15 August 2000
Via facsimile: 000-000-0000
C.C. CROWS PUBLICATIONS INC.
X.X. Xxx 00000
Xxxxxxxx, Xxxxxx
00000-0000
Attention: Xx. Xxxxx Xxxxxxxx
Dear Sirs:
Re: Letter of Intent
C.C. CROWS PUBLICATIONS INC. (the "Company" or "Crows")
We write to confirm our intent to acquire all of the issued and outstanding
share capital of Crows on and subject to the following terms and conditions:
Share Purchase Agreement
1. Xxxxx Xxxxxxxx (the "Vendor") shall sell all of the issued and outstanding
capital stock in the Company (the "Crows Shares") to xxxxxxxxxxxxxx.xxx,
Inc. or its wholly owned subsidiary ("Forest") on a date (the "Closing
Date") to be determined by agreement between the parties hereto, which date
shall, in any event, occur on or before December 31, 2000 unless extended
by agreement between the parties hereto. Vendor represents that he owns, or
will own by the Closing Date, all of the outstanding capital stock of
Crows.
Consideration for Capital Stock
2. In consideration for all of the capital stock of Crows on the Closing Date
Forest will pay to the Vendor the aggregate sum of US$330,000 (the "Cash
Purchase Price") in cash, and will issue to Vendor 400,000 shares of common
stock of Forest as set forth in the following paragraph (the "Common Stock
Price").
Issuance of Common Stock
3. The number of Forest common shares to be issued will be four hundred
thousand shares (400,000). The Forest common shares to be issued shall be
subject to restrictions on transfer under applicable regulations of the
U.S. Securities and Exchange Commission and state law. Xxxxx Xxxxxxxx shall
have piggyback rights to register such shares for a period of two years.
The definitive Share Purchase Agreement shall contain all provisions
necessary to describe the procedure for, and insure, compliance with all
U.S. and Canadian securities laws and regulations.
Deposit
4. The Company or its agent shall hold the Common Stock Price in escrow until
the Closing Date as per the Escrow Instructions attached hereto as Exhibit
I. The shares shall be issued in the following denominations; 125,000 and
275,000. The shares representing 125,000 common shares shall be issued and
delivered to the Vendor's agent following the date of this Agreement within
a reasonable time frame and shall be held by the Vendor's agent as a
non-refundable deposit towards the total Common Stock Price. Upon delivery
of the cash purchase price and the remaining 275,000 common shares at
Closing, the Vendor will deliver the Crows Shares to Forest. In the
interim, both parties will endeavour to fulfil all representations in this
letter of intent. Forest shall have the right to rescind this agreement
without cause at anytime by providing written notification to Vendor and
Vendor's agent, in which case Vendor shall be entitled to keep the 125,000
common shares. Vendor represents that he owns, or will own by the Closing
Date, all of the issued and outstanding share capital of Crows and that
there are no outstanding options, warrants or other rights to acquire the
capital stock of Crows.
Employment Agreement
5. Forest intends to enter into employee agreements with the following
employees, Xx. Xxx Xxxxxxxx, Xxx Xxxxxxxxx and Xxxxx Xxxxx. Vendor will
assist Forest in entering into these employment agreements. The Employment
Agreements shall have a three year term, shall contain an option in favour
of Forest to renew for an additional two year term, and shall:
(a) contain industry standard non-disclosure, confidentiality and
non-competition/non-circumvention clauses;
(b) provide for the annual cash compensation by Forest in the amount that
is currently provided by Crows, with provision for an annual review
consistent with Forest's internal policies; and
(c) provide for the issuance of stock options (the "Options") to purchase
the common stock of Forest pursuant to the Forest Amended 2000 Stock
Option Plan. The number of common shares to be subject to such options
shall be determined by management based on the internal compensation
plan.
Conditions Precedent
6. The Vendor agrees that Forest's obligation to consummate the
transaction contemplated by this letter of intent is expressly subject
to the following conditions precedent:
(a) Forest having conducted a satisfactory due diligence review of Crows
and the assets of Crows, which due diligence review shall include but
shall not be limited to a review of the tax consequences to Forest of
the acquisition, the corporate records of Crows as well as all
searches normally conducted of government registries, taxation offices
and credit agencies. Crows further agrees to provide all consents
required by Forest, acting reasonably, in order to facilitate such
searches; access to records of current accounts payable and accounts
receivable of Crows; and copies of all documents relating to
indebtedness of Crows.
(b) Execution of a definitive Share Purchase Agreement between Forest,
Crows, and Xxxxx Xxxxxxxx, in form and substance acceptable to counsel
to all parties. Such definitive agreement shall contain
representations and warranties from Vendors and Forest typical of
similar transactions.
(c) Execution of Employment Agreements and the granting of stock options
to each employee, the number of common shares of Forest to be subject
to such options to be agreed upon prior to the Closing Date and based
on standard internal policies.
(d) Evidence of the conversion of all outstanding debt of Crows into
common shares.
(e) The execution and delivery by Xxxxx Xxxxxxxx, as lessor, and Forest,
as lessee, of a "triple net" lease for the premises located at 0000 XX
Xxxxxxxxx Xxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxxxxx, 00000 (the "premises"),
in form and substance satisfactory to counsel to both parties (the
"Lease"). The initial term of the Lease shall be one (1) year, with an
option to renew for one year terms up to a total term of five (5)
years. The lessee shall have the right to sublease all or part of the
premises with the consent of the lessor. Base rent for the premises
shall be $3,500 per month, payable on the first of each month, in
advance. Base rent shall be adjusted annually based upon the increase
in the CPI for the Portland Metropolitan Statistical Area. Forest
acknowledges that a portion of the premises is currently leased to
another tenant on a month-to-month basis, and agrees to sublease that
portion of the premises to the tenant at the tenant's current monthly
rent for a reasonable period of time if requested by the tenant.
(f) Evidence of an insurance policy that covers the property and
liabilities of Crows.
(g) Crows providing to Forest for the inclusion in the Share Purchase
Agreement all exhibits and documents requested including, but not
limited to, copies of all subscribers to Crows services, accounts
payable, articles of incorporation and bylaws.
(h) The resignation of the directors and officers of Crows on the Closing
Date and the appointment of Xxx Xxxxxxxx, President of Forest as the
sole director and officer of Crows.
(i) The completion, at Forest's expense, of two year audited financial
statements of Crows by an independent public chartered accountant and
review of same by the Board of Directors of Forest.
(j) The approval of the Board of Directors of Forest.
(k) Vendor's ability at the Closing Date, to transfer title to all of the
issued and outstanding Crows shares free and clear of any liens,
claims, charges or encumbrances and not subject to any agreement,
option or right to purchase such common stock.
(l) Forest obtaining sufficient capital to fund the cash costs of the
proposed purchase of the common stock of Crows.
(m) Representation by Vendors that to the best of their knowledge:
1. there are no liabilities of Crows, contingent or otherwise, which
are not disclosed or reflected in the audited financial
statements (as described in 5(i) above), in schedule provided at
the Closing, or in the Company's tax returns.
2. Crows has good and marketable title to all their properties and
assets.
3. all tax returns and reports of Crows required by law to be filed
by the Closing Date have been filed and are substantially true,
complete and correct.
4. absence of any material adverse changes in the business of
Crows from the date of this letter to the Closing Date.
7. Forest agrees that Vendors obligation to consummate the transaction
contemplated by this letter of agreement is expressly subject to the
following conditions precedent:
1. written confirmation of access by Forest to sufficient capital to
fund the cash costs of the purchase of the common stock in a form
acceptable to the Vendors, acting reasonably.
2. vendors having conducted a satisfactory due diligence review of
Forest.
3. execution and delivery by Xxxxx Xxxxxxxx, as lessor, and Forest,
as lessee, of a "triple net" lease for the premises located at
0000 XX Xxxxxxxxx Xxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxxxxx, 00000 (the
"premises"), in form and substance satisfactory to counsel to
both parties (the "Lease"). The initial term of the Lease shall
be one (1) year, with an option to renew for one year terms up to
a total term of five (5) years. The lessee shall have the right
to sublease all or part of the premises with the consent of the
lessor. Base rent for the premises shall be $3,500 per month,
payable on the first of each month, in advance. Base rent shall
be adjusted annually based upon the increase in the CPI for the
Portland Metropolitan Statistical Area.
4. the absence of any material adverse changes in the business of
Forest from the date of this letter to the Closing Date.
Closing
8. The transaction contemplated by this letter shall close on a date (the
"Closing Date") to be determined by agreement between the parties hereto,
which date shall, in any event, occur on or before December 31, 2000 unless
extended by agreement between the parties hereto.
Miscellaneous
9. While recognizing that the purchase proposed by this letter of intent is
subject to all of the conditions set forth above, the parties hereto agree
to use their best efforts to proceed with preparation of a definitive Share
Purchase Agreement and the Employment Agreements to be executed on the
Closing Date. The parties hereto further agree to proceed with due
diligence the satisfaction of the conditions set forth herein and to
consummate the transaction.
10. Crows and Xxxxx Xxxxxxxx shall use their best efforts to assist Forest in
obtaining from all appropriate persons all such approvals and consents in
form and term reasonably satisfactory to counsel for Forest, as are
necessary or required in order to permit the transactions described herein.
11. All parties hereto agree to bear their own costs associated with this
letter, except for the provisions of the foregoing paragraph 5(i).
12. All parties hereto agree that the existence and terms of this letter are
confidential and shall not be disclosed to any person or entity until such
time as generally disclosed by Forest in consultation with Vendors.
Further, while this letter of agreement is in force, both parties agree not
to actively pursue competing corporate transactions.
13. This letter may be executed by facsimile and in counterparts, each of which
so executed shall be deemed to be an original, and such counterparts shall
together constitute one letter of intent.
14. The definitive Share Purchase Agreement and the Employment Agreements and
any other agreements to be executed on the Closing Date will be governed by
the laws of the State of Oregon.
15. This letter of agreement has been prepared and executed as an aid to
negotiation of the Definitive Share Purchase Agreement and the Employment
Agreements and, except as otherwise specifically provided herein, it is not
intended to constitute a binding agreement upon all parties. It is
acknowledged that Vendors and Forest, respectively, have not completed
their intended investigations with respect to the matters covered by this
letter of intent and still may rescind the definitive Share Purchase
Agreement and Employment Agreements. No party hereto will be liable to any
other party by the reasons of the terms of, or failure to reach definitive
agreements with respect to, the transaction contemplated hereby.
Notwithstanding the foregoing nor any other provisions of this letter of
agreement, the provisions of the foregoing paragraph4,11, and 12 is
intended to be legally binding upon the parties hereto.
If this letter accurately records the terms of our agreement, please execute
same in the space below and return an originally signed copy of this letter to
our office.
Yours very truly,
xxxxxxxxxxxxxx.xxx, Inc.
Per:
/s/ XXX XXXXXXXX
---------------------
Xxx Xxxxxxxx
President
Accepted this 16th day of August, 2000
by
/s/ XXXXX XXXXXXXX
-----------------
Xxxxx Xxxxxxxx
