EXHIBIT 2.6
CONFIDENTIAL September 2, 1999
--------------------------------------------------------------------------------
LETTER OF INTENT
Stock Purchase Agreement
NEOCOM Microspecialists, Inc.
I. ACQUIRING ENTITY
Sitestar Corporation (the "Buyer" "Sitestar"), incorporated
in the State of Nevada, will purchase (the "Purchase") all
the outstanding shares of NEOCOM Microspecialists, Inc., a
Virginia corporation (the "Company" "NEOCOM"); its principal
owners being Mr. Xxx Xxxxxxxx, Xx. Xxx Xxxxxxxx and Xx. Xxxx
Xxxxxxx (the "Principal Shareholders"). The Company is
represented by Optimum Strategic Finance (OSF) through Mr.
Xxxxx Xxxxxxxx. (the "Intermediary").
II. STRUCTURE AND CONSIDERATION
Buyer will purchase 100% of the total outstanding stock of
the Company. The aggregate consideration for the transaction
will be $6.918 million paid as follows:
A. $5.995 million in common stock in Sitestar at $3.50 per
share.
B. Conversion of $123,000 of NEOCOM debt to Sitestar
common stock at $3.50 per share.
C. The retirement of $800,000 in NEOCOM debt.
III. PURCHASE CONSIDERATION
Purchase consideration is based on the Company's aggregate
net worth and general financial performance at closing being
not less than as reflected on data provided to the Buyer
during negotiations. Should the aggregate net worth and/or
the general financial performance at the closing differ, the
purchase price shall be subject to adjustment accordingly.
Assets of the Company are to include all balance sheet items
and other assets presently utilized in the business and any
and all equipment, machines or material that do not appear
on the balance sheet, such as the business name and
licenses, but are used in the business. A definitive list of
assets shall be compiled and agreed upon by Xxxxx and the
Company. The additional terms and conditions of the purchase
consideration will be addressed in the definitive agreement.
1
CONFIDENTIAL September 2, 1999
IV. PAYMENT STRUCTURE
Buyer will deliver to the Shareholders stock certificates
equal to the purchase price at the closing and the execution
of a definitive agreement.
V. COVENANTS
A. Sitestar shares will list on the NASD Bulletin Board
within sixty (60) days of the execution of this
agreement with an opening price of $3.50 per share.
B. For a period of thirty (30) days from the consummation
of this transaction, Buyer will compensate Seller in
additional shares in Sitestar should Sitestar stock
fall below $1.75 per share for a consecutive ten (10)
day period. Said compensation will be designed to make
Seller whole in original purchase price.
X. Xxxxx will initiate an SB-2 fundraising effort within
thirty (30) days from the listing of Sitestar. Barring
unforeseen delays by the Securities and Exchange
Commission (SEC), the SB-2 fundraising effort will be
completed within 120 days from the close of this
transaction.
X. Xxxxx will raise a minimum of $2 million during the
prescribed fundraising effort.
E. Commensurate with the Buyer's Virginia-area ISP
consolidation strategy, Xxxxx will commit a minimum of
$500,000 in capital resources to said strategy. The
Buyer intends for Seller to serve as foundation for
said strategy and, as such, will commit a minimum of
$200,000 directly to Company to facilitate growth.
F. At the close of the transaction, Xxxxxx will personally
assume all debt currently charged to NEOCOM. Cash flow
from NEOCOM operations will continue to service said
debt during the Buyer's fundraising efforts. Buyer will
issue free trading shares during SB-2 fundraising
effort to be utilized to retire said debt and eliminate
Xxxxxx's personal guarantees. Buyer intends to retire
said debt within (120) days from the close of the
transaction.
X. Xxxxx agrees to assume any tax consequences faced by
Xxxxxx in accordance with the retirement of debt
described in Section V(F).
2
CONFIDENTIAL September 2, 1999
X. Xxxxxx's Board of Directors will remain in effect until
which time as all contingencies are satisfied or waived
by both parties.
I. Each party shall be responsible for their own legal and
transactional expenses. Xxxxx will be responsible for
the travel expenses of one principal Shareholder to Los
Angeles during the due diligence period.
VI. EMPLOYMENT CONTRACTS
A. Principal Shareholders will enter into an employment /
management contract with the Buyer for a minimum of
twenty four (24) months with further compensation from
Buyer, with a reasonable compensation package, the
terms and conditions of which will be addressed in the
definitive agreement.
X. Xxxxx and Seller have an understanding as to the
specific needs of Xx. Xxxxxxx'x employment / management
contract. During the due diligence period, Parties will
structure an agreement that enables Xx. Xxxxxxx to
receive compensation and benefits for a period of sixty
(60) months.
VII. NON-COMPETE CONTRACTS
Principal Shareholders will enter into a non-compete
contract with Buyer after the term of the management
contract for an additional period of thirty six (36) months
the terms and conditions of which will be addressed in the
definitive agreement.
VIII. TIMETABLE FOR CLOSING
It is the objective of the Buyer to close the acquisition
within thirty (30) days from the execution of this letter.
Buyer's obligation to close the acquisition will be subject
to (i) the execution of the definitive purchase agreement
and related documentation (collectively the "Definitive
Agreement") reflecting the terms of the acquisition as set
forth herein and containing representations, warranties
covenants and agreements of the Seller, satisfactory in form
and substance to Buyer; (ii) the receipt of all material
consents and approvals necessary for the consummation of the
acquisition and the ongoing operation of the business of the
Seller; (iii) the absence of any material adverse change in
the business, assets, condition (financial or otherwise), or
prospects of the Seller.
3
CONFIDENTIAL September 2, 1999
IX. Conduct of Business
From the date of your acceptance hereof, through the closing
date, the Seller shall conduct its business only in the
ordinary course and consistent with relationships and
goodwill existing on the date hereof and promptly notify
Buyer of any emergency or other change in the ordinary
course of the Seller's business
X. EXCLUSIVITY
For a period of thirty (30) days following the execution of
this agreement, the Seller will not directly or indirectly
through any officer, employee, stockholder, director, agent,
affiliate or otherwise (i) enter into any agreement,
agreement in principal or commitment (whether or not legally
binding) relating to any business combination with,
recapitalization of, or acquisition or purchase of all or a
significant portion of the assets of , or a material portion
of the equity interest in the Seller or relating to any
similar transaction (a "Competing Transaction"), (ii)
solicit, initiate or encourage the submission of any
proposal or offer from any person or entity relating to any
Competing Transaction, or (iii) participate in any
discussions or negotiations regarding a Competing
Transaction. The Seller shall notify the Buyer promptly if
any proposal regarding a Competing Transaction (or any
inquiry or any contact with any person or entity with
respect thereto) is made and shall advise Buyer of the
contents thereof. In addition, the Seller will immediately
terminate all discussions, negotiations or agreements now
pending with other potential participants in a Competing
Transaction.
XI. ACCESS
Seller agrees to provide Buyer and its advisors with timely
and reasonable access to the Company and all information
that any of them reasonably requests.
XII. CONFIDENTIALITY
The purchase price and terms of this agreement and
acquisition will be held by the parties in strict confidence
and will not be disclosed to anyone other than the agents or
representatives and financing sources of the parties who
need to know such information in connection with the
transaction completed hereby.
4
CONFIDENTIAL September 2, 1999
XIII. BINDING EFFECT
This letter does not constitute a binding obligation to
effect the acquisition, it is understood that such
obligation shall arise only from the Definitive Agreement.
XIV. CLOSING
A. Subject to completion of final due diligence,
accounting review and the completion of legal
documentation, the closing date of this transaction
will be at a place, and on a date mutually acceptable
to Buyer and the Company, and the date at the very
latest September 30, 1999.
X. Xxxxx and the Company agree that OSF has represented
the Company on this transaction, and that the Company
is solely responsible for all fees.
Please evidence your agreement with the foregoing by executing this agreement in
the space provided below. We very much look forward to working with you towards
the successful completion of this transaction and building a mutually beneficial
relationship.
AGREED AND ACCEPTED:
NEOCOM Microspecialists, Inc. Sitestar Corporation
/s/ Xxx Xxxxxxxx /s/ Xxxxxxx X. Xxxxxx
------------------------- ------------------------
By: Xxx Xxxxxxxx By: Xxxxxxx X. Xxxxxx
President President
/s/ Xxx Xxxxxxxx
-------------------------
By: Xxx Xxxxxxxx
Vice President
/s/ Xxxx Xxxxxxx
-------------------------
By: Xxxx Xxxxxxx
Vice President
Date: August 31, 1999 Date: September 2, 1999
5
