Attached files
Exhibit 10.1
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made effective as of the 22nd day of June, 2012
AMONG:
VERIFY SMART CORP. a Nevada corporation, with its principal offices at
564 Wedge Lane, Fernley, Nevada 89408
("VERIFY")
AND:
UKABOBS LLC DBA IMOBILE INTERACTIVE, a New Jersey Limited Liability
Company , with its principal offices at 16 South Avenue West, Suite
168, Cranford, New Jersey 07016
("UKABOBS")
AND:
THE UNDERSIGNED SELLING MEMBERS OF UKABOBS AS LISTED ON SCHEDULE 1
ATTACHED HERETO
(the "SELLING MEMBERS")
WHEREAS:
A. The Selling Members/ are the legal and beneficial owners of 100% of all
membership interests in and to Ukabobs (the "UKABOBS MEMBERSHIP INTEREST");
B. Verify has agreed to pay the Purchase Price, as defined herein, and to
issue 8,800,000 common shares in the capital stock of Verify (the "VERIFY
SHARES") as of the Closing Date, as defined herein, to the Selling Members
as consideration for the purchase by Verify of the Ukabobs Membership
Interest held by the Selling Members; and
C. Upon the terms and subject to the conditions set forth in this Agreement,
the Selling Members have agreed to sell the Ukabobs Membership Interest to
Verify in exchange for issuance of the Verify Shares and payment of the
Purchase Price and the Royalty, as defined herein.
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. DEFINITIONS
1.1. Definitions. The following terms have the following meanings, unless the
context indicates otherwise:
(a) "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;
(b) "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;
(c) "Closing Date" shall mean August 31, 2012, or such earlier or later
date mutually agreed upon by the parties hereto in writing and in
accordance with Section 11.6 following the satisfaction or waiver by
Verify and Ukabobs of the conditions precedent set out in Sections 5.1
and 5.2 respectively;
(d) "Closing Documents" shall mean the papers, instruments and documents
required to be executed and delivered at the Closing pursuant to this
Agreement;
(e) "Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended;
(f) "Gross Revenue" means all non-refundable revenues actually received
from operations by Verify, net of any witholding or other foreign
remittance taxes, but shall exclude revenues received from investment
or financing activities (as those terms are defined by GAAP), and
shall exclude any foreign revenues that are frozen or unremittable to
Verify until such foreign revenues are remitted.
(g) "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;
(h) "Ukabobs Membership Interest" shall mean 100% of all right, title and
interest in and to Ukabobs, including but not limited to the limited
liability company membership interest in Ukabobs beneficially held,
either directly or indirectly, by the Selling Members, being 100% of
all membership interests in Ukabobs, and including all management
rights in and to Ukabobs;
(i) "Purchase Price" shall mean $300,000.
(j) "Verify Shares" shall mean 8,800,000 fully paid and non-assessable
common shares of Verify, to be issued to the Selling Members by Verify
on the Closing Date;
(k) "SEC" shall mean the Securities and Exchange Commission;
(l) "Securities Act" shall mean the United States Securities Act of 1933,
as amended;
(m) "Taxes" shall include international, federal, state, provincial and
local income taxes, capital gains tax, value-added taxes, franchise,
personal property and real property taxes, levies, assessments,
tariffs, duties (including any customs duty), business license or
other fees, sales, use and any other taxes relating to the assets of
the designated party or the business of the designated party for all
periods up to and including the Closing Date, together with any
related charge or amount, including interest, fines, penalties and
additions to tax, if any, arising out of tax assessments; and
(n) "Transaction" shall mean the purchase of the Ukabobs Membership
Interest by Verify from the Selling Members in consideration for the
issuance of the Verify Shares and the payment of the Purchase Price.
1.2. Schedules. The following schedules are attached to and form part of this
Agreement:
Schedule 1 - Selling Members
Schedule 1A - Selling Member Execution Page
Schedule 2 - Certificate of Non-U.S. Member
Schedule 3 - Certificate of U.S. member (Accredited)
Schedule 3A - Certificate of U.S. member (Non-Accredited)
Schedule 4 - Directors and Officers of Ukabobs LLC
Schedule 5 - Ukabobs LLC Leases, Subleases, Claims, Capital Expenditures,
Taxes and Other Property Interests
2
Schedule 6 - Ukabobs LLC Intellectual Property
Schedule 7 - Ukabobs LLC Material Contracts
Schedule 8 - Ukabobs LLC Employment Agreements and Arrangements
1.3 Currency. All references to currency referred to in this Agreement are in
United States Dollars (US$), unless expressly stated otherwise.
2. THE OFFER, PURCHASE AND SALE OF SHARES
2.1. Offer, Purchase and Sale of Shares. Subject to the terms and conditions of
this Agreement, the Selling Members hereby covenant and agree to sell,
assign and transfer to Verify, and Verify hereby covenants and agrees to
purchase from the Selling Members the Ukabobs Membership Interest held by
the Selling Members.
2.2. Cash Consideration. As partial consideration for the sale of the Ukabobs
Membership Interest by the Selling Members to Verify, Verify shall pay to
the Selling Members, in the amount set out opposite each Selling Members'
name in Schedule 1, on the basis of $3,000 for each 1% of the Ukabobs
Membership Interest held by each Selling Member. The aggregate Purchase
Price shall be payable as follows:
(a) $100,000 within 5 business days following the Closing Date; and
(b) $200,000 payable within 12 months following the Closing Date; the
whole in accordance with Schedule 1.
Any portion of the Purchase Price that is in arrears shall bear interest at
a variable rate equal to the prime rate publicly announced by the Bank of
America from time to time as its prime rate plus one (1) percent. Interest
shall commence accruing on the date that relevant portion of the Purchase
Price becomes in arrears and shall be computed on the basis of a 365-day
year and the actual number of days elapsed.
2.3. Share Consideration. As partial consideration for the sale of the Ukabobs
Membership Interest by the Selling Members to Verify, Verify shall allot
and issue the Verify Shares to the Selling Members in the amount set out
opposite each Selling Members' name in Schedule 1 on the basis of 88,000
Verify Shares for each 1% of the Ukabobs Membership Interest held by each
Selling Member. The Selling Members acknowledge and agree that the Verify
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 Members agree to abide by all applicable resale
restrictions and hold periods imposed by all applicable securities
legislation. All certificates representing the Verify Shares issued on
Closing will be endorsed with one of the following legend pursuant to the
Securities Act in order to reflect the fact that the Verify Shares will be
issued to the Selling Members pursuant to an exemption from the
registration requirements of the Securities Act:
For Selling Members not resident in the United States:
"THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE
TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN)
PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT").
NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE
1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY
NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS
DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS
OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION
3
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."
For Selling Members resident in the United States:
"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."
2.4. Membership Interest Transfer Procedure. Each Selling Member may transfer
his, her or its portion of the Ukabobs Membership Interest by delivering to
Verify a duly executed and notarized instrument of transfer in a form
acceptable to Verify, together with any certificate evidencing the
applicable portion of the Ukabobs Membership Interest, as applicable, and
any additional documents required under New Jersey law, including
appropriate instructions to allow the registration of the Ukabobs
Membership Interest in the name of Verify, together with:
(a) if the Selling Member is not resident in the United States, a
Certificate of Non-U.S. Shareholder (the "Regulation S Certificate"),
a copy of which is set out in Schedule 2;
(b) if the Selling Member is an Accredited Investor and resident in the
United States, a Certificate of U.S. Shareholder (the "Rule 506
Certificate"), a copy of which is set out in Schedule 3; and
(c) if the Selling Member is a non-Accredited Investor and resident in the
United States, a Certificate of Non-Accredited Investor, a copy of
which is set out in Schedule 3A.
2.5. Fractional Shares. Notwithstanding any other provision of this Agreement,
no certificate for fractional shares of the Verify Shares will be issued in
the Transaction. In lieu of any such fractional shares, if any of the
Selling Members would otherwise be entitled to receive a fraction of a
share of the Verify Shares upon surrender of certificates representing the
Ukabobs Membership Interest for exchange pursuant to this Agreement, the
Selling Members will be entitled to have such fraction rounded up to the
nearest whole number of Verify Shares and will receive from Verify a stock
certificate representing same.
2.6. Closing Date. The Closing will take place, subject to the terms and
conditions of this Agreement, on the Closing Date.
2.7. Restricted Shares. The Selling Members acknowledge that the Verify 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.
4
3. REPRESENTATIONS AND WARRANTIES OF UKABOBS
As of the Closing, Ukabobs and the Selling Members, jointly and severally,
represent and warrant to Verify, and acknowledge that Verify 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 Verify, as follows:
3.1. Organization and Good Standing. Ukabobs is a limited liability company duly
organized, validly existing and in good standing under the laws of New
Jersey and has the requisite corporate power and authority to own, lease
and to carry on its business as now being conducted. Ukabobs is duly
qualified to do business and is in good standing as a foreign corporation
in each of the jurisdictions in which Ukabobs 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 Ukabobs taken as a whole.
3.2. Authority. Ukabobs has all requisite corporate power and authority to
execute and deliver this Agreement and any other document contemplated by
this Agreement (collectively, the "Ukabobs Documents") to be signed by
Ukabobs and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of each of the
Ukabobs Documents by Ukabobs and the consummation of the transactions
contemplated hereby have been duly authorized by Ukabobs's in accordance
with its constating documents. No other corporate or member proceeding on
the part of Ukabobs is necessary to authorize such documents or to
consummate the transactions contemplated hereby. This Agreement has been,
and the other Ukabobs Documents when executed and delivered by Ukabobs as
contemplated by this Agreement will be, duly executed and delivered by
Ukabobs and this Agreement is, and the other Ukabobs Documents when
executed and delivered by Ukabobs as contemplated hereby will be, valid and
binding obligations of Ukabobs 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.
3.3. Capitalization of Ukabobs. The entire right and title, and management and
ownership interest in and to Ukabobs consists of the Ukabobs Membership
Interest described in Schedule 1 hereto. Each portion of the Ukabobs
Membership Interest has been duly authorized, validly issued, is not issued
in violation of any pre-emptive rights and is fully paid and
non-assessable, is not subject to pre-emptive rights and was issued in full
compliance with the laws of the State of New Jersey and with the Ukabobs's
Certificate of Formation and Operating Agreement. There are no outstanding
options, warrants, subscriptions, conversion rights, or other rights,
agreements, or commitments obligating Ukabobs to issue any additional
membership, management, or ownership interest in Ukabobs, or any other
securities convertible into, exchangeable for, or evidencing the right to
subscribe for or acquire from Ukabobs any Ukabobs Membership Interest.
There are no agreements purporting to restrict the transfer of the Ukabobs
Membership Interest, no voting agreements, member agreements, voting
trusts, or other arrangements restricting or affecting the voting of the
Ukabobs Membership Interest.
3.4. Ownership of Ukabobs Membership Interest. As of the Closing Date, Schedule
1 contains a true and complete list of membership in Ukabobs, including
each member's name, address and percentage of the Ukabobs Membership
Interest held by each member.
3.5. Directors and Officers of Ukabobs. The duly elected or appointed directors
and the duly appointed officers of Ukabobs are as set out in Schedule 4.
3.6. Corporate Records of Ukabobs. The corporate records of Ukabobs, 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
Ukabobs is, in all material respects, correct and contains all records
required by all applicable laws, as applicable, in regards to all
5
proceedings, consents, actions and meetings of the members, managing
members and the board of directors of Ukabobs.
3.7. 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 Ukabobs 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 Ukabobs or
any of its subsidiaries, or any of their respective material property
or assets; or
(b) violate any provision of the Certificate of Formation or any other
constating documents of Ukabobs, any of its subsidiaries or any
applicable laws.
3.8. Actions and Proceedings. To the best knowledge of Ukabobs, there is no
basis for and there is no action, suit, judgment, claim, demand or
proceeding outstanding or pending, or threatened against Ukabobs or which
involves any of the business, or the properties or assets of Ukabobs that,
if adversely resolved or determined, would have a material adverse effect
on the business, operations, assets, properties, known prospects, or
conditions of Ukabobs taken as a whole (a "Ukabobs Material Adverse
Effect"). To the knowledge of Ukabobs, 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 Ukabobs Material Adverse Effect.
3.9. Compliance.
(a) To the best knowledge of Ukabobs, Ukabobs 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 Ukabobs;
(b) To the best knowledge of Ukabobs, Ukabobs 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
Ukabobs Material Adverse Effect; and
(c) To the Bbest knowledge of Ukabobs, Ukabobs has operated in material
compliance with all laws, rules, statutes, ordinances, orders and
regulations applicable to its business. Ukabobs has not received any
notice of any violation thereof, nor is Ukabobs aware of any valid
basis therefore.
3.10.Financial Representations. The books, records and accounts of Ukabobs
(collectively the "UKABOBS BOOKS AND RECORDS") for the period ended May 31,
2012 (the "UKABOBS ACCOUNTING DATE"), a true and complete set of which has
been provided to Verify, together with the audited financial statements of
Ukabobs for the periods ended December 31, 2010 and December 31, 2011, and
the unaudited financial statements for the interim period ended March 31,
2012 (collectively the "UKABOBS FINANCIAL STATEMENTS"), copies of which
shall be provided to Verify as a condition of Closing, fairly and correctly
set out and disclose, in all material respects, in accordance with
Generally Accepted Accounting Principles, the financial position of
Ukabobs, and all material financial transactions, assets, and Liabilities
of Ukabobs have been accurately recorded in Ukabobs Books and Records.
Ukabobs has not received any advice or notification from its independent
certified public accountants that Ukabobs has used any improper accounting
practice that would have the effect of not reflecting or incorrectly
reflecting in the Ukabobs Books and Records, any properties, assets,
Liabilities, revenues, or expenses. The Ukabob Financial Statements:
(a) are in accordance with the books and records of Ukabob;
6
(b) present fairly the financial condition of Ukabob as of the respective
dates indicated and the results of operations for such periods; and
(c) have been prepared in accordance with GAAP.
3.11.Absence of Undisclosed Liabilities. To the best knowledge of Ukabobs,
Ukabobs does not have any material Liabilities or obligations either direct
or indirect, matured or unmatured, absolute, contingent or otherwise that
exceed $5,000, which:
(a) are not set forth in the Ukabobs Books and Records 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 Verify; 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 Ukabobs
Books and Records.
3.12. Tax Matters.
(a) As of the date hereof:
(i) Ukabobs 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 Ukabobs, and
(ii) all such returns are true and correct in all material respects;
(b) Ukabobs 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 Ukabobs Material Adverse Effect;
(c) Ukabobs 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;
(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 Ukabobs, the Ukabobs Books and Records
contain full provision for all Taxes including any deferred Taxes that
may be assessed to Ukabobs for the accounting period ended on the
Ukabobs 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 Ukabobs Accounting Date or for any profit earned by
Ukabobs on or prior to the Ukabobs Accounting Date or for which
Ukabobs is accountable up to such date and all contingent Liabilities
for Taxes have been provided for or disclosed in the Ukabobs Books and
Records.
3.13.Absence of Changes. Since the Ukabobs Accounting Date, Ukabobs 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
7
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 except for ordinary course business transactions consistent
with past practice;
(c) created, incurred, assumed or guaranteed any indebtedness for money
borrowed, or mortgaged, pledged or subjected any of the material
assets or properties of Ukabobs or its subsidiaries 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) to the best of its knowledge, suffered any damage, destruction or
loss, whether or not covered by insurance, that materially and
adversely effects its business, operations, assets, properties or
known prospects;
(g) to the best of its knowledge, 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.
3.14.Absence of Certain Changes or Events. Since the Ukabobs Accounting Date,
there has not been:
(a) a Ukabobs Material Adverse Effect; or
(b) any material change by Ukabobs in its accounting methods, principles
or practices.
3.15.Subsidiaries. Ukabobs does not have any subsidiaries or agreements of any
nature to acquire any subsidiary or to acquire or lease any other business
operations.
3.16.Personal Property. Ukabobs possesses, and has good and marketable title of
all property necessary for the continued operation of the business of
Ukabobs as presently conducted and as represented to Verify. All such
property is used in the business of Ukabobs. 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.
8
All material equipment, furniture, fixtures and other tangible personal
property and assets owned or leased by Ukabobs is owned by Ukabobs free and
clear of all liens, security interests, charges, encumbrances, and other
adverse claims, except as disclosed in Schedule 5.
3.17. Intellectual Property
(a) Intellectual Property Assets. Ukabobs owns or holds an interest in all
intellectual property assets necessary for the operation of the
business of Ukabobs as it is currently conducted (collectively, the
"INTELLECTUAL PROPERTY ASSETS"), including:
(i) all functional business names, trading names, registered and
unregistered trademarks, service marks, and applications
(collectively, the "MARKS");
(ii) all patents, patent applications, design patents, design patent
applications, and designs, inventions, methods, processes and
discoveries that may be patentable (collectively, the "PATENTS");
(iii)all copyrights in both published works and unpublished works
(collectively, the "COPYRIGHTS"); and
(iv) all know-how, trade secrets, confidential information, customer
lists, software, technical information, data, process technology,
plans, drawings, and blue prints owned, used, or licensed by
Ukabobs as licensee or licensor (collectively, the "TRADE
SECRETS").
(b) Agreements. Schedule 6 contains a complete and accurate list and
summary description, including any royalties paid or received by
Ukabobs, of all contracts and agreements relating to the Intellectual
Property Assets to which Ukabobs is a party or by which Ukabobs 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 Ukabobs is the licensee. To
the best knowledge of Ukabobs, 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 6, Ukabobs is the owner of all right, title,
and interest in and to each of the Intellectual Property Assets, free
and clear of all liens, security interests, charges, encumbrances, and
other adverse claims, and has the right to use without payment to a
third party of all the Intellectual Property Assets. Except as set
forth in Schedule 6, all former and current employees and contractors
of Ukabobs have executed written contracts, agreements or other
undertakings with Ukabobs that assign all rights to any inventions,
improvements, discoveries, or information relating to the business of
Ukabobs. No employee, director, officer or member of Ukabobs owns
directly or indirectly in whole or in part, any Intellectual Property
Asset which Ukabobs is presently using or which is necessary for the
conduct of its business. To the best knowledge of Ukabobs, no employee
or contractor of Ukabobs 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 Ukabobs.
(d) Patents. Schedule 6 contains a complete and accurate list and summary
description of all Patents. Except as set out in Schedule 6, Ukabobs
does not hold any right, title or interest in and to any Patent and
Ukabobs has not filed any patent application with any third party. To
the best knowledge of Ukabobs, none of the products manufactured and
sold, nor any process or know-how used, by Ukabobs infringes or is
alleged to infringe any patent or other proprietary night of any other
person or entity.
(e) Trademarks. Schedule 6 contains a complete and accurate list and
summary description of all Marks. Except as set out in Schedule 6,
Ukabobs does not hold any right, title or interest in and to any Mark
and Ukabobs has not registered or filed any application to register
any Mark with any third party. To the best knowledge of Ukabobs, none
9
of the Marks, if any, used by Ukabobs infringes or is alleged to
infringe any trade name, trademark, or service mark of any third
party.
(f) Copyrights. Schedule 6 contains a complete and accurate list and
summary description of all Copyrights. Except as set out in Schedule
6, Ukabobs 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 Ukabobs,
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.
(g) Trade Secrets. Schedule 6 contains a complete and accurate list and
summary description of all Trade Secrets. Ukabobs has taken all
reasonable precautions to protect the secrecy, confidentiality, and
value of its Trade Secrets. Ukabobs 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 Ukabobs,
have not been used, divulged, or appropriated either for the benefit
of any person or entity or to the detriment of Ukabobs. No Trade
Secret is subject to any adverse claim or has been challenged or
threatened in any way.
3.18.Employees and Consultants. All employees and consultants of Ukabobs have
been paid all salaries, wages, income and any other sum due and owing to
them by Ukabobs, as at the end of the most recent completed pay period.
Ukabobs is not aware of any labor conflict with any employees that might
reasonably be expected to have a Ukabobs Material Adverse Effect. To the
best knowledge of Ukabobs, no employee of Ukabobs 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 Ukabobs or any other nature of the business conducted
or to be conducted by Ukabobs.
3.19.Real Property. Ukabobs does not own any real property. Each of the leases,
subleases, claims or other real property interests (collectively, the
"LEASES") to which Ukabobs is a party or is bound, as set out in Schedule
5, 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
Ukabobs 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.
Ukabobs has not assigned, transferred, conveyed, mortgaged, deeded in
trust, or encumbered any interest in the Leases or the leasehold property
pursuant thereto.
3.20.Material Contracts and Transactions. Schedule 7 attached hereto lists each
material contract, agreement, license, permit, arrangement, commitment,
instrument or contract to which Ukabobs 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 Ukabobs 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
Ukabobs. 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.
3.21.Certain Transactions. Ukabobs is not a guarantor or indemnitor of any
indebtedness of any third party, including any person, firm or corporation.
3.22.No Brokers. Ukabobs 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.
10
3.23.Completeness of Disclosure. No representation or warranty by Ukabobs in
this Agreement nor any certificate, schedule, statement, document or
instrument furnished or to be furnished to Verify pursuant hereto contains
or will contain any untrue statement of a material fact or omits or will
omit to state a material fact required to be stated herein or therein or
necessary to make any statement herein or therein not materially
misleading.
4. REPRESENTATIONS AND WARRANTIES OF VERIFY
As of the Closing, Verify represents and warrants to Ukabobs and the Selling
Members and acknowledges that Ukabobs and the Selling Members 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 Ukabobs or the Selling Members, as follows:
4.1. Organization and Good Standing. Verify 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. Verify 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 Verify.
4.2. Authority. Verify has all requisite corporate power and authority to
execute and deliver this Agreement and any other document contemplated by
this Agreement (collectively, the "VERIFY DOCUMENTS") to be signed by
Verify and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of each of the
Verify Documents by Verify and the consummation by Verify 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
Verify is necessary to authorize such documents or to consummate the
transactions contemplated hereby. This Agreement has been, and the other
Verify Documents when executed and delivered by Verify as contemplated by
this Agreement will be, duly executed and delivered by Verify and this
Agreement is, and the other Verify Documents when executed and delivered by
Verify, as contemplated hereby will be, valid and binding obligations of
Verify 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 Verify. The entire authorized capital stock and other
equity securities of Verify consists of 240,000,000 shares of common stock
with a par value of $0.001 (the "VERIFY COMMON STOCK") and no preferred
stock. As of the date of this Agreement, there are 52,785,500 shares of
Verify Common Stock issued and outstanding, not including the 8,800,000
Verify Shares to be issued to the Selling Members herein. All of the issued
and outstanding shares of Verify 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 Verify to issue any
additional shares of Verify Common Stock, or any other securities
convertible into, exchangeable for, or evidencing the right to subscribe
for or acquire from Verify any shares of Verify Common Stock as of the date
of this Agreement. There are no agreements purporting to restrict the
transfer of the Verify Common Stock, no voting agreements, voting trusts,
or other arrangements restricting or affecting the voting of the Verify
Common Stock.
4.4. Non-Contravention. Neither the execution, delivery and performance of this
Agreement, nor the consummation of the Transaction, will:
11
(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 Verify 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 Verify or any of its
material property or assets;
(b) violate any provision of the applicable incorporation or charter
documents of Verify; or
(c) violate any order, writ, injunction, decree, statute, rule, or
regulation of any court or governmental or regulatory authority
applicable to Verify or any of its material property or assets.
4.5. Validity of Verify Common Stock Issuable upon the Transaction. The Verify
Shares to be issued to the Selling Partners/owners 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.
4.6. Actions and Proceedings. To the best knowledge of Verify, 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 Verify,
threatened against Verify which involves any of the business, or the
properties or assets of Verify that, if adversely resolved or determined,
would have a material adverse effect on the business, operations, assets,
properties, prospects or conditions of Verify taken as a whole (a "VERIFY
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 Verify Material Adverse Effect.
4.7. Compliance.
(a) To the best knowledge of Verify, Verify 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 Verify;
(b) To the best knowledge of Verify, Verify 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
Verify Material Adverse Effect;
(c) Verify has operated in material compliance with all laws, rules,
statutes, ordinances, orders and regulations applicable to its
business. Verify has not received any notice of any violation thereof,
nor is Verify aware of any valid basis therefore.
4.8. 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 Verify 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.
4.9. SEC Filings. Verify has furnished or made available to Ukabobs and the
Selling Members a true and complete copy of each report, schedule,
registration statement and proxy statement filed by Verify with the SEC
(collectively, and as such documents have since the time of their filing
been amended, the "Verify SEC Documents"). As of their respective dates,
the Verify 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
Verify SEC Documents. The Verify SEC Documents constitute all of the
documents and reports that Verify was required to file with the SEC
pursuant to the Exchange Act and the rules and regulations promulgated
thereunder by the SEC.
12
4.10.Financial Representations. The books, records and accounts of Verify
(collectively the "VERIFY BOOKS AND RECORDS") for the period ended May 31,
2012 (the "VERIFY ACCOUNTING DATE"), a true and complete set of which has
been provided to Verify, together with the audited financial statements of
Verify for the periods ended June 30, 2010 and June 30, 2011, and the
unaudited financial statements for the interim period ended March 31, 2012
(collectively, the "VERIFY FINANCIAL STATEMENTS"), copies of which shall be
provided to Ukabobs as a condition of Closing, fairly and correctly set out
and disclose, in all material respects, in accordance with Generally
Accepted Accounting Principles, the financial position of Verify, and all
material financial transactions, assets, and Liabilities of Verify have
been accurately recorded in the Verify Books and Records. The Verify
Financial Statements:
(a) are in accordance with the books and records of Verify;
(b) present fairly the financial condition of Verify as of the respective
dates indicated and the results of operations for such periods; and
(c) have been prepared in accordance with GAAP.
Verify has not received any advice or notification from its independent
certified public accountants that Verify has used any improper accounting
practice that would have the effect of not reflecting or incorrectly
reflecting in the Verify Financial Statements or the books and records of
Verify, any properties, assets, Liabilities, revenues, or expenses. The
books, records, and accounts of Verify accurately and fairly reflect, in
reasonable detail, the assets, and Liabilities of Verify. Verify has not
engaged in any transaction, maintained any bank account, or used any funds
of Verify, except for transactions, bank accounts, and funds which have
been and are reflected in the normally maintained books and records of
Verify.
4.11.Absence of Undisclosed Liabilities. Verify 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 Verify 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 Ukabobs; 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 Verify
Financial Statements.
4.12. Tax Matters.
(a) As of the date hereof:
(i) Verify 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) Verify has paid all Taxes that have become or are due with respect to
any period ended on or prior to the date hereof;
(c) Verify 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
13
(e) To the best knowledge of Verify, the Verify Financial Statements
contain full provision for all Taxes including any deferred Taxes that
may be assessed to Verify for the accounting period ended on the
Verify 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 Verify Accounting Date or for any profit earned by Verify
on or prior to the Verify Accounting Date or for which Verify is
accountable up to such date and all contingent Liabilities for Taxes
have been provided for or disclosed in the Verify Financial
Statements.
4.13.Absence of Changes. Since the Verify Accounting Date, except as disclosed
in the Public SEC Documents and except as contemplated in this Agreement,
Verify 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 Verify 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
14
(l) agreed, whether in writing or orally, to do any of the foregoing.
4.14.Absence of Certain Changes or Events. Since the Verify Accounting Date,
except as and to the extent disclosed in the Verify SEC Documents, there
has not been:
(a) a Verify Material Adverse Effect; or
(b) any material change by Verify in its accounting methods, principles or
practices.
4.15.Subsidiaries. Verify 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 Verify SEC Documents.
4.16.Personal Property. There are no material equipment, furniture, fixtures
and other tangible personal property and assets owned or leased by Verify,
except as disclosed in the Verify SEC Documents.
4.17.Employees and Consultants. Verify does not have any employees or
consultants, except as disclosed in the Verify SEC Documents.
4.18.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 Verify is a party except as disclosed in writing to
Ukabobs or as disclosed in the Verify SEC Documents.
4.19.No Brokers. Verify 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.
4.20.Application of Takeover Protections. Verify 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 Verify'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 Verify as a result of the transactions
under this Agreement or the exercise of any rights pursuant to this
Agreement.
4.21.No SEC or Financial Industry Regulatory Authority Inquiries. Neither the
Verify 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.
Verify currently do not have any outstanding comment letters or other
correspondences from the SEC or FINRA.
4.22.No Liabilities. Upon Closing, except as otherwise described in the Verify
Financial Statements, Verify shall have no direct, indirect or contingent
Liabilities outstanding that exceed $1,000.
4.23.Completeness of Disclosure. No representation or warranty by Verify in
this Agreement nor any certificate, schedule, statement, document or
instrument furnished or to be furnished to Ukabobs 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 Verify. The obligation of Verify 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 11.6. 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 Verify and may be waived by Verify in its sole discretion.
15
(a) Representations and Warranties. The representations and warranties of
Ukabobs and the Selling Members set forth in this Agreement will be
true, correct and complete in all material respects as of the Closing
Date, as though made on and as of the Closing Date.
(b) Performance. All of the covenants and obligations that Ukabobs and the
Selling Members 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 Ukabobs Documents, the
Ukabobs Financial Statements and all other documents necessary or
reasonably required to consummate the Transaction, all in form and
substance reasonably satisfactory to Verify, will have been executed
and delivered to Verify.
(d) Third Party Consents. Verify will have received duly executed copies
of all third party consents and approvals contemplated by this
Agreement, in form and substance reasonably satisfactory to Verify.
(e) Past Employment Agreements. Verify will have received from Ukabobs
copies of all agreements or arrangements that evidence the employment
of all of the hourly and salaried employees of Ukabobs as set out on
Schedule 8 attached hereto, which, if any, constitute all of the
employees reasonably necessary to operate the business of Ukabobs
substantially as presently operated.
(f) No Material Adverse Change. No Ukabobs Material Adverse Effect will
have occurred since the date of this Agreement.
(g) Outstanding Ukabobs Membership Interest. Ukabobs will not have granted
any additional right or title, including but not limited to any
management interest or ownership interest of any kind other than the
Ukabobs Membership Interest outstanding as of the date of this
Agreement as set out in Schedule 1 hereto.
(h) Delivery of Ukabobs Books and Records and Financial Statements.
Ukabobs will have delivered to Verify the Ukabobs Books and Records
and the Ukabobs Financial Statements.
(i) Due Diligence Review of Ukabobs Books and Records and Financial
Statements. Verify and its accountants will be reasonably satisfied
with their due diligence investigation and review of the Ukabobs Books
and Records and the Ukabobs Financial Statements.
(j) Due Diligence Generally. Verify and its solicitors will be reasonably
satisfied with their due diligence investigation of Ukabobs 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 Ukabobs and the Selling Members which are reasonably
germane to the Transaction;
(ii) a physical inspection of the assets of Ukabobs by Verify or its
representatives; and
(iii) title to the material assets of Ukabobs.
(k) Compliance with Securities Laws. Verify will have received evidence
satisfactory to Verify that the Verify 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 Regulation S; and
In order to establish the availability of the safe harbor from the
registration requirements of the Securities Act for the issuance of Verify
Shares to each Selling Member, Ukabobs will deliver to Verify on Closing, a
16
Regulation S Certificate or Rule 506 Certificate, as applicable, and a
Questionnaire duly executed by each Selling Member.
(l) Employment Agreements. Paul R. DiMarco and Mitesh Patel will have
entered into employment agreements with Verify in a form acceptable to
Verify.
(m) Licensed Rights. The Saas Agreement between Smashlife Team Sports, LLC
and Imobile Interactive dated April 16, 2012 shall be effectively
terminated by Ukabobs in accordance with the terms thereof, and there
shall be no third party licensees of any rights in or to the Ukabobs
Intellectual Property.
5.2 Conditions Precedent to Closing by Ukabobs. The obligation of Ukabobs and
the Selling Members 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 11.6. 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 Ukabobs and the Selling Members and may be waived by Ukabobs and
the Selling Members in their discretion.
(a) Representations and Warranties. The representations and warranties of
Verify set forth in this Agreement will be true, correct and complete
in all material respects as of the Closing Date, as though made on and
as of the Closing Date.
(b) Performance. All of the covenants and obligations that Verify 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. Verify must have delivered each of the documents
required to be delivered by it pursuant to this Agreement.
(c) Transaction Documents. This Agreement, the Verify Documents and all
other documents necessary or reasonably required to consummate the
Transaction, all in form and substance reasonably satisfactory to
Ukabobs, will have been executed and delivered by Verify.
(d) 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.
(e) Due Diligence Generally. Ukabobs will be reasonably satisfied with
their due diligence investigation of Verify that is reasonable and
customary in a transaction of a similar nature to that contemplated by
the Transaction.
(f) Appointments. Verify will have made the following appointments of
officers and director with effect subject only to the Closing:
(i) Paul DiMarco to be appointed as Director of Verify; and
(ii) Mitesh Patel to be appointed as Chief Technical Officer of
Verify.
6. EMPLOYMENT AGREEMENTS. Paul R. DiMarco and Mitesh Patel will enter into
employment agreements with Verify in a form acceptable to Mr. DiMarco and Mr.
Patel, respectively.
7. ADDITIONAL COVENANTS OF THE PARTIES
7.1. Notification of Financial Liabilities. Ukabobs will immediately notify
Verify in accordance with Section 10.6 hereof, if Ukabobs receives any
advice or notification from its independent certified public accounts that
Ukabobs has used any improper accounting practice that would have the
17
effect of not reflecting or incorrectly reflecting in the books, records,
and accounts of Ukabobs, 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.
7.2. Access and Investigation. Between the date of this Agreement and the
Closing Date, Ukabobs, on the one hand, and Verify, 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.
7.3. Confidentiality. All information regarding the business of Ukabobs
including, without limitation, financial information that Ukabobs provides
to Verify during Verify's due diligence investigation of Ukabobs will be
kept in strict confidence by Verify and will not be used (except in
connection with due diligence), dealt with, exploited or commercialized by
Verify or disclosed to any third party (other than Verify's professional
accounting and legal advisors) without the prior written consent of
Ukabobs. If the Transaction contemplated by this Agreement does not proceed
for any reason, then upon receipt of a written request from Ukabobs, Verify
will immediately return to Ukabobs (or as directed by Ukabobs) any
information received regarding Ukabobs's business. Likewise, all
information regarding the business of Verify including, without limitation,
financial information that Verify provides to Ukabobs during its due
diligence investigation of Verify will be kept in strict confidence by
Ukabobs and will not be used (except in connection with due diligence),
dealt with, exploited or commercialized by Ukabobs or disclosed to any
third party (other than Ukabobs's professional accounting and legal
advisors) without Verify'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 Verify, Ukabobs will immediately return
to Verify (or as directed by Verify) any information received regarding
Verify's business.
7.4. 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.
7.5. Exclusivity. Until such time, if any, as this Agreement is terminated
pursuant to this Agreement, Ukabobs and Verify 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 Ukabobs or Verify, as applicable,
18
or any merger, consolidation, business combination, or similar transaction
other than as contemplated by this Agreement.
7.6. Conduct of Ukabobs and Verify Business Prior to Closing. From the date of
this Agreement to the Closing Date, and except to the extent that Verify
otherwise consents in writing, Ukabobs 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 Ukabobs otherwise consents in writing, Verify 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.
7.7. Certain Acts Prohibited - Ukabobs. 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, Ukabobs will not, without the
prior written consent of Verify:
(a) alter itsCertificate of Formation or other constating 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 Ukabobs except in the ordinary course of business;
(c) dispose of or contract to dispose of any Ukabobs 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 portion of the Ukabobs Membership Interests, or any rights,
warrants or options to acquire, any such Membership Interest;
(e) not:
(i) declare, set aside or pay any dividends on, or make any other
distributions in respect of the Ukabobs Membership Interest, or
(ii) split, combine or reclassify the Ukabobs Membership Interest or
issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for any portion of the
Ukabobs Membership Interest; or
(f) not materially increase benefits or compensation expenses of Ukabobs,
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.
7.8. Public Announcements. Verify and Ukabobs 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.
8. CLOSING
8.1. Closing. The Closing shall take place on the Closing Date at the offices of
the lawyers for Verify 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 Ukabobs and Verify, provided such
undertakings are satisfactory to each party's respective legal counsel.
19
8.2. Closing Deliveries of Ukabobs and the Selling Members. At Closing, Ukabobs
and the Selling Members will deliver or cause to be delivered the
following, fully executed and in the form and substance reasonably
satisfactory to Verify:
(a) copies of all resolutions and/or consent actions adopted by or on
behalf of the managing members or the Selling Members of Ukabobs, as
required by the constating documents of Ukabobs, evidencing approval
of this Agreement and the Transaction;
(b) if any of the Selling Members/owners 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 Members, a valid and binding power
of attorney or equivalent from such Selling Member;
(c) documents representing the ownership of the Ukabobs Membership
Interest 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) the Ukabobs Documents, the Ukabobs Books and Records and any other
necessary documents, each duly executed by Ukabobs, as required to
give effect to the Transaction;
8.3. Closing Deliveries of Verify. At Closing, Verify will deliver or cause to
be delivered the following, fully executed and in the form and substance
reasonably satisfactory to Ukabobs:
(a) copies of all resolutions and/or consent actions adopted by or on
behalf of the board of directors of Verify evidencing approval of this
Agreement and the Transaction;
(b) all certificates and other documents required by Section 5.2 of this
Agreement;
(c) the Verify Documents and any other necessary documents, each duly
executed by Verify, as required to give effect to the Transaction; and
8.4. Additional Closing Delivery of Verify. At Closing, Verify will deliver or
cause to be delivered the share certificates representing the Verify
Shares.
9. TERMINATION.
9.1. Termination. This Agreement may be terminated at any time prior to the
Closing Date contemplated hereby by:
(a) mutual agreement of Verify and Ukabobs;
(b) Verify, if there has been a material breach by Ukabobs or any of the
Selling Members of any material representation, warranty, covenant or
agreement set forth in this Agreement on the part of Ukabobs or the
Selling Members that is not cured, to the reasonable satisfaction of
Verify, within ten business days after notice of such breach is given
by Verify (except that no cure period will be provided for a breach by
Ukabobs or the Selling Members that by its nature cannot be cured);
(c) by election of either party, if the Closing is not achieved by the
Closing Date, provided that neither party may elect termination
pursuant this section 5.1(c) if the failure to achieve Closing
resulted solely from the electing party's failure to satisfy its
closing deliveries in accordance with section 4 hereunder.
20
(d) Ukabobs, if there has been a material breach by Verify of any material
representation, warranty, covenant or agreement set forth in this
Agreement on the part of Verify that is not cured by the breaching
party, to the reasonable satisfaction of Ukabobs, within ten business
days after notice of such breach is given by Ukabobs (except that no
cure period will be provided for a breach by Verify that by its nature
cannot be cured); or
(e) Verify or Ukabobs 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.
9.2. Effect of Termination. In the event of the termination of this Agreement as
provided in Section 9.1, this Agreement will be of no further force or
effect, provided, however, that section 7.3 (Confidentiality) and section
11 (Miscellaneous Provisions) of this Agreement shall survive termination
of this Agreement, and no termination of this Agreement will relieve any
party of liability for any breaches of this Agreement failure to perform
any obligations that occurred prior to the date of termination.
10. INDEMNIFICATION, REMEDIES, SURVIVAL
10.1.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 Verify or Ukabobs
including damages for lost profits or lost business opportunities.
10.2.Agreement of Ukabobs to Indemnify. Ukabobs will indemnify, defend, and
hold harmless, to the full extent of the law, Verify and its Members from,
against, and in respect of any and all Losses asserted against, relating
to, imposed upon, or incurred by Verify and its members by reason of,
resulting from, based upon or arising out of:
(a) the material breach by Ukabobs of any representation or warranty of
Ukabobs contained in or made pursuant to this Agreement, any Ukabobs
Document or any certificate or other instrument delivered pursuant to
this Agreement; or
(b) the material breach or material partial breach by Ukabobs of any
covenant or agreement of Ukabobs made in or pursuant to this
Agreement, any Ukabobs Document or any certificate or other instrument
delivered pursuant to this Agreement.
10.3.Agreement of the Selling Members to Indemnify. The Selling Members will
indemnify, defend, and hold harmless, to the full extent of the law, Verify
and its members from, against, and in respect of any and all Losses
asserted against, relating to, imposed upon, or incurred by Verify and its
members by reason of, resulting from, based upon or arising out of:
(a) any material breach by the Selling Members of Section 2.2 of this
Agreement; or
(b) any misstatement, misrepresentation or breach of the representations
and warranties made by the Selling Members contained in or made
pursuant to the Regulation S Certificate, Rule 506 Certificate or the
Questionnaire executed by each Selling Member as part of the share
exchange procedure detailed in Section 2.3 of this Agreement.
10.4.Agreement of Verify to Indemnify. Verify will indemnify, defend, and hold
harmless, to the full extent of the law, Ukabobs and the Selling Members
from, against, for, and in respect of any and all Losses asserted against,
relating to, imposed upon, or incurred by Ukabobs and the Selling Members
by reason of, resulting from, based upon or arising out of:
(a) the breach by Verify of any representation or warranty of Verify
contained in or made pursuant to this Agreement, any Verify Document
or any certificate or other instrument delivered pursuant to this
Agreement; or
21
(b) the breach or partial breach by Verify of any covenant or agreement of
Verify made in or pursuant to this Agreement, any Verify Document or
any certificate or other instrument delivered pursuant to this
Agreement.
11. MISCELLANEOUS PROVISIONS
11.1.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.
11.2.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.
11.3.Amendment. This Agreement may not be amended except by an instrument in
writing signed by each of the parties.
11.4.Expenses. Verify 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 Verify and Ukabobs will bear
its respective legal costs incurred in connection with the preparation,
execution and performance of this Agreement and the Transaction
contemplated hereby. Notwithstanding the foregoing, in the event that the
Closing does not occur, each of the parties will be responsible for all
costs (including, but not limited to, financial advisory, accounting, legal
and other professional or consulting fees and expenses) incurred by it in
connection with the transactions hereby contemplated.
11.5.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.
11.6.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 Ukabobs or any of the Selling Members:
VERIFY SMART CORP.
564 Wedge Lane.
Fernley, Nevada 89408
Attention:
Fax:
E-mail:
22
To Ukabobs at:
UKABOBS
16 South Avenue West, Suite 168
Cranford, New Jersey 07016
Attention:
Fax:
E-mail:
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.
11.7.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.
11.8.Benefits. This Agreement is and will only be construed as for the benefit
of or enforceable by those persons party to this Agreement.
11.9.Assignment. This Agreement may not be assigned (except by operation of
law) by any party without the consent of the other parties.
11.10. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Nevada applicable to contracts
made and to be performed therein.
11.11. 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.
11.12. Gender. All references to any party will be read with such changes in
number and gender as the context or reference requires.
11.13. 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 State of Nevada, 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.
11.14. 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.
11.15. 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.
11.16. Schedules and Exhibits. The schedules and exhibits are attached to this
Agreement and incorporated herein.
[SIGNATURE PAGE FOLLOWS]
23
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
VERIFY SMART CORP.
Per: /s/ Tony Cinotti
---------------------------------
Tony Cinotti
Its: Director and Authorized Signatory
UKABOBS LLC
Per: /s/ Mitesh Patel
---------------------------------
Mitesh Patel
Its: Member and Authorized Signatory
Per: /s/ Paul DiMarco
---------------------------------
Paul DiMarco
Its: Member and Authorized Signatory
24
SCHEDULE 1
TO THE SHARE PURCHASE AGREEMENT
AMONG VERIFY SMART CORP., UKABOBS LLC AND THE SELLING MEMBERS
AS SET OUT IN THE SHARE PURCHASE AGREEMENT
THE SELLING MEMBERS
Percentage of Percentage of
$100,000 $200,000 Total Number
Purchase Price Purchase Price of Verify
Percentage of Payable Within Payable Within Shares to be
Ukabob 5 days following 12 months following issued by
Membership Execution of Closing of Verify on
Name Address Interest Held this Agreement this Agreement Closing
---- ------- ------------- -------------- -------------- -------
Paul DiMarco 467 Brookside Place, 43% 3,784,000
Cranford, NJ
Mitesh Patel 104 Camelot Ct., 43% 3,784,000
Princeton, NJ 08540
Richard S. Langford 5% 440,000
Michael McManus 4% 352,000
Jeffrey Zambel 2% 176,000
Steven R. Suchin 949 Ohio Avenue 2% 176,000
Midland, PA 15059
Sachinkumar Patel 17 Ducatel Cres. .50% 44,000
Ajax, ON,
L1T0B1, Canada
Siddharth Patel 9 Washburn Street, Apt #2 .50% 44,000
Jersey City, NJ 07306 ---- ---------
TOTAL: 100% 8,800,000
==== =========
25
SCHEDULE 1A
TO THE SHARE PURCHASE AGREEMENT
AMONG VERIFY SMART CORP., UKABOBS LLC AND THE SELLING MEMBERS
AS SET OUT IN THE SHARE PURCHASE AGREEMENT
ACKNOWLEDGED AND AGREED TO THIS _______ day of __________________, 2012, BY:
----------------------------------------------------------
(Name of Subscriber - Please type or print)
----------------------------------------------------------
(Signature and, if applicable, Office)
----------------------------------------------------------
(Address of Subscriber)
----------------------------------------------------------
(City, State or Province, Postal Code of Subscriber)
----------------------------------------------------------
(Country of Subscriber)
----------------------------------------------------------
(Telephone number of Subscriber)
----------------------------------------------------------
(Social Security/Insurance No. of Subscriber)
26
SCHEDULE 2
TO THE SHARE PURCHASE AGREEMENT
AMONG VERIFY SMART CORP., UKABOBS LLC AND THE SELLING MEMBERS
AS SET OUT IN THE SHARE PURCHASE AGREEMENT
CERTIFICATE OF NON-U.S. SHAREHOLDER
In connection with the issuance of common stock (the "Verify Shares") of Verify
Smart Corp., a Nevada corporation ("Verify"), to the undersigned, pursuant to
that certain Share Purchase Agreement dated April19 2012, (the "Agreement"),
among Verify, Ukabobs LLC, a New Jersey Limited LiabilityCompany ("Ukabobs") and
the members of Ukabobs as set out in the Agreement (each, a "Selling Member"),
the undersigned Selling Member hereby agrees, acknowledges, represents and
warrants that:
1. the undersigned is not a "U.S. Person" as such term is defined by Rule
902 of Regulation S under the United States Securities Act of 1933, as amended
("U.S. Securities Act") (the definition of which includes, but is not limited
to, an individual resident in the U.S. and an estate or trust of which any
executor or administrator or trust, respectively is a U.S. Person and any
partnership or corporation organized or incorporated under the laws of the
U.S.);
2. none of the Verify 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 Member understands and agrees that offers and sales of any
of the Verify Shares prior to the expiration of a period of one year after the
date of original issuance of the Verify Shares (the one year period hereinafter
referred to as the "Distribution Compliance Period") shall only be made in
compliance with the safe harbor provisions set forth in Regulation S, pursuant
to the registration provisions of the U.S. Securities Act or an exemption
therefrom, and that all offers and sales after the Distribution Compliance
Period shall be made only in compliance with the registration provisions of the
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 Member understands and agrees not to engage in any hedging
transactions involving any of the Verify 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 Member is acquiring the Verify 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 Verify Shares
in the United States or to U.S. Persons;
6. the Selling Member has not acquired the Verify Shares as a result of,
and will not itself engage in, any directed selling efforts (as defined in
Regulation S under the U.S. Securities Act) in the United States in respect of
the Verify Shares which would include any activities undertaken for the purpose
of, or that could reasonably be expected to have the effect of, conditioning the
market in the United States for the resale of any of the Verify Shares;
provided, however, that the Selling Members may sell or otherwise dispose of the
Verify Shares pursuant to registration thereof under the U.S. Securities Act and
any applicable state and provincial securities laws or under an exemption from
such registration requirements;
7. the statutory and regulatory basis for the exemption claimed for the
sale of the Verify Shares, although in technical compliance with Regulation S,
would not be available if the offering is part of a plan or scheme to evade the
registration provisions of the U.S. Securities Act or any applicable state and
provincial securities laws;
27
8. Verify has not undertaken, and will have no obligation, to register any
of the Verify Shares under the U.S. Securities Act;
9. Verify is entitled to rely on the acknowledgements, agreements,
representations and warranties and the statements and answers of the Selling
Member contained in the Agreement and this Certificate, and the Selling Member
will hold harmless Verify 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 Member not being true and correct;
10. 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 Verify Shares and, with respect to applicable resale restrictions, is solely
responsible (and Verify is not in any way responsible) for compliance with
applicable resale restrictions;
11. the undersigned and the undersigned's advisor(s) have had a reasonable
opportunity to ask questions of and receive answers from Verify in connection
with the acquisition of the Verify Shares under the Agreement, and to obtain
additional information, to the extent possessed or obtainable by Verify without
unreasonable effort or expense;
12. the books and records of Verify 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 Verify Shares under the Agreement have been made available for inspection by
the undersigned, the undersigned's attorney and/or advisor(s);
13. the undersigned:
(a) is knowledgeable of, or has been independently advised as to, the
applicable securities laws of the securities regulators having application in
the jurisdiction in which the undersigned is resident (the "International
Jurisdiction") which would apply to the acquisition of the Verify Shares;
(b) the undersigned is acquiring the Verify 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 Verify 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 Verify 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 Verify Shares; and
(d) the acquisition of the Verify 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 Verify in
the International Jurisdiction; and
the undersigned will, if requested by Verify, deliver to Verify a
certificate or opinion of local counsel from the International
Jurisdiction which will confirm the matters referred to in
Sections 13(c) and 13(d) above to the satisfaction of Verify,
acting reasonably;
14. the undersigned (i) is able to fend for itself in connection with the
acquisition of the Verify 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 Verify Shares; and (iii) has the ability to bear
the economic risks of its prospective investment and can afford the complete
loss of such investment;
28
15. the undersigned is not aware of any advertisement of any of the Verify
Shares and is not acquiring the Verify Shares as a result of any form of general
solicitation or general advertising including advertisements, articles, notices
or other communications published in any newspaper, magazine or similar media or
broadcast over radio or television, or any seminar or meeting whose attendees
have been invited by general solicitation or general advertising;
16. no person has made to the undersigned any written or oral
representations:
(a) that any person will resell or repurchase any of the Verify
Shares;
(b) that any person will refund the purchase price of any of the
Verify Shares;
(c) as to the future price or value of any of the Verify Shares; or
(d) that any of the Verify 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 Verify Shares on any stock
exchange or automated dealer quotation system, except that currently certain
market makers make market in the common shares of Verify on the OTC Bulletin
Board;
17. none of the Verify 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 Verify 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 Verify on the OTC Bulletin Board;
18. the undersigned is outside the United States when receiving and
executing this Agreement and is acquiring the Verify 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 Verify Shares;
19. neither the SEC nor any other securities commission or similar
regulatory authority has reviewed or passed on the merits of the Verify Shares;
20. the Verify Shares are not being acquired, directly or indirectly, for
the account or benefit of a U.S. Person or a person in the United States;
21. the undersigned acknowledges and agrees that Verify shall refuse to
register any transfer of Verify 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;
22. the undersigned understands and agrees that the Verify Shares will bear
the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE
TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN)
PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT").
NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE
1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY
NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS
DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS
OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER 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."
29
23. the address of the undersigned included herein is the sole address of
the undersigned as of the date of this certificate.
IN WITNESS WHEREOF, I have executed this Certificate of Non-U.S. Shareholder.
Date: , 2012
-------------------------
-------------------------------------------------
Signature
-------------------------------------------------
Print Name
-------------------------------------------------
Title (if applicable)
-------------------------------------------------
Address
-------------------------------------------------
30
SCHEDULE 3
TO THE SHARE PURCHASE AGREEMENT
AMONG VERIFY SMART CORP., UKABOBS LLC AND THE SELLING MEMBER
AS SET OUT IN THE SHARE PURCHASE AGREEMENT
CERTIFICATE OF ACCREDITED U.S. SHAREHOLDER
In connection with the issuance of common stock (the "Verify Shares") of Verify
Smart Corp., a Nevada corporation ("Verify"), to the undersigned, pursuant to
that certain Share Exchange Agreement dated ____, 2012. (the "Agreement"), among
Verify, Ukabobs LLC., a New Jersey Limited Liability Company ("Ukabobs") and the
members of Ukabobs as set out in the Agreement (each, a "Selling Member"), the
undersigned Selling Member 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.
31
_______ 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 Member 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 Member is an entity which initialed 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 Verify 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 Member understands and agrees that offers and sales of any
of the Verify 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 Member understands and agrees not to engage in any hedging
transactions involving any of the Verify 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 Member is acquiring the Verify 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 Verify Shares
in the United States or to U.S. Persons;
6. Verify has not undertaken, and will have no obligation, to register any
of the Verify Shares under the U.S. Securities Act;
7. Verify is entitled to rely on the acknowledgements, agreements,
representations and warranties and the statements and answers of the Selling
Member contained in the Agreement and this Certificate, and the Selling Member
will hold harmless Verify 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 Member not being true and correct;
32
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 Verify Shares and, with respect to applicable resale restrictions, is solely
responsible (and Verify 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 Verify in connection
with the acquisition of the Verify Shares under the Agreement, and to obtain
additional information, to the extent possessed or obtainable by Verify without
unreasonable effort or expense;
10. the books and records of Verify 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 Verify 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 Verify Shares;
(b) the undersigned is acquiring the Verify 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 Verify 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 Verify 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 Verify Shares; and
(d) the acquisition of the Verify 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 Verify in the
International ( Jurisdiction; and
the undersigned will, if requested by Verify, deliver to Verify 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 Verify, acting
reasonably;
12. the undersigned (i) is able to fend for itself in connection with the
acquisition of the Verify 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 Verify 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 Verify
Shares and is not acquiring the Verify 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;
33
14. no person has made to the undersigned any written or oral
representations:
(a) that any person will resell or repurchase any of the Verify Shares;
(b) that any person will refund the purchase price of any of the Verify
Shares;
(c) as to the future price or value of any of the Verify Shares; or
(d) that any of the Verify 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 Verify Shares on
any stock exchange or automated dealer quotation system, except that
currently certain market makers make market in the common shares of
Verify on the OTC Bulletin Board;
15. none of the Verify 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 Verify 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 Verify on the OTC Bulletin Board;
16. the undersigned is acquiring the Verify 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 Verify Shares;
17. neither the SEC nor any other securities commission or similar
regulatory authority has reviewed or passed on the merits of the Verify Shares;
18. the undersigned acknowledges and agrees that Verify shall refuse to
register any transfer of Verify 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 Verify 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.
IN WITNESS WHEREOF, I have executed this Certificate of U.S. Shareholder.
Date: , 2010.
----------------------------
--------------------------------------------
Signature
--------------------------------------------
Print Name
--------------------------------------------
Title (if applicable)
--------------------------------------------
Address
--------------------------------------------
34
SCHEDULE 3A
TO THE SHARE PURCHASE AGREEMENT
AMONG VERIFY SMART CORP., UKABOBS LLC AND THE SELLING MEMBER
AS SET OUT IN THE SHARE PURCHASE AGREEMENT
CERTIFICATE OF NON-ACCREDITED U.S. SHAREHOLDER
All capitalized terms herein, unless otherwise defined, have the meanings
ascribed thereto in the subscription between Verify Smart Corp. and the
undersigned Selling Member.
This Questionnaire is for use by a Selling Member who is a US person (as that
term is defined Regulation S of the United States Securities Act of 1933 (the
"1933 Act"))in connection with the issuance of common stock (the "Verify
Shares") of Verify Smart Corp., a Nevada corporation ("Verify"), to the
undersigned, pursuant to that certain Share Exchange Agreement dated ____, 2012.
(the "Agreement"), among Verify, Ukabobs LLC., a New Jersey Limited Liability
Company ("Ukabobs") and the members of Ukabobs as set out in the Agreement
(each, a "Selling Member"). The purpose of this Questionnaire is to assure
Verify that the Selling Member will meet the standards imposed by the 1933 Act
and the appropriate exemptions of applicable state securities laws. Verify will
rely on the information contained in this Questionnaire for the purposes of such
determination. The Securities will not be registered under the 1933 Act in
reliance upon the exemption from registration afforded by Section 4(2) of the
1933 Act and Rule 506 of Regulation D promulgated thereunder. This Questionnaire
is not an offer of Securities or any other securities of Verify in any state
other than those specifically authorized by the Issuer.
All information contained in this Questionnaire will be treated as confidential.
However, by signing and returning this Questionnaire, the Selling Member agrees
that, if necessary, this Questionnaire may be presented to such parties as the
Verify deems appropriate to establish the availability, under the 1933 Act or
applicable state securities law, of exemption from registration in connection
with the issuance of the Securities hereunder.
Please attach additional pages if necessary to answer any question fully.
REPRESENTATIONS OF SELLING MEMBER
This item is presented in alternative form. Please initial in the space provided
the applicable alternative.
_____ 1. ALTERNATIVE ONE: The Selling Member covenants, represents and warrants
to verify that it has such knowledge and experience in financial and
business matters that it is capable of evaluating the relative merits
and risks of an investment in the Securities and Issuer and is not
utilizing a Purchaser Representative in connection with evaluating
such merits and risks. The Selling Member is providing evidence of its
knowledge and experience in these matters through the information
requested below in this Questionnaire; or
_____ 2. ALTERNATIVE TWO: The Selling Member covenants, represents and warrants
to Verify that it has chosen to use the services of a Purchaser
Representative acceptable to the Selling Member in connection with the
Selling Member's acquisition of the Securities. The Selling Member
hereby acknowledges that the person named below is its Purchaser
Representative who will assist and advise the Selling Member in
evaluating the merits and risks of an investment in the Securities and
Verify and affirms that such Purchaser Representative has previously
disclosed in writing any material relationship that exists between the
Purchaser Representative (or its affiliates) and Verify (or its
affiliates) that is mutually understood to be contemplated, or that
has existed at any time during the previous two years, and any
compensation received or to be received as a result of such
relationship.
35
--------------------------------------------------------------------------------
(name of Purchaser Representative)
--------------------------------------------------------------------------------
(address of Purchaser Representative)
If the Selling Member utilizes a Purchaser Representative, this Questionnaire
must be accompanied by a completed and signed Purchaser Representative
Questionnaire, a copy of which can be obtained from Verify upon request; and
3. The Selling Member further acknowledges being furnished with the following
specified information a reasonable time prior to purchase of the Securities
and acknowledges reviewing Verify's public record available on the SEC
website at www.sec.gov:
(i) Verify's Quarterly Report on Form 10-Q for the quarter ended March 31,
2012,
(ii) Verify's Annual Report on Form 10-K for the year ended June 30, 2011;
(iii) Verify's Annual Report on Form 10-K for the year ended June 30, 2010;
(iv) the audited financial statements of Ukabobs LLC for the year ended
December 31, 2011;
(v) the audited financial statements of Ukabobs LLC for the year ended
December 31, 2010;
(vi) the unaudited financial statements of Ukabobs LLC for the quarter
ended March 31, 2012;
(vii)a brief description of the Securities being distributed, and any
material changes in Verify's affairs that are not disclosed in the
documents furnished; and
4. The Selling Member further acknowledges that at a reasonable time prior to
the acquisition of the Securities, it has been afforded the opportunity to
ask questions and receive answers concerning the terms and conditions of
the offering and to obtain any additional information which Verify
possesses or can acquire without unreasonable effort or expense that is
necessary to verify the accuracy of the information furnished.
FOR INDIVIDUAL SELLING MEMBERS
1. Name:
------------------------------------------------------------------------
2. Residential Address & Telephone Number:
--------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3. Length of Residence in State of Residence:
-----------------------------------
4. U.S. Citizen: _____ Yes _____ No
5. Social Security Number:
------------------------------------------------------
36
6. Business Address & Telephone Number:
-----------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
7. Preferred Mailing Address: _____ Residence _____ Business
8. Other:
-----------------------------------------------------------------------
9. Date of Birth:
---------------------------------------------------------------
10. Employer and Position:
------------------------------------------------------
11. Name of Business:
-----------------------------------------------------------
12. Business or Professional Education and Degrees:
School Degree Year Received
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
13. Prior Employment (last 5 years):
Employer Nature of Duties Dates of Employment
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FOR INVESTORS THAT ARE CORPORATIONS, PARTNERSHIPS, TRUSTS OR OTHER ENTITIES
15. Name:
-----------------------------------------------------------------------
16. Address of Principal
Office:
---------------------------------------------------------------------
17. Telephone:
-------------------------------------------------------------------
18. Date and State of Incorporation or
Organization:
---------------------------------------------------------------
--------------------------------------------------------------------------------
19. Taxpayer Identification Number:
---------------------------------------------
37
20. Nature of Business:
---------------------------------------------------------
21. Individual Authorized to Execute this Questionnaire (indicate name and
office):
--------------------------------------------------------------------
--------------------------------------------------------------------------------
FOR ALL INVESTORS
22. Relationship to Verify, if any:
--------------------------------------------------------------------------------
23. Is the Selling Member an officer of director of a publicly-held company?
____ Yes _____ No
If yes, specify company:
----------------------------------------------------
24. Does the Selling Member beneficially own 10% or more of the voting
securities of a publicly-held company?
____ Yes _____ No
If yes, specify company:
----------------------------------------------------
25. Within the last 5 years, has the Selling Member personally invested in
investments sold by means of private placements in reliance on
exemptions from registration under the 1933 Act and State securities
laws?
____ Yes _____ No
26. Prior investments by the Selling Member which were purchased in
reliance on exemptions from registration under the 1933 Act and State
securities laws (initial the highest number applicable):
Amount (Cumulative)
Real Estate:
None: _____ Up to $50,000 _____ $50,000 to $250,000 _____ Over $250,000 _____
Securities:
None: _____ Up to $50,000 _____ $50,000 to $250,000 _____ Over $250,000 _____
Other:
None: _____ Up to $50,000 _____ $50,000 to $250,000 _____ Over $250,000 _____
27. Does the Selling Member consider itself to be an experienced and
sophisticated investor?
____ Yes _____ No
If so, please provide evidence of investment sophistication and/or
experience:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
38
28. Does the Selling Member, or any person authorized to execute this
Questionnaire, consider itself to have such knowledge of Verify and its
business and such experience in financial and business matters to
enable it to evaluate the merits and risks of an investment in the
Securities and Verify, should the Selling Member be given an
opportunity to so invest?
____ Yes _____ No
29. If the Selling Member is an individual, please indicate the Selling
Member's and his/her spouse's combined gross income during the
preceding two years (initial the highest number applicable):
2006 2007
_____ Less than $75,000 _____ Less than $75,000
_____ $75,001 to $100,000 _____ $75,001 to $100,000
_____ $100,001 to $200,000 _____ $100,001 to $200,000
_____ $200,001 to $300,000 _____ $200,001 to $300,000
_____ $Over $300,000 _____ $Over $300,000
30. If the Selling Member is an individual, please indicate the Selling
Member's and his/her spouse's combined estimated net worth (exclusive
of home, home furnishings and personal automobiles) (initial the
highest number applicable):
_____ Less than $100,000 _____ $300,0001 to $500,000
_____ $100,001 to $200,000 _____ $500,001 to $1,000,000
_____ $200,001 to $300,000 _____ Over $1,000,000
31. Regardless of the amount of the proposed investment:
(a) Will the Selling Member's proposed investment exceed 10% of its
individual net worth, or the Selling Member's joint net worth with its
spouse as determined in subparagraph 33 above?
_____ Yes _____ No
(b) Will the Selling Member be able to bear the economic risk of its
investment in this transaction?
_____ Yes _____ No
32. If the Selling Member does not qualify as an Accredited Investor,
please provide answers to the following questions (Accredited Investors
may omit answers to this paragraph).
(a) State total assets of the Selling Member, including cash, stocks and
bonds, automobiles, real estate, and any other assets:
$
---------------------------------------------------------------------
39
(b) State total liabilities of the Selling Member including real estate
indebtedness, accounts payable, taxes payable and any other
liabilities:
$
---------------------------------------------------------------------
(c) State annual income of the Selling Member including salary, securities
income, rental income and any other income:
$
---------------------------------------------------------------------
(d) State annual expenses of the Selling Member, excluding ordinary living
expenses, including real estate payments, rent, property taxes and
other expenses:
$
---------------------------------------------------------------------
(e) Does the Selling Member expect the amount of its assets, liabilities,
income and expenses, as stated above, to be subject to significant
change in the future:
____ Yes _____ No
If yes, explain:
----------------------------------------------------------------------
FOR ALL SELLING MEMBERS
33. SELLING MEMBER'S ACKNOWLEDGEMENTS. The Selling Member acknowledges and
agrees (on its own behalf and, if applicable, on behalf of each beneficial
purchaser for whom the Selling Member is contracting hereunder) with Verify, the
U.S. Affiliates and the Agents (which acknowledgements and agreements shall
survive the Closing) that:
(a) no agency, governmental authority, regulatory body, stock exchange or
other entity has made any finding or determination as to the merit for
investment of, nor have any such agencies or governmental authorities,
regulatory bodies, stock exchanges or other entities made any
recommendation or endorsement with respect to, the Securities;
(b) the sale and delivery of the Securities is conditional upon such sale
being exempt from the prospectus filing and registration requirements,
and being exempt from the requirement to deliver an offering
memorandum in connection with the distribution of the Securities under
the applicable securities laws or upon the issuance of such orders,
consents or approvals as may be required to permit such sale without
the requirement of filing a prospectus or registration statement;
(c) none of the Securities have been or will be registered under the 1933
Act or the securities laws of any state and the Securities may not be
offered or sold, directly or indirectly, in the United States to, or
for the account or benefit of, a U.S. Person or a person in the United
States unless registered under the 1933 Act and the securities laws of
all applicable states or unless an exemption from such registration
requirements is available, and Verify has no obligation or present
intention of filing a registration statement under the U.S. Securities
Act in respect of any of the Securities ;
(d) the Selling Member may not offer, sell or transfer the Securities
within the United States or to, or for the account or benefit of, a
U.S. Person, unless the Securities are registered under the 1933 Act
and the securities laws of all applicable states or an exemption from
such registration requirements is available;
40
(e) the acquisition of the Securities has not been made through or as a
result of any "general solicitation or general advertising" (as such
terms are used in Rule 502(c) of Regulation D) the distribution of the
Securities has not been accompanied by any advertisement, including,
without limitation, in printed public media, radio, television or
telecommunications, including electronic display, or as part of a
general solicitation;
(f) the certificates evidencing the Securities will bear a legend, and the
certificates evidencing the Warrant Shares may bear a legend,
regarding restrictions on transfer as required pursuant to applicable
Securities Laws, including applicable federal and state securities
laws of the United States;
(g) Verify is relying on an exemption from the requirements to provide the
Selling Member with a prospectus or registration statement and to sell
securities through a person or company registered to sell securities
under the securities laws or other applicable securities legislation
and, as a consequence of acquiring Securities pursuant to this
exemption, certain protections, rights and remedies provided by the
securities laws or other applicable securities legislation including
statutory rights of rescission or damages, will not be available to
the Selling Member; and
(h) no person has made to the Selling Member any written or oral
representations:
(i) that any person will resell or repurchase the Securities ;
(ii) that any person will refund the purchase price of the Securities
; or
(iii) as to the future price or value of any of the Securities .
FOR ALL SELLING MEMBERS
34. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Selling Member hereby
represents and warrants to, and covenants with Verify which representations,
warranties and covenants shall survive the Closing, that as at the execution
date of certificate and the Closing Date:
(a) it acknowledges that Verify has not filed a prospectus or registration
statement with any of the securities regulators or any other
securities commission or similar authority in connection with the
distribution of the Securities and that:
(i) the Selling Member is restricted from using most of the civil
remedies available under the applicable securities laws;
(ii) the Selling Member may not receive information that would
otherwise be required to be provided to him under the applicable
securities laws;
(iii) the Selling Member is relieved from certain obligations that it
would otherwise be required to give if it provided a prospectus
or registration statement under the applicable securities laws;
and
(iv) the issuance and sale of the Securities to the Selling Member is
subject to the sale being exempt from the prospectus and
registration requirements of the applicable securities laws.
(b) the Selling Member further acknowledges that:
41
(i) no securities commission or similar regulatory authority has
reviewed or passed on the merits of the Securities ;
(ii) there is no government or other insurance covering the Securities
;
(iii) there are risks associated with the purchase of the Securities ;
and
(iv) there are restrictions on the Selling Member's (or beneficial
purchaser's, if applicable) ability to re-sell the Securities and
it is the responsibility of the Selling Member to find out what
those restrictions are and to comply with them before selling the
Securities;
(c) if required by applicable Securities Laws, and any other applicable
law the Selling Member will execute, deliver, file and otherwise
assist Verify in filing such reports, undertakings and other documents
with respect to the issuance of the Securities as may be required.
(d) The Selling Member understands that the Securities are restricted
securities (as defined in Rule 144 under the 1933 Act) and agrees that
if it decides to offer, sell or otherwise transfer the Securities, it
will not offer, sell or otherwise transfer any of such securities
directly or indirectly, unless:
(i) the transfer is to Verify;
(ii) The transfer is outside the United States in a transaction
meeting the requirements of Rule 904 of Regulation S under the
1933 Act ("REGULATION S") and in compliance with applicable local
laws and regulations of the jurisdiction(s) in which such sale is
made;
(iii) the transfer is made pursuant to the exemption from t he
registration requirements under the 1933 Act provided by Rule 144
thereunder, if available, and in accordance with applicable state
securities laws; or
(iv) the Securities are transferred in a transaction that does not
require registration under the 1933 Act or any applicable state
securities laws, and the Selling Member has prior to such sale
furnished to Verify an opinion of counsel of recognized standing
or other evidence of exemption, in either case reasonably
satisfactory to Verify; and
(e) the Selling Member understands and acknowledges that upon the issuance
thereof, and until such time as the same is no longer required under
the applicable requirements of the 1933 Act or applicable U.S. state
securities laws and regulations, the certificates representing the
Securities, and all securities issued in exchange therefore or in
substitution thereof, will bear a legend in substantially the
following form:
"THE SECURITIES REPRESENTED HEREBY (and if a warrant, the legend shall
include the following: AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF)
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"). THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT OR: (A) TO THE ISSUER, (B) OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT, (C) IN
COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
1933 ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS, OR (D) WITH THE PRIOR CONSENT OF THE
42
ISSUER, IN A TRANSACTION T HAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933
ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE HOLDER HAS FURNISHED
TO THE ISSUER AN OPINION TO SUCH EFFECT FROM COUNSEL OF RECOGNIZED STANDING
REASONABLY SATISFACTORY TO THE ISSUER PRIOR TO SUCH OFFER, SALE, PLEDGE OR
TRANSFER."
The Selling Member hereby certifies that the information contained in this
Questionnaire is complete and accurate and the Selling Member will notify Verify
promptly of any change in any such information. If this Questionnaire is being
completed on behalf of a corporation, partnership, trust or estate, the person
executing on behalf of the Selling Member represents that it has the authority
to execute and deliver this Questionnaire on behalf of such entity.
IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the
_______ day of __________________, 2012.
If a Corporation, Partnership or
Other Entity: If an Individual:
------------------------------------ -------------------------------------
Print of Type Name of Entity Signature
------------------------------------ -------------------------------------
Signature of Authorized Signatory Print or Type Name
------------------------------------ -------------------------------------
Type of Entity Social Security/Tax I.D. No.
43
SCHEDULE 4
TO THE SHARE PURCHASE AGREEMENT
AMONG VERIFY SMART CORP., UKABOBS LLC AND THE SELLING MEMBERS AS SET
OUT IN THE SHARE PURCHASE AGREEMENT
DIRECTORS AND OFFICERS OF UKABOBS LLC
DIRECTORS: Paul R. DiMarco Mitesh Patel
OFFICERS: Paul R. DiMarco Mitesh Patel
44
SCHEDULE 5
TO THE SHARE PURCHASE AGREEMENT
AMONG VERIFY SMART CORP., UKABOBS LLC AND THE SELLING MEMBERS AS SET
OUT IN THE SHARE PURCHASE AGREEMENT
UKABOBS LLC LEASES, SUBLEASES, CLAIMS, CAPITAL EXPENDITURES,
TAXES AND OTHER PROPERTY INTERESTS
There are no Ukabobs Leases, Subleases, Claims Capital Expenditures, Taxes
and Other Property Interests as at the Closing Date.
45
SCHEDULE 6
TO THE SHARE PURCHASE AGREEMENT
AMONG VERIFY SMART CORP., UKABOBS LLC AND THE SELLING MEMBERS AS SET
OUT IN THE SHARE PURCHASE AGREEMENT
UKABOBS LLC INTELLECTUAL PROPERTY
Ukabobs has developed a mobile content delivery platform which included specific
program code developed and owned by Ukabobs. The delivery platform ( iM Direct)
incorporates functionality which provides two way communication between the
mobile phone and platform, establishes targeted databases thru the use of
specific user defined distribution channels or groups, enables "push" technology
to registered subscribers, enables the management of subscribers among many
other features. Ukabobs has developed a robust "Mobile Channel Gateway" which is
the backbone of the distribution of digital content to the mobile phone channel
internationally.
Ukabobs is the owner and operator of www.ukabobs.com an international
multi-media websites that enables the sale of digital content from authors and
contributors worldwide.
Ukabobs is the owner and operator of www.imobileinteractive.com IMobile's Mass
Communication Platform enables the instant delivery of information to mobile
phones, email addresses and web pages with ease. The IMobile Platform combines
the power of delivering text messages and multi-media messages to mobile phones
within a single Web Portal interface eliminating the need to purchase and
implement multiple applications for achieving the same result.
Ukabobs is the owner and operator of www.dealsbybigfoot.com which is a deal of
the day type of service with full mobile capabilities including instant delivery
of the discount voucher to the buyer's mobile.
DOMAINS OWNED BY UKABOBS:
Dealsbybigfoot.com
Ukabobs.com
Imobileinteractive.com
U2c.us
Goimobile.com
Iglobalinteractive.com
HARDWARE:
-1 server hosted at 1&1 commercial data center, leased on monthly fee basis
-2 live gateway servers
-4 additional development/spare servers
-10 communication devices
SOFTWARE/LICENSES:
-MOZAT M2U Diamond Edition
-php
-mysql
-ActiveXperts Mobile Messaging Toolkit
-ImageMagik
-TVC
TRADEMARKS/COPY RIGHTS (UN-REGISTERED):
-all logos/icons on ukabobs.com
-all code for ukabobs.com
-all logos/icons on imobileinteractive.com
46
-all code for imobileinteractive.com
-all logos/icons on dealsbybigfoot.com
-all code for dealsbybigfoot.com
-"ImDirect", "uKabobs", "DealsByBigFoot", "iMobile Interactive"
-code for our own SMS/MMS gateway
-tag line "because the world needs a piece of you..."
-tagline "fast forward to the mobile channel..."
TRADE SECRETS:
-Our unique mobile conversion routines
-Our ability to deliver SMS/MMS globally without per message fees
-ImDirect API that generates a customized pop-up which links to the Mass
communication system
-Our own SMS/MMS gateway software
47
SCHEDULE 7
TO THE SHARE PURCHASE AGREEMENT
AMONG VERIFY SMART CORP., UKABOBS LLC AND THE SELLING MEMBERS AS SET
OUT IN THE SHARE PURCHASE AGREEMENT
UKABOBS MATERIAL CONTRACTS
Saas Agreement with Smashlife Team Sports, LLC dated April 16, 2012
(see attached)
48
SCHEDULE 8
TO THE SHARE PURCHASE AGREEMENT
AMONG VERIFY SMART CORP., UKABOBS AND THE SELLING MEMBERS AS SET
OUT IN THE SHARE PURCHASE AGREEMENT
UKABOBS EMPLOYMENT AGREEMENTS AND ARRANGEMENTS
None
4
