LETTER OF INTENT
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Parties:
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HL Ventures
Inc., a Nevada corporation (“HL”), and Urban Barns Foods Inc., an Alberta
corporation (“Urban Barns”), wish to enter into this binding letter of
intent (the “LOI”) which will provide for the basic structure of a share
exchange and reverse merger between the parties (the “Share
Exchange”).
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It
is the intention of the parties to enter into a long form agreement governing
the Share Exchange by August 15, 2009.
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Structure:
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The parties
shall complete the Share Exchange in accordance with the terms of this LOI
as applicable to the respective companies.
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Consideration:
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Pursuant to
the Share Exchange, all outstanding common shares of Urban Barns shall be
exchanged for common shares of HL so that at the closing of the Share
Exchange (the “Share Exchange Closing”) the shareholders of Urban Barns
shall hold 25,000,000 common shares of HL.
All related
party debts owed by HL shall be cancelled upon the Share Exchange
Closing.
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Conditions
Precedent:
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Prior to the
Share Exchange Closing:
· HL shall
change its name to Urban Barns Foods Inc. or another name acceptable to
both parties.
· HL shall
complete a forward split of its common stock on a 7 for 1
basis.
· HL shall
appoint Xxxxx Xxxxxxxxxxx and Xxx Xxxxxxxxx to its board of
directors.
· Urban Barns
shall obtain approval for the Share Exchange from each of its shareholders
and its board of directors.
· HL shall
obtain all required approval for the Share Exchange from its shareholders
and board of directors.
· HL shall have
no liabilities.
· Urban Barns
shall have provided HL with audited financial statements for such periods
as required by the Securities and Exchange Commission.
· Both parties
will have conducted due diligence on each other and the results of such
due diligence will be satisfactory to both parties.
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Details
of Closing:
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Upon the
Share Exchange Closing:
· Current
shareholders of Urban Barns shall be issued 25,000,000 shares of the
common stock of HL in exchange for all of the issued and outstanding
common shares of Urban Barns’ stock.
· Xxxxx Xxxxxx
and Xxxxxx Xxx shall resign as directors of HL;
· Xxxxx Xxxxxx
shall resign from all officer positions with HL and Urban Barns shall
appoint individuals to fill any officer vacancies.
· Xxxxx Xxxxxx
shall cancel 20,500,000 post split shares of HL’s common stock held in his
name.
· Urban Barns
shall become a fully owned subsidiary of HL.
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Termination
Events:
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This LOI and
any Share Exchange agreement entered into on the basis of this LOI will
have provisions for termination, and the rescission of any actions
undertaken in order to fulfill the obligations of this LOI or a subsequent
agreement, upon the occurrence of any one of the following
events:
· By mutual
consent and such consent will not be unreasonably withheld;
or
· By either
party if either party is not satisfied with the results of due diligence
undertaken in good faith.
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Independent
Legal
Advice:
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Each party
acknowledges that it has had the opportunity to obtain its own independent
legal and tax advice with respect to the terms of this LOI prior to
execution of this LOI and further acknowledges that it fully understands
this LOI. Urban Barns and the Urban Barns Shareholders
acknowledge that counsel for HL does not represent the interests of Urban
Barns or its shareholders.
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Representations
and Warranties
Of
HL:
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HL represents
and warrants to Urban Barns that:
1. HL is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Nevada and has the requisite corporate power and
authority to own, lease and to carry on its business as now being
conducted. HL is duly qualified to do business and is in good
standing as a foreign corporation in each of the jurisdictions in which HL
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 HL taken as a whole.
2. To the best
knowledge of HL, there is no basis for and there is no action, suit,
judgment, claim, demand or proceeding outstanding or pending, or
threatened against or affecting HL or which involves any of the business,
or the properties or assets of HL that, if adversely resolved or
determined, would have a material adverse effect on the business,
operations, assets, properties, prospects, or conditions of HL taken as a
whole (a “HL 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 HL Material
Adverse Effect.
3. HL has all
requisite corporate power and authority to execute and deliver this LOI
and any other document contemplated by this LOI (collectively, the “HL
Documents”) to be signed by HL and to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The
execution and delivery of each of the HL Documents by HL and the
consummation by HL 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 HL is necessary to authorize such documents or
to consummate the transactions contemplated hereby. This LOI
has been, and the other HL Documents when executed and delivered by HL as
contemplated by this LOI will be, duly executed and delivered by HL and
this LOI is, and the other HL Documents when executed and delivered by HL,
as contemplated hereby will be, valid and binding obligations of HL
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. The HL common
shares to be issued upon the Share Exchange Closing will, upon issuance,
have been duly and validly authorized and, when so issued in accordance
with the terms of this LOI, will be duly and validly issued, fully paid
and non-assessable.
5. No
representation or warranty by HL in this LOI nor any certificate,
schedule, statement, document or instrument furnished or to be furnished
to Urban Barns 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.
6. HL currently
has no more than 6,200,000 shares of common stock outstanding and no
outstanding derivative securities and no issued or outstanding preferred
shares. HL shall have no more than 43,400,000 post split shares
of common stock issued and outstanding immediately prior to the Share
Exchange Closing.
7. Compliance
a) To the best
knowledge of HL, HL 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 HL;
b) To the best
knowledge of HL, HL 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 HL Material Adverse
Effect;
c) HL has duly
filed all reports and returns required to be filed by it with governmental
authorities and has obtained all governmental permits and other
governmental consents, except as may be required after the execution of
this LOI. All of such permits and consents are in full force
and effect, and no proceedings for the suspension or cancellation of any
of them, and no investigation relating to any of them, is pending or to
the best knowledge of HL, threatened, and none of them will be adversely
affected by the consummation of the Share Exchange; and
d) HL has
operated in material compliance with all laws, rules, statutes,
ordinances, orders and regulations applicable to its
business. HL has not received any notice of any violation
thereof, nor is HL aware of any valid basis therefore.
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Representations
and Warranties of Urban Barns:
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Urban Barns
represents and warrants to HL that:
1. Urban Barns
is a corporation duly organized, validly existing and in good standing
under the laws of the Province of Alberta and has the requisite corporate
power and authority to own, lease and to carry on its business as now
being conducted. Urban Barns is duly qualified to do business
and is in good standing as a foreign corporation in each of the
jurisdictions in which Urban Barns 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 Urban
Barns taken as a whole.
2. To the best
knowledge of Urban Barns, there is no basis for and there is no action,
suit, judgment, claim, demand or proceeding outstanding or pending, or
threatened against or affecting Urban Barns or which involves any of the
business, or the properties or assets of Urban Barns that, if adversely
resolved or determined, would have a material adverse effect on the
business, operations, assets, properties, prospects, or conditions of
Urban Barns taken as a whole (an “Urban Barns 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 an Urban Barns Material Adverse
Effect.
3. Urban Barns
has all requisite corporate power and authority to execute and deliver
this LOI and any other document contemplated by this LOI (collectively,
the “Urban Barns Documents”) to be signed by Urban Barns and to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of each of the Urban Barns
Documents by Urban Barns and the consummation by Urban Barns 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
Urban Barns is necessary to authorize such documents or to consummate the
transactions contemplated hereby. This LOI has been, and the
other Urban Barns Documents when executed and delivered by Urban Barns as
contemplated by this LOI will be, duly executed and delivered by Urban
Barns and this LOI is, and the other Urban Barns Documents when executed
and delivered by Urban Barns, as contemplated hereby will be, valid and
binding obligations of Urban Barns 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. No
representation or warranty by Urban Barns in this LOI nor any certificate,
schedule, statement, document or instrument furnished or to be furnished
to HL 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. Neither the
execution, delivery and performance of this LOI, nor the consummation of
the Share Exchange, will 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 Urban Barns
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 Urban
Barns or any of its subsidiaries, or any of their respective material
property or assets.
6. Urban
Barns acknowledges that any HL securities issued in this Share Exchange
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 of 1933, or pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act of 1933 and in each case only in accordance with all
applicable securities laws.
7. Compliance
a) To the best
knowledge of Urban Barns, Urban Barns 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 Urban
Barns;
b) To the best
knowledge of Urban Barns, Urban Barns 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 Urban Barns Material
Adverse Effect;
c) Urban Barns
has duly filed all reports and returns required to be filed by it with
governmental authorities and has obtained all governmental permits and
other governmental consents, except as may be required after the execution
of this LOI. All of such permits and consents are in full force
and effect, and no proceedings for the suspension or cancellation of any
of them, and no investigation relating to any of them, is pending or to
the best knowledge of Urban Barns, threatened, and none of them will be
adversely affected by the consummation of the Share Exchange;
and
d) Urban Barns
has operated in material compliance with all laws, rules, statutes,
ordinances, orders and regulations applicable to its
business. Urban Barns has not received any notice of any
violation thereof, nor is Urban Barns aware of any valid basis
therefore.
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Mutual
Covenants:
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1. The
representations and warranties of both parties set forth in this LOI will
be true, correct and complete in all respects as of the Share Exchange
Closing, as though made on and as of the Share Exchange
Closing.
2. All
information regarding the business of Urban Barns including, without
limitation, financial information that Urban Barns provides to HL during
HL’s due diligence investigation of Urban Barns will be kept in strict
confidence by HL and will not be used (except in connection with due
diligence), dealt with, exploited or commercialized by HL or disclosed to
any third party (other than HL’s professional accounting and legal
advisors) without the prior written consent of Urban Barns. If
the Share Exchange contemplated by this LOI does not proceed for any
reason, then upon receipt of a written request from Urban Xxxxx, XX will
immediately return to Urban Barns (or as directed by Urban Barns) any
information received regarding Urban Barns’ business. Likewise,
all information regarding the business of HL including, without
limitation, financial information that HL provides to Urban Barns during
its due diligence investigation of HL will be kept in strict confidence by
Urban Barns and will not be used (except in connection with due
diligence), dealt with, exploited or commercialized by Urban Barns or
disclosed to any third party (other than Urban Barns’ professional
accounting and legal advisors) without HL’s prior written
consent. If the Share Exchange contemplated by this LOI does
not proceed for any reason, then upon receipt of a written request from
HL, Urban Barns will immediately return to HL (or as directed by HL) any
information received regarding HL’s business.
3. Between the
date of this LOI and the Share Exchange Closing, each of the parties to
this LOI 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
LOI, if it becomes aware of the occurrence after the date of this LOI 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. 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 LOI or of the occurrence of any event that may
make the satisfaction of such conditions impossible or
unlikely.
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Jurisdiction
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The parties
agree to attorn to the non-exclusive jurisdiction of the Province of
Alberta regarding this LOI.
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Accepted on: July
22, 2009
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Per:
/s/
Xxxxx Xxxxxx
Xxxxx
Xxxxxx
CEO
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Urban
Barns Foods Inc.
Per:
/s/
Xxxxx Xxxxxxxxxxx
Xxxxx
Xxxxxxxxxxx
Authorized
Representative
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