities convertible into,
exchangeable for, or evidencing the right to subscribe for or acquire from
Pubco any shares of Pubco Common Stock as of the date of this Agreement.
There are no agreements purporting to restrict the transfer of the Pubco
Common Stock, no voting agreements, voting trusts, or other arrangements
restricting or affecting the voting of the Pubco Common
Stock.
|
4.4.
|
Directors and Officers
of Pubco. The duly elected or appointed directors and the duly
appointed officers of Pubco are as listed on Schedule
5.
|
4.5.
|
Corporate Records of
Pubco. The corporate records of Pubco, as required to be maintained
by it pursuant to the laws of the State of Nevada, are accurate, complete
and current in all material respects, and the minute book of Pubco is, in
all material respects, correct and contains all material records required
by the law of the State of Nevada in regards to all proceedings, consents,
actions and meetings of the shareholders and the board of directors of
Pubco.
|
4.6.
|
Non-Contravention.
Neither the execution, delivery and performance of this Agreement, nor the
consummation of the Transaction,
will:
|
(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 Pubco under any term, condition or provision of
any loan or credit agreement, note, debenture, bond, mortgage, indenture,
lease or other agreement, instrument, permit, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Pubco or
any of its material property or
assets;
|
(b)
|
violate
any provision of the applicable incorporation or charter documents of
Pubco; or
|
12
(c)
|
violate
any order, writ, injunction, decree, statute, rule, or regulation of any
court or governmental or regulatory authority applicable to Pubco or any
of its material property or assets.
|
4.7.
|
Validity of Pubco
Common Stock Issuable upon the Transaction. The Pubco Shares to be
issued to the Selling Shareholders upon consummation of the Transaction in
accordance with this Agreement will, upon issuance, have been duly and
validly authorized and, when so issued in accordance with the terms of
this Agreement, will be duly and validly issued, fully paid and
non-assessable.
|
4.8.
|
Actions and
Proceedings. To the best knowledge of Pubco, there is no claim,
charge, arbitration, grievance, action, suit, investigation or proceeding
by or before any court, arbiter, administrative agency or other
governmental authority now pending or, to the best knowledge of Pubco,
threatened against Pubco which involves any of the business, or the
properties or assets of Pubco that, if adversely resolved or determined,
would have a material adverse effect on the business, operations, assets,
properties, prospects or conditions of Pubco taken as a whole (a “Pubco Material Adverse
Effect”). There is no reasonable basis for any claim or action
that, based upon the likelihood of its being asserted and its success if
asserted, would have such a Pubco Material Adverse
Effect.
|
4.9.
|
Compliance.
|
(a)
|
To
the best knowledge of Pubco, Pubco is in compliance with, is not in
default or violation in any material respect under, and has not been
charged with or received any notice at any time of any material violation
of any statute, law, ordinance, regulation, rule, decree or other
applicable regulation to the business or operations of
Pubco;
|
(b)
|
To
the best knowledge of Pubco, Pubco is not subject to any judgment, order
or decree entered in any lawsuit or proceeding applicable to its business
and operations that would constitute a Pubco Material Adverse
Effect;
|
(c)
|
Pubco
has operated in material compliance with all laws, rules, statutes,
ordinances, orders and regulations applicable to its business. Pubco has
not received any notice of any violation thereof, nor is Pubco aware of
any valid basis therefore.
|
4.10.
|
Filings, Consents and
Approvals. No filing or registration with, no notice to and no
permit, authorization, consent, or approval of any public or governmental
body or authority or other person or entity is necessary for the
consummation by Pubco of the Transaction contemplated by this Agreement to
continue to conduct its business after the Closing Date in a manner which
is consistent with that in which it is presently
conducted.
|
4.11.
|
SEC Filings.
Pubco has furnished or made available to Priveco and the Selling
Shareholders a true and complete copy of each report, schedule,
registration statement and proxy statement filed by Pubco with the SEC
(collectively, and as such documents have since the time of their filing
been amended, the “Pubco SEC Documents”). As of their respective dates,
the Pubco SEC Documents complied in all material respects with the
requirements of the Securities Act, or the Exchange Act, as the case may
be, and the rules and regulations of the SEC thereunder applicable to such
Pubco SEC Documents. The Pubco SEC Documents constitute all of the
documents and reports that Pubco was required to file with the SEC
pursuant to the Exchange Act and the rules and regulations promulgated
thereunder by the SEC.
|
4.12.
|
Financial
Representations. Included with the Pubco SEC Documents are true,
correct, and complete copies of audited balance sheets for Pubco dated as
of May 31, 2009 and unaudited balance sheets for Pubco dated as of
February 28, 2010 (the “Pubco Accounting Date”),
together with related statements of income, cash flows, and changes in
shareholder’s equity for the fiscal year and interim period then ended
(collectively, the “Pubco
Financial Statements”). The Pubco Financial
Statements:
|
(a)
|
are
in accordance with the books and records of
Pubco;
|
13
(b)
|
present
fairly the financial condition of Pubco as of the respective dates
indicated and the results of operations for such periods;
and
|
(c)
|
have
been prepared in accordance with
GAAP.
|
Pubco has
not received any advice or notification from its independent certified public
accountants that Pubco has used any improper accounting practice that would have
the effect of not reflecting or incorrectly reflecting in the Pubco Financial
Statements or the books and records of Pubco, any properties, assets,
Liabilities, revenues, or expenses. The books, records, and accounts of Pubco
accurately and fairly reflect, in reasonable detail, the assets, and Liabilities
of Pubco. Pubco has not engaged in any transaction, maintained any bank account,
or used any funds of Pubco, except for transactions, bank accounts, and funds
which have been and are reflected in the normally maintained books and records
of Pubco.
4.13.
|
Absence of Undisclosed
Liabilities. Pubco has no material Liabilities or obligations
either direct or indirect, matured or unmatured, absolute, contingent or
otherwise, which:
|
(a)
|
are
not set forth in the Pubco Financial Statements or have not heretofore
been paid or discharged;
|
(b)
|
did
not arise in the regular and ordinary course of business under any
agreement, contract, commitment, lease or plan specifically disclosed in
writing to Priveco; or
|
(c)
|
have
not been incurred in amounts and pursuant to practices consistent with
past business practice, in or as a result of the regular and ordinary
course of its business since the date of the last Pubco Financial
Statements.
|
4.14.
|
Tax
Matters.
|
(a)
|
As
of the date hereof:
|
(i)
|
Pubco
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
them, and
|
(ii)
|
all
such returns are true and correct in all material
respects;
|
(b)
|
Pubco
has paid all Taxes that have become or are due with respect to any period
ended on or prior to the date
hereof;
|
(c)
|
Pubco
is not presently under and has not received notice of, any contemplated
investigation or audit by the Canada Revenue Agency or the Internal
Revenue Service 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 agency;
and
|
(e)
|
To
the best knowledge of Pubco, the Pubco Financial Statements contain full
provision for all Taxes including any deferred Taxes that may be assessed
to Pubco for the accounting period ended on the Pubco 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 Pubco Accounting Date
or for any profit earned by Pubco on or prior to the Pubco Accounting Date
or for which Pubco is accountable up to such date and all contingent
Liabilities for Taxes have been provided for or disclosed in the Pubco
Financial Statements.
|
14
4.15.
|
Absence of
Changes. Since the Pubco Accounting Date, except as disclosed in
the Public SEC Documents and except as contemplated in this Agreement,
Pubco 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 damage or risk of material
loss 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 Pubco 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 its capital shares or redeemed,
purchased or otherwise acquired or agreed to redeem, purchase or acquire
any of its capital shares or equity
securities;
|
(f)
|
suffered
any damage, destruction or loss, whether or not covered by insurance, that
materially and adversely effects 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 labor trouble,
termination, resignation, strike or other occurrence, event or condition
of any similar character which has had or might have an adverse effect on
its business, operations, assets, properties or
prospects;
|
(i)
|
made
commitments or agreements for capital expenditures or capital additions or
betterments exceeding in the aggregate
$10,000;
|
(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.
|
4.16.
|
Absence of Certain
Changes or Events. Since the Pubco Accounting Date, except as and
to the extent disclosed in the Pubco SEC Documents, there has not
been:
|
(a)
|
a
Pubco Material Adverse Effect; or
|
(b)
|
any
material change by Pubco in its accounting methods, principles or
practices.
|
15
4.17.
|
Subsidiaries.
Pubco does not have any subsidiaries or agreements of any nature to
acquire any subsidiary or to acquire or lease any other business
operations, except as disclosed in the Pubco SEC
Documents.
|
4.18.
|
Personal
Property. There are no material equipment, furniture, fixtures and
other tangible personal property and assets owned or leased by Pubco,
except as disclosed in the Pubco SEC
Documents.
|
4.19.
|
Employees and
Consultants. Pubco does not have any employees or consultants,
except as disclosed in the Pubco SEC
Documents.
|
4.20.
|
Material Contracts and
Transactions. Other than as expressly contemplated by this
Agreement, there are no material contracts, agreements, licenses, permits,
arrangements, commitments, instruments, understandings or contracts,
whether written or oral, express or implied, contingent, fixed or
otherwise, to which Pubco is a party except as disclosed in writing to
Priveco or as disclosed in the Pubco SEC
Documents.
|
4.21.
|
No Brokers.
Pubco has not incurred any obligation or liability to any party for any
brokerage fees, agent’s commissions, or finder’s fees in connection with
the Transaction contemplated by this Agreement, with the exception of the
issuance of the HE Capital Shares at
Closing.
|
4.22.
|
Internal Accounting
Controls. Pubco 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. Pubco’s certifying officers have evaluated the
effectiveness of Pubco’s controls and procedures as of end of the filing
period prior to the filing date of the Form 10-Q for the quarter ended
February 28, 2010 (such date, the “Evaluation Date”). Pubco presented in
its most recently filed Form 10-Q the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures
based on their evaluations as of the Evaluation Date. Since the Evaluation
Date, there have been no significant changes in Pubco’s internal controls
(as such term is defined in Item 307 of Regulation S-K under the Exchange
Act) or, to Pubco’s knowledge, in other factors that could significantly
affect Pubco’s internal controls.
|
4.23.
|
Listing and
Maintenance Requirements. Pubco 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 the NASD or any trading
market on which Pubco’s common stock is or has been listed or quoted to
the effect that Pubco is not in compliance with the quoting, listing or
maintenance requirements of the OTCBB or such other trading
market.
|
4.24.
|
Application of
Takeover Protections. Pubco and its board of directors have taken
all necessary action, if any, in order to render inapplicable any control
share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover
provision under Pubco’s certificate or articles of incorporation (or
similar charter documents) or the laws of its state of incorporation that
is or could become applicable to Pubco as a result of the transactions
under this Agreement or the exercise of any rights pursuant to this
Agreement.
|
4.25.
|
No SEC or Financial
Industry Regulatory Authority Inquiries. Neither the Pubco 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. Pubco currently
do not have any outstanding comment letters or other correspondences from
the SEC or FINRA.
|
4.26.
|
No Liabilities.
Upon Closing, Pubco shall have no direct, indirect or contingent
liabilities outstanding that exceed
$1,000.
|
16
4.27.
|
Completeness of
Disclosure. No representation or warranty by Pubco in this
Agreement nor any certificate, schedule, statement, document or instrument
furnished or to be furnished to Priveco pursuant hereto contains or will
contain any untrue statement of a material fact or omits or will omit to
state a material fact required to be stated herein or therein or necessary
to make any statement herein or therein not materially
misleading.
|
5.
|
CLOSING
CONDITIONS
|
5.1.
|
Conditions Precedent
to Closing by Pubco. The obligation of Pubco to consummate the
Transaction is subject to the satisfaction or written waiver of the
conditions set forth below by a date mutually agreed upon by the parties
hereto in writing and in accordance with Section 10.6. The Closing of the
Transaction contemplated by this Agreement will be deemed to mean a waiver
of all conditions to Closing. These conditions precedent are for the
benefit of Pubco and may be waived by Pubco in its sole
discretion.
|
(a)
|
Representations and
Warranties. The representations and warranties of Priveco and the
Selling Shareholders set forth in this Agreement will be true, correct and
complete in all respects as of the Closing Date, as though made on and as
of the Closing Date and Priveco will have delivered to Pubco a certificate
dated as of the Closing Date, to the effect that the representations and
warranties made by Priveco in this Agreement are true and
correct.
|
(b)
|
Performance.
All of the covenants and obligations that Priveco and the Selling
Shareholders are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing must have been performed and complied
with in all material respects.
|
(c)
|
Transaction
Documents. This Agreement, the Priveco Documents, the Priveco
Financial Statements and all other documents necessary or reasonably
required to consummate the Transaction, all in form and substance
reasonably satisfactory to Pubco, will have been executed and delivered to
Pubco.
|
(d)
|
Secretary’s
Certificate – Priveco. Pubco will have received a certificate from
the Secretary of Priveco attaching:
|
(i)
|
a
copy of Priveco’s Bylaws, Articles of Incorporation and all other
incorporation documents, as amended through the Closing Date;
and
|
(ii)
|
copies
of resolutions duly adopted by the board of directors of Priveco approving
the execution and delivery of this Agreement and the consummation of the
transactions contemplated herein.
|
(e)
|
Legal Opinion –
Priveco. Pubco will have received an opinion, dated as of the
Closing Date, from counsel for Priveco, and such other local or special
counsel as is appropriate, all of which opinion will be in the form and
substance reasonably satisfactory to Pubco and its
counsel.
|
(f)
|
Third Party
Consents. Pubco will have received duly executed copies of all
third party consents and approvals contemplated by this Agreement, in form
and substance reasonably satisfactory to
Pubco.
|
(g)
|
Employment
Agreements. Pubco will have received from Priveco copies of all
agreements or arrangements that evidence the employment of all of the
hourly and salaried employees of Priveco as set out on Schedule 9 attached
hereto, which constitute all of the employees reasonably necessary to
operate the business of Priveco substantially as presently
operated.
|
(h)
|
No Material Adverse
Change. No Priveco Material Adverse Effect will have occurred since
the date of this Agreement.
|
17
(i)
|
Outstanding
Shares. Priveco will have no more than 12,106,002 shares of Priveco
Common Stock issued and outstanding on the Closing
Date.
|
(j)
|
Delivery of Financial
Statements. Priveco will have delivered to Pubco the Priveco
Financial Statements, which financial statements will include audited
financial statements for Priveco’s two fiscal years, prepared in
accordance with GAAP and audited by an independent auditor registered with
the PCAOB.
|
(k)
|
Due Diligence Review
of Financial Statements. Pubco and its accountants will be
reasonably satisfied with their due diligence investigation and review of
the Priveco Financial Statements.
|
(l)
|
Due Diligence
Generally. Pubco and its solicitors will be reasonably satisfied
with their due diligence investigation of Priveco that is reasonable and
customary in a transaction of a similar nature to that contemplated by the
Transaction, including:
|
(i)
|
materials,
documents and information in the possession and control of Priveco and the
Selling Shareholders which are reasonably germane to the
Transaction;
|
(ii)
|
a
physical inspection of the assets of Priveco by Pubco or its
representatives; and
|
(iii)
|
title
to the material assets of Priveco.
|
(m)
|
Compliance with
Securities Laws. Pubco will have received evidence satisfactory to
Pubco that the Pubco Shares issuable in the Transaction will be
issuable:
|
(i)
|
without
registration pursuant to the Securities Act in reliance on a safe harbor
from the registration requirements of the Securities Act provided by
Section 4(2) of the Securities Act, Regulation D and/or Regulation S;
and
|
(ii)
|
in
reliance upon an exemption from the prospectus and registration
requirements of the BC Securities
Act.
|
5.2.
|
In
order to establish the availability of the safe harbor from the
registration requirements of the Securities Act and the prospectus and
registration requirements of the BC Securities Act for the issuance of
Pubco Shares to each Selling Shareholder, Priveco will deliver to Pubco on
Closing, a Rule 506 Certificate and a Questionnaire duly executed by each
Selling Shareholder. Conditions Precedent
to Closing by Priveco. The obligation of Priveco and the Selling
Shareholders to consummate the Transaction is subject to the satisfaction
or written waiver of the conditions set forth below by a date mutually
agreed upon by the parties hereto in writing and in accordance with
Section 10.6. 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 Priveco and the Selling Shareholders and may be waived by
Priveco and the Selling Shareholders in their
discretion.
|
(a)
|
Representations and
Warranties. The representations and warranties of Pubco set forth
in this Agreement will be true, correct and complete in all respects as of
the Closing Date, as though made on and as of the Closing Date and Pubco
will have delivered to Priveco a certificate dated the Closing Date, to
the effect that the representations and warranties made by Pubco in this
Agreement are true and correct.
|
(b)
|
Performance.
All of the covenants and obligations that Pubco are required to perform or
to comply with pursuant to this Agreement at or prior to the Closing must
have been performed and complied with in all material respects. Pubco must
have delivered each of the documents required to be delivered by it
pursuant to this Agreement.
|
18
(c)
|
Transaction
Documents. This Agreement, the Pubco Documents and all other
documents necessary or reasonably required to consummate the Transaction,
all in form and substance reasonably satisfactory to Priveco, will have
been executed and delivered by
Pubco.
|
(d)
|
Secretary’s
Certificate - Pubco. Priveco will have received a certificate from
the Secretary of Pubco attaching:
|
(i)
|
a
copy of Pubco’s Articles of Incorporation and Bylaws, as amended through
the Closing Date; and
|
(ii)
|
copies
of resolutions duly adopted by the board of directors of Pubco approving
the execution and delivery of this Agreement and the consummation of the
transactions contemplated herein.
|
(e)
|
Legal Opinion –
Pubco. Priveco will have received a legal opinion, dated as of the
Closing Date, from counsel for Pubco, and such other local or special
legal counsel as is appropriate, all of which opinion shall be in the form
and substance reasonably satisfactory to Priveco and its
counsel.
|
(f)
|
Third Party
Consents. Priveco will have received from Pubco duly executed
copies of all third-party consents, permits, authorisations and approvals
of any public, regulatory (including the SEC) or governmental body or
authority or person or entity contemplated by this Agreement, in the form
and substance reasonably satisfactory to
Priveco.
|
(g)
|
No Material Adverse
Change. No Pubco Material Adverse Effect will have occurred since
the date of this Agreement.
|
(h)
|
No Action. No
suit, action, or proceeding will be pending or threatened before any
governmental or regulatory authority wherein an unfavorable judgment,
order, decree, stipulation, injunction or charge would result in
and/or:
|
(i)
|
the
consummation of any of the transactions contemplated by this Agreement;
or
|
(ii)
|
cause
the Transaction to be rescinded following
consummation.
|
(i)
|
Outstanding
Shares. On the Closing Date, Pubco will have no more than
100,000,000 common shares issued and outstanding in the capital of Pubco
after giving effect to issuance of the Pubco Shares and the HE Capital
Shares.
|
(j)
|
Public Market.
On the Closing Date, the shares of Pubco Common Stock will be quoted on
the OTC Bulletin Board.
|
(k)
|
Due Diligence Review
of Financial Statements. Priveco and its accountants will be
reasonably satisfied with their due diligence investigation and review of
the Pubco Financial Statements, the Pubco SEC Documents, and the contents
thereof, prepared in accordance with
GAAP.
|
(l)
|
Due Diligence
Generally. Priveco will be reasonably satisfied with their due
diligence investigation of Pubco that is reasonable and customary in a
transaction of a similar nature to that contemplated by the
Transaction.
|
6.
|
ADDITIONAL COVENANTS
OF THE PARTIES
|
6.1.
|
Notification of
Financial Liabilities. Priveco will immediately notify Pubco
in accordance
with Section 10.6 hereof, if Priveco receives any advice or notification
from its independent certified public accounts that Priveco has used any
improper accounting practice that would have the effect of not reflecting
or incorrectly reflecting in the books, records, and accounts of Priveco,
any properties, assets, Liabilities, revenues, or expenses.
Notwithstanding any statement to the contrary in this Agreement, this
covenant will survive Closing and continue in full force and
effect.
|
19
6.2.
|
Access and
Investigation. Between the date of this Agreement and the Closing
Date, Priveco, on the one hand, and Pubco, on the other hand, will, and
will cause each of their respective representatives
to:
|
(a)
|
afford
the other and its representatives full and free access to its personnel,
properties, assets, contracts, books and records, and other documents and
data;
|
(b)
|
furnish
the other and its representatives with copies of all such contracts, books
and records, and other existing documents and data as required by this
Agreement and as the other may otherwise reasonably request;
and
|
(c)
|
furnish
the other and its representatives with such additional financial,
operating, and other data and information as the other may reasonably
request.
|
All of
such access, investigation and communication by a party and its representatives
will be conducted during normal business hours and in a manner designed not to
interfere unduly with the normal business operations of the other party. Each
party will instruct its auditors to co-operate with the other party and its
representatives in connection with such investigations.
6.3.
|
Confidentiality.
All information regarding the business of Priveco including, without
limitation, financial information that Priveco provides to Pubco during
Pubco’s due diligence investigation of Priveco will be kept in strict
confidence by Pubco and will not be used (except in connection with due
diligence), dealt with, exploited or commercialized by Pubco or disclosed
to any third party (other than Pubco’s professional accounting and legal
advisors) without the prior written consent of Priveco. If the Transaction
contemplated by this Agreement does not proceed for any reason, then upon
receipt of a written request from Priveco, Pubco will immediately return
to Priveco (or as directed by Priveco) any information received regarding
Priveco’s business. Likewise, all information regarding the business of
Pubco including, without limitation, financial information that Pubco
provides to Priveco during its due diligence investigation of Pubco will
be kept in strict confidence by Priveco and will not be used (except in
connection with due diligence), dealt with, exploited or commercialized by
Priveco or disclosed to any third party (other than Priveco’s professional
accounting and legal advisors) without Pubco’s prior written consent. If
the Transaction contemplated by this Agreement does not proceed for any
reason, then upon receipt of a written request from Pubco, Priveco will
immediately return to Pubco (or as directed by Pubco) any information
received regarding Pubco’s
business.
|
6.4.
|
Notification.
Between the date of this Agreement and the Closing Date, each of the
parties to this Agreement will promptly notify the other parties in
writing if it becomes aware of any fact or condition that causes or
constitutes a material breach of any of its representations and warranties
as of the date of this Agreement, if it becomes aware of the occurrence
after the date of this Agreement of any fact or condition that would cause
or constitute a material 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 Schedules relating to such party, such party
will promptly deliver to the other parties a supplement to the Schedules
specifying such change. During the same period, each party will promptly
notify the other parties of the occurrence of any material breach of any
of its covenants in this Agreement or of the occurrence of any event that
may make the satisfaction of such conditions impossible or
unlikely.
|
6.5.
|
Exclusivity.
Until such time, if any, as this Agreement is terminated pursuant to this
Agreement, Priveco and Pubco will not, directly or indirectly, solicit,
initiate, entertain or accept any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the
merits of any unsolicited inquiries or proposals from, any person or
entity relating to any transaction involving the sale of the business or
assets (other than in the ordinary course of business), or any of the
capital stock of Priveco or Pubco, as applicable, or any merger,
consolidation, business combination, or similar transaction other than as
contemplated by this Agreement.
|
20
6.6.
|
Conduct of Priveco and
Pubco Business Prior to Closing. From the date of this Agreement to
the Closing Date, and except to the extent that Pubco otherwise consents
in writing, Priveco will operate its business substantially as presently
operated and only in the ordinary course and in compliance with all
applicable laws, and use its best efforts to preserve intact its good
reputation and present business organization and to preserve its
relationships with persons having business dealings with it. Likewise,
from the date of this Agreement to the Closing Date, and except to the
extent that Priveco otherwise consents in writing, Pubco will operate its
business substantially as presently operated and only in the ordinary
course and in compliance with all applicable laws, and use its best
efforts to preserve intact its good reputation and present business
organization and to preserve its relationships with persons having
business dealings with it.
|
6.7.
|
Certain Acts
Prohibited – Priveco. Except as expressly contemplated by this
Agreement or for purposes in furtherance of this Agreement, between the
date of this Agreement and the Closing Date, Priveco will not, without the
prior written consent of Pubco:
|
(a)
|
its
Constitution, Articles of Association or other incorporation
documents;
|
(b)
|
incur
any liability or obligation other than in the ordinary course of business
or encumber or permit the encumbrance of any properties or assets of
Priveco except in the ordinary course of
business;
|
21
(c)
|
dispose
of or contract to dispose of any Priveco property or assets, including the
Intellectual Property Assets, except in the ordinary course of business
consistent with past practice;
|
(d)
|
issue,
deliver, sell, pledge or otherwise encumber or subject to any lien any
shares of the Priveco Common Stock, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible
securities;
|
(e)
|
not:
|
(i)
|
declare,
set aside or pay any dividends on, or make any other distributions in
respect of the Priveco Common Stock,
or
|
(ii)
|
split,
combine or reclassify any Priveco Common Stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of Priveco Common Stock;
or
|
(f)
|
not
materially increase benefits or compensation expenses of Priveco, other
than as contemplated by the terms of any employment agreement in existence
on the date of this Agreement, increase the cash compensation of any
director, executive officer or other key employee or pay any benefit or
amount not required by a plan or arrangement as in effect on the date of
this Agreement to any such person.
|
6.8.
|
Certain Acts
Prohibited - Pubco. Except as expressly contemplated by this
Agreement, between the date of this Agreement and the Closing Date, Pubco
will not, without the prior written consent of
Priveco:
|
(a)
|
incur
any liability or obligation or encumber or permit the encumbrance of any
properties or assets of Pubco except in the ordinary course of business
consistent with past practice;
|
(b)
|
dispose
of or contract to dispose of any Pubco property or assets except in the
ordinary course of business consistent with past
practice;
|
(c)
|
declare,
set aside or pay any dividends on, or make any other distributions in
respect of the Pubco Common Stock;
or
|
(d)
|
materially
increase benefits or compensation expenses of Pubco, increase the cash
compensation of any director, executive officer or other key employee or
pay any benefit or amount to any such
person.
|
6.9.
|
Public
Announcements. Pubco and Priveco each agree that they will not
release or issue any reports or statements or make any public
announcements relating to this Agreement or the Transaction 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.
|
6.10.
|
Employment
Agreements. Between the date of this Agreement and the Closing
Date, Priveco will have made necessary arrangements to employ all of the
hourly and salaried employees of Priveco reasonably necessary to operate
such business substantially as presently operated. Priveco agrees to
provide copies of all such agreements and arrangements that evidence such
employment at or prior to Closing.
|
6.11.
|
Pubco Board of
Directors. The current directors of Pubco will adopt resolutions
appointing William F. Cleave abd Kevin M. Coughlion to the Board of
Directors of Pubco and will accept the resignation of Charles Payne as a
director and officer of Pubco, which appointments and resignations will be
effective on Closing.
|
7.
|
CLOSING
|
7.1.
|
Closing. The
Closing shall take place on the Closing Date at the offices of the lawyers
for Pubco or at such other location as agreed to by the parties.
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 Priveco and Pubco, provided such undertakings
are satisfactory to each party’s respective legal
counsel.
|
7.2.
|
Closing Deliveries of
Priveco and the Selling Shareholders. At Closing, Priveco and the
Selling Shareholders will deliver or cause to be delivered the following,
fully executed and in the form and substance reasonably satisfactory to
Pubco:
|
(a)
|
copies
of all resolutions and/or consent actions adopted by or on behalf of the
board of directors of Priveco evidencing approval of this Agreement and
the Transaction;
|
(b)
|
if
any of the Selling Shareholders appoint any person, by power of attorney
or equivalent, to execute this Agreement or any other agreement, document,
instrument or certificate contemplated by this agreement, on behalf of the
Selling Shareholder, a valid and binding power of attorney or equivalent
from such Selling Shareholder;
|
(c)
|
share
certificates representing the Priveco Shares as required by Section 2.3 of
this Agreement;
|
(d)
|
all
certificates and other documents required by Sections 2.3 and 5.1 of this
Agreement;
|
(e)
|
a
certificate of an officer of Priveco, dated as of Closing, certifying
that:
|
(i)
|
each
covenant and obligation of Priveco has been complied with;
and
|
(ii)
|
each
representation, warranty and covenant of Priveco is true and correct at
the Closing as if made on and as of the
Closing;
|
(f)
|
the
Priveco Documents, the Priveco Financial Statements and any other
necessary documents, each duly executed by Priveco, as required to give
effect to the Transaction;
|
22
(g)
|
copies
of all agreements and arrangements required by Section 6.10 of this
Agreement.
|
7.3.
|
Closing Deliveries of
Pubco. At Closing, Pubco will deliver or cause to be delivered the
following, fully executed and in the form and substance reasonably
satisfactory to Priveco:
|
(a)
|
copies
of all resolutions and/or consent actions adopted by or on behalf of the
board of directors of Pubco evidencing approval of this Agreement and the
Transaction;
|
(b)
|
all
certificates and other documents required by Section 5.2 of this
Agreement;
|
(c)
|
a
certificate of an officer of Pubco, dated as of Closing, certifying
that:
|
(i)
|
each
covenant and obligation of Pubco has been complied with;
and
|
(ii)
|
each
representation, warranty and covenant of Pubco is true and correct at the
Closing as if made on and as of the
Closing;
|
(d)
|
the
Pubco Documents and any other necessary documents, each duly executed by
Pubco, as required to give effect to the Transaction;
and
|
(e)
|
the
resolutions required to effect the changes contemplated in Sections 6.11
of this Agreement.
|
7.4.
|
Additional Closing
Delivery of Pubco. At Closing, Pubco will deliver or cause to be
delivered the share certificates representing the Pubco Shares and the HE
Capital Shares.
|
8.
|
TERMINATION
|
8.1.
|
Termination.
This Agreement may be terminated at any time prior to the Closing Date
contemplated hereby by:
|
(a)
|
mutual
agreement of Pubco and Priveco;
|
(b)
|
Pubco,
if there has been a material breach by Priveco or any of the Selling
Shareholders of any material representation, warranty, covenant or
agreement set forth in this Agreement on the part of Priveco or the
Selling Shareholders that is not cured, to the reasonable satisfaction of
Pubco, within ten business days after notice of such breach is given by
Pubco (except that no cure period will be provided for a breach by Priveco
or the Selling Shareholders that by its nature cannot be
cured);
|
(c)
|
Priveco,
if there has been a material breach by Pubco of any material
representation, warranty, covenant or agreement set forth in this
Agreement on the part of Pubco that is not cured by the breaching party,
to the reasonable satisfaction of Priveco, within ten business days after
notice of such breach is given by Priveco (except that no cure period will
be provided for a breach by Pubco that by its nature cannot be cured);
or
|
(d)
|
Pubco
or Priveco if any permanent injunction or other order of a governmental
entity of competent authority preventing the consummation of the
Transaction contemplated by this Agreement has become final and
non-appealable.
|
8.2.
|
Effect of Termination.
In the event of the termination of this Agreement as provided in
Section 8.1, 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.
|
23
9.
|
INDEMNIFICATION,
REMEDIES, SURVIVAL
|
9.1.
|
Certain
Definitions. For the purposes of this Article 9 the terms “Loss”
and “Losses” mean 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
Pubco or Priveco including damages for lost profits or lost business
opportunities.
|
9.2.
|
Agreement of Priveco
to Indemnify. Priveco will indemnify, defend, and hold harmless, to
the full extent of the law, Pubco and its shareholders from, against, and
in respect of any and all Losses asserted against, relating to, imposed
upon, or incurred by Pubco and its shareholders by reason of, resulting
from, based upon or arising out of:
|
(a)
|
the
breach by Priveco of any representation or warranty of Priveco contained
in or made pursuant to this Agreement, any Priveco Document or any
certificate or other instrument delivered pursuant to this Agreement;
or
|
(b)
|
the
breach or partial breach by Priveco of any covenant or agreement of
Priveco made in or pursuant to this Agreement, any Priveco Document or any
certificate or other instrument delivered pursuant to this
Agreement.
|
9.3.
|
Agreement of the
Selling Shareholders to Indemnify. The Selling Shareholders will
indemnify, defend, and hold harmless, to the full extent of the law, Pubco
and its shareholders from, against, and in respect of any and all Losses
asserted against, relating to, imposed upon, or incurred by Pubco and its
shareholders by reason of, resulting from, based upon or arising out
of:
|
(a)
|
any
breach by the Selling Shareholders of Section 2.2 of this Agreement;
or
|
(b)
|
any
misstatement, misrepresentation or breach of the representations and
warranties made by the Selling Shareholders contained in or made pursuant
to the Regulation S Certificate, Rule 506 Certificate or the Questionnaire
executed by each Selling Shareholder as part of the share exchange
procedure detailed in Section 2.3 of this
Agreement.
|
9.4.
|
Agreement of Pubco to
Indemnify. Pubco will indemnify, defend, and hold harmless, to the
full extent of the law, Priveco and the Selling Shareholders from,
against, for, and in respect of any and all Losses asserted against,
relating to, imposed upon, or incurred by Priveco and the Selling
Shareholders by reason of, resulting from, based upon or arising out
of:
|
(a)
|
the
breach by Pubco of any representation or warranty of Pubco contained in or
made pursuant to this Agreement, any Pubco Document or any certificate or
other instrument delivered pursuant to this Agreement;
or
|
(b)
|
the
breach or partial breach by Pubco of any covenant or agreement of Pubco
made in or pursuant to this Agreement, any Pubco Document or any
certificate or other instrument delivered pursuant to this
Agreement.
|
10.
|
MISCELLANEOUS
PROVISIONS
|
10.1.
|
Effectiveness of
Representations; Survival. Each party is entitled to rely on the
representations, warranties and agreements of each of the other parties
and all such representation, warranties and agreement will be effective
regardless of any investigation that any party has undertaken or failed to
undertake. Unless otherwise stated in this Agreement, and except for
instances of fraud, the representations, warranties and agreements will
survive the Closing Date and continue in full force and effect until one
(1) year after the Closing Date.
|
10.2.
|
Further
Assurances. Each of the parties hereto will co-operate with the
others and execute and deliver to the other parties hereto such other
instruments and documents and take such other actions as may be reasonably
requested from time to time by any other party hereto as necessary to
carry out, evidence, and confirm the intended purposes of this
Agreement.
|
24
10.3.
|
Amendment. This
Agreement may not be amended except by an instrument in writing signed by
each of the parties.
|
10.4.
|
Expenses. Pubco
will bear all costs incurred in connection with the preparation, execution
and performance of this Agreement and the Transaction contemplated hereby,
including all fees and expenses of agents, representatives and
accountants; provided that Pubco and Priveco will bear its respective
legal costs incurred in connection with the preparation, execution and
performance of this Agreement and the Transaction contemplated
hereby.
|
10.5.
|
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.
|
10.6.
|
Notices. All
notices and other communications required or permitted under this
Agreement must be in writing and will be deemed given if sent by personal
delivery, faxed with electronic confirmation of delivery,
internationally-recognized express courier or registered or certified mail
(return receipt requested), postage prepaid, to the parties at the
following addresses (or at such other address for a party as will be
specified by like notice):
|
If to
Priveco or any of the Selling Shareholders:
Leeward
Group, Inc.
108 West
13th
Street
Wilmington,
Delaware 19801
Attention:
|
Kevin
Coughlin
|
Telephone:
|
(609) 216-7938 |
With a
copy (which will not constitute notice) to:
Macdonald
Tuskey
Suite
1210, 777 Hornby Street
Vancouver,
British Columbia, Canada V6Z 1S4
Attention:
|
William
L. Macdonald
|
Telephone:
|
(604)
648-1670
|
Facsimile:
|
(604)
681-4760
|
If to
Pubco:
Principle
Security International, Inc.
Unit B –
2015 Burrard Street
Vancouver,
British Columbia, V6J 3H4
Telephone:
|
(604) 924-8000 |
Facsimile:
|
(604) 677-5900 |
25
With a
copy (which will not constitute notice) to:
Sichenzia
Ross Friedman Ference LLP
61
Broadway, 32nd Floor
New
York, NY 10006
Attention:
Andrea Cataneo
|
|
Telephone:
212-930-9700
|
|
Facsimile:
212-930-9725
|
All such
notices and other communications will be deemed to have been
received:
(a)
|
in
the case of personal delivery, on the date of such
delivery;
|
(b)
|
in
the case of a fax, when the party sending such fax has received electronic
confirmation of its delivery;
|
(c)
|
in
the case of delivery by internationally-recognized express courier, on the
business day following dispatch;
and
|
(d)
|
in
the case of mailing, on the fifth business day following
mailing.
|
10.7.
|
Headings. The
headings contained in this Agreement are for convenience purposes only and
will not affect in any way the meaning or interpretation of this
Agreement.
|
10.8.
|
Benefits. This
Agreement is and will only be construed as for the benefit of or
enforceable by those persons party to this
Agreement.
|
10.9.
|
Assignment.
This Agreement may not be assigned (except by operation of law) by any
party without the consent of the other
parties.
|
10.10.
|
Governing Law.
This Agreement will be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be
performed therein.
|
10.11.
|
Construction.
The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rule of
strict construction will be applied against any
party.
|
10.12.
|
Gender. All
references to any party will be read with such changes in number and
gender as the context or reference
requires.
|
10.13.
|
Business Days.
If the last or appointed day for the taking of any action required or the
expiration of any rights granted herein shall be a Saturday, Sunday or a
legal holiday in the Province of British Columbia, then such action may be
taken or right may be exercised on the next succeeding day which is not a
Saturday, Sunday or such a legal
holiday.
|
10.14.
|
Counterparts.
This Agreement may be executed in one or more counterparts, all of which
will be considered one and the same agreement and will become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
|
10.15.
|
Fax Execution.
This Agreement may be executed by delivery of executed signature pages by
fax and such fax execution will be effective for all
purposes.
|
10.16.
|
Schedules and
Exhibits. The schedules and exhibits are attached to this Agreement
and incorporated herein.
|
26
IN
WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
PRINCIPLE
SECURITY INTERNATIONAL, INC.
/s/
Stanley Chapman
By: Stanley Chapman, Director
THE
LEEWARD GROUP INC.
/s/
Kevin Coughlin
By: Kevin Coughlin, President
27
SCHEDULE
1
TO THE
SHARE EXCHANGE AGREEMENT
AMONG
PRINCIPLE SECURITY INTERNATIONAL, INC., THE LEEWARD GROUP INC. AND THE SELLING
SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
THE
SELLING SHAREHOLDERS
Name
|
Address
|
Number
of Priveco Shares held before Closing
|
Total
Number of Pubco Shares to be issued by Pubco on Closing
|
Kevin
M. Coughlin
|
111
N. Central Ave.
Hartsdale,
NY 10530
|
5,303,001
|
28,473,072
|
William
F. Cleave
|
65
S. Main Street
Pennington,
NJ 08534
|
5,303,001
|
28,473,072
|
Digital
Application Corp.
|
769
S.W. 104th
St. Ste 2
Miami,
FL 33156
|
1,500,000
|
8,053,856
|
Total
shares:
|
12,106,002
|
65,000,000
|
28
SCHEDULE
2
TO THE
SHARE EXCHANGE AGREEMENT
AMONG
PRINCIPLE SECURITY INTERNATIONAL, INC., THE LEEWARD GROUP INC. AND THE SELLING
SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
CERTIFICATE
OF U.S. SHAREHOLDER
In
connection with the issuance of common stock (the “Pubco Shares”) of PRINCIPLE
SECURITY INTERNATIONAL, INC., a Nevada corporation (“Pubco”), to the
undersigned, pursuant to that certain Share Exchange Agreement dated May____,
2010. (the “Agreement”), among Pubco, THE LEEWARD GROUP INC., a Delaware
corporation (“Priveco”) and the shareholders of Priveco as set out in the
Agreement (each, a “Selling Shareholder”), the undersigned Selling Shareholder
hereby agrees, acknowledges, represents and warrants that:
1. the
undersigned satisfies one or more of the categories of "Accredited Investors",
as defined by Regulation D promulgated under the United States Securities Act of
1933, as amended (the “U.S. 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
"bank" as defined under Section (3)(a)(2) of the 1933 Act or savings
and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act acting in its individual or
fiduciary capacity; a broker dealer registered pursuant to Section 15
of the Securities
Exchange Act of 1934 (United States); an insurance company as
defined in Section 2(13) of the 1933 Act; an investment company
registered under the Investment Company Act of
1940 (United States) or a business development company as defined
in Section 2(a)(48) of such Act; a Small Business Investment Company
licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act
of 1958 (United States); a plan with total assets in excess of
$5,000,000 established and maintained by a state, a political subdivision
thereof, or an agency or instrumentality of a state or a political
subdivision thereof, for the benefit of its employees; an employee benefit
plan within the meaning of the Employee Retirement Income
Security Act of 1974 (United States) whose investment decisions are
made by a plan fiduciary, as defined in Section 3(21) of such Act,
which is either a bank, savings and loan association, insurance company or
registered investment adviser, or if the employee benefit plan has total
assets in excess of $5,000,000,
or, if a self-directed plan, whose investment decisions are made solely by
persons that are accredited
investors.
|
29
Category
5
|
A
private business development company as defined in Section 202(a)(22)
of the Investment
Advisers Act of 1940 (United
States).
|
Category
6
|
A
director or executive officer of the
Company.
|
Category
7
|
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
1933 Act.
|
Category
8
|
An
entity in which all of the equity owners satisfy the requirements of one
or more of the foregoing
categories.
|
Note that
for any of the Selling Shareholders claiming to satisfy one of the above
categories of Accredited Investor may be required to supply the Company with a
balance sheet, prior years' federal income tax returns or other appropriate
documentation to verify and substantiate the Subscriber's status as an
Accredited Investor.
If the
Selling Shareholder is an entity which initialled Category 8 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:
__________________________________________________________________________________
2. none
of the Pubco Shares have been or will be registered under the U.S. 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 U.S.
Securities Act and in compliance with any applicable state and foreign
securities laws;
3. the
Selling Shareholder understands and agrees that offers and sales of any of the
Pubco Shares shall be made only in compliance with the registration provisions
of the U.S. Securities Act or an exemption therefrom and in each case only in
accordance with applicable state and foreign securities laws;
4. the
Selling Shareholder understands and agrees not to engage in any hedging
transactions involving any of the Pubco Shares unless such transactions are in
compliance with the provisions of the U.S. Securities Act and in each case only
in accordance with applicable state and provincial securities laws;
5. the
Selling Shareholder is acquiring the Pubco 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 Pubco Shares in the United
States or to U.S. Persons;
6. Pubco
has not undertaken, and will have no obligation, to register any of the Pubco
Shares under the U.S. Securities Act;
7. Pubco
is entitled to rely on the acknowledgements, agreements, representations and
warranties and the statements and answers of the Selling Shareholder contained
in the Agreement and this Certificate, and the Selling Shareholder will hold
harmless Pubco from any loss or damage either one may suffer as a result of any
such acknowledgements, agreements, representations and/or warranties made by the
Selling Shareholder not being true and correct;
30
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
Pubco Shares and, with respect to applicable resale restrictions, is solely
responsible (and Pubco 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 Pubco in connection with the
acquisition of the Pubco Shares under the Agreement, and to obtain additional
information, to the extent possessed or obtainable by Pubco without unreasonable
effort or expense;
10. the
books and records of Pubco 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 Pubco
Shares under the Agreement have been made available for inspection by the
undersigned, the undersigned’s attorney and/or advisor(s);
11. 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 Pubco
Shares;
|
(b)
|
the
undersigned is acquiring the Pubco 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
Pubco 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 Pubco 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 Pubco Shares;
and
|
(d)
|
the
acquisition of the Pubco 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 Pubco in the International
Jurisdiction; and
|
the
undersigned will, if requested by Pubco, deliver to Pubco a certificate or
opinion of local counsel from the International Jurisdiction which will confirm
the matters referred to in Sections 11(c) and 11(d) above to the satisfaction of
Pubco, acting reasonably;
12. the
undersigned (i) is able to fend for itself in connection with the acquisition of
the Pubco 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 Pubco Shares; and (iii) has the ability to bear the economic risks of its
prospective investment and can afford the complete loss of such
investment;
13. the
undersigned is not aware of any advertisement of any of the Pubco Shares and is
not acquiring the Pubco 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;
31
14. no
person has made to the undersigned any written or oral
representations:
(a)
|
that
any person will resell or repurchase any of the Pubco
Shares;
|
(b)
|
that
any person will refund the purchase price of any of the Pubco
Shares;
|
(c)
|
as
to the future price or value of any of the Pubco Shares;
or
|
(d)
|
that
any of the Pubco 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 Pubco Shares on any stock exchange or
automated dealer quotation system, except that currently certain market
makers make market in the common shares of Pubco on the OTC Bulletin
Board;
|
15. none
of the Pubco Shares are listed on any stock exchange or automated dealer
quotation system and no representation has been made to the undersigned that any
of the Pubco 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 Pubco on the OTC Bulletin Board;
16. the
undersigned is acquiring the Pubco 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 Pubco
Shares;
17. neither
the SEC nor any other securities commission or similar regulatory authority has
reviewed or passed on the merits of the Pubco Shares;
18. the
undersigned acknowledges and agrees that Pubco shall refuse to register any
transfer of Pubco Shares not made in accordance with the provisions of
Regulation S, pursuant to registration under the U.S. Securities Act, or
pursuant to an available exemption from registration under the U.S. Securities
Act;
19. the
undersigned understands and agrees that the Pubco Shares 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. 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.”
20. the
address of the undersigned included herein is the sole address of the
undersigned as of the date of this certificate.
32
IN
WITNESS WHEREOF, I have executed this Certificate of U.S.
Shareholder.
Date:
,
2010.
Signature
Print
Name
Title (if
applicable)
Address
33
SCHEDULE
3
TO THE
SHARE EXCHANGE AGREEMENT
AMONG
PRINCIPLE SECURITY INTERNATIONAL, INC., THE LEEWARD GROUP INC. AND THE SELLING
SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
NATIONAL
INSTRUMENT 45-106 INVESTOR QUESTIONNAIRE
The
purpose of this Questionnaire is to assure Pubco that the Selling Shareholders
will meet certain requirements for the registration and prospectus exemptions
provided for under National Instrument 45-106 (“NI 45-106”), as adopted by
certain Provincial Securities Commissions in respect to the issuance of the
Pubco Shares pursuant to the Transaction. Pubco will rely on the information
contained in this Questionnaire for the purposes of such
determination.
The
undersigned Selling Shareholder covenants, represents and warrants to Pubco
that:
1.
|
the
Selling Shareholder is (check one or more of the following
boxes):
|
(a)
|
a
director, executive officer, employee or control person of Pubco or an
affiliate of Pubco
|
[
]
|
|||
(b)
|
a
spouse, parent, grandparent, brother, sister or child of a director,
executive officer or control person of Pubco or an affiliate of
Pubco
|
[
]
|
|||
(c)
|
a
parent, grandparent, brother, sister or child of the spouse of a director,
executive officer or control person of Pubco or an affiliate of
Pubco
|
[
]
|
|||
(d)
|
a
close personal friend of a director, executive officer or control person
of Pubco or an affiliate of Pubco
|
[
]
|
|||
(e)
|
a
close business associate of a director, executive officer or control
person of Pubco or an affiliate of Pubco
|
[
]
|
|||
(f)
|
a
founder of Pubco or a spouse, parent, grandparent, brother, sister, child,
close personal friend or close business associate of a founder of
Pubco
|
[
]
|
|||
(g)
|
a
parent, grandparent, brother, sister or child of the spouse of a founder
of Pubco
|
[
]
|
|||
(h)
|
a
company, partnership or other entity which a majority of the voting
securities are beneficially owned by, or a majority of the directors are,
persons or companies as described in paragraphs (a) to (g)
above
|
[
]
|
|||
(i)
|
purchasing
the Pubco Shares as principal with an aggregate value of more than
CDN$150,000
|
[
]
|
|||
(j)
|
an
accredited investor
|
[
]
|
|||
2.
|
if
the Selling Shareholder has checked one or more of boxes b, c, d, e, f, g
or h in section 1 above, the director(s), executive officer(s), control
person(s) or founder(s) of Pubco with whom the Selling Shareholder has the
relationship is:
|
(Instructions
to Selling Shareholder: fill in the name of each director, executive officer,
founder and control person which you have the above-mentioned relationship with.
If you have checked box h, also indicate which of a to g describes the
securityholders or directors which qualify you as box h and provide the names of
those individuals. Please attach a separate page if necessary).
34
3.
|
If
the Subscriber has ticked box j in section 1 above, the Selling
Shareholder acknowledges and agrees that Pubco shall not consider the
Selling Shareholder’s request for Pubco Shares for acceptance unless the
undersigned provides to Pubco:
|
(i)
|
the
information required in sections 4 and 5;
and
|
(ii)
|
such
other supporting documentation that Pubco or its legal counsel may request
to establish the Selling Shareholder’s qualification as an Accredited
Investor;
|
4.
|
the
Selling Shareholder has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of
the Transaction and the Selling Shareholder is able to bear the economic
risk of loss arising from such
Transaction;
|
5.
|
the
Selling Shareholder satisfies one or more of the categories of “accredited
investor” (as that term is defined in NI 45-106) indicated below (please
check the appropriate box):
|
o
|
an
individual who, either alone or with a spouse, beneficially owns, directly
or indirectly, financial assets (as defined in NI 45-106) having an
aggregate realizable value that, before taxes, but net of any related
liabilities, exceeds CDN$1,000,000;
|
o
|
an
individual whose net income before taxes exceeded CDN$200,000 in each of
the two most recent calendar years or whose net income before taxes
combined with that of a spouse exceeded CDN$300,000 in each of those years
and who, in either case, reasonably expects to exceed that net income
level in the current calendar year;
|
|
|
o
|
an
individual who, either alone or with a spouse, has net assets of at least
CDN$5,000,000;
|
o
|
an
entity, other than an individual or investment fund, that has net assets
of at least CDN$5,000,000 as shown on its most recently prepared financial
statements;
|
o
|
an
entity registered under the securities legislation of a jurisdiction of
Canada as an advisor 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), or any entity organized in a foreign
jurisdiction that is analogous to any such person or entity;
or
|
o
|
an
entity 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 or companies that are accredited
investors.
|
35
The
Selling Shareholder acknowledges and agrees that the Selling Shareholder may be
required by Pubco to provide such additional documentation as may be reasonably
required by Pubco and its legal counsel in determining the Selling Shareholder’s
eligibility to acquire the Pubco Shares under relevant securities
legislation.
IN
WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the ____
day of ,
2010.
____________________________________
|
Date:_____________________,
2010.
|
Signature
____________________________________
Print
Name
____________________________________
Title (if
applicable)
____________________________________
Address
____________________________________
36
SCHEDULE
4
TO THE
SHARE EXCHANGE AGREEMENT
AMONG
PRINCIPLE SECURITY INTERNATIONAL, INC., THE LEEWARD GROUP INC. AND THE SELLING
SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
DIRECTORS
AND OFFICERS OF PRIVECO
Directors:
|
||
Kevin
M. Coughlin
William
F. Cleave
|
Chairman
Director
|
|
Officers:
|
||
Kevin M. Coughlin | President & CEO | |
Kevin M. Coughlin | Treasurer | |
William F. Cleave | Vice President & COO | |
William F. Cleave | Secretary |
37
SCHEDULE
5
TO THE
SHARE EXCHANGE AGREEMENT
AMONG
PRINCIPLE SECURITY INTERNATIONAL, INC.., THE LEEWARD GROUP INC. AND THE SELLING
SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
DIRECTORS
AND OFFICERS OF PUBCO
Directors:
|
|
Charles
Payne
Stanley
Chapman
|
|
Officers:
|
|
Name
|
Office
|
Charles
Payne
|
President,
Chief Executive Officer, Chief Financial Officer and
Treasurer
|
38
SCHEDULE
6
TO THE
SHARE EXCHANGE AGREEMENT
AMONG
PRINCIPLE SECURITY INTERNATIONAL, INC., THE LEEWARD GROUP INC. AND THE SELLING
SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
PRIVECO
LEASES, SUBLEASES, CLAIMS, CAPITAL EXPENDITURES,
TAXES
AND OTHER PROPERTY INTERESTS
1.
|
651
Orchard Street New Bedford MA 02744
|
a.
|
$1,342.00
|
b.
|
5
Year Lease
|
c.
|
Expires
12/31/2015
|
2.
|
414
County Street New Bedford MA 02740
|
a.
|
$2,650.00
|
b.
|
3
Year Lease
|
c.
|
Expires
7/31/2010
|
3.
|
111
N. Central Ave., Ste 350 Hartsdale NY
10530
|
a.
|
$650.00
|
b.
|
1
Year Lease
|
c.
|
Expires
3/31/2011
|
4.
|
65
S. Main Street, Ste A 300 Pennington NJ
08534
|
a.
|
$850.00
|
b.
|
1
Year Lease
|
c.
|
Expires
10/31/2010
|
5.
|
1935
Elmwood Ave., Warwick RI 02888
|
a.
|
$1750.00
|
b.
|
1
Year Lease
|
c.
|
Expires
1/31/2011
|
6.
|
4
Courthouse Lane, Ste 6, Chelmsford
MA
|
a.
|
$500.00
|
b.
|
Monthly
|
c.
|
2
Month Notice
|
7.
|
Great
American Lease Phones
|
a.
|
$358.90
|
b.
|
10
Year Lease
|
c.
|
Expires
3/31/2011
|
8.
|
Manifest
Funding Sign
|
a.
|
$235.72
|
b.
|
5
Year Lease
|
c.
|
Expires
8/31/2012
|
39
SCHEDULE
7
TO THE
SHARE EXCHANGE AGREEMENT
AMONG
PRINCIPLE SECURITY INTERNATIONAL, INC., THE LEEWARD GROUP INC. AND THE SELLING
SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
PRIVECO
INTELLECTUAL PROPERTY
None
40
SCHEDULE
8
TO THE
SHARE EXCHANGE AGREEMENT
AMONG
PRINCIPLE SECURITY INTERNATIONAL, INC., THE LEEWARD GROUP INC. AND THE SELLING
SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
PRIVECO
MATERIAL CONTRACTS
|
|
1.
|
Asset
Purchase Agreement Flagship Insurance and
Sangamon
|
2.
|
Asset
Purchase Agreement Brady Rogers and Leeward
Group
|
3.
|
Asset
Purchase Agreement Waughtal DP Ins and Leeward
Group
|
41
SCHEDULE
9
TO THE
SHARE EXCHANGE AGREEMENT
AMONG
PRINCIPLE SECURITY INTERNATIONAL, INC., THE LEEWARD GROUP INC. AND THE SELLING
SHAREHOLDERS AS SET OUT IN THE SHARE EXCHANGE AGREEMENT
PRIVECO
EMPLOYMENT AGREEMENTS AND ARRANGEMENTS
None
42