Exhibit 2.1
LETTER OF INTENT
July 15, 2005
Ladies and Gentlemen:
This binding Letter of Intent ("LOI") sets forth the basic terms and
conditions under which Superclick, Inc., a Washington state corporation
("BUYER") will enter into a definitive agreement (the "Definitive Agreement")
with HotelNet, a Georgia Limited Liability Company ("SELLER") for the
acquisition of the SELLER by the BUYER (the "Transaction"). It is anticipated
that the consummation of the Transaction will occur on or about August 19, 2005,
or on such other date to which the parties may agree ("Closing"). This binding
LOI is subject to the terms and conditions outlined herein, including, but not
limited to the satisfactory completion of due diligence by both parties and the
preparation, execution and performance of the Definitive Agreement containing
such terms, conditions, covenants, representations and warranties as are
reasonable and customary in similar transactions. In this LOI, BUYER and SELLER
are sometimes referred to as the "Parties."
Based on the information currently known, it is proposed that the
Definitive Agreement include terms and conditions to be negotiated based on the
following:
1. TRANSACTION CONSIDERATION AND TERMS
At Closing SELLER shall:
(i) Receive consideration of four hundred and fifty thousand dollars
(US$450,000) in cash to pay for SELLER's investments/loans/expenses
and legal fees plus three million two hundred and fifty thousand
(3,250,000) shares of the BUYER's common stock ("STOCK") (in
addition to the 1,500,000 shares to be issued under paragraph 2
below) which shall carry all the same rights and provisions of
BUYER's currently issued common stock. The STOCK shall be restricted
and not be entitled to any registration rights;
(ii) Receive a note payable (secured by collateral to be defined in the
definitive purchase agreement) for an additional sum of three
hundred and fifty thousand (US$350,000) in cash to pay for SELLER's
back pay over two years and accrued salaries to be paid to SELLER in
a manner and timing to be determined and mutually agreed upon
between BUYER and SELLER, but not less than 120 days from Closing;
(iii) Contingent upon a net zero balance, or a positive balance of the
SELLER's Accounts Payables to Accounts Receivables as of the closing
date, SELLER will receive a note payable for an additional sum of
two-hundred thousand (US$200,000) in cash, to pay for SELLER's back
pay over three years and accrued salaries payable not less than 240
days from closing. Any negative balance of the SELLER's Accounts
Payables to Accounts Receivables will be deducted from the $200,000
note up to a maximum of the entire value of the $200,000 note.
(iv) Appoint two members - Xxxxxx Xxxxx and Xxxxx Xxxxx to the BUYER's
Board of Directors.
(v) Comply with BUYER's request for all requisite due diligence
documentation.
At Closing BUYER shall:
(i) Receive one-hundred percent (100%) of the total outstanding shares
of SELLER's (and/or its subsidiaries and affiliates) common shares
("Units"); BUYER is entitled to receive ALL assets and shall assume
ALL liabilities of SELLER. BUYER shall accommodate SELLER's
reasonable requests concerning the structure of the Transaction to
allow SELLER and its members to minimize their tax burden from the
Transaction. (ii) Receive five-percent (5%) of the total outstanding
membership interest of Just Jack LLC ; an option to purchase up to
45% of Just Jack LLC rights to participate in all rounds of
financing (iii) Retain rights to use "Just Jack LLC" on any and all
installations where the BUYER's XXXX product is installed. (vi)
Comply with BUYER's request for all requisite due diligence
documentation.
2. ADDITIONAL CONSIDERATION
(i) Binder Stock. At the execution of this LOI, BUYER shall issue to
SELLER, or as SELLER may direct, one-million five hundred thousand
shares (1,500,000) of the BUYER's common stock ("BINDER STOCK"). The
BINDER STOCK shall be issued without registration under applicable
securities laws and shall not be entitled to any registration
rights. The BINDER STOCK shall carry all the same rights and
provisions of BUYER's currently issued common stock, although SELLER
may be required to return the BINDER STOCK to BUYER under paragraph
9 below.
(ii) Performance and Bonus Structure. The BUYER's intention to acquire
SELLER is based in large part on the BUYER's expectation of future
performance by the SELLER both in terms of revenues and addition of
rooms to the BUYER's existing inventory, as well as those rooms of
the SELLER's which are being purchased in the TRANSACTION. At the
execution of this LOI, BUYER will provide SELLER with (a) a pro
forma which includes BUYER's projected performance ("PROJECTIONS")
of the SELLER within the first year from the CLOSING of the
TRANSACTION and (b) a bonus schedule to Xxxxxx Xxxxx and Xxxxx Xxxxx
which is based on their exceeding the BUYER's expectations as
defined in the PROJECTIONS.
(iii) Termination Fees. It is the BUYER's intention to transfer SELLER's
customer support business which is currently outsourced to a third
party ("CUSTOMER SUPPORT") to BUYER's in-house operations in
Montreal, Canada on an expedited basis. If SELLER incurs any early
termination fees from the third party to whom it currently
outsources the CUSTOMER SUPPORT, ("TERMINATION FEES") then BUYER
will pay for TERMINATION FEES up to Twenty-Two Thousand ($22,000.00)
dollars.
(iv) Employment Contracts. Folllowing consummation of the CLOSING, BUYER
will offer employment contracts to Xxxxx Xxxxx, Xxxx Xxxxx and
Xxxxxx Xxxxx in particular, as well as other individuals currently
under the employment of the SELLER, as it deems to be strategically
valuable.
i. ACCESS
During the period from the date this letter is signed by both parties
until the date on which either Party provides the other Party with written
notice that negotiations toward a Definitive Agreement are terminated, SELLER
and BUYER will afford each other full and free access to SELLER and BUYER, their
personnel, properties, contracts, books and records, and all other documents and
data during reasonable business hours upon at least 24 hours prior notice;
provided, however, neither SELLER nor BUYER shall contact one another's
employees, customers or vendors without SELLER's express prior written consent.
4. MUTUAL CONFIDENTIALITY AND NON-SOLICITATION
The Parties have entered into a Confidentiality Agreement which shall
remain in effect after the execution and delivery of this Letter of Intent.
XXXXX agrees not to solicit employees of SELLER at any time during BUYER'S
review and for a period of 24 months thereafter.
5. DISCLOSURE
Except as to the extent required by law, without the prior written consent
of the other Party, no Party will, and each will direct its representatives not
to make, directly or indirectly any public comment, statement or communication
with respect a possible transaction between the Parties.
6. COSTS
BUYER and SELLER will each be responsible for and bear all of their
own costs and expenses incurred at any time in connection with pursuing or
consummating the contemplated Transaction.
7. COMPLETION OF TRANSACTION
Each Party will act in good faith to finalize negotiations of the
terms of the Transaction; complete its diligence review; execute a Definitive
Agreement containing such terms, conditions, covenants, representations and
warranties as are reasonable and customary in similar transactions; and close
the Transaction.
8. GOVERNING LAW
This letter of intent will be governed by and construed under the
laws of the State of California.
9. TERMINATION AND BREAK-UP FEE
This LOI may be terminated upon written notice by either Party to the
other Party unilaterally, for any reason or no reason, with or without
reasonable cause, at any time; however, if SELLER terminates with or without
reasonable cause it shall transfer the BINDER STOCK to BUYER, or as BUYER may
direct. If BUYER terminates without reasonable cause, SELLER shall retain the
BINDER STOCK without any further restrictions other than applicable securities
law restrictions. The termination of this LOI will not affect the liability of a
Party for breach of any of provisions contained herein prior to the termination.
Upon such a termination of the Parties will have no further obligations
hereunder, except as stated in Paragraphs 3, 4, 6, 8 and 9 herein, which will
survive any such termination.
10. COUNTERPARTS
This letter may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this letter and all of which,
when taken together, will be deemed to constitute one and the same.
If you desire to proceed in accordance with this LOI, please sign and
return one copy of this letter.
Very truly yours,
Superclick, Inc.
By:
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Xxxx X. Xxxxxxx, Chairman and Interim CFO
Hotel Net, LLC
By:
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Xxxxxx Xxxxx, President and CEO
