EXHIBIT 10
XX XXXXXXXXX GROUP
xxx.xxxxxxxxxxx.xxx
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August 26, 2005
Xxxxxxx X. Xxxxx
CEO
Slide View Corporation
0000 Xxxx Xxxxxxx Xxxx x Xxxxx 0
Xxx Xxxxx, XX 00000-0000
Dear Mr. Xxxxx:
LETTER OF INTENT
XX XXXXXXXXX GROUP, ("XX XXXXXXXXX OR THE COMPANY") A NEVADA
CORPORATION, AND SLIDE VIEW CORPORATION (" NEW SLIDE VIEW"), A NEVADA
CORPORATION, HEREBY ENTER INTO THIS LETTER OF INTENT TO Set forth the substance
of the agreements and agreements-in-principle we reached in relation to a
proposed sale of assets from XX Xxxxxxxxx `s wholly owned subsidiary to the New
Slide View with a contemplated distribution of registered stock of New Slide
View to the shareholders of XX Xxxxxxxxx.
XX Xxxxxxxxx seeks to consummate the transactions described in this
Letter of Intent solely in the best interests of its shareholders as a way to
raise capital to commercialize the patents held by XX Xxxxxxxxx'x present
subsidiary, Slide View Corp., an Oklahoma corporation ("Old Slide View").
Because of a restructuring of the management of XX Xxxxxxxxx and the rescission
of two merger agreements to acquire foreign subsidiaries in 2004, the Board of
XX Xxxxxxxxx has great concern about the ability of the Company to presently
raise capital and consummate its business plans for Old Slide View. The Board
and current management of XX Xxxxxxxxx believe after due consideration that a
spin off of the patents held by Old Slide View into New Slide View will allow
sufficient separation and independence of those assets from XX Xxxxxxxxx so that
New Slide View will be able to raise sufficient capital to commercialize those
patents, register the stock of New Slide View, and create value for all of the
present stock holders of XX Xxxxxxxxx.
We understand that the management of New Slide View has targeted an
initial raise of $1 million in equity financing by November 15, 2005. New Slide
View management will use the initial proceeds to first fund a prototype and then
initiate an appropriate registration. We understand this commitment, as well as
the commitment by New Slide View Management to raise any additional necessary
funds to commercialize the Slide View patents and to expediently and diligently
carry out the New Slide View business and commercialization plan, and the
Securities and Exchange Commission registration of New Slide View stock and
warrants in an Form SB-2 as key and critical to our entering into any
transactions under this Letter of Intent.
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XX XXXXXXXXX GROUP
xxx.xxxxxxxxxxx.xxx
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We are very excited about this transaction and eager to move forward to
the negotiation and execution of an asset purchase agreement (the "Agreement").
We would like to confirm our agreement in principle with New Slide View upon the
following terms and conditions:
1. DUE DILIGENCE BY NEW SLIDE VIEW. The due diligence period for this
transaction shall be 2 weeks from the receipt of all company records after the
execution of this Agreement (Due Diligence Period"). SV mgmt may ask for
additional time to complete the due diligence if significant material facts are
discovered during the due diligence period. Within 48 hours of the execution of
this Letter of Intent, XX Xxxxxxxxx shall deliver to New Slide View and its
attorneys, accountants, engineers, consultants and other authorized
representatives all XX Xxxxxxxxx'x books and records for the purpose of
exercising due diligence to investigate the financial condition and liabilities,
the business and operating results, all product information and the ownership of
its patents, if any. New Slide View may conduct its due diligence in any manner
it deems appropriate, and XX Xxxxxxxxx grants New Slide View full access to
gather information from any source available. XX Xxxxxxxxx agrees to provide New
Slide View with copies of all public information on file with the Securities and
Exchange Commission. A confidentiality agreement will be entered into between
the parties.
2. DUE DILIGENCE BY XX XXXXXXXXX. During the Due Diligence Period New Slide View
will give to XX Xxxxxxxxx and its attorneys, accountants, engineers, consultants
and other authorized representatives access to Slide View's books and records
for the purpose of exercising due diligence to investigate the financial
condition and liabilities, the business and operating results, and the ownership
of its patents, if any. XX Xxxxxxxxx may conduct its due diligence in any manner
it deems appropriate, and New Slide View grants XX Xxxxxxxxx full access to
gather information from any source available. New Slide View agrees to provide
XX Xxxxxxxxx with copies of New Slide View audited financial statements, as may
be required by the Securities and Exchange Commission ("SEC") for inclusion in
its public filings and reports
3. TERMINATION. Prior to the end of the Due Diligence Period,
(a) Either party may terminate this letter of intent if (i) the other
party fails to perform its obligations herein, (ii) the other party's assets are
found to be encumbered by any liens, encumbrances, judgments or claims, (iii) if
there is any litigation claims against the either party; (iv) if upon the advice
of either party's accountants or legal advisers the structure of the transaction
is not sound from either a legal or accounting standpoint.; or if there is any
fact disclosed in the Due Diligence Period which either party deems to be
material to its decision to proceed with the transactions hereunder, and such
party determines such material fact to be adverse to its decision to proceed in
accordance with this Letter of Intent.
4. STRUCTURE OF TRANSACTION
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XX XXXXXXXXX GROUP
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(a) Consideration for Asset Purchase. If at the end of the Due
Diligence Period, both parties wish to proceed further, they will enter into a
Asset Purchase Agreement on or before September 30th, 2005 providing for the
issuance of shares of Common Stock of Slide View in consideration of all of the
assets of XX Xxxxxxxxx Group relating to its patents and intellectual property
of New Slide View division. Each current shareholder of XX Xxxxxxxxx will be
entitled to receive on a pro rata basis one share of the voting common stock of
New Slide View for each voting common share of XX Xxxxxxxxx owned at the time of
the closing of the Asset Purchase Agreement Each Shareholder of XX Xxxxxxxxx
will also be entitled to receive one warrant to purchase the common stock of New
Slide View for each four shares of XX Xxxxxxxxx common stock owned at the time
of the closing of the Asset Purchase Agreement. The strike price of the warrants
shall be no lower than $0.50 and no higher than $1.25, as shall be determined in
good faith by the Board of Directors of New Slide View. The New Slide View stock
and warrants to be issued in consideration of this transaction may be issued
into a trust or held in escrow for the benefit of XX Xxxxxxxxx stockholders
pending registration of such stock with the Securities and Exchange Commission
("SEC"), at the discretion of the XX Xxxxxxxxx Board.
(b) Registration of New Slide View Stock
Upon closing of the initial funding & after a prototype has been funded, New
Slide View will: immediately and diligently undertake a registration of the
(a)New Slide View voting common stock, (b)the voting common stock underlying the
warrants , and (c) the warrants to be issued to XX Xxxxxxxxx shareholders with
the SEC. It is contemplated that such registration statement shall be on Form
SB-2 of the SEC's registration statement forms. New Slide View may include an
additional amount of voting common stock, voting common stock underlying
warrants, and warrants in such registration statement as follows:
(i) 2 million shares of voting common stock plus 1.5 million
warrants (500,000 shares exercisable at $0.25; 500,000
shares exercisable at $0 .75; and 500,000 shares exercisable
at $1.00) to Xxx Xxxxx. Mr. Xxxxx will further receive 500,000
shares of voting common stock after 6 months of service and
additional 500,000 shares of voting common stock after 12
months of service.
(ii) 500,000 shares of voting common stock plus 1.5 million
warrants (500,0000 shares exercisable at $0.25, .500,000
shares exercisable at $0 .75 and 500,000 shares exercisable at
$1.00 to Xxx Xxxxxxx . Xx. Xxxxxxx will receive 500,000
additional shares of voting common stock after 6 months of
service.
(iii) 2 million shares of voting common stock plus 1.5 million
warrants (500,000 shares exercisable at $0.25,:. 500,000
shares exercisable at $0 .75: and 500,000 shares exercisable
at $1.00) to Xxxxxxxxxxx XxXxxxxx. Xx. XxXxxxxx will further
receive 500,000 shares of voting common stock after 6 months
of service and additional 500,000 shares of voting common
stock after 12 months of service.
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XX XXXXXXXXX GROUP
xxx.xxxxxxxxxxx.xxx
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New Slide View may also include an amount equal to 5% of: ( the sum of
number of shares of voting common stock issued to XX Xxxxxxxxx plus 10
million shares), to fund an employee benefit plan, to hire consultants,
and/or to incentivize management. ("Management Allocation"). Such
Management Allocation may be issued directly or through options to the
management, employees, consultants, and/or Board of New Slide View in
New Slide View's management's discretion in order to compensate for
performance. Such voting common stock can be issued through the use of
warrants.
Regarding such Management Allocation, up to two million shares of
voting common stock may be awarded as compensation for work to be
accomplished under appropriate vesting standards for performance in
accordance with New Slide View Board approval. Stock compensation
awards in excess of 2 million shares must be approved by each of the XX
Xxxxxxxxx appointees to the New Slide View Board.
(c) Terms of warrants
All warrants issued pursuant to this Letter of Intent shall bear the same terms
as follows:
(i) The warrants issued shall expire 5 years from the date of
issuance.
(ii) The warrants will contain a "cashless exercise" provision.
(ii) New Slide View will make the warrants DTC eligible and shall
take appropriate steps to cause to be filed a Form 15c211 for
the warrants.
(iii) The warrants issued to XX Xxxxxxxxx Shareholders may contain
an escalator clause to increase to the strike price to $1.50
after eighteen months from the date of issuance.
5. LOCK UP AND PROXY AGREEMENTS FOR XX XXXXXXXXX MAJORITY SHAREHOLDERS
(a) Lock Up Agreements
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XX XXXXXXXXX GROUP
xxx.xxxxxxxxxxx.xxx
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All shareholders of XX Xxxxxxxxx listed in Item 11- of the 2004 Form
10-K filed June 22, 2005, all management and board member shareholders
of New Slide View, and any shareholder of New Slide View that would be
required to reported on Item 11 of a Form 10-K, will agree to "lock-up"
and refrain from selling their New Slide View shares on the open market
for a period of 18 months, except that any such shareholder may (i)
engage in private transfers of New Slide View stock as permissible
under applicable exemptions under the federal securities laws in the
manner provided under Rule 144 so long as this lock up provision and
the proxy agreement set forth below is maintained with respect to any
such transfer, with 10 days notice to New Slide View (ii) and sell on
the open market up to a maximum ten percent (10%) of its total New
Slide View stock, provided that Slide View management is given 15 days
notice to attempt to arrange for a planned block/ institutional trading
of these shares at no greater than a 20% discount to market price. If
management cannot arrange a block/ institutional trading of such shares
at no greater than a 20% discount to market price upon 15 days
following such notice to New Slide View management, the shareholder
will be free to make its own arrangements for open market sale.
(b) Proxy Agreements
All XX Xxxxxxxxx shareholders listed in Item 11 of the 2004 Form 10K,
filed June 22, 2005, shall sign a limited proxy statement for eighteen
months duration allowing management of New Slide View day to day
control of New Slide View. Such proxy rights shall NOT include:
(i) the right to increase or decrease capital stock or to engage
in a forward or reverse split of the capital stock of New
Slide View;
(ii) the right to issue New Slide View stock to management of Slide
View and its Board beyond the amounts set forth in this Letter
of Intent;
(iii) the right to sell any of the intellectual property assets of
New Slide View, or more than 25% of the total assets of New
Slide View excluding intellectual property assets of New Slide
View; ; (iv) the right to encumber any of the intellectual
property assets of New Slide View by virtue of a security
interest, lien or other agreement to the benefit of any member
of New Slide View management or its Board, or third party
related thereto;
(v) the right to encumber the total assets of New Slide View
excluding the intellectual property assets of New Slide View
by virtue of a security interest, lien or other agreement to
the benefit of any member of New Slide View management or its
Board, or third party related thereto;
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XX XXXXXXXXX GROUP
xxx.xxxxxxxxxxx.xxx
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(vi) the right to merge or consolidate New Slide View into another
company, or to wind up the operations of New Slide View;
however the right of New Slide View to acquire new companies
by merger or acquisition, or to enter into joint ventures
shall be in the purview of the New Slide View Board and
granted by the Proxy Agreements referred to in this Section;
(vii) the right to file for bankruptcy or receivership or to appoint
a trustee For New Slide View; and
(viii) the right to designate a new class of preferred or other stock
of New Slide View which has supravoting privileges or atypical
privileges for convertible preferred stock; or to modify
Existing rights of any existing shareholder of New Slide View
6. DIRECTORSHIPS.
The stock holders of XX Xxxxxxxxx may name two directors to the Board of New
Slide View (for a term of 1 year), The stockholders of XX Xxxxxxxxx shall have
ultimate authority to appoint such directors, and however New Slide View's
management shall be provided with reasonable notice of appointment and an
opportunity for review and submission of opinion concerning such appointments.
7. INDEMNIFICATION.
XX Xxxxxxxxx will provide indemnification to New Slide View management and its
Board members solely in the manner set forth below for any unforeseen legal or
financial issues that may arise from actions taken by XX Xxxxxxxxx'x management
prior to the closing of the Asset Purchase Agreement with New Slide View and for
any expenses, claims or damages not disclosed in the Asset Purchase Agreement.
(a) Any such indemnification shall be provided solely from and limited to a
reserve in escrow of 10% of the New Slide View voting common stock to be issued
to all shareholders of XX Xxxxxxxxx listed in Item 11- of the 2004 Form 10-K
filed June 22, 2005; for a period of two years following the Asset Purchase
Agreement.
(b)XX Xxxxxxxxx will cooperate with New Slide View to obtain an indemnification
insurance policy if New Slide View chooses to obtain such coverage. XX Xxxxxxxxx
will also cooperate in the defense of New Slide View in the event of any third
party lawsuit or claim.
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XX XXXXXXXXX GROUP
xxx.xxxxxxxxxxx.xxx
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8. COMPLAINT AGAINST XXXXXXX XX AND XXXXXX XXXX
Prior to closing, XX Xxxxxxxxx shall file a complaint against Xxxxxxx Xx and
Xxxxxx Xxxx regarding wrongs done by these former officers as described in XX
Xxxxxxxxx'x 8-K reports filed between December 1, 2004 and July 1, 2005. XX
Xxxxxxxxx shall make diligent efforts prior to and after closing to obtain
service of process on these former officers, and to obtain a favorable.
settlement agreement.
9. MAINTENANCE OF OPERATIONS.
>From the date hereof through the Closing, each of New Slide View and the XX
Xxxxxxxxx will conduct its business so as to maintain and preserve its property,
business, and other assets, including the goodwill of customers, suppliers, and
vendors. In addition, during such period, each of New Slide View or XX Xxxxxxxxx
will not, unless expressly permitted hereunder or with the prior written consent
of the CompanY:
(a) engage in any transaction other than in the ordinary
course of business consistent with the best interest of New Slide View
and its shareholders;
(b) make any material or substantive changes in its business
or capital structure, except as contemplated in Exhibit 1 to this
Agreement;
(c) issue any capital stock or any rights, warrants or options
to purchase its capital stock, except as contemplated in Exhibit 1 of
this Agreement; or
(d) sell, transfer, encumber, pledge or hypothecate any of its
assets other than as permitted in this Letter of Intent;
9. CLOSING AGREEMENT. The closing agreement will also contain the
following terms and conditions:
(a) Prior to the closing of the Asset Purchase, XX
Xxxxxxxxx will have the right to nominate up to two
(2) members of the Board of Directors which will
consist of not less than five (5) and not more than
seven (7) persons, and; upon the closing of the Asset
Purchase the nominees of XX Xxxxxxxxx will be elected
as full members of the Board of Directors of New
Slide View (for a term of 1 year)
(b) The New Slide View shares to be issued to the
shareholders of XX Xxxxxxxxx shall be issued into a
trust or escrow agreement, or other appropriate
vehicle, or in an appropriate manner, to satisfy
federal and state securities law requirements,
pending registration in a Form SB-2 or other
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XX XXXXXXXXX GROUP
xxx.xxxxxxxxxxx.xxx
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appropriate registration statement, Upon such
registration statement being declared effective such
New Slide View shares shall be distributed to the
shareholders of XX Xxxxxxxxx in a manner in
accordance with federal and state securities laws. .
(c) All appropriate representations, warranties, and
covenants to ensure that New Slide View will act in
the best interests of XX Xxxxxxxxx'x shareholders;
(d) All initial compensation agreements for management
and the Board of Directors of New Slide View shall be
agreed upon in principal and approved prior to the
closing.
It is anticipated that the initial
management team of New Slide View shall be:
Xxxxxxx X.Xxxxx, CEO
Xxxxxx Xxxxxxx, Operations Manager
Xxxxxxxxxxx XxXxxxxx, President and
Director of Marketing and Sales
New Slide View may consider an outside marketing
consultant and compensate that consultant at market rates
including the payment of cash and stock from the Management
Allocation.
XX Xxxxxxxxx shall issue 1 million shares of voting
common stock to a consultant chosen by Slideview. Such shares
shall be registrable at consultant's option in a Form S-8.
The initial monthly salaries of the initial
management team, presuming full time commitment, shall be
monthly upon the closing of the Asset Purchase Agreement as
follows:
:
Salaries: Monthly
Xxxxx *$ 10000
Xxxxxxx $ 5000
Mac Donald $10,000
Total *$25,000
Each of , these salaries will accrue each month until
New Slide View has obtained a capital raise of equity funds
with a target of 1mm, upon raising sufficient funds for
prototype, registration and sufficient operating capital the
salaries shall be paid in the following manner. 50% cash and
50% in restricted voting common stock, upon raise of
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XX XXXXXXXXX GROUP
xxx.xxxxxxxxxxx.xxx
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$750,0000, 75% cash and 25% in voting common stock; and upon
raise of over $1million, entirely in cash. The accrued
earnings will be paid in cash and restricted stock in
accordance with the ratio schedule given above, based upon a
stock price of no less that $0.250 per share and no more than
$1.00 per share, as validly determined by the Board of
Directors of the Company in conjunction with their
accountants.
(e) Board members shall each be paid $3000 per month in cash
for each month of service, $3000 per month in restricted
voting common shares. The cash portion will be treated as an
accrual until equity funding is completed, except that the
Board may vote to compensate Board Members who are active in
New Slide View operations immediately in cash(given adequate
funding as contemplated in management salary discussion
above).. The stock issuance to the Board members shall be
based upon a stock price of no less that $0.250 per share and
no more than $1.00 per share. Such share price shall be no
less than the strike price of the warrants issued to the XX
Xxxxxxxxx stockholders
(e) New Slide View commits to provide an adequate reserve
from capital raised for the payment of accounting,
legal and consulting expenses in connection with the
SB-2 filing and other necessary legal, accounting and
consulting expenses. New Slide View also commits to
build the prototype and comply with ongoing trademark
registration requirements by November 15, 2005,
unless reasonably extended by the parties.
(g) Such other covenants, conditions and indemnities as
are mutually agreed upon to be customary in
acquisition agreements with public companies.
(h) Any other covenants and conditions the parties may
agree upon.
(i) The effective closing date of the acquisition shall
be on or before September 13thh, 2005, but may be
reasonably extended by mutual agreement of the
parties.
10. CORPORATE REQUIREMENTS. The acquisition agreement shall be subject
to (a) the authorization of the boards of directors of both parties, and (b) the
approval of the stockholders of both parties. XX Xxxxxxxxx will furnish such
information, including financial statements, as may be required by the
Securities and Exchange Commission ("SEC") for inclusion in the SB-2
registration statement of New Slide View.
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XX XXXXXXXXX GROUP
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11. PUBLICITY; FILINGS. The parties will consult with each other
concerning any press releases or other publicity which they may wish to issue to
disclose this letter of intent or, the various transactions contemplated herein;
provided, however, that as a public company, XX Xxxxxxxxx must at all times
determine for itself what public disclosure is warranted, when and in what form
and any filings that are required to be made by it under the federal securities
laws, and XX Xxxxxxxxx will make such disclosure and filings as it determines
are warranted or required; provided, further, that New Slide View and a
representative of New Slide View may jointly disclose the subject matter hereof
under appropriate restrictions against non-disclosure to one or more companies
or other interested parties expressing an interest in a business venture with
the combined company.
12. ENFORCEABILITY.
Except for paragraphs 3, 11 13, and this paragraph 12, which are fully
enforceable in accordance with their respective terms, the balance of this
letter of intent is merely a good faith expression by the parties of their
intent to enter into the acquisition agreement on the terms outlined above, and
until they do so, paragraphs 1 through 5 of this letter of intent will not be
binding on or enforceable against the parties hereto. This letter of intent may
be modified in writing signed by the parties hereto.
13. CERTAIN REPRESENTATIONS.
Each Party hereto represents and warrants to the other that: (a) such party has
the legal right, power and authority to enter into this Letter of Intent and
consummate the transactions contemplated hereby; and (b) all written information
concerning such party provided to another party hereto is true and correct in
all material respects.
If the foregoing is an accurate expression of your intent, kindly be
good enough to confirm that fact by countersigning and returning to us the
enclosed duplicate copy of this letter of intent. Due to the importance of this
effort we seek your earliest approval.
Agreed to and Accepted On Behalf Agreed to and Accepted On Behalf
of XX Xxxxxxxxx Group by of Slide View Corporation by
/s/ Xxx Xxxxxxx /s/ Xxxxxxx X. Xxxxx
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Xxx Xxxxxxx Xxxxxxx X. Xxxxx,
Vice President and Director Chief Executive Officer
