SPUD INC. entered into a letter of intent to acquire Rainy Hollow Ventures Inc. (TSXV:RHV.P) from Ionic Securities Ltd. and others for approximately CAD 320 million in a reverse merger transaction on September 30, 2020. SPUD INC. entered into an arrangement agreement to acquire Rainy Hollow Ventures Inc. (TSXV:RHV.P) from Ionic Securities Ltd. and others in a reverse merger transaction on December 21, 2020. Prior to the closing of the transaction, Rainy Hollow will complete a share consolidation based on one (1) new Rainy Hollow common share for seven (7) old Rainy Hollow common shares outstanding. As of December 21, 2020, Rainy Hollow intends to consolidate the common shares of Rainy Hollow on an eight (8) to one (1) basis. Upon completion of the Arrangement, it is anticipated that an aggregate of 43,267,801 post-consolidation Rainy Hollow shares will be issued to former holders of SPUD Shares and that an aggregate of 8,292,349 post-Consolidation Rainy Hollow Shares will be reserved for issuance to former holders of SPUD options and SPUD warrants. SPUD intends to complete a brokered financing of unsecured convertible debentures on or about October 10, 2020 to raise a minimum of CAD 5 million and a maximum of CAD 10 million principal amount, which unsecured convertible debentures will automatically be converted, immediately prior to closing of the transaction, into SPUD shares at a price per share equal to an amount representing a 15% discount to the listing price of the Resulting Issuer shares on the TSXV or the Toronto Stock Exchange (the “TSX”), as the case may be. As of October 21, 2020, SPUD completed a brokered private placement financing pursuant to which it issued an aggregate principal amount of CAD 15.5 million unsecured convertible debentures. In connection with the transaction, SPUD also intends to complete a brokered financing for aggregate gross proceeds of at least CAD 25 million consisting of SPUD shares or subscription receipts (the “concurrent financing”), at a price to be determined in the context of the market, prior to closing of the transaction. As on December 23, 2020, SPUD completed a private placement of subscription receipts for gross proceeds of approximately CAD 24.2 million. As a result of the transaction, the resulting issuer will indirectly carry on the business of SPUD and will change its name to “Sustainable Produce Urban Delivery Inc.” or such other name as agreed to by the parties and as may be accepted by the TSXV or the TSX and any other relevant regulatory authorities. As of March 17, 2021, Rainy Hollow intends to change its name to “Freshlocal Solutions Inc". Upon completion the combined entity will carry on the current business of SPUD. As part of the name change, SPUD will be releasing a new company logo and establishing a new company website. Rainy Hollow will be delisted from the TSXV and the common shares of the Resulting Issuer will begin trading on the TSX under the symbol “LOCL”. In the event of termination of agreement, SPUD will pay Rainy Hollow a cash payment of CAD 0.25 million.

In addition to the name change, Rainy Hollow will also seek the requisite corporate approvals to complete the consolidation, to set the number of directors (all SPUD nominees), and to elect the same. If the transaction is completed, it is expected that the board of directors of the resulting issuer will be comprised of suitable nominees, each of whom will be appointed by SPUD. Further, the officers of the resulting issuer will be determined by SPUD prior to completion of the transaction. As part of transaction, Peter van Stolk will be Chief Executive Officer and Director, Monique A. Wilberg, Todd Cherniak, Eric Phaneuf, Terry Vanderkruyk will be Directors, Adrienne Uy will be Chief Financial Officer & Secretary, and Jef King will be Chief Technology Officer.

The transaction is subject to entering into and execution of the definitive agreement, Rainy Hollow and SPUD intend to complete the transaction by way of amalgamation, arrangement, or other similar transaction, whereby Rainy Hollow will acquire all of the issued and outstanding securities of SPUD, to form the resulting issuer; receipt of all required regulatory approvals with respect to the transaction and listing of the Resulting Issuer shares on the TSXV or the TSX; all third party consents and corporate approvals necessary to complete the Transaction are obtained, including approval of SPUD shareholders and the Supreme Court of British Columbia including approval of the name change and the consolidation, as applicable; the signature of lock-up agreements required of certain SPUD and Rainy Hollow shareholders, the signature of voting agreements required of certain SPUD shareholders, all directors and officers of Rainy Hollow will resign, Rainy Hollow will have a minimum cash balance as the cash balance, SPUD Shareholders holding no more than 5% of the issued and outstanding SPUD Common Shares will have exercised their Dissent Rights and the concurrent financing shall have been completed. In connection with the transaction, if necessary, SPUD will convene a meeting of its shareholders for the purposes of approving the transaction, where applicable, the transaction cannot close until the required shareholder approval is obtained. Rainy Hollow intends to apply for exemption for the Sponsorship requirement as required by the TSXV. As of March 30, 2021, the transaction was approved by shareholders of SPUD. As of April 12, 2021, Rainy Hollow has received conditional approval from TSX Venture Exchange. SPUD has also received conditional approval to list the common shares of the Resulting Issuer on Toronto Stock Exchange following the completion of the transaction. Final approval of the listing is subject to the resulting issuer meeting certain conditions required by the TSX on or before June 29, 2021. As of April 15, 2021, Rainy Hollow completed the consolidation of its common shares on the basis of 8 pre-consolidation common shares for one post-consolidation common share. Completion of the transaction is expected to occur at the beginning of the month of April but in no event later than April 22, 2021. As of April 12, 2021, the transaction is expected to close on or about April 16, 2021.

Melinda Park, Scott Robson, Shane Barnes and Samer Chomery of Borden Ladner Gervais LLP acted as legal advisor to Rainy Hollow. Sébastien Bellefleur, Monica Dingle, Laura Fabi, Rosemary McCabe and Neil Wiener of Fasken Martineau DuMoulin LLP acted as legal advisors to SPUD. Computershare Trust Company of Canada acted as transfer agent to Rainy Hollow Ventures Inc.